[Charter No. 7C-756]

                 NUVEEN INSURED MUNICIPAL OPPORTUNITY FUND, INC.

                  STATEMENT ESTABLISHING AND FIXING THE RIGHTS
                               AND PREFERENCES OF
                             MUNICIPAL AUCTION RATE
                 CUMULATIVE PREFERRED STOCK ("MUNIPREFERRED(R)")



                 NUVEEN INSURED MUNICIPAL OPPORTUNITY FUND, INC.

                                TABLE OF CONTENTS



                                                                                                                    PAGE
                                                                                                                 
DEFINITIONS........................................................................................................    1
   "AA" Composite Commercial Paper Rate............................................................................    1
   Accountant's Confirmation.......................................................................................    2
   Affiliate.......................................................................................................    2
   Agent Member....................................................................................................    2
   Anticipation Notes..............................................................................................    2
   Applicable Rate.................................................................................................    2
   Articles........................................................................................................    2
   Auction.........................................................................................................    2
   Auction Agency Agreement........................................................................................    2
   Auction Agent...................................................................................................    2
   Auction Date....................................................................................................    3
   Auction Procedures..............................................................................................    3
   Available MuniPreferred.........................................................................................    3
   Benchmark Rate..................................................................................................    3
   Beneficial Owner................................................................................................    3
   Bid and Bids....................................................................................................    3
   Bidder and Bidders..............................................................................................    3
   Board of Directors..............................................................................................    3
   Broker Dealer...................................................................................................    3
   Broker Dealer Agreement.........................................................................................    3
   Business Day....................................................................................................    3
   Code............................................................................................................    3
   Commercial Paper Dealers........................................................................................    3
   Common Stock....................................................................................................    4
   Cure Date.......................................................................................................    4
   Date of Original Issue..........................................................................................    4
   Deposit Securities..............................................................................................    4
   Discounted Value................................................................................................    4
   Dividend Payment Date...........................................................................................    4
   Dividend Period.................................................................................................    4
   Existing Holder.................................................................................................    4
   Failure to Deposit..............................................................................................    4
   Federal Tax Rate Increase.......................................................................................    5
   Fund............................................................................................................    5
   Gross up Payment................................................................................................    5
   Hold Order and Hold Orders......................................................................................    5
   Holder..........................................................................................................    5
   Independent Accountant..........................................................................................    5
   Initial Rate Period.............................................................................................    5
   Interest Equivalent.............................................................................................    5
   Issue Type Category.............................................................................................    5
   Kenny Index.....................................................................................................    5


                                       ii



                                TABLE OF CONTENTS
                                   (continued)



                                                                                                                    PAGE
                                                                                                                 
   Late Charge.....................................................................................................    5
   Liquidation Preference..........................................................................................    5
   Market Value....................................................................................................    5
   Maximum Potential Gross up Payment Liability....................................................................    6
   Maximum Rate....................................................................................................    6
   Minimum Rate Period.............................................................................................    7
   Moody's.........................................................................................................    7
   Moody's Discount Factor.........................................................................................    7
   Moody's Eligible Asset..........................................................................................    7
   Moody's Exposure Period.........................................................................................    7
   Moody's Volatility Factor.......................................................................................    7
   Municipal Obligations shall mean Municipal Obligations..........................................................    9
   MuniPreferred...................................................................................................    8
   MuniPreferred Basic Maintenance Amount..........................................................................    8
   MuniPreferred Basic Maintenance Cure Date.......................................................................    9
   MuniPreferred Basic Maintenance Report..........................................................................    9
   1940 Act........................................................................................................    9
   1940 Act Cure Date..............................................................................................    9
   1940 Act MuniPreferred Asset Coverage...........................................................................    9
   Notice of Redemption............................................................................................   10
   Notice of Special Rate Period...................................................................................   10
   Order and Orders................................................................................................   10
   Original Issue Insurance........................................................................................   10
   Other Issues....................................................................................................   10
   Outstanding.....................................................................................................   10
   Permanent Insurance.............................................................................................   10
   Person..........................................................................................................   10
   Portfolio Insurance.............................................................................................   10
   Potential Beneficial Owner......................................................................................   10
   Potential Holder................................................................................................   10
   Preferred Stock.................................................................................................   10
   Quarterly Valuation Date........................................................................................   11
   Rate Multiple...................................................................................................   11
   Rate Period.....................................................................................................   11
   Rate Period Days................................................................................................   11
   Receivables for Municipal Obligations Sold......................................................................   11
   Redemption Price................................................................................................   11
   Reference Rate..................................................................................................   11
   Registration Statement..........................................................................................   11
   S&P.............................................................................................................   11
   S&P Discount Factor.............................................................................................   12
   S&P Eligible Asset..............................................................................................   12
   S&P Exposure Period.............................................................................................   12


                                       iii



                                TABLE OF CONTENTS
                                   (continued)



                                                                                                                    PAGE
                                                                                                                 
   S&P Volatility Factor...........................................................................................   12
   Secondary Market Insurance......................................................................................   12
   Securities Depository...........................................................................................   12
   Sell Order and Sell Orders......................................................................................   12
   Special Rate Period.............................................................................................   12
   Special Redemption Provisions...................................................................................   12
   Submission Deadline.............................................................................................   12
   Submitted Bid and Submitted Bids................................................................................   12
   Submitted Hold Order and Submitted Hold Orders..................................................................   12
   Submitted Order and Submitted Orders............................................................................   12
   Subsequent Rate Period..........................................................................................   13
   Substitute Commercial Paper Dealer..............................................................................   13
   Substitute U.S. Government Securities Dealer....................................................................   13
   Sufficient Clearing Bids........................................................................................   13
   Taxable Allocation..............................................................................................   13
   Taxable Equivalent of the Short Term Municipal Bond Rate........................................................   13
   Taxable Income..................................................................................................   13
   Treasury Bill...................................................................................................   14
   Treasury Bill Rate..............................................................................................   14
   Treasury Note...................................................................................................   14
   Treasury Note Rate..............................................................................................   14
   U.S. Government Securities Dealer...............................................................................   15
   Valuation Date..................................................................................................   15
   Volatility Factor...............................................................................................   15
   Voting Period...................................................................................................   15
   Winning Bid Rate................................................................................................   15

PART I. ...........................................................................................................   15
        1.   Number of Authorized Shares...........................................................................   15
        2.   Dividends.............................................................................................   15
             (a)  Ranking..........................................................................................   15
             (b)  Cumulative Cash Dividends........................................................................   15
             (c)  Dividends Cumulative From Date of Original Issue.................................................   15
             (d)  Dividend Payment Dates and Adjustment Thereof....................................................   16
             (e)  Dividend Rates and Calculation of Dividends......................................................   16
                  (i)   Dividend Rates.............................................................................   16
                  (ii)  Calculation of Dividends...................................................................   18
             (f)  Curing a Failure to Deposit......................................................................   18
             (g)  Dividend Payments by Fund to Auction Agent.......................................................   19
             (h)  Auction Agent as Trustee of Dividend Payments by Fund............................................   19
             (i)  Dividends Paid to Holders........................................................................   19
             (j)  Dividends Credited Against Earliest Accumulated But Unpaid Dividends.............................   19


                                       iv



                                TABLE OF CONTENTS
                                   (continued)



                                                                                                                    PAGE
                                                                                                                 
             (k)  Dividends Designated as Exempt Interest Dividends................................................   19
        3.   Gross up Payments.....................................................................................   19
             (a)  Minimum Rate Periods and Special Rate Periods of 28 Rate Period Days or Fewer....................   19
             (b)  Special Rate Periods of More Than 28 Rate Period Days............................................   20
             (c)  No Gross up Payments In the Event of a Reallocation..............................................   20
        4.   Designation of Special Rate Periods...................................................................   20
             (a)  Length of and Preconditions for Special Rate Period..............................................   20
             (b)  Adjustment of Length of Special Rate Period......................................................   20
             (c)  Notice of Proposed Special Rate Period...........................................................   21
             (d)  Notice of Special Rate Period....................................................................   21
             (e)  Failure to Deliver Notice of Special Rate Period.................................................   22
        5.   Voting Rights.........................................................................................   22
             (a)  One Vote Per Share of MuniPreferred..............................................................   22
             (b)  Voting For Additional Directors..................................................................   23
                  (i)   Voting Period..............................................................................   23
                  (ii)  Notice of Special Meeting..................................................................   23
                  (iii) Terms of Office of Existing Directors......................................................   24
                  (iv)  Terms of Office of Certain Directors to Terminate Upon Termination of Voting Period........   24
             (c)  Holders of MuniPreferred To Vote On Certain Other Matters........................................   24
                  (i)   Increases in Capitalization................................................................   24
                  (ii)  1940 Act Matters...........................................................................   25
             (d)  Board May Take Certain Actions Without Shareholder Approval......................................   25
             (e)  Voting Rights Set Forth Herein Are Sole Voting Rights............................................   26
             (f)  No Preemptive Rights or Cumulative Voting........................................................   26
             (g)  Voting for Directors Sole Remedy for Fund's Failure to Pay Dividends.............................   26
             (h)  Holders Entitled to Vote.........................................................................   26
        6.   1940 Act MuniPreferred Asset Coverage.................................................................   27
        7.   MuniPreferred Basic Maintenance Amount................................................................   27
        8.   [Reserved]............................................................................................   29
        9.   Restrictions on Dividends and Other Distributions.....................................................   29
             (a)  Dividends on Preferred Stock Other Than MuniPreferred............................................   29
             (b)  Dividends and Other Distributions With Respect to Common Stock Under the 1940 Act................   29
             (c)  Other Restrictions On Dividends and Other Distributions..........................................   29
        10.  Rating Agency Restrictions............................................................................   30
        11.  Redemption............................................................................................   31
             (a)  Optional Redemption..............................................................................   31
             (b)  Mandatory Redemption.............................................................................   32
             (c)  Notice of Redemption.............................................................................   33
             (d)  No Redemption Under Certain Circumstances........................................................   34
 

                                        v



                                TABLE OF CONTENTS
                                   (continued)



                                                                                                                    PAGE
                                                                                                                 
             (e)  Absence of Funds Available for Redemption........................................................   34
             (f)  Auction Agent as Trustee of Redemption Payments by Fund..........................................   34
             (g)  Shares for Which Notice of Redemption Has Been Given Are No Longer Outstanding...................   34
             (h)  Compliance With Applicable Law...................................................................   35
             (i)  Only Whole Shares of MuniPreferred May Be Redeemed...............................................   35
        12.  Liquidation Rights....................................................................................   35
             (a)  Ranking..........................................................................................   35
             (b)  Distributions Upon Liquidation...................................................................   35
             (c)  Pro Rata Distributions...........................................................................   35
             (d)  Rights of Junior Stock...........................................................................   36
             (e)  Certain Events Not Constituting Liquidation......................................................   36
        13.  Miscellaneous.........................................................................................   36
             (a)  Amendment of Appendix A to Add Additional Series.................................................   36
             (b)  Appendix A Incorporated By Reference.............................................................   36
             (c)  No Fractional Shares.............................................................................   36
             (d)  Status of Shares of MuniPreferred Redeemed, Exchanged or Otherwise Acquired by the Fund..........   36
             (e)  Board May Resolve Ambiguities....................................................................   37
             (f)  Headings Not Determinative.......................................................................   37
             (g)  Notices..........................................................................................   37
PART II. ..........................................................................................................   37
        1.   Orders................................................................................................   37
        2.   Submission of Orders by Broker Dealers to Auction Agent...............................................   39
        3.   Determination of Sufficient Clearing Bids, Winning Bid Rate and Applicable Rate.......................   41
        4.   Acceptance and Rejection of Submitted Bids and Submitted Sell Orders and Allocation of Shares.........   42
        5.   Notification of Allocations...........................................................................   45
        6.   Auction Agent.........................................................................................   45
        7.   Transfer of Shares of MuniPreferred...................................................................   46
        8.   Global Certificate....................................................................................   46
APPENDIX A.........................................................................................................   48
Section 1.   Designation As To Series..............................................................................   48
Section 2.   Number of Authorized Shares Per Series................................................................   49
Section 3.   Exceptions to Certain Definitions.....................................................................   49
Section 4.   Certain Definitions...................................................................................   49
Section 5.   Initial Rate Periods..................................................................................   54
Section 6.   Date for Purposes of Paragraph (yyy) Contained Under the Heading "Definitions" in this Statement......   54
Section 7.   Party Named for Purposes of the Definition of "Rate Multiple" in this Statement.......................   55
Section 8.   Additional Definitions................................................................................   55


                                       vi



                                TABLE OF CONTENTS
                                   (continued)



                                                                                                                    PAGE
                                                                                                                 
Section 9.   Dividend Payment Dates................................................................................   55
Section 10.  Amount for Purposes of Subparagraph (c)(i) of Section 5 of Part I of this Statement...................   55
Section 11.  Redemption Provisions Applicable to Initial Rate Periods..............................................   55
Section 12.  Applicable Rate for Purposes of Subparagraph(b)(iii) of Section 3 of Part II of this Statement........   55


                                       vii



     NUVEEN INSURED MUNICIPAL OPPORTUNITY FUND, INC., a Minnesota corporation
(the "FUND"), certifies to the Secretary of State of the State of Minnesota
that:

     FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Fund by Article FIFTH of the Fund's Articles of Incorporation, as amended
(which, as hereafter restated or amended from time to time are, together with
this Statement, herein called the "ARTICLES"), the Board of Directors has, by
resolution, authorized the issuance of shares of the Fund's authorized Preferred
Stock, par value $.01 per share, liquidation preference $25,000 per share,
having such designation or designations as to series as is set forth in Section
1 of APPENDIX A hereto and such number of shares per such series as is set forth
in Section 2 of APPENDIX A hereto.

     SECOND: The preferences, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption, of the shares
of each series of MuniPreferred described in Section 1 of APPENDIX A hereto are
as follows (each such series being referred to herein as a series of
MuniPreferred, and shares of all such series being referred to herein
individually as a share of MuniPreferred and collectively as shares of
MuniPreferred):

                                   DEFINITIONS

     Except as otherwise specifically provided in Section 3 of APPENDIX A
hereto, as used in Parts I and II of this Statement, the following terms shall
have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and vice versa), unless the context
otherwise requires:

     (A) ""AA" COMPOSITE COMMERCIAL PAPER RATE," on any date for any Rate Period
of shares of a series of MuniPreferred, 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 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 Fund 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 Fund 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.

     (B) "ACCOUNTANT'S CONFIRMATION" shall have the meaning specified in
paragraph (c) of Section 7 of Part I of this Statement.

     (C) "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 Fund; provided, however, that no
Broker Dealer controlled by, in control of or under common control with the Fund
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 directors, trustees or executive officers of which is a director of the
Fund be deemed to be an Affiliate solely because such director, trustee or
executive officer is also a director of the Fund.

     (D) "AGENT MEMBER" shall mean a member of or participant in the Securities
Depository that will act on behalf of a Bidder.

     (E) "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) that are rated by S&P.

     (F) "APPLICABLE RATE" shall have the meaning specified in subparagraph
(e)(i) of Section 2 of Part I of this Statement.

     (G) "ARTICLES" shall have the meaning specified on the first page of this
Statement.

     (H) "AUCTION" shall mean each periodic implementation of the Auction
Procedures.

     (I) "AUCTION AGENCY AGREEMENT" shall mean the agreement between the Fund
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 MuniPreferred so long as the Applicable Rate for
shares of such series is to be based on the results of an Auction.

     (J) "AUCTION AGENT" shall mean the entity appointed as such by a resolution
of the Board of Directors in accordance with Section 6 of Part II of this
Statement.

                                        2


     (K) "AUCTION DATE," with respect to any Rate Period, shall mean the
Business Day next preceding the first day of such Rate Period.

     (L) "AUCTION PROCEDURES" shall mean the procedures for conducting Auctions
set forth in Part II of this Statement.

     (M) "AVAILABLE MUNIPREFERRED" shall have the meaning specified in paragraph
(a) of Section 3 of Part II of this Statement.

     (N) "BENCHMARK RATE" shall have the meaning specified in Section 12 of
APPENDIX A hereto.

     (O) "BENEFICIAL OWNER," with respect to shares of a series of
MuniPreferred, 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.

     (P) "BID" and "BIDS" shall have the respective meanings specified in
paragraph (a) of Section 1 of Part II of this Statement.

     (Q) "BIDDER" and "BIDDERS" shall have the respective meanings specified in
paragraph (a) of Section 1 of Part II of this Statement; provided, however, that
neither the Fund 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 Fund may
be a Bidder in an Auction, but only if the Orders placed by such Broker Dealer
are not for its own account.

     (R) "BOARD OF DIRECTORS" shall mean the Board of Directors of the Fund or
any duly authorized committee thereof.

     (S) "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 Statement, 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 Fund and has entered into a Broker Dealer Agreement that remains
effective.

     (T) "BROKER DEALER AGREEMENT" shall mean an agreement among the Fund, the
Auction Agent and a Broker Dealer pursuant to which such Broker Dealer agrees to
follow the procedures specified in Part II of this Statement.

     (U) "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.

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

     (W) "COMMERCIAL PAPER DEALERS" shall mean Lehman Commercial Paper
Incorporated, Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated or, in lieu of any thereof, their respective affiliates or
successors, if such entity is a commercial paper dealer.

                                        3


     (X) "COMMON STOCK" shall mean the common stock, par value $.01 per share,
of the Fund.

     (Y) "CURE DATE" shall mean the MuniPreferred Basic Maintenance Cure Date or
the 1940 Act Cure Date, as the case may be.

     (Z) "DATE OF ORIGINAL ISSUE," with respect to shares of a series of
MuniPreferred, shall mean the date on which the Fund initially issued such
shares.

     (AA) "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 Section 11 of Part I of this Statement, such Municipal Obligations shall be
considered "DEPOSIT SECURITIES" only if they are also rated P-1, MIG-1 or VMIG-1
by Moody's.

     (BB) "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
Moody's Eligible Asset that is not currently callable as of such Valuation Date
at the option of the issuer thereof, the quotient of the Market Value thereof
divided by the applicable Moody's Discount Factor, or (b) with respect to a
Moody's Eligible Asset that is currently callable as of such Valuation Date at
the option of the issuer thereof, the quotient of (1) the lesser of the Market
Value or call price thereof, including any call premium, divided by (2) the
applicable Moody's Discount Factor.

     (CC) [Reserved]

     (DD) [Reserved]

     (EE) "DIVIDEND PAYMENT DATE," with respect to shares of a series of
MuniPreferred, shall mean any date on which dividends are payable on shares of
such series pursuant to the provisions of paragraph (d) of Section 2 of Part I
of this Statement.

     (FF) "DIVIDEND PERIOD," with respect to shares of a series of
MuniPreferred, 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.

     (GG) "EXISTING HOLDER," with respect to shares of a series of
MuniPreferred, shall mean a Broker Dealer (or any such other Person as may be
permitted by the Fund) that is listed on the records of the Auction Agent as a
holder of shares of such series.

     (HH) "FAILURE TO DEPOSIT," with respect to shares of a series of
MuniPreferred, shall mean a failure by the Fund 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

                                        4


City of New York, New York, the Redemption Price to be paid on such redemption
date for any share of such series after notice of redemption is mailed pursuant
to paragraph (c) of Section 11 of Part I of this Statement; provided, however,
that the foregoing clause (B) shall not apply to the Fund's failure to pay the
Redemption Price in respect of shares of MuniPreferred 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.

     (II) "FEDERAL TAX RATE INCREASE" shall have the meaning specified in the
definition of "MOODY'S VOLATILITY FACTOR."

     (JJ) "FUND" shall mean the entity named on the first page of this
Statement, which is the issuer of the shares of MuniPreferred.

     (KK) "GROSS UP PAYMENT" shall have the meaning specified in Section 4 of
APPENDIX A hereto.

     (LL) "HOLDER," with respect to shares of a series of MuniPreferred, shall
mean the registered holder of such shares as the same appears on the stock books
of the Fund.

     (MM) "HOLD ORDER" and "HOLD ORDERS" shall have the respective meanings
specified in paragraph (a) of Section 1 of Part II of this Statement.

     (NN) "INDEPENDENT ACCOUNTANT" shall mean a nationally recognized
accountant, or firm of accountants, that is with respect to the Fund an
independent public accountant or firm of independent public accountants under
the Securities Act of 1933, as amended from time to time.

     (OO) "INITIAL RATE PERIOD," with respect to shares of a series of
MuniPreferred, shall have the meaning specified with respect to shares of such
series in Section 5 of APPENDIX A hereto.

     (PP) "INTEREST EQUIVALENT" means a yield on a 360 day basis of a discount
basis security which is equal to the yield on an equivalent interest bearing
security.

     (QQ) "ISSUE TYPE CATEGORY," if defined in Section 4 of APPENDIX A hereto,
shall have the meaning specified in that section.

     (RR) "KENNY INDEX" shall have the meaning specified in the definition of
"TAXABLE EQUIVALENT OF THE SHORT TERM MUNICIPAL BOND RATE."

     (SS) "LATE CHARGE" shall have the meaning specified in subparagraph
(e)(1)(B) of Section 2 of Part I of this Statement.

     (TT) "LIQUIDATION PREFERENCE," with respect to a given number of shares of
MuniPreferred, means $25,000 times that number.

     (UU) "MARKET VALUE" of any asset of the Fund shall mean the market value
thereof determined by the pricing service designated from time to time by the
Board of Directors.

                                        5


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

     (VV) "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 Fund 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 Fund, as of the end of the
calendar month immediately preceding such Valuation Date, and assuming such
Gross up Payments are fully taxable.

     (WW) "MAXIMUM RATE," for shares of a series of MuniPreferred 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 Fund pursuant to Section 4 of Part I of this Statement, 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 Fund pursuant to Section 4 of Part I of this Statement, 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

                                        6


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.

     (XX) [Reserved]

     (YY) "MINIMUM RATE PERIOD" shall mean any Rate Period consisting of 7 Rate
Period Days.

     (ZZ) "MOODY'S" shall mean Moody's Investors Service, Inc., a Delaware
corporation, and its successors.

     (AAA) "MOODY'S DISCOUNT FACTOR" shall have the meaning specified in Section
4 of APPENDIX A hereto.

     (BBB) "MOODY'S ELIGIBLE ASSET" shall have the meaning specified in Section
4 of APPENDIX A hereto.

     (CCC) "MOODY'S EXPOSURE PERIOD" shall mean the period commencing on a given
Valuation Date and ending 56 days thereafter.

     (DDD) "MOODY'S 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 Moody's 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%

                                        7


                          15%             341%
                          20%             369%
                          25%             400%
                          30%             436%
                          35%             477%
                          40%             525%

     (EEE) "MUNIPREFERRED" shall have the meaning set forth on the first page of
this Statement.

     (FFF) "MUNIPREFERRED 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 MuniPreferred outstanding on such date multiplied by $25,000
(plus the product of the number of shares of any other series of Preferred Stock
outstanding on such date multiplied by the liquidation preference of such
shares), plus any redemption premium applicable to shares of MuniPreferred (or
other Preferred Stock) 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 MuniPreferred 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 shares of Preferred
Stock 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 MuniPreferred
outstanding from such first respective Dividend Payment Date therefor through
the 56th 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 Fund shall have delivered a Notice
of Special Rate Period to the Auction Agent pursuant to Section 4(d)(i) of this
Part I 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 Fund shall have delivered a Notice of Special Rate
Period to the Auction Agent pursuant to Section 4(d)(i) of this Part I with
respect to shares of such series designating a Special Rate Period consisting of
56 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 shares of
Preferred Stock outstanding from such respective dividend payment dates through
the 56th day after such Valuation Date, as established by or pursuant to the
respective statements establishing and fixing the rights and preferences of such
other shares of Preferred Stock) (except that (1) if such Valuation Date occurs
at a time when a Failure to Deposit (or, in the case of shares of Preferred
Stock other than MuniPreferred, 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

                                        8


(or, in the case of shares of Preferred Stock other than MuniPreferred, 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 Fund for the 90 days subsequent to such Valuation
Date; (E) the amount of the Fund's Maximum Potential Gross up Payment Liability
in respect of shares of MuniPreferred (and similar amounts payable in respect of
other shares of Preferred Stock pursuant to provisions similar to those
contained in Section 3 of Part I of this Statement) as of such Valuation Date;
and (F) any current liabilities as of such Valuation Date to the extent not
reflected in any of (i)(A) through (i)(E) (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 Moody's 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)(F) become payable, otherwise the Moody's Discounted Value)
of any of the Fund's assets irrevocably deposited by the Fund for the payment of
any of (i)(A) through (i)(F).

     (GGG) "MUNIPREFERRED BASIC MAINTENANCE CURE DATE," with respect to the
failure by the Fund to satisfy the MuniPreferred Basic Maintenance Amount (as
required by paragraph (a) of Section 7 of Part I of this Statement) as of a
given Valuation Date, shall mean the seventh Business Day following such
Valuation Date.

     (HHH) "MUNIPREFERRED BASIC MAINTENANCE REPORT" shall mean a report signed
by the President, Treasurer or any Senior Vice President or Vice President of
the Fund which sets forth, as of the related Valuation Date, the assets of the
Fund, the Market Value and the Discounted Value thereof (seriatim and in
aggregate), and the MuniPreferred Basic Maintenance Amount.

     (III) "MUNICIPAL OBLIGATIONS" shall mean "MUNICIPAL OBLIGATIONS" as defined
in the Fund's registration statement on Form N 2 on file with the Securities and
Exchange Commission, as such registration statement may be amended from time to
time (the "Registration Statement").

     (JJJ) "1940 ACT" shall mean the Investment Company Act of 1940, as amended
from time to time.

     (KKK) "1940 ACT CURE DATE," with respect to the failure by the Fund to
maintain the 1940 Act MuniPreferred Asset Coverage (as required by Section 6 of
Part I of this Statement) as of the last Business Day of each month, shall mean
the last Business Day of the following month.

     (LLL) "1940 ACT MUNIPREFERRED 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 Fund which are stock, including all
outstanding shares of MuniPreferred (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 stock of a closed end investment company as a
condition of declaring dividends on its common stock).

                                        9


     (MMM) "NOTICE OF REDEMPTION" shall mean any notice with respect to the
redemption of shares of MuniPreferred pursuant to paragraph (c) of Section 11 of
Part I of this Statement.

     (NNN) "NOTICE OF SPECIAL RATE PERIOD" shall mean any notice with respect to
a Special Rate Period of shares of MuniPreferred pursuant to subparagraph (d)(i)
of Section 4 of Part I of this Statement.

     (OOO) "ORDER" and "ORDERS" shall have the respective meanings specified in
paragraph (a) of Section 1 of Part II of this Statement.

     (PPP) "ORIGINAL ISSUE INSURANCE," if defined in Section 4 of APPENDIX A
hereto, shall have the meaning specified in that section.

     (QQQ) "OTHER ISSUES," if defined in Section 4 of APPENDIX A hereto, shall
have the meaning specified in that section.

     (RRR) "OUTSTANDING" shall mean, as of any Auction Date with respect to
shares of a series of MuniPreferred, the number of shares of such series
theretofore issued by the Fund except, without duplication, (i) any shares of
such series theretofore cancelled or delivered to the Auction Agent for
cancellation or redeemed by the Fund, (ii) any shares of such series as to which
the Fund 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 Fund.

     (SSS) "PERMANENT INSURANCE," if defined in Section 4 of APPENDIX A hereto,
shall have the meaning specified in that section.

     (TTT) "PERSON" 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.

     (UUU) "PORTFOLIO INSURANCE," if defined in Section 4 of APPENDIX A hereto,
shall have the meaning specified in that section.

     (VVV) "POTENTIAL BENEFICIAL OWNER," with respect to shares of a series of
MuniPreferred, 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.

     (WWW) "POTENTIAL HOLDER," with respect to shares of a series of
MuniPreferred, shall mean a Broker Dealer (or any such other person as may be
permitted by the Fund) 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.

     (XXX) "PREFERRED STOCK" shall mean the preferred stock of the Fund, and
includes the shares of MuniPreferred.

                                       10


     (YYY) "QUARTERLY VALUATION DATE" shall mean the last Business Day of each
February, May, August and November of each year, commencing on the date set
forth in Section 6 of APPENDIX A hereto.

     (ZZZ) "RATE MULTIPLE" shall have the meaning specified in Section 4 of
APPENDIX A hereto.

     (AAAA) "RATE PERIOD," with respect to shares of a series of MuniPreferred,
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.

     (BBBB) "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 (d) of Section 2 of Part I of this Statement or
paragraph (b) of Section 4 of Part I of this Statement.

     (CCCC) "RECEIVABLES FOR MUNICIPAL OBLIGATIONS SOLD" shall mean (A) for
purposes of calculation of Moody's 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 Fund has received prior written authorization
from Moody's or (y) with counterparties having a Moody's long term debt rating
of at least Baa3; and (ii) the Moody's 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 calculation of 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.

     (DDDD) "REDEMPTION PRICE" shall mean the applicable redemption price
specified in paragraph (a) or (b) of Section 11 of Part I of this Statement.

     (EEEE) "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.

     (FFFF) "REGISTRATION STATEMENT" has the meaning specified in the definition
of "Municipal Obligations."

     (GGGG) "S&P" shall mean Standard & Poor's Corporation, a New York
corporation, and its successors.

                                       11


     (HHHH) "S&P DISCOUNT FACTOR" shall have the meaning specified in Section 4
of APPENDIX A hereto.

     (IIII) "S&P ELIGIBLE ASSET" shall have the meaning specified in Section 4
of APPENDIX A hereto.

     (JJJJ) "S&P EXPOSURE PERIOD" shall mean the maximum period of time
following a Valuation Date that the Fund has under this Statement to cure any
failure to maintain, as of such Valuation Date, the Discounted Value for its
portfolio at least equal to the MuniPreferred Basic Maintenance Amount (as
described in paragraph (a) of Section 7 of Part I of this Statement).

     (KKKK) "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.

     (LLLL) "SECONDARY MARKET INSURANCE," if defined in Section 4 of APPENDIX A
hereto, shall have the meaning specified in that section.

     (MMMM) "SECURITIES DEPOSITORY" shall mean The Depository Trust Company and
its successors and assigns or any other securities depository selected by the
Fund which agrees to follow the procedures required to be followed by such
securities depository in connection with shares of MuniPreferred.

     (NNNN) "SELL ORDER" and "SELL ORDERS" shall have the respective meanings
specified in paragraph (a) of Section 1 of Part II of this Statement.

     (OOOO) "SPECIAL RATE PERIOD," with respect to shares of a series of
MuniPreferred, shall have the meaning specified in paragraph (a) of Section 4 of
Part I of this Statement.

     (PPPP) "SPECIAL REDEMPTION PROVISIONS" shall have the meaning specified in
subparagraph (a)(i) of Section 11 of Part I of this Statement.

     (QQQQ) "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.

     (RRRR) "SUBMITTED BID" and "SUBMITTED BIDS" shall have the respective
meanings specified in paragraph (a) of Section 3 of Part II of this Statement.

     (SSSS) "SUBMITTED HOLD ORDER" and "SUBMITTED HOLD ORDERS" shall have the
respective meanings specified in paragraph (a) of Section 3 of Part II of this
Statement.

     (TTTT) "SUBMITTED ORDER" and "SUBMITTED ORDERS" shall have the respective
meanings specified in paragraph (a) of Section 3 of Part II of this Statement.

                                       12


     (UUUU) "SUBMITTED SELL ORDER" and "SUBMITTED SELL ORDERS" shall have the
respective meanings specified in paragraph (a) of Section 3 of Part II of this
Statement.

     (VVVV) "SUBSEQUENT RATE PERIOD," with respect to shares of a series of
MuniPreferred, 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.

     (WWWW) "SUBSTITUTE COMMERCIAL PAPER DEALER" shall mean The First Boston
Company 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.

     (XXXX) "SUBSTITUTE U.S. GOVERNMENT SECURITIES DEALER" shall mean The First
Boston Company 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.

     (YYYY) "SUFFICIENT CLEARING BIDS" shall have the meaning specified in
paragraph (a) of Section 3 of Part II of this Statement.

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

     (AAAAA) "TAXABLE INCOME" shall have the meaning specified in Section 12 of
APPENDIX A hereto.

     (BBBBB) "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 Kenny S&P 30 day High Grade Index or
any successor index (the "Kenny Index") (provided, however, that any such
successor index must be approved by Moody's (if Moody's is then rating the
shares of MuniPreferred) and S&P (if S&P is then rating the shares of
MuniPreferred)), 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 Kenny S&P 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 Kenny S&P 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 maximum marginal regular Federal individual
income tax rate applicable to ordinary income or the

                                       13


maximum marginal regular Federal corporate income tax rate applicable to
ordinary income (in each case expressed as a decimal), whichever is greater;
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 Kenny S&P 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 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), whichever is greater.

     (CCCCC) "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.

     (DDDDD) "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.

     (EEEEE) "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.

     (FFFFF) "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 Fund 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 Fund 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.

                                       14


     (GGGGG) "U.S. GOVERNMENT SECURITIES DEALER" shall mean Lehman Government
Securities Incorporated, Goldman, Sachs & Co., Salomon Brothers 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.

     (HHHHH) "VALUATION DATE" shall mean, for purposes of determining whether
the Fund is maintaining the MuniPreferred Basic Maintenance Amount, each
Business Day.

     (IIIII) "VOLATILITY FACTOR" shall mean, as of any Valuation Date, the
greater of the Moody's Volatility Factor and the S&P Volatility Factor.

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

     (KKKKK) "WINNING BID RATE" shall have the meaning specified in paragraph
(a) of Section 3 of Part II of this Statement.

     Any additional definitions specifically set forth in Section 8 of APPENDIX
A hereto shall be incorporated herein and made part hereof by reference thereto.

                                    PART I.

1. NUMBER OF AUTHORIZED SHARES. The number of authorized shares constituting a
series of MuniPreferred shall be as set forth with respect to such series in
Section 2 of APPENDIX A hereto.

2. DIVIDENDS.

     (A) RANKING. The shares of a series of MuniPreferred shall rank on a parity
with each other, with shares of any other series of MuniPreferred and with
shares of any other series of Preferred Stock as to the payment of dividends by
the Fund.

     (B) CUMULATIVE CASH DIVIDENDS. The Holders of shares of MuniPreferred of
any series shall be entitled to receive, when, as and if declared by the Board
of Directors, out of funds legally available therefor, cumulative cash dividends
at the Applicable Rate for shares of such series, determined as set forth in
paragraph (e) of this Section 2, and no more (except to the extent set forth in
Section 3 of this Part I), payable on the Dividend Payment Dates with respect to
shares of such series determined pursuant to paragraph (d) of this Section 2.
Holders of shares of MuniPreferred shall not be entitled to any dividend,
whether payable in cash, property or stock, in excess of full cumulative
dividends, as herein provided, on shares of MuniPreferred. No interest, or sum
of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on shares of MuniPreferred which may be in arrears, and,
except to the extent set forth in subparagraph (e)(i) of this Section 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 MuniPreferred of any series shall accumulate at the Applicable Rate for
shares of such series from the Date of Original Issue thereof.

                                       15


     (D) DIVIDEND PAYMENT DATES AND ADJUSTMENT THEREOF. The Dividend Payment
Dates with respect to shares of a series of MuniPreferred shall be as set forth
with respect to shares of such series in Section 9 of APPENDIX A hereto;
provided, however, that:

          (i) (A) in the case of a series of MuniPreferred designated as "Series
F MuniPreferred" or "Series M MuniPreferred" in Section 1 of APPENDIX A hereto,
if the Monday or Tuesday, as the case may be, on which dividends would otherwise
be payable on shares of such series is not a Business Day, then such dividends
shall be payable on such shares on the first Business Day that falls after such
Monday or Tuesday, as the case may be, and (B) in the case of a series of
MuniPreferred designated as "Series T MuniPreferred," "Series W MuniPreferred"
or "Series TH MuniPreferred" in Section 1 of APPENDIX A hereto, if the
Wednesday, Thursday or Friday, as the case may be, on which dividends would
otherwise be payable on shares of such series is not a Business Day, then such
dividends shall be payable on such shares on the first Business Day that falls
prior to such Wednesday, Thursday or Friday, as the case may be; and

          (ii) notwithstanding Section 9 of APPENDIX A hereto, the Fund in its
discretion may establish the Dividend Payment Dates in respect of any Special
Rate Period of shares of a series of MuniPreferred 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 Fund; and further provided that (1) any such Dividend
Payment Date shall be a Business Day and (2) the last Dividend Payment Date in
respect of such Special Rate Period shall be the Business Day immediately
following the last day thereof, as such last day is determined in accordance
with paragraph (b) of Section 4 of this Part I.

     (E) DIVIDEND RATES AND CALCULATION OF DIVIDENDS.

          (i) DIVIDEND RATES. The dividend rate on shares of MuniPreferred 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 Section 1 of APPENDIX A
hereto. 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

                                       16


     third Business Day next succeeding the date on which such Failure to
     Deposit occurred, such Failure to Deposit shall have been cured in
     accordance with paragraph (f) of this Section 2 and the Fund shall have
     paid to the 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 paragraph (f)
     of this Section 2 (including the day such Failure to Deposit occurs and
     excluding the day such Failure to Deposit is cured) and the denominator of
     which shall be 360, and applying the rate obtained against the aggregate
     Liquidation Preference of the outstanding shares of such series 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 Fund pursuant to
     paragraph (c) of Section 11 of this Part I, 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 paragraph (f) of this Section 2
     (including the day such Failure to Deposit occurs and excluding the day
     such Failure to Deposit is cured) and the denominator of which shall be
     360, and applying the rate obtained against the aggregate Liquidation
     Preference of the outstanding shares of such series to be redeemed, 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 paragraph (f) of this Section 2 or the Fund 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 paragraph (f) of this Section 2 and (2) the Fund pays
     the applicable Late Charge to the Auction Agent (the condition set forth in
     this clause (2) to apply only in the event Moody's is rating such shares at
     the time the Fund 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

                                       17


     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 paragraph (f) of this Section 2 or, in the event Moody's is then
     rating such shares, the Fund 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 paragraph (f) of this Section 2 and (2) the Fund pays
     the applicable Late Charge to the Auction Agent (the condition set forth in
     this clause (2) to apply only in the event Moody's is rating such shares at
     the time the Fund 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 at which dividends are payable on
     shares of a series of MuniPreferred 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 MuniPreferred 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 MuniPreferred shall have been cured (if such Failure to
Deposit is not solely due to the willful failure of the Fund to make the
required payment to the 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 Section 2, the Fund 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

                                       18


mailed by the Fund pursuant to paragraph (c) of Section 11 of Part I of this
Statement; provided, however, that the foregoing clause (B) shall not apply to
the Fund's failure to pay the Redemption Price in respect of shares of
MuniPreferred when the related Redemption Notice provides that redemption of
such shares is subject to one or more conditions precedent and any such
condition precedent shall not have been satisfied at the time or times and in
the manner specified in such Notice of Redemption.

     (G) DIVIDEND PAYMENTS BY FUND TO AUCTION AGENT. The Fund 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
MuniPreferred, 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 FUND. 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 paragraph (i) of this Section 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 Fund 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 MuniPreferred
shall be paid on the Dividend Payment Date therefor to the Holders thereof as
their names appear on the stock books of the Fund 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 MuniPreferred 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 stock books of the Fund on such date, not
exceeding 15 days preceding the payment date thereof, as may be fixed by the
Board of Directors.

     (K) DIVIDENDS DESIGNATED AS EXEMPT INTEREST DIVIDENDS. Dividends on shares
of MuniPreferred shall be designated as exempt interest dividends up to the
amount of tax exempt income of the Fund, to the extent permitted by, and for
purposes of, Section 852 of the Code.

3. GROSS UP PAYMENTS. Holders of shares of MuniPreferred shall be entitled to
receive, when, as and if declared by the Board of Directors, out of funds
legally available therefor, 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 Fund allocates any net capital gains or other
income taxable for Federal income tax purposes to a dividend paid on shares of
MuniPreferred without having given

                                       19


advance notice thereof to the Auction Agent as provided in Section 5 of Part II
of this Statement (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 MuniPreferred or the liquidation of the Fund, the Fund
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 Fund's 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 Holder's address as the same appears or last appeared on the stock books
of the Fund.

     (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 Fund makes a
Taxable Allocation to a dividend paid on shares of MuniPreferred, the Fund
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 Fund's 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 Holder's address as the same appears or last appeared on the stock books of
the Fund.

     (C) NO GROSS UP PAYMENTS IN THE EVENT OF A REALLOCATION. The Fund shall not
be required to make Gross up Payments with respect to any net capital gains or
other taxable income determined by the Internal Revenue Service to be allocable
in a manner different from that allocated by the Fund.

4. DESIGNATION OF SPECIAL RATE PERIODS.

     (A) LENGTH OF AND PRECONDITIONS FOR SPECIAL RATE PERIOD. The Fund, at its
option, may designate any succeeding Subsequent Rate Period of shares of a
series of MuniPreferred as a Special Rate Period consisting of a specified
number of Rate Period Days evenly divisible by seven and not more than 1,820,
subject to adjustment as provided in paragraph (b) of this Section 4. A
designation of a Special Rate Period shall be effective only if (A) notice
thereof shall have been given in accordance with paragraph (c) and subparagraph
(d)(i) of this Section 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 Fund pursuant to paragraph (c) of Section 11 of
this Part I 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 Fund wishes to designate any succeeding Subsequent Rate Period for
shares of a series of MuniPreferred as a Special Rate Period consisting of more
than 28 Rate Period Days, the Fund shall notify S&P (if S&P is then rating such
series) and Moody's (if Moody's is then rating such series) in advance of the
commencement of such Subsequent Rate Period that the Fund wishes to designate
such Subsequent Rate Period as a Special Rate Period and shall provide S&P (if
S&P is then rating such series) and Moody's (if Moody's is then rating such
series) with such documents as either may request.

     (B) ADJUSTMENT OF LENGTH OF SPECIAL RATE PERIOD. In the event the Fund
wishes to designate a Subsequent Rate Period as a Special Rate Period, but the
day following what would

                                       20


otherwise be the last day of such Special Rate Period is not (a) a Tuesday that
is a Business Day in the case of a series of MuniPreferred designated as "Series
M MuniPreferred" in Section 1 of APPENDIX A hereto, (b) a Wednesday that is a
Business Day in the case of a series of MuniPreferred designated as "Series T
MuniPreferred" in Section 1 of APPENDIX A hereto, (c) a Thursday that is a
Business Day in the case of a series of MuniPreferred designated as "Series W
MuniPreferred" in Section 1 of APPENDIX A hereto, (d) a Friday that is a
Business Day in the case of a series of MuniPreferred designated as "Series TH
MuniPreferred" in Section 1 of APPENDIX A hereto, (e) a Monday that is a
Business Day in the case of a series of MuniPreferred designated as "Series F
MuniPreferred" in Section 1 of APPENDIX A hereto, then the Fund shall designate
such Subsequent Rate Period as a Special Rate Period consisting of the period
commencing on the first day following the end of the immediately preceding Rate
Period and ending (a) 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 MuniPreferred, (b) on the first Tuesday that is followed by a Wednesday
that is a Business Day preceding what would otherwise be such last day, in the
case of Series T MuniPreferred, (c) on the first Wednesday that is followed by a
Thursday that is a Business Day preceding what would otherwise be such last day,
in the case of Series W MuniPreferred, (d) on the first Thursday that is
followed by a Friday that is a Business Day preceding what would otherwise be
such last day, in the case of Series TH MuniPreferred, and (e) on the first
Sunday that is followed by a Monday that is a Business Day preceding what would
otherwise be such last day, in the case of Series F MuniPreferred.

     (C) NOTICE OF PROPOSED SPECIAL RATE PERIOD. If the Fund proposes to
designate any succeeding Subsequent Rate Period of shares of a series of
MuniPreferred as a Special Rate Period pursuant to paragraph (a) of this Section
4, not less than 20 (or such lesser number of days as may be agreed to from time
to time by the Auction Agent) nor more than 30 days prior to the date the Fund
proposes to designate as the first day of such Special Rate Period (which shall
be such day that would otherwise be the first day of a Minimum Rate Period),
notice shall be (i) published or caused to be published by the Fund 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 Fund by
first class mail, postage prepaid, to the Holders of shares of such series. Each
such notice shall state (A) that the Fund may exercise its option to designate a
succeeding Subsequent Rate Period of shares of such series as a Special Rate
Period, specifying the first day thereof and (B) that the Fund 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 Fund 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 MuniPreferred as to which notice
has been given as set forth in paragraph (c) of this Section 4 (or such later
time or date, or both, as may be agreed to by the Auction Agent), the Fund shall
deliver to the Auction Agent either:

          (i) a notice ("NOTICE OF SPECIAL RATE PERIOD") stating (A) that the
Fund has determined to designate the next succeeding Rate Period of shares of
such series as a Special Rate Period, specifying the same and the first day
thereof, (B) the Auction Date immediately

                                       21


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 MuniPreferred Basic Maintenance Report showing that, as of the third Business
Day next preceding such proposed Special Rate Period, Moody's Eligible Assets
(if Moody's 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 MuniPreferred 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 Moody's Discount Factors applicable to
Moody's Eligible Assets are determined by reference to the first Exposure Period
longer than the Exposure Period then applicable to the Fund, as described in the
definition of Moody's Discount Factor herein); or

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

     (E) FAILURE TO DELIVER NOTICE OF SPECIAL RATE PERIOD. If the Fund fails to
deliver either of the notices described in subparagraphs (d)(i) or (d)(ii) of
this Section 4 (and, in the case of the notice described in subparagraph (d)(i)
of this Section 4, a MuniPreferred Basic Maintenance Report to the effect set
forth in such subparagraph (if either Moody's 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 Fund 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 Section 4. In the event the Fund delivers to the Auction Agent a
notice described in subparagraph (d)(i) of this Section 4, it shall file a copy
of such notice with the Secretary of the Fund, and the contents of such notice
shall be binding on the Fund. In the event the Fund delivers to the Auction
Agent a notice described in subparagraph (d)(ii) of this Section 4, the Fund
will provide Moody's (if Moody's 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 MUNIPREFERRED. Except as otherwise provided in
the Articles or as otherwise required by law, (i) each Holder of shares of
MuniPreferred shall be entitled to one vote for each share of MuniPreferred held
by such Holder on each matter submitted to a vote of shareholders of the Fund,
and (ii) the holders of outstanding shares of Preferred Stock, including each
share of MuniPreferred, and of shares of Common Stock shall vote together as a
single class; provided, however, that, at any meeting of the shareholders of the
Fund held for the election of directors, the holders of outstanding shares of
Preferred Stock, including MuniPreferred, represented in person or by proxy at
said meeting, shall be entitled, as

                                       22


a class, to the exclusion of the holders of all other securities and classes of
capital stock of the Fund, to elect two directors of the Fund, each share of
Preferred Stock, including each share of MuniPreferred, entitling the holder
thereof to one vote. Subject to paragraph (b) of this Section 5, the holders of
outstanding shares of Common Stock and Preferred Stock, including MuniPreferred,
voting together as a single class, shall elect the balance of the directors.

     (B) VOTING FOR ADDITIONAL DIRECTORS.

          (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 directors constituting the Board of Directors shall be automatically
increased by the smallest number that, when added to the two directors elected
exclusively by the holders of shares of Preferred Stock, including shares of
MuniPreferred, would constitute a majority of the Board of Directors as so
increased by such smallest number; and the holders of shares of Preferred Stock,
including MuniPreferred, shall be entitled, voting as a class on a one vote per
share basis (to the exclusion of the holders of all other securities and classes
of capital stock of the Fund), to elect such smallest number of additional
directors, together with the two directors 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 share of Preferred Stock, including MuniPreferred, 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 shares of Preferred Stock are
     entitled under the 1940 Act to elect a majority of the directors of the
     Fund.

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 shares of Preferred Stock to elect
additional directors as described in subparagraph (b)(i) of this Section 5, the
Fund 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 Fund 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
shares of Preferred Stock held during a Voting Period at which directors are to
be elected, such holders, voting together as a class (to the exclusion of the
holders of all other securities and classes of capital stock of the Fund), shall
be entitled to elect the number of directors prescribed in subparagraph (b)(i)
of this Section 5 on a one vote per share basis.

                                       23


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

          (iv) TERMS OF OFFICE OF CERTAIN DIRECTORS TO TERMINATE UPON
TERMINATION OF VOTING PERIOD. Simultaneously with the termination of a Voting
Period, the terms of office of the additional directors elected by the Holders
and holders of other Preferred Stock pursuant to subparagraph (b)(i) of this
Section 5 shall terminate, the remaining directors shall constitute the
directors of the Fund and the voting rights of the Holders and such other
holders to elect additional directors pursuant to subparagraph (b)(i) of this
Section 5 shall cease, subject to the provisions of the last sentence of
subparagraph (b)(i) of this Section 5.

     (C) HOLDERS OF MUNIPREFERRED TO VOTE ON CERTAIN OTHER MATTERS.

          (i) INCREASES IN CAPITALIZATION. So long as any shares of
MuniPreferred are outstanding, the Fund shall not, without the affirmative vote
or consent of the Holders of at least a majority of the shares of MuniPreferred
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 stock ranking prior to or on a parity with shares of MuniPreferred
with respect to the payment of dividends or the distribution of assets upon
dissolution, liquidation or winding up of the affairs of the Fund, or authorize,
create or issue additional shares of any series of MuniPreferred (except that,
notwithstanding the foregoing, but subject to the provisions of paragraph (c) of
Section 10 of this Part I, the Board of Directors, without the vote or consent
of the Holders of MuniPreferred, may from time to time authorize and create, and
the Fund may from time to time issue, additional shares of any series of
MuniPreferred or classes or series of Preferred Stock ranking on a parity with
shares of MuniPreferred with respect to the payment of dividends and the
distribution of assets upon dissolution, liquidation or winding up of the
affairs of the Fund; provided, however, that if Moody's or S&P is not then
rating the shares of MuniPreferred, the aggregate liquidation preference of all
Preferred Stock of the Fund outstanding after any such issuance, exclusive of
accumulated and unpaid dividends, may not exceed the amount set forth in Section
10 of APPENDIX A hereto) or (b) amend, alter or repeal the provisions of the
Articles, including this Statement, whether by merger, consolidation or
otherwise, so as to affect any preference, right or power of such shares of
MuniPreferred or the Holders thereof; provided, however, that (i) none of the
actions permitted by the exception to (a) above will be deemed to affect such
preferences, rights or powers, (ii) a division of a share of MuniPreferred will
be deemed to affect such preferences, rights or powers only if the terms of such
division adversely affect the Holders of shares of MuniPreferred and (iii) the
authorization, creation and issuance of classes or series of stock ranking
junior to shares of MuniPreferred with respect to the payment of dividends and
the distribution of assets upon dissolution, liquidation or winding up of the
affairs of the Fund, will be deemed to affect such preferences, rights or powers
only if Moody's or S&P is then rating shares of MuniPreferred and such issuance
would, at the time thereof, cause the Fund not to satisfy the 1940 Act
MuniPreferred Asset Coverage or the MuniPreferred

                                       24


Basic Maintenance Amount. So long as any shares of MuniPreferred are
outstanding, the Fund shall not, without the affirmative vote or consent of the
Holders of at least 66 2/3% of the shares of MuniPreferred outstanding at the
time, in person or by proxy, either in writing or at a meeting, voting as a
separate class, file a voluntary application for relief under Federal bankruptcy
law or any similar application under state law for so long as the Fund is
solvent and does not foresee becoming insolvent. To the extent that shares of
MuniPreferred constitute a series of stock under Minnesota law and to the extent
the Holders of such shares are empowered under the Minnesota Business
Corporation Act to vote as a class on the actions set forth above in this
subparagraph (c)(i), the Fund shall not approve any such action without the
affirmative vote or consent of the Holders of at least a majority of the shares
of MuniPreferred of such series outstanding at the time, in person or by proxy,
either in writing or at a meeting (voting as a separate class).

          (ii) 1940 ACT MATTERS. Unless a higher percentage is provided for in
the Articles, (A) the affirmative vote of the Holders of at least a majority of
the shares of Preferred Stock, including MuniPreferred, outstanding at the time,
voting as a separate class, shall be required to approve any conversion of the
Fund from a closed end to an open end investment company and (B) the affirmative
vote of the Holders of a "majority of the outstanding shares of Preferred
Stock," including MuniPreferred, 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 shares of Preferred Stock," including
MuniPreferred, voting as a separate class, shall be required to approve any
action not described in the first sentence of this Section 5(c)(ii) requiring a
vote of security holders of the Fund under Section 13(a) of the 1940 Act. For
purpose of the foregoing, "majority of the outstanding shares of Preferred
Stock" 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 MuniPreferred is required pursuant to the provisions of Section 13(a) of the
1940 Act, the Fund shall, not later than ten Business Days prior to the date on
which such vote is to be taken, notify Moody's (if Moody's is then rating the
shares of MuniPreferred) and S&P (if S&P is then rating the shares of
MuniPreferred) that such vote is to be taken and the nature of the action with
respect to which such vote is to be taken. The Fund shall, not later than ten
Business Days after the date on which such vote is taken, notify Moody's (if
Moody's is then rating the shares of MuniPreferred) of the results of such vote.

     (D) BOARD MAY TAKE CERTAIN ACTIONS WITHOUT SHAREHOLDER APPROVAL. The Board
of Directors, without the vote or consent of the shareholders of the Fund, 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 Statement viewed by Moody's 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 MuniPreferred or the Holders thereof; provided, however, that the Board of
Directors receives written confirmation from Moody's (such confirmation being
required to be obtained only in the event Moody's is rating the shares of
MuniPreferred 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, Issue Type Category and Other Issues as such terms
apply to S&P Eligible Assets and (y) S&P Discount Factor, S&P Eligible Asset,
S&P Exposure Period and S&P Volatility Factor) and S&P (such confirmation being
required to be obtained only in the event S&P is rating the shares of
MuniPreferred and in no event being required to be

                                       25


obtained in the case of the definitions of (x) Discounted Value, Receivables for
Municipal Obligations Sold, Issue Type Category and Other Issues as such terms
apply to Moody's Eligible Assets, and (y) Moody's Discount Factor, Moody's
Eligible Asset, Moody's Exposure Period and Moody's Volatility Factor) that any
such amendment, alteration or repeal would not impair the ratings then assigned
by Moody's or S&P, as the case may be, to shares of MuniPreferred:

Deposit Securities                          Issue Type Category
Discounted Value                            Market Value
Escrowed Bonds                              Maximum Potential Gross-up
MuniPreferred Basic Maintenance Amount      Payment Liability
                                            S&P Eligible Asset
MuniPreferred Basic Maintenance Cure Date   S&P Exposure Period
                                            S&P Volatility Factor
MuniPreferred Basic Maintenance Report      Valuation Date
                                            Volatility Factor

Moody's Discount Factor
Moody's Eligible Asset
Moody's Exposure Period
Moody's Volatility Factor
1940 Act Cure Date
1940 Act MuniPreferred Asset Coverage

Other Issues
Quarterly Valuation Date
Receivables for Municipal
  Obligations Sold
S&P Discount Factor

     (E) VOTING RIGHTS SET FORTH HEREIN ARE SOLE VOTING RIGHTS. Unless otherwise
required by law, the Holders of shares of MuniPreferred 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
MuniPreferred shall have no preemptive rights or rights to cumulative voting.

     (G) VOTING FOR DIRECTORS SOLE REMEDY FOR FUND'S FAILURE TO PAY DIVIDENDS.
In the event that the Fund fails to pay any dividends on the shares of
MuniPreferred, the exclusive remedy of the Holders shall be the right to vote
for directors pursuant to the provisions of this Section 5.

     (H) HOLDERS ENTITLED TO VOTE. For purposes of determining any rights of the
Holders to vote on any matter, whether such right is created by this Statement,
by the other provisions of the Articles, by statute or otherwise, no Holder
shall be entitled to vote any share of MuniPreferred and no share of
MuniPreferred 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

                                       26


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 (c) of Section 11 of this Part I and the Redemption Price for the
redemption of such shares shall have been deposited in trust with the Auction
Agent for that purpose. No share of MuniPreferred held by the Fund or any
affiliate of the Fund (except for shares held by a Broker Dealer that is an
affiliate of the Fund for the account of its customers) shall have any voting
rights or be deemed to be outstanding for voting or other purposes.

6. 1940 ACT MUNIPREFERRED ASSET COVERAGE. The Fund shall maintain, as of the
last Business Day of each month in which any share of MuniPreferred is
outstanding, the 1940 Act MuniPreferred Asset Coverage.

7. MUNIPREFERRED BASIC MAINTENANCE AMOUNT.

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

     (B) On or before 5:00 P.M., New York City time, on the third Business Day
after a Valuation Date on which the Fund fails to satisfy the MuniPreferred
Basic Maintenance Amount, and on the third Business Day after the MuniPreferred
Basic Maintenance Cure Date with respect to such Valuation Date, the Fund shall
complete and deliver to S&P (if S&P is then rating the shares of MuniPreferred),
Moody's (if Moody's is then rating the shares of MuniPreferred) and the Auction
Agent (if either S&P or Moody's is then rating the shares of MuniPreferred) a
MuniPreferred Basic Maintenance Report as of the date of such failure or such
MuniPreferred 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 or telecopy, telex or other electronic transcription thereof and on the
same day the Fund mails to the Auction Agent for delivery on the next Business
Day the full MuniPreferred Basic Maintenance Report. The Fund shall also deliver
a MuniPreferred Basic Maintenance Report to (i) the Auction Agent (if either
Moody's or S&P is then rating the shares of MuniPreferred) 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, (ii)
Moody's (if Moody's is then rating the shares of MuniPreferred) and S&P (if S&P
is then rating the shares of MuniPreferred) as of any Quarterly Valuation Date,
in each case on or before the third Business Day after such day, and (iii) S&P,
if and when requested for any Valuation Date, on or before the third Business
Day after such request. A failure by the Fund to deliver a MuniPreferred Basic
Maintenance Report pursuant to the preceding sentence shall be deemed to be
delivery of a MuniPreferred Basic Maintenance Report indicating the Discounted
Value for all assets of the Fund is less than the MuniPreferred Basic
Maintenance Amount, as of the relevant Valuation Date.

     (C) Within ten Business Days after the date of delivery of a MuniPreferred
Basic Maintenance Report in accordance with paragraph (b) of this Section 7
relating to a Quarterly

                                       27


Valuation Date, the Fund shall cause the Independent Accountant to confirm in
writing to S&P (if S&P is then rating the shares of MuniPreferred), Moody's (if
Moody's is then rating the shares of MuniPreferred) and the Auction Agent (if
either S&P or Moody's is then rating the shares of MuniPreferred) (i) the
mathematical accuracy of the calculations reflected in such Report (and in any
other MuniPreferred Basic Maintenance Report, randomly selected by the
Independent Accountant, that was delivered by the Fund during the quarter ending
on such Quarterly Valuation Date) and (ii) that, in such Report (and in such
randomly selected Report), the Fund determined in accordance with this Statement
whether the Fund had, at such Quarterly Valuation Date (and at the Valuation
Date addressed in such randomly selected Report), S&P Eligible Assets (if S&P is
then rating the shares of MuniPreferred) of an aggregate Discounted Value at
least equal to the MuniPreferred Basic Maintenance Amount and Moody's Eligible
Assets (if Moody's is then rating the shares of MuniPreferred) of an aggregate
Discounted Value at least equal to the MuniPreferred Basic Maintenance Amount
(such confirmation being herein called the "ACCOUNTANT'S CONFIRMATION").

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

     (E) If any Accountant's Confirmation delivered pursuant to paragraph (c) or
(d) of this Section 7 shows that an error was made in the MuniPreferred Basic
Maintenance Report for a particular Valuation Date for which such Accountant's
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 MuniPreferred) or Moody's Eligible Assets (if Moody's is
then rating the shares of MuniPreferred), as the case may be, of the Fund 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 Fund, and the Fund shall accordingly amend and deliver the
MuniPreferred Basic Maintenance Report to S&P (if S&P is then rating the shares
of MuniPreferred), Moody's (if Moody's is then rating the shares of
MuniPreferred) and the Auction Agent (if either S&P or Moody's is then rating
the shares of MuniPreferred) promptly following receipt by the Fund of such
Accountant's 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 MuniPreferred, the Fund shall
complete and deliver to S&P (if S&P is then rating the shares of MuniPreferred)
and Moody's (if Moody's is then rating the shares of MuniPreferred) a
MuniPreferred 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
Fund shall cause the Independent Accountant to confirm in writing to S&P (if S&P
is then rating the shares of MuniPreferred) (i) the mathematical accuracy of the
calculations

                                       28


reflected in such Report and (ii) that the Discounted Value of S&P Eligible
Assets reflected thereon equals or exceeds the MuniPreferred 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 Fund shall have redeemed Common Stock or (ii) the ratio of
the Discounted Value of S&P Eligible Assets or the Discounted Value of Moody's
Eligible Assets to the MuniPreferred Basic Maintenance Amount is less than or
equal to 105%, the Fund shall complete and deliver to S&P (if S&P is then rating
the shares of MuniPreferred) or Moody's (if Moody's is then rating the shares of
MuniPreferred), as the case may be, a MuniPreferred Basic Maintenance Report as
of the date of either such event.

8. [RESERVED]

9. RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS.

     (A) DIVIDENDS ON PREFERRED STOCK OTHER THAN MUNIPREFERRED. 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 stock ranking, as to the
payment of dividends, on a parity with shares of MuniPreferred for any period
unless full cumulative dividends have been or contemporaneously are declared and
paid on the shares of each series of MuniPreferred through its most recent
Dividend Payment Date. When dividends are not paid in full upon the shares of
each series of MuniPreferred through its most recent Dividend Payment Date or
upon the shares of any other class or series of stock ranking on a parity as to
the payment of dividends with shares of MuniPreferred through their most recent
respective dividend payment dates, all dividends declared upon shares of
MuniPreferred and any other such class or series of stock ranking on a parity as
to the payment of dividends with shares of MuniPreferred shall be declared pro
rata so that the amount of dividends declared per share on shares of
MuniPreferred and such other class or series of stock shall in all cases bear to
each other the same ratio that accumulated dividends per share on the shares of
MuniPreferred and such other class or series of stock bear to each other (for
purposes of this sentence, the amount of dividends declared per share of
MuniPreferred shall be based on the Applicable Rate for such share for the
Dividend Periods during which dividends were not paid in full).

     (B) DIVIDENDS AND OTHER DISTRIBUTIONS WITH RESPECT TO COMMON STOCK UNDER
THE 1940 ACT. The Board of Directors shall not declare any dividend (except a
dividend payable in shares of Common Stock), or declare any other distribution,
upon shares of Common Stock, or purchase shares of Common Stock, unless in every
such case the shares of Preferred Stock 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 stock of a closed end investment
company as a condition of declaring dividends on its common 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 MuniPreferred is outstanding, and except as set forth in paragraph
(a) of this Section 9 and paragraph (c) of Section 12 of this Part I, (A) the
Fund shall not declare, pay or set apart for

                                       29


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 Stock or other stock, if any, ranking junior to the
shares of MuniPreferred as to the payment of dividends and the distribution of
assets upon dissolution, liquidation or winding up) in respect of the Common
Stock or any other stock of the Fund ranking junior to or on a parity with the
shares of MuniPreferred 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 shares of Common
Stock or any other such junior stock (except by conversion into or exchange for
stock of the Fund ranking junior to the shares of MuniPreferred as to the
payment of dividends and the distribution of assets upon dissolution,
liquidation or winding up), or any such parity stock (except by conversion into
or exchange for stock of the Fund ranking junior to or on a parity with
MuniPreferred 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 MuniPreferred 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 Fund has
redeemed the full number of shares of MuniPreferred required to be redeemed by
any provision for mandatory redemption pertaining thereto, and (B) the Fund
shall not declare, pay or set apart for payment any dividend or other
distribution (other than a dividend or distribution paid in shares of, or in
options, warrants or rights to subscribe for or purchase, Common Stock or other
stock, if any, ranking junior to shares of MuniPreferred as to the payment of
dividends and the distribution of assets upon dissolution, liquidation or
winding up) in respect of Common Stock or any other stock of the Fund ranking
junior to shares of MuniPreferred 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 shares
of Common Stock or any other such junior stock (except by conversion into or
exchange for stock of the Fund ranking junior to shares of MuniPreferred as to
the payment of dividends and the distribution of assets upon dissolution,
liquidation or winding up), unless immediately after such transaction the
Discounted Value of Moody's Eligible Assets (if Moody's is then rating the
shares of MuniPreferred) and S&P Eligible Assets (if S&P is then rating the
shares of MuniPreferred) would each at least equal the MuniPreferred Basic
Maintenance Amount.

10. RATING AGENCY RESTRICTIONS. For so long as any shares of MuniPreferred are
outstanding and Moody's or S&P, or both, are rating such shares, the Fund will
not, unless it has received written confirmation from Moody's 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) buy or sell futures or write put or call options;

     (B) borrow money, except that the Fund may, without obtaining the written
confirmation described above, borrow money for the purpose of clearing
securities transactions if (i) the MuniPreferred Basic Maintenance Amount would
continue to be satisfied after giving effect to such borrowing 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 in an amount not
exceeding 5 per

                                       30


centum of the value of the total assets of the Fund 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 MuniPreferred or any class or
series of stock ranking prior to or on a parity with shares of MuniPreferred
with respect to the payment of dividends or the distribution of assets upon
dissolution, liquidation or winding up of the Fund, or reissue any shares of
MuniPreferred previously purchased or redeemed by the Fund;

     (D) engage in any short sales of securities;

     (E) lend securities;

     (F) merge or consolidate into or with any other corporation;

     (G) change the pricing service (currently Standard & Poor's Securities
Evaluations, Inc.) referred to in the definition of Market Value; or

     (H) enter into reverse repurchase agreements.

11. REDEMPTION.

     (A) OPTIONAL REDEMPTION. (i) Subject to the provisions of subparagraph (v)
of this paragraph (a), shares of MuniPreferred of any series may be redeemed, at
the option of the Fund, 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
MuniPreferred may not be redeemed in Part If after such partial redemption fewer
than 500 shares of such series remain outstanding; (2) unless otherwise provided
in Section 11 of APPENDIX A hereto, shares of a series of MuniPreferred are
redeemable by the Fund 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 paragraph (a), the Notice
of Special Rate Period relating to a Special Rate Period of shares of a series
of MuniPreferred, as delivered to the Auction Agent and filed with the Secretary
of the Fund, may provide that shares of such series shall not be redeemable
during the whole or any part of such Special Rate Period (except as provided in
subparagraph (iv) of this paragraph (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
MuniPreferred for a Special Rate Period thereof may contain Special Redemption
Provisions only if the Fund's Board of Directors, 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 Fund.

                                       31


          (iii) If fewer than all of the outstanding shares of a series of
MuniPreferred are to be redeemed pursuant to subparagraph (i) of this paragraph
(a), the number of shares of such series to be redeemed shall be determined by
the Board of Directors, 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 paragraph
(a), shares of any series of MuniPreferred may be redeemed, at the option of the
Fund, 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 equalled 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) the date fixed for
redemption.

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

     (B) MANDATORY REDEMPTION. The Fund 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 Directors for redemption, certain of the shares of MuniPreferred, if
the Fund fails to have either Moody's Eligible Assets with a Discounted Value or
S&P Eligible Assets with a Discounted Value greater than or equal to the
MuniPreferred Basic Maintenance Amount or fails to maintain the 1940 Act
MuniPreferred Asset Coverage, in accordance with the requirements of the rating
agency or agencies then rating the shares of MuniPreferred, and such failure is
not cured on or before the MuniPreferred Basic Maintenance Cure Date or the 1940
Act Cure Date, as the case may be. The number of shares of MuniPreferred to be
redeemed shall be equal to the lesser of (i) the minimum number of shares of
MuniPreferred, together with all shares of other Preferred Stock 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 Fund's having both Moody's Eligible Assets with a Discounted
Value and S&P Eligible Assets with a Discounted Value

                                       32


greater than or equal to the MuniPreferred Basic Maintenance Amount or
maintaining the 1940 Act MuniPreferred Asset Coverage, as the case may be, on
such Cure Date (provided, however, that if there is no such minimum number of
shares of MuniPreferred and shares of other Preferred Stock the redemption or
retirement of which would have had such result, all shares of MuniPreferred and
Preferred Stock then outstanding shall be redeemed), and (ii) the maximum number
of shares of MuniPreferred, together with all shares of other Preferred Stock
subject to redemption or retirement, that can be redeemed out of funds expected
to be legally available therefor. In determining the shares of MuniPreferred
required to be redeemed in accordance with the foregoing, the Fund shall
allocate the number required to be redeemed to satisfy the MuniPreferred Basic
Maintenance Amount or the 1940 Act MuniPreferred Asset Coverage, as the case may
be, pro rata among shares of MuniPreferred and other Preferred Stock (and, then,
pro rata among each series of MuniPreferred) subject to redemption or
retirement. The Fund shall effect such redemption on the date fixed by the Fund
therefor, which date shall not be earlier than 20 days nor later than 40 days
after such Cure Date, except that if the Fund does not have funds legally
available for the redemption of all of the required number of shares of
MuniPreferred and shares of other Preferred Stock which are subject to
redemption or retirement or the Fund otherwise is unable to effect such
redemption on or prior to 40 days after such Cure Date, the Fund shall redeem
those shares of MuniPreferred and shares of other Preferred Stock 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
MuniPreferred are to be redeemed pursuant to this paragraph (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 Fund shall determine or be required to
redeem shares of a series of MuniPreferred pursuant to paragraph (a) or (b) of
this Section 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 Holder's address as the same appears on the
stock books of the Fund on the record date established by the Board of
Directors. 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
MuniPreferred 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 Directors 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 Section 11 under which such
redemption is made. If fewer than all shares of a series of MuniPreferred 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 Fund may provide in any Notice of Redemption relating to a
redemption contemplated to be effected pursuant to paragraph (a) of this Section
11 that such redemption is subject to one or more conditions precedent and that
the Fund shall not be required to effect such redemption unless each such
condition shall have been satisfied at the time or times and in the manner
specified in such Notice of Redemption.

                                       33


     (D) NO REDEMPTION UNDER CERTAIN CIRCUMSTANCES. Notwithstanding the
provisions of paragraphs (a) or (b) of this Section 11, if any dividends on
shares of a series of MuniPreferred (whether or not earned or declared) are in
arrears, no shares of such series shall be redeemed unless all outstanding
shares of such series are simultaneously redeemed, and the Fund shall not
purchase or otherwise acquire any shares of such series; provided, however, that
the foregoing shall not prevent the purchase or acquisition of all outstanding
shares of such series pursuant to the successful completion of an otherwise
lawful purchase or exchange offer made on the same terms to, and accepted by,
Holders of all outstanding shares of such series.

     (E) ABSENCE OF FUNDS AVAILABLE FOR REDEMPTION. To the extent that any
redemption for which Notice of Redemption has been mailed is not made by reason
of the absence of legally available funds therefor, such redemption shall be
made as soon as practicable to the extent such funds become available. Failure
to redeem shares of MuniPreferred shall be deemed to exist at any time after the
date specified for redemption in a Notice of Redemption when the Fund shall have
failed, for any reason whatsoever, to deposit in trust with the Auction Agent
the Redemption Price with respect to any shares for which such Notice of
Redemption has been mailed; provided, however, that the foregoing shall not
apply in the case of the Fund's 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 Fund may not have
redeemed shares of MuniPreferred for which a Notice of Redemption has been
mailed, dividends may be declared and paid on shares of MuniPreferred and shall
include those shares of MuniPreferred for which a Notice of Redemption has been
mailed.

     (F) AUCTION AGENT AS TRUSTEE OF REDEMPTION PAYMENTS BY FUND. All moneys
paid to the Auction Agent for payment of the Redemption Price of shares of
MuniPreferred 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
paragraph (c) of this Section 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 MuniPreferred 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 subparagraph (e)(i)
of Section 2 of this Part I and in Section 3 of this Part I. 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 Directors
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
MuniPreferred subject to redemption. In the case that fewer than all of the
shares represented by any such certificate are redeemed, a new certificate shall
be issued, representing the unredeemed shares, without cost to the Holder
thereof. The Fund shall

                                       34


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 MuniPreferred called for redemption
on such date and (ii) all other amounts to which Holders of shares of
MuniPreferred called for redemption may be entitled. Any funds so deposited that
are unclaimed at the end of 90 days from such redemption date shall, to the
extent permitted by law, be repaid to the Fund, after which time the Holders of
shares of MuniPreferred so called for redemption may look only to the Fund for
payment of the Redemption Price and all other amounts to which they may be
entitled. The Fund shall be entitled to receive, from time to time after the
date fixed for redemption, any interest on the funds so deposited.

     (H) COMPLIANCE WITH APPLICABLE LAW. In effecting any redemption pursuant to
this Section 11, the Fund shall use its best efforts to comply with all
applicable conditions precedent to effecting such redemption under the 1940 Act
and Minnesota law, but shall effect no redemption except in accordance with the
1940 Act and Minnesota law.

     (I) ONLY WHOLE SHARES OF MUNIPREFERRED MAY BE REDEEMED. In the case of any
redemption pursuant to this Section 11, only whole shares of MuniPreferred shall
be redeemed, and in the event that any provision of the Articles 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 MuniPreferred shall rank on a parity
with each other, with shares of any other series of MuniPreferred and with
shares of any other series of Preferred Stock as to the distribution of assets
upon dissolution, liquidation or winding up of the affairs of the Fund.

     (B) DISTRIBUTIONS UPON LIQUIDATION. Upon the dissolution, liquidation or
winding up of the affairs of the Fund, whether voluntary or involuntary, the
Holders of shares of MuniPreferred then outstanding shall be entitled to receive
and to be paid out of the assets of the Fund available for distribution to its
shareholders, before any payment or distribution shall be made on the Common
Stock or on any other class of stock of the Fund ranking junior to the
MuniPreferred upon dissolution, liquidation or winding up, an amount equal to
the Liquidation Preference with respect to such shares plus an amount equal to
all dividends thereon (whether or not earned or declared) accumulated but unpaid
to (but not including) the date of final distribution in same day funds,
together with any payments required to be made pursuant to Section 3 of this
Part I in connection with the liquidation of the Fund. After the payment to the
Holders of the shares of MuniPreferred of the full preferential amounts provided
for in this paragraph (b), the Holders of MuniPreferred as such shall have no
right or claim to any of the remaining assets of the Fund.

     (C) PRO RATA DISTRIBUTIONS. In the event the assets of the Fund available
for distribution to the Holders of shares of MuniPreferred upon any dissolution,
liquidation, or winding up of the affairs of the Fund, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
Holders are entitled pursuant to paragraph (b) of this Section 12, no such
distribution shall be made on account of any shares of any other class or series
of Preferred Stock ranking on a parity with the shares of MuniPreferred with
respect to the

                                       35


distribution of assets upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares of
MuniPreferred, 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 STOCK. Subject to the rights of the holders of shares
of any series or class or classes of stock ranking on a parity with the shares
of MuniPreferred with respect to the distribution of assets upon dissolution,
liquidation or winding up of the affairs of the Fund, after payment shall have
been made in full to the Holders of the shares of MuniPreferred as provided in
paragraph (b) of this Section 12, but not prior thereto, any other series or
class or classes of stock ranking junior to the shares of MuniPreferred with
respect to the distribution of assets upon dissolution, liquidation or winding
up of the affairs of the Fund shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the Holders of the shares of
MuniPreferred shall not be entitled to share therein.

     (E) CERTAIN EVENTS NOT CONSTITUTING LIQUIDATION. Neither the sale of all or
substantially all the property or business of the Fund, nor the merger or
consolidation of the Fund into or with any other corporation nor the merger or
consolidation of any other corporation into or with the Fund shall be a
dissolution, liquidation or winding up, whether voluntary or involuntary, for
the purposes of this Section 12.

13. MISCELLANEOUS.

     (A) AMENDMENT OF APPENDIX A TO ADD ADDITIONAL SERIES. Subject to the
provisions of paragraph (c) of Section 10 of this Part I, the Board of Directors
may, by resolution duly adopted, without shareholder approval (except as
otherwise provided by this Statement or required by applicable law), amend
APPENDIX A hereto to (1) reflect any amendments hereto which the Board of
Directors is entitled to adopt pursuant to the terms of this Statement without
shareholder approval and (2) add additional series of MuniPreferred or
additional shares of a series of MuniPreferred (and terms relating thereto) to
the series and shares of MuniPreferred theretofore described thereon. Each such
additional series and all such additional shares shall be governed by the terms
of this Statement.

     (B) APPENDIX A INCORPORATED BY REFERENCE. APPENDIX A hereto is incorporated
in and made a part of this Statement by reference thereto.

     (C) NO FRACTIONAL SHARES. No fractional shares of MuniPreferred shall be
issued.

     (D) STATUS OF SHARES OF MUNIPREFERRED REDEEMED, EXCHANGED OR OTHERWISE
ACQUIRED BY THE FUND. Shares of MuniPreferred which are redeemed, exchanged or
otherwise acquired by the Fund shall return to the status of authorized and
unissued shares of Preferred Stock without designation as to series. Upon the
redemption, exchange or other acquisition by the Fund of all outstanding shares
of a series of MuniPreferred, all provisions of the Articles relating to such
series (including, without limitation, all provisions of this Statement relating
to such series) shall cease to be of further effect and shall cease to be part
of the Articles. Upon the occurrence of any such event, the Board of Directors
shall have the power, pursuant to

                                       36


Minnesota Statutes Section 302A.135, Subdivision 5 or any successor provision
and without shareholder action, to cause restated articles of incorporation of
the Fund or other appropriate documents to be prepared and filed with the
Secretary of State of the State of Minnesota which reflect such removal from the
Articles of all such provisions relating to such series or, if appropriate, the
cancellation of this Statement, or both.

     (E) BOARD MAY RESOLVE AMBIGUITIES. To the extent permitted by applicable
law, the Board of Directors may interpret or adjust the provisions of this
Statement to resolve any inconsistency or ambiguity or to remedy any formal
defect, and may amend this Statement with respect to any series of MuniPreferred
prior to the issuance of shares of such series.

     (F) HEADINGS NOT DETERMINATIVE. The headings contained in this Statement
are for convenience of reference only and shall not affect the meaning or
interpretation of this Statement.

     (G) NOTICES. All notices or communications, unless otherwise specified in
the By Laws of the Fund or this Statement, shall be sufficiently given if in
writing and delivered in person 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 MuniPreferred:

          (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,

                                       37


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 the 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
paragraph (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 paragraph (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 paragraph (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 paragraph (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 MuniPreferred 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 clause (iv) of paragraph (a) of
     Section 4 of this Part II 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 clause
     (iii) of paragraph (b) of Section 4 of this Part II 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 MuniPreferred 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 clause (iii) of paragraph (b) of Section 4 of this
     Part II if Sufficient Clearing Bids for shares of such series do not exist;

                                       38


provided, however, that a Broker Dealer that is an Existing Holder with respect
to shares of a series of MuniPreferred shall not be liable to any Person for
failing to sell such shares pursuant to a Sell Order described in the proviso to
paragraph (c) of Section 2 of this Part II 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
Fund) with the provisions of Section 7 of this Part II or (2) such Broker Dealer
has informed the Auction Agent pursuant to the terms of its Broker Dealer
Agreement that, according to such Broker Dealer's 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 MuniPreferred 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 clause (v) of paragraph (a) of Section 4 of this
     Part II 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 MuniPreferred 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 MuniPreferred of a series
subject to an Auction on such Auction Date obtained by such Broker Dealer,
designating itself (unless otherwise permitted by the Fund) 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 Fund);

          (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

                                       39


               (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
Holder's 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
MuniPreferred 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
MuniPreferred 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 Orders 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;

                                       40


               (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
MuniPreferred 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 MuniPreferred, 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 MuniPreferred" 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

                                       41


               (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) (I) 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 MuniPreferred of such series.

     (B) Promptly after the Auction Agent has made the determinations pursuant
to paragraph (a) of this Section 3, the Auction Agent shall advise the Fund of
the Maximum Rate for shares of the series of MuniPreferred 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 Section 12
of APPENDIX A hereto.

4. ACCEPTANCE AND REJECTION OF SUBMITTED BIDS AND SUBMITTED SELL ORDERS AND
ALLOCATION OF SHARES. Existing Holders shall continue to hold the shares of
MuniPreferred that are subject to Submitted Hold Orders, and, based on the
determinations made pursuant to

                                       42


paragraph (a) of Section 3 of this Part II, 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 MuniPreferred
have been made, all Submitted Sell Orders with respect to shares of such series
shall be accepted and, subject to the provisions of paragraphs (d) and (e) of
this Section 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 MuniPreferred 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 MuniPreferred 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 Holder's 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 shares of MuniPreferred subject to such Submitted Bid, unless the
number of Outstanding shares of MuniPreferred subject to all such Submitted Bids
shall be greater than the number of shares of MuniPreferred ("remaining shares")
in the excess of the Available MuniPreferred of such series over the number of
shares of MuniPreferred subject to Submitted Bids described in clauses (ii) and
(iii) of this paragraph (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 MuniPreferred subject to such Submitted Bid, but only
in an amount equal to the number of shares of MuniPreferred 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 MuniPreferred
held by such Existing Holder subject to such Submitted Bid and the denominator
of which shall be the aggregate number of Outstanding shares of MuniPreferred
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 Holder's 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 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 MuniPreferred of such series over the number of shares of
MuniPreferred subject to Submitted Bids described in clauses (ii) through (iv)
of this paragraph (a) by a fraction, the numerator of which shall be the number
of Outstanding shares of MuniPreferred subject to such Submitted Bid and the
denominator of which shall be the aggregate number of Outstanding shares of
MuniPreferred subject to such Submitted Bids made

                                       43


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 MuniPreferred
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
paragraph (d) of this Section 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 MuniPreferred 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 Holder's 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 paragraph (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 MuniPreferred 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
paragraph (a) or clause (iii) of paragraph (b) of this Section 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
MuniPreferred 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
MuniPreferred 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 MuniPreferred.

     (E) If, as a result of the procedures described in clause (v) of paragraph
(a) of this Section 4, any Potential Holder would be entitled or required to
purchase less than a whole share of a series of MuniPreferred on any Auction
Date, the Auction Agent shall, in such manner as it shall determine in its sole
discretion, allocate shares of MuniPreferred of such series for purchase

                                       44


among Potential Holders so that only whole shares of MuniPreferred 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 MuniPreferred of such series on such Auction
Date.

     (F) Based on the results of each Auction for shares of a series of
MuniPreferred, 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 MuniPreferred 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 MuniPreferred 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
MuniPreferred 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 Fund 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 Beneficial Owner, a Potential Beneficial
Owner or its respective Agent Member to deliver shares of MuniPreferred of any
series or to pay for shares of MuniPreferred of any series sold or purchased
pursuant to the Auction Procedures or otherwise.

5. NOTIFICATION OF ALLOCATIONS. Whenever the Fund intends to include any net
capital gains or other income taxable for Federal income tax purposes in any
dividend on shares of MuniPreferred, the Fund 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 Fund, 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
MuniPreferred 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 MuniPreferred are outstanding,
the Auction Agent, duly appointed by the Fund to so act, shall be in each case a
commercial bank, trust company or other financial institution independent of the
Fund and its affiliates (which however, may engage or have engaged in business
transactions with the Fund or its affiliates) and at no time shall the Fund 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

                                       45


during any period that any shares of MuniPreferred are outstanding, the Board of
Directors 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 Agent's registry of Existing Holders of shares of a
series of MuniPreferred 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 MuniPreferred and 9:30 a.m.
on the Auction Date for such Auction to ascertain the number of shares of such
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 Dealer's 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 Dealer's inquiry.

7. TRANSFER OF SHARES OF MUNIPREFERRED. Unless otherwise permitted by the Fund,
a Beneficial Owner or an Existing Holder may sell, transfer or otherwise dispose
of shares of MuniPreferred 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 this Part II or to a Broker Dealer; provided, however, that (a) a
sale, transfer or other disposition of shares of MuniPreferred 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 Section 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 Fund) 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 MuniPreferred 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 MuniPreferred shall be made on the books of the Fund to any Person
other than the Securities Depository or its nominee. The foregoing restriction
on registration of transfer shall be conspicuously noted on the face or back of
the certificates of MuniPreferred in such a manner as to comply with the
requirements of Minnesota Statute Section 302A.429, Subd. 2, and Section 8-204
of the Uniform Commercial Code as in effect in the State of Minnesota, or any
successor provisions.

                                       46


     IN WITNESS WHEREOF, NUVEEN INSURED MUNICIPAL OPPORTUNITY FUND, INC., has
caused these presents to be signed in its name and on its behalf by its Vice
President and attested by its Assistant Secretary, and the said officers of the
Fund further acknowledged said instrument to be the corporate act of the Fund,
and stated under penalty of perjury that to the best of their knowledge,
information and belief the matters and facts therein set forth with respect to
approval are true in all material respects, all on October 12, 2009.

                                    NUVEEN INSURED MUNICIPAL
                                    OPPORTUNITY FUND, INC.


                                    By: /s/ Kevin J. McCarthy
                                        ----------------------------------------
                                        Kevin J. McCarthy
                                        Vice President

ATTEST: /s/ Virginia O'Neal
        ----------------------------
        Virginia O'Neal
        Assistant Secretary

                                       47


                 NUVEEN INSURED MUNICIPAL OPPORTUNITY FUND, INC.

                                   APPENDIX A

SECTION 1. DESIGNATION AS TO SERIES.

     SERIES W3: A series of 1,510 shares of Preferred Stock, par value $.01 per
share, liquidation preference $25,000 per share, is hereby designated "Municipal
Auction Rate Cumulative Preferred Stock, Series W3." Each share of Series W3
MuniPreferred shall be issued on October 16, 2009; have an Applicable Rate for
its Initial Rate Period equal to 0.442% per annum; have an initial Dividend
Payment Date of Thursday, October 22, 2009; and have such other preferences,
limitations and relative voting rights, in addition to those required by
applicable law or set forth in the Articles applicable to Preferred Stock of the
Fund, as set forth in Part I and Part II of this Statement. The Series W3
MuniPreferred shall constitute a separate series of Preferred Stock of the Fund,
and each share of Series W3 MuniPreferred shall be identical except as provided
in Section 11 of Part I of this Statement. Any references to "Series W
MuniPreferred" in Part I of this Statement shall include Series W3
MuniPreferred.

     SERIES TH3: A series of 2,577 shares of Preferred Stock, par value $.01 per
share, liquidation preference $25,000 per share, is hereby designated "Municipal
Auction Rate Cumulative Preferred Stock, Series TH3." Each share of Series TH3
MuniPreferred shall be issued on October 16, 2009; have an Applicable Rate for
its Initial Rate Period equal to 0.427% per annum; have an initial Dividend
Payment Date of Friday, October 23, 2009; and have such other preferences,
limitations and relative voting rights, in addition to those required by
applicable law or set forth in the Articles applicable to Preferred Stock of the
Fund, as set forth in Part I and Part II of this Statement. The Series TH3
MuniPreferred shall constitute a separate series of Preferred Stock of the Fund,
and each share of Series TH3 MuniPreferred shall be identical except as provided
in Section 11 of Part I of this Statement. Any references to "Series TH
MuniPreferred" in Part I of this Statement shall include Series TH3
MuniPreferred.

SECTION 2. NUMBER OF AUTHORIZED SHARES PER SERIES.

     The number of authorized shares constituting Series W3 MuniPreferred is
1,640; and Series TH3 MuniPreferred is 2,800.

SECTION 3. EXCEPTIONS TO CERTAIN DEFINITIONS.

     Notwithstanding the definitions contained under the heading "Definitions"
in this Statement, the following terms shall have the following meanings for
purposes of this Statement:

     Not applicable.

SECTION 4. CERTAIN DEFINITIONS.

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

                                       48


     "GROSS UP PAYMENT" means payment to a Holder of shares of MuniPreferred of
an amount which, when taken together with the aggregate amount of Taxable
Allocations made to such Holder to which such Gross up Payment relates, would
cause such Holder's dividends in dollars (after Federal income tax consequences)
from the aggregate of such Taxable Allocations and the related Gross up Payment
to be equal to the dollar amount of the dividends which would have been received
by such Holder if the amount of such aggregate Taxable Allocations would have
been excludable from the gross income of such Holder. 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 MuniPreferred is subject to the
Federal alternative minimum tax with respect to dividends received from the
Fund; and (iii) assuming that each Taxable Allocation and each Gross up Payment
(except to the extent such Gross up Payment is designated as an exempt interest
dividend under Section 852(b)(5) of the Code or successor provisions) would be
taxable in the hands of each Holder of shares of MuniPreferred at the maximum
marginal regular Federal individual income tax rate applicable to ordinary
income or net capital gains, as applicable, or the maximum marginal regular
Federal corporate income tax rate applicable to ordinary income or net capital
gains, as applicable, whichever is greater, in effect at the time such Gross up
Payment is made.

     "MOODY'S DISCOUNT FACTOR" shall mean, for purposes of determining the
Discounted Value of any Moody's Eligible Asset, the percentage determined by
reference to (i) (A) in the event such Municipal Obligation is covered by an
Original Issue Insurance policy or a Portfolio Insurance policy which does not
provide the Fund with the option to obtain Permanent Insurance with respect to
such Municipal Obligation, or is not covered by bond insurance, the Moody's or
S&P rating on such Municipal Obligation, (B) in the event such Municipal
Obligation is covered by a Secondary Market Insurance Policy, the Moody's
insurance claims-paying ability rating of the issuer of the policy, or (C) in
the event such Municipal Obligation is covered by a Portfolio Insurance policy
which provides the Fund with the option to obtain Permanent Insurance with
respect to such Municipal Obligation, at the Fund's option, the Moody's or S&P
rating on such Municipal Obligation or the Moody's insurance claims-paying
ability rating of the issuer of the Portfolio Insurance policy and (ii) the
shortest Exposure Period set forth opposite such rating that is the same length
as or is longer than the Moody's Exposure Period, in accordance with the table
set forth below:



                                                     RATING CATEGORY
                                -----------------------------------------------------
                                                     (V)MIG             SP-1
Exposure Period                 AAA*    AA*    A*     BAA*    OTHER**   -1***   +***
-----------------------------   ----   ----   ----   ------   -------   -----   -----
                                                            
7 weeks                         151%   159%   168%    202%      229%     136%    148%
8 weeks or less but
   greater than seven weeks     154    164    173     205       235      137     149
9 weeks or less but
   greater than eight weeks     158    169    179     209       242      138     150


*    Moody's rating.

**   Municipal Obligations not rated by Moody's but rated BBB by S&P.

                                       49


***  Municipal Obligations rated MIG-1 or VMIG-1 or, if not rated by Moody's,
     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.

     If the Moody's Discount Factor used to discount a particular Municipal
Obligation is determined by reference to the insurance claims-paying ability
rating of the insurer of such Municipal Obligation, such Moody's Discount Factor
will be increased by an amount equal to 50% of the difference between (i) the
percentage set forth in the above table under the applicable rating category,
and (ii) the percentage set forth in the above table under the rating category
that is one rating category below the applicable rating category.
Notwithstanding the foregoing, (i) the Moody's 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 Moody's and mature or have a demand
feature at par exercisable in 30 days or less or 125% as 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 Moody's
Discount Factor will be applied to cash or to Receivables for Municipal
Obligations Sold.

     "MOODY'S ELIGIBLE ASSET" shall mean cash, Receivables for Municipal
Obligations Sold or a Municipal Obligation that (i) pays interest in cash, (ii)
is publicly rated Baa or higher by Moody's or, if not rated by Moody's but rated
by S&P, is rated at least BBB by S&P (provided, however, that for purposes of
determining the Moody's Discount Factor applicable to any such S&P rated
Municipal Obligation, such Municipal Obligation (excluding any short term
Municipal Obligation) shall be deemed to have a Moody's rating which is one full
rating category lower than its S&P rating), (iii) does not have its Moody's
rating suspended by Moody's, and (iv) is part of an issue of Municipal
Obligations of at least $10,000,000. Municipal Obligations issued by any one
issuer and rated BBB by S&P may comprise no more than 4% of total Moody's
Eligible Assets; such BBB rated Municipal Obligations, if any, together with any
Municipal Obligations issued by the same issuer and rated Baa by Moody's or A by
S&P, may comprise no more than 6% of total Moody's Eligible Assets; such BBB,
Baa and A rated Municipal Obligations, if any, together with any Municipal
Obligations issued by the same issuer and rated A by Moody's or AA by S&P, may
comprise no more than 10% of total Moody's Eligible Assets; and such BBB, Baa, A
and AA rated Municipal Obligations, if any, together with any Municipal
Obligations issued by the same issuer and rated Aa by Moody's or AAA by S&P, may
comprise no more than 20% of total Moody's 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 Obligation. Municipal Obligations issued by
issuers located within a single state or territory and rated BBB by S&P may
comprise no more than 12% of total Moody's Eligible Assets; such BBB rated
Municipal Obligations, if any, together with any Municipal Obligations issued by
issuers located within the same state or territory and rated Baa by Moody's or A
by S&P, may comprise no more than 20% of total Moody's Eligible Assets; such
BBB, Baa and A rated Municipal Obligations, if any, together with any Municipal
Obligations issued by issuers located within the same state or territory and
rated A by Moody's or AA by S&P, may comprise no more than 40% of total Moody's
Eligible Assets; and such BBB, Baa, A and AA rated Municipal Obligations, if
any, together with any Municipal Obligations issued by issuers located within
the same state or territory and rated Aa by Moody's or AAA by S&P, may comprise
no more than 60% of total

                                       50


Moody's Eligible Assets. 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, Moody's Eligible Assets shall be calculated without including
cash, and Municipal Obligations rated MIG-1, VMIG-1 or P-1 or, if not rated by
Moody's, rated A-1+/AA or SP-1+/AA by S&P, shall be considered to have a long
term rating of A. When the Fund sells a Municipal Obligation and agrees to
repurchase such Municipal Obligation at a future date, such Municipal Obligation
shall be valued at its Discounted Value for purposes of determining Moody's
Eligible Assets, and the amount of the repurchase price of such Municipal
Obligation shall be included as a liability for purposes of calculating the
MuniPreferred Basic Maintenance Amount. When the Fund purchases a Moody's
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 Fund upon such future
date, provided that the counterparty to the transaction has a long term debt
rating of at least A2 from Moody's 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.

     Notwithstanding the foregoing, an asset will not be considered a Moody's
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 Moody's has indicated to the Fund will not
affect the status of such asset as a Moody's 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 Fund by the Fund's adviser, custodian or the Auction Agent and (d) Liens by
virtue of any repurchase agreement; or (ii) deposited irrevocably for the
payment of any liabilities for purposes of determining the MuniPreferred Basic
Maintenance Amount.

     For purposes of determining as of any Valuation Date whether the Fund has
Moody's Eligible Assets with an aggregate Discounted Value at least equal to the
MuniPreferred Basic Maintenance Amount, the Fund shall include as a liability in
the calculation of the MuniPreferred Basic Maintenance Amount an amount
calculated semi-annually equal to 150% of the estimated cost of obtaining
Permanent Insurance with respect to Moody's Eligible Assets that are (i) covered
by Portfolio Insurance policies which provide the Fund with the option to obtain
such Permanent Insurance and (ii) discounted by a Moody's Discount Factor
determined by reference to the insurance claims-paying ability rating of the
issuer of such Portfolio Insurance policy.

     "ORIGINAL ISSUE INSURANCE" shall mean "ORIGINAL ISSUE INSURANCE" as defined
in the Fund's Registration Statement.

     "PERMANENT INSURANCE" shall mean "PERMANENT INSURANCE" as defined in the
Fund's Registration Statement.

     "PORTFOLIO INSURANCE" shall mean "PORTFOLIO INSURANCE" as defined in the
Fund's Registration Statement.

     "RATE MULTIPLE," for shares of a series of MuniPreferred on any Auction
Date for shares of such series, shall mean the percentage, determined as set
forth below, based on the prevailing

                                       51


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 Fund 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 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, whichever is
greater.

     For purposes of this definition, the "prevailing rating" of shares of a
series of MuniPreferred shall be (i) "aa3"/AA- or higher if such shares have a
rating of "aa3" or better by Moody's 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 Moody's 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 Moody's 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 Moody's 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 Fund shall take all reasonable action necessary to enable either S&P or
Moody's to provide a rating for shares of MuniPreferred. If neither S&P nor
Moody's shall make such a rating available, the party set forth in Section 7 of
APPENDIX A 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 the series of MuniPreferred set forth
opposite such party's name in Section 7 of APPENDIX A and the Fund shall take
all reasonable action to enable such rating agency to provide a rating for such
shares.

     "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 (i) (A) in the event such Municipal Obligation is covered by an
Original Issue Insurance policy or a Portfolio Insurance policy which does not
provide the Fund with the option to obtain Permanent Insurance with

                                       52


respect to such Municipal Obligation, or is not covered by bond insurance, the
S&P or Moody's rating on such Municipal Obligation, (B) in the event such
Municipal Obligation is covered by a Secondary Market Insurance policy, the S&P
insurance claims-paying ability rating of the issuer of the policy, or (C) in
the event such Municipal Obligation is covered by a Portfolio Insurance policy
which provides the Fund with the option to obtain Permanent Insurance with
respect to such Municipal Obligation, at the Fund's option, the S&P or Moody's
rating on such Municipal Obligation or the S&P insurance claims-paying ability
rating of the issuer of the Portfolio Insurance policy and (ii) the shortest
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*
------------------   ----   ----   ----   ----
40 Business Days     190%   195%   210%   250%
22 Business Days     170    175    190    230
10 Business Days     155    160    175    215
7 Business Days      150    155    170    210
3 Business Days      130    135    150    190

*    S&P rating.

     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, or 125% if such Municipal Obligations are not rated by
S&P but are rated VMIG-1, P-1 or MIG-1 by Moody's; provided, however, that any
such Moody's 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
Moody's 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 or to Receivables for Municipal
Obligations Sold. For purposes of the foregoing, Anticipation Notes rated SP-1+
or, if not rated by S&P, rated MIG-1 or VMIG-1 by Moody's, 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 Fund for the payment of any liabilities within the meaning of
MuniPreferred Basic Maintenance Amount), Receivables for Municipal Obligations
Sold or a Municipal Obligation owned by the Fund 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 (provided, however, that such
Moody's-rated Municipal Obligations will be included in 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 such S&P Eligible Assets; and further provided
that, for purposes of determining the S&P Discount Factor applicable to any such
Moody's-rated Municipal Obligation, such Municipal Obligation will be deemed to
have an S&P rating which is one full rating category lower than it's

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Moody's rating); (iii) is publicly rated BBB or higher by S&P or, if not rated
by S&P but rated by Moody's, is rated at least A by Moody's; (iv) is not part of
a private placement of Municipal Obligations; and (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. 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 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;

     (2) Long Term Municipal Obligations issued by issuers in any one state or
territory shall be considered S&P Eligible Assets only to the extent the Market
Value of such Municipal Obligations does not exceed 20% of the aggregate Market
Value of S&P Eligible Assets.

     For purposes of determining as of any Valuation Date whether the Fund has
S&P Eligible Assets with an aggregate Discounted Value at least equal to the
MuniPreferred Basic Maintenance Amount, the Fund shall include as a liability in
the calculation of the MuniPreferred Basic Maintenance Amount an amount
calculated semi-annually equal to 150% of the estimated cost of obtaining
Permanent Insurance with respect to S&P Eligible Assets that are (i) covered by
Portfolio Insurance policies which provide the Fund with the option to obtain
such Permanent Insurance and (ii) discounted by an S&P Discount Factor
determined by reference to the insurance claims-paying ability rating of the
issuer of such Portfolio Insurance policy.

     "SECONDARY MARKET INSURANCE" shall mean "SECONDARY MARKET INSURANCE" as
defined in the Fund's Registration Statement.

SECTION 5. INITIAL RATE PERIODS.

     The Initial Rate Period for shares of Series W3 MuniPreferred shall be the
period from and including the Date of Original Issue thereof to but excluding
October 22, 2009.

     The Initial Rate Period for shares of Series TH3 MuniPreferred shall be the
period from and including the Date of Original Issue thereof to but excluding
October 23, 2009.

SECTION 6. DATE FOR PURPOSES OF PARAGRAPH (YYY) CONTAINED UNDER THE HEADING
"DEFINITIONS" IN THIS STATEMENT.

     November 30, 2009 for Series W3 MuniPreferred and Series TH3 MuniPreferred.

                                       54


SECTION 7. PARTY NAMED FOR PURPOSES OF THE DEFINITION OF "RATE MULTIPLE" IN THIS
STATEMENT.



PARTY:                                                         SERIES OF MUNIPREFERRED:
                                                                   
Third-party broker-dealer approved by the Board of Directors           Series W3
Third-party broker-dealer approved by the Board of Directors          Series TH3


SECTION 8. ADDITIONAL DEFINITIONS.

     Not applicable.

SECTION 9. DIVIDEND PAYMENT DATES.

     Except as otherwise provided in paragraph (d) of Section 2 of Part I of
this Statement, dividends shall be payable on shares of:

     Series W3 MuniPreferred on Thursday, October 22, 2009, and on each Thursday
thereafter;

     Series TH3 MuniPreferred on Friday, October 23, 2009, and on each Friday
thereafter.

SECTION 10. AMOUNT FOR PURPOSES OF SUBPARAGRAPH (C)(I) OF SECTION 5 OF PART I OF
THIS STATEMENT.

     $600,000,000

SECTION 11. REDEMPTION PROVISIONS APPLICABLE TO INITIAL RATE PERIODS.

     Not applicable.

SECTION 12. APPLICABLE RATE FOR PURPOSES OF SUBPARAGRAPH(B)(III) OF SECTION 3 OF
PART II OF THIS STATEMENT.

     For purpose of subparagraph (b)(iii) of Section 3 of Part II of this
Statement, 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 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,
whichever is greater; provided, however, that if the Fund has notified the
Auction Agent of its intent to allocate to

                                       55


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 MuniPreferred 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.

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