<DOCUMENT>
<TYPE>EX-99.77Q1 OTHR EXHB
<SEQUENCE>8
<FILENAME>nkx77q1ab0812.txt
<TEXT>
<PAGE>


        NUVEEN INSURED CALIFORNIA TAX-FREE ADVANTAGE MUNICIPAL FUND (NKX)
 (EFFECTIVE AS OF MAY 7, 2012: NUVEEN CALIFORNIA AMT-FREE MUNICIPAL INCOME FUND)


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

                           Effective Date: May 7, 2012

<PAGE>


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

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>       <C>                                                                                                  <C>
DESIGNATION OF SERIES 2 VRDP......................................................................................4

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

PART I...........................................................................................................18

     1.   NUMBER OF AUTHORIZED SHARES............................................................................18

     2.   DIVIDENDS..............................................................................................18

          (a)   Ranking..........................................................................................18
          (b)   Cumulative Cash Dividends........................................................................18
          (c)   Dividends Cumulative from Date of Original Issue.................................................19
          (d)   Dividend Payment Dates and Adjustment Thereof....................................................19
          (e)   Applicable Rates and Calculation of Dividends....................................................19
          (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..................................21
          (i)   Dividends Paid to Holders........................................................................21
          (j)   Dividends Credited Against Earliest Accumulated But Unpaid Dividends.............................21
          (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......................................................22
          (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

     5.   VOTING RIGHTS..........................................................................................24

          (a)   One Vote Per VRDP Share..........................................................................24
          (b)   Voting for Additional Trustees...................................................................24
          (c)   Holders of VRDP to Vote on Certain Other Matters.................................................25
          (d)   Board May Take Certain Actions Without Shareholder Approval......................................26
          (e)   Voting Rights Set Forth Herein are Sole Voting Rights............................................27
          (f)   No Preemptive Rights or Cumulative Voting........................................................27
          (g)   Voting for Trustees Sole Remedy for Fund's Failure to Pay Dividends..............................27
          (h)   Holders Entitled to Vote.........................................................................27

     6.   MINIMUM VRDP ASSET COVERAGE............................................................................27

     7.   VRDP BASIC MAINTENANCE AMOUNT..........................................................................27

     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...............28
          (c)   Other Restrictions on Dividends and Other Distributions..........................................28

     9.   RATING AGENCY RESTRICTIONS.............................................................................29

     10.  REDEMPTION.............................................................................................29

          (a)   Optional Redemption..............................................................................29
</TABLE>

                                        2

<PAGE>


<TABLE>
<S>       <C>                                                                                                  <C>
          (b)   Mandatory Redemption.............................................................................30
          (c)   Notice of Redemption.............................................................................33
          (d)   No Redemption Under Certain Circumstances........................................................33
          (e)   Absence of Funds Available for Redemption........................................................33
          (f)   Tender and Paying Agent as Trustee of Redemption Payments by Fund................................34
          (g)   Deposit with the Tender and Paying Agent; Shares for Which Notice of Redemption Has Been
                Given Are No Longer Outstanding..................................................................34
          (h)   Compliance With Applicable Law...................................................................34
          (i)   Only Whole VRDP Shares May Be Redeemed...........................................................35
          (j)   Modification of Redemption Procedures............................................................35

     11.  LIQUIDATION RIGHTS.....................................................................................35

          (a)   Ranking..........................................................................................35
          (b)   Distributions Upon Liquidation...................................................................35
          (c)   Pro Rata Distributions...........................................................................35
          (d)   Rights of Junior Shares..........................................................................35
          (e)   Certain Events Not Constituting Liquidation......................................................36

     12.  PURCHASE OBLIGATION....................................................................................36

     13.  MISCELLANEOUS..........................................................................................37

          (a)   Amendment of or Supplements to this Statement....................................................37
          (b)   No Fractional Shares.............................................................................38
          (c)   Status of VRDP Shares Redeemed, Exchanged or Otherwise Acquired by the Fund......................38
          (d)   Purchase Obligation Part of VRDP Shares..........................................................38
          (e)   Treatment of VRDP Shares as Stock................................................................38
          (f)   Board May Resolve Ambiguities....................................................................38
          (g)   Headings Not Determinative.......................................................................38
          (h)   Notices..........................................................................................38

PART II..........................................................................................................38

     1.   REMARKETING PROCEDURES.................................................................................38

     2.   REMARKETING SCHEDULE...................................................................................40

     3.   DETERMINATION OF APPLICABLE RATE.......................................................................42

     4.   FAILED REMARKETING CONDITION...........................................................................43

     5.   PURCHASE OF VRDP SHARES BY REMARKETING AGENT...........................................................43

     6.   NOTIFICATION OF ALLOCATIONS............................................................................43

     7.   TRANSFERS..............................................................................................43

     8.   GLOBAL CERTIFICATE.....................................................................................44
</TABLE>

                                        3

<PAGE>


           NUVEEN INSURED CALIFORNIA TAX-FREE ADVANTAGE MUNICIPAL FUND

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

         NUVEEN  INSURED  CALIFORNIA   TAX-FREE  ADVANTAGE   MUNICIPAL  FUND,  a
Massachusetts business trust (the "Fund"), hereby certifies that:

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

         SECOND:  The preferences  (including  liquidation  preference),  voting
powers, restrictions, limitations as to dividends, qualifications, and terms and
conditions  of  redemption,  of the shares of the Series 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 the Series 2 VRDP
designated  below and,  concurrently  with this  amendment and  restatement,  is
issuing Series of VRDP designated Series 3, Series 4 and Series 5, each of which
Series is issued pursuant to a separate  statement  establishing  the rights and
preferences of Variable Rate Demand Preferred Shares of such Series, as the same
may be amended or supplemented  from time to time; and, in conjunction  with the
issuance of multiple  Series of VRDP,  the Fund is amending and  restating  this
Statement  as  set  forth  herein  to  resolve   certain   inconsistencies   and
ambiguities.

                          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 Series 1 VRDP (as defined below) on Wednesday, June 23,
2010,  for the Initial Rate Period  from,  and  including,  the Date of Original
Issue to, and including,  June 30, 2010 and an initial  Dividend Payment Date of
July 1, 2010. 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 355. The Board of Trustees may, from time
to time, authorize the issuance of additional Series 2 VRDP Shares in accordance
with the terms hereof.

         The  initial  issuance of a share of Series 2 VRDP was made in exchange
for a share of Series 1 Variable Rate Demand  Preferred  Shares of the Fund (the
"Series 1 VRDP") and only upon the  concurrent  return of such share of Series 1
VRDP  to  the  status  of  authorized  and  unissued  Preferred  Shares  without
designation as to series.  The Statement  Establishing and Fixing the Rights and
Preferences of Variable Rate Demand Preferred  Shares,  executed as of August 5,
2008,  shall not apply to the Series 2 VRDP Shares or any  additional  Series of
VRDP.

                                        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 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 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

                                        5

<PAGE>


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 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,   an  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 Series 2
VRDP Shares, means the date on which the Fund initially issued such shares.

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

                  (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 an S&P  Eligible  Asset,  the  quotient of the Market Value
thereof divided by the applicable S&P Discount Factor,  (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 (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,  and (iii) with respect to any Other
Rating Agency, as set forth in the Other Rating Agency Guidelines.

                  (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 2 VRDP are paid to Holders.

                  (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 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.

                                        7

<PAGE>


                  (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.

                  (ff)     "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 and

                                        8

<PAGE>


California  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 California  personal income tax with
respect to dividends  received from the Fund (that is,  without giving effect to
any other  California 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 of  Series 2 VRDP  Shares  at the  maximum  marginal  combined
regular  federal and California  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.

                  (gg)     "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.

                  (hh)     "INFORMATION   MEMORANDUM"   means  the   information
memorandum  in respect of the Series 2 VRDP  Shares of the Fund,  dated June 22,
2010,  as  amended,  revised or  supplemented  from time to time,  including  in
connection with any Remarketing, if applicable.

                  (ii)     "INITIAL  RATE PERIOD," with respect to Series 2 VRDP
Shares,  means the period commencing on and including the Date of Original Issue
thereof  and  ending on,  and  including,  June 30,  2010,  the next  succeeding
Wednesday, as set forth under "Designation of Series 2 VRDP" above.

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

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

                  (ll)     "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.

                  (mm)     "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,  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

                                        9

<PAGE>


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
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.

                  (nn)     "LIQUIDATION  PREFERENCE,"  with  respect  to a given
number of Series 2 VRDP Shares, means $100,000 times that number.

                  (oo)     "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.

                  (pp)     "LIQUIDITY   PROVIDER"   means  any  entity  in  such
capacity  pursuant to a VRDP Purchase  Agreement,  initially,  Deutsche Bank AG,
acting through its New York branch.

                  (qq)     "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 as may be required for the Series 2 VRDP Shares to
satisfy the eligibility criteria under Rule 2a-7 under the 1940 Act.

                  (rr)     "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.

                  (ss)     "LONDON   BUSINESS   DAY"  means  any  day  on  which
commercial banks are generally open for business in London.

                  (tt)     "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.

                  (uu)     "MANDATORY PURCHASE DATE" means the Purchase Date for
a Mandatory  Purchase in  accordance  with this  Statement and the VRDP Purchase
Agreement.

                  (vv)     "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 364 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 364 days from the Scheduled  Termination Date
of the VRDP Purchase  Agreement being  replaced,  or (ii) in connection with

                                       10

<PAGE>


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 364 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.

                  (ww)     "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.

                  (xx)     "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 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.

                  (yy)     "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) with the prior
written consent of the Liquidity  Provider with respect to its classification as
a Mandatory Tender Event, each failure by the Fund to pay the Liquidity Provider
the  applicable  fee due in advance under the terms of the VRDP Fee Agreement by
seven  Business  Days prior to the  beginning of the month to which such payment
relates;  (d) the eighth day prior to the scheduled date of the occurrence of an
Extraordinary Corporate Event; (e) the Fund shall have obtained and delivered to
the  Tender  and  Paying  Agent an  Alternate  VRDP  Purchase  Agreement  by the
fifteenth  day  prior to the  Scheduled  Termination  Date,  Liquidity  Provider
Ratings Event  Termination Date or Related Party  Termination  Date, as the case
may be, of the VRDP Purchase  Agreement being replaced;  (f) the Fund shall have
provided  a Notice of  Proposed  Special  Rate  Period in  accordance  with this
Statement; or (g) 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).

                  (zz)     "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.

                  (aaa)    "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.

                                       11

<PAGE>


                  (bbb)  "MAXIMUM  RATE," 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,  means 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            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  lower  of the  ratings  of the  Rating
   Agencies 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 and California
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.  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.

                  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 and California  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.

                                       12

<PAGE>


                  (ccc)    "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.

                  (ddd)    "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).

                  (eee)    "MINIMUM VRDP ASSET COVERAGE CURE DATE," with respect
to the  failure by the Fund to  maintain  the Minimum  VRDP Asset  Coverage  (as
required by Section 6 of Part I of this  Statement)  as of the last Business Day
of each month, means the tenth Business Day of the following month.

                  (fff)    "MOODY'S" means Moody's  Investors  Service,  Inc., a
Delaware corporation, and its successors.

                  (ggg)    "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.

                  (hhh)    "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.

                  (iii)    "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.

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

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

                  (lll)    "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.

                  (mmm)    "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.

                  (nnn)    "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.

                  (ooo)    "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.

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

                  (qqq)    "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

                                       13

<PAGE>


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.

                  (rrr)    "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,
Moody's and S&P.

                  (sss)    "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.

                  (ttt)    "OTHER RATING AGENCY" means each NRSRO, if any, other
than  Moody's  or S&P then  providing  a  rating  for the  Series 2 VRDP  Shares
pursuant to the request of the Fund.

                  (uuu)    "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.

                  (vvv)    "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.

                  (www)    "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.

                  (xxx)    "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.

                  (yyy)    "PREFERRED SHARES" means the preferred  shares of the
Fund, and includes the VRDP Shares of each Series.

                  (zzz)    "PRELIMINARY  NOTICE  OF  PURCHASE"  shall  have  the
meaning specified in paragraph (b) of Section 2 of Part II of this Statement.

                  (aaaa)   "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

                                       14

<PAGE>


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;  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.

                  (bbbb)   "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,
in each case  following  delivery of a Notice of Purchase  with  respect to such
Series 2 VRDP Shares, and Holders, in the case of any Mandatory Purchase.

                  (cccc)   "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.

                  (dddd)   "PURCHASED  VRDP  SHARES"  means  all  Series  2 VRDP
Shares  purchased  by the  Liquidity  Provider  pursuant  to the  VRDP  Purchase
Agreement,  so long as such  Series 2 VRDP  Shares  are  owned by the  Liquidity
Provider.

                  (eeee)   "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 the day of the week
that is the regular Rate Determination Date if such day is a Business Day.

                  (ffff)   "RATE  PERIOD,"  with  respect  to shares of Series 2
VRDP,  means the Initial Rate Period and any Subsequent  Rate Period,  including
any Special Rate Period, of shares of such Series.

                  (gggg)   "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.

                  (hhhh)   "RATING  AGENCY" means each of 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.

                  (iiii)   "RATING AGENCY CERTIFICATE" has the meaning specified
in paragraph (b) of Section 7 of Part I of this Statement.

                  (jjjj)   "RATING AGENCY GUIDELINES" means Moody's  Guidelines,
S&P Guidelines and any Other Rating Agency Guidelines.

                  (kkkk)  "REDEMPTION  PRICE"  means the  applicable  redemption
price  specified  in  paragraph  (a) or  (b) of  Section  10 of  Part I of  this
Statement.

                  (llll)   "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.

                                       15

<PAGE>


                  (mmmm)   "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.

                  (nnnn)   "RELATED PARTY  TERMINATION DATE" means the effective
date of the Related Party Termination Event.

                  (oooo)   "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 2 VRDP Shares pursuant to the terms
of the VRDP Purchase Agreement.

                  (pppp)   "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.

                  (qqqq)   "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.

                  (rrrr)   "REMARKETING AGREEMENT" means the agreement 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 2 VRDP and the Remarketing Procedures.

                  (ssss)   "REMARKETING NOTICE" shall have the meaning specified
in paragraph (b) of Section 2 of Part II of this Statement.

                  (tttt)   "REMARKETING  PROCEDURES"  means the  procedures  for
conducting Remarketings set forth in Part II of this Statement.

                  (uuuu)   "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.

                  (vvvv)   "S&P" means  Standard & Poor's  Ratings  Services,  a
division of The McGraw-Hill  Companies,  Inc., a New York  corporation,  and its
successors.

                  (wwww)   "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 ratings of Series 2 VRDP Shares.

                  (xxxx)   "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 ratings of Series 2
VRDP Shares.

                  (yyyy)   "S&P  GUIDELINES"  means  the  guidelines,  as may be
amended  from time to time,  in  connection  with S&P  ratings  of Series 2 VRDP
Shares.

                  (zzzz)   "SCHEDULED TERMINATION DATE" means September 1, 2011,
or any  succeeding  date to which  the term of the VRDP  Purchase  Agreement  is
extended.

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

                  (bbbbb)  "SECURITIES ACT" means the Securities Act of 1933, as
amended.

                                       16

<PAGE>


                  (ccccc)  "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 Series 2 VRDP Shares.

                  (ddddd)  "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.

                  (eeeee)  "SPECIAL  OPTIONAL TENDER  PROVISIONS" shall have the
meaning specified in paragraph (g) of Section 1 of Part II of this Statement.

                  (fffff)  "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 Section 4 of Part I of this Statement.

                  (ggggg)  "SPECIAL   REDEMPTION   PROVISIONS"  shall  have  the
meaning specified in paragraph (a)(i) of Section 10 of Part I of this Statement.

                  (hhhhh)  "STATEMENT" means this amended and restated statement
establishing  and fixing the rights and preferences of Series 2 VRDP Shares,  as
it may be amended or supplemented from time to time.

                  (iiiii)  "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.

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

                  (kkkkk)  "TAXABLE ALLOCATION" shall have the meaning specified
in paragraph (a) of Section 3 of Part I of this Statement.

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

                  (mmmmm)  "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.

                  (nnnnn)  "TENDER  AND  PAYING  AGENT   AGREEMENT"   means  the
agreement between the Fund and the Tender and Paying Agent pursuant to which The
Bank of New York Mellon, or any successor, acts as Tender and Paying Agent.

                  (ooooo)  "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.

                  (ppppp)  "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.

                                       17

<PAGE>


                  (qqqqq)  "VOTING  PERIOD" shall have the meaning  specified in
paragraph (b)(i) of Section 5 of Part I of this Statement.

                  (rrrrr)  "VRDP BASIC MAINTENANCE  AMOUNT," as of any Valuation
Date, shall have the meaning set forth in the Rating Agency Guidelines.

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

                  (ttttt)  "VRDP  BASIC  MAINTENANCE   REPORT"  shall  have  the
meaning set forth in the Rating Agency Guidelines.

                  (uuuuu)  "VRDP FEE  AGREEMENT"  means  the VRDP Fee  Agreement
with  respect to Series 2 VRDP,  dated June 24,  2010,  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.

                  (vvvvv)  "VRDP  PURCHASE  AGREEMENT"  means the VRDP  Purchase
Agreement  with  respect to Series 2 VRDP,  dated  June 24,  2010,  between  the
Liquidity  Provider  and the Tender and Paying  Agent,  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.

                                       18

<PAGE>


                  (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

                           (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 set forth with  respect to the shares of such Series
         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

                                       19

<PAGE>


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

                                       20

<PAGE>


         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
Series 2 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 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 (or as otherwise provided for and in connection with designation of
a Special Rate Period),  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. 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

                                       21

<PAGE>


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 and California  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.

         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  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  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 either 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.

                                       22

<PAGE>


                  (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 mailed by the Fund by first-class  mail,
postage prepaid, 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, (F) the Special Redemption  Provisions,  if any, applicable to shares of
such Series in respect of such Special Rate Period and (G) the Special  Optional
Tender  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:

                           (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, (E) the Special Redemption Provisions,  if any, applicable
         to shares of such Series in respect of such Special Rate Period and (F)
         the Special Optional Tender Provisions, if any, applicable to shares of
         such Series in respect of such Special  Rate Period,  such notice to be
         accompanied by a VRDP Basic Maintenance  Report showing that, as of the
         third Business Day  immediately  preceding  such proposed  Special Rate
         Period,  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 of  shares  of such  Series  and that the next  succeeding  Rate
         Period of shares of such Series shall be a Minimum Rate Period.

                                       23

<PAGE>


                  (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 either  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  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.

         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.

                                       24

<PAGE>


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

                           (ii)     NOTICE  OF  SPECIAL  MEETING.   As  soon  as
         practicable  after the accrual of any right of the holders of Preferred
         Shares to elect additional trustees as described in paragraph (b)(i) of
         this Section 5, the Fund shall call a special  meeting of such holders,
         and the  Fund  shall  mail a notice  of such  special  meeting  to such
         holders, such meeting to be held not less than 10 nor more than 20 days
         after the date of mailing of such notice.  If a special  meeting is not
         called by the Fund, it may be called by any such holder on like notice.
         The record date for determining  the holders  entitled to notice of and
         to vote at such special  meeting  shall be the close of business on the
         fifth Business Day preceding the day on which such notice is mailed. At
         any such  special  meeting and at each  meeting of holders of Preferred
         Shares held during a Voting Period at which trustees are to be elected,
         such  holders,  voting  together  as a class (to the  exclusion  of the
         holders of all other  securities  and  classes of shares of  beneficial
         interest  of the  Fund),  shall be  entitled  to elect  the  number  of
         trustees  prescribed  in  paragraph  (b)(i)  of  this  Section  5  on a
         one-vote-per-share basis.

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

                           (iv)     TERMS  OF  OFFICE  OF  CERTAIN  TRUSTEES  TO
         TERMINATE UPON  TERMINATION OF VOTING PERIOD.  Simultaneously  with the
         termination of a Voting  Period,  the terms of office of the 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 Series 2 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, but subject to the
         provisions  of  Section  9 of Part I of this  Statement,  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

                                       25

<PAGE>


         affairs of the Fund will be deemed to affect such  preferences,  rights
         or powers  only if Moody's or S&P is then  rating  Series 2 VRDP Shares
         and such issuance  would,  at the time  thereof,  cause the Fund not to
         satisfy the Minimum VRDP Asset  Coverage or the VRDP Basic  Maintenance
         Amount. 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).

                           (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 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.

                  (d)      BOARD MAY TAKE CERTAIN  ACTIONS  WITHOUT  SHAREHOLDER
                           APPROVAL.

                  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 or  maintaining  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,
provided  that the Board of Trustees  receives  written  confirmation  from such
Rating Agency,  as applicable (with such confirmation in no event being required
to be obtained from a particular  Rating Agency with respect to  definitions  or
other provisions  relevant only to and adopted in connection with another Rating
Agency's rating of the Series 2 VRDP Shares) that any such amendment, alteration
or repeal  would not  adversely  affect the rating then  assigned by such Rating
Agency.

                  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 holder of shares of Series 2 VRDP Shares, or any other
shareholder of the Fund.

                                       26

<PAGE>


                  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
2VRDP  Shares held 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 last Business Day of each
month in which any Series 2 VRDP Share is  Outstanding,  the Minimum  VRDP Asset
Coverage.

         7.       VRDP BASIC MAINTENANCE AMOUNT.

                  (a)      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) 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),
(ii) 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  (iii)  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)      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,  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"). A failure by the Fund to deliver a Rating Agency Certificate with
respect to the VRDP Basic Maintenance Amount shall be deemed to be delivery of a
Rating Agency Certificate

                                       27

<PAGE>


indicating the Discounted Value for all assets of the Fund is less than the VRDP
Basic Maintenance Amount, as of the relevant Valuation Date.

         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 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,

                                       28

<PAGE>


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 as to the payment of  dividends  and the  distribution  of
assets upon  dissolution,  liquidation or winding up), unless  immediately after
such  transaction the Discounted Value of Moody's Eligible Assets (if Moody's is
then rating the Series 2 VRDP  Shares) and S&P  Eligible  Assets (if S&P is then
rating  the  Series 2 VRDP  Shares)  would  each at least  equal the VRDP  Basic
Maintenance Amount.

         9.       RATING AGENCY RESTRICTIONS.

  For so long as any Series 2 VRDP Shares
are  Outstanding  and any Rating Agency is then rating the Series 2 VRDP Shares,
the Fund will not engage in  certain  proscribed  transactions  set forth in the
Rating Agency Guidelines,  unless it has received written confirmation from each
such Rating Agency that  proscribes  the  applicable  transaction  in its Rating
Agency Guidelines that any such action would not impair the rating then assigned
by such Rating Agency to Series 2 VRDP Shares.

         10.      REDEMPTION.

                  (a)      OPTIONAL REDEMPTION.

                           (i)      Subject to the  provisions of paragraph (iv)
         of this  paragraph (a) 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  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  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 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

                                       29

<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)      The Fund shall redeem all Outstanding Series
         2 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. The Fund also shall
         redeem,  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,  certain of the Series 2 VRDP Shares, if the Fund fails
         to have either 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 VRDP Shares) with a  Discounted  Value  greater than or
         equal to the VRDP Basic  Maintenance  Amount,  or fails to maintain the
         Minimum VRDP Asset Coverage in accordance with this Statement, and such
         failure is not cured on or before the VRDP Basic  Maintenance Cure Date
         or the Minimum VRDP Asset  Coverage  Cure Date, as the case may be. The
         number of Series 2 VRDP  Shares  to be  redeemed  shall be equal to the
         lesser of (i) the minimum number of Series 2 VRDP Shares, together with
         all other  Preferred  Shares subject to redemption or  retirement,  the
         redemption of which,  if deemed to have occurred  immediately  prior to
         the opening of business on the  applicable  Cure Date,  would result in
         the Fund's having each of 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 or maintaining the Minimum VRDP Asset Coverage on the applicable
         Cure Date (provided,  however,  that if there is no such minimum number
         of Series 2 VRDP Shares and other  Preferred  Shares the  redemption or
         retirement  of which would have such  result,  all Series 2 VRDP Shares
         and Preferred Shares then outstanding shall be redeemed),  and (ii) the
         maximum  number  of  Series 2 VRDP  Shares,  together  with  all  other
         Preferred  Shares  subject to  redemption  or  retirement,  that can be
         redeemed  out of funds  expected  to be legally  available  therefor in
         accordance  with the Declaration and applicable law. In determining the
         Series 2 VRDP Shares  required to be  redeemed in  accordance  with the
         foregoing,  the Fund shall allocate the number  required to be redeemed
         to satisfy the VRDP Basic Maintenance  Amount or the Minimum VRDP Asset
         Coverage,  as the case may be,  pro rata  among  VRDP  Shares and other
         Preferred Shares (and, then, pro rata among each Series of VRDP Shares)
         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 40 days  after the  applicable
         Cure  Date,  except  that if the  Fund  does  not  have  funds  legally
         available for the redemption of all of the required  number of Series 2
         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 40  days  after  the
         applicable  Cure Date, the Fund shall redeem those Series 2 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.    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

                                       30

<PAGE>


         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  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.

                           (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

                                       31

<PAGE>


         interests or  encumbrances  arising by operation of law and any lien of
         the Custodian  with respect to the payment of its fees or repayment for
         its advances.

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

           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 Board of Trustees,  by
         resolution  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  Board of  Trustees  receives  the  prior  written  consent  of the
         Liquidity Provider and written confirmation from each Rating Agency, as
         applicable,  that any such  amendments  would not adversely  affect the
         rating then assigned by such Rating Agency to the VRDP Shares.

                           (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 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

                                       32

<PAGE>


         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 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 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 June 1, 2040 Redemption Date for the Outstanding Series 2
         VRDP  Shares,  the  requirement  of the Fund to  maintain  a  Liquidity
         Account for the  Outstanding  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,

                                       33

<PAGE>


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.

                  (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) Business 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.

                                       34

<PAGE>


                  (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
Remarketing  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 Board of Trustees,  without shareholder  approval,  by
resolution 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.

                  (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

                                       35

<PAGE>


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,  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  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
provision  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.

         (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.

                                       36

<PAGE>


                  (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  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  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 the Fund will issue to the
purchaser replacement VRDP Share certificates.

                  (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.

                  Subject  to the  provisions  of  Section  9 of  Part I of 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.

                                       37

<PAGE>



                  (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 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;

                                       38

<PAGE>


                  (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 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 VRDP Share certificates.

                  (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,

                                       39

<PAGE>


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)      In connection with any Special Rate Period designated
pursuant  to  Section  4 of Part I of this  Statement,  the  Board of  Trustees,
without the vote or consent of any Holder of Series 2 VRDP Shares but with prior
written consent of the Liquidity Provider,  in the Notice of Special Rate Period
relating to Series 2 VRDP Shares,  as delivered to the Remarketing Agent and the
Liquidity  Provider,  may provide for optional tender provisions relating solely
to such Special Rate Period ("Special Optional Tender  Provisions")  whereby the
minimum number of days' notice  required for an Optional Tender may exceed seven
days as specified in the Special  Optional  Tender  Provisions  for such Special
Rate Period.

                  (h)      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  remarketed
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

                                       40

<PAGE>


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 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 by
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  returned  to  the

                                       41

<PAGE>


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,  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.

         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.

                  (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.

                                       42

<PAGE>


                  (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 and California  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 a Series of 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  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

                                       43

<PAGE>


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  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.

                                       44

<PAGE>


         IN  WITNESS  WHEREOF,  Nuveen  Insured  California  Tax-Free  Advantage
Municipal  Fund has caused these  presents to be signed as of May 4, 2012 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  amended  and  restated  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 INSURED CALIFORNIA TAX-FREE
                                       ADVANTAGE MUNICIPAL 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

                                       45
</TEXT>
</DOCUMENT>
