<SEC-DOCUMENT>0001083839-13-000103.txt : 20130530
<SEC-HEADER>0001083839-13-000103.hdr.sgml : 20130530
<ACCEPTANCE-DATETIME>20130530150200
ACCESSION NUMBER:		0001083839-13-000103
CONFORMED SUBMISSION TYPE:	NSAR-A
PUBLIC DOCUMENT COUNT:		12
CONFORMED PERIOD OF REPORT:	20130331
FILED AS OF DATE:		20130530
DATE AS OF CHANGE:		20130530
EFFECTIVENESS DATE:		20130530

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NUVEEN NEW YORK AMT-FREE MUNICIPAL INCOME FUND
		CENTRAL INDEX KEY:			0001195739
		IRS NUMBER:				030487021
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		NSAR-A
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-21211
		FILM NUMBER:		13881380

	BUSINESS ADDRESS:	
		STREET 1:		333 WEST WACKER DRIVE
		CITY:			CHICAGO
		STATE:			IL
		ZIP:			60606
		BUSINESS PHONE:		3129178146

	MAIL ADDRESS:	
		STREET 1:		333 WEST WACKER DRIVE
		CITY:			CHICAGO
		STATE:			IL
		ZIP:			60606

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NUVEEN INSURED NEW YORK TAX FREE ADVANTAGE MUNICIPAL FUND
		DATE OF NAME CHANGE:	20021003
</SEC-HEADER>
<DOCUMENT>
<TYPE>NSAR-A
<SEQUENCE>1
<FILENAME>nrk033113answer.fil
<TEXT>
<PAGE>      PAGE  1
000 A000000 03/31/2013
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001 A000000 NUVEEN NY AMT-FREE MUNICIPAL INCOME FUND
001 B000000 811-21211
001 C000000 3129178200
002 A000000 333 WEST WACKER DRIVE
002 B000000 CHICAGO
002 C000000 IL
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014 A000001 NUVEEN INVESTMENTS, LLC
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015 A000001 STATE STREET BANK AND TRUST COMPANY
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<PAGE>      PAGE  2
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015 C030001 02110
015 E010001 X
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019 C000000 NUVEENFUND
021  000000        0
022 A000001 SIEBERT BRANDFORD
022 B000001 13-2639174
022 C000001     37460
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022 A000002 JP MORGAN CHASE
022 B000002 13-3224016
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022 A000003 CITIGROUP
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SIGNATURE   STEPHEN D. FOY
TITLE       V.P. & CONTROLLER

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77C VOTES
<SEQUENCE>2
<FILENAME>nrk77c033113.txt
<TEXT>
Form N-SAR, Sub-Item 77C
Submission of matters to a vote of security holders


Nuveen New York AMT-Free Municipal Income Fund
  f/k/a Nuveen Insured New York Tax-Free Advantage
  Municipal Fund

811-21211

A special meeting of shareholders was held in the
offices of Nuveen Investments on November 27, 2012;
at this meeting the shareholders were asked to vote on
the approval of the issuance of additional common
shares and the approval of an Agreement and Plan of
Reorganization. The special meeting was subsequently
adjourned to December 14, 2012 and January 24, 2013.

Final voting results for January 24, 2013 are as follows:
<table>
<c>
<c> Common and Preferred shares voting
together as a class
<c>

Preferred shares
<c>

Common Shares
To approve an Agreement and Plan of
Reorganization.



   For
                                  -
             1,449,371
                          -
   Against
                                  -
                143,073
                          -
   Abstain
                                 -
                  13,528
                          -
Total
                                  -
             1,605,972
                          -




To approve the issuance of additional
common shares in connection with each
Reorganization.



   For
                     3,127,701
                          -
             1,680,330
   Against
                        249,515
                          -
                104,442
   Abstain
                        124,193
                          -
                110,665
      Total
                     3,501,409
                          -
             1,895,437
</table>


Proxy materials are herein
incorporated by reference
to the SEC filing on October 24,
2012, under
Conformed Submission Type
Form 497, accession
number 0001193125-12-431809.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77I NEW SECUR
<SEQUENCE>3
<FILENAME>nrk77i033113.txt
<TEXT>
Form N-SAR,
Sub-Item 77I
Terms of new or amended securities


Nuveen New York AMT-Free Municipal Income
Fund
  f/k/a Nuveen Insured New York Tax-Free Advantage
    Municipal Fund

811-21211

The Registrant has added new series of the preferred share
class, as stated in each of the Statements Establishing and
Fixing the Rights and Preferences, containing a description of
the securities.  The Registrant incorporates by reference to
this Sub-Item 77I the Registrants five Statements of
Establishing and Fixing the Rights and Preferences, filed as
exhibits to Form N-SAR,Sub-Item 77Q1(a).


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77M MERGERS
<SEQUENCE>4
<FILENAME>nrk77m033113.txt
<TEXT>
SUB-ITEM 77M
Mergers

Nuveen New York AMT-Free Municipal
Income Fund
  f/k/a Nuveen Insured New York Tax-Free
Advantage
    Municipal Fund

811-21211


On March 8, 2013 the above-referenced fund was the
surviving fund in a reorganization.  All of the assets of the
Nuveen New York Dividend Advantage Municipal Income
Fund, Nuveen New York Select Quality Municipal Fund,
Inc., Nuveen New York Investment Quality Municipal
Fund, Inc., Nuveen New York Quality Income Municipal
Fund, Inc. and Nuveen New York Premium Income
Municipal Fund, Inc. were transferred to the Nuveen New
York AMT-Free Municipal Income Fund.  The
circumstances and details of the reorganization are
contained in the SEC filing on October 18, 2012, under
Conformed Submission Type N 14 8C/A, accession
number 0001193125-12-426327, which materials are
herein incorporated by reference.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1 OTHR EXHB
<SEQUENCE>5
<FILENAME>nrk77q1a033113amendmts.txt
<TEXT>
Form N-SAR,
Sub-Item 77Q1(a)
Copies of any material amendments
to the registrants charter


Nuveen New York AMT-Free Municipal Income
Fund
  f/k/a Nuveen Insured New York Tax-Free Advantage
    Municipal Fund

811-21211


Attached please find as an exhibit under
Sub-Item 77Q1(a) of Form N-SAR a copy of five additional
Statements Establishing and fixing the Rights and
preferences of Preferred Shares, each of which is considered
to be an amendment to the Funds Charter.





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1 OTHR EXHB
<SEQUENCE>6
<FILENAME>nrk77q1avdrpseries1nqn.txt
<TEXT>
<PAGE>




                 NUVEEN NEW YORK 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 1 Variable Rate Demand Preferred Shares of
         Nuveen New York Investment Quality Municipal Fund, Inc. (NQN))

                         Effective Date: March 11, 2013

<PAGE>



                                TABLE OF CONTENTS
                                -----------------

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <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.........................................................23
                  (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....................................................................28

         7.       VRDP Basic Maintenance Amount..................................................................28

         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...............................29

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

         10.      Redemption.....................................................................................30

                  (a)      Optional Redemption...................................................................30
                  (b)      Mandatory Redemption..................................................................31
                  (c)      Notice of Redemption..................................................................35

</TABLE>
                                           2

<PAGE>



<TABLE>
<S>                                                                                                            <C>
                  (d)      No Redemption Under Certain Circumstances.............................................35
                  (e)      Absence of Funds Available for Redemption.............................................35
                  (f)      Tender and Paying Agent as Trustee of Redemption Payments by Fund.....................35
                  (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........................................................36
                  (i)      Only Whole VRDP Shares May Be Redeemed................................................36
                  (j)      Modification of Redemption Procedures.................................................36

         11.      Liquidation Rights.............................................................................36

                  (a)      Ranking...............................................................................36
                  (b)      Distributions Upon Liquidation........................................................37
                  (c)      Pro Rata Distributions................................................................37
                  (d)      Rights of Junior Shares...............................................................37
                  (e)      Certain Events Not Constituting Liquidation...........................................37

         12.      Purchase Obligation............................................................................37

         13.      Miscellaneous..................................................................................39

                  (a)      Amendment of or Supplements to this Statement.........................................39
                  (b)      No Fractional Shares..................................................................39
                  (c)      Status of VRDP Shares Redeemed, Exchanged or Otherwise Acquired by the
                           Fund..................................................................................39
                  (d)      Purchase Obligation Part of VRDP Shares...............................................39
                  (e)      Treatment of VRDP Shares as Stock.....................................................39
                  (f)      Board May Resolve Ambiguities.........................................................39
                  (g)      Headings Not Determinative............................................................39
                  (h)      Notices...............................................................................39
PART II..........................................................................................................39

         1.       Remarketing Procedures.........................................................................39

         2.       Remarketing Schedule...........................................................................41

         3.       Determination of Applicable Rate...............................................................43

         4.       Failed Remarketing Condition...................................................................44

         5.       Purchase of VRDP Shares by Remarketing Agent...................................................44

         6.       Notification of Allocations....................................................................44

         7.       Transfers......................................................................................44

         8.       Global Certificate.............................................................................45
</TABLE>


                                       3

<PAGE>


                 NUVEEN NEW YORK AMT-FREE MUNICIPAL INCOME FUND

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

         NUVEEN  NEW  YORK  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 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  one  Series  of
Preferred  Shares,  and,  concurrently with the initial issuance of the Series 1
VRDP Shares  designated  below,  the Fund is issuing  Series of VRDP  designated
Series 2,  Series 3 and Series 4 and a Series of  Variable  Rate  MuniFund  Term
Preferred  designated  Series 2014;  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,
March 6, 2013,  for the Initial Rate Period  from,  and  including,  the Date of
Original Issue to, and including, March 13, 2013 and an initial Dividend Payment
Date of April 1, 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 1,123. 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 1
Variable  Rate Demand  Preferred  Shares of Nuveen New York  Investment  Quality
Municipal  Fund,  Inc. (the  "Acquired  Fund VRDP")  outstanding  on the date of
distribution in connection with the reorganization of Nuveen New York Investment
Quality  Municipal  Fund,  Inc.  (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  Municipal
                        Obligation that qualifies as an eligible  security under
                        Rule 2a-7 under the 1940 Act;

                                       6

<PAGE>



                  (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.

                  (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 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, if applicable,  such other  short-term
debt ratings as

                                       7

<PAGE>



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 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.

                                       8

<PAGE>



                  (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, New York State and New York City personal 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 and New York State and New York City
personal  income tax with respect to dividends  received from the Fund (that is,
without  giving  effect to any other New York  State or New York City tax or 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  combined  regular federal,  New York State and New York
City personal income tax rate applicable to ordinary income (taking into account
the federal income tax  deductibility of state and local taxes paid or incurred)
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 Fund, the Acquired Fund and the other funds specified  therein,  dated as of
October 31, 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,
March 13, 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, Citibank, N.A.

                  (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,  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.  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 Shares 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) in the event of a
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 if the  Liquidity
Provider (in its sole discretion) thereafter provides written notice to the Fund
that such failure to pay such fee constitutes a Mandatory  Tender Event; (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 Effective Leverage Ratio covenant with the

                                       11

<PAGE>


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),  if 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  combined  regular  federal,  New York State and New York City
personal  income tax rate applicable to ordinary income (taking into account the
federal income tax  deductibility  of state and local taxes paid or incurred) 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,  provided,  that,
notwithstanding  any  provision  to the contrary in the  Remarketing  Agreement,
immediately  following

                                       12

<PAGE>



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  combined
regular  federal,  New York  State and New York City  personal  income  tax rate
applicable  to ordinary  income  (taking  into  account  the federal  income tax
deductibility of state and local taxes paid or incurred) 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.

                                       13

<PAGE>



                  (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.

                  (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.

                                       14

<PAGE>



                  (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.

                  (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 or
any Mandatory  Purchase,  in each case  following  delivery of a Final Notice of
Purchase with respect to such Series 1 VRDP Shares.

                                       15

<PAGE>



                  (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.

                  (kkkk)   "PURCHASED  VRDP  SHARES"  means  all  Series  1 VRDP
Shares  purchased  by the  Liquidity  Provider  pursuant  to the  VRDP  Purchase
Agreement,  so long as the  Liquidity  Provider  continues to be the  beneficial
owner for federal income tax purposes of such Series 1 VRDP Shares.

                  (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 determined  without
regard to any prior extension of a Rate Determination Date to 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  termination of the VRDP Purchase  Agreement in accordance  with its
terms following the occurrence of a Related Party Termination Event.

                  (wwww)   "RELATED PARTY TERMINATION EVENT" means 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.

                                       16

<PAGE>



                  (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,
initially Citigroup Global Markets Inc.

                  (zzzz)   "REMARKETING   AGREEMENT"   means   the   Remarketing
Agreement with respect to the Series 1 VRDP Shares, dated March 11, 2013, by and
among the Fund, the Investment  Adviser and the  Remarketing  Agent, as amended,
modified or  supplemented  from time to time,  or any similar  agreement  with a
successor Remarketing Agent..

                  (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 15, 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.

                                       17

<PAGE>



                  (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.

                  (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)

                                       18

<PAGE>



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.

                  (cccccc) "VRDP FEE  AGREEMENT"  means the Variable Rate Demand
Preferred  Shares  (VRDP) Fee  Agreement  with  respect to Series 1 VRDP Shares,
dated March 11, 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  March 11,  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

                                       19

<PAGE>


                           (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  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

                                       20

<PAGE>


                  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 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 equal the sum of the dividends  accumulated  but not
         yet paid for each Rate Period (or part thereof) in the related Dividend
         Period or Dividend  Periods.  The amount of dividends  accumulated  for
         each  such  Rate  Period  (or  part  thereof)   shall  be  computed  by
         multiplying the Applicable Rate in effect for shares of such Series for
         such Rate  Period (or part  thereof) by a fraction,  the  numerator  of
         which shall be the number of days in such Rate Period (or part thereof)
         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

                                       21

<PAGE>



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 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,  New York State and New York City
personal  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.

                                       22

<PAGE>



         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 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:

                                       23

<PAGE>



                           (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 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.

                                       24

<PAGE>



         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 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

                                       25

<PAGE>



         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 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

                                       26

<PAGE>



         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 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).

                                       27

<PAGE>



                  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 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

                                       28

<PAGE>



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.

         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

                                       29

<PAGE>



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.

         9.       SHORT-TERM RATINGS.

                  The Fund will use its  reasonable  best efforts to maintain at
least one short-term  rating of 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

                                       30

<PAGE>



         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 August 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)  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,

                                       31

<PAGE>



         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 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  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

                                       32

<PAGE>



         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

                                       33

<PAGE>



         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:

                     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  August  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 August  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 August 1, 2040 Redemption
         Date for the Outstanding  Series 1 VRDP Shares,  the requirement of the
         Fund to maintain a Liquidity Account for the Outstanding

                                       34

<PAGE>



         Series 1 VRDP Shares as contemplated by this Section  10(b)(iii)  shall
         lapse and be of no further force and effect.

                  (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.

                                       35

<PAGE>



                  (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 (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.

                                       36

<PAGE>



                  (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 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, if applicable,  such other  short-term
debt  ratings 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.

                                       37

<PAGE>



                  (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 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

                                       38

<PAGE>



the  Fund  will  issue  to  the  purchaser   replacement  Series  1  VRDP  Share
certificates in lieu of such undelivered Series 1 VRDP Shares.

                  (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

                                       39

<PAGE>



Business Day).  Each Notice of Tender shall be irrevocable  (except as described
below) and effective upon receipt and shall:

                           (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

                                       40

<PAGE>



         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  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

                                       41

<PAGE>



VRDP Shares by means of "FREE" delivery 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

                                       42

<PAGE>



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 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),  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.

                                       43

<PAGE>



                  (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 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,
New York State and New York City personal 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

                                       44

<PAGE>



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  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 New York AMT-Free  Municipal Income Fund has caused
these presents to be signed as of March 8, 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 NEW YORK AMT-FREE MUNICIPAL INCOME
                                    FUND


                                    By:             /s/ Gifford R. Zimmerman
                                             -----------------------------------
                                             Name: Gifford R. Zimmerman
                                             Title: Chief Administrative Officer

ATTEST:


         /s/ Kevin J. McCarthy
------------------------------------
Name:  Kevin J. McCarthy
Title: Vice President and Secretary

                                       46
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1 OTHR EXHB
<SEQUENCE>7
<FILENAME>nrk77q1avdrpseries2nvn.txt
<TEXT>
<PAGE>


                 NUVEEN NEW YORK AMT-FREE MUNICIPAL INCOME FUND

                      STATEMENT ESTABLISHING AND FIXING THE
                       RIGHTS AND PREFERENCES OF SERIES 2
                      VARIABLE RATE DEMAND PREFERRED SHARES

      (Relating to the issuance of Series 2 VRDP by the above-named fund in
 exchange for the outstanding Series 1 Variable Rate Demand Preferred Shares of
           Nuveen New York Select Quality Municipal Fund, Inc. (NVN))

                         Effective Date: March 11, 2013

<PAGE>


                                TABLE OF CONTENTS
                                -----------------
<TABLE>
                                                                                                                 Page
                                                                                                                 ----
<S>                                                                                                              <C>
DESIGNATION OF SERIES 2 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............................................................22

                  (a)      Length of and Preconditions for Special Rate Period...................................22
                  (b)      Adjustment of Length of Special Rate Period...........................................23
                  (c)      Notice of Proposed Special Rate Period................................................23
                  (d)      Notice of Special Rate Period.........................................................23
                  (e)      Failure to Deliver Notice of Special Rate Period......................................24
                  (f)      Other Special Rate Period Provisions..................................................24

         5.       Voting Rights..................................................................................24

                  (a)      One Vote Per VRDP Share...............................................................24
                  (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....................................................................28

         7.       VRDP Basic Maintenance Amount..................................................................28

         8.       Restrictions on Dividends and Other Distributions..............................................28

                  (a)      Dividends on Preferred Shares.........................................................28
                  (b)      Dividends and Other Distributions With Respect to Common Shares Under the
                           1940 Act..............................................................................29
                  (c)      Other Restrictions on Dividends and Other Distributions...............................29

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

         10.      Redemption.....................................................................................30

                  (a)      Optional Redemption...................................................................30
                  (b)      Mandatory Redemption..................................................................31
                  (c)      Notice of Redemption..................................................................35
</TABLE>

                                        2

<PAGE>


<TABLE>

<S>                                                                                                              <C>

                  (d)      No Redemption Under Certain Circumstances.............................................35
                  (e)      Absence of Funds Available for Redemption.............................................35
                  (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........................................................36
                  (i)      Only Whole VRDP Shares May Be Redeemed................................................36
                  (j)      Modification of Redemption Procedures.................................................36

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

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

         12.      Purchase Obligation............................................................................37

         13.      Miscellaneous..................................................................................39

                  (a)      Amendment of or Supplements to this Statement.........................................39
                  (b)      No Fractional Shares..................................................................39
                  (c)      Status of VRDP Shares Redeemed, Exchanged or Otherwise Acquired by the
                           Fund..................................................................................39
                  (d)      Purchase Obligation Part of VRDP Shares...............................................39
                  (e)      Treatment of VRDP Shares as Stock.....................................................39
                  (f)      Board May Resolve Ambiguities.........................................................39
                  (g)      Headings Not Determinative............................................................39
                  (h)      Notices...............................................................................40
PART II..........................................................................................................40

         1.       Remarketing Procedures.........................................................................40

         2.       Remarketing Schedule...........................................................................41

         3.       Determination of Applicable Rate...............................................................43

         4.       Failed Remarketing Condition...................................................................44

         5.       Purchase of VRDP Shares by Remarketing Agent...................................................44

         6.       Notification of Allocations....................................................................44

         7.       Transfers......................................................................................45

         8.       Global Certificate.............................................................................45
</TABLE>

                                        3

<PAGE>



                 NUVEEN NEW YORK AMT-FREE MUNICIPAL INCOME FUND

                      STATEMENT ESTABLISHING AND FIXING THE
                       RIGHTS AND PREFERENCES OF SERIES 2
                      VARIABLE RATE DEMAND PREFERRED SHARES

         NUVEEN  NEW  YORK  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 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 2 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  one  Series  of
Preferred  Shares,  and,  concurrently with the initial issuance of the Series 2
VRDP Shares  designated  below,  the Fund is issuing  Series of VRDP  designated
Series 1,  Series 3 and Series 4 and a Series of  Variable  Rate  MuniFund  Term
Preferred  designated  Series 2014;  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 2 VRDP

         Series 2: A series of  preferred  shares,  par  value  $.01 per  share,
liquidation  preference  $100,000 per share, is hereby authorized and designated
"Series 2 Variable  Rate Demand  Preferred  Shares,"  also referred to herein as
"Series 2 VRDP" or "Series 2 VRDP  Shares." Each share of Series 2 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 2 VRDP,  each share of
Series 2 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,
March 6, 2013,  for the Initial Rate Period  from,  and  including,  the Date of
Original Issue to, and including, March 13, 2013 and an initial Dividend Payment
Date of April 1, 2013. The Series 2 VRDP shall  constitute a separate  series of
preferred shares of the Fund and each share of Series 2 VRDP shall be identical.

         The  number of Series 2 VRDP  Shares  which the Board of  Trustees  has
initially authorized for issuance is 1,648. The Board of Trustees may, from time
to time, authorize the issuance of additional Series 2 VRDP Shares in accordance
with the terms hereof.

         One share of Series 2 VRDP initially  authorized for issuance as stated
above  shall be issued  and  distributed  in  respect  of each share of Series 1
Variable  Rate  Demand  Preferred  Shares  of  Nuveen  New York  Select  Quality
Municipal  Fund,  Inc. (the  "Acquired  Fund VRDP")  outstanding  on the date of
distribution  in connection  with the  reorganization  of Nuveen New York Select
Quality  Municipal  Fund,  Inc.  (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 2 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  2 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 2
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,  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.

                                        5

<PAGE>


                  (h)      "BENEFICIAL  OWNER"  means a  Person  in  whose  name
Series 2 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 2 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
2 VRDP Share,  means the date on which the Fund  initially  issued such Series 2
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  Municipal
                        Obligation that qualifies as an eligible  security under
                        Rule 2a-7 under the 1940 Act;

                                        6

<PAGE>


                  (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.

                  (t)      "DIVIDEND  PERIOD,"  with  respect  to Series 2 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 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, if applicable,  such other  short-term
debt ratings as

                                        7

<PAGE>


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 2 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 2 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 2 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 2 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 2 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 2 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 and Paying Agent does not perform its
obligations)  on the Purchase Date indicating the number of Series 2 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.

                                        8

<PAGE>


                  (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 2 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 2 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 2 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, New York State and New York City personal 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 and New York State and New York City
personal  income tax with respect to dividends  received from the Fund (that is,
without  giving  effect to any other New York  State or New York City tax or 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  combined  regular federal,  New York State and New York
City personal income tax rate applicable to ordinary income (taking into account
the federal income tax  deductibility of state and local taxes paid or incurred)
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 2 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 Fund, the Acquired Fund and the other funds specified  therein,  dated as of
October 31, 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 2 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,
March 13, 2013, the next succeeding  Wednesday,  as set forth under "Designation
of Series 2 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 2 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, Citibank, N.A.

                  (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 2 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 2 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,  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.  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 2 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 2 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 2 VRDP Shares
remain  unsold and the  Remarketing  Agent does not purchase for its own account
the unsold  Series 2 VRDP  Shares  tendered  to the Tender and Paying  Agent for
Remarketing (provided, that the Remarketing Agent may seek to sell such Series 2
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 2 VRDP Shares 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) in the event of a
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 if the  Liquidity
Provider (in its sole discretion) thereafter provides written notice to the Fund
that such failure to pay such fee constitutes a Mandatory  Tender Event; (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 Effective Leverage Ratio covenant with the

                                       11

<PAGE>

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),  if 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 2 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 2 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
2 VRDP Shares will depend on the long-term  rating assigned to the Series 2 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 2 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 2 VRDP  Shares  utilizing  the  higher of the  ratings of the Rating
     Agencies then rating the Series 2 VRDP Shares.
**   Includes  unrated,  if no Rating  Agency is then  rating  the Series 2 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 2 VRDP  Shares  for that Rate  Period,  the  Applicable
Percentage in the  foregoing  table shall be divided by the quantity 1 minus the
maximum  marginal  combined  regular  federal,  New York State and New York City
personal  income tax rate applicable to ordinary income (taking into account the
federal income tax  deductibility  of state and local taxes paid or incurred) 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,  provided,  that,
notwithstanding  any  provision  to the contrary in the  Remarketing  Agreement,
immediately  following

                                       12

<PAGE>


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 2 VRDP Shares for that Rate  Period,  the Maximum  Rate shall
not exceed 15%  divided by the  quantity 1 minus the maximum  marginal  combined
regular  federal,  New York  State and New York City  personal  income  tax rate
applicable  to ordinary  income  (taking  into  account  the federal  income tax
deductibility of state and local taxes paid or incurred) 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 2 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 2 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 2 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.

                                       13

<PAGE>


                  (ppp)    "NOTICE OF PROPOSED  SPECIAL RATE  PERIOD"  means any
notice with  respect to a proposed  Special  Rate Period of Series 2 VRDP Shares
pursuant to paragraph (c) of Section 4 of Part I of this Statement.

                  (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 2 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 2 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 2 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 2 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 2 VRDP Shares remain  unsold and the  Remarketing
Agent does not  purchase  for its own  account  the unsold  Series 2 VRDP Shares
tendered  to the Tender  and Paying  Agent for  Remarketing  (provided  that the
Remarketing  Agent may seek to sell such  Series 2 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 2 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 2 VRDP Shares.

                                       14

<PAGE>


                  (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 2 VRDP Shares.

                  (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 2 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 2 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 2 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 2 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 or
any Mandatory  Purchase,  in each case  following  delivery of a Final Notice of
Purchase with respect to such Series 2 VRDP Shares.

                                       15

<PAGE>


                  (jjjj)   "PURCHASE   PRICE"  means  an  amount  equal  to  the
Liquidation Preference of any Series 2 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.

                  (kkkk)   "PURCHASED  VRDP  SHARES"  means  all  Series  2 VRDP
Shares  purchased  by the  Liquidity  Provider  pursuant  to the  VRDP  Purchase
Agreement,  so long as the  Liquidity  Provider  continues to be the  beneficial
owner for federal income tax purposes of such Series 2 VRDP Shares.

                  (llll)   "RATE  DETERMINATION DATE" means, with respect to any
Series 2 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 determined  without
regard to any prior extension of a Rate Determination Date to a Business Day.

                  (mmmm)   "RATE  PERIOD," with respect to Series 2 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 2 VRDP  Shares),  Moody's (if Moody's is then rating Series 2 VRDP
Shares),  S&P (if S&P is then rating Series 2 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  termination of the VRDP Purchase  Agreement in accordance  with its
terms following the occurrence of a Related Party Termination Event.

                  (wwww)   "RELATED PARTY TERMINATION EVENT" means the Liquidity
Provider becoming a Related Party of the Fund other than through the acquisition
of Series 2 VRDP Shares pursuant to the terms of the VRDP Purchase Agreement.

                  (xxxx)   "REMARKETING"  means the remarketing of Series 2 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.

                                       16

<PAGE>


                  (yyyy)   "REMARKETING  AGENT"  means the entity  appointed  as
such with  respect  to  Series 2 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,
initially Citigroup Global Markets Inc.

                  (zzzz)   "REMARKETING   AGREEMENT"   means   the   Remarketing
Agreement with respect to the Series 2 VRDP Shares, dated March 11, 2013, by and
among the Fund, the Investment  Adviser and the  Remarketing  Agent, as amended,
modified or  supplemented  from time to time,  or any similar  agreement  with a
successor Remarketing Agent.

                  (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 15, 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.

                                       17

<PAGE>


                  (nnnnn)  "SPECIAL  RATE PERIOD," with respect to Series 2 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.

                  (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 2 VRDP Shares,  as it may be amended
or supplemented from time to time.

                  (qqqqq)  "SUBSEQUENT  RATE  PERIOD," with respect to shares of
Series 2 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 2 VRDP Shares.

                  (vvvvv)  "TENDER AND PAYING AGENT  AGREEMENT" means the Tender
and Paying Agent  Agreement  with  respect to the Series 2 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)

                                       18

<PAGE>


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.

                  (cccccc) "VRDP FEE  AGREEMENT"  means the Variable Rate Demand
Preferred  Shares  (VRDP) Fee  Agreement  with  respect to Series 2 VRDP Shares,
dated March 11, 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 2 VRDP
Shares,  dated  March 11,  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 2
VRDP is as set forth above under the title "Designation of Series 2 VRDP."

         2.       DIVIDENDS.

                  (a)      RANKING.  The shares of Series 2 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 2
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 2 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 2 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 2 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 2 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 2 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

                                       19

<PAGE>


                           (ii)     notwithstanding  the foregoing,  the Fund in
         its discretion  may establish the Dividend  Payment Dates in respect of
         any Special  Rate Period for Series 2 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  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 2 VRDP Shares  during the Initial  Rate Period shall be equal to
         the rate per  annum  specified  under  "Designation  of  Series 2 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

                                       20

<PAGE>


                  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 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 2 VRDP on any Dividend  Payment
Date shall equal the sum of the dividends  accumulated but not yet paid for each
Rate  Period  (or part  thereof)  in the  related  Dividend  Period or  Dividend
Periods. The amount of dividends  accumulated for each such Rate Period (or part
thereof)  shall be computed by  multiplying  the  Applicable  Rate in effect for
shares of such Series for such Rate Period (or part thereof) by a fraction,  the
numerator  of which  shall be the  number of days in such Rate  Period  (or part
thereof) 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 2 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 2 VRDP Shares, the Fund
shall pay to the Tender and Paying  Agent,  not later

                                       21

<PAGE>


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 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 2 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 2
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 2 VRDP  Shares,  the
transferor as  Beneficial  Owner of Series 2 VRDP Shares shall be deemed to have
agreed  pursuant  to the terms of the Series 2 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
2 VRDP Shares in exchange  for payment of the  Purchase  Price for such Series 2
VRDP Shares by the transferee.

                  (j)      DIVIDENDS  CREDITED AGAINST EARLIEST  ACCUMULATED BUT
UNPAID  DIVIDENDS.  Any  dividend  payment  made on Series 2 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 2 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 2 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,  New York State and New York City
personal  income tax purposes to a dividend paid on Series 2 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.

                                       22

<PAGE>


         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 2 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 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 2 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 2 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 2 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 2 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 2 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 2
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 2 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 2 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 2 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:

                                       23

<PAGE>


                           (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  2 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 amounts due with  respect to  redemptions
         payable,  in each  case,  on Series 2 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
2 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 2 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.

                                       24

<PAGE>


         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 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

                                       25

<PAGE>


         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 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 2 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 2 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 2 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 2 VRDP,  or  classes  or series of  Preferred  Shares
         ranking  on a parity  with  Series 2 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 2 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 2
         VRDP  Shares and (iii) the  authorization,  creation  and  issuance  of
         classes or series of shares ranking junior to Series 2 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 2 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 2 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 2 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 2
         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 2 VRDP
         outstanding at the time, in person or by proxy, either in writing or at
         a  meeting   (the   Series  2  VRDP   voting  as  a  separate   class).
         Notwithstanding the foregoing, the Fund, without approval of Holders of
         Series 2 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 2 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


                                       26

<PAGE>


         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 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 2
         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 2 VRDP  Shares),  Moody's  (if  Moody's is then
         rating the  Series 2 VRDP  Shares)  and S&P (if S&P is then  rating the
         Series 2 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 2
         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 2 VRDP  Shares  is
         otherwise  required by this  Statement,  the  Declaration or applicable
         law,  (i)  Holders  of  outstanding  shares  of  Series 2 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 2 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 2 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 2
         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 2 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 2 VRDP  Shares,  and any such
adoption,  amendment,  alteration  or repeal  will not be  deemed to affect  the
preferences, rights or powers of Series 2 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 2 VRDP Shares without
replacement,  in either  case,  without the approval of Holders of Series 2 VRDP
Shares or other shareholders of the Fund. In the event a Rating Agency ceases to
furnish a long-term  rating for the Series 2 VRDP Shares or the Fund  terminates
the services of a Rating Agency then providing a long-term rating for the Series
2 VRDP Shares,  such rating, to the extent it would have been taken into account
in any of the provisions of the Series 2 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).

                                       27

<PAGE>


                  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  2 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 alter other  provisions  of this  Statement,
without the vote or consent of any Holder of Series 2 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 2 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 2 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 2 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 2 VRDP Share and no
Series 2 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  2  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 2 VRDP Share is
Outstanding, the Minimum VRDP Asset Coverage.

         7.       VRDP BASIC MAINTENANCE AMOUNT.

                  (a)      Subject to paragraph  (c) below,  so long as Series 2
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  2 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 2 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 2 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 2 VRDP Shares).

                  (b)      Subject  to  paragraph  (c)  below,  the  Fund  shall
deliver to each Rating  Agency which is then rating Series 2 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


                                       28

<PAGE>


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 2 VRDP Shares, and the Rating Agency Guidelines
may be changed or  eliminated  at any time  without  the  approval of Holders of
Series 2 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 2 VRDP Shares.

         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 2 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 2 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 2 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 2 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 2 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 2 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 2 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 2 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 2 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
2 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 2 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 2
VRDP Shares

                                       29

<PAGE>


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 2 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 2 VRDP Shares)
would at least  equal  the VRDP  Basic  Maintenance  Amount  (if  any),  if then
required by such Rating Agency or Agencies.

         9.       SHORT-TERM RATINGS.

                  The Fund will use its  reasonable  best efforts to maintain at
least one short-term  rating of the Series 2 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 2 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 2 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 2 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 2 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 2 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 2 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 2 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 2 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 2 VRDP Shares),  the Discounted Value of Moody's
         Eligible  Assets (if Moody's is then  rating the Series 2 VRDP  Shares)
         and the Discounted  Value of S&P Eligible Assets (if S&P is then rating
         the  Series  2 VRDP  Shares)  each  at  least  equals  the  VRDP


                                       30

<PAGE>


         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 2 VRDP Shares on August 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 2 VRDP
         Shares) with a Discounted Value, Moody's Eligible Assets (if Moody's is
         then rating the Series 2 VRDP  Shares)  with a  Discounted  Value,  S&P
         Eligible Assets (if S&P is then rating the Series 2 VRDP Shares) with a
         Discounted  Value, or Other Rating Agency Eligible Assets (if any Other
         Rating  Agency  is  then  rating  the  Series  2  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 2 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 2 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 2 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 2 VRDP
         Shares) with a Discounted Value, Moody's Eligible Assets (if Moody's is
         then rating the Series 2 VRDP  Shares)  with a  Discounted  Value,  S&P
         Eligible Assets (if S&P is then rating the Series 2 VRDP Shares) with a
         Discounted  Value and Other Rating Agency Eligible Assets (if any Other
         Rating  Agency  is  then  rating  the  Series  2  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 2
         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 2 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,


                                       31

<PAGE>


         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 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 2 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 2 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 2 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 2 VRDP
         Shares are  Outstanding  and held by Persons  other than the  Liquidity
         Provider,  the Purchase  Obligation  of the  Liquidity  Provider  whose
         Series  2  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 2 VRDP Shares are Outstanding and held by Persons other than
         the Liquidity Provider and (b) the Purchase Obligation of the Liquidity
         Provider  whose  Series  2  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 2 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 2 VRDP Shares
         are subject to the Failed


                                       32

<PAGE>


         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 2 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 2 VRDP Shares in the distribution referred to under "Designation
         of Series 2 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  date  of   acquisition   and  (z)  not
         successfully remarketed,  then (I) the Series 2 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 2 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 2 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



                                       33

<PAGE>


         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:

                     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  August  1, 2040  specified  in  Section
         10(b)(i)  above,  if any Series 2 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 2
         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 2 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 August  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 2 VRDP Shares may be
         applied  by  the  Fund,  in  its  discretion,  towards  payment  of the
         Redemption  Price for the  Outstanding  Series 2 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 2 VRDP Shares on the August 1, 2040 Redemption
         Date for the Outstanding  Series 2 VRDP Shares,  the requirement of the
         Fund to maintain a Liquidity Account for the Outstanding


                                       34

<PAGE>


         Series 2 VRDP Shares as contemplated by this Section  10(b)(iii)  shall
         lapse and be of no further force and effect.

                  (c)      NOTICE OF REDEMPTION.  If the Fund shall determine or
be required to redeem,  in whole or in part, shares of Series 2 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 2 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 2 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 2 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 2 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 2
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 2 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 2 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 2 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 2 VRDP Shares for which a Notice of Redemption has
been  provided,  dividends  may be declared and paid on Series 2 VRDP Shares and
shall include  those Series 2 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 2 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.

                                       35

<PAGE>


                  (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 (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 2 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 2 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 2
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 2
VRDP Shares  called for  redemption  on such date and (ii) all other  amounts to
which Holders of Series 2 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 2 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  2 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 2 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 2 VRDP Shares,  provided  that such
modification  does not materially and adversely affect the Holders of the Series
2 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 2 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 2 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.

                                       36

<PAGE>


                  (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 2 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 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 2 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 2 VRDP Shares of the full
preferential amounts provided for in this paragraph (b), the Holders of Series 2
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 2 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 2 VRDP or any shares of any
other class or series of Preferred  Shares ranking on a parity with the Series 2
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 2 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 2 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 2 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 2 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 2 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  2 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, if applicable,  such other  short-term
debt  ratings as may be  required  for the Series 2 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 2 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 2 VRDP Shares
or the  Liquidity  Provider  by an NRSRO then rating the Series 2 VRDP Shares or
Liquidity Provider.

                                       37

<PAGE>


                  (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 Electronic  Means,
or by first  class mail,  postage  prepaid,  in the case in which  Series 2 VRDP
Shares are in physical form, of such Failed Remarketing Condition.

                  (c)      Each  Series 2 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 2 VRDP  Shares  tendered  to the Tender and
Paying Agent for Remarketing  (provided that the  Remarketing  Agent may seek to
sell such Series 2 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 2 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 2 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 2 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 2 VRDP
Shares,  the Fund shall have no  obligation  to  purchase  Series 2 VRDP  Shares
acquired by the Liquidity  Provider  pursuant to the VRDP Purchase  Agreement or
otherwise.

                  (f)      Series  2  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 2 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 2 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 2 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  2 VRDP  Shares  are  issued  in
certificated  form and a Holder  fails to deliver  such  Series 2 VRDP Shares to
which a Mandatory Purchase relates,  on or prior to the Mandatory Purchase Date,
the Holder of such  Series 2 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 2 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 2
VRDP Shares.  Any moneys held by the Tender and Paying Agent for the purchase of
undelivered Series 2 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 2 VRDP Shares. The undelivered Series 2 VRDP Shares shall be
deemed to be no longer  Outstanding  (except as to entitlement to payment of the
Purchase Price), and


                                       38

<PAGE>


the  Fund  will  issue  to  the  purchaser   replacement  Series  2  VRDP  Share
certificates in lieu of such undelivered Series 2 VRDP Shares.

                  (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 2 VRDP (and  terms  relating  thereto).  Each such
additional  share  of  Series  2 VRDP  shall be  governed  by the  terms of this
Statement as so amended or supplemented.

                  (b)      NO FRACTIONAL  SHARES.  No  fractional  Series 2 VRDP
Shares shall be issued.

                  (c)      STATUS  OF  VRDP  SHARES   REDEEMED,   EXCHANGED   OR
OTHERWISE  ACQUIRED  BY THE  FUND.  Series 2 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 2 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 2 VRDP  Shares,  but for which final
payment is not received by the Fund,  shall  return to the status of  authorized
and unissued Series 2 VRDP Shares.

                  (d)      PURCHASE  OBLIGATION PART OF VRDP SHARES. Each Holder
and Beneficial  Owner, by virtue of acquiring Series 2 VRDP Shares, is deemed to
have  agreed,  for U.S.  federal  income  tax  purposes,  to treat the  Purchase
Obligation  as  part of the  Series  2 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 2 VRDP Shares, is deemed to have
agreed, for U.S. federal income tax purposes,  to treat the Series 2 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 2 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 2 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


                                       39

<PAGE>


Business Day).  Each Notice of Tender shall be  irrevocable(except  as described
below) and effective upon receipt and shall:

                           (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 2 VRDP Shares to be purchased,  the CUSIP number of the Series 2
         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 2 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 2 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 2 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 2 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 2 VRDP Shares previously
         tendered pursuant to an Optional Tender for which the Purchase Date has
         not yet occurred.  In the event that Series 2 VRDP Shares are issued in
         certificated form and a Holder of Series 2 VRDP Shares fails to deliver
         such  Series 2 VRDP Shares to which a  Mandatory  Tender  relates on or
         prior to the  Purchase  Date,  the Holder of such  Series 2 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 2 VRDP Shares as of the
         scheduled Purchase Date. Any such undelivered Series 2 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 2 VRDP  Shares.  Any moneys  held by the Tender and
         Paying Agent for the purchase of undelivered  Series 2 VRDP Shares will
         be held in


                                       40

<PAGE>


         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 2 VRDP Shares.  The undelivered  Series 2 VRDP
         Shares  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 2 VRDP Share certificates in lieu
         of such undelivered Series 2 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 2 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 2 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 2 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 2 VRDP  Shares.  A Notice of  Revocation  shall be
effective as to the number of Series 2 VRDP Shares  specified  therein as having
been  revoked  less the number of such  Series 2 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 2 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 2 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 2 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 2 VRDP Shares  properly  tendered  pursuant to a
Tender.

         2.       REMARKETING SCHEDULE.

                  (a)      In  connection  with any attempted  Remarketing,  all
tendered  Series 2 VRDP Shares shall be remarketed at the Purchase Price of such
Series 2 VRDP Shares. The calculation of the Purchase Price of the Series 2 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 2 VRDP Shares and the aggregate  number and Purchase Price of
Series 2 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 2 VRDP Shares by the Remarketing Agent relating to
tendered  Series 2 VRDP Shares  shall be used for the  purchase of the  tendered
Series 2 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 2 VRDP Shares for sale through the Securities
Depository  in  immediately  available  funds  against  delivery of the tendered
Series 2 VRDP  Shares to the Tender  and Paying  Agent  through  the  Securities
Depository,  the  delivery of such Series 2 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 2


                                       41

<PAGE>


VRDP Shares by means of "FREE" delivery 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 2 VRDP Shares,  if any,  that it  successfully  remarketed  for
purchase on such  Purchase Date and the  aggregate  Purchase  Price of such sold
Series 2 VRDP  Shares  and the  number  of  Series 2 VRDP  Shares,  if any,  not
successfully  remarketed  for purchase on such  Purchase  Date and the aggregate
Purchase  Price of such unsold  Series 2 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 2 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  2 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 2
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 2 VRDP Shares to be purchased on such  Purchase  Date (or if  remarketing
proceeds  for any tendered  Series 2 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 2 VRDP Shares  required to be purchased by the  Liquidity  Provider.  For
purposes of the Final Notice of Purchase,  any tendered Series 2 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 2 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 2 VRDP Shares,  wire
transfer the aggregate  Purchase Price of all Series 2 VRDP Shares in respect of
which Final Notices of Purchase have been delivered to it for purchase of Series
2 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 2 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 2 VRDP Shares that are the
subject of any such Final Notice of Purchase,  through  means of the  Securities
Depository in the case of Series 2 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 2 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 2 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 2 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


                                       42

<PAGE>


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 the
benefit  of the  Remarketing  Agent on  account of  purchasers  purchasing  in a
Remarketing  until the  Series 2 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 2 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 2 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 2 VRDP Shares  subject to purchase  pursuant to the Purchase  Obligation,
the Purchase  Price for such Series 2 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 2 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 2 VRDP Shares held by the Liquidity  Provider
as to which any  then-effective  Purchase  Obligation  by a successor  liquidity
provider  is  inapplicable),  any Series 2 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 2 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 2 VRDP
tendered  for  Remarketing  by the  Liquidity  Provider  and any other Holder or
Beneficial Owner of shares of Series 2 VRDP in any Remarketing,  the Remarketing
Agent shall  allocate those shares of Series 2 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 2
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 2 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.

                                       43

<PAGE>


                  (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 Liquidity Provider and the Holders of Series 2 VRDP
Shares by first class mail, postage prepaid (in the case of physical shares), or
Electronic  Means  (in the case of  Series 2 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 2 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 2 VRDP
Shares in a Remarketing;  however,  the Remarketing Agent shall not be obligated
to purchase  any Series 2 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 2 VRDP Shares in a Remarketing  unless,  in each case, such Series 2 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,
New York State and New York City personal income tax purposes in any dividend on
Series 2 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
2 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 2 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 2 VRDP Shares
from a  Beneficial  Owner who holds  shares  through an Agent


                                       44

<PAGE>


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  2  VRDP  Shares  under  the  Securities  Act.
Accordingly,   the  Series  2  VRDP  Shares  are  subject  to   restrictions  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 2
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 2 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 2 VRDP
Shares  which are to be cancelled  within 10 days of purchase by the Fund),  are
not permitted to purchase Series 2 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 2 VRDP Shares;  provided,  further, that, without regard to the preceding
requirements,  purchases  of Series 2 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 2 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 2 VRDP  Shares  and
prospective  purchasers of Series 2 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 2 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 2 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 New York AMT-Free  Municipal Income Fund has caused
these presents to be signed as of March 8, 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 NEW YORK AMT-FREE MUNICIPAL INCOME
                                   FUND


                                   By:          /s/ Gifford R. Zimmerman
                                        ----------------------------------------
                                        Name:  Gifford R. Zimmerman
                                        Title: Chief Administrative Officer

ATTEST:



         /s/ Kevin J. McCarthy
------------------------------------
Name:  Kevin J. McCarthy
Title: Vice President and Secretary

                                       46
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1 OTHR EXHB
<SEQUENCE>8
<FILENAME>nrk77q1avdrpseries3nun.txt
<TEXT>
<PAGE>



                 NUVEEN NEW YORK AMT-FREE MUNICIPAL INCOME FUND

                      STATEMENT ESTABLISHING AND FIXING THE
                       RIGHTS AND PREFERENCES OF SERIES 3
                      VARIABLE RATE DEMAND PREFERRED SHARES

 (Relating to the issuance of Series 3 VRDP by the above-named fund in
 exchange for the outstanding Series 1 Variable Rate Demand Preferred Shares of
           Nuveen New York Quality Income Municipal Fund, Inc. (NUN))

                         Effective Date: March 11, 2013


<PAGE>



                                TABLE OF CONTENTS
                                -----------------

<TABLE>
<CAPTION>

                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
DESIGNATION OF SERIES 3 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............................................................22

                  (a)      Length of and Preconditions for Special Rate Period...................................22
                  (b)      Adjustment of Length of Special Rate Period...........................................23
                  (c)      Notice of Proposed Special Rate Period................................................23
                  (d)      Notice of Special Rate Period.........................................................23
                  (e)      Failure to Deliver Notice of Special Rate Period......................................24
                  (f)      Other Special Rate Period Provisions..................................................24

         5.       Voting Rights..................................................................................24

                  (a)      One Vote Per VRDP Share...............................................................24
                  (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....................................................................28

         7.       VRDP Basic Maintenance Amount..................................................................28

         8.       Restrictions on Dividends and Other Distributions..............................................28

                  (a)      Dividends on Preferred Shares.........................................................28
                  (b)      Dividends and Other Distributions With Respect to Common Shares Under the
                           1940 Act..............................................................................29
                  (c)      Other Restrictions on Dividends and Other Distributions...............................29

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

         10.      Redemption.....................................................................................30

                  (a)      Optional Redemption...................................................................30
                  (b)      Mandatory Redemption..................................................................31
                  (c)      Notice of Redemption..................................................................35
</TABLE>

                                        2

<PAGE>



<TABLE>
<S>                                                                                                            <C>
                  (d)      No Redemption Under Certain Circumstances.............................................35
                  (e)      Absence of Funds Available for Redemption.............................................35
                  (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........................................................36
                  (i)      Only Whole VRDP Shares May Be Redeemed................................................36
                  (j)      Modification of Redemption Procedures.................................................36

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

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

         12.      Purchase Obligation............................................................................37

         13.      Miscellaneous..................................................................................39

                  (a)      Amendment of or Supplements to this Statement.........................................39
                  (b)      No Fractional Shares..................................................................39
                  (c)      Status of VRDP Shares Redeemed, Exchanged or Otherwise Acquired by the
                           Fund..................................................................................39
                  (d)      Purchase Obligation Part of VRDP Shares...............................................39
                  (e)      Treatment of VRDP Shares as Stock.....................................................39
                  (f)      Board May Resolve Ambiguities.........................................................39
                  (g)      Headings Not Determinative............................................................39
                  (h)      Notices...............................................................................40
PART II..........................................................................................................40

         1.       Remarketing Procedures.........................................................................40

         2.       Remarketing Schedule...........................................................................41

         3.       Determination of Applicable Rate...............................................................43

         4.       Failed Remarketing Condition...................................................................44

         5.       Purchase of VRDP Shares by Remarketing Agent...................................................44

         6.       Notification of Allocations....................................................................44

         7.       Transfers......................................................................................45

         8.       Global Certificate.............................................................................45
</TABLE>

                                        3

<PAGE>



                 NUVEEN NEW YORK AMT-FREE MUNICIPAL INCOME FUND

                      STATEMENT ESTABLISHING AND FIXING THE
                       RIGHTS AND PREFERENCES OF SERIES 3
                      VARIABLE RATE DEMAND PREFERRED SHARES

         NUVEEN  NEW  YORK  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 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 3 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  one  Series  of
Preferred  Shares,  and,  concurrently with the initial issuance of the Series 3
VRDP Shares  designated  below,  the Fund is issuing  Series of VRDP  designated
Series 1,  Series 2 and Series 4 and a Series of  Variable  Rate  MuniFund  Term
Preferred  designated  Series 2014;  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 3 VRDP

         Series 3: A series of  preferred  shares,  par  value  $.01 per  share,
liquidation  preference  $100,000 per share, is hereby authorized and designated
"Series 3 Variable  Rate Demand  Preferred  Shares,"  also referred to herein as
"Series 3 VRDP" or "Series 3 VRDP  Shares." Each share of Series 3 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 3 VRDP,  each share of
Series 3 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,
March 6, 2013,  for the Initial Rate Period  from,  and  including,  the Date of
Original Issue to, and including, March 13, 2013 and an initial Dividend Payment
Date of April 1, 2013. The Series 3 VRDP shall  constitute a separate  series of
preferred shares of the Fund and each share of Series 3 VRDP shall be identical.

         The  number of Series 3 VRDP  Shares  which the Board of  Trustees  has
initially authorized for issuance is 1,617. The Board of Trustees may, from time
to time, authorize the issuance of additional Series 3 VRDP Shares in accordance
with the terms hereof.

         One share of Series 3 VRDP initially  authorized for issuance as stated
above  shall be issued  and  distributed  in  respect  of each share of Series 1
Variable  Rate  Demand  Preferred  Shares  of  Nuveen  New York  Quality  Income
Municipal  Fund,  Inc. (the  "Acquired  Fund VRDP")  outstanding  on the date of
distribution  in connection with the  reorganization  of Nuveen New York Quality
Income   Municipal  Fund,  Inc.  (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 3 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  3 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 3
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 3 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 3 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
3 VRDP Share,  means the date on which the Fund  initially  issued such Series 3
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  Municipal
                        Obligation that qualifies as an eligible  security under
                        Rule 2a-7 under the 1940 Act;

                                        6

<PAGE>



                  (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.

                  (t)      "DIVIDEND  PERIOD,"  with  respect  to Series 3 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 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, if applicable,  such other  short-term
debt ratings as

                                        7

<PAGE>



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 3 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 3 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 3 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 3 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 3 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 3 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 and Paying Agent does not perform its
obligations)  on the Purchase Date indicating the number of Series 3 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.

                                        8

<PAGE>


                  (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 3 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 3 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 3 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, New York State and New York City personal 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 and New York State and New York City
personal  income tax with respect to dividends  received from the Fund (that is,
without  giving  effect to any other New York  State or New York City tax or 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  combined  regular federal,  New York State and New York
City personal income tax rate applicable to ordinary income (taking into account
the federal income tax  deductibility of state and local taxes paid or incurred)
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 3 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 Fund, the Acquired Fund and the other funds specified  therein,  dated as of
October 31, 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 3 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,
March 13, 2013, the next succeeding  Wednesday,  as set forth under "Designation
of Series 3 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 3 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, Citibank, N.A.

                  (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 3 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 3 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,  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.  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 3 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 3 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 3 VRDP Shares
remain  unsold and the  Remarketing  Agent does not purchase for its own account
the unsold  Series 3 VRDP  Shares  tendered  to the Tender and Paying  Agent for
Remarketing (provided, that the Remarketing Agent may seek to sell such Series 3
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 3 VRDP Shares 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) in the event of a
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 if the  Liquidity
Provider (in its sole discretion) thereafter provides written notice to the Fund
that such failure to pay such fee constitutes a Mandatory  Tender Event; (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 Effective Leverage Ratio covenant with the

                                       11

<PAGE>


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),  if 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 3 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 3 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
3 VRDP Shares will depend on the long-term  rating assigned to the Series 3 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 3 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 3 VRDP Shares  utilizing the higher of the ratings of the Rating
     Agencies then rating the Series 3 VRDP Shares.
**   Includes  unrated,  if no Rating  Agency is then  rating  the Series 3 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 3 VRDP  Shares  for that Rate  Period,  the  Applicable
Percentage in the  foregoing  table shall be divided by the quantity 1 minus the
maximum  marginal  combined  regular  federal,  New York State and New York City
personal  income tax rate applicable to ordinary income (taking into account the
federal income tax  deductibility  of state and local taxes paid or incurred) 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,  provided,  that,
notwithstanding  any  provision  to the contrary in the  Remarketing  Agreement,
immediately  following

                                       12

<PAGE>


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 3 VRDP Shares for that Rate  Period,  the Maximum  Rate shall
not exceed 15%  divided by the  quantity 1 minus the maximum  marginal  combined
regular  federal,  New York  State and New York City  personal  income  tax rate
applicable  to ordinary  income  (taking  into  account  the federal  income tax
deductibility of state and local taxes paid or incurred) 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 3 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 3 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 3 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.

                                       13

<PAGE>


                  (ppp)    "NOTICE OF PROPOSED  SPECIAL RATE  PERIOD"  means any
notice with  respect to a proposed  Special  Rate Period of Series 3 VRDP Shares
pursuant to paragraph (c) of Section 4 of Part I of this Statement.

                  (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 3 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 3 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 3 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 3 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 3 VRDP Shares remain  unsold and the  Remarketing
Agent does not  purchase  for its own  account  the unsold  Series 3 VRDP Shares
tendered  to the Tender  and Paying  Agent for  Remarketing  (provided  that the
Remarketing  Agent may seek to sell such  Series 3 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 3 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 3 VRDP Shares.

                                       14

<PAGE>


                  (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 3 VRDP Shares.

                  (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 3 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 3 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 3 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 3 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 or
any Mandatory  Purchase,  in each case  following  delivery of a Final Notice of
Purchase with respect to such Series 3 VRDP Shares.

                                       15

<PAGE>


                  (jjjj)   "PURCHASE   PRICE"  means  an  amount  equal  to  the
Liquidation Preference of any Series 3 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.

                  (kkkk)   "PURCHASED  VRDP  SHARES"  means  all  Series  3 VRDP
Shares  purchased  by the  Liquidity  Provider  pursuant  to the  VRDP  Purchase
Agreement,  so long as the  Liquidity  Provider  continues to be the  beneficial
owner for federal income tax purposes of such Series 3 VRDP Shares.

                  (llll)   "RATE  DETERMINATION DATE" means, with respect to any
Series 3 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 determined  without
regard to any prior extension of a Rate Determination Date to a Business Day.

                  (mmmm)   "RATE  PERIOD," with respect to Series 3 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 3 VRDP  Shares),  Moody's (if Moody's is then rating Series 3 VRDP
Shares),  S&P (if S&P is then rating Series 3 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  termination of the VRDP Purchase  Agreement in accordance  with its
terms following the occurrence of a Related Party Termination Event.

                  (wwww)   "RELATED PARTY TERMINATION EVENT" means the Liquidity
Provider becoming a Related Party of the Fund other than through the acquisition
of Series 3 VRDP Shares pursuant to the terms of the VRDP Purchase Agreement.

                  (xxxx)   "REMARKETING"  means the remarketing of Series 3 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.

                                       16

<PAGE>


                  (yyyy)   "REMARKETING  AGENT"  means the entity  appointed  as
such with  respect  to  Series 3 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,
initially Citigroup Global Markets Inc.

                  (zzzz)   "REMARKETING   AGREEMENT"   means   the   Remarketing
Agreement with respect to the Series 3 VRDP Shares, dated March 11, 2013, by and
among the Fund, the Investment  Adviser and the  Remarketing  Agent, as amended,
modified or  supplemented  from time to time,  or any similar  agreement  with a
successor Remarketing Agent.

                  (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 December 12, 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.

                                       17

<PAGE>


                  (nnnnn)  "SPECIAL  RATE PERIOD," with respect to Series 3 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.

                  (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 3 VRDP Shares,  as it may be amended
or supplemented from time to time.

                  (qqqqq)  "SUBSEQUENT  RATE  PERIOD," with respect to shares of
Series 3 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 3 VRDP Shares.

                  (vvvvv)  "TENDER AND PAYING AGENT  AGREEMENT" means the Tender
and Paying Agent  Agreement  with  respect to the Series 3 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)

                                       18

<PAGE>


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.

                  (cccccc) "VRDP FEE  AGREEMENT"  means the Variable Rate Demand
Preferred  Shares  (VRDP) Fee  Agreement  with  respect to Series 3 VRDP Shares,
dated March 11, 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 3 VRDP
Shares,  dated  March 11,  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 3
VRDP is as set forth above under the title "Designation of Series 3 VRDP."

         2.       DIVIDENDS.

                  (a)      RANKING.  The shares of Series 3 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 3
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 3 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 3 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 3 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 3 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 3 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

                                       19

<PAGE>


                           (ii)     notwithstanding  the foregoing,  the Fund in
         its discretion  may establish the Dividend  Payment Dates in respect of
         any Special  Rate Period for Series 3 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  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 3 VRDP Shares  during the Initial  Rate Period shall be equal to
         the rate per  annum  specified  under  "Designation  of  Series 3 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


                                       20

<PAGE>


                  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 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 3 VRDP on any Dividend
         Payment Date shall equal the sum of the dividends  accumulated  but not
         yet paid for each Rate Period (or part thereof) in the related Dividend
         Period or Dividend  Periods.  The amount of dividends  accumulated  for
         each  such  Rate  Period  (or  part  thereof)   shall  be  computed  by
         multiplying the Applicable Rate in effect for shares of such Series for
         such Rate  Period (or part  thereof) by a fraction,  the  numerator  of
         which shall be the number of days in such Rate Period (or part thereof)
         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 3 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 3 VRDP Shares, the Fund
shall pay to the Tender and Paying Agent, not later

                                       21

<PAGE>


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 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 3 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 3
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 3 VRDP  Shares,  the
transferor as  Beneficial  Owner of Series 3 VRDP Shares shall be deemed to have
agreed  pursuant  to the terms of the Series 3 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
3 VRDP Shares in exchange  for payment of the  Purchase  Price for such Series 3
VRDP Shares by the transferee.

                  (j)      DIVIDENDS  CREDITED AGAINST EARLIEST  ACCUMULATED BUT
UNPAID  DIVIDENDS.  Any  dividend  payment  made on Series 3 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 3 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 3 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,  New York State and New York City
personal  income tax purposes to a dividend paid on Series 3 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.

                                       22

<PAGE>


         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 3 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 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 3 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 3 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 3 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 3 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 3 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 3
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 3 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 3 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 3 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:

                                       23

<PAGE>


                           (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  3 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 amounts due with  respect to  redemptions
         payable,  in each  case,  on Series 3 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
3 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 3 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.

                                       24

<PAGE>


         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 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

                                       25

<PAGE>


         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 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 3 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 3 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 3 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 3 VRDP,  or  classes  or series of  Preferred  Shares
         ranking  on a parity  with  Series 3 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 3 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 3
         VRDP  Shares and (iii) the  authorization,  creation  and  issuance  of
         classes or series of shares ranking junior to Series 3 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 3 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 3 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 3 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 3
         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 3 VRDP
         outstanding at the time, in person or by proxy, either in writing or at
         a  meeting   (the   Series  3  VRDP   voting  as  a  separate   class).
         Notwithstanding the foregoing, the Fund, without approval of Holders of
         Series 3 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 3 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

                                       26

<PAGE>


         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 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 3
         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 3 VRDP  Shares),  Moody's  (if  Moody's is then
         rating the  Series 3 VRDP  Shares)  and S&P (if S&P is then  rating the
         Series 3 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 3
         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 3 VRDP  Shares  is
         otherwise  required by this  Statement,  the  Declaration or applicable
         law,  (i)  Holders  of  outstanding  shares  of  Series 3 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 3 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 3 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 3
         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 3 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 3 VRDP  Shares,  and any such
adoption,  amendment,  alteration  or repeal  will not be  deemed to affect  the
preferences, rights or powers of Series 3 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 3 VRDP Shares without
replacement,  in either  case,  without the approval of Holders of Series 3 VRDP
Shares or other shareholders of the Fund. In the event a Rating Agency ceases to
furnish a long-term  rating for the Series 3 VRDP Shares or the Fund  terminates
the services of a Rating Agency then providing a long-term rating for the Series
3 VRDP Shares,  such rating, to the extent it would have been taken into account
in any of the provisions of the Series 3 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).

                                       27

<PAGE>


                  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  3 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 alter other  provisions  of this  Statement,
without the vote or consent of any Holder of Series 3 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 3 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 3 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 3 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 3 VRDP Share and no
Series 3 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  3  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 3 VRDP Share is
Outstanding, the Minimum VRDP Asset Coverage.

         7.       VRDP BASIC MAINTENANCE AMOUNT.

                  (a)      Subject to paragraph  (c) below,  so long as Series 3
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  3 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 3 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 3 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 3 VRDP Shares).

                  (b)      Subject  to  paragraph  (c)  below,  the  Fund  shall
deliver to each Rating  Agency which is then rating Series 3 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

                                       28

<PAGE>


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 3 VRDP Shares, and the Rating Agency Guidelines
may be changed or  eliminated  at any time  without  the  approval of Holders of
Series 3 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 3 VRDP Shares.

         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 3 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 3 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 3 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 3 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 3 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 3 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 3 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 3 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 3 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
3 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 3 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 3
VRDP Shares

                                       29

<PAGE>


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 3 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 3 VRDP Shares)
would at least  equal  the VRDP  Basic  Maintenance  Amount  (if  any),  if then
required by such Rating Agency or Agencies.

         9.       SHORT-TERM RATINGS.

                  The Fund will use its  reasonable  best efforts to maintain at
least one short-term  rating of the Series 3 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 3 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 3 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 3 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 3 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 3 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 3 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 3 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 3 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 3 VRDP Shares),  the Discounted Value of Moody's
         Eligible  Assets (if Moody's is then  rating the Series 3 VRDP  Shares)
         and the Discounted  Value of S&P Eligible Assets (if S&P is then rating
         the  Series  3 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

                                       30

<PAGE>


         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 3 VRDP Shares on December 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 3 VRDP
         Shares) with a Discounted Value, Moody's Eligible Assets (if Moody's is
         then rating the Series 3 VRDP  Shares)  with a  Discounted  Value,  S&P
         Eligible Assets (if S&P is then rating the Series 3 VRDP Shares) with a
         Discounted  Value, or Other Rating Agency Eligible Assets (if any Other
         Rating  Agency  is  then  rating  the  Series  3  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 3 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 3 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 3 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 3 VRDP
         Shares) with a Discounted Value, Moody's Eligible Assets (if Moody's is
         then rating the Series 3 VRDP  Shares)  with a  Discounted  Value,  S&P
         Eligible Assets (if S&P is then rating the Series 3 VRDP Shares) with a
         Discounted  Value and Other Rating Agency Eligible Assets (if any Other
         Rating  Agency  is  then  rating  the  Series  3  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 3
         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 3 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,

                                       31

<PAGE>


         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 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 3 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 3 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 3 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 3 VRDP
         Shares are  Outstanding  and held by Persons  other than the  Liquidity
         Provider,  the Purchase  Obligation  of the  Liquidity  Provider  whose
         Series  3  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 3 VRDP Shares are Outstanding and held by Persons other than
         the Liquidity Provider and (b) the Purchase Obligation of the Liquidity
         Provider  whose  Series  3  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 3 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 3 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

                                       32

<PAGE>


         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 3 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  3  VRDP  Shares  in  the
         distribution  referred to under "Designation of Series 3 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 date
         of acquisition and (z) not successfully remarketed, then (I) the Series
         3 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 3 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 3 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

                                       33

<PAGE>


         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:

                     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  December 1, 2040  specified  in Section
         10(b)(i)  above,  if any Series 3 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 3
         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 3 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  December 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 3 VRDP Shares may be
         applied  by  the  Fund,  in  its  discretion,  towards  payment  of the
         Redemption  Price for the  Outstanding  Series 3 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 3 VRDP Shares on the December 1, 2040 Redemption
         Date for the Outstanding  Series 3 VRDP Shares,  the requirement of the
         Fund to maintain a Liquidity Account for the

                                       34

<PAGE>


         Outstanding  Series  3 VRDP  Shares  as  contemplated  by this  Section
         10(b)(iii) shall lapse and be of no further force and effect.

                  (c)      NOTICE OF REDEMPTION.  If the Fund shall determine or
be required to redeem,  in whole or in part, shares of Series 3 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 3 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 3 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 3 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 3 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 3
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 3 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 3 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 3 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 3 VRDP Shares for which a Notice of Redemption has
been  provided,  dividends  may be declared and paid on Series 3 VRDP Shares and
shall include  those Series 3 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 3 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.

                                       35

<PAGE>


                  (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 (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 3 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 3 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 3
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 3
VRDP Shares  called for  redemption  on such date and (ii) all other  amounts to
which Holders of Series 3 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 3 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  3 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 3 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 3 VRDP Shares,  provided  that such
modification  does not materially and adversely affect the Holders of the Series
3 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 3 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 3 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.

                                       36

<PAGE>


                  (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 3 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 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 3 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 3 VRDP Shares of the full
preferential amounts provided for in this paragraph (b), the Holders of Series 3
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 3 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 3 VRDP or any shares of any
other class or series of Preferred  Shares ranking on a parity with the Series 3
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 3 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 3 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 3 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 3 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 3 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  3 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, if applicable,  such other  short-term
debt  ratings as may be  required  for the Series 3 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 3 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 3 VRDP Shares
or the  Liquidity  Provider  by an NRSRO then rating the Series 3 VRDP Shares or
Liquidity Provider.

                                       37

<PAGE>


                  (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 Electronic  Means,
or by first  class mail,  postage  prepaid,  in the case in which  Series 3 VRDP
Shares are in physical form, of such Failed Remarketing Condition.

                  (c)      Each  Series 3 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 3 VRDP  Shares  tendered  to the Tender and
Paying Agent for Remarketing  (provided that the  Remarketing  Agent may seek to
sell such Series 3 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 3 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 3 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 3 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 3 VRDP
Shares,  the Fund shall have no  obligation  to  purchase  Series 3 VRDP  Shares
acquired by the Liquidity  Provider  pursuant to the VRDP Purchase  Agreement or
otherwise.

                  (f)      Series  3  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 3 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 3 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 3 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 3 VRDP  Shares  are  issued  in
certificated  form and a Holder  fails to deliver  such  Series 3 VRDP Shares to
which a Mandatory Purchase relates,  on or prior to the Mandatory Purchase Date,
the Holder of such  Series 3 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 3 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 3
VRDP Shares.  Any moneys held by the Tender and Paying Agent for the purchase of
undelivered Series 3 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 3 VRDP Shares. The undelivered Series 3 VRDP Shares shall be
deemed to be no longer  Outstanding  (except as to entitlement to payment of the
Purchase Price),  and

                                       38

<PAGE>


the  Fund  will  issue  to  the  purchaser   replacement  Series  3  VRDP  Share
certificates in lieu of such undelivered Series 3 VRDP Shares.

                  (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 3 VRDP (and  terms  relating  thereto).  Each such
additional  share  of  Series  3 VRDP  shall be  governed  by the  terms of this
Statement as so amended or supplemented.

                  (b)      NO FRACTIONAL  SHARES.  No  fractional  Series 3 VRDP
Shares shall be issued.

                  (c)      STATUS  OF  VRDP  SHARES   REDEEMED,   EXCHANGED   OR
OTHERWISE  ACQUIRED  BY THE  FUND.  Series 3 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 3 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 3 VRDP  Shares,  but for which final
payment is not received by the Fund,  shall  return to the status of  authorized
and unissued Series 3 VRDP Shares.

                  (d)      PURCHASE  OBLIGATION PART OF VRDP SHARES. Each Holder
and Beneficial  Owner, by virtue of acquiring Series 3 VRDP Shares, is deemed to
have  agreed,  for U.S.  federal  income  tax  purposes,  to treat the  Purchase
Obligation  as  part of the  Series  3 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 3 VRDP Shares, is deemed to have
agreed, for U.S. federal income tax purposes,  to treat the Series 3 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 3 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 3 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

                                       39

<PAGE>


Business Day).  Each Notice of Tender shall be irrevocable  (except as described
below) and effective upon receipt and shall:

                           (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 3 VRDP Shares to be purchased,  the CUSIP number of the Series 3
         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 3 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 3 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 3 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 3 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 3 VRDP Shares previously
         tendered pursuant to an Optional Tender for which the Purchase Date has
         not yet occurred.  In the event that Series 3 VRDP Shares are issued in
         certificated form and a Holder of Series 3 VRDP Shares fails to deliver
         such  Series 3 VRDP Shares to which a  Mandatory  Tender  relates on or
         prior to the  Purchase  Date,  the Holder of such  Series 3 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 3 VRDP Shares as of the
         scheduled Purchase Date. Any such undelivered Series 3 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 3 VRDP  Shares.  Any moneys  held by the Tender and
         Paying Agent for the purchase of undelivered  Series 3 VRDP Shares will
         be held in

                                       40

<PAGE>


         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 3 VRDP Shares.  The undelivered  Series 3 VRDP
         Shares  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 3 VRDP Share certificates in lieu
         of such undelivered Series 3 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 3 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 3 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 3 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 3 VRDP  Shares.  A Notice of  Revocation  shall be
effective as to the number of Series 3 VRDP Shares  specified  therein as having
been  revoked  less the number of such  Series 3 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 3 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 3 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 3 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 3 VRDP Shares  properly  tendered  pursuant to a
Tender.

         2.       REMARKETING SCHEDULE.

                  (a)      In  connection  with any attempted  Remarketing,  all
tendered  Series 3 VRDP Shares shall be remarketed at the Purchase Price of such
Series 3 VRDP Shares. The calculation of the Purchase Price of the Series 3 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 3 VRDP Shares and the aggregate  number and Purchase Price of
Series 3 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 3 VRDP Shares by the Remarketing Agent relating to
tendered  Series 3 VRDP Shares  shall be used for the  purchase of the  tendered
Series 3 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 3 VRDP Shares for sale through the Securities
Depository  in  immediately  available  funds  against  delivery of the tendered
Series 3

                                       41

<PAGE>


VRDP Shares to the Tender and Paying Agent  through the  Securities  Depository,
the delivery of such Series 3 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 3 VRDP Shares by means of
"FREE" delivery 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 3 VRDP Shares,  if any,  that it  successfully  remarketed  for
purchase on such  Purchase Date and the  aggregate  Purchase  Price of such sold
Series 3 VRDP  Shares  and the  number  of  Series 3 VRDP  Shares,  if any,  not
successfully  remarketed  for purchase on such  Purchase  Date and the aggregate
Purchase  Price of such unsold  Series 3 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 3 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  3 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 3
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 3 VRDP Shares to be purchased on such  Purchase  Date (or if  remarketing
proceeds  for any tendered  Series 3 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 3 VRDP Shares  required to be purchased by the  Liquidity  Provider.  For
purposes of the Final Notice of Purchase,  any tendered Series 3 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 3 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 3 VRDP Shares,  wire
transfer the aggregate  Purchase Price of all Series 3 VRDP Shares in respect of
which Final Notices of Purchase have been delivered to it for purchase of Series
3 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 3 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 3 VRDP Shares that are the
subject of any such Final Notice of Purchase,  through  means of the  Securities
Depository in the case of Series 3 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 3 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 3 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 3 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 the  benefit  of the  Remarketing  Agent  on  account  of  purchasers
purchasing in a Remarketing  until the Series 3 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

                                       42

<PAGE>


returned  to the  Remarketing  Agent on account of  purchasers  purchasing  in a
Remarketing.  Upon receipt of Series 3 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 3 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 3 VRDP Shares
subject to purchase pursuant to the Purchase Obligation,  the Purchase Price for
such Series 3 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 3 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 3 VRDP Shares held by the Liquidity  Provider
as to which any  then-effective  Purchase  Obligation  by a successor  liquidity
provider  is  inapplicable),  any Series 3 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 3 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 3 VRDP
tendered  for  Remarketing  by the  Liquidity  Provider  and any other Holder or
Beneficial Owner of shares of Series 3 VRDP in any Remarketing,  the Remarketing
Agent shall  allocate those shares of Series 3 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 3
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 3 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.

                                       43

<PAGE>


                  (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 Liquidity Provider and the Holders of Series 3 VRDP
Shares by first class mail, postage prepaid (in the case of physical shares), or
Electronic  Means  (in the case of  Series 3 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 3 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 3 VRDP
Shares in a Remarketing;  however,  the Remarketing Agent shall not be obligated
to purchase  any Series 3 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 3 VRDP Shares in a Remarketing  unless,  in each case, such Series 3 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,
New York State and New York City personal income tax purposes in any dividend on
Series 3 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
3 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 3 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 3 VRDP Shares
from a Beneficial Owner who holds shares through an Agent

                                       44

<PAGE>


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  3  VRDP  Shares  under  the  Securities  Act.
Accordingly,   the  Series  3  VRDP  Shares  are  subject  to   restrictions  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 3
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 3 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 3 VRDP
Shares  which are to be cancelled  within 10 days of purchase by the Fund),  are
not permitted to purchase Series 3 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 3 VRDP Shares;  provided,  further, that, without regard to the preceding
requirements,  purchases  of Series 3 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 3 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 3 VRDP  Shares  and
prospective  purchasers of Series 3 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 3 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 3 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 New York AMT-Free  Municipal Income Fund has caused
these presents to be signed as of March 8, 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 NEW YORK AMT-FREE MUNICIPAL INCOME
                                    FUND



                                    By:             /s/ Gifford R. Zimmerman
                                             -----------------------------------
                                             Name:  Gifford R. Zimmerman
                                             Title: Chief Administrative Officer

ATTEST:



       /s/ Kevin J. McCarthy
------------------------------------
Name:  Kevin J. McCarthy
Title: Vice President and Secretary

                                       46
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1 OTHR EXHB
<SEQUENCE>9
<FILENAME>nrk77q1avdrpseries4nko.txt
<TEXT>
<PAGE>


                 NUVEEN NEW YORK AMT-FREE MUNICIPAL INCOME FUND

                      STATEMENT ESTABLISHING AND FIXING THE
                       RIGHTS AND PREFERENCES OF SERIES 4
                      VARIABLE RATE DEMAND PREFERRED SHARES

      (Relating to the issuance of Series 4 VRDP by the above-named fund in
                          exchange for the outstanding
                Series 2 Variable Rate Demand Preferred Shares of
         Nuveen New York Dividend Advantage Municipal Income Fund (NKO))

                         EFFECTIVE DATE: MARCH 11, 2013

<PAGE>


                                TABLE OF CONTENTS
                                -----------------

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
DESIGNATION OF SERIES 4 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..............................................................23
              (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........................................................................28

         7.   VRDP BASIC MAINTENANCE AMOUNT......................................................................28

         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....................................29

         9.   SHORT-TERM RATINGS.................................................................................30

         10.  REDEMPTION.........................................................................................30
</TABLE>

                                        2

<PAGE>


<TABLE>
<S>                                                                                                            <C>
              (a)     Optional Redemption........................................................................30
              (b)     Mandatory Redemption.......................................................................31
              (c)     Notice of Redemption.......................................................................35
              (d)     No Redemption Under Certain Circumstances..................................................35
              (e)     Absence of Funds Available for Redemption..................................................35
              (f)     Tender and Paying Agent as Trustee of Redemption Payments by Fund..........................35
              (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.............................................................36
              (i)     Only Whole VRDP Shares May Be Redeemed.....................................................36
              (j)     Modification of Redemption Procedures......................................................36

         11.  LIQUIDATION RIGHTS.................................................................................36

              (a)     Ranking....................................................................................36
              (b)     Distributions Upon Liquidation.............................................................37
              (c)     Pro Rata Distributions.....................................................................37
              (d)     Rights of Junior Shares....................................................................37
              (e)     Certain Events Not Constituting Liquidation................................................37

         12.  PURCHASE OBLIGATION................................................................................37

         13.  MISCELLANEOUS......................................................................................39

              (a)     Amendment of or Supplements to this Statement..............................................39
              (b)     No Fractional Shares.......................................................................39
              (c)     Status of VRDP Shares Redeemed, Exchanged or Otherwise Acquired by the Fund................39
              (d)     Purchase Obligation Part of VRDP Shares....................................................39
              (e)     Treatment of VRDP Shares as Stock..........................................................39
              (f)     Board May Resolve Ambiguities..............................................................39
              (g)     Headings Not Determinative.................................................................39
              (h)     Notices....................................................................................39

PART II..........................................................................................................39

         1.   REMARKETING PROCEDURES.............................................................................39

         2.   REMARKETING SCHEDULE...............................................................................41

         3.   DETERMINATION OF APPLICABLE RATE...................................................................43

         4.   FAILED REMARKETING CONDITION.......................................................................44

         5.   PURCHASE OF VRDP SHARES BY REMARKETING AGENT.......................................................44

         6.   NOTIFICATION OF ALLOCATIONS........................................................................44

         7.   TRANSFERS..........................................................................................45

         8.   GLOBAL CERTIFICATE.................................................................................45
</TABLE>

                                        3

<PAGE>


                 NUVEEN NEW YORK AMT-FREE MUNICIPAL INCOME FUND

                      STATEMENT ESTABLISHING AND FIXING THE
                       RIGHTS AND PREFERENCES OF SERIES 4
                      VARIABLE RATE DEMAND PREFERRED SHARES

         NUVEEN  NEW  YORK  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 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 4 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  one  Series  of
Preferred  Shares,  and,  concurrently with the initial issuance of the Series 4
VRDP Shares  designated  below,  the Fund is issuing  Series of VRDP  designated
Series 1,  Series 2 and Series 3 and a Series of  Variable  Rate  MuniFund  Term
Preferred  designated  Series 2014;  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 4 VRDP

         Series 4: A series of  preferred  shares,  par  value  $.01 per  share,
liquidation  preference  $100,000 per share, is hereby authorized and designated
"Series 4 Variable  Rate Demand  Preferred  Shares,"  also referred to herein as
"Series 4 VRDP" or "Series 4 VRDP  Shares." Each share of Series 4 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 4 VRDP,  each share of
Series 4 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,
March 6, 2013,  for the Initial Rate Period  from,  and  including,  the Date of
Original Issue to, and including, March 13, 2013 and an initial Dividend Payment
Date of April 1, 2013. The Series 4 VRDP shall  constitute a separate  series of
preferred shares of the Fund and each share of Series 4 VRDP shall be identical.

         The  number of Series 4 VRDP  Shares  which the Board of  Trustees  has
initially  authorized  for issuance is 500. The Board of Trustees may, from time
to time, authorize the issuance of additional Series 4 VRDP Shares in accordance
with the terms hereof.

         One share of Series 4 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 New York  Dividend  Advantage
Municipal  Income Fund (the  "Acquired  Fund VRDP")  outstanding  on the date of
distribution in connection with the  reorganization  of Nuveen New York Dividend
Advantage  Municipal  Income  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 4 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  4 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 4
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 4 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 4 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
4 VRDP Share,  means the date on which the Fund  initially  issued such Series 4
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 4 VRDP are paid to Holders.

                  (t)      "DIVIDEND  PERIOD,"  with  respect  to Series 4 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 4 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 4 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 4 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 4 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 4 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 4 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

                                       8

<PAGE>


and Paying  Agent or for any reason the Tender and Paying Agent does not perform
its  obligations)  on the Purchase Date  indicating  the number of Series 4 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 4 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 4 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 4 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, New York State and New York City personal 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 and New York State and New York City
personal  income tax with respect to dividends  received from the Fund (that is,
without  giving  effect to any other New York  State or New York City tax or 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  combined  regular federal,  New York State and New York
City personal income tax rate applicable to ordinary income (taking into account
the federal income tax  deductibility of state and local taxes paid or incurred)
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 4 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 Fund, the Acquired Fund and the other funds specified  therein,  dated as of
October 31, 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 4 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,
March 13, 2013, the next succeeding  Wednesday,  as set forth under "Designation
of Series 4 VRDP" above.

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

                                       9

<PAGE>



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

                  (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 4 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 4 VRDP
Shares to satisfy the eligibility criteria under Rule 2a-7 under the 1940 Act.

                                       10

<PAGE>


                  (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 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 4 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 4 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 4 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 4 VRDP Shares
remain  unsold and the  Remarketing  Agent does not purchase for its own account
the unsold  Series 4 VRDP  Shares  tendered  to the Tender and Paying  Agent for
Remarketing (provided, that the Remarketing Agent may seek to sell such Series 4
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 4 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

                                       11

<PAGE>


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 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 4 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 4 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
4 VRDP Shares will depend on the long-term  rating assigned to the Series 4 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 4 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 4 VRDP  Shares  utilizing  the  higher of the  ratings of the Rating
     Agencies then rating the Series 4 VRDP Shares.
**   Includes  unrated,  if no Rating  Agency is then  rating the  Series 4 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 4 VRDP Shares for that Rate
Period, the Applicable Percentage in the foregoing table shall be divided by the
quantity 1 minus the maximum marginal  combined regular federal,  New York State
and New York City personal income tax rate applicable to ordinary income (taking
into account the federal income tax  deductibility of state and local taxes paid
or incurred) 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

                                       12

<PAGE>


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,  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 4 VRDP Shares for that Rate  Period,  the Maximum  Rate shall
not exceed 15%  divided by the  quantity 1 minus the maximum  marginal  combined
regular  federal,  New York  State and New York City  personal  income  tax rate
applicable  to ordinary  income  (taking  into  account  the federal  income tax
deductibility of state and local taxes paid or incurred) 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 4 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 4 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 4 VRDP
Shares.

                  (nnn)    "MUNICIPAL OBLIGATIONS" means municipal securities as
described in the Information Memorandum.


                                       13

<PAGE>



                  (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 4 VRDP Shares
pursuant to paragraph (c) of Section 4 of Part I of this Statement.

                  (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 4 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 4 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 4 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 4 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 4 VRDP Shares remain  unsold and the  Remarketing
Agent does not  purchase  for its own  account  the unsold  Series 4 VRDP Shares
tendered  to the Tender  and Paying  Agent for  Remarketing  (provided  that the
Remarketing  Agent may seek to sell such  Series 4 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 4 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 4 VRDP Shares.

                                       14

<PAGE>



                  (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 4 VRDP Shares.

                  (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 4 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 4 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 4 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 4 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 4 VRDP Shares, and Holders, in the case of any Mandatory Purchase.


                                       15

<PAGE>



                  (jjjj)   "PURCHASE   PRICE"  means  an  amount  equal  to  the
Liquidation Preference of any Series 4 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.

                  (kkkk)   "PURCHASED  VRDP  SHARES"  means  all  Series  4 VRDP
Shares  purchased  by the  Liquidity  Provider  pursuant  to the  VRDP  Purchase
Agreement,  so long as such  Series 4 VRDP  Shares  are  owned by the  Liquidity
Provider.

                  (llll)   "RATE  DETERMINATION DATE" means, with respect to any
Series 4 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 4 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 4 VRDP  Shares),  Moody's (if Moody's is then rating Series 4 VRDP
Shares),  S&P (if S&P is then rating Series 4 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 4 VRDP Shares pursuant to the terms
of the VRDP Purchase Agreement.

                  (xxxx)   "REMARKETING"  means the remarketing of Series 4 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.

                                       16

<PAGE>


                  (yyyy)   "REMARKETING  AGENT"  means the entity  appointed  as
such with  respect  to  Series 4 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.

                  (zzzz)   "REMARKETING   AGREEMENT"   means   the   Remarketing
Agreement  with respect to the Series 4 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
4 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.

                                       17

<PAGE>


                  (nnnnn)  "SPECIAL  RATE PERIOD," with respect to Series 4 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.

                  (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 4 VRDP Shares,  as it may be amended
or supplemented from time to time.

                  (qqqqq)  "SUBSEQUENT  RATE  PERIOD," with respect to shares of
Series 4 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 4 VRDP Shares.

                  (vvvvv)  "TENDER AND PAYING AGENT  AGREEMENT" means the Tender
and Paying Agent  Agreement  with  respect to the Series 4 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)

                                       18

<PAGE>


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.

                  (cccccc) "VRDP FEE  AGREEMENT"  means the Variable Rate Demand
Preferred  Shares  (VRDP) Fee  Agreement  with  respect to Series 4 VRDP Shares,
dated March 11, 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 4 VRDP
Shares,  dated  March 11,  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 4
VRDP is as set forth above under the title "Designation of Series 4 VRDP."

         2.       DIVIDENDS.

                  (a)      RANKING.  The shares of Series 4 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 4
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 4 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 4 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 4 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 4 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 4 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

                                       19

<PAGE>


                           (ii)     notwithstanding  the foregoing,  the Fund in
         its discretion  may establish the Dividend  Payment Dates in respect of
         any Special  Rate Period for Series 4 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  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 4 VRDP Shares  during the Initial  Rate Period shall be equal to
         the rate per  annum  specified  under  "Designation  of  Series 4 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

                                       20

<PAGE>



                  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 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 4 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 4 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 4 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

                                       21

<PAGE>


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
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 4 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 4
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 4 VRDP  Shares,  the
transferor as  Beneficial  Owner of Series 4 VRDP Shares shall be deemed to have
agreed  pursuant  to the terms of the Series 4 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
4 VRDP Shares in exchange  for payment of the  Purchase  Price for such Series 4
VRDP Shares by the transferee.

                  (j)      DIVIDENDS  CREDITED AGAINST EARLIEST  ACCUMULATED BUT
UNPAID  DIVIDENDS.  Any  dividend  payment  made on Series 4 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 4 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 4 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,  New York State and New York City
personal  income tax purposes to a dividend paid on Series 4 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.

                                       22

<PAGE>


         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 4 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 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 4 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 4 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 4 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 4 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 4 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 4
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 4 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 4 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 4 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:

                                       23

<PAGE>


                           (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  4 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 amounts due with  respect to  redemptions
         payable,  in each  case,  on Series 4 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
4 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 4 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.

                                       24

<PAGE>


         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 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

                                       25

<PAGE>



         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 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 4 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 4 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 4 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 4 VRDP,  or  classes  or series of  Preferred  Shares
         ranking  on a parity  with  Series 4 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 4 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 4
         VRDP  Shares and (iii) the  authorization,  creation  and  issuance  of
         classes or series of shares ranking junior to Series 4 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 4 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 4 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 4 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 4
         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 4 VRDP
         outstanding at the time, in person or by proxy, either in writing or at
         a  meeting   (the   Series  4  VRDP   voting  as  a  separate   class).
         Notwithstanding the foregoing, the Fund, without approval of Holders of
         Series 4 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 4 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

                                       26

<PAGE>


         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 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 4
         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 4 VRDP  Shares),  Moody's  (if  Moody's is then
         rating the  Series 4 VRDP  Shares)  and S&P (if S&P is then  rating the
         Series 4 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 4
         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 4 VRDP  Shares  is
         otherwise  required by this  Statement,  the  Declaration or applicable
         law,  (i)  Holders  of  outstanding  shares  of  Series 4 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 4 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 4 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 4
         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 4 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 4 VRDP  Shares,  and any such
adoption,  amendment,  alteration  or repeal  will not be  deemed to affect  the
preferences, rights or powers of Series 4 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 4 VRDP Shares without
replacement,  in either  case,  without the approval of Holders of Series 4 VRDP
Shares or other shareholders of the Fund. In the event a Rating Agency ceases to
furnish a long-term  rating for the Series 4 VRDP Shares or the Fund  terminates
the services of a Rating Agency then providing a long-term rating for the Series
4 VRDP Shares,  such rating, to the extent it would have been taken into account
in any of the provisions of the Series 4 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).

                                       27

<PAGE>


                  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  4 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 alter other  provisions  of this  Statement,
without the vote or consent of any Holder of Series 4 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 4 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 4 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 4 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 4 VRDP Share and no
Series 4 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  4  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 4 VRDP Share is
Outstanding, the Minimum VRDP Asset Coverage.

         7.       VRDP BASIC MAINTENANCE AMOUNT.

                  (a)      Subject to paragraph  (c) below,  so long as Series 4
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  4 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 4 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 4 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 4 VRDP Shares).

                  (b)      Subject  to  paragraph  (c)  below,  the  Fund  shall
deliver to each Rating  Agency which is then rating Series 4 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

                                       28

<PAGE>


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 4 VRDP Shares, and the Rating Agency Guidelines
may be changed or  eliminated  at any time  without  the  approval of Holders of
Series 4 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 4 VRDP Shares.

         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 4 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 4 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 4 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 4 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 4 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 4 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 4 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 4 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 4 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
4 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 4 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 4
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 4 VRDP Shares,

                                       29

<PAGE>


immediately  after  such  transaction  the  Discounted  Value of  Rating  Agency
Eligible  Assets (as determined by each Rating  Agency,  if any, then rating the
Series 4 VRDP Shares) would at least equal the VRDP Basic Maintenance Amount (if
any), if then required by such Rating Agency or Agencies.

         9.       SHORT-TERM  RATINGS. The Fund  will  use its  reasonable  best
efforts to maintain at least one short-term  rating on the Series 4 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 4 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 4 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 4 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 4 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 4 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 4 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 4 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 4 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 4 VRDP Shares),  the Discounted Value of Moody's
         Eligible  Assets (if Moody's is then  rating the Series 4 VRDP  Shares)
         and the Discounted  Value of S&P Eligible Assets (if S&P is then rating
         the  Series  4 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

                                       30

<PAGE>


         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 4 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 4 VRDP
         Shares) with a Discounted Value, Moody's Eligible Assets (if Moody's is
         then rating the Series 4 VRDP  Shares)  with a  Discounted  Value,  S&P
         Eligible Assets (if S&P is then rating the Series 4 VRDP Shares) with a
         Discounted  Value, or Other Rating Agency Eligible Assets (if any Other
         Rating  Agency  is  then  rating  the  Series  4  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 4 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 4 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 4 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 4 VRDP
         Shares) with a Discounted Value, Moody's Eligible Assets (if Moody's is
         then rating the Series 4 VRDP  Shares)  with a  Discounted  Value,  S&P
         Eligible Assets (if S&P is then rating the Series 4 VRDP Shares) with a
         Discounted  Value and Other Rating Agency Eligible Assets (if any Other
         Rating  Agency  is  then  rating  the  Series  4  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 4
         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 4 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

                                       31

<PAGE>



         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 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 4 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 4 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 4 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 4 VRDP
         Shares are  Outstanding  and held by Persons  other than the  Liquidity
         Provider,  the Purchase  Obligation  of the  Liquidity  Provider  whose
         Series  4  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 4 VRDP Shares are Outstanding and held by Persons other than
         the Liquidity Provider and (b) the Purchase Obligation of the Liquidity
         Provider  whose  Series  4  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 4 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 4 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

                                       32

<PAGE>


         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 4 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 4 VRDP Shares in
         the distribution referred to under "Designation of Series 4 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 date
         of acquisition and (z) not successfully remarketed, then (I) the Series
         4 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 4 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 4 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

                                       33

<PAGE>


         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:

             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 4 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 4 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 4 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 4 VRDP  Shares  may be
         applied  by  the  Fund,  in  its  discretion,  towards  payment  of the
         Redemption  Price for the  Outstanding  Series 4 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 4 VRDP  Shares on the June 1, 2040  Redemption
         Date for the Outstanding  Series

                                       34

<PAGE>


         4 VRDP  Shares,  the  requirement  of the Fund to  maintain a Liquidity
         Account for the  Outstanding  Series 4 VRDP Shares as  contemplated  by
         this  Section  10(b)(iii)  shall  lapse and be of no further  force and
         effect.

                  (c)      NOTICE OF  REDEMPTION. If the Fund shall determine or
be required to redeem,  in whole or in part, shares of Series 4 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 4 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 4 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 4 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 4 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 4
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 4 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 4 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 4 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 4 VRDP Shares for which a Notice of Redemption has
been  provided,  dividends  may be declared and paid on Series 4 VRDP Shares and
shall include  those Series 4 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 4 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.

                                       35

<PAGE>


                  (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 (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 4 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 4 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 4
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 4
VRDP Shares  called for  redemption  on such date and (ii) all other  amounts to
which Holders of Series 4 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 4 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  4 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 4 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 4 VRDP Shares,  provided  that such
modification  does not materially and adversely affect the Holders of the Series
4 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 4 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 4 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.

                                       36

<PAGE>


                  (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 4 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 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 4 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 4 VRDP Shares of the full
preferential amounts provided for in this paragraph (b), the Holders of Series 4
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 4 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 4 VRDP or any shares of any
other class or series of Preferred  Shares ranking on a parity with the Series 4
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 4 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 4 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 4 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 4 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 4 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  4 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 4 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 4 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 4 VRDP Shares
or the  Liquidity  Provider  by an NRSRO then rating the Series 4 VRDP Shares or
Liquidity Provider.

                                       37

<PAGE>


                  (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 Electronic  Means,
or by first  class mail,  postage  prepaid,  in the case in which  Series 4 VRDP
Shares are in physical form, of such Failed Remarketing Condition.

                  (c)      Each  Series 4 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 4 VRDP  Shares  tendered  to the Tender and
Paying Agent for Remarketing  (provided that the  Remarketing  Agent may seek to
sell such Series 4 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 4 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 4 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 4 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 4 VRDP
Shares,  the Fund shall have no  obligation  to  purchase  Series 4 VRDP  Shares
acquired by the Liquidity  Provider  pursuant to the VRDP Purchase  Agreement or
otherwise.

                  (f)      Series  4  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 4 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 4 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 4 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 4 VRDP  Shares  are  issued  in
certificated  form and a Holder  fails to deliver  such  Series 4 VRDP Shares to
which a Mandatory Purchase relates,  on or prior to the Mandatory Purchase Date,
the Holder of such  Series 4 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 4 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 4
VRDP Shares.  Any moneys held by the Tender and Paying Agent for the purchase of
undelivered Series 4 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 4 VRDP Shares. The undelivered Series 4 VRDP Shares shall be
deemed to be no longer  Outstanding  (except as to entitlement to payment of the
Purchase Price),  and

                                       38

<PAGE>


the  Fund  will  issue  to  the  purchaser   replacement  Series  4  VRDP  Share
certificates in lieu of such undelivered Series 4 VRDP Shares.

                  (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 4 VRDP (and  terms  relating  thereto).  Each such
additional  share  of  Series  4 VRDP  shall be  governed  by the  terms of this
Statement as so amended or supplemented.

                  (b)      NO  FRACTIONAL  SHARES. No fractional  Series  4 VRDP
Shares shall be issued.

                  (c)      STATUS  OF  VRDP  SHARES   REDEEMED,   EXCHANGED   OR
OTHERWISE  ACQUIRED  BY  THE FUND. Series  4 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 4 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 4 VRDP  Shares,  but for which final
payment is not received by the Fund,  shall  return to the status of  authorized
and unissued Series 4 VRDP Shares.

                  (d)      PURCHASE  OBLIGATION PART OF VRDP SHARES. Each Holder
and Beneficial  Owner, by virtue of acquiring Series 4 VRDP Shares, is deemed to
have  agreed,  for U.S.  federal  income  tax  purposes,  to treat the  Purchase
Obligation  as  part of the  Series  4 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 4 VRDP Shares, is deemed to have
agreed, for U.S. federal income tax purposes,  to treat the Series 4 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 4 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 4 VRDP Shares (in  denominations  of $100,000 and
integral  multiples  thereof) for purchase at the Purchase Price on

                                       39

<PAGE>


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:

                  (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 4
                           VRDP Shares to be purchased, the CUSIP number of the
                           Series 4 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 4 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 4 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 4 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 4 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 4 VRDP Shares previously
         tendered pursuant to an Optional Tender for which the Purchase Date has
         not yet occurred.  In the event that Series 4 VRDP Shares are issued in
         certificated form and a Holder of Series 4 VRDP Shares fails to deliver
         such  Series 4 VRDP Shares to which a  Mandatory  Tender  relates on or
         prior to the  Purchase  Date,  the Holder of such  Series 4 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 4 VRDP Shares as of the
         scheduled Purchase Date. Any such undelivered Series 4

                                       40

<PAGE>


         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 4 VRDP Shares.  Any moneys held by the
         Tender and Paying Agent for the purchase of  undelivered  Series 4 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 4 VRDP Shares. The undelivered
         Series 4 VRDP Shares 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 4 VRDP Share certificates in
         lieu of such undelivered Series 4 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 4 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 4 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 4 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 4 VRDP  Shares.  A Notice of  Revocation  shall be
effective as to the number of Series 4 VRDP Shares  specified  therein as having
been  revoked  less the number of such  Series 4 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 4 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 4 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 4 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 4 VRDP Shares  properly  tendered  pursuant to a
Tender.

         2.       REMARKETING SCHEDULE.

                  (a)      In  connection  with any attempted  Remarketing,  all
tendered  Series 4 VRDP Shares shall be remarketed at the Purchase Price of such
Series 4 VRDP Shares. The calculation of the Purchase Price of the Series 4 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 4 VRDP Shares and the aggregate  number and Purchase Price of
Series 4 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 4 VRDP Shares by the Remarketing Agent relating to
tendered  Series 4 VRDP Shares  shall be used for the  purchase of the  tendered
Series 4 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,

                                       41

<PAGE>


in the case of an Optional Tender, or Holder, in the case of a Mandatory Tender,
tendering  Series 4 VRDP Shares for sale through the  Securities  Depository  in
immediately  available  funds  against  delivery of the  tendered  Series 4 VRDP
Shares to the Tender and Paying Agent  through the  Securities  Depository,  the
delivery of such Series 4 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 4 VRDP Shares by means of
"FREE" delivery 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 4 VRDP Shares,  if any,  that it  successfully  remarketed  for
purchase on such  Purchase Date and the  aggregate  Purchase  Price of such sold
Series 4 VRDP  Shares  and the  number  of  Series 4 VRDP  Shares,  if any,  not
successfully  remarketed  for purchase on such  Purchase  Date and the aggregate
Purchase  Price of such unsold  Series 4 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 4 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  4 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 4
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 4 VRDP Shares to be purchased on such  Purchase  Date (or if  remarketing
proceeds  for any tendered  Series 4 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 4 VRDP Shares  required to be purchased by the  Liquidity  Provider.  For
purposes of the Final Notice of Purchase,  any tendered Series 4 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 4 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 4 VRDP Shares,  wire
transfer the aggregate  Purchase Price of all Series 4 VRDP Shares in respect of
which Final Notices of Purchase have been delivered to it for purchase of Series
4 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 4 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 4 VRDP Shares that are the
subject of any such Final Notice of Purchase,  through  means of the  Securities
Depository in the case of Series 4 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 4 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 4 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

                                       42

<PAGE>


Agent  for the  payment  of the  Purchase  Price  shall be held in trust for the
benefit of the Liquidity  Provider  until the Series 4 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 the benefit of the Remarketing  Agent on account of purchasers
purchasing in a Remarketing  until the Series 4 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 4 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 4 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 4 VRDP Shares  subject to purchase  pursuant to the Purchase  Obligation,
the Purchase  Price for such Series 4 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 4 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 4 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 4 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
4 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 4 VRDP
tendered  for  Remarketing  by the  Liquidity  Provider  and any other Holder or
Beneficial Owner of shares of Series 4 VRDP in any Remarketing,  the Remarketing
Agent shall  allocate those shares of Series 4 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 4
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 4 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

                                       43

<PAGE>


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 Liquidity Provider and the Holders of Series 4 VRDP
Shares by first class mail, postage prepaid (in the case of physical shares), or
Electronic  Means  (in the case of  Series 4 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 4 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 4 VRDP
Shares in a Remarketing;  however,  the Remarketing Agent shall not be obligated
to purchase  any Series 4 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 4 VRDP Shares in a Remarketing  unless,  in each case, such Series 4 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,
New York State and New York City personal income tax purposes in any dividend on
Series 4 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
4 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.

                                       44

<PAGE>


         7.       TRANSFERS.

                  (a)      Unless otherwise  permitted by the Fund, a Beneficial
Owner or Holder may sell,  transfer or otherwise dispose of Series 4 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 4 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 4 VRDP Shares under the Securities Act.  Accordingly,  the
Series 4 VRDP Shares are subject to restrictions 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 4 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 4 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 4 VRDP
Shares  which are to be cancelled  within 10 days of purchase by the Fund),  are
not permitted to purchase Series 4 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 4 VRDP Shares;  provided,  further, that, without regard to the preceding
requirements,  purchases  of Series 4 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 4 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 4 VRDP  Shares  and
prospective  purchasers of Series 4 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 4 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 4 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 New York AMT-Free Municipal Income Fund has
caused these presents to be signed as of March 8, 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 NEW YORK AMT-FREE MUNICIPAL INCOME
                                    FUND

                                    By:    /s/ Gifford R. Zimmerman
                                           -------------------------------------
                                           Name: Gifford R. Zimmerman
                                           Title:   Chief Administrative Officer

ATTEST:

        /s/ Kevin J. McCarthy
------------------------------------
Name:  Kevin J. McCarthy
Title: Vice President and Secretary

                                       46
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1 OTHR EXHB
<SEQUENCE>10
<FILENAME>nrk77q1avmtp.txt
<TEXT>
<PAGE>


                                                                  EXECUTION COPY

                 NUVEEN NEW YORK AMT-FREE MUNICIPAL INCOME FUND

          STATEMENT ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES
                 OF VARIABLE RATE MUNIFUND TERM PREFERRED SHARES

<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          PAGE
<S>                                                                                        <C>
1.   Definitions.............................................................................1

     1.1     Definitions.....................................................................1
     1.2     Interpretation.................................................................11

2.   Terms Applicable to All Series of Variable Rate Munifund Term Preferred Shares.........12

     2.1     Number of Shares; Ranking......................................................12
     2.2     Dividends and Distributions....................................................13
     2.3     Liquidation Rights.............................................................16
     2.4     Coverage & Leverage Tests......................................................17
     2.5     Redemption.....................................................................18
     2.6     Voting Rights..................................................................24
     2.7     Rating Agencies................................................................29
     2.8     Issuance of Additional Preferred Shares........................................29
     2.9     Status of Redeemed or Repurchased VMTP Shares..................................29
     2.10    Distributions with respect to Taxable Allocations..............................29
     2.11    Term Redemption Liquidity Account and Liquidity Requirement....................31
     2.12    Global Certificate.............................................................32
     2.13    Notice.........................................................................33
     2.14    Termination....................................................................33
     2.15    Appendices.....................................................................33
     2.16    Actions on Other than Business Days............................................33
     2.17    Modification...................................................................33
     2.18    Transfers......................................................................33
     2.19    No Additional Rights...........................................................34
</TABLE>

                                        i

<PAGE>


                 NUVEEN NEW YORK AMT-FREE MUNICIPAL INCOME FUND

          STATEMENT ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES
                 OF VARIABLE RATE MUNIFUND TERM PREFERRED SHARES

         Nuveen  New  York  AMT-Free  Municipal  Income  Fund  (the  "Fund"),  a
Massachusetts business trust, certifies that:

                                    RECITALS

         FIRST:   The  Fund  is  authorized  under  Article  IV  of  the  Fund's
Declaration of Trust (which, as hereafter  restated or amended from time to time
is herein called the  "Declaration"),  to issue an unlimited number of Preferred
Shares (as defined below), par value $.01 per share.

         SECOND:  Pursuant  to the  authority  expressly  vested in the Board of
Trustees  of the Fund by Article IV of the  Declaration,  the Board of  Trustees
has, by resolution, authorized the issuance of a class of Preferred Shares, $.01
par value per share,  of the Fund, such shares to be classified as Variable Rate
MuniFund Term Preferred  Shares  ("VMTP"),  and such VMTP to be issued in one or
more series. The terms related to a series may be set forth in this Statement as
modified,  amended  or  supplemented  in an  Appendix  (each an  "Appendix"  and
collectively the "Appendices") attached hereto or in a separate Statement.

         THIRD: The number of shares, preferences,  voting powers, restrictions,
limitations  as to  dividends,  qualifications,  and  terms  and  conditions  of
redemption,  of each series of VMTP issued  pursuant to this  Statement  are set
forth in this Statement, as modified, amended or supplemented in the Appendix to
this Statement specifically relating to such series as now or hereafter filed by
the Fund with the Secretary of State of the Commonwealth of Massachusetts  (each
such series being issued  pursuant to this Statement being referred to herein as
a "Series of VMTP Shares," "VMTP Shares of a Series" or a "Series"),  and shares
of all such Series being referred to herein  individually  as a "VMTP Share" and
collectively as the "VMTP Shares").

         1.       Definitions.

                  1.1      Definitions.  Unless  the  context  or use  indicates
another or different  meaning or intent and except with respect to any Series as
specifically  provided in the Appendix  applicable  to such Series,  each of the
following terms when used in this Statement  shall have the meaning  ascribed to
it below,  whether such term is used in the singular or plural and regardless of
tense:

                  "1940  Act"  means  the  Investment  Company  Act of 1940,  as
amended, or any successor statute.

                  "1940 Act Asset Coverage"  means "asset  coverage," as defined
for purposes of Section  18(h) of the 1940 Act, of at least 200% with respect to
all  outstanding  senior  securities  of the Fund  which are shares of stock for
purposes of the 1940 Act,  including all outstanding  VMTP Shares (or such other
asset  coverage as may in the future be specified in or under the 1940 Act or by
rule, regulation or order of United States Securities and Exchange Commission as

<PAGE>


the minimum asset coverage for senior  securities which are shares of stock of a
closed-end investment company).

                  "Additional Amount Payment" means a payment to a Holder (other
than a New York Holder) of VMTP Shares of an amount which,  when taken  together
with the aggregate  amount of Taxable  Allocations  made to such Holder to which
such Additional Amount Payment relates,  would cause such Holder's  dividends in
dollars  (after  federal  income tax  consequences)  from the  aggregate of such
Taxable Allocations and the related Additional Amount Payment to be equal to the
dollar amount of the  dividends  that would have been received by such Holder if
the amount of such aggregate Taxable Allocations would have been excludable (for
federal  income  tax  purposes)  from the  gross  income  of such  Holder.  Such
Additional  Amount Payment shall be calculated (i) without  consideration  being
given to the time value of money; (ii) assuming that no Holder of VMTP Shares is
subject  to the  federal  alternative  minimum  tax with  respect  to  dividends
received from the Fund; and (iii) assuming that each Taxable Allocation and each
Additional  Amount Payment (except to the extent such Additional  Amount Payment
is reported as an exempt-interest  dividend for purposes of Section 852(b)(5) of
the Code)  would be  taxable in the hands of each  Holder of VMTP  Shares at the
maximum marginal regular federal  individual  income tax rate (taking account of
the tax  imposed  under  Section  1411 of the Code or any  successor  provision)
applicable to ordinary income or net capital gain, as applicable, or the maximum
marginal regular federal corporate income tax rate applicable to ordinary income
or net capital gain, as applicable,  whichever is greater, in effect at the time
such Additional Amount Payment is paid.

                  "Additional  New York Amount Payment" means a payment to a New
York  Holder of VMTP Shares of an amount  which,  when taken  together  with the
aggregate  amount of Taxable  Allocations  made to such New York Holder to which
such  Additional  New York  Amount  Payment  relates,  would cause such New York
Holder's  dividends in dollars (after federal,  New York State and New York City
income tax consequences) from the aggregate of such Taxable  Allocations and the
related  Additional  New York Amount Payment to be equal to the dollar amount of
the  dividends  that would  have been  received  by such New York  Holder if the
amount of such aggregate  Taxable  Allocations  would have been  excludable (for
federal  income tax  purposes,  and New York State and New York City  individual
income  tax  purposes)  from the  gross  income  of such New York  Holder.  Such
Additional New York Amount Payment shall be calculated (i) without consideration
being given to the time value of money; (ii) assuming that no New York Holder of
VMTP Shares is subject to the federal  alternative  minimum tax with  respect to
dividends  received  from the Fund;  (iii) only taking into  account the regular
federal  income tax (and the tax imposed  under  Section 1411 of the Code or any
successor  provision) and New York State and New York City individual income tax
with respect to dividends received from the Fund (that is, without giving effect
to any other New York  State  tax,  New York City tax or any other  federal  tax
based on  income);  and (iv)  assuming  that each  Taxable  Allocation  and each
Additional  New York Amount  Payment  (except to the extent such  Additional New
York Amount Payment is reported as an  exempt-interest  dividend for purposes of
Section  852(b)(5)  of the Code)  would be taxable in the hands of each New York
Holder of VMTP Shares at the maximum marginal combined regular federal, New York
State  and New York City  individual  income  tax rate  (taking  account  of the
federal income tax  deductibility  of state and local taxes paid or incurred and
the tax  imposed  under  Section  1411 of the Code or any  successor  provision)
applicable  to  ordinary  income or net capital  gains,  as  applicable,  or the

                                        2

<PAGE>


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 Additional New York Amount Payment is paid.

                  "Adviser" means Nuveen Fund Advisors,  LLC, a Delaware limited
liability  company,  or such  other  entity  as  shall  be then  serving  as the
investment  adviser  of  the  Fund,  and  shall  include,  as  appropriate,  any
sub-adviser duly appointed by the Adviser.

                  "Agent   Member"  means  a  Person  with  an  account  at  the
Securities  Depository that holds one or more VMTP Shares through the Securities
Depository,  directly or  indirectly,  for a  Designated  Owner and that will be
authorized  and  instructed,  directly or indirectly,  by a Designated  Owner to
disclose  information  to the  Redemption  and Paying Agent with respect to such
Designated Owner.

                  "Appendices" and "Appendix" shall have the respective meanings
as set forth in the Recitals of this Statement.

                  "Applicable Spread" means, with respect to any Rate Period for
any Series of VMTP  Shares,  the  percentage  per annum set forth  opposite  the
highest  applicable  credit rating most recently  assigned to such Series by any
Rating Agency in the table set forth  directly  below on the Rate  Determination
Date for such Rate Period:

                               LONG-TERM RATINGS*

           MOODY'S                     FITCH              APPLICABLE PERCENTAGE
---------------------------  -------------------------  ------------------------
         Aaa to Aa2                  AAA to AA                    1.05%
             Aa3                        AA-                       1.25%
             A1                         A+                        1.45%
             A2                          A                        1.65%
             A3                         A-                        1.85%
            Baa1                       BBB+                       2.75%
            Baa2                        BBB                       2.90%
            Baa3                       BBB-                      3.05%**
*And/or the equivalent ratings of an Other Rating Agency then rating the VMTP
Shares utilizing the highest of the ratings of the Rating Agencies then rating
the VMTP Shares.
*Unless an Increased Rate Period is in effect or the Increased Rate otherwise
applies to any portion of a Rate Period, in which case the Applicable Spread
shall be 6.05% for such period or portion thereof, as the case may be.

                  "Asset  Coverage" means "asset  coverage" of a class of senior
security which is a stock,  as defined for purposes of Section 18(h) of the 1940
Act  as in  effect  on the  date  hereof,  determined  on the  basis  of  values
calculated  as of a time within 48 hours  (only  including  Business  Days) next
preceding the time of such determination.

                                        3

<PAGE>


                  "Asset Coverage Cure Date" means,  with respect to the failure
by the Fund to  maintain  Asset  Coverage  of at least  225% as of the  close of
business on a Business  Day (as  required by Section  2.4(a)),  the date that is
thirty (30) calendar days following such Business Day.

                  "Below  Investment  Grade"  means,  with respect any Series of
VMTP  Shares and as of any date,  the  following  ratings  with  respect to each
Rating Agency (to the extent it is a Rating Agency on such date):

                                    (i)     lower  than  BBB-,  in the  case  of
                  Fitch;

                                    (ii)    lower  than  Baa3,  in the  case  of
                  Moody's; and

                                    (iii)   lower than an  equivalent  long-term
                  credit  rating to those set forth in clauses (i) and (ii),  in
                  the case of any Other Rating Agency.

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

                  "Business  Day"  means any 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.

                  "By-Laws"  means the By-Laws of the Fund as amended  from time
to time.

                  "Closed-End  Funds"  shall  have the  meaning  as set forth in
Section 2.18(a).

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

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

                  "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.

                  "Custodian  Agreement" means, with respect to any Series,  the
Custodian  Agreement by and between the  Custodian  and the Fund with respect to
such Series.

                  "Date of Original  Issue"  means,  with respect to any Series,
the date specified as the Date of Original Issue for such Series in the Appendix
for such Series.

                  "Declaration"  shall  have  the  meaning  as set  forth in the
Recitals of this Statement.

                  "Default"  shall  mean  a  Dividend  Default  or a  Redemption
Default.

                                        4

<PAGE>


                  "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
Redemption Date, Dividend Payment Date or other 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 Obligation;

                  (3)      any Municipal  Security that has a credit rating from
         at least one NRSRO  that is the  highest  applicable  rating  generally
         ascribed  by such  NRSRO to  Municipal  Securities  with  substantially
         similar terms as of the date of this Statement (or such rating's future
         equivalent),  including (A) any such  Municipal  Security 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 Municipal Security 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  Securities  or U.S.
         Government Obligations 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).

                  "Designated Owner" means a Person in whose name VMTP Shares of
any  Series  are  recorded  as  beneficial  owner  of such  VMTP  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.

                  "Dividend  Default"  shall  have the  meaning  as set forth in
Section 2.2(g)(i).

                  "Dividend Payment Date" means, with respect to any Series, the
first  Business  Day of each  calendar  month that any shares of such Series are
outstanding;  provided,  however,  that with respect to any Series for which the
first Dividend Period,  as specified in the Appendix relating to such Series, is
longer than one month,  the first Dividend Payment Date for such Series shall be
the first  Business Day of the calendar month  immediately  following the end of
such Dividend Period.

                  "Dividend  Period"  means,  with  respect to any  Series,  the
Dividend Period for such Series set forth in the Appendix for such Series.

                                        5

<PAGE>


                  "Dividend  Rate" means,  with respect to any Rate Period for a
Series of VMTP  Shares  and  subject  to the  adjustment  described  in  Section
2.10(a), the Index Rate for such Rate Period plus the Applicable Spread for such
Rate Period; provided,  however, that with respect to any Increased Rate Period,
the Dividend Rate shall mean the Increased  Rate for such Increased Rate Period;
and  provided  further  that the  Dividend  Rate for any Rate Period shall in no
event exceed the Maximum Rate.

                  "Effective Leverage Ratio" shall have the meaning as set forth
in Section 2.4(d).

                  "Effective Leverage Ratio Cure Date" shall have the meaning as
set forth in Section 2.5(b)(ii)(A).

                  "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  Redemption  and  Paying  Agent  and the
Custodian,  shall be sent by such means to each of its representatives set forth
in the  Redemption  and Paying  Agent  Agreement  and the  Custodian  Agreement,
respectively.

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

                  "Fitch" means Fitch Ratings,  a part of the Fitch Group, which
is jointly owned by Fimalac,  S.A. and Hearst Corporation,  and any successor or
successors thereto.

                  "Fund"  shall have the meaning as set forth in the Preamble to
this Statement.

                  "Holder" means,  with respect to the VMTP Shares of any Series
or any other  security  issued by the Fund, a Person in whose name such security
is registered in the registration books of the Fund maintained by the Redemption
and Paying Agent or otherwise.

                  "Increased  Rate" means,  with respect to any  Increased  Rate
Period for a Series of VMTP Shares,  the Index Rate for such Rate Period plus an
Applicable Spread of 6.05%.

                  "Increased Rate Period" shall have the meaning as set forth in
Section 2.2(g)(i).

                  "Index  Rate"  means,  with  respect to any Rate  Period for a
Series of VMTP Shares,  the SIFMA  Municipal  Swap Index made  available by 3:00
p.m., New York City time, on the Rate Determination Date for such Rate Period.

                  "Initial Rate Period"  means,  with respect to the VMTP Shares
of any Series, the period commencing on and including the Date of Original Issue
thereof and ending on, and including, the next succeeding calendar day that is a
Wednesday  (or if such  Wednesday  is not a Business  Day,  the next  succeeding
Business Day).

                  "Liquidation  Preference"  means,  with respect to any Series,
the amount specified as the liquidation  preference per share for that Series in
the Appendix for such Series.

                                        6

<PAGE>


                  "Liquidity  Account  Initial Date" means,  with respect to any
Series,  the  date  designated  as the  Liquidity  Account  Initial  Date in the
Appendix for such Series.

                  "Liquidity  Account  Investments"  means Deposit Securities or
any other  security or investment  owned by the Fund that is rated not less than
A3 by Moody's,  A- by Standard & Poor's,  A- by Fitch or an equivalent rating by
any other NRSRO (or any such rating's future equivalent).

                  "Liquidity Requirement" shall have the meaning as set forth in
Section 2.11(b).

                  "Mandatory  Redemption  Price"  shall have the  meaning as set
forth in Section 2.5(b)(i)(A).

                  "Market Value" of any asset of the Fund means,  for securities
for which market  quotations  are readily  available,  the market value  thereof
determined by an independent third-party pricing service designated from time to
time by the Board of Trustees,  which pricing service shall be Standard & Poor's
Securities  Evaluations,  Inc./J. J. Kenny Co., Inc. (or any successor thereto),
International  Data  Corporation  (or  any  successor  thereto)  or  such  other
independent  third-party  pricing service  broadly  recognized in the tax-exempt
fund  market.  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 that include
consideration  of:  yields or  prices  of  Municipal  Securities  of  comparable
quality,  type of  issue,  coupon,  maturity  and  rating;  state  of  issuance;
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 recommended valuations.

                  "Maximum Rate" means 15% per annum.

                  "Moody's"  means  Moody's  Investors  Service,  Inc.  and  any
successor or successors thereto.

                  "Municipal   Securities"   means  "municipal   securities"  as
described under the heading  "Portfolio  Investments" in the prospectus or other
offering document for a Series of VMTP Shares.

                  "New York Holder" means, solely for purposes of the definition
of "Additional  New York Amount  Payment" and Section 2.10 hereof,  (i) a Holder
who is a natural  person  subject to New York State or New York City taxation on
his or her income; or (ii) a Holder,  other than a natural person, that seeks to
pay dividends (or make other  distributions  or  allocations of income) that are
exempt from New York State or New York City income tax. For all other  purposes,
a "New York Holder" means a "Holder."

                  "Notice of Redemption"  shall have the meaning as set forth in
Section 2.5(d).

                  "Notice of Taxable  Allocation"  shall have the meaning as set
forth in Section 2.10(a).

                                        7

<PAGE>


                  "NRSRO" means (a) each of Fitch, Moody's and Standard & Poor's
so  long  as  such  Person  is  a  nationally   recognized   statistical  rating
organization  within the meaning of Section 3(a)(62) of the Exchange Act and (b)
any other  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.

                  "Optional Redemption Date" shall have the meaning as set forth
in Section 2.5(c)(i).

                  "Optional  Redemption  Premium"  means,  with  respect  to any
Series,  the premium  payable by the Fund upon the  redemption of VMTP Shares of
such  Series at the option of the Fund,  as set forth in the  Appendix  for such
Series.

                  "Optional  Redemption  Price"  shall  have the  meaning as set
forth in Section 2.5(c)(i).

                  "Other Rating Agency" means each Rating Agency,  if any, other
than  Moody's or Fitch then  providing a rating for the VMTP Shares  pursuant to
the request of the Fund.

                  "Outstanding"  means,  as of any  date  with  respect  to VMTP
Shares of any  Series,  the  number of VMTP  Shares of such  Series  theretofore
issued by the Fund except (without duplication):

                           (a)      any VMTP Shares of such  Series  theretofore
         cancelled or redeemed or delivered to the  Redemption  and Paying Agent
         for cancellation or redemption in accordance with the terms hereof;

                           (b)      any VMTP  Shares of such  Series as to which
         the Fund  shall  have  given a Notice  of  Redemption  and  irrevocably
         deposited  with the  Redemption  and Paying  Agent  sufficient  Deposit
         Securities to redeem such shares in accordance with Section 2.5 hereof;

                           (c)      any VMTP  Shares of such  Series as to which
         the Fund shall be the Holder or the Designated Owner; and

                           (d)      any VMTP Shares of such  Series  represented
         by any  certificate  in lieu of  which  any new  certificate  has  been
         executed and delivered by the Fund.

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

                  "Preferred  Shares" means the authorized  preferred  shares of
beneficial  interest,  par value $.01 per  share,  of the Fund,  including  VMTP
Shares  of each  Series,  shares  of any other  series  of  preferred  shares of
beneficial interest now or hereafter issued by the Fund, and shares of any other
stock  hereafter  authorized  and issued by the Fund of a class having  priority
over any other class as to distribution of assets or payments of dividends.

                                        8

<PAGE>


                  "Purchase  Agreement"  means (i) with  respect to the  initial
Series of VMTP Shares  issued  pursuant  to this  Statement,  the VMTP  Purchase
Agreement  to be dated as of March 11,  2013  between  the Fund and Wells  Fargo
Bank,  National  Association  and (ii) with respect to any subsequent  Series of
VMTP Shares,  the purchase  agreement or other  similar  agreement  for the VMTP
Shares of such Series (if any) specified in the Appendix for such Series.

                  "Rate  Determination  Date" means, with respect to the Initial
Rate Period for any Series of VMTP Shares,  the day  immediately  preceding  the
Date of Original Issue of such Series,  and with respect to any Subsequent  Rate
Period for any Series of VMTP Shares, the last day of the immediately  preceding
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 determined without regard to any prior extension of a
Rate Determination Date to a Business Day.

                  "Rate  Period"  means,  with  respect  to any  Series  of VMTP
Shares,  the  Initial  Rate  Period and any  Subsequent  Rate Period of the VMTP
Shares of such Series.

                  "Rating  Agencies"  means,  as of any date and in respect of a
Series of VMTP  Shares,  (i) each of Moody's  and Fitch and (ii) any other NRSRO
designated as a Rating  Agency on such date in  accordance  with Section 2.7, in
each case (i) or (ii)  above,  to the extent it  maintains  a rating on the VMTP
Shares of such Series on such date and the Board of Trustees has not  terminated
its designation as a Rating Agency in accordance  with Section 2.7.  Moody's and
Fitch have initially been  designated as the Rating Agencies for purposes of the
VMTP Shares.  In the event that at any time any Rating Agency (i) ceases to be a
Rating  Agency for purposes of any Series of VMTP Shares and such Rating  Agency
has been replaced by an Other Rating Agency in accordance  with Section 2.7, any
references to any credit rating of such replaced Rating Agency in this Statement
or any Appendix shall be deleted for purposes hereof as provided below and shall
be deemed instead to be references to the equivalent  credit rating of the Other
Rating Agency that has replaced such Rating Agency as of the most recent date on
which such  replacement  Other Rating Agency  published  credit ratings for such
Series of VMTP Shares or (ii) designates a new rating  definition for any credit
rating of such Rating Agency with a corresponding  replacement rating definition
for such credit rating of such Rating  Agency,  any  references to such replaced
rating  definition  of such Rating  Agency  contained  in this  Statement or any
Appendix  shall  instead  be  deemed  to be  references  to  such  corresponding
replacement rating definition.  In the event that at any time the designation of
any Rating  Agency as a Rating  Agency for purposes of any Series of VMTP Shares
is  terminated  in  accordance  with Section 2.7, any rating of such  terminated
Rating Agency, to the extent it would have been taken into account in any of the
provisions  of  this  Statement  or the  Appendix  for  such  Series,  shall  be
disregarded,  and only the ratings of the  then-designated  Rating  Agencies for
such Series shall be taken into account for purposes of this  Statement and such
Appendix.

                  "Rating Agency  Guidelines" means the guidelines of any Rating
Agency,  as they may be amended or modified from time to time,  compliance  with
which is required to cause such Rating Agency to continue to issue a rating with
respect to a Series of VMTP Shares for so long as such Series is Outstanding.

                                        9

<PAGE>


                  "Ratings  Event"  shall have the  meaning set forth in Section
2.2(g)(i).

                  "Redemption  and  Paying  Agent"  means,  with  respect to any
Series,  State  Street Bank and Trust  Company and its  successors  or any other
redemption and paying agent appointed by the Fund with respect to such Series.

                  "Redemption and Paying Agent Agreement" means, with respect to
any Series,  the Transfer Agency and Service Agreement dated October 7, 2002, as
amended,  by and among the  Redemption  and Paying  Agent,  the Fund and certain
other  Persons,  as further  amended by an Amendment  thereto dated February 24,
2011  relating to the VMTP Shares,  and as the same may be amended,  restated or
modified  from time to time, or any similar  agreement  between the Fund and any
other redemption and paying agent appointed by the Fund.

                  "Redemption  Date"  shall  have the  meaning  as set  forth in
Section 2.5(d).

                  "Redemption  Default"  shall have the  meaning as set forth in
Section 2.2(g)(i).

                  "Redemption  Price" shall mean the Term Redemption  Price, the
Mandatory Redemption Price or the Optional Redemption Price, as applicable.

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

                  "Securities   Depository"  shall  mean  The  Depository  Trust
Company  and its  successors  and  assigns  or any other  securities  depository
selected  by the Fund that  agrees  to  follow  the  procedures  required  to be
followed  by such  securities  depository  as set forth in this  Statement  with
respect to the VMTP Shares.

                  "Series" and "Series of VMTP  Shares"  shall have the meanings
as set forth in the Recitals of this Statement.

                  "SIFMA Municipal Swap Index" means the Securities Industry and
Financial  Markets  Association  Municipal  Swap  Index,  or such other  weekly,
high-grade index comprised of seven-day,  tax-exempt  variable rate demand notes
produced by  Municipal  Market  Data,  Inc. or its  successor,  or as  otherwise
designated  by  the  Securities  Industry  and  Financial  Markets  Association;
provided,  however, that if such index is no longer produced by Municipal Market
Data, Inc. or its successor,  then SIFMA Municipal Swap Index shall mean (i) the
S&P  Municipal  Bond 7 Day High Grade Rate Index  produced  by Standard & Poor's
Financial Services LLC or its successors or (ii) if the S&P Municipal Bond 7 Day
High Grade Rate Index is no longer produced,  such other  reasonably  comparable
index selected in good faith by the Board of Trustees of the Fund.

                  "Standard & Poor's" means Standard & Poor's Ratings  Services,
a Standard & Poor's  Financial  Services  LLC  business,  and any  successor  or
successors thereto.

                  "Statement"  means this Statement  Establishing and Fixing the
Rights and  Preferences of Variable Rate MuniFund Term Preferred  Shares,  as it
may be amended from time to time in accordance with its terms.

                                       10

<PAGE>


                  "Subsequent Rate Period" means,  with respect to any Series of
VMTP Shares,  the period  consisting of seven days, but adjusted in each case to
reflect any changes  when the regular day that is a Rate  Determination  Date is
not a Business Day,  from,  and  including,  the first day following the Initial
Rate Period of such Series to, and including,  the next Rate  Determination Date
for 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.

                  "Tax  Event"  shall  have the  meaning as set forth in Section
2.2(g)(i).

                  "Taxable  Allocation"  means, with respect to any Series,  the
allocation of any net capital gain or other income taxable for regular  federal,
New York State,  or New York City  individual  income tax purposes to a dividend
paid in respect of such Series.

                  "Term  Redemption  Amount" shall have the meaning as set forth
in Section 2.11(a).

                  "Term Redemption Date" means, with respect to any Series,  the
date specified as the Term Redemption Date in the Appendix for such Series.

                  "Term Redemption  Liquidity Account" shall have the meaning as
set forth in Section 2.11(a).

                  "Term Redemption Price" shall have the meaning as set forth in
Section 2.5(a).

                  "U.S. Government  Obligations" 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.

                  "VMTP"  shall have the meaning as set forth in the Recitals of
this Statement.

                  "VMTP  Shares"  shall  have the  meaning  as set  forth in the
Recitals of this Statement.

                  "VMTP Shares of a Series"  shall have the meaning as set forth
in the Recitals of this Statement.

                  "Voting Period" shall have the meaning as set forth in Section
2.6(b)(i).

                  With  respect  to  any  Series,  any  additional   definitions
specifically  set  forth  in the  Appendix  relating  to  such  Series  and  any
amendments to any definitions specifically set forth in the Appendix relating to
such  Series,  as such  Appendix  may be  amended  from  time to time,  shall be
incorporated  herein and made part hereof by  reference  thereto,  but only with
respect to such Series.

                  1.2      Interpretation.  The headings  preceding  the text of
Sections  included in this Statement are for  convenience  only and shall not be
deemed part of this Statement or be

                                       11

<PAGE>


given any  effect in  interpreting  this  Statement.  The use of the  masculine,
feminine or neuter  gender or the  singular or plural form of words herein shall
not limit any provision of this Statement.  The use of the terms  "including" or
"include"  shall in all cases herein mean  "including,  without  limitation"  or
"include,  without limitation,"  respectively.  Reference to any Person includes
such Person's  successors and assigns to the extent such  successors and assigns
are  permitted  by the terms of any  applicable  agreement,  and  reference to a
Person in a particular  capacity  excludes such Person in any other  capacity or
individually. Reference to any agreement (including this Statement), document or
instrument  means such agreement,  document or instrument as amended or modified
and in effect from time to time in  accordance  with the terms  thereof  and, if
applicable,  the terms hereof.  Except as otherwise  expressly set forth herein,
reference to any law means such law as amended, modified,  codified, replaced or
re-enacted,  in whole  or in part,  including  rules,  regulations,  enforcement
procedures  and  any   interpretations   promulgated   thereunder.   Underscored
references to Sections shall refer to those portions of this Statement.  The use
of the terms  "hereunder,"  "hereof," "hereto" and words of similar import shall
refer to this Statement as a whole and not to any particular Article, Section or
clause of this Statement.

         2.       Terms  Applicable to All Series of Variable Rate Munifund Term
Preferred Shares

         Except for such changes and amendments  hereto with respect to a Series
of VMTP Shares that are  specifically  contemplated by the Appendix  relating to
such Series, each Series of VMTP Shares shall have the following terms:

                  2.1      Number of Shares; Ranking.

                           (a)      The number of authorized shares constituting
         any Series of VMTP  Shares  shall be as set forth with  respect to such
         Series in the Appendix  hereto  relating to such Series.  No fractional
         VMTP Shares shall be issued.

                           (b)      The VMTP Shares of each Series shall rank on
         a parity with VMTP  Shares of each other  Series and with shares of any
         other series of Preferred Shares as to the payment of dividends and the
         distribution of assets upon  dissolution,  liquidation or winding up of
         the  affairs of the Fund.  The VMTP  Shares of each  Series  shall have
         preference  with  respect  to  the  payment  of  dividends  and  as  to
         distribution of assets upon  dissolution,  liquidation or winding up of
         the affairs of the Fund over the Common Shares as set forth herein.

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

                  2.2      Dividends and Distributions.

                           (a)      The  Holders  of VMTP  Shares of any  Series
         shall be  entitled to receive,  when,  as and if declared  by, or under
         authority  granted  by,  the Board of  Trustees,  out of funds  legally
         available   therefor  and  in   preference   to  dividends   and  other
         distributions  on Common  Shares,  cumulative  cash dividends and other
         distributions  on

                                       12

<PAGE>


         each  share of such  Series  at the  Dividend  Rate  for  such  Series,
         calculated  as set  forth  herein,  and no more.  Dividends  and  other
         distributions  on the VMTP Shares of any Series shall  accumulate  from
         the Date of Original  Issue with respect to such Series.  The amount of
         dividends  per share payable on VMTP Shares of a Series on any Dividend
         Payment Date shall equal the sum of the dividends  accumulated  but not
         yet paid for each Rate Period (or part thereof) in the related Dividend
         Period.  The amount of dividends per share of a Series  accumulated for
         each  such Rate  Period  (or part  thereof)  shall be  computed  by (i)
         multiplying  the Dividend Rate in effect for VMTP Shares of such Series
         for such Rate Period (or part thereof) by a fraction,  the numerator of
         which  shall be the actual  number of days in such Rate Period (or part
         thereof)  and the  denominator  of which shall be the actual  number of
         days in the year in which  such  Rate  Period  (or such  part  thereof)
         occurs  (365  or 366)  and  (ii)  multiplying  the  product  determined
         pursuant  to clause (i) by the  Liquidation  Preference  for a share of
         such Series.

                           (b)      Dividends on VMTP Shares of each Series with
         respect to any  Dividend  Period  shall be  declared  to the Holders of
         record of such shares as their names shall  appear on the  registration
         books of the Fund at the close of business on each day in such Dividend
         Period and shall be paid as provided in Section 2.2(f) hereof.

                           (c)      (i)     No   full    dividends   and   other
         distributions  shall be  declared or paid on shares of a Series of VMTP
         Shares for any Dividend  Period or part thereof unless full  cumulative
         dividends and other  distributions due through the most recent dividend
         payment dates therefor for all outstanding  Preferred Shares (including
         shares of other  Series of VMTP  Shares)  ranking on a parity with such
         Series of VMTP Shares have been or  contemporaneously  are declared and
         paid through the most recent dividend  payment dates therefor.  If full
         cumulative dividends and other distributions due have not been declared
         and paid on all such outstanding  Preferred  Shares of any series,  any
         dividends  and  other  distributions  being  declared  and paid on VMTP
         Shares of a Series  will be  declared  and paid as  nearly  pro rata as
         possible in proportion to the respective amounts of dividends and other
         distributions  accumulated but unpaid on the shares of each such series
         of  Preferred  Shares on the  relevant  dividend  payment date for such
         series.  Subject to  Section  2.10,  and  Section  2.4 of the  Purchase
         Agreement, no Holders of VMTP Shares shall be entitled to any dividends
         and other  distributions,  whether payable in cash, property or shares,
         in excess of full  cumulative  dividends  and  other  distributions  as
         provided in this Section 2.2(c)(i) on such VMTP Shares.

                                    (ii)    For so long as any VMTP  Shares  are
                  Outstanding,  the Fund shall not:  (x) declare any dividend or
                  other distribution (other than a dividend or distribution paid
                  in Common  Shares) in respect of the Common  Shares,  (y) call
                  for  redemption,  redeem,  purchase or  otherwise  acquire for
                  consideration  any Common  Shares,  or (z) pay any proceeds of
                  the  liquidation  of the Fund in respect of the Common Shares,
                  unless,  in each case, (A)  immediately  thereafter,  the Fund
                  shall have 1940 Act Asset Coverage after  deducting the amount
                  of such  dividend or  distribution  or  redemption or purchase
                  price or liquidation  proceeds,  (B) all cumulative  dividends
                  and  other  distributions  on all VMTP  Shares  and all  other
                  series of Preferred  Shares  ranking on a parity with the VMTP
                  Shares due on or prior to the date of the applicable dividend,
                  distribution,  redemption,  purchase or

                                       13

<PAGE>


                  acquisition  shall have been  declared and paid (or shall have
                  been declared and Deposit  Securities or sufficient  funds (in
                  accordance  with the terms of such  Preferred  Shares) for the
                  payment thereof shall have been deposited irrevocably with the
                  paying agent for such Preferred Shares) and (C) the Fund shall
                  have  deposited   Deposit   Securities   pursuant  to  and  in
                  accordance with the requirements of Section  2.5(d)(ii) hereof
                  with  respect to  Outstanding  VMTP Shares of any Series to be
                  redeemed  pursuant to Section  2.5(a) or Section 2.5(b) hereof
                  for  which a Notice of  Redemption  shall  have been  given or
                  shall have been  required to be given in  accordance  with the
                  terms  hereof  on or  prior  to the  date  of  the  applicable
                  dividend, distribution, redemption, purchase or acquisition.

                                    (iii)   Any  dividend  payment  made on VMTP
                  Shares  of a  Series  shall  first  be  credited  against  the
                  dividends and other distributions  accumulated with respect to
                  the  earliest  Dividend  Period  for  such  Series  for  which
                  dividends and other distributions have not been paid.

                           (d)      Not later  than  12:00  noon,  New York City
         time,  on the Dividend  Payment  Date for a Series of VMTP Shares,  the
         Fund  shall  deposit  with the  Redemption  and  Paying  Agent  Deposit
         Securities  having an aggregate Market Value on such date sufficient to
         pay the dividends and  distributions  that are payable on such Dividend
         Payment  Date in  respect  of such  Series.  The  Fund may  direct  the
         Redemption   and  Paying  Agent  with  respect  to  the  investment  or
         reinvestment  of any such Deposit  Securities so deposited prior to the
         Dividend   Payment  Date,   provided  that  such  investment   consists
         exclusively  of  Deposit  Securities  and  provided  further  that  the
         proceeds of any such  investment will be available as same day funds at
         the opening of business on such Dividend Payment Date.

                           (e)      All   Deposit   Securities   paid   to   the
         Redemption  and Paying Agent for the payment of dividends  payable on a
         Series of VMTP  Shares  shall be held in trust for the  payment of such
         dividends  by the  Redemption  and Paying  Agent for the benefit of the
         Holders  of such  Series  entitled  to the  payment  of such  dividends
         pursuant  to Section  2.2(f).  Any moneys  paid to the  Redemption  and
         Paying Agent in  accordance  with the  foregoing but not applied by the
         Redemption  and Paying  Agent to the  payment of  dividends,  including
         interest  earned on such  moneys  while so held,  will,  to the  extent
         permitted  by law, be repaid to the Fund as soon as possible  after the
         date on which such moneys were to have been so applied, upon request of
         the Fund.

                           (f)      Dividends  on VMTP Shares of a Series  shall
         be paid on each Dividend Payment Date for such Series to the Holders of
         shares of such Series as their names appear on the  registration  books
         of the Fund at the close of business on the day  immediately  preceding
         such  Dividend  Payment Date (or if such day is not a Business Day, the
         next preceding Business Day).  Dividends in arrears on VMTP Shares of a
         Series for any past  Dividend  Period may be  declared  and paid at any
         time,  without  reference to any regular  Dividend Payment Date, to the
         Holders  of  shares  of  such  Series  as  their  names  appear  on the
         registration books of the Fund on such date, not exceeding fifteen (15)
         calendar days  preceding  the payment date thereof,  as may be fixed by
         the Board of Trustees.  No interest or sum of money in lieu of interest
         will be payable in

                                       14

<PAGE>


         respect of any  dividend  payment  or  payments  on VMTP  Shares of any
         Series which may be in arrears.

                           (g)      (i)     The  Dividend   Rate  on a Series of
         VMTP Shares shall be adjusted to the Increased  Rate for each Increased
         Rate Period (as hereinafter defined). Subject to the cure provisions of
         Section  2.2(g)(iii),  a Rate Period  with  respect to a Series of VMTP
         Shares shall be deemed to be an "Increased Rate Period" if on the first
         day of such Rate  Period,  (A) the Fund has failed to deposit  with the
         Redemption  and Paying  Agent by 12:00 noon,  New York City time,  on a
         Dividend Payment Date for such Series,  Deposit Securities (as a result
         of complying with Section 2.2(c) or otherwise)  that will provide funds
         available to the Redemption  and Paying Agent on such Dividend  Payment
         Date  sufficient  to pay the full amount of any dividend on such Series
         payable on such Dividend  Payment Date (a "Dividend  Default") and such
         Dividend Default has not ended as contemplated by Section 2.2(g)(ii) on
         or prior to such first day; (B) the Fund has failed to deposit with the
         Redemption  and Paying Agent by 12:00 noon,  New York City time,  on an
         applicable  Redemption  Date for such Series,  Deposit  Securities that
         will provide funds available to the Redemption and Paying Agent on such
         Redemption  Date  sufficient  to pay the full amount of the  Redemption
         Price  payable  in respect of such  Series on such  Redemption  Date (a
         "Redemption  Default")  and such  Redemption  Default  has not ended as
         contemplated  by Section  2.2(g)(ii) on or prior to such first day; (C)
         any  Rating  Agency has  withdrawn  the credit  rating  required  to be
         maintained  with  respect to such Series  pursuant to Section 2.7 other
         than due to the Rating  Agency  ceasing to rate  tax-exempt  closed-end
         management  investment  companies  generally  and  such  withdrawal  is
         continuing;  (D) a Ratings Event (as defined below) has occurred and is
         continuing  with  respect to such  Series;  or (E) (i) a court or other
         applicable  governmental  authority has made a final determination that
         for  federal tax  purposes  the VMTP Shares do not qualify as equity in
         the Fund and (ii) such determination  results from an act or failure to
         act on the part of the Fund (a "Tax Event"). A "Ratings Event" shall be
         deemed to exist with  respect to any Series of VMTP  Shares at any time
         such VMTP Shares have a long-term  credit rating from at least one-half
         of the Rating Agencies designated at such time that is Below Investment
         Grade.  For the avoidance of doubt,  no  determination  by any court or
         other applicable  governmental authority that requires the Fund to make
         an Additional  Amount Payment in respect of a Taxable  Allocation shall
         be deemed to be a Tax Event hereunder.

                                    (ii)    Subject  to the cure  provisions  of
                  Section  2.2(g)(iii),  a  Dividend  Default  or  a  Redemption
                  Default on a Series of VMTP Shares  shall end on the  Business
                  Day on which,  by 12:00  noon,  New York City time,  an amount
                  equal to all unpaid  dividends  on such  Series and any unpaid
                  Redemption  Price on such  Series  shall  have been  deposited
                  irrevocably in trust in same-day funds with the Redemption and
                  Paying Agent.

                                    (iii)   No  Increased   Rate  Period  for  a
                  Series of VMTP Shares with respect to any Dividend  Default or
                  Redemption  Default  on such  Series  shall be  deemed to have
                  commenced  if the  amount of any  dividend  or any  Redemption
                  Price due in  respect of such  Series (if such  Default is not
                  solely due to the  willful  failure of the Fund) is  deposited
                  irrevocably in trust, in same-day  funds,  with the

                                       15

<PAGE>


                  Redemption and Paying Agent by 12:00 noon, New York City time,
                  on a Business  Day that is not later  than three (3)  Business
                  Days after the applicable  Dividend Payment Date or Redemption
                  Date for such  Series  with  respect  to  which  such  Default
                  occurred,  together with an amount equal to the Increased Rate
                  on such  Series  applied  to the  amount  and  period  of such
                  non-payment on such Series,  determined as provided in Section
                  2.2(a).

                  2.3      Liquidation Rights.

                           (a)      In the event of any liquidation, dissolution
         or  winding  up of  the  affairs  of the  Fund,  whether  voluntary  or
         involuntary,  the Holders of VMTP  Shares  shall be entitled to receive
         out  of  the  assets  of  the  Fund  available  for   distribution   to
         shareholders,  after  satisfying  claims of  creditors  but  before any
         distribution  or payment shall be made in respect of the Common Shares,
         a liquidation distribution equal to the Liquidation Preference for such
         shares,  plus  an  amount  equal  to all  unpaid  dividends  and  other
         distributions  on such shares  accumulated to (but  excluding) the date
         fixed for such  distribution  or payment on such shares (whether or not
         earned or declared by the Fund, but excluding  interest  thereon),  and
         such  Holders  shall be  entitled  to no further  participation  in any
         distribution  or  payment  in  connection  with any  such  liquidation,
         dissolution or winding up.

                           (b)      lf,  upon any  liquidation,  dissolution  or
         winding  up  of  the  affairs  of  the  Fund,   whether   voluntary  or
         involuntary,  the assets of the Fund available for  distribution  among
         the Holders of all  Outstanding  VMTP Shares and any other  outstanding
         Preferred  Shares  ranking on a parity  with the VMTP  Shares  shall be
         insufficient  to permit  the  payment  in full to such  Holders  of the
         Liquidation  Preference of such VMTP Shares plus accumulated and unpaid
         dividends and other distributions on such shares as provided in Section
         2.3(a)  above and the  amounts  due upon  liquidation  with  respect to
         shares of such other Preferred Shares, then such available assets shall
         be distributed among the Holders of such VMTP Shares and shares of such
         other  Preferred   Shares  ratably  in  proportion  to  the  respective
         preferential  liquidation  amounts  to  which  they  are  entitled.  In
         connection  with any  liquidation,  dissolution  or  winding  up of the
         affairs of the Fund, whether voluntary or involuntary, unless and until
         the  Liquidation   Preference  on  each  Outstanding  VMTP  Share  plus
         accumulated and unpaid dividends and other distributions on such shares
         as  provided  in  Section  2.3(a)  above  have been paid in full to the
         Holders of such shares,  no dividends,  distributions or other payments
         will be made on, and no  redemption,  purchase or other  acquisition by
         the Fund will be made by the Fund in respect of, the Common Shares.

                           (c)      Neither the sale of all or substantially all
         of the property or business of the Fund, nor the merger,  consolidation
         or  reorganization  of the Fund  into or with  any  other  business  or
         statutory  trust,   corporation  or  other  entity,   nor  the  merger,
         consolidation  or  reorganization  of any other  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 purpose of this Section 2.3.

                                       16

<PAGE>


                  2.4      Coverage & Leverage Tests.

                           (a)      Asset Coverage  Requirement.  For so long as
         any VMTP  Shares of any  Series  are  Outstanding,  the Fund shall have
         Asset  Coverage  of at least 225% as of the close of  business  on each
         Business Day. If the Fund shall fail to maintain such Asset Coverage as
         of any time as of which such compliance is required to be determined as
         aforesaid,  the  provisions of Section  2.5(b)(i)  shall be applicable,
         which  provisions to the extent complied with shall constitute the sole
         remedy for the Fund's  failure to comply  with the  provisions  of this
         Section 2.4(a).

                           (b)      Calculation of Asset Coverage.  For purposes
         of  determining   whether  the   requirements  of  Section  2.4(a)  are
         satisfied,  (i) no VMTP Shares of any Series or other Preferred  Shares
         shall be deemed  to be  Outstanding  for  purposes  of any  computation
         required  by Section  2.4(a)  if,  prior to or  concurrently  with such
         determination,  sufficient Deposit Securities or other sufficient funds
         (in accordance with the terms of such Series or other Preferred Shares)
         to pay the full  redemption  price for such  Series or other  Preferred
         Shares  (or  the  portion  thereof  to be  redeemed)  shall  have  been
         deposited  in trust  with the  paying  agent  for such  Series or other
         Preferred Shares and the requisite notice of redemption for such Series
         or other Preferred Shares (or the portion thereof to be redeemed) shall
         have been given,  and (ii) the Deposit  Securities or other  sufficient
         funds that  shall have been so  deposited  with the  applicable  paying
         agent shall not be included as assets of the Fund for  purposes of such
         computation.

                           (c)      Effective Leverage Ratio Requirement. For so
         long as VMTP  Shares  of any  Series  are  Outstanding,  the  Effective
         Leverage  Ratio shall not exceed 45% as of the close of business on any
         Business Day; provided, however, in the event that the Fund's Effective
         Leverage  Ratio  exceeds  45% on any  Business  Day solely by reason of
         fluctuations  in the market value of the Fund's  portfolio  securities,
         the Effective Leverage Ratio shall not exceed 46% on such Business Day.
         If the Effective Leverage Ratio shall exceed the applicable  percentage
         provided  in the  preceding  sentence  as of any time as of which  such
         compliance is required to be determined as aforesaid, the provisions of
         Section 2.5(b)(ii) shall be applicable,  which provisions to the extent
         complied with shall  constitute  the sole remedy for the Fund's failure
         to comply with the provisions of this Section 2.4(c).

                           (d)      Calculation of Effective Leverage Ratio. For
         purposes of determining  whether the requirements of Section 2.4(c) are
         satisfied,  the "Effective  Leverage  Ratio" on any date shall mean the
         quotient of:

                                    (i)     The   sum  of  (A)   the   aggregate
                  liquidation  preference of the Fund's "senior  securities" (as
                  that  term is  defined  in the 1940  Act)  that are  stock for
                  purposes of the 1940 Act, excluding,  without duplication, (1)
                  any such  senior  securities  for which the Fund has  issued a
                  notice  of  redemption   and  either  has  delivered   Deposit
                  Securities or sufficient  funds (in accordance  with the terms
                  of such senior securities) to the paying agent for such senior
                  securities  or otherwise  has adequate  Deposit  Securities or
                  sufficient  funds on hand for the  purpose of such  redemption
                  and (2) any such  senior  securities  that are to be  redeemed
                  with

                                       17

<PAGE>


                  net proceeds  from the sale of the VMTP Shares,  for which the
                  Fund has delivered Deposit  Securities or sufficient funds (in
                  accordance  with the terms of such senior  securities)  to the
                  paying  agent for such  senior  securities  or  otherwise  has
                  adequate  Deposit  Securities or sufficient  funds on hand for
                  the purpose of such  redemption;  (B) the aggregate  principal
                  amount  of  the   Fund's   "senior   securities   representing
                  indebtedness"  (as that term is defined in the 1940 Act);  and
                  (C) the aggregate principal amount of floating rate securities
                  not  owned  by the  Fund  that  correspond  to the  associated
                  inverse floating rate securities owned by the Fund; divided by

                                    (ii)    The sum of (A) the  Market  Value of
                  the Fund's total assets  (including  amounts  attributable  to
                  senior  securities,  but  excluding  any assets  consisting of
                  Deposit  Securities or funds referred to in clauses (A)(1) and
                  (A)(2) of  Section  2.4(d)(i)  above),  less the amount of the
                  Fund's accrued  liabilities  (other than  liabilities  for the
                  aggregate  principal amount of senior securities  representing
                  indebtedness,  including  floating rate securities),  and (B),
                  the aggregate principal amount of floating rate securities not
                  owned by the Fund that  correspond to the  associated  inverse
                  floating rate securities owned by the Fund.

                  2.5      Redemption.  Each  Series  of VMTP  Shares  shall  be
subject to redemption by the Fund as provided below:

                           (a)      Term  Redemption.  The Fund shall redeem all
         VMTP Shares of a Series on the Term Redemption Date for such Series, at
         a price per share equal to the Liquidation Preference per share of such
         Series  plus  an  amount  equal  to  all  unpaid  dividends  and  other
         distributions  on  such  share  of such  Series  accumulated  from  and
         including  the  Date of  Original  Issue  to (but  excluding)  the Term
         Redemption  Date for such Series  (whether or not earned or declared by
         the  Fund,  but  excluding  interest  thereon)  (the  "Term  Redemption
         Price").

                           (b)      Asset Coverage and Effective  Leverage Ratio
         Mandatory Redemption.

                                    (i)     Asset Coverage Mandatory Redemption.
                  (A) If the  Fund  fails to  comply  with  the  Asset  Coverage
                  requirement as provided in Section 2.4(a) as of any time as of
                  which  such   compliance  is  required  to  be  determined  in
                  accordance  with Section  2.4(a) and such failure is not cured
                  as of the Asset  Coverage  Cure Date other than as a result of
                  the redemption  required by this Section  2.5(b)(i),  the Fund
                  shall,   to  the  extent   permitted   by  the  1940  Act  and
                  Massachusetts  law, by the close of  business on the  Business
                  Day next  following  such Asset  Coverage  Cure Date,  cause a
                  notice of redemption  to be issued,  and cause to be deposited
                  Deposit Securities or other sufficient funds in trust with the
                  Redemption and Paying Agent or other applicable  paying agent,
                  in each case in  accordance  with the  terms of the  Preferred
                  Shares to be  redeemed,  for the  redemption  of a  sufficient
                  number of  Preferred  Shares,  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 VMTP Shares of
                  any Series,  to enable it to meet the  requirements of Section
                  2.5(b)(i)(B).  In the event  that any VMTP

                                       18

<PAGE>


                  Shares  of a  Series  then  Outstanding  are  to  be  redeemed
                  pursuant to this Section 2.5(b)(i), the Fund shall redeem such
                  shares  at  a  price  per  share  equal  to  the   Liquidation
                  Preference  per share of such Series  plus an amount  equal to
                  all unpaid dividends and other  distributions on such share of
                  such  Series  accumulated  from  and  including  the  Date  of
                  Original  Issue to (but  excluding)  the date  fixed  for such
                  redemption by the Board of Trustees  (whether or not earned or
                  declared by the Fund,  but  excluding  interest  thereon) (the
                  "Mandatory Redemption Price").

                                            (B)      On the Redemption  Date for
                           a redemption  contemplated  by Section  2.5(b)(i)(A),
                           the Fund  shall  redeem at the  Mandatory  Redemption
                           Price, out of funds legally available therefor,  such
                           number of Preferred  Shares (which may include at the
                           sole option of the Fund any number or  proportion  of
                           VMTP  Shares of any  Series) as shall be equal to the
                           lesser of (x) the minimum number of Preferred Shares,
                           the  redemption of which,  if deemed to have occurred
                           immediately  prior to the  opening of business on the
                           Asset  Coverage  Cure Date,  would result in the Fund
                           having  Asset  Coverage on such Asset  Coverage  Cure
                           Date of at least  225%  (provided,  however,  that if
                           there is no such  minimum  number of VMTP  Shares and
                           other  Preferred  Shares the redemption or retirement
                           of which would have such result,  all VMTP Shares and
                           other  Preferred  Shares  then  outstanding  shall be
                           redeemed),  and (y) the maximum  number of  Preferred
                           Shares that can be redeemed out of funds  expected to
                           be legally available  therefor in accordance with the
                           Declaration and applicable law.  Notwithstanding  the
                           foregoing,  in the event  that  Preferred  Shares are
                           redeemed pursuant to this Section 2.5(b)(i), the Fund
                           may at its  sole  option,  but  is not  required  to,
                           redeem a  sufficient  number  of VMTP  Shares  of any
                           Series pursuant to this Section  2.5(b)(i) that, when
                           aggregated  with other  Preferred  Shares redeemed by
                           the Fund,  would  result,  if deemed to have occurred
                           immediately  prior to the  opening of business on the
                           Asset  Coverage  Cure Date,  in the Fund having Asset
                           Coverage  on such Asset  Coverage  Cure Date of up to
                           and  including  250%.  The  Fund  shall  effect  such
                           redemption  on the date  fixed by the Fund  therefor,
                           which  date  shall  not be  later  than  thirty  (30)
                           calendar  days after such 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 VMTP  Shares  and other  Preferred  Shares
                           which have been designated to be redeemed or the Fund
                           otherwise is unable to effect such  redemption  on or
                           prior to thirty (30)  calendar  days after such Asset
                           Coverage Cure Date,  the Fund shall redeem those VMTP
                           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.  If fewer than
                           all of the Outstanding VMTP Shares of a Series are to
                           be redeemed pursuant to this Section  2.5(b)(i),  the
                           number of VMTP  Shares of such  Series to be redeemed
                           shall be redeemed (A) pro rata among the  Outstanding
                           shares  of  such  Series,  (B) by lot or (C) in  such
                           other manner as the Board of Trustees  may  determine
                           to be fair and equitable.

                                       19

<PAGE>


                                    (ii)    Effective  Leverage Ratio  Mandatory
                  Redemption.  (A) If (x) the  Fund  fails  to  comply  with the
                  Effective  Leverage  Ratio  requirement as provided in Section
                  2.4(c) as of any time as of which such  compliance is required
                  to be determined in accordance with Section 2.4(c) or (y) with
                  respect to the initial  Series of VMTP Shares issued  pursuant
                  to this Statement, the Fund fails to comply with the Effective
                  Leverage Ratio requirement  determined as set forth in Section
                  6.13 of the Purchase  Agreement  applicable  to such Series if
                  such  requirement  shall still be in effect in accordance with
                  the terms of such Purchase  Agreement,  and, in any such case,
                  such  failure is not cured as of the close of  business on the
                  date that is seven Business Days following the Business Day on
                  which such  non-compliance is first determined (the "Effective
                  Leverage  Ratio  Cure  Date")  other  than as a result  of the
                  redemption required by this Section 2.5(b)(ii), the Fund shall
                  not later than the close of business on the  Business Day next
                  following  the  Effective  Leverage  Ratio Cure Date cause the
                  Effective  Leverage Ratio  (determined in accordance  with the
                  requirements  applicable to the determination of the Effective
                  Leverage  Ratio under this  Statement,  and under the Appendix
                  and  Purchase  Agreement  for any  applicable  Series  of VMTP
                  Shares in respect  of which the  Effective  Leverage  Ratio is
                  being  determined) to not exceed the Effective  Leverage Ratio
                  required  under Section 2.4(c)  (without  giving effect to the
                  parenthetical  provision  in the  first  sentence  of  Section
                  2.4(c)) as so  determined,  by (x)  engaging  in  transactions
                  involving  or relating to the  floating  rate  securities  not
                  owned by the Fund and/or the inverse  floating rate securities
                  owned by the Fund, including the purchase,  sale or retirement
                  thereof,  (y) to the  extent  permitted  by the  1940  Act and
                  Massachusetts  law, cause a notice of redemption to be issued,
                  and  cause  to  be  deposited  Deposit   Securities  or  other
                  sufficient funds in trust with the Redemption and Paying Agent
                  or other  applicable  paying agent, in each case in accordance
                  with the terms of the Preferred Shares to be redeemed, for the
                  redemption of a sufficient number of Preferred  Shares,  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 VMTP Shares of any Series,  or (z)  engaging in
                  any combination of the actions contemplated by clauses (x) and
                  (y) of this  sentence of Section  2.5(b)(ii)(A).  In the event
                  that any VMTP Shares of a Series are to be  redeemed  pursuant
                  to clause  (y) of the  penultimate  sentence  of this  Section
                  2.5(b)(ii)(A),  the Fund shall  redeem  such VMTP  Shares at a
                  price per VMTP Share equal to the Mandatory Redemption Price.

                                            (B)      On the Redemption  Date for
                           a  redemption  contemplated  by  clause  (y)  of  the
                           penultimate  sentence of Section  2.5(b)(ii)(A),  the
                           Fund shall not redeem more than the maximum number of
                           Preferred  Shares that can be  redeemed  out of funds
                           expected   to  be  legally   available   therefor  in
                           accordance  with the  Declaration and applicable law.
                           If the Fund is unable to redeem the  required  number
                           of VMTP Shares and other Preferred  Shares which have
                           been  designated  to be redeemed in  accordance  with
                           clause  (y) of the  penultimate  sentence  of Section
                           2.5(b)(ii)(A)  due to the  unavailability  of legally
                           available  funds,  the Fund shall  redeem  those VMTP
                           Shares and other Preferred Shares

                                       20

<PAGE>


                           which  it  was  unable  to  redeem  on  the  earliest
                           practicable  date on which it is able to effect  such
                           redemption. If fewer than all of the Outstanding VMTP
                           Shares of a Series  are to be  redeemed  pursuant  to
                           clause  (y) of the  penultimate  sentence  of Section
                           2.5(b)(ii)(A),  the  number  of VMTP  Shares  of such
                           Series to be redeemed  shall be redeemed (A) pro rata
                           among the Outstanding  shares of such Series,  (B) by
                           lot or (C) in  such  other  manner  as the  Board  of
                           Trustees may determine to be fair and equitable.

                           (c)      Optional Redemption.

                                    (i)     Subject to the provisions of Section
                  2.5(c)(ii), the Fund may at its option on any Business Day (an
                  "Optional  Redemption  Date")  redeem in whole or from time to
                  time in part the Outstanding  VMTP Shares of any Series,  at a
                  redemption  price per VMTP  Share  (the  "Optional  Redemption
                  Price") equal to (x) the Liquidation Preference per VMTP Share
                  of  such  Series  plus  (y) an  amount  equal  to  all  unpaid
                  dividends and other  distributions  on such VMTP Share of such
                  Series  accumulated  from and  including  the Date of Original
                  Issue to (but excluding) the Optional Redemption Date (whether
                  or not earned or declared by the Fund, but excluding  interest
                  thereon)  plus (z) the Optional  Redemption  Premium per share
                  (if any) that is applicable to an optional  redemption of VMTP
                  Shares  of such  Series  that  is  effected  on such  Optional
                  Redemption Date as set forth in the Appendix  relating to such
                  Series.

                                    (ii)    If fewer than all of the outstanding
                  VMTP Shares of a Series are to be redeemed pursuant to Section
                  2.5(c)(i),  the shares of such Series to be redeemed  shall be
                  selected either (A) pro rata among the Holders of such Series,
                  (B) by  lot  or (C) in  such  other  manner  as the  Board  of
                  Trustees may  determine to be fair and  equitable.  Subject to
                  the provisions of this Statement and applicable law, the Board
                  of  Trustees  will  have  the  full  power  and  authority  to
                  prescribe the terms and conditions upon which VMTP Shares will
                  be redeemed pursuant to this Section 2.5(c) from time to time.

                                    (iii)   The Fund may not on any date deliver
                  a Notice of Redemption  pursuant to Section  2.5(d) in respect
                  of a redemption  contemplated to be effected  pursuant to this
                  Section  2.5(c)  unless  on such  date the Fund has  available
                  Deposit   Securities   for  the   Optional   Redemption   Date
                  contemplated  by such  Notice  of  Redemption  having a Market
                  Value  not less  than the  amount  (including  any  applicable
                  premium)  due to  Holders  of VMTP  Shares  by  reason  of the
                  redemption  of such VMTP  Shares on such  Optional  Redemption
                  Date.

                           (d)      Procedures for Redemption.

                                    (i)     If the Fund  shall  determine  or be
                  required  to  redeem,  in whole or in part,  VMTP  Shares of a
                  Series pursuant to Section 2.5(a),  (b) or (c), the Fund shall
                  deliver a notice of redemption  (the "Notice of  Redemption"),
                  by overnight delivery, by first class mail, postage prepaid or
                  by  Electronic  Means  to

                                       21

<PAGE>


                  Holders  thereof,  or request the Redemption and Paying Agent,
                  on  behalf  of  the  Fund,  to  promptly  do so  by  overnight
                  delivery,   by  first  class  mail,   postage  prepaid  or  by
                  Electronic Means. A Notice of Redemption shall be provided not
                  more than  forty-five  (45)  calendar  days  prior to the date
                  fixed  for  redemption  in  such  Notice  of  Redemption  (the
                  "Redemption  Date").  Each  such  Notice of  Redemption  shall
                  state:  (A) the Redemption  Date; (B) the Series and number of
                  VMTP  Shares to be  redeemed;  (C) the CUSIP  number  for VMTP
                  Shares of such Series; (D) the applicable  Redemption Price on
                  a per  share  basis;  (E) if  applicable,  the place or places
                  where the certificate(s) for such 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;  (F) that  dividends on the
                  VMTP Shares to be redeemed will cease to  accumulate  from and
                  after such  Redemption  Date;  and (G) the  provisions of this
                  Statement  under which such  redemption is made. If fewer than
                  all VMTP  Shares  held by any Holder are to be  redeemed,  the
                  Notice of  Redemption  delivered  to such  Holder  shall  also
                  specify  the number of VMTP  Shares to be  redeemed  from such
                  Holder  and, if  applicable,  the method of  determining  such
                  number.  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.

                                    (ii)    If the Fund  shall  give a Notice of
                  Redemption, then at any time from and after the giving of such
                  Notice of  Redemption  and prior to 12:00 noon,  New York City
                  time,  on the  Redemption  Date  (so  long  as any  conditions
                  precedent  to such  redemption  have been met or waived by the
                  Fund),  the Fund shall (A)  deposit  with the  Redemption  and
                  Paying Agent  Deposit  Securities  having an aggregate  Market
                  Value on the date thereof no less than the Redemption Price of
                  the VMTP Shares to be redeemed on the Redemption  Date and (B)
                  give the Redemption and Paying Agent irrevocable  instructions
                  and authority to pay the  applicable  Redemption  Price to the
                  Holders  of the  VMTP  Shares  called  for  redemption  on the
                  Redemption Date. The Fund may direct the Redemption and Paying
                  Agent with respect to the investment of any Deposit Securities
                  consisting of cash so deposited prior to the Redemption  Date,
                  provided  that the  proceeds of any such  investment  shall be
                  available at the opening of business on the Redemption Date as
                  same day funds.  Notwithstanding  the provisions of clause (A)
                  of the preceding sentence,  if the Redemption Date is the Term
                  Redemption  Date,  then such  deposit  of  Deposit  Securities
                  (which  may come in whole or in part from the Term  Redemption
                  Liquidity  Account)  shall be made no later than  fifteen (15)
                  calendar days prior to the Term Redemption Date.

                                    (iii)   Upon the date of the deposit of such
                  Deposit  Securities,  all  rights of the  Holders  of the VMTP
                  Shares so called  for  redemption  shall  cease and  terminate
                  except  the  right  of the  Holders  thereof  to  receive  the
                  Redemption  Price

                                       22

<PAGE>


                  thereof  and such  VMTP  Shares  shall  no  longer  be  deemed
                  Outstanding  for any  purpose  whatsoever  (other than (A) the
                  transfer  thereof prior to the applicable  Redemption Date and
                  (B) the  accumulation of dividends  thereon in accordance with
                  the  terms  hereof  up  to  (but   excluding)  the  applicable
                  Redemption   Date,   which   accumulated   dividends,   unless
                  previously  declared  and  paid as  contemplated  by the  last
                  sentence of Section 2.5(d)(vi) below, shall be payable only as
                  part of the  applicable  Redemption  Price  on the  Redemption
                  Date).  The Fund shall be entitled to receive,  promptly after
                  the Redemption  Date, any Deposit  Securities in excess of the
                  aggregate  Redemption  Price of the  VMTP  Shares  called  for
                  redemption on the Redemption  Date. Any Deposit  Securities so
                  deposited that are unclaimed at the end of three hundred sixty
                  five (365)  calendar days from the Redemption  Date shall,  to
                  the  extent  permitted  by law,  be repaid to the Fund,  after
                  which the Holders of the VMTP Shares so called for  redemption
                  shall  look  only to the Fund for  payment  of the  Redemption
                  Price  thereof.  The Fund shall be entitled  to receive,  from
                  time to time after the  Redemption  Date,  any interest on the
                  Deposit Securities so deposited.

                                    (iv)    On or  after  the  Redemption  Date,
                  each Holder of VMTP Shares in certificated  form (if any) that
                  are subject to redemption  shall surrender the  certificate(s)
                  evidencing   such  VMTP  Shares  to  the  Fund  at  the  place
                  designated  in the  Notice of  Redemption  and  shall  then be
                  entitled to receive the Redemption Price for such VMTP Shares,
                  without  interest,  and, in the case of a redemption  of fewer
                  than all the VMTP Shares represented by such certificate(s), a
                  new  certificate  representing  the VMTP  Shares that were not
                  redeemed.

                                    (v)     Notwithstanding the other provisions
                  of this Section 2.5, except as otherwise  required by law, the
                  Fund  shall not  redeem  any VMTP  Shares  or other  series of
                  Preferred Shares ranking on a parity with the VMTP Shares with
                  respect  to  dividends  and  other  distributions  unless  all
                  accumulated and unpaid  dividends and other  distributions  on
                  all  Outstanding  VMTP  Shares and  shares of other  series of
                  Preferred Shares ranking on a parity with the VMTP Shares with
                  respect  to  dividends   and  other   distributions   for  all
                  applicable  past  dividend  periods  (whether or not earned or
                  declared   by  the   Fund)   (x)   shall   have  been  or  are
                  contemporaneously   paid  or  (y)  shall   have  been  or  are
                  contemporaneously   declared   and   Deposit   Securities   or
                  sufficient  funds (in  accordance  with the terms of such VMTP
                  Shares or other  Preferred  Shares)  for the  payment  of such
                  dividends  and  other  distributions  shall  have  been or are
                  contemporaneously  deposited  with the  Redemption  and Paying
                  Agent or other applicable paying agent for such VMTP Shares or
                  other  Preferred  Shares in accordance  with the terms of such
                  VMTP Shares or other Preferred Shares, provided, however, that
                  the foregoing shall not prevent the purchase or acquisition of
                  Outstanding  VMTP  Shares  pursuant  to  an  otherwise  lawful
                  purchase or  exchange  offer made on the same terms to Holders
                  of all  Outstanding  VMTP Shares and any such other  series of
                  Preferred   Shares  for  which  all   accumulated  and  unpaid
                  dividends and other distributions have not been paid.

                                       23

<PAGE>


                                    (vi)    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.  In the case of any  redemption
                  pursuant to Section  2.5(c),  no  Redemption  Default shall be
                  deemed to have  occurred  if the Fund shall fail to deposit in
                  trust  with the  Redemption  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 a Notice
                  of  Redemption  has been  provided  with  respect  to any VMTP
                  Shares, dividends may be declared and paid on such VMTP Shares
                  in accordance  with their terms if Deposit  Securities for the
                  payment of the Redemption  Price of such VMTP Shares shall not
                  have been  deposited in trust with the  Redemption  and Paying
                  Agent for that purpose.

                           (e)      Redemption  and  Paying  Agent as Trustee of
         Redemption Payments by Fund. All Deposit Securities  transferred to the
         Redemption and Paying Agent for payment of the Redemption Price of VMTP
         Shares called for  redemption  shall be held in trust by the Redemption
         and Paying  Agent for the  benefit  of Holders of VMTP  Shares so to be
         redeemed until paid to such Holders in accordance with the terms hereof
         or returned to the Fund in  accordance  with the  provisions of Section
         2.5(d)(iii) above.

                           (f)      Compliance With Applicable Law. In effecting
         any  redemption  pursuant to this  Section  2.5, 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.

                           (g)      Modification   of   Redemption   Procedures.
         Notwithstanding the foregoing  provisions of this Section 2.5, the Fund
         may, in its sole discretion and without a shareholder  vote, modify the
         procedures set forth above with respect to  notification  of redemption
         for  the  VMTP  Shares,   provided  that  such  modification  does  not
         materially and adversely affect the Holders of the VMTP Shares or cause
         the  Fund to  violate  any  applicable  law,  rule or  regulation;  and
         provided further that no such  modification  shall in any way alter the
         rights or  obligations  of the  Redemption and Paying Agent without its
         prior consent.

                  2.6      Voting Rights.

                           (a)      One Vote Per VMTP Share. Except as otherwise
         provided in the  Declaration or as otherwise  required by law, (i) each
         Holder of VMTP Shares shall be entitled to one vote for each VMTP 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  Outstanding  VMTP  Shares,  and  Common  Shares  shall  vote
         together  as a single  class;  provided,  however,  that the holders of
         outstanding Preferred Shares,  including

                                       24

<PAGE>


         Outstanding  VMTP  Shares,  shall  be  entitled,  as a  class,  to  the
         exclusion of the Holders of all other  securities  and Common Shares of
         the Fund,  to elect two  trustees of the Fund at all times.  Subject to
         Section 2.6(b),  the Holders of outstanding Common Shares and Preferred
         Shares, including VMTP 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 clauses
                  (A) or (B) of this Section  2.6(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 VMTP Shares, would constitute a
                  majority  of the Board of  Trustees  as so  increased  by such
                  smallest  number;   and  the  Holders  of  Preferred   Shares,
                  including VMTP 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  capital  stock 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  for  any
                           outstanding  share of Preferred  Shares including any
                           Outstanding   VMTP   Share,   accumulated   dividends
                           (whether   or  not  earned  or   declared)   on  such
                           outstanding  share of  Preferred  Shares  equal to at
                           least two (2) full years'  dividends shall be due and
                           unpaid and  sufficient  cash or specified  securities
                           shall not have been deposited with the Redemption and
                           Paying Agent or other applicable paying agent for the
                           payment of such accumulated dividends; or

                                            (B)      if at any time  Holders  of
                           Preferred  Shares are  otherwise  entitled  under the
                           1940  Act  to  elect  a  majority  of  the  Board  of
                           Trustees.

                           Upon the  termination of a Voting Period,  the voting
         rights described in this Section 2.6(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 Section 2.6(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 Section 2.6(b)(i), the Fund shall call a special meeting of
                  such Holders and notify the Redemption and Paying Agent and/or
                  such  other  Person  as is  specified  in the  terms  of  such
                  Preferred  Shares to receive notice (i) by mailing or delivery
                  by  Electronic  Means or (ii) in such other manner and by such
                  other means as are  specified  in the terms of such  Preferred
                  Shares, a notice of such special meeting to such Holders, such
                  meeting to be held not less than ten (10) nor

                                       25

<PAGE>


                  more than  thirty  (30)  calendar  days  after the date of the
                  delivery by Electronic  Means or mailing of such notice or the
                  delivery of such  notice by such other means as are  described
                  above.  If the Fund fails to call such a special  meeting,  it
                  may be called at the expense of the Fund by any such Holder on
                  like notice.  The record date for  determining  the Holders of
                  Preferred  Shares  entitled  to  notice of and to vote at such
                  special  meeting  shall be the close of  business on the fifth
                  (5th)  Business Day  preceding  the calendar day on which such
                  notice is mailed or otherwise  delivered.  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 capital stock of the Fund),  shall be entitled to elect the
                  number  of  trustees  prescribed  in  Section  2.6(b)(i)  on a
                  one-vote-per-share basis.

                                    (iii)   Terms   of   Office   of    Existing
                  Trustees. The terms of office of the incumbent trustees of the
                  Fund at the time of a special  meeting of Holders of Preferred
                  Shares to elect additional trustees in accordance with Section
                  2.6(b)(i)  shall  not be  affected  by the  election  at  such
                  meeting by the Holders of VMTP  Shares and such other  Holders
                  of  Preferred  Shares of the number of trustees  that they are
                  entitled to elect,  and the trustees so elected by the Holders
                  of VMTP  Shares and such other  Holders of  Preferred  Shares,
                  together  with the two (2) trustees  elected by the Holders of
                  Preferred  Shares in accordance with Section 2.6(a) hereof and
                  the  remaining  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  additional  trustees  elected  by the  Holders  of the
                  Preferred   Shares   pursuant  to  Section   2.6(b)(i)   shall
                  terminate,   the  remaining   trustees  shall  constitute  the
                  trustees  of the Fund and the voting  rights of the Holders of
                  Preferred  Shares to elect  additional  trustees  pursuant  to
                  Section  2.6(b)(i)  shall cease,  subject to the provisions of
                  the last sentence of Section 2.6(b)(i).

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

                                    (i)     Certain     Amendments     Requiring
                  Approval of VMTP Shares.  Except as otherwise permitted by the
                  terms  of  this  Statement,  so long as any  VMTP  Shares  are
                  Outstanding,  the Fund shall not, without the affirmative vote
                  or consent of the  Holders of at least a majority  of the VMTP
                  Shares of all Series  Outstanding at the time, voting together
                  as a separate class,  amend, alter or repeal the provisions of
                  the Declaration,  including this Statement, whether by merger,
                  consolidation  or  otherwise,  so as to  adversely  affect any
                  preference,  right or power of such VMTP Shares or the Holders
                  thereof;   provided,   however,  that  (i)  a  change  in  the
                  capitalization  of the Fund in  accordance  with  Section  2.8
                  hereof shall not be considered to adversely  affect the rights
                  and  preferences of the

                                       26

<PAGE>


                  VMTP  Shares,  and (ii) a division  of a VMTP  Share  shall be
                  deemed to adversely affect such preferences,  rights or powers
                  only  if the  terms  of such  division  adversely  affect  the
                  Holders of the VMTP Shares. For purposes of the foregoing,  no
                  matter  shall be deemed to  adversely  affect any  preference,
                  right or power of a VMTP  Share of any  Series  or the  Holder
                  thereof  unless  such  matter  (i)  alters  or  abolishes  any
                  preferential right of such VMTP Share, or (ii) creates, alters
                  or abolishes  any right in respect of  redemption of such VMTP
                  Share  (other than as a result of a division of a VMTP Share).
                  So long as any VMTP  Shares  are  Outstanding,  the Fund shall
                  not, without the affirmative vote or consent of the Holders of
                  at least 66 2/3% of the VMTP Shares  Outstanding  at the time,
                  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.

                                    (ii)    1940  Act  Matters.  Unless a higher
                  percentage is provided for in the Declaration, the affirmative
                  vote of the Holders of at least "a majority of the outstanding
                  Preferred  Shares,"  including VMTP Shares  Outstanding at the
                  time,  voting as a separate  class,  shall be required  (A) to
                  approve any  conversion  of the Fund from a  closed-end  to an
                  open-end  investment  company,  (B) to  approve  any  plan  of
                  reorganization  (as  such  term  is  used  in  the  1940  Act)
                  adversely  affecting such shares,  or (C) to approve any other
                  action  requiring a vote of security holders of the Fund under
                  Section 13(a) of the 1940 Act. For purposes of the  foregoing,
                  the vote of a "majority of the outstanding  Preferred  Shares"
                  means the vote at an annual or special  meeting duly called of
                  (i)  sixty-seven  percent (67%) or more of such shares present
                  at a meeting,  if the Holders of more than fifty percent (50%)
                  of such  shares are  present or  represented  by proxy at such
                  meeting, or (ii) more than fifty percent (50%) of such shares,
                  whichever is less.

                                    (iii)   Certain     Amendments     Requiring
                  Approval  of  Specific  Series  of  VMTP  Shares.   Except  as
                  otherwise permitted by the terms of this Statement, so long as
                  any VMTP  Shares of a Series are  Outstanding,  the Fund shall
                  not, without the affirmative vote or consent of the Holders of
                  at  least a  majority  of the  VMTP  Shares  of  such  Series,
                  Outstanding at the time,  voting as a separate  class,  amend,
                  alter or repeal the  provisions  of the  Appendix  relating to
                  such Series, whether by merger, consolidation or otherwise, so
                  as to  adversely  affect  any  preference,  right or power set
                  forth in such  Appendix  of the VMTP  Shares of such Series or
                  the Holders thereof;  provided,  however, that (i) a change in
                  the  capitalization of the Fund in accordance with Section 2.8
                  hereof shall not be considered to adversely  affect the rights
                  and preferences of the VMTP Shares of such Series,  and (ii) a
                  division  of a VMTP  Share  shall be  deemed  to  affect  such
                  preferences,  rights  or  powers  only  if the  terms  of such
                  division  adversely  affect the  Holders of the VMTP Shares of
                  such  Series;  and  provided,   further,  that  no  amendment,
                  alteration or repeal of the  obligation of the Fund to (x) pay
                  the Term  Redemption  Price on the Term  Redemption Date for a
                  Series,  or (y) accumulate  dividends at the Dividend Rate (as
                  set  forth  in  this  Statement  and the  applicable  Appendix
                  hereto) for a Series shall be effected without,  in each case,
                  the prior

                                       27

<PAGE>


                  unanimous  vote or  consent of the  Holders of such  Series of
                  VMTP Shares. For purposes of the foregoing, no matter shall be
                  deemed to adversely affect any preference, right or power of a
                  VMTP  Share of a Series  or the  Holder  thereof  unless  such
                  matter (i) alters or abolishes any preferential  right of such
                  VMTP Share, or (ii) creates,  alters or abolishes any right in
                  respect of redemption of such VMTP Share.

                           (d)      Voting  Rights  Set  Forth  Herein  Are Sole
         Voting Rights. Unless otherwise required by law or the Declaration, the
         Holders  of  VMTP  Shares  shall  not  have  any  relative   rights  or
         preferences  or other  special  rights with respect to voting such VMTP
         Shares other than those  specifically set forth in this Section 2.6(d);
         provided,  however,  that nothing in this Statement  shall be deemed to
         preclude  or limit the right of the Fund (to the  extent  permitted  by
         applicable  law) to  contractually  agree with any Holder or Designated
         Owner of VMTP  Shares of any Series  that any action or inaction by the
         Fund shall require the consent or approval of such Holder or Designated
         Owner.

                           (e)      No  Cumulative  Voting.  The Holders of VMTP
         Shares shall have no rights to cumulative voting.

                           (f)      Voting for  Trustees  Sole Remedy for Fund's
         Failure to Declare or Pay  Dividends.  In the event that the Fund fails
         to declare  or pay any  dividends  on any Series of VMTP  Shares on the
         Dividend Payment Date therefor,  the exclusive remedy of the Holders of
         the VMTP Shares shall be the right to vote for trustees pursuant to the
         provisions of this Section 2.6(f). Nothing in this Section 2.6(f) shall
         be deemed to affect the  obligation of the Fund to  accumulate  and, if
         permitted by applicable law, the  Declaration  and this Statement,  pay
         dividends at the Increased Rate in the  circumstances  contemplated  by
         Section 2.2(g) hereof.

                           (g)      Holders  Entitled to Vote.  For  purposes of
         determining  any rights of the  Holders  of VMTP  Shares 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 of
         VMTP Shares  shall be entitled to vote any VMTP Share and no VMTP 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 the time of the actual  vote on the matter,  as the
         case may be, the requisite  Notice of  Redemption  with respect to such
         VMTP Share shall have been given in accordance  with this Statement and
         Deposit Securities for the payment of the Redemption Price of such VMTP
         Share shall have been deposited in trust with the Redemption and Paying
         Agent for that  purpose.  No VMTP Share held by the Fund shall 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.

                  2.7      Rating  Agencies.  The Fund  shall  use  commercially
reasonable  efforts  to cause the  Rating  Agencies  to issue  long-term  credit
ratings with respect to each Series of VMTP Shares for so long as such Series is
Outstanding.  The Fund shall use commercially  reasonable efforts to comply with
any applicable Rating Agency Guidelines.  If a Rating Agency shall cease to rate
the  securities  of  tax-exempt   closed-end   management  investment  companies
generally, the

                                       28

<PAGE>


Board of Trustees  shall  terminate the  designation  of such Rating Agency as a
Rating  Agency  hereunder.  The Board of  Trustees  may elect to  terminate  the
designation of any Rating Agency as a Rating Agency  hereunder with respect to a
Series  of  VMTP  Shares  so long  as  either  (i)  immediately  following  such
termination,  there would be at least two Rating  Agencies  with respect to such
Series or (ii) it replaces the  terminated  Rating Agency with another NRSRO and
provides  notice  thereof to the  Holders  of such  Series;  provided  that such
replacement  shall not occur unless such  replacement  Other Rating Agency shall
have at the time of such  replacement (i) published a rating for the VMTP Shares
of such Series and (ii) entered  into an agreement  with the Fund to continue to
publish such rating subject to the Rating  Agency's  customary  conditions.  The
Board of Trustees may also elect to designate  one or more other NRSROs as Other
Rating  Agencies  hereunder with respect to a Series of VMTP Shares by notice to
the  Holders of the VMTP  Shares.  The Rating  Agency  Guidelines  of any Rating
Agency  may be  amended  by such  Rating  Agency  without  the vote,  consent or
approval of the Fund,  the Board of Trustees or any Holder of Preferred  Shares,
including any VMTP Shares, or Common Shares.

                  2.8      Issuance of Additional  Preferred  Shares. So long as
any VMTP Shares are  Outstanding,  the Fund may,  without the vote or consent of
the Holders thereof,  authorize,  establish and create and issue and sell shares
of one or more series of a class of senior  securities of the Fund  representing
stock under Section 18 of the 1940 Act,  ranking on a parity with VMTP Shares as
to the payment of dividends  and the  distribution  of assets upon  dissolution,
liquidation  or the winding up of the  affairs of the Fund,  in addition to then
Outstanding Series of VMTP Shares,  including  additional Series of VMTP Shares,
in each case in accordance with  applicable  law,  provided that the Fund shall,
immediately  after giving effect to the issuance of such Preferred Shares and to
its receipt and application of the proceeds thereof, including to the redemption
of Preferred Shares with such proceeds,  have Asset Coverage  (calculated in the
same manner as is contemplated by Section 2.4(b) hereof) of at least 225%.

                  2.9      Status of Redeemed or Repurchased  VMTP Shares.  VMTP
Shares that at any time have been redeemed or purchased by the Fund shall, after
such  redemption  or  purchase,  have the  status  of  authorized  but  unissued
Preferred Shares.

                  2.10     Distributions  with  respect to Taxable  Allocations.
Whenever a Taxable Allocation is to be paid by the Fund with respect to the VMTP
Shares of a Series with respect to any Dividend  Period and either the Increased
Rate or the Maximum Rate is not in effect during such Dividend Period,  the Fund
shall  comply with one of clause (a),  clause (b) or clause (c) of this  Section
2.10:

                           (a)      The  Fund   may   provide   notice   to  the
         Redemption and Paying Agent prior to the  commencement  of any Dividend
         Period  for a  Series  of VMTP  Shares  of the  amount  of the  Taxable
         Allocation  that will be made in respect  of shares of such  Series for
         such Dividend Period (a "Notice of Taxable Allocation"). Such Notice of
         the Taxable  Allocation will state the amount of the dividends  payable
         in  respect  of each  VMTP  Share  of the  applicable  Series  for such
         Dividend  Period that will be treated as a Taxable  Allocation  and the
         adjustment  to the  Dividend  Rate for each  Rate  Period  (or  portion
         thereof)  included in such Dividend Period that will be required to pay
         the Additional  Amount Payment,  or Additional New York Amount Payment,
         as applicable,  in respect of the Taxable  Allocation paid on such VMTP
         Share for such Dividend Period. In lieu of

                                       29

<PAGE>


         adjusting the Dividend  Rate,  the Fund may make, in addition to and in
         conjunction  with the payment of regular  dividends  for such  Dividend
         Period,  a supplemental  distribution  in respect of each share of such
         series for such Dividend Period equal to the Additional  Amount Payment
         or  Additional  New York  Amount  Payment,  as  applicable,  payable in
         respect of the Taxable  Allocation paid on such share for such Dividend
         Period. The Fund will use commercially reasonable efforts to effect the
         distribution  of Taxable  Allocations in respect of VMTP Shares of each
         Series as provided in this Section  2.10(a),  and shall only effect the
         distribution of Taxable  Allocation  pursuant to Section 2.10(b) and/or
         Section  2.10(c)  if  such  commercially   reasonable  efforts  do  not
         reasonably  permit  the Fund to effect  the  distribution  of a Taxable
         Allocation as contemplated by this Section 2.10(a).

                           (b)      If the Fund  does not  provide  a Notice  of
         Taxable  Allocation  as provided in Section  2.10(a)  with respect to a
         Taxable  Allocation that is made in respect of VMTP Shares of a Series,
         the Fund may make one or more  supplemental  distributions on shares of
         such Series  equal to the amount of such Taxable  Allocation.  Any such
         supplemental  distribution in respect of VMTP Shares of a Series may be
         declared  and  paid  on any  date,  without  reference  to any  regular
         Dividend  Payment  Date,  to the  Holders,  or  New  York  Holders,  as
         applicable,  of shares  of such  Series  as their  names  appear on the
         registration books of the Fund on such date, not exceeding fifteen (15)
         calendar  days   preceding  the  payment  date  of  such   supplemental
         distribution, as may be fixed by the Board of Trustees.

                           (c)      If in  connection  with a redemption of VMTP
         Shares, the Fund makes a Taxable Allocation without having either given
         advance notice thereof  pursuant to Section 2.10(a) or made one or more
         supplemental  distributions pursuant to Section 2.10(b), the Fund shall
         direct the  Redemption  and Paying Agent to send an  Additional  Amount
         Payment or  Additional  New York  Amount  Payment,  as  applicable,  in
         respect of such  Taxable  Allocation  to each  Holder and each New York
         Holder,  as applicable,  of such shares at such person's address as the
         same appears or last appeared on the record books of the Fund.

                           (d)      The  Fund  shall  not  be  required  to  pay
         Additional  Amount Payments or Additional New York Amount Payments,  as
         applicable,  with  respect to VMTP Shares of any Series with respect to
         any net capital gain or other taxable income determined by the Internal
         Revenue  Service to be allocable in a manner  different from the manner
         used by the Fund.

                           (e)      With  respect  to each  Holder  and each New
         York Holder, the Fund shall only be required,  pursuant to this Section
         2.10, to pay either an Additional  Amount  Payment or an Additional New
         York Amount Payment, but not both.

                           (f)      No  Additional  New York  Amount  Payment as
         described  in this  Section 2.10 shall apply or be payable with respect
         to any VMTP Shares that are being  registered  and sold  pursuant to an
         effective  registration  statement  under the  Securities Act or to any
         subsequent transfer of such registered VMTP Shares.

                                       30

<PAGE>


                  2.11     Term  Redemption   Liquidity  Account  and  Liquidity
Requirement.


                           (a)      On or prior to the Liquidity Account Initial
         Date with  respect to any Series of VMTP  Shares,  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  (the  "Term
         Redemption  Liquidity  Account")  Liquidity Account  Investments with a
         Market  Value equal to at least One  Hundred Ten Percent  (110%) of the
         Term  Redemption  Amount  with  respect  to  such  Series.   The  "Term
         Redemption  Amount" for any Series of VMTP Shares shall be equal to the
         Term  Redemption  Price to be paid on the Term Redemption Date for such
         Series,  based on the number of shares of such Series then Outstanding,
         assuming for this  purpose  that the  Dividend  Rate for such Series in
         effect at the time of the  creation  of the Term  Redemption  Liquidity
         Account for such Series  will be the  Dividend  Rate in effect for such
         Series until the Term Redemption Date for such Series.  If, on any date
         after the Liquidity Account Initial Date, the aggregate Market Value of
         the  Liquidity  Account  Investments  included  in the Term  Redemption
         Liquidity  Account  for a  Series  of VMTP  Shares  as of the  close of
         business  on any  Business  Day is less than One  Hundred  Ten  Percent
         (110%) of the Term Redemption Amount with respect to such Series,  then
         the Fund shall  cause the  Custodian  and the  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 Term  Redemption
         Liquidity  Account for such Series is at least equal to One Hundred Ten
         Percent  (110%) of the Term  Redemption  Amount  with  respect  to such
         Series  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 with respect to a Series of VMTP Shares,
         the Adviser,  on behalf of the Fund,  shall be entitled to instruct the
         Custodian on any date to release any Liquidity Account Investments from
         such  segregation and to substitute  therefor other  Liquidity  Account
         Investments,  so long as (i)  the  assets  of the  Fund  segregated  as
         Liquidity  Account  Investments  at the close of  business on such date
         have a Market Value equal to at least One Hundred Ten Percent (110%) of
         the Term  Redemption  Amount  with  respect to such Series and (ii) 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 at
         least the Liquidity  Requirement (if any) determined in accordance with
         Section  2.11(b)  below with respect to such Series 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 Term
         Redemption  Liquidity Account for any Series of VMTP 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.

                           (b)      The Market  Value of the Deposit  Securities
         held in the Term  Redemption  Liquidity  Account  for a Series  of VMTP
         Shares,  from and after the 15th day of the calendar  month (or if such
         day is not a Business  Day, the next  succeeding  Business Day) that is
         the number of months  preceding  the  calendar  month in which the Term
         Redemption  Date for such Series  occurs,  in each case as specified in
         the table set forth below, shall not be less than the percentage of the
         Term  Redemption  Amount for such

                                       31

<PAGE>


         Series set forth below  opposite such number of months (the  "Liquidity
         Requirement"),  but in all cases  subject to the  provisions of Section
         2.11(c) below:

         ----------------------------------------------------------------------
                Number of Months                 Value of Deposit Securities
               Preceding Month of                   as Percentage of Term
              Term Redemption Date:                   Redemption Amount
         ----------------------------------------------------------------------
                        5                                    20%
         ----------------------------------------------------------------------
                        4                                    40%
         ----------------------------------------------------------------------
                        3                                    60%
         ----------------------------------------------------------------------
                        2                                    80%
         ----------------------------------------------------------------------
                        1                                   100%
         ----------------------------------------------------------------------

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

                           (d)      The Deposit Securities  included in the Term
         Redemption Liquidity Account for a Series of VMTP Shares may be applied
         by the Fund, in its discretion,  towards payment of the Term Redemption
         Price for such  Series as  contemplated  by  Section  2.5(d).  Upon the
         deposit by the Fund with the  Redemption  and  Paying  Agent of Deposit
         Securities having an initial combined Market Value sufficient to effect
         the  redemption  of the VMTP Shares of a Series on the Term  Redemption
         Date for  such  Series  in  accordance  with  Section  2.5(d)(ii),  the
         requirement  of the  Fund to  maintain  the Term  Redemption  Liquidity
         Account as  contemplated  by this Section 2.11 shall lapse and be of no
         further force and effect.

                  2.12     Global  Certificate.  Prior to the  commencement of a
Voting Period,  (i) all VMTP Shares of any Series  Outstanding from time to time
shall be represented by one global certificate for such Series registered in the
name of the  Securities  Depository or its nominee and (ii) no  registration  of
transfer of shares of such  Series of VMTP Shares  shall be made on the books of
the Fund to any Person other than the  Securities  Depository  or its nominee or
transferee.  The foregoing  restriction  on  registration  of transfer  shall be
conspicuously  noted on the  face or back of the  global  certificates  for such
Series of VMTP Shares.

                  2.13     Notice.  All  notices  or  communications  hereunder,
unless otherwise specified in this Statement,  shall be sufficiently given if in
writing and  delivered  in person,  by  telecopier,  by  Electronic  Means or by
overnight  delivery.  Notices  delivered  pursuant to this Section 2.13 shall be
deemed given on the date received.

                  2.14     Termination.  In the event  that no VMTP  Shares of a
Series are  Outstanding,  all rights and  preferences of the VMTP Shares of such
Series established and

                                       32

<PAGE>


designated hereunder shall cease and terminate,  and all obligations of the Fund
under this Statement with respect to such Series shall terminate.

                  2.15     Appendices.  The  designation  of each Series of VMTP
Shares may be set forth in this Statement through an Appendix attached hereto or
in a separate 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) (1) amend the Appendix to this Statement relating to
a Series so as to reflect any amendments to the terms  applicable to such Series
including an increase in the number of authorized  shares of such Series and (2)
add  additional  Series  of VMTP  Shares by  including  a new  Appendix  to this
Statement relating to such Series.

                  2.16     Actions on Other than Business Days. Unless otherwise
provided  herein,  if the date for making  any  payment,  performing  any act or
exercising any right, in each case as provided for in this  Statement,  is not a
Business Day, such payment  shall be made,  act performed or right  exercised on
the next  succeeding  Business Day, with the same force and effect as if made or
done on the nominal date provided therefor,  and, with respect to any payment so
made, no dividends, interest or other amount shall accrue for the period between
such nominal date and the date of payment.

                  2.17     Modification.  To the extent  permitted by applicable
law and Section 2.6(c),  the Board of Trustees,  without the vote of the Holders
of VMTP  Shares,  may  interpret,  supplement  or amend the  provisions  of this
Statement  or  any  Appendix   hereto  to  supply  any  omission,   resolve  any
inconsistency  or ambiguity or to cure,  correct or supplement  any defective or
inconsistent provision, including any provision that becomes defective after the
date hereof  because of  impossibility  of  performance or any provision that is
inconsistent with any provision of any other Preferred Shares of the Fund.

                  2.18     Transfers.

                           (a)      A  Designated  Owner or  Holder  of any VMTP
Shares of any Series may sell, transfer or otherwise dispose of VMTP Shares only
in whole  shares and only to (i) Persons  that such  Designated  Owner or Holder
reasonably  believes are  "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  that  are
registered closed-end  management investment companies,  the shares of which are
traded on a national securities exchange ("Closed-End Funds"),  banks, insurance
companies or registered open-end management investment companies, or (ii) tender
option bond trusts in which all investors are Persons that such Designated Owner
or Holder reasonably believes are "qualified  institutional  buyers" (as defined
in Rule 144A  under the  Securities  Act or any  successor  provision)  that are
Closed-End Funds, banks, insurance companies,  or registered open-end management
investment companies, or (iii) other investors with the prior written consent of
the Fund. The  restrictions on transfer  contained in this Section 2.18(a) shall
not apply to any VMTP Shares that are being  registered  and sold pursuant to an
effective  registration  statement under the Securities Act or to any subsequent
transfer of such VMTP Shares.

                                       33

<PAGE>


                           (b)      If at any time  the  Fund is not  furnishing
information  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 VMTP Shares and  prospective
purchasers of VMTP Shares,  upon request,  information  with respect to the Fund
satisfying the requirements of subsection (d)(4) of Rule 144A.

                           (c)      Each Holder of VMTP  Shares  shall be deemed
         to have agreed that, in connection with any transfer of VMTP Shares, it
         is  transferring  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 VMTP Shares in exchange for payment of
         the purchase price for such VMTP Shares by the transferee.

                  2.19     No Additional  Rights.  Unless otherwise  required by
law or the  Declaration,  the Holders of VMTP Shares shall not have any relative
rights or  preferences  or other special rights with respect to such VMTP Shares
other than those  specifically set forth in this Statement;  provided,  however,
that nothing in this Statement shall be deemed to preclude or limit the right of
the Fund (to the extent permitted by applicable law) to contractually agree with
any Holder or  Designated  Owner of VMTP Shares of any Series with regard to any
special rights of such Holder or Designated Owner with respect to its investment
in the Fund.

                  [Signature Page Begins on the Following Page]

                                       34

<PAGE>


     (Signature Page to the Statement Establishing and Fixing the Rights and
          Preferences of Variable Rate MuniFund Term Preferred Shares)


         IN WITNESS WHEREOF,  Nuveen New York AMT-Free Municipal Income Fund has
caused  this  Statement  to be  signed  in its name and on its  behalf by a duly
authorized officer,  who acknowledges said instrument to be the corporate act of
the Fund, and states that to the best of such officer's  knowledge,  information
and belief the matters and facts  herein set forth with  respect to approval are
true in all material respects, all as of ______________.


                                            NUVEEN NEW YORK AMT-FREE
                                            MUNICIPAL INCOME FUND

                                            By:
                                               ---------------------------------
                                            Name: Gifford R. Zimmerman
                                            Title: Chief Administrative Officer

<PAGE>


                                                                      APPENDIX A

                 NUVEEN NEW YORK AMT-FREE MUNICIPAL INCOME FUND

            VARIABLE RATE MUNIFUND TERM PREFERRED SHARES, SERIES 2014

              Preliminary Statement and Incorporation By Reference

         This  Appendix  establishes  a Series of Variable  Rate  MuniFund  Term
Preferred Shares of Nuveen New York AMT-Free  Municipal  Income Fund.  Except as
set forth below,  this  Appendix  incorporates  by reference the terms set forth
with respect to all Series of such Variable Rate Municipal Term Preferred Shares
in that  "Statement  Establishing  and  Fixing the  Rights  and  Preferences  of
Variable Rate MuniFund Term Preferred  Shares" filed with the Secretary of State
of the State of  Massachusetts  on March 8, 2013 (the  "VMTP  Statement").  This
Appendix has been adopted by  resolution  of the Board of Trustees of Nuveen New
York  AMT-Free  Municipal  Income  Fund.  Capitalized  terms used herein but not
defined  herein  have the  respective  meanings  therefor  set forth in the VMTP
Statement.

         Section 1.   Designation  as to Series.  Variable  Rate  MuniFund  Term
Preferred  Shares,  Series 2014: A series of Five Hundred Seven (507)  Preferred
Shares  classified as Variable Rate  MuniFund  Term  Preferred  Shares is hereby
designated as the "Variable  Rate MuniFund Term Preferred  Shares,  Series 2014"
(the  "Series  2014 VMTP  Shares").  Each share of such  Series  shall have such
preferences, voting powers, restrictions,  limitations as to dividends and other
distributions,  qualifications  and  terms  and  conditions  of  redemption,  in
addition to those  required by  applicable  law and those that are expressly set
forth in the  Declaration  and the VMTP Statement  (except as the VMTP Statement
may be expressly  modified by this Appendix),  as are set forth in this Appendix
A. The Series 2014 VMTP Shares shall  constitute a separate  series of Preferred
Shares and of the Variable Rate MuniFund Term  Preferred  Shares and each Series
2014 VMTP Share shall be identical.  The following  terms and  conditions  shall
apply solely to the Series 2014 VMTP Shares:

         Section 2.   Number of   Authorized   Shares  of Series.  The number of
authorized shares is Five Hundred Seven (507).

         Section 3.   Date of Original Issue with respect to Series. The Date of
Original Issue is March 11, 2013.

         Section 4.   Liquidation   Preference   Applicable   to   Series.   The
Liquidation Preference is $100,000.00 per share.

         Section 5.   Term   Redemption   Date  Applicable  to Series.  The Term
Redemption Date is October 1, 2014.

         Section 6.   Dividend   Payment   Dates   Applicable   to  Series.  The
Dividend  Payment Dates are the first  Business Day of the month next  following
each Dividend Period.

         Section 7.   Liquidity   Account  Initial  Date  Applicable  to Series.
The Liquidity Account Initial Date is April 1, 2014.

                               Appendix A - Page 1

<PAGE>


         Section 8.   Exceptions  to  Certain   Definitions   Applicable  to the
Series. The following  definitions  contained under the heading "Definitions" in
the VMTP Statement are hereby amended as follows:

         Not applicable.

         Section 9.   Additional  Definitions  Applicable  to  the Series.  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:

         "Dividend  Period" means,  with respect to the Series 2014 VMTP Shares,
in the case of the first Dividend  Period,  the period  beginning on the Date of
Original Issue for such Series and ending on and including the last calendar day
of the  month  in  which  the  Date of  Original  Issue  occurred  and for  each
subsequent  Dividend  Period,  the period  beginning on and  including the first
calendar day of the month  following  the month in which the  previous  Dividend
Period ended and ending on and including the last calendar day of such month.

         "Optional  Redemption  Premium"  means with respect to each Series 2014
VMTP Share to be redeemed an amount equal to

                  Not applicable.

         Section 10.  Amendments  to  Terms  of  VMTP  Shares  Applicable to the
Series. The following  provisions contained under the heading "Terms of the VMTP
Shares" in the VMTP Statement are hereby amended as follows:

         Not applicable.

                               Appendix A - Page 2

<PAGE>


   (Signature Page to the Appendix A to Statement Establishing and Fixing the
     Rights and Preferences of Variable Rate MuniFund Term Preferred Shares)

         IN WITNESS WHEREOF,  Nuveen New York AMT-Free Municipal Income Fund has
caused  this  Appendix  to be  signed  in its name and on its  behalf  by a duly
authorized officer,  who acknowledges said instrument to be the corporate act of
the Fund, and states that to the best of such officer's  knowledge,  information
and belief the matters and facts  herein set forth with  respect to approval are
true in all material respects, all as of March 7, 2013.

                                            NUVEEN NEW YORK AMT-FREE
                                            MUNICIPAL INCOME FUND

                                            By: /s/ Gifford R. Zimmerman
                                                -------------------------
                                            Name: Gifford R. Zimmerman
                                            Title: Chief Administrative Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1 OTHR EXHB
<SEQUENCE>11
<FILENAME>nrk77q1d0313definingnewclass.txt
<TEXT>
Form N-SAR,
Sub-Item 77Q1(d)
Copies of any constituent
instruments defining the
rights of shareholders


Nuveen New York AMT-Free Municipal Income
Fund
  f/k/a Nuveen Insured New York Tax-Free Advantage
    Municipal Fund

811-21211

The rights of the holders of each new series of preferred
securities are described in the five Statements of
Establishing and Fixing the Rights and Preferences of
Preferred Shares.  The Registrant incorporates by
reference to this Sub-Item 77Q1(d) the Registrants five
Statements of Establishing and Fixing the Rights and
Preferences, filed as exhibits to Form N-SAR, Sub-Item
77Q1(a).


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1 OTHR EXHB
<SEQUENCE>12
<FILENAME>nrk77q1g033113mergeragrmt.txt
<TEXT>
Form N-SAR,
Sub-Item 77Q1(g)

Copies of any merger or consolidation
agreements


Nuveen New York AMT-Free Municipal Income Fund
  f/k/a Nuveen Insured New York Tax-Free Advantage
    Municipal Fund

811-21211


On March 8, 2013 the above-referenced fund was the
surviving fund in a reorganization.  All of the assets of the
Nuveen New York Dividend Advantage Municipal Income
Fund, Nuveen New York Select Quality Municipal Fund, Inc.,
Nuveen New York Investment Quality Municipal Fund, Inc.,
Nuveen New York Quality Income Municipal Fund, Inc. and
Nuveen New York Premium Income Municipal Fund, Inc.
were transferred to the Nuveen New York AMT-Free
Municipal Income Fund.  The circumstances and details of the
reorganization as well as copies of the Agreements and Plans
of Reorganization are contained in the SEC filing on October
18, 2012, under Conformed Submission Type N 14 8C/A,
accession number 0001193125-12-426327, which materials
are herein incorporated by reference.

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
