Common use of Certain United States Federal Income Tax Consequences of the Offer Clause in Contracts

Certain United States Federal Income Tax Consequences of the Offer. The discussion below is a summary of the material United States federal income tax consequences of a sale of Shares pursuant to the Offer. Certain shareholders (including insurance companies, tax-exempt organizations and financial institutions or broker-dealers) may be subject to special rules not discussed below. The sale of Shares pursuant to the Offer will be treated as a "sale or exchange" if the sale (a) is "not essentially equivalent to a dividend" with respect to the shareholder, (b) is "substantially disproportionate" with respect to the shareholder, or (c) results in a "complete termination" of all of the shareholder's interest in the Fund. In determining whether any of these tests is met, Xxxxxx considered to be owned by the shareholder by reason of certain constructive ownership rules, as well as Shares actually owned, will be taken into account. Thus, a shareholder may be deemed to own Shares actually owned, and in some cases constructively owned, by certain related individuals and certain entities in which the shareholder has an interest (or which have an interest in the shareholder) and Shares which such shareholder has the right to acquire by exercise of an option. In addition, each shareholder should be aware that, under certain circumstances, a sale or purchase of Shares contemporaneous with the Offer may be taken into account in determining whether any of the tests is satisfied. Whether a sale will be "not essentially equivalent to a dividend" with respect to any shareholder will depend on the shareholder's facts and circumstances and on the response of other shareholders to the Offer, but will, in any event, require a "meaningful reduction" in a shareholder's interest in the Fund. The sale of Shares by a shareholder will be "substantially disproportionate" with respect to such shareholder if after the sale (i) the percentage of the outstanding Shares that the shareholder actually and constructively owns is less than 80% of the percentage of the outstanding Shares actually and constructively owned by such shareholder immediately before the sale, and (ii) the shareholder owns less than 50% of the outstanding Shares. Finally, if a shareholder sells all the Shares actually owned by him, such shareholder may be eligible to waive certain constructive ownership provisions and, thus, meet the requirements for a "complete termination" of his interest in the Fund. If any of the above tests is satisfied, the shareholder will recognize gain (or loss) in the amount by which the purchase price received by the shareholder pursuant to the Offer is greater (or less) than the shareholder's tax basis in the Shares sold. Such gain (or loss) will be capital gain (or loss) if the Shares are held as a capital asset and will be long-term capital gain (or loss) if the Shares have been held for more than one year. However, any such loss will be treated as a long-term capital loss to the extent of any long-term capital gain dividends and undistributed long-term capital gains included in income by the shareholder with respect to such Shares, if the Shares have been held for 6 months or less. Additionally, any such loss will be disallowed to the extent the Shares sold are replaced within the 61-day period beginning 30 days before the Shares are sold, and the disallowed loss will be reflected in an adjustment to the basis of the Shares acquired. If none of the above tests is satisfied, (i) the shareholder will be treated as having received a dividend in the amount of the cash received for the Shares sold pursuant to the Offer, assuming that the Fund's current or accumulated earnings and profits equal or exceed the cash paid to shareholders which is treated as a dividend and (ii) the shareholder's tax basis in the Shares sold to the Fund will be transferred to any remaining Shares held by the shareholder. If the shareholder does not actually own any remaining Shares, such shareholder may be permitted to transfer such basis to Shares owned by a related person or may lose such basis entirely. The amount treated as a dividend will not be eligible for the dividends-received deduction allowed to domestic corporate shareholders. The Depository may be required to backup withhold United States federal income tax at the rate of 31% of the gross payment made pursuant to the Offer to shareholders who fail to provide their correct taxpayer identification number or to make required certifications, or who have been notified by the Internal Revenue Service that they are subject to backup withholding. Corporate shareholders and certain other shareholders are exempt from such backup withholding. Any amounts withheld may be credited against a shareholder's United States federal income tax liability. The Depository will withhold 30% of the gross payment to a shareholder that is a nonresident alien individual, fiduciary of a foreign trust or estate, foreign corporation or foreign partnership (a "foreign shareholder") unless the Depository determines that a reduced rate of withholding or an exemption from withholding is applicable pursuant to an applicable income tax treaty. (Exemption from backup withholding does not exempt a foreign shareholder from the 30% withholding). The Depository will determine a shareholder's status as a foreign shareholder and eligibility for a reduced rate of, or an exemption from, withholding, by reference to the shareholder's address and to any valid certificates or statements concerning eligibility for a reduced rate of, or exemption from, withholding, unless facts and circumstances indicate that such reliance is not warranted. A foreign shareholder that has not previously submitted the appropriate certificates or statements with respect to a reduced rate of, or exemption from, withholding for which such shareholder may be eligible should consider doing so in order to avoid over-withholding. A foreign shareholder may be eligible to obtain a refund of tax withheld if such shareholder meets one of the three tests for sale or exchange treatment described above or is otherwise able to establish that no tax, or a reduced amount of tax, was due. THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE SALE OF SHARES PURSUANT TO THE OFFER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND ANY POSSIBLE CHANGES IN TAX LAWS.