BYLAWS
OF
PIMCO CORPORATE INCOME FUND
(AMENDED AND RESTATED AS OF MARCH 1, 2010)
ARTICLE 1
AGREEMENT AND DECLARATION OF TRUST AND PRINCIPAL OFFICE
1.1 Principal Office of the Trust. A principal office of the Trust shall be
located in New York, New York. The Trust may have other principal offices
within or without Massachusetts as the Trustees may determine or as they may
authorize.
1.2 Agreement and Declaration of Trust. These Second Amended and Restated
Bylaws (the "Bylaws") shall be subject to the Agreement and Declaration of
Trust, as amended or restated from time to time (the "Declaration of Trust"),
of PIMCO Corporate Income Fund, the Massachusetts business trust established by
the Declaration of Trust (the "Trust"). Capitalized terms used in these Bylaws
and not otherwise defined herein shall have the meanings given to such terms in
the Declaration of Trust.
ARTICLE 2
MEETINGS OF TRUSTEES
2.1 Regular Meetings. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from time
to time determine, provided that notice of the first regular meeting following
any such determination shall be given to absent Trustees. A regular meeting of
the Trustees may be held without call or notice immediately after and at the
same place as the annual meeting of the Shareholders (as defined in the
Declaration of Trust).
2.2 Special Meetings. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting when called by the
Chairman of the Trustees, the President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the
Secretary or an Assistant Secretary or by the officer or the Trustees calling
the meeting.
2.3 Notice. It shall be sufficient notice to the Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram, telex
or telecopy or other electronic facsimile transmission method at least
twenty-four hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give notice to him or
her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her, before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her. Neither notice of a meeting nor a waiver of a notice need specify the
purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees then
in office shall constitute a quorum. Any meeting may be adjourned from time to
time by a majority of the votes cast upon the question, whether or not a quorum
is present, and the meeting may be held as adjourned without further notice.
ARTICLE 3
OFFICERS AND CHAIRMAN OF THE TRUSTEES
3.1 Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary, a Chief Compliance Officer and such other
officers, if any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from time to time
may in their discretion appoint. Any officer may but need not be a Trustee or a
Shareholder. Any two or more offices may be held by the same person.
3.2 Election. The President, the Treasurer, and the Secretary shall be
elected annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at the same meeting at which the President, Treasurer
and Secretary are elected, or at any other time. If required by the 1940 Act,
the Chief Compliance Officer shall be elected or appointed by a majority of the
trustees, as well as a majority of the Trustees who are not Interested Persons
of the Trust ("Independent Trustees"), and otherwise in accordance with Rule
38a-1 (or any successor rule) under the 1940 Act, as such rule may be amended
from time to time ("Rule 38a-1"). Vacancies in any office may be filled at any
time.
3.3 Tenure. The Chairman of the Trustees, if one is elected, the President,
the Treasurer, the Secretary and the Chief Compliance Officer shall hold office
until their respective successors are chosen and qualified, or in each case
until he or she sooner dies, resigns, is removed with or without cause or
becomes disqualified, provided that, if required by the 1940 Act, any renewal
of the Chief Compliance Officer shall be in accordance with Rule 38a-1. Each
other officer shall hold office and each agent of the Trust shall retain
authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these Bylaws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to the
office occupied by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 Chairman of the Trustees. There shall be an office of the Chairman of
the Trustees, which shall serve of behalf of the Trustees, but shall not be an
officer of the Trust. The office of the Chairman of the Trustees may be held by
more than one person. Any Chairman of the Trustees shall be elected by a
majority of the Trustees, as well as a majority of the Independent Trustees if
required by the 1940 Act. If required by the 1940 Act, any Chairman of the
Trustees shall be an Independent Trustee and may, but need not, be a
shareholder. The
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powers and the duties of the Chairman of the Trustees shall include any and all
such powers and duties relating to the operations of the Trustees as, from time
to time, may be conferred upon or assigned to such office by the Trustees or as
may be required by law, provided that the Chairman of the Trustees shall have
no individual authority to act for the Trust as an officer of the Trust. In
carrying out the responsibilities and duties of the office, the Chairman of the
Trustees may seek assistance and input from other Trustees or Committees of the
Trustees, officers of the Trust and the Trust's investment adviser(s) and other
service providers, as deemed necessary or appropriate. The Trustees, including
a majority of the Independent Trustees if required by the 1940 Act, may appoint
one or more persons to perform the duties of the Chairman of the Trustees, in
the event of his absence at any meeting or in the event of his disability.
3.6 President; Vice President. The President shall be the chief executive
officer. Any Vice President shall have such duties and powers as may be
designated from time to time by the Trustees or the President.
3.7 Treasurer; Assistant Treasurer. The Treasurer shall be the chief
financial and accounting officer of the Trust, and shall, subject to the
provisions of the Declaration of Trust and to any arrangement made by the
Trustees with a custodian, investment adviser, sub-adviser or manager, or
transfer, shareholder servicing or similar agent, be in charge of the valuable
papers, books of account and accounting records of the Trust, and shall have
such other duties and powers as may be designated from time to time by the
Trustees or by the President. Any Assistant Treasurer shall have such duties
and powers as may be designated from time to time by the Trustees or the
President.
3.8 Secretary; Assistant Secretary. The Secretary shall record all
proceedings of the Shareholders and the Trustees in books to be kept therefor,
which books or a copy thereof shall be kept at the principal office of the
Trust. In the absence of the Secretary from any meeting of the Shareholders or
Trustees, an Assistant Secretary, or if there be none or if he or she is
absent, a temporary secretary chosen at such meeting shall record the
proceedings thereof in the aforesaid books. Any Assistant Secretary shall have
such duties and powers as may be designated from time to time by the Trustees
or the President.
3.9 Chief Compliance Officer. The Chief Compliance Officer shall perform the
duties and have the responsibilities of the chief compliance officer of the
Trust, including if required by the 1940 Act any such duties and
responsibilities imposed by Rule 38a-1, and shall have such other duties and
powers as may be designated from time to time by the Trustees.
3.10 Resignations. Any officer may resign at any time by written instrument
signed by him or her and delivered to the Chairman of the Trustees, if any, the
President or the Secretary, or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. Except to the extent expressly provided in a written agreement with the
Trust, no officer resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal.
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ARTICLE 4
COMMITTEES
4.1 Quorum; Voting. Except as provided below or as otherwise specifically
provided in the resolutions constituting a Committee of the Trustees and
providing for the conduct of its meetings, a majority of the members of any
Committee of the Trustees shall constitute a quorum for the transaction of
business, and any action of such a Committee may be taken at a meeting by a
vote of a majority of the members present (a quorum being present) or evidenced
by one or more writings signed by such a majority. Members of a Committee may
participate in a meeting of such Committee by means of a conference telephone
or other communications equipment by means of which all persons participating
in the meeting can hear each other at the same time and participation by such
means shall constitute presence in person at a meeting.
With respect to a Valuation Committee of the Trustees, one or more of the
Committee members shall constitute a quorum for the transaction of business.
Except as specifically provided in the resolutions constituting a Committee
of the Trustees and providing for the conduct of its meetings, Article 2,
Sections 2.2 and 2.3 of these Bylaws relating to special meetings shall govern
the notice requirements for Committee meetings, except that it shall be
sufficient notice to a Valuation Committee of the Trustees to send notice by
telegram, telex or telecopy or other electronic means (including by telephone
voice-message or e-mail) at least fifteen minutes before the meeting.
ARTICLE 5
REPORTS
5.1 General. The Trustees and officers shall render reports at the time and
in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
ARTICLE 6
FISCAL YEAR
6.1 General. Except as from time to time otherwise provided by the Trustees,
the initial fiscal year of the Trust shall end on such date as is determined in
advance or in arrears by the Treasurer, and the subsequent fiscal years shall
end on such date in subsequent years.
ARTICLE 7
SEAL
7.1 General. The seal of the Trust shall, subject to alteration by the
Trustees, consist of a flat-faced die with the word "Massachusetts," together
with the name of the Trust and the year of its organization cut or engraved
thereon; provided, however, that unless otherwise required by the Trustees, the
seal shall not be necessary to be placed on, and its absence shall not impair
the validity of, any document, instrument or other paper executed and delivered
by or on behalf of the Trust.
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ARTICLE 8
EXECUTION OF PAPERS
8.1 General. Except as the Trustees may generally or in particular cases
authorize the execution thereof in some other manner, all deeds, leases,
transfers, contracts, bonds, notes, checks, drafts and other obligations made,
accepted or endorsed by the Trust shall be executed by the President, any Vice
President, the Treasurer or by whomever else shall be designated for that
purpose by vote of the Trustees, and need not bear the seal of the Trust.
ARTICLE 9
ISSUANCE OF SHARE CERTIFICATES
9.1 Share Certificates. Except as provided in Article 11 hereof, each
Shareholder shall be entitled to a certificate stating the number of Shares (as
defined in the Declaration of Trust) owned by him or her, in such form as shall
be prescribed from time to time by the Trustees. Such certificates shall be
signed by the President or any Vice President and by the Treasurer or any
Assistant Treasurer. Such signatures may be by facsimile if the certificate is
signed by a transfer agent, or by a registrar, other than a Trustee, officer or
employee of the Trust. In case any officer who has signed or whose facsimile
signature has been placed on such certificate shall cease to be such officer
before such certificate is issued, it may be issued by the Trust with the same
effect as if he or she were such officer at the time of its issuance.
Notwithstanding the foregoing, in lieu of issuing certificates for Shares,
the Trustees or the transfer agent may either issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such
Shares, who shall in either case be deemed, for all purposes hereunder, to be
the holders of certificates for such Shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
9.2 Loss of Certificates. In case of the alleged loss or destruction or the
mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
9.3 Issuance of New Certificates to Pledgee. A pledgee of Shares transferred
as collateral security shall be entitled to a new certificate if the instrument
of transfer substantially describes the debt or duty that is intended to be
secured thereby. Such new certificate shall express on its face that it is held
as collateral security, and the name of pledgor shall be stated thereon, who
alone shall be liable as a Shareholder and entitled to vote thereon.
9.4 Discontinuance of Issuance of Certificates. Notwithstanding anything to
the contrary in this Article 9, the Trustees may at any time discontinue the
issuance of share certificates and may, by written notice to each Shareholder,
require the surrender of share certificates to the Trust for cancellation. Such
surrender and cancellation shall not effect the ownership of Shares in the
Trust.
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ARTICLE 10
SHAREHOLDERS' VOTING POWERS AND MEETINGS
10.1 Voting Powers. The Shareholders shall have power to vote only (i) for
the election or removal of Trustees as provided in Article IV, Sections 1 and 3
of the Declaration of Trust and Article 11 hereto, (ii) with respect to any
Manager or sub-adviser as provided in Article IV, Section 8 of the Declaration
of Trust to the extent required by the 1940 Act, (iii) with respect to certain
transactions and other matters to the extent and as provided in Article V,
Sections 2 and 3 of the Declaration of Trust and Article 11 hereto, (iv) with
respect to any termination of this Trust to the extent and as provided in
Article IX, Section 4 of the Declaration of Trust and Article 11 hereto (for
the avoidance of any doubt, Shareholders shall have no separate right to vote
with respect to the termination of the Trust or a series or class of Shares if
the Trustees (including the Continuing Trustees) exercise their right to
terminate the Trust or such series or class pursuant to clauses (ii) and (y) of
Article IX, Section 4 of the Declaration of Trust), (v) with respect to any
amendment of the Declaration of Trust to the extent and as provided in Article
IX, Section 7 of the Declaration of Trust and Article 11 hereto, (vi) to the
same extent as the stockholders of a Massachusetts business corporation as to
whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or the Shareholders, and (vii) with respect to such additional matters relating
to the Trust as may be required by law, the Declaration of Trust, these Bylaws
or any registration of the Trust with the Securities and Exchange Commission
(or any successor agency) or any state, or as the Trustees may consider
necessary or desirable. Each whole Share shall be entitled to one vote as to
any matter on which it is entitled to vote and each fractional Share shall be
entitled to a proportionate fractional vote, except as otherwise provided in
the Declaration of Trust, these Bylaws, or required by applicable law. Except
as otherwise provided in the Declaration of Trust or these Bylaws or required
by applicable law, all Shares of the Trust then entitled to vote shall be voted
in the aggregate as a single class without regard to classes or series of
Shares. There shall be no cumulative voting in the election of Trustees. Shares
may be voted in person or by proxy. A proxy with respect to Shares held in the
name of two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. The placing of a
Shareholder's name on a proxy pursuant to telephonic or electronically
transmitted instructions obtained pursuant to procedures reasonably designed to
verify that such instructions have been authorized by such Shareholder shall
constitute execution of such proxy by or on behalf of such Shareholder. A proxy
purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until Shares of a particular class or
series are issued, the Trustees may exercise all rights of Shareholders and may
take any action required by law, the Declaration of Trust or these Bylaws to be
taken by Shareholders as to such class or series.
10.2 Voting Power and Meetings. Except as provided in the next sentence,
regular meetings of the Shareholders for the election of Trustees and the
transaction of such other business as may properly come before the meeting
shall be held, so long as Shares are listed for trading on the New York Stock
Exchange, on at least an annual basis, on such day and at such place as shall
be designated by the Trustees. In the event that such a meeting is not held in
any
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annual period if so required, whether the omission be by oversight or
otherwise, a subsequent special meeting may be called by the Trustees and held
in lieu of such meeting with the same effect as if held within such annual
period. Special meetings of the Shareholders or any or all classes or series of
Shares may also be called by the Trustees from time to time for such other
purposes as may be prescribed by law, by the Declaration of Trust or by these
Bylaws, or for the purpose of taking action upon any other matter deemed by the
Trustees to be necessary or desirable. A special meeting of Shareholders may be
held at any such time, day and place as is designated by the Trustees. Written
notice of any meeting of Shareholders, stating the date, time, place and
purpose of the meeting, shall be given or caused to be given by a majority of
the Trustees and a majority of the Continuing Trustees at least seven days
before such meeting to each Shareholder entitled to vote thereat by leaving
such notice with the Shareholder at his or her residence or usual place of
business or by mailing such notice, postage prepaid, to the Shareholder's
address as it appears on the records of the Trust. Such notice may be given by
the Secretary or an Assistant Secretary or by any other officer designated for
such purpose by the Trustees. Whenever notice of a meeting is required to be
given to a Shareholder under the Declaration of Trust or these Bylaws, a
written waiver thereof, executed before or after the meeting by such
Shareholder or his or her attorney thereunto authorized and filed with the
records of the meeting, shall be deemed equivalent to such notice. Notice of a
meeting need not be given to any Shareholder who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to such
Shareholder. No ballot shall be required for any election unless required by a
Shareholder present or represented at the meeting and entitled to vote in such
election. Notwithstanding anything to the contrary in this Section 10.2, no
matter shall be properly before any annual or special meeting of Shareholders
and no business shall be transacted thereat unless in accordance with
Section 10.6 of these Bylaws.
10.3 Quorum and Required Vote. Except when a larger quorum is required by
any provision of law or the Declaration of Trust or these Bylaws, thirty
percent (30%) of the Shares entitled to vote on a particular matter shall
constitute a quorum for the transaction of business at a Shareholders' meeting,
except that where any provision of law or the Declaration of Trust or these
Bylaws permits or requires that holders of any class or series of Shares shall
vote as an individual class or series, then thirty percent (30%) (unless a
larger quorum is required as specified above) of Shares of that class or series
entitled to vote shall be necessary to constitute a quorum for the transaction
of business by that class or series. Any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held, within a
reasonable time after the date set for the original meeting, without the
necessity of further notice. Except when a different vote is required by any
provision of law or the Declaration of Trust or these Bylaws, a plurality of
the quorum of Shares necessary for the transaction of business at a
Shareholders' meeting shall decide any questions and a plurality of Shares
voted shall elect a Trustee, provided that where any provision of law or of the
Declaration of Trust or these Bylaws permits or requires that the holders of
any class or series of Shares shall vote as an individual class or series, then
a plurality of the quorum of Shares of that class or series necessary for the
transaction of business by that class or series at a Shareholders' meeting
shall decide that matter insofar as that class or series is concerned.
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10.4 Action by Written Consent. Any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger proportion thereof as shall be required by any express
provision of law or the Declaration of Trust or these Bylaws) consent to the
action in writing and such written consents are filed with the records of the
meetings of Shareholders. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.
10.5 Record Dates. For the purpose of determining the Shareholders who are
entitled to vote or act at any meeting or any adjournment thereof, or who are
entitled to receive payment of any dividend or of any other distribution, the
Trustees may from time to time fix a time, which shall be not more than 90 days
before the date of any meeting of Shareholders or the date for the payment of
any dividend or of any other distribution, as the record date for determining
the Shareholders having the right to notice of and to vote at such meeting and
any adjournment thereof or the right to receive such dividend or distribution,
and in such case only Shareholders of record on such record date shall have the
right notwithstanding any transfer of Shares on the books of the Trust after
the record date; or without fixing such record date the Trustees may for any of
such purposes close the register or transfer books for all or any part of such
period.
10.6 Advance Notice of Shareholder Nominees for Trustees and Other
Shareholder Proposals. (a) As used in this Section 10.6, the term "annual
meeting" refers to any annual meeting of Shareholders as well as any special
meeting held in lieu of an annual meeting as described in the first two
sentences of Section 10.2 of these Bylaws, and the term "special meeting"
refers to all meetings of Shareholders other than an annual meeting or a
special meeting in lieu of an annual meeting.
(b) The matters to be considered and brought before any annual or special
meeting of Shareholders shall be limited to only such matters, including the
nomination and election of Trustees, as shall be brought properly before such
meeting in compliance with the procedures set forth in this Section 10.6. Only
persons who are nominated in accordance with the procedures set forth in this
Section 10.6 shall be eligible for election as Trustees, and no proposal to fix
the number of Trustees shall be brought before an annual or special meeting of
Shareholders or otherwise transacted unless in accordance with the procedures
set forth in this Section 10.6, except as may be otherwise provided in these
Bylaws with respect to the right of holders of preferred shares of beneficial
interest, if any, of the Trust to nominate and elect a specified number of
Trustees in certain circumstances.
(c) For any matter to be properly before any annual meeting, the matter must
be (i) specified in the notice of meeting given by or at the direction of a
majority of the Trustees and a majority of the Continuing Trustees pursuant to
Section 10.2 of these Bylaws, (ii) otherwise brought before the meeting by or
at the direction of a majority of the Continuing Trustees (or any duly
authorized committee thereof), or (iii) brought before the meeting in the
manner specified in this Section 10.6(c) by a Shareholder of record entitled to
vote at the meeting or by a Shareholder (a "Beneficial Owner") that holds
Shares entitled to vote at the meeting through a nominee or "street name"
holder of record and that can demonstrate to the Trust such indirect ownership
and such Beneficial Owner's entitlement to vote such Shares, provided that the
Shareholder was the Shareholder of record or the Beneficial Owner held such
Shares at the time the notice provided for in this Section 10.6(c) is delivered
to the Secretary.
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In addition to any other requirements under applicable law and the
Declaration of Trust and these Bylaws, persons nominated by Shareholders for
election as Trustees and any other proposals by Shareholders may be properly
brought before an annual meeting only pursuant to timely notice (the
"Shareholder Notice") in writing to the Secretary. To be timely, the
Shareholder Notice must be delivered to or mailed and received at the principal
executive offices of the Trust not less than forty-five (45) nor more than
sixty (60) days prior to the first anniversary date of the date on which the
Trust first mailed its proxy materials for the prior year's annual meeting;
provided, however, with respect to the Trust's first annual meeting, the
Shareholder Notice must be so delivered or mailed and so received on or before
January 1, 2003; provided further, however, if and only if the annual meeting
is not scheduled to be held within a period that commences thirty (30) days
before the first anniversary date of the annual meeting for the preceding year
and ends thirty (30) days after such anniversary date (an annual meeting date
outside such period being referred to herein as an "Other Annual Meeting
Date"), such Shareholder Notice must be given in the manner provided herein by
the later of the close of business on (i) the date forty-five (45) days prior
to such Other Annual Meeting Date or (ii) the tenth (10/th/) business day
following the date such Other Annual Meeting Date is first publicly announced
or disclosed.
Any Shareholder desiring to nominate any person or persons (as the case may
be) for election as a Trustee or Trustees of the Trust shall deliver, as part
of such Shareholder Notice: (i) a statement in writing setting forth (A) the
name, age, date of birth, business address, residence address and nationality
of the person or persons to be nominated; (B) the class or series and number of
all Shares of the Trust owned of record or beneficially by each such person or
persons, as reported to such Shareholder by such nominee(s); (C) any other
information regarding each such person required by paragraphs (a), (d), (e) and
(f) of Item 401 of Regulation S-K or paragraph (b) of Item 22 of Rule 14a-101
(Schedule 14A) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), adopted by the Securities and Exchange Commission (or the
corresponding provisions of any regulation or rule subsequently adopted by the
Securities and Exchange Commission or any successor agency applicable to the
Trust); (D) any other information regarding the person or persons to be
nominated that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitation of proxies for
election of Trustees or directors pursuant to Section 14 of the Exchange Act
and the rules and regulations promulgated thereunder; and (E) whether such
Shareholder believes any nominee is or will be an "interested person" of the
Trust (as defined in the Investment Company Act of 1940, as amended) and, if
not an "interested person," information regarding each nominee that will be
sufficient for the Trust to make such determination; and (ii) the written and
signed consent of the person or persons to be nominated to be named as nominees
and to serve as Trustees if elected. In addition, the Trustees may require any
proposed nominee to furnish such other information as they may reasonably
require or deem necessary to determine the eligibility of such proposed nominee
to serve as a Trustee. Any Shareholder Notice required by this Section 10.6(c)
in respect of a proposal to fix the number of Trustees shall also set forth a
description of and the text of the proposal, which description and text shall
state a fixed number of Trustees that otherwise complies with applicable law,
these Bylaws and the Declaration of Trust.
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Without limiting the foregoing, any Shareholder who gives a Shareholder
Notice of any matter proposed to be brought before a Shareholder meeting
(whether or not involving nominees for Trustees) shall deliver, as part of such
Shareholder Notice: (i) the description of and text of the proposal to be
presented; (ii) a brief written statement of the reasons why such Shareholder
favors the proposal; (iii) such Shareholder's name and address as they appear
on the Trust's books; (iv) any other information relating to the Shareholder
that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with the solicitation of proxies with respect
to the matter(s) proposed pursuant to Section 14 of the Exchange Act and the
rules and regulations promulgated thereunder; (v) the class or series and
number of all Shares of the Trust owned beneficially and of record by such
Shareholder; (vi) any material interest of such Shareholder in the matter
proposed (other than as a Shareholder); (vii) a representation that the
Shareholder intends to appear in person or by proxy at the Shareholder meeting
to act on the matter(s) proposed; (viii) if the proposal involves nominee(s)
for Trustees, a description of all arrangements or understandings between the
Shareholder and each proposed nominee and any other person or persons
(including their names) pursuant to which the nomination(s) are to be made by
the Shareholder; and (ix) in the case of a Beneficial Owner, evidence
establishing such Beneficial Owner's indirect ownership of, and entitlement to
vote, Shares at the meeting of Shareholders. As used in this Section 10.6,
Shares "beneficially owned" shall mean all Shares which such person is deemed
to beneficially own pursuant to Rules 13d-3 and 13d-5 under the Exchange Act.
(d) For any matter to be properly before any special meeting, the matter
must be specified in the notice of meeting given by or at the direction of a
majority of the Trustees and a majority of the Continuing Trustees pursuant to
Section 10.2 of these Bylaws. In the event the Trust calls a special meeting
for the purpose of electing one or more Trustees, any Shareholder may nominate
a person or persons (as the case may be) for election to such position(s) as
specified in the Trust's notice of meeting if and only if the Shareholder
provides a notice containing the information required in the Shareholder Notice
to the Secretary required with respect to annual meetings by Section 10.6(c)
hereof, and such notice is delivered to or mailed and received at the principal
executive office of the Trust not later than the close of business on the tenth
(10/th/) day following the day on which the date of the special meeting and of
the nominees proposed by the Trustees to be elected at such meeting are
publicly announced or disclosed.
(e) For purposes of this Section 10.6, a matter shall be deemed to have been
"publicly announced or disclosed" if such matter is disclosed in a press
release reported by the Dow Xxxxx News Service, Associated Press or comparable
national news service, in a document publicly filed by the Trust with the
Securities and Exchange Commission, or in a Web site accessible to the public
maintained by the Trust or by its investment adviser or an affiliate of such
investment adviser with respect to the Trust.
(f) In no event shall an adjournment or postponement (or a public
announcement thereof) of a meeting of Shareholders commence a new time period
(or extend any time period) for the giving of notice as provided in this
Section 10.6.
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(g) The person presiding at any meeting of Shareholders, in addition to
making any other determinations that may be appropriate to the conduct of the
meeting, shall have the power and duty to (i) determine whether a nomination or
proposal of other matters to be brought before a meeting and notice thereof
have been duly made and given in the manner provided in this Section 10.6 and
elsewhere in these Bylaws and the Declaration of Trust and (ii) if not so made
or given, to direct and declare at the meeting that such nomination and/or such
other matters shall be disregarded and shall not be considered. Any
determination by the person presiding shall be binding on all parties absent
manifest error.
(h) Notwithstanding anything to the contrary in this Section 10.6 or
otherwise in these Bylaws, unless required by federal law, no matter shall be
considered at or brought before any annual or special meeting unless such
matter has been approved for these purposes by a majority of the Continuing
Trustees and, in particular, no Beneficial Owner shall have any rights as a
Shareholder except as may be required by federal law. Furthermore, nothing in
this Section 10.6 shall be construed as creating any implication or presumption
as to the requirements of federal law.
ARTICLE 11
STATEMENT CREATING FIVE SERIES OF AUCTION RATE CUMULATIVE PREFERRED SHARES
Auction Rate Cumulative Preferred Shares, Series M: 2,400 preferred shares
of beneficial interest, par value $0.00001 per share, liquidation preference
$25,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared) thereon, is hereby designated "Auction Rate
Cumulative Preferred Shares, Series M." Each share of Auction Rate Cumulative
Preferred Shares, Series M (sometimes referred to herein as "Series M Preferred
Shares") may be issued on a date to be determined by the Board of Trustees of
the Trust or pursuant to their delegated authority; have an Initial Dividend
Rate and an Initial Dividend Payment Date as shall be determined in advance of
the issuance thereof by the Board of Trustees of the Trust or pursuant to their
delegated authority; and have such other preferences, voting powers,
limitations as to dividends, qualifications and terms and conditions of
redemption as are set forth in these Bylaws. The Series M Preferred Shares
shall constitute a separate series of preferred shares of beneficial interest
of the Trust, and each share of Series M Preferred Shares shall be identical.
Auction Rate Cumulative Preferred Shares, Series T: 2,400 preferred shares
of beneficial interest, par value $0.00001 per share, liquidation preference
$25,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared) thereon, is hereby designated "Auction Rate
Cumulative Preferred Shares, Series T." Each share of Auction Rate Cumulative
Preferred Shares, Series T (sometimes referred to herein as "Series T Preferred
Shares") may be issued on a date to be determined by the Board of Trustees of
the Trust or pursuant to their delegated authority; have an Initial Dividend
Rate and an Initial Dividend Payment Date as shall be determined in advance of
the issuance thereof by the Board of Trustees of the Trust or pursuant to their
delegated authority; and have such other preferences, voting powers,
limitations as to dividends, qualifications and terms and conditions of
redemption as are set forth in these Bylaws. The Series T Preferred Shares
shall constitute a separate series of preferred shares of beneficial interest
of the Trust, and each share of Series T Preferred Shares shall be identical.
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Auction Rate Cumulative Preferred Shares, Series W: 2,400 preferred shares
of beneficial interest, par value $0.00001 per share, liquidation preference
$25,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared) thereon, is hereby designated "Auction Rate
Cumulative Preferred Shares, Series W." Each share of Auction Rate Cumulative
Preferred Shares, Series W (sometimes referred to herein as "Series W Preferred
Shares") may be issued on a date to be determined by the Board of Trustees of
the Trust or pursuant to their delegated authority; have an Initial Dividend
Rate and an Initial Dividend Payment Date as shall be determined in advance of
the issuance thereof by the Board of Trustees of the Trust or pursuant to their
delegated authority; and have such other preferences, voting powers,
limitations as to dividends, qualifications and terms and conditions of
redemption as are set forth in these Bylaws. The Series W Preferred Shares
shall constitute a separate series of preferred shares of beneficial interest
of the Trust, and each share of Series W Preferred Shares shall be identical.
Auction Rate Cumulative Preferred Shares, Series Th: 2,400 preferred shares
of beneficial interest, par value $0.00001 per share, liquidation preference
$25,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared) thereon, is hereby designated "Auction Rate
Cumulative Preferred Shares, Series Th." Each share of Auction Rate Cumulative
Preferred Shares, Series Th (sometimes referred to herein as "Series Th
Preferred Shares") may be issued on a date to be determined by the Board of
Trustees of the Trust or pursuant to their delegated authority; have an Initial
Dividend Rate and an Initial Dividend Payment Date as shall be determined in
advance of the issuance thereof by the Board of Trustees of the Trust or
pursuant to their delegated authority; and have such other preferences, voting
powers, limitations as to dividends, qualifications and terms and conditions of
redemption as are set forth in these Bylaws. The Series Th Preferred Shares
shall constitute a separate series of preferred shares of beneficial interest
of the Trust, and each share of Series Th Preferred Shares shall be identical.
Auction Rate Cumulative Preferred Shares, Series F: 2,400 preferred shares
of beneficial interest, par value $0.00001 per share, liquidation preference
$25,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared) thereon, is hereby designated "Auction Rate
Cumulative Preferred Shares, Series F." Each share of Auction Rate Cumulative
Preferred Shares, Series F (sometimes referred to herein as "Series F Preferred
Shares") may be issued on a date to be determined by the Board of Trustees of
the Trust or pursuant to their delegated authority; have an Initial Dividend
Rate and an Initial Dividend Payment Date as shall be determined in advance of
the issuance thereof by the Board of Trustees of the Trust or pursuant to their
delegated authority; and have such other preferences, voting powers,
limitations as to dividends, qualifications and terms and conditions of
redemption as are set forth in these Bylaws. The Series F Preferred Shares
shall constitute a separate series of preferred shares of beneficial interest
of the Trust, and each share of Series F Preferred Shares shall be identical.
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11.1 Definitions. (a) Unless the context or use indicates another or
different meaning or intent, in Article 11 of these Bylaws the following terms
have the following meanings, whether used in the singular or plural:
"'AA' Financial Composite Commercial Paper Rate" on any date means
(i) (A) the Interest Equivalent of the 7-day rate (in the case of a Dividend
Period which is a 7-Day Dividend Period or shorter), the 30-day rate (for
Dividend Periods greater than 7 days but fewer than or equal to 31 days), the
60-day rate (for Dividend Periods greater than 31 days but fewer than or equal
to 61 days) and the 90-day rate (for Dividend Periods greater than 61 days but
fewer than or equal to 91 days) on commercial paper on behalf of issuers whose
corporate bonds are rated AA by S&P, or the equivalent of such rating by
another Rating Agency, as announced by the Federal Reserve Bank of New York for
the close of business on the Business Day immediately preceding such date; and
(B) for Dividend Periods greater than 91 days but fewer than 184 days, the rate
described in clause (ii) below; or (ii) if the Federal Reserve Bank of New York
does not make available such a rate, or with respect to Dividend Periods
greater than 91 days but fewer than 184 days, then the arithmetic average of
the Interest Equivalent of such rates on commercial paper placed on behalf of
such issuers, 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 immediately preceding such date (rounded to the next highest one-thousandth
(0.001) of 1%). If any Commercial Paper Dealer does not quote a rate required
to determine the "AA" Financial Composite Commercial Paper Rate, such rate
shall be determined on the basis of the quotations (or quotation) furnished by
the remaining Commercial Paper Dealers (or Dealer), if any, or, if there are no
such Commercial Paper Dealers, by the Auction Agent. For purposes of this
definition, (A) "Commercial Paper Dealers" shall mean (1) Citigroup Global
Markets Inc., Xxxxxx Brothers Inc., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated and Xxxxxxx Sachs & Co.; (2) in lieu of any thereof, its
respective affiliate or successor; and (3) in the event that any of the
foregoing shall cease to quote rates for commercial paper of issuers of the
sort described above, in substitution therefor, a nationally recognized dealer
in commercial paper of such issuers then making such quotations selected by the
Trust, and (B) "Interest Equivalent" of a rate stated on a discount basis for
commercial paper of a given number of days' maturity shall mean a number equal
to the quotient (rounded upward to the next higher one-thousandth(0.001) of 1%)
of (1) such rate expressed as a decimal, divided by (2) the difference between
(x) 1.00 and (y) a fraction, the numerator of which shall be the product of
such rate expressed as a decimal, multiplied by the number of days in which
such commercial paper shall mature and the denominator of which shall be 360.
"Accountant's Confirmation" has the meaning set forth in Section 11.7(c) of
these Bylaws.
"Adviser" means the Trust's investment adviser which initially shall be
PIMCO Advisors, a division of Allianz Dresdner Asset Management of America L.P.
"Affiliate" means any Person known to the Auction Agent to be controlled by,
in control of, or under common control with, the Trust.
"Agent Member" means a member of the Securities Depository that will act on
behalf of a Beneficial Owner of one or more Preferred Shares or on behalf of a
Potential Beneficial Owner.
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"Applicable Percentage" has the meaning set forth in Section 11.10(a)(vi) of
these Bylaws.
"Applicable Rate" means the rate per annum at which cash dividends are
payable on the Preferred Shares for any Dividend Period.
"Approved Price" means the "fair value" as determined by the Trust in
accordance with the valuation procedures adopted from time to time by the Board
of Trustees of the Trust and for which the Trust receives a xxxx-to-market
price (which, for the purpose of clarity, shall not mean Market Value) from an
independent source at least semi-annually.
"Auction" means a periodic operation of the Auction Procedures.
"Auction Agent" means Deutsche Bank Trust Company Americas unless and until
another commercial bank, trust company or other financial institution appointed
by a resolution of the Board of Trustees of the Trust or a duly authorized
committee thereof enters into an agreement with the Trust to follow the Auction
Procedures for the purpose of determining the Applicable Rate and to act as
transfer agent, registrar, dividend disbursing agent and redemption agent for
the Preferred Shares.
"Auction Date" has the meaning set forth in Section 11.10(a)(i) of these
Bylaws.
"Auction Procedures" means the procedures for conducting Auctions set forth
in Section 11.10 of these Bylaws.
"Bank Loans" means direct purchases of, assignments of, participations in
and other interests in (a) any bank loan or (b) any loan made by an investment
bank, investment fund or other financial institution, provided that such loan
under this clause (b) is similar to those typically made, syndicated, purchased
or participated by a commercial bank or institutional loan investor in the
ordinary course of business.
"Beneficial Owner" 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 Preferred Shares or a Broker-Dealer that holds Preferred Shares for
its own account.
"Broker-Dealer" means any broker-dealer, or other entity permitted by law to
perform the functions required of a Broker-Dealer pursuant to Section 11.10 of
these Bylaws, that has been selected by the Trust and has entered into a
Broker-Dealer Agreement with the Auction Agent that remains effective.
"Broker-Dealer Agreement" means an agreement between the Auction Agent and a
Broker-Dealer pursuant to which such Broker-Dealer agrees to follow the
procedures specified in Section 11.10 of these Bylaws.
"Business Day" means a day on which the New York Stock Exchange is open for
trading and which is not a Saturday, Sunday or other day on which banks in New
York City are authorized or obligated by law to close.
-14-
"Closing Transactions" has the meaning set forth in Section 11.8(a)(i) of
these Bylaws.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commercial Paper Dealers" has the meaning set forth in the definition of
"'AA' Financial Composite Commercial Paper Rate."
"Common Shares" means the shares of beneficial interest designated as common
shares, par value $0.00001 per share, of the Trust.
"Cure Date" has the meaning set forth in Section 11.4(a)(ii) of these Bylaws.
"Date of Original Issue" means, with respect to any Preferred Share, the
date on which the Trust first issues such share.
"Declaration of Trust" means the Amended and Restated Agreement and
Declaration of Trust of the Trust dated November 12, 2001, as from time to time
amended and supplemented.
"Deposit Securities" means cash and portfolio securities rated at least A2
(having a remaining maturity of 12 months or less), X-0, XXXX-0 xx XXX-0 by
Moody's or A (having a remaining maturity of 12 months or less), A-1+ or SP-1+
by S&P.
"Discount Factor" means a Moody's Discount Factor (if Xxxxx'x is then rating
the Preferred Shares) or a discount factor included in the calculations used by
another Rating Agency then rating the Preferred Shares for purposes of
determining such Rating Agency's rating on the Preferred Shares, as applicable,
provided that this term shall not apply with respect to Fitch or its rating on
the Preferred Shares.
"Discounted Value" of any asset of the Trust means the quotient of the
Market Value of an Eligible Asset divided by the applicable Discount Factor,
provided that with respect to an Eligible Asset that is currently callable, the
Discounted Value will be equal to the quotient as calculated above or the call
price, whichever is lower, and that with respect to an Eligible Asset that is
prepayable, the Discounted Value will be equal to the quotient as calculated
above or the par value, whichever is lower.
"Dividend Payment Date," with respect to Preferred Shares, has the meaning
set forth in Section 11.2(b)(i) of these Bylaws.
"Dividend Period" means the Initial Dividend Period, any 7-Day Dividend
Period and any Special Dividend Period.
"Eligible Asset" means a Moody's Eligible Asset (if Xxxxx'x is then rating
the Preferred Shares) and/or any asset included in the calculations used by
another Rating Agency then rating the Preferred Shares for purposes of
determining such Rating Agency's rating on the Preferred Shares, as applicable,
provided that this term shall not apply with respect to Fitch or its rating on
the Preferred Shares.
-15-
"Existing Holder" means a Broker-Dealer, or any such other Person that may
be permitted by the Trust, that is listed as the holder of record of Preferred
Shares in the Share Books.
"Extension Period" has the meaning set forth in Section 11.2(c)(iii) of
these Bylaws.
"FHLB, FNMA and FFCB Debentures" has the meaning set forth in paragraph
(viii) of the definition of "Moody's Eligible Assets."
"Fitch" means Fitch, Inc. or its successors.
"Fitch Covered Forward Commitment" has the meaning set forth in
Section 11.8(f) of these Bylaws.
"Fitch Criteria" means the Closed-End Fund Criteria Report issued by Fitch
entitled "Closed-End Fund Debt and Preferred Stock Rating Criteria" dated
August 17, 2009 and attached to these Bylaws as Exhibit 1, which is hereby
incorporated by reference into and made a part of these Bylaws. The Trust may,
but is not required to, amend or restate the Fitch Criteria from time to time,
through an amendment or restatement of Exhibit 1 or otherwise, to reflect
revised criteria issued by Fitch by resolution of the Board of Trustees of the
Trust and without shareholder approval.
"Fitch Net OC" has the meaning given to such term in the Fitch Criteria to
be consistent with a AAA rating of the Preferred Shares by Fitch, and shall be
calculated with respect to the Trust in accordance with the applicable formula
and related guidance provided in the Fitch Criteria and by Fitch (including
with respect to discount factors, if any, or other treatment to be applied with
respect to securities or other assets held by the Trust which are not
specifically referenced in the Fitch Criteria), and the good faith
determinations of the Trust or its agents of the Fitch Net OC and related
interpretations of the Fitch Criteria shall be conclusive and binding on all
parties.
"Fitch Net OC Test" means an asset coverage test with respect to the
Preferred Shares that shall be satisfied as of a particular date or time if the
Trust has Fitch Net OC in excess of one-hundred percent (100%) as of such date
or time.
"Fitch Preferred Shares Asset Coverage" means, as of a particular date or
time, sufficient asset coverage with respect to the Preferred Shares such that
the Trust is satisfying both the (i) Fitch Total OC Test and the (ii) Fitch Net
OC Test as of such date or time.
"Fitch Preferred Shares Asset Coverage Report" means, with respect to Fitch
Preferred Shares Asset Coverage, a report including the information to be
provided to Fitch as called for in the second bullet under "Investment Manager
Review - Surveillance" in the Fitch Criteria.
"Fitch Total OC" has the meaning given to such term in the Fitch Criteria to
be consistent with a AAA rating of the Preferred Shares by Fitch, and shall be
calculated with respect to the Trust in accordance with the applicable formula
and related guidance provided in the Fitch Criteria and by Fitch (including
with respect to discount factors, if any, or other treatment to be
-16-
applied with respect to securities or other assets held by the Trust which are
not specifically referenced in the Fitch Criteria), and the good faith
determinations of the Trust or its agents of Fitch Total OC and related
interpretations of the Fitch Criteria at any time and from time to time shall
be conclusive and binding on all parties.
"Fitch Total OC Test" means an asset coverage test with respect to the
Preferred Shares that shall be satisfied as of a particular date or time if the
Trust has Fitch Total OC in excess of one-hundred percent (100%) as of such
date or time.
"Holder" means a Person identified as a holder of record of Preferred Shares
in the Share Register.
"Independent Accountant" means a nationally recognized accountant, or firm
of accountants, that is, with respect to the Trust, an independent public
accountant or firm of independent public accountants under the Securities Act
and serving as such for the Trust.
"Initial Dividend Payment Date" means, with respect to a series of Preferred
Shares, the Initial Dividend Payment Date as determined by the Board of
Trustees of the Trust or pursuant to their delegated authority with respect to
such series.
"Initial Dividend Period" has the meaning set forth in Section 11.2(c)(i) of
these Bylaws.
"Initial Dividend Rate" means, with respect to a series of Preferred Shares,
the rate per annum applicable to the Initial Dividend Period for such series of
Preferred Shares.
"Interest Equivalent" has the meaning set forth in the definition of "'AA'
Financial Composite Commercial Paper Rate."
"Lien" means any material lien, mortgage, pledge, security interest or
security agreement of any kind.
"Long Term Dividend Period" means a Special Dividend Period consisting of a
specified period of one whole year or more but not greater than five years.
"Mandatory Redemption Price" means $25,000 per Preferred Share plus an
amount equal to accumulated but unpaid dividends (whether or not earned or
declared) to the date fixed for redemption.
"Market Value" of any asset of the Trust shall be the market value thereof
determined by a Pricing Service. Market Value of any asset shall include any
interest accrued thereon. A Pricing Service shall value portfolio securities at
the quoted bid prices or the mean between the quoted bid and asked prices or
the yield equivalent when quotations are not readily available. Securities for
which quotations are not readily available shall be valued at fair value as
determined by a Pricing Service using methods which include consideration of:
yields or prices of securities of comparable quality, type of issue, coupon,
maturity and rating; indications as to value from dealers; and general market
conditions. A Pricing Service may employ electronic data processing techniques
and/or a matrix system to determine valuations. In the event a
-17-
Pricing Service is unable to value a security, the security shall be valued at
the lower of two dealer bids obtained by the Trust from dealers who are members
of the Financial Industry Regulatory Authority, Inc. and who make a market in
the security, at least one of which shall be in writing. Futures contracts and
options are valued at closing prices for such instruments established by the
exchange or board of trade on which they are traded, or if market quotations
are not readily available, are valued at fair value on a consistent basis using
methods determined in good faith by the Board of Trustees of the Trust.
"Maximum Applicable Rate," with respect to Preferred Shares, has the meaning
set forth in Section 11.10(a)(vi) of these Bylaws.
"Moody's" means Xxxxx'x Investors Service, Inc. or its successors.
"Moody's Discount Factor" means, for purposes of determining the Discounted
Value of any Moody's Eligible Asset, the percentage determined as follows. The
Moody's Discount Factor for any Moody's Eligible Asset other than the
securities set forth below will be the percentage provided in writing by
Moody's.
(i) Corporate debt securities: The percentage determined by reference to
the rating on such asset with reference to the remaining term to maturity of
such asset, in accordance with the table set forth below.
XXXXX'X RATING CATEGORY
-------------------------------------------
TERM TO MATURITY OF CORPORATE DEBT SECURITY AAA AA A BAA BA B CAA UNRATED/1/
------------------------------------------- --- --- --- --- --- --- --- ---------
1 year or less.................................... 109% 112% 115% 118% 119% 125% 205% 225%
2 years or less (but longer than 1 year).......... 115 118 122 125 127 133 205 225
3 years or less (but longer than 2 years)......... 120 123 127 131 133 140 205 225
4 years or less (but longer than 3 years)......... 126 129 133 138 140 147 205 225
5 years or less (but longer than 4 years)......... 132 135 139 144 146 154 205 225
7 years or less (but longer than 5 years)......... 139 143 147 152 156 164 205 225
10 years or less (but longer than 7 years)........ 145 150 155 160 164 173 205 225
15 years or less (but longer than 10 years)....... 150 155 160 165 170 180 205 225
20 years or less (but longer than 15 years)....... 150 155 160 165 170 190 205 225
30 years or less (but longer than 20 years)....... 150 155 160 165 170 191 205 225
Greater than 30 years............................. 165 173 181 189 205 221 221 225
--------
/1/ Unrated corporate debt securities, which are corporate debt securities
rated by neither Moody's nor S&P, are limited to 10% of discounted Moody's
Eligible Assets. If a corporate debt security is unrated by Moody's but is
rated by S&P, a rating two numeric ratings below the S&P rating will be
used (e.g., where the S&P rating is AAA, a Xxxxx'x rating of Aa1 will be
used; where the S&P rating is AA+, a Xxxxx'x rating of Aa3 will be used).
If a corporate debt security is unrated by both Moody's and S&P, the Trust
will use the percentage set forth under "Unrated" in this table.
The Moody's Discount Factors presented in the immediately preceding table
will also apply to Moody's Eligible Assets that are FHLB, FNMA and FFCB
Debentures and to rated TRACERs, whereby the ratings in the table will be
applied to the underlying securities and the Market Value of each underlying
security will be its proportionate amount of the Market Value of the TRACER.
The Moody's Discount Factors presented in the immediately preceding table
will also apply to corporate debt securities that do not
-18-
pay interest in U.S. dollars or euros, provided that the Moody's Discount
Factor determined from the table shall be multiplied by a factor of 110% for
purposes of calculating the Discounted Value of such securities.
(ii) Preferred stock: The Moody's Discount Factor for preferred stock
shall be (A) for preferred stocks issued by a utility, 155%; (B) for
preferred stocks of industrial and financial issuers, 209%; and (C) for
auction rate preferred stocks, 350%.
(iii) Short-term instruments: The Moody's Discount Factor applied to
short-term portfolio securities, including without limitation corporate debt
securities, Short Term Money Market Instruments and municipal debt
obligations, will be (A) 100%, so long as such portfolio securities mature
or have a demand feature at par exercisable within the Moody's Exposure
Period; (B) 115%, so long as such portfolio securities mature or have a
demand feature at par not exercisable within the Moody's Exposure Period;
and (C) 125%, if such securities are not rated by Moody's, so long as such
portfolio securities are rated at least A-1+/AA or SP-1+/AA by S&P and
mature or have a demand feature at par exercisable within the Moody's
Exposure Period. A Moody's Discount Factor of 100% will be applied to cash.
(iv) U.S. Government Securities and U.S. Treasury Strips:
U.S. TREASURY
U.S. GOVERNMENT STRIPS
SECURITIES DISCOUNT
REMAINING TERM TO MATURITY DISCOUNT FACTOR FACTOR
-------------------------- --------------- -------------
1 year or less.................................. 107% 107%
2 years or less (but longer than 1 year)........ 113 115
3 years or less (but longer than 2 years)....... 118 121
4 years or less (but longer than 3 years)....... 123 128
5 years or less (but longer than 4 years)....... 128 135
7 years or less (but longer than 5 years)....... 135 147
10 years or less (but longer than 7 years)...... 141 163
15 years or less (but longer than 10 years)..... 146 191
20 years or less (but longer than 15 years)..... 154 218
30 years or less (but longer than 20 years)..... 154 244
(v) Rule 144A Securities: The Moody's Discount Factor applied to Rule
144A Securities whose terms include rights to registration under the
Securities Act exercisable within 1 year of the applicable date shall be
100% of the Moody's Discount Factor that would apply were the securities
registered under the Securities Act. The Moody's Discount Factor applied to
Rule 144A Securities whose terms include rights to registration under the
Securities Act that are not exercisable within one year of the applicable
date shall be 120% of the Moody's Discount Factor that would apply were the
securities registered under the Securities Act. The Moody's Discount Factor
applied to Rule 144A Securities whose terms do not include rights to
registration under the Securities Act shall be 130% of the Xxxxx'x Discount
Factor that would apply were the securities registered under the Securities
Act.
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(vi) Bank Loans: The Xxxxx'x Discount Factor applied to senior Bank Loans
("Senior Loans") shall be the percentage specified in the table below
opposite such Xxxxx'x Loan Category:
XXXXX'X LOAN DISCOUNT
CATEGORY FACTOR
------------ --------
A............................. 118%
B............................. 137%
C............................. 161%
D............................. 222%
E............................. 222%
(vii) Asset-backed securities: The Xxxxx'x Discount Factor applied to
asset-backed securities shall be 131%. Mortgage-backed securities: The
Xxxxx'x Discount Factor applied to collateralized mortgage obligations,
planned amortization class bonds and targeted amortization class bonds shall
be determined by reference to the weighted average life of the security and
whether cash flow is retained (i.e., controlled by a trustee) or excluded
(i.e., not controlled by a trustee), in accordance with the table set forth
below.
CASH FLOW CASH FLOW
REMAINING TERM TO MATURITY RETAINED EXCLUDED
-------------------------- --------- ---------
3 years or less.............................. 133% 141%
7 years or less (but longer than 3 years).... 142 151
10 years or less (but longer than 7 years)... 158 168
20 years or less (but longer than 10 years).. 174 185
The Xxxxx'x Discount Factor applied to residential mortgage pass-throughs
(including private-placement mortgage pass-throughs) shall be determined by
reference to the coupon paid by such security and whether cash flow is
retained (i.e., controlled by a trustee) or excluded (i.e., not controlled
by a trustee), in accordance with the table set forth below.
CASH FLOW CASH FLOW
COUPON RETAINED EXCLUDED
------ --------- ---------
5%...................................... 166% 173%
6%...................................... 162 169
7%...................................... 158 165
8%...................................... 154 161
9%...................................... 151 157
10%..................................... 148 154
11%..................................... 144 154
12%..................................... 142 151
13%..................................... 139 148
adjustable.............................. 165 172
The Xxxxx'x Discount Factor applied to fixed-rate pass-throughs that are not
rated by Xxxxx'x and are serviced by a servicer approved by Xxxxx'x shall be
determined by reference to the table in the following paragraph.
The Xxxxx'x Discount Factor applied to whole loans shall be determined by
reference to the coupon paid by such security and whether cash flow is
retained (i.e., controlled by a trustee) or excluded (i.e., not controlled
by a trustee), in accordance with the table set forth below.
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CASH FLOW CASH FLOW
COUPON RETAINED EXCLUDED
------ --------- ---------
5%...................................... 172% 179%
6%...................................... 167 174
7%...................................... 163 170
8%...................................... 159 165
9%...................................... 155 161
10%..................................... 151 158
11%..................................... 148 157
12%..................................... 145 154
13%..................................... 142 151
adjustable.............................. 170 177
(viii) Municipal debt obligations: The Xxxxx'x Discount Factor applied to
municipal debt obligations shall be the percentage determined by reference
to the rating on such asset and the shortest Exposure Period set forth
opposite such rating that is the same length as or is longer than the
Xxxxx'x Exposure Period, in accordance with the table set forth below
(provided that any municipal obligation (excluding any short-term municipal
obligation) not rated by Xxxxx'x but rated by S&P shall be deemed to have a
Xxxxx'x rating which is one full rating category lower than its S&P rating):
EXPOSURE PERIOD AAA/1/ AA/1/ A/1/ BAA/1/ OTHER/2/ (V)MIG-1/3/ SP-1+/4/ UNRATED/5/
--------------- ----- ---- --- ----- ------- ---------- ------- ---------
7 weeks........................................... 151% 159% 166% 173% 187% 136% 148% 225%
8 weeks or less but greater than seven weeks...... 154 161 168 176 190 137 149 231
9 weeks or less but greater than eight weeks...... 158 163 170 177 192 138 150 240
--------
/1/ Xxxxx'x rating.
/2/ Municipal debt obligations not rated by Xxxxx'x but rated BBB by S&P.
/3/ Municipal debt obligations rated MIG-1 or VMIG-1, which do not mature or
have a demand feature at par exercisable in 30 days and which do not have
a long-term rating.
/4/ Municipal debt obligations not rated by Xxxxx'x but rated SP-1+ by S&P,
which do not mature or have a demand feature at par exercisable in 30 days
and which do not have a long-term rating.
/5/ Municipal debt obligations rated less than Baa3 or not rated by Xxxxx'x
and less than BBB or not rated by S&P, not to exceed 10% of Xxxxx'x
Eligible Assets.
(ix) Structured Notes: The Xxxxx'x Discount Factor applied to Structured
Notes will be (A) in the case of a corporate issuer, the Xxxxx'x Discount
Factor determined in accordance with paragraph (i) under this definition,
whereby the rating on the issuer of the Structured Note will be the rating
on the Structured Note for purposes of determining the Xxxxx'x Discount
Factor in the table in paragraph (i); and (B) in the case of an issuer that
is the U.S. government or an agency or instrumentality thereof, the Xxxxx'x
Discount Factor determined in accordance with paragraph (iii) under this
definition.
-21-
(x) Convertible securities (including convertible preferred stock):
(1) For convertible securities having a Delta between 0.4 and 0.0, the
Xxxxx'x Discount Factor shall be 100% of the Xxxxx'x Discount Factor applied
to non-convertible corporate debt securities (i.e. using the Xxxxx'x
Discount Factors found in the subsection (ii) of this definition), (2) for
convertible securities having a Delta between 0.8 and 0.4, the Xxxxx'x
Discount Factor shall be 192% for securities rated Baa or above and 226% for
securities rated Ba and below, and (3) for convertible securities having a
Delta between 1.0 and 0.8, the Xxxxx'x Discount Factor shall be 195% for
securities rated Baa or above and 229% for securities rated Ba and below;
provided, however, that for any unrated convertible security, the Xxxxx'x
Discount Factor shall be 250%./1,2/
/1/ Unless conclusions regarding liquidity risk as well as estimates of both
the probability and severity of default for applicable Trust assets can
be derived from other sources as well as combined with a number of
sources as presented by the Trust to Xxxxx'x, unrated fixed-income and
convertible securities, which are securities that are not rated by any
of Xxxxx'x, S&P or Fitch Ratings, are limited to 10% of Xxxxx'x Eligible
Assets for purposes of calculations related to the Preferred Shares
Basic Maintenance Amount. If a convertible security is not rated by any
of Xxxxx'x, S&P or Fitch Ratings, the Trust will consider the security
unrated for the purposes of the discounts discussed above. Ratings
assigned by S&P and/or Fitch Ratings are generally accepted at face
value. However, adjustments to face value may be made to particular
categories of credits for which the ratings by S&P and/or Fitch Ratings
do not seem to approximate a Xxxxx'x rating equivalent. Split-rated
securities assigned by S&P and Fitch Ratings (i.e., these Rating
Agencies assign different rating categories to the security) will be
accepted at the lower of the two ratings.
/2/ Discount factors are for 7-week exposure period.
For the purposes of determining such discount factors, "Delta", which is
intended to express the change in the price of the convertible security per
unit of change in the price of the common stock into which the convertible
security is convertible, shall be the number provided by Xxxxxxx Lynch,
Pierce, Xxxxxx and Xxxxx, Incorporated or such other provider as the Trust
shall determine from time to time. The Trust shall use commercially
reasonable efforts to update such Delta figures monthly.
Upon conversion to common stock, the Discount Factors applicable to common
stock will apply:
COMMON STOCKS(1) LARGE-CAP MID-CAP SMALL CAP
---------------- --------- ------- ---------
7 week exposure period.................. 200% 205% 220%
--------
(1)Market cap for Large-cap stocks are $10 billion and up, Mid-cap stocks range
between $2 billion and $10 billion, and Small-cap stocks are $2 billion and
below."
"Xxxxx'x Eligible Assets" means
(i) cash (including interest and dividends due on assets rated (A) Baa3
or higher by Xxxxx'x if the payment date is within five Business Days of the
Valuation Date, (B) A2 or higher if the payment date is within thirty days
of the Valuation Date, and (C) A1 or higher if the payment date is within
the Xxxxx'x Exposure Period) and receivables for Xxxxx'x Eligible Assets
sold if the receivable is due within five Business Days of the Valuation
Date, and if the trades which generated such receivables are (A) settled
through
-22-
clearing house firms with respect to which the Trust has received prior
written authorization from Xxxxx'x or (B) (1) with counterparties having a
Xxxxx'x long-term debt rating of at least Baa3 or (2) with counterparties
having a Xxxxx'x Short Term Money Market Instrument rating of at least P-1;
(ii) Short Term Money Market Instruments so long as (A) such securities
are rated at least P-1, (B) in the case of demand deposits, time deposits
and overnight funds, the supporting entity is rated at least A2, or (C) in
all other cases, the supporting entity (1) is rated A2 and the security
matures within one month, (2) is rated A1 and the security matures within
three months or (3) is rated at least Aa3 and the security matures within
six months; provided, however, that for purposes of this definition, such
instruments (other than commercial paper rated by S&P and not rated by
Xxxxx'x) need not meet any otherwise applicable S&P rating criteria;
(iii) U.S. Government Securities and U.S. Treasury Strips;
(iv) Rule 144A Securities;
(v) Senior Loans and other Bank Loans approved by Xxxxx'x;
(vi) Corporate debt securities if (A) such securities are rated Caa or
higher by Xxxxx'x; (B) such securities provide for the periodic payment of
interest in cash in U.S. dollars or euros, except that such securities that
do not pay interest in U.S. dollars or euros shall be considered Xxxxx'x
Eligible Assets if they are rated by Xxxxx'x or S&P; (C) for securities
which provide for conversion or exchange into equity capital at some time
over their lives, the issuer must be rated at least B3 by Xxxxx'x and the
discount factor will be 250%; (D) for debt securities rated Ba1 and below,
no more than 10% of the original amount of such issue may constitute Xxxxx'x
Eligible Assets; (E) such securities have been registered under the
Securities Act or are restricted as to resale under federal securities laws
but are eligible for resale pursuant to Rule 144A under the Securities Act
as determined by the Trust's investment manager or portfolio manager acting
pursuant to procedures approved by the Board of Trustees, except that such
securities that are not subject to U.S. federal securities laws shall be
considered Xxxxx'x Eligible Assets if they are publicly traded; and (F) such
securities are not subject to extended settlement.
Notwithstanding the foregoing limitations, (x) corporate debt securities
not rated at least Caa by Xxxxx'x or not rated by Xxxxx'x shall be
considered to be Xxxxx'x Eligible Assets only to the extent the Market Value
of such corporate debt securities does not exceed 10% of the aggregate
Market Value of all Xxxxx'x Eligible Assets; provided, however, that if the
Market Value of such corporate debt securities exceeds 10% of the aggregate
Market Value of all Xxxxx'x Eligible Assets, a portion of such corporate
debt securities (selected by the Trust) shall not be considered Xxxxx'x
Eligible Assets, so that the Market Value of such corporate debt securities
(excluding such portion) does not exceed 10% of the aggregate Market Value
of all Xxxxx'x Eligible Assets; and (y) corporate debt securities rated by
neither Xxxxx'x nor S&P shall be considered to be
-23-
Xxxxx'x Eligible Assets only to the extent such securities are issued by
entities which (i) have not filed for bankruptcy within the past three
years, (ii) are current on all principal and interest in their fixed income
obligations, (iii) are current on all preferred stock dividends, and
(iv) possess a current, unqualified auditor's report without qualified,
explanatory language.
(vii) Preferred stocks if (A) dividends on such preferred stock are
cumulative, (B) such securities provide for the periodic payment of
dividends thereon in cash in U.S. dollars or euros and do not provide for
conversion or exchange into, or have warrants attached entitling the holder
to receive, equity capital at any time over the respective lives of such
securities, (C) the issuer of such a preferred stock has common stock listed
on either the New York Stock Exchange or the American Stock Exchange (or
their successors), (D) the issuer of such a preferred stock has a senior
debt rating from Xxxxx'x of Baa1 or higher or a preferred stock rating from
Xxxxx'x of Baa3 or higher and (E) such preferred stock has paid consistent
cash dividends in U.S. dollars or euros over the last three years or has a
minimum rating of A1 (if the issuer of such preferred stock has other
preferred issues outstanding that have been paying dividends consistently
for the last three years, then a preferred stock without such a dividend
history would also be eligible). In addition, the preferred stocks must have
the following diversification requirements: (X) the preferred stock issue
must be greater than $50 million and (Y) the minimum holding by the Trust of
each issue of preferred stock is $500,000 and the maximum holding of
preferred stock of each issue is $5 million. In addition, preferred stocks
issued by transportation companies will not be considered Xxxxx'x Eligible
Assets;
(viii) Asset-backed and mortgage-backed securities:
(A) Asset-backed securities if (1) such securities are rated at least
Aa3 by Xxxxx'x or at least AA by S&P, (2) the securities are part of an
issue that is $250 million or greater, or the issuer of such securities
has a total of $500 million or greater of asset-backed securities
outstanding at the time of purchase of the securities by the Trust and
(3) the expected average life of the securities is not greater than 4
years;
(B) Collateralized mortgage obligations ("CMOs"), including CMOs with
interest rates that float at a multiple of the change in the underlying
index according to a pre-set formula, provided that any CMO held by the
Trust (1) has been rated Aaa by Xxxxx'x or AAA by S&P, (2) does not have
a coupon which floats inversely, (3) is not portioned as an
interest-only or principal-only strip and (4) is part of an issuance
that had an original issue size of at least $100 million;
(C) Planned amortization class bonds ("PACs") and targeted
amortization class bonds ("TACs") provided that such PACs or TACs are
(1) backed by certificates of either the Federal National Mortgage
Association ("FNMA"), the Government National Mortgage Association
("GNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC")
representing ownership in single-family first lien mortgage loans with
original terms of 30 years, (2) part of an issuance that had an original
issue
-24-
size of at least $10 million, (3) part of PAC or TAC classes that have
payment priority over other PAC or TAC classes, (4) if TACs, TACs that
do not support PAC classes, and (5) if TACs, not considered reverse TACs
(i.e., do not protect against extension risk);
(D) Consolidated senior debt obligations of Federal Home Loan Banks
("FHLBs"), senior long-term debt of the FNMA, and consolidated
systemwide bonds and FCS Financial Assistance Corporation Bonds of
Federal Farm Credit Banks ("FFCBs") (collectively, "FHLB, FNMA and FFCB
Debentures"), provided that such FHLB, FNMA and FFCB Debentures are
(1) direct issuance corporate debt rated Aaa by Xxxxx'x, (2) senior debt
obligations backed by the FHLBs, FFCBs or FNMA, (3) part of an issue
entirely denominated in U.S. dollars and (4) not callable or
exchangeable debt issues;
(E) Mortgage pass-throughs rated at least Aa by Xxxxx'x and
pass-throughs issued prior to 1987 (if rated AA by S&P and based on
fixed-rate mortgage loans) by Travelers Mortgage Services, Citicorp
Homeowners, Citibank, N.A., Sears Mortgage Security or RFC - Salomon
Brothers Mortgage Securities, Inc., provided that (1) certificates must
evidence a proportional, undivided interest in specified pools of fixed
or adjustable rate mortgage loans, secured by a valid first lien, on
one- to four-family residential properties and (2) the securities are
publicly registered (not issued by FNMA, GNMA or FHLMC);
(F) Private-placement mortgage pass-throughs provided that
(1) certificates represent a proportional undivided interest in
specified pools of fixed-rate mortgage loans, secured by a valid first
lien, on one- to four-family residential properties, (2) documentation
is held by a trustee or independent custodian, (3) pools of mortgage
loans are serviced by servicers that have been approved by FNMA or FHLMC
and funds shall be advanced to meet deficiencies to the extent provided
in the pooling and servicing agreements creating such certificates, and
(4) pools have been rated Aa or better by Xxxxx'x; and
(G) Whole loans (e.g., direct investments in mortgages) provided that
(1) at least 65% of such loans (a) have seasoning of no less than 6
months, (b) are secured by single-family detached residences, (c) are
owner-occupied primary residences, (d) are secured by a first-lien,
fully-documented mortgage, (e) are neither currently delinquent (30 days
or more) nor delinquent during the preceding year, (f) have
loan-to-value ratios of 80% or below, (g) carry normal hazard insurance
and title insurance, as well as special hazard insurance, if applicable,
(h) have original terms to maturity not greater than 30 years, with at
least one year remaining to maturity, (i) have a minimum of $10,000
remaining principal balance, (j) for loans underwritten after January 1,
1978, FNMA and/or FHLMC forms are used for fixed-rate loans, and
(k) such loans are whole loans and not participations; (2) for loans
that do not satisfy the requirements set forth in the foregoing clause
(1), (a) non-owner occupied properties represent no greater than 15% of
the aggregate of either the adjustable-rate pool or the fixed-rate pool,
(b) multi-family properties (those with five or more units)
-25-
represent no greater than 15% of the aggregate of either the
adjustable-rate pool or the fixed-rate pool, (c) condominiums represent
no greater than 10% of the aggregate of either the adjustable-rate pool
or the fixed-rate pool, and any condominium project must be 80% occupied
at the time the loan is originated, (d) properties with loan-to-value
ratios exceeding 80% represent no greater than 25% of the aggregate of
either the adjustable-rate pool or the fixed-rate pool and the portion
of the mortgage on any such property that exceeds a loan-to-value ratio
of 80% is insured with Primary Mortgage Insurance from an insurer rated
at least Baa3 by Xxxxx'x and (e) loan balances in excess of the current
FHLMC limit plus $75,000 represent no greater than 25% of the aggregate
of either the adjustable-rate pool or the fixed-rate pool, loan balances
in excess of $350,000 represent no greater than 10% of the aggregate of
either the adjustable-rate pool or the fixed-rate pool, and loan
balances in excess of $1,000,000 represent no greater than 5% of the
aggregate of either the adjustable-rate pool or the fixed-rate pool;
(3) no greater than 5% of the pool of loans is concentrated in any one
zip code; (4) the pool of loans contains at least 100 loans or $2
million in loans per servicer; (5) for adjustable-rate mortgages
("ARMs"), (a) any ARM is indexed to the National Cost of Funds index,
the 11th District Cost of Funds index, the 1-year Treasury or the
6-month Treasury, (b) the margin over the given index is between 0.15%
and 0.25% for either cost-of-funds index and between 0.175% and 0.325%
for Treasuries, (c) the maximum yearly interest rate increase is 2%,
(d) the maximum life-time interest rate increase is 6.25% and (e) ARMs
may include Federal Housing Administration and Department of Veterans
Affairs loans; (6) for "teaser" loans, (a) the initial discount from the
current ARM market rate is no greater than 2%, (b) the loan is
underwritten at the market rate for ARMs, not the "teaser" rate, and
(c) the loan is seasoned six months beyond the "teaser" period.
(ix) Any municipal debt obligation that (A) pays interest in cash,
(B) does not have a Xxxxx'x rating, as applicable, suspended by Xxxxx'x, and
(C) is part of an issue of municipal debt obligations of at least
$5,000,000, except for municipal debt obligations rated below A by Xxxxx'x,
in which case the minimum issue size is $10,000,000;
(x) Structured Notes and rated TRACERs;
(xi) Financial contracts, as such term is defined in
Section 3(c)(2)(B)(ii) of the 1940 Act, not otherwise provided for in this
definition but only upon receipt by the Trust of a letter from Xxxxx'x
specifying any conditions on including such financial contract in Xxxxx'x
Eligible Assets and assuring the Trust that including such financial
contract in the manner so specified would not affect the credit rating
assigned by Xxxxx'x to the Preferred Shares;
(xii) Convertible securities (including convertible preferred stock),
provided that (A) the issuer of common stock must have a Xxxxx'x senior
unsecured debt of Caa or better, or an S&P or a Fitch rating of CCC or
better, (B) the common stocks must be traded on the New York Stock Exchange,
the American Stock Exchange, or the NASDAQ, (C) dividends must be paid in
U.S. dollars, (D) the portfolio of convertible bonds must be diversified as
set forth in the table set forth below, (E) the company shall not hold
shares exceeding the average weekly trading volume during the preceding
month, and (F) synthetic convertibles are excluded from asset eligibility.
-26-
CONVERTIBLE BONDS DIVERSIFICATION GUIDELINES
MAXIMUM SINGLE MAXIMUM SINGLE MAXIMUM SINGLE
TYPE ISSUER (%)/1/ INDUSTRY (%) STATE (%)/1/
---- -------------- -------------- --------------
Utility....................... 4 50 7/2/
Other......................... 6 20 n/a
--------
/1/ Percentage represent a portion of the aggregate market value and number of
outstanding shares of the convertible stock portfolio.
/2 /Utility companies operating in more than one state should be diversified
according to the state in which they generate the largest part of their
revenues. Publicly available information on utility company revenues by
state is available from the Uniform Statistical Report (USR) or the Federal
Energy Regulation Commission (FERC)."
In addition, portfolio holdings as described below must be within the
following diversification and issue size requirements in order to be included
in Xxxxx'x Eligible Assets:
MAXIMUM SINGLE MAXIMUM SINGLE MINIMUM ISSUE SIZE
RATINGS /1/ ISSUER /2,3/ INDUSTRY /3,4/ ($ IN MILLION) /5/
----------- -------------- -------------- ------------------
Aaa........................... 100% 100% $100
Aa............................ 20 60 100
A............................. 10 40 100
Baa........................... 6 20 100
Ba............................ 4 12 50 /6/
B1-B2......................... 3 8 50 /6/
B3 or below................... 2 5 50 /6/
--------
/1/ Refers to the preferred stock and senior debt rating of the portfolio
holding.
/2/ Companies subject to common ownership of 25% or more are considered as one
issuer.
/3/ Percentages represent a portion of the aggregate Market Value of the
portfolio holdings.
/4/ Industries are determined according to Xxxxx'x Industry Classifications,
as defined herein.
/5/ Except for preferred stock, which has a minimum issue size of $50 million.
/6/ Portfolio holdings from issues ranging from $50 million to $100 million
are limited to 20% of the Fund's total assets.
Where the Trust sells an asset and agrees to repurchase such asset in the
future, the Discounted Value of such asset will constitute a Xxxxx'x Eligible
Asset and the amount the Trust is required to pay upon repurchase of such asset
will count as a liability for the purposes of the Preferred Shares Basic
Maintenance Amount. Where the Trust purchases an asset and agrees to sell it to
a third party in the future, cash receivable by the Trust thereby will
constitute a Xxxxx'x Eligible Asset if the long-term debt of such other party
is rated at least A2 by Xxxxx'x and such agreement has a term of 30 days or
less; otherwise the Discounted Value of such purchased asset will constitute a
Xxxxx'x Eligible Asset. For the purposes of calculation of Xxxxx'x Eligible
Assets, portfolio securities which have been called for redemption by the
issuer thereof shall be valued at the lower of Market Value or the call price
of such portfolio securities.
-27-
Notwithstanding the foregoing, an asset will not be considered a Xxxxx'x
Eligible Asset to the extent that it has been irrevocably deposited for the
payment of (i)(A) through (i)(E) under the definition of Preferred Shares Basic
Maintenance Amount or to the extent it is subject to any Liens, except for
(A) Liens which are being contested in good faith by appropriate proceedings
and which Xxxxx'x has indicated to the Trust will not affect the status of such
asset as a Xxxxx'x 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 Trust by its investment
manager or portfolio manager, the Trust's custodian, transfer agent or
registrar or the Auction Agent and (D) Liens arising by virtue of any
repurchase agreement.
"Xxxxx'x Exposure Period" means the period commencing on a given Valuation
Date and ending 49 days thereafter.
"Xxxxx'x Forward Commitment" has the meaning set forth in Section 11.8(d) of
these Bylaws.
"Xxxxx'x Hedging Transactions" has the meaning set forth in Section 11.8(a)
of these Bylaws.
"Xxxxx'x Industry Classification" means, for the purposes of determining
Xxxxx'x Eligible Assets, each of the following industry classifications (or
such other classifications as Xxxxx'x may from time to time approve for
application to the Preferred Shares):
1. Aerospace and Defense: Major Contractor, Subsystems, Research, Aircraft
Manufacturing, Arms, Ammunition
2. Automobile: Automobile Equipment, Auto-Manufacturing, Auto Parts
Manufacturing, Personal Use Trailers, Motor Homes, Dealers
3. Banking: Bank Holding, Savings and Loans, Consumer Credit, Small Loan,
Agency, Factoring, Receivables
4. Beverage, Food and Tobacco: Beer and Ale, Distillers, Wines and Liquors,
Distributors, Soft Drink Syrup, Bottlers, Bakery, Mill Sugar, Canned
Foods, Corn Refiners, Dairy Products, Meat Products, Poultry Products,
Snacks, Packaged Foods, Candy, Gum, Seafood, Frozen Food, Cigarettes,
Cigars, Leaf/Snuff, Vegetable Oil
5. Buildings and Real Estate: Brick, Cement, Climate Controls, Contracting,
Engineering, Construction, Hardware, Forest Products (building-related
only), Plumbing, Roofing, Wallboard, Real Estate, Real Estate
Development, REITs, Land Development
6. Chemicals, Plastics and Rubber: Chemicals (non-agricultural), Industrial
Gases, Sulfur, Plastics, Plastic Products, Abrasives, Coatings, Paints,
Varnish, Fabricating
-28-
7. Containers, Packaging and Glass: Glass, Fiberglass, Containers made of:
Glass, Metal, Paper, Plastic, Wood or Fiberglass
8. Personal and Non-Durable Consumer Products (Manufacturing Only): Soaps,
Perfumes, Cosmetics, Toiletries, Cleaning Supplies, School Supplies
9. Diversified/Conglomerate Manufacturing
10.Diversified/Conglomerate Service
11.Diversified Natural Resources, Precious Metals and Minerals:
Fabricating, Distribution
12.Ecological: Pollution Control, Waste Removal, Waste Treatment and Waste
Disposal
13.Electronics: Computer Hardware, Electric Equipment, Components,
Controllers, Motors, Household Appliances, Information Service
Communicating Systems, Radios, TVs, Tape Machines, Speakers, Printers,
Drivers, Technology
00.Xxxxxxx: Investment Brokerage, Leasing, Syndication, Securities
15.Farming and Agriculture: Livestock, Grains, Produce, Agriculture
Chemicals, Agricultural Equipment, Fertilizers
00.Xxxxxxx: Grocery Stores, Convenience Food Stores
00.Xxxxxxxxxx, Education and Childcare: Ethical Drugs, Proprietary Drugs,
Research, Health Care Centers, Nursing Homes, HMOs, Hospitals, Hospital
Supplies, Medical Equipment
18.Home and Office Furnishings, Housewares, and Durable Consumer Products:
Carpets, Floor Coverings, Furniture, Cooking, Ranges
00.Xxxxxx, Motels, Inns and Gaming
00.Xxxxxxxxx: Life, Property and Casualty, Broker, Agent, Surety
21.Leisure, Amusement, Motion Pictures, Entertainment: Boating, Bowling,
Billiards, Musical Instruments, Fishing, Photo Equipment, Records,
Tapes, Sports, Outdoor Equipment (Camping), Tourism, Resorts, Games, Toy
Manufacturing, Motion Picture Production Theaters, Motion Picture
Distribution
22.Machinery (Non-Agricultural, Non-Construction, Non-Electronic):
Industrial, Machine Tools, Steam Generators
-29-
23.Mining, Steel, Iron and Non-Precious Metals: Coal, Copper, Lead,
Uranium, Zinc, Aluminum, Stainless Steel, Integrated Steel, Ore
Production, Refractories, Steel Mill Machinery, Mini-Xxxxx, Fabricating,
Distribution and Sales of the foregoing
24.Oil and Gas: Crude Producer, Retailer, Well Supply, Service and Drilling
25.Printing, Publishing, and Broadcasting: Graphic Arts, Paper, Paper
Products, Business Forms, Magazines, Books, Periodicals, Newspapers,
Textbooks, Radio, T.V., Cable Broadcasting Equipment
26.Cargo Transport: Rail, Shipping, Railroads, Rail-car Builders, Ship
Builders, Containers, Container Builders, Parts, Overnight Mail,
Trucking, Truck Manufacturing, Trailer Manufacturing, Air Cargo,
Transport
27.Retail Stores: Apparel, Toy, Variety, Drugs, Department, Mail Order
Catalog, Showroom
28.Telecommunications: Local, Long Distance, Independent, Telephone,
Telegraph, Satellite, Equipment, Research, Cellular
29.Textiles and Leather: Producer, Synthetic Fiber, Apparel Manufacturer,
Leather Shoes
30.Personal Transportation: Air, Bus, Rail, Car Rental
31.Utilities: Electric, Water, Hydro Power, Gas
32.Diversified Sovereigns: Semi-sovereigns, Canadian Provinces,
Supra-national Agencies
The Trust will use its discretion in determining which industry
classification is applicable to a particular investment in consultation with
the Independent Accountant and Xxxxx'x, to the extent the Trust considers
necessary.
"Xxxxx'x Loan Category" means the following five categories (and, for
purposes of this categorization, the Market Value of a Xxxxx'x Eligible Asset
trading at par is equal to $1.00):
(i) "Xxxxx'x Loan Category A" means Performing Senior Loans which have a
Market Value or an Approved Price greater than or equal to $0.90.
(ii) "Xxxxx'x Loan Category B" means: (A) Performing Senior Loans which
have a Market Value or an Approved Price of greater than or equal to $0.80
but less than $0.90; and (B) non-Performing Senior Loans which have a Market
Value or an Approved Price greater than or equal to $0.85.
-30-
(iii) "Xxxxx'x Loan Category C" means: (A) Performing Senior Loans which
have a Market Value or an Approved Price of greater than or equal to $0.70
but less than $0.80; and (B) non-Performing Senior Loans which have a Market
Value or an Approved Price of greater than or equal to $0.75 but less than
$0.85.
(iv) "Xxxxx'x Loan Category D" means Senior Loans which have a Market
Value or an Approved Price less than $0.75.
(v) "Xxxxx'x Loan Category E" means non-Senior Loans which have a Market
Value or an Approved Price.
Notwithstanding any other provision contained above, for purposes of
determining whether a Xxxxx'x Eligible Asset falls within a specific Xxxxx'x
Loan Category, to the extent that any Xxxxx'x Eligible Asset would fall in more
than one of the Xxxxx'x Loan Categories, such Xxxxx'x Eligible Asset shall be
deemed to fall into the Xxxxx'x Loan Category with the lowest applicable
Xxxxx'x Discount Factor.
"Xxxxx'x Preferred Shares Asset Coverage" means, as of a particular date or
time, sufficient asset coverage with respect to the Preferred Shares such that
the Trust has Xxxxx'x Eligible Assets having an aggregate Discounted Value
equal to or greater than the Preferred Shares Basic Maintenance Amount as of
such date or time.
"Xxxxx'x Preferred Shares Asset Coverage Report" means, with respect to
Xxxxx'x Preferred Shares Asset Coverage, a report signed by any of the
President, Treasurer, any Senior Vice President or any Vice President of the
Trust which sets forth, as of the related Valuation Date, the assets of the
Trust, the Market Value and the Discounted Value thereof (seriatim and in
aggregate), and the Preferred Shares Basic Maintenance Amount.
"Monthly Valuation Date" means the last Business Day of each month of the
Trust in each fiscal year of the Trust.
"1940 Act" means the Investment Company Act of 1940, as amended from time to
time.
"1940 Act Cure Date," with respect to the failure by the Trust to maintain
the 1940 Act Preferred Shares Asset Coverage (as required by these Bylaws) as
of the last Business Day of each month, means the last Business Day of the
following month.
"1940 Act Preferred Shares Asset Coverage" means asset coverage, as defined
in Section 18(h) of the 1940 Act, of at least 200% with respect to all
outstanding senior securities of the Trust which are shares of beneficial
interest, including Preferred Shares (or such other asset coverage as may in
the future be specified in or under the 1940 Act as the minimum asset coverage
for senior securities which are shares of beneficial interest of a closed-end
investment company as a condition of paying dividends on its common shares).
"Non-Call Period" has the meaning set forth under the definition of
"Specific Redemption Provisions."
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"Non-Payment Period" means a period commencing on and including a Dividend
Payment Date or redemption date for which the Trust shall fail to (i) declare,
prior to the close of business on the second Business Day preceding such
Dividend Payment Date, for payment on or (to the extent permitted by
Section 11.2(c)(i) of these Bylaws) within three Business Days after such
Dividend Payment Date to the Holders as of 12:00 noon, New York City time, on
the Business Day preceding such Dividend Payment Date, the full amount of any
dividend on Preferred Shares payable on such Dividend Payment Date, provided,
however, that if the Trust is not able to make such declaration in compliance
with the foregoing because an unforeseen event or unforeseen events causes or
cause a day that otherwise would have been a Business Day not to be a Business
Day, then the Trust may make such declaration on the Business Day immediately
preceding the Dividend Payment Date, if possible, or, if not possible, on the
Dividend Payment Date, and in such case the Trust shall not be deemed to have
failed to declare a dividend otherwise required to be declared, or
(ii) deposit, irrevocably in trust, in same-day funds, with the Auction Agent
by 12:00 noon, New York City time, (A) on such Dividend Payment Date the full
amount of any cash dividend on such shares payable (if declared) on such
Dividend Payment Date or (B) on any such redemption date for any Preferred
Shares called for redemption, the Mandatory Redemption Price per share of such
Preferred Shares or, in the case of an optional redemption, the Optional
Redemption Price per share, and ending on and including the Business Day on
which, by 12:00 noon, New York City time, all unpaid cash dividends and unpaid
redemption prices shall have been so deposited or shall have otherwise been
made available to Holders in same-day funds; provided that a Non-Payment Period
shall not end unless the Trust shall have given at least five days' but no more
than 30 days' written notice of such deposit or availability to the Auction
Agent, all Existing Holders (at their addresses appearing in the Share Books)
and the Securities Depository. Notwithstanding the foregoing, the failure by
the Trust to deposit funds as provided for by clauses (ii)(A) or (ii)(B) above
within three Business Days after any Dividend Payment Date or redemption date,
as the case may be, in each case to the extent contemplated by
Section 11.2(c)(i) of these Bylaws, shall not constitute a "Non-Payment Period."
"Non-Payment Period Rate" means, initially, 300% of the applicable Reference
Rate, provided that the Board of Trustees of the Trust shall have the authority
to adjust, modify, alter or change from time to time the initial Non-Payment
Period Rate if the Board of Trustees of the Trust determines and each of Fitch
and Xxxxx'x (and any Substitute Rating Agency in lieu of Fitch or Xxxxx'x in
the event Fitch or Xxxxx'x shall not rate the Preferred Shares) advises the
Trust in writing that such adjustment, modification, alteration or change will
not adversely affect its then current ratings on the Preferred Shares.
"Normal Dividend Payment Date" has the meaning set forth in
Section 11.2(b)(i) of these Bylaws.
"Notice of Redemption" means any notice with respect to the redemption of
Preferred Shares pursuant to Section 11.4 of these Bylaws.
"Notice of Revocation" has the meaning set forth in Section 11.2(c)(iii) of
these Bylaws.
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"Notice of Special Dividend Period" has the meaning set forth in
Section 11.2(c)(iii) of these Bylaws.
"Optional Redemption Price" means $25,000 per share plus an amount equal to
accumulated but unpaid dividends (whether or not earned or declared) to the
date fixed for redemption plus any applicable redemption premium attributable
to the designation of a Premium Call Period.
"Outstanding" means, as of any date (i) with respect to Preferred Shares,
Preferred Shares theretofore issued by the Trust except, without duplication,
(A) any Preferred Shares theretofore canceled or delivered to the Auction Agent
for cancellation, or redeemed by the Trust, or as to which a Notice of
Redemption shall have been given and Deposit Securities shall have been
deposited in trust or segregated by the Trust pursuant to Section 11.4(c)
hereto and (B) any Preferred Shares as to which the Trust or any Affiliate
(other than an Affiliate that is a Broker-Dealer) thereof shall be a Beneficial
Owner, provided that Preferred Shares held by an Affiliate shall be deemed
outstanding for purposes of calculating Xxxxx'x Preferred Shares Asset Coverage
and (ii) with respect to other preferred shares of beneficial interest of the
Trust, the meaning equivalent to that for Preferred Shares as set forth in
clause (i).
"Parity Shares" means the Preferred Shares and each other outstanding series
of preferred shares of beneficial interest of the Trust the holders of which,
together with the holders of the Preferred Shares, shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in proportion to the full respective
preferential amounts to which they are entitled, without preference or priority
one over the other.
"Performing" means with respect to any asset that is a Bank Loan or other
debt, the issuer of such investment is not in default of any payment
obligations in respect thereof.
"Person" means and includes an individual, a corporation, a partnership, a
trust, an unincorporated association, a joint venture or other entity or a
government or any agency or political subdivision thereof.
"Potential Beneficial Owner" means a customer of a Broker-Dealer or a
Broker-Dealer that is not a Beneficial Owner of Preferred Shares but that
wishes to purchase such shares, or that is a Beneficial Owner that wishes to
purchase additional Preferred Shares.
"Potential Holder" means any Broker-Dealer or any such other Person as may
be permitted by the Trust, including any Existing Holder, who may be interested
in acquiring Preferred Shares (or, in the case of an Existing Holder,
additional Preferred Shares).
"Preferred Shares" means the Series M Preferred Shares, the Series T
Preferred Shares, the Series W Preferred Shares, the Series Th Preferred Shares
and the Series F Preferred Shares.
"Preferred Shares Basic Maintenance Amount," as of any Valuation Date, means
the dollar amount equal to the sum of (i)(A) the product of the number of
Preferred Shares Outstanding on such date multiplied by $25,000, plus any
redemption premium applicable to Preferred Shares then subject to redemption;
(B) the aggregate amount of dividends that will
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have accumulated at the respective Applicable Rates (whether or not earned or
declared) to (but not including) the first respective Dividend Payment Dates
for each series of Preferred Shares Outstanding that follow such Valuation
Date; (C) the aggregate amount of dividends that would accumulate on shares of
each series of Preferred Shares Outstanding from such first respective Dividend
Payment Date therefor through the 49th day after such Valuation Date, at the
Maximum Applicable Rate (calculated as if such Valuation Date were the Auction
Date for the Dividend Period commencing on such Dividend Payment Date) for a
7-Day Dividend Period of shares of such series to commence on such Dividend
Payment Date, multiplied by the Volatility Factor (except that (1) if such
Valuation Date occurs during a Non-Payment Period, the dividend for purposes of
calculation would accumulate at the then current Non-Payment Period Rate and
(2) for those days during the period described in this clause (C) in respect of
which the Applicable Rate in effect immediately prior to such Dividend Payment
Date will remain in effect, the dividend for purposes of calculation would
accumulate at such Applicable Rate in respect of those days); (D) the amount of
anticipated expenses of the Trust for the 90 days subsequent to such Valuation
Date; and (E) any current liabilities as of such Valuation Date to the extent
not reflected in any of (i)(A) through (i)(D) (including, without limitation,
any payables for portfolio securities of the Trust purchased as of such
Valuation Date and any liabilities incurred for the purpose of clearing
securities transactions) less (ii) the value (i.e., the face value of cash,
short-term securities rated XXX-0, XXXX-0 xx X-0, 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)(E) become payable, otherwise the Discounted Value) of any of the
Trust's assets irrevocably deposited by the Trust for the payment of any of
(i)(A) through (i)(E).
"Premium Call Period" has the meaning set forth under the definition of
"Specific Redemption Provisions."
"Pricing Service" means any pricing service designated by the Board of
Trustees of the Trust and approved by Xxxxx'x for purposes of determining
whether the Trust has Xxxxx'x Preferred Shares Asset Coverage.
"Quarterly Valuation Date" means the last Business Day of the last month of
each fiscal quarter of the Trust in each fiscal year of the Trust, commencing
April 30, 2002.
"Rating Agency" means a nationally recognized statistical rating
organization.
"Rating Agency Preferred Shares Asset Coverage Report" means a Xxxxx'x
Preferred Shares Asset Coverage Report, a Fitch Preferred Shares Asset Coverage
Report or a similar report to be provided to another Rating Agency, as
applicable.
"Rating Agency Preferred Shares Asset Coverage" means, (i) with respect to
the asset coverage specifications of Fitch, Fitch Preferred Shares Asset
Coverage, (ii) with respect to the asset coverage specifications of Xxxxx'x,
Xxxxx'x Preferred Shares Asset Coverage, and (iii) with respect to a Substitute
Rating Agency then rating the Preferred Shares, the asset coverage
specifications of such Substitute Rating Agency.
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"Rating Agency Preferred Shares Asset Coverage Cure Date," with respect to
the failure by the Trust to satisfy Fitch Preferred Shares Asset Coverage,
Xxxxx'x Preferred Shares Asset Coverage or asset coverage specified by a
Substitute Rating Agency then rating the Preferred Shares (as required by
Section 11.7(a) of these Bylaws) as of a given Valuation Date, means the tenth
Business Day following such Valuation Date.
"Reference Rate" means the applicable "AA" Financial Composite Commercial
Paper Rate (for a Dividend Period of fewer than 184 days) or the applicable
Treasury Index Rate (for a Dividend Period of 184 days or more).
"Request for Special Dividend Period" has the meaning set forth in
Section 11.2(c)(iii) of these Bylaws.
"Response" has the meaning set forth in Section 11.2(c)(iii) of these Bylaws.
"Rule 144A Securities" means securities which are restricted as to resale
under federal securities laws but are eligible for resale pursuant to Rule 144A
under the Securities Act as determined by the Trust's investment manager or
portfolio manager acting pursuant to procedures approved by the Board of
Trustees of the Trust.
"S&P" means Standard & Poor's, a division of The XxXxxx-Xxxx Companies,
Inc., or its successors.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Securities Depository" means The Depository Trust Company and its
successors and assigns or any successor securities depository selected by the
Trust as securities depository for the Preferred Shares that agrees to follow
the procedures required to be followed by such securities depository in
connection with the Preferred Shares.
"Senior Loans" has the meaning set forth under the definition of "Xxxxx'x
Discount Factor."
"Series M Preferred Shares" means the Auction Rate Cumulative Preferred
Shares, Series M.
"Series T Preferred Shares" means the Auction Rate Cumulative Preferred
Shares, Series T.
"Series W Preferred Shares" means the Auction Rate Cumulative Preferred
Shares, Series W.
"Series Th Preferred Shares" means the Auction Rate Cumulative Preferred
Shares, Series Th.
"Series F Preferred Shares" means the Auction Rate Cumulative Preferred
Shares, Series F.
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"7-Day Dividend Period" means a Dividend Period consisting of seven days.
"Share Books" means the books maintained by the Auction Agent setting forth
at all times a current list, as determined by the Auction Agent, of Existing
Holders of the Preferred Shares.
"Share Register" means the register of Holders maintained on behalf of the
Trust by the Auction Agent in its capacity as transfer agent and registrar for
the Preferred Shares.
"Short Term Dividend Period" means a Special Dividend Period consisting of a
specified number of days, evenly divisible by seven and not fewer than fourteen
nor more than 364.
"Short Term Money Market Instruments" means the following types of
instruments if, on the date of purchase or other acquisition thereof by the
Trust, the remaining term to maturity thereof is not in excess of 180 days (or
270 days for instruments rated at least Aaa for purposes of determining Xxxxx'x
Eligible Assets):
(i) commercial paper rated either F1 by Fitch or A-1 by S&P if such
commercial paper matures in 30 days or P-1 by Xxxxx'x and either F1+ by
Fitch or A-1+ by S&P if such commercial paper matures in over 30 days;
(ii) demand or time deposits in, and banker's acceptances and
certificates of deposit of (A) a depository institution or trust company
incorporated under the laws of the United States of America or any state
thereof or the District of Columbia or (B) a United States branch office or
agency of a foreign depository institution (provided that such branch office
or agency is subject to banking regulation under the laws of the United
States, any state thereof or the District of Columbia);
(iii) overnight funds;
(iv) U.S. Government Securities; and
(v) Eurodollar demand or time deposits in, or certificates of deposit of,
the head office or the London branch office of a depository institution or
trust company if the certificates of deposit, if any, and the long-term
unsecured debt obligations (other than such obligations the ratings of which
are based on the credit of a person or entity other than such depository
institution or trust company) of such depository institution or trust
company that have (1) credit ratings on each Valuation Date of at least P-1
from Xxxxx'x and either F1+ from Fitch or A-1+ from S&P, in the case of
commercial paper or certificates of deposit, and (2) credit ratings on each
Valuation Date of at least Aa3 from Xxxxx'x and either AA- from Fitch or AA-
from S&P, in the case of long-term unsecured debt obligations; provided,
however, that in the case of any such investment that matures in no more
than one Business Day from the date of purchase or other acquisition by the
Trust, all of the foregoing requirements shall be applicable except that the
required long-term unsecured debt credit rating of such depository
institution or trust company from Xxxxx'x, Fitch and S&P shall be at least
A2, A and A, respectively; and provided further, however, that the foregoing
credit rating requirements shall be deemed to be met with
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respect to a depository institution or trust company if (1) such depository
institution or trust company is the principal depository institution in a
holding company system, (2) the certificates of deposit, if any, of such
depository institution or trust company are not rated on any Valuation Date
below P-1 by Xxxxx'x, F1+ by Fitch or A-1+ by S&P and there is no long-term
rating, and (3) the holding company shall meet all of the foregoing credit
rating requirements (including the preceding proviso in the case of
investments that mature in no more than one Business Day from the date of
purchase or other acquisition by the Trust); and provided further, that the
interest receivable by the Trust shall not be subject to any withholding or
similar taxes.
"Special Dividend Period" means a Short Term Dividend Period or a Long Term
Dividend Period.
"Specific Redemption Provisions" means, with respect to a Special Dividend
Period either, or both of, (i) a period (a "Non-Call Period") determined by the
Board of Trustees of the Trust, after consultation with the Auction Agent and
the Broker-Dealers, during which the Preferred Shares subject to such Dividend
Period shall not be subject to redemption at the option of the Trust and (ii) a
period (a "Premium Call Period"), consisting of a number of whole years and
determined by the Board of Trustees of the Trust, after consultation with the
Auction Agent and the Broker-Dealers, during each year of which the Preferred
Shares subject to such Dividend Period shall be redeemable at the Trust's
option at a price per share equal to $25,000 plus accumulated but unpaid
dividends plus a premium expressed as a percentage of $25,000, as determined by
the Board of Trustees of the Trust after consultation with the Auction Agent
and the Broker-Dealers.
"Structured Notes" means privately negotiated debt obligations where the
principal and/or interest is determined by reference to the performance of a
benchmark asset or market (an "embedded index"), such as selected securities or
an index of securities, or the differential performance of two assets or
markets, such as indices reflecting bonds.
"Subsequent Dividend Period" has the meaning set forth in Section 11.2(c)(i)
of these Bylaws.
"Substitute Commercial Paper Dealers" means such substitute commercial paper
dealer or dealers as the Trust may from time to time appoint or, in lieu of any
thereof, their respective affiliates or successors.
"Substitute Rating Agency" means a Rating Agency selected by Citigroup
Global Markets Inc. or its affiliates and successors, after consultation with
the Trust, to act as the substitute Rating Agency to determine the credit
ratings of the Preferred Shares.
"Sufficient Clearing Bids" has the meaning set forth in Section 11.10(d)(i)
of these Bylaws.
"TRACERs" means traded custody receipts representing direct ownership in a
portfolio of underlying securities.
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"Treasury Xxxx" means a direct obligation of the U.S. government having a
maturity at the time of issuance of 364 days or less.
"Treasury Bonds" means United States Treasury Bonds or Notes.
"Treasury Index Rate" means the average yield to maturity for actively
traded marketable U.S. Treasury fixed interest rate securities having the same
number of 30-day periods to maturity as the length of the applicable Dividend
Period, determined, to the extent necessary, by linear interpolation based upon
the yield for such securities having the next shorter and next longer number of
30-day periods to maturity treating all Dividend Periods with a length greater
than the longest maturity for such securities as having a length equal to such
longest maturity, in all cases based upon data set forth in the most recent
weekly statistical release published by the Board of Governors of the Federal
Reserve System (currently in H.15 (519)); provided, however, if the most recent
such statistical release shall not have been published during the 15 days
preceding the date of computation, the foregoing computations shall be based
upon the average of comparable data as quoted to the Trust by at least three
recognized dealers in U.S. government securities selected by the Trust.
"U.S. Government Securities" means direct obligations of the United States
or of its agencies or instrumentalities that are entitled to the full faith and
credit of the United States and that, other than Treasury Bills, provide for
the periodic payment of interest and the full payment of principal at maturity
or call for redemption.
"U.S. Treasury Securities" means direct obligations of the United States
Treasury that are entitled to the full faith and credit of the United States.
"U.S. Treasury Strips" means securities based on U.S. Treasury Securities
created through the Separate Trading of Registered Interest and Principal of
Securities program.
"Valuation Date" means, for purposes of determining whether the Trust is
maintaining Rating Agency Preferred Shares Asset Coverage, the last Business
Day of each week commencing with the Date of Original Issue.
"Volatility Factor" means 1.89.
"Voting Period" has the meaning set forth in Section 11.5(b) of these Bylaws.
(b) The foregoing definitions of Accountant's Confirmation, Closing
Transactions, Deposit Securities, Discounted Value, Fitch Covered Forward
Commitment, Fitch Criteria, Fitch Net OC, Fitch Net OC Test, Fitch Preferred
Shares Asset Coverage, Fitch Preferred Shares Asset Coverage Report, Fitch
Total OC, Fitch Total OC Test, Independent Accountant, Market Value, Maximum
Applicable Rate, Xxxxx'x Advance Rate, Xxxxx'x Discount Factor, Xxxxx'x
Eligible Assets, Xxxxx'x Exposure Period, Xxxxx'x Forward Commitment, Xxxxx'x
Hedging Transactions, Xxxxx'x Industry Classification, Xxxxx'x Loan Category,
Xxxxx'x Preferred Shares Asset Coverage, Xxxxx'x Preferred Shares Asset
Coverage Report, Monthly Valuation Date, 1940 Act Cure Date, 1940 Act Preferred
Shares Asset Coverage, Preferred Shares Basic Maintenance Amount, Quarterly
Valuation Date, Rating Agency Preferred Shares Asset
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Coverage Report, Rating Agency Preferred Shares Asset Coverage, Rating Agency
Preferred Shares Asset Coverage Cure Date, Short Term Money Market Instruments,
Treasury Bonds, Valuation Date and Volatility Factor (and any terms defined
within such definitions) have been determined by the Board of Trustees of the
Trust in order to obtain a rating of "AAA" from Fitch and a rating of "Aaa"
from Xxxxx'x on the Preferred Shares; and the Board of Trustees of the Trust
shall have the authority, without shareholder approval, to amend, alter or
repeal from time to time the foregoing definitions (and any terms defined
within such definitions) and the restrictions and guidelines set forth
thereunder if Fitch, Xxxxx'x or any Substitute Rating Agency advises the Trust
in writing that such amendment, alteration or repeal will not adversely affect
its then current rating on the Preferred Shares.
11.2 Dividends. (a) The Holders of a particular series of Preferred Shares
shall be entitled to receive, when, as and if declared by the Board of Trustees
of the Trust, out of funds legally available therefor, cumulative dividends
each consisting of cash at the Applicable Rate and no more, payable on the
respective dates set forth below. Dividends on the shares of each series of
Preferred Shares so declared and payable shall be paid in preference to and in
priority over any dividends declared and payable on the Common Shares.
(b) (i) Cash dividends on shares of each series of Preferred Shares shall
accumulate from the Date of Original Issue and shall be payable, when, as and
if declared by the Board of Trustees of the Trust, out of funds legally
available therefor, commencing on the Initial Dividend Payment Date. Following
the Initial Dividend Payment Date for a series of Preferred Shares, dividends
on that series of Preferred Shares will be payable, at the option of the Trust,
either (i) with respect to any 7-Day Dividend Period and any Short Term
Dividend Period of 35 or fewer days, on the day next succeeding the last day
thereof, or (ii) with respect to any Short Term Dividend Period of more than 35
days and with respect to any Long Term Dividend Period, monthly on the first
Business Day of each calendar month during such Short Term Dividend Period or
Long Term Dividend Period and on the day next succeeding the last day thereof
(each such date referred to in clause (i) or (ii) being herein referred to as a
"Normal Dividend Payment Date"), except that if such Normal Dividend Payment
Date is not a Business Day, then the Dividend Payment Date shall be the first
Business Day next succeeding such Normal Dividend Payment Date. Although any
particular Dividend Payment Date may not occur on the originally scheduled date
because of the exceptions discussed above, the next succeeding Dividend Payment
Date, subject to such exceptions, will occur on the next following originally
scheduled date. If for any reason a Dividend Period for a series of Preferred
Shares is scheduled to begin on the same day and end on the same day as a
Dividend Period for another series of Preferred Shares, then the last day of
such Dividend Period for such other series of Preferred Shares shall be the
second Business Day next succeeding such scheduled day unless the Trust obtains
the opinion of tax counsel referred to in this paragraph. Subject to the
limitation in the next sentence, if for any reason a Dividend Payment Date
cannot be fixed as described above, then the Board of Trustees of the Trust
shall fix the Dividend Payment Date. However, no Dividend Period of any series
of Preferred Shares shall be co-extensive with any Dividend Period of any other
series of Preferred Shares unless the Trust has received an opinion of tax
counsel that having such co-extensive periods will not affect the
deductibility, for federal income tax purposes, of dividends paid on the
different series of Preferred Shares. The Board of Trustees of the Trust before
authorizing a dividend may change a Dividend Payment Date if such change
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does not adversely affect the contract rights of the Holders of Preferred
Shares set forth in the Declaration of Trust or the Bylaws. The Initial
Dividend Period, 7-Day Dividend Periods and Special Dividend Periods with
respect to a series of Preferred Shares are hereinafter sometimes referred to
as "Dividend Periods." Each dividend payment date determined as provided above
is hereinafter referred to as a "Dividend Payment Date."
(ii) Each dividend shall be paid to the Holders as they appear in the Stock
Register as of 12:00 noon, New York City time, on the Business Day preceding
the Dividend Payment Date. 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 they appear on the Stock Register on a date,
not exceeding 15 days prior to the payment date therefor, as may be fixed by
the Board of Trustees of the Trust.
(c) (i) During the period from and including the Date of Original Issue to
but excluding the Initial Dividend Payment Date for a series of Preferred
Shares (the "Initial Dividend Period"), the Applicable Rate for such series of
Preferred Shares shall be the Initial Dividend Rate. Commencing on the Initial
Dividend Payment Date for a series of Preferred Shares, the Applicable Rate on
that series for each subsequent dividend period (hereinafter referred to as a
"Subsequent Dividend Period"), which Subsequent Dividend Period shall commence
on and include a Dividend Payment Date and shall end on and include the
calendar day prior to the next Dividend Payment Date (or last Dividend Payment
Date in a Dividend Period if there is more than one Dividend Payment Date),
shall be equal to the rate per annum that results from implementation of the
Auction Procedures.
For a series of Preferred Shares, the Applicable Rate for such series for
each Dividend Period commencing during a Non-Payment Period shall be equal to
the Non-Payment Period Rate; and each Dividend Period, commencing after the
first day of and during, but not after the end of, a Non-Payment Period shall
be a 7-Day Dividend Period. Except in the case of the willful failure of the
Trust to pay a dividend on a Dividend Payment Date or to redeem any Preferred
Shares on the date set for such redemption, any amount of any dividend due on
any Dividend Payment Date (if, prior to the close of business on the second
Business Day preceding such Dividend Payment Date, the Trust has declared such
dividend payable on such Dividend Payment Date to the Holders of such Preferred
Shares as of 12:00 noon, New York City time, on the Business Day preceding such
Dividend Payment Date) or redemption price with respect to any Preferred Shares
not paid to such Holders when due may be paid to such Holders in the same form
of funds by 12:00 noon, New York City time, on any of the first three Business
Days after such Dividend Payment Date or due date, as the case may be, provided
that such amount is accompanied by a late charge calculated for such period of
non-payment at the Non-Payment Period Rate applied to the amount of such
non-payment based on the actual number of days comprising such period
(excluding any days that would have been Business Days but for the occurrence
of any unforeseen event or unforeseen events that caused such days not to be
Business Days) divided by 365, and in such case such period shall not
constitute a Non-Payment Period; provided, however, that the Trust shall not be
required to pay any late charge if it declares a dividend on the Dividend
Payment Date or the Business Day immediately preceding such Dividend Payment
Date in accordance with clause (i) of the definition of "Non-Payment Period"
and deposits payment for such dividend as contemplated by clause (ii)(A) of the
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definition of "Non-Payment Period" on or before the second Business Day
succeeding the day on which the dividend was declared. In the case of a willful
failure of the Trust to pay a dividend on a Dividend Payment Date or to redeem
any Preferred Shares on the date set for such redemption, the preceding
sentence shall not apply and the Applicable Rate for the Dividend Period
commencing during the Non-Payment Period resulting from such failure shall be
the Non-Payment Period Rate. For the purposes of the foregoing, payment to a
person in same-day funds on any Business Day at any time shall be considered
equivalent to payment to such person in New York Clearing House (next-day)
funds at the same time on the preceding Business Day, and any payment made
after 12:00 noon, New York City time, on any Business Day shall be considered
to have been made instead in the same form of funds and to the same person
before 12:00 noon, New York City time, on the next Business Day.
(ii) The amount of cash dividends per share of any series of Preferred
Shares payable (if declared) on the Initial Dividend Payment Date, each
Dividend Payment Date of any 7-Day Dividend Period and each Dividend Payment
Date of each Short Term Dividend Period shall be computed by multiplying the
Applicable Rate for such Dividend Period by a fraction, the numerator of which
will be the number of days in such Dividend Period or part thereof that such
share was outstanding and the denominator of which will be 365, multiplying the
amount so obtained by $25,000, and rounding the amount so obtained to the
nearest cent. During any Long Term Dividend Period, the amount of cash
dividends per share of a series of Preferred Shares payable (if declared) on
any Dividend Payment Date shall be computed by multiplying the Applicable Rate
for such Dividend Period by a fraction, the numerator of which will be such
number of days in such part of such Dividend Period that such share was
outstanding and for which dividends are payable on such Dividend Payment Date
and the denominator of which will be 360, multiplying the amount so obtained by
$25,000, and rounding the amount so obtained to the nearest cent.
(iii) The Trust may, at its sole option and to the extent permitted by law,
by telephonic and written notice (a "Request for Special Dividend Period") to
the Auction Agent and to each Broker-Dealer, request that the next succeeding
Dividend Period for a series of Preferred Shares be a number of days (other
than seven), evenly divisible by seven and not fewer than fourteen nor more
than 364 in the case of a Short Term Dividend Period or one whole year or more
but not greater than five years in the case of a Long Term Dividend Period,
specified in such notice, provided that the Trust may not give a Request for
Special Dividend Period for a Dividend Period of greater than 28 days (and any
such request shall be null and void) unless, for any Auction occurring after
the initial Auction, Sufficient Clearing Bids were made in the last occurring
Auction and unless full cumulative dividends and any amounts due with respect
to redemptions have been paid in full. Such Request for Special Dividend
Period, in the case of a Short Term Dividend Period, shall be given on or prior
to the second Business Day but not more than seven Business Days prior to an
Auction Date for a series of Preferred Shares and, in the case of a Long Term
Dividend Period, shall be given on or prior to the second Business Day but not
more than 28 days prior to an Auction Date for a series of Preferred Shares.
Upon receiving such Request for Special Dividend Period, the Broker-Dealer(s)
shall jointly determine the Optional Redemption Price of the Preferred Shares
during such Special Dividend Period and the Specific Redemption Provisions and
shall give the Trust and the Auction Agent written notice (a "Response") of
such determination by no later than the second Business Day prior to such
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Auction Date. In making such determination the Broker-Dealer(s) will consider
(1) existing short-term and long-term market rates and indices of such
short-term and long-term rates, (2) existing market supply and demand for
short-term and long-term securities, (3) existing yield curves for short-term
and long-term securities comparable to the Preferred Shares, (4) industry and
financial conditions which may affect the Preferred Shares, (5) the investment
objectives of the Trust, and (6) the Dividend Periods and dividend rates at
which current and potential beneficial holders of the Preferred Shares would
remain or become beneficial holders. After providing the Request for Special
Dividend Period to the Auction Agent and each Broker-Dealer as set forth above,
the Trust may by no later than the second Business Day prior to such Auction
Date give a notice (a "Notice of Special Dividend Period") to the Auction
Agent, the Securities Depository and each Broker-Dealer which notice will
specify (i) the duration of the Special Dividend Period, (ii) the Optional
Redemption Price as specified in the related Response and (iii) the Specific
Redemption Provisions, if any, as specified in the related Response. The Trust
also shall provide a copy of such Notice of Special Dividend Period to Fitch,
Xxxxx'x and any Substitute Rating Agency. The Trust shall not give a Notice of
Special Dividend Period and, if the Trust has given a Notice of Special
Dividend Period, the Trust is required to give telephonic and written notice of
its revocation (a "Notice of Revocation") to the Auction Agent, each
Broker-Dealer, and the Securities Depository on or prior to the Business Day
prior to the relevant Auction Date if (x) either the 1940 Act Preferred Shares
Asset Coverage is not satisfied or the Trust shall fail to maintain both Fitch
Preferred Shares Asset Coverage and Xxxxx'x Preferred Shares Asset Coverage, on
each of the two Valuation Dates immediately preceding the Business Day prior to
the relevant Auction Date on an actual basis and on a pro forma basis giving
effect to the proposed Special Dividend Period (using as a pro forma dividend
rate with respect to such Special Dividend Period the dividend rate which the
Broker-Dealers shall advise the Trust is an approximately equal rate for
securities similar to the Preferred Shares with an equal dividend period) or
(y) sufficient funds for the payment of dividends payable on the immediately
succeeding Dividend Payment Date have not been irrevocably deposited with the
Auction Agent by the close of business on the third Business Day preceding the
Auction Date immediately preceding such Dividend Payment Date. The Trust also
shall provide a copy of such Notice of Revocation to Fitch, Xxxxx'x and any
Substitute Rating Agency. If the Trust is prohibited from giving a Notice of
Special Dividend Period as a result of any of the factors enumerated in clause
(x) or (y) above or if the Trust gives a Notice of Revocation with respect to a
Notice of Special Dividend Period for any series of Preferred Shares, the next
succeeding Dividend Period will be a 7-Day Dividend Period. In addition, in the
event Sufficient Clearing Bids are not made in an Auction, or if an Auction is
not held for any reason, such next succeeding Dividend Period will be a 7-Day
Dividend Period and the Trust may not again give a Notice of Special Dividend
Period for the Preferred Shares (and any such attempted notice shall be null
and void) until Sufficient Clearing Bids have been made in an Auction with
respect to a 7-Day Dividend Period. If an Auction is not held because an
unforeseen event or unforeseen events cause a day that otherwise would have
been a Dividend Payment Date or an Auction Date not to be a Business Day, then
the length of the Dividend Period relating to such Dividend Payment Date shall
be extended by seven days (or a multiple thereof if necessary because of such
unforeseen event or events) (an "Extension Period"), the Applicable Rate for
such Extension Period shall be the Applicable Rate for the Dividend Period so
extended and the Dividend Payment Date for such Dividend Period shall be the
first Business Day next succeeding the end of such Extension Period.
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(d) (i) Holders shall not be entitled to any dividends, whether payable in
cash, property or Preferred Shares, in excess of full cumulative dividends as
herein provided. Except for the late charge payable pursuant to
Section 11.2(c)(i) hereof, no interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment on the Preferred Shares
that may be in arrears.
(ii) For so long as any Preferred Share is Outstanding, the Trust shall not
declare, pay or set apart for payment any dividend or other distribution (other
than a dividend or distribution paid in shares of, or options, warrants or
rights to subscribe for or purchase, Common Shares or other shares of
beneficial interest, if any, ranking junior to the Preferred Shares as to
dividends or upon liquidation) in respect of the Common Shares or any other
shares of beneficial interest of the Trust ranking junior to or on a parity
with the Preferred Shares as to dividends or upon liquidation, or call for
redemption, redeem, purchase or otherwise acquire for consideration any Common
Shares or any other such junior shares (except by conversion into or exchange
for shares of the Trust ranking junior to the Preferred Shares as to dividends
and upon liquidation) or any other such Parity Shares (except by conversion
into or exchange for stock of the Trust ranking junior to or on a parity with
the Preferred Shares as to dividends and upon liquidation), unless
(A) immediately after such transaction, the Trust shall maintain both Fitch
Preferred Shares Asset Coverage and Xxxxx'x Preferred Shares Asset Coverage,
and the Trust shall maintain the 1940 Act Preferred Shares Asset Coverage,
(B) full cumulative dividends on Preferred Shares due on or prior to the date
of the transaction have been declared and paid or shall have been declared and
sufficient funds for the payment thereof deposited with the Auction Agent and
(C) the Trust has redeemed the full number of Preferred Shares required to be
redeemed by any provision for mandatory redemption contained herein.
(e) Each dividend shall consist of cash at the Applicable Rate.
(f) No fractional Preferred Shares shall be issued.
(g) Solely for purposes of the proviso in clause (i) under the definition of
"Non-Payment Period," the second parenthetical in the second sentence of the
second paragraph of Section 11.2(c)(i) of these Bylaws and the last sentence of
Section 11.2(c)(iii) of these Bylaws, any day on which banks in New York City
generally are closed, for any reason, while the New York Stock Exchange remains
open for trading and any day which otherwise would be a Business Day as defined
in these Bylaws on which the Auction Agent is closed for business, for any
reason, shall be considered a day which is not a Business Day.
11.3 Liquidation Rights. Upon any liquidation, dissolution or winding up of
the Trust, whether voluntary or involuntary, the Holders shall be entitled to
receive, out of the assets of the Trust available for distribution to
shareholders, before any distribution or payment is made upon any Common Shares
or any other shares of beneficial interest ranking junior in right of payment
upon liquidation to the Preferred Shares, the sum of $25,000 per share plus
accumulated but unpaid dividends (whether or not earned or declared) thereon to
the date of distribution, and after
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such payment the Holders will be entitled to no other payments. If upon any
liquidation, dissolution or winding up of the Trust, the amounts payable with
respect to the Preferred Shares and any other Outstanding class or series of
preferred shares of beneficial interest of the Trust ranking on a parity with
the Preferred Shares as to payment upon liquidation are not paid in full, the
Holders and the holders of such other class or series will share ratably in any
such distribution of assets in proportion to the respective preferential
amounts to which they are entitled. After payment of the full amount of the
liquidating distribution to which they are entitled, the Holders will not be
entitled to any further participation in any distribution of assets by the
Trust. A consolidation, merger or statutory share exchange of the Trust with or
into any other Trust or entity or a sale, whether for cash, shares of stock,
securities or properties, of all or substantially all or any part of the assets
of the Trust shall not be deemed or construed to be a liquidation, dissolution
or winding up of the Trust.
11.4 Redemption. (a) Preferred Shares shall be redeemable by the Trust as
provided below:
(i) To the extent permitted under the 1940 Act and Massachusetts law, upon
giving a Notice of Redemption, the Trust at its option may redeem shares of any
series of Preferred Shares, in whole or in part, out of funds legally available
therefor, at the Optional Redemption Price per share, on any Dividend Payment
Date; provided that no Preferred Share may be redeemed at the option of the
Trust during (A) the Initial Dividend Period with respect to a series of shares
or (B) a Non-Call Period to which such share is subject.
(ii) The Trust shall redeem, out of funds legally available therefor, at the
Mandatory Redemption Price per share, Preferred Shares to the extent permitted
under the 1940 Act and Massachusetts law, on a date fixed by the Board of
Trustees of the Trust, if the Trust fails (x) to maintain both Fitch Preferred
Shares Asset Coverage and Xxxxx'x Preferred Shares Asset Coverage as provided
in Section 11.7(a) or (y) to satisfy the 1940 Act Preferred Shares Asset
Coverage as provided in Section 11.6, and such failure is not cured on or
before the Rating Agency Preferred Shares Asset Coverage Cure Date or the 1940
Act Cure Date (herein collectively referred to as a "Cure Date"), as the case
may be. The number of Preferred Shares to be redeemed shall be equal to the
lesser of (i) the minimum number of Preferred Shares the redemption of which,
if deemed to have occurred immediately prior to the opening of business on the
Cure Date, together with all other preferred shares of beneficial interest of
the Trust subject to redemption or retirement, would result in (x) the Trust
having Fitch Preferred Shares Asset Coverage and Xxxxx'x Preferred Shares Asset
Coverage or (y) satisfaction of the 1940 Act Preferred Shares Asset Coverage,
as the case may be, on such Cure Date (provided that, if there is no such
minimum number of Preferred Shares and other preferred shares of beneficial
interest of the Trust the redemption of which would have such result, all
Preferred Shares and other preferred shares of beneficial interest of the Trust
then Outstanding shall be redeemed), and (ii) the maximum number of Preferred
Shares, together with all other preferred shares of beneficial interest of the
Trust subject to redemption or retirement, that can be redeemed out of funds
expected to be legally available therefor on such redemption date. In
determining the number of Preferred Shares required to be redeemed in
accordance with the foregoing, the Trust shall allocate the number required to
be redeemed which would result in (x) the Trust having Fitch Preferred Shares
Asset Coverage and Xxxxx'x Preferred Shares Asset Coverage or (y)
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satisfaction of the 1940 Act Preferred Shares Asset Coverage, as the case may
be, pro rata among Preferred Shares of all series and other preferred shares of
beneficial interest of the Trust subject to redemption pursuant to provisions
similar to those contained in this Section 11.4(a)(ii); provided that Preferred
Shares which may not be redeemed at the option of the Trust due to the
designation of a Non-Call Period applicable to such shares (A) will be subject
to mandatory redemption only to the extent that other shares are not available
to satisfy the number of shares required to be redeemed and (B) will be
selected for redemption in an ascending order of outstanding number of days in
the Non-Call Period (with shares with the lowest number of days to be redeemed
first) and by lot in the event of shares having an equal number of days in such
Non-Call Period. The Trust shall effect such redemption on a Business Day which
is not later than 35 days after such Cure Date, except that if the Trust does
not have funds legally available for the redemption of all of the required
number of Preferred Shares and other preferred shares of beneficial interest of
the Trust which are subject to mandatory redemption or the Trust otherwise is
unable to effect such redemption on or prior to 35 days after such Cure Date,
the Trust shall redeem those Preferred Shares which it is unable to redeem on
the earliest practicable date on which it is able to effect such redemption out
of funds legally available therefor.
(b) Notwithstanding any other provision of this Section 11.4, no Preferred
Shares may be redeemed pursuant to Section 11.4(a)(i) of these Bylaws
(i) unless all dividends in arrears on all remaining outstanding Parity Shares
shall have been or are being contemporaneously paid or declared and set apart
for payment and (ii) if redemption thereof would result in the Trust's failure
to maintain Fitch Preferred Shares Asset Coverage or Xxxxx'x Preferred Shares
Asset Coverage. In the event that less than all the outstanding shares of a
series of Preferred Shares are to be redeemed and there is more than one
Holder, the shares of that series of Preferred Shares to be redeemed shall be
selected by lot or such other method as the Trust shall deem fair and equitable.
(c) Whenever Preferred Shares are to be redeemed, the Trust, not less than
17 nor more than 30 days prior to the date fixed for redemption, shall mail a
notice ("Notice of Redemption") by first-class mail, postage prepaid, to each
Holder of Preferred Shares to be redeemed and to the Auction Agent. The Notice
of Redemption shall set forth (i) the redemption date, (ii) the amount of the
redemption price, (iii) the aggregate number of Preferred Shares of such series
to be redeemed, (iv) the place or places where Preferred Shares of such series
are to be surrendered for payment of the redemption price, (v) a statement that
dividends on the shares to be redeemed shall cease to accumulate on such
redemption date and (vi) the provision of these Bylaws pursuant to which such
shares are being redeemed. No defect in the Notice of Redemption or in the
mailing or publication thereof shall affect the validity of the redemption
proceedings, except as required by applicable law.
If the Notice of Redemption shall have been given as aforesaid and,
concurrently or thereafter, the Trust shall have deposited in trust with the
Auction Agent, or segregated in an account at the Trust's custodian bank for
the benefit of the Auction Agent, Deposit Securities (with a right of
substitution) having an aggregate Discounted Value (calculated using Xxxxx'x
Eligible Assets and Xxxxx'x Discount Factors for these purposes) equal to the
redemption payment for the Preferred Shares as to which such Notice of
Redemption has been given with irrevocable instructions and authority to pay
the redemption price to the Holders of such shares,
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then upon the date of such deposit or, if no such deposit is made, then upon
such date fixed for redemption (unless the Trust shall default in making the
redemption payment), all rights (including without limitation voting rights) of
the Holders of such shares as shareholders of the Trust by reason of the
ownership of such shares will cease and terminate (except their right to
receive the redemption price in respect thereof, but without interest), and
such shares shall no longer be deemed Outstanding; provided, however, that
unless otherwise provided in the Fitch Criteria, such shares shall be deemed to
be Outstanding for purposes of calculating Fitch Preferred Shares Asset
Coverage (but not for the other purposes specified above, including with
respect to the rights of Holders). The Trust shall be entitled to receive, from
time to time, from the Auction Agent the interest, if any, on such Deposit
Securities deposited with it and the Holders of any shares so redeemed shall
have no claim to any of such interest. In case the Holder of any shares so
called for redemption shall not claim the redemption payment for his shares
within one year after the date of redemption, the Auction Agent shall, upon
demand, pay over to the Trust such amount remaining on deposit and the Auction
Agent shall thereupon be relieved of all responsibility to the Holder of such
shares called for redemption and such Holder thereafter shall look only to the
Trust for the redemption payment.
11.5 Voting Rights. (a) General. Except as otherwise provided in the
Declaration of Trust or Bylaws, each Holder of Preferred Shares shall be
entitled to one vote for each share held on each matter submitted to a vote of
shareholders of the Trust, and the holders of preferred shares of beneficial
interest of the Trust, including Preferred Shares, and of Common Shares shall
vote together as a single class; provided that the holders of preferred shares
of beneficial interest of the Trust, including Preferred Shares, shall be
entitled, as a class, to the exclusion of the holders of all other securities
and classes of shares of beneficial interest of the Trust, to elect two
Trustees of the Trust. Subject to Section 11.5(b) hereof, the holders of shares
of beneficial interest of the Trust, including the holders of preferred shares
of beneficial interest of the Trust, including Preferred Shares, voting as a
single class, shall elect the balance of the trustees.
(b) Right to Elect Majority of Board of Trustees. During any period in which
any one or more of the conditions described below shall exist (such period
being referred to herein as a "Voting Period"), the number of trustees
constituting the Board of Trustees of the Trust shall be automatically
increased by the smallest number that, when added to the two trustees elected
exclusively by the holders of preferred shares of beneficial interest of the
Trust, would constitute a majority of the Board of Trustees of the Trust as so
increased by such smallest number; and the holders of preferred shares of
beneficial interest of the Trust shall be entitled, voting separately as one
class (to the exclusion of the holders of all other securities and classes of
shares of beneficial interest of the Trust), to elect such smallest number of
additional trustees, together with the two trustees that such holders are in
any event entitled to elect.
A Voting Period shall commence:
(i) if at any time accumulated dividends (whether or not earned or declared,
and whether or not funds are then legally available in an amount sufficient
therefor) on the outstanding Preferred Shares equal to at least two full years'
dividends shall be due and unpaid and sufficient cash or specified securities
shall not have been deposited with the Auction Agent for the payment of such
accumulated dividends; or
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(ii) if at any time holders of any preferred shares of beneficial interest
of the Trust, including the holders of Preferred Shares, are entitled to elect
a majority of the trustees of the Trust under the 1940 Act.
Upon the termination of a Voting Period, the voting rights described in this
Section 11.5(b) shall cease, subject always, however, to the reverting of such
voting rights in the Holders upon the further occurrence of any of the events
described in Section 11.5(b).
(c) Right to Vote with Respect to Certain Other Matters. So long as any
Preferred Shares are outstanding, the Trust shall not, without the affirmative
vote of the holders of a majority of the Preferred Shares Outstanding at the
time, voting separately as one class: (i) authorize, create or issue any class
or series of shares of beneficial interest ranking prior to the Preferred
Shares or any other series of preferred shares of beneficial interest of the
Trust with respect to payment of dividends or the distribution of assets on
liquidation; provided, however, that no vote is required to authorize the
issuance of another series of Preferred Shares or another class of preferred
shares of beneficial interest of the Trust that is substantially identical in
all respects to the Preferred Shares, or (ii) amend, alter or repeal the
provisions of the Declaration of Trust or Bylaws, whether by merger,
consolidation or otherwise, so as to adversely affect any of the contract
rights expressly set forth in the Declaration of Trust or Bylaws of holders of
Preferred Shares or any other preferred shares of beneficial interest of the
Trust. To the extent permitted under the 1940 Act, in the event shares of more
than one series of Preferred Shares are outstanding, the Trust shall not
approve any of the actions set forth in clause (i) or (ii) which adversely
affects the contract rights expressly set forth in the Declaration of Trust or
Bylaws of a Holder of a series of Preferred Shares differently than those of a
Holder of any other series of Preferred Shares without the affirmative vote of
the holders of at least a majority of the Preferred Shares of each series
adversely affected and Outstanding at such time (each such adversely affected
series voting separately as a class). Unless a higher percentage is provided
for under the Declaration of Trust or these Bylaws, the affirmative vote of the
holders of a majority of the outstanding preferred shares of beneficial
interest of the Trust, including Preferred Shares, voting together as a single
class, will be required to approve any plan of reorganization (including
bankruptcy proceedings) adversely affecting such shares or any action requiring
a vote of security holders under Section 13(a) of the 1940 Act. To the extent
permitted under the 1940 Act, in the event shares of more than one series of
Preferred Shares are outstanding, with respect to any action requiring
Shareholder approval pursuant to the operation of Section 2 or Section 3 of
Article V of the Declaration of Trust, the affirmative vote of at least
seventy-five percent of the Preferred Shares of each series Outstanding at such
time (each such series voting separately as a class) shall also be required.
The class (and, where applicable, series) vote of holders of preferred shares
of beneficial interest of the Trust, including Preferred Shares, described
above will in each case be in addition to a separate vote of the requisite
percentage of Common Shares and preferred shares of beneficial interest of the
Trust, including Preferred Shares, voting together as a single class necessary
to authorize the action in question.
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(d) Voting Procedures.
(i) As soon as practicable after the accrual of any right of the holders of
preferred shares of beneficial interest of the Trust to elect additional
trustees as described in Section 11.5(b) above, the Trust shall call a special
meeting of such holders and instruct the Auction Agent and any other registrar
for preferred shares of beneficial interest of the Trust other than Preferred
Shares to mail a notice of such special meeting to such holders, such meeting
to be held not less than 10 nor more than 20 days after the date of mailing of
such notice. If the Trust fails to send such notice to the Auction Agent and
any other applicable registrar, or if the Trust 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 held during a Voting Period, such holders, voting together as a class
(to the exclusion of the holders of all other securities and classes of shares
of beneficial interest of the Trust), shall be entitled to elect the number of
Trustees prescribed in Section 11.5(b) above. At any such meeting or
adjournment thereof in the absence of a quorum, a majority of such holders
present in person or by proxy shall have the power to adjourn the meeting
without notice, other than by an announcement at the meeting, to a date not
more than 120 days after the original record date.
(ii) Except as otherwise required by applicable law, for purposes of
determining any rights of the Holders to vote on any matter or the number of
shares required to constitute a quorum, whether such right is created by these
Bylaws, by the other provisions of the Declaration of Trust, by statute or
otherwise, a Preferred Share which is not Outstanding shall not be counted.
(iii) The terms of office of all persons who are trustees of the Trust at
the time of a special meeting of Holders and holders of other preferred shares
of beneficial interest of the Trust to elect trustees shall continue,
notwithstanding the election at such meeting by the Holders and such other
holders of the number of trustees that they are entitled to elect, and the
persons so elected by the Holders and such other holders, together with the two
incumbent trustees elected by the Holders and such other holders of preferred
shares of beneficial interest of the Trust and the remaining incumbent trustees
elected by the holders of the Common Shares and preferred shares of beneficial
interest of the Trust, shall constitute the duly elected trustees of the Trust.
(iv) Simultaneously with the expiration of a Voting Period, the terms of
office of the additional trustees elected by the Holders and holders of other
preferred shares of beneficial interest of the Trust pursuant to
Section 11.5(b) above shall terminate, the remaining trustees shall constitute
the trustees of the Trust and the voting rights of the Holders and such other
holders to elect additional trustees pursuant to Section 11.5(b) above shall
cease, subject to the provisions of the last sentence of Section 11.5(b).
(e) Exclusive Remedy. Unless otherwise required by law, the Holders shall
not have any rights or preferences other than those specifically set forth
herein. The Holders shall have no preemptive rights or rights to cumulative
voting. In the event that the Trust fails to pay any dividends on the Preferred
Shares, the exclusive remedy of the Holders shall be the right to vote for
trustees pursuant to the provisions of this Section 11.5.
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11.6 1940 Act Preferred Shares Asset Coverage. The Trust shall maintain, as
of the last Business Day of each month in which any Preferred Shares are
outstanding, the 1940 Act Preferred Shares Asset Coverage.
11.7 Rating Agency Preferred Shares Asset Coverage. (a) So long as any
Preferred Shares are outstanding and any Rating Agency then rating the
Preferred Shares so requires, the Trust shall maintain, on each Valuation Date,
and shall verify to its satisfaction that it is maintaining on such Valuation
Date, both Fitch Preferred Shares Asset Coverage and Xxxxx'x Preferred Shares
Asset Coverage. Upon any failure to maintain Fitch Preferred Shares Asset
Coverage or Xxxxx'x Preferred Shares Asset Coverage, the Trust will use its
best efforts to alter the composition of its portfolio to achieve both Fitch
Preferred Shares Asset Coverage and Xxxxx'x Preferred Shares Asset Coverage on
or prior to the Rating Agency Preferred Shares Asset Coverage Cure Date.
(b) On or before 5:00 p.m., New York City time, on the third Business Day
after a Valuation Date on which the Trust fails to satisfy Rating Agency
Preferred Shares Asset Coverage specified by a particular Rating Agency, the
Trust shall complete and deliver to (i) the Auction Agent and (ii) such Rating
Agency, the Rating Agency Preferred Shares Asset Coverage Report called for by
such Rating Agency, as of the date of such failure, which will be deemed to
have been delivered to such recipient if the recipient receives a copy or
telecopy, telex or other electronic transcription thereof and on the same day
the Trust mails to the recipient for delivery on the next Business Day the
complete Rating Agency Preferred Shares Asset Coverage Report. The Trust will
deliver to each applicable Rating Agency a Rating Agency Preferred Shares Asset
Coverage Report called for by such Rating Agency on or before 5:00 p.m., New
York City time, on the third Business Day after a Valuation Date on which the
Trust cures its failure to maintain Rating Agency Preferred Shares Asset
Coverage specified by such Rating Agency, or, with respect to Moody's, on which
the Trust fails to maintain Eligible Assets with an aggregate Discounted Value
which exceeds the Preferred Shares Basic Maintenance Amount by 5% or more. The
Trust will also deliver (i) a Fitch Preferred Shares Asset Coverage Report to
the Auction Agent and Fitch as of each Monthly Valuation Date on or before the
third Business Day after such date and (ii) a Xxxxx'x Preferred Shares Asset
Coverage Report to the Auction Agent and Xxxxx'x as of each Quarterly Valuation
Date on or before the third Business Day after such date. Additionally, on or
before 5:00 p.m., New York City time, on the third Business Day after the first
day of a Special Dividend Period, the Trust will deliver (i) a Fitch Preferred
Shares Asset Coverage Report to the Auction Agent and Fitch and (ii) a Moody's
Preferred Shares Asset Coverage Report to the Auction Agent and Moody's. The
Trust shall also provide (i) Fitch with a Fitch Preferred Shares Asset Coverage
Report when specifically requested by Fitch or as otherwise required under the
Fitch Criteria and (ii) Moody's with a Moody's Preferred Shares Asset Coverage
Report when specifically requested by Moody's.
(c) With respect to Moody's ratings of the Preferred Shares, within twenty
Business Days after the date of delivery of a Moody's Preferred Shares Asset
Coverage Report to the Auction Agent and Xxxxx'x in accordance with the third
sentence of Section 11.7(b) above relating to a Quarterly Valuation Date
(except as described in the following sentence), the Independent Accountant
will confirm in writing to the Auction Agent and Moody's, (i) the mathematical
accuracy of the calculations reflected in such Report, (ii) that, in such
Report, the Trust correctly
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determined the assets of the Trust which constitute Moody's Eligible Assets at
such Quarterly Valuation Date in accordance with these Bylaws, (iii) that, in
such Report, the Trust determined whether the Trust had, at such Quarterly
Valuation Date in accordance with these Bylaws, Xxxxx'x Eligible Assets with an
aggregate Discounted Value at least equal to the Preferred Shares Basic
Maintenance Amount, (iv) with respect to the S&P ratings on portfolio
securities of the Trust, the issuer name, issue size and coupon rate, if any,
listed in such Report, that the Independent Accountant has verified such
information in reference to third-party information sources (such as Reuters or
Bloomberg) and the Independent Accountant shall provide a listing in its letter
of any differences, (v) with respect to the Fitch ratings on portfolio
securities of the Trust, the issuer name, issue size and coupon rate, if any,
listed in such Report, that the Independent Accountant has verified such
information in reference to third-party information sources (such as Reuters or
Bloomberg) and the Independent Accountant shall provide a listing in its letter
of any differences, (vi) with respect to the Moody's ratings on portfolio
securities of the Trust, the issuer name, issue size and coupon rate, if any,
listed in such Report, that the Independent Accountant has verified such
information in reference to third-party information sources (such as Reuters or
Bloomberg) and the Independent Accountant shall provide a listing in its letter
of any differences and (vii) that the Independent Accountant has compared the
prices in such Report to the prices in the applicable pricing appraisal report
provided by the custodian of the Trust's assets to the Trust for purposes of
valuing securities in the Trust's portfolio and verified that such information
agrees (in the event such information does not agree, the Independent
Accountant will provide a listing in its letter of such differences) (such
confirmation is herein called the "Accountant's Confirmation"). Notwithstanding
the foregoing sentence, the Independent Accountant will provide the
confirmation described in the foregoing sentence with respect to Moody's
Preferred Shares Asset Coverage Reports delivered pursuant to the third
sentence of Section 11.7(b) above only for such Moody's Preferred Shares Asset
Coverage Reports relating to the last fiscal quarter of each fiscal year.
(d) With respect to Moody's ratings of the Preferred Shares, within twenty
Business Days after the date of delivery to the Auction Agent and Moody's of a
Moody's Preferred Shares Asset Coverage Report in accordance with the second
sentence of Section 11.7(b) above relating to the Rating Agency Preferred
Shares Asset Coverage Cure Date with respect to such failure, the Trust shall
cause the Independent Accountant to provide to the Auction Agent and Moody's an
Accountant's Confirmation as to such Moody's Preferred Shares Asset Coverage
Report.
(e) With respect to Moody's ratings of the Preferred Shares, if any
Accountant's Confirmation delivered to Moody's pursuant to subparagraph (c) or
(d) of this Section 11.7 shows that an error was made in the Xxxxx'x Preferred
Shares Asset Coverage 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 Moody's Eligible Assets of
the Trust was determined by the Independent Accountant, the calculation or
determination made by such Independent Accountant shall be final and conclusive
and shall be binding on the Trust, and the Trust shall accordingly amend and
deliver the Moody's Preferred Shares Asset Coverage Report to the Auction Agent
and Moody's promptly following receipt by the Trust of such Accountant's
Confirmation.
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(f) On or before 5:00 p.m., New York City time, on the first Business Day
after the Date of Original Issue of the Preferred Shares, the Trust will
complete and deliver (i) a Fitch Preferred Shares Asset Coverage Report to
Fitch and (ii) a Moody's Preferred Shares Asset Coverage Report to Moody's, in
each case as of the close of business on such Date of Original Issue. Within
five Business Days of such Date of Original Issue, the Independent Accountant
will confirm in writing (i) to Fitch (x) the mathematical accuracy of the
calculations reflected in the Fitch Preferred Shares Asset Coverage Report and
(y) that the Trust satisfies Fitch Preferred Shares Asset Coverage as reflected
therein and (ii) to Moody's (x) the mathematical accuracy of the calculations
reflected in the Moody's Preferred Shares Asset Coverage Report and (y) that
the Trust satisfies Moody's Preferred Shares Asset Coverage as reflected
therein. Also, on or before 5:00 p.m., New York City time, on the first
Business Day after Common Shares are repurchased by the Trust, the Trust will
complete and deliver (i) a Fitch Preferred Shares Asset Coverage Report to
Fitch and (ii) a Moody's Preferred Shares Asset Coverage Report to Xxxxx'x, in
each case as of the close of business on such date that Common Shares are
repurchased.
11.8 Certain Other Restrictions. (a) For so long as any Preferred Shares are
rated by Xxxxx'x, the Trust will not buy or sell financial futures contracts,
write, purchase or sell call options on financial futures contracts or purchase
put options on financial futures contracts or write call options (except
covered call options) on portfolio securities unless it receives written
confirmation from Moody's that engaging in such transactions would not impair
the ratings then assigned to the Preferred Shares by Moody's, except that the
Trust may purchase or sell exchange-traded financial futures contracts based on
any index approved by Moody's or Treasury Bonds, and purchase, write or sell
exchange-traded put options on such financial futures contracts, any index
approved by Moody's or Treasury Bonds, and purchase, write or sell
exchange-traded call options on such financial futures contracts, any index
approved by Moody's or Treasury Bonds (collectively "Moody's Hedging
Transactions"), subject to the following limitations:
(i) the Trust will not engage in any Moody's Hedging Transaction based on
any index approved by Moody's (other than transactions that terminate a
futures contract or option held by the Trust by the Trust's taking the
opposite position thereto ("Closing Transactions")) that would cause the
Trust at the time of such transaction to own or have sold:
(A) outstanding financial futures contracts based on such index
exceeding in number 10% of the average number of daily traded financial
futures contracts based on such index in the 30 days preceding the time
of effecting such transaction as reported by The Wall Street Journal; or
(B) outstanding financial futures contracts based on any index
approved by Moody's having a Market Value exceeding 50% of the Market
Value of all portfolio securities of the Trust constituting Moody's
Eligible Assets owned by the Trust (other than Moody's Eligible Assets
already subject to a Moody's Hedging Transaction);
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(ii) the Trust will not engage in any Moody's Hedging Transaction based
on Treasury Bonds (other than Closing Transactions) that would cause the
Trust at the time of such transaction to own or have sold:
(A) outstanding financial futures contracts based on Treasury Bonds
with such contracts having an aggregate Market Value exceeding 20% of
the aggregate Market Value of Moody's Eligible Assets owned by the Trust
and rated Aa by Moody's (or, if not rated by Moody's but rated by S&P,
rated AAA by S&P); or
(B) outstanding financial futures contracts based on Treasury Bonds
with such contracts having an aggregate Market Value exceeding 80% of
the aggregate Market Value of all portfolio securities of the Trust
constituting Moody's Eligible Assets owned by the Trust (other than
Moody's Eligible Assets already subject to a Moody's Hedging
Transaction) and rated Baa or A by Moody's (or, if not rated by Moody's
but rated by S&P, rated A or AA by S&P)
(for purposes of the foregoing clauses (i) and (ii), the Trust shall be
deemed to own the number of financial futures contracts that underlie any
outstanding options written by the Trust);
(iii) the Trust will engage in Closing Transactions to close out any
outstanding financial futures contract based on any index approved by
Moody's if the amount of open interest in such index as reported by The Wall
Street Journal is less than an amount to be mutually determined by Moody's
and the Trust;
(iv) the Trust will engage in a Closing Transaction to close out any
outstanding financial futures contract by no later than the fifth Business
Day of the month in which such contract expires and will engage in a Closing
Transaction to close out any outstanding option on a financial futures
contract by no later than the first Business Day of the month in which such
option expires;
(v) the Trust will engage in Moody's Hedging Transactions only with
respect to financial futures contracts or options thereon having the next
settlement date or the settlement date immediately thereafter;
(vi) the Trust (A) will not engage in options and futures transactions
for leveraging or speculative purposes, except that an option or futures
transaction shall not for these purposes be considered a leveraged position
or speculative so long as the combination of the Trust's non-derivative
positions, together with the relevant option or futures transaction,
produces a synthetic investment position, or the same economic result, that
could be achieved by an investment, consistent with the Trust's investment
objectives and policies, in a security that is not an option or futures
transaction, and (B) will not write any call options or sell any financial
futures contracts for the purpose of hedging the anticipated purchase of an
asset prior to completion of such purchase; and
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(vii) the Trust will not enter into an option or futures transaction
unless, after giving effect thereto, the Trust would continue to have
Moody's Preferred Shares Asset Coverage.
(b) For purposes of determining whether the Trust has Moody's Preferred
Shares Asset Coverage, the Discounted Value of Moody's Eligible Assets that the
Trust is obligated to deliver or receive pursuant to an outstanding futures
contract or option shall be as follows:
(i) assets subject to call options written by the Trust that are either
exchange-traded and "readily reversible" or that expire within 49 days after
the date as of which such valuation is made shall be valued at the lesser of
(A) Discounted Value and (B) the exercise price of the call option written
by the Trust;
(ii) assets subject to call options written by the Trust not meeting the
requirements of clause (i) of this sentence shall have no value;
(iii) assets subject to put options written by the Trust shall be valued
at the lesser of (A) the exercise price and (B) the Discounted Value of the
assets subject to the option;
(iv) futures contracts shall be valued at the lesser of (A) settlement
price and (B) the Discounted Value of the assets subject to the futures
contract, provided that, if a contract matures within 49 days after the date
as of which such valuation is made, where the Trust is the seller the
contract may be valued at the settlement price and where the Trust is the
buyer the contract may be valued at the Discounted Value of the assets
subject to the futures contract; and
(v) where delivery may be made to the Trust with any security of a class
of securities, the Trust shall assume that it will take delivery of the
security with the lowest Discounted Value.
(c) For purposes of determining whether the Trust has Moody's Preferred
Shares Asset Coverage, the following amounts shall be subtracted from the
aggregate Discounted Value of the Moody's Eligible Assets held by the Trust to
the extent the relevant asset is a Moody's Eligible Asset:
(i) 10% of the exercise price of a written call option;
(ii) the exercise price of any written put option;
(iii) where the Trust is the seller under a financial futures contract,
10% of the settlement price of the financial futures contract;
(iv) where the Trust is the purchaser under a financial futures contract,
any amounts payable by the Trust under such financial futures contract;
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(v) the settlement price of the underlying financial futures contract if
the Trust writes put options on a financial futures contract; and
(vi) 105% of the Market Value of the underlying financial futures
contract if the Trust writes call options on a financial futures contract
and does not own the underlying contract.
(d) For so long as any Preferred Shares are rated by Moody's, the Trust will
not enter into any "Moody's Forward Commitment," herein defined as any contract
to purchase securities for a fixed price at a future date beyond customary
settlement time (other than such contracts that constitute Moody's Hedging
Transactions), except that the Trust may enter into Moody's Forward Commitments
subject to the following limitations:
(i) for each Moody's Forward Commitment, the Trust will maintain with its
custodian (A) cash, cash equivalents or short-term, fixed-income securities
rated X-0, XXX-0 xx XXXX-0 by Moody's or A-1 by S&P and maturing in one year
or less with a fair market value that equals or exceeds the amount by which
the Trust's obligations under any Moody's Forward Commitments to which it is
from time to time a party exceed obligations to the Trust arising from
securities sales by the Trust that are scheduled to settle at a future date,
or (B) long-term, fixed-income securities with a then current market value
that equals or exceeds the amount by which the Trust's obligations under any
Moody's Forward Commitments to which it is from time to time a party exceed
obligations to the Trust arising from securities sales by the Trust that are
scheduled to settle on a future date, or (C) a combination of assets
described in (A) and (B) above that in the aggregate equals or exceeds the
amount by which the Trust's obligations under any Moody's Forward
Commitments to which it is from time to time a party exceed obligations to
the Trust arising from securities sales by the Trust that are scheduled to
settle on a future date; and
(ii) the Trust will not enter into a Moody's Forward Commitment unless,
after giving effect thereto, the Trust would continue to have Moody's
Preferred Shares Asset Coverage.
For purposes of determining whether the Trust has Moody's Preferred Shares
Asset Coverage, the Discounted Value of all Forward Commitments to which the
Trust is a party and of all securities deliverable to the Trust pursuant to
such Forward Commitments shall be zero.
(e) For so long as any Preferred Shares are Outstanding and Xxxxx'x is
rating such shares, the Trust, unless it has received written confirmation from
Xxxxx'x that such action would not impair the rating then assigned to the
Preferred Shares by Moody's, will not:
(i) borrow money except for the purpose of clearing transactions in
portfolio securities (which borrowings under any circumstances shall be
limited to an amount equal to 5% of the Market Value of the Trust's assets
at the time of such borrowings and which borrowings shall be repaid within
60 days and not be extended or renewed and shall not cause the Trust to fail
to satisfy Moody's Preferred Shares Asset Coverage);
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(ii) engage in short sales of securities;
(iii) lend any securities;
(iv) issue any class or series of shares of beneficial interest ranking
prior to or on a parity with the Preferred Shares with respect to the
payment of dividends or the distribution of assets upon dissolution,
liquidation or winding up of the Trust;
(v) merge or consolidate into or with any other corporation or entity; and
(vi) change any Pricing Service of the Trust.
(f) For so long as any Preferred Shares are rated by Fitch, the Trust will
not enter into any "Fitch Covered Forward Commitment," herein defined as any
contract to purchase securities for a fixed price at a future date beyond
customary settlement time which, after giving effect thereto, would result in
the Trust failing to satisfy Fitch Preferred Shares Asset Coverage.
11.9 Notice. All notices or communications, unless otherwise specified in
these Bylaws, shall be sufficiently given if in writing and delivered in person
or mailed by first-class mail, postage prepaid. Notice shall be deemed given on
the earlier of the date received or the date seven days after which such notice
is mailed.
11.10 Auction Procedures. (a) Certain Definitions. As used in this
Section 11.10, the following terms shall have the following meanings, unless
the context otherwise requires:
(i) "Auction Date" means the first Business Day preceding the first day
of a Dividend Period.
(ii) "Available Preferred Shares" has the meaning specified in
Section 11.10(d)(i) below.
(iii) "Bid" has the meaning specified in Section 11.10(b)(i) below.
(iv) "Bidder" has the meaning specified in Section 11.10(b)(i) below.
(v) "Hold Order" has the meaning specified in Section 11.10(b)(i) below.
(vi) "Maximum Applicable Rate" for any Dividend Period will be the
Applicable Percentage of the Reference Rate. The Auction Agent will round
each applicable Maximum Applicable Rate to the nearest one-thousandth
(0.001) of one percent per annum, with any such number ending in five
ten-thousandths of one percent being rounded upwards to the nearest
one-thousandth (0.001) of one percent. The Auction Agent will not round the
applicable Reference Rate as part of its calculation of the Maximum
Applicable Rate. The "Applicable Percentage" shall be the percentage
determined based on the lower of the credit ratings assigned on such date by
Moody's and Fitch as follows:
FITCH APPLICABLE
MOODY'S CREDIT RATING CREDIT RATING PERCENTAGE
--------------------- ------------- ----------
Aa3 or above.................. AA- or above 150%
A3 to A1...................... A- to A+ 160%
Baa3 to Baa1.................. BBB-to BBB+ 250%
Below Baa3.................... Below BBB- 275%
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The Applicable Percentage as so determined shall be further subject to
upward but not downward adjustment in the discretion of the Board of
Trustees of the Trust after consultation with the Broker-Dealers, provided
that immediately following any such increase the Trust would satisfy both
Fitch Preferred Shares Asset Coverage and Moody's Preferred Shares Asset
Coverage. The Trust shall take all reasonable action necessary to enable
Moody's and Fitch to provide a rating for each series of Preferred Shares.
If Moody's or Fitch shall not make such a rating available, Citigroup Global
Markets Inc. or its affiliates and successors, after consultation with the
Trust, shall select another Rating Agency to act as a Substitute Rating
Agency.
(vii) "Order" has the meaning specified in Section 11.10(b)(i) below.
(viii) "Preferred Shares" means the Preferred Shares being auctioned
pursuant to this Section 11.10.
(ix) "Sell Order" has the meaning specified in Section 11.10(b)(i) below.
(x) "Submission Deadline" means 1:00 p.m., New York City time, on any
Auction Date or such other time on any Auction Date as may be specified by
the Auction Agent from time to time as the time by which each Broker-Dealer
must submit to the Auction Agent in writing all Orders obtained by it for
the Auction to be conducted on such Auction Date.
(xi) "Submitted Bid" has the meaning specified in Section 11.10(d)(i)
below.
(xii) "Submitted Hold Order" has the meaning specified in
Section 11.10(d)(i) below.
(xiii) "Submitted Order" has the meaning specified in Section 11.10(d)(i)
below.
(xiv) "Submitted Sell Order" has the meaning specified in
Section 11.10(d)(i) below.
(xv) "Sufficient Clearing Bids" has the meaning specified in
Section 11.10(d)(i) below.
(xvi) "Winning Bid Rate" has the meaning specified in Section 11.10(d)(i)
below.
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(b) Orders by Beneficial Owners, Potential Beneficial Owners, Existing
Holders and Potential Holders.
(i) Unless otherwise permitted by the Trust, Beneficial Owners and
Potential Beneficial Owners may only participate in Auctions through their
Broker-Dealers. Broker-Dealers will submit the Orders of their respective
customers who are Beneficial Owners and Potential Beneficial Owners to the
Auction Agent, designating themselves as Existing Holders in respect of
shares subject to Orders submitted or deemed submitted to them by Beneficial
Owners and as Potential Holders in respect of shares subject to Orders
submitted to them by Potential Beneficial Owners. A Broker-Dealer may also
hold Preferred Shares in its own account as a Beneficial Owner. A
Broker-Dealer may thus submit Orders to the Auction Agent as a Beneficial
Owner or a Potential Beneficial Owner and therefore participate in an
Auction as an Existing Holder or Potential Holder on behalf of both itself
and its customers. On or prior to the Submission Deadline on each Auction
Date:
(A) each Beneficial Owner may submit to its Broker-Dealer information
as to:
(1) the number of Outstanding Preferred Shares, if any, held by
such Beneficial Owner which such Beneficial Owner desires to continue
to hold without regard to the Applicable Rate for the next succeeding
Dividend Period for such shares;
(2) the number of Outstanding Preferred Shares, if any, held by
such Beneficial Owner which such Beneficial Owner desires to continue
to hold, provided that the Applicable Rate for the next succeeding
Dividend Period for such shares shall not be less than the rate per
annum specified by such Beneficial Owner; and/or
(3) the number of Outstanding Preferred Shares, if any, held by
such Beneficial Owner which such Beneficial Owner offers to sell
without regard to the Applicable Rate for the next succeeding
Dividend Period; and
(B) each Broker-Dealer, using a list of Potential Beneficial Owners
that shall be maintained in good faith for the purpose of conducting a
competitive Auction, shall contact Potential Beneficial Owners,
including Persons that are not Beneficial Owners, on such list to
determine the number of Outstanding Preferred Shares, if any, which each
such Potential Beneficial Owner offers to purchase, provided that the
Applicable Rate for the next succeeding Dividend Period 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 the communication by a
Broker-Dealer acting for its own account to the Auction Agent, of
information referred to in clause (A) or (B) of this Section 11.10(b)(i)
is hereinafter referred to as an "Order" and each Beneficial Owner and
each Potential Beneficial Owner placing an Order, including a
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Broker-Dealer acting in such capacity for its own account, is
hereinafter referred to as a "Bidder"; an Order containing the
information referred to in clause (A)(1) of this Section 11.10(b)(i) is
hereinafter referred to as a "Hold Order"; an Order containing the
information referred to in clause (A)(2) or (B) of this
Section 11.10(b)(i) is hereinafter referred to as a "Bid"; and an Order
containing the information referred to in clause (A)(3) of this
Section 11.10(b)(i) is hereinafter referred to as a "Sell Order."
Inasmuch as a Broker-Dealer participates in an Auction as an Existing
Holder or a Potential Holder only to represent the interests of a
Beneficial Owner or Potential Beneficial Owner, whether it be its
customers or itself, all discussion herein relating to the consequences
of an Auction for Existing Holders and Potential Holders also applies to
the underlying beneficial ownership interests represented.
(ii) (A) A Bid by an Existing Holder shall constitute an irrevocable
offer to sell:
(1) the number of Outstanding Preferred Shares specified in such
Bid if the Applicable Rate determined on such Auction Date shall be
less than the rate per annum specified in such Bid; or
(2) such number or a lesser number of Outstanding Preferred Shares
to be determined as set forth in Section 11.10(e)(i)(D) if the
Applicable Rate determined on such Auction Date shall be equal to the
rate per annum specified therein; or
(3) a lesser number of Outstanding Preferred Shares to be
determined as set forth in Section 11.10(e)(ii)(C) if such specified
rate per annum shall be higher than the Maximum Applicable Rate and
Sufficient Clearing Bids do not exist.
(B) A Sell Order by an Existing Holder shall constitute an
irrevocable offer to sell:
(1) the number of Outstanding Preferred Shares specified in such
Sell Order; or
(2) such number or a lesser number of Outstanding Preferred Shares
to be determined as set forth in Section 11.10(e)(ii)(C) if
Sufficient Clearing Bids do not exist.
(C) A Bid by a Potential Holder shall constitute an irrevocable offer
to purchase:
(1) the number of Outstanding Preferred Shares specified in such
Bid if the Applicable Rate determined on such Auction Date shall be
higher than the rate per annum specified in such Bid; or
(2) such number or a lesser number of Outstanding Preferred Shares
to be determined as set forth in Section 11.10(e)(i)(E) if the
Applicable Rate determined on such Auction Date shall be equal to the
rate per annum specified therein.
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(c) Submission of Orders by Broker-Dealers to Auction Agent.
(i) Each Broker-Dealer shall submit in writing or through the Auction
Agent's auction processing system to the Auction Agent prior to the
Submission Deadline on each Auction Date all Orders obtained by such
Broker-Dealer, designating itself (unless otherwise permitted by the Trust)
as an Existing Holder in respect of shares subject to Orders submitted or
deemed submitted to it by Beneficial Owners and as a Potential Holder in
respect of shares subject to Orders submitted to it by Potential Beneficial
Owners, and specifying with respect to each Order:
(A) the name of the Bidder placing such Order (which shall be the
Broker-Dealer unless otherwise permitted by the Trust);
(B) the aggregate number of Outstanding Preferred Shares that are the
subject of such Order;
(C) to the extent that such Bidder is an Existing Holder:
(1) the number of Outstanding Preferred Shares, if any, subject to
any Hold Order placed by such Existing Holder;
(2) the number of Outstanding Preferred Shares, if any, subject to
any Bid placed by such Existing Holder and the rate per annum
specified in such Bid; and
(3) the number of Outstanding Preferred Shares, if any, subject to
any Sell Order placed by such Existing Holder; and
(D) to the extent such Bidder is a Potential Holder, the rate per
annum specified in such Potential Holder's Bid.
(ii) If any rate per annum 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%.
(iii) If an Order or Orders covering all of the Outstanding Preferred
Shares held by an Existing Holder are not submitted to the Auction Agent
prior to the Submission Deadline, the Auction Agent shall deem a Hold Order
(in the case of an Auction relating to a Special Dividend Period of 28 days
or less) or a Sell Order (in the case of an Auction relating to a Special
Dividend Period of longer than 28 days) to have been submitted on behalf of
such Existing Holder covering the number of Outstanding Preferred Shares
held by such Existing Holder and not subject to Orders submitted to the
Auction Agent.
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(iv) If one or more Orders on behalf of an Existing Holder covering in
the aggregate more than the number of Outstanding Preferred Shares held by
such Existing Holder are submitted to the Auction Agent, such Order shall be
considered valid as follows and in the following order of priority:
(A) any Hold Order submitted on behalf of such Existing Holder shall
be considered valid up to and including the number of Outstanding
Preferred Shares held by such Existing Holder; provided that if more
than one Hold Order is submitted on behalf of such Existing Holder and
the number of Preferred Shares subject to such Hold Orders exceeds the
number of Outstanding Preferred Shares held by such Existing Holder, the
number of Preferred Shares subject to each of such Hold Orders shall be
reduced pro rata so that such Hold Orders, in the aggregate, will cover
exactly the number of Outstanding Preferred Shares held by such Existing
Holder;
(B) any Bids submitted on behalf of such Existing Holder shall be
considered valid, in the ascending order of their respective rates per
annum if more than one Bid is submitted on behalf of such Existing
Holder, up to and including the excess of the number of Outstanding
Preferred Shares held by such Existing Holder over the number of
Preferred Shares subject to any Hold Order referred to in
Section 11.10(c)(iv)(A) above (and if more than one Bid submitted on
behalf of such Existing Holder specifies the same rate per annum and
together they cover more than the remaining number of shares that can be
the subject of valid Bids after application of Section 11.10(c)(iv)(A)
above and of the foregoing portion of this Section 11.10(c)(iv)(B) to
any Bid or Bids specifying a lower rate or rates per annum, the number
of shares subject to each of such Bids shall be reduced pro rata so that
such Bids, in the aggregate, cover exactly such remaining number of
shares); and the number of shares, if any, subject to Bids not valid
under this Section 11.10(c)(iv)(B) shall be treated as the subject of a
Bid by a Potential Holder; and
(C) any Sell Order shall be considered valid up to and including the
excess of the number of Outstanding Preferred Shares held by such
Existing Holder over the number of Preferred Shares subject to Hold
Orders referred to in Section 11.10(c)(iv)(A) and Bids referred to in
Section 11.10(c)(iv)(B); provided that if more than one Sell Order is
submitted on behalf of any Existing Holder and the number of Preferred
Shares subject to such Sell Orders is greater than such excess, the
number of Preferred Shares subject to each of such Sell Orders shall be
reduced pro rata so that such Sell Orders, in the aggregate, cover
exactly the number of Preferred Shares equal to such excess.
(v) If more than one Bid is submitted on behalf of any Potential Holder,
each Bid submitted shall be a separate Bid with the rate per annum and
number of Preferred Shares therein specified.
(vi) Any Order submitted by a Beneficial Owner as 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.
(vii) The Trust shall not be responsible for a Broker-Dealer's failure to
act in accordance with the instructions of Beneficial Owners or Potential
Beneficial Owners or failure to comply with the provisions of this
Section 11.10.
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(d) Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
(i) Not earlier than the Submission Deadline on each Auction Date, the
Auction Agent shall assemble all Orders submitted or deemed submitted to it
by the Broker-Dealers (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 shall determine:
(A) the excess of the total number of Outstanding Preferred Shares
over the number of Outstanding Preferred Shares that are the subject of
Submitted Hold Orders (such excess being hereinafter referred to as the
"Available Preferred Shares");
(B) from the Submitted Orders whether the number of Outstanding
Preferred Shares that are the subject of Submitted Bids by Potential
Holders specifying one or more rates per annum equal to or lower than
the Maximum Applicable Rate exceeds or is equal to the sum of:
(1) the number of Outstanding Preferred Shares that are the
subject of Submitted Bids by Existing Holders specifying one or more
rates per annum higher than the Maximum Applicable Rate, and
(2) the number of Outstanding Preferred Shares that are subject to
Submitted Sell Orders (if such excess or such equality exists (other
than because the number of Outstanding Preferred Shares in clause
(1) above and this clause (2) are each zero because all of the
Outstanding Preferred Shares are the subject of Submitted Hold
Orders), such Submitted Bids by Potential Holders being hereinafter
referred to collectively as "Sufficient Clearing Bids"); and
(C) if Sufficient Clearing Bids exist, the lowest rate per annum
specified in the Submitted Bids (the "Winning Bid Rate") that if:
(1) each Submitted Bid from Existing Holders specifying the
Winning Bid Rate and all other Submitted Bids from Existing Holders
specifying lower rates per annum were rejected, thus entitling such
Existing Holders to continue to hold the Preferred Shares that are
the subject of such Submitted Bids, and
(2) each Submitted Bid from Potential Holders specifying the
Winning Bid Rate and all other Submitted Bids from Potential Holders
specifying lower rates per annum were accepted, thus entitling the
Potential Holders to purchase the Preferred Shares that are the
subject of such Submitted Bids, would result in the number of shares
subject to all Submitted Bids specifying the Winning Bid Rate or a
lower rate per annum being at least equal to the Available Preferred
Shares.
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(ii) Promptly after the Auction Agent has made the determinations
pursuant to Section 11.10(d)(i), the Auction Agent shall advise the Trust of
the Maximum Applicable Rate and, based on such determinations, the
Applicable Rate for the next succeeding Dividend Period as follows:
(A) if Sufficient Clearing Bids exist, that the Applicable Rate for
the next succeeding Dividend Period shall be equal to the Winning Bid
Rate;
(B) if Sufficient Clearing Bids do not exist (other than because all
of the Outstanding Preferred Shares are the subject of Submitted Hold
Orders), that the Applicable Rate for the next succeeding Dividend
Period shall be equal to the Maximum Applicable Rate; or
(C) if all of the Outstanding Preferred Shares are the subject of
Submitted Hold Orders, that the Dividend Period next succeeding the
Auction shall automatically be the same length as the immediately
preceding Dividend Period and the Applicable Rate for the next
succeeding Dividend Period shall be equal to 80% of the Reference Rate
on the date of the Auction.
(e) Acceptance and Rejection of Submitted Bids and Submitted Sell Orders and
Allocation of Shares. Based on the determinations made pursuant to
Section 11.10(d)(i), the Submitted Bids and Submitted Sell Orders shall be
accepted or rejected and the Auction Agent shall take such other action as set
forth below:
(i) If Sufficient Clearing Bids have been made, subject to the provisions
of Section 11.10(e)(iii) and Section 11.10(e)(iv), Submitted Bids and
Submitted Sell Orders shall be accepted or rejected in the following order
of priority and all other Submitted Bids shall be rejected:
(A) the Submitted Sell Orders of Existing Holders shall be accepted
and the Submitted Bid of each of the Existing Holders specifying any
rate per annum that is higher than the Winning Bid Rate shall be
accepted, thus requiring each such Existing Holder to sell the
Outstanding Preferred Shares that are the subject of such Submitted Sell
Order or Submitted Bid;
(B) the Submitted Bid of each of the Existing Holders specifying any
rate per annum that is lower than the Winning Bid Rate shall be
rejected, thus entitling each such Existing Holder to continue to hold
the Outstanding Preferred Shares that are the subject of such Submitted
Bid;
(C) the Submitted Bid of each of the Potential Holders specifying any
rate per annum that is lower than the Winning Bid Rate shall be accepted;
(D) the Submitted Bid of each of the Existing Holders specifying a
rate per annum that is equal to the Winning Bid Rate shall be rejected,
thus entitling each such Existing Holder to continue to hold the
Outstanding Preferred Shares that are the subject of such Submitted Bid,
unless the number of Outstanding Preferred Shares subject to all such
Submitted Bids shall be greater than the number of Outstanding Preferred
Shares ("Remaining Shares") equal to the excess of the Available
Preferred
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Shares over the number of Outstanding Preferred Shares subject to
Submitted Bids described in Section 11.10(e)(i)(B) and
Section 11.10(e)(i)(C), in which event the Submitted Bids of each such
Existing Holder shall be accepted, and each such Existing Holder shall
be required to sell Outstanding Preferred Shares, but only in an amount
equal to the difference between (1) the number of Outstanding Preferred
Shares then held by such Existing Holder subject to such Submitted Bid
and (2) the number of Preferred Shares obtained by multiplying (x) the
number of Remaining Shares by (y) a fraction the numerator of which
shall be the number of Outstanding Preferred Shares held by such
Existing Holder subject to such Submitted Bid and the denominator of
which shall be the sum of the number of Outstanding Preferred Shares
subject to such Submitted Bids made by all such Existing Holders that
specified a rate per annum equal to the Winning Bid Rate; and
(E) the Submitted Bid of each of the Potential Holders specifying a
rate per annum that is equal to the Winning Bid Rate shall be accepted
but only in an amount equal to the number of Outstanding Preferred
Shares obtained by multiplying (x) the difference between the Available
Preferred Shares and the number of Outstanding Preferred Shares subject
to Submitted Bids described in Section 11.10(e)(i)(B),
Section 11.10(e)(i)(C) and Section 11.10(e)(i)(D) by (y) a fraction the
numerator of which shall be the number of Outstanding Preferred Shares
subject to such Submitted Bid and the denominator of which shall be the
sum of the number of Outstanding Preferred Shares subject to such
Submitted Bids made by all such Potential Holders that specified rates
per annum equal to the Winning Bid Rate.
(ii) If Sufficient Clearing Bids have not been made (other than because
all of the Outstanding Preferred Shares are subject to Submitted Hold
Orders), subject to the provisions of Section 11.10(e)(iii), Submitted
Orders shall be accepted or rejected as follows in the following order of
priority and all other Submitted Bids shall be rejected:
(A) the Submitted Bid of each Existing Holder specifying any rate per
annum that is equal to or lower than the Maximum Applicable Rate shall
be rejected, thus entitling such Existing Holder to continue to hold the
Outstanding Preferred Shares that are the subject of such Submitted Bid;
(B) the Submitted Bid of each Potential Holder specifying any rate
per annum that is equal to or lower than the Maximum Applicable Rate
shall be accepted, thus requiring such Potential Holder to purchase the
Outstanding Preferred Shares that are the subject of such Submitted Bid;
and
(C) the Submitted Bids of each Existing Holder specifying any rate
per annum that is higher than the Maximum Applicable Rate shall be
accepted and the Submitted Sell Orders of each Existing Holder shall be
accepted, in both cases only in an amount equal to the difference
between (1) the number of Outstanding Preferred Shares then held by such
Existing Holder subject to such Submitted Bid or Submitted Sell Order
and (2) the number of Preferred Shares obtained by multiplying (x) the
difference between the Available Preferred Shares and the aggregate
number of
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Outstanding Preferred Shares subject to Submitted Bids described in
Section 11.10(e)(ii)(A) and Section 11.10(e)(ii)(B) by (y) a fraction
the numerator of which shall be the number of Outstanding Preferred
Shares held by such Existing Holder subject to such Submitted Bid or
Submitted Sell Order and the denominator of which shall be the number of
Outstanding Preferred Shares subject to all such Submitted Bids and
Submitted Sell Orders.
(iii) If, as a result of the procedures described in Section 11.10(e),
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 Preferred
Share on any Auction Date, the Auction Agent shall, in such manner as in its
sole discretion it shall determine, round up or down the number of Preferred
Shares to be purchased or sold by any Existing Holder or Potential Holder on
such Auction Date so that each Outstanding Preferred Share purchased or sold
by each Existing Holder or Potential Holder on such Auction Date shall be a
whole Preferred Share.
(iv) If, as a result of the procedures described in Section 11.10(e), any
Potential Holder would be entitled or required to purchase less than a whole
Preferred Share on any Auction Date, the Auction Agent shall, in such manner
as in its sole discretion it shall determine, allocate Preferred Shares for
purchase among Potential Holders so that only whole Preferred Shares are
purchased on such Auction Date by any Potential Holder, even if such
allocation results in one or more of such Potential Holders not purchasing
any Preferred Shares on such Auction Date.
(v) Based on the results of each Auction, the Auction Agent shall
determine, with respect to each Broker-Dealer that submitted Bids or Sell
Orders on behalf of Existing Holders or Potential Holders, the aggregate
number of Outstanding Preferred Shares to be purchased and the aggregate
number of the Outstanding Preferred Shares to be sold by such Potential
Holders and Existing Holders and, to the extent that such aggregate number
of Outstanding shares to be purchased and such aggregate number of
Outstanding shares to be sold differ, the Auction Agent shall determine to
which other Broker-Dealer or Broker-Dealers acting for one or more
purchasers such Broker-Dealer shall deliver, or from which other
Broker-Dealer or Broker-Dealers acting for one or more sellers such
Broker-Dealer shall receive, as the case may be, Outstanding Preferred
Shares.
(f) Miscellaneous.
(i) The Trust may interpret the provisions of this Section 11.10 to
resolve any inconsistency or ambiguity, remedy any formal defect or make any
other change or modification that does not substantially adversely affect
the rights of Beneficial Owners of Preferred Shares.
(ii) A Beneficial Owner or an Existing Holder (A) may sell, transfer or
otherwise dispose of Preferred Shares only pursuant to a Bid or Sell Order
in accordance with the procedures described in this Section 11.10 or to or
through a Broker-Dealer or to such other persons as may be permitted by the
Trust, provided that in the case of all transfers
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other than pursuant to Auctions such Beneficial Owner or Existing Holder,
its Broker-Dealer, if applicable, or its Agent Member advises the Auction
Agent of such transfer and (B) except as otherwise required by law, shall
have the ownership of the Preferred Shares held by it maintained in book
entry form by the Securities Depository in the account of its Agent Member,
which in turn will maintain records of such Beneficial Owner's beneficial
ownership. The Trust may not submit an Order in any Auction.
(iii) All of the Outstanding Preferred Shares of a series shall be
registered in the name of the nominee of the Securities Depository unless
otherwise required by law or unless there is no Securities Depository. If
there is no Securities Depository, at the Trust's option and upon its
receipt of such documents as it deems appropriate, any Preferred Shares may
be registered in the Stock Register in the name of the Beneficial Owner
thereof and such Beneficial Owner thereupon will be entitled to receive
certificates therefor and required to deliver certificates therefor upon
transfer or exchange thereof.
11.11 Securities Depository; Stock Certificates. (a) If there is a
Securities Depository, all of the Preferred Shares of each series shall be
issued to the Securities Depository and registered in the name of the
Securities Depository or its nominee. Certificates may be issued as necessary
to represent Preferred Shares. All such certificates shall bear a legend to the
effect that such certificates are issued subject to the provisions restricting
the transfer of Preferred Shares contained in these Bylaws. Unless the Trust
shall have elected, during a Non-Payment Period, to waive this requirement, the
Trust will also issue stop-transfer instructions to the Auction Agent for the
Preferred Shares. Except as provided in paragraph (b) below, the Securities
Depository or its nominee will be the Holder, and no Beneficial Owner shall
receive certificates representing its ownership interest in such shares.
(b) If the Applicable Rate applicable to all Preferred Shares of a series
shall be the Non-Payment Period Rate or there is no Securities Depository, the
Trust may at its option issue one or more new certificates with respect to such
shares (without the legend referred to in Section 11.11(a)) registered in the
names of the Beneficial Owners or their nominees and rescind the stop-transfer
instructions referred to in Section 11.11(a) with respect to such shares.
ARTICLE 12
AMENDMENT TO THE BYLAWS
12.1 General. Except to the extent that the Declaration of Trust or
applicable law require a vote or consent of Shareholders, these Bylaws may be
amended, changed, altered or repealed, in whole or part, only by resolution of
a majority of the Trustees then in office at any meeting of the Trustees, or by
one or more writings signed by such Trustees.
12.2 Article 11. Without limiting the provisions of Section 12.1, the Board
of Trustees of the Trust may, by resolution duly adopted, without shareholder
approval (except as otherwise required by Article 11 or required by applicable
law), amend Article 11 to (a) reflect any amendments hereto which the Board of
Trustees of the Trust is entitled to adopt pursuant to the terms of Article 11
without shareholder approval or (b) add additional series of Preferred Shares
or additional shares of a series of Preferred Shares (and terms relating
thereto) to the series and Preferred Shares described herein. Each such
additional series and all such additional Preferred Shares shall be governed by
the terms of Article 11.
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XXXXX XXXXXXXX DATED AUGUST 17, 2009
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