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<TYPE>EX-99.77Q1 OTHR EXHB
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<FILENAME>a77.txt
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As Amended  12/13/00  Article 12, Section 12.10(a)(v)
As Amended  2/13/01  Article 2.1
As Amended 5/8/01  Article 2.1 As Amended  6/20/01  Article 2.1;  Article 4.6 As
Amended,  12/9/03 Article 12, Part II As Amended  8/11/04  Article 3.3;  Article
4.5;  Article 4.8 As Amended 2/7/07  Article2.1 As Amended 6/29/07 Article 4 and
Name As Amended  12/18/2007  Article 2 As Amended 2/26/2008 Article 7 As Amended
6/24/08 Article 12

AMENDED AND RESTATED BY-LAWS
OF

MFS INVESTMENT GRADE MUNICIPAL TRUST


Article 1.
Agreement and Declaration of Trust and Principal Office

      1.1. Agreement and Declaration of Trust. These By-Laws shall be subject to
the  Agreement  and  Declaration  of Trust,  as from time to time in effect (the
Declaration of Trust),  of MFS Investment Grade Municipal Trust, a Massachusetts
business trust established by the Declaration of Trust (the Trust).
1.2.Principal Office of the Trust.The principal office of the Trust shall be
located in Boston, Massachusetts.

Article 2.
Shareholders

     2.1 Shareholder Meetings. Except as provided in the next sentence,  regular
meetings of the shareholders for the election of Trustees and the transaction of
such other  business as may properly  come before the meeting  shall be held, so
long as Shares  are listed for  trading  on the New York Stock  Exchange,  on at
least an annual basis, on such day and at such place as shall be designated by a
majority  of the  Trustees.  In the event that such a meeting is not held in any
annual period if so required, whether the omission be by oversight or otherwise,
a  subsequent  special  meeting may be called by a majority of the  Trustees and
held in lieu of such  meeting with the same effect as if held within such annual
period.  A Special meeting of the shareholders of the Trust may be called at any
time by a majority of the  Trustees,  by the  president or, if a majority of the
Trustees and the president shall fail to call any meeting of shareholders  for a
period of 30 days after written application of one or more shareholders who hold
at least 10% of all outstanding  shares of the Trust, then such shareholders may
call such meeting.  Each call of a meeting shall state the place, date, hour and
purposes of the meeting.

2.2 Advance Notice of Shareholder Nominees for Trustees and Other Shareholder
Proposals.

      (a) As used in this  Section 2.2,  the term annual  meeting  refers to any
annual meeting of shareholders as well as any special meeting held in lieu of an
annual  meeting as described in the first two  sentences of Section 2.1 of these
Bylaws,  and the term special  meeting  refers to all  meetings of  shareholders
other than an annual meeting or a special meeting in lieu of an annual meeting.

      (b) The matters  proposed by  shareholders  to be  considered  and brought
before any annual or special  meeting of  shareholders  shall be limited to only
such matters,  including the  nomination  and election of Trustees,  as shall be
brought properly before such meeting in compliance with the procedures set forth
in this Section  2.2.  Only persons who are  nominated  in  accordance  with the
procedures  set forth in this  Section  2.2 shall be  eligible  for  election as
Trustees,  and no proposal to fix the number of Trustees shall be brought before
an annual or special meeting of shareholders or otherwise  considered  unless in
accordance  with the procedures set forth in this Section 2.2,  except as may be
otherwise  provided  in these  Bylaws  with  respect  to the right of holders of
preferred  shares of beneficial  interest,  if any, of the Trust to nominate and
elect a specified number of Trustees in certain circumstances.

      (c) For any matter to be properly  before any annual  meeting,  the matter
must be (i) specified in the notice of meeting given by or at the direction of a
majority  of the  Trustees  pursuant  to Section  2.4 of these  Bylaws,  or (ii)
brought  before the meeting in the manner  specified in this Section 2.2(c) by a
shareholder  of record  entitled to vote at the meeting or by a  shareholder  (a
Beneficial  Owner) that holds Shares  entitled to vote at the meeting  through a
nominee or street  name holder of record and that can  demonstrate  to the Trust
such indirect  ownership and such  Beneficial  Owners  entitlement  to vote such
Shares,  provided  that the  shareholder  was the  shareholder  of record or the
Beneficial  Owner held such Shares at the time the notice  provided  for in this
Section 2.2(c) is delivered to the secretary.

      In  addition  to any  other  requirements  under  applicable  law  and the
Declaration of Trust and these Bylaws,  persons  nominated by  shareholders  for
election as Trustees  and any other  proposals by  shareholders  may be properly
brought before an annual meeting only pursuant to timely notice (the Shareholder
Notice) in writing to the secretary.  To be timely,  the Shareholder Notice must
be delivered to or mailed and received at the principal executive offices of the
Trust not less than  forty-five  (45) nor more than sixty (60) days prior to the
first  anniversary  date of the date on which  the  Trust  first  sent its proxy
materials for the prior years annual meeting; provided, however, with respect to
the  annual  meetings  to be held in the  calendar  years  2008  and  2009,  the
Shareholder  Notice must be so  delivered or mailed and so received on or before
March 18, 2008, and May 1, 2009, respectively; provided further, however, if and
only if the annual  meeting is not  scheduled  to be held  within a period  that
commences  thirty  (30) days  before  the first  anniversary  date of the annual
meeting for the preceding year and ends thirty (30) days after such  anniversary
date (an annual  meeting date outside such period being referred to herein as an
Other Annual Meeting Date), such Shareholder  Notice must be given in the manner
provided herein by the later of the close of business on (i) the date forty-five
(45) days  prior to such  Other  Annual  Meeting  Date or (ii) the tenth  (10th)
business day following the date such Other Annual Meeting Date is first publicly
announced or disclosed.

      Any  shareholder  desiring to nominate  any person or persons (as the case
may be) for  election as a Trustee or Trustees  of the Trust shall  deliver,  as
part of such  Shareholder  Notice:  (i) a statement in writing setting forth (A)
the  name,  age,  date  of  birth,  business  address,   residence  address  and
nationality  of the person or persons to be  nominated;  (B) the class or series
and number of all Shares of the Trust  owned of record or  beneficially  by each
such person or persons, as reported to such shareholder by such nominee(s);  (C)
any other  information  regarding each such person  required by paragraphs  (a),
(d), (e) and (f) of Item 401 of  Regulation  S-K or paragraph  (b) of Item 22 of
Rule  14a-101  (Schedule  14A) under the  Securities  Exchange  Act of 1934,  as
amended (the Exchange Act),  adopted by the  Securities and Exchange  Commission
(or the corresponding  provisions of any regulation or rule subsequently adopted
by the Securities and Exchange  Commission or any successor agency applicable to
the  Trust);  (D) any other  information  regarding  the person or persons to be
nominated  that would be required to be disclosed in a proxy  statement or other
filings  required  to be made in  connection  with  solicitation  of proxies for
election of Trustees or directors pursuant to Section 14 of the Exchange Act and
the  rules  and  regulations  promulgated  thereunder;   and  (E)  whether  such
shareholder believes any nominee is or will be an interested person of the Trust
(as defined in the  Investment  Company Act of 1940,  as amended) and, if not an
interested  person,  information  regarding each nominee that will be sufficient
for the  Trust to make  such  determination;  and (ii) the  written  and  signed
consent of the person or persons to be  nominated to be named as nominees and to
serve as Trustees if  elected.  In  addition,  a majority  of the  Trustees  may
require  any  proposed  nominee to furnish  such other  information  as they may
reasonably  require or deem  necessary  to  determine  the  eligibility  of such
proposed nominee to serve as a Trustee.  Any Shareholder Notice required by this
Section 2.2(c) in respect of a proposal to fix the number of Trustees shall also
set forth a description of and the text of the proposal,  which  description and
text  shall  state a fixed  number of  Trustees  that  otherwise  complies  with
applicable law, these Bylaws and the Declaration of Trust.

      Without  limiting the foregoing,  any  shareholder who gives a Shareholder
Notice  of any  matter  proposed  to be  brought  before a  shareholder  meeting
(whether or not involving nominees for Trustees) shall deliver,  as part of such
Shareholder  Notice:  (i) the  description  of and  text of the  proposal  to be
presented;  (ii) a brief written  statement of the reasons why such  shareholder
favors the proposal;  (iii) such shareholders name and address as they appear on
the Trusts books;  (iv) any other  information  relating to the shareholder that
would be required to be disclosed in a proxy statement or other filings required
to be made in connection  with the  solicitation  of proxies with respect to the
matter(s)  proposed pursuant to Section 14 of the Exchange Act and the rules and
regulations  promulgated  thereunder;  (v) the class or series and number of all
Shares of the Trust owned  beneficially and of record by such shareholder;  (vi)
any material  interest of such shareholder in the matter proposed (other than as
a shareholder); (vii) a representation that the shareholder intends to appear in
person or by proxy at the shareholder  meeting to act on the matter(s) proposed;
(viii) if the proposal  involves  nominee(s) for Trustees,  a description of all
arrangements or understandings between the shareholder and each proposed nominee
and any other person or persons  (including  their names)  pursuant to which the
nomination(s)  are to be  made by the  shareholder;  and  (ix) in the  case of a
Beneficial  Owner,   evidence   establishing  such  Beneficial  Owners  indirect
ownership of, and entitlement to vote, Shares at the meeting of shareholders. As
used in this Section 2.2, Shares  beneficially owned shall mean all Shares which
such  person is deemed to  beneficially  own  pursuant  to Rules 13d-3 and 13d-5
under the Exchange Act.

      (d) For any matter to be properly before any special  meeting,  the matter
must be  specified  in the notice of meeting  given by or at the  direction of a
majority of the Trustees  pursuant to Section 2.4 of these Bylaws.  In the event
the Trust  calls a special  meeting  for the  purpose  of  electing  one or more
Trustees,  any shareholder may nominate a person or persons (as the case may be)
for election to such position(s) as specified in the Trusts notice of meeting if
and  only if the  shareholder  provides  a  notice  containing  the  information
required in the  Shareholder  Notice to the  secretary  required with respect to
annual  meetings by Section  2.2(c)  hereof,  and such notice is delivered to or
mailed and  received at the  principal  executive  office of the Trust not later
than the close of business on the tenth  (10th) day  following  the day on which
the date of the special  meeting and of the  nominees  proposed by a majority of
the Trustees to be elected at such meeting are publicly announced or disclosed.

      (e) For  purposes of this  Section  2.2, a matter  shall be deemed to have
been  publicly  announced  or  disclosed  if such matter is disclosed in a press
release  reported by the Dow Jones News Service,  Associated Press or comparable
national  news  service,  in a  document  publicly  filed by the Trust  with the
Securities and Exchange  Commission,  or in a Web site  accessible to the public
maintained  by the Trust or by its  investment  adviser or an  affiliate of such
investment adviser with respect to the Trust.

      (f)  In no  event  shall  an  adjournment  or  postponement  (or a  public
announcement  thereof) of a meeting of  shareholders  commence a new time period
(or extend any time period) for the giving of notice as provided in this Section
2.2.

      (g) The person  presiding at any meeting of  shareholders,  in addition to
making any other  determinations  that may be  appropriate to the conduct of the
meeting,  shall have the power and duty to (i) determine whether a nomination or
proposal of other matters to be brought before a meeting and notice thereof have
been  duly  made and  given  in the  manner  provided  in this  Section  2.2 and
elsewhere in these Bylaws and the  Declaration  of Trust and (ii) if not so made
or given, to direct and declare at the meeting that such nomination  and/or such
other  matters  shall  be  disregarded   and  shall  not  be   considered.   Any
determination  by the person  presiding  shall be binding on all parties  absent
manifest error.

      (h)  Notwithstanding  anything  to the  contrary  in this  Section  2.2 or
otherwise in these  Bylaws,  unless  required by federal law, no matter shall be
considered at or brought before any annual or special meeting unless such matter
has been  approved  for these  purposes  by a majority of the  Trustees  and, in
particular, no Beneficial Owner shall have any rights as a shareholder except as
may be required by federal law.  Furthermore,  nothing in this Section 2.2 shall
be construed as creating any  implication or presumption as to the  requirements
of federal law.

2.3 Place of  Meetings.  All meetings of the  shareholders  shall be held at the
principal office of the Trust, or, to the extent permitted by the Declaration of
Trust,  at such other place within the United  States as shall be  designated by
the Trustees or the president of the Trust.

     2.4 Notice of Meetings.  A written notice of each meeting of  shareholders,
stating the place, date and hour and the purposes of the meeting, shall be given
at least  seven days  before the  meeting to each  shareholder  entitled to vote
thereat by leaving  such notice with him or at his  residence  or usual place of
business or by mailing it, postage prepaid, and addressed to such shareholder at
his  address as it appears in the  records of the Trust.  Such  notice  shall be
given by the secretary or an assistant  secretary or by an officer designated by
the  Trustees.  No  notice of any  meeting  of  shareholders  need be given to a
shareholder if a written waiver of notice,  executed before or after the meeting
by such shareholder or his attorney thereunto duly authorized, is filed with the
records of the meeting.

     2.5 Ballots.  No ballot shall be required for any election unless requested
by a shareholder  present or  represented at the meeting and entitled to vote in
the election.

     2.6 Proxies.  Shareholders entitled to vote may vote either in person or by
proxy in  writing  dated not more  than six  months  before  the  meeting  named
therein,  which  proxies  shall be  filed  with the  secretary  or other  person
responsible to record the proceedings of the meeting before being voted.  Unless
otherwise  specifically  limited by their terms,  such proxies shall entitle the
holders  thereof to vote at any  adjournment  of such  meeting  but shall not be
valid after the final adjournment of such meeting. The placing of a shareholders
name  on  a  proxy   pursuant  to  telephonic  or   electronically   transmitted
instructions  obtained pursuant to procedures reasonably designed to verify that
such  instructions  have been authorized by such  shareholder  shall  constitute
execution of such proxy by or on behalf of such shareholder.

Article 3.
Trustees

      3.1.  Committees and Advisory  Board.  The Trustees may appoint from their
number an executive  committee and other committees.  Except as the Trustees may
otherwise  determine,  any such  committee  may make  rules for  conduct  of its
business. The Trustees may appoint an advisory board to consist of not less than
two nor more than five  members.  The  members of the  advisory  board  shall be
compensated  in such manner as the Trustees may  determine and shall confer with
and advise the  Trustees  regarding  the  investments  and other  affairs of the
Trust.  Each member of the  advisory  board  shall hold  office  until the first
meeting of the Trustees following the next meeting of the shareholders and until
his successor is elected and  qualified,  or until he sooner dies,  resigns,  is
removed,  or  becomes  disqualified,  or until  the  advisory  board  is  sooner
abolished by the Trustees.

In  addition,  the  Trustees  may appoint a Dividend  Committee of not less than
three persons, at least one of whom shall be a Trustee of the Trust.

No special  compensation shall be payable to members of the Dividend  Committee.
Each  member  of the  Dividend  Committee  will  hold  office  until  his or her
successor  is elected  and  qualified  or until the  member  dies,  resigns,  is
removed,  becomes  disqualified  or until  the  Committee  is  abolished  by the
Trustees.

      3.2.  Regular  Meetings.  Regular  meetings  of the  Trustees  may be held
without call or notice at such places and at such times as the Trustees may from
time to time  determine,  provided  that  notice  of the first  regular  meeting
following any such determination shall be given to absent Trustees.

      3.3. Special Meetings. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting,  when called by the
board  chair,  the  president  or the  treasurer  or by two  or  more  Trustees,
sufficient  notice  thereof  being given to each Trustee by the  secretary or an
assistant  secretary or by the board  chair,  the officer or one of the Trustees
calling the meeting.

      3.4. Notice.  It shall be sufficient notice to a Trustee to send notice by
mail at least  forty-  eight  hours or by telegram  at least  twenty-four  hours
before the  meeting  addressed  to the Trustee at his or her usual or last known
business  or  residence  address or to give notice to him or her in person or by
telephone at least  twenty-four  hours  before the meeting.  Notice of a meeting
need not be given to any Trustee if a written waiver of notice,  executed by him
or her before or after the meeting, is filed with the records of the meeting, or
to any Trustee who attends the meeting  without  protesting  prior thereto or at
its  commencement  the lack of notice to him or her. Neither notice of a meeting
nor a waiver of a notice need specify the purposes of the meeting.

      3.5. Quorum. At any meeting of the Trustees one-third of the Trustees then
in office shall constitute a quorum;  provided,  however,  a quorum shall not be
less than two unless the number of  Trustees  then in office  shall be one.  Any
meeting may be adjourned  from time to time by a majority of the votes cast upon
the question, whether or not a quorum is present, and the meeting may be held as
adjourned without further notice.

Article 4.
Officers and Agents

      4.1.  Enumeration;  Qualification.  The  officers  of the Trust shall be a
president,  a treasurer and a secretary who shall be elected by the Trustees. In
addition,  there shall be an Independent Chief Compliance Officer,  who shall be
elected or appointed by a majority of the Trustees,  including a majority of the
Trustees  who are not  interested  persons  of the  Trust as  defined  under the
Investment  Company Act of 1940 (the 1940 Act) (the Independent  Trustees),  and
otherwise in accordance with rule 38a-1 (or any successor rule)  thereunder,  as
such rule may be amended from time to time (Rule 38a-1).  The Trustees from time
to time may in their discretion elect or appoint such other officers, if any, as
the business of the Trust may require  pursuant to section 4.3 of these By-Laws.
The Trust may also have such agents,  if any, as the Trustees  from time to time
may in their discretion  appoint.  Any officer may be but none need be a Trustee
or shareholder. Any two or more offices may be held by the same person.

      4.2.  Powers.  Subject  to the other  provisions  of these  By-Laws,  each
officer  shall  have,  in  addition  to the duties and powers  herein and in the
Declaration of Trust set forth,  such duties and powers as are commonly incident
to his or her office as if the Trust were organized as a Massachusetts  business
corporation  and such other  duties and powers as the  Trustees may from time to
time  designate,  including  without  limitation the power to make purchases and
sales of portfolio  securities of the Trust pursuant to  recommendations  of the
Trusts investment  adviser in accordance with the policies and objectives of the
Trust set forth in its prospectus and with such general or specific instructions
as the  Trustees  may from  time to time  have  issued.  The  Independent  Chief
Compliance Officer shall perform the duties and have the responsibilities of the
chief  compliance  officer of the Trust in accordance with Rule 38a-1, and shall
perform such other duties and have such other  responsibilities  as from time to
time may be assigned to him by the Trustees.  The Independent  Chief  Compliance
Officer shall report  directly to the Trustees or a Committee of the Trustees in
carrying out his functions.

      4.3.  Election.  The president,  the treasurer and the secretary  shall be
elected  annually by the Trustees at their first  meeting  following  the annual
meeting of the shareholders.  The Independent Chief Compliance  Officer shall be
elected  pursuant to Section 4.1 of these By- Laws. Other elected  officers,  if
any, may be elected or appointed by the Trustees at said meeting or at any other
time. Assistant officers may be appointed by the elected officers.

      4.4.  Tenure.  The  president,   the  treasurer,  the  secretary  and  the
Independent  Chief  Compliance  Officer shall hold office until their respective
successors  are  chosen  and  qualified,  or in each case until he or she sooner
dies, resigns, is removed or becomes disqualified,  provided that any removal of
the Independent Chief Compliance  Officer shall also require the vote or consent
of a majority of the  Independent  Trustees and otherwise be in accordance  with
the  provisions  of Rule  38a-1.  Each other  officer  shall hold  office at the
pleasure of the  Trustees.  Each agent shall retain his or her  authority at the
pleasure of the Trustees.

      4.5.  President  and Vice  Presidents.  The  president  shall be the chief
executive  officer of the Trust.  The president shall preside at all meetings of
the shareholders at which he or she is present, except as otherwise voted by the
Trustees.  Any vice  president  shall  have such  duties  and powers as shall be
designated from time to time by the Trustees.

      4.6.  Treasurer,  Controller and Chief Accounting  Officer.  The treasurer
shall  be  the  chief  financial  officer  of  the  Trust  and,  subject  to any
arrangement  made  by the  Trustees  with a  bank  or  trust  company  or  other
organization as custodian or transfer or shareholder services agent, shall be in
charge of its valuable  papers and shall have such duties and powers as shall be
designated from time to time by the Trustees or by the president.  Any assistant
treasurer  shall have such duties and powers as shall be designated from time to
time by the Trustees.

      The controller shall be the officer of the Trust primarily responsible for
ensuring all  expenditures  of the Trust are  reasonable  and  appropriate.  The
controller  shall be responsible  for oversight and maintenance of liquidity and
leverage facilities  available to the Trust and shall have such other duties and
powers as may be designated from time to time by the Trustees or the President.

The chief  accounting  officer of the Trust  shall be in charge of its books and
accounting  records.  The chief  accounting  officer  shall be  responsible  for
preparation  of  financial  statements  of the Trust and shall  have such  other
duties and powers as may be designated  from time to time by the Trustees or the
President.

      4.7. Secretary and Assistant  Secretaries.  The secretary shall record all
proceedings of the  shareholders  and the Trustees in books to be kept therefor,
which books shall be kept at the principal  office of the Trust.  In the absence
of the  secretary  from any meeting of  shareholders  or Trustees,  an assistant
secretary,  or if there be none or he or she is absent, a temporary clerk chosen
at the meeting shall record the proceedings thereof in the aforesaid books.

      4.8 Board Chair.  The Trustees shall annually elect one of their number to
serve as their chair.  The board chair shall hold such position until his or her
successor is chosen and qualified,  or until he or she sooner dies,  resigns, is
removed or becomes disqualified. The board chair shall hold such position at the
pleasure of the  Trustees.  The board chair shall preside at all meetings of the
Trustees  at which he or she is present and shall  perform any other  duties and
responsibilities prescribed from time to time by the Trustees. In the absence of
the board  chair,  or in the event that such  position is vacant,  the  Trustees
present at any meeting  shall  designate  one of their number to preside at such
meeting. The board chair shall not be considered an officer of the Trust.

Article 5.
Resignations and Removals

Any  Trustee,  officer  or  advisory  board  member  may  resign  at any time by
delivering his or her resignation in writing to the president,  the treasurer or
the  secretary  or to a meeting of the  Trustees.  The  Trustees  may remove any
officer  elected  by them  with or  without  cause by the vote or  consent  of a
majority  of the  Trustees  then in  office  provided  that any  removal  of the
Independent Chief Compliance Officer shall also require the vote or consent of a
majority of the  Independent  Trustees and otherwise be in accordance  with Rule
38a-1.  Except to the extent expressly  provided in a written agreement with the
Trust, no Trustee,  officer, or advisory board member resigning,  and no officer
or advisory  board member removed shall have any right to any  compensation  for
any period following his or her resignation or removal,  or any right to damages
on account of such removal.

Article 6.
Vacancies

A vacancy  in any office may be filled at any time.  Each  successor  shall hold
office for the unexpired  term, and in the case of the president,  the treasurer
and the  secretary,  until his or her successor is chosen and  qualified,  or in
each  case  until  he or  she  sooner  dies,  resigns,  is  removed  or  becomes
disqualified.  A vacancy  in the  office  of the  Independent  Chief  Compliance
Officer shall be filled in accordance with Section 4.1 of these By-Laws.

Article 7.
Shares of Beneficial Interest

7.1.  Share Certificates.  Except as provided in Section 12.1, in lieu of
issuing certificates
for shares, the Trustees or the transfer agent shall keep accounts upon the
books of the Trust for the record holders of such shares.
      7.2.  Discontinuance  of Issuance of  Certificates.  Except as provided in
Section 12.1, the Trustees have discontinued the issuance of share  certificates
and may, by written notice to each  shareholder,  require the surrender of share
certificates  of the Trust for  cancellation.  Such  surrender and  cancellation
shall not affect the ownership of shares in the Trust.

Article 8.
Record Date and Closing Transfer Books

The  Trustees  may fix in advance a time,  which  shall not be more than 90 days
before the date of any  meeting of  shareholders  or the date for the payment of
any dividend or making of any other distribution to shareholders,  as the record
date for determining the shareholders  having the right to notice and to vote at
such meeting and any  adjournment  thereof or the right to receive such dividend
or  distribution,  and in such case only  shareholders  of record on such record
date shall have such right,  notwithstanding any transfer of shares on the books
of the Trust  after the record  date;  or without  fixing  such  record date the
Trustees may for any such purposes  close the transfer books for all or any part
of such period.

Article 9.
Seal

The seal of the Trust shall, subject to alteration by the Trustees, consist of a
flat-faced  circular die with the word  Massachusetts  together with the name of
the Trust and the year of its organization, cut or engraved thereon; but, unless
otherwise required by the Trustees, the seal shall not be necessary to be placed
on, and its absence shall not impair the validity of, any  document,  instrument
or other paper executed and delivered by or on behalf of the Trust.

Article 10.
Execution of Papers

Except as the  Trustees may  generally  or in  particular  cases  authorize  the
execution thereof in some other manner, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts and other obligations made, accepted or endorsed by
the Trust shall be signed, and all transfers of securities  standing in the name
of the  Trust  shall  be  executed,  by  the  president  or by  one of the  vice
presidents  or by the treasurer or by  whomsoever  else shall be designated  for
that  purpose  by the  vote of the  Trustees  and  need not bear the seal of the
Trust.

Article 11.
Fiscal Year

Except as from time to time otherwise provided by the Trustees,  the fiscal year
of the Trust shall end on December 31.

Article 12.
Shares of Beneficial Interest

The Trust has an unlimited number of common shares, without par value, which may
be issued from time to time by the  Trustees of the Trust.  The Trust also has a
class of 2,400 preferred shares,  without par value,  which may be issued by the
Trustees  from time to time in one or more  series  and with such  designations,
preferences and other rights,  qualifications,  limitations and  restrictions as
are determined by the Board of Trustees or a duly authorized  committee  thereof
and set forth in this Article 12.

      12.1.  Statement Creating One Series of Municipal Auction Rate
 Cumulative Preferred Shares

There is one series of Municipal Auction Rate Cumulative Preferred Shares.


PART I

DESIGNATION

SERIES M: A series of 2,400  preferred  shares,  without par value,  liquidation
preference  $25,000 per share plus  accumulated  but unpaid  dividends,  if any,
thereon  (whether or not earned or  declared),  is hereby  designated  Municipal
Auction Rate Cumulative  Preferred Shares,  Series M and is referred to below as
Series M Municipal  Preferred.  Each share of Series M Municipal Preferred shall
be issued on August 26,  1999;  have an  Applicable  Rate for its  Initial  Rate
Period  equal to 3.40% per  annum;  have an  initial  Dividend  Payment  Date of
Tuesday,  August 31,  1999;  and have such other  preferences,  limitations  and
relative  voting and other rights,  in addition to those  required by applicable
law or set forth in the Trusts  Declaration of Trust, as are set forth in Part I
and Part II of this Section 12.1. Series M Municipal  Preferred shall constitute
a separate series of Municipal  Preferred of the Trust. The Board of Trustees of
the Trust may, in their  discretion,  increase the number of shares of Municipal
Preferred  authorized  under these  By-laws to authorize the issuance of another
series of Municipal Preferred so long as such issuance is permitted by paragraph
5 of Part I of this Section 12.1.

      1.  Definitions  Unless the context or use indicates  another or different
meaning  or intent,  in Part I and Part II of this  Section  12.1 the  following
terms have the following meanings, whether used in the singular or plural:

AA Composite Commercial Paper Rate, on any date for any Rate Period of shares of
a series of Municipal  Preferred,  shall mean (i) (A) in the case of any Minimum
Rate Period or any Special  Rate Period of fewer than 49 Rate Period  Days,  the
interest  equivalent of the 30-day rate;  provided,  however,  that if such Rate
Period is a Minimum  Rate Period and the AA Composite  Commercial  Paper Rate is
being used to determine the  Applicable  Rate for shares of such series when all
of the  Outstanding  shares of such series are subject to Submitted Hold Orders,
then the interest  equivalent of the seven-day  rate, and (B) in the case of any
Special  Rate Period of (1) 49 or more but fewer than 70 Rate Period  Days,  the
interest  equivalent  of the 60-day rate;  (2) 70 or more but fewer than 85 Rate
Period Days, the arithmetic average of the interest equivalent of the 60-day and
90-day  rates;  (3) 85 or more but fewer than 99 Rate Period Days,  the interest
equivalent  of the 90-day  rate;  (4) 99 or more but fewer than 120 Rate  Period
Days,  the  arithmetic  average  of the  interest  equivalent  of the 90-day and
120-day rates; (5) 120 or more but fewer than 141 Rate Period Days, the interest
equivalent of the 120-day  rate;  (6) 141 or more but fewer than 162 Rate Period
Days,  the  arithmetic  average of the  interest  equivalent  of the 120-day and
180-day  rates;  and (7) 162 or more but fewer than 183 Rate  Period  Days,  the
interest equivalent of the 180-day rate, in each case on commercial paper placed
on behalf of issuers whose corporate bonds are rated AA by S&P or the equivalent
of such rating by S&P or another rating agency,  as made available on a discount
basis or otherwise by the Federal  Reserve Bank of New York for the Business Day
next preceding such date; or (ii) in the event that the Federal  Reserve Bank of
New York does not make available any such rate,  then the arithmetic  average of
such rates, as quoted on a discount basis or otherwise,  by the Commercial Paper
Dealers to the Auction  Agent for the close of business on the Business Day next
preceding  such  date.  If any  Commercial  Paper  Dealer  does not quote a rate
required to determine the AA Composite  Commercial  Paper Rate, the AA Composite
Commercial  Paper  Rate shall be  determined  on the basis of the  quotation  or
quotations  furnished by the  remaining  Commercial  Paper Dealer or  Commercial
Paper  Dealers  and  any  Substitute   Commercial  Paper  Dealer  or  Substitute
Commercial Paper Dealers selected by the Trust to provide such rate or rates not
being supplied by any Commercial  Paper Dealer or Commercial  Paper Dealers,  as
the case may be, or, if the Trust does not select any such Substitute Commercial
Paper Dealer or Substitute Commercial Paper Dealers, by the remaining Commercial
Paper Dealer or Commercial Paper Dealers.  For purposes of this definition,  the
interest  equivalent of a rate stated on a discount  basis (a discount rate) for
commercial  paper of a given  days  maturity  shall  be  equal  to the  quotient
(rounded  upwards  to the next  higher  one-thousandth  (.001)  of 1% of (A) the
discount rate divided by (B) the difference  between (x) 1.00 and (y) a fraction
the  numerator  of which  shall be the  product of the  discount  rate times the
number of days in which such  commercial  paper matures and the  denominator  of
which shall be 360.

  Accountants Confirmation shall have the meaning specified in paragraph 7(c) of
Part I of this Section 12.1.

Affiliate shall mean, for purposes of the definition of Outstanding,  any Person
known to the Auction  Agent to be  controlled  by, in control of or under common
control with the Trust; provided,  however, that no Broker-Dealer controlled by,
in control of or under  common  control  with the Trust shall be deemed to be an
Affiliate nor shall any  corporation or any Person  controlled by, in control of
or under common control with such corporation, one of the trustees, directors or
executive  officers  of which is a  trustee  of the  Trust  be  deemed  to be an
Affiliate solely because such trustee,  director or executive  officer is also a
trustee of the Trust.

Agent Member shall mean a member of or participant in the Securities  Depository
that will act on behalf of a Bidder.

Anticipation   Notes  shall  mean  Tax   Anticipation   Notes  (TANs),   Revenue
Anticipation  Notes (RANs), Tax and Revenue  Anticipation  Notes (TRANs),  Grant
Anticipation  Notes  (GANs)  that are rated by S&P and Bond  Anticipation  Notes
(BANs).

Applicable Rate shall have the meaning  specified in paragraph 2(e)(i) of Part I
of this Section 12.1.

Auction shall mean each periodic implementation of the Auction Procedures.

Auction  Agency  Agreement  shall mean the  agreement  between the Trust and the
Auction Agent which  provides,  among other things,  that the Auction Agent will
follow the Auction  Procedures for purposes of determining  the Applicable  Rate
for shares of a series of Municipal Preferred so long as the Applicable Rate for
shares of such series is to be based on the results of an Auction.

Auction  Agent shall mean the entity  appointed as such by a  resolution  of the
Board of  Trustees in  accordance  with  paragraph 6 of Part II of this  Section
12.1.

Auction Date, with respect to any Rate Period,  shall mean the Business Day next
preceding the first day of such Rate Period.

Auction  Procedures shall mean the procedures for conducting  Auctions set forth
in Part II of this Section 12.1.

Available Municipal Preferred shall have the meaning specified in paragraph 3(a)
of Part II of this Section 12.1.

Benchmark Rate shall have the meaning  specified in paragraph 3(c) of Part II of
this Section 12.1.

Beneficial  Owner  with  respect to shares of a series of  Municipal  Preferred,
means a  customer  of a  Broker-Dealer  who is  listed  on the  records  of that
Broker-Dealer  (or, if  applicable,  the Auction Agent) as a holder of shares of
such series.

Bid and Bids shall have the respective  meanings  specified in paragraph 1(a) of
Part II of this Section 12.1.

Bidder and Bidders  shall have the  respective  meanings  specified in paragraph
1(a) of Part II of this Section 12.1; provided,  however, that neither the Trust
nor any  affiliate  thereof  shall be  permitted  to be a Bidder in an  Auction,
except that any Broker-Dealer  that is an affiliate of the Trust may be a Bidder
in an Auction,  but only if the Orders placed by such  Broker-Dealer are not for
its own account.

Board of  Trustees  shall  mean the Board of  Trustees  of the Trust or any duly
authorized committee thereof.

Broker-Dealer  shall mean any  broker-dealer,  commercial  bank or other  entity
permitted by law to perform the functions required of a Broker-Dealer in Part II
of this Section 12.1,  that is a member of, or a participant  in, the Securities
Depository or is an affiliate of such member or  participant,  has been selected
by the  Trust  and has  entered  into a  Broker-Dealer  Agreement  that  remains
effective.

Broker-Dealer  Agreement  shall mean an agreement  among the Trust,  the Auction
Agent and a Broker-Dealer  pursuant to which such Broker-Dealer agrees to follow
the procedures specified in Part II of this Section 12.1.

Business  Day shall mean a day on which the New York Stock  Exchange is open for
trading,  and which is  neither a  Saturday,  Sunday  nor any other day on which
banks in The City of New York, New York are authorized by law to close.

By-laws means these Amended and Restated By-laws of the Trust.

Code means the Internal Revenue Code of 1986, as amended from time to time.

Commercial Paper Dealers means Lehman  Commercial Paper  Incorporated,  Goldman,
Sachs & Co. and Merrill  Lynch,  Pierce,  Fenner & Smith  Incorporated  and such
other  commercial  paper  dealer or  dealers  as the Trust may from time to time
appoint, or, in lieu of any thereof, their respective affiliates or successors.

Common Shares means the common shares of beneficial interest, without par value,
of the Trust.

Cure Date shall have the meaning  specified in paragraph 11(b) of Part I of this
Section 12.1.

Date of  Original  Issue  with  respect  to  shares  of a  series  of  Municipal
Preferred, shall mean the date on which the Trust originally issued such shares.

Declaration  shall mean the Agreement and  Declaration  of Trust dated March 16,
1989 of the  Trust,  as amended by  Amendment  No. 1 dated July 30,  1999 to the
Agreement and Declaration of Trust of the Trust, both on file with the Secretary
of The Commonwealth of Massachusetts  and as hereafter  restated or amended from
time to time.

Deposit Securities shall mean cash and Municipal Obligations rated at least A-1+
or SP-1+ by S&P, except that, for purposes of  subparagraph  (a)(v) of paragraph
11 of  Part  I of  this  Section  12.1,  such  Municipal  Obligations  shall  be
considered  Deposit  Securities only if they are also rated P-1, MIG-1 or VMIG-1
by Moodys.

Discounted  Value, as of any Valuation Date,  shall mean, (i) with respect to an
S&P Eligible  Asset,  the quotient of the Market  Value  thereof  divided by the
applicable  S&P Discount  Factor and (ii) (a) with respect to a Moodys  Eligible
Asset that is not currently  callable as of such Valuation Date at the option of
the issuer thereof,  the quotient of (i) the Market Value thereof divided by (2)
the product of (A) the applicable  Moodys Discount Factor  multiplied by (B) the
sum of 1 plus the  Moodys  Liquidity  Factor;  or (b) with  respect  to a Moodys
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 product of
(A) the applicable  Moodys Discount  Factor  multiplied by (B) the sum of 1 plus
the Moodys Liquidity Factor.

Dividend  Payment  Date,  with  respect  to  shares  of a  series  of  Municipal
Preferred,  shall mean any date on which dividends are payable on shares of such
series  pursuant to the  provisions of paragraph  2(d) of Part I of this Section
12.1.

Dividend  Period,  with  respect to shares of a series of  Municipal  Preferred,
shall mean 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.

Escrowed Bonds means Municipal  Obligations  that (i) have been determined to be
legally  defeased in accordance with S&Ps legal defeasance  criteria,  (ii) have
been  determined to be  economically  defeased in accordance  with S&Ps economic
defeasance  criteria and assigned a rating of AAA by S&P, (iii) are not rated by
S&P but have been determined to be legally defeased by Moodys, or (iv) have been
determined to be economically  defeased by Moodys and assigned a rating no lower
than the rating that is Moodys equivalent of S&Ps AAA rating.

Existing  Holder,  with  respect to shares of a series of  Municipal  Preferred,
shall mean a Broker-Dealer  (or any such other Person as may be permitted by the
Trust) that is listed on the records of the Auction  Agent as a holder of shares
of such series.

Failure to Deposit,  with respect to shares of a series of Municipal  Preferred,
shall mean a failure by the Trust to pay to the  Auction  Agent,  not later than
12:00 noon,  New York City time,  (A) on the  Business  Day next  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 next  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 shares of such series after notice of redemption is
mailed  pursuant to paragraph  11(c) of Part I of this Section  12.1;  provided,
however,  that the foregoing clause (B) shall not apply to the Trusts failure to
pay the  Redemption  Price in respect of shares of Municipal  Preferred 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.

Federal Tax Rate Increase shall have the meaning  specified in the definition of
Moodys Volatility Factor.

Gross-up  Payment in respect of any dividend means payment to a Holder of shares
of a series of Municipal  Preferred  of an amount  which,  giving  effect to the
Taxable Allocations made with respect to such dividend, would cause such Holders
after-tax  returns  (taking into account  both the Taxable  Allocations  and the
Gross-up  Payment)  to be equal to the  after-tax  return the Holder  would have
received if no such Taxable  Allocations  had occurred.  Such  Gross-up  Payment
shall be calculated:  (i) without consideration being given to the time value of
money; (ii) assuming that no Holder of shares of Municipal  Preferred is subject
to the Federal  alternative  minimum tax with respect to dividends received from
the Trust; and (iii) assuming that each Holder of shares of Municipal  Preferred
is taxable at the maximum  marginal regular Federal  individual  income tax rate
applicable to ordinary income or net capital gain, as applicable, or the maximum
marginal regular Federal corporate income tax rate applicable to ordinary income
or net capital gain, as applicable,  whichever is greater, in effect at the time
such Gross-up Payment is made.

Holder,  with respect to shares of a series of Municipal  Preferred,  shall mean
the Registered  Holder of such shares as the same appears on the record books of
the Trust.

Hold Order and Hold  Orders  shall have the  respective  meanings  specified  in
paragraph 1(a) of Part II of this Section 12.1.

Independent Accountant shall mean a nationally recognized accountant, or firm of
accountants,  that  is,  with  respect  to  the  Trust,  an  independent  public
accountant or firm of independent public accountants under the Securities Act of
1933, as amended from time to time.

Initial Margin means the amount of cash or securities deposited with a broker as
a margin payment at the time of purchase or sale of a futures contract.

Initial Rate Period, with respect to shares of a series of Municipal  Preferred,
shall mean the period from and  including  the Date of  Original  Issue for such
series to but excluding the initial Dividend Payment Date for such series.

Interest  Equivalent  shall mean a yield on a 360-day basis of a discount  basis
security which is equal to the yield on an equivalent interest-bearing security.

Inverse Floater shall mean trust  certificates or other  instruments  evidencing
interests  in one or more  municipal  securities  that  qualify as S&P  Eligible
Assets (and satisfy the issuer and size  requirements  of the  definition of S&P
Eligible  Assets)  the  interest  rates  on which  are  adjusted  at  short-term
intervals  on a basis that is inverse to the  simultaneous  readjustment  of the
interest  rates on  corresponding  floating  rate  trust  certificates  or other
instruments issued by the same issuer,  provided that the ratio of the aggregate
dollar amount of floating rate  instruments to inverse floating rate instruments
issued by the same issuer does not exceed three to one at their time of original
issuance  unless the floating rate instrument has only one reset remaining until
maturity.

Kenny Index shall have the  meaning  set forth under the  definition  of Taxable
Equivalent of the Short-Term Municipal Bond Rate.

Late Charge shall have the meaning  specified in paragraph  2(e)(i)(B) of Part I
of this Section 12.1.

Liquidation  Preference,  with  respect to a given number of shares of Municipal
Preferred, means $25,000 times that number.

Market Value of any asset of the Trust means the market value thereof determined
by the pricing  service  designated  from time to time by the Board of Trustees.
Market  Value of any asset  shall  include any  interest  accrued  thereon.  The
pricing  service  will  use  current  industry   standards  to  value  portfolio
securities. The pricing service may employ electronic data processing techniques
or a matrix  system,  or both,  to determine  valuations.  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.
In the event the  pricing  service is unable to value a security,  the  security
shall be valued at the  lower of two  dealer  bids  obtained  by the Trust  from
dealers who are  nationally  recognized  members of the National  Association of
Securities  Dealers,  Inc. who are independent of the investment  advisor to the
Trust  and make a market  in the  security,  at least  one of which  shall be in
writing.  Futures  contracts  and options are valued at closing  prices for such
instruments  established  by the  exchange  or board of trade on which  they are
traded,  or if market quotations are not readily  available,  are valued at fair
value on a  consistent  basis  using  methods  determined  in good  faith by the
Trustees.

Maximum Potential  Gross-up Payment  Liability,  as of any Valuation Date, shall
mean the  aggregate  amount of Gross-up  Payments that would be due if the Trust
were to make Taxable  Allocations,  with respect to any taxable year,  estimated
based upon dividends paid and the amount of  undistributed  realized net capital
gains  and  other  taxable  income  earned  by the  Trust,  as of the end of the
calendar month  immediately  preceding  such  Valuation  Date, and assuming such
Gross-up Payments are fully taxable.

Maximum Rate, for shares of a series of Municipal  Preferred on any Auction Date
for shares of such series, shall mean:

(i) in the case of any Auction  Date which is not the Auction  Date  immediately
prior to the first day of any  proposed  Special Rate Period  designated  by the
Trust pursuant to paragraph 4 of Part I of this Section 12.1, the product of (A)
the  Reference  Rate on such  Auction Date for the next Rate Period of shares of
such series and (B) the Rate  Multiple on such Auction  Date,  unless  shares of
such series have or had a Special Rate Period  (other than a Special Rate Period
of 28 Rate  Period  Days or fewer) and an Auction at which  Sufficient  Clearing
Bids  existed has not yet  occurred  for a Minimum Rate Period of shares of such
series after such Special Rate Period, in which case the higher of:

(A)  the dividend rate on shares of such series for the then-ending Rate
Period; and

(B) the product of (1) the higher of (x) the Reference Rate on such Auction Date
for a Rate Period  equal in length to the  then-ending  Rate Period of shares of
such series,  if such then-ending Rate Period was 364 Rate Period Days or fewer,
or the Treasury Note Rate on such Auction Date for a Rate Period equal in length
to the  then-ending  Rate Period of shares of such series,  if such then- ending
Rate Period was more than 364 Rate Period Days,  and (y) the  Reference  Rate on
such  Auction Date for a Rate Period equal in length to such Special Rate Period
of shares of such  series,  if such Special Rate Period was 364 Rate Period Days
or fewer, or the Treasury Note Rate on such Auction Date for a Rate Period equal
in length to such Special Rate Period, if such Special Rate Period was more than
364 Rate Period Days and (2) the Rate Multiple on such Auction Date; or

(ii) in the case of any Auction Date which is the Auction Date immediately prior
to the first day of any  proposed  Special Rate Period  designated  by the Trust
pursuant to paragraph 4 of Part I of this Section  12.1,  the product of (A) the
highest of (1) the  Reference  Rate on such Auction Date for a Rate Period equal
in length to the  then-ending  Rate  Period  of shares of such  series,  if such
then-ending  Rate Period was 364 Rate Period Days or fewer, or the Treasury Note
Rate on such Auction  Date for a Rate Period equal in length to the  then-ending
Rate Period of shares of such series,  if such  then-ending Rate Period was more
than 364 Rate Period Days,  (2) the Reference  Rate on such Auction Date for the
Special  Rate  Period for which the Auction is being held if such  Special  Rate
Period  is 364  Rate  Period  Days or fewer or the  Treasury  Note  Rate on such
Auction  Date for the Special Rate Period for which the Auction is being held if
such  Special  Rate  Period  is more  than 364  Rate  Period  Days,  and (3) the
Reference  Rate on such  Auction  Date for Minimum Rate Periods and (B) the Rate
Multiple on such Auction Date.

Minimum Rate Period shall mean any Rate Period consisting of 7 Rate Period Days.

Moodys shall mean Moodys Investors Service, Inc., a Delaware corporation,
and its successors.

Moodys  Discount  Factor shall mean, for purposes of determining  the Discounted
Value of any Moodys  Eligible Asset,  the percentage  determined by reference to
the rating on such asset and the  shortest  Exposure  Period set forth  opposite
such rating  that is the same  length as or is longer  than the Moodys  Exposure
Period, in accordance with the table set forth below:

Rating Category

Exposure Period
Aaa*

Aa*
A*
Baa*
Other**
(V)MIG-1***
SP-1+****
Unrated*****
7 weeks
151%
159%
166%
173%
187%
136%
148%
225%
8 weeks or less but
greater than seven
weeks


154

161

168

176

190

137

149

231
9 weeks or less but
greater than eight
weeks
156
163
170
177
192
138
150
240

*Moodys rating.
** Municipal Obligations not rated by Moodys but rated BBB by S&P. *** Municipal
Obligations rated MIG-1 or VMIG-1,  which do not mature or have a demand feature
at par  exercisable  in 30 days and which do not have a long-term  rating.  ****
Municipal  Obligations  not rated by Moodys but rated SP-1+ by S&P, which do not
mature or have a demand  feature at par  exercisable in 30 days and which do not
have a long-term rating.

***** Municipal  Obligations  rated less than Baa3 by Moodys or less than BBB by
S&P or not rated by Moodys or S&P.

Notwithstanding  the foregoing,  (i) the Moodys  Discount  Factor for short-term
Municipal  Obligations  will be 115%, so long as such Municipal  Obligations are
rated at least  MIG-1,  VMIG-1  or P-1 by  Moodys  and  mature  or have a demand
feature  at par  exercisable  in 30  days  or  less,  or  125%,  so long as such
Municipal  Obligations  are rated at least A-1+/AA or SP-1+/AA by S&P and mature
or have a demand  feature  at par  exercisable  in 30 days or less,  and (ii) no
Moodys  Discount  Factor will be applied to cash or to Receivables for Municipal
Obligations Sold or futures, options and similar instruments (to the extent such
securities are Moodys Eligible Assets); provided,  however, that for purposes of
determining the Moodys Discount Factor applicable to a Municipal Obligation, any
Municipal Obligation  (excluding any short-term Municipal  Obligation) not rated
by Moodys but rated by S&P shall be deemed to have a Moodys  rating which is one
full rating category lower than its S&P rating.

Moodys  Eligible Asset shall mean cash,  Receivables  for Municipal  Obligations
Sold, futures,  options and similar instruments (other than Inverse Floaters and
index  warrants) or a Municipal  Obligation that (i) pays interest in cash, (ii)
does not have its Moodys rating,  if applicable,  suspended by Moodys,  (iii) is
part of an issue of Municipal  Obligations of at least $10,000,000,  and (iv) is
not  subject to a covered  call or a covered  put  option  written by the Trust.
Municipal  Obligations issued by any one issuer and not rated by Moodys or rated
lower  than Baa3 by Moodys  and not rated by S&P or rated  lower than BBB by S&P
(Unrated  Moodys  Municipal  Obligations)  may comprise no more than 4% of total
Moodys  Eligible  Assets;  such Unrated Moodys  Municipal  Obligations,  if any,
together with any Municipal  Obligations issued by the same issuer and rated BBB
by S&P may  comprise  no more  than 4% of total  Moodys  Eligible  Assets;  such
BBB-rated  Municipal  Obligations and Unrated Moodys Municipal  Obligations,  if
any, together with any Municipal Obligations issued by the same issuer and rated
Baa by Moodys or A by S&P may comprise no more than 6% of total Moodys  Eligible
Assets;  such BBB,  Baa and A-rated  Municipal  Obligations  and Unrated  Moodys
Municipal Obligations, if any, together with any Municipal Obligations issued by
the same  issuer and rated A by Moodys or AA by S&P,  may  comprise no more than
10% of total Moodys Eligible Assets; and such BBB, Baa, A and AA-rated Municipal
Obligations and Unrated Moodys Municipal Obligations,  if any, together with any
Municipal Obligations issued by the same issuer and rated Aa by Moodys or AAA by
S&P, may comprise no more than 20% of total Moodys Eligible Assets. For purposes
of the  foregoing  sentence,  any Municipal  Obligation  backed by the guaranty,
letter of  credit or  insurance  issued by a third  party  shall be deemed to be
issued by such third  party if the  issuance of such  third-party  credit is the
sole  determinant  of  the  rating  on  such  Municipal  Obligations.  Municipal
Obligations issued by issuers located within a single state or territory and not
rated by Moodys or rated lower than Baa3 by Moodys and not rated by S&P or rated
lower than BBB by S&P may  comprise  no more than 12% of total  Moodys  Eligible
Assets;  such Unrated Moodys Municipal  Obligations,  if any,  together with any
Municipal  Obligations  issued  by  issuers  located  within  the same  state or
territory  and rated BBB by S&P may  comprise  no more than 12% of total  Moodys
Eligible  Assets;  such  BBB-rated  Municipal  Obligations  and  Unrated  Moodys
Municipal Obligations, if any, together with any Municipal Obligations issued by
issuers  located within the same state or territory and rated Baa by Moodys or A
by S&P, may comprise no more than 20% of total Moodys Eligible Assets; such BBB,
Baa and A-rated Municipal Obligations and Unrated Moodys Municipal  Obligations,
if any, together with any Municipal Obligations issued by issuers located within
the same state or territory  and rated A by Moodys or AA by S&P, may comprise no
more than 40% of total Moodys Eligible Assets; and such BBB, Baa, A and AA-rated
Municipal Obligations and Unrated Moodys Municipal Obligations, if any, together
with any Municipal  Obligations  issued by issuers located within the same state
or territory and rated Aa by Moodys or AAA by S&P, may comprise no more than 60%
of total Moodys Eligible Assets.  Municipal  Obligations  which are not rated by
Moodys or S&P may  comprise no more than 40% of the  aggregate  Market  Value of
Moodys  Eligible  Assets;  provided,  however,  that if the Market Value of such
Municipal  Obligations  exceeds  40% of the  aggregate  Market  Value of  Moodys
Eligible Assets, a portion of such Municipal Obligations (selected by the Trust)
shall not be considered Moodys Eligible Assets, so that the Market Value of such
Municipal  Obligations  (excluding  such  portion)  does not  exceed  40% of the
aggregate Market Value of Moodys Eligible  Assets;  provided,  however,  that no
such unrated Municipal Obligation shall be considered a Moodys Eligible Asset if
such  Municipal  Obligation  shall be in  default,  which  term  shall  mean for
purposes of this definition, either (a) the nonpayment by the issuer of interest
or principal when due or (b) the  notification of the Trust by the trustee under
the  underlying  indenture  or other  governing  instrument  for such  Municipal
Obligation  that the issuer will fail to pay when due  principal  or interest on
such Municipal Obligation.  For purposes of applying the foregoing requirements,
a Municipal Obligation shall be deemed to be rated BBB by S&P if rated BBB-, BBB
or BBB+ by S&P,  Moodys Eligible  Assets shall be calculated  without  including
cash, and Municipal  Obligations rated MIG-1,  VMIG-1 or P-1 or, if not rated by
Moodys,  rated  A-1+/Aa  or  SP-1+/AA  by S&P,  shall  be  considered  to have a
long-term rating of A. When the Trust sells a Municipal Obligation and agrees to
repurchase such Municipal  Obligation at a future day, such Municipal Obligation
shall be valued at its  Discounted  Value for  purposes  of  determining  Moodys
Eligible  Assets,  and the  amount  of the  repurchase  price of such  Municipal
Obligation  shall be included as a liability  for  purposes of  calculating  the
Municipal  Preferred Basic Maintenance Amount. When the Trust purchases a Moodys
Eligible Asset and agrees to sell it at a future date, such Eligible Asset shall
be valued at the amount of cash to be  received  by the Trust  upon such  future
date,  provided that the  counterparty  to the  transaction has a long-term debt
rating of at least A2 and a  short-term  debt  rating of at least P1 from Moodys
and the transaction has a term of no more than 30 days;  otherwise such Eligible
Asset  shall be valued  at the  Discounted  Value of such  Eligible  Asset.  For
purposes  of  determining  the  aggregate  Discounted  Value of Moodys  Eligible
Assets,  such  aggregate  amount  shall be reduced  with  respect to any futures
contracts as set forth in paragraph 10(a) of Part I of this Section 12.1.

Notwithstanding the foregoing, an asset will not be considered a Moodys Eligible
Asset to the extent it is (i) subject to any material  lien,  mortgage,  pledge,
security  interest  or security  agreement  of any kind  (collectively,  Liens),
except for (a) Liens  which are being  contested  in good  faith by  appropriate
proceedings  and which  Moodys  has  indicated  to the Trust will not affect the
status of such asset as a Moodys  Eligible  Asset,  (b) Liens for taxes that are
not then due and payable or that can be paid  thereafter  without  penalty,  (c)
Liens  to  secure  payment  for  services  rendered  or  cash  advanced  to  the
Massachusetts  Financial Services Company, Inc., The Chase Manhattan Bank or the
Auction  Agent,  (d) Liens by  virtue of any  repurchase  agreement  or  futures
contract  and (e)  Liens by  virtue  of the  transfer  of such  asset  that is a
Municipal  Obligation  by the Trust to a special  purpose  issuer that, in turn,
issues floating rate trust  certificates or other  instruments and corresponding
Inverse Floaters that collectively  evidence  interests in such asset,  provided
that,  for purposes of  calculating  the total  market value of such asset,  the
accrued interest of such asset shall be derived from the accrued interest of the
Inverse Floaters  representing  interests therein; or (ii) deposited irrevocably
for the payment of any  liabilities  for  purposes of  determine  the  Municipal
Preferred Basic Maintenance Amount.

Moodys  Exposure  Period shall mean the period  commencing on a given  Valuation
Date and ending 49 days thereafter.

Moodys Liquidity Factor shall equal the product,  expressed as a percentage,  of
(i) the quotient,  expressed as a percentage,  of (A) the aggregate value of the
Municipal  Obligations  that are  transferred  by the Trust to  special  purpose
issuers  that,  in  turn,  issue  floating  rate  trust  certificates  or  other
instruments  and  corresponding  Inverse  Floaters  that  collectively  evidence
interests in such Municipal  Obligations divided by (B) the total asset value of
the Trust;  multiplied by (ii) the quotient,  measured at their time of original
issuance,  expressed as a  percentage,  of (A) the  aggregate  dollar  amount of
floating rate trust  certificates or other instruments issued by the same issuer
that issued,  and  corresponding  to, the Inverse Floaters issued by the special
purpose issuers  referred to in clause (i)(A) of this definition  divided by (B)
the aggregate value calculated in clause (i)(A) of this  definition;  multiplied
by (iii) 15%.

Moodys  Volatility  Factor shall mean, as of any Valuation Date, (i) in the case
of any Minimum  Rate  Period,  any Special Rate period of 28 Rate Period Days or
fewer,  or  any  Special  Rate  Period  of  57  Rate  Period  Days  or  more,  a
multiplicative  factor equal to 275%,  except as otherwise  provided in the last
sentence of this definition; (ii) in the case of any Special Rate Period of more
than 28 but fewer than 36 Rate Period  Days,  a  multiplicative  factor equal to
203%;  (iii) in the case of any  Special  Rate  Period of more than 35 but fewer
than 43 Rate Period Days,  a  multiplicative  factor equal to 217%;  (iv) in the
case of any  Special  Rate  Period of more than 42 but fewer than 50 Rate Period
Days, a multiplicative  factor equal to 226%; and (v) in the case of any Special
Rate Period of more than 49 but fewer than 57 Rate Period Days, a multiplicative
factor equal to 235%.  If, as a result of the  enactment of changes to the Code,
the  greater  of  the  maximum  marginal  Federal  individual  income  tax  rate
applicable to ordinary income and the maximum marginal Federal  corporate income
tax rate  applicable  to ordinary  income will  increase,  such  increase  being
rounded up to the next five  percentage  points (the Federal Tax Rate Increase),
until the effective date of such increase,  the Moodys  Volatility Factor in the
case of any Rate Period described in (i) above in this definition  instead shall
be determined by reference to the following table:

Federal Volatility
Tax Rate Increase   Factor

 5%   295%
10%   317%
15%   341%
20%   369%
25%   400%
30%   436%
35%   477%
40%   525%

Municipal  Obligations shall mean Municipal Obligations as defined in the Trusts
registration  statement  on Form N-2 as filed with the  Securities  and Exchange
Commission on August 20, 1999 (the Registration Statement).

Municipal  Preferred  shall mean  Municipal  Auction Rate  Cumulative  Preferred
Shares,  without par value,  liquidation  preference  $25,000 per share,  of the
Trust.

Municipal  Preferred Basic  Maintenance  Amount, as of any Valuation Date, shall
mean the dollar  amount equal to the sum of (i) (A) the product of the number of
shares of Municipal  Preferred  outstanding  on such date  multiplied by $25,000
(plus the  product  of the  number of  shares of any other  series of  Preferred
Shares outstanding on such date multiplied by the liquidation preference of such
shares), plus any redemption premium applicable to shares of Municipal Preferred
(or other Preferred Shares) then subject to redemption; (B) the aggregate amount
of dividends  that will have  accumulated  at the  respective  Applicable  Rates
(whether or not earned or declared) to (but not including) the first  respective
Dividend Payment Dates for shares of Municipal Preferred outstanding that follow
such  Valuation  Date (plus the aggregate  amount of  dividends,  whether or not
earned or declared,  that will have accumulated in respect of other  outstanding
Preferred Shares to, but not including,  the first  respective  dividend payment
dates for such other shares that follow such Valuation  Date); (C) the aggregate
amount of dividends that would  accumulate on shares of each series of Municipal
Preferred  outstanding from such first respective Dividend Payment Date therefor
through the 49th day after such Valuation Date, at the Maximum Rate  (calculated
as if such Valuation  Date were the Auction Date for the Rate Period  commencing
on such  Dividend  Payment  Date)  for a Minimum  Rate  Period of shares of such
series to commence on such Dividend Payment Date, assuming,  solely for purposes
of the foregoing,  that if on such Valuation Date the Trust shall have delivered
a Notice of Special  Rate Period to the  Auction  Agent  pursuant  to  paragraph
4(d)(i) of Part I of this  Section  12.1 with  respect to shares of such series,
such  Maximum  Rate shall be the higher of (a) the Maximum  Rate for the Special
Rate Period of shares of such series to commence on such  Dividend  Payment Date
and (b) the Maximum  Rate for a Minimum  Rate Period of shares of such series to
commence on such Dividend  Payment Date,  multiplied  by the  Volatility  Factor
applicable  to a Minimum  Rate  Period,  or, in the event the Trust  shall  have
delivered  a Notice of Special  Rate  Period to the  Auction  Agent  pursuant to
paragraph  4(d)(i) of Part I of this Section 12.1 with respect to shares of such
series  designating  a Special Rate Period  consisting of 49 Rate Period Days or
more, the Volatility  Factor  applicable to a Special Rate Period of that length
(plus the  aggregate  amount of dividends  that would  accumulate at the maximum
dividend  rate or rates on any  other  Preferred  Shares  outstanding  from such
respective  dividend  payment  dates  through the 49th day after such  Valuation
Date, as established by or pursuant to the  respective  statements  establishing
and fixing the rights and  preferences of such other  Preferred  Shares) (except
that (1) if such  Valuation Date occurs at a time when a Failure to Deposit (or,
in the case of  Preferred  Shares  other  than  Municipal  Preferred,  a failure
similar to a Failure to  Deposit)  has  occurred  that has not been  cured,  the
dividend for purposes of calculation  would  accumulate at the current  dividend
rate then applicable to the shares in respect of which such failure has occurred
and (2) for those days during the period  described in this  subparagraph (C) in
respect  of  which  the  Applicable  Rate in  effect  immediately  prior to such
Dividend  Payment  Date will remain in effect (or, in the case of the  Preferred
Shares other than Municipal Preferred,  in respect of which the dividend rate or
rates in effect immediately prior to such respective dividend payment dates will
remain in effect),  the dividend for purposes of calculation would accumulate at
such  Applicable Rate (or other rate or rates, as the case may be) in respect of
those days); (D) the amount of anticipated expenses of the Trust for the 90 days
subsequent  to  such  Valuation  Date;  (E) the  amount  of the  Trusts  Maximum
Potential Gross-up Payment Liability in respect of shares of Municipal Preferred
(and similar amounts  payable in respect of other  Preferred  Shares pursuant to
provisions  similar to those  contained in paragraph 3 of Part I of this Section
12.1) as of such Valuation  Date;  (F) only for purposes of Section  7(a)(ii) of
Part I of this Article 12, the total  market  value of the  floating  rate trust
certificates or other instruments  corresponding to the Inverse Floaters held by
the Trust as of such  Valuation  Date and issued by the same  issuer that issued
such  Inverse  Floaters,  provided  that the  total  market  value of each  such
floating rate trust  certificate or other instrument is calculated as the sum of
(i) its principal  amount and (ii) the difference of (a) the accrued interest of
the  municipal  security  or  securities  underlying  such  floating  rate trust
certificate or other instrument and the  corresponding  Inverse Floater less (b)
the accrued interest of the corresponding  Inverse Floater;  and (G) any current
liabilities  as of such  Valuation  Date to the extent not  reflected  in any of
(i)(A) through (i)(F) (including, without limitation, any payables for Municipal
Obligations purchased as of such Valuation Date and any liabilities incurred for
the purpose of clearing securities  transactions) less (ii) the value (i.e., for
purposes  of current  Moodys  guidelines,  the face value of cash,  short-  term
Municipal Obligations rated MIG-1, VMIG-1 or P-1, and short-term securities that
are the direct  obligation  of the U.S.  government,  provided in each case that
such securities  mature on or prior to the date upon which any of (i)(A) through
(i)(G) become payable,  otherwise the Moodys Discounted Value or for purposes of
current  S&P guides,  the face value of cash,  short-term  municipal  securities
rated A-1+ or SP-1+ and mature or have a demand  feature  exercisable in 30 days
or less, and short-term  securities  that are the direct  obligation of the U.S.
government, provided in each case that such securities mature on or prior to the
date upon which any of (i)(A)  through  (i)(G) become  payable,  otherwise  S&Ps
Discounted Value) of any of the Trusts assets irrevocably deposited by the Trust
for the payment of any of (i)(A) through (i)(G).

Municipal  Preferred Basic Maintenance Cure Date, with respect to the failure by
the Trust to  satisfy  the  Municipal  Preferred  Basic  Maintenance  Amount (as
required by paragraph 7(a) of Part I of this Section 12.1) as a given  Valuation
Date, shall mean the second Business Day following such Valuation Date.

Municipal  Preferred Basic Maintenance  Report shall mean a report signed by the
President, Treasurer, Controller, Secretary or any Senior Vice President or Vice
President of the Trust which sets forth,  as of the related  Valuation Date, the
assets of the Trust, the Market Value and the Discounted Value thereof (seriatim
and in aggregate), and the Municipal Preferred Basic Maintenance Amount.

1940 Act shall mean the Investment  Company Act of 1940, as amended from time to
time.

1940 Act Cure Date,  with  respect to the failure by the Trust to  maintain  the
1940 Act Municipal  Preferred Asset Coverage (as required by paragraph 7 of Part
I of this Section  12.1) as of the last  Business Day of each month,  shall mean
the last Business Day of the following month.

1940 Act  Municipal  Preferred  Asset  Coverage  shall mean asset  coverage,  as
defined in Section  18(h) of the 1940 Act, of at least 200% with  respect to all
outstanding  senior  securities  of the  Trust  which are  shares of  beneficial
interest, including all outstanding shares of Municipal Preferred (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).

Notice of  Redemption  shall mean any notice with respect to the  redemption  of
shares of  Municipal  Preferred  pursuant to  paragraph  11(c) of Part I of this
Section 12.1.

Notice of Special  Rate Period  shall mean any notice with  respect to a Special
Rate Period of shares of Municipal  Preferred  pursuant to paragraph  4(d)(i) of
Part I of this Section 12.1.

Order and Orders shall have the respective  meanings specified in paragraph 1(a)
of Part II of this Section 12.1.

Outstanding  shall mean,  as of any Auction  Date with  respect to shares of any
series of Municipal  Preferred,  the number of shares of such series theretofore
issued by the Trust except,  without duplication,  (i) any shares of such series
theretofore  canceled or  delivered  to the Auction  Agent for  cancellation  or
redeemed  by the Trust,  (ii) any shares of such series as to which the Trust or
any Affiliate  thereof shall be an Existing  Holder and (iii) any shares of such
series  represented by any  certificate in lieu of which a new  certificate  has
been executed and delivered by the Trust.

Persons shall mean and include 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.

Potential  Beneficial  Owner,  with  respect to shares of a series of  Municipal
Preferred,  shall mean a customer of a  Broker-Dealer  that is not a  Beneficial
Owner of shares  of such  series  but that  wishes  to  purchase  shares of such
series,  or that is a  Beneficial  Owner of shares of such series that wishes to
purchase additional shares of such series.

Potential  Holder,  with respect to shares of a series of  Municipal  Preferred,
shall mean a Broker-Dealer  (or any such other person as may be permitted by the
Trust)  that is not an  Existing  Holder of shares of such  series or that is an
Existing  Holder of shares of such  series  that  wishes to become the  Existing
Holder of additional shares of such series.

Preferred  Shares shall mean the  preferred  shares,  without par value,  of the
Trust, and includes the shares of Municipal Preferred.

Rate Multiple, for shares of a series of Municipal Preferred on any Auction Date
for shares of such series,  shall mean the  percentage,  determined as set forth
below,  based on the prevailing rating of shares of such series in effect at the
close of business on the Business Day next preceding such Auction Date:

Prevailing Rating Percentage
aa3/AA- or higher 110%
a3/A-125%
baa3/BBB-150%
ba3/BB-200%
Below ba3/BB-250%

provided, however, that in the event the Trust has notified the Auction Agent of
its intent to allocate  income taxable for Federal income tax purposes to shares
of such series prior to the Auction  establishing the Applicable Rate for shares
of such  series,  the  applicable  percentage  in the  foregoing  table shall be
divided by the  quantity 1 minus the  greater of the  maximum  marginal  regular
Federal  individual income tax rate applicable to ordinary income or the maximum
marginal  regular  Federal  corporate  income tax rate  applicable  to  ordinary
income.

For purposes of this definition,  the prevailing rating of shares of a series of
Municipal  Preferred shall be (i) aa3/AA- or higher if such shares have a rating
of aa3 or better by Moodys  and AA- or better by S&P or the  equivalent  of such
ratings by such  agencies or a substitute  rating  agency or  substitute  rating
agencies selected as provided below,  (ii) if not aa3/AA- or higher,  then a3/A-
if such  shares  have a rating of a3 or better by Moodys and A- or better by S&P
or the equivalent of such ratings by such agencies or a substitute rating agency
or substitute rating agencies  selected as provided below,  (iii) if not aa3/AA-
or higher or  a3/A-,  then  baa3/BBB-  if such  shares  have a rating of baa3 or
better by Moodys and BBB- or better by S&P or the  equivalent of such ratings by
such  agencies or a  substitute  rating  agency or  substitute  rating  agencies
selected as provided below,  (iv) if not aa3/AA- or higher,  a3/A- or baa3/BBB-,
then  ba3/BB- if such shares have a rating of ba3 or better by Moodys and BB- or
better by S&P or the equivalent of such ratings by such agencies or a substitute
rating agency or substitute  rating agencies selected as provided below, and (v)
if not aa3/AA- or higher,  a3/A-,  baa3/BBB-,  or ba3/BB-,  then below  ba3/BB-;
provided,  however, that if such shares are rated by only one rating agency, the
prevailing  rating will be  determined  without  reference  to the rating of any
other rating  agency.  The Trust shall take all reasonable  action  necessary to
enable  either  S&P or  Moodys  to  provide a rating  for  shares  of  Municipal
Preferred. If neither S&P nor Moodys shall make such a rating available, Salomon
Smith  Barney  Inc.  or its  successor  shall  select  at least  one  nationally
recognized  statistical  rating  organization (as that term is used in the rules
and regulations of the Securities and Exchange  Commission  under the Securities
Exchange  Act of 1934,  as  amended  from  time to time) to act as a  substitute
rating  agency in respect of shares of such series of Municipal  Preferred,  and
the Trust  shall take all  reasonable  action to enable  such  rating  agency to
provide a rating for such shares.

Rate Period,  with respect to shares of a series of Municipal  Preferred,  shall
mean the Initial  Rate Period of shares of such series and any  Subsequent  Rate
Period, including any Special Rate Period, of shares of such series.

Rate Period Days,  for any Rate Period or Dividend  Period,  means the number of
days that  would  constitute  such Rate  Period or  Dividend  Period but for the
application  of paragraph  2(d) of Part I of this Section 12.1 or paragraph 4(b)
of Part I of this Section 12.1.

Receivables  for  Municipal  Obligations  Sold  shall mean (A) for  purposes  of
calculating  Moodys  Eligible  Assets as of any Valuation Date, no more than the
aggregate of the  following:  (i) the book value of  receivables  for  Municipal
Obligations  sold as of or prior to such Valuation Date if such  receivables are
due within five business days of such  Valuation  Date,  and if the trades which
generated such  receivables  are (x) settled  through  clearing house firms with
respect to which the Trust has received prior written  authorization from Moodys
or (y) with  counterparties  having a Moodys  long-term  debt rating of at least
Baa3; and (ii) the Moodys  Discounted Value of Municipal  Obligations sold as of
or prior to such Valuation Date which generated receivables, if such receivables
are due within five business days of such  Valuation Date but do not comply with
either  of the  conditions  specified  in (i)  above,  and (B) for  purposes  of
calculating  S&P Eligible  Assets as of any  Valuation  Date,  the book value of
receivables for Municipal Obligations sold as of or prior to such Valuation Date
if such receivables are due within five business days of such Valuation Date.

Redemption  Price  shall  mean the  applicable  redemption  price  specified  in
paragraph 11(a) or (b) of Part I of this Section 12.1.

Reference  Rate  shall  mean (i) the  higher of the  Taxable  Equivalent  of the
Short-Term Municipal Bond Rate and the AA Composite Commercial Paper Rate in the
case of Minimum  Rate Periods and Special Rate Periods of 28 Rate Period Days or
fewer;  (ii) the AA Composite  Commercial Paper Rate in the case of Special Rate
Periods of more than 28 Rate Period  Days but fewer than 183 Rate  Period  Days;
and (iii) the  Treasury  Bill Rate in the case of Special  Rate  Periods of more
than 182 Rate Period Days but fewer than 365 Rate Period Days.

Registration  Statement has the meaning specified in the definition of Municipal
Obligations.

S&P means Standard & Poors Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors.

S&P Discount Factor shall mean, for purposes of determining the Discounted Value
of any S&P Eligible Asset, the percentage  determined by reference to the rating
on such asset and the  shortest  S&P  Exposure  Period set forth  opposite  such
rating that is the same length as or is longer than the S&P Exposure Period,  in
accordance with the table set forth below:

 Rating Category

Exposure Period AAA*AA*A*BBB*Unrated**Zeros***

45 Business Days 190% 195% 210% 250% 220% 572%
25 Business Days 170 175 190230 220 496
10 Business Days 155 160 175 215 220 426
  7 Business Days 150 155 170 210 220 411
  3 Business Days 130 135 150 190 220 388
--------------
* S&P rating.

** S&P  Eligible  Assets  not rated by S&P or rated less than BBB by S&P and not
rated at least the  equivalent of an A rating by another  nationally  recognized
credit rating agency.

*** Municipal  Obligations rated AAA by S&P which are not interest bearing or do
not pay interest at least semi-annually.

Notwithstanding  the  foregoing,  (i) the S&P  Discount  Factor  for  short-term
Municipal  Obligations  will be 115%, so long as such Municipal  Obligations are
rated  A-1+ or SP-1+ by S&P and  mature  or have a  demand  feature  exercisable
within  30 days or less,  120% if such  Municipal  Obligations  are rated A-1 or
SP-1- by S&P and mature or have a demand feature  exercisable  within 30 days or
less, or 125% if such Municipal  Obligations  are not rated by S&P but are rated
VMIG-1, P-1 or MIG-1 by Moodys;  provided,  however, that any such Moodys- rated
short-term  Municipal  Obligations which have demand features exercisable within
30 days or less  must be backed by a letter of  credit,  liquidity  facility  or
guarantee from a bank or other financial institution with a short-term rating of
at least A-1+ from S&P and further provided that such  Moodys-rated  short-term
Municipal  Obligations  may  comprise no more than 50% of short- term  Municipal
Obligations  that qualify as S&P Eligible  Assets;  (ii) no S&P Discount  Factor
will be applied to cash,  options and similar  instruments or to Receivables for
Municipal  Obligations Sold, except that S&P Discount Factors will be applied to
futures;  (iii) the S&P Discount  Factor for Inverse  Floaters shall be equal to
the product of (A) the  discount  factor  determined  by  reference to the table
above and (B) the ratio,  at their time of  original  issuance,  expressed  as a
fraction, of (1) the aggregate dollar amount of floating rate trust certificates
or other  instruments  corresponding  to and issued by the same issuer as issued
such  Inverse  Floaters  to (2) the  aggregate  dollar  amount  of such  Inverse
Floaters;  and (iv) except as set forth in clause (i) above,  in the case of any
Municipal  Obligation  that is not rated by S&P but qualifies as an S&P Eligible
Asset pursuant to clause (iii) of that  definition,  such  Municipal  Obligation
will be deemed to have an S&P rating one full rating category lower than the S&P
rating  category  that is the  equivalent  of the rating  category in which such
Municipal Obligation is placed by such other nationally recognized credit rating
agency. For purposes of the foregoing, Anticipation Notes rated SP-1+ or, if not
rated by S&P,  rated  MIG-1 or VMIG-1 by  Moodys,  which do not mature or have a
demand  feature at par  exercisable in 30 days and which do not have a long-term
rating, shall be considered to be short-term Municipal Obligations.

S&P Eligible Asset shall mean cash (excluding any cash irrevocably  deposited by
the Trust for the payment of any  liabilities  within the  meaning of  Municipal
Preferred Basic Maintenance Amount), Receivables for Municipal Obligations Sold,
futures,  options,  Inverse  Floaters  and  similar  instruments  or a Municipal
Obligation  owned by the Trust that (i) is interest bearing and pays interest at
least  semi-annually;  (ii) is payable with respect to principal and interest in
U.S.  Dollars;  (iii) is publicly  rated BBB or higher by S&P or,  except in the
case  of  Anticipation   Notes  that  are  Grant   Anticipation  Notes  or  Bond
Anticipation  Notes which must be rated by S&P to be  included  in S&P  Eligible
Assets,  if not rated by S&P but rated by another  nationally  recognized credit
rating agency, is rated at least A by such agency; (iv) is not part of a private
placement of Municipal Obligations (except in the case of Inverse Floaters); (v)
is part of an issue of Municipal  Obligations  with an original issue size of at
least $20  million  or, if of an issue  with an  original  issue  size below $20
million (but in no event below $10 million), is issued by an issuer with a total
of at least $50 million of securities outstanding;  and (vi) is not subject to a
covered call or covered put option written by the Trust.  Solely for purposes of
this definition, the term Municipal Obligation means any obligation the interest
on which is exempt from regular  Federal income  taxation and which is issued by
any  of  the  fifty  United  States,  the  District  of  Columbia  or any of the
territories of the United States, their subdivisions,  counties,  cities, towns,
villages,  school  districts  and agencies  (including  authorities  and special
districts created by the states), and federally sponsored agencies such as local
housing authorities. Notwithstanding the foregoing limitations:

(1)  Municipal  Obligations  (excluding  Escrowed  Bonds)  of any one  issuer or
guarantor (excluding bond insurers) shall be considered S&P Eligible Assets only
to the extent the Market Value of such Municipal Obligations does not exceed 10%
of the aggregate Market Value of S&P Eligible Assets,  provided that 2% is added
to the applicable S&P Discount  Factor for every 1% by which the Market Value of
such  Municipal  Obligations  exceeds 5% of the  aggregate  Market  Value of S&P
Eligible Assets,  and provided that Municipal  Obligations  (excluding  Escrowed
Bonds) not rated by S&P or rated less than BBB by S&P or not rated at least A by
another  nationally  recognized  credit  rating  agency  of any  one  issuer  or
guarantor (excluding bond insurers) shall constitute S&P Eligible Assets only to
the extent the Market Value of such Municipal  Obligations does not exceed 5% of
the aggregate Market Value of S&P Eligible Assets;

(2) Municipal  Obligations  not rated at least BBB by S&P or not rated by S&P or
not rated at least A by another nationally recognized credit rating agency shall
be  considered  S&P Eligible  Assets only to the extent the Market Value of such
Municipal  Obligations  does not exceed 50% of the aggregate Market Value of S&P
Eligible Assets;  provided,  however, that if the Market Value of such Municipal
Obligations  exceeds 50% of the aggregate Market Value of S&P Eligible Assets, a
portion of such  Municipal  Obligations  (selected  by the  Trust)  shall not be
considered  S&P  Eligible  Assets,  so that the Market  Value of such  Municipal
Obligations (excluding such portion) does not exceed 50% of the aggregate Market
Value of S&P Eligible Assets;

(3) Long-term Municipal Obligations (excluding Escrowed Bonds) issued by issuers
in any one state or territory  shall be considered  S&P Eligible  Assets only to
the extent that the Market Value of such Municipal  Obligations  does not exceed
25% of the aggregate Market Value of S&P Eligible Assets;

(4) Municipal  Obligations which are not interest bearing or do not pay interest
at least  semi-annually  shall be considered S&P Eligible Assets if rated AAA by
S&P and

(5) A Municipal Obligation that is transferred by the Trust to a special purpose
issuer  that,  in  turn,  issues  floating  rate  trust  certificates  or  other
instruments  and  corresponding  Inverse  Floaters  that  collectively  evidence
interests in such  Municipal  Obligation  shall not be considered a S&P Eligible
Asset.

For purposes of  determining  the  aggregate  Discounted  Value of S&Ps Eligible
Assets,  such  aggregate  amount  shall be reduced  with  respect to any futures
contracts as set forth in paragraph 10(a) of Part I of this Section 12.1.

S&P Exposure  Period shall mean the period  commencing on a given Valuation Date
and ending three business days thereafter.

S&P  Volatility  Factor shall mean, as of any Valuation  Date, a  multiplicative
factor  equal to (i) 305% in the case of any Minimum  Rate Period or any Special
Rate  Period  of 28 Rate  Period  Days or  fewer;  (ii)  268% in the case of any
Special  Rate  Period of more than 28 Rate  Period  Days but fewer than 183 Rate
Period Days;  and (iii) 204% in the case of any Special Rate Period of more than
182 Rate Period Days.

Securities Depository shall mean The Depository Trust Company and its successors
and  assigns or any other  securities  depository  selected  by the Trust  which
agrees to follow the  procedures  required  to be  followed  by such  securities
depository in connection with shares of Municipal Preferred.

Sell Order and Sell  Orders  shall have the  respective  meanings  specified  in
paragraph 1(a) of Part II of this Section 12.1.

Special Rate Period, with respect to shares of a series of Municipal  Preferred,
shall have the meaning  specified  in  paragraph  4(a) of Part I of this Section
12.1.

Special  Redemption  Provisions  shall have the meaning  specified  in paragraph
11(a)(i) of Part I of this Section 12.1.

Submission  Deadline  shall mean 1:30 P.M.,  New York City time,  on any Auction
Date or such other time on any Auction Date by which Broker-Dealers are required
to submit  Orders to the Auction  Agent as specified  by the Auction  Agent from
time to time.

Submitted Bid and Submitted Bids shall have the respective meanings specified in
paragraph 3(a) of Part II of this Section 12.1.

Submitted  Hold  Order and  Submitted  Hold  Orders  shall  have the  respective
meanings specified in paragraph 3(a) of Part II of this Section 12.1.

Submitted  Order  and  Submitted  Orders  shall  have  the  respective  meanings
specified in paragraph 3(a) of Part II of this Section 12.1.

Submitted  Sell  Order and  Submitted  Sell  Orders  shall  have the  respective
meanings specified in paragraph 3(a) of Part II of this Section 12.1.

Subsequent  Rate  Period,  with  respect  to  shares  of a series  of  Municipal
Preferred,  shall mean the period from and including the first day following the
Initial Rate Period of shares of such series to but  excluding the next 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;  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 the last day of the last Dividend Period thereof.

Substitute  Commercial Paper Dealer shall mean CS First Boston or Morgan Stanley
& Co. Incorporated or their respective affiliates or successors,  if such entity
is a commercial  paper  dealer;  provided,  however,  that none of such entities
shall be a Commercial Paper Dealer.

Substitute  U.S.  Government  Securities  Dealer  shall mean CS First Boston and
Merrill  Lynch,  Pierce,   Fenner  &  Smith  Incorporated  or  their  respective
affiliates or successors, if such entity is a U.S. Government securities dealer;
provided,  however,  that  none  of such  entities  shall  be a U.S.  Government
Securities Dealer.

Sufficient  Clearing Bids shall have the meaning  specified in paragraph 3(a) of
Part II of this Section 12.1.

Taxable  Allocation shall have the meaning specified in paragraph 3 of Part I of
this Section 12.1.

Taxable  Equivalent of the  Short-Term  Municipal Bond Rate, on any date for any
Minimum  Rate  Period or Special  Rate  Period of 28 Rate  Period Days or fewer,
shall  mean  90% of the  quotient  of (A) the per  annum  rate  expressed  on an
interest  equivalent basis equal to the S&P Kenny 30 day High Grade Index or any
successor index (the Kenny Index)  (provided,  however,  that any such successor
index  must be  approved  by Moodys  (if  Moodys is then  rating  the  shares of
Municipal  Preferred)  and S&P (if S&P is then  rating the  shares of  Municipal
Preferred)), made available for the Business Day immediately preceding such date
but in any event not later than 8:30 A.M.,  New York City time,  on such date by
S&P J.J. Kenny Evaluation  Services or any successor thereto,  based upon 30-day
yield evaluations at par of short-term bonds the interest on which is excludable
for regular  Federal income tax purposes under the Code, of high grade component
issuers  selected by S&P J.J.  Kenny  Evaluation  Services or any such successor
from time to time in its  discretion,  which  component  issuers shall  include,
without  limitation,  issuers of general obligation bonds, but shall exclude any
bonds the interest on which  constitutes an item of tax preference under Section
57(a)(5) of the Code, or successor  provisions,  for purposes of the alternative
minimum  tax,  divided by (B) 1.00 minus the  greater  of the  maximum  marginal
regular Federal  individual income tax rate applicable to ordinary income or the
maximum  marginal  regular  Federal  corporate  income  tax rate  applicable  to
ordinary income (in each case expressed as a decimal);  provided,  however, that
if the Kenny Index is not made so available by 8:30 A.M., New York City time, on
such date by S&P J.J. Kenny  Evaluation  Services or any successor,  the Taxable
Equivalent of the Short-Term  Municipal Bond Rate shall mean the quotient of (A)
the per annum rate expressed on an interest  equivalent  basis equal to the most
recent Kenny Index so made available for any preceding  Business Day, divided by
(B) 1.00 minus the greater of the maximum  marginal  regular Federal  individual
income tax rate  applicable to ordinary income or the maximum  marginal  regular
Federal  corporate  income tax rate  applicable to ordinary income (in each case
expressed as a decimal).

Taxable Income shall have the meaning  specified in paragraph 3(c) of Part II of
this Section 12.1.

Treasury  Bill shall mean a direct  obligation of the U.S.  Government  having a
maturity at the time of issuance of 364 days or less.

Treasury  Bill Rate,  on any date for any Rate  Period,  shall mean (i) the bond
equivalent yield,  calculated in accordance with prevailing industry convention,
of the  rate on the most  recently  auctioned  Treasury  Bill  with a  remaining
maturity closest to the length of such Rate Period, as quoted in The Wall Street
Journal on such date for the Business Day next  preceding  such date; or (ii) in
the event that any such rate is not published in The Wall Street  Journal,  then
the bond equivalent  yield,  calculated in accordance  with prevailing  industry
convention,  as  calculated  by reference to the  arithmetic  average of the bid
price quotations of the most recently  auctioned  Treasury Bill with a remaining
maturity  closest to the length of such Rate Period,  as determined by bid price
quotations as of the close of business on the Business Day immediately preceding
such date obtained from the U.S.  Government  Securities  Dealers to the Auction
Agent.

Treasury  Note shall mean a direct  obligation of the U.S.  Government  having a
maturity at the time of issuance of five years or less but more than 364 days.

Treasury Note Rate, on any date for any Rate Period, shall mean (i) the yield on
the most recently  auctioned  Treasury Note with a remaining maturity closest to
the length of such Rate  Period,  as quoted in The Wall  Street  Journal on such
date for the Business Day next  preceding  such date;  or (ii) in the event that
any such rate is not  published  in The Wall Street  Journal,  then the yield as
calculated by reference to the arithmetic average of the bid price quotations of
the most recently  auctioned  Treasury Note with a remaining maturity closest to
the length of such Rate Period,  as determined by bid price quotations as of the
close of business on the Business Day  immediately  preceding such date obtained
from the U.S.  Government  Securities  Dealers to the Auction Agent. If any U.S.
Government  Securities  Dealer does not quote a rate  required to determine  the
Treasury  Bill Rate or the Treasury  Note Rate,  the  Treasury  Bill Rate or the
Treasury  Note  Rate  shall  be  determined  on the  basis of the  quotation  or
quotations furnished by the remaining U.S. Government  Securities Dealer or U.S.
Government  Securities  Dealers and any Substitute  U.S.  Government  Securities
Dealers  selected by the Trust to provide such rate or rates not being  supplied
by any U.S. Government  Securities Dealer or U.S. Government Securities Dealers,
as the case may be, or, if the Trust does not  select any such  Substitute  U.S.
Government  Securities Dealer or Substitute U.S. Government  Securities Dealers,
by the remaining U.S. Government Securities Dealer or U.S. Government Securities
Dealers.

U.S. Government Securities Dealer shall mean Lehman Government Securities
Incorporated, Goldman, Sachs & Co., Salomon Smith Barney Inc.
and Morgan Guaranty Trust Company of New York or their respective affiliates or
successors, if such entity is a U.S.government securities dealer.

Valuation  Date shall mean,  for  purposes of  determining  whether the Trust is
maintaining the Municipal Preferred Basic Maintenance Amount, each Business Day.

Variation Margin means, in connection with an outstanding futures contract owned
or sold by the Trust,  the amount of cash or securities paid to or received from
a broker  (subsequent  to the Initial  Margin  payment) from time to time as the
price of such futures contract fluctuates.

Volatility  Factor  shall mean,  as of any  Valuation  Date,  the greater of the
Moodys Volatility Factor and the S&P Volatility Factor.

Voting  Period shall have the meaning  specified in paragraph  5(b) of Part I of
this Section 12.1.

Winning Bid Rate shall have the meaning  specified in paragraph  3(a) of Part II
of this Section 12.1.

      2.Dividends.

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

      (b)  Cumulative  Cash  Dividends.  The  Holders  of  shares  of  Municipal
Preferred of any series shall be entitled to receive,  when,  as and if declared
by the Board of Trustees,  out of funds legally available therefor in accordance
with  the  Declaration,  these  By-laws  and  applicable  law,  cumulative  cash
dividends at the  Applicable  Rate for shares of such series,  determined as set
forth in subparagraph (e) of this paragraph 2, and no more (except to the extent
set  forth  in  paragraph  3 of Part I of this  Section  12.1),  payable  on the
Dividend Payment Dates with respect to shares of such series determined pursuant
to  subparagraph  (d) of this  paragraph  2.  Holders  of  shares  of  Municipal
Preferred  shall not be  entitled  to any  dividend,  whether  payable  in cash,
property or shares, in excess of full cumulative dividends,  as herein provided,
on  shares  of  Municipal  Preferred.  No  interest,  or sum of money in lieu of
interest,  shall be payable in respect of any  dividend  payment or  payments on
shares of Municipal Preferred which may be in arrears, and, except to the extent
set forth in subparagraph (e)(i) of this paragraph 2, no additional sum of money
shall be payable in respect of any such arrearage.

      (c) Dividends Cumulative From Date of Original Issue.  Dividends on shares
of Municipal Preferred of any series shall accumulate at the Applicable Rate for
shares of such series from the Date of Original Issue thereof.

      (d) Dividend Payment Dates and Adjustments  Thereof.  The Dividend Payment
Dates  with  respect  to  shares  of a series of  Municipal  Preferred  shall be
Tuesday,  August 31, 1999 and each Tuesday  thereafter with respect to shares of
Series M Municipal Preferred; provided, however, that

      (i) (A) if the Tuesday on which  dividends  would  otherwise be payable on
shares  of  Series M  Municipal  Preferred  is not a  Business  Day,  then  such
dividends  shall be payable on shares of such series on the first  Business  Day
that falls after such Tuesday; and

      (ii)  notwithstanding the foregoing provisions of this paragraph 2(d), the
Trust in its discretion  may establish the Dividend  Payment Dates in respect of
any Special Rate Period of shares of a series of Municipal Preferred  consisting
of more than 28 Rate Period Days;  provided,  however,  that such dates shall be
set forth in the Notice of Special  Rate Period  relating to such  Special  Rate
Period,  as delivered to the Auction Agent,  which Notice of Special Rate Period
shall be filed with the  Secretary of the Trust;  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 subparagraph (b) of paragraph 4 of Part I of this Section 12.1.

      (e)Dividend Rates and Calculation of Dividends.

(i) Dividend  Rates.  The dividend rate on shares of Municipal  Preferred of any
series during the period from and after the Date of Original  Issue of shares of
such series to and  including  the last day of the Initial Rate Period of shares
of such  series  shall be equal to the rate per annum set forth with  respect to
shares of such series under Designation in Part I of this Section 12.1. 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 an
Auction  for  shares of such  series on the  Auction  Date next  preceding  such
Subsequent Rate Period; provided, however, that if:

(A) an Auction  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 the Maximum Rate for shares of such series
on the Auction Date therefor;

(B) any Failure to Deposit  shall have  occurred  with respect to shares of such
series  during any Rate  Period  thereof  (other  than any  Special  Rate Period
consisting of more than 364 Rate Period Days or any Rate Period  succeeding  any
Special Rate Period  consisting of more than 364 Rate Period Days during which a
Failure to Deposit occurred that has not been cured),  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 subparagraph (f) of this paragraph 2 and the Trust shall have
paid to the Auction Agent a late charge (Late Charge) equal to the sum of (1) if
such Failure to Deposit  consisted  of the failure  timely to pay to the Auction
Agent the full amount of dividends  with  respect to any Dividend  Period of the
shares  of such  series,  an  amount  computed  by  multiplying  (x) 200% of the
Reference  Rate for the Rate Period during which such Failure to Deposit  occurs
on the Dividend  Payment Date for such  Dividend  Period 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  subparagraph  (f) of this  paragraph  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 and (2) if such Failure to Deposit  consisted
of the failure  timely to pay to the Auction Agent the  Redemption  Price of the
shares, if any, of such series for which Notice of Redemption has been mailed by
the Trust pursuant to paragraph  11(c) of Part I of this Section 12.1, an amount
computed  by  multiplying  (x) 200% of the  Reference  Rate for the Rate  Period
during  which such  Failure to Deposit  occurs on the  redemption  date 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  subparagraph  (f) of this
paragraph 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, no Auction will be held in
respect of shares of such series for the Subsequent  Rate Period thereof 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  Auction  Date for such
Subsequent Rate Period;

(C) any Failure to Deposit  shall have  occurred  with respect to shares of such
series  during any Rate  Period  thereof  (other  than any  Special  Rate Period
consisting of more than 364 Rate Period Days or any Rate Period  succeeding  any
Special Rate Period  consisting of more than 364 Rate Period Days during which a
Failure to Deposit occurred that has not been cured),  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 subparagraph (f) of this paragraph 2 or the Trust shall
not have paid the applicable  Late Charge to the Auction Agent,  no Auction will
be held in respect of shares of such series for the first Subsequent Rate Period
thereof  thereafter (or for any Rate Period thereof  thereafter to and including
the Rate Period  during which (1) such Failure to Deposit is cured in accordance
with  subparagraph (f) of this paragraph 2 and (2) the Trust pays the applicable
Late Charge to the Auction Agent (the  condition set forth in this clause (2) to
apply only in the event Moodys is rating such shares at the time the Trust cures
such Failure to Deposit),  in each case no later than 12:00 Noon,  New York City
time, on the fourth Business Day prior to the end of such Rate Period),  and the
dividend  rate for shares of such  series for each such  Subsequent  Rate Period
shall be a rate per annum equal to the Maximum Rate for shares of such series on
the Auction 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 ba3/BB-); or

(D) any Failure to Deposit  shall have  occurred  with respect to shares of such
series  during a Special Rate Period  thereof  consisting  of more than 364 Rate
Period  Days,  or during any Rate Period  thereof  succeeding  any Special  Rate
Period  consisting  of more than 364 Rate Period Days during  which a Failure to
Deposit  occurred that has not been cured,  and,  prior to 12:00 Noon,  New York
City time,  on the fourth  Business Day  preceding the Auction Date for the Rate
Period  subsequent  to such Rate Period,  such Failure to Deposit shall not have
been cured in accordance  with  subparagraph  (f) of this paragraph 2 or, in the
event  Moodys is then  rating  such  shares,  the Trust  shall not have paid the
applicable  Late Charge to the Auction Agent (such Late Charge,  for purposes of
this  subparagraph  (D), to be calculated by using,  as the Reference  Rate, the
Reference Rate  applicable to a Rate Period (x) consisting of more than 182 Rate
Period Days but fewer than 365 Rate Period Days and (y)  commencing  on the date
on which the Rate Period during which Failure to Deposit occurs  commenced),  no
Auction  will be held in  respect of shares of such  series for such  Subsequent
Rate Period (or for any Rate Period thereof thereafter to and including the Rate
Period  during  which (1) such  Failure to Deposit is cured in  accordance  with
subparagraph  (f) of this paragraph 2 and (2) the Trust pays the applicable Late
Charge to the Auction Agent (the condition set forth in this clause (2) to apply
only in the event  Moodys is rating such shares at the time the Trust cures such
Failure to Deposit),  in each case no later than 12:00 Noon, New York City time,
on the  fourth  Business  Day  prior to the end of such  Rate  Period),  and the
dividend  rate for shares of such  series for each such  Subsequent  Rate Period
shall be a rate per annum equal to the Maximum Rate for shares of such series on
the Auction 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  ba3/BB-) (the rate per annum of which  dividends are payable
on shares of a series of Municipal  Preferred for any Rate Period  thereof being
herein referred to as the Applicable Rate for shares of such series).

(ii)  Calculation  of  Dividends.  The amount of dividends  per share payable on
shares of a series of Municipal  Preferred on any date on which  dividends shall
be  payable  on shares of such  series  shall be  computed  by  multiplying  the
Applicable  Rate for shares of such series in effect for such Dividend Period or
Dividend  Periods or part  thereof for which  dividends  have not been paid by a
fraction,  the  numerator of which shall be the number of days in such  Dividend
Period or Dividend Periods or part thereof and the denominator of which shall be
365 if such Dividend Period consists of 7 Rate Period Days and 360 for all other
Dividend Periods, and applying the rate obtained against $25,000.

      (f) Curing a Failure to  Deposit.  A Failure  to Deposit  with  respect to
shares of a series of Municipal Preferred shall have been cured (if such Failure
to Deposit is not  solely  due to the  willful  failure of the Trust to make the
required  payments  to the  Auction  Agent)  with  respect to any Rate Period of
shares of such  series if,  within the  respective  time  periods  described  in
subparagraph  (e)(i)  of this  paragraph  2, the  Trust  shall  have paid to the
Auction Agent (A) all accumulated and 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 mailed by the Trust  pursuant to
paragraph  11(c) of Part I of this Section  12.1;  provided,  however,  that the
foregoing clause (B) shall not apply to the Trusts failure to pay the Redemption
Price in respect of shares of Municipal  Preferred  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 Trust to Auction  Agent.  The Trust shall pay to
the  Auction  Agent,  not later than  12:00  Noon,  New York City  time,  on the
Business Day next preceding each Dividend Payment Date for shares of a series of
Municipal Preferred, an aggregate amount of funds available on the next Business
Day in The City of New York, New York,  equal to the dividends to be paid to all
Holders of shares of such series on such Dividend Payment Date.

      (h)  Auction  Agent as Trustee of Dividend  Payments by Trust.  All moneys
paid to the Auction  Agent for the payment of  dividends  (or for the payment of
any Late Charge) shall be held in trust for the payment of such  dividends  (and
any such Late  Charge)  by the  Auction  Agent for the  benefit  of the  Holders
specified  in  subparagraph  (i) of this  paragraph  2. Any  moneys  paid to the
Auction  Agent in  accordance  with the foregoing but not applied by the Auction
Agent to the payment of dividends (and any such Late Charge) will, to the extent
permitted  by law, be repaid to the Trust at the end of 90 days from the date on
which such moneys were so to have been applied.

      (i)  Dividends  Paid to  Holders.  Each  dividend  on shares of  Municipal
Preferred  shall be paid on the Dividend  Payment  Date  therefor to the Holders
thereof as their names  appear on the record  books of the Trust on the Business
Day next preceding such Dividend Payment Date.

      (j) Dividends Credited Against Earliest  Accumulated But Unpaid Dividends.
Any  dividend  payment  made on shares of  Municipal  Preferred  shall  first be
credited against the earliest  accumulated but unpaid dividends due with respect
to such  shares.  Dividends  in  arrears  for any past  Dividend  Period  may be
declared and paid at any time, without reference to any regular Dividend Payment
Date,  to the Holders as their names  appear on the record books of the Trust 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 shares
of Municipal  Preferred shall be designated as  exempt-interest  dividends up to
the amount of tax- exempt income of the Trust,  to the extent  permitted by, and
for purposes of, Section 852 of the Code.

      3.Gross-up Payments.

Holders of shares of Municipal Preferred shall be entitled to receive,  when, as
and if  declared  by the  Board  of  Trustees,  out of funds  legally  available
therefor in accordance with the  Declaration,  these By-laws and applicable law,
dividends in an amount equal to the aggregate Gross-up Payments as follows:

      (a) Minimum  Rate  Periods and Special Rate Periods of 28 Rate Period Days
or Fewer.  If, in the case of any Minimum Rate Period or any Special Rate Period
of 28 Rate Period Days or fewer,  the Trust  allocates  any net capital  gain or
other  income  taxable for  Federal  income tax  purposes to a dividend  paid on
shares of Municipal Preferred without having given advance notice thereof to the
Auction  Agent as provided in  paragraph 5 of Part II of this Section 12.1 (such
allocation being referred to herein as a Taxable Allocation) solely by reason of
the  fact  that  such  allocation  is  made  retroactively  as a  result  of the
redemption of all or a portion of the outstanding shares of Municipal  Preferred
or the  liquidation  of the  Trust,  the  Trust  shall,  prior to the end of the
calendar year in which such  dividend was paid,  provide  notice  thereof to the
Auction  Agent and  direct  the Trusts  dividend  disbursing  agent to send such
notice with a Gross- up Payment to each Holder of such shares that was  entitled
to such dividend  payment  during such calendar year at such Holders  address as
the same appears or last appeared on the record books of the Trust.

      (b) Special Rate Periods of More Than 28 Rate Period Days. If, in the case
of any Special Rate Period of more than 28 Rate Period  Days,  the Trust makes a
Taxable  Allocation  to a dividend  paid on shares of Municipal  Preferred,  the
Trust shall,  prior to the end of the calendar  year in which such  dividend was
paid, provide notice thereof to the Auction Agent and direct the Trusts dividend
disbursing  agent to send such notice with a Gross-up  Payment to each Holder of
shares that was entitled to such dividend  payment  during such calendar year at
such Holders address as the same appears or last appeared on the record books of
the Trust.

      (c) No Gross-up  Payments In the Event of a Reallocation.  The Trust shall
not be required to make  Gross-up  Payments with respect to any net capital gain
or other  taxable  income  determined  by the  Internal  Revenue  Service  to be
allocable in a manner different from that allocated by the Trust.

      4.Designation of Special Rate Periods.

      (a) Length of and Preconditions for Special Rate Period. The Trust, at its
option,  may  designate  any  succeeding  Subsequent  Rate Period of shares of a
series of Municipal Preferred 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  subparagraph  (b) of this  paragraph 4. A
designation  of a Special  Rate  Period  shall be  effective  only if (A) notice
thereof shall have been given in accordance with subparagraphs (c) and (d)(i) of
this  paragraph 4, (B) an Auction for shares of such series shall have been held
on the Auction Date immediately preceding the first day of such proposed Special
Rate Period and  Sufficient  Clearing  Bids for shares of such series shall have
existed in such  Auction,  and (C) if any Notice of  Redemption  shall have been
mailed by the Trust  pursuant to paragraph  11(c) of Part I of this Section 12.1
with respect to any shares of such series,  the Redemption Price with respect to
such shares shall have been deposited  with the Auction Agent.  In the event the
Trust wishes to designate any succeeding  Subsequent Rate Period for shares of a
series of Municipal  Preferred as a Special Rate Period  consisting of more than
28 Rate  Period  Days,  the Trust  shall  notify S&P (if S&P is then rating such
series)  and  Moodys (if Moodys is then  rating  such  series) in advance of the
commencement  of such  Subsequent Rate Period that the Trust wishes to designate
such  Subsequent  Rate Period as a Special Rate Period and shall provide S&P (if
S&P is then  rating  such  series)  and Moodys (if  Moodys is then  rating  such
series) with such documents as either may request.

      (b)  Adjustment  of Length of Special Rate Period.  In the event the Trust
wishes to designate a Subsequent  Rate Period as a Special Rate Period,  but the
day following  what would  otherwise be the last day of such Special Rate Period
is not a Tuesday that is a Business  Day,  then the Trust shall  designate  such
Subsequent  Rate  Period as a  Special  Rate  Period  consisting  of the  period
commencing at the end of the immediately preceding Rate Period and ending on the
first Monday that is followed by a Tuesday that is a Business Day preceding what
would otherwise be such last day, in the case of Series M Municipal Preferred.

      (c) Notice of  Proposed  Special  Rate  Period.  If the Trust  proposes to
designate  any  succeeding  Subsequent  Rate  Period  of  shares  of a series of
Municipal  Preferred as a Special Rate Period  pursuant to  subparagraph  (a) of
this  paragraph  4, not less  than 20 (or such  lesser  number of days as may be
agreed to from time to time by the Auction Agent) nor more than 30 days prior to
the date the Trust  proposes to  designate as the first day of such Special Rate
Period  (which  shall be such day that  would  otherwise  be the  first day of a
Minimum Rate Period), notice shall be (i) published or caused to be published by
the Trust in a newspaper of general  circulation  to the financial  community in
The City of New York, New York, which carries financial news, and (ii) mailed by
the Trust by first-class mail, postage prepaid, to the Holders of shares of such
series.  Each such notice shall state (A) that the Trust 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 and (B) that the Trust
will,  by 11:00  A.M.,  New York City  time,  on the  second  Business  Day next
preceding such date (or by such later time or date, or both, as may be agreed to
by the Auction Agent) notify the Auction Agent of either (x) its  determination,
subject to certain conditions,  to exercise such option, in which case the Trust
shall specify the Special Rate Period  designated,  or (y) its determination not
to exercise such option.

      (d) Notice of Special Rate Period. No later than 11:00 A.M., New York City
time,  on the second  Business Day next  preceding the first day of any proposed
Special  Rate Period of shares of a series of  Municipal  Preferred  as to which
notice has been given as set forth in  subparagraph  (c) of this paragraph 4 (or
such later time or date, or both, as may be agreed to by the Auction Agent), the
Trust shall deliver to the Auction Agent either:

(i) a notice  (Notice of Special  Rate  Period)  stating  (A) that the Trust has
determined to designate the next succeeding Rate Period of shares of such series
as a Special Rate Period, specifying the same and the first day thereof, (B) the
Auction Date immediately prior to the first day of such Special Rate Period, (C)
that such Special Rate Period shall not commence if (1) an Auction for shares of
such  series  shall not be held on such  Auction  Date for any  reason or (2) an
Auction  for  shares  of such  series  shall  be held on such  Auction  Date but
Sufficient  Clearing  Bids for  shares  of such  series  shall not exist in such
Auction,  (D) the  scheduled  Dividend  Payment  Dates for shares of such series
during such Special Rate Period and (E) the Special  Redemption  Provisions,  if
any, applicable to shares of such series in respect of such Special Rate Period;
such notice to be accompanied by a Municipal  Preferred Basic Maintenance Report
showing that, as of the third Business Day next preceding such proposed  Special
Rate Period,  Moodys  Eligible Assets (if Moodys is then rating such series) and
S&P  Eligible  Assets (if S&P is then rating such series) each have an aggregate
Discounted  Value at least equal to the Municipal  Preferred  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 Auction  Date for the  proposed  Special Rate
Period, and (b) the Moodys Discount Factors applicable to Moodys Eligible Assets
are  determined  by  reference  to the first  Exposure  Period  longer  than the
Exposure  Period then applicable to the Trust, as described in the definition of
Moodys Discount Factor herein); or

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

      (e) Failure to Deliver  Notice of Special Rate Period.  If the Trust fails
to deliver either of the notices described in subparagraphs (d)(i) or (d)(ii) of
this  paragraph  4 (and,  in the case of the notice  described  in  subparagraph
(d)(i) of this paragraph 4, a Municipal  Preferred Basic  Maintenance  Report to
the  effect  set forth in such  subparagraph  (if  either  Moodys or S&P is then
rating the series in question))  with respect to any designation of any proposed
Special Rate Period to the Auction  Agent by 11:00 A.M.,  New York City time, on
the second  Business Day next  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
Auction  Agent),  the Trust  shall be deemed to have  delivered  a notice to the
Auction  Agent with  respect to such Special Rate Period to the effect set forth
in subparagraph  (d)(ii) of this paragraph 4. In the event the Trust delivers to
the Auction Agent a notice described in subparagraph (d)(i) of this paragraph 4,
it shall file a copy of such notice  with the  Secretary  of the Trust,  and the
contents  of such notice  shall be binding on the Trust.  In the event the Trust
delivers to the Auction Agent a notice described in subparagraph (d)(ii) of this
paragraph 4, the Trust will provide  Moodys (if Moodys is then rating the series
in  question)  and S&P (if S&P is then rating the series in  question) a copy of
such notice.

      5.Voting Rights.

      (a) One Vote  Per  Share  of  Municipal  Preferred.  Except  as  otherwise
provided in the Declaration,  this paragraph 5 or as otherwise  required by law,
(i) each Holder of shares of Municipal  Preferred  shall be entitled to one vote
for  each  share of  Municipal  Preferred  held by such  Holder  on each  matter
submitted  to a vote of  shareholders  of the  Trust,  and (ii) the  holders  of
outstanding Preferred Shares,  including each share of Municipal Preferred,  and
of Common Shares shall vote together as a single class; provided, however, that,
at any  meeting  of the  shareholders  of the  Trust  held for the  election  of
trustees,  the holders of  outstanding  Preferred  Shares,  including  Municipal
Preferred, represented in person or by proxy at said meeting, shall be entitled,
as a class, to the exclusion of the holders of all other  securities and classes
of shares of  beneficial  interest  of the Trust,  to elect two  trustees of the
Trust,  each  Preferred  Share,  including  each share of  Municipal  Preferred,
entitling the holder thereof to one vote.  Subject to  subparagraph  (b) of this
paragraph 5, the holders of  outstanding  Common  Shares and  Preferred  Shares,
including  Municipal  Preferred,  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  subparagraph  (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 shares of Municipal Preferred,  would
constitute a majority of the Board of Trustees as so increased by such  smallest
number;  and the holders of Preferred  Shares,  including  Municipal  Preferred,
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 Trust),  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
Share, including Municipal Preferred, 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 Auction 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 Trust.

Upon the  termination  of a Voting Period,  the voting rights  described in this
subparagraph  (b)(i) shall cease,  subject always,  however, to the revesting of
such voting  rights in the Holders  upon the  further  occurrence  of any of the
events described in this subparagraph (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 subparagraph (b)(i) of this paragraph 5, the Trust shall notify the
Auction  Agent  and the  Auction  Agent  shall  call a special  meeting  of such
holders,  by  mailing a notice of such  special  meeting to such  holders,  such
meeting  to be held not less  than 10 nor more  than 20 days  after  the date of
mailing of such  notice.  If the Trust  fails to send such notice to the Auction
Agent or if the Auction  Agent does not call such a special  meeting,  it may be
called by any such holder on like notice.  The record date for  determining  the
holders  entitled to notice of and to vote at such special  meeting shall be the
close of  business on the fifth  Business  Day  preceding  the day on which such
notice is mailed.  At any such special meeting and at each meeting 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 Trust),  shall be entitled to elected the number of trustees  prescribed  in
subparagraph (b)(i) of this paragraph 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 Trust 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 the  number of  trustees  that they are  entitled  to elect,  and the
persons so elected by the Holders and such other holders,  together with the two
incumbent  trustees  elected by the Holders and such other  holders of 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
Trust.

(iv) Terms of Office of Certain Trustees to Terminate Upon Termination of Voting
Period.  Simultaneously  with the  termination of a Voting  Period,  the term of
office of the  additional  trustees  elected by the Holders and holders of other
Preferred  Shares  pursuant  to  subparagraph  (b)(i) of this  paragraph 5 shall
terminate, the remaining trustees shall constitute the trustees of the Trust and
the voting  rights of the  Holders  and such other  holders to elect  additional
trustees  pursuant  to  subparagraph  (b)(i) of this  paragraph  5 shall  cease,
subject to the  provisions of the last sentence of  subparagraph  (b)(i) of this
paragraph 5.

      (c)Holders of Municipal Preferred To Vote on Certain Other Matters.

(i) Increases in  Capitalization.  So long as any shares of Municipal  Preferred
are outstanding, the Trust shall not, without the affirmative vote or consent of
the  Holders  of at  least a  majority  of the  shares  of  Municipal  Preferred
outstanding  at the  time,  in person or by  proxy,  either in  writing  or at a
meeting, voting as a separate class: (a) authorize, create or issue any class or
series of  shares  ranking  prior to or on a parity  with  shares  of  Municipal
Preferred with respect to the payment of dividends or the distribution of assets
upon  dissolution,  liquidation  or winding up of the  affairs of the Trust,  or
authorize,  create  or  issue  additional  shares  of any  series  of  Municipal
Preferred  (except  that,  notwithstanding  the  foregoing,  but  subject to the
provisions  of  paragraph  10(c) of Part I of this  Section  12.1,  the Board of
Trustees, without the vote or consent of the Holders of Municipal Preferred, may
from  time to time  authorize  and  create,  and the Trust may from time to time
issue,  additional  shares of any series of  Municipal  Preferred  or classes or
series  of  Preferred  Shares  ranking  on a parity  with  shares  of  Municipal
Preferred  with  respect to the payment of  dividends  and the  distribution  of
assets upon dissolution,  liquidation or winding up of the affairs of the Trust;
provided,  however,  that if  Moodys  or S&P is not then  rating  the  shares of
Municipal  Preferred,  the  aggregate  liquidation  preference  of all Preferred
Shares  of  the  Trust  outstanding  after  any  such  issuance,   exclusive  of
accumulated  and unpaid  dividends,  may not exceed  $60,000,000)  or (b) amend,
alter or repeal the provisions of the Declaration or the By-Laws, including this
Section 12.1, whether by merger, consolidation or otherwise, so as to materially
affect any preference,  right or power of such shares of Municipal  Preferred to
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 share of Municipal  Preferred will be deemed to
affect such  preferences,  rights or powers  only if the terms of such  division
adversely  affect the  Holders of shares of  Municipal  Preferred  and (iii) the
authorization,  creation  and  issuance  of classes or series of shares  ranking
junior to shares of Municipal Preferred with respect to the payment of dividends
and the  distribution of assets upon  dissolution,  liquidation or winding up of
the affairs of the Trust, will be deemed to affect such  preferences,  rights or
powers only if Moodys or S&P is then rating  shares of Municipal  Preferred  and
such issuance  would,  at the time  thereof,  cause the Trust not to satisfy the
1940 Act Municipal  Preferred  Asset Coverage or the Municipal  Preferred  Basic
Maintenance   Amount.  So  long  as  any  shares  of  Municipal   Preferred  are
outstanding, the Trust shall not, without the affirmative vote or consent of the
Holders of at least 66 2/3% of the shares of Municipal Preferred  outstanding at
the time, in person or by proxy, either in writing or at a meeting,  voting as a
separate class, file a voluntary application for relief under Federal bankruptcy
law or any  similar  application  under  state  law for so long as the  Trust is
solvent and does not foresee becoming insolvent.

(ii)  1940 Act  Matters.  Unless  a higher  percentage  is  provided  for in the
Declaration  or these  By-laws,  (A) the  affirmative  vote of the Holders of at
least  a  majority  of the  Preferred  Shares,  including  Municipal  Preferred,
outstanding  at the time,  voting as a  separate  class,  shall be  required  to
approve any conversion of the Trust 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  Municipal  Preferred,  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
Municipal  Preferred,  voting as a separate class,  shall be required to approve
any  action not  described  in the first  sentence  of this  paragraph  5(c)(ii)
requiring a vote of security  holders of the Trust  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 Municipal  Preferred is required  pursuant to the provisions of Section 13(a)
of the 1940 Act, the Trust shall,  not later than ten Business Days prior to the
date on which such vote is to be taken,  notify Moodys (if Moodys is then rating
the shares of Municipal  Preferred) and S&P (if S&P is then rating the shares of
Municipal  Preferred) that such vote is to be taken and the nature of the action
with respect to which such vote is to be taken.  The Trust shall, not later than
ten Business Days after the date on which such vote is taken,  notify Moodys (if
Moodys is then rating the shares of Municipal Preferred) and S&P (if S&P is then
rating the shares of Municipal Preferred) of the results of such vote.

(iii)  Separate  Vote by Series.  To the extent  permitted by the 1940 Act, with
respect to actions set forth in paragraph  5(c)(i) and paragraph  5(c)(ii) above
(including amendment,  alteration or repeal of the provisions of the Declaration
of Trust or the By- Laws,  whether by merger,  consolidation  or otherwise) that
would adversely  affect the rights of one or more series of Municipal  Preferred
(the Affected  Series) in a manner  different from any other series of Municipal
Preferred,  the Trust will not approve any such action  without the  affirmative
vote or consent of the Holders of at least a majority of the shares of each such
Affected Series  outstanding at the time, in person or proxy,  either in writing
or at a meeting (each such Affected Series voting as a separate class).

      (d) Board May Take Certain Actions Without Shareholder Approval. The Board
of Trustees,  without the vote or consent of the  shareholders of the Trust, may
from time to time amend,  alter or repeal any or all of the  definitions  of the
terms listed  below,  or any  provision of this Section 12.1 viewed by Moodys or
S&P as a predicate for any such definition,  and any such amendment,  alteration
or repeal  will not be deemed to  affect  the  preferences,  rights or powers of
shares of Municipal Preferred or the Holders thereof;  provided,  however,  that
the Board of  Trustees  receives  written  confirmation  from (i)  Moodys  (such
confirmation  being  required to be obtained  only in the event Moodys is rating
the shares of Municipal  Preferred and in no event being required to be obtained
in the case of the  definitions  of (x) Deposit  Securities,  Discounted  Value,
Receivables for Municipal  Obligations Sold and Other Issues as such terms apply
to S&P Eligible  Asset and (y) S&P Discount  Factor,  S&P  Eligible  Asset,  S&P
Exposure Period and S&P Volatility Factor) and (ii) S&P (such confirmation being
required to be obtained  only in the event S&P is rating the shares of Municipal
Preferred  and in no event  being  required  to be  obtained  in the case of the
definitions of (x) Discounted Value,  Receivables for Municipal Obligations Sold
and Other Issues as such terms apply to Moodys  Eligible  Asset,  and (y) Moodys
Discount  Factor,  Moodys  Eligible  Asset,  Moodys  Exposure  Period and Moodys
Volatility  Factor)  that any such  amendment,  alteration  or repeal  would not
impair the ratings then assigned by Moodys or S&P, as the case may be, to shares
of Municipal Preferred:

Deposit Securities
Discounted Value
Escrowed Bonds
Market Value

Maximum Potential Gross-up Payment
Liability
Municipal Preferred Basic Maintenance
Amount
Municipal Preferred Basic Maintenance Cure
Date
Municipal Preferred Basic Maintenance Report
Moodys Discount Factor
Moodys Eligible Asset



Moodys Exposure Period
Moodys Volatility Factor
1940 Act Cure Date

1940 Act Municipal Preferred Asset Coverage
Other Issues


Receivables for Municipal Obligations Sold
S&P Discount Factor
S&P Eligible Asset
S&P Exposure Period
S&P Volatility Factor
Valuation Date
Volatility Factor


In addition,  the Trust may change its policies to comply with changes in rating
agency  requirements upon receiving written  notification of such changes.  Such
changes will be subject to ratification by the Board of Trustees.

      (e)  Voting  Rights  Set  Forth  Herein  Are Sole  Voting  Rights.  Unless
otherwise  required by law, these By-laws or by the Declaration,  the Holders of
shares of Municipal  Preferred shall not have any 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 shares of Municipal
Preferred shall have no preemptive rights or rights to cumulative voting.

      (g) Voting for Trustees Sole Remedy for Trusts  Failure to Pay  Dividends.
In the  event  that  the  Trust  fails to pay any  dividends  on the  shares  of
Municipal  Preferred,  the exclusive remedy of the Holders shall be the right to
vote for Trustees pursuant to the provisions of this paragraph 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 Section
12.1, by the other provisions of these By-laws or the Declaration, by statute or
otherwise,  no Holder shall be entitled to vote any share of Municipal Preferred
and no share of Municipal  Preferred  shall be deemed to be outstanding  for the
purpose of voting or determining  the number of shares  required to constitute a
quorum if, prior to or  concurrently  with the time of  determination  of shares
entitled to vote or shares deemed  outstanding for quorum purposes,  as the case
may be, the  requisite  Notice of  Redemption  with respect to such shares shall
have been mailed as provided in  paragraph  11(c) of Part I of this Section 12.1
and the  Redemption  Price for the  redemption  of such  shares  shall have been
deposited  in trust  with the  Auction  Agent  for that  purpose.  No  shares of
Municipal  Preferred held by the Trust or any affiliate of the Trust (except for
shares held by a Broker-Dealer that is an affiliate of the Trust for the account
of its  customers)  shall have any voting rights or be deemed to be  outstanding
for voting or other purposes.

      (i)  Notwithstanding  any  provision  of these  By-Laws  to the  contrary,
neither the Holders of Municipal  Preferred,  nor the Holders of any one or more
series  thereof,  shall be entitled to vote as a separate  class with respect to
any matter, if such separate class vote is prohibited by the 1940 Act.

      6.1940 Act Municipal Preferred Asset Coverage.

The Trust shall maintain, as of the last Business Day of each month in which any
share of Municipal  Preferred is outstanding,  the 1940 Act Municipal  Preferred
Asset Coverage.

      7.Municipal Preferred Basic Maintenance Amount.

      (a) So long as shares of Municipal  Preferred are  outstanding,  the Trust
shall  maintain,  on each Valuation  Date, and shall verify to its  satisfaction
that it is maintaining on such Valuation Date, (i) S&P Eligible Assets having an
aggregate  Discounted  Value equal to or greater  than the  Municipal  Preferred
Basic  Maintenance  Amount  (if S&P is  then  rating  the  shares  of  Municipal
Preferred) and (ii) Moodys Eligible Assets having an aggregate  Discounted Value
equal to or greater than the Municipal  Preferred Basic  Maintenance  Amount (if
Moodys is then rating the shares of Municipal Preferred).

      (b) On or before 5:00 P.M.,  New York City time, on the third Business Day
after a  Valuation  Date on which  the  Trust  fails to  satisfy  the  Municipal
Preferred  Basic  Maintenance  Amount,  and on the third  Business Day after the
Municipal  Preferred Basic  Maintenance Cure Date with respect to such Valuation
Date,  the Trust  shall  complete  and deliver to S&P (if S&P is then rating the
shares of Municipal  Preferred),  Moodys (if Moodys is then rating the shares of
Municipal  Preferred)  and the  Auction  Agent (if  either S&P or Moodys is then
rating  the  shares  of  Municipal   Preferred)  a  Municipal   Preferred  Basic
Maintenance  Report as of the date of such failure or such  Municipal  Preferred
Basic  Maintenance  Cure Date,  as the case may be, which will be deemed to have
been  delivered  to the Auction  Agent if the Auction  Agent  receives a copy of
telecopy,  telex or other electronic  transcription  thereof and on the same day
the Trust mails to the Auction  Agent for delivery on the next  Business Day the
full Municipal Preferred Basic Maintenance Report.

The Trust shall also deliver a Municipal  Preferred Basic Maintenance  Report to
(i) the  Auction  Agent (if  either  Moodys or S&P is then  rating the shares of
Municipal  Preferred) as of (A) the fifteenth day of each month (or, if such day
is not a  Business  Day,  the  next  succeeding  Business  Day) and (B) the last
Business Day of each month,  and (ii) S&P and Moodys,  if and when requested for
any Valuation  Date, on or before the third  Business Day after such request.  A
failure by the Trust to deliver a Municipal  Preferred Basic Maintenance  Report
pursuant to the preceding sentence shall be deemed to be delivery of a Municipal
Preferred  Basic  Maintenance  Report  indicating the  Discounted  Value for all
assets of the  Trust is less  than the  Municipal  Preferred  Basic  Maintenance
Amount, as of the relevant Valuation Date.

      (c) As  frequently  as  requested  by Moodys (if Moodys is then rating the
shares of  Municipal  Preferred)  or S&P (if S&P is then  rating  the  shares of
Municipal  Preferred),  the Trust  shall  cause the  Independent  Accountant  to
confirm  in  writing  to S&P (if S&P is then  rating  the  shares  of  Municipal
Preferred),  Moodys (if Moodys is then rating the shares of Municipal Preferred)
and the  Auction  Agent (if  either  S&P or Moodys is then  rating the shares of
Municipal Preferred) (i) the mathematical accuracy of the calculations reflected
in such  Report and (ii) that,  in such Report  (and in such  randomly  selected
Report),  the Trust  determined in accordance  with this  paragraph  whether the
Trust had,  at the time of such  request , S&P  Eligible  Assets (if S&P is then
rating the shares of Municipal  Preferred) of an aggregate  Discounted  Value at
least  equal to the  Municipal  Preferred  Basic  Maintenance  Amount and Moodys
Eligible Assets (if Moodys is then rating the shares of Municipal  Preferred) of
an aggregate  Discounted  Value at least equal to the Municipal  Preferred Basic
Maintenance  Amount  (such  confirmation  being  herein  called the  Accountants
Confirmation).

      (d) Within ten  Business  Days after the date of  delivery  of a Municipal
Preferred Basic  Maintenance  Report in accordance with subparagraph (b) of this
paragraph 7 relating to any Valuation  Date on which the Trust failed to satisfy
the Municipal  Preferred Basic Maintenance Amount, and relating to the Municipal
Preferred  Basic  Maintenance  Cure Date with respect to such failure to satisfy
the Municipal  Preferred  Basic  Maintenance  Amount,  the Trust shall cause the
Independent  Accountant  to provide to S&P (if S&P is then  rating the shares of
Municipal  Preferred),  Moodys (if Moodys is then rating the shares of Municipal
Preferred)  and the  Auction  Agent (if either S&P or Moodys is then  rating the
shares of Municipal Preferred) an Accountants  Confirmation as to such Municipal
Preferred Basic Maintenance Report.

      (e) If any Accountants Confirmation delivered pursuant to subparagraph (c)
or (d) of  this  paragraph  7 shows  that an  error  was  made in the  Municipal
Preferred  Basic  Maintenance  Report for a particular  Valuation Date for which
such  Accountants  Confirmation  was required to be  delivered,  or shows that a
lower  aggregate  Discounted  Value for the aggregate of all S&P Eligible Assets
(if S&P is then rating the shares of  Municipal  Preferred)  or Moodys  Eligible
Assets (if Moodys is then rating the shares of Municipal Preferred), as the case
may  be,  of the  Trust  was  determined  by  the  Independent  Accountant,  the
calculation or determination made by such Independent  Accountant shall be final
and  conclusive  and  shall  be  binding  on the  Trust,  and  the  Trust  shall
accordingly amend and deliver the Municipal  Preferred Basic Maintenance  Report
to S&P (if S&P is then  rating the shares of  Municipal  Preferred),  Moodys (if
Moodys is then rating the shares of Municipal  Preferred)  and the Auction Agent
(if either  S&P or Moodys is then  rating  the  shares of  Municipal  Preferred)
promptly following receipt by the Trust of such Accountants Confirmation.

      (f) On or before 5:00 p.m.,  New York City time, on the first Business Day
after the Date of Original Issue of any shares of Municipal Preferred, the Trust
shall complete and deliver to S&P (if S&P is then rating the shares of Municipal
Preferred)  and  Moodys  (if  Moodys is then  rating  the  shares  of  Municipal
Preferred) a Municipal  Preferred  Basic  Maintenance  Report as of the close of
business on such Date of Original Issue.  Within five Business Days of such Date
of Original Issue,  the Trust shall cause the Independent  Accountant to confirm
in writing to S&P (if S&P is then rating the shares of Municipal  Preferred) (i)
the mathematical accuracy of the calculations  reflected in such Report and (ii)
that the Discounted  Value of S&P Eligible  Assets  reflected  thereon equals or
exceeds the Municipal Preferred Basic Maintenance Amount reflected thereon.

      (g) On or before 5:00 p.m.,  New York City time, on the third Business Day
after either (i) the Trust shall have  redeemed  Common Shares or (ii) the ratio
of the Discounted Value of S&P Eligible Assets or the Discounted Value of Moodys
Eligible Assets to the Municipal Preferred Basic Maintenance Amount is less than
or equal to 105%,  the Trust shall  complete  and deliver to S&P (if S&P is then
rating the shares of  Municipal  Preferred)  or Moodys (if Moodys is then rating
the shares of Municipal  Preferred),  as the case may be, a Municipal  Preferred
Basic Maintenance Report as of the date of either such event.

      8.[Reserved].

      9.Restrictions on Dividends and Other Distributions.

      (a) Dividends on Preferred Shares Other Than Municipal  Preferred.  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 Trust ranking, as to the payment of dividends,  on a parity with
shares of Municipal  Preferred for any period unless full  cumulative  dividends
have  been or  contemporaneously  are  declared  and paid on the  shares of each
series of Municipal  Preferred  through its most recent  Dividend  Payment Date.
When  dividends are not paid in full upon the shares of each series of Municipal
Preferred  through its most recent  Dividend  Payment Date or upon the shares of
any other class or series of shares of beneficial  interest of the Trust ranking
on a parity as to the payment of dividends  with shares of  Municipal  Preferred
through  their most recent  respective  dividend  payment  dates,  all dividends
declared  upon shares of Municipal  Preferred and any other such class or series
of shares of  beneficial  interest  ranking  on a parity  as to the  payment  of
dividends with shares of Municipal  Preferred shall be declared pro rata so that
the amount of dividends declared per share on shares of Municipal  Preferred 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
shares  of  Municipal  Preferred  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 per share of Municipal  Preferred shall be based on
the  Applicable  Rate for such  shares 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 share of Municipal  Preferred is outstanding,  and except as set forth in
subparagraph  (a) of this  paragraph  9 and  paragraph  12(c)  of Part I of this
Section 12.1, (A) the Trust 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 shares of Municipal
Preferred 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 Trust  ranking  junior to or on a parity with the shares of
Municipal Preferred 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
Trust ranking  junior to the shares of Municipal  Preferred 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  Trust  ranking  junior  to or on a  parity  with  Municipal
Preferred 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 each series of Municipal  Preferred  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  Auction  Agent and (ii) the
Trust has redeemed the full number of shares of Municipal  Preferred required to
be redeemed by any provision for mandatory  redemption  pertaining thereto,  and
(B) the Trust 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 shares of Municipal  Preferred 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 Trust ranking  junior to shares of Municipal  Preferred 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 Trust ranking junior to shares of
Municipal  Preferred  as to the payment of  dividends  and the  distribution  of
assets upon  dissolution,  liquidation or winding up), unless  immediately after
such  transaction  the Discounted  Value of Moodys Eligible Assets (if Moodys is
then rating the shares of Municipal  Preferred) and S&P Eligible  Assets (if S&P
is then rating the shares of Municipal  Preferred) would each at least equal the
Municipal Preferred Basic Maintenance Amount.

      10.Rating Agency Restrictions.

For so long as any shares of Municipal  Preferred are  outstanding and Moodys or
S&P, or both, are rating such shares, the Trust will not, unless it has received
written confirmation from Moodys or S&P, or both, as appropriate,  that any such
action would not impair the ratings then  assigned by such rating agency to such
shares, engage in any one or more of the following transactions:

      (a) purchase or sell futures contracts, write, purchase or sell options on
futures  contracts  or write put options  (except  covered put  options) or call
options  (except covered call options) on portfolio  securities  except that the
Trust may purchase or sell futures  contracts  based on the Bond Buyer Municipal
Bond  Index  (the  Municipal  Index) or United  States  Treasury  Bonds or Notes
(Treasury  Bonds)  and  write,  purchase  or sell put and call  options  on such
contracts  (collectively,   Hedging  Transactions),  subject  to  the  following
limitations:

(i) the Trust will not engage in any Hedging  Transaction based on the Municipal
Index (other than transactions which terminate a futures contract or option held
by the  Trust  by the  Trusts  taking  an  opposite  position  thereto  (Closing
Transactions)),  which would cause the Trust at the time of such  transaction to
own or have sold the least of (A) more than 1,000 outstanding  futures contracts
based on the Municipal  Index,  (B) outstanding  futures  contracts based on the
Municipal  Index  exceeding in number 25% of the quotient of the Market Value of
the Trusts total assets divided by $1,000 or (C) outstanding  futures  contracts
based on the Municipal  Index  exceeding in number 10% of the average  number of
daily open interest  futures  contracts  based on the Municipal  Index in the 30
days  preceding the time of effecting  such  transaction as reported by The Wall
Street Journal.

(ii) the Trust  will not engage in any  Hedging  Transaction  based on  Treasury
Bonds (other than Closing  Transactions) which would cause the Trust at the time
of such  transaction to own or have sold the lesser of (A)  outstanding  futures
contracts based on Treasury Bonds exceeding in number 50% of the quotient of the
Market  Value of the Trusts total  assets  divided by $100,000  ($200,000 in the
case of a two-year  United  States  Treasury  Note) or (B)  outstanding  futures
contracts  based on Treasury Bonds exceeding in number 10% of the average number
of  daily  traded  futures  contracts  based  on  Treasury  Bonds in the 30 days
preceding the time of effecting such  transaction as reported by The Wall Street
Journal;

(iii) the Trust will engage in Closing Transactions to close out any outstanding
futures  contract  which the Trust  owns or has sold or any  outstanding  option
thereon owned by the Trust in the event (A) the Trust does not have S&P Eligible
Assets  or  Moodys  Eligible  Assets,  as the  case  may be,  with an  aggregate
Discounted  Value  equal  to or  greater  than  the  Municipal  Preferred  Basic
Maintenance  Amount  on two  consecutive  Valuation  Dates  and (B) the Trust is
required to pay Variation Margin on the second such Valuation Date;

(iv) the Trust will engage in a Closing Transaction to close out any outstanding
futures  contract  or option  thereon in the month prior to the  delivery  month
under the terms of such  futures  contract  or option  thereon  unless the Trust
holds the securities deliverable under such terms; and

(v) when the Trust writes a futures  contract or option thereon,  it will either
maintain an amount of cash, cash  equivalents or fixed-income  securities  rated
BBB or  better by S&P or  Moodys,  as the case may be for S&P  purposes  and any
liquid  assets for Moodys  purposes,  in a  segregated  account  with the Trusts
custodian,  so that the amount so segregated  plus the amount of Initial  Margin
and  Variation  Margin held in the account of or on behalf of the Trusts  broker
with respect to such futures  contract or option  equals the Market Value of the
futures contract or option, or, in the event the Trust writes a futures contract
or option thereon which requires  delivery of an underlying  security,  it shall
hold such underlying security in its portfolio.

For purposes of determining  whether the Trust has S&P Eligible Assets or Moodys
Eligible  Assets,  as the case may be,  with a  Discounted  Value that equals or
exceeds the Municipal  Preferred Basic Maintenance  Amount, the Discounted Value
of cash or securities held for the payment of Initial Margin or Variation Margin
shall be zero and the  aggregate  Discounted  Value of S&P  Eligible  Assets  or
Moodys Eligible Assets,  as the case may be, shall be reduced by an amount equal
to (I) 30% of the  aggregate  settlement  value,  as  marked to  market,  of any
outstanding  futures  contracts  based on the Municipal Index which are owned by
the Trust plus (II) 25% of the aggregate  settlement value, as marked to market,
of any outstanding futures contracts based on Treasury Bonds which contracts are
owned by the Trust.

      (b) borrow money, except that the Trust may, without obtaining the written
confirmation   described  above,  borrow  money  for  the  purpose  of  clearing
securities  transactions if (i) the Municipal Preferred Basic Maintenance Amount
would  continue to be satisfied  after giving  effect to such  borrowing  (which
shall mean,  for purposes of the  calculation of the Municipal  Preferred  Basic
Maintenance Amount, adding the amount of the liability for such borrowing to the
calculation  of  the  Municipal   Preferred  Basic   Maintenance   Amount  under
subparagraph  (F) under the  definition  of that term in Part I of this  Section
12.1) and (ii) such  borrowing  (A) is privately  arranged  with a bank or other
person and is evidenced by a promissory  note or other evidence of  indebtedness
that  is not  intended  to be  publicly  distributed  or  (B)  is for  temporary
purposes,  is evidenced by a promissory  note or other evidence of  indebtedness
and is an amount not  exceeding 5% of the value of the total assets of the Trust
at the time of the borrowing;  for purposes of the foregoing,  temporary purpose
means  that the  borrowing  is to be repaid  within  sixty days and is not to be
extended or renewed;

      (c) issue  additional  shares of any series of Municipal  Preferred or any
class or  series  of  shares  ranking  prior to or on a parity  with  shares  of
Municipal Preferred with respect to the payment of dividends or the distribution
of assets upon  dissolution,  liquidation or winding up of the Trust, or reissue
any shares of Municipal Preferred previously purchased or redeemed by the Trust;

      (d)engage in any short sales of securities;

      (e)lend securities;

      (f)merge or consolidate into or with any corporation;

(g)change the pricing service (currently both Muller Data Corporation and
Standard & Poors J.J. Kenny Evaluation Services are used by the Trust) referred
to in the definition of Market Value to a pricing service other than Muller Data
Corporation or Standard & Poors J.J. Kenny Evaluation Services; or

      (h)enter into reverse repurchase agreements.

      11.Redemption.

      (a)Optional Redemption.

(i) Subject to the  provisions of  subparagraph  (v) of this  subparagraph  (a),
shares of Municipal  Preferred  of any series may be redeemed,  at the option of
the Trust,  as a whole or from time to time in part, on the second  Business Day
preceding  any Dividend  Payment  Date for shares of such  series,  out of funds
legally available therefor,  at a redemption price per share equal to the sum of
$25,000  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 a  series  of  Municipal
Preferred  may not be redeemed in part if after such  partial  redemption  fewer
than 500 shares of such series remain outstanding; (2) unless otherwise provided
herein,  shares of a series of Municipal  Preferred are  redeemable by the Trust
during the Initial  Rate Period  thereof  only on the second  Business  Day next
preceding the last Dividend  Payment Date for such Initial Rate Period;  and (3)
subject to  subparagraph  (ii) of this  subparagraph  (a), the Notice of Special
Rate Period relating to a Special Rate Period of shares of a series of Municipal
Preferred, as delivered to the Auction Agent and filed with the Secretary of the
Trust, may provide that shares of such series shall not be redeemable during the
whole  or  any  part  of  such  Special  Rate  Period  (except  as  provided  in
subparagraph  (iv) of this  subparagraph  (a)) 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 shares of a series of Municipal
Preferred  for a Special  Rate Period  thereof may  contain  Special  Redemption
Provisions  only if the Trusts Board of Trustees,  after  consultation  with the
Broker-Dealer  or Broker- Dealers for such Special Rate Period of shares of such
series,  determines  that such  Special  Redemption  Provisions  are in the best
interest of the Trust.  (iii) If fewer than all of the  outstanding  shares of a
series of Municipal Preferred are to be redeemed pursuant to subparagraph (i) of
this  subparagraph (a), the number of shares of such series to be redeemed shall
be  determined  by the Board of Trustees,  and such shares shall be redeemed pro
rata from the  Holders of shares of such series in  proportion  to the number of
shares of such series held by such Holders.

(iv) Subject to the provisions of  subparagraph  (v) of this  subparagraph  (a),
shares of any series of Municipal  Preferred  may be redeemed,  at the option of
the Trust, as a whole but not in part, out of funds legally available  therefor,
on the first day following any Dividend Period thereof included in a Rate Period
consisting of more than 364 Rate Period Days if, on the date of determination of
the  Applicable  Rate for  shares  of such  series  for such Rate  Period,  such
Applicable Rate equaled or exceeded on such date of  determination  the Treasury
Note Rate for such Rate Period, at a redemption price per share equal to the sum
of $25,000  plus an amount equal to  accumulated  but unpaid  dividends  thereon
(whether or not earned or declared) to (but not including) to the date fixed for
redemption.

(v) The  Trust  may not on any date  mail a Notice  of  Redemption  pursuant  to
subparagraph (c) of this paragraph 11 in respect of a redemption contemplated to
be effected  pursuant to this subparagraph (a) unless on such date (a) the Trust
has available  Deposit  Securities  with maturity or tender dates not later than
the day preceding  the  applicable  redemption  date and having a value not less
than the amount  (including any applicable  premium) due to Holders of shares of
Municipal  Preferred  by  reason  of the  redemption  of  such  shares  on  such
redemption  date and (b) the  Discounted  Value of Moodys  Eligible  Assets  (if
Moodys is then  rating the shares of  Municipal  Preferred)  and the  Discounted
Value of S&P  Eligible  Assets (if S&P is then  rating  the shares of  Municipal
Preferred) each at least equal the Municipal Preferred Basic Maintenance Amount,
and would at least  equal  the  Municipal  Preferred  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 Moodys  Eligible  Assets at least  equals the
Municipal  Preferred  Basic  Maintenance  Amount,  the Moodys  Discount  Factors
applicable  to Moodys  Eligible  Assets shall be  determined by reference to the
first  Exposure  Period longer than the Exposure  Period then  applicable to the
Trust, as described in the definition of Moodys Discount Factor herein.

      (b) Mandatory  Redemption.  The Trust shall redeem,  at a redemption price
equal to  $25,000  per share  plus  accumulated  but  unpaid  dividends  thereon
(whether or not earned or declared) to (but not including) the date fixed by the
Board of Trustees for redemption,  certain of the shares of Municipal Preferred,
if the Trust  fails to have either  Moodys  Eligible  Assets  with a  Discounted
Value, or S&P Eligible Assets with a Discounted Value,  greater than or equal to
the Municipal  Preferred Basic Maintenance  Amount or fails to maintain the 1940
Act Municipal  Preferred Asset Coverage,  in accordance with the requirements of
the rating agency or agencies then rating the shares of Municipal Preferred, and
such failure is not cured on or before the Municipal Preferred Basic Maintenance
Cure Date or the 1940 Act Cure  Date,  as the case may be (the Cure  Date).  The
number of shares of  Municipal  Preferred  to be redeemed  shall be equal to the
lesser of (i) the minimum number of shares of Municipal Preferred, 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 Cure Date,  would have resulted in the Trusts having both Moodys
Eligible  Assets  with a  Discounted  Value,  and  S&P  Eligible  Assets  with a
Discounted  Value,  greater  than or  equal  to the  Municipal  Preferred  Basic
Maintenance  Amount  or  maintaining  the 1940  Act  Municipal  Preferred  Asset
Coverage,  as the case may be,  on such Cure Date  (provided,  however,  that if
there is no such  minimum  number  of shares of  Municipal  Preferred  and other
Preferred  Shares the  redemption  or  retirement  of which  would have had such
result, all shares of Municipal  Preferred and Preferred Shares then outstanding
shall  be  redeemed),  and  (ii) the  maximum  number  of  shares  of  Municipal
Preferred,  together with all other  Preferred  Shares  subject to redemption or
retirement,  that can be redeemed out of funds expected to be legally  available
therefor in accordance with the  Declaration,  these By-laws and applicable law.
In  determining  the shares of  Municipal  Preferred  required to be redeemed in
accordance  with the foregoing,  the Trust shall allocate the number required to
be redeemed to satisfy the Municipal  Preferred Basic Maintenance  Amount or the
1940 Act Municipal Preferred Asset Coverage,  as the case may be, pro rata among
shares of Municipal  Preferred and other  Preferred  Shares (and,  then pro rata
among each series of Municipal  Preferred)  subject to redemption or retirement.
The Trust shall effect such  redemption on the date fixed by the Trust therefor,
which date  shall not be earlier  than 20 days nor later than 40 days after such
Cure Date,  except that if the Trust does not have funds  legally  available for
the  redemption of all of the required  number of shares of Municipal  Preferred
and other Preferred  Shares which are subject to redemption or retirement or the
Trust otherwise is unable to effect such redemption on or prior to 40 days after
such Cure Date,  the Trust shall redeem those shares of Municipal  Preferred and
other Preferred Shares which it was unable to redeem on the earliest practicable
date on which it is able to effect  such  redemption.  If fewer  than all of the
outstanding  shares  of a  series  of  Municipal  Preferred  are to be  redeemed
pursuant  to this  subparagraph  (b),  the number of shares of such series to be
redeemed shall be redeemed pro rata from the Holders of shares of such series in
proportion to the number of shares of such series held by such Holders.

      (c) Notice of Redemption.  If the Trust shall  determine or be required to
redeem shares of a series of Municipal Preferred pursuant to subparagraph (a) or
(b) of this  paragraph 11, it shall mail a Notice of Redemption  with respect to
such  redemption  by first class mail,  postage  prepaid,  to each Holder of the
shares of such  series  to be  redeemed,  at such  Holders  address  as the same
appears on the record books of the Trust on the record date  established  by the
Board of Trustees. Such Notice of Redemption shall be so mailed not less than 20
nor more than 45 days prior to the date fixed for  redemption.  Each such Notice
of Redemption shall state: (i) the redemption date; (ii) the number of shares of
Municipal  Preferred  to be  redeemed  and the series  thereof;  (iii) the CUSIP
number for shares of such series;  (iv) the Redemption  Price;  (v) the place or
places where the  certificate(s)  for such shares (properly endorsed or assigned
for  transfer,  if the Board of  Trustees  shall so  require  and the  Notice of
Redemption  shall so state) are to be surrendered  for payment of the Redemption
Price; (vi) that dividends on the shares to be redeemed will cease to accumulate
on such  redemption  date;  and (vii) the  provisions of this paragraph 11 under
which such redemption is made. If fewer than all shares of a series of Municipal
Preferred held by any Holder are to be redeemed, the Notice of Redemption mailed
to such  Holder  shall also  specify  the number of shares of such  series to be
redeemed  from such  Holder.  The Trust may provide in any Notice of  Redemption
relating  to an optional  redemption  contemplated  to be  effected  pursuant to
subparagraph  (a) of this paragraph 11 that such redemption is subject to one or
more conditions  precedent and that the Trust shall not be required to make such
redemption  unless each such condition  shall have been satisfied at the time or
times and in the manner specified in such Notice of Redemption.

      (d)  No  Redemption  Under  Certain  Circumstances.   Notwithstanding  the
provisions of subparagraphs (a) or (b) of this paragraph 11, if any dividends on
shares of a series of  Municipal  Preferred  (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 Trust
shall not  purchase or otherwise  acquire any shares of such  series;  provided,
however, that the foregoing shall not prevent the purchase or acquisition of all
outstanding  shares of such series  pursuant to the successful  completion of an
otherwise  lawful  purchase  or  exchange  offer  made on the same terms to, and
accepted by, Holders of all outstanding shares of such series.

      (e)  Absence of Funds  Available  for  Redemption.  To the extent that any
redemption  for which Notice of Redemption has been mailed is not made by reason
of the  absence of legally  available  funds  therefor  in  accordance  with the
Declaration,  these By-laws and applicable law, such redemption shall be made as
soon as practicable to the extent such funds become available. Failure to redeem
shares of Municipal  Preferred shall be deemed to occur if at any time after the
date  specified for  redemption  in a Notice of Redemption  the Trust shall have
failed,  for any reason  whatsoever,  to deposit in trust with the Auction Agent
the  Redemption  Price  with  respect  to any  shares  of which  such  Notice of
Redemption  has been mailed;  provided,  however,  that the foregoing  shall not
apply in the case of the Trusts  failure  to  deposit in trust with the  Auction
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  Trust may not have
redeemed shares of Municipal Preferred for which a Notice of Redemption has been
mailed,  dividends may be declared and paid on shares of Municipal Preferred and
shall  include  those  shares  of  Municipal  Preferred  for  which a Notice  of
Redemption has been mailed.

      (f) Auction Agent as Trustee of Redemption  Payments by Trust.  All moneys
paid to the  Auction  Agent for  payment  of the  Redemption  Price of shares of
Municipal  Preferred called for redemption shall be held in trust by the Auction
Agent for the benefit of Holders of shares so to be redeemed.

      (g) Shares  for Which  Notice of  Redemption  Has Been Given Are No Longer
Outstanding.  Provided  a Notice  of  Redemption  has been  mailed  pursuant  to
subparagraph  (c) of this  paragraph 11, upon the deposit with the Auction Agent
(on the Business Day next  preceding the date fixed for redemption  thereby,  in
funds  available on the next Business Day in The City of New York,  New York) of
funds  sufficient  to redeem  the  shares of  Municipal  Preferred  that are the
subject of such notice,  dividends on such shares shall cease to accumulate  and
such shares shall no longer be deemed to be outstanding 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
paragraphs  2(e)(i) and 3 of Part I of this  Section  12.1.  Upon  surrender  in
accordance with the Notice of Redemption of the  certificates  for any shares so
redeemed (properly  endorsed or assigned for transfer,  if the Board of Trustees
shall so require and the Notice of Redemption  shall so state),  the  Redemption
Price shall be paid by the Auction  Agent to the Holders of shares of  Municipal
Preferred  subject to redemption.  In the case that fewer than all of the shares
represented by any such  certificate are redeemed,  a new  certificate  shall be
issued,  representing the unredeemed shares, without cost to the Holder thereof.
The Trust shall be entitled to receive from the Auction  Agent,  promptly  after
the date fixed for  redemption,  any cash  deposited  with the Auction  Agent in
excess  of (i)  the  aggregate  Redemption  Price  of the  shares  of  Municipal
Preferred called for redemption on such date and (ii) all other amounts to which
Holders of shares of Municipal  Preferred 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 Trust,
after  which time the  Holders of shares of  Municipal  Preferred  so called for
redemption  may look only to the Trust for payment of the  Redemption  Price and
all other amounts to which they may be entitled.  The Trust shall be entitled to
receive, from time to time after the date fixed for redemption,  any interest on
the funds so deposited.

      (h) Compliance With  Applicable Law. In effecting any redemption  pursuant
to this  paragraph  11, the Trust 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 Shares of Municipal Preferred May Be Redeemed.  In the case
of any redemption  pursuant to this paragraph 11, only whole shares of Municipal
Preferred  shall  be  redeemed,  and in the  event  that  any  provision  of the
Declaration or these By-laws would require redemption of a fractional share, the
Auction  Agent  shall be  authorized  to round up so that only whole  shares are
redeemed.

      12.Liquidation Rights.

      (a) Ranking. The shares of a series of Municipal Preferred shall rank on a
parity with each other,  with shares of any other series of Municipal  Preferred
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
Trust.

      (b) Distributions Upon Liquidation.  Upon the dissolution,  liquidation or
winding up of the affairs of the Trust,  whether  voluntary or involuntary,  the
Holders of shares of Municipal  Preferred then outstanding  shall be entitled to
receive and to be paid out of the assets of the Trust 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 Trust ranking junior to the
Municipal Preferred 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 distributions in same-day funds,
together with any payments required to be made pursuant to paragraph 3 of Part I
of this Section 12.1 in connection with the liquidation of the Trust.  After the
payment  to the  Holders  of the  shares  of  Municipal  Preferred  of the  full
preferential  amounts  provided  for in this  subparagraph  (b),  the holders of
Municipal Preferred as such shall have no right or claim to any of the remaining
assets of the Trust.

      (c) Pro Rata Distributions. In the event the assets of the Trust available
for  distribution  to the  Holders  of shares of  Municipal  Preferred  upon any
dissolution,  liquidation  or  winding up of the  affairs of the Trust,  whether
voluntary or  involuntary,  shall be  insufficient to pay in full all amounts to
which such Holders are entitled  pursuant to subparagraph  (b) of this paragraph
12, no such  distribution  shall be made on  account  of any shares of any other
class or series of  Preferred  Shares  ranking  on a parity  with the  shares of
Municipal  Preferred  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  shares of  Municipal  Preferred,  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 series or class or classes of shares  ranking on a parity with the
shares of Municipal  Preferred with respect to the  distribution  of assets upon
dissolution,  liquidation  or  winding up of the  affairs  of the  Trust,  after
payment  shall have been made in full to the Holders of the shares of  Municipal
Preferred as provided in  subparagraph  (b) of this  paragraph 12, but not prior
thereto,  any other series or class or classes of shares  ranking  junior to the
shares of Municipal  Preferred with respect to the  distribution  of assets upon
dissolution,  liquidation  or  winding  up of the  affairs  of the Trust  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 shares of Municipal  Preferred shall not be entitled to share
therein.

      (e) Certain Events Not Constituting  Liquidation.  Neither the sale of all
or substantially all of the property or business of the Trust, nor the merger or
consolidation  of the Trust  into or with any  Massachusetts  business  trust or
corporation nor the merger or consolidation of any Massachusetts  business trust
or  corporation  into or with the Trust shall be a  dissolution,  liquidation or
winding up, whether voluntary or involuntary, for the purposes of this paragraph
12.

      13.Miscellaneous.

      (a) Amendment of this Section 12.1 to Add  Additional  Series.  Subject to
the  provisions  of  subparagraph  (c) of paragraph 10 of Part I of this Section
12.1, the Board of Trustees may, by resolution duly adopted, without shareholder
approval  (except as  otherwise  provided  by this  Section  12.1 or required by
applicable  law),  amend Section 12.1 to (1) reflect any amendment  hereto which
the Board of Trustees is entitled to adopt pursuant to the terms of this Section
12.1  without  shareholder  approval or (2) add  additional  series of Municipal
Preferred or  additional  shares of a series of Municipal  Preferred  (and terms
relating  thereto) to the series and shares of Municipal  Preferred  theretofore
described  thereon.  Each such additional  series and all such additional shares
shall be governed by the terms of this Section 12.1.

      (b)[Reserved]

(c)No Fractional Shares.No fractional shares of Municipal Preferred shall
 be issued.

      (d)  Status  of Shares  of  Municipal  Preferred  Redeemed,  Exchanged  or
Otherwise  Acquired  by the  Trust.  Shares  of  Municipal  Preferred  which are
redeemed,  exchanged  or  otherwise  acquired by the Trust  shall  return to the
status of authorized and unissued  Preferred  Shares  without  designation as to
series.

      (e) Board May Resolve  Ambiguities.  To the extent permitted by applicable
law,  the Board of  Trustees  may  interpret  or adjust the  provisions  of this
Section 12.1 to resolve any  inconsistency  or ambiguity or to remedy any formal
defect,  and may amend this Section 12.1 with respect to any series of Municipal
Preferred prior to this issuance of shares of such series.

(f)Headings Not Determinative.  The headings contained in this Section 12.1 are
for convenience of reference only and shall not affect the meaning or
interpretation of this Section 12.1.

      (g) Notices. All notices or communications,  unless otherwise specified in
these By-Laws or this Section 12.1,  shall be  sufficiently  given if in writing
and delivered in person or mailed by first-class mail, postage prepaid.

PART II

      1.Orders.

      (a) Prior to the Submission  Deadline on each Auction Date for shares of a
series of Municipal Preferred:

(i) each  Beneficial  Owner of shares of such  series may submit to its  Broker-
Dealer by telephone or otherwise information as to:

(A) the  number of  Outstanding  shares,  if any,  of such  series  held by such
Beneficial Owner which such Beneficial Owner desires to continue to hold without
regard to the Applicable  Rate for shares of such series for the next succeeding
Rate Period of such shares;

(B) the  number of  Outstanding  shares,  if any,  of such  series  held by such
Beneficial  Owner which such  Beneficial  Owner offers to sell if the Applicable
Rate for shares of such series for the next  succeeding Rate Period of shares of
such series shall be less than the rate per annum  specified by such  Beneficial
Owner; and/or

(C) the  number of  Outstanding  shares,  if any,  of such  series  held by such
Beneficial  Owner which such  Beneficial  Owner offers to sell without regard to
the  Applicable  Rate for  shares of such  series for the next  succeeding  Rate
Period of shares of such series; and

(ii) one or more  Broker-Dealers,  using lists of Potential  Beneficial  Owners,
shall in good faith for the purpose of  conducting  a  competitive  Auction in a
commercially   reasonable  manner,   contact  Potential  Beneficial  Owners  (by
telephone or otherwise),  including  Persons that are not Beneficial  Owners, on
such lists to determine the number of shares,  if any, of such series which each
such Potential  Beneficial  Owner offers to purchase if the Applicable  Rate for
shares of such  series  for the next  succeeding  Rate  Period of shares of such
series  shall not be less than the rate per annum  specified  by such  Potential
Beneficial Owner.

For  purposes  hereof,  the  communication  by a  Beneficial  Owner or Potential
Beneficial Owner to a Broker-Dealer, or by a Broker-Dealer to the Auction Agent,
of  information  referred to in clause  (i)(A),  (i)(B),  (i)(C) or (ii) of this
subparagraph  (a) is  hereinafter  referred to as an Order and  collectively  as
Orders and each Beneficial Owner and each Potential  Beneficial Owner placing an
Order with a  Broker-Dealer,  and such  Broker-Dealer  placing an Order with the
Auction  Agent,  is  hereinafter  referred  to as a Bidder and  collectively  as
Bidders;  an Order  containing the  information  referred to in clause (i)(A) of
this  subparagraph  (a)  is  hereinafter   referred  to  as  a  Hold  Order  and
collectively as Hold Orders; an Order containing the information  referred to in
clause (i)(B) or (ii) of this  subparagraph (a) is hereinafter  referred to as a
Bid and collectively as Bids; and an Order  containing the information  referred
to in clause (i)(C) of this  subparagraph  (a) is  hereinafter  referred to as a
Sell Order and collectively as Sell Orders.

      (b) (i) A Bid by a Beneficial  Owner or an Existing  Holder of shares of a
series of  Municipal  Preferred  subject to an Auction on any Auction Date shall
constitute an irrevocable offer to sell:

(A) The number of Outstanding shares of such series specified in such Bid if the
Applicable Rate for shares of such series  determined on such Auction Date shall
be less than the rate specified therein;

(B) such number or a lesser  number of  Outstanding  shares of such series to be
determined as set forth in paragraph 4(a)(iv) of Part II of this Section 12.1 if
the  Applicable  Rate for shares of such series  determined on such Auction Date
shall be equal to the rate specified therein; or

(C) the number of Outstanding shares of such series specified in such Bid if the
rate specified  therein shall be higher than the Maximum Rate for shares of such
series,  or such number or a lesser number of Outstanding  shares of such series
to be determined as set forth in paragraph  4(b)(iii) of Part II of this Section
12.1 if the rate  specified  therein  shall be higher than the Maximum  Rate for
shares of such series and Sufficient  Clearing Bids for shares of such series do
not exist.

(ii) A Sell Order by a  Beneficial  Owner or an  Existing  Holder of shares of a
series of  Municipal  Preferred  subject to an Auction on any Auction Date shall
constitute an irrevocable offer to sell:

(A)  the number of Outstanding shares of such series specified in such Sell
Order; or

(B) such number or a lesser number of  Outstanding  shares of such series as set
forth in  paragraph  4(b)(iii)  of Part II of this  Section  12.1 if  Sufficient
Clearing Bids for shares of such series do not exist;

provided,  however, that a Broker-Dealer that is an Existing Holder with respect
to shares of a series of Municipal  Preferred  shall not be liable to any Person
for  failing  to sell such  shares  pursuant  to a Sell Order  described  in the
proviso to  paragraph  2(c) of Part II of this  Section  12.1 if (1) such shares
were  transferred by the  Beneficial  Owner thereof  without  compliance by such
Beneficial Owner or its transferee Broker-Dealer (or other transferee person, if
permitted  by the Trust) with the  provisions  of paragraph 7 of Part II of this
Section 12.1 or (2) such  Broker-Dealer  has informed the Auction Agent pursuant
to  the  terms  of  its   Broker-Dealer   Agreement  that,   according  to  such
Broker-Dealers  records,  such  Broker-Dealer  believes  it is not the  Existing
Holder of such shares.

(iii) A Bid by a Potential  Beneficial Holder or a Potential Holder of shares of
a series of Municipal  Preferred subject to an Auction on any Auction Date shall
constitute an irrevocable offer to purchase:

(A) the number of Outstanding shares of such series specified in such Bid if the
Applicable Rate for shares of such series  determined on such Auction Date shall
be higher than the rate specified therein; or

(B) such number or a lesser number of  Outstanding  shares of such series as set
forth in paragraph  4(a)(v) of Part II of this  Section  12.1 if the  Applicable
Rate for shares of such series determined on such Auction Date shall be equal to
the rate specified therein.

      (c) No Order for any number of shares of  Municipal  Preferred  other than
whole shares shall be valid.

      2.Submission of Orders by Broker-Dealers to Auction Agent.

      (a) Each Broker-Dealer  shall submit in writing to the Auction Agent prior
to the  Submission  Deadline  on each  Auction  Date all  Orders  for  shares of
Municipal  Preferred  of a series  subject to an Auction  on such  Auction  Date
obtained by such  Broker-Dealer,  designating itself (unless otherwise permitted
by the  Trust) as an  Existing  Holder in  respect  of shares  subject to Orders
submitted  or deemed  submitted  to it by  Beneficial  Owners and as a Potential
Holder in  respect  of shares  subject to Orders  submitted  to it by  Potential
Beneficial Owners, and shall specify with respect to each Order for such shares:

(i)  the name of the Bidder placing such Order (which shall be the Broker-Dealer
unless otherwise permitted by the Trust);

(ii)  the aggregate number of shares of such series that are the subject of such
Order;

(iii) to the extent  that such  Bidder is an  Existing  Holder of shares of such
series:

(A) the number of shares,  if any, of such  series  subject to any Hold Order of
such Existing Holder;

(B) the  number of shares,  if any,  of such  series  subject to any Bid of such
Existing Holder and the rate specified in such Bid; and

(C) the number of shares,  if any, of such  series  subject to any Sell Order of
such Existing Holder; and

(iv) to the extent such Bidder is a Potential  Holder of shares of such  series,
the rate and number of shares of such series specified in such Potential Holders
Bid.

      (b) If any rate  specified in any Bid contains  more than three figures to
the right of the decimal  point,  the Auction  Agent shall round such rate up to
the next highest one thousandth (.001) of 1%.

      (c) If an  Order or  Orders  covering  all of the  Outstanding  shares  of
Municipal  Preferred of a series held by any Existing Holder is not submitted to
the Auction Agent prior to the Submission Deadline, the Auction Agent shall deem
a Hold  Order to have been  submitted  by or on behalf of such  Existing  Holder
covering the number of  Outstanding  shares of such series held by such Existing
Holder and not  subject to Orders  submitted  to the  Auction  Agent;  provided,
however,  that if an Order or Orders covering all of the  Outstanding  shares of
such series held by any Existing  Holder is not  submitted to the Auction  Agent
prior to the  Submission  Deadline  for an Auction  relating  to a Special  Rate
Period consisting of more than 28 Rate Period Days, the Auction Agent shall deem
a Sell  Order to have been  submitted  by or on behalf of such  Existing  Holder
covering the number of  outstanding  shares of such series held by such Existing
Holder and not subject to Orders submitted to the Auction Agent.

      (d) If one or more  Orders  of an  Existing  Holder  is  submitted  to the
Auction  Agent  covering in the  aggregate  more than the number of  Outstanding
shares of  Municipal  Preferred  of a series  subject to an Auction held by such
Existing Holder, such Orders shall be considered valid in the following order of
priority:

(i) all Hold Orders for shares of such series  shall be  considered  valid,  but
only up to and including in the aggregate  the number of  Outstanding  shares of
such series held by such  Existing  Holder,  and if the number of shares of such
series  subject to such Hold Order exceeds the number of  Outstanding  shares of
such series held by such Existing  Holder,  the number of shares subject to each
such Hold  Order  shall be reduced  pro rata to cover the number of  Outstanding
shares of such series held by such Existing Holder;

(ii) (A) any Bid for shares of such series shall be  considered  valid up to and
including the excess of the number of Outstanding  shares of such series held by
such  Existing  Holder over the number of shares of such  series  subject to any
Hold Orders referred to in clause (i) above;

(B) subject to  subclause  (A),  if more than one Bid of an Existing  Holder for
shares of such series is submitted  to the Auction  Agent with the same rate and
the number of Outstanding  shares of such series subject to such Bids is greater
than such excess,  such Bids shall be  considered  valid up to and including the
amount of such excess,  and the number of shares of such series  subject to each
Bid with the same rate shall be  reduced  pro rata to cover the number of shares
of such series equal to such excess;

(C)  subject  to  subclauses  (A) and (B),  if more than one Bid of an  Existing
Holder  for  shares of such  series  is  submitted  to the  Auction  Agent  with
different  rates,  such Bids shall be considered valid in the ascending order of
their respective rates up to and including the amount of such excess; and

(D) in any such event, the number,  if any, of such  Outstanding  shares of such
series  subject to any portion of Bids  considered not valid in whole or in part
under this  clause  (ii) shall be treated as the  subject of a Bid for shares of
such series by or on behalf of a Potential Holder at the rate therein specified;
and

(iii) all Sell Orders for shares of such series shall be considered  valid up to
and including the excess of the number of Outstanding shares of such series held
by such Existing  Holder over the sum of shares of such series  subject to valid
Hold Orders referred to in clause (i) above and valid Bids referred to in clause
(ii) above.

      (e) If more than one Bid for one or more  shares of a series of  Municipal
Preferred  is submitted  to the Auction  Agent by or on behalf of any  Potential
Holder, each such Bid submitted shall be a separate Bid with the rate and number
of shares therein specified.

      (f) Any Order  submitted by a Beneficial  Owner or a Potential  Beneficial
Owner to its Broker-Dealer, or by a Broker-Dealer to the Auction Agent, prior to
the Submission Deadline on any Auction Date, shall be irrevocable.

3.Determination of Sufficient Clearing Bids,
Winning Bid Rate and Applicable Rate.

      (a) Not earlier  than the  Submission  Deadline on each  Auction  Date for
shares of a series of Municipal Preferred,  the Auction Agent shall assemble all
valid  Orders  submitted  or deemed  submitted  to it by the  Broker-Dealers  in
respect  of  shares of such  series  (each  such  Order as  submitted  or deemed
submitted by a  Broker-Dealer  being  hereinafter  referred to individually as a
Submitted Hold Order, a Submitted Bid or a Submitted Sell Order, as the case may
be,  or as a  Submitted  Order,  and  collectively  as  Submitted  Hold  Orders,
Submitted  Bids or Submitted  Sell  Orders,  as the case may be, or as Submitted
Orders) and shall determine for such series:

(i) the  excess of the  number of  Outstanding  shares of such  series  over the
number of  Outstanding  shares of such series  subject to Submitted  Hold Orders
(such excess being hereinafter  referred to as the Available Municipal Preferred
of such series);

(ii)  from the Submitted Orders for shares of such series whether:

(A) the number of Outstanding shares of such series subject to Submitted Bids of
Potential  Holders  specifying  one or more  rates  equal to or  lower  than the
Maximum Rate for shares of such series;

exceeds or is equal to the sum of:

(B) the number of Outstanding shares of such series subject to Submitted Bids of
Existing  Holders  specifying one or more rates higher than the Maximum Rate for
shares of such series; and

(C)  the number of Outstanding shares of such series subject to Submitted
Sell Orders

(in the event such excess or such equality exists (other than because the number
of shares of such series in subclauses  (B) and (C) above is zero because all of
the  Outstanding  shares of such series are subject to Submitted  Hold  Orders),
such  Submitted  Bids in  subclause  (A) above  being  hereinafter  referred  to
collectively as Sufficient Clearing Bids for shares of such series); and

(iii) if Sufficient  Clearing  Bids for shares of such series exist,  the lowest
rate  specified in such  Submitted Bids (the Winning Bid Rate for shares of such
series) which if:

(A) each such Submitted Bid of Existing Holders  specifying such lowest rate and
(II) all other such Submitted Bids of Existing  Holders  specifying  lower rates
were  rejected,  thus  entitling  such Existing  Holders to continue to hold the
shares of such series that are subject to such Submitted Bids; and

(B) (I) each such Submitted Bid of Potential Holders specifying such lowest rate
and (II) all other such Submitted  Bids of Potential  Holders  specifying  lower
rates were accepted;

would  result  in  such  Existing  Holders  described  in  subclause  (A)  above
continuing  to hold an  aggregate  number of  Outstanding  shares of such series
which,  when  added to the  number of  Outstanding  shares of such  series to be
purchased by such  Potential  Holders  described in subclause  (B) above,  would
equal not less than the Available Municipal Preferred of such series.

      (b) Promptly after the Auction Agent has made the determinations  pursuant
to  subparagraph  (a) of this  paragraph  3, the Auction  Agent shall advise the
Trust of the Maximum  Rate for shares of the series of Municipal  Preferred  for
which  an  Auction  is  being  held  on the  Auction  Date  and,  based  on such
determination,  the  Applicable  Rate for  shares  of such  series  for the next
succeeding Rate Period thereof as follows:

(i) if  Sufficient  Clearing  Bids for  shares of such  series  exist,  that the
Applicable  Rate for all  shares of such  series  for the next  succeeding  Rate
Period  thereof shall be equal to the Winning Bid Rate for shares of such series
so determined;

(ii) if  Sufficient  Clearing Bids for shares of such series do not exist (other
than  because  all of the  Outstanding  shares of such  series  are  subject  to
Submitted Hold Orders),  that the Applicable  Rate for all shares of such series
for the next  succeeding  Rate Period thereof shall be equal to the Maximum Rate
for shares of such series; or

(iii) if all of the  Outstanding  shares of such series are subject to Submitted
Hold Orders, that the Applicable Rate for all shares of such series for the next
succeeding Rate Period thereof shall be as set forth in subparagraph (c) of this
paragraph 3.

      (c) For  purposes  of  subparagraph  (b)(iii)  of this  paragraph  3,  the
Applicable Rate for shares of such series for the next succeeding Rate Period of
shares of such  series  shall be equal to the lesser of the Kenny Index (if such
Rate Period  consists of fewer than 183 Rate Period  Days) or the product of (A)
(I) the AA  Composite  Commercial  Paper Rate on such Auction Date for such Rate
Period,  if such Rate Period  consists of fewer than 183 Rate Period Days;  (II)
the Treasury  Bill Rate on such Auction Date for such Rate Period,  if such Rate
Period  consists of more than 182 but fewer than 365 Rate Period Days;  or (III)
the Treasury  Note Rate on such Auction Date for such Rate Period,  if such Rate
Period is more than 364 Rate Period Days (the rate  described  in the  foregoing
clause (A)(I),  (II) or (III),  as  applicable,  being referred to herein as the
Benchmark  Rate) and (B) 1 minus the  greater of the  maximum  marginal  regular
Federal  individual income tax rate applicable to ordinary income or the maximum
marginal  regular  Federal  corporate  income tax rate  applicable  to  ordinary
income;  provided,  however, that if the Trust has notified the Auction Agent of
its  intent to  allocate  to shares of such  series in such Rate  Period any net
capital gains or other income taxable for Federal  income tax purposes  (Taxable
Income), the Applicable Rate for shares of such series for such Rate Period will
be (i) if the  Taxable  Yield  Rate  (as  defined  below)  is  greater  than the
Benchmark  Rate,  then the Benchmark  Rate, or (ii) if the Taxable Yield Rate is
less than or equal to the Benchmark  Rate, then the rate equal to the sum of (x)
the lesser of the Kenny  Index (if such Rate  Period  consists of fewer than 183
Rate Period Days) or the product of the Benchmark Rate  multiplied by the factor
set  forth  in the  preceding  clause  (B) and (y) the  product  of the  maximum
marginal  regular  Federal  individual  income tax rate  applicable  to ordinary
income or the maximum marginal  regular Federal  corporate income tax applicable
to ordinary income, whichever is greater,  multiplied by the Taxable Yield Rate.
For purposes of the foregoing,  Taxable Yield Rate means the rate  determined by
(a) dividing the amount of Taxable Income  available for  distribution  per such
share of Municipal  Preferred  by the number of days in the  Dividend  Period in
respect of which such Taxable  Income is  contemplated  to be  distributed,  (b)
multiplying the amount determined in (a) above by 365 (in the case of a Dividend
Period of 7 Rate Period Days) or 360 (in the case of any other Dividend Period),
and (c) dividing the amount determined in (b) above by $25,000.

4.  Acceptance  and Rejection of Submitted  Bids and  Submitted  Sell Orders and
Allocation  of Shares.  Existing  Holders  shall  continue to hold the shares of
Municipal Preferred that are subject to Submitted Hold Orders, and, based on the
determinations  made pursuant to  subparagraph  (a) of paragraph 3 of Part II of
this  Section  12.1,  the  Submitted  Bids and  Submitted  Sell Orders  shall be
accepted or rejected by the Auction  Agent and the Auction Agent shall take such
other action as set forth below:

      (a) If  Sufficient  Clearing  Bids for  shares  of a series  of  Municipal
Preferred  have been made,  all Submitted  Sell Orders with respect to shares of
such series shall be accepted and,  subject to the  provisions of  subparagraphs
(d) and (e) of this  paragraph 4,  Submitted Bids with respect to shares of such
series  shall be  accepted  or  rejected  as follows in the  following  order of
priority  and all other  Submitted  Bids with  respect to shares of such  series
shall be rejected:

(i) Existing  Holders  Submitted  Bids for shares of such series  specifying any
rate that is higher than the Winning Bid Rate for shares of such series shall be
accepted,  thus  requiring  each  such  Existing  Holder  to sell the  shares of
Municipal Preferred subject to such Submitted Bids;

(ii) Existing  Holders  Submitted Bids for shares of such series  specifying any
rate that is lower than the Winning Bid Rate for shares of such series  shall be
rejected,  thus  entitling  each such  Existing  Holder to  continue to hold the
shares of Municipal Preferred subject to such Submitted Bids;

(iii) Potential  Holders Submitted Bids for shares of such series specifying any
rate that is lower than the Winning Bid Rate for shares of such series  shall be
accepted;

(iv) each Existing Holders  Submitted Bid for shares of such series specifying a
rate that is equal to the Winning  Bid Rate for shares of such  series  shall be
rejected,  thus entitling such Existing  Holder to continue to hold the share of
Municipal  Preferred  subject  to such  Submitted  Bid,  unless  the  number  of
Outstanding  shares of Municipal  Preferred  subject to all such  Submitted Bids
shall be greater  than the number of shares of  Municipal  Preferred  (remaining
shares) in the excess of the Available  Municipal  Preferred of such series over
the number of shares of Municipal  Preferred subject to Submitted Bids described
in  clauses  (ii) and  (iii) of this  subparagraph  (a),  in  which  event  such
Submitted  Bid of such  Existing  Holder  shall be  rejected  in part,  and such
Existing  Holder  shall be entitled  to  continue  to hold  shares of  Municipal
Preferred  subject to such  Submitted  Bid,  but only in an amount  equal to the
number of shares of Municipal  Preferred of such series  obtained by multiplying
the number of remaining  shares by a fraction,  the  numerator of which shall be
the number of  Outstanding  shares of Municipal  Preferred held by such Existing
Holder subject to such  Submitted Bid and the  denominator of which shall be the
aggregate number of Outstanding  shares of Municipal  Preferred  subject to such
Submitted Bids made by all such Existing  Holders that specified a rate equal to
the Winning Bid Rate for shares of such series; and

(v) each Potential  Holders Submitted Bid for shares of such series specifying a
rate that is equal to the  Winning  Bid Rate of shares of such  series  shall be
accepted  but only in an amount  equal to the  number  of shares of such  series
obtained  by  multiplying  the number of shares in the  excess of the  Available
Municipal  Preferred  of such  series  over the  number of  shares of  Municipal
Preferred  subject to Submitted  Bids  described in clauses (ii) through (iv) of
this subparagraph (a) by a fraction,  the numerator of which shall be the number
of Outstanding shares of Municipal  Preferred subject to such Submitted Bids and
the denominator of which shall be the aggregate number of Outstanding  shares of
Municipal  Preferred  subject to such  Submitted Bids made by all such Potential
Holders  that  specified a rate equal to the Winning Bid Rate for shares of such
series.

      (b) If  Sufficient  Clearing  Bids for  shares  of a series  of  Municipal
Preferred have not been made (other than because all of the  Outstanding  shares
of such series are subject to Submitted Hold Orders),  subject to the provisions
of  subparagraph  (d) of this paragraph 4,  Submitted  Orders for shares of such
series  shall be  accepted  or  rejected  as follows in the  following  order of
priority  and all  other  Submitted  Bids for  shares  of such  series  shall be
rejected:

(i) Existing  Holders  Submitted  Bids for shares of such series  specifying any
rate that is equal to or lower than the  Maximum  Rate for shares of such series
shall be rejected,  thus entitling such Existing Holders to continue to hold the
shares of Municipal Preferred subject to such Submitted Bids;

(ii) Potential  Holders  Submitted Bids for shares of such series specifying any
rate that is equal to or lower than the  Maximum  Rate for shares of such series
shall be accepted; and

(iii) Each Existing Holders  Submitted Bid for shares of such series  specifying
any rate that is higher than the Maximum  Rate for shares of such series and the
Submitted Sell Orders for shares of such series of each Existing Holder shall be
accepted,  thus entitling each Existing Holder that submitted or on whose behalf
was submitted any such  Submitted Bid or Submitted Sell Order to sell the shares
of such series  subject to such  Submitted Bid or Submitted  Sell Order,  but in
both  cases  only in an amount  equal to the  number  of  shares of such  series
obtained by multiplying the number of shares of such series subject to Submitted
Bids  described  in clause  (ii) of this  subparagraph  (b) by a  fraction,  the
numerator of which shall be the number of Outstanding shares of such series held
by such Existing  Holder  subject to such  Submitted Bid or Submitted Sell Order
and the denominator of which shall be the aggregate number of Outstanding shares
of such series subject to all such Submitted Bids and Submitted Sell Orders.

      (c) If all of the  Outstanding  shares of a series of Municipal  Preferred
are subject to Submitted  Hold  Orders,  all  Submitted  Bids for shares of such
series shall be rejected.

      (d) If, as a result of the  procedures  described in clause (iv) or (v) of
subparagraph  (a) or clause (iii) of  subparagraph  (b) of this paragraph 4, any
Existing  Holder would be entitled or required to sell, or any Potential  Holder
would be entitled or required to purchase,  a fraction of a share of a series of
Municipal Preferred on any Auction Date, the Auction Agent shall, in such manner
as it shall  determine  in its sole  discretion,  round up or down the number of
shares of  Municipal  Preferred  of such series to be  purchased  or sold by any
Existing  Holder or  Potential  Holder on such  Auction Date as a result of such
procedures  so that the number of shares so purchased  or sold by each  Existing
Holder  or  Potential  Holder  on such  Auction  Date  shall be whole  shares of
Municipal Preferred.

      (e) If, as a result of the procedures described in clause (v) of paragraph
(a) of this  paragraph 4, any Potential  Holder would be entitled or required to
purchase less than a whole share of series of Municipal Preferred on any Auction
Date, the Auction Agent shall,  in such manner as it shall determine in its sole
discretion,  allocate shares of Municipal  Preferred of such series for purchase
among Potential Holders so that only whole shares of Municipal Preferred of such
series are purchased on such Auction Date as a result of such  procedures by any
Potential  Holder,  even if such  allocation  results  in one or more  Potential
Holders not  purchasing  shares of  Municipal  Preferred  of such series on such
Auction Date.

      (f)  Based on the  results  of each  Auction  for  shares  of a series  of
Municipal  Preferred,  the Auction Agent shall determine the aggregate number of
shares of such series to be purchased and the aggregate number of shares of such
series to be sold by Potential Holders and Existing Holders and, with respect to
each  Potential  Holder and Existing  Holder,  to the extent that such aggregate
number of shares to be purchased and such aggregate  number of shares to be sold
differ,  determine to which other Potential Holder(s) or Existing Holder(s) they
shall deliver,  or from which other  Potential  Holder(s) or Existing  Holder(s)
they shall  receive,  as the case may be, shares of Municipal  Preferred of such
series.   Notwithstanding  any  provision  of  the  Auction  Procedures  or  the
Settlement  Procedures  to the  contrary,  in the  event an  Existing  Holder or
Beneficial  Owner of shares of a series of Municipal  Preferred  with respect to
whom a Broker- Dealer  submitted a Bid to the Auction Agent for such shares that
was accepted in whole or in part, or submitted or is deemed to have  submitted a
Sell  Order for such  shares  that was  accepted  in whole or in part,  fails to
instruct  its Agent  Member to deliver  such shares  against  payment  therefor,
partial  deliveries  of shares  of  Municipal  Preferred  that have been made in
respect of Potential  Holders or Potential  Beneficial Owners Submitted Bids for
shares  of such  series  that  have  been  accepted  in whole  or in part  shall
constitute  good delivery to such  Potential  Holders and  Potential  Beneficial
Owners.

      (g) Neither the Trust nor the Auction  Agent nor any  affiliate  of either
shall have any  responsibility  or  liability  with respect to the failure of an
Existing  Holder, a Potential  Holder,  a Benefit Owner, a Potential  Beneficial
Owner or its respective Agent Member to deliver shares of Municipal Preferred of
any series or to pay for shares of  Municipal  Preferred  of any series  sold or
purchased pursuant to the Auction Procedures or otherwise.

      5. Notification of Allocations.  Whenever the Trust intends to include any
net capital gain or other income  taxable for Federal income tax purposes in any
dividend on shares of Municipal  Preferred,  the Trust  shall,  in the case of a
Minimum  Rate  Period or a Special  Rate Period of 28 Rate Period Days or fewer,
and may, in the case of any other Special Rate Period,  notify the Auction Agent
of the amount to be so included  not later than the  Dividend  Payment Date next
preceding the Auction Date on which the Applicable  Rate for such dividend is to
be established.  Whenever the Auction Agent receives such notice from the Trust,
it will be required in turn to notify  each  Broker-Dealer,  who, on or prior to
such Auction Date,  in  accordance  with its  Broker-Dealer  Agreement,  will be
required to notify its  Beneficial  Owners and  Potential  Beneficial  Owners of
shares of Municipal  Preferred  believed by it to be interested in submitting an
Order in the Auction to be held on such Auction Date.

      6. Auction  Agent.  For so long as any shares of Municipal  Preferred  are
outstanding,  the Auction Agent, duly appointed by the Trust to so act, shall be
in each case a commercial  bank,  trust company or other  financial  institution
independent of the Trust and its affiliates  (which however,  may engage or have
engaged in business  transactions  with the Trust or its  affiliates)  and at no
time  shall  the  Trust or any of its  affiliates  act as the  Auction  Agent in
connection with the Auction Procedures.  If the Auction Agent resigns or for any
reason its  appointment  is  terminated  during  any  period  that any shares of
Municipal  Preferred are  outstanding,  the Board of Trustees shall use its best
efforts promptly thereafter to appoint another qualified  commercial bank, trust
company or financial institution to act as the Auction Agent. The Auction Agents
registry of Existing Holders of shares of a series of Municipal  Preferred shall
be conclusive and binding on the Broker-Dealers.  A Broker-Dealer may inquire of
the Auction Agent between 3:00 p.m. on the Business Day preceding an Auction for
shares of a series of Municipal  Preferred and 9:30 a.m. on the Auction Date for
such Auction to  ascertain  the number of shares of a series in respect of which
the Auction Agent has determined such Broker-Dealer to be an Existing Holder. If
such  Broker-Dealer  believes it is the Existing  Holder of fewer shares of such
series than  specified by the Auction  Agent in response to such  Broker-Dealers
inquiry,  such  Broker-  Dealer may so inform the Auction  Agent of that belief.
Such  Broker-Dealer  shall not, in its capacity as Existing  Holder of shares of
such series,  submit  Orders in such Auction in respect of shares of such series
covering  in the  aggregate  more  than the  number  of  shares  of such  series
specified by the Auction Agent in response to such Broker-Dealers inquiry.

      7. Transfer of Shares of Municipal  Preferred.  Unless otherwise permitted
by the Trust,  a Beneficial  Owner or an Existing  Holder may sell,  transfer or
otherwise dispose of shares of Municipal Preferred only in whole shares and only
pursuant to a Bid or Sell Order placed with the Auction Agent in accordance with
the procedures  described in Part II of this Section 12.1 or to a Broker-Dealer;
provided,  however,  that (a) a sale, transfer or other disposition of shares of
Municipal  Preferred  from a customer  of a  Broker-Dealer  who is listed on the
records of that Broker-Dealer as the holder of such shares to that Broker-Dealer
or  another  customer  of that  Broker-Dealer  shall not be deemed to be a sale,
transfer  or  other  disposition  for  purposes  of  this  paragraph  7 if  such
Broker-Dealer remains the Existing Holder of the shares so sold,  transferred or
disposed of immediately after such sale,  transfer or disposition and (b) in the
case of all transfers  other than pursuant to Auctions,  the  Broker-Dealer  (or
other  Person,  if permitted  by the Trust) to whom such  transfer is made shall
advise the Auction Agent of such transfer.

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

Article 13.
Amendments

Except as otherwise  expressly  stated  herein,  these By-Laws may be amended or
replaced,  in whole or in part,  by a majority of the Trustees then in office at
any  meeting  of the  Trustees,  or by one or  more  writings  signed  by such a
majority.

June 24, 2008

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