FORM OF AMENDED AND RESTATED
BYLAWS
OF
RMR F.I.R.E. FUND
(Dated as of _____, 2004)
ARTICLE I
AGREEMENT AND DECLARATION OF TRUST AND PRINCIPAL OFFICE
1.1 AGREEMENT AND DECLARATION OF TRUST. These Bylaws shall be
subject to the Agreement and Declaration of Trust, as amended or restated from
time to time (the "Declaration of Trust"), of RMR F.I.R.E. 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 II
TRUSTEES
2.1 NUMBER OF TRUSTEES. The number of Trustees shall be initially
set at five. Each of the Trustees shall be designated as a Class I, Class II or
Class III Trustee as required by the Declaration of Trust. The number of
Trustees may be changed by the Trustees then in office, provided it SHALL NOT be
less than three. The Trustees shall be designated as Class I, Class II or Class
III Trustees by the Trustees.
2.2 INDEPENDENT TRUSTEES. After completion of the Trust's initial
public offering of Shares, a majority of the Trustees holding office shall at
all times be Trustees who are not "interested persons" of the Trust (as defined
in the Investment Company Act of 1940, as amended), except for the fact of their
being Trustees; and, PROVIDED, HOWEVER, that less than a majority of the
Trustees may be such independent Trustees on a temporary basis by reason of the
death, resignation, removal or other vacancy in the office of one or more
Trustees.
2.3 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.
2.4 SPECIAL MEETINGS. Special meetings of the Trustees may be held
at any time and at any place designated in the call of the meeting when called
by the Chairman of the Trustees, the President, the Treasurer, the Secretary or
by two or more Trustees, provided notice thereof is given to each Trustee by the
Secretary or an Assistant Secretary or by the officer or the Trustees calling
the meeting.
2.5 NOTICE. It shall be sufficient notice to the Trustee of a
special meeting to send notice by mail at least seventy-two hours or by
telegram, telex, telecopy, electronic mail 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
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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. Neither notice of a meeting nor a waiver of a notice need
specify the purposes of the meeting.
2.6 QUORUM. At any meeting of the Trustees a majority of the
Trustees then in office shall constitute a quorum. Any meeting of the Trustees
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. Whether or not a Trustee votes on a matter at
a meeting which he attends, he will nonetheless be considered present for
purposes of establishing a quorum to consider the matter.
2.7 ATTENDANCE. Except as required by applicable law, attendance at
Trustees meetings may be in person or by a teleconference or other
communications medium by means of which all persons participating in the meeting
can hear and speak with each other.
2.8 WRITTEN CONSENT. Action by the Trustees may be taken by written
consent signed by a majority of the Trustees then in office, provided that the
form of written consent is circulated to all Trustees before or promptly after
it is signed by the majority of Trustees.
ARTICLE III
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 of the Trustees, 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. The Chairman of the Trustees, if one is
elected, shall be a Trustee and may but need not be a Shareholder; and any other
officer may but does not need to 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 any 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 of the Trustees 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. Alternatively, the Trustees may designate one
Trustee or another officer to preside at such meetings. The Trustees may
designate a chief executive officer from among the Trustees or the elected
officers. Any Vice President shall have such duties and powers as may be
designated from time to time by the Trustees or the President.
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3.6 TREASURER; ASSISTANT TREASURER. The Treasurer shall be the chief
financial and chief accounting officer of the Trust, and shall, subject to any
arrangement made by the Trustees with a custodian, investment adviser,
sub-adviser, 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, the President or the Treasurer.
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, the President
or the Secretary.
3.8 RESIGNATIONS. Any Trustee or officer may resign at any time by
written instrument signed by him or her and delivered to the Chairman, 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 IV
COMMITTEES
4.1 APPOINTMENT. The powers, duties and responsibilities of the
Trustees maybe delegated to one or more Committees. Trustees, officers or agents
of the Trust may serve on Committees, but all Committees shall have at least one
Trustee who will serve as Chairman of the Committee. Committees shall have the
powers, duties and responsibilities as may be assigned to them by the Trustees.
4.2 MEETINGS; NOTICE. Except as specifically provided in resolutions
constituting a Committee or providing for the conduct of its meetings: (i)
Committee meetings may be called by the Chairman or any two Committee members;
(ii) notice of Committee meetings may be given by the person calling the
meeting, the Secretary or any Assistant Secretary; and (iii) notice of Committee
meetings shall be given in the manner and within the times provided for Trustees
meetings.
4.3 QUORUM; VOTING. Except as provided below or as otherwise
specifically provided in the resolutions constituting a Committee and providing
for the conduct of its meetings, a majority of the members of any Committee
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 (so long as a quorum is 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 medium by means of which all persons participating in the meeting
can hear and speak to each other.
ARTICLE V
FISCAL YEAR
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5.1 GENERAL. Except as from time to time otherwise provided by the
Trustees, the fiscal year of the Trust shall be a calendar year.
ARTICLE VI
SEAL
6.1 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 document executed
and delivered by or on behalf of the Trust.
ARTICLE VII
EXECUTION OF PAPERS
7.1 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 VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
8.1 REGULAR AND SPECIAL MEETINGS. Except as provided in the next
sentence, regular meetings of the Shareholders for the election of Trustees and
the transaction of such other business as may properly come before the meeting
shall be held, so long as Shares are listed for trading on the American Stock
Exchange, on at least an annual basis, on such day and at such place as shall be
designated by the Trustees. Such regular meetings of the Shareholders shall only
be called by the Board of 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 the
Trustees to be necessary or desirable. A special meeting of Shareholders may be
held at any such time, day and place as is designated by the Trustees. Written
notice of any meeting of Shareholders, stating the time, place and purpose of
the meeting, shall be given or caused to be given by the Trustees at least ten
days before such meeting to each Shareholder entitled to vote thereat by leaving
such notice with the Shareholder at his or her residence or usual place of
business or by mailing such notice, postage prepaid, to the Shareholder's
address as it appears on the records of the Trust. Such notice may be given by
the Secretary or an Assistant Secretary or by any other officer designated 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.
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8.2 VOTING POWER. 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
notice of the meeting forwarded to the Shareholders by the Trustees, the
Declaration of Trust, these Bylaws, or required by applicable law. Except as
otherwise provided in the notice of the meeting forwarded to the Shareholders by
the Trustees, the Declaration of Trust, 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.
8.3 RECORD DATES. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, the
Trustees may from time to time fix a time and date, which shall be not more than
90 days before the date of any meeting of Shareholders, as the record date for
determining the Shareholders having the right to notice of and to vote at such
meeting and any adjournment thereof and 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.
ARTICLE IX
AMENDMENT TO THE BYLAWS
9.1 GENERAL. These Bylaws may be amended, changed, altered or
repealed, in whole or part, only by resolution of the Trustees at any meeting of
the Trustees at which a quorum is present, or by a written consent signed by a
majority of the Trustees then in office.
ARTICLE X
PREFERRED SHARES OF BENEFICIAL INTEREST
10.1 STATEMENT CREATING ONE SERIES OF PREFERRED SHARES.
DESIGNATION
SERIES W: 800 preferred shares, par value $.0001 per share,
liquidation preference $25,000 per share plus an amount equal to accumulated
but unpaid distributions thereon (whether or not earned or declared), are
hereby designated auction preferred shares, Series W (the "Series" or
"Preferred Shares"). Each share of the Series shall have an Applicable Rate
for its Initial Rate Period determined pursuant to a resolution of the Board
of Trustees and an initial Distribution Payment Date of _____ ___, 2004.
Preferred Shares may be marketed under the name "auction preferred
shares" or "Preferred Shares" or such other name as the Board of Trustees may
approve from time to time.
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Each Preferred Share shall have such other preferences, rights, voting
powers, restrictions, limitations as to distributions, qualifications and terms
and conditions of redemption, in addition to those required by applicable law,
as are set forth in Parts I and II of Article X of these Bylaws. Subject to the
provisions of Section 5(c) of Part I hereof, the Board of Trustees of the Trust
may, in the future, reclassify additional shares of the Trust's capital shares
as Preferred Shares, with the same preferences, rights, voting powers,
restrictions, limitations as to distributions, qualifications and terms and
conditions of redemption and other terms herein described, except that the
Applicable Rate for the Initial Rate Period, its initial Payment Date and any
other changes in the terms herein set forth shall be as set forth in the Bylaws
reclassifying such shares as Preferred Shares.
Capitalized terms used in Parts I and II of Article X of these Bylaws
shall have the meanings (with the terms defined in the singular having
comparable meanings when used in the plural and vice versa) provided in the
"Definitions" section immediately following, unless the context otherwise
requires.
DEFINITIONS
As used in Parts I and II of Article X of these Bylaws, the following
terms shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
(a) "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.
(b) "AUDITOR'S CONFIRMATION" shall have the meaning specified in
paragraph (c) of Section 7 of Part I of these Bylaws.
(c) "AFFILIATE" shall mean, for purposes of the definition of
"Outstanding," any Person known to the Auction Agent to be controlled
by, in control of or under common control with the Trust; PROVIDED,
HOWEVER, that for purposes of these Bylaws no Broker-Dealer controlled
by, in control of or under common control with the Trust shall be deemed
to be an Affiliate nor shall any corporation or any Person controlled
by, in control of or under common control with such corporation, one of
the trustees, directors, or executive officers of which is a Trustee of
the Trust, be deemed to be an Affiliate solely because such trustee,
director or executive officer is also a Trustee of the Trust.
(d) "AGENT MEMBER" shall mean a member of or participant in the
Securities Depository that will act on behalf of a Bidder.
(e) "ALL HOLD RATE" shall mean 80% of the Reference Rate.
(f) "ANNUAL VALUATION DATE" shall mean the last Business Day of December
of each year.
(g) "APPLICABLE PERCENTAGE" shall mean the percentage determined based
on the lower of the credit ratings assigned to the Preferred Shares on
such date by Moody's and Fitch as follows:
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Credit Ratings
-------------------------------------------- Applicable
Xxxxx'x Fitch Percentage
------------------ ------------------- ----------
Aa3 or higher AA- or higher 150%
A3 to A1 A- to A+ 200%
Baa3 to Baa1 BBB- to BBB+ 225%
Ba 1 and lower BB+ and lower 275%
For purposes of this definition, the "prevailing rating" of the
Preferred Shares shall be (i) Aaa/AAA if such shares have a rating of
Aaa by Moody's and AAA by Fitch and the equivalent of such ratings by
such agencies or a substitute rating agency or substitute rating
agencies; (ii) if not Aaa/AAA, then Aa3/AA- if such shares have a rating
of Aa3 or better by Moody's and AA- or better by Fitch or the equivalent
of such rating by such agencies or a substitute rating agency or
substitute rating agencies, (iii) if not Aa3/AA- or higher, then A3/A-
if such shares have a rating of A3 or better by Moody's and A- or better
by Fitch or the equivalent of such ratings by such agencies or a
substitute rating agency or substitute rating agencies, (iv) if not
A3/A- or higher, then Baa3/BBB- if such shares have a rating of Baa3 or
better by Moody's and BBB- or better by Fitch or the equivalent of such
ratings by such agencies or substitute rating agency or substitute
rating agencies, (v) if not Baa3/BBB- or higher, then below Baa3/BBB-.
The Applicable Percentage as so determined shall be further
subject to upward but not downward adjustment in the discretion of the
Board of Trustees of the Trust after consultation with the
Broker-Dealers, provided that immediately following any such increase
the Trust would be in compliance with the Preferred Shares Basic
Maintenance Amount. The Trust shall take all reasonable action necessary
to enable Moody's and Fitch to provide a rating for the Preferred
Shares. If Moody's or Fitch shall not make such a rating available, the
Trust shall select another rating agency to act as a substitute rating
agency. Notwithstanding the foregoing, the Trust shall not be required
to have more than one rating agency provide a rating for the Preferred
Shares.
(h) "APPLICABLE RATE" shall mean, for each Rate Period (i) if Sufficient
Clearing Orders exist for the Auction in respect thereof, the Winning
Bid Rate, (ii) if Sufficient Clearing Orders do not exist for the
Auction in respect thereof, the Maximum Rate, and (iii) in the case of
any Distribution Period if all the Preferred Shares are the subject of
Submitted Hold Orders for the Auction in respect thereof, the All Hold
Rate.
(i) "APPLICABLE SPREAD" means the spread determined based on the lower
of the credit ratings assigned to Preferred Shares on such date by
Xxxxx'x (if Xxxxx'x is then rating the Preferred Shares) and Fitch (if
Fitch is then rating the Preferred Shares) as follows:
Credit Ratings
-------------------------------------------- Applicable
Xxxxx'x Fitch Spread
------------------ ------------------- ----------
Aa3 or higher AA- or higher 150 bps
A3 to A1 A- to A+ 200 bps
Baa3 to Baa1 BBB- to BBB+ 225 bps
Ba 1 and lower BB+ and lower 275 bps
For purposes of this definition, the "prevailing rating" of the
Preferred Shares shall be (i) Aaa/AAA if such shares have a rating of
Aaa by Moody's and AAA by Fitch or the equivalent of such ratings by
such agencies or a substitute rating agency or substitute rating
agencies; (ii) if not Aaa/AAA, then Aa3/AA- if such shares have a rating
of Aa3 or better by Moody's and AA- or better by Fitch or the equivalent
of such rating by such agencies or a substitute rating agency or
substitute rating agencies, (iii) if not Aa3/AA- or higher, then A3/A-
if such shares have a rating
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of A3 or better by Moody's and A- or better by Fitch or the equivalent
of such ratings by such agencies or a substitute rating agency or
substitute rating agencies, (iv) if not A3/A- or higher, then Baa3/BBB-
if such shares have a rating of Baa3 or better by Moody's and BBB- or
better by Fitch or the equivalent of such ratings by such agencies or
substitute rating agency or substitute rating agencies, (v) if not
Baa3/BBB- or higher, then below Baa3/BBB-.
The Applicable Spread as so determined shall be further subject
to upward but not downward adjustment in the discretion of the Board of
Trustees after consultation with the Broker-Dealers, provided that
immediately following any such increase the Trust would be in compliance
with the Preferred Shares Basic Maintenance Amount.
(j) "AUCTION" shall mean each periodic implementation of the Auction
Procedures.
(k) "AUCTION AGENCY AGREEMENT" shall mean the agreement between the
Trust and the Auction Agent which provides, among other things, that the
Auction Agent will follow the Auction Procedures for purposes of
determining the Applicable Rate for the Preferred Shares so long as the
Applicable Rate for such Preferred Shares is to be based on the results
of an Auction.
(l) "AUCTION AGENT" shall mean the entity appointed as such by a
resolution of the Board of Trustees in accordance with Section 6 of Part
II of Article X of these Bylaws.
(m) "AUCTION DATE" with respect to any Rate Period, shall mean the
Business Day next preceding the first day of such Rate Period.
(n) "AUCTION PROCEDURES" shall mean the procedures for conducting
Auctions set forth in Part II of Article X of these Bylaws.
(o) "AVAILABLE PREFERRED SHARES" shall have the meaning specified in
paragraph (a) of Section 3 of Part II of Article X of these Bylaws.
(p) "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.
(q) "BENEFICIAL OWNER" with respect to shares of Preferred Shares, means
a customer (including broker dealers that are not Broker Dealers) of a
Broker-Dealer who is listed on the records of that Broker-Dealer (or, if
applicable, the Auction Agent) as a holder of Preferred Shares.
(r) "BID" and "BIDS" shall have the respective meanings specified in
paragraph (a) of Section 1 of Part II of Article X of these Bylaws.
(s) "BIDDER" and "BIDDERS" shall have the respective meanings specified
in paragraph (a) of Section 1 of Part II of Article X of these Bylaws;
PROVIDED, HOWEVER, that neither the Trust nor any affiliate thereof
shall be permitted to be a Bidder in an Auction, except that any
Broker-Dealer that is an affiliate of the Trust may be a Bidder in an
Auction, but only if the Orders placed by such Broker-Dealer are not for
its own account.
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(t) "BOARD OF TRUSTEES" shall mean the Board of Trustees of the Trust or
any duly authorized committee thereof.
(u) "BROKER-DEALER" shall mean any broker-dealer, commercial bank or
other entity permitted by law to perform the functions required of a
Broker-Dealer in Part II of Article X of these Bylaws, that is a member
of, or a participant in, the Securities Depository or is an affiliate of
such member or participant, has been selected by the Trust and has
entered into a Broker-Dealer Agreement that remains effective.
(v) "BROKER-DEALER AGREEMENT" shall mean an agreement between the
Auction Agent and a Broker-Dealer pursuant to which such Broker-Dealer
agrees to follow the procedures specified in Part II of Article X of
these Bylaws.
(w) "BUSINESS DAY" shall mean a day on which the New York Stock Exchange
is open for trading and which is neither a Saturday, Sunday nor any
other day on which banks in New York, New York, are authorized or
obligated by law to close.
(x) "CLOSING TRANSACTION" shall have the meaning specified in paragraph
(a)(i)(A) of Section 13 of Part I of Article X of these Bylaws.
(y) "CODE" means the Internal Revenue Code of 1986, as amended.
(z) "COMMON SHARES" shall mean the outstanding common shares, par value
$.001 per share, of the Trust.
(aa) "CURE DATE" shall mean the Preferred Shares Basic Maintenance Cure
Date or the 1940 Act Cure Date, as the case may be.
(bb) "DATE OF ORIGINAL ISSUE" with respect to the Preferred Shares,
shall mean the date on which the Trust initially issued such shares.
(cc) "DECLARATION OF TRUST" shall have the meaning specified on the
first page of these Bylaws.
(dd) "DEPOSIT SECURITIES" shall mean cash and any obligations or
securities, including Short Term Money Market Instruments that are
Eligible Assets, rated at least AAA or F-1 by Fitch, X-0, XXX-0 xx
XXXX-0 by Moody's or AAA or A-1 by S&P.
(ee) "DISCOUNTED VALUE" as of any Valuation Date, shall mean, (i) with
respect to a Fitch Eligible Asset or Xxxxx'x Eligible Asset that is not
currently callable or prepayable as of such Valuation Date at the option
of the issuer thereof, the quotient of the Market Value thereof divided
by the Fitch Discount Factor for a Fitch Eligible Asset or Moody's
Discount Factor for a Moody's Eligible Asset, (ii) with respect to a
Fitch Eligible Asset or Moody's Eligible Asset that is currently
callable as of such Valuation Date at the option of the issuer thereof,
the quotient as calculated above or the call price, plus accrued
interest or distributions, as applicable, whichever is lower, and (iii)
with respect to a Fitch Eligible Asset or Xxxxx'x Eligible Asset that is
prepayable, the quotient as calculated above or the par value, plus
accrued interest or distribution, as applicable, whichever is lower.
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(ff) "DISTRIBUTION PAYMENT DATE" with respect to the Preferred Shares,
shall mean any date on which distributions are payable on the Preferred
Shares pursuant to the provisions of paragraph (d) of Section 2 of Part
I of Article X of these Bylaws.
(gg) "DISTRIBUTION PERIOD," with respect to the Preferred Shares, shall
mean the period from and including the Date of Original Issue of shares
of a series of Preferred Shares to but excluding the initial
Distribution Payment Date for shares of the Series and thereafter any
period from and including one Distribution Payment Date for shares of
the Series to but excluding the next succeeding Distribution Payment
Date for shares of the Series.
(hh) "EXISTING HOLDER," with respect to shares of Preferred Shares,
shall mean a Broker-Dealer (or any such other Person as may be permitted
by the Trust) that is listed on the records of the Auction Agent as a
holder of shares of the Series.
(ii) "EXPOSURE PERIOD" shall mean the period commencing on a given
Valuation Date and ending 41 days thereafter for Fitch and 49 days
thereafter for Xxxxx'x.
(jj) "FAILURE TO DEPOSIT," with respect to shares of a series of
Preferred Shares, shall mean a failure by the Trust to pay to the
Auction Agent, not later than 12:00 noon, Eastern time, (A) on any
Distribution Payment Date for shares of the Series, in funds available
on such Distribution Payment Date in New York, New York, the full amount
of any distribution (whether or not earned or declared) to be paid on
such Distribution Payment Date on any share of the Series or (B) on any
redemption date in funds available on such redemption date for shares of
the Series in New York, New York, the Redemption Price to be paid on
such redemption date for any share of the Series after notice of
redemption is mailed pursuant to paragraph (c) of Section 11 of Part I
of Article X of these Bylaws; PROVIDED, HOWEVER, that the foregoing
clause (B) shall not apply to the Trust's failure to pay the Redemption
Price in respect of Preferred Shares when the related Notice of
Redemption provides that redemption of such shares is subject to one or
more conditions precedent and any such condition precedent shall not
have been satisfied at the time or times and in the manner specified in
such Notice of Redemption.
(kk) "FITCH" means Fitch Ratings and its successors.
(ll) "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 Fitch Eligible Asset other
than the securities set forth below will be the percentage provided in
writing by Fitch.
(i) Municipal Obligations: the Fitch Discount Factor for Municipal
Obligations is 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
Exposure Period, in accordance with the table set forth below.
RATING CATEGORY
Exposure Period AAA* AA* A* BBB* F1** Unrated***
--------------- --- -- - --- -- -------
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%
-10-
----------
*Fitch rating (or, if not rated by Fitch, see the definition of "Fitch
Eligible Asset" below).
**Municipal Obligations rated F1 by Fitch (or, if not rated by Fitch, see
the definition of "Fitch Eligible Asset" below), which do not mature or
have a demand feature at par exercisable in 30 days and which do not have a
long-term rating.
***Includes Municipal Obligations rated less than BBB by Fitch (or, if not
rated by Fitch, see the definition of "Fitch Eligible Asset" below) and
unrated securities.
Notwithstanding the foregoing, (i) the Fitch Discount Factor for
short-term Municipal Obligations will be 115%, so long as such
Municipal Obligations are rated at least F2 by Fitch (or, if not
rated by Fitch, rated XXX-0, XXXX-0 or P-1 by Xxxxx'x or at least
A-1+ or SP-1+ by S&P) and mature or have a demand feature at par
exercisable in 30 days or less, and (ii) no Fitch Discount Factor
will be applied to cash or to Receivables for Municipal Obligations
Sold.
(ii) Corporate Debt Securities: the Fitch Discount Factor for
corporate debt securities is 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.
FITCH DISCOUNT FACTORS FOR CORPORATE DEBT SECURITIES INCLUDING NON-INVESTMENT
GRADE BONDS
Terms to Maturity AAA AA A BBB BB Unrated(1)
----------------- --- -- - --- -- ----------
1 year or less 106% 108% 110% 112% 130% 152%
2 years or less (but longer
than 1 year) 106% 108% 110% 112% 130% 152%
3 years or less (but longer
than 2 years) 106% 108% 110% 112% 130% 152%
4 years or less (but longer
than 3 years) 111% 113% 115% 117% 134% 152%
5 years or less (but longer
than 4 years) 111% 113% 115% 117% 134% 152%
7 years or less (but longer
than 5 years) 114% 116% 118% 120% 136% 152%
10 years or less (but longer
than 7 years) 116% 118% 120% 122% 137% 152%
15 years or less (but longer
than 10 years) 120% 122% 124% 124% 139% 152%
30 years or less (but longer
than 15 years) 124% 127% 129% 129% 145% 152%
Greater than 30 years 124% 127% 129% 129% 145% 152%
(1) If a security is not rated by Fitch 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 Baa, a Fitch rating of BBB will be
-11-
used). If a security is not rated by Fitch 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 Fitch rating of AAA will be used, and where
the only rating on a security is a Xxxxx'x rating of Ba, a Fitch rating of BB
will be used). If a security is either not rated by any Rating Agency or is
rated below BB, the Trust will use the percent set forth under "Unrated" in the
table above.
The Fitch Discount Factors presented in the immediately preceding
table apply to corporate debt securities that are performing and
have a Market Value determined by a Pricing Service of an Approved
Price. The Fitch Discount Factor noted in the table above for a debt
security rated B by Fitch shall apply to any non-performing debt
security with a price equal to or greater than $0.90. The
Fitch Discount Factor noted in the table above for a debt security
rated below B by Fitch shall apply to any non-performing debt
security with a price less than $0.90 but equal to or greater
than $.020. If a debt security does not have a Market Value
determined by a Pricing Service or an Approved Price, a rating two
rating categories 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 BB- 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%.
The Fitch Discount Factors presented in the immediately preceding
table will also apply to corporate obligations backed by a
guarantee, 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.
(iii) Common stock and warrants: The Fitch Discount Factor applied
to common stock will be:
Large-cap stocks: 200%
Mid-cap stocks: 233%
Small-cap stocks: 286%
Others: 370%
Small-cap stocks refer to stocks with a market capitalization
between $300 million to $2 billion. Mid-cap stocks refer to
stocks with a market capitalization between $2 billion to $10
billion. Large-cap stocks are companies having a market
capitalization greater than $10 billion.
(iv) Preferred stock: The Fitch Discount Factor applied to preferred
stock is the percentage determined by reference to the rating in
accordance with the table set forth below.
-12-
DISCOUNT
PREFERRED STOCK (1) FACTOR
------------------- --------
AAA 130%
AA 133%
A 135%
BBB 139%
BB 154%
Not rated or below BB 161%
Investment grade Dividends Received Deduction ("DRD") 164%
Not rated or below investment grade DRD 200%
(1) If a security is not rated by Fitch 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 Baa, a
Fitch rating of BBB will be used). If a security is not rated by Fitch
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 Fitch rating of AAA will be used, and where the
only rating on a security is a Xxxxx'x rating of Ba, a Fitch rating of
BB will be used). If a security is either not rated by any Rating Agency
or is rated below BB, the Trust will use the percent set forth under
"Not rated or below BB" in the table above.
(v) Convertible securities: The Fitch Discount Factor applied to
convertible securities is (A) 200% for investment grade convertibles
and (B) 222% for below investment grade convertibles so long as such
convertible debt securities have neither (x) conversion premiums
greater than 100% nor (y) have a yield to maturity or yield to worse
of greater than 15% above the relevant Treasury curve.
The Fitch Discount Factor applied to convertible debt securities
which have conversion premiums of greater than 100% is (A) 152% for
investment grade convertibles and (B) 179% for below investment
grade convertibles so long as such convertible debt securities do
not have a yield to maturity or yield to worse of greater than 15%
above the relevant Treasury curve.
The Fitch Discount Factor applied to convertible debt securities
which have a yield to maturity or yield to worse of greater than 15%
above the relevant Treasury curve is 370%.
If a security is not rated by Fitch 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
Baa, a Fitch rating of BBB will be used). If a security is not rated
by Fitch 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 Fitch rating of AAA will be
used, and where the only rating on a security is a Xxxxx'x rating of
Ba, a Fitch rating 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.
-13-
(vi) U.S. Government Securities:
DISCOUNT
TIME REMAINING TO MATURITY 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%
15 years or less (but longer than 10 years) 122%
20 years or less (but longer than 15 years) 130%
25 years or less (but longer than 20 years) 146%
Greater than 25 years 154%
(vii) Short-Term Investments and Cash: The Fitch Discount Factor
applied to short-term portfolio securities, including without
limitation Debt Securities, Short Term Money Market Instruments and
municipal debt obligations, will be (A) 100%, so long as such
portfolio securities mature or have a demand feature at par
exercisable within the Fitch Exposure Period; (B) 115%, so long as
such portfolio securities mature or have a demand feature at par not
exercisable within the Fitch Exposure Period; and (C) 125%, so long
as such portfolio securities neither mature nor have a demand
feature at part exercisable within the Fitch Exposure Period. A
Fitch Discount Factor of 100% will be applied to cash.
(viii) Rule 144A Securities: The Fitch Discount Factor applied to
Rule 144A Securities shall be the Discount Factor determined in
accordance with the table above under "Corporate Debt Securities" in
subsection (ii), multiplied by 110% until such securities are
registered under the Securities Act.
(ix) 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 $0.40) 696%
U.S. agency interest only securities (with Market Value less than or equal to $0.40) 214%
AAA LockOut securities, interest only 236%
-14-
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 mortgage rated AAA(1) 123%
Jumbo mortgage rated AA(1) 130%
Jumbo mortgage rated A(1) 136%
Jumbo mortgage 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.
(x) Real Estate Investment Trusts:
(a) For common stock and preferred stock of REITs and other
real estate companies, the Fitch Discount Factor applied shall
be:
REIT or other real estate company preferred stock 154%
REIT or other real estate company common stock 196%
(b) For corporate debt securities of REITs, Real Estate
Companies, and Lodging Companies, the Fitch Discount Factor
applied shall be:
Terms to Maturity AAA AA A BBB BB B Unrated
----------------- --- -- - --- -- - -------
1 year or less 111% 114% 117% 120% 121% 127% 127%
2 years or less (but longer than 1 year) 116% 123% 125% 127% 132% 137% 137%
3 years or less (but longer than 2 years) 121% 125% 127% 131% 133% 140% 152%
4 years or less (but longer than 3 years) 126% 126% 129% 132% 136% 140% 164%
5 years or less (but longer than 4 years) 131% 132% 135% 139% 144% 149% 185%
7 years or less (but longer than 5 years) 140% 143% 146% 152% 159% 167% 228%
10 years or less (but longer than 7 years) 141% 143% 147% 153% 160% 168% 232%
12 years or less (but longer than 10 years) 144% 144% 150% 157% 165% 174% 249%
15 years or less (but longer than 12 years) 148% 151% 155% 163% 172% 182% 274%
30 years or less (but longer than 15 years) 152% 156% 160% 169% 180% 191% 306%
-15-
If a security is not rated by Fitch 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 Baa, a Fitch rating of BBB will be used). If a
security is not rated by Fitch 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 Fitch rating of AAA will be used, and where the
only rating on a security is a Xxxxx'x rating of Ba, a Fitch
rating of BB will be used). Securities rated either below B or
not rated by any Rating Agency shall be treated as "Unrated" in
the table above.
(xi) Futures and call options: For purposes of the Preferred Shares
Basic Maintenance Amount, futures held by the Trust and call options
sold by the Trust shall not be included as Fitch Eligible Assets.
However, such assets shall be valued at Market Value by subtracting
the good faith margin and the maximum daily trading variance as of
the Valuation Date. For call options purchased by the Trust, the
Market Value of the call option will be included as a Fitch Eligible
Asset subject to a Fitch Discount Factor mutually agreed to between
the Trust and Fitch based on the characteristics of the option
contract such as its maturity and the underlying security of the
contract.
(xii) Securities lending: The Trust may engage in securities lending
in an amount not to exceed 10% of the Trust's total gross assets.
For purposes of calculating the Preferred Shares Basic Maintenance
Amount, such securities lent shall be included as Fitch Eligible
Assets with the appropriate Fitch Discount Factor applied to such
lent security. The obligation to return such collateral shall not be
included as an obligation/liability for purposes of calculating the
Preferred Shares Basic Maintenance Amount. However, the Trust may
reinvest cash collateral for securities lent in conformity with its
investment objectives and policies and the provisions of these
Bylaws. In such event, to the extent that securities lending
collateral received is invested by the Trust in assets that
otherwise would be Fitch Eligible Assets and the value of such
assets exceeds the amount of the Trust's obligation to return the
collateral on a Valuation Date, such excess amount shall be included
in the calculation of Fitch Eligible Assets by applying the
applicable Fitch Discount Factor to this amount and adding the
product to total Fitch Eligible Assets. Conversely, if the value of
assets in which securities lending collateral has been invested is
less then the amount of the Trust's obligation to return the
collateral on a Valuation Date, such difference shall be included as
an obligation/liability of the Trust for purposes of calculating the
Preferred Shares Basic Maintenance Amount. Collateral received by
the Trust in a securities lending transaction and maintained by the
Trust in the form received shall not be included as a Fitch Eligible
Asset for purposes of calculating the Preferred Shares Basic
Maintenance Amount.
(xiii) Swaps (including Total Return Swaps and Interest Rate Swaps):
Total Return and Interest Rate Swaps are subject to the following
provisions:
If the Trust has an outstanding gain from a swap transaction on
a Valuation Date, the gain will be included as a Fitch Eligible
Asset subject to the Fitch Discount Factor on the counterparty
to the swap transaction. At the time a swap is executed, the
Trust will only enter into swap transactions where the
counterparty has at least a Fitch rating of A- or Xxxxx'x rating
of A3.
-16-
(a) Only the cumulative unsettled profit and loss from a
Total Return Swap transaction will be calculated when
determining the Preferred Shares Basic Maintenance Amount. If
the Trust has an outstanding liability from a swap transaction
on a Valuation Date, the Trust will count such liability as an
outstanding liability from the total Fitch Eligible Assets in
calculating the Preferred Shares Basic Maintenance Amount.
(b) In addition, for swaps other than Total Return
Swaps, the Market Value of the position (positive or negative)
will be included as a Fitch Eligible Asset. The aggregate
notional value of all swaps will not exceed the Liquidation
Preference of the Outstanding Preferred Shares.
(c)(1) The underlying securities subject to a credit
default swap sold by the Trust will be subject to the applicable
Fitch Discount Factor for each security subject to the swap; (2)
If the Trust purchases a credit default swap and holds the
underlying security, the Market Value of the credit default swap
and the underlying security will be included as a Fitch Eligible
Asset subject to the Fitch Discount Factor assessed based on the
counterparty risk; and (3) the Trust will not include a credit
default swap as a Fitch Eligible Asset purchase by the Trust
without the Trust holding the underlying security or when the
Trust busy a credit default swap for a basket of securities
without holding all the securities in the basket.
(xiv) Senior Loans: The Fitch Discount Factor applied to senior,
secured floating rate Loans made to corporate and other business
entities ("Senior Loans") shall be the percentage specified in the
table below opposite such Fitch Loan Category:
Fitch Loan Category Discount Factor
------------------- ---------------
A 115%
B 130%
C 152%
D 370%
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.
(xv) GNMAs, FNMAs, FHLMCs, etc.
(xvi) MBS, asset-backed and other mortgage-backed securities:
MBS: U.S. Government Agency (FNMA, FHLMC or GNMA) conforming
mortgage-backed securities with a stated maturity of 30 years shall
have a discount factor of 114% and conforming mortgage-backed
securities with a stated maturity of 15 years shall have a discount
factor of 111%.
Asset-backed and other mortgage-backed securities: The percentage
determined by reference to the asset type in accordance with the
table set forth below.
-17-
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) 120%
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 $0.40) 696%
U.S. agency interest only securities (with Market Value less than or equal to $0.40) 271%
AAA Lock-Out 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 mortgage rated AAA(1) 123%
Jumbo mortgage rated AA(1) 130%
Jumbo mortgage rated A(1) 136%
Jumbo mortgage 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.
(mm) "FITCH ELIGIBLE ASSETS" means:
(i) Cash (including interest and dividends due on assets rated (a)
BBB or higher by Fitch or the equivalent by another Rating Agency if
the payment date is within five (5) Business Days of the Valuation
Date, (b) A or higher by Fitch or the equivalent by another Rating
Agency if the payment date is within thirty (30) days of the
Valuation Date, and (c) A+ or higher by Fitch 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 (5) Business Days of the Valuation
Date, and if the trades which generated such receivables are settled
within five (5) Business Days;
(ii) Short Term Money Market Instruments so long as (a) such
securities are rated at least F1+ by Fitch or the equivalent by
another Rating Agency, (b) in the case of demand deposits,
-18-
time deposits and overnight funds, the supporting entity is rated at
least A by Fitch or the equivalent by another Rating Agency, or (c)
in all other case, the supporting entity (1) is rated at least A by
Fitch or the equivalent by another Rating Agency and the security
matures within one month, (2) is rated at least A by Fitch or the
equivalent by another Rating Agency and the security matures within
three months or (3) is rated at least AA by Fitch or the equivalent
by another Rating Agency and the security matures within six months;
(iii) Municipal Obligations that (i) pay interest in cash, (ii) do
not have their Fitch rating, as applicable, suspended by Fitch, and
(iii) are part of an issue of Municipal Obligations of at least
$10,000,000. In Addition, Municipal Obligations in the Trust's
portfolio must be within the following investment guidelines to be
Fitch Eligible Assets.
Minimum Maximum Single Maximum State
Issue Size Underlying Obligor Allowed
Rating ($ Millions) (1) Issuer (%) (2) (%) (2)(3)
-------- ---------------- ------------------ -------------
AAA 10 100 100
AA 10 20 60
A 10 10 40
BBB 10 6 20
BB 10 4 12
B 10 3 12
CCC 10 2 12
----------
(1) Preferred stock has a minimum issue size of $50 million.
(2) The referenced percentage represents maximum cumulation total for the
related rating category and each lower rating category.
(3) Territorial bonds (other than those issued by Puerto Rico and counted
collectively) are each limited to 10% of Fitch Eligible Assets. For
diversification purposes, Puerto Rico will be treated as a state.
For purposes of applying the foregoing requirements and applying the
applicable Fitch Discount Factor, if a Municipal Obligation is not
rated by Fitch but is rated by Xxxxx'x and S&P, such Municipal
Obligation (excluding short-term Municipal Obligations) will be
deemed to have the Fitch rating which is the lower of the Xxxxx'x
and S&P rating. If a Municipal Obligation is not rated by Fitch but
is rated by Xxxxx'x or S&P, such Municipal Obligation (excluding
short-term Municipal Obligations) will be deemed to have such
rating. Eligible Assets shall be calculated without including cash;
and Municipal Obligations rated F1 by Fitch or, if not rated by
Fitch, rated XXX-0, XXXX-0 or P-1 by Xxxxx'x; or, if not rated by
Xxxxx'x, rated A-1+/AA or SP-1+/AA by S&P shall be considered to
have a long-term rating of A. When the Trust sells a Municipal
Obligation and agrees to repurchase such Municipal Obligation at a
future date, such Municipal Obligation shall be valued at its
Discounted Value for purposes of determining Fitch Eligible Assets,
and the amount of the repurchase price of such Municipal Obligation
shall be included as a liability for purposes of calculating the
Preferred Shares Basic Maintenance Amount. When the Trust purchases
a Fitch Eligible Asset and agrees to sell it at a future date, such
Fitch Eligible Asset shall be valued at the amount of cash to be
received by the Trust upon such future date, provided that
-19-
the counterparty to the transaction has a long-term debt rating of
at least A by Fitch and the transaction has a term of no more than
30 days; otherwise, such Fitch Eligible Asset shall be valued at the
Discounted Value of such Fitch Eligible Asset.
Notwithstanding the foregoing, an asset will not be considered a
Fitch Eligible Asset for purposes of determining the Preferred
Shares Basic Maintenance Amount to the extent it is (i) subject to
any material lien, mortgage, pledge, security interest or security
agreement of any kind (collectively, "Liens"), except for (a) Liens
which are being contested in good faith by appropriate proceedings
and which Fitch (if Fitch is then rating the Preferred Shares) 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 the investment adviser, custodian or the Auction Agent, (d) Liens
by virtue of any repurchase agreement, and (e) Liens in connection
with any futures margin account; or (ii) deposited irrevocably for
the payment of any liabilities for purposes of determining the
Preferred Shares Basic Maintenance Amount.
(iv) U.S. Government Securities;
(v) Debt securities, if 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 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 a member of the European Union,
Argentina, Australia, Brazil, Chile, Japan, Korea, and Mexico or
other country if Fitch does not inform the Trust that including debt
securities from such foreign country will adversely impact Fitch's
rating of the Preferred Shares (the "Approved Foreign Nations"), (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. All debt securities satisfying
the foregoing requirements and restriction of this paragraph are
herein referred to as "Debt Securities."
(vi) Preferred stocks if (1) 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, (2) the
issuer or such a preferred stock has common stock listed on either
the New York Stock Exchange, the American Stock Exchange or in the
over-the-counter market, and (3) the issuer of such a preferred
stock has a senior debt rating or
-20-
preferred stock rating from Fitch of BBB- or higher or the
equivalent rating by another Rating Agency. In addition, the
preferred stocks issue must be at least $50 million;
(vii) Common stocks (1)(a) which are traded on the New York Stock
Exchange, the American Stock Exchange or in the over-the-counter
market, (b) which, if cash dividend paying, pay cash dividends in
U.S. dollars, and (c) which may be sold without restriction by the
Trust; provided, however, that (i) 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 Assets 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 (ii) 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
time the Market Value of such common stock shall not be a Fitch's
Eligible Asset; and (2) securities denominated in any currency other
than the U.S. dollar and securities 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 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 Approved Foreign Nations shall
not be a Fitch Eligible Asset;
(viii) Rule 144A Securities;
(ix) Warrants on common stocks described in (vii) above;
(x) any common stock, preferred stock or any debt securities of
REITs or real estate companies;
(xi) Interest Rate Swaps or Interest Rate Caps entered into
according to International Swap Dealers Association ("ISDA")
standards if (1) the counterparty to the swap transaction has a
short-term rating of not less than F1 by Fitch or the equivalent by
another Rating Agency, or, if the swap counterparty does not have a
short-term rating, the counterparty's senior unsecured long-term
debt rating is AA or higher by Fitch or the equivalent by another
Rating Agency and (2) the original aggregate notional amount of the
Interest Rate Swap or Interest Rate Cap transaction or transactions
is not greater than the Liquidation Preference of the Preferred
Shares originally issued;
(xii) Swaps, including Total Return Swaps entered into according to
ISDA;
(xiii) 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 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 to the
Preferred Shares;
(xiv) asset-backed and mortgage-backed securities;
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(xv) senior loans; and
(xvi) Fitch Hedging Transactions.
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 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 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 diversification limitations: 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:
EQUITY SECURITIES Maximum Single Issuer (1)
----------------- -------------------------
Large-cap 5%
Mid-cap 5%
Small-cap 5%
(1) Percentages represent both a portion of the aggregate Market Value
and number of outstanding shares of the common stock portfolio.
DEBT SECURITIES Maximum Single Maximum Single Minimum Issue Size
RATED AT LEAST (1) Issuer (2) Industry (2)(3) ($ in million) (4)
------------------ -------------- --------------- ------------------
AAA 100% 100% $100
AA- 20% 75% $100
A- 10% 50% $100
BBB- 6% 25% $100
BB- 4% 16% $ 50
B- 3% 12% $ 50
CCC 2% 8% $ 50
-22-
(1) Not applicable to corporate debt securities of REITs, Real Estate Companies,
and Lodging Companies.
(2) Percentages represent a portion of the aggregate Market Value of corporate
debt securities.
(3) Industries are determined according to Fitch's Industry Classifications, as
defined herein.
(4) Preferred stock has a minimum issue size of $50 million, and mortgage pass
through issued by Federal Home Loan Mortgage Corporation ("FHLMC"), the Federal
National Mortgage Association ("FNMA") or the Government National Mortgage
Association ("GNMA"), which has no minimum issue size.
If a security is not rated by Fitch 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 Baa, a Fitch rating of BBB will be used). If a
security is not rated by Fitch 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 Fitch rating of AAA will be used, and where the only
rating on a security is a Xxxxx'x rating of Ba, a Fitch rating of BB will be
used). If a security is either rated below CCC or not rated by any Rating
Agency, the Trust will treat the security as if it were "CCC" in the table
above.
REIT AND OTHER REAL ESTATE COMPANY SECURITIES
5% issuer limitation (including common, preferred, debt
and other securities)
(nn) "FITCH HEDGING TRANSACTIONS" has the meaning set forth in paragraph
(b)(1) of Section 13 of Part I of Article X of these Bylaws.
(oo) "FITCH INDUSTRY CLASSIFICATIONS" means, for the purposes of
determining Fitch Eligible Assets, each of the following industry
classifications:
Aerospace & Defense
Automobiles
Banking, Finance & Real Estate
Broadcasting & Media
Building & Materials
Cable
Chemicals
Computers & Electronics
Consumer Products
Energy
Environmental Services
Farming & Agriculture
Food, Beverage & Tobacco
Gaming & Restaurants
Healthcare & Pharmaceuticals
Industrial/Manufacturing
Insurance
Leisure & Entertainment
Metals & Mining
Miscellaneous
Packaging and Containers
Paper & Forest Products
Retail
Sovereign
Structured Finance Obligations
Supermarkets & Drugstores
Telecommunications
Textiles & Furniture
Transportation
Utilities
-23-
The Trust shall use its discretion in determining which industry
classification is applicable to a particular investment.
(pp) "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 $0.90.
(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
$0.80 but less than $0.90; and (B) non-Performing Bank Loans which
have a Market Value or an Approved Price greater than or equal
to $0.85.
(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
$0.70 but less than $0.80; (B) non-Performing Bank Loans which
have a Market Value or an Approved Price of greater than or
equal to $0.75 but less than $0.85; and (C) Performing Bank Loans
without an Approved Price rated BB- or higher by Fitch. If a
security is not rated by Fitch 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 's rating is
Baa1, a Fitch rating of BBB+ will be used). If a security is not
rated by Fitch 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 Fitch rating of AAA will be
used, and where the only rating on a security is a Xxxxx'x rating of
Ba3, a Fitch rating of BB- will be used).
(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.
(qq) "FORWARD COMMITMENTS" shall have the meaning specified in paragraph
(a)(iv) of Section 13 of Part I of Article X of these Bylaws.
(rr) "HOLDER" with respect to shares of a series of Preferred Shares,
shall mean the registered holder of such shares as the same appears on
the record books of the Trust.
(ss) "HOLD ORDER" and "HOLD ORDERS" shall have the respective meanings
specified in paragraph (a) of Section 1 of Part II of Article X of these
Bylaws.
(tt) "INDEPENDENT ACCOUNTANT" shall mean a nationally recognized
accountant, or firm of accountants, that is with respect to the Trust an
independent public accountant or firm of independent public accountants
under the Securities Act of 1933, as amended from time to time.
-24-
(uu) "INITIAL RATE PERIOD" shall be the period from and including the
Date of Original Issue to but excluding _____ __, 2004 with respect to
the Series.
(vv) "INTEREST EQUIVALENT" means a yield on a 360-day basis of a
discount basis security, which is equal to the yield on an equivalent
interest-bearing security.
(ww) "INTEREST RATE CAP" means an options contract which puts an upper
limit on a floating exchange rate. The contract protects the holder from
rises in short-term interest rates by making a payment to the holder
when an underlying interest rate (the index or reference interest rate)
exceed a specified strike rate (the cap rate).
(xx) "LATE CHARGE" shall have the meaning specified in subparagraph
(e)(1)(B) of Section 2 of Part I of Article X of these Bylaws.
(yy) "LIBOR Dealers" means __________________ and such other dealer or
dealers as the Trust may from time to time appoint, or, in lieu of any
thereof, their respective affiliates or successors.
(zz) "LIBOR Rate" on any Auction Date, means (i) the rate for deposits
in U.S. dollars for the designated Distribution 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 shall 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
Distribution 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 Dealer to the Reference
Banks, (B) if at least two of the Reference Banks provide such
quotations, LIBOR Rate shall equal such arithmetic mean of such
quotations, (C) if only one or none of the Reference Banks provide such
quotations, LIBOR Rate shall 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 Trust's approval) are quoting
on the relevant LIBOR Determination Date for deposits in U.S. dollars
for the designated Distribution Period in an amount determined by the
LIBOR Dealer (after obtaining the Trust'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 Trust 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 shall be LIBOR Rate as determined on the previous Auction Date. If
the number of Distribution Period days shall be (i) 7 or more but fewer
than 21 days, such rate shall be the seven-day LIBOR rate; (ii) 21 or
more but fewer than 49 days, such rate shall be the one-month LIBOR
rate; (iii) 49 or more but fewer than 77 days, such rate shall be the
two-month LIBOR rate; (iv) 77 or more but fewer than 112 days, such rate
shall be the three-month LIBOR rate; (v) 112 or more but fewer than 140
days, such rate shall be the four-month LIBOR rate; (vi) 140 or more but
fewer that 168 days, such rate shall be the five-month
-25-
LIBOR rate; (vii) 168 or more but fewer 189 days, such rate shall be the
six-month LIBOR rate; (viii) 189 or more but fewer than 217 days, such
rate shall be the seven-month LIBOR rate; (ix) 217 or more but fewer
than 252 days, such rate shall be the eight-month LIBOR rate; (x) 252 or
more but fewer than 287 days, such rate shall be the nine-month LIBOR
rate; (xi) 287 or more but fewer than 315 days, such rate shall be the
ten-month LIBOR rate; (xii) 315 or more but fewer than 343 days, such
rate shall be the eleven-month LIBOR rate; and (xiii) 343 or more but
fewer than 365 days, such rate shall be the twelve-month LIBOR rate.
(aaa) "LIQUIDATION PREFERENCE" with respect to a given number of
Preferred Shares, means $25,000 times that number.
(bbb) "LONDON BUSINESS DAY" means any day on which commercial banks are
generally open for business in London.
(ccc) "MARKET VALUE" of any asset of the Trust shall mean the market
value thereof determined in accordance with the pricing procedures of
the Trust.
(ddd) "MAXIMUM RATE" shall mean, with respect to Preferred Shares for
any Distribution Period, the greater of (A) the Applicable Percentage of
the Reference Rate or (B) the Applicable Spread plus the Reference Rate
on the Auction Date. The Auction Agent will round each applicable
Maximum Rate to the nearest one-thousandth (0.001) of one percent per
annum, with any such number ending in five ten-thousandths of one
percent being rounded upwards to the nearest one-thousandth (0.001) of
one percent. Generally, the applicable distribution rate for any
Distribution Period for the Preferred Shares will not be more than the
Maximum Rate attributable to such shares. The Maximum Rate for the
Preferred Shares will depend on the credit rating assigned to such
shares and on the length of the Distribution Period.
(eee) "MINIMUM RATE PERIOD" shall mean any Rate Period consisting of ___
Rate Period Days for the Preferred Shares.
(fff) "MOODY'S" shall mean Xxxxx'x Investors Service, Inc., a Delaware
corporation, and its successors.
(ggg) "MOODY'S DISCOUNT FACTOR" shall mean, 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.
"Moody's Discount Factor" has the meaning specified under "Glossary" in the
Trust's final prospectus for shares of MMP. The Moody's Discount Factor for any
Moody's Eligible Asset other than the securities set forth below will be the
percentage provided in writing by Moody's
(i) CORPORATE DEBT SECURITIES: The percentage determined by reference
to the rating on such asset with reference to the remaining term to
maturity of such asset, in accordance with the table set forth below (NON
CONVERTIBLES).
XXXXX'X RATING CATEGORY
Term to Maturity of
Corporate Debt Security(2) 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 the Corporation's assets can be
derived from other sources, securities rated below B by Moody's and unrated
securities, which are securities rated by neither Moody's, S&P nor Fitch,
are limited to 10% of Moody's Eligible Assets. If a corporate debt security
is unrated by Xxxxx'x, S&P or Fitch, the Fund will use the percentage set
forth under "Unrated" in this table. Ratings assigned by S&P or Fitch are
generally accepted by Moody's at face value. However, adjustments to face
value may be made to particular categories of credits for which the S&P
and/or Fitch rating does not seem to approximate a Xxxxx'x rating
equivalent. Split rated securities assigned by S&P and Fitch will be
accepted at the lower of the two ratings.
-26-
(2) The Moody's Discount Factors for debt securities shall also be applied to
any derivative transaction, in which case the rating of the counterparty
shall determine the appropriate rating category.
For corporate debt securities that do not pay interest in U.S. dollars, the fund
sponsor will use the applicable currency conversion rates.
PREFERRED STOCK: The Xxxxx'x Discount Factor for taxable preferred stock shall
be:
Aaa 150%
Aa 155%
A 160%
Baa 165%
Ba 196%
B 216%
LESS THAN B or Not Rated 250%
(1) Rule 144A securities' Discount Factor will be increased by an additional
20%.
(2) Because of the size of the DRD market, these preferreds will be assigned a
different discount factor to reflect their liquidity. Investment grade DRDs
will receive a 165% discount factor and non-investment grade DRDs will
receive a 216% discount factor.
COMMON STOCK
Common Stocks (1) LARGE-CAP MID-CAP SMALL-CAP
7 week exposure period 200% 205% 220%
(1) Market cap for Large-cap stocks are $10 billion and up, Mid-cap stocks
range between $2 billion and $10 billion, and Small-cap stocks are $2
billion and below.
CONVERTIBLE SECURITIES: (INCLUDING CONVERTIBLE PREFERRED)
Equity--the convertibles in this group would have a delta that ranges between
1-.8. For investment grade bonds the discount factor would be 195% and for below
investment grade securities the discount factor would be 229%.
Total Return--the convertibles in this group would have a delta that ranges
between .8-.4. For investment grade bonds the discount factor would be 192% and
for below investment grade securities the discount factor would be 226%.
Yield Alternative--the convertibles in this group would have a delta that
ranges between .4-0. For this category the discount factors used are based on
Xxxxx'x rating for corporate debt securities table.
Any unrated convertible bonds would receive a discount factor of 250%.
UPON CONVERSION TO COMMON STOCK, THE DISCOUNT FACTORS APPLICABLE TO COMMON STOCK
WILL APPLY.
(i) Common Shares and Preferred Shares of REITs and Other Real
Estate Companies:
COMMON STOCK AND PREFERRED STOCK OF REITS AND OTHER REAL ESTATE COMPANIES:
DISCOUNT FACTOR(1)(2)(3)
common stock of REITs 154%
preferred stock of REITs 154%
(1) A Discount Factor of 250% will be applied to those assets in a
single Moody's Real Estate Industry/Property Sector Classification
which exceeds 30% of Moody's Eligible Assets but are not greater than
35% of Moody's Eligible Assets.
(2) A Discount Factor of 250% will be applied if dividends on such
securities have not been paid consistently (either quarterly or
annually) over the previous three years, or for such shorter time period
that such securities have been outstanding.
(3) A Discount Factor of 250% will be applied if the market
capitalization (including common stock and preferred stock) of an
issuer is below $500 million.
(ii) Debt Securities of REITs and Other Real Estate Companies(1):
Xxxxx'x Rating Category
Term to Maturity of ----------------------- Unrated
Corporate Debt Security AAA AA A BAA BA B (2)
----------------------- --- -- - --- -- - -------
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) The Moody's Discount Factors for debt securities shall also be
applied to any interest rate swap or cap, in which case the rating of
the counterparty shall determine the appropriate rating category.
(2) Unless conclusions regarding liquidity risk as well as estimates of
both the probability and severity of default for the Trust's assets can
be derived from other sources, securities rated below B by Moody's and
unrated securities, which are securities rated by neither Moody's, S&P
nor Fitch, are limited to 10% of Moody's Eligible Assets. If a
corporate, municipal or other debt security is unrated by Moody's, S&P
or Fitch, the Trust will use the percentage set forth under "Unrated" in
this table. Ratings assigned by S&P or Fitch are generally accepted by
Moody's at face value. However, adjustments to face value may be made to
particular categories of credits for which the S&P and/or Fitch rating
does not seem to approximate a Xxxxx'x rating equivalent. Split rated
securities assigned by S&P and Fitch will be accepted at the lower of
the two ratings.
(iii) U.S. Treasury Securities and U.S. Treasury Strips:
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U.S. Government
Securities Discount U.S. Treasury Strips
Remaining Term to Maturity 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%
(iv) Short-term instruments: The Moody's Discount Factor applied to
short-term portfolio securities, including without limitation
corporate debt securities, Short Term Money Market Instruments and
municipal debt obligations, will be (A) 100%, so long as such
portfolio securities mature or have a demand feature at par
exercisable within 49 days of the relevant valuation date; (B) 115%,
so long as such portfolio securities do not mature within the
Moody's Exposure Period or have a demand feature at par not
exercisable within 49 days of the relevant valuation date; and (C)
125%, if such securities are not rated by Moody's, so long as such
portfolio securities are rated at least A-1+/AA or SP-1+/AA by S&P
and mature or have a demand feature at par exercisable within 49
days of the relevant valuation date. The Moody's Discount Factor
applied to 2a-7 Money Market Funds will be 110%. A Moody's Discount
Factor of 100% will be applied to cash.
(hhh) "MOODY'S ELIGIBLE ASSETS" shall mean the following:
Corporate debt securities if (A) such securities are rated B3or higher by
Moody's; (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 Moody's Eligible Assets if
they are rated by Moody's or S&P or Fitch; (C) for debt securities rated Ba1 and
below, no more than 10% of the original amount of such issue may constitute
Moody's Eligible Assets; (D) 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 Fund'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 Moody's
Eligible Assets if they are publicly traded; and (E) such securities are not
subject to extended settlement.
Notwithstanding the foregoing limitations, (x) corporate debt securities
not rated at least B3 by Moody's or not rated by Moody's shall be considered to
be Moody's Eligible Assets only to the extent the Market Value of such corporate
debt securities does not exceed 10% of the aggregate Market Value of all Moody's
Eligible Assets; provided, however, that if the Market Value of such corporate
debt securities exceeds 10% of the aggregate Market Value of all Moody's
Eligible Assets, a portion of such corporate debt securities (selected by the
Trust) shall not be considered Moody's 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 Moody's Eligible Assets; and (y) corporate
debt securities rated by neither Moody's nor S&P nor Fitch shall be considered
to be Moody's 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.
Preferred stocks if (A) dividends on such preferred stock are cumulative,
(B) such securities provide for the periodic payment of dividends thereon
in cash in U.S. dollars or euros and do not provide for conversion or
exchange into, or have warrants attached entitling the holder to receive,
equity capital at any time over the respective lives of such securities,
(C) the issuer of such a preferred stock has common stock listed on either
the New York Stock Exchange or the American Stock Exchange, or NASDAQ and
(D) such preferred stock has paid consistent cash dividends in U.S. dollars
or euros over the last three years or has a minimum rating of A1 (if the
issuer of such preferred stock has other preferred issues outstanding that
have been paying dividends consistently for the last three years, then a
preferred stock without such a dividend history would also be eligible). In
addition, the preferred stocks must have the following diversification
requirements: (X) the preferred stock issue must be greater than $50
million and (Y) the minimum holding by the Trust of each issue of preferred
stock is $500,000 and the maximum holding of preferred stock of each issue
is $5 million. In addition, preferred stocks issued by transportation
companies will not be considered Xxxxx'x Eligible Assets;
common stocks (i) which (A) are traded on a nationally recognized stock
exchange or in the over-the-counter market, (B) if cash dividend paying,
pay cash dividends in US dollars and (C) may be sold without restriction
by the Corporation; PROVIDED, HOWEVER, that (y) common stock which, while
a Xxxxx'x Eligible Asset owned by the Corporation, ceases paying any
regular cash dividend will no longer be considered a Xxxxx'x Eligible Asset
until 71 days after the date of the announcement of such cessation, unless
the issuer of the common stock has senior debt securities rated at least
A3 by Moody's and (z) the aggregate Market Value of the Corporation's
holdings of the common stock of any issuer in excess of 4% in the case
of utility common stock and 6% in the case of non-utility common stock
of the aggregate Market Value of the Corporation's holdings shall not
be Moody's Eligible Assets, (ii) which are securities denominated in any
currency other than the US dollar or securities 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") or their equivalents 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 or (iii) which are securities of issuers formed under the laws of
jurisdictions other than the United States (and in existence for at least
five years) for which no ADRs are traded; PROVIDED, HOWEVER, that the
aggregate Market Value of the Corporation's holdings of securities
denominated in currencies other than the US dollar and ADRs in excess of
(A) 6% of the aggregate Market Value of the Outstanding shares of common
stock of such issuer thereof or (B) 10% of the Market Value of the
Corporation's Moody's Eligible Assets with respect to issuers formed under
the laws of any single such non-U.S. jurisdiction other than Australia,
Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan,
the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland and the
United Kingdom, shall not be a Xxxxx'x Eligible Asset
(i) Common shares, preferred shares and any debt security of REITs
and Real Estate Companies.
(a) Common shares of REITs and preferred shares and any debt
security of REITs and Other Real Estate Companies: (A) which
comprise at least 7 of the 14 Moody's Real Estate
Industry/Property Sector Classifications ("Moody's Sector
Classifications") listed below and of which no more than 35%
may constitute a single such classification; (B) which in the
aggregate constitute at least 40 separate classes of common
shares, preferred shares, and debt securities, issued by at
least 30 issuers; (C) issued by a single issuer which in the
aggregate constitute no more than 50% of the Market Value of
Moody's Eligible Assets, (D) issued by a single issuer which,
with respect to 50% of the Market Value of Moody's Eligible
Assets, constitute in the aggregate no more than 5% of Market
Value of Moody's Eligible Assets; and
(b) Unrated debt securities or preferred securities issued
by an issuer which: (A) has not filed for bankruptcy within the
past three years; (B) is current on all principal and interest
on such debt security; (C) is current on such preferred security
distributions; (D) possesses a current, unqualified auditor's
report without qualified, explanatory language and (E) in the
aggregate, do not exceed 10% of the discounted Moody's Eligible
Assets;
(ii) Interest rate swaps or caps entered into according to
International Swap Dealers Association ("ISDA") standards if (a) the
counterparty to the swap transaction has a short-term rating of not
less than P-1 or, if the counterparty does not have a short-term
rating, the
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counterparty's senior unsecured long-term debt rating is A3 or
higher and (b) the original aggregate notional amount of the
interest rate swap or cap transaction or transactions is not to be
greater than the liquidation preference of the Preferred Shares
originally issued. The interest rate swap or cap transaction will be
marked-to-market daily;
(iii) U.S. Treasury Securities and Treasury Strips;
(iv) 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 depository
institution is rated at least A2, (C) such securities are of 2a-7
Money Market Funds, (D) such securities are repurchase agreements,
or (E) 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 Fitch and not rated by Moody's) need not
meet any otherwise applicable Xxxxx'x rating criteria; and
(v) Cash (including, for this purpose, 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 49 days of the
relevant valuation date; PROVIDED, HOWEVER, that such interest and
dividends may, at the Trust's discretion, be discounted at the same
rate as the related security or on such other basis as Moody's and
the Trust may agree from time to time) and receivables for Moody's
Eligible Assets sold if the receivable is due within five Business
Days of the Valuation Date.
Additionally, in order to merit consideration as an eligible asset, securities
should be issued by entities which:
o Have not filed for bankruptcy within the past year
o Are current on all principle and interest in their fixed income
obligations
o Are current on all preferred stock dividends
o Possess a current, unqualified auditor's report without qualified,
explanatory language.
In addition, portfolio holdings as described below must be within the
following diversification and issue size requirements in order to be included in
Moody's 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 Moody's Industry
Classifications, as defined herein.
(5) Except for preferred stock, which has a minimum issue size of $50
million.
(6) Portfolio holdings from issues ranging from $50 million to $100
million are limited to 20% of the Fund's total assets.
Equity Securities:
MAXIMUM SINGLE MAXIMUM SINGLE MINIMUM SINGLE
INDUSTRY CATEGORY ISSUER(%)(1) INDUSTRY(%)(1) STATE(%)(1)
----------------- -------------- -------------- --------------
Utility 4 50 7(2)
Industrial 4 45 7
Financial 5 40 6
Other 6 20 N/A
(iii) "MOODY'S HEDGING TRANSACTION" shall have the meaning specified in
paragraph (a)(i) of Section 13 of Part I of Article X of these Bylaws.
"Moody's Industry Classification" means, for the purposes of determining
Moody's Eligible Assets, each of the following industry classifications (or such
other classifications as Moody's may from time to time approve for application
to the Preferred Shares):
1. Aerospace and Defense: Major Contractor, Subsystems, Research,
Aircraft Manufacturing, Arms, and Ammunition
2. Automobile: Automobile Equipment, Auto-Manufacturing, Auto Parts
Manufacturing, Personal Use Trailers, Motor Homes, Dealers
3. Banking: Bank Holding, Savings and Loans, Consumer Credit, Small Loan,
Agency, Factoring, Receivables
4. Beverage, Food and Tobacco: Beer and Ale, Distillers, Wines and
Liquors, Distributors, Soft Drink Syrup, Bottlers, Bakery, Mill Sugar,
Canned Foods, Corn Refiners, Dairy Products, Meat Products, Poultry
Products, Snacks, Packaged Foods, Candy, Gum, Seafood, Frozen Food,
Cigarettes, Cigars, Leaf/Snuff, Vegetable Oil
5. Buildings and Real Estate: Brick, Cement, Climate Controls,
Contracting, Engineering, Construction, Hardware, Forest Products
(building-related only), Plumbing, Roofing, Wallboard, Real Estate,
Real Estate Development, REITs, Land Development
6. Chemicals, Plastics and Rubber: Chemicals (non-agricultural),
Industrial Gases, Sulfur, Plastics, Plastic Products, Abrasives,
Coatings, Paints, Varnish, Fabricating
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
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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, House wares, and Durable Consumer
Products: Carpets, Floor Coverings, Furniture, Cooking, Ranges
19. Hotels, Motels, Inns and Gaming
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, and 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, T.V., Cable Broadcasting Equipment
26. Cargo Transport: Rail, Shipping, Railroads, Rail-car Builders, Ship
Builders, Containers, Container Builders, Parts, Overnight Mail,
Trucking, Truck Manufacturing, Trailer Manufacturing, Air Cargo,
Transport
27. Retail Stores: Apparel, Toy, Variety, Drugs, Department, Mail Order
Catalog, Showroom
28. Telecommunications: Local, Long Distance, Independent, Telephone,
Telegraph, Satellite, Equipment, Research, Cellular
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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
(jjj) "MOODY'S REAL ESTATE INDUSTRY/PROPERTY SECTOR CLASSIFICATION"
means, for the purposes of determining Moody's Eligible Assets, each of
the following Industry Classifications (as defined by the National
Association of Real Estate Investment Trusts, "NAREIT"):
1. Office
2. Industrial
3. Mixed
4. Shopping Centers
5. Regional Malls
6. Free Standing
7. Apartments
8. Manufactured Homes
9. Diversified
10. Lodging/Resorts
11. Health Care
12. Home Financing
13. Commercial Financing
14. Self Storage
The Trust will use its discretion in determining which NAREIT Industry
Classification is applicable to a particular investment in consultation
with the independent auditor and/or Moody's, as necessary.
(kkk) "1940 ACT" shall mean the Investment Company Act of 1940, as
amended from time to time.
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(lll) "1940 ACT CURE DATE," with respect to the failure by the Trust to
maintain the 1940 Act Preferred Shares Asset Coverage (as required by
Section 6 of Part I of Article X of these Bylaws) as of the last
Business Day of each month, shall mean the last Business Day of the
following month.
(mmm) "1940 ACT PREFERRED SHARES ASSET COVERAGE" shall mean asset
coverage, as defined in Section 18(h) of the 1940 Act, of at least 200%
with respect to all outstanding senior securities of the Trust which are
shares, including all outstanding Preferred Shares (or such other asset
coverage as may in the future be specified in or under the 1940 Act as
the minimum asset coverage for senior securities which are shares or
stock of a closed-end investment company as a condition of declaring
dividends on its common shares or stock).
(nnn) "NOTICE OF REDEMPTION" shall mean any notice with respect to the
redemption of Preferred Shares pursuant to paragraph (c) of Section 11
of Part I of Article X of these Bylaws.
(ooo) "NOTICE OF SPECIAL RATE PERIOD" shall mean any notice with respect
to a Special Rate Period of shares of a series of Preferred Shares
pursuant to subparagraph (d)(i) of Section 4 of Part I of Article X of
these Bylaws.
(ppp) "ORDER" and "ORDERS" shall have the respective meanings specified
in paragraph (a) of Section 1 of Part II of Article X of these Bylaws.
(qqq) "OTHER REAL ESTATE COMPANIES" shall mean companies that generally
derive at least 50% of their revenue from real estate or have at least
50% of their assets in real estate, but not including REITs.
(rrr) "OUTSTANDING" shall mean, as of any Auction Date with respect to
shares of a series of Preferred Shares, the number of shares theretofore
issued by the Trust except, without duplication, (i) any shares of the
Series theretofore cancelled or delivered to the Auction Agent for
cancellation or redeemed by the Trust, (ii) any shares of the Series as
to which the Trust or any Affiliate thereof shall be an Existing Holder
and (iii) any shares of the Series represented by any certificate in
lieu of which a new certificate has been executed and delivered by the
Trust.
(sss) "PERFORMING" means with respect to any asset that is a Bank Loan
or other debt, the issuer of such investment is not in default of any
payment obligations in respect thereof.
(ttt) "PERSON" shall mean and include an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or
other entity or a government or any agency or political subdivision
thereof.
(uuu) "POTENTIAL BENEFICIAL OWNER," with respect to shares of a series
of Preferred Shares, shall mean a customer (including broker dealers
which are not Broker Dealers) of a Broker-Dealer that is not a
Beneficial Owner of shares of the Series but that wishes to purchase
shares of the Series, or that is a Beneficial Owner of shares of the
Series that wishes to purchase additional shares of the Series.
(vvv) "POTENTIAL HOLDER," with respect to Preferred Shares, shall mean a
Broker-Dealer (or any such other person as may be permitted by the
Trust) that is not an Existing Holder of Preferred Shares or that is an
Existing Holder of Preferred Shares that wishes to become the Existing
Holder of additional Preferred Shares.
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(www) "PREFERRED SHARES" shall have the meaning set forth in the first
paragraph of Article X of these Bylaws.
(xxx) "PREFERRED SHARES BASIC MAINTENANCE AMOUNT" as of any Valuation
Date, shall mean the dollar amount equal to the sum of (i)(A) the
product of the number of Preferred Shares outstanding on such date
(including Preferred Shares held by an Affiliate of the Trust but not
Preferred Shares held by the Trust) multiplied by $___ (plus the product
of the number of shares of any other series of preferred shares
outstanding on such date multiplied by the liquidation preference of
such shares) plus any redemption premium applicable to Preferred Shares
(or other preferred shares) then subject to redemption; (B) the
aggregate amount of distributions that will have accumulated at the
respective Applicable Rates (whether or not earned or declared) to (but
not including) the first respective Distribution Payment Dates for the
Preferred Shares outstanding that follows such Valuation Date; (C) the
aggregate amount of distributions that would accumulate on Preferred
Shares outstanding from such first Distribution Payment Dates therefor
referenced in (B) of this paragraph through the 45th day after such
Valuation Date at the respective Applicable Rates referenced in (B) of
this paragraph; (D) the amount of anticipated non-interest expenses of
the Trust for the 90 days subsequent to such Valuation Date; (E) the
amount of the current outstanding balances of any indebtedness or
obligations of the Trust senior in right of payment to the Preferred
Shares plus distributions accrued together with 30 days additional
distributions on the current outstanding balances calculated at the
current rate; and (F) any other current liabilities payable during the
30 days subsequent to such Valuation Date, including, without
limitation, indebtedness due within one year and any redemption premium
due with respect to the Preferred Shares for which a Notice of
Redemption has been sent, as of such Valuation Date, to the extent not
reflected in any of (i)(A) through (i)(E) (including, without
limitation, any liabilities incurred for the purpose of clearing
securities transactions) less (ii) the sum of any cash plus the value of
any of the Trust's assets irrevocably deposited by the Trust for the
payment of any of (i)(A) through (i)(F) ("value," for purposes of this
clause (ii), means the Discounted Value of the security, except that if
the security matures prior to the relevant redemption payment date and
is either fully guaranteed by the U.S. Government or is rated at least
P-1 by Moody's, it will be valued at its face value). Any documents to
be provided to Fitch pursuant to this section shall be delivered to
Fitch electronically at the following email address:
xxxxx.xxxxxxxxxxxx@xxxxxxxxxxxx.xxx.
(yyy) "PREFERRED SHARES BASIC MAINTENANCE CURE DATE," with respect to
the failure by the Trust to satisfy the Preferred Shares Basic
Maintenance Amount (as required by paragraph (a) of Section 7 of Part I
of Article X of these Bylaws) as of a given Valuation Date, shall mean
the ______ Business Day following such Valuation Date.
(zzz) "PREFERRED SHARES BASIC MAINTENANCE REPORT" shall mean a report
signed by the President, Treasurer, Assistant Treasurer, Controller,
Assistant Controller or any Senior Vice President or Vice President of
the Trust which sets forth, as of the related Valuation Date, the assets
of the Trust, the Market Value and the Discounted Value thereof
(seriatim and in aggregate), and the Preferred Shares Basic Maintenance
Amount.
(aaaa) "PRICING SERVICE" shall mean any pricing service designated from
time to time in accordance with the Trust's pricing procedures.
(bbbb) "QUARTERLY VALUATION DATE" shall mean the last Business Day of
each March, June, September and December of each year, commencing on
____ __, 2004.
(cccc) "RATE PERIOD," with respect to shares of a series of Preferred
Shares, shall mean the Initial Rate Period and any Subsequent Rate
Period, including any Special Rate Period.
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(dddd) "RATE PERIOD DAYS" for any Rate Period or Distribution Period,
means the number of days that would constitute such Rate Period or
Distribution Period but for the application of paragraph (d) of Section
2 of Part I of Article X of these Bylaws or paragraph (b) of Section 4
of Part I of Article X of these Bylaws.
(eeee) "RATING AGENCY" means a nationally recognized statistical rating
organization, including Moody's, S&P, or Fitch.
(ffff) "REFERENCE BANKS" means four major banks in the London interbank
market selected by ______________ or its affiliates or successors or
such other party as the Trust may from time to time appoint.
(gggg) "REIT," or real estate investment trust, means a company
dedicated to owning, operating or financing real estate.
(hhhh) "REDEMPTION PRICE" shall mean the applicable redemption price
specified in Section 11 of Part I of Article X of these Bylaws.
(iiii) "REFERENCE RATE" shall mean, with respect to the determination of
the Maximum Rate, the applicable LIBOR Rate (for a distribution period
or a special distribution period of fewer than 365 days), and the
applicable Treasury Index Rate (for a special distribution period of 365
days or more).
(jjjj) "S&P" shall mean Standard & Poor's Ratings Services and its
successors.
(kkkk) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(llll) "SECURITIES DEPOSITORY" shall mean ___________________ and its
successors and assigns or any other securities depository selected by
the Trust that agrees to follow the procedures required to be followed
by such securities depository in connection with the Preferred Shares.
(mmmm) "SELL ORDER" and "SELL ORDERS" shall have the respective meanings
specified in paragraph (a) of Section 1 of Part II of Article X of these
Bylaws.
(nnnn) "SERIES" shall have the meaning given in the first paragraph of
Article X of these Bylaws.
(oooo) "SHORT-TERM MONEY MARKET INSTRUMENTS" shall mean 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:
(i) commercial paper rated A-1 or the equivalent if such commercial
paper matures in 30 days or A-1+ or the equivalent 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
-34-
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;
(v) registered investment companies that are money market funds in
compliance with Rule 2a-7 under the 1940 Act ("2a-7 Money Market
Funds"); and
(vi) overnight repurchase agreements.
(pppp) "SPECIAL RATE PERIOD," with respect to Preferred Shares, shall
have the meaning specified in paragraph (a) of Section 4 of Part I of
Article X of these Bylaws.
(qqqq) "SPECIAL REDEMPTION PROVISIONS" shall have the meaning specified
in subparagraph (a)(i) of Section 11 of Part I of Article X of these
Bylaws.
(rrrr) "SUBMISSION DEADLINE" shall mean 1:00 P.M., Eastern time, on any
Auction Date or such other time on any Auction Date by which
Broker-Dealers are required to submit Orders to the Auction Agent as
specified by the Auction Agent from time to time.
(ssss) "SUBMITTED BID" and "SUBMITTED BIDS" shall have the respective
meanings specified in paragraph (a) of Section 3 of Part II of Article X
of these Bylaws.
(tttt) "SUBMITTED HOLD ORDER" and "SUBMITTED HOLD ORDERS" shall have the
respective meanings specified in paragraph (a) of Section 3 of Part II
of Article X of these Bylaws.
(uuuu) "SUBMITTED ORDER" and "SUBMITTED ORDERS" shall have the
respective meanings specified in paragraph (a) of Section 3 of Part II
of Article X of these Bylaws.
(vvvv) "SUBMITTED SELL ORDER" and "SUBMITTED SELL ORDERS" shall have the
respective meanings specified in paragraph (a) of Section 3 of Part II
of Article X of these Bylaws.
(wwww) "SUBSEQUENT RATE PERIOD," with respect to Preferred Shares, shall
mean the period from and including the first day following the Initial
Rate Period of Preferred Shares to but excluding the next Distribution
Payment Date for Preferred Shares and any period thereafter from and
including one Distribution Payment Date for Preferred Shares to but
excluding the next succeeding Distribution Payment Date for Preferred
Shares; PROVIDED, HOWEVER, that if any Subsequent Rate Period is also a
Special Rate Period, such term shall mean the period commencing on the
first day of such Special Rate Period and ending on the last day of the
last Distribution Period thereof.
(xxxx) "SUBSTITUTE U.S. GOVERNMENT SECURITIES DEALER" shall mean
_______________________ or their respective affiliates or successors, if
such entity is a U.S. Government securities dealer or such other entity
designated by the Trust; PROVIDED, HOWEVER, that none of such entities
shall be a U.S. Government Securities Dealer.
-35-
(yyyy) "SWAP" means a derivative transaction between two parties who
contractually agree to exchange the returns (or differentials in rates
of return) to be exchanges or "swapped" between the parties, which
returns are calculated with respect to a "notional amount," i.e., a
particular dollar amount invested at a particular interest rate or in a
"basket" of securities representing a particular index.
(i) "INTEREST RATE SWAP" means an arrangement whereby two parties
(called counterparties) enter into an agreement to exchange periodic
interest payments. The dollar amount the counterparties pay to each
other is an agreed-upon periodic interest rate multiplied by some
predetermined dollar principal, called the notional principal
amount. No principal is exchanged between parties to the
transaction; only interest is exchanged.
(ii) "TOTAL RETURN SWAP" means an agreement between counterparties
in which one party agrees to make payments of the total return from
underlying asset(s), which may include securities, baskets of
securities, or securities indices during the specified period, in
return for payments equal to a fixed or floating rate of interest or
the total return from other underlying asset(s).
(zzzz) "TREASURY XXXX" shall mean a direct obligation of the U.S.
Government having a maturity at the time of issuance of 364 days or
less.
(aaaaa) "TREASURY FUTURES" shall have the meaning specified in paragraph
(a)(i) of Section 13 of Part I of Article X of these Bylaws.
(bbbbb) "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 Distribution 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 Distribution 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.
(ccccc) "TREASURY NOTE" shall mean a direct obligation of the U.S.
Government having a maturity at the time of issuance of five years or
less but more than 364 days.
(ddddd) "TREASURY NOTE RATE," on any date for any Rate Period, shall
mean (i) the yield on the most recently auctioned Treasury Note with a
remaining maturity closest to the length of such Rate Period, as quoted
in The Wall Street Journal on such date for the Business Day next
preceding such date; or (ii) in the event that any such rate is not
published in The Wall Street Journal, then the yield as calculated by
reference to the arithmetic average of the bid price quotations of the
most recently auctioned Treasury Note with a remaining maturity closest
to the length of such Rate Period, as determined by bid price quotations
as of the close of business on the Business Day immediately preceding
such date obtained from the U.S. Government Securities Dealers to the
Auction Agent. If any U.S. Government Securities Dealer does not quote a
rate required to determine the Treasury Note Rate, the Treasury Note
Rate shall be determined on the
-36-
basis of the quotation or quotations furnished by the remaining U.S.
Government Securities Dealer or U.S. Government Securities Dealers and
any Substitute U.S. Government Securities Dealers selected by the Trust
to provide such rate or rates not being supplied by any U.S. Government
Securities Dealer or U.S. Government Securities Dealers, as the case may
be, or, if the Trust does not select any such Substitute U.S. Government
Securities Dealer or Substitute U.S. Government Securities Dealers, by
the remaining U.S. Government Securities Dealer or U.S. Government
Securities Dealers.
(eeeee) "TRUST" shall mean the entity named on the first page of these
Bylaws, which is the issuer of the Preferred Shares.
(fffff) "U.S. GOVERNMENT SECURITIES DEALER" shall mean
_______________________________ and any other U.S. Government Securities
Dealer selected by the Trust as to which Moody's (if Xxxxx'x is then
rating the Preferred Shares) or Fitch (if Fitch is then rating the
Preferred Shares) shall not have objected or their respective affiliates
or successors, if such entity is a U.S. Government Securities Dealer.
(ggggg) "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.
(hhhhh) "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.
(iiiii) "VALUATION DATE" shall mean, for purposes of determining whether
the Trust is maintaining the Preferred Shares Basic Maintenance Amount,
the last Business Day of each week.
(jjjjj) "VOTING PERIOD" shall have the meaning specified in paragraph
(b) of Section 5 of Part I of Article X of these Bylaws.
(kkkkk) "WINNING BID RATE" shall have the meaning specified in paragraph
(a) of Section 3 of Part II of Article X of these Bylaws.
PART I
1. NUMBER OF AUTHORIZED SHARES. The number of authorized shares
constituting the Series is 8,000 of which 800 shares will be issued on _____
__, 2004 or on such other date as the officers of the Trust may determine.
2. DISTRIBUTIONS.
(a) RANKING. The Preferred Shares shall rank on a parity with each
other and with any other series of preferred shares as to the payment of
distributions by the Trust.
(b) CUMULATIVE CASH DISTRIBUTIONS. The Holders of Preferred Shares
shall be entitled to receive, when, as and if declared by the Board of
Trustees, out of funds legally available therefor in accordance with the
Declaration of Trust and applicable law, cumulative cash distributions
at the Applicable Rate for shares of the Series, determined as set forth
in paragraph (e) of this Section 2, and no more (except to the extent
set forth in Section 3 of this Part I), payable on the Distribution
Payment Dates with respect to shares of the Series determined
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pursuant to paragraph (d) of this Section 2. Holders of Preferred Shares
shall not be entitled to any distribution, whether payable in cash,
property or shares, in excess of full cumulative distributions, as
herein provided, on Preferred Shares. No interest, or sum of money in
lieu of interest, shall be payable in respect of any distribution
payment or payments on Preferred Shares which may be in arrears, and,
except to the extent set forth in subparagraph (e)(i) of this Section 2,
no additional sum of money shall be payable in respect of any such
arrearage.
(c) DISTRIBUTIONS CUMULATIVE FROM DATE OF ORIGINAL ISSUE.
Distributions on Preferred Shares shall accumulate at the Applicable
Rate from the Date of Original Issue thereof.
(d) DISTRIBUTION PAYMENT DATES AND ADJUSTMENT THEREOF. Distributions
on Preferred Shares shall be payable for the Initial Rate Period on ___
__, 2004, and, if declared by the Board of Trustees (which declaration
may be by a single resolution for multiple such dates), on each seventh
day thereafter (or after the Distribution Payment Date with respect to
an intervening Special Rate Period), with respect to the Preferred Share
(each date being a "Distribution Payment Date"); PROVIDED, HOWEVER,
that:
(i) if the day on which distributions would otherwise be payable
on Preferred Shares is not a Business Day, then such distributions
shall be payable on such Preferred Shares on the first Business
Day that falls after such day, and
(ii) notwithstanding this paragraph (d) of Section 2, the Trust in
its discretion may establish the Distribution Payment Dates in
respect of any Special Rate Period of Preferred Shares consisting
of more than ___ Rate Period Days, with respect to the Series;
PROVIDED, HOWEVER, that such dates shall be set forth in the
Notice of Special Rate Period relating to such Special Rate
Period, as delivered to the Auction Agent, which Notice of Special
Rate Period shall be filed with the Secretary of the Trust; and
further provided that (1) any such Distribution Payment Date shall
be a Business Day and (2) the last Distribution Payment Date in
respect of such Special Rate Period shall be the Business Day
immediately following the last day thereof, as such last day is
determined in accordance with paragraph (b) of Section 4 of this
Part I.
(e) DISTRIBUTION RATES AND CALCULATION OF DISTRIBUTIONS.
(i) DISTRIBUTION RATES. The distribution rate on Preferred Shares
during the period from and after the Date of Original Issue of
Preferred Shares to and including the last day of the Initial Rate
Period of such Preferred Shares shall be equal to the rate per
annum determined with respect to such Preferred Shares pursuant to
a resolution of the Board of Trustees, as set forth under
"Designation." The initial distribution rate on any series of
preferred shares subsequently established by the Trust shall be
the rate set forth in or determined in accordance with the
resolutions of the Board of Trustees establishing such series. For
each Subsequent Rate Period of Preferred Shares, the distribution
rate on such Preferred Shares shall be equal to the rate per annum
that results from an Auction for shares of the Series on the
Auction Date next preceding such Subsequent Rate Period (but the
rate set at the Auction will not exceed the Maximum Rate);
PROVIDED, HOWEVER, that if:
(A) subject to Section 9 of Part II, an Auction for any
Subsequent Rate Period of Preferred Shares is not held for any
reason other than as described below or if Sufficient Clearing
Orders have not been made in an Auction (other than as a result
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of all Preferred Shares being the subject of Submitted Hold
Orders), then the distribution rate on the shares of the Series
for such Subsequent Rate Period will be the Maximum Rate of the
Series on the Auction Date therefor;
(B) any Failure to Deposit shall have occurred with respect to
shares of the Series during any Rate Period thereof (other than
any Special Rate Period consisting of more than 364 Rate Period
Days or any Rate Period succeeding any Special Rate Period
consisting of more than 364 Rate Period Days during which a
Failure to Deposit occurred that has not been cured), but, prior
to 12:00 Noon, Eastern time, on the third Business Day next
succeeding the date on which such Failure to Deposit occurred,
such Failure to Deposit shall have been cured in accordance with
paragraph (f) of this Section 2 and the Trust shall have paid to
the Auction Agent a late charge ("Late Charge") equal to the sum
of (1) if such Failure to Deposit consisted of the failure
timely to pay to the Auction Agent the full amount of
distributions with respect to any Distribution Period of shares
of the Series, an amount computed by multiplying (x) 200% of the
Reference Rate for the Rate Period during which such Failure to
Deposit occurs on the Distribution Payment Date for such
Distribution Period by (y) a fraction, the numerator of which
shall be the number of days for which such Failure to Deposit
has not been cured in accordance with paragraph (f) of this
Section 2 (including the day such Failure to Deposit occurs and
excluding the day such Failure to Deposit is cured) and the
denominator of which shall be 360, and applying the rate
obtained against the aggregate Liquidation Preference of the
outstanding shares of the Series and (2) if such Failure to
Deposit consisted of the failure timely to pay to the Auction
Agent the Redemption Price of the shares, if any, of the Series
for which Notice of Redemption has been mailed by the Trust
pursuant to paragraph (c) of Section 11 of this Part I, an
amount computed by multiplying (x) 200% of the Reference Rate
for the Rate Period during which such Failure to Deposit occurs
on the redemption date by (y) a fraction, the numerator of which
shall be the number of days for which such Failure to Deposit is
not cured in accordance with paragraph (f) of this Section 2
(including the day such Failure to Deposit occurs and excluding
the day such Failure to Deposit is cured) and the denominator of
which shall be 360, and applying the rate obtained against the
aggregate Liquidation Preference of the outstanding shares of
the Series to be redeemed, then no Auction will be held, in
respect of shares of the Series for the Subsequent Rate Period
thereof and the distribution rate for shares of the Series for
such Subsequent Rate Period will be the Maximum Rate on the
Auction Date for such Subsequent Rate Period;
(C) any Failure to Deposit shall have occurred with respect to
shares of the Series during any Rate Period thereof (other than
any Special Rate Period consisting of more than 364 Rate Period
Days or any Rate Period succeeding any Special Rate Period
consisting of more than 364 Rate Period Days during which a
Failure to Deposit occurred that has not been cured), and, prior
to 12:00 Noon, Eastern time, on the third Business Day next
succeeding the date on which such Failure to Deposit occurred,
such Failure to Deposit shall not have been cured in accordance
with paragraph (f) of this Section 2 or the Trust shall not have
paid the applicable Late Charge to the Auction Agent, then no
Auction will be held in respect of shares of the Series for the
first Subsequent Rate Period thereof thereafter (or for any Rate
Period thereof thereafter to and including the Rate Period
during which (1) such Failure to Deposit is cured in accordance
with paragraph (f) of this Section 2 and (2) the Trust pays the
applicable Late Charge to the Auction Agent (the condition set
forth in this clause (2) to apply only in the event Xxxxx'x is
rating such shares at the time the
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Trust cures such Failure to Deposit), in each case no later than
12:00 Noon, Eastern time, on the fourth Business Day prior to
the end of such Rate Period), and the distribution rate for
shares of the Series for each such Subsequent Rate Period for
shares of the Series shall be a rate per annum equal to the
Maximum Rate on the Auction Date for such Subsequent Rate Period
(but with the prevailing rating for shares of the Series, for
purposes of determining such Maximum Rate, being deemed to be
"Below "Baa3"/BBB-"); or
(D) any Failure to Deposit shall have occurred with respect to
shares of the Series during a Special Rate Period thereof
consisting of more than 364 Rate Period Days, or during any Rate
Period thereof succeeding any Special Rate Period consisting of
more than 364 Rate Period Days during which a Failure to Deposit
occurred that has not been cured, and, prior to 12:00 Noon,
Eastern time, on the fourth Business Day preceding the Auction
Date for the Rate Period subsequent to such Rate Period, such
Failure to Deposit shall not have been cured in accordance with
paragraph (f) of this Section 2 or, in the event Xxxxx'x is then
rating such shares, the Trust shall not have paid the applicable
Late Charge to the Auction Agent (such Late Charge, for purposes
of this subparagraph (D), to be calculated by using, as the
Reference Rate, the Reference Rate applicable to a Rate Period
(x) consisting of more than 270 Rate Period Days and (y)
commencing on the date on which the Rate Period during which
Failure to Deposit occurs commenced), then no Auction will be
held with respect to shares of the Series for such Subsequent
Rate Period (or for any Rate Period thereof thereafter to and
including the Rate Period during which (1) such Failure to
Deposit is cured in accordance with paragraph (f) of this
Section 2 and (2) the Trust pays the applicable Late Charge to
the Auction Agent (the condition set forth in this clause (2) to
apply only in the event Xxxxx'x is rating such shares at the
time the Trust cures such Failure to Deposit), in each case no
later than 12:00 Noon, Eastern time, on the fourth Business Day
prior to the end of such Rate Period), and the distribution rate
for shares of the Series for each such Subsequent Rate Period
shall be a rate per annum equal to the Maximum Rate for shares
of the Series on the Auction Date for such Subsequent Rate
Period (but with the prevailing rating for shares of the Series,
for purposes of determining such Maximum Rate, being deemed to
be "Below "Baa3"/BBB-").
(ii) CALCULATION OF DISTRIBUTIONS. The amount of distributions per
share payable on Preferred Shares on any date on which
distributions on shares of the Series shall be payable shall be
computed by multiplying the Applicable Rate for shares of the
Series in effect for such Distribution Period or Distribution
Periods or part thereof for which distributions have not been paid
by a fraction, the numerator of which shall be the number of days
in such Distribution Period or Distribution Periods or part
thereof and the denominator of which shall be 360, and applying
the rate obtained against $___.
(f) CURING A FAILURE TO DEPOSIT. A Failure to Deposit with respect to
Preferred Shares shall have been cured (if such Failure to Deposit is
not solely due to the willful failure of the Trust to make the required
payment to the Auction Agent) with respect to any Rate Period of shares
of the Series if, within the respective time periods described in
subparagraph (e)(i) of this Section 2, the Trust shall have paid to the
Auction Agent (A) all accumulated and unpaid distributions on shares of
the Series and (B) without duplication, the Redemption Price for shares,
if any, of the Series for which Notice of Redemption has been mailed by
the Trust pursuant to paragraph (c) of Section 11 of Part I of Article X
of these Bylaws; PROVIDED, HOWEVER, that the foregoing clause (B) shall
not apply to the Trust's failure to pay the Redemption Price in respect
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of Preferred Shares when the related Redemption Notice provides that
redemption of such Preferred Shares is subject to one or more conditions
precedent and any such condition precedent shall not have been satisfied
at the time or times and in the manner specified in such Notice of
Redemption.
(g) DISTRIBUTION PAYMENTS BY TRUST TO AUCTION AGENT. The Trust shall
pay to the Auction Agent, not later than 12:00 Noon, Eastern time, on
each Distribution Payment Date for Preferred Shares, an aggregate amount
of funds available in The City of New York, New York, equal to the
distributions to be paid to all Holders of shares of the Series on such
Distribution Payment Date.
(h) AUCTION AGENT AS TRUSTEE OF DISTRIBUTION PAYMENTS BY TRUST. All
moneys paid to the Auction Agent for the payment of distributions shall
be held in trust for the payment of such distributions by the Auction
Agent for the benefit of the Holders specified in paragraph (i) of this
Section 2. Any moneys paid to the Auction Agent in accordance with the
foregoing but not applied by the Auction Agent to the payment of
distributions will, to the extent permitted by law, be repaid to the
Trust at the end of 90 days from the date on which such moneys were so
to have been applied.
(i) DISTRIBUTIONS PAID TO HOLDERS. Each distribution on Preferred
Shares shall be paid on the Distribution Payment Date therefor to the
Holders thereof as their names appear on the record books of the Trust
on the Business Day next preceding such Distribution Payment Date.
(j) DISTRIBUTIONS CREDITED AGAINST EARLIEST ACCUMULATED BUT UNPAID
DISTRIBUTIONS. Any distribution payment made on Preferred Shares shall
first be credited against the earliest accumulated but unpaid
distributions due with respect to such Preferred Shares. Distributions
in arrears for any past Distribution Period may be declared and paid at
any time, without reference to any regular Distribution Payment Date, to
the Holders as their names appear on the record books of the Trust on
such date, not exceeding 15 days preceding the payment date thereof, as
may be fixed by the Board of Trustees.
3. RESERVED.
4. DESIGNATION OF SPECIAL RATE PERIODS.
(a) LENGTH OF AND PRECONDITIONS FOR SPECIAL RATE PERIOD. The Trust,
at its option, may designate any succeeding Subsequent Rate Period of
Preferred Shares as a special rate period consisting of a specified
number of Rate Period Days, other than the number of Rate Period Days
comprising a Minimum Rate Period, that is evenly divisible by ___,
subject to adjustment as provided in paragraph (b) of this Section 4
(each such period, a "Special Rate Period"). A designation of a Special
Rate Period shall be effective only if (A) notice thereof shall have
been given in accordance with paragraph (c) and subparagraph (d)(i) of
this Section 4, (B) an Auction for shares of the Series shall have been
held on the Auction Date immediately preceding the first day of such
proposed Special Rate Period and Sufficient Clearing Bids for shares of
the Series shall have existed in such Auction, and (C) if any Notice of
Redemption shall have been mailed by the Trust pursuant to paragraph (c)
of Section 11 of this Part I with respect to any shares of the Series,
the Redemption Price with respect to such shares shall have been
deposited with the Auction Agent. In the event the Trust wishes to
designate any succeeding Subsequent Rate Period for Preferred Shares as
a Special Rate Period consisting of more than 28 Rate Period Days, the
Trust shall notify Fitch (if Fitch is then rating the Preferred Shares)
and
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Xxxxx'x (if Xxxxx'x is then rating the Preferred Shares) in advance of
the commencement of such Subsequent Rate Period that the Trust wishes to
designate such Subsequent Rate Period as a Special Rate Period and shall
provide Fitch (if Fitch is then rating the Preferred Shares) and Xxxxx'x
(if Xxxxx'x is then rating the Preferred Shares) with such documents as
either may request. In addition, full cumulative distributions, any
amounts due with respect to mandatory redemptions and any additional
distributions payable prior to such date must be paid in full or
deposited with the Auction Agent. The Trust also must have portfolio
securities with a discounted value at least equal to the Preferred
Shares Basic Maintenance Amount.
(b) ADJUSTMENT OF LENGTH OF SPECIAL RATE PERIOD. In the event the
Trust wishes to designate a Subsequent Rate Period as a Special Rate
Period, but the day following what would otherwise be the last day of
such Special Rate Period is not a Thursday that is a Business Day in
case of the Series, then the Trust shall designate such Subsequent Rate
Period as a Special Rate Period consisting of the period commencing on
the first day following the end of the immediately preceding Rate Period
and ending on the first Wednesday that is followed by a Thursday that
is a Business Day preceding what would otherwise be such last day in
the case of the Series.
(c) NOTICE OF PROPOSED SPECIAL RATE PERIOD. If the Trust proposes to
designate any succeeding Subsequent Rate Period of Preferred Shares as a
Special Rate Period pursuant to paragraph (a) of this Section 4, not
less than ___ (or such lesser number of days as determined by the Trust
with appropriate consultation with the Auction Agent and Broker-Dealers)
nor more than 30 days prior to the date the Trust proposes to designate
as the first day of such Special Rate Period (which shall be such day
that would otherwise be the first day of a Minimum Rate Period), notice
shall be mailed by the Trust by first-class mail, postage prepaid, to
the Holders of shares of the Series. Each such notice shall state (A)
that the Trust may exercise its option to designate a succeeding
Subsequent Rate Period of shares of the Series as a Special Rate Period,
specifying the first day thereof and (B) that the Trust will, by 11:00
A.M., Eastern time, on the second Business Day next preceding such date
(or by such later time or date, or both, as determined by the Trust with
appropriate consultation with the Auction Agent and Broker-Dealers)
notify the Auction Agent of either (x) its determination, subject to
certain conditions, to exercise such option, in which case the Trust
shall specify the Special Rate Period designated, or (y) its
determination not to exercise such option.
(d) NOTICE OF SPECIAL RATE PERIOD. No later than 11:00 A.M., Eastern
time, on the second Business Day next preceding the first day of any
proposed Special Rate Period of shares of a series of Preferred Shares
as to which notice has been given as set forth in paragraph (c) of this
Section 4 (or such later time or date, or both, as determined by the
Trust with appropriate consultation with the Auction Agent and
Broker-Dealers), the Trust shall deliver to the Auction Agent either:
(i) a notice ("Notice of Special Rate Period") stating (A) that
the Trust has determined to designate the next succeeding Rate
Period of shares of the Series as a Special Rate Period,
specifying the same and the first day thereof, (B) the Auction
Date immediately prior to the first day of such Special Rate
Period, (C) that such Special Rate Period shall not commence if
(1) an Auction for shares of the Series shall not be held on such
Auction Date for any reason or (2) an Auction for shares of the
Series shall be held on such Auction Date but Sufficient Clearing
Bids for shares of the Series shall not exist in such Auction
(other than because all Outstanding shares of the Series are
subject to Submitted Hold Orders), (D) the scheduled Distribution
Payment Dates for shares of the Series during such Special Rate
Period and (E) the Special Redemption Provisions, if any,
applicable to shares of the Series in respect of such Special Rate
Period, such notice to be
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accompanied by a Preferred Shares Basic Maintenance Report showing
that, as of the third Business Day next preceding such proposed
Special Rate Period, Xxxxx'x Eligible Assets (if Xxxxx'x is then
rating the series in question) and Fitch Eligible Assets (if Fitch
is then rating the series in question) each have an aggregate
Discounted Value at least equal to the Preferred Shares Basic
Maintenance Amount as of such Business Day (assuming for purposes
of the foregoing calculation that (a) the Maximum Rate is the
Maximum Rate on such Business Day as if such Business Day were the
Auction Date for the proposed Special Rate Period, and (b) if
applicable, the Moody's Discount Factors applicable to Moody's
Eligible Assets and the Fitch Discount Factors applicable to Fitch
Eligible Assets are determined by reference to the first Exposure
Period longer than the Exposure Period then applicable to the
Trust, as described in the definitions of Moody's Discount Factor
and Fitch Discount Factor herein); or
(ii) a notice stating that the Trust has determined not to
exercise its option to designate a Special Rate Period of shares
of the Series and that the next succeeding Rate Period of shares
of the Series shall be a Minimum Rate Period.
(e) FAILURE TO DELIVER NOTICE OF SPECIAL RATE PERIOD. If the Trust
fails to deliver either of the notices described in subparagraphs (d)(i)
or (d)(ii) of this Section 4 (and, in the case of the notice described
in subparagraph (d)(i) of this Section 4, a Preferred Shares Basic
Maintenance Report to the effect set forth in such subparagraph (if
either Moody's or Fitch is then rating the series in question)) with
respect to any designation of any proposed Special Rate Period to the
Auction Agent by 11:00 A.M., Eastern time, on the second Business Day
next preceding the first day of such proposed Special Rate Period (or by
such later time or date, or both, as determined by the Trust with
appropriate consultation with the Auction Agent and Broker-Dealers), the
Trust shall be deemed to have delivered a notice to the Auction Agent
with respect to such Special Rate Period to the effect set forth in
subparagraph (d)(ii) of this Section 4. In the event the Trust delivers
to the Auction Agent a notice described in subparagraph (d)(i) of this
Section 4, it shall file a copy of such notice with the Secretary of the
Trust, and the contents of such notice shall be binding on the Trust. In
the event the Trust delivers to the Auction Agent a notice described in
subparagraph (d)(ii) of this Section 4, the Trust will provide Moody's
(if Xxxxx'x is then rating the series in question) and Fitch (if Fitch
is then rating the series in question) a copy of such notice.
5. VOTING RIGHTS.
(a) ONE VOTE PER PREFERRED SHARE. Except as otherwise provided in the
Declaration of Trust or as otherwise required by law, (i) each Holder of
Preferred Shares shall be entitled to one vote for each Preferred Share
held by such Holder on each matter submitted to a vote of Shareholders
of the Trust, and (ii) the holders of outstanding shares of preferred
shares, including Preferred Shares, and of Common Shares shall vote
together as a single class; PROVIDED, HOWEVER, that, at any meeting of
the Shareholders of the Trust held for the election of Trustees, the
holders of outstanding shares of preferred shares, including Preferred
Shares, represented in person or by proxy at said meeting, shall be
entitled, as a class, to the exclusion of the holders of all other
securities and classes of shares of the Trust, to elect two Trustees of
the Trust (regardless of the total number of Trustees serving on the
Trust's Board of Trustees), each share of preferred shares, including
each Preferred Share, entitling the holder thereof to one vote;
provided, further, that if the Board of Trustees shall be divided into
one or more classes, the Board of Trustees shall determine to which
class or classes the Trustees elected by the holders of preferred shares
shall be assigned and the holders of the preferred shares shall only be
entitled to elect the Trustees so designated as being elected by the
holders of the preferred shares when their term shall have
-43-
expired; provided, finally, that such Trustees appointed by the holders
of preferred shares shall be allocated as evenly as possible among the
classes of Trustees. Subject to paragraph (b) of this Section 5, the
holders of outstanding Common Shares and preferred shares, including
Preferred Shares, voting together as a single class, shall elect the
balance of the Trustees.
(b) VOTING FOR ADDITIONAL TRUSTEES.
(i) VOTING PERIOD. Except as otherwise provided in the Declaration
of Trust or as otherwise required by law, during any period in
which any one or more of the conditions described in subparagraphs
(A) or (B) of this subparagraph (b)(i) shall exist (such period
being referred to herein as a "Voting Period"), the number of
Trustees constituting the Board of Trustees shall be automatically
increased by the smallest number that, when added to the two
Trustees elected exclusively by the holders of preferred shares,
including Preferred Shares, would constitute a majority of the
Board of Trustees as so increased by such smallest number; and the
holders of preferred shares, including Preferred Shares, shall be
entitled, voting as a class on a one-vote-per-share basis (to the
exclusion of the holders of all other securities and classes of
shares of the Trust), to elect such smallest number of additional
Trustees, together with the two Trustees that such holders are in
any event entitled to elect. A Voting Period shall commence:
(A) if at the close of business on any distribution payment date
accumulated distributions (whether or not earned or declared) on
any outstanding preferred shares, including Preferred Shares,
equal to at least two full years' distributions 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 distributions; or
(B) if at any time holders of Preferred Shares are entitled
under the 1940 Act to elect a majority of the Trustees of the
Trust.
Upon the termination of a Voting Period, the voting rights
described in this subparagraph (b)(i) shall cease, subject always,
however, to the revesting of such voting rights in the Holders
upon the further occurrence of any of the events described in this
subparagraph (b)(i).
(ii) NOTICE OF SPECIAL MEETING. As soon as practicable after the
accrual of any right of the holders of preferred shares, including
Preferred Shares, to elect additional Trustees as described in
subparagraph (b)(i) of this Section 5, the Trust shall notify the
Auction Agent and the Auction Agent shall call a special meeting
of such registered holders, by mailing a notice of such special
meeting to such holders, such meeting to be held not less than 10
nor more than 30 days after the date of mailing of such notice. If
the Trust fails to send such notice to the Auction Agent or if the
Auction Agent does not call such a special meeting, it may be
called by any such holder on like notice. The record date for
determining the registered 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 or on such other date as the Trust may determine. At any
such special meeting and at each meeting of holders of preferred
shares, including Preferred Shares, held during a Voting Period at
which Trustees are to be elected, such holders, voting together as
a class (to the exclusion of the holders of all other securities
and classes of shares of the Trust), shall be entitled to elect
the number of Trustees prescribed in subparagraph (b)(i) of this
Section 5 on a one-vote-per-share basis.
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(iii) TERMS OF OFFICE OF EXISTING TRUSTEES. The terms of office of
all persons who are Trustees of the Trust at the time of a special
meeting of Holders and holders of other shares of preferred shares
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 the Trust and the remaining
incumbent Trustees elected by the holders of the Common Shares and
preferred shares, including Preferred Shares, shall constitute the
duly elected Trustees of the Trust.
(iv) TERMS OF OFFICE OF CERTAIN TRUSTEES TO TERMINATE UPON
TERMINATION OF VOTING PERIOD. Simultaneously with the termination
of a Voting Period, the terms of office of the additional Trustees
elected by the Holders and holders of other preferred shares of
the Trust pursuant to subparagraph (b)(i) of this Section 5 shall
terminate, the remaining Trustees shall constitute the Trustees of
the Trust and the voting rights of the Holders and such other
holders to elect additional Trustees pursuant to subparagraph
(b)(i) of this Section 5 shall cease, subject to the provisions of
the last sentence of subparagraph (b)(i) of this Section 5.
(c) HOLDERS OF PREFERRED SHARES TO VOTE ON CERTAIN OTHER MATTERS.
(i) INCREASES IN CAPITALIZATION. So long as any Preferred Shares
are outstanding, the Trust shall not, without the affirmative vote
or consent of the Holders of at least a majority of the Preferred
Shares outstanding at the time, in person or by proxy, either in
writing or at a meeting, voting as a separate class: (a)
authorize, create or issue any class or series of shares ranking
prior to or on a parity with Preferred Shares with respect to the
payment of distributions or the distribution of assets upon
dissolution, liquidation or winding up of the affairs of the
Trust, or authorize, create or issue additional shares of any
series of Preferred Shares (except that, notwithstanding the
foregoing, but subject to the provisions of paragraph (c) of
Section 13 of this Part I, the Board of Trustees, without the vote
or consent of the Holders of Preferred Shares, may from time to
time authorize and create, and the Trust may from time to time
issue additional shares of Preferred Shares, or classes or series
of preferred shares ranking on a parity with Preferred Shares with
respect to the payment of distributions and the distribution of
assets upon dissolution, liquidation or winding up of the affairs
of the Trust; PROVIDED, HOWEVER, that if Xxxxx'x and Fitch (or
other NRSRO) is not then rating the Preferred Shares, the
aggregate liquidation preference of all Preferred Shares of the
Trust outstanding after any such issuance, exclusive of
accumulated and unpaid distributions, may not exceed $___) or (b)
amend, alter or repeal the provisions of the Declaration of Trust,
or these Bylaws, whether by merger, consolidation or otherwise, so
as to affect any preference, right or power of such Preferred
Shares or the Holders thereof; PROVIDED, HOWEVER, that (i) none of
the actions permitted by the exception to (a) above will be deemed
to affect such preferences, rights or powers, (ii) a division or
split of a Preferred Share will be deemed to affect such
preferences, rights or powers only if the terms of such division
adversely affect the Holders of Preferred Shares and (iii) the
authorization, creation and issuance of classes or series of
shares ranking junior to Preferred Shares with respect to the
payment of distributions and the distribution of assets upon
dissolution, liquidation or winding up of the affairs of the
Trust, will be deemed to affect such preferences, rights or powers
only if Xxxxx'x or Fitch is then rating Preferred Shares and such
issuance would, at the time thereof, cause the Trust not to
satisfy the
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1940 Act Preferred Shares Asset Coverage or the Preferred Shares
Basic Maintenance Amount. So long as any Preferred Shares are
outstanding, the Trust shall not, without the affirmative vote or
consent of the Holders of at least a majority of the Preferred
Shares outstanding at the time, in person or by proxy, either in
writing or at a meeting, voting as a separate class, file a
voluntary application for relief under Federal bankruptcy law or
any similar application under state law for so long as the Trust
is solvent and does not foresee becoming insolvent.
(ii) 1940 ACT MATTERS. Unless a higher percentage is provided for
in the Declaration of Trust, (A) the affirmative vote of the
Holders a "majority of the outstanding" (as such term is defined
in the 1940 Act) preferred shares of the Trust, including
Preferred Shares, voting as a separate class, shall be required to
approve (A) any plan of reorganization (as such term is used in
the 1940 Act) adversely affecting such shares and (B) any action
requiring a vote of security holders of the Trust under Section
13(a) of the 1940 Act. In the event a vote of Holders of Preferred
Shares is required pursuant to the provisions of Section 13(a) of
the 1940 Act, the Trust shall, not later than ten Business Days
prior to the date on which such vote is to be taken, notify
Xxxxx'x (if Xxxxx'x is then rating the Preferred Shares) and Fitch
(if Fitch is then rating the Preferred Shares) that such vote is
to be taken and the nature of the action with respect to which
such vote is to be taken. The Trust shall, not later than ten
Business Days after the date on which such vote is taken, notify
Xxxxx'x (if Xxxxx'x is then rating the Preferred Shares) and Fitch
(if Fitch is then rating the Preferred Shares) of the results of
such vote.
(d) BOARD MAY TAKE ACTIONS WITHOUT SHAREHOLDER APPROVAL. The Board of
Trustees may, without the vote or consent of the Holders of the
Preferred Shares, or any other shareholder of the Trust, from time to
time amend, alter or repeal any or all of the definitions of the terms
listed herein, or any provision of the Bylaws viewed by Moody's or Fitch
as a predicate for any such definition, and any such amendment,
alteration or repeal will not be deemed to affect the preferences,
rights or powers of the Preferred Shares or the Holders thereof,
provided the Board of Trustees receives confirmation from Xxxxx'x (if
Xxxxx'x is then rating the Preferred Shares) and Fitch (if Fitch is then
rating the Preferred Shares), that any such amendment, alteration or
repeal would not impair the ratings then assigned to the Preferred
Shares by Xxxxx'x (if Xxxxx'x is then rating the Preferred Shares) or
Fitch (if Fitch is then rating the Preferred Shares).
In addition, subject to compliance with applicable law, the
Board of Trustees may amend the definition of Maximum Rate to increase
the percentage amount by which the Reference Rate is multiplied to
determine the Maximum Rate shown therein without the vote or consent of
the holders of preferred shares, including Preferred Shares, or any
other shareholder of the Trust, and without receiving any confirmation
from any rating agency, after consultation with the Broker-Dealers,
provided that immediately following any such increase the Trust would
meet the Preferred Shares Basic Maintenance Amount Test.
(e) RELATIVE RIGHTS AND PREFERENCES. Unless otherwise required by law
or provided elsewhere in the Declaration of Trust, the Holders of
Preferred Shares shall not have any relative rights or preferences or
other special rights other than those specifically set forth herein.
(f) NO PREEMPTIVE RIGHTS OR CUMULATIVE VOTING. The Holders of
Preferred Shares shall have no preemptive rights or rights to cumulative
voting.
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(g) VOTING FOR TRUSTEES SOLE REMEDY FOR TRUST'S FAILURE TO PAY
DISTRIBUTIONS. In the event that the Trust fails to pay any
distributions on the Preferred Shares, the exclusive remedy of the
Holders shall be the right to vote for Trustees pursuant to the
provisions of this Section 5.
(h) HOLDERS ENTITLED TO VOTE. For purposes of determining any rights
of the Holders to vote on any matter, whether such right is created by
these Bylaws, by the Declaration of Trust, by statute or otherwise, no
Holder shall be entitled to vote Preferred Shares and no Preferred
Shares shall be deemed to be "outstanding" for the purpose of voting or
determining the number of shares required to constitute a quorum if,
prior to or concurrently with the time of determination of shares
entitled to vote or shares deemed outstanding for quorum purposes, as
the case may be, the requisite Notice of Redemption with respect to such
shares shall have been mailed as provided in paragraph (c) of Section 11
of this Part I and the Redemption Price for the redemption of such
shares shall have been deposited in trust with the Auction Agent for
that purpose. No Preferred Shares held by the Trust or any affiliate of
the Trust (except for shares held by a Broker-Dealer that is an
affiliate of the Trust for the account of its customers) shall have any
voting rights or be deemed to be outstanding for voting or other
purposes.
6. 1940 ACT PREFERRED SHARES ASSET COVERAGE. THE TRUST SHALL MAINTAIN,
AS OF THE LAST BUSINESS DAY OF EACH MONTH IN WHICH ANY SHARE OF A SERIES OF
PREFERRED SHARES IS OUTSTANDING, THE 1940 ACT PREFERRED SHARES ASSET COVERAGE;
PROVIDED, HOWEVER, THAT THE REDEMPTION PURSUANT TO SECTION 11(b) OF THIS PART I
SHALL BE THE SOLE REMEDY IN THE EVENT THE TRUST FAILS TO DO SO.
7. PREFERRED SHARES BASIC MAINTENANCE AMOUNT.
(a) So long as Preferred Shares are outstanding, the Trust shall
maintain, on each Valuation Date, and shall verify to its satisfaction
that it is maintaining on such Valuation Date, (i) Fitch Eligible Assets
having an aggregate Discounted Value equal to or greater than the
Preferred Shares Basic Maintenance Amount (if Fitch is then rating the
Preferred Shares) and (ii) Moody's Eligible Assets having an aggregate
Discounted Value equal to or greater than the Preferred Shares Basic
Maintenance Amount (if Xxxxx'x is then rating the Preferred Shares);
PROVIDED, HOWEVER, that the redemption pursuant to Section 11(b) of this
Part I shall be the sole remedy in the event the Trust fails to do so.
(b) On or before 5:00 P.M., Eastern time, on the third Business Day
after a Valuation Date on which the Trust fails to satisfy the Preferred
Shares Basic Maintenance Amount, and on the third Business Day after the
Preferred Shares Basic Maintenance Cure Date with respect to such
Valuation Date, the Trust shall complete and deliver to Fitch (if Fitch
is then rating the Preferred Shares) and Xxxxx'x (if Xxxxx'x is then
rating the Preferred Shares) a Preferred Shares Basic Maintenance Report
as of the date of such failure or such Preferred Shares Basic
Maintenance Cure Date, as the case may be. The Trust shall also deliver
a Preferred Shares Basic Maintenance Report to Moody's (if Xxxxx'x is
then rating the Preferred Shares) and Fitch (if Fitch is then rating the
Preferred Shares), in each case on or before the seventh Business Day
after the last Business Day of each month. A failure by the Trust to
deliver a Preferred Shares Basic Maintenance Report pursuant to the
preceding sentence shall be deemed to be delivery of a Preferred Shares
Basic Maintenance Report indicating the Discounted Value for all assets
of the Trust is less than the Preferred Shares Basic Maintenance Amount,
as of the relevant Valuation Date.
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(c) Within ten Business Days after the date of delivery of a
Preferred Shares Basic Maintenance Report in accordance with paragraph
(b) of this Section 7 relating to a Quarterly Valuation Date that is
also an Annual Valuation Date, the Trust shall cause the Independent
Accountant to confirm in writing to Fitch (if Fitch is then rating the
Preferred Shares) and Moody's (if Xxxxx'x is then rating the Preferred
Shares) (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 Annual Valuation Date), (ii)
that, in such Report (and in such randomly selected Report), the Trust
correctly determined in accordance with these Bylaws whether the Trust
had, at such Annual Valuation Date (and at the Valuation Date addressed
in such randomly-selected Report), Fitch Eligible Assets (if Fitch is
then rating the Preferred Shares) of an aggregate Discounted Value at
least equal to the Preferred Shares Basic Maintenance Amount and Moody's
Eligible Assets (if Xxxxx'x is then rating the Preferred Shares) of an
aggregate Discounted Value at least equal to the Preferred Shares Basic
Maintenance Amount, (iii) that, in such Report (and in such randomly
selected Report), the Trust determined whether the Trust had, at such
Annual Valuation Date (and at the Valuation Date addressed in such
randomly selected Report) in accordance with these Bylaws, with respect
to the Fitch ratings, the issuer name and issue size and coupon rate
listed in such Report, verified by the Independent Accountant by
reference to Bloomberg Financial Services or another independent source
approved by Moody's (if Xxxxx'x is then rating the Preferred Shares) and
Fitch (if Fitch is then rating the Preferred Shares) and the Independent
Accountant shall provide a listing in its letter of any differences,
(iv) with respect to the Moody's ratings, the issuer name, issue size
and coupon rate listed in such Report, that such information has been
verified by the Independent Accountant by reference to Bloomberg
Financial Services or another independent source approved by Moody's (if
Xxxxx'x is then rating the Preferred Shares) and Fitch (if Fitch is then
rating the Preferred Shares) and the Independent Accountant shall
provide a listing in its letter of any differences, (v) 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, that 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) and (vi) with respect to
such confirmation to Moody's (if Xxxxx'x is then rating the Preferred
Shares) and Fitch (if Fitch is then rating the Preferred Shares), that
the Trust has satisfied the requirements of Section 13 of this Part I
with respect to portfolio holdings as of the date of such Report (such
confirmation is herein called the "Auditor's Confirmation"); PROVIDED,
HOWEVER, that the Independent Accountant may base the conclusions
related to (ii) through (vi) above on a sample of at least 25 securities
(or such other number of securities as the Independent Accountant and
Moody's (if Xxxxx'x is then rating the Preferred Shares) and Fitch (if
Fitch is then rating the Preferred Shares) may agree from time to time).
(d) Within ten Business Days after the date of delivery of a
Preferred Shares Basic Maintenance Report in accordance with paragraph
(b) of this Section 7 relating to any Valuation Date on which the Trust
failed to satisfy the Preferred Shares Basic Maintenance Amount, and
relating to the Preferred Shares Basic Maintenance Cure Date with
respect to such failure to satisfy the Preferred Shares Basic
Maintenance Amount, the Trust shall cause the Independent Accountant to
provide to Fitch (if Fitch is then rating the Preferred Shares) and
Moody's (if Xxxxx'x is then rating the Preferred Shares) an Auditor's
Confirmation as to such Preferred Shares Basic Maintenance Report.
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(e) If any Auditor's Confirmation delivered pursuant to paragraph (c)
or (d) of this Section 7 shows that an error was made in the Preferred
Shares Basic Maintenance Report for a particular Valuation Date for
which such Auditor's Confirmation was required to be delivered, or shows
that a lower aggregate Discounted Value for the aggregate of all Fitch
Eligible Assets (if Fitch is then rating the Preferred Shares) or
Moody's Eligible Assets (if Xxxxx'x is then rating the Preferred
Shares), as the case may be, of the Trust was determined by the
Independent Accountant, then in the absence of manifest error 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 Fitch (if Fitch is then rating the Preferred
Shares) and Moody's (if Xxxxx'x is then rating the Preferred Shares)
promptly following receipt by the Trust of such Auditor's Confirmation.
(f) On or before 5:00 p.m., Eastern time, on the first Business Day
after the Date of Original Issue of any Preferred Shares, the Trust
shall complete and deliver to Fitch (if Fitch is then rating the
Preferred Shares) and Moody's (if Xxxxx'x is then rating the Preferred
Shares) a Preferred Shares Basic Maintenance Report as of the close of
business on such Date of Original Issue.
(g) On or before 5:00 p.m., Eastern time, on the seventh Business Day
after either (i) the Trust shall have redeemed Common Shares or (ii) the
ratio of the Discounted Value of Fitch Eligible Assets or the Discounted
Value of Moody's Eligible Assets to the Preferred Shares Basic
Maintenance Amount on any valuation date is less than or equal to 105%
or (iii) whenever requested by Moody's or Fitch, the Trust shall
complete and deliver to Fitch (if Fitch is then rating the Preferred
Shares) or Moody's (if Xxxxx'x is then rating the Preferred Shares), as
the case may be, a Preferred Shares Basic Maintenance Report as of the
date of such request.
8. RESERVED.
9. RESTRICTIONS ON DISTRIBUTIONS AND OTHER DISTRIBUTIONS.
(a) DISTRIBUTIONS ON SHARES OTHER THAN PREFERRED SHARES. Except as
set forth in the next sentence, no distributions shall be declared or
paid or set apart for payment on the shares of any class or series of
shares of the Trust ranking, as to the payment of distributions, on a
parity with Preferred Shares for any period unless full cumulative
distributions have been or contemporaneously are declared and paid on
the Preferred Shares through its most recent Distribution Payment Date.
When distributions are not paid in full upon the Preferred Shares
through its most recent Distribution Payment Date or upon the shares of
any other class or series of shares of the Trust ranking on a parity as
to the payment of distributions with Preferred Shares through their most
recent respective distribution payment dates, all distributions declared
upon Preferred Shares and any other such class or series of shares
ranking on a parity as to the payment of distributions with Preferred
Shares shall be declared pro rata so that the amount of distributions
declared per share on Preferred Shares and such other class or series of
shares shall in all cases bear to each other the same ratio that
accumulated distributions per share on the Preferred Shares and such
other class or series of shares bear to each other (for purposes of this
sentence, the amount of distributions declared per share of Preferred
Shares shall be based on the Applicable Rate for such share for the
Distribution Periods during which distributions were not paid in full).
(b) DIVIDENDS AND OTHER DISTRIBUTIONS WITH RESPECT TO COMMON SHARES
UNDER THE 1940 ACT. The Board of Trustees shall not declare any dividend
(except a dividend payable in Common Shares), or declare any other
distribution, upon the Common Shares, or purchase Common Shares, unless
in every such case the Preferred Shares
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have, at the time of any such declaration or purchase, an asset coverage
(as defined in and determined pursuant to the 0000 Xxx) of at least 200%
(or such other asset coverage as may in the future be specified in or
under the 1940 Act as the minimum asset coverage for senior securities
which are shares or stock of a closed-end investment company as a
condition of declaring dividends on its common shares or stock) after
deducting the amount of such dividend, distribution or purchase price,
as the case may be.
(c) OTHER RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS. For so
long as any Preferred Shares are outstanding, and except as set forth in
paragraph (a) of this Section 9 and paragraph (c) of Section 12 of this
Part I, (A) the Trust shall not declare, pay or set apart for payment
any dividend or other distribution (other than a dividend or
distribution paid in shares of, or in options, warrants or rights to
subscribe for or purchase, Common Shares or other shares, if any,
ranking junior to the Preferred Shares as to the payment of dividends
and the distribution of assets upon dissolution, liquidation or winding
up) in respect of the Common Shares or any other shares of the Trust
ranking junior to or on a parity with the Preferred Shares as to the
payment of dividends or other distributions, including the distribution
of assets upon dissolution, liquidation or winding up, or call for
redemption, redeem, purchase or otherwise acquire for consideration any
Common Shares or any other such junior shares (except by conversion into
or exchange for shares of the Trust ranking junior to the Preferred
Shares as to the payment of dividends and other distributions, including
the distribution of assets upon dissolution, liquidation or winding up),
or any such parity shares (except by conversion into or exchange for
shares of the Trust ranking junior to or on a parity with Preferred
Shares as to the payment of dividends and other distributions, including
the distribution of assets upon dissolution, liquidation or winding up),
unless (i) full cumulative distributions on Preferred Shares through its
most recently ended Distribution Period shall have been paid or shall
have been declared and sufficient funds for the payment thereof are
reasonably expected by the Trust to be available for payment on the date
payment is due to the Auction Agent and (ii) the Trust has redeemed the
full number of Preferred Shares required to be redeemed by any provision
for mandatory redemption pertaining thereto, and (B) the Trust shall not
declare, pay or set apart for payment any dividend or other distribution
(other than a dividend or distribution paid in shares of, or in options,
warrants or rights to subscribe for or purchase, Common Shares or other
shares, if any, ranking junior to Preferred Shares as to the payment of
dividends and other distributions, including the distribution of assets
upon dissolution, liquidation or winding up) in respect of Common Shares
or any other shares of the Trust ranking junior to Preferred Shares as
to the payment of dividends or other distributions, including the
distribution of assets upon dissolution, liquidation or winding up, or
call for redemption, redeem, purchase or otherwise acquire for
consideration any Common Shares or any other such junior shares (except
by conversion into or exchange for shares of the Trust ranking junior to
Preferred Shares as to the payment of dividends and other distributions,
including the distribution of assets upon dissolution, liquidation or
winding up), unless immediately after such transaction the Discounted
Value of Moody's Eligible Assets (if Xxxxx'x is then rating the
Preferred Shares) and Fitch Eligible Assets (if Fitch is then rating the
Preferred Shares) would each at least equal the Preferred Shares Basic
Maintenance Amount.
10. RESERVED.
11. REDEMPTION.
(a) OPTIONAL REDEMPTION.
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(i) Subject to the provisions of subparagraph (v) of this
paragraph (a), Preferred Shares may be redeemed, at the option of
the Trust, as a whole or from time to time in part, on the second
Business Day preceding any Distribution Payment Date for shares of
the Series, out of funds legally available therefor, at a
redemption price per share equal to the sum of $___ plus an amount
equal to accumulated but unpaid distributions thereon (whether or
not earned or declared) to (but not including) the date fixed for
redemption; PROVIDED, HOWEVER, that (1) Preferred Shares are
redeemable by the Trust during the Initial Rate Period only on the
second Business Day next preceding the last Distribution Payment
Date for such Initial Rate Period; and (2) subject to subparagraph
(ii) of this paragraph (a), the Notice of Special Rate Period
relating to a Special Rate Period of Preferred Shares, as
delivered to the Auction Agent and filed with the Secretary of the
Trust, may provide that shares of the Series shall not be
redeemable during the whole or any part of such Special Rate
Period (except as provided in subparagraph (iv) of this paragraph
(a)) or shall be redeemable during the whole or any part of such
Special Rate Period only upon payment of such redemption premium
or premiums as shall be specified therein ("Special Redemption
Provisions").
(ii) A Notice of Special Rate Period relating to Preferred Shares
for a Special Rate Period thereof may contain Special Redemption
Provisions only if the Trust's Board of Trustees, after
consultation with the Broker-Dealer or Broker-Dealers for such
Special Rate Period of shares of the Series, determines that such
Special Redemption Provisions are in the best interest of the
Trust.
(iii) If fewer than all of the outstanding Preferred Shares are to
be redeemed pursuant to subparagraph (i) of this paragraph (a),
the number of shares of the Series to be redeemed shall be
determined by the Board of Trustees, and such shares shall be
redeemed pro rata from the Holders of shares of the Series in
proportion to the number of shares of the Series held by such
Holders or by such other method that the Board of Trustees deems
fair and equitable.
(iv) Subject to the provisions of subparagraph (v) of this
paragraph (a), Preferred Shares may be redeemed, at the option of
the Trust, as a whole but not in part, out of funds legally
available therefor, on the first day following any Distribution
Period thereof included in a Rate Period consisting of more than
364 Rate Period Days if, on the date of determination of the
Applicable Rate for shares of the Series for such Rate Period,
such Applicable Rate equaled or exceeded on such date of
determination the Treasury Note Rate for such Rate Period, at a
redemption price per share equal to the sum of $___ plus an amount
equal to accumulated but unpaid distributions thereon (whether or
not earned or declared) to (but not including) the date fixed for
redemption.
(v) The Trust may not on any date mail a Notice of Redemption
pursuant to paragraph (c) of this Section 11 in respect of a
redemption contemplated to be effected pursuant to this paragraph
(a) unless on such date (a) the Trust has available Deposit
Securities with maturity or tender dates not later than the day
preceding the applicable redemption date and having a value not
less than the amount (including any applicable premium) due to
Holders of Preferred Shares by reason of the redemption of such
shares on such redemption date and (b) the Discounted Value of
Moody's Eligible Assets (if Xxxxx'x is then rating the Preferred
Shares) and the Discounted Value of Fitch Eligible Assets (if
Fitch is then rating the Preferred Shares) each at least equal the
Preferred Shares Basic Maintenance Amount, and would at least
equal the Preferred Shares Basic Maintenance Amount immediately
subsequent to such redemption if such redemption were to occur on
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such date. The Trust shall not be required to have available
Deposit Securities as described in clause (a) of this subparagraph
(v) in respect of a redemption of any Preferred Shares, as a whole
or in part, contemplated to be effected pursuant to paragraph
11(a) where such redemption is subject to the issuance of shares
of any other series of preferred shares or debt or other leverage
of the Trust. For purposes of determining in clause (b) of the
second preceding sentence whether the Discounted Value of Moody's
Eligible Assets and Fitch Eligible Assets each at least equal the
Preferred Shares Basic Maintenance Amount, and would at least
equal the Preferred Shares Basic Maintenance Amount immediately
subsequent to such redemption, the Moody's Discount Factor
applicable to Moody's Eligible Assets and the Fitch Discount
Factor applicable to Fitch Discount Assets shall be determined by
reference, if applicable, to the first Exposure Period longer than
the Exposure Period then applicable to the Trust, as described in
the definition of Moody's Discount Factor and Fitch Discount
Factor herein.
(b) MANDATORY REDEMPTION. The Trust shall redeem, at a redemption
price equal to $___ per share plus accumulated but unpaid distributions
thereon (whether or not earned or declared) to (but not including) the
date fixed by the Board of Trustees for redemption, certain of the
Preferred Shares, if the Trust fails to have either Moody's Eligible
Assets with a Discounted Value or Fitch Eligible Assets with a
Discounted Value greater than or equal to the Preferred Shares Basic
Maintenance Amount, in accordance with the requirements of the rating
agency or agencies then rating the Preferred Shares, or fails to
maintain the 1940 Act Preferred Shares Asset Coverage and such failure
is not cured on or before the Preferred Shares Basic Maintenance Cure
Date or the 1940 Act Cure Date, as the case may be. The number of
Preferred Shares to be redeemed shall be equal to the lesser of (i) the
minimum number of Preferred Shares, together with all other preferred
shares subject to redemption or retirement, the redemption of which, if
deemed to have occurred immediately prior to the opening of business on
the Cure Date, would have resulted in the Trust's having both Moody's
Eligible Assets with a Discounted Value and Fitch Eligible Assets with a
Discounted Value greater than or equal to the Preferred Shares Basic
Maintenance Amount or maintaining the 1940 Act Preferred Shares Asset
Coverage, as the case may be, on such Cure Date (PROVIDED, HOWEVER, that
if there is no such minimum number of Preferred Shares and other
preferred shares the redemption or retirement of which would have had
such result, all Preferred Shares and other preferred shares then
outstanding shall be redeemed), and (ii) the maximum number of Preferred
Shares, together with all other preferred shares subject to redemption
or retirement, that can be redeemed out of funds expected to be legally
available therefore in accordance with the Declaration of Trust and
applicable law. In determining the Preferred Shares required to be
redeemed in accordance with the foregoing, the Trust shall allocate the
number required to be redeemed to satisfy the Preferred Shares Basic
Maintenance Amount or the 1940 Act Preferred Shares Asset Coverage, as
the case may be, pro rata among Preferred Shares and other preferred
shares (and, then, pro rata among the Preferred Shares) subject to
redemption or retirement. The Trust shall effect such redemption on the
date fixed by the Trust therefore, which date shall not be earlier than
20 days (or such lesser number of days as determined by the Trust with
appropriate consultation with the Auction Agent and Broker-Dealers) nor
later than 40 days after such Cure Date, except that if the Trust does
not have funds legally available for the redemption of all of the
required number of Preferred Shares and other preferred shares that are
subject to redemption or retirement or the Trust otherwise is unable to
effect such redemption on or prior to 40 days after such Cure Date, the
Trust shall redeem those Preferred Shares and other preferred shares
which it was unable to redeem on the earliest practicable date on which
it is able to effect such redemption. If fewer than all of the
outstanding shares Preferred Shares are to be redeemed pursuant to this
paragraph (b), the number of Preferred Shares to be redeemed shall be
redeemed pro rata from the Holders of Preferred Shares
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in proportion to the number of Preferred Shares held by such Holders or
by such other method that the Board of Trustees deems fair and
equitable.
(c) NOTICE OF REDEMPTION. If the Trust shall determine or be required
to redeem Preferred Shares pursuant to paragraph (a) or (b) of this
Section 11, it shall mail a Notice of Redemption with respect to such
redemption by first class mail, postage prepaid, to each Holder of the
Preferred Shares to be redeemed, at such Holder's address as the same
appears on the record books of the Trust on the record date established
by the Board of Trustees. Such Notice of Redemption shall be so mailed
not less than 20 (or such lesser number of days as determined by the
Trust with appropriate consultation with the Auction Agent and
Broker-Dealers) nor more than 45 days prior to the date fixed for
redemption. Each such Notice of Redemption shall state: (i) the
redemption date; (ii) the number of Preferred Shares to be redeemed;
(iii) the CUSIP number for the shares of the Series; (iv) the Redemption
Price; (v) the place or places where the certificate(s) for such shares
(properly endorsed or assigned for transfer, if the Board of Trustees
shall so require and the Notice of Redemption shall so state) are to be
surrendered for payment of the Redemption Price; (vi) that distributions
on the shares to be redeemed will cease to accumulate on such redemption
date; and (vii) the provisions of this Section 11 under which such
redemption is made. If fewer than all Preferred Shares held by any
Holder are to be redeemed, the Notice of Redemption mailed to such
Holder shall also specify the number of shares of the Series to be
redeemed from such Holder. The Trust may provide in any Notice of
Redemption relating to a redemption contemplated to be effected pursuant
to paragraph (a) of this Section 11 that such redemption is subject to
one or more conditions precedent and that the Trust shall not be
required to effect such redemption unless each such condition shall have
been satisfied at the time or times and in the manner specified in such
Notice of Redemption.
(d) NO REDEMPTION UNDER CERTAIN CIRCUMSTANCES. Notwithstanding the
provisions of paragraphs (a) or (b) of this Section 11, if any
distributions on Preferred Shares (whether or not earned or declared)
are in arrears, no Preferred Shares shall be redeemed unless all
outstanding shares of the Series are simultaneously redeemed, and the
Trust shall not purchase or otherwise acquire any shares of the Series;
PROVIDED, HOWEVER, that the foregoing shall not prevent the purchase or
acquisition of all outstanding shares of the Series pursuant to the
successful completion of an otherwise lawful purchase or exchange offer
made on the same terms to, and accepted by, Holders of all outstanding
shares of the Series.
(e) ABSENCE OF FUNDS AVAILABLE FOR REDEMPTION. To the extent that any
redemption for which Notice of Redemption has been mailed is not made by
reason of the absence of legally available funds therefor in accordance
with the Declaration of Trust and applicable law, such redemption shall
be made as soon as practicable to the extent such funds become
available. Failure to redeem Preferred Shares shall be deemed to exist
at any time after the date specified for redemption in a Notice of
Redemption when the Trust shall have failed, for any reason whatsoever,
to deposit in trust with the Auction Agent the Redemption Price with
respect to any shares for which such Notice of Redemption has been
mailed; PROVIDED, HOWEVER, that the foregoing shall not apply in the
case of the Trust's failure to deposit in trust with the Auction Agent
the Redemption Price with respect to any shares where (1) the Notice of
Redemption relating to such redemption provided that such redemption was
subject to one or more conditions precedent and (2) any such condition
precedent shall not have been satisfied at the time or times and in the
manner specified in such Notice of Redemption. Notwithstanding the fact
that the Trust may not have redeemed Preferred Shares for which a Notice
of Redemption has been mailed, distributions may be declared and paid on
Preferred Shares and shall include those Preferred Shares for which a
Notice of Redemption has been mailed.
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(f) AUCTION AGENT AS TRUSTEE OF REDEMPTION PAYMENTS BY TRUST. All
moneys paid to the Auction Agent for payment of the Redemption Price of
Preferred Shares called for redemption shall be held in trust by the
Auction Agent for the benefit of Holders of shares so to be redeemed.
(g) SHARES FOR WHICH NOTICE OF REDEMPTION HAS BEEN GIVEN ARE NO
LONGER OUTSTANDING. Provided a Notice of Redemption has been mailed
pursuant to paragraph (c) of this Section 11, upon the deposit with the
Auction Agent (on the Business Day fixed for redemption thereby, in
funds available on that Business Day in The City of New York, New York)
of funds sufficient to redeem the Preferred Shares that are the subject
of such notice, distributions on such shares shall cease to accumulate
and such shares shall no longer be deemed to be outstanding for any
purpose, and all rights of the Holders of the shares so called for
redemption shall cease and terminate, except the right of such Holders
to receive the Redemption Price, but without any interest or other
additional amount, except as provided in subparagraph (e)(i) of Section
2 of this Part I and in Section 3 of this Part I. The Trust shall be
entitled to receive from the Auction Agent, promptly after the date
fixed for redemption, any cash deposited with the Auction Agent in
excess of (i) the aggregate Redemption Price of the Preferred Shares
called for redemption on such date and (ii) all other amounts to which
Holders of Preferred Shares called for redemption may be entitled. Any
funds so deposited that are unclaimed at the end of 90 days from such
redemption date shall, to the extent permitted by law, be repaid to the
Trust, after which time the Holders of Preferred Shares so called for
redemption may look only to the Trust for payment of the Redemption
Price and all other amounts to which they may be entitled.
(h) COMPLIANCE WITH APPLICABLE LAW. In effecting any redemption
pursuant to this Section 11, the Trust shall use its best efforts to
comply with all applicable conditions precedent to effecting such
redemption under the 1940 Act and any applicable Massachusetts law, but
shall effect no redemption except in accordance with the 1940 Act and
any applicable Massachusetts law.
(i) ONLY WHOLE PREFERRED SHARES MAY BE REDEEMED. In the case of any
redemption pursuant to this Section 11, only whole Preferred Shares
shall be redeemed, and in the event that any provision of the
Declaration of Trust would require redemption of a fractional share, the
Auction Agent shall be authorized to round up so that only whole shares
are redeemed.
(j) MODIFICATION OF REDEMPTION PROCEDURES. Notwithstanding any of the
foregoing provisions of this Section 11, the Trust may modify any or all
of the requirements relating to the Notice of Redemption provided that
(i) any such modification does not materially and adversely affect any
holder of Preferred Shares, and (ii) the Trust receives notice from
Xxxxx'x (if Xxxxx'x is then rating the Preferred Shares) and Fitch (if
Fitch is then rating the Preferred Shares) that such modification would
not impair the ratings assigned by Xxxxx'x and Fitch to the Preferred
Shares.
(k) PURCHASE OR OTHER ACQUISITION OF PREFERRED SHARES OUTSIDE OF AN
AUCTION. Except for the provisions described above, nothing contained in
these Bylaws limits any right of the Trust to purchase or otherwise
acquire any Preferred Shares outside of an Auction at any price, whether
higher or lower than the price that would be paid in connection with an
optional or mandatory redemption, so long as, at the time of any such
purchase, there is no arrearage in the payment of distributions on, or
the mandatory or optional redemption price with respect to, any
Preferred Shares for which Notice of Redemption has been given and the
Trust meets the 1940 Act Preferred Shares Asset Coverage and the
Preferred Shares Basic
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Maintenance Amount Test after giving effect to such purchase or
acquisition on the date thereof. Any shares that are purchased, redeemed
or otherwise acquired by the Trust shall have no voting rights. If fewer
than all the Outstanding Preferred Shares are redeemed or otherwise
acquired by the Trust, the Trust shall give notice of such transaction
to the Auction Agent, in accordance with the procedures agreed upon by
the Board of Trustees.
12. LIQUIDATION RIGHTS.
(a) RANKING. The Preferred Shares shall rank on a parity with each
other and with shares of any other series of preferred shares as to the
distribution of assets upon dissolution, liquidation or winding up of
the affairs of the Trust.
(b) DISTRIBUTIONS UPON LIQUIDATION. Upon the dissolution, liquidation
or winding up of the affairs of the Trust, whether voluntary or
involuntary, the Holders of Preferred Shares then outstanding shall be
entitled to receive and to be paid out of the assets of the Trust
available for distribution to its Shareholders, before any payment or
distribution shall be made on the Common Shares or on any other class of
shares of the Trust ranking junior to the Preferred Shares upon
dissolution, liquidation or winding up, an amount equal to the
Liquidation Preference with respect to such shares plus an amount equal
to all distributions thereon (whether or not earned or declared but
excluding interest thereon) accumulated but unpaid to (but not
including) the date of final distribution in same day funds. After the
payment to the Holders of the Preferred Shares of the full preferential
amounts provided for in this paragraph (b), the Holders of Preferred
Shares as such shall have no right or claim to any of the remaining
assets of the Trust.
(c) PRO RATA DISTRIBUTIONS. In the event the assets of the Trust
available for distribution to the Holders of Preferred Shares upon any
dissolution, liquidation, or winding up of the affairs of the Trust,
whether voluntary or involuntary, shall be insufficient to pay in full
all amounts to which such Holders are entitled pursuant to paragraph (b)
of this Section 12, no such distribution shall be made on account of any
shares of any other class or series of preferred shares ranking on a
parity with the Preferred Shares with respect to the distribution of
assets upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the
Preferred Shares, ratably, in proportion to the full distributable
amounts for which holders of all such parity shares are respectively
entitled upon such dissolution, liquidation or winding up.
(d) RIGHTS OF JUNIOR SHARES. Subject to the rights of the holders of
shares of any series or class or classes of shares ranking on a parity
with the Preferred Shares with respect to the distribution of assets
upon dissolution, liquidation or winding up of the affairs of the Trust,
after payment shall have been made in full to the Holders of the
Preferred Shares as provided in paragraph (b) of this Section 12, but
not prior thereto, any other series or class or classes of shares
ranking junior to the Preferred Shares with respect to the distribution
of assets upon dissolution, liquidation or winding up of the affairs of
the Trust shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets remaining to
be paid or distributed, and the Holders of the Preferred Shares shall
not be entitled to share therein.
(e) CERTAIN EVENTS NOT CONSTITUTING LIQUIDATION. Neither the sale of
all or substantially all the property or business of the Trust, nor the
merger or consolidation of the Trust into or with any corporation nor
the merger or consolidation of any corporation into or with the Trust
shall be a dissolution, liquidation or winding up, whether voluntary or
involuntary, for the purposes of this Section 12.
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13. FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS.
(a) If Xxxxx'x is rating any Preferred Shares, then:
(i) For so long as any Preferred Shares are rated by Xxxxx'x, the
Trust will not buy or sell futures contracts, write, purchase or
sell call options on futures contracts or purchase put options on
futures contracts or write call options (except covered call
options) on portfolio securities unless it receives confirmation
from Moody's that engaging in such transactions would not impair
the ratings then assigned to such Preferred Shares by Moody's,
except that the Trust may purchase or sell exchange-traded futures
contracts based on the NAREIT Index (the "Real Estate Index") or
United States Treasury Bonds, Bills or Notes ("Treasury Futures"),
and purchase, write or sell exchange-traded put options on such
futures contracts and purchase, write or sell exchange-traded call
options on such futures contracts (collectively, "Moody's Hedging
Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Moody's Hedging Transaction
based on the Real Estate Index (other than transactions which
terminate a futures contract or option held by the Trust by the
Trust's taking an opposite position thereto ("Closing
Transactions")) which would cause the Trust at the time of such
transaction to own or have sold outstanding futures contracts
based on the Real Estate Index exceeding in number 10% of the
average number of daily traded futures contracts based on the
Real Estate Index in the 30 days preceding the time of effecting
such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any Moody's Hedging Transaction
based on Treasury Futures (other than Closing Transactions)
which would cause the Trust at the time of such transaction to
own or have sold (i) outstanding futures contracts based on
Treasury Futures having an aggregate Market Value exceeding 20%
of the aggregate Market Value of Moody's Eligible Assets owned
by the Trust and rated at least Aa by Moody's (or, if not rated
by Moody's, rated AA by S&P or Fitch), or (ii) outstanding
futures contracts based on Treasury Futures having an aggregate
Market Value exceeding 40% of the aggregate Market Value of all
securities of REITs and Other Real Estate Companies constituting
Moody's Eligible Assets owned by the Trust (other than Moody's
Eligible Assets already subject to a Moody's Hedging
Transaction) and rated Baa or A by Moody's (or, if not rated by
Moody's, rated Baa or A by S&P or Fitch) (for purpose 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);
(C) the Trust will engage in Closing Transactions to close out
any outstanding futures contract based on the Real Estate Index
if the amount of open interest in the Real Estate Index as
reported by The Wall Street Journal is less than 100; and
(D) the Trust will not enter into an option on futures
transaction 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.
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(ii) 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 which the Trust is
obligated to deliver or receive pursuant to an outstanding futures
contract or option shall be as follows:
(A) assets subject to call options written by the Trust which
are either exchange-traded and "readily reversible" or which
expire within 49 days after the date as of which such valuation
is made shall be valued at the lesser of: (i) Discounted Value
and (ii) the exercise price of the call option written by the
Trust;
(B) assets subject to call options written by the Trust not
meeting the requirements of clause (A) of this sentence shall
have no value;
(C) assets subject to put options written by the Trust shall be
valued at the lesser of: (i) the exercise price and (ii) the
Discounted Value of the subject security.
(iii) For purposes of determining whether the Trust has Moody's
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:
(A) 10% of the exercise price of a written call option;
(B) the exercise price of any written put option;
(C) where the Trust is the seller under a futures contract, 10%
of the settlement price of the futures contract;
(D) where the Trust is the purchaser under a futures contract,
the settlement price of assets purchased under such futures
contract;
(E) the settlement price of the underlying futures contract if
the Trust writes put options on a futures contract and does not
own the underlying contract; and
(F) 105% of the Market Value of the underlying futures contracts
if the Trust writes call options on a futures contract and does
not own the underlying contract.
(iv) For so long as any Preferred Shares are rated by Moody's, the
Trust will not enter into any contract to purchase securities for
a fixed price at a future date beyond customary settlement time
(other than such contracts that constitute Moody's Hedging
Transactions that are permitted under Section 13(a)(ii) of this
Part I), except that the Trust may enter into such contracts to
purchase newly-issued securities on the date such securities are
issued ("Forward Commitments"), subject to the following
limitation:
(A) the Trust will maintain in a segregated account with its
custodian cash, cash equivalents or short-term, fixed-income
securities rated X-0, XXX-0 or MIG-1 by Moody's 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
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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
(B) the Trust will not enter into a Forward Commitment unless,
after giving effect thereto, the Trust would continue to have
Moody's 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.
(b) If Fitch is rating any Preferred Shares, then:
(i) For so long as any Preferred Shares are rated by Fitch, the
Trust will not buy or sell futures contracts, write, purchase or
sell call options on futures contracts or purchase put options on
futures contracts or write call options (except covered call
options) on portfolio securities unless it receives confirmation
from Fitch that engaging in such transactions would not impair the
ratings then assigned to such Preferred Shares by Fitch, except
that the Trust may purchase or sell exchange-traded futures
contracts based on the Real Estate Index or Treasury Futures, and
purchase, write or sell exchange-traded put options on such
futures contracts and purchase, write or sell exchange-traded call
options on such futures contracts (collectively, "Fitch Hedging
Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Fitch Hedging Transaction
based on the Real Estate Index (other than Closing Transactions)
which would cause the Trust at the time of such transactions to
own or have sold outstanding futures contracts based on the Real
Estate Index exceeding in number 10% of the average number of
daily traded futures contracts based on the Real Estate Index in
the 30 days preceding the time of effecting such transaction (as
reported by The Wall Street Journal);
(B) the Trust will not engage in any Fitch Hedging Transaction
based on Treasury Futures (other than Closing Transactions)
which would cause the Trust at the time of such transaction to
own or have sold (i) outstanding futures contracts based on
Treasury Futures 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 by Fitch (or, if not rated by
Fitch, rated at least Aa by Moody's; or, if not rated by
Moody's, rated at least AA by S&P), or (ii) outstanding futures
contracts based on Treasury Futures 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 BBB by Fitch (or, if not rated by Fitch, rated at least
Baa by Moody's, or, if not rated by Moody's, rated at least A 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);
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(C) the Trust will engage in Closing Transactions to close any
outstanding futures contract based on the Real Estate Index if
the amount of open interest in the Real Estate Index as reported
by The Wall Street Journal is less than 100; and
(D) the Trust will not enter into an option on future
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.
(ii) 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 which the Trust is
obligated to deliver or receive pursuant to an outstanding futures
contract or option shall be as follows:
(A) assets subject to call options written by the Trust which
are either exchange-traded and "readily reversible" or which
expire within 49 days after the date as of which such valuation
is made shall be valued at the lesser of: (i) Discounted Value
and (ii) the exercise price of the call option written by the
Trust;
(B) assets subject to call options written by the Trust not
meeting the requirements of clause (A) of this sentence shall
have no value;
(C) assets subject to put options written by the Trust shall be
valued at the lesser of: (i) the exercise price and (ii) the
Discounted Value of the subject security.
(iii) 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:
(A) 10% of the exercise price of a written call option;
(B) the exercise price of any written put option;
(C) where the Trust is the seller under a futures contract, 10%
of the settlement price of the futures contract;
(D) where the Trust is the purchaser under a futures contract,
the settlement price of assets purchased under such futures
contract;
(E) the settlement price of the underlying futures contract if
the Trust writes put options on a futures contract and does not
own the underlying contract; and
(F) 105% of the Market Value of the underlying futures contracts
if the Trust writes call options on a futures contract and does
not own the underlying contract.
(iv) For so long as any Preferred Shares are rated by Fitch, the
Trust will not enter into 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 that
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are permitted under Section 13(b)(ii) of this Part I), except that
the Trust may enter into Forward Commitments, subject to the
following limitation:
(A) the Trust will maintain in a segregated account with its
custodian cash, cash equivalents or short-term, fixed-income
securities rated F-1 by Fitch (or, if not rated by Fitch, rated
X-0, XXX-0 or MIG-1 by Moody's) 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
(B) 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.
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.
(c) For so long as any Preferred Shares are outstanding and Moody's
or Fitch or both is rating such shares, the Trust will not, unless it
has received confirmation from Moody's or Fitch or both, as applicable,
that any such action would not impair the rating then assigned by such
rating agency to such shares, engage in any one or more of the following
transactions:
(i) borrow money, except that the Trust may, without obtaining the
confirmation described above, borrow money for the purpose of
clearing securities transactions if
(A) the Preferred Shares Basic Maintenance Amount would continue
to be satisfied after giving effect to such borrowing and
(B) such borrowing (i) is privately arranged with a bank or
other person and is evidenced by a promissory note or other
evidence of indebtedness that is not intended to be publicly
distributed or (ii) is for "temporary purposes," is evidenced by
a promissory note or other evidence of indebtedness and is in an
amount not exceeding 5% of the value of the total assets of the
Trust at the time of the borrowing (for purposes of the
foregoing, "temporary purposes" means that the borrowing is to
be repaid within sixty days and is not to be extended or
renewed);
(ii) except as provided in Section 5 of this Part I, issue
additional Preferred Shares or any class or series of shares
ranking prior to or on a parity with Preferred Shares with respect
to the payment of dividends or other distributions, including the
distribution of assets upon dissolution, liquidation or winding up
of the Trust, or reissue any Preferred Shares previously purchased
or redeemed by the Trust;
(iii) engage in any short sales of securities;
(iv) lend securities;
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(v) merge or consolidate into or with any other corporation or
entity;
(vi) for purposes of valuation of Moody's Eligible Assets: (A) if
the Trust writes a call option, the underlying asset will be
valued as follows:(1) if the option is exchange-traded and may be
offset readily or if the option expires before the earliest
possible redemption of the Series, at the lower of the Discounted
Value of the underlying security of the option and the exercise
price of the option or (2) otherwise, it has no value; (B) if the
Trust writes a put option, the underlying asset will be valued as
follows: the lesser of (1) exercise price and (2) the Discounted
Value of the underlying security; and (C) call or put option
contracts which the Trust buys have no value. For so long as the
Series is rated by Moody's: (A) the Trust will not engage in
options transactions for leveraging or speculative purposes; (B)
the Trust will not write or sell any anticipatory contracts
pursuant to which the Trust xxxxxx the anticipated purchase of an
asset prior to completion of such purchase; (C) the Trust will not
enter into an option transaction with respect to portfolio
securities unless, after giving effect thereto, the Trust would
continue to have Eligible Assets with an aggregate Discounted
Value equal to or greater than the Preferred Shares Basic
Maintenance Amount; (D) the Trust will not enter into an option
transaction with respect to portfolio securities unless after
giving effect to such transaction the Trust would continue to be
in compliance with the provisions relating to the Preferred Shares
Basic Maintenance Amount; (E) for purposes of the Preferred Shares
Basic Maintenance Amount assets in margin accounts are not
Eligible Assets; (F) the Trust will write only exchange-traded
options on exchanges approved by Moody's (if Xxxxx'x is then
rating the Series); (G) where delivery may be made to the Trust
with any of a class of securities, the Trust will assume for
purposes of the Preferred Shares Basic Maintenance Amount that it
takes delivery of that security which yields it the least value;
(H) the Trust will not engage in forward contracts; and (I) there
will be a quarterly audit made of the Trust's options transactions
by the Trust's independent auditors to confirm that the Trust is
in compliance with these standards;
(vii) change a pricing service (which has been designated by
management or the Board of Trustees); and
(viii) enter into reverse repurchase agreements.
In the event any Preferred Shares are outstanding and another
nationally-recognized statistical rating organization is rating such
shares in addition to or in lieu of Moody's or Fitch, the Trust shall
comply with any restrictions imposed by such rating agency, which
restrictions may be more restrictive than those imposed by Moody's or
Fitch.
14. MISCELLANEOUS.
(a) AMENDMENT OF BYLAWS TO ADD ADDITIONAL SERIES. Subject to the
provisions of paragraph (c) of Section 10 of this Part I, the Board of
Trustees may, by resolution duly adopted, without shareholder approval
(except as otherwise provided by these Bylaws or required by applicable
law), approving an annex hereto, (1) reflect any amendments hereto which
the Board of Trustees is entitled to adopt pursuant to the terms of
these Bylaws without shareholder approval or (2) add additional series
of Preferred Shares or additional shares of a series of Preferred Shares
(and terms relating thereto) to the series and Preferred Shares
described herein. Each such additional series and all such additional
shares shall be governed by the terms of these Bylaws.
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(b) NO FRACTIONAL SHARES. No fractional Preferred Shares shall be
issued.
(c) STATUS OF PREFERRED SHARES REDEEMED, EXCHANGED OR OTHERWISE
ACQUIRED BY THE TRUST. Preferred Shares that are redeemed, exchanged or
otherwise acquired by the Trust shall return to the status of authorized
and unissued Preferred Shares.
(d) BOARD MAY RESOLVE AMBIGUITIES. To the extent permitted by
applicable law, the Board of Trustees may interpret or adjust the
provisions of these Bylaws to resolve any inconsistency or ambiguity or
to remedy any formal defect, and may amend these Bylaws with respect to
Preferred Shares prior to the issuance of shares of the Series.
(e) HEADINGS NOT DETERMINATIVE. The headings contained in these
Bylaws are for convenience of reference only and shall not affect the
meaning or interpretation of these Bylaws.
(f) NOTICES. All notices or communications, unless otherwise
specified in these Bylaws, shall be sufficiently given if in writing and
delivered in person or by facsimile or mailed by first-class mail,
postage prepaid. Notices delivered pursuant to this Section 14 shall be
deemed given on the earlier of the date received or the date five days
after which such notice is mailed, except as otherwise provided in these
Bylaws or by the Massachusetts Business Corporation Law for notices of
shareholders' meetings.
(g) EXEMPTION FROM OWNERSHIP RESTRICTIONS. Pursuant to Article V,
Sections 2.7(a)-(b) of the Declaration of Trust, for any Person who
holds Preferred Shares, the share ownership restrictions contained in
Article V, Sections 2.1(a)(i)-(ii) of the Declaration of Trust shall be
computed as though all Preferred Shares were not issued and outstanding.
PART II
1. ORDERS.
(a) Prior to the Submission Deadline on each Auction Date for
Preferred Shares:
(i) each Beneficial Owner of shares of the Series may submit to
its Broker-Dealer by telephone or otherwise information as to:
(A) the number of Outstanding shares, if any, of the Series held
by such Beneficial Owner which such Beneficial Owner desires to
continue to hold without regard to the Applicable Rate for
shares of the Series for the next succeeding Rate Period of the
Series;
(B) the number of Outstanding shares, if any, of the Series held
by such Beneficial Owner which such Beneficial Owner offers to
sell if the Applicable Rate for shares of the Series for the
next succeeding Rate Period of shares of the Series shall be
less than the rate per annum specified by such Beneficial Owner;
and/or
(C) the number of Outstanding shares, if any, of the Series held
by such Beneficial Owner which such Beneficial Owner offers to
sell without regard to the Applicable Rate for shares of the
Series for the next succeeding Rate Period of shares of the
Series; and
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(ii) one or more Broker-Dealers, using lists of Potential
Beneficial Owners, shall in good faith for the purpose of
conducting a competitive Auction in a commercially reasonable
manner, contact Potential Beneficial Owners (by telephone or
otherwise), including Persons that are not Beneficial Owners, on
such lists to determine the number of shares, if any, of the
Series which each such Potential Beneficial Owner offers to
purchase if the Applicable Rate for shares of the Series for the
next succeeding Rate Period of shares of the Series shall not be
less than the rate per annum specified by such Potential
Beneficial Owner.
For the purposes hereof, the communication by a Beneficial Owner or
Potential Beneficial Owner to a Broker-Dealer, or by a Broker-Dealer to the
Auction Agent, of information referred to in clause (i)(A), (i)(B), (i)(C)
or (ii) of this paragraph (a) is hereinafter referred to as an "Order" and
collectively as "Orders" and each Beneficial Owner and each Potential
Beneficial Owner placing an Order with a Broker-Dealer, and such
Broker-Dealer placing an Order with the Auction Agent, is hereinafter
referred to as a "Bidder" and collectively as "Bidders"; an Order
containing the information referred to in clause (i)(A) of this paragraph
(a) is hereinafter referred to as a "Hold Order" and collectively as "Hold
Orders"; an Order containing the information referred to in clause (i)(B)
or (ii) of this paragraph (a) is hereinafter referred to as a "Bid" and
collectively as "Bids"; and an Order containing the information referred to
in clause (i)(C) of this paragraph (a) is hereinafter referred to as a
"Sell Order" and collectively as "Sell Orders."
(b)
(i) A Bid by a Beneficial Owner or an Existing Holder of Preferred
Shares subject to an Auction on any Auction Date shall constitute
an irrevocable offer to sell:
(A) the number of Outstanding shares of the Series specified in
such Bid if the Applicable Rate for shares of the Series
determined on such Auction Date shall be less than the rate
specified therein;
(B) such number or a lesser number of Outstanding shares of the
Series to be determined as set forth in clause (iv) of paragraph
(a) of Section 4 of this Part II if the Applicable Rate for
shares of the Series determined on such Auction Date shall be
equal to the rate specified therein; or
(C) the number of Outstanding shares of the Series specified in
such Bid if the rate specified therein shall be higher than the
Maximum Rate for shares of the Series, or such number or a
lesser number of Outstanding shares of the Series to be
determined as set forth in clause (iii) of paragraph (b) of
Section 4 of this Part II if the rate specified therein shall be
higher than the Maximum Rate for shares of the Series and
Sufficient Clearing Bids for shares of the Series do not exist.
(ii) A Sell Order by a Beneficial Owner or an Existing Holder of
Preferred Shares subject to an Auction on any Auction Date shall
constitute an irrevocable offer to sell:
(A) the number of Outstanding shares of the Series specified in
such Sell Order; or
(B) such number or a lesser number of Outstanding shares of the
Series as set forth in clause (iii) of paragraph (b) of Section
4 of this Part II if Sufficient Clearing Bids for shares of the
Series do not exist; PROVIDED, HOWEVER, that a Broker-Dealer
that is an Existing Holder with respect to shares of a series of
Preferred Shares shall not be
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liable to any Person for failing to sell such shares pursuant to
a Sell Order described in the proviso to paragraph (c) of
Section 2 of this Part II if (1) such shares were transferred by
the Beneficial Owner thereof without compliance by such
Beneficial Owner or its transferee Broker-Dealer (or other
transferee person, if permitted by the Trust) with the
provisions of Section 7 of this Part II or (2) such
Broker-Dealer has informed the Auction Agent pursuant to the
terms of its Broker-Dealer Agreement that, according to such
Broker-Dealer's records, such Broker-Dealer believes it is not
the Existing Holder of such shares.
(iii) A Bid by a Potential Beneficial Holder or a Potential Holder
of Preferred Shares subject to an Auction on any Auction Date
shall constitute an irrevocable offer to purchase:
(A) the number of Outstanding shares of the Series specified in
such Bid if the Applicable Rate for shares of the Series
determined on such Auction Date shall be higher than the rate
specified therein; or
(B) such number or a lesser number of Outstanding shares of the
Series as set forth in clause (v) of paragraph (a) of Section 4
of this Part II if the Applicable Rate for shares of the Series
determined on such Auction Date shall be equal to the rate
specified therein.
(c) No Order for any number of Preferred Shares other than whole
shares shall be valid.
2. SUBMISSION OF ORDERS BY BROKER-DEALERS TO AUCTION AGENT.
(a) Each Broker-Dealer shall submit in writing to the Auction Agent
prior to the Submission Deadline on each Auction Date all Orders for
Preferred Shares subject to an Auction on such Auction Date obtained by
such Broker-Dealer, designating itself (unless otherwise permitted by
the Trust) as an Existing Holder in respect of shares subject to Orders
submitted or deemed submitted to it by Beneficial Owners and as a
Potential Holder in respect of shares subject to Orders submitted to it
by Potential Beneficial Owners, and shall specify with respect to each
Order for such shares:
(i) the name of the Bidder placing such Order (which shall be the
Broker-Dealer unless otherwise permitted by the Trust);
(ii) the aggregate number of shares of the Series that are the
subject of such Order;
(iii) to the extent that such Bidder is an Existing Holder of
shares of the Series:
(A) the number of shares, if any, of the Series subject to any
Hold Order of such Existing Holder;
(B) the number of shares, if any, of the Series subject to any
Bid of such Existing Holder and the rate specified in such Bid;
and
(C) the number of shares, if any, of the Series subject to any
Sell Order of such Existing Holder; and
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(iv) to the extent such Bidder is a Potential Holder of shares of
the Series, the rate and number of shares of the Series specified
in such Potential Holder's Bid.
(b) If any rate specified in any Bid contains more than three figures
to the right of the decimal point, the Auction Agent shall round such
rate up to the next highest one thousandth (.001) of 1%.
(c) If an Order or Orders covering all of the Outstanding Preferred
Shares held by any Existing Holder is not submitted to the Auction Agent
prior to the Submission Deadline, the Auction Agent shall deem a Hold
Order to have been submitted by or on behalf of such Existing Holder
covering the number of Outstanding shares of the Series held by such
Existing Holder and not subject to Orders submitted to the Auction
Agent; PROVIDED, HOWEVER, that if an Order or Orders covering all of the
Outstanding shares of the Series held by any Existing Holder is not
submitted to the Auction Agent prior to the Submission Deadline for an
Auction relating to a Special Rate Period consisting of more than 28
Rate Period Days, the Auction Agent shall deem a Sell Order to have been
submitted by or on behalf of such Existing Holder covering the number of
outstanding shares of the Series held by such Existing Holder and not
subject to Orders submitted to the Auction Agent.
(d) If one or more Orders of an Existing Holder is submitted to the
Auction Agent covering in the aggregate more than the number of
Outstanding Preferred Shares subject to an Auction held by such Existing
Holder, such Orders shall be considered valid in the following order of
priority:
(i) all Hold Orders for shares of the Series shall be considered
valid, but only up to and including in the aggregate the number of
Outstanding shares of the Series held by such Existing Holder, and
if the number of shares of the Series subject to such Hold Orders
exceeds the number of Outstanding shares of the Series held by
such Existing Holder, the number of shares subject to each such
Hold Order shall be reduced pro rata to cover the number of
Outstanding shares of the Series held by such Existing Holder;
(ii) (A) any Bid for shares of the Series shall be considered
valid up to and including the excess of the number of Outstanding
shares of the Series held by such Existing Holder over the number
of shares of the Series subject to any Hold Orders referred to in
clause (i) above;
(B) subject to subclause (A), if more than one Bid of an
Existing Holder for shares of the Series is submitted to the
Auction Agent with the same rate and the number of Outstanding
shares of the Series subject to such Bids is greater than such
excess, such Bids shall be considered valid up to and including
the amount of such excess, and the number of shares of the
Series subject to each Bid with the same rate shall be reduced
pro rata to cover the number of shares of the Series equal to
such excess;
(C) subject to subclauses (A) and (B), if more than one Bid of
an Existing Holder for shares of the Series is submitted to the
Auction Agent with different rates, such Bids shall be
considered valid in the ascending order of their respective
rates up to and including the amount of such excess; and
(D) in any such event, the number, if any, of such Outstanding
shares of the Series subject to any portion of Bids considered
not valid in whole or in part under this
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clause (ii) shall be treated as the subject of a Bid for shares
of the Series by or on behalf of a Potential Holder at the rate
therein specified; and
(iii) all Sell Orders for shares of the Series shall be considered
valid up to and including the excess of the number of Outstanding
shares of the Series held by such Existing Holder over the sum of
shares of the Series subject to valid Hold Orders referred to in
clause (i) above and valid Bids referred to in clause (ii) above.
(e) If more than one Bid for one or more Preferred Shares is
submitted to the Auction Agent by or on behalf of any Potential Holder,
each such Bid submitted shall be a separate Bid with the rate and number
of shares therein specified.
(f) Any Order submitted by a Beneficial Owner or a Potential
Beneficial Owner to its Broker-Dealer, or by a Broker-Dealer to the
Auction Agent, prior to the Submission Deadline on any Auction Date,
shall be irrevocable.
3. DETERMINATION OF SUFFICIENT CLEARING BIDS, WINNING BID RATE AND
APPLICABLE RATE.
(a) Not earlier than the Submission Deadline on each Auction Date for
Preferred Shares, the Auction Agent shall assemble all valid Orders
submitted or deemed submitted to it by the Broker-Dealers in respect of
shares of the Series (each such Order as submitted or deemed submitted
by a Broker-Dealer being hereinafter referred to individually as a
"Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order,"
as the case may be, or as a "Submitted Order" and collectively as
"Submitted Hold Orders," "Submitted Bids" or "Submitted Sell Orders," as
the case may be, or as "Submitted Orders") and shall determine for the
Series:
(i) the excess of the number of Outstanding Preferred Shares of
the Series over the number of Outstanding shares of the Series
subject to Submitted Hold Orders (such excess being hereinafter
referred to as the "Available Preferred Shares" of the Series);
(ii) from the Submitted Orders for shares of the Series whether:
(A) the number of Outstanding shares of the Series subject to
Submitted Bids of Potential Holders specifying one or more rates
equal to or lower than the Maximum Rate for shares of the Series
exceeds or is equal to the sum of:
(B) the number of Outstanding shares of the Series subject to
Submitted Bids of Existing Holders specifying one or more rates
higher than the Maximum Rate for shares of the Series; and
(C) the number of Outstanding shares of the Series subject to
Submitted Sell Orders (in the event such excess or such equality
exists (other than because the number of shares of the Series in
subclauses (B) and (C) above is zero because all of the
Outstanding shares of the Series are subject to Submitted Hold
Orders), such Submitted Bids in subclause (A) above being
hereinafter referred to collectively as "Sufficient Clearing
Bids" for shares of the Series); and
(iii) if Sufficient Clearing Bids for shares of the Series exist,
the lowest rate specified in such Submitted Bids (the "Winning Bid
Rate" for shares of the Series) which if:
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(A) (I) each such Submitted Bid of Existing Holders specifying
such lowest rate and (II) all other such Submitted Bids of
Existing Holders specifying lower rates were rejected, thus
entitling such Existing Holders to continue to hold the shares
of the Series that are subject to such Submitted Bids; and
(B) (I) each such Submitted Bid of Potential Holders specifying
such lowest rate and (II) all other such Submitted Bids of
Potential Holders specifying lower rates were accepted;
would result in such Existing Holders described in subclause (A)
above continuing to hold an aggregate number of Outstanding shares
of the Series which, when added to the number of Outstanding
shares of the Series to be purchased by such Potential Holders
described in subclause (B) above, would equal not less than the
Available Preferred Shares of the Series.
(b) Promptly after the Auction Agent has made the determinations
pursuant to paragraph (a) of this Section 3, the Auction Agent shall
advise the Trust of the Maximum Rate for Preferred Shares for which an
Auction is being held on the Auction Date and, based on such
determination, the Applicable Rate for shares of the Series for the next
succeeding Rate Period thereof as follows:
(i) if Sufficient Clearing Bids for shares of the Series exist,
the Applicable Rate for all shares of the Series for the next
succeeding Rate Period thereof shall be equal to the Winning Bid
Rate for shares of the Series so determined;
(ii) if Sufficient Clearing Bids for shares of the Series do not
exist (other than because all of the Outstanding shares of the
Series are subject to Submitted Hold Orders), the Applicable Rate
for all shares of the Series for the next succeeding Rate Period
thereof shall be equal to the Maximum Rate for shares of the
Series; or
(iii) if all of the Outstanding shares of the Series are subject
to Submitted Hold Orders, the Applicable Rate for all shares of
the Series for the next succeeding Rate Period thereof shall be
the All Hold Rate.
4. ACCEPTANCE AND REJECTION OF SUBMITTED BIDS AND SUBMITTED SELL ORDERS
AND ALLOCATION OF SHARES. Existing Holders shall continue to hold the Preferred
Shares that are subject to Submitted Hold Orders, and, based on the
determinations made pursuant to paragraph (a) of Section 3 of this Part II, the
Submitted Bids and Submitted Sell Orders shall be accepted or rejected by the
Auction Agent and the Auction Agent shall take such other action as set forth
below:
(a) If Sufficient Clearing Bids for Preferred Shares have been made,
all Submitted Sell Orders with respect to shares of the Series shall be
accepted and, subject to the provisions of paragraphs (d) and (e) of
this Section 4, Submitted Bids with respect to shares of the Series
shall be accepted or rejected as follows in the following order of
priority and all other Submitted Bids with respect to shares of the
Series shall be rejected:
(i) Existing Holders' Submitted Bids for shares of the Series
specifying any rate that is higher than the Winning Bid Rate for
shares of the Series shall be accepted, thus requiring each such
Existing Holder to sell the Preferred Shares subject to such
Submitted Bids;
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(ii) Existing Holders' Submitted Bids for shares of the Series
specifying any rate that is lower than the Winning Bid Rate for
shares of the Series shall be rejected, thus entitling each such
Existing Holder to continue to hold the Preferred Shares subject
to such Submitted Bids;
(iii) Potential Holders' Submitted Bids for shares of the Series
specifying any rate that is lower than the Winning Bid Rate for
shares of the Series shall be accepted;
(iv) each Existing Holder's Submitted Bid for shares of the Series
specifying a rate that is equal to the Winning Bid Rate for shares
of the Series shall be rejected, thus entitling such Existing
Holder to continue to hold the Preferred Shares subject to such
Submitted Bid, unless the number of Outstanding Preferred Shares
subject to all such Submitted Bids shall be greater than the
number of Preferred Shares ("remaining shares") in the excess of
the Available Preferred Shares of the Series over the number of
Preferred Shares subject to Submitted Bids described in clauses
(ii) and (iii) of this paragraph (a), in which event such
Submitted Bid of such Existing Holder shall be rejected in part,
and such Existing Holder shall be entitled to continue to hold
Preferred Shares subject to such Submitted Bid, but only in an
amount equal to the number of Preferred Shares of the Series
obtained by multiplying the number of remaining shares by a
fraction, the numerator of which shall be the number of
Outstanding Preferred Shares held by such Existing Holder subject
to such Submitted Bid and the denominator of which shall be the
aggregate number of Outstanding Preferred Shares subject to such
Submitted Bids made by all such Existing Holders that specified a
rate equal to the Winning Bid Rate for shares of the Series; and
(v) each Potential Holder's Submitted Bid for shares of the Series
specifying a rate that is equal to the Winning Bid Rate for shares
of the Series shall be accepted but only in an amount equal to the
number of shares of the Series obtained by multiplying the number
of shares in the excess of the Available Preferred Shares of the
Series over the number of Preferred Shares subject to Submitted
Bids described in clauses (ii) through (iv) of this paragraph (a)
by a fraction, the numerator of which shall be the number of
Outstanding Preferred Shares subject to such Submitted Bid and the
denominator of which shall be the aggregate number of Outstanding
Preferred Shares subject to such Submitted Bids made by all such
Potential Holders that specified a rate equal to the Winning Bid
Rate for shares of the Series.
(b) If Sufficient Clearing Bids for shares of a series of Preferred
Shares have not been made (other than because all of the Outstanding
shares of the Series are subject to Submitted Hold Orders), subject to
the provisions of paragraph (d) of this Section 4, Submitted Orders for
shares of the Series shall be accepted or rejected as follows in the
following order of priority and all other Submitted Bids for shares of
the Series shall be rejected:
(i) Existing Holders' Submitted Bids for shares of the Series
specifying any rate that is equal to or lower than the Maximum
Rate for shares of the Series shall be rejected, thus entitling
such Existing Holders to continue to hold the Preferred Shares
subject to such Submitted Bids;
(ii) Potential Holders' Submitted Bids for shares of the Series
specifying any rate that is equal to or lower than the Maximum
Rate for shares of the Series shall be accepted; and
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(iii) Each Existing Holder's Submitted Bid for shares of the
Series specifying any rate that is higher than the Maximum Rate
for shares of the Series and the Submitted Sell Orders for shares
of the Series of each Existing Holder shall be accepted, thus
entitling each Existing Holder that submitted or on whose behalf
was submitted any such Submitted Bid or Submitted Sell Order to
sell the shares of the Series subject to such Submitted Bid or
Submitted Sell Order, but in both cases only in an amount equal to
the number of shares of the Series obtained by multiplying the
number of shares of the Series subject to Submitted Bids described
in clause (ii) of this paragraph (b) by a fraction, the numerator
of which shall be the number of Outstanding shares of the Series
held by such Existing Holder subject to such Submitted Bid or
Submitted Sell Order and the denominator of which shall be the
aggregate number of Outstanding shares of the Series subject to
all such Submitted Bids and Submitted Sell Orders.
(c) If all of the Outstanding Preferred Shares are subject to
Submitted Hold Orders, all Submitted Bids for shares of the Series shall
be rejected.
(d) If, as a result of the procedures described in clause (iv) or (v)
of paragraph (a) or clause (iii) of paragraph (b) of this Section 4, any
Existing Holder would be entitled or required to sell, or any Potential
Holder would be entitled or required to purchase, a fraction of a
Preferred Share on any Auction Date, the Auction Agent shall, in such
manner as it shall determine in its sole discretion, round up or down
the number of Preferred Shares of the Series to be purchased or sold by
any Existing Holder or Potential Holder on such Auction Date as a result
of such procedures so that the number of shares so purchased or sold by
each Existing Holder or Potential Holder on such Auction Date shall be
whole Preferred Shares.
(e) If, as a result of the procedures described in clause (v) of
paragraph (a) of this Section 4, any Potential Holder would be entitled
or required to purchase less than a whole share of a series of Preferred
Shares on any Auction Date, the Auction Agent shall, in such manner as
it shall determine in its sole discretion, allocate Preferred Shares of
the Series for purchase among Potential Holders so that only whole
Preferred Shares of the Series are purchased on such Auction Date as a
result of such procedures by any Potential Holder, even if such
allocation results in one or more Potential Holders not purchasing
Preferred Shares of the Series on such Auction Date.
(f) Based on the results of each Auction for Preferred Shares, the
Auction Agent shall determine the aggregate number of shares of the
Series to be purchased and the aggregate number of shares of the Series
to be sold by Potential Holders and Existing Holders and, with respect
to each Potential Holder and Existing Holder, to the extent that such
aggregate number of shares to be purchased and such aggregate number of
shares to be sold differ, determine to which other Potential Holder(s)
or Existing Holder(s) they shall deliver, or from which other Potential
Holder(s) or Existing Holder(s) they shall receive, as the case may be,
Preferred Shares of the Series.
Notwithstanding any provision of the Auction Procedures or the
Settlement Procedures to the contrary, in the event an Existing Holder
or Beneficial Owner of Preferred Shares with respect to whom a
Broker-Dealer submitted a Bid to the Auction Agent for such shares that
was accepted in whole or in part, or submitted or is deemed to have
submitted a Sell Order for such shares that was accepted in whole or in
part, fails to instruct its Agent Member to deliver such shares against
payment therefor, partial deliveries of Preferred Shares that have been
made in respect of Potential Holders' or Potential Beneficial Owners'
Submitted Bids for shares of the Series that
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have been accepted in whole or in part shall constitute good delivery to
such Potential Holders and Potential Beneficial Owners.
(g) Neither the Trust nor the Auction Agent nor any affiliate of
either shall have any responsibility or liability with respect to the
failure of an Existing Holder, a Potential Holder, a Beneficial Owner, a
Potential Beneficial Owner or its respective Agent Member to deliver
Preferred Shares or to pay for Preferred Shares sold or purchased
pursuant to the Auction Procedures or otherwise.
5. RESERVED.
6. AUCTION AGENT.
For so long as any Preferred Shares are outstanding, the Auction Agent,
duly appointed by the Trust to so act, shall be in each case a commercial bank,
trust company or other financial institution independent of the Trust and its
affiliates (which however, may engage or have engaged in business transactions
with the Trust or its affiliates) and at no time shall the Trust or any of its
affiliates act as the Auction Agent in connection with the Auction Procedures.
If the Auction Agent resigns or for any reason its appointment is terminated
during any period that any Preferred Shares are outstanding, the Board of
Trustees shall use its best efforts promptly thereafter to appoint another
qualified commercial bank, trust company or financial institution to act as the
Auction Agent. The Auction Agent's registry of Existing Holders of Preferred
Shares shall be conclusive and binding on the Broker-Dealers. A Broker-Dealer
may inquire of the Auction Agent between 3:00 p.m. Eastern time on the Business
Day preceding an Auction for shares of a series of Preferred Shares and 9:30
a.m. Eastern time on the Auction Date for such Auction to ascertain the number
of shares in respect of which the Auction Agent has determined such
Broker-Dealer to be an Existing Holder. If such Broker-Dealer believes it is the
Existing Holder of fewer shares of the Series than specified by the Auction
Agent in response to such Broker-Dealer's inquiry, such Broker-Dealer may so
inform the Auction Agent of that belief. Such Broker-Dealer shall not, in its
capacity as Existing Holder of shares of the Series, submit Orders in such
Auction in respect of shares of the Series covering in the aggregate more than
the number of shares of the Series specified by the Auction Agent in response to
such Broker-Dealer's inquiry.
7. TRANSFER OF PREFERRED SHARES.
Unless otherwise permitted by the Trust, a Beneficial Owner or an
Existing Holder may sell, transfer or otherwise dispose of Preferred Shares only
in whole shares and only pursuant to a Bid or Sell Order placed with the Auction
Agent in accordance with the procedures described in this Part II or to a
Broker-Dealer, PROVIDED, HOWEVER, that (a) a sale, transfer or other disposition
of Preferred Shares from a customer of a Broker-Dealer who is listed on the
records of that Broker-Dealer as the holder of such shares to that Broker-Dealer
or another customer of that Broker-Dealer shall not be deemed to be a sale,
transfer or other disposition for purposes of this Section 7 if such
Broker-Dealer remains the Existing Holder of the shares so sold, transferred or
disposed of immediately after such sale, transfer or disposition and (b) in the
case of all transfers other than pursuant to Auctions, the Broker-Dealer (or
other Person, if permitted by the Trust) to whom such transfer is made shall
advise the Auction Agent of such transfer.
8. GLOBAL CERTIFICATE.
Prior to the commencement of a Voting Period, (i) all of the Preferred
Shares outstanding from time to time shall be represented by one global
certificate registered in the name of the Securities Depository or its nominee
and (ii) no registration of transfer of Preferred Shares shall be made on the
books of the Trust to any Person other than the Securities Depository or its
nominee.
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9. FORCE MAJEURE.
(a) Notwithstanding anything else set forth herein, if an Auction
Date is not a Business Day because the New York Stock Exchange is closed
for business for more than three consecutive business days due to an act
of God, natural disaster, act of war, civil or military disturbance, act
of terrorism, sabotage, riots or a loss or malfunction of utilities or
communications services or the Auction Agent is not able to conduct an
Auction in accordance with the Auction Procedures for any such reason,
then the Auction Rate for the next Distribution Period shall be the
Auction Rate determined on the previous Auction Date.
(b) Notwithstanding anything else set forth herein, if a Distribution
Payment Date is not a Business Day because the New York Stock Exchange
is closed for business for more than three consecutive business days due
to an act of God, natural disaster, act of war, civil or military
disturbance, act of terrorism, sabotage, riots or a loss or malfunction
of utilities or communications services or the distribution payable on
such date cannot be paid for any such reason, then:
(i) the Distribution Payment Date for the affected Distribution
Period shall be the next Business Day on which the Trust and its
paying agent, if any, are able to cause the distribution to be
paid using their reasonable best efforts;
(ii) the affected Distribution Period shall end on the day it
would have ended had such event not occurred and the Distribution
Payment Date had remained the scheduled date; and
(iii) the next Distribution Period will begin and end on the dates
on which it would have begun and ended had such event not occurred
and the Distribution Payment Date remained the scheduled date.
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