<DOCUMENT>
<TYPE>EX-99.77Q1 OTHR EXHB
<SEQUENCE>11
<FILENAME>nkx77q1aenkl0812.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)

                      STATEMENT ESTABLISHING AND FIXING THE
                       RIGHTS AND PREFERENCES OF SERIES 5
                      VARIABLE RATE DEMAND PREFERRED SHARES

      (Relating to the issuance of Series 5 VRDP by the above-named fund in
 exchange for the outstanding Series 1 Variable Rate Demand Preferred Shares of
       Nuveen Insured California Dividend Advantage Municipal Fund (NKL))

                           Effective Date: May 7, 2012

<PAGE>


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

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
DESIGNATION OF SERIES 5 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................................................22
                  (d)      Notice of Special Rate Period.........................................................23
                  (e)      Failure to Deliver Notice of Special Rate Period......................................23

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

                  (a)      One Vote Per VRDP Share...............................................................24
                  (b)      Voting for Additional Trustees........................................................24
                  (c)      Holders of VRDP Shares 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.       Short-Term Ratings.............................................................................29

         10.      Redemption.....................................................................................29

                  (a)      Optional Redemption...................................................................29
                  (b)      Mandatory Redemption..................................................................30
                  (c)      Notice of Redemption..................................................................33
                  (d)      No Redemption Under Certain Circumstances.............................................34
</TABLE>

                                        2

<PAGE>


<TABLE>
<S>                                                                                                            <C>
                  (e)      Absence of Funds Available for Redemption.............................................34
                  (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........................................................35
                  (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...............................................................36
                  (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

                      STATEMENT ESTABLISHING AND FIXING THE
                       RIGHTS AND PREFERENCES OF SERIES 5
                      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 5 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 a Series of VRDP
designated Series 2, and, concurrently with the initial issuance of the Series 5
VRDP Shares  designated  below,  the Fund is issuing  Series of VRDP  designated
Series 3 and  Series 4; each of Series 2,  Series 3 and  Series 4 VRDP 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.

                          DESIGNATION OF SERIES 5 VRDP

         Series 5: A series of  preferred  shares,  par  value  $.01 per  share,
liquidation  preference  $100,000 per share, is hereby authorized and designated
"Series 5 Variable  Rate Demand  Preferred  Shares,"  also referred to herein as
"Series 5 VRDP" or "Series 5 VRDP  Shares." Each share of Series 5 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 5 VRDP,  each share of
Series 5 VRDP shall have an Applicable  Rate equal to the rate determined by the
Remarketing Agent on the Acquired Fund VRDP (as defined below) on Wednesday, May
2, 2012, for the Initial Rate Period from,  and including,  the Date of Original
Issue to, and  including,  May 9, 2012 and an initial  Dividend  Payment Date of
June 1, 2012. The Series 5 VRDP shall  constitute a separate series of preferred
shares of the Fund and each share of Series 5 VRDP shall be identical.

         The  number of Series 5 VRDP  Shares  which the Board of  Trustees  has
initially authorized for issuance is 1,044. The Board of Trustees may, from time
to time, authorize the issuance of additional Series 5 VRDP Shares in accordance
with the terms hereof.

         One share of Series 5 VRDP initially  authorized for issuance as stated
above  shall be issued  and  distributed  in  respect  of each share of Series 1
Variable Rate Demand  Preferred  Shares of Nuveen  Insured  California  Dividend
Advantage  Municipal Fund (the "Acquired Fund VRDP")  outstanding on the date of
distribution in connection with the  reorganization of Nuveen Insured California
Dividend  Advantage  Municipal  Fund (the  "Acquired  Fund") as described in the
Information Memorandum (as defined below).

                                        4

<PAGE>


                                   DEFINITIONS

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

                  (a)      "AGENT  MEMBER" means a Person with an account at the
Securities  Depository  that holds one or more Series 5 VRDP Shares  through the
Securities Depository,  directly or indirectly,  for a Beneficial Owner and that
will be authorized and instructed, directly or indirectly, by a Beneficial Owner
to disclose information to the Remarketing Agent and the Tender and Paying Agent
with respect to such Beneficial Owner.

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

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

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

                  (e)      "APPLICABLE  RATE" means the dividend  rate per annum
on any  Series  5 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 5
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, then such Applicable Spread of 225 basis points (2.25%),  250 basis
points (2.50%),  275 basis points (2.75%), 300 basis points (3.00%) or 400 basis
points  (4.00%) will continue to be the  Applicable  Spread in  connection  with
determining the Maximum Rate in effect for each Rate Period  commencing with the
first  Subsequent Rate Period after the Failed  Remarketing  Condition no longer
exists through and including the first Subsequent Rate Period ending on or after
the 45th day after the day the Failed  Remarketing  Condition no longer  exists;
provided further, that (i) if a new Failed Remarketing Condition occurs prior to
the end of such  period  and the  Applicable  Spread  is then 225  basis  points
(2.25%), the date such new Failed Remarketing Condition occurs will be deemed to
be the 60th  day of a  continued  Failed  Remarketing  Condition,  (ii) if a new
Failed  Remarketing  Condition  occurs  prior to the end of such  period and the
Applicable  Spread is then 250 basis  points  (2.50%),  the date such new Failed
Remarketing  Condition  occurs  will be deemed to be the 90th day of a continued
Failed Remarketing Condition, (iii) if a new Failed Remarketing Condition occurs
prior to the end of such  period  and the  Applicable  Spread  is then 275 basis
points (2.75%),  the date such new Failed  Remarketing  Condition occurs will be
deemed to be the 120th day of a continued Failed Remarketing Condition,  (iv) if
a new Failed  Remarketing  Condition  occurs prior to the end of such period and
the Applicable Spread is then 300 basis points (3.00%), the date such new Failed
Remarketing  Condition  occurs will be deemed to be the 150th day of a continued
Failed  Remarketing  Condition,

                                        5

<PAGE>


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

                  (h)      "BENEFICIAL  OWNER"  means a  Person,  including  the
Liquidity  Provider  to the  extent  it is at any time the  Beneficial  Owner of
Series  5  VRDP  Shares  (irrespective  of any  assignment  or  transfer  by the
Liquidity Provider of its voting rights), in whose name Series 5 VRDP Shares are
recorded as  beneficial  owner of such  Series 5 VRDP  Shares by the  Securities
Depository, an Agent Member or another securities intermediary on the records of
such Securities Depository, Agent Member or securities intermediary, as the case
may be, or such Person's subrogee.

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

                  (j)      "BUSINESS  DAY"  means a day other  than a day (a) on
which  commercial  banks in The City of New  York,  New  York  are  required  or
authorized by law or executive order to close or (b) on which the New York Stock
Exchange is 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 5
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
thereof.

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

                  (1)   cash or any cash equivalent;

                  (2)   any U.S. Government Security;

                  (3)   any Municipal  Security that has a credit rating from at
                        least one NRSRO that is the  highest  applicable  rating
                        generally ascribed by such NRSRO to Municipal Securities
                        with substantially  similar terms as of the date of this
                        Statement   (or  such   rating's   future   equivalent),
                        including (A) any such Municipal  Security that has been
                        pre-refunded  by the issuer thereof with the proceeds of
                        such  refunding  having been  irrevocably  deposited  in
                        trust or escrow for the  repayment  thereof  and (B) any
                        such fixed or  variable  rate  Municipal  Security  that
                        qualifies as an eligible  security under Rule 2a-7 under
                        the 1940 Act;

                                        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  Securities or U.S.  Government
                        Securities or any combination thereof; or

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

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

                  (s)      "DIVIDEND PAYMENT DATE," except as otherwise provided
in paragraph (d) of Section 2 of Part I of this  Statement,  means the date that
is the first Business Day of each calendar month.

                  (t)      "DIVIDEND  PERIOD,"  with  respect  to Series 5 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 and
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  and  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,  if
any, 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 5 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 5 VRDP Shares that 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 5 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 5 VRDP  Shares,  that were  subject to a
proper  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 pursuant to
a Remarketing, (ii) purchased by the Liquidity Provider pursuant to the Purchase
Obligation, or (iii) if not successfully remarketed pursuant to a Remarketing or
purchased by the Liquidity  Provider  pursuant to the Purchase  Obligation,  the
subject of a properly  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 5 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 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 5 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 5 VRDP Shares
to be  purchased  on such  date  pursuant  to the  Purchase  Obligation,  or, in
connection with a Mandatory Purchase, the Mandatory Purchase Notice delivered by
the Fund or the Tender and Paying Agent on behalf of the Fund.

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

                                        8

<PAGE>


                  (gg)     "FITCH  DISCOUNT  FACTOR" means the discount  factors
set forth in the Fitch Guidelines for use in calculating the Discounted Value of
the Fund's assets in connection with Fitch's ratings of Series 5 VRDP Shares.

                  (hh)     "FITCH ELIGIBLE  ASSETS" means assets of the Fund set
forth in the Fitch  Guidelines  as eligible  for  inclusion in  calculating  the
Discounted  Value of the Fund's  assets in  connection  with Fitch's  ratings of
Series 5 VRDP Shares.

                  (ii)     "FITCH  GUIDELINES"  means the guidelines,  as may be
amended from time to time,  applied by Fitch in connection  with Fitch's ratings
of Series 5 VRDP Shares.

                  (jj)     "GROSS-UP  PAYMENT"  means  payment  to a  Beneficial
Owner of an amount  which,  when taken  together  with the  aggregate  amount of
Taxable Allocations made to such Beneficial Owner to which such Gross-up Payment
relates,  would cause such Beneficial Owner's dividends in dollars (after giving
effect to regular federal and 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 5 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.

                  (kk)     "HOLDER" means a Person in whose name a Series 5 VRDP
Share is  registered  in the  registration  books of the Fund  maintained by the
Tender and Paying Agent.

                  (ll)     "INFORMATION MEMORANDUM" means the proxy statement of
the  Fund  and  the  Acquired  Fund,  dated  as of  January  27,  2012,  and the
information  memorandum  attached thereto,  as amended,  revised or supplemented
from time to time, including in connection with any Remarketing, if applicable.

                  (mm)     "INITIAL  RATE PERIOD," with respect to Series 5 VRDP
Shares,  means the period commencing on and including the Date of Original Issue
in connection  with the initial  issuance  thereof and ending on, and including,
May 9, 2012, the next succeeding  Wednesday,  as set forth under "Designation of
Series 5 VRDP" above.

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

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

                  (pp)     "LIBOR  DEALER"  means  Morgan  Stanley & Co. LLC and
such other  dealer or  dealers  as the Fund from time to time may  appoint or in
lieu of any thereof, their respective affiliates and successors.

                  (qq)     "LIBOR RATE" means, on any Rate  Determination  Date,
(i) the rate for deposits in U.S. dollars for the designated Rate Period,  which
appears on Reuters display page LIBOR01 ("Page  LIBOR01")

                                        9

<PAGE>


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

                  (rr)     "LIQUIDATION  PREFERENCE,"  with  respect  to a given
number of Series 5 VRDP Shares, means $100,000 times that number.

                  (ss)     "LIQUIDITY  ACCOUNT  INVESTMENTS"  means any  Deposit
Security or any other security or investment  owned by the Fund that is rated at
least A- or the  equivalent  rating by each NRSRO then rating  such  security or
investment,  provided  that any such  Deposit  Security  or  other  security  or
investment shall be so rated by at least one NRSRO.

                  (tt)     "LIQUIDITY   PROVIDER"   means  any  entity  in  such
capacity pursuant to a VRDP Purchase Agreement,  initially, Morgan Stanley Bank,
N.A.

                  (uu)     "LIQUIDITY   PROVIDER   RATINGS   EVENT"   means  the
Liquidity Provider shall fail to maintain at any time short-term debt ratings in
one of the two highest  ratings  categories  from the  Requisite  NRSROs or such
other short-term debt ratings,  if any, as may be required for the Series 5 VRDP
Shares to satisfy the eligibility criteria under Rule 2a-7 under the 1940 Act.

                  (vv)     "LIQUIDITY  PROVIDER RATINGS EVENT  TERMINATION DATE"
means  the  date  established  by the  Tender  and  Paying  Agent,  acting  upon
instructions of the Fund pursuant to the Tender and Paying Agent Agreement,  for
termination  of the VRDP Purchase  Agreement  upon the occurrence of a Liquidity
Provider Ratings Event,  which date shall be not less than 16 days nor more than
30 days following such Liquidity Provider Ratings Event.

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

                                       10

<PAGE>


                  (xx)     "MANDATORY  PURCHASE" means the mandatory purchase of
Outstanding  Series 5 VRDP Shares by the Liquidity Provider pursuant to the VRDP
Purchase Agreement in connection with a Mandatory Purchase Event.

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

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

                  (aaa)    "MANDATORY PURCHASE NOTICE" means, in connection with
the Mandatory Purchase of Series 5 VRDP Shares, a notice delivered in accordance
with the VRDP  Purchase  Agreement by the Fund or the Tender and Paying Agent on
behalf  of the Fund to the  Holders  and the  Liquidity  Provider  specifying  a
Mandatory Purchase Date.

                  (bbb)    "MANDATORY  TENDER,"  with  respect  to  a  Mandatory
Tender Event,  means the mandatory tender of all Series 5 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 5 VRDP Shares
remain  unsold and the  Remarketing  Agent does not purchase for its own account
the unsold  Series 5 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.

                  (ccc)    "MANDATORY  TENDER  EVENT"  means (a) each failure by
the Fund to make a scheduled payment of dividends on any Series 5 VRDP Shares on
a Dividend  Payment Date;  (b) the  occurrence of a Liquidity  Provider  Ratings
Event  (which  shall  constitute  a  single  Mandatory  Tender  Event  upon  the
occurrence of such Liquidity  Provider Ratings Event,  whether or not continuing
and  whether or not such  Liquidity  Provider  Ratings  Event also  results in a
Mandatory Purchase Event; provided that, a subsequent Liquidity Provider Ratings
Event,  following  restoration of the  short-term  debt ratings to the requisite
level,  shall  constitute a new Mandatory  Tender Event);  (c) in the event of a
failure by the Fund to pay the  Liquidity  Provider  the  applicable  fee due in
advance under the terms of the VRDP Fee  Agreement by seven  Business Days prior
to the  beginning  of the month to which such payment  relates if the  Liquidity
Provider (in its sole discretion) thereafter provides written notice to the Fund
that such failure to pay such fee constitutes a Mandatory  Tender Event; (d) the
eighth day prior to the scheduled  date of the  occurrence  of an  Extraordinary
Corporate  Event;  (e) the Fund shall have  obtained and delivered to the Tender
and Paying Agent an Alternate VRDP Purchase Agreement by the fifteenth day prior
to the Scheduled  Termination Date, Liquidity Provider Ratings Event Termination
Date or Related Party Termination Date, as the case may be, of the VRDP Purchase
Agreement being replaced;  (f) the 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),  if the Liquidity  Provider (in its sole
discretion)  thereafter  provides written notice to the Fund that the failure to
timely cure such breach  constitutes  a Mandatory  Tender Event  (subject to the
Fund  curing  such  breach  prior to the  delivery  date of such notice from the
Liquidity Provider).

                                       11

<PAGE>


                  (ddd)    "MANDATORY  TENDER NOTICE" means,  in connection with
the Mandatory  Tender of Series 5 VRDP Shares,  a notice delivered in accordance
with the VRDP  Purchase  Agreement by the Fund or the Tender and Paying Agent on
behalf  of the Fund to the  Holders  and the  Liquidity  Provider  specifying  a
Mandatory Tender Event and Purchase Date.

                  (eee)    "MARKET  VALUE"  of any  asset of the Fund  means the
market value thereof  determined by an independent  third-party  pricing service
designated  from time to time by the Board of Trustees.  The Market Value of any
asset shall  include any interest  accrued  thereon.  The pricing  service shall
value 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 shall be valued at fair value as determined
by the pricing service using methods which include  consideration  of: yields or
prices of municipal bonds of comparable quality, type of issue, coupon, maturity
and rating; indications as to value from dealers; and general market conditions.
The pricing service may employ electronic data processing techniques or a matrix
system, or both, to determine valuations.

                  (fff)    "MAXIMUM  RATE," for Series 5 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 5
VRDP Shares will depend on the  long-term  rating  assigned to the Series 5 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 5 VRDP Shares for that Rate
Period. The Applicable Percentage of the Applicable Base Rate is as follows:

     --------------------------------------------------------------------------

                                                APPLICABLE PERCENTAGE OF
       LONG-TERM*                               APPLICABLE BASE RATE--NO
         RATINGS                                      NOTIFICATION

     --------------------------------------------------------------------------
         MOODY'S                FITCH
         -------                -----
       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 5 VRDP Shares at the request of the Fund utilizing the higher of
     the ratings of the Rating Agencies then rating the Series 5 VRDP Shares.
**   Includes  unrated,  if no Rating  Agency is then  rating  the Series 5 VRDP
     Shares at the request of the Fund.

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 5 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  (if  applicable).  Furthermore,  in the event of
Special Rate  Periods of greater than 364 days,  the Maximum Rate may be subject
to upward adjustment as provided in the Remarketing Agreement,  provided,  that,
notwithstanding  any  provision  to the contrary in the  Remarketing  Agreement,
immediately  following any such increase,  the Fund would be in compliance  with
the  Minimum  VRDP  Asset  Coverage  and the VRDP Basic  Maintenance  Amount (if
applicable).

                                       12

<PAGE>


                  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 5 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.

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

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

                  (iii)    "MINIMUM VRDP ASSET COVERAGE CURE DATE," 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.

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

                  (kkk)    "MOODY'S  DISCOUNT FACTOR" means the discount factors
set forth in the Moody's  Guidelines for use in calculating the Discounted Value
of the Fund's assets in connection with Moody's ratings of Series 5 VRDP Shares.

                  (lll)    "MOODY'S  ELIGIBLE  ASSETS"  means assets of the Fund
set forth in the Moody's Guidelines as eligible for inclusion in calculating the
Discounted  Value of the Fund's  assets in  connection  with Moody's  ratings of
Series 5 VRDP Shares.

                  (mmm)    "MOODY'S GUIDELINES" means the guidelines,  as may be
amended from time to time, applied by Moody's in connection with Moody's ratings
of Series 5 VRDP Shares.

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

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

                  (ppp)    "NOTICE OF PROPOSED  SPECIAL RATE PERIOD"  shall have
the meaning specified in paragraph (c) of Section 4 of Part I of this Statement.

                                       13

<PAGE>


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

                  (rrr)    "NOTICE OF REDEMPTION"  means any notice with respect
to the  redemption of Series 5 VRDP Shares  pursuant to paragraph (c) of Section
10 of Part I of this Statement.

                  (sss)    "NOTICE OF REVOCATION"  means, in connection with the
revocation by a Beneficial  Owner or its Agent Member of its Notice of Tender, a
notice,  substantially  in the form  attached  to the Tender  and  Paying  Agent
Agreement, delivered by a Beneficial Owner or its Agent Member to the Tender and
Paying Agent  indicating an intention to revoke the tender of some or all of the
Series 5 VRDP Shares for sale on a Purchase  Date  pursuant to Section 1 of Part
II of this Statement.

                  (ttt)    "NOTICE  OF  SPECIAL  RATE  PERIOD"  shall  have  the
meaning specified in paragraph (d)(i) of Section 4 of Part I of this Statement.

                  (uuu)    "NOTICE  OF  TENDER"  means,  in  connection  with an
Optional Tender, a notice,  substantially in the form attached to the Tender and
Paying Agent  Agreement,  delivered by a Beneficial Owner or its Agent Member to
the Tender and Paying  Agent,  indicating  an intention to tender  Series 5 VRDP
Shares  for sale on a  Purchase  Date  pursuant  to Section 1 of Part II of this
Statement.

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

                  (www)    "OPTIONAL  TENDER"  means any tender of Series 5 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 5 VRDP Shares remain  unsold and the  Remarketing
Agent does not  purchase  for its own  account  the unsold  Series 5 VRDP Shares
tendered  to the Tender  and Paying  Agent for  Remarketing  (provided  that the
Remarketing  Agent may seek to sell such  Series 5 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.

                  (xxx)    "OTHER RATING AGENCY" means each NRSRO, if any, other
than  Moody's or Fitch  then  providing  a rating  for the Series 5 VRDP  Shares
pursuant to the request of the Fund.

                  (yyy)    "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 5 VRDP Shares.

                  (zzz)    "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 5 VRDP Shares.

                  (aaaa)   "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 redemption by the Fund,
(ii) any shares of such  Series with  respect to which,  in the case of Series 5
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 5 VRDP  Share  will be deemed to be  Outstanding  for
purposes of the VRDP Purchase Agreement until redeemed by the Fund.

                                       14

<PAGE>


                  (bbbb)   "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.

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

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

                  (eeee)   "PURCHASE  DATE,"  with  respect to any  purchase  of
Series 5 VRDP Shares,  means (i) in connection with an Optional Tender, the date
specified in a Notice of Tender, which date shall be no earlier than the seventh
day (or, if such day is not a Business  Day, the next  succeeding  Business Day)
following delivery to the Tender and Paying Agent of the Notice of Tender,  (ii)
in  connection  with a Mandatory  Tender,  the date  specified in the  Mandatory
Tender  Notice  (or,  if such day is not a  Business  Day,  the next  succeeding
Business Day), subject to the immediately succeeding sentence below, or (iii) in
connection with a Mandatory  Purchase,  the Mandatory Purchase Date specified in
the Mandatory  Purchase  Notice (or, if such day is not a Business Day, the next
succeeding  Business  Day).  The Purchase Date in respect of a Mandatory  Tender
Event shall be not later than seven days  following the date a Mandatory  Tender
Notice is sent to Holders by Electronic Means; provided,  that: (A) the Purchase
Date in connection with the failure of the Fund to pay the applicable fee to the
Liquidity Provider may not be later than the last Business Day of the month such
payment was due; (B) the Purchase Date in connection  with the  occurrence of an
Extraordinary Corporate Event may not be later than the Business Day immediately
preceding  the  occurrence  of the  Extraordinary  Corporate  Event (and,  if no
earlier  Purchase Date is specified in a Mandatory Tender Notice with respect to
such Extraordinary  Corporate Event, the Business Day immediately  preceding the
occurrence  of the  Extraordinary  Corporate  Event  shall be  deemed  to be the
Purchase  Date  irrespective  of the  failure to have given or sent a  Mandatory
Tender  Notice);  (C) the Purchase Date in connection with the Fund obtaining an
Alternate  VRDP  Purchase  Agreement  may not be  later  than the  Business  Day
immediately  preceding  the  termination  of the VRDP Purchase  Agreement  being
replaced;  and (D) the  Purchase  Date in  connection  with a Notice of Proposed
Special Rate Period may not be later than the first day of such proposed Special
Rate Period.

                  (ffff)  "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 5 VRDP
Shares on any Purchase Date at the Purchase Price from Beneficial Owners, in the
case of any Optional Tender, and Holders, in the case of any Mandatory Tender or
any Mandatory  Purchase,  in each case  following  delivery of a Final Notice of
Purchase with respect to such Series 5 VRDP Shares.

                  (gggg)   "PURCHASE   PRICE"  means  an  amount  equal  to  the
Liquidation Preference of any Series 5 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.

                  (hhhh)   "PURCHASED  VRDP  SHARES"  means  all  Series  5 VRDP
Shares  purchased  by the  Liquidity  Provider  pursuant  to the  VRDP  Purchase
Agreement,  so long as the  Liquidity  Provider  continues to be the  beneficial
owner for federal income tax purposes of such Series 5 VRDP Shares.

                  (iiii)   "RATE  DETERMINATION DATE" means, with respect to any
Series 5 VRDP Shares,  the last day of a Rate Period for such Series or, if such
day is not a Business Day, the next succeeding Business Day; provided,  however,
that the next  succeeding  Rate  Determination  Date will be determined  without
regard to any prior extension of a Rate Determination Date to a Business Day.

                  (jjjj)   "RATE  PERIOD," with respect to Series 5 VRDP,  means
the Initial Rate Period and any  Subsequent  Rate Period,  including any Special
Rate Period, for shares of such Series.

                  (kkkk)   "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.

                                       15

<PAGE>


                  (llll)   "RATING  AGENCY" means each of Moody's (if Moody's is
then rating Series 5 VRDP Shares),  Fitch (if Fitch is then rating Series 5 VRDP
Shares), and any Other Rating Agency.

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

                  (nnnn)   "RATING   AGENCY   ELIGIBLE   ASSETS"  means  Moody's
Eligible Assets,  Fitch Eligible Assets and Other Rating Agency Eligible Assets,
as applicable.

                  (oooo)   "RATING AGENCY GUIDELINES" means Moody's  Guidelines,
Fitch Guidelines and any Other Rating Agency Guidelines.

                  (pppp)   "REDEMPTION DATE" shall have the meaning specified in
paragraph (c) of Section 10 of Part I of this Statement.

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

                  (rrrr)   "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.

                  (ssss)   "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.

                  (tttt)   "RELATED PARTY  TERMINATION DATE" means the effective
date of the  termination of the VRDP Purchase  Agreement in accordance  with its
terms following the occurrence of a Related Party Termination Event.

                  (uuuu)   "RELATED PARTY TERMINATION EVENT" means the Liquidity
Provider becoming a Related Party of the Fund other than through the acquisition
of Series 5 VRDP Shares pursuant to the terms of the VRDP Purchase Agreement.

                  (vvvv)   "REMARKETING"  means the remarketing of Series 5 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.

                  (wwww)   "REMARKETING  AGENT"  means the entity  appointed  as
such with  respect  to  Series 5 VRDP  Shares  by a  resolution  of the Board of
Trustees and any additional or successor  companies or entities appointed by the
Board of Trustees which have entered into a Remarketing Agreement with the Fund,
initially Morgan Stanley & Co. LLC.

                  (xxxx)   "REMARKETING   AGREEMENT"   means   the   Remarketing
Agreement  with  respect to the Series 5 VRDP  Shares,  dated as of May 7, 2012,
among the Fund, the Investment  Adviser and the initial  Remarketing  Agent,  as
amended,  modified or supplemented  from time to time, or any similar  agreement
with a successor Remarketing Agent.

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

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

                  (aaaaa)  "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

                                       16

<PAGE>


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.

                  (bbbbb)  "SCHEDULED  TERMINATION  DATE" means May 6, 2013,  or
any  succeeding  date to  which  the  term of the  VRDP  Purchase  Agreement  is
extended,  or, as the case may be, the initial Scheduled Termination Date of any
Alternate VRDP Purchase  Agreement,  or any succeeding date to which the term of
the Alternate VRDP Purchase Agreement is extended.

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

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

                  (eeeee)  "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 5 VRDP Shares.

                  (fffff)  "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.

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

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

                  (iiiii)  "SPECIAL RATE PERIOD," with respect to Series 5 VRDP,
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.

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

                  (kkkkk)  "STATEMENT"  means this  statement  establishing  and
fixing the rights and preferences of Series 5 VRDP Shares,  as it may be amended
or supplemented from time to time.

                  (lllll)  "SUBSEQUENT  RATE  PERIOD," with respect to shares of
Series 5 VRDP  Shares,  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.

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

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

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

                  (ppppp)  "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

                                       17

<PAGE>


agent,  transfer agent,  registrar,  dividend  disbursing  agent,  paying agent,
redemption price  disbursing agent and calculation  agent in connection with the
payment  of  regularly  scheduled  dividends  with  respect to the Series 5 VRDP
Shares.

                  (qqqqq)  "TENDER AND PAYING AGENT  AGREEMENT" means the Tender
and Paying Agent  Agreement,  dated as of May 7, 2012,  between the Fund and the
Tender and Paying Agent, as amended, modified or supplemented from time to time,
or any similar agreement with a successor Tender and Paying Agent.

                  (rrrrr)  "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.

                  (sssss)  "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.

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

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

                  (vvvvv)  "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.

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

                  (xxxxx)  "VRDP FEE  AGREEMENT"  means the Variable Rate Demand
Preferred Shares (VRDP) Fee Agreement with respect to Series 5 VRDP, dated as of
May 7, 2012,  between the Fund and the initial Liquidity  Provider,  as amended,
modified or  supplemented  from time to time,  or any similar  agreement  with a
successor Liquidity Provider.

                  (yyyyy)  "VRDP  PURCHASE  AGREEMENT"  means the Variable  Rate
Demand Preferred Shares (VRDP) Purchase Agreement with respect to Series 5 VRDP,
dated as of May 7, 2012,  between the initial 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 5
VRDP is as set forth above under the title "Designation of Series 5 VRDP."

         2.       DIVIDENDS.

                  (a)      RANKING.  The shares of Series 5 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 5
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

                                       18

<PAGE>


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 5 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 5 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 5 VRDP  Shares  which may be in
arrears,  and no  additional  sum of money  shall be  payable in respect of such
arrearage,  except  that the Fund  shall pay as a  supplemental  dividend a Late
Charge (as defined below in paragraph (e)(i)(C) of this Section 2) on account of
a  Failure  to  Deposit,  if any,  in  respect  of each day  during  the  period
commencing on the day a Failure to Deposit  occurs through and including the day
immediately preceding the earlier of (i) the day the Failure to Deposit is cured
and (ii) the third Business Day next  succeeding the day on which the Failure to
Deposit occurred.

                  (c)      DIVIDENDS  CUMULATIVE  FROM DATE OF  ORIGINAL  ISSUE.
Dividends on Series 5 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 5 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 5 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 5 VRDP Shares  during the Initial  Rate Period shall be equal to
         the rate per  annum  specified  under  "Designation  of  Series 5 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

                                       19

<PAGE>


                  Rate Period Days or fewer, and (ii) until the first day of the
                  next  succeeding  Dividend  Period after a Failed  Remarketing
                  Condition  no  longer  exists  in the case of a  Special  Rate
                  Period of greater than 28 Rate Period Days;

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

                                       20

<PAGE>


                  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 5 VRDP on any Dividend
         Payment Date shall equal the sum of the dividends  accumulated  but not
         yet paid for each Rate Period (or part thereof) in the related Dividend
         Period or Dividend  Periods.  The amount of dividends  accumulated  for
         each  such  Rate  Period  (or  part  thereof)   shall  be  computed  by
         multiplying the Applicable Rate in effect for shares of such Series for
         such Rate  Period (or part  thereof) by a fraction,  the  numerator  of
         which shall be the number of days in such Rate Period (or part thereof)
         and the  denominator of which shall be the actual number of days in the
         year  (365 or 366),  and  applying  each  such  rate  obtained  against
         $100,000.

                  (f)      CURING A FAILURE  TO  DEPOSIT.  A Failure  to Deposit
with  respect to shares of Series 5 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 5 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 5 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 5 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 5
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 5 VRDP  Shares,  the
transferor as  Beneficial  Owner of Series 5 VRDP Shares shall be deemed to have
agreed  pursuant  to the terms of the Series 5 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
5 VRDP Shares in exchange  for payment of the  Purchase  Price for such Series 5
VRDP Shares by the transferee.

                  (j)      DIVIDENDS  CREDITED AGAINST EARLIEST  ACCUMULATED BUT
UNPAID  DIVIDENDS.  Any  dividend  payment  made on Series 5 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.

                                       21

<PAGE>


Dividends  in arrears for any past  Dividend  Period may be declared and paid at
any time, without reference to any regular Dividend Payment Date, to the Holders
as  their  names  appear  on the  record  books of the  Fund on such  date,  not
exceeding 15 days  preceding  the payment date  thereof,  as may be fixed by the
Board of Trustees.

                  (k)      DIVIDENDS  DESIGNATED AS  EXEMPT-INTEREST  DIVIDENDS.
Dividends  on  Series 5 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 5 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 5 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 Subsequent  Rate Period for Series 5
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 5 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 5 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 Subsequent  Rate Period for Series 5 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 Fitch (if Fitch 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 Fitch (if Fitch 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 5 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 or, if the succeeding
Subsequent  Rate Period is a Special  Rate  Period,  it shall end on a Wednesday
designated by the Fund, subject to the foregoing Business Day requirement.

                  (c)      NOTICE OF PROPOSED  SPECIAL RATE PERIOD.  If the Fund
proposes to designate any  Subsequent  Rate Period for Series 5 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

                                       22

<PAGE>


(which shall be such day that would otherwise be the first day of a Minimum Rate
Period),  notice ("Notice of Proposed Special Rate Period") shall be sent by the
Fund by  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 5 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 5 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 5 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  for 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  5 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 5 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 (if then  applicable) 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), Fitch Eligible Assets (if Fitch
         is then  rating  the shares of such  Series)  and Other  Rating  Agency
         Eligible  Assets (if any Other Rating  Agency is then rating the shares
         of such  Series  at the  request  of the Fund)  each have an  aggregate
         Discounted Value at least equal to the VRDP Basic Maintenance Amount as
         of  such   Business  Day   (assuming  for  purposes  of  the  foregoing
         calculation  that  (a) the  Maximum  Rate is the  Maximum  Rate on such
         Business Day as if such Business Day were the Rate  Determination  Date
         for the  proposed  Special Rate  Period,  and (b) the Moody's  Discount
         Factors  applicable  to  Moody's  Eligible  Assets  are  determined  by
         reference  to the first  Exposure  Period (as  defined  in the  Moody's
         Guidelines)  longer than the  Exposure  Period then  applicable  to the
         Fund, as described in the Moody's Guidelines); or

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

                  (e)      FAILURE TO DELIVER NOTICE OF SPECIAL RATE PERIOD.  If
the Fund fails to deliver either of the notices  described in paragraphs  (d)(i)
or  (d)(ii)  of this  Section 4 (and,  in the case of the  notice  described  in
paragraph  (d)(i) of this  Section  4, a VRDP  Basic  Maintenance  Report to the
effect set forth in such  paragraph  (but only if either  Moody's,  Fitch or any
Other Rating Agency 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

                                       23

<PAGE>


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),  Fitch (if Fitch is then  rating the shares of the
Series in question)  and each Other Rating Agency (if any Other Rating Agency is
then  rating the shares of the Series in  question at the request of the Fund) 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.

                  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

                                       24

<PAGE>


         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 5 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 5 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, except as provided  below,  on a parity
         with the Series 5 VRDP Shares with  respect to the payment of dividends
         or the distribution of assets upon dissolution,  liquidation or winding
         up of the affairs of the Fund, or authorize, create or issue additional
         shares of any Series of VRDP Shares (except that,  notwithstanding  the
         foregoing,  the Board of  Trustees,  without the vote or consent of the
         Holders of Series 5 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 5 VRDP,  or classes or series of
         Preferred  Shares  ranking on a parity  with  Series 5 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 5 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 5 VRDP  Shares  and (iii) the  authorization,  creation  and
         issuance of classes or series of shares ranking junior to Series 5 VRDP
         Shares with respect to the payment of dividends and the distribution of
         assets upon  dissolution,  liquidation  or winding up of the affairs of
         the Fund will be deemed to affect  such  preferences,  rights or powers
         only if such issuance would, at the time thereof, cause the Fund not to
         satisfy the Minimum VRDP Asset Coverage. For purposes of the foregoing,
         except as  otherwise  set forth in this  Statement,  no matter shall be
         deemed to  materially  and  adversely  affect any right,  preference or
         power of the Series 5 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 5 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 5 VRDP  Shares  outstanding  at the
         time, in person or by proxy, either in writing or at a meeting,  voting
         as a separate  class,

                                       25

<PAGE>


         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 5 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  Series  5 VRDP
         outstanding at the time, in person or by proxy, either in writing or at
         a  meeting   (the   Series  5  VRDP   voting  as  a  separate   class).
         Notwithstanding  the  foregoing,  the  Board of  Trustees  of the Fund,
         without   approval  of  Holders  of  Series  5  VRDP  Shares  or  other
         shareholders  of the Fund,  has the right to terminate  the services of
         any and all Rating Agencies providing a long-term rating for the Series
         5 VRDP  Shares,  and such rating or  ratings,  to the extent it or they
         would  have been taken into  account in any of the  provisions  in this
         Statement,  will be disregarded (for the avoidance of doubt, other than
         the effect of the absence of such ratings for  purposes of  determining
         the Maximum Rate).

                           (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 5
         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 5 VRDP  Shares),  Fitch  (if Fitch is then
         rating the Series 5 VRDP Shares) and each Other  Rating  Agency (if any
         Other  Rating  Agency is then  rating the  Series 5 VRDP  Shares at the
         request  of the Fund)  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 5
         VRDP Shares) of the results of such vote.

                           (iii)    EXCLUSIVE RIGHT TO VOTE ON CERTAIN  MATTERS.
         Notwithstanding the foregoing,  and except as otherwise required by the
         1940  Act,  whenever  a vote of  Holders  of  Series 5 VRDP  Shares  is
         otherwise  required by this  Statement,  the  Declaration or applicable
         law,  (i)  Holders  of  outstanding  shares of of Series 5 VRDP will be
         entitled  as a Series,  to the  exclusion  of the  holders of all other
         shares,  including  other  Preferred  Shares,  Common  Shares and other
         classes  of  shares of  beneficial  interest  of the  Fund,  to vote on
         matters  affecting shares of Series 5 VRDP that do not adversely affect
         any of the  rights of holders of such  other  shares,  including  other
         Preferred  Shares,  Common  Shares  and  other  classes  of  shares  of
         beneficial  interest,  as  expressly  set forth in the  Declaration  or
         statement  establishing  and  designating  any  such  shares,  and (ii)
         Holders of outstanding  shares of Series 5 VRDP will not be entitled to
         vote on  matters  affecting  any  other  Preferred  Shares  that do not
         adversely  affect  any of the  rights of  Holders of shares of Series 5
         VRDP, as expressly set forth in the Declaration and this Statement.

                  (d)      BOARD MAY TAKE CERTAIN  ACTIONS  WITHOUT  SHAREHOLDER
APPROVAL.  The Fund is not required to maintain  any  particular  short-term  or
long-term  ratings for the Series 5 VRDP Shares,  and, subject only to Section 9
of this Part I, the Board of Trustees, without the vote or consent of any holder
of Preferred  Shares,  including any Series of VRDP, or any other shareholder of
the Fund, may from time to time adopt,  amend, alter or repeal any or all of the
definitions  contained herein,  add covenants and other obligations of the Fund,
or confirm  the  applicability  of  covenants  and other  obligations  set forth
herein, in connection with obtaining,  maintaining or changing the rating of any
Rating  Agency  which is then  rating  the  Series 5 VRDP  Shares,  and any such
adoption,  amendment,  alteration  or repeal  will not be  deemed to affect  the
preferences, rights or powers of Series 5 VRDP Shares, or the holders thereof.

                                       26

<PAGE>


                  Subject  only to  Section  9 of  this  Part I,  the  Board  of
Trustees may, at any time, replace a Rating Agency with another Rating Agency or
terminate the services of any Rating  Agencies  then  providing a rating for the
Series 5 VRDP Shares without  replacement,  in either case, without the approval
of Holders of Series 5 VRDP  Shares or other  shareholders  of the Fund.  In the
event a Rating Agency ceases to furnish a long-term rating for the Series 5 VRDP
Shares or the Fund  terminates  the services of a Rating Agency then providing a
long-term  rating for the Series 5 VRDP Shares,  such  rating,  to the extent it
would have been taken into account in any of the provisions of the Series 5 VRDP
Shares included in this Statement, will be disregarded,  and only the ratings of
the  then-designated  Rating  Agency or  Agencies,  if any,  will be taken  into
account  (for the  avoidance  of doubt,  other than the effect of the absence of
such ratings for purposes of determining the Maximum Rate).

                  Notwithstanding  anything  herein to the contrary,  the Rating
Agency  Guidelines,  as they may be amended from time to time by the  respective
Rating Agency, will be reflected in a written document and may be amended by the
respective Rating Agency without the vote,  consent or approval of the Fund, the
Board of Trustees and any holder of shares of Series 5 VRDP Shares, or any other
shareholder of the Fund.

                  Notwithstanding  the  foregoing,  nothing in this Section 5 is
intended  in any  way to  limit  the  ability  of (i) the  Fund to make  certain
adjustments  in the  Remarketing  Agreement as provided  under the definition of
"Maximum Rate," subject to the limitations set forth in such definition, or (ii)
the Board of  Trustees  to amend or alter other  provisions  of this  Statement,
without the vote or consent of any holder of Series 5 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 5 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 5 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 5 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 5 VRDP Share and no
Series 5 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 the shares entitled
to vote or the VRDP Shares deemed  outstanding for quorum purposes,  as the case
may be, the requisite  Notice of  Redemption  with respect to such Series 5 VRDP
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 5 VRDP Shares
owned  (legally or  beneficially)  or  controlled by the Fund shall not have any
voting rights or be deemed to be outstanding  for voting or for  calculating the
voting percentage required on any other matter or other purposes.

         6.       MINIMUM VRDP ASSET COVERAGE.  The Fund shall  maintain,  as of
the  last  Business  Day of each  month  in which  any  Series  5 VRDP  Share is
Outstanding, the Minimum VRDP Asset Coverage.

         7.       VRDP BASIC MAINTENANCE AMOUNT.

                  (a)      Subject to paragraph  (c) below,  so long as Series 5
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 5 VRDP Shares), (ii) Fitch Eligible Assets having an aggregate Discounted
Value equal to or greater  than the VRDP Basic  Maintenance  Amount (if Fitch is
then rating the Series 5 VRDP Shares),  and (iii) Other Rating  Agency  Eligible
Assets having an aggregate

                                       27

<PAGE>


Discounted Value equal to or greater than the VRDP Basic Maintenance  Amount (if
any Other Rating Agency is then rating the Series 5 VRDP Shares).

                  (b)      Subject  to  paragraph  (c)  below,  the  Fund  shall
deliver to each Rating  Agency which is then rating Series 5 VRDP Shares and any
other party specified in the Rating Agency  Guidelines all certificates that are
set forth in the  respective  Rating Agency  Guidelines  regarding  Minimum VRDP
Asset Coverage, the VRDP Basic Maintenance Amount and/or related calculations at
such times and containing such information as set forth in the respective Rating
Agency  Guidelines (each, a "Rating Agency  Certificate").  Subject to paragraph
(c) below,  a failure by the Fund to deliver a Rating  Agency  Certificate  with
respect to the VRDP Basic Maintenance Amount shall be deemed to be delivery of a
Rating Agency Certificate  indicating the Discounted Value for all assets of the
Fund  is less  than  the  VRDP  Basic  Maintenance  Amount,  as of the  relevant
Valuation Date.

                  (c)      The Fund is not required to maintain  any  particular
long-term ratings for the Series 5 VRDP Shares, and the Rating Agency Guidelines
may be changed or  eliminated  at any time  without  the  approval of Holders of
Series 5 VRDP  Shares  or any  other  shareholders  of the  Fund,  including  in
connection  with the change or elimination of any or all long-term  ratings then
applicable to the Series 5 VRDP Shares.

         8.       RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS.

                  (a)      DIVIDENDS ON PREFERRED SHARES. Except as set forth in
the next  sentence,  no  dividends  shall be  declared  or paid or set apart for
payment on the shares of any class or series of shares of beneficial interest of
the Fund ranking, as to the payment of dividends, on a parity with Series 5 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 5 VRDP Share  shall be based on the  Applicable  Rate for such VRDP 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 5 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 5 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 5 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 5 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 5 VRDP

                                       28

<PAGE>


Shares as to the  payment  of  dividends  and the  distribution  of assets  upon
dissolution, liquidation or winding up), unless (i) full cumulative dividends on
shares of Series 5 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 5 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 5 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 5 VRDP  Shares as to the  payment of  dividends  or the  distribution  of
assets upon  dissolution,  liquidation  or winding  up, or call for  redemption,
redeem, purchase or otherwise acquire for consideration any Common Shares or any
other such junior shares  (except by  conversion  into or exchange for shares of
the Fund  ranking  junior to Series 5 VRDP Shares as to the payment of dividends
and the  distribution  of assets upon  dissolution,  liquidation or winding up),
unless,  to the  extent any  Rating  Agency or  Agencies  are then  providing  a
long-term  rating  for  the  Series  5  VRDP  Shares,   immediately  after  such
transaction the Discounted Value of Rating Agency Eligible Assets (as determined
by each Rating  Agency,  if any,  then rating the Series 5 VRDP Shares) would at
least equal the VRDP Basic Maintenance Amount (if any), if then required by such
Rating Agency or Agencies.

         9.       SHORT-TERM RATINGS.

                  The Fund will use its  reasonable  best  effort to maintain at
least one short-term  rating of the Series 5 VRDP Shares, to the extent that the
Liquidity Provider then has a short-term debt rating.

         10.      REDEMPTION.

                  (a)      OPTIONAL REDEMPTION.

                           (i)      Subject to the  provisions  of  subparagraph
         (iv) of this paragraph (a), shares of Series 5 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 5 VRDP may not be redeemed
         in part if after such partial  redemption  fewer than 50 shares of such
         Series  would remain  Outstanding;  (2) shares of Series 5 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 5 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 5 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 5 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 5 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

                                       29

<PAGE>


         dates not later than the day preceding the applicable  Redemption  Date
         and  having a Market  Value not less  than the  amount  (including  any
         applicable premium) due to Holders of Series 5 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 5 VRDP  Shares),  the  Discounted  Value of Fitch  Eligible
         Assets  (if Fitch is then  rating  the  Series 5 VRDP  Shares)  and the
         Discounted  Value of Other Rating Agency  Eligible Assets (if any Other
         Rating Agency is then rating the Series 5 VRDP Shares at the request of
         the Fund) each at least equals the VRDP Basic Maintenance  Amount,  and
         would at least  equal the VRDP  Basic  Maintenance  Amount  immediately
         subsequent to such  redemption if such redemption were to occur on such
         date.  For  purposes  of  determining  in clause  (b) of the  preceding
         sentence  whether the Discounted  Value of Moody's  Eligible  Assets at
         least equals the VRDP Basic  Maintenance  Amount,  the Moody's Discount
         Factors  applicable to Moody's  Eligible  Assets shall be determined by
         reference  to the first  Exposure  Period (as  defined  in the  Moody's
         Guidelines)  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 5 VRDP Shares on June 1, 2041, 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 5 VRDP
Shares, if the Fund fails to, if applicable, have either Moody's Eligible Assets
(if Moody's is then rating the Series 5 VRDP Shares)  with a  Discounted  Value,
Fitch Eligible  Assets (if Fitch is then rating the Series 5 VRDP Shares) with a
Discounted  Value,  or Other Rating Agency  Eligible Assets (if any Other Rating
Agency is then rating the Series 5 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. In the event of failure by
the Fund to have Rating Agency Eligible  Assets with a Discounted  Value greater
than or equal to the VRDP Basic Maintenance Amount, if then applicable, the Fund
may seek to cure such  failure  on or prior to the VRDP Basic  Maintenance  Cure
Date by complying with the requirements of the Rating Agency or Rating Agencies,
if any,  then  rating  the  Series 5 VRDP  Shares  as in  effect  at the time of
failure.  Alternatively,  on or prior to such VRDP Basic  Maintenance Cure Date,
the Fund may choose to cure by (a)  complying  with the VRDP  Basic  Maintenance
Amount  applicable to long-term  ratings for the Series 5 VRDP Shares lower than
the ratings prevailing at the time of failure or (b) terminating the services of
the Rating Agency or Agencies then providing a long-term  rating of the Series 5
VRDP Shares. The number of Series 5 VRDP Shares to be redeemed shall be equal to
the lesser of (i) the minimum number of Series 5 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 (x) having  each of
Moody's  Eligible  Assets (if Moody's is then  rating the Series 5 VRDP  Shares)
with a  Discounted  Value,  Fitch  Eligible  Assets (if Fitch is then rating the
Series 5 VRDP Shares) with a Discounted  Value and Other Rating Agency  Eligible
Assets (if any Other Rating Agency is then rating the Series 5 VRDP Shares) with
a Discounted  Value greater than or equal to the VRDP Basic  Maintenance  Amount
and (y)  maintaining  the  Minimum  VRDP  Asset  Coverage,  in each  case on the
applicable  Cure Date  (provided,  however,  that,  if there is no such  minimum
number of Series 5 VRDP  Shares and other  Preferred  Shares the  redemption  or
retirement  of which  would  have such  result,  all  Series 5 VRDP  Shares  and
Preferred  Shares  then  outstanding  shall be  redeemed),  and (ii) the maximum
number of Series 5 VRDP Shares, together with all other Preferred Shares subject
to redemption or retirement, that can be redeemed out of funds legally available
therefor in accordance  with the  Declaration and applicable law. In determining
the  Series  5 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 5 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 5 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 5 VRDP are to be redeemed  pursuant to this  paragraph (b), the
number

                                       30

<PAGE>


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 5 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 5 VRDP Shares are Outstanding and held by Persons
         other than the  Liquidity  Provider,  the  Purchase  Obligation  of the
         Liquidity Provider whose Series 5 VRDP Shares are subject to the Failed
         Remarketing  Condition--Purchased  VRDP  Shares  Redemption  remains in
         effect to the extent  required  by, and in  accordance  with,  the VRDP
         Purchase  Agreement to which such  Liquidity  Provider is a party,  and
         (ii) to the  extent (a) any Series 5 VRDP  Shares are  Outstanding  and
         held by Persons other than the Liquidity  Provider and (b) the Purchase
         Obligation  of the  Liquidity  Provider  whose Series 5 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 5 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 5
         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 5 VRDP Shares
         which it was unable to redeem on the earliest practicable date on which
         it is able to effect such  redemption.  In the event that the Liquidity
         Provider receives any Series 5 VRDP Shares in the distribution referred
         to under  "Designation  of Series 5 VRDP" above in respect of shares of
         Acquired Fund VRDP (x) beneficially owned by the Liquidity Provider for
         federal  income tax  purposes  and that were  acquired  pursuant to the
         Liquidity  Provider's  purchase obligation with respect to the Acquired
         Fund VRDP, (y) continuously  beneficially  owned for federal income tax
         purposes by the Liquidity Provider from the date of acquisition and (z)
         not  successfully  remarketed,  then (I) the  Series 5 VRDP  Shares  so
         received  shall be  treated as  Purchased  VRDP  Shares,  (II) a Failed
         Remarketing  Condition-Purchased  VRDP Shares  shall be deemed to exist
         and be continuing as of the date of  distribution  of the Series 5 VRDP
         Shares  and to  have  commenced  on the  date  the  Liquidity  Provider
         acquired  the  related  shares of  Acquired  Fund VRDP  pursuant to the
         Liquidity  Provider's  purchase obligation with respect to the Acquired
         Fund VRDP and (III) any  notices  given by the  Liquidity  Provider  in
         accordance  with the VRDP fee  agreement  relating to the Acquired Fund
         VRDP shall be deemed to have been given in accordance with the VRDP Fee
         Agreement for purposes of this subsection (b)(ii).

                                    (B)      Upon the occurrence and continuance
                  of a Failed Remarketing  Condition--Purchased VRDP Shares with
                  respect to any Series 5 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

                                       31

<PAGE>


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

                                    (C)      Subject  to  notice   having   been
                  received  as referred to in  paragraph  (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:

<TABLE>
<CAPTION>
                         Number of Days* Preceding
                       the Six-Month Anniversary of           Value of Deposit Securities
                       Liquidity Provider's Purchase    as Percentage of Liquidation Preference
                  ------------------------------------  ---------------------------------------
<S>                                 <C>                                       <C>
                                    135                                       20%
                                    105                                       40%
                                    75                                        60%
                                    45                                        80%
                                    15                                       100%
</TABLE>

------------------
*    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

                                       32

<PAGE>


                  Purchased VRDP Shares,  so that the aggregate  Market Value of
                  the Deposit  Securities  included in the Liquidity Account for
                  such  Purchased VRDP Shares is at least equal to the Liquidity
                  Requirement  for such Purchased VRDP Shares not later than the
                  close of business on the next succeeding Business Day.

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

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

                           (iii)    At least six months  prior to the  scheduled
         mandatory Redemption Date of June 1, 2041 specified in Section 10(b)(i)
         above,  if any Series 5 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 5 VRDP Shares.
         The Fund shall  maintain  such  Liquidity  Account in  accordance  with
         Section   10(b)(ii)(B),   (C)  and  (D)  above  and  comply   with  the
         requirements  set forth  therein  with  respect  to  Liquidity  Account
         Investments and the Liquidity Requirement;  provided, that for purposes
         of this Section  10(b)(iii)  all  references  therein to Purchased VRDP
         Shares shall be deemed to be to all  Outstanding  Series 5 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, 2041, 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 5 VRDP  Shares  may be
         applied  by  the  Fund,  in  its  discretion,  towards  payment  of the
         Redemption  Price for the  Outstanding  Series 5 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 5 VRDP  Shares on the June 1, 2041  Redemption
         Date for the Outstanding  Series 5 VRDP Shares,  the requirement of the
         Fund to maintain a Liquidity Account for the Outstanding  Series 5 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 5 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 5 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 5 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 5 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

                                       33

<PAGE>


Redemption Price; (vi) that dividends on the Series 5 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 5 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 5
VRDP Shares to be redeemed from such Holder.  The Fund may provide in any Notice
of Redemption  relating to an optional  redemption  contemplated  to be effected
pursuant  to this  Statement  that such  redemption  is  subject  to one or more
conditions  precedent  not otherwise  expressly  stated herein 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 5 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 a Notice of Redemption has been provided is
not made by reason  of the  absence  of  legally  available  funds  therefor  in
accordance with the  Declaration  and applicable  law, such redemption  shall be
made as soon as practicable to the extent such funds become available. A failure
to redeem  Series 5 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 5 VRDP Shares for which a Notice of Redemption has
been  provided,  dividends  may be declared and paid on Series 5 VRDP Shares and
shall include  those Series 5 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 5 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 5 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 5 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 Series 5
VRDP 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 5 VRDP Shares subject to  redemption.  In the

                                       34

<PAGE>


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 5 VRDP Shares called for redemption on such date
and (ii) all other  amounts to which  Holders of Series 5 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 5 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 5 VRDP
Shares  will be deemed  to be  Outstanding  for  purposes  of the VRDP  Purchase
Agreement until redeemed by the Fund.

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

                  (i)      ONLY WHOLE VRDP SHARES MAY BE  REDEEMED.  In the case
of any  redemption  pursuant to this Section 10, only whole Series 5 VRDP Shares
shall be redeemed,  and in the event that any provision of the Declaration would
require  redemption of a fractional  share, the Tender and Paying Agent shall be
authorized to round up so that only whole shares are redeemed.

                  (j)      MODIFICATION      OF      REDEMPTION      PROCEDURES.
Notwithstanding  the  foregoing  provisions of this Section 10, the Fund may, in
its sole  discretion,  modify the  procedures  set forth  above with  respect to
notification  of  redemption  for the Series 5 VRDP Shares,  provided  that such
modification  does not materially and adversely affect the Holders of the Series
5 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 Fund,  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
(including  in respect of the treatment of the Series 5 VRDP Shares as stock for
U.S.  federal  income tax purposes)  with respect to the  redemption of Series 5
VRDP Shares  owned by the  Liquidity  Provider,  the Fund,  without  shareholder
approval,  by  resolution  of the Board of Trustees  may modify such  redemption
procedures.

         11.      LIQUIDATION RIGHTS.

                  (a)      RANKING.  The shares of Series 5 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 5 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 5 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 5 VRDP Shares of the full
preferential amounts provided for in this paragraph (b), the Holders of Series 5
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 5 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 5 VRDP or any

                                       35

<PAGE>


shares of any other class or series of Preferred Shares ranking on a parity with
the Series 5 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 5 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 5 VRDP Shares with respect to the  distribution of assets
upon  dissolution,  liquidation or winding up of the affairs of the Fund,  after
payment  shall have been made in full to the Holders of the Series 5 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 5 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 5 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  5 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,  if any, as may be required for the Series 5 VRDP
Shares to satisfy the eligibility criteria under Rule 2a-7 under the 1940 Act on
an  ongoing  basis to the  extent  that  the  Fund  can do so on a  commercially
reasonable  basis as determined in the sole discretion of the Board of Trustees.
If the Fund maintains a VRDP Purchase Agreement providing a Purchase Obligation,
the provisions herein relating to the Liquidity  Provider shall be operative and
the following shall apply:

                  (a)      The Fund shall notify, or cause the Tender and Paying
Agent to notify,  Holders by Electronic  Means, or by first class mail,  postage
prepaid,  in the case in which Series 5 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 and 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 5 VRDP Shares
or the  Liquidity  Provider  by an NRSRO then rating the Series 5 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 5 VRDP
Shares are in physical form, of such Failed Remarketing Condition.

                  (c)      Each  Series 5 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 5 VRDP  Shares  tendered  to the Tender and
Paying Agent for Remarketing  (provided that the  Remarketing  Agent may seek to
sell such Series 5 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 5 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

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<PAGE>


(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 5 VRDP Shares that
are the subject of such notice.

                  (d)      The Fund will  require in the Tender and Paying Agent
Agreement that, pursuant to a Tender,  Series 5 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) of Part I of
this  Statement  in  connection  with a  mandatory  redemption  of Series 5 VRDP
Shares,  the Fund shall have no  obligation  to  purchase  Series 5 VRDP  Shares
acquired by the Liquidity  Provider  pursuant to the VRDP Purchase  Agreement or
otherwise.

                  (f)      Series  5  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 5 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 5 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 5 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 5 VRDP  Shares  are  issued  in
certificated form outside the book-entry system of the Securities Depository and
a Holder  fails  to  deliver  such  Series 5 VRDP  Shares  to which a  Mandatory
Purchase relates, on or prior to the Mandatory Purchase Date, the Holder of such
Series  5 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 5 VRDP Shares as of the
scheduled  Purchase  Date.  Any such  undelivered  Series 5 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 5 VRDP
Shares.  Any moneys  held by the Tender and  Paying  Agent for the  purchase  of
undelivered Series 5 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 5 VRDP Shares. The undelivered Series 5 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 in lieu of such undelivered Series 5 VRDP Shares.

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

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

         13.      MISCELLANEOUS.

                  (a)      AMENDMENT OF OR  SUPPLEMENTS TO THIS  STATEMENT.  The
Board of Trustees may, by resolution duly adopted,  without shareholder approval
(except as otherwise  provided by this Statement or required by applicable law),
amend or supplement  this Statement to (1) reflect any amendments or supplements
hereto which the Board of Trustees is entitled to adopt pursuant to the terms of
this Statement without  shareholder  approval or (2)

                                       37

<PAGE>


provide  for the  issuance  of  additional  shares of  Series 5 VRDP (and  terms
relating thereto). Each such additional share of Series 5 VRDP shall be governed
by the terms of this Statement as so amended or supplemented.

                  (b)      NO FRACTIONAL  SHARES.  No  fractional  Series 5 VRDP
Shares shall be issued.

                  (c)      STATUS  OF  VRDP  SHARES   REDEEMED,   EXCHANGED   OR
OTHERWISE  ACQUIRED  BY THE  FUND.  Series 5 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 5 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 5 VRDP  Shares,  but for which final
payment is not received by the Fund,  shall  return to the status of  authorized
and unissued Series 5 VRDP Shares.

                  (d)      PURCHASE  OBLIGATION PART OF VRDP SHARES. Each Holder
and Beneficial  Owner, by virtue of acquiring Series 5 VRDP Shares, is deemed to
have  agreed,  for U.S.  federal  income  tax  purposes,  to treat the  Purchase
Obligation  as  part of the  Series  5 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 5 VRDP Shares, is deemed to have
agreed, for U.S. federal income tax purposes,  to treat the Series 5 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 5 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 5 VRDP Shares (in  denominations  of $100,000 and
integral  multiples  thereof) for purchase at the Purchase Price on the Purchase
Date  designated in a Notice of Tender (or if such day is not a Business Day, on
the next  succeeding  Business Day).  Each Notice of Tender shall be irrevocable
(except as described below) and effective upon receipt and shall:

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

                           (ii)     state the series and the aggregate number of
         Series 5 VRDP Shares to be purchased,  the CUSIP number of the Series 5
         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 5 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.

                                       38

<PAGE>


                  (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  5  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 5 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 5 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 5 VRDP Shares previously
         tendered pursuant to an Optional Tender for which the Purchase Date has
         not yet occurred.  In the event that Series 5 VRDP Shares are issued in
         certificated  form  outside  the  book-entry  system of the  Securities
         Depository  and a Holder of Series 5 VRDP Shares  fails to deliver such
         Series 5 VRDP Shares to which a Mandatory Tender relates on or prior to
         the Purchase Date, the Holder of such Series 5 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 5 VRDP  Shares  as of the  scheduled
         Purchase Date. Any such undelivered Series 5 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 5 VRDP  Shares.  Any moneys held by the Tender and Paying  Agent
         for the purchase of undelivered  Series 5 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 5 VRDP Shares. The undelivered Series 5 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  in  lieu  of  such
         undelivered Series 5 VRDP Shares.

                  (f)      A Beneficial Owner or its Agent Member that delivered
a Notice of Tender in connection  with an Optional Tender may deliver in writing
by  email  transmission  (or if email  transmission  shall  be  unavailable,  by
facsimile  transmission)  to the Tender and Paying  Agent,  not later than 10:00
a.m., New York City time, on or prior to the Business Day immediately  preceding
the Purchase Date, a notice to the effect that such  Beneficial  Owner wishes to
revoke its  election to tender some or all of the Series 5 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 5 VRDP Shares  specified  in such  Notice of  Revocation
that are subject to an  agreement  of sale  pursuant to a

                                       39

<PAGE>


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 5 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 5 VRDP
Shares.  A Notice of Revocation  shall be effective as to the number of Series 5
VRDP Shares  specified  therein as having been  revoked  less the number of such
Series 5 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 5 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 5 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 5 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 5 VRDP Shares but with prior
written consent of the Liquidity Provider,  in the Notice of Special Rate Period
relating to Series 5 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 5 VRDP Shares  properly  tendered  pursuant to a
Tender.

         2.       REMARKETING SCHEDULE.

                  (a)      In  connection  with any attempted  Remarketing,  all
tendered  Series 5 VRDP Shares shall be remarketed at the Purchase Price of such
Series 5 VRDP Shares. The calculation of the Purchase Price of the Series 5 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 5 VRDP Shares and the aggregate  number and Purchase Price of
Series 5 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 5 VRDP Shares by the Remarketing Agent relating to
tendered  Series 5 VRDP Shares  shall be used for the  purchase of the  tendered
Series 5 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 5 VRDP Shares for sale through the Securities
Depository  in  immediately  available  funds  against  delivery of the tendered
Series 5 VRDP  Shares to the Tender  and Paying  Agent  through  the  Securities
Depository,  the  delivery of such Series 5 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 5 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 5 VRDP Shares,  if any,  that it  successfully  remarketed  for
purchase on such  Purchase Date and the  aggregate

                                       40

<PAGE>


Purchase Price of such sold Series 5 VRDP Shares and the number of Series 5 VRDP
Shares,  if any, not successfully  remarketed for purchase on such Purchase Date
and the aggregate  Purchase Price of such unsold Series 5 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 5 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 5 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 5
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 5 VRDP Shares to be purchased on such  Purchase  Date (or if  remarketing
proceeds  for any tendered  Series 5 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 5 VRDP Shares  required to be purchased by the  Liquidity  Provider.  For
purposes of the Final Notice of Purchase,  any tendered Series 5 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 5 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 5 VRDP Shares,  wire
transfer the aggregate  Purchase Price of all Series 5 VRDP Shares in respect of
which Final Notices of Purchase have been delivered to it for purchase of Series
5 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 5 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 5 VRDP Shares that are the
subject of any such Final Notice of Purchase,  through  means of the  Securities
Depository in the case of Series 5 VRDP Shares in the form of global securities.

                  (d)      Upon  receipt by the Tender and Paying Agent from the
Beneficial Owner or its Agent Member, in the case of an Optional Tender, or from
the Holder,  in the case of a Mandatory Tender, of tendered Series 5 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 5 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 5 VRDP Shares are delivered by the tendering
Beneficial Owners or their Agent Members,  in the case of an Optional Tender, or
by the tendering  Holder,  in the case of a Mandatory  Tender,  against  payment
therefor  or  returned  to  the  Liquidity  Provider.  Any  funds  paid  by  the
Remarketing  Agent and held in an account of the Tender and Paying Agent for the
payment of the Purchase Price in connection with a Remarketing  shall be held in
trust  for the  benefit  of the  Remarketing  Agent  on  account  of  purchasers
purchasing in a Remarketing  until the Series 5 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 5 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 5 VRDP
Shares  remarketed by the Remarketing

                                       41

<PAGE>


Agent,  or in the form of payment  pursuant to the VRDP Purchase  Agreement from
the Liquidity Provider, with respect to Series 5 VRDP Shares subject to purchase
pursuant to the Purchase  Obligation,  the Purchase Price for such Series 5 VRDP
Shares to the relevant tendering Beneficial Owners, Agent Members or Holders, 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 5 VRDP Shares in the form of global
securities and their  Remarketing  will be  accomplished  in accordance with the
applicable procedures of the Securities Depository.

                  (f)      The Remarketing Agent and the Tender and Paying Agent
each shall use commercially  reasonable efforts to meet the timing  requirements
set forth above.  At any time that no Purchase  Obligation is in effect (or with
respect to a remarketing of Series 5 VRDP Shares held by the Liquidity  Provider
as to which any  then-effective  Purchase  Obligation  by a successor  liquidity
provider  is  inapplicable),  any Series 5 VRDP Shares  unsold in a  Remarketing
shall be returned to the  relevant  tendering  Beneficial  Owners or their Agent
Members,  or the relevant 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 5 VRDP
Shares for its own account  outside of a  Remarketing  at a price other than the
Purchase Price.

                  (g)      In  connection  with the  allocation of Series 5 VRDP
tendered  for  Remarketing  by the  Liquidity  Provider  and any other Holder or
Beneficial Owner of shares of Series 5 VRDP in any Remarketing,  the Remarketing
Agent shall  allocate those shares of Series 5 VRDP  previously  acquired by the
Liquidity  Provider pursuant to its Purchase  Obligation first to any purchasers
in a  Remarketing  (such  allocation  coming first from those shares of Series 5
VRDP acquired earliest by the Liquidity Provider).

         3.       DETERMINATION OF APPLICABLE RATE.

                  (a)      The  Applicable  Rate  shall  be  determined  by  the
Remarketing Agent on and as of each Rate  Determination  Date as the lowest rate
under  then-existing  market  conditions  that in the  Remarketing  Agent's sole
judgment  would  result  in the  Series 5 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 5 VRDP
Shares by first class mail, postage prepaid (in the case of physical shares), or
Electronic  Means  (in the case of  Series 5 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 5 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 5 VRDP
Shares in a Remarketing;  however,  the Remarketing Agent shall not be obligated
to purchase  any Series 5 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 5 VRDP Shares in a Remarketing  unless,  in each case, such Series 5 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 5 VRDP Shares,
the Fund shall  (except as  provided  below)  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 5 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 5 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 5 VRDP Shares under the Securities Act.  Accordingly,  the
Series 5 VRDP Shares are subject to restrictions on  transferability  and resale
and may only be purchased by and sold to  "qualified  institutional  buyers" (as
defined in Rule 144A under the  Securities  Act or any  successor  provision) in
accordance with Rule 144A under the Securities Act or any successor provision or
any exemption from  registration  available and otherwise in accordance with the
legend set forth on the face of the Series 5 VRDP Shares.

                                       43

<PAGE>


                  (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 5 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 5 VRDP
Shares  which are to be cancelled  within 10 days of purchase by the Fund),  are
not permitted to purchase Series 5 VRDP Shares without the prior written consent
of the Liquidity Provider,  and any such purchases without such consent shall be
void ab initio;  provided,  however,  that the Fund shall give prompt  notice to
Beneficial Owners by Electronic Means upon any of the foregoing Persons,  singly
or in the  aggregate,  acquiring  a  beneficial  interest  in 20% or more of the
Series 5 VRDP Shares;  provided,  further, that, without regard to the preceding
requirements,  purchases  of Series 5 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 5 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 5 VRDP  Shares  and
prospective  purchasers of Series 5 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 5 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 5 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  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>
