Exhibit b.3
SECOND AMENDED AND RESTATED
BYLAWS
of
PIMCO FLOATING RATE INCOME FUND
(Dated as of October 28, 2003)
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 shall be subject to the Agreement and Declaration of Trust, as amended or
restated from time to time (the "Declaration of Trust"), of PIMCO Floating Rate
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, 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 a 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
3.1 Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary, and such other officers including a
Chairman, 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. 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 and the Secretary 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. 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; President; Vice President. Unless the Trustees otherwise
provide, the Chairman or, if there is none or in the absence of the Chairman,
the President shall preside at all meetings of the Shareholders and of the
Trustees. 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.
3.6 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
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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.
3.7 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.
3.8 Resignations. Any officer may resign at any time by written instrument
signed by him or her and delivered to the Chairman, 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.
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,
Section 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.
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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.
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
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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 affect the ownership of Shares in the
Trust.
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 (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) or (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 Articles 11 and 12 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
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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 in respect of the terms of a class of preferred shares of beneficial
interest of the Trust as reflected in 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 Common 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
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 a majority of the
Trustees and a majority of the Continuing 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 or agent 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
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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.
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.
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(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.
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 annual meeting to be
held in the calendar year 2004, the Shareholder Notice must be so delivered
or mailed and so received on or before July 1, 2004; 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
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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.
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
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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 (10th) 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.
(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.
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(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 Market Preferred Shares
A series of Auction Market Preferred Shares, Series T: 2,800 preferred
shares of beneficial interest, par value $.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 Market Preferred Shares, Series T." Each share of Auction Market
Preferred Shares, Series T (sometimes referred to herein as "Series T AMPS") may
be issued on a date to be determined by the Board of Trustees of the Trust or
pursuant to their delegated authority; has 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 has 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 AMPS shall constitute a separate series of
preferred shares of beneficial interest of the Trust, and each share of Series T
AMPS shall be identical.
A series of Auction Market Preferred Shares, Series W: 2,800 preferred
shares of beneficial interest, par value $.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 Market Preferred Shares, Series W." Each share of Auction Market
Preferred Shares, Series W (sometimes referred to herein as "Series W AMPS") may
be issued on a date to be determined by the Board of Trustees of the Trust or
pursuant to their delegated authority; has 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 has 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 AMPS shall constitute a separate series of
preferred shares of beneficial interest of the Trust, and each share of Series W
AMPS shall be identical.
A series of Auction Market Preferred Shares, Series TH: 2,800 preferred
shares of beneficial interest, par value $.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 Market Preferred Shares, Series TH." Each share of Auction Market
Preferred Shares, Series TH (sometimes referred to herein as "Series TH AMPS")
may be issued on a date to be determined by the Board of Trustees of the Trust
or pursuant to their delegated authority; has 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 has such other preferences, voting powers, limitations
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as to dividends, qualifications and terms and conditions of redemption as are
set forth in these Bylaws. The Series TH AMPS shall constitute a separate series
of preferred shares of beneficial interest of the Trust, and each share of
Series TH AMPS shall be identical.
11.1 Definitions. (a) Unless the context or use clearly 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:
"Accountant's Confirmation" has the meaning set forth in Section 11.7(c) of
these Bylaws.
"Additional Trustees" has the meaning set forth in Section 11.5(b) of these
Bylaws.
"ADR" has the meaning set forth in paragraph (iii) of the definition of
"Fitch Eligible Assets."
"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 or a participant in the Securities
Depository that will act on behalf of a Beneficial Owner of one or more AMPS or
on behalf of a Potential Beneficial Owner.
"AMPS" means the Series T AMPS, the Series W AMPS and the Series TH AMPS.
"Applicable Percentage" has the meaning set forth in Section 11.10(a)(vii)
of these Bylaws.
"Applicable Rate" means the rate per annum at which cash dividends are
payable on the AMPS for any Dividend Period.
"Applicable Spread" has the meaning set forth in Section 11.10(a)(vii) of
these Bylaws.
"Approved Foreign Nations" has the meaning set forth in the definition of
"Fitch Eligible Assets."
"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
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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 paying agent and redemption agent for the AMPS.
"Auction Date" has the meaning set forth in Section 11.10(a)(ii) of these
Bylaws.
"Auction Procedures" means the procedures for conducting Auctions, as 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 AMPS or a Broker-Dealer that holds AMPS 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.
"Canadian Bonds" has the meaning set forth in the definition of "Fitch
Eligible Assets."
""Catastrophe Bonds" means securities that entitle the holders thereof to
receive a fixed principal or similar amount and a specified return on such
amount, generally having the following characteristics: (1) the issuer of such
asset-backed security has entered into a swap, insurance contract or similar
arrangement with a counterparty pursuant to which such issuer agrees to pay
amounts to the counterparty upon the occurrence of certain specified events,
including: hurricanes, earthquakes and other events, and (2) payments on such
security depend primarily upon the occurrence and/or severity of such events.
"Closing Transactions" has the meaning set forth in Section 11.8(a)(i) of
these Bylaws.
"Common Shares" means the shares of beneficial interest designated as
common shares, par value $.00001 per share, of the Trust.
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"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 Auction Market
Preferred Share, the date on which the Trust first issues such share.
"Debt Securities" has the meaning set forth in paragraph (vi) of the
definition of "Fitch Eligible Assets."
"Declaration of Trust" means the Amended and Restated Agreement and
Declaration of Trust of the Trust dated August 14, 2003, 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 Fitch Discount Factor or a Moody's Discount
Factor, as applicable.
"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 AMPS, has the meaning set forth in
Section 11.2(b)(i) of these Bylaws.
"Dividend Period" means the Initial Dividend Period, any Seven-Day Dividend
Period and any Special Dividend Period.
"Eligible Asset" means a Fitch Eligible Asset (if Fitch Ratings is then
rating the AMPS), a Moody's Eligible Asset (if Xxxxx'x is then rating the AMPS)
and/or any asset included in the calculations used by any Rating Agency then
rating the AMPS for purposes of determining such Rating Agency's rating on the
AMPS, as applicable.
"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 AMPS 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
(ix) of the definition of "Moody's Eligible Assets."
"Fitch Discount Factor" means, for purposes of determining the Discounted
Value of any Fitch Eligible Asset, the percentage determined as follows. The
Fitch Discount Factor for any
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Fitch Eligible Asset other than the securities set forth below will be the
percentage provided in writing by Fitch Ratings.
(i) Debt Securities: The percentage determined by reference to the
rating of the Debt Security with reference to the remaining term to
maturity of the Debt Security (other than short-term Debt Securities
covered by clause (iii) below), in accordance with the table set forth
below.
Fitch Rating Category
Term to Maturity of Debt Not rated or
Debt Security AAA AA A BBB BB below BB/1/
------------- --- -- - --- -- -----------
3 years or less (but
longer than 1 year)..... 106.38% 108.11% 109.89% 111.73% 129.87% 151.52%
5 years or less (but
longer than 3 years).... 111.11 112.99 114.94 116.96 134.24 151.52
7 years or less (but
longer than 5 years).... 113.64 115.61 117.65 119.76 135.66 151.52
10 years or less (but
longer than 7 years).... 115.61 117.65 119.76 121.95 136.74 151.52
15 years or less (but
longer than 10 years)... 119.76 121.95 124.22 126.58 139.05 151.52
More than 15 years...... 124.22 126.58 129.03 131.58 144.55 151.52
------------
/1/ If a security is not rated by Fitch Ratings but is rated by two other
Rating Agencies, then the lower of the ratings on the security from the two
other Rating Agencies will be used to determine the Fitch Discount Factor
(e.g., where the S&P rating is A- and the Xxxxx'x rating is Baa1, a rating
by Fitch Ratings of BBB+ will be used). If a security is not rated by Fitch
Ratings but is rated by only one other Rating Agency, then the rating on
the security from the other Rating Agency will be used to determine the
Fitch Discount Factor (e.g., where the only rating on a security is an S&P
rating of AAA-, a rating by Fitch Ratings of AAA- will be used, and where
the only rating on a security is a Xxxxx'x rating of Ba3, a rating by Fitch
Ratings of BB- will be used). If a security is not rated by any Rating
Agency, the Trust will use the percentage set forth under "Not rated or
below BB" in this table.
The Fitch Discount Factors presented in the immediately preceding
table apply to Debt Securities that are Performing and have a Market Value
determined by a Pricing Service or an Approved Price. The Fitch Discount
Factor noted in the table above for a Debt Security not rated or rated
below BB by Fitch Ratings shall apply to any non-Performing Debt Security
with a price equal to or greater than $.20 per security. If a Debt Security
does not have a Market Value determined by a Pricing Service or an Approved
Price, a rating one rating category below the actual rating on the Debt
Security will be used (e.g., where the actual rating is A-, the rating for
Debt Securities rated BBB- will be used). The Fitch Discount Factor for a
Debt Security issued by a limited partnership that is not a Rule 144A
Security shall be the Discount Factor determined in accordance with the
table set forth above multiplied by 105%.
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The Fitch Discount Factors presented in the immediately preceding
table will also apply to (i) interest rate swaps and caps, whereby the
rating of the counterparty to the swap or cap will be the rating used to
determine the Fitch Discount Factor in the table; and (ii) TRACERs and
TRAINs, 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 or TRAIN. The Fitch
Discount Factors presented in the immediately preceding table will also
apply to corporate obligations backed by a guaranty, a letter of credit or
insurance issued by a third party. If the third-party credit rating is the
basis for the rating on the obligation, then the rating on the third party
will be used to determine the Fitch Discount Factor in the table. The Fitch
Discount Factors presented in the immediately preceding table will also
apply to preferred trust certificates, the rating on which will be
determined by the underlying debt instruments in the trust, unless such
preferred trust certificates are determined by Fitch Ratings to qualify for
a traditional equity discount factor, in which case the Fitch Discount
Factor shall be 370%.
(ii)Preferred shares: The percentage determined by reference to the
rating of the preferred shares in accordance with the table set forth
below.
Preferred Shares Discount Factor
AAA Taxable Preferred ................................... 130%
AA Taxable Preferred .................................... 133%
A Taxable Preferred ..................................... 135%
BBB Taxable Preferred ................................... 139%
BB Taxable Preferred .................................... 154%
Not rated or below BB Taxable Preferred ................. 161%
Investment Grade DRD Preferred .......................... 164%
Not rated or below Investment Grade DRD Preferred ....... 200%/1/
------------
/1/ If a security is not rated by Fitch Ratings but is rated by two other
Rating Agencies, then the lower of the ratings on the security from the two
other Rating Agencies will be used to determine the Fitch Discount Factor
(e.g., where the S&P rating is A- and the Xxxxx'x rating is Baa1, a rating
by Fitch Ratings of BBB+ will be used). If a security is not rated by Fitch
Ratings but is rated by only one other Rating Agency, then the rating on
the security from the other Rating Agency will be used to determine the
Fitch Discount Factor (e.g., where the only rating on a security is an S&P
rating of AAA-, a rating by Fitch Rating of AAA- will be used, and where
the only rating on a security is a Xxxxx'x rating of Ba3, a rating by Fitch
Ratings of BB- will be used). If a security is not rated by any Rating
Agency, the Trust will use the percentage set forth under "Not rated or
below Investment Grade DRD Preferred" in this table.
(iii) Short-term instruments: The Fitch Discount Factor applied to
short-term portfolio securities, including without limitation Debt
Securities with terms to maturity of one year or less, Short Term Money
Market Instruments and municipal debt obligations with terms to maturity
within the Fitch Exposure Period, will be (A) 100%, so long as such
portfolio securities mature or have a demand feature at par exercisable
within the Fitch Exposure Period; (B) 115%, so long as such portfolio
securities neither mature nor have a demand feature exercisable at par
within the Fitch Exposure Period; and (C) 125%, so long as such portfolio
securities neither mature within the Fitch Exposure
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Period nor have a demand feature at par. A Fitch Discount factor of 100%
will be applied to cash.
(iv) U.S. Government Securities and U.S. Treasury Strips: The
percentage determined by reference to the remaining term to maturity of the
security in accordance with the table below.
Time Remaining to Maturity Discount Factor
-------------------------- ---------------
1 year or less 101.5%
2 years or less (but longer than 1 year) 103
3 years or less (but longer than 2 years) 105
4 years or less (but longer than 3 years) 107
5 years or less (but longer than 4 years) 109
7 years or less (but longer than 5 years) 112
10 years or less (but longer than 7 years) 114
Greater than 10 years 122
(v) Convertible securities: The Fitch Discount Factor applied to
convertible securities will be (a) 200% for investment grade convertible
securities and (b) 222% for below investment grade convertible securities
so long as such convertible securities have neither (x) a conversion
premium greater than 100% nor (y) a yield to maturity or yield to worst of
greater than 15.00% above the corresponding Treasury curve.
The Fitch Discount Factor applied to convertible securities which have
conversion premiums of greater than 100% will be (a) 152% for investment
grade convertible securities and (b) 179% for below investment grade
convertible securities so long as such convertible securities do not have a
yield to maturity or yield to worst of greater than 15.00% above the
corresponding Treasury curve.
The Fitch Discount Factor applied to convertible securities which have
a yield to maturity or yield to worst of greater than 15.00% above the
corresponding Treasury curve will be 370%.
If a security is not rated by Fitch Ratings but is rated by two other
Rating Agencies, then the lower of the ratings on the security from the two
other Rating Agencies will be used to determine the Fitch Discount Factor
(e.g., where the S&P rating is A- and the Xxxxx'x rating is Baa1, a rating
by Fitch Ratings of BBB+ will be used). If a security is not rated by Fitch
Ratings but is rated by only one other Rating Agency, then the rating on
the security from the other Rating Agency will be used to determine the
Fitch Discount Factor (e.g., where the only rating on a security is an S&P
rating of AAA, a rating by Fitch Ratings of AAA will be used, and where the
only rating on a security is a Xxxxx'x rating of Ba3, a rating by Fitch
Ratings of BB- will be used). If a security is not rated by any Rating
Agency, the Trust will treat the security as if it were below investment
grade.
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(vi) Rule 144A Securities: The Fitch Discount Factor applied to Rule
144A Securities will be 110% of the Fitch Discount Factor which would apply
were the securities registered under the Securities Act.
(vii) Asset-backed and mortgage-backed securities: The percentage
determined by reference to the asset type in accordance with the table set
forth below.
Asset Type (with time remaining to maturity, if applicable) Discount Factor
---------- ---------------
U.S. Treasury/agency securities (10 years or less) ...................... 118%
U.S. Treasury/agency securities (greater than 10 years) ................. 127%
U.S. agency sequentials (10 years or less) .............................. 128%
U.S. agency sequentials (greater than 10 years) ......................... 142%
U.S. agency principal only securities ................................... 236%
U.S. agency interest only securities
(with Market Value greater than $.40) ................................... 696%
U.S. agency interest only securities
(with Market Value less than or equal to $.40) .......................... 214%
AAA LockOut securities, interest only ................................... 236%
U.S. agency planned amortization class bonds (10 years or less) ......... 115%
U.S. agency planned amortization class bonds (greater than 10 years) .... 136%
AAA sequentials (10 years or less) ...................................... 118%
AAA sequentials (greater than 10 years) ................................. 135%
AAA planned amortization class bonds (10 years or less) ................. 115%
AAA planned amortization class bonds (greater than 10 years) ............ 140%
Jumbo mortgages rated AAA/1/ ............................................ 123%
Jumbo mortgages rated AA/1/ ............................................. 130%
Jumbo mortgages rated A/1/ .............................................. 136%
Jumbo mortgages rated BBB/1/ ............................................ 159%
Commercial mortgage-backed securities rated AAA ......................... 131%
Commercial mortgage-backed securities rated AA .......................... 139%
Commercial mortgage-backed securities rated A ........................... 148%
Commercial mortgage-backed securities rated BBB ......................... 177%
Commercial mortgage-backed securities rated BB .......................... 283%
Commercial mortgage-backed securities rated B ........................... 379%
Commercial mortgage-backed securities rated CCC or not rated ............ 950%
------------
/1/ Applies to jumbo mortgages, credit cards, auto loans, home equity
loans, manufactured housing and prime mortgage-backed securities not
issued by a U.S. agency or instrumentality.
(viii)Bank Loans: The percentage determined by reference to the Fitch
Loan Category in accordance with the table set forth below.
Fitch Loan Category Discount Factor
------------------- ---------------
A......................... 126%
B......................... 157
C......................... 184
D......................... 433
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(ix) REITs:
(a) Common stock and preferred stock of REITs and other real
estate companies:
Discount Factor
---------------
REIT or other real estate company preferred stock 154%
REIT or other real estate company common stock 196%
(b) Corporate debt securities of REITs:
Term to Maturity AAA AA A BBB BB B CCC
---------------- --- -- - --- -- - ---
1 year.......... 111% 114% 117% 120% 121% 127% 227%
2 year.......... 116% 125% 125% 127% 132% 137% 137%
3 year.......... 121% 123% 127% 131% 133% 140% 225%
4 year.......... 126% 126% 129% 132% 136% 140% 164%
5 year.......... 131% 132% 135% 139% 144% 149% 185%
7 year.......... 140% 143% 146% 152% 159% 167% 228%
10 year......... 141% 143% 147% 153% 160% 168% 232%
12 year......... 144% 144% 150% 157% 165% 174% 249%
15 year......... 148% 151% 155% 163% 172% 182% 274%
20-30 year...... 152% 156% 160% 169% 180% 191% 306%
If a security is not rated by Fitch Ratings but is rated by two other
Rating Agencies, then the lower of the ratings on the security from the two
other Rating Agencies will be used to determine the Fitch Discount Factor
(e.g., where the S&P rating is A- and the Xxxxx'x rating is Baa1, a rating
by Fitch Ratings of BBB+ will be used). If a security is not rated by Fitch
Ratings but is rated by only one other Rating Agency, then the rating on
the security from the other Rating Agency will be used to determine the
Fitch Discount Factor (e.g., where the only rating on a security is an S&P
rating of AAA, a rating by Fitch Ratings of AAA will be used, and where the
only rating on a security is a Xxxxx'x rating of Ba3, a rating by Fitch
Ratings of BB- will be used). If a security is not rated by any Rating
Agency, the Trust will treat the security as if it were below investment
grade.
(x) Municipal debt obligations: The Fitch Discount Factor applied to
municipal debt obligations will be the percentage determined by reference
to the table set forth below.
Fitch Rating Category
Fitch Exposure Period AAA AA A BBB F1/1/ Unrated/2/
--------------------- --- -- - --- ----- ----------
7 weeks................ 151% 159% 166% 173% 136% 225%
8 weeks or less but
greater than 7 weeks... 154 161 168 176 137 231
9 weeks or less but
greater than 8 weeks... 158 163 170 177 138 240
------------
/1/ Municipal debt obligations rated by Fitch Ratings which do not mature
or have a demand feature at par exercisable in 30 days and which do not
have a long-term rating.
/2/ If a security is not rated by Fitch Ratings but is rated by two other
Rating Agencies, then the lower of the ratings on the security from the two
other Rating Agencies will be used to determine the Fitch Discount
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Factor (e.g., where the S&P rating is A- and the Xxxxx'x rating is Baa1, a
rating by Fitch Ratings of BBB+ will be used). If a security is not rated
by Fitch Ratings but is rated by only one other Rating Agency, then the
rating on the security from the other Rating Agency will be used to
determine the Fitch Discount Factor (e.g., where the only rating on a
security is an S&P rating of AAA-, a rating by Fitch Ratings of AAA- will
be used, and where the only rating on a security is a Xxxxx'x rating of
Ba3, a rating by Fitch Ratings of BB- will be used). If a security is not
rated by any Rating Agency, the Trust will use the percentage set forth
under "Unrated" in this table.
(xi) Foreign Bonds: The Fitch Discount Factor (A) for a Foreign Bond
the principal of which (if not denominated in U.S. dollars) is subject to a
currency hedging transaction will be the Fitch Discount Factor that would
otherwise apply to such Foreign Bonds in accordance with this definition
and (B) for (1) a Foreign Bond the principal of which (if not denominated
in U.S. dollars) is not subject to a currency hedging transaction and (2) a
bond issued in a currency other than U.S. dollars by a corporation, limited
liability company or limited partnership domiciled in, or the government or
any agency, instrumentality or political subdivision of, a nation other
than an Approved Foreign Nation, will be 370%.
(xii) Structured Notes: The Fitch Discount Factor applied to
Structured Notes will be (A) in the case of a corporate issuer, the Fitch
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 Fitch
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 Fitch Discount Factor determined in accordance with paragraph (iii)
under this definition.
(xiii) Unhedged foreign investments: A discount factor of 105% shall
be applied to the Market Value of unhedged foreign investments otherwise
determined in accordance with the preceding paragraphs; provided, however,
if the foreign issuer of such unhedged foreign investment is from a country
whose sovereign debt rating in a non-local currency is not assigned a
rating of `AA' or better by Fitch, a discount factor of 117% shall be
applied to the Market Value thereof otherwise determined in accordance with
the preceding paragraphs.
(xiv) Catastrophe Bonds: The Fitch Discount Factor applied to
Catastrophe Bonds will be 333.33%.
"Fitch Eligible Assets" means
(i) cash (including interest and dividends due on assets rated (A) BBB
or higher by Fitch Ratings or the equivalent by another Rating Agency if
the payment date is within five Business Days of the Valuation Date, (B) A
or higher by Fitch Ratings or the equivalent by another Rating Agency if
the payment date is within thirty days of the Valuation Date, and (C) A+ or
higher by Fitch Ratings or the equivalent by another Rating Agency if the
payment date is within the Fitch Exposure Period) and receivables for Fitch
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
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clearing house firms with respect to which the Trust has received prior
written authorization from Fitch Ratings or (B) (1) with counterparties
having a long-term debt rating of at least BBB- from Fitch Ratings or
the equivalent from another Rating Agency or (2) with counterparties
having a Short Term Money Market Instrument rating of at least F1+ by
Fitch Ratings or the equivalent by another Rating Agency;
(ii) preferred shares if (A) dividends on such preferred shares
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 common stock or its equivalent at any time over
the respective lives of such securities, (C) the issuer of such a
preferred shares has common stock listed on either the New York Stock
Exchange or the American Stock Exchange, (D) the issuer of such
preferred shares has a senior debt rating or preferred stock rating
from Fitch Ratings of BBB- or higher or the equivalent rating by
another Rating Agency and (E) the preferred shares are part of an issue
that is at least $50 million;
(iii) (A) common stocks (1) which are traded on the New York Stock
Exchange or the American Stock Exchange or in the over-the-counter
market, (2) which, if cash dividend paying, pay cash dividends in U.S.
dollars, and (3) which may be sold without restriction by the Trust;
provided, however, that (a) common stock which, while a Fitch Eligible
Asset owned by the Trust, ceases paying any regular cash dividend will
no longer be considered a Fitch Eligible Asset until 60 calendar days
after the date of the announcement of such cessation, unless the issuer
of the common stock has senior debt securities rated at least A- by
Fitch and (b) the aggregate Market Value of the Trust's holdings of the
common stock of any issuer in excess of 5% per U.S. issuer of the
number of outstanding shares of such issuer times the Market Value of
such common stock shall not be a Fitch's Eligible Asset; and (B) common
stocks or their equivalent denominated in any currency other than the
U.S. dollar and common stocks or their equivalent of issuers formed
under the laws of jurisdictions other than the United States, its
states and the District of Columbia for which there are
dollar-denominated American Depository Receipts ("ADRs") which are
traded in the United States on exchanges or over-the-counter and are
issued by banks formed under the laws of the United States, its states
or the District of Columbia; provided, however, that the aggregate
Market Value of the Trust's holdings of securities denominated in
currencies other than the U.S. dollar and ADRs in excess of 3% of the
aggregate Market Value of the outstanding shares of common stock or its
equivalent of such issuer or in excess of 10% of the Market Value of
the Trust's Fitch Eligible Assets with respect to issuers formed under
the laws of any single such non-U.S. jurisdiction other than Argentina,
Australia, Brazil, Xxxxx, Xxxxxx, Xxxxxxx, Xxxxx, Xxxxx, Xxxxx, Xxxxxx,
Xxxxx or the United Kingdom (each an "Approved Foreign Nation," and
collectively the "Approved Foreign Nations") or Canada shall not be a
Fitch Eligible Asset;
(iv) Short Term Money Market Instruments so long as (A) such
securities are rated at least F1+ by Fitch Ratings or the equivalent by
another Rating Agency, (B) in the case of demand deposits, time
deposits and overnight funds, the supporting entity is rated at
-21-
least A by Fitch Ratings or the equivalent by another Rating Agency, or
(C) in all other cases, the supporting entity (1) is rated at least A
by Fitch Ratings or the equivalent by another Rating Agency and the
security matures within one month, (2) is rated at least A by Fitch
Ratings or the equivalent by another Rating Agency and the security
matures within three months or (3) is rated at least AA by Fitch
Ratings or the equivalent by another Rating Agency and the security
matures within six months;
(v) U.S. Government Securities and U.S. Treasury Strips;
(vi) debt securities if (A) 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 of the Trust; and (B) such securities are issued by (1) a
U.S. corporation, limited liability company or limited partnership, (2)
a corporation, limited liability company or limited partnership
domiciled in an Approved Foreign Nation, (3) the government of any
Approved Foreign Nation or any of its agencies, instrumentalities or
political subdivisions (the debt securities of Approved Foreign Nation
issuers being referred to collectively as "Foreign Bonds"), (4) a
corporation, limited liability company or limited partnership domiciled
in Canada or (5) the Canadian government or any of its agencies,
instrumentalities or political subdivisions (the debt securities of
Canadian issuers being referred to collectively as "Canadian Bonds").
Foreign Bonds held by the Trust will qualify as Fitch Eligible Assets
only up to a maximum of 20% of the aggregate Market Value of all assets
constituting Fitch Eligible Assets. Similarly, Canadian Bonds held by
the Trust will qualify as Fitch Eligible Assets only up to a maximum of
20% of the aggregate Market Value of all assets constituting Fitch
Eligible Assets. Notwithstanding the limitations in the two preceding
sentences, Foreign Bonds and Canadian Bonds held by the Trust will
qualify as Fitch Eligible Assets only up to a maximum of 30% of the
aggregate Market Value of all assets constituting Fitch Eligible
Assets. In addition, bonds which are issued in connection with a
reorganization under U.S. federal bankruptcy law ("Reorganization
Bonds") will be considered debt securities constituting Fitch Eligible
Assets if (a) they provide for periodic payment of interest in cash in
U.S. dollars or euros; (b) they do not provide for conversion or
exchange into equity capital at any time over their lives; (c) they
have been registered under the Securities Act or are restricted as to
resale under federal securities laws but are eligible for trading under
Rule 144A promulgated pursuant to 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; (d) they
were issued by a U.S. corporation, limited liability company or limited
partnership; and (e) at the time of purchase at least one year had
elapsed since the issuer's reorganization. Reorganization Bonds may
also be considered debt securities constituting Fitch Eligible Assets
if they have been approved by Fitch Ratings, which approval shall not
be unreasonably withheld. All debt securities satisfying the foregoing
requirements and restrictions of this paragraph (vi) are herein
referred to as "Debt Securities."
-22-
(vii) asset-backed and mortgage-backed securities;
(viii) Rule 144A Securities;
(ix) Bank Loans;
(x) municipal debt obligations;
(xi) TRACERs, TRAINs and Structured Notes;
(xii) interest rate swaps entered into according to International
Swap Dealers Association standards if (A) the counterparty to the swap
transaction has a short-term rating of not less than F1 from Fitch
Ratings or the equivalent by another Rating Agency, or, if the swap
counterparty does not have a short-term rating, the counterparty has a
senior unsecured long-term debt rating of AA or higher from Fitch
Ratings or the equivalent from another Rating Agency and (B) the
original aggregate notional amount of the interest rate swap
transaction or transactions is not greater than the liquidation
preference of the Preferred Shares originally issued;
(xiii) any common stock, preferred stock or any debt security of
REITs or real estate companies;
(xiv) Catastrophe Bonds; and
(xv) unrated debt securities issued by an issuer which (A) has not
filed for bankruptcy in the past three years; (B) is current on all
interest and principal on its fixed income obligations; and (C) is
current on all preferred stock dividends.
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 may be included
in Fitch Eligible Assets, but, with respect to any financial contract, only upon
receipt by the Trust of a writing from Fitch Ratings specifying any conditions
on including such financial contract in Fitch Eligible Assets and assuring the
Trust that including such financial contract in the manner so specified would
not affect the credit rating assigned by Fitch Ratings to the AMPS.
In addition, portfolio holdings as described below must be within the
following diversification and issue size requirements in order to be included in
Fitch's Eligible Assets:
Security Rated At Maximum Single Maximum Single Minimum Issue Size
Least Issuer/1/ Industry/1/,/2/ ($ in million)/3/
AAA 100% 100% $100
AA- 00 00 000
X- 00 00 100
BBB- 6 25 100
BB- 4 16 50
B- 3 12 50
CCC 2 8 50
------------
/1/ Percentages represent a portion of the aggregate market value of
corporate debt securities.
-23-
/2/ Industries are determined according to Fitch's Industry
Classifications, as defined herein.
/3/ Preferred stock has a minimum issue size of $50 million for all rating
categories in the table.
Where the Trust sells an asset and agrees to repurchase such asset in
the future, the Discounted Value of such asset will constitute a Fitch 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 Fitch Eligible Asset if the long-term debt of such other party is
rated at least A- by Fitch Ratings or the equivalent by another Rating Agency
and such agreement has a term of 30 days or less; otherwise the Discounted Value
of such purchased asset will constitute a Fitch Eligible Asset.
Notwithstanding the foregoing, an asset will not be considered a Fitch
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 Fitch Ratings has indicated to the Trust will not affect the status of
such asset as a Fitch 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.
"Fitch Exposure Period" means the period commencing on (and including)
a given Valuation Date and ending 49 days thereafter.
"Fitch Hedging Transactions" has the meaning set forth in Section
11.8(f) of these Bylaws.
"Fitch Industry Classifications" means, for the purposes of determining
Fitch Eligible Assets, each of the following industry classifications (or such
other classifications as Fitch Ratings may from time to time approve for
application to the AMPS):
1. Aerospace & Defense
2. Automobiles
3. Banking, Finance & Real Estate
4. Broadcasting & Media
5. Building & Materials
6. Business Services
7. Cable
8. Chemicals
9. Computers & Electronics
10. Consumer Products
11. Energy
12. Environmental Services
13. Farming & Agriculture
14. Food, Beverage & Tobacco
-24-
15. Gaming, Lodging & Restaurants
16. Healthcare & Pharmaceuticals
17. Industrial/Manufacturing
18. Insurance
19. Leisure & Entertainment
20. Metals & Mining
21. Miscellaneous
22. Packaging and Containers
23. Paper & Forest Products
24. Retail
25. Sovereign
26. Structured Finance Obligations
27. Supermarkets & Drugstores
28. Telecommunications
29. Textiles & Furniture
30. Transportation
31. Utilities
The Trust shall use its discretion in determining which industry
classification is applicable to a particular investment.
"Fitch Loan Category" means the following four categories (and, for
purposes of this categorization, the Market Value of a Fitch Eligible Asset
trading at par is equal to $1.00):
(i) "Fitch Loan Category A" means Performing Bank Loans which have
a Market Value or an Approved Price greater than or equal to $.90.
(ii) "Fitch Loan Category B" means: (A) Performing Bank Loans
which have a Market Value or an Approved Price of greater than or equal
to $.80 but less than $.90; and (B) non-Performing Bank Loans which
have a Market Value or an Approved Price greater than or equal to $.85.
(iii) "Fitch Loan Category C" means: (A) Performing Bank Loans
which have a Market Value or an Approved Price of greater than or equal
to $.70 but less than $.80; (B) non-Performing Bank Loans which have a
Market Value or an Approved Price of greater than or equal to $.75 but
less than $.85; and (C) Performing Bank Loans without an Approved Price
rated BB- or higher by Fitch Ratings. If a security is not rated by
Fitch Ratings but is rated by two other Rating Agencies, then the lower
of the ratings on the security from the two other Rating Agencies will
be used to determine the Fitch Discount Factor (e.g., where the S&P
rating is A- and the Xxxxx'x rating is Baa1, a rating by Fitch Ratings
of BBB+ will be used). If a security is not rated by Fitch Ratings but
is rated by only one other Rating Agency, then the rating on the
security from the other Rating Agency will be used to determine the
Fitch Discount Factor (e.g., where the only rating on a security is an
S&P rating of AAA-, a rating by Fitch Ratings of AAA- will be used, and
where the only rating on a security is a Xxxxx'x rating of Ba3, a
rating by Fitch Ratings of BB- will be used).
-25-
(iv) "Fitch Loan Category D" means Bank Loans not described in any
of the foregoing categories.
Notwithstanding any other provision contained above, for purposes of
determining whether a Fitch Eligible Asset falls within a specific Fitch Loan
Category, to the extent that any Fitch Eligible Asset would fall within more
than one of the Fitch Loan Categories, such Fitch Eligible Asset shall be deemed
to fall into the Fitch Loan Category with the lowest applicable Fitch Discount
Factor.
"Fitch Ratings" means Fitch, Inc., doing business as Fitch Ratings, or
its successors.
"Foreign Bonds" has the meaning set forth in clause (vi) of the
definition of "Fitch Eligible Assets."
"Forward Commitment" has the meaning set forth in Section 11.8(d) of
these Bylaws.
"Holder" means a Person identified as a holder of record of AMPS 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
AMPS, the initial dividend payment date with respect to the Initial Dividend
Period 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 AMPS, the
rate per annum applicable to the Initial Dividend Period for such series of
AMPS.
"LIBOR Dealers" means Xxxxxxx Lynch, Pierce, Xxxxxx and Xxxxx
Incorporated and such other dealer or dealers as the Fund may from time to time
appoint, or, in lieu of any thereof, their respective affiliates or successors.
"LIBOR Rate," on any Auction Date, means (i) the rate for deposits in
U.S. dollars for the designated Dividend Period, which appears on display page
3750 of Moneyline's Telerate Service ("Telerate Page 3750") (or such other page
as may replace that page on that service, or such other service as may be
selected by the LIBOR Dealer or its successors that are LIBOR Dealers) as of
11:00 a.m., London time, on the day that is the London Business Day preceding
the Auction Date (the "LIBOR Determination Date"), or (ii) if such rate does not
appear on Telerate Page 3750 or such other page as may replace such Telerate
Page 3750, (A) the LIBOR Dealer will determine the arithmetic mean of the
offered quotations of the Reference Banks to leading banks in the London
interbank market for deposits in U.S. dollars for the designated Dividend Period
in an amount determined by such LIBOR Dealer by reference to requests for
quotations as of approximately 11:00 a.m. (London time) on such date made by
such LIBOR
-26-
Dealer to the Reference Banks, (B) if at least two of the Reference Banks
provide such quotations, LIBOR Rate will equal such arithmetic mean of such
quotations, (C) if only one or none of the Reference Banks provide such
quotations, LIBOR Rate will be deemed to be the arithmetic mean of the offered
quotations that leading banks in The City of New York selected by the LIBOR
Dealer (after obtaining the Fund's approval) are quoting on the relevant LIBOR
Determination Date for deposits in U.S. dollars for the designated Dividend
Period in an amount determined by the LIBOR Dealer (after obtaining the Fund's
approval) that is representative of a single transaction in such market at such
time by reference to the principal London offices of leading banks in the London
interbank market; provided, however, that if one of the LIBOR Dealers does not
quote a rate required to determine the LIBOR Rate, the LIBOR Rate will be
determined on the basis of the quotation or quotations furnished by any
Substitute LIBOR Dealer or Substitute LIBOR Dealers selected by the Fund to
provide such rate or rates not being supplied by the LIBOR Dealer; provided
further, that if the LIBOR Dealer and Substitute LIBOR Dealers are required but
unable to determine a rate in accordance with at least one of the procedures
provided above, LIBOR Rate will be LIBOR Rate as determined on the previous
Auction Date. If the number of Dividend Period days will be (i) 7 or more but
fewer than 21 days, such rate will be the seven-day LIBOR rate; (ii) more than
21 but fewer than 49 days, such rate will be the one-month LIBOR rate; (iii) 49
or more but fewer than 77 days, such rate will be the two-month LIBOR rate; (iv)
77 or more but fewer than 112 days, such rate will be the three-month LIBOR
rate; (v) 112 or more but fewer than 140 days, such rate will be the four-month
LIBOR rate; (vi) 140 or more but fewer than 168 days, such rate will be the
five-month LIBOR rate; (vii) 168 or more but fewer than 189 days, such rate will
be the six-month LIBOR rate; (viii) 189 or more but fewer than 217 days, such
rate will be the seven-month LIBOR rate; (ix) 217or more but fewer than 252
days, such rate will be the eight-month LIBOR rate; (x) 252 or more but fewer
than 287 days, such rate will be the nine-month LIBOR rate; (xi)287 or more but
fewer than 315 days, such rate will be the ten-month LIBOR rate; (xii) 315 or
more but fewer than 343 days, such rate will be the eleven-month LIBOR rate; and
(xiii) 343 or more but fewer than 365 days, such rate will be the twelve-month
LIBOR rate.
"Lien" means any material lien, mortgage, pledge, security interest or
security agreement of any kind.
"London Business Day" means any day on which commercial banks are
generally open for business in London.
"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
(sometimes referred to as a "Long Term Special Rate Period").
"Mandatory Redemption Price" means $25,000 per Auction Market Preferred
Share plus an amount equal to accumulated but unpaid dividends (whether or not
earned or declared) to (but not including) the date fixed for redemption.
"Market Value" of any asset of the Trust shall be the market value
thereof determined by a Pricing Service. The 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
-27-
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 Pricing Service is unable to value a security, the
security shall be valued at the lower of two bid quotations obtained by the
Trust from dealers who are members of the National Association of Securities
Dealers, Inc. and who make a market in the security, at least one of which shall
be in writing. If two bid quotations are not readily available for any
securities, such securities shall be valued in good faith at fair value pursuant
to procedures approved by the Board of Trustees of the Trust. Futures contracts
and options are valued at the 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 in good faith pursuant to
procedures approved by the Board of Trustees of the Trust. All other assets will
be 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 AMPS, has the meaning set
forth in Section 11.10(a)(vii) 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) Convertible securities (including convertible preferred stock):
The percentage determined by reference to the sector groupings of the issuer of
the convertible security with reference to the rating of such security, in
accordance with the table set forth below.
Rating/1/ Discount Factors/2/
--------- -------------------
Utility Industrial Financial Transportation
------- ---------- --------- --------------
Aaa 162% 256% 233% 250%
Aa 167 261 238 265
A 172 266 243 275
Baa 188 282 259 285
Ba 195 290 265 290
B 199 293 270 295
Unrated 300 300 300 300
---------
/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, unrated fixed-income and convertible securities
(which are securities that are not rated by any of Moody's, S&P or
Fitch Ratings) are limited to 10% of Moody's Eligible Assets for
purposes of
-28-
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 use the applicable percentage set forth in the
row entitled "Unrated" in the table 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 Seven-week exposure period.
Upon conversion to common stock, the Discount Factors applicable to common stock
will apply:
Common Stocks Utility Industrial Financial
------------- ------- ---------- ---------
Seven week exposure 170% 264% 241%
period
(ii) Corporate debt securities (non-convertible): 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 Below B and
-----------
Corporate Debt Security Aaa Aa A Baa Ba B Unrated/1/
----------------------- --- -- - --- -- - -------
1 year or less 109% 112% 115% 118% 137% 150% 250%
2 years or less (but longer than 1 year) 115 118 122 125 146 160 250
3 years or less (but longer than 2 years) 120 123 127 131 153 168 250
4 years or less (but longer than 3 years) 126 129 133 138 161 176 250
5 years or less (but longer than 4 years) 132 135 139 144 168 185 250
7 years or less (but longer than 5 years) 139 143 147 152 179 197 250
10 years or less (but longer than 7 years) 145 150 155 160 189 208 250
15 years or less (but longer than 10 years) 150 155 160 165 196 216 250
20 years or less (but longer than 15 years) 150 155 160 165 196 228 250
30 years or less (but longer than 20 years) 150 155 160 165 196 229 250
Greater than 30 years 165 173 181 189 205 240 250
/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, securities
rated below B by Xxxxx'x and, 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 corporate debt security is not rated by any of
Xxxxx'x, S&P or Fitch Ratings, the Trust will use the applicable
percentage set forth under the column entitled "Below B and Unrated" in
the table above. Ratings assigned by S&P and/or Fitch Ratings are
generally accepted by Xxxxx'x 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.
The Xxxxx'x Discount Factors presented in the immediately preceding
table will also apply to Xxxxx'x Eligible Assets that are FHLB, FNMA
and FFCB Debentures and to
-29-
rated TRACERs and TRAINs, 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 or TRAIN, provided that (i) the Xxxxx'x Discount
Factor for any TRAIN or TRACER rated by Xxxxx'x will be the percentage
determined, based on the Xxxxx'x rating of the TRAIN or TRACER, in
accordance with the table set forth above and (ii) the Xxxxx'x
Discount Factors determined from the table shall be multiplied by a
factor of 120% for purposes of calculating the Discounted Value of
TRAINs. The Xxxxx'x Discount Factors presented in the immediately
preceding table will also apply to corporate debt securities that do
not pay interest in U.S. dollars or euros. The Trust will consult with
Xxxxx'x to determine incremental discount factors for non-U.S. dollar
and non-euro denominated bonds.
(iii)Preferred stock (other than convertible preferred stock,
which is subject to paragraph (i) above): The Xxxxx'x 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%.
(iv) Short-term instruments: The Xxxxx'x Discount Factor applied
to short-term portfolio securities, including without limitation
short-term corporate debt securities, Short Term Money Market
Instruments and short-term municipal debt obligations, will be (A)
100%, so long as such portfolio securities mature or have a demand
feature at par exercisable within the Xxxxx'x Exposure Period; (B)
115%, so long as such portfolio securities do not mature within the
Xxxxx'x Exposure Period, or have a demand feature at par not
exercisable within the Xxxxx'x Exposure Period; and (C) 125%, if such
securities are not rated by Xxxxx'x, so long as such portfolio
securities are rated at least A-1+/AA or SP-1+/AA by S&P or Fitch
Ratings and mature or have a demand feature at par exercisable within
the Xxxxx'x Exposure Period. A Xxxxx'x Discount Factor of 100% will be
applied to cash.
(v) U.S. Government Securities and U.S. Treasury Strips: The
percentage determined by reference to the remaining term to maturity of
such asset, in accordance with the table set forth below.
U.S. Government Securities U.S. Treasury Strips
Remaining Term to Maturity Discount Factor Discount 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
(vi) Rule 144A Securities: The Xxxxx'x Discount Factor applied to
Rule 144A Securities for Rule 144A Securities whose terms include
rights to registration under the
-30-
Securities Act within one year and Rule 144A Securities which do not
have registration rights within one year will be 120% and 130%,
respectively, of the Xxxxx'x Discount Factor which would apply were
the securities registered under the Securities Act.
-31-
(vii) Bank Loans: The Xxxxx'x Discount Factor applied to senior Bank
Loans ("Senior Loans") shall be the percentage specified in accordance with the
table set forth below (or such lower percentages as Xxxxx'x may approve in
writing from time to time):
Xxxxx'x Rating Category
-----------------------
Caa and below (including
------------------------
Type of Loan Aaa-A Baa and Ba/1/ B/1/ distressed and unrated)/1/
------------ ----- ------------- ---- --------------------------
Senior Loans * $250 MM 118% 136% 149% 250%
Non-Senior Loans * 128% 146% 159% 260%
$250 MM
Loans ** $250 MM 138% 156% 169% 270%
/1/ If a Senior Loan is not rated by any of Xxxxx'x, S&P or Fitch
Ratings, the Trust will use the applicable percentage set forth under
the column entitled "Caa and below (including distressed and unrated)"
in the table above. Ratings assigned by S&P and/or Fitch Ratings are
generally accepted by Xxxxx'x at face value. However, adjustments to
face value may be made to particular categories of securities 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; provided however, that, in a situation where a security is
rated "B" (or equivalent) by a given Rating Agency and rated "Caa" (or
equivalent) by another Rating Agency, the Trust will use the applicable
percentage set forth under the column entitled "B" in the table above.
(viii) Asset-backed and mortgage-backed securities: The Xxxxx'x
Discount Factor applied to asset-backed securities shall be 131%. 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.
Remaining Term to Maturity Cash Flow Retained Cash Flow 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.
* Less than
** Greater than
-32-
Coupon Cash Flow Retained Cash Flow 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
(relating to whole loans).
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.
Coupon Cash Flow Retained Cash Flow 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
(ix) 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, except as provided in the following table, any
municipal obligation:
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Exposure Period Aaa Aa A Baa Other (V)MIG-1/1/ SP-1+/2/ Unrated/3/
--------------- --- -- - --- ----- ----------- -------- ----------
7 weeks 151% 159% 166% 173% 187% 136% 148% 225%
8 weeks or less but 154 161 168 176 190 137 149 231
greater than seven
weeks
9 weeks or less but 158 163 170 177 192 138 150 240
greater than eight
weeks
______________
/1/ Municipal debt obligations not rated by Xxxxx'x but rated equivalent
to XXX-0, (X)XXX-0, xx X-0, by S&P and Fitch Ratings that have a
maturity less than or equal to 49 days.
/2/ Municipal debt obligations not rated by Xxxxx'x but rated equivalent
to MIG-1, (V)MIG-1, or P-1 by S&P and Fitch Ratings that have a
maturity greater than 49 days.
/3/ Unless conclusions regarding liquidity risk as well as estimates of
both the probability and severity of default for the corporation's or
municipal issuer's assets can be derived from other sources as well as
combined with a number of sources as presented by the Trust to Xxxxx'x
securities rated below B by Xxxxx'x and unrated securities, which are
securities rated by neither Xxxxx'x, S&P nor Fitch Ratings, are limited
to 10% of Xxxxx'x Eligible Assets. If a municipal debt security is
unrated by Xxxxx'x, S&P or Fitch, the Trust will use the percentage set
forth under "Other" in the Municipal Debt Table. Ratings assigned by
S&P or Fitch are generally accepted by Xxxxx'x at face value (e.g.,
treating a rating of AAA by S&P or Fitch Ratings as Aaa for purposes of
the table above and a rating of AA by S&P or Fitch Ratings as Aa for
purposes of the table above. However, adjustments to face value may be
made to particular categories of credits for which the ratings by S&P
and/or Fitch Rating 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.
(x) 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 (ii)
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
(ii); 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 (v) under this definition.
The Xxxxx'x Discount Factor for any Xxxxx'x Eligible Asset other
than the securities set forth above will be the percentage provided in
writing by Xxxxx'x. Additionally, in order to merit consideration as a
Xxxxx'x Eligible Asset, securities should be issued by entities which:
(a) have not filed for bankruptcy within the past three years, (b) are
current on all principal and interest in their fixed income
obligations, (c) are current on all preferred stock dividends, and (d)
possess a current, unqualified auditor's report without qualified,
explanatory language.
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"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 clearing house firms 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 or Fitch Ratings and not rated by Xxxxx'x) need not meet any
otherwise applicable rating criteria of S&P or Fitch Ratings;
(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, S&P or
Fitch Ratings; (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
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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 none of Xxxxx'x, S&P,
or Fitch Ratings shall be considered to be 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) 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 a rating of CCC or better by
S&P or Fitch Ratings, (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.
Convertible Bonds Diversification Guidelines
--------------------------------------------
Type Maximum Single Issuer (%)/1/ Maximum Single Industry (%) Maximum Single 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).
(viii) 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, the American Stock
Exchange or the NASDAQ, (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); provided,
-36-
however, that convertible preferred stock shall be treated as convertible
securities in accordance with paragraph (vii) above. 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;
(ix) 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 or Fitch
Ratings, (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 or Fitch Ratings, (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 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 or Fitch
Ratings and based on fixed-rate
-37-
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) 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) 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 that
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
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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 .15% and .25% for
either cost-of-funds index and between .175% and .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; and (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.
(x) 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 $10,000,000;
(xi) Structured Notes, rated TRACERs and TRAINs;
(xii) Financial contracts, as such term is defined in Section
3(c)(2)(B)(ii) of the 1940 Act, not otherwise provided for in this
definition but only upon receipt by the Trust of a letter from Xxxxx'x
specifying any conditions on including such financial contract in Xxxxx'x
Eligible Assets and assuring the Trust that including such financial
contract in the manner so specified would not affect the credit rating
assigned by Xxxxx'x to the AMPS; and
(xiii) Common stock, preferred stock or any debt security of REITs
or real estate companies.
In addition, portfolio holdings as described below must be within the
following diversification and issue size requirements in order to be included in
Xxxxx'x Eligible Assets:
Maximum Single Maximum Single Minimum Issue Size
Ratings /1/ Issuer /2/,/3/ Industry /3/,/4/ ($ 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
corporate debt securities.
/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 Trust's total assets.
-39-
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.
Notwithstanding the foregoing, an asset will not be considered a Xxxxx'x
Eligible Asset to the extent that it (i) 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, or (ii) has been segregated against obligations of the Trust in
connection with an outstanding derivative transaction.
"Xxxxx'x Exposure Period" means the period commencing on a given
Valuation Date and ending 49 days thereafter.
"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 AMPS):
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
-40-
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
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
14. Finance: Investment Brokerage, Leasing, Syndication, Securities
15. Farming and Agriculture: Livestock, Grains, Produce, Agriculture
Chemicals, Agricultural Equipment, Fertilizers
16. Grocery: Grocery Stores, Convenience Food Stores
17. Healthcare, 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
19. Hotels, Motels, Inns and Gaming
-41-
20. Insurance: 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
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, TV, Cable Broadcasting Equipment
26. Cargo Transport: Rail, Shipping, Railroads, Railcar Builders, Ship
Builders, Containers, Container Builders, Parts, Overnight Mail,
Trucking, Truck Manufacturing, Trailer Manufacturing, Air Cargo,
Transport
27. Retail Stores: Apparel, Toy, Variety, Drug, 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.
"1940 Act" means the Investment Company Act of 1940, as amended from time
to time.
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"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 AMPS (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."
"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 (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 AMPS 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 AMPS called for redemption, the Mandatory
Redemption Price per share of such AMPS 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 Ratings and Xxxxx'x (and any Substitute Rating Agency in
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lieu of Fitch Ratings or Xxxxx'x in the event Fitch Ratings or Xxxxx'x shall not
rate the AMPS) advises the Trust in writing that such adjustment, modification,
alteration or change will not adversely affect its then current ratings on the
AMPS.
"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
AMPS 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.
"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 Auction Market Preferred
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 AMPS, AMPS
theretofore issued by the Trust except, without duplication, (A) any AMPS
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 AMPS 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 AMPS held by an Affiliate shall be
deemed outstanding for purposes of calculating the Preferred Shares Basic
Maintenance Amount and (ii) with respect to other preferred shares of beneficial
interest of the Trust, the meaning equivalent to that for AMPS as set forth in
clause (i).
"Parity Shares" means the AMPS and each other outstanding series of
preferred shares of beneficial interest of the Trust the holders of which,
together with the holders of the AMPS, 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 the issuer of any asset that is a Bank
Loan, Corporate Debt Security 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 AMPS but that wishes to purchase
such shares, or that is a Beneficial Owner that wishes to purchase additional
AMPS.
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"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 AMPS (or, in the case of an Existing Holder, additional AMPS).
"Preferred Share 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 AMPS
Outstanding on such date multiplied by $25,000, plus any redemption premium
applicable to AMPS then subject to redemption; (B) the aggregate amount of
dividends that will have accumulated at the respective Applicable Rates (whether
or not earned or declared) to (but not including) the first respective Dividend
Payment Dates for each series of AMPS Outstanding that follow such Valuation
Date (plus the aggregate amount of dividends, whether or not earned or declared,
that will have accumulated in respect of other outstanding preferred shares to,
but not including, the first respective dividend payment dates for such other
shares that follow such Valuation Date); (C) the aggregate amount of dividends
that would accumulate on shares of each series of AMPS 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).
"Preferred Share Basic Maintenance Cure Date," with respect to the failure
by the Trust to satisfy the Preferred Shares Basic Maintenance Amount (as
required by Section 11.7(a) of these Bylaws) as of a given Valuation Date, means
the sixth Business Day following such Valuation Date.
"Preferred Shares Basic Maintenance Report" means 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.
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"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 Fitch Ratings, Xxxxx'x or any Substitute
Rating Agency, as applicable, for purposes of determining whether the Trust has
Eligible Assets with an aggregate Discounted Value that equals or exceeds the
Preferred Shares Basic Maintenance Amount.
"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
October __, 2003.
"Rating Agency" means a nationally recognized statistical rating
organization.
"Reference Banks" means four major banks in the London interbank market
selected by Xxxxxxx Lynch, Pierce, Xxxxxx and Xxxxx Incorporated or its
affiliates or successors or such other party as the Fund may from time to time
appoint.
"Reference Rate" means the LIBOR rate (for a Dividend Period of fewer than
365 days) or the applicable Treasury Index Rate (for a Dividend Period of 365
days or more).
"REITs" means real estate investment trusts.
"Reorganization Bonds" has the meaning set forth under the definition of
"Fitch Eligible Assets."
"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 AMPS that agrees to follow the procedures
required to be followed by such securities depository in connection with the
AMPS.
"Senior Loans" has the meaning set forth in paragraph (vii) of the
definition of "Xxxxx'x Discount Factor."
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"Series T AMPS" means the Auction Market Preferred Shares, Series T.
"Series W AMPS" means the Auction Market Preferred Shares, Series W.
"Series TH AMPS" means the Auction Market Preferred Shares, Series TH.
"Seven-Day Dividend Period" means a Subsequent Dividend Period that (a)
consists of seven days or (b) would consist of seven days but for the fact that
the Dividend Payment Date which immediately follows, or the Dividend Payment
Date which falls within, such Subsequent Dividend Period is not a Business Day.
"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 AMPS.
"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 AMPS.
"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 F-1 by Fitch Ratings or A-1 by S&P
if such commercial paper matures in 30 days or P-1 by Xxxxx'x and either
F-1+ by Fitch Ratings 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 F-1+ from Fitch Ratings or
A-1+ from S&P, in the case of commercial paper
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or certificates of deposit, and (2) credit ratings on each Valuation Date
of at least Aa3 from Xxxxx'x and either AA from Fitch Ratings 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, Xxxxx Ratings and S&P shall be
at least A2, A-2 and A, respectively; and provided further, however, that
the foregoing credit rating requirements shall be deemed to be met with
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, F-1+ by Fitch Ratings 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" (sometimes referred to as a "Special Rate
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 AMPS subject to such Special 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 AMPS subject
to such Special Dividend Period shall be redeemable at the Trust's option at a
price per share equal to $25,000, plus accumulated but unpaid dividends (whether
or not earned or declared) to (but not including) the date fixed for redemption,
plus a premium expressed as a percentage or percentages 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 Rating Agency" means a Rating Agency selected by Xxxxxxx Lynch,
Pierce, Xxxxxx and Xxxxx Incorporated or its affiliates and successors, after
consultation with the Trust, to act as the substitute Rating Agency to determine
the credit ratings of the AMPS.
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"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.
"TRAINs" means Targeted Return Index Securities, which are trust
certificates comprised of bonds that are chosen to track a particular index.
"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.
"Trust" means the PIMCO Floating Rate Income Fund.
"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 the Preferred Shares Basic Maintenance Amount, 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.
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(b) The foregoing definitions of Accountant's Confirmation, Preferred
Shares Basic Maintenance Amount, Preferred Shares Basic Maintenance Cure Date,
Preferred Shares Basic Maintenance Report, Bank Loans, Closing Transactions,
Cure Date, Debt Securities, Deposit Securities, Discounted Value, Fitch Discount
Factor, Fitch Eligible Assets, Fitch Exposure Period, Fitch Hedging
Transactions, Fitch Industry Classifications, Forward Commitment, 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
Hedging Transactions, Xxxxx'x Industry Classification, Xxxxx'x Loan Category,
1940 Act Cure Date, 1940 Act Preferred Shares Asset Coverage, Performing, Senior
Loans, Short Term Money Market Instruments, Structured Notes, TRACERs, Treasury
Xxxx, Treasury Bonds, U.S. Government Securities, U.S. Treasury Securities, U.S.
Treasury Strips, 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 Ratings and a rating of
"Aaa" from Xxxxx'x on the AMPS on their Date of Original Issue; 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 Ratings, 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 AMPS.
11.2 Dividends.
(a) The Holders of a particular series of AMPS 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
AMPS 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 AMPS shall
accumulate at the relevant Applicable Rate(s) 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 AMPS, dividends on that series of AMPS will be
payable, at the option of the Trust, either (i) with respect to any
Seven-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
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Dividend Period for a series of AMPS is scheduled to begin on the same day
and end on the same day as a Dividend Period for another series of AMPS,
then the last day of such Dividend Period for such other series of AMPS
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 AMPS shall be co- extensive with any
Dividend Period of any other series of AMPS 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 AMPS. The Board of Trustees of the Trust
before authorizing a dividend may change a Dividend Payment Date if such
change does not adversely affect the contract rights of the Holders of AMPS
set forth in the Declaration of Trust or the Bylaws. The Initial Dividend
Period, Seven-Day Dividend Periods and Special Dividend Periods with
respect to a series of AMPS 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 Share 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 Share 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
AMPS (the "Initial Dividend Period"), the Applicable Rate for such series
of AMPS shall be the Initial Dividend Rate. Commencing on the Initial
Dividend Payment Date for a series of AMPS, 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 AMPS, 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 Seven-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 AMPS 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 AMPS 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 AMPS not paid to such Holders when due may be paid to such
Holders in the same form
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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 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 AMPS 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 dividends per share of any series of
AMPS payable (if declared) on the Initial Dividend Payment Date, each
Dividend Payment Date of each Seven-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 AMPS 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 AMPS 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
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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 AMPS 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 AMPS. Upon receiving such Request for Special Dividend Period, the
Broker-Dealer(s) shall jointly determine the Optional Redemption
Price of the AMPS of the applicable series of AMPS 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 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 AMPS, (4) industry and
financial conditions which may affect the AMPS of the applicable
series, (5) the investment objective of the Trust, and (6) the
Dividend Periods and dividend rates at which current and potential
beneficial holders of the AMPS 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, if any, 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
Ratings, 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
Fitch Eligible Assets and Xxxxx'x Eligible Assets each with an
aggregate Discounted Value at least equal to the Preferred Shares
Basic Maintenance Amount, 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 AMPS 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
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Date. The Trust also shall provide a copy of such Notice of
Revocation to Fitch Ratings, 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
AMPS, the next succeeding Dividend Period for that series will be a
Seven-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
Seven-Day Dividend Period and the Trust may not again give a Notice
of Special Dividend Period for the AMPS (and any such attempted
notice shall be null and void) until Sufficient Clearing Bids have
been made in an Auction with respect to a Seven-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.
(d) (i) Holders shall not be entitled to any dividends, whether
payable in cash, property or AMPS, 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 AMPS
that may be in arrears.
(ii) For so long as any AMPS are 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 AMPS 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 AMPS 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 AMPS 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 AMPS as to dividends and upon liquidation), unless
(A) immediately after such transaction, the Trust shall have Fitch
Eligible Assets and Xxxxx'x Eligible Assets each with an aggregate
Discounted Value equal to or greater than the Preferred Shares Basic
Maintenance Amount and the Trust shall maintain the 1940 Act
Preferred Shares Asset Coverage, (B) full cumulative dividends on
AMPS 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 AMPS required to be redeemed by
any provision for mandatory redemption contained herein. Further, for
so long as any AMPS are Outstanding, the
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Trust shall not declare, pay or set apart for payment any dividend or
other distribution on any Parity Shares other than the AMPS unless
contemporaneously herewith it declares, pays or sets apart for
payment, as the case may be, the same proportionate share of
dividends on the AMPS.
(e) Each dividend shall consist of cash at the Applicable Rate.
(f) No fractional AMPS 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 of AMPS then
outstanding 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 AMPS, 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 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
AMPS and any other Outstanding class or series of preferred shares of beneficial
interest of the Trust ranking on a parity with the AMPS 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 have no right or claim to any of the remaining
assets of 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) AMPS 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 AMPS, 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 AMPS 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.
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(ii) The Trust shall redeem, out of funds legally available
therefor, at the Mandatory Redemption Price per share, AMPS 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 to maintain Fitch Eligible Assets and Xxxxx'x
Eligible Assets each with an aggregate Discounted Value equal to
or greater than the Preferred Shares Basic Maintenance Amount as
provided in Section 11.7(a) or 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 Preferred Shares Basic
Maintenance Cure Date or the 1940 Act Cure Date (herein
collectively referred to as a "Cure Date"), as the case may be.
The number of AMPS to be redeemed shall be equal to the lesser
of (i) the minimum number of AMPS 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 the Trust having Fitch Eligible
Assets and Xxxxx'x Eligible Assets each with an aggregate
Discounted Value equal to or greater than the Preferred Shares
Basic Maintenance Amount or 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
AMPS and other preferred shares of beneficial interest of the
Trust the redemption of which would have such result, all AMPS
and other preferred shares of beneficial interest of the Trust
then Outstanding shall be redeemed), and (ii) the maximum number
of AMPS, 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
AMPS required to be redeemed in accordance with the foregoing,
the Trust shall allocate the number required to be redeemed
which would result in the Trust having Fitch Eligible Assets and
Xxxxx'x Eligible Assets each with an aggregate Discounted Value
equal to or greater than the Preferred Shares Basic Maintenance
Amount or satisfaction of the 1940 Act Preferred Shares Asset
Coverage, as the case may be, pro rata among AMPS 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 AMPS 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 remaining 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 remaining 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 AMPS 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 AMPS 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.
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(b) Notwithstanding any other provision of this Section 11.4, no
AMPS may be redeemed pursuant to Section 11.4(a)(i) of these Bylaws
unless (i) 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) redemption thereof would not result
in the Trust's failure to maintain Fitch Eligible Assets or Xxxxx'x
Eligible Assets with an aggregate Discounted Value equal to or greater
than the Preferred Shares Basic Maintenance Amount. In the event that
less than all the outstanding shares of a series of AMPS are to be
redeemed and there is more than one Holder, the shares of that series of
AMPS to be redeemed shall be selected by lot or such other method as the
Trust shall deem fair and equitable.
(c) Whenever AMPS 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 AMPS 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 AMPS of
such series to be redeemed, (iv) the place or places where AMPS 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 equal
to the redemption payment (including any applicable premiums) for the
AMPS 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, 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. 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.
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(a) General. Except as otherwise provided in the Declaration of
Trust or Bylaws or as otherwise required by applicable law, each Holder
of AMPS 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
Outstanding preferred shares of beneficial interest of the Trust,
including AMPS, and of Common Shares shall vote together as a single
class; provided that, at any meeting of the shareholders of the Trust
held for the election of trustees, the holders of Outstanding preferred
shares of beneficial interest of the Trust, including AMPS, 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 AMPS, voting as a single class, shall elect the balance of the
trustees.
(b) Right to Elect Majority of Board of Trustees. Except as
otherwise required by law, 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,
including the AMPS, 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 (as so
elected, the "Additional Trustees"), in addition to 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 any outstanding
preferred shares, including the AMPS, 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
(ii) if at any time holders of any preferred shares of
beneficial interest of the Trust, including the holders of AMPS,
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 revesting of such voting rights in the Holders upon
the further occurrence of any of the events described in this
Section 11.5(b), the terms of the Additional Trustees shall
terminate automatically, and the remaining Trustees shall constitute
the Trustees of the Trust.
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(c) Right to Vote with Respect to Certain Other Matters. So long
as any AMPS are Outstanding, the Trust shall not, without the affirmative
vote or consent of the holders of a majority of the preferred shares of
the Trust, including the AMPS, 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 AMPS or any other
series of preferred shares of beneficial interest of the Trust with
respect to payment of dividends or the distribution of assets upon
dissolution, liquidation or winding up the affairs of the Trust;
provided, however, that no vote is required to authorize the issuance of
another series of AMPS or another class of preferred shares of beneficial
interest of the Trust that is substantially identical in all respects to
the AMPS; 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 AMPS 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 of the Trust, including the AMPS, 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 AMPS
differently than those of a Holder of any other series of preferred
shares of the Trust, including the AMPS, without the affirmative vote of
the holders of at least a majority of the AMPS 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 AMPS,
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 AMPS 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 AMPS
of each series Outstanding at such time (each such series voting
separately as a class) shall also be required. The class (and, where
applicable, the series) vote of holders of preferred shares of beneficial
interest of the Trust, including AMPS, 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 AMPS, voting together as a single class, necessary to authorize
the action in question.
(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 AMPS 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
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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 at which trustees are to be
elected, such holders, voting together as a class (to the
exclusion of the holders of all other securities and classes of
shares of beneficial interest of the Trust), shall be entitled
to 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,
an Auction Market 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 termination of a Voting
Period, the terms of office of the Additional Trustees shall
automatically 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 AMPS, the exclusive remedy of the Holders
shall be the right to vote for trustees pursuant to the provisions of
this Section 11.5.
11.6 1940 Act Preferred Shares Asset Coverage . The Trust shall
maintain, as of the last Business Day of each month in which any AMPS are
outstanding, the 1940 Act Preferred Shares Asset Coverage.
11.7 Preferred Shares Basic Maintenance Amount.
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(a) So long as any AMPS are outstanding and any Rating Agency so
requires, the Trust shall maintain, on each Valuation Date, and shall
verify to its satisfaction that it is maintaining on such Valuation Date,
Fitch Eligible Assets and Xxxxx'x Eligible Assets each having an
aggregate Discounted Value equal to or greater than the Preferred Shares
Basic Maintenance Amount. Upon any failure to maintain the required
Discounted Value, the Trust will use its best efforts to alter the
composition of its portfolio to retain a Discounted Value of both Fitch
Eligible Assets and Xxxxx'x Eligible Assets at least equal to the
Preferred Shares Basic Maintenance Amount on or prior to the Preferred
Shares Basic Maintenance 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
the Preferred Shares Basic Maintenance Amount, the Trust shall complete
and deliver to (i) the Auction Agent and (ii) Fitch Ratings, Xxxxx'x and
any other Rating Agency then rating the AMPS the Discounted Value of
whose Eligible Assets fails to satisfy the Preferred Shares Basic
Maintenance Amount, as applicable, a complete Preferred Shares Basic
Maintenance Report 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 Preferred Shares Basic Maintenance Report. The
Trust will deliver a Preferred Shares Basic Maintenance Report to each
applicable 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 Eligible Assets of each applicable Rating Agency
with an aggregate Discounted Value equal to or greater than the Preferred
Shares Basic Maintenance Amount or on which the Trust fails to maintain
Eligible Assets of each applicable Rating Agency with an aggregate
Discounted Value which exceeds the Preferred Shares Basic Maintenance
Amount by 5% or more. The Trust will also deliver a Preferred Shares
Basic Maintenance Report to the Auction Agent, Fitch Ratings 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 a Preferred Shares Basic Maintenance
Report to the Auction Agent, Fitch Ratings and Xxxxx'x. The Trust shall
also provide Fitch Ratings or Xxxxx'x with a Preferred Shares Basic
Maintenance Report when specifically requested by Fitch Ratings or
Xxxxx'x, respectively.
(c) Within ten Business Days after the date of delivery of a
Preferred Shares Basic Maintenance Report in accordance with 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, Fitch Ratings and Xxxxx'x, (i) the
mathematical accuracy of the calculations reflected in such Report (and
in any other Preferred Shares Basic Maintenance Report, randomly selected
by the Independent Accountant, that was delivered by the Trust during the
quarter ending on such Quarterly Valuation Date), (ii) that, in such
Report (and in such randomly selected Report), the Trust correctly
determined the assets of the Trust which constitute Fitch Eligible Assets
and Xxxxx'x Eligible Assets at such Quarterly Valuation Date in
accordance with these Bylaws, (iii) that, in such Report (and in such
randomly selected Report), the Trust determined whether the Trust had, at
such Quarterly Valuation Date (and at the Valuation Date addressed in
such randomly selected
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Report) in accordance with these Bylaws, Fitch Eligible Assets and Xxxxx'x
Eligible Assets each with an aggregate Discounted Value at least equal to
the Preferred Shares Basic Maintenance Amount, (iv) with respect to the
ratings by S&P of 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 requested that S&P or Fitch Ratings
verify such information and the Independent Accountant shall provide a
listing in its letter of any differences, (v) with respect to the Fitch
Ratings' ratings on portfolio securities of the Trust, the issuer name,
issue size and coupon rate, if any, listed in such Report, that such
information has been verified by Fitch Ratings (in the event such
information is not verified by Fitch Ratings, the Independent Accountant
will inquire of Fitch Ratings what such information is, and provide a
listing in its letter of any differences), (vi) with respect to the Xxxxx'x
ratings on portfolio securities of the Trust, the issuer name, issue size
and coupon rate, if any, listed in such Report, that such information has
been verified by Xxxxx'x (in the event such information is not verified by
Xxxxx'x, the Independent Accountant will inquire of Xxxxx'x what such
information is, and provide a listing in its letter of any differences) and
(vii) with respect to the bid or mean price (or such alternative
permissible factor used in calculating the Market Value) provided by the
custodian of the Trust's assets to the Trust for purposes of valuing
securities in the Trust's portfolio, the Independent Accountant has traced
the price used in such Report to the bid or mean price listed in such
Report as provided to the Trust 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 Preferred Shares Basic Maintenance Reports delivered pursuant to the
third sentence of Section 11.7(b) above only for such Preferred Shares
Basic Maintenance Reports relating to the last fiscal quarter of each
fiscal year.
(d) Within ten Business Days after the date of delivery to the Auction
Agent and any applicable Rating Agency of a Preferred Shares Basic
Maintenance Report in accordance with Section 11.7(b) above relating to any
Valuation Date on which the Trust failed to maintain Eligible Assets of
such applicable Rating Agency with an aggregate Discounted Value equal to
or greater than the Preferred Shares Basic Maintenance Amount, and relating
to the AMPS Basic Maintenance Cure Date with respect to such failure, the
Trust shall cause the Independent Accountant to provide to the Auction
Agent and each applicable Rating Agency an Accountant's Confirmation as to
such Preferred Shares Basic Maintenance Report.
(e) If any Accountant's Confirmation delivered pursuant to
subparagraph (c) or (d) of this Section 11.7 shows that an error was made
in the Preferred Shares Basic Maintenance Report for a particular Valuation
Date for which such Accountant's Confirmation was required to be delivered,
or shows that a lower aggregate Discounted Value for the aggregate of all
Fitch Eligible Assets or Xxxxx'x 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 Preferred Shares Basic Maintenance Report to the Auction Agent and each
applicable Rating Agency promptly following receipt by the Trust of such
Accountant's Confirmation.
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(f) Within five Business Days after the Date of Original Issue of the
AMPS, the Trust will complete and deliver to Xxxxx'x a Preferred Shares
Basic Maintenance Report as of the close of business on such Date of
Original Issue. Also, on or before 5:00 p.m., New York City time, on the
first Business Day after any Common Shares are repurchased by the Trust,
the Trust will complete and deliver to Fitch Ratings and Xxxxx'x a
Preferred Shares Basic Maintenance Report 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 AMPS 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 Xxxxx'x
that engaging in such transactions would not impair the ratings then
assigned to the AMPS by Xxxxx'x, except that the Trust may purchase or sell
exchange-traded financial futures contracts based on any index approved by
Xxxxx'x or Treasury Bonds, and purchase, write or sell exchange-traded put
options on such financial futures contracts, any index approved by Xxxxx'x
or Treasury Bonds, and purchase, write or sell exchange-traded call options
on such financial futures contracts, any index approved by Xxxxx'x or
Treasury Bonds (collectively "Xxxxx'x Hedging Transactions"), subject to
the following limitations:
(i) the Trust will not engage in any Xxxxx'x Hedging Transaction
based on any index approved by Xxxxx'x (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% (or such higher percentage as
Xxxxx'x may approve) 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 Xxxxx'x having a Market Value exceeding 50% (or
such higher percentage as Xxxxx'x may approve) of the Market
Value of all portfolio securities of the Trust constituting
Xxxxx'x Eligible Assets owned by the Trust (other than Xxxxx'x
Eligible Assets already subject to a Xxxxx'x Hedging
Transaction);
(ii) the Trust will not engage in any Xxxxx'x 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% (or such higher
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percentage as Xxxxx'x may approve) of the aggregate Market Value
of Xxxxx'x Eligible Assets owned by the Trust and rated Aa or
higher by Xxxxx'x (or, if not rated by Xxxxx'x but rated by S&P
or Fitch Ratings, rated AAA by S&P or Fitch Ratings); 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 Xxxxx'x Eligible
Assets owned by the Trust (other than Xxxxx'x Eligible Assets
already subject to a Xxxxx'x Hedging Transaction) and rated Baa
or A by Xxxxx'x (or, if not rated by Xxxxx'x but rated by S&P or
Fitch Ratings, rated A or AA by S&P or Fitch Ratings)
(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 Xxxxx'x 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 Xxxxx'x 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 Xxxxx'x 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
(vii) while the Trust may use options and futures transactions
for hedging and risk management purposes, it will not enter into an
option or futures transaction unless, after giving effect thereto, the
Trust would continue to have Xxxxx'x Eligible Assets
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with an aggregate Discounted Value equal to or greater than the
Preferred Shares Basic Maintenance Amount.
(b) For purposes of determining whether the Trust has Xxxxx'x Eligible
Assets with an aggregate Discounted Value that equals or exceeds the
Preferred Shares Basic Maintenance Amount, the Discounted Value of Xxxxx'x
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 Xxxxx'x Eligible
Assets with an aggregate Discounted Value that equals or exceeds the
Preferred Shares Basic Maintenance Amount, the following amounts shall be
subtracted from the aggregate Discounted Value of the Xxxxx'x Eligible
Assets held by the Trust to the extent the relevant asset is a Xxxxx'x
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 AMPS are rated by Xxxxx'x, the Trust will not
enter into any "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 Fitch Hedging
Transactions or Xxxxx'x Hedging Transactions, as applicable), except that
the Trust may enter into Forward Commitments subject to the following
limitations:
(i) for each 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 Xxxxx'x or A-1 by S&P or
Fitch Ratings 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 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 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 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 Forward Commitment unless,
after giving effect thereto, the Trust would continue to have Xxxxx'x
Eligible Assets with an aggregate Discounted Value equal to or greater
than the Preferred Shares Basic Maintenance Amount.
For purposes of determining whether the Trust has Xxxxx'x Eligible
Assets with an aggregate Discounted Value that equals or exceeds the
Preferred Shares Basic Maintenance Amount, 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 AMPS are Outstanding and Fitch Ratings or
Xxxxx'x or both are rating such shares, the Trust, unless it has received
written confirmation from Fitch Ratings or Xxxxx'x or both, as applicable,
that such action would not impair the rating then assigned to the AMPS by
Fitch Ratings or Xxxxx'x or both, as applicable, will not:
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(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 aggregate Discounted Value of Fitch Eligible
Assets or Xxxxx'x Eligible Assets, as applicable, to be less than the
Preferred Shares Basic Maintenance Amount);
(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 AMPS 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 AMPS are rated by Fitch Ratings, 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 Fitch
Ratings that engaging in such transactions would not impair the ratings
then assigned to the AMPS by Fitch Ratings, except that the Trust may
purchase or sell exchange-traded financial futures contracts based on any
index approved by Fitch Ratings or Treasury Bonds, and purchase, write or
sell exchange-traded put options on such financial futures contracts, any
index approved by Fitch Ratings or Treasury Bonds and purchase, write or
sell exchange-traded call options on such financial futures contracts, any
index approved by Fitch Ratings or Treasury Bonds (collectively "Fitch
Hedging Transactions"), subject to the following limitations:
(i) the Trust will not engage in any Fitch Hedging Transaction
based on any index approved by Fitch Ratings (other than Closing
Transactions) that would cause the Trust at the time of such
transaction to own or have sold 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;
(ii) the Trust will not engage in any Fitch 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 Fitch
Eligible Assets owned by the Trust and rated at least AA
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by Fitch Ratings (or, if not rated by Fitch Ratings, rated at
least Aa by Xxxxx'x; or, if not rated by Xxxxx'x, rated AAA by
S&P); or
(B) outstanding financial futures contracts based on
Treasury Bonds with such contracts having an aggregate Market
Value exceeding 40% of the aggregate Market Value of all Fitch
Eligible Assets owned by the Trust (other than Fitch Eligible
Assets already subject to a Fitch Hedging Transaction) and rated
at least A or BBB by Fitch Ratings (or, if not rated by Fitch
Ratings, rated at least Baa by Xxxxx'x; or, if not rated by
Xxxxx'x, rated at least A or AA by S&P)
(for purposes of the foregoing clauses (i) and (ii), the Trust shall be
deemed to own 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 Fitch Ratings 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 Fitch Ratings and the Trust; and
(iv) the Trust will not enter into an option or futures
transaction unless, after giving effect thereto, the Trust would
continue to have Fitch Eligible Assets with an aggregate Discounted
Value equal to or greater than the Preferred Shares Basic Maintenance
Amount.
(g) For purposes of determining whether the Trust has Fitch Eligible
Assets with an aggregate Discounted Value that equals or exceeds the
Preferred Shares Basic Maintenance Amount, the Discounted Value of Fitch
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
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(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.
(h) For purposes of determining whether the Trust has Fitch Eligible
Assets with an aggregate Discounted Value that equals or exceeds the
Preferred Shares Basic Maintenance Amount, the following amounts shall be
subtracted from the aggregate Discounted Value of the Fitch Eligible Assets
held by the Trust to the extent the relevant asset is a Fitch 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, the settlement price of assets purchased under such
financial futures contract;
(v) the settlement price of the underlying financial futures
contract if the Trust writes put options on a financial futures
contract and does not own the underlying contract; and
(vi) 105% of the Market Value of the underlying financial futures
contracts if the Trust writes call options on a financial futures
contract and does not own the underlying contract.
(i) For so long as any AMPS are rated by Fitch Ratings, the Trust will
not enter into any Forward Commitments, except that the Trust may enter
into Forward Commitments subject to the following limitations:
(i) the Trust will maintain in a segregated account with its
custodian cash, cash equivalents or short-term, fixed-income
securities rated F1 or better by Fitch Ratings (or, if not rated by
Fitch Ratings, rated P-1 by Xxxxx'x) and maturing prior to the date of
the Forward Commitment with a Market Value that equals or exceeds the
amount of the Trust's obligations under any Forward Commitments to
which it is from time to time a party or long-term fixed income
securities with a Discounted Value that equals or exceeds the amount
of the Trust's obligations under any Forward Commitment to which it is
from time to time a party; and
(ii) the Trust will not enter into a Forward Commitment unless,
after giving effect thereto, the Trust would continue to have Fitch
Eligible Assets with an aggregate Discounted Value equal to or greater
than the Preferred Shares Basic Maintenance Amount.
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For purposes of determining whether the Trust has Fitch Eligible Assets with an
aggregate Discounted Value that equals or exceeds the Preferred Shares Basic
Maintenance Amount, 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.
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) "AMPS" means the AMPS being auctioned pursuant to this Section
11.10
(ii) "Auction Date" means the first Business Day preceding the first
day of a Dividend Period.
(iii) "Available AMPS" has the meaning specified in Section
11.10(d)(i)(A) below.
(iv) "Bid" has the meaning specified in Section 11.10(b)(i)(B)
below.
(v) "Bidder" has the meaning specified in Section 11.10(b)(i)(B)
below.
(vi) "Hold Order" has the meaning specified in Section 11.10(b)(i)
(B) below.
(vii) "Maximum Applicable Rate" for any Dividend Period will be the
greater of the Applicable Percentage of the Reference Rate or the
Applicable Spread plus the Reference Rate. The Auction Agent will round
each applicable Maximum Applicable Rate to the nearest one-thousandth
(.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 (.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 Xxxxx'x and
Fitch Ratings as follows:
Credit Ratings
-------------------------------------- Applicable
Xxxxx'x Fitch Percentage
---------------- --------------- ----------
Aaa AAA 125%
Aa3 to Aa1 AA- to AA+ 150%
A3 to A1 A- to A+ 200%
Baa3 to Baa1 BBB- to BBB+ 250%
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Ba1 and lower BB+ and lower 300%
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 the Board of Trustees has received assurance from Xxxxx'x, Xxxxx
Ratings and from any other Rating Agency then rating the APMS that such
increase will not impair such Rating Agency's rating thereof, and further
provided that immediately following any such increase the Trust would be in
compliance with the Preferred Shares Basic Maintenance Amount. The Trust
shall take all reasonable action necessary to enable Xxxxx'x or Fitch
Ratings to provide a rating for each series of AMPS. If Xxxxx'x or Xxxxx
Ratings shall not make such a rating available, Xxxxxxx Lynch, Pierce,
Xxxxxx and Xxxxx Incorporated or its affiliates and successors, after
consultation with the Trust, shall select another Rating Agency to act as a
Substitute Rating Agency.
"Applicable Spread" means the spread determined based on the credit
rating assigned to the series of AMPS on such date by Xxxxx'x and Fitch
Ratings as follows:
Credit Ratings
------------------------------------------ Applicable Spread over
Xxxxx'x Fitch Reference Rate
------------------- -------------------- ----------------------
Aaa AAA 125 bps
Aa3 to Aa1 AA- to AA+ 150 bps
A3 to A1 A- to A+ 200 bps
Baa3 to Baa1 BBB- to BBB+ 250 bps
Ba1 and lower BB+ and lower 300 bps
The Applicable Spread as so determined will be further subject to
upward but not downward adjustment in the discretion of the Board of
Directors after consultation with the Broker-Dealers, provided that that
immediately following any such increase the Fund would be in compliance
with the Preferred Shares Basic Maintenance Amount. The Fund will take all
reasonable action necessary to enable either Xxxxx'x or Fitch to provide a
rating for each series of AMPS. If neither Xxxxx'x nor Fitch will make such
a rating available, the Fund will select another Rating Agency to act as a
substitute Rating Agency.
For purposes of this definition, the "prevailing rating" of shares of
a series of AMPS will be (i) AAA if such shares have a rating of AAA by
Xxxxx'x or Fitch or the equivalent of such ratings by such agencies or
substitute rating agencies selected as provided below; (ii) if not AAA,
then AA- if such shares have a rating of AA- or better by Xxxxx'x or Fitch
or the equivalent of such ratings by such agencies or substitute rating
agencies selected as provided below, (iii) if not AA- or higher, than A- if
such shares have a rating of A- or better by Xxxxx'x or Fitch or the
equivalent of such ratings by such agencies or substitute rating agencies
selected as provided below, (iv) if not A- or higher
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then BBB- if such shares have a rating of BBB- or better by Xxxxx'x or
Fitch or the equivalent of such ratings by such agencies or substitute
rating agencies selected as provided below, (v) if not BBB- or higher, then
below BBB-; provided, however, that if such shares are rated by only one
rating agency, the prevailing rating will be determined without reference
to the rating of any other rating agency.
(viii) "Order" has the meaning specified in Section 11.10(b)(i)(B)
below.
(ix) "Sell Order" has the meaning specified in Section 11.10(b)(i)(B)
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)(C) below.
(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 AMPS 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:
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(1) the number of Outstanding AMPS, 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 AMPS, 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 AMPS, 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 in a commercially
reasonable manner 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 AMPS, 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 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 a Beneficial Owner or an Existing Holder shall
constitute an irrevocable offer to sell:
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(1) the number of Outstanding AMPS 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 AMPS 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 AMPS 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 a Beneficial Owner or an Existing Holder
shall constitute an irrevocable offer to sell:
(1) the number of Outstanding AMPS specified in such Sell
Order; or
(2) such number or a lesser number of Outstanding AMPS 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 AMPS 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 AMPS 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.
(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);
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(B) the aggregate number of Outstanding AMPS that are the subject
of such Order;
(C) to the extent that such Bidder is a Beneficial Owner or an
Existing Holder:
(1) the number of Outstanding AMPS, if any, subject to
any Hold Order placed by such Beneficial Owner or Existing
Holder;
(2) the number of Outstanding AMPS, if any, subject to
any Bid placed by such Beneficial Owner or Existing Holder
and the rate per annum specified in such Bid; and
(3) the number of Outstanding AMPS, if any, subject to
any Sell Order placed by such Beneficial Owner or 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 AMPS 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 any Auction other than an Auction relating to a Special Dividend Period
of 91 days or less) or a Sell Order (in the case of an Auction relating to
a Special Dividend Period of longer than 91 days) to have been submitted on
behalf of such Existing Holder covering the number of Outstanding AMPS held
by such Existing Holder and not subject to Orders submitted to the Auction
Agent.
(iv) If one or more Orders on behalf of an Existing Holder covering in
the aggregate more than the number of Outstanding AMPS 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 AMPS 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 AMPS subject to such Hold Orders exceeds the number of
Outstanding AMPS held by such Existing Holder, the number of AMPS
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 AMPS held by such Existing Holder;
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(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
AMPS held by such Existing Holder over the number of AMPS 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 AMPS held by such Existing
Holder over the number of AMPS 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 AMPS
subject to such Sell Orders is greater than such excess, the number of
AMPS 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
AMPS 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 AMPS 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.
(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
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"Submitted Bid" or a "Submitted Sell Order," as the case may be, or, more
generally, as a "Submitted Order") and shall determine:
(A) the excess of the total number of Outstanding AMPS over the
number of Outstanding AMPS that are the subject of Submitted Hold
Orders (such excess being hereinafter referred to as the "Available
AMPS");
(B) from the Submitted Orders whether the number of Outstanding
AMPS 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 AMPS 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 AMPS that are subject to
Submitted Sell Orders (if such excess or such equality
exists (other than because the number of Outstanding AMPS in
clause (1) above and this clause (2) are each zero because
all of the Outstanding AMPS 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 AMPS 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 AMPS 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 AMPS.
(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:
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(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 AMPS 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 AMPS 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. Existing Holders shall continue to hold
the AMPS that are subject to Submitted Hold Orders, and, 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 AMPS 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 AMPS 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 AMPS that are the subject of
such Submitted Bid, unless the number of Outstanding AMPS subject
to all such Submitted Bids shall be greater than the number of
Outstanding AMPS ("Remaining Shares") equal to the excess of the
Available AMPS over the number of Outstanding AMPS 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
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be required to sell Outstanding AMPS, but only in an amount equal
to the difference between (1) the number of Outstanding AMPS then
held by such Existing Holder subject to such Submitted Bid and (2)
the number of AMPS obtained by multiplying (x) the number of
Remaining Shares by (y) a fraction the numerator of which shall be
the number of Outstanding AMPS held by such Existing Holder subject
to such Submitted Bid and the denominator of which shall be the sum
of the number of Outstanding AMPS 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 AMPS obtained by multiplying (x) the difference between
the Available AMPS and the number of Outstanding AMPS 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 AMPS subject
to such Submitted Bid and the denominator of which shall be the
number of Outstanding AMPS 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 AMPS 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 AMPS 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 AMPS 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 AMPS then held
by such Existing Holder subject to such Submitted Bid or Submitted
Sell Order and (2) the number of AMPS obtained by multiplying (x)
the difference between the Available AMPS and the aggregate number
of Outstanding AMPS 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 AMPS held by
such Existing Holder subject to such Submitted Bid or Submitted
Sell Order and the denominator of which shall be the
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number of Outstanding AMPS subject to all such Submitted Bids and
Submitted Sell Orders. If all of the Outstanding shares of a series
of AMPS are subject to Submitted Hold Orders, all Submitted Bids
for shares of such series shall be rejected.
(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 an Auction Market 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 AMPS to be purchased or sold
by any Existing Holder or Potential Holder on such Auction Date so
that each Outstanding Auction Market Preferred Share purchased or sold
by each Existing Holder or Potential Holder on such Auction Date shall
be a whole Auction Market 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 Auction Market Preferred Share on any
Auction Date, the Auction Agent shall, in such manner as in its sole
discretion it shall determine, allocate AMPS for purchase among
Potential Holders so that only whole AMPS 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 AMPS 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 AMPS to be purchased and
the aggregate number of the Outstanding AMPS 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 AMPS.
(f) Miscellaneous.
(i) To the extent permitted by applicable law, the Trust may
in its sole discretion 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 AMPS.
(ii) Unless otherwise permitted by the Trust, a Beneficial
Owner or an Existing Holder (A) may sell, transfer or otherwise
dispose of AMPS 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
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Trust, provided that in the case of all transfers 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 AMPS 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 AMPS 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 AMPS may be
registered in the Share 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 AMPS 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 AMPS. All such certificates shall bear a legend to
the effect that such certificates are issued subject to the provisions
restricting the transfer of AMPS 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 AMPS. 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 AMPS 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 requires a vote or consent of Shareholders or a higher vote or
consent by the Trustees and/or the Continuing Trustees, these Bylaws may be
amended, changed, altered or repealed, in whole or part, only by resolution of a
majority of the Trustees and a majority of the Continuing Trustees then in
office at any meeting of the Trustees, or by one or more writings signed by such
Trustees and Continuing Trustees.
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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 thereto 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 AMPS or additional
shares of a series of AMPS (and terms relating thereto) to the series and AMPS
described herein, provided that the Board of Trustees shall not authorize,
create or issue an additional series of AMPS unless it has received assurance
from Xxxxx'x, Xxxxx Ratings and from any other Rating Agency then rating the
AMPS that such authorization, creation or issuance will not impair such Rating
Agency's then current rating thereof. Each such additional series and all such
additional AMPS shall be governed by the terms of Article 11.
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