AMENDED AND RESTATED
BYLAWS
of
PIMCO CORPORATE INCOME FUND
(Amended and Restated as of December 11, 2008)
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 Principal Office of the Trust. A principal office of the Trust shall be
located in New York, New York. The Trust may have other principal offices within
or without Massachusetts as the Trustees may determine or as they may authorize.
1.2 Agreement and Declaration of Trust. These Amended and Restated Bylaws
(the "Bylaws") shall be subject to the Agreement and Declaration of Trust, as
amended or restated from time to time (the "Declaration of Trust"), of PIMCO
Corporate Income Fund, the Massachusetts business trust established by the
Declaration of Trust (the "Trust"). Capitalized terms used in these Bylaws and
not otherwise defined herein shall have the meanings given to such terms in the
Declaration of Trust.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from time to
time determine, provided that notice of the first regular meeting following any
such determination shall be given to absent Trustees. A regular meeting of the
Trustees may be held without call or notice immediately after and at the same
place as the annual meeting of the Shareholders (as defined in the Declaration
of Trust).
2.2 Special Meetings. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting when called by the
Chairman of the Trustees, the President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the Secretary
or an Assistant Secretary or by the officer or the Trustees calling the meeting.
2.3 Notice. It shall be sufficient notice to the Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram, telex
or telecopy or other electronic facsimile transmission method at least
twenty-four hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give notice to him or
her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her, before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her. Neither notice of a meeting nor a waiver of a notice need specify the
purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees then
in office shall constitute a quorum. Any meeting may be adjourned from time to
time by a majority of the votes cast upon the question, whether or not a quorum
is present, and the meeting may be held as adjourned without further notice.
ARTICLE 3
Officers and Chairman of the Trustees
3.1 Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary, a Chief Compliance Officer and such other
officers, if any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from time to time may
in their discretion appoint. Any officer may but need not be a Trustee or a
Shareholder. Any two or more offices may be held by the same person.
3.2 Election. The President, the Treasurer, and the Secretary shall be
elected annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at the same meeting at which the President, Treasurer
and Secretary are elected, or at any other time. If required by the 1940 Act,
the Chief Compliance Officer shall be elected or appointed by a majority of the
trustees, as well as a majority of the Trustees who are not Interested Persons
of the Trust ("Independent Trustees"), and otherwise in accordance with Rule
38a-1 (or any successor rule) under the 1940 Act, as such rule may be amended
from time to time ("Rule 38a-1"). Vacancies in any office may be filled at any
time.
3.3 Tenure. The Chairman of the Trustees, if one is elected, the President,
the Treasurer, the Secretary and the Chief Compliance Officer shall hold office
until their respective successors are chosen and qualified, or in each case
until he or she sooner dies, resigns, is removed with or without cause or
becomes disqualified, provided that, if required by the 1940 Act, any renewal of
the Chief Compliance Officer shall be in accordance with Rule 38a-1. Each other
officer shall hold office and each agent of the Trust shall retain authority at
the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these Bylaws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to the
office occupied by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 Chairman of the Trustees. There shall be an office of the Chairman of
the Trustees, which shall serve of behalf of the Trustees, but shall not be an
officer of the Trust. The office of the Chairman of the Trustees may be held by
more than one person. Any Chairman of
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the Trustees shall be elected by a majority of the Trustees, as well as a
majority of the Independent Trustees if required by the 1940 Act. If required by
the 1940 Act, any Chairman of the Trustees shall be an Independent Trustee and
may, but need not, be a shareholder. The powers and the duties of the Chairman
of the Trustees shall include any and all such powers and duties relating to the
operations of the Trustees as, from time to time, may be conferred upon or
assigned to such office by the Trustees or as may be required by law, provided
that the Chairman of the Trustees shall have no individual authority to act for
the Trust as an officer of the Trust. In carrying out the responsibilities and
duties of the office, the Chairman of the Trustees may seek assistance and input
from other Trustees or Committees of the Trustees, officers of the Trust and the
Trust's investment adviser(s) and other service providers, as deemed necessary
or appropriate. The Trustees, including a majority of the Independent Trustees
if required by the 1940 Act, may appoint one or more persons to perform the
duties of the Chairman of the Trustees, in the event of his absence at any
meeting or in the event of his disability.
3.6 President; Vice President. The President shall be the chief executive
officer. Any Vice President shall have such duties and powers as may be
designated from time to time by the Trustees or the President.
3.7 Treasurer; Assistant Treasurer. The Treasurer shall be the chief
financial and accounting officer of the Trust, and shall, subject to the
provisions of the Declaration of Trust and to any arrangement made by the
Trustees with a custodian, investment adviser, sub-adviser or manager, or
transfer, shareholder servicing or similar agent, be in charge of the valuable
papers, books of account and accounting records of the Trust, and shall have
such other duties and powers as may be designated from time to time by the
Trustees or by the President. Any Assistant Treasurer shall have such duties and
powers as may be designated from time to time by the Trustees or the President.
3.8 Secretary; Assistant Secretary. The Secretary shall record all
proceedings of the Shareholders and the Trustees in books to be kept therefor,
which books or a copy thereof shall be kept at the principal office of the
Trust. In the absence of the Secretary from any meeting of the Shareholders or
Trustees, an Assistant Secretary, or if there be none or if he or she is absent,
a temporary secretary chosen at such meeting shall record the proceedings
thereof in the aforesaid books. Any Assistant Secretary shall have such duties
and powers as may be designated from time to time by the Trustees or the
President.
3.9 Chief Compliance Officer. The Chief Compliance Officer shall perform
the duties and have the responsibilities of the chief compliance officer of the
Trust, including if required by the 1940 Act any such duties and
responsibilities imposed by Rule 38a-1, and shall have such other duties and
powers as may be designated from time to time by the Trustees.
3.10 Resignations. Any officer may resign at any time by written instrument
signed by him or her and delivered to the Chairman of the Trustees, if any, the
President or the Secretary, or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. Except to the extent expressly provided in a written agreement with the
Trust, no officer resigning and no officer removed shall have any right to any
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compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal.
ARTICLE 4
Committees
4.1 Quorum; Voting. Except as provided below or as otherwise specifically
provided in the resolutions constituting a Committee of the Trustees and
providing for the conduct of its meetings, a majority of the members of any
Committee of the Trustees shall constitute a quorum for the transaction of
business, and any action of such a Committee may be taken at a meeting by a vote
of a majority of the members present (a quorum being present) or evidenced by
one or more writings signed by such a majority. Members of a Committee may
participate in a meeting of such Committee by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting.
With respect to a Valuation Committee of the Trustees, one or more of the
Committee members shall constitute a quorum for the transaction of business.
Except as specifically provided in the resolutions constituting a Committee
of the Trustees and providing for the conduct of its meetings, Article 2,
Section 2.2 of these Bylaws relating to special meetings shall govern the notice
requirements for Committee meetings, except that it shall be sufficient notice
to a Valuation Committee of the Trustees to send notice by telegram, telex or
telecopy or other electronic means (including by telephone voice-message or
e-mail) at least fifteen minutes before the meeting.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at the time and
in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
6.1 General. Except as from time to time otherwise provided by the
Trustees, the initial fiscal year of the Trust shall end on such date as is
determined in advance or in arrears by the Treasurer, and the subsequent fiscal
years shall end on such date in subsequent years.
ARTICLE 7
Seal
7.1 General. The seal of the Trust shall, subject to alteration by the
Trustees, consist of a flat-faced die with the word "Massachusetts," together
with the name of the Trust and the year of its organization cut or engraved
thereon; provided, however, that unless otherwise required by the Trustees, the
seal shall not be necessary to be placed on, and its absence shall not
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impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or in particular cases
authorize the execution thereof in some other manner, all deeds, leases,
transfers, contracts, bonds, notes, checks, drafts and other obligations made,
accepted or endorsed by the Trust shall be executed by the President, any Vice
President, the Treasurer or by whomever else shall be designated for that
purpose by vote of the Trustees, and need not bear the seal of the Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Share Certificates. Except as provided in Article 11 hereof, each
Shareholder shall be entitled to a certificate stating the number of Shares (as
defined in the Declaration of Trust) owned by him or her, in such form as shall
be prescribed from time to time by the Trustees. Such certificates shall be
signed by the President or any Vice President and by the Treasurer or any
Assistant Treasurer. Such signatures may be by facsimile if the certificate is
signed by a transfer agent, or by a registrar, other than a Trustee, officer or
employee of the Trust. In case any officer who has signed or whose facsimile
signature has been placed on such certificate shall cease to be such officer
before such certificate is issued, it may be issued by the Trust with the same
effect as if he or she were such officer at the time of its issuance.
Notwithstanding the foregoing, in lieu of issuing certificates for Shares,
the Trustees or the transfer agent may either issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such Shares,
who shall in either case be deemed, for all purposes hereunder, to be the
holders of certificates for such Shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
9.2 Loss of Certificates. In case of the alleged loss or destruction or the
mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
9.3 Issuance of New Certificates to Pledgee. A pledgee of Shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificate shall express on its face that it is
held as collateral security, and the name of pledgor shall be stated thereon,
who alone shall be liable as a Shareholder and entitled to vote thereon.
9.4 Discontinuance of Issuance of Certificates. Notwithstanding anything to
the contrary in this Article 9, the Trustees may at any time discontinue the
issuance of share certificates and may, by written notice to each Shareholder,
require the surrender of share certificates to the Trust for cancellation. Such
surrender and cancellation shall not effect the ownership of Shares in the
Trust.
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ARTICLE 10
Shareholders' Voting Powers and Meetings
10.1 Voting Powers. The Shareholders shall have power to vote only (i) for
the election or removal of Trustees as provided in Article IV, Sections 1 and 3
of the Declaration of Trust and Article 11 hereto, (ii) with respect to any
Manager or sub-adviser as provided in Article IV, Section 8 of the Declaration
of Trust to the extent required by the 1940 Act, (iii) with respect to certain
transactions and other matters to the extent and as provided in Article V,
Sections 2 and 3 of the Declaration of Trust and Article 11 hereto, (iv) with
respect to any termination of this Trust to the extent and as provided in
Article IX, Section 4 of the Declaration of Trust and Article 11 hereto (for the
avoidance of any doubt, Shareholders shall have no separate right to vote with
respect to the termination of the Trust or a series or class of Shares if the
Trustees (including the Continuing Trustees) exercise their right to terminate
the Trust or such series or class pursuant to clauses (ii) and (y) of Article
IX, Section 4 of the Declaration of Trust), (v) with respect to any amendment of
the Declaration of Trust to the extent and as provided in Article IX, Section 7
of the Declaration of Trust and Article 11 hereto, (vi) to the same extent as
the stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
and (vii) with respect to such additional matters relating to the Trust as may
be required by law, the Declaration of Trust, these Bylaws or any registration
of the Trust with the Securities and Exchange Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or desirable.
Each whole Share shall be entitled to one vote as to any matter on which it is
entitled to vote and each fractional Share shall be entitled to a proportionate
fractional vote, except as otherwise provided in the Declaration of Trust, these
Bylaws, or required by applicable law. Except as otherwise provided in the
Declaration of Trust or these Bylaws or required by applicable law, all Shares
of the Trust then entitled to vote shall be voted in the aggregate as a single
class without regard to classes or series of Shares. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy. A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to exercise of
the proxy the Trust receives a specific written notice to the contrary from any
one of them. The placing of a Shareholder's name on a proxy pursuant to
telephonic or electronically transmitted instructions obtained pursuant to
procedures reasonably designed to verify that such instructions have been
authorized by such Shareholder shall constitute execution of such proxy by or on
behalf of such Shareholder. A proxy purporting to be executed by or on behalf of
a Shareholder shall be deemed valid unless challenged at or prior to its
exercise and the burden of proving invalidity shall rest on the challenger.
Until Shares of a particular class or series are issued, the Trustees may
exercise all rights of Shareholders and may take any action required by law, the
Declaration of Trust or these Bylaws to be taken by Shareholders as to such
class or series.
10.2 Voting Power and Meetings. Except as provided in the next sentence,
regular meetings of the Shareholders for the election of Trustees and the
transaction of such other business as may properly come before the meeting shall
be held, so long as Shares are listed for trading on the New York Stock
Exchange, on at least an annual basis, on such day and at such place as shall be
designated by the Trustees. In the event that such a meeting is not held in any
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annual period if so required, whether the omission be by oversight or otherwise,
a subsequent special meeting may be called by the Trustees and held in lieu of
such meeting with the same effect as if held within such annual period. Special
meetings of the Shareholders or any or all classes or series of Shares may also
be called by the Trustees from time to time for such other purposes as may be
prescribed by law, by the Declaration of Trust or by these Bylaws, or for the
purpose of taking action upon any other matter deemed by the Trustees to be
necessary or desirable. A special meeting of Shareholders may be held at any
such time, day and place as is designated by the Trustees. Written notice of any
meeting of Shareholders, stating the date, time, place and purpose of the
meeting, shall be given or caused to be given by a majority of the Trustees and
a majority of the Continuing Trustees at least seven days before such meeting to
each Shareholder entitled to vote thereat by leaving such notice with the
Shareholder at his or her residence or usual place of business or by mailing
such notice, postage prepaid, to the Shareholder's address as it appears on the
records of the Trust. Such notice may be given by the Secretary or an Assistant
Secretary or by any other officer designated for such purpose by the Trustees.
Whenever notice of a meeting is required to be given to a Shareholder under the
Declaration of Trust or these Bylaws, a written waiver thereof, executed before
or after the meeting by such Shareholder or his or her attorney thereunto
authorized and filed with the records of the meeting, shall be deemed equivalent
to such notice. Notice of a meeting need not be given to any Shareholder who
attends the meeting without protesting prior thereto or at its commencement the
lack of notice to such Shareholder. No ballot shall be required for any election
unless required by a Shareholder present or represented at the meeting and
entitled to vote in such election. Notwithstanding anything to the contrary in
this Section 10.2, no matter shall be properly before any annual or special
meeting of Shareholders and no business shall be transacted thereat unless in
accordance with Section 10.6 of these Bylaws.
10.3 Quorum and Required Vote. Except when a larger quorum is required by
any provision of law or the Declaration of Trust or these Bylaws, thirty percent
(30%) of the Shares entitled to vote on a particular matter shall constitute a
quorum for the transaction of business at a Shareholders' meeting, except that
where any provision of law or the Declaration of Trust or these Bylaws permits
or requires that holders of any class or series of Shares shall vote as an
individual class or series, then thirty percent (30%) (unless a larger quorum is
required as specified above) of Shares of that class or series entitled to vote
shall be necessary to constitute a quorum for the transaction of business by
that class or series. Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held, within a reasonable time after
the date set for the original meeting, without the necessity of further notice.
Except when a different vote is required by any provision of law or the
Declaration of Trust or these Bylaws, a plurality of the quorum of Shares
necessary for the transaction of business at a Shareholders' meeting shall
decide any questions and a plurality of Shares voted shall elect a Trustee,
provided that where any provision of law or of the Declaration of Trust or these
Bylaws permits or requires that the holders of any class or series of Shares
shall vote as an individual class or series, then a plurality of the quorum of
Shares of that class or series necessary for the transaction of business by that
class or series at a Shareholders' meeting shall decide that matter insofar as
that class or series is concerned.
10.4 Action by Written Consent. Any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger
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proportion thereof as shall be required by any express provision of law or the
Declaration of Trust or these Bylaws) consent to the action in writing and such
written consents are filed with the records of the meetings of Shareholders.
Such consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
10.5 Record Dates. For the purpose of determining the Shareholders who are
entitled to vote or act at any meeting or any adjournment thereof, or who are
entitled to receive payment of any dividend or of any other distribution, the
Trustees may from time to time fix a time, which shall be not more than 90 days
before the date of any meeting of Shareholders or the date for the payment of
any dividend or of any other distribution, as the record date for determining
the Shareholders having the right to notice of and to vote at such meeting and
any adjournment thereof or the right to receive such dividend or distribution,
and in such case only Shareholders of record on such record date shall have the
right notwithstanding any transfer of Shares on the books of the Trust after the
record date; or without fixing such record date the Trustees may for any of such
purposes close the register or transfer books for all or any part of such
period.
10.6 Advance Notice of Shareholder Nominees for Trustees and Other
Shareholder Proposals. (a) As used in this Section 10.6, the term "annual
meeting" refers to any annual meeting of Shareholders as well as any special
meeting held in lieu of an annual meeting as described in the first two
sentences of Section 10.2 of these Bylaws, and the term "special meeting" refers
to all meetings of Shareholders other than an annual meeting or a special
meeting in lieu of an annual meeting.
(b) The matters to be considered and brought before any annual or special
meeting of Shareholders shall be limited to only such matters, including the
nomination and election of Trustees, as shall be brought properly before such
meeting in compliance with the procedures set forth in this Section 10.6. Only
persons who are nominated in accordance with the procedures set forth in this
Section 10.6 shall be eligible for election as Trustees, and no proposal to fix
the number of Trustees shall be brought before an annual or special meeting of
Shareholders or otherwise transacted unless in accordance with the procedures
set forth in this Section 10.6, except as may be otherwise provided in these
Bylaws with respect to the right of holders of preferred shares of beneficial
interest, if any, of the Trust to nominate and elect a specified number of
Trustees in certain circumstances.
(c) For any matter to be properly before any annual meeting, the matter
must be (i) specified in the notice of meeting given by or at the direction of a
majority of the Trustees and a majority of the Continuing Trustees pursuant to
Section 10.2 of these Bylaws, (ii) otherwise brought before the meeting by or at
the direction of a majority of the Continuing Trustees (or any duly authorized
committee thereof), or (iii) brought before the meeting in the manner specified
in this Section 10.6(c) by a Shareholder of record entitled to vote at the
meeting or by a Shareholder (a "Beneficial Owner") that holds Shares entitled to
vote at the meeting through a nominee or "street name" holder of record and that
can demonstrate to the Trust such indirect ownership and such Beneficial Owner's
entitlement to vote such Shares, provided that the Shareholder was the
Shareholder of record or the Beneficial Owner held such Shares at the time the
notice provided for in this Section 10.6(c) is delivered to the Secretary.
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In addition to any other requirements under applicable law and the
Declaration of Trust and these Bylaws, persons nominated by Shareholders for
election as Trustees and any other proposals by Shareholders may be properly
brought before an annual meeting only pursuant to timely notice (the
"Shareholder Notice") in writing to the Secretary. To be timely, the Shareholder
Notice must be delivered to or mailed and received at the principal executive
offices of the Trust not less than forty-five (45) nor more than sixty (60) days
prior to the first anniversary date of the date on which the Trust first mailed
its proxy materials for the prior year's annual meeting; provided, however, with
respect to the Trust's first annual meeting, the Shareholder Notice must be so
delivered or mailed and so received on or before January 1, 2003; provided
further, however, if and only if the annual meeting is not scheduled to be held
within a period that commences thirty (30) days before the first anniversary
date of the annual meeting for the preceding year and ends thirty (30) days
after such anniversary date (an annual meeting date outside such period being
referred to herein as an "Other Annual Meeting Date"), such Shareholder Notice
must be given in the manner provided herein by the later of the close of
business on (i) the date forty-five (45) days prior to such Other Annual Meeting
Date or (ii) the tenth (10th) business day following the date such Other Annual
Meeting Date is first publicly announced or disclosed.
Any Shareholder desiring to nominate any person or persons (as the case may
be) for election as a Trustee or Trustees of the Trust shall deliver, as part of
such Shareholder Notice: (i) a statement in writing setting forth (A) the name,
age, date of birth, business address, residence address and nationality of the
person or persons to be nominated; (B) the class or series and number of all
Shares of the Trust owned of record or beneficially by each such person or
persons, as reported to such Shareholder by such nominee(s); (C) any other
information regarding each such person required by paragraphs (a), (d), (e) and
(f) of Item 401 of Regulation S-K or paragraph (b) of Item 22 of Rule 14a-101
(Schedule 14A) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), adopted by the Securities and Exchange Commission (or the
corresponding provisions of any regulation or rule subsequently adopted by the
Securities and Exchange Commission or any successor agency applicable to the
Trust); (D) any other information regarding the person or persons to be
nominated that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitation of proxies for
election of Trustees or directors pursuant to Section 14 of the Exchange Act and
the rules and regulations promulgated thereunder; and (E) whether such
Shareholder believes any nominee is or will be an "interested person" of the
Trust (as defined in the Investment Company Act of 1940, as amended) and, if not
an "interested person," information regarding each nominee that will be
sufficient for the Trust to make such determination; and (ii) the written and
signed consent of the person or persons to be nominated to be named as nominees
and to serve as Trustees if elected. In addition, the Trustees may require any
proposed nominee to furnish such other information as they may reasonably
require or deem necessary to determine the eligibility of such proposed nominee
to serve as a Trustee. Any Shareholder Notice required by this Section 10.6(c)
in respect of a proposal to fix the number of Trustees shall also set forth a
description of and the text of the proposal, which description and text shall
state a fixed number of Trustees that otherwise complies with applicable law,
these Bylaws and the Declaration of Trust.
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Without limiting the foregoing, any Shareholder who gives a Shareholder
Notice of any matter proposed to be brought before a Shareholder meeting
(whether or not involving nominees for Trustees) shall deliver, as part of such
Shareholder Notice: (i) the description of and text of the proposal to be
presented; (ii) a brief written statement of the reasons why such Shareholder
favors the proposal; (iii) such Shareholder's name and address as they appear on
the Trust's books; (iv) any other information relating to the Shareholder that
would be required to be disclosed in a proxy statement or other filings required
to be made in connection with the solicitation of proxies with respect to the
matter(s) proposed pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder; (v) the class or series and number of all
Shares of the Trust owned beneficially and of record by such Shareholder; (vi)
any material interest of such Shareholder in the matter proposed (other than as
a Shareholder); (vii) a representation that the Shareholder intends to appear in
person or by proxy at the Shareholder meeting to act on the matter(s) proposed;
(viii) if the proposal involves nominee(s) for Trustees, a description of all
arrangements or understandings between the Shareholder and each proposed nominee
and any other person or persons (including their names) pursuant to which the
nomination(s) are to be made by the Shareholder; and (ix) in the case of a
Beneficial Owner, evidence establishing such Beneficial Owner's indirect
ownership of, and entitlement to vote, Shares at the meeting of Shareholders. As
used in this Section 10.6, Shares "beneficially owned" shall mean all Shares
which such person is deemed to beneficially own pursuant to Rules 13d-3 and
13d-5 under the Exchange Act.
(d) For any matter to be properly before any special meeting, the matter
must be specified in the notice of meeting given by or at the direction of a
majority of the Trustees and a majority of the Continuing Trustees pursuant to
Section 10.2 of these Bylaws. In the event the Trust calls a special meeting for
the purpose of electing one or more Trustees, any Shareholder may nominate a
person or persons (as the case may be) for election to such position(s) as
specified in the Trust's notice of meeting if and only if the Shareholder
provides a notice containing the information required in the Shareholder Notice
to the Secretary required with respect to annual meetings by Section 10.6(c)
hereof, and such notice is delivered to or mailed and received at the principal
executive office of the Trust not later than the close of business on the tenth
(10th) day following the day on which the date of the special meeting and of the
nominees proposed by the Trustees to be elected at such meeting are publicly
announced or disclosed.
(e) For purposes of this Section 10.6, a matter shall be deemed to have
been "publicly announced or disclosed" if such matter is disclosed in a press
release reported by the Dow Xxxxx News Service, Associated Press or comparable
national news service, in a document publicly filed by the Trust with the
Securities and Exchange Commission, or in a Web site accessible to the public
maintained by the Trust or by its investment adviser or an affiliate of such
investment adviser with respect to the Trust.
(f) In no event shall an adjournment or postponement (or a public
announcement thereof) of a meeting of Shareholders commence a new time period
(or extend any time period) for the giving of notice as provided in this Section
10.6.
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(g) The person presiding at any meeting of Shareholders, in addition to
making any other determinations that may be appropriate to the conduct of the
meeting, shall have the power and duty to (i) determine whether a nomination or
proposal of other matters to be brought before a meeting and notice thereof have
been duly made and given in the manner provided in this Section 10.6 and
elsewhere in these Bylaws and the Declaration of Trust and (ii) if not so made
or given, to direct and declare at the meeting that such nomination and/or such
other matters shall be disregarded and shall not be considered. Any
determination by the person presiding shall be binding on all parties absent
manifest error.
(h) Notwithstanding anything to the contrary in this Section 10.6 or
otherwise in these Bylaws, unless required by federal law, no matter shall be
considered at or brought before any annual or special meeting unless such matter
has been approved for these purposes by a majority of the Continuing Trustees
and, in particular, no Beneficial Owner shall have any rights as a Shareholder
except as may be required by federal law. Furthermore, nothing in this Section
10.6 shall be construed as creating any implication or presumption as to the
requirements of federal law.
ARTICLE 11
Statement Creating Five Series of Auction Rate Cumulative Preferred Shares
Auction Rate Cumulative Preferred Shares, Series M: 2,400 preferred shares
of beneficial interest, par value $0.00001 per share, liquidation preference
$25,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared) thereon, is hereby designated "Auction Rate
Cumulative Preferred Shares, Series M." Each share of Auction Rate Cumulative
Preferred Shares, Series M (sometimes referred to herein as "Series M Preferred
Shares") may be issued on a date to be determined by the Board of Trustees of
the Trust or pursuant to their delegated authority; have an Initial Dividend
Rate and an Initial Dividend Payment Date as shall be determined in advance of
the issuance thereof by the Board of Trustees of the Trust or pursuant to their
delegated authority; and have such other preferences, voting powers, limitations
as to dividends, qualifications and terms and conditions of redemption as are
set forth in these Bylaws. The Series M Preferred Shares shall constitute a
separate series of preferred shares of beneficial interest of the Trust, and
each share of Series M Preferred Shares shall be identical.
Auction Rate Cumulative Preferred Shares, Series T: 2,400 preferred shares
of beneficial interest, par value $0.00001 per share, liquidation preference
$25,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared) thereon, is hereby designated "Auction Rate
Cumulative Preferred Shares, Series T." Each share of Auction Rate Cumulative
Preferred Shares, Series T (sometimes referred to herein as "Series T Preferred
Shares") may be issued on a date to be determined by the Board of Trustees of
the Trust or pursuant to their delegated authority; have an Initial Dividend
Rate and an Initial Dividend Payment Date as shall be determined in advance of
the issuance thereof by the Board of Trustees of the Trust or pursuant to their
delegated authority; and have such other preferences, voting powers, limitations
as to dividends, qualifications and terms and conditions of redemption as are
set forth in these Bylaws. The Series T Preferred Shares shall constitute a
separate series of preferred shares of beneficial interest of the Trust, and
each share of Series T Preferred Shares shall be identical.
-11-
$$/BREAK/$$END
Auction Rate Cumulative Preferred Shares, Series W: 2,400 preferred shares
of beneficial interest, par value $0.00001 per share, liquidation preference
$25,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared) thereon, is hereby designated "Auction Rate
Cumulative Preferred Shares, Series W." Each share of Auction Rate Cumulative
Preferred Shares, Series W (sometimes referred to herein as "Series W Preferred
Shares") may be issued on a date to be determined by the Board of Trustees of
the Trust or pursuant to their delegated authority; have an Initial Dividend
Rate and an Initial Dividend Payment Date as shall be determined in advance of
the issuance thereof by the Board of Trustees of the Trust or pursuant to their
delegated authority; and have such other preferences, voting powers, limitations
as to dividends, qualifications and terms and conditions of redemption as are
set forth in these Bylaws. The Series W Preferred Shares shall constitute a
separate series of preferred shares of beneficial interest of the Trust, and
each share of Series W Preferred Shares shall be identical.
Auction Rate Cumulative Preferred Shares, Series Th: 2,400 preferred shares
of beneficial interest, par value $0.00001 per share, liquidation preference
$25,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared) thereon, is hereby designated "Auction Rate
Cumulative Preferred Shares, Series Th." Each share of Auction Rate Cumulative
Preferred Shares, Series Th (sometimes referred to herein as "Series Th
Preferred Shares") may be issued on a date to be determined by the Board of
Trustees of the Trust or pursuant to their delegated authority; have an Initial
Dividend Rate and an Initial Dividend Payment Date as shall be determined in
advance of the issuance thereof by the Board of Trustees of the Trust or
pursuant to their delegated authority; and have such other preferences, voting
powers, limitations as to dividends, qualifications and terms and conditions of
redemption as are set forth in these Bylaws. The Series Th Preferred Shares
shall constitute a separate series of preferred shares of beneficial interest of
the Trust, and each share of Series Th Preferred Shares shall be identical.
Auction Rate Cumulative Preferred Shares, Series F: 2,400 preferred shares
of beneficial interest, par value $0.00001 per share, liquidation preference
$25,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared) thereon, is hereby designated "Auction Rate
Cumulative Preferred Shares, Series F." Each share of Auction Rate Cumulative
Preferred Shares, Series F (sometimes referred to herein as "Series F Preferred
Shares") may be issued on a date to be determined by the Board of Trustees of
the Trust or pursuant to their delegated authority; have an Initial Dividend
Rate and an Initial Dividend Payment Date as shall be determined in advance of
the issuance thereof by the Board of Trustees of the Trust or pursuant to their
delegated authority; and have such other preferences, voting powers, limitations
as to dividends, qualifications and terms and conditions of redemption as are
set forth in these Bylaws. The Series F Preferred Shares shall constitute a
separate series of preferred shares of beneficial interest of the Trust, and
each share of Series F Preferred Shares shall be identical.
11.1 Definitions. (a) Unless the context or use indicates another or
different meaning or intent, in Article 11 of these Bylaws the following terms
have the following meanings, whether used in the singular or plural:
-12-
$$/BREAK/$$END
"'AA' Financial Composite Commercial Paper Rate" on any date means (i) (A)
the Interest Equivalent of the 7-day rate (in the case of a Dividend Period
which is a 7-Day Dividend Period or shorter), the 30-day rate (for Dividend
Periods greater than 7 days but fewer than or equal to 31 days), the 60-day rate
(for Dividend Periods greater than 31 days but fewer than or equal to 61 days)
and the 90-day rate (for Dividend Periods greater than 61 days but fewer than or
equal to 91 days) on commercial paper on behalf of issuers whose corporate bonds
are rated AA by S&P, or the equivalent of such rating by another Rating Agency,
as announced by the Federal Reserve Bank of New York for the close of business
on the Business Day immediately preceding such date; and (B) for Dividend
Periods greater than 91 days but fewer than 184 days, the rate described in
clause (ii) below; or (ii) if the Federal Reserve Bank of New York does not make
available such a rate, or with respect to Dividend Periods greater than 91 days
but fewer than 184 days, then the arithmetic average of the Interest Equivalent
of such rates on commercial paper placed on behalf of such issuers, as quoted on
a discount basis or otherwise by the Commercial Paper Dealers to the Auction
Agent for the close of business on the Business Day immediately preceding such
date (rounded to the next highest one-thousandth (0.001) of 1%). If any
Commercial Paper Dealer does not quote a rate required to determine the "AA"
Financial Composite Commercial Paper Rate, such rate shall be determined on the
basis of the quotations (or quotation) furnished by the remaining Commercial
Paper Dealers (or Dealer), if any, or, if there are no such Commercial Paper
Dealers, by the Auction Agent. For purposes of this definition, (A) "Commercial
Paper Dealers" shall mean (1) Xxxxxxx Xxxxx Xxxxxx Inc., Xxxxxx Brothers Inc.,
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and Xxxxxxx Sachs & Co.; (2)
in lieu of any thereof, its respective affiliate or successor; and (3) in the
event that any of the foregoing shall cease to quote rates for commercial paper
of issuers of the sort described above, in substitution therefor, a nationally
recognized dealer in commercial paper of such issuers then making such
quotations selected by the Trust, and (B) "Interest Equivalent" of a rate stated
on a discount basis for commercial paper of a given number of days' maturity
shall mean a number equal to the quotient (rounded upward to the next higher
one-thousandth(0.001) of 1%) of (1) such rate expressed as a decimal, divided by
(2) the difference between (x) 1.00 and (y) a fraction, the numerator of which
shall be the product of such rate expressed as a decimal, multiplied by the
number of days in which such commercial paper shall mature and the denominator
of which shall be 360.
"Accountant's Confirmation" has the meaning set forth in Section 11.7(c) of
these Bylaws.
"Adviser" means the Trust's investment adviser which initially shall be
PIMCO Advisors, a division of Allianz Dresdner Asset Management of America L.P.
"Affiliate" means any Person known to the Auction Agent to be controlled
by, in control of, or under common control with, the Trust.
"Agent Member" means a member of the Securities Depository that will act on
behalf of a Beneficial Owner of one or more Preferred Shares or on behalf of a
Potential Beneficial Owner.
-13-
$$/BREAK/$$END
"Applicable Rate" means the rate per annum at which cash dividends are
payable on the Preferred Shares for any Dividend Period.
"Applicable Percentage" has the meaning set forth in Section 11.10(a)(vi)
of these Bylaws.
"Approved Foreign Nations" has the meaning set forth in the definition of
"Fitch Eligible Assets."
"Approved Price" means the "fair value" as determined by the Trust in
accordance with the valuation procedures adopted from time to time by the Board
of Trustees of the Trust and for which the Trust receives a xxxx-to-market price
(which, for the purpose of clarity, shall not mean Market Value) from an
independent source at least semi-annually.
"Auction" means a periodic operation of the Auction Procedures.
"Auction Agent" means Bankers Trust Company unless and until another
commercial bank, trust company or other financial institution appointed by a
resolution of the Board of Trustees of the Trust or a duly authorized committee
thereof enters into an agreement with the Trust to follow the Auction Procedures
for the purpose of determining the Applicable Rate and to act as transfer agent,
registrar, dividend disbursing agent and redemption agent for the Preferred
Shares.
"Auction Date" has the meaning set forth in Section 11.10(a)(i) of these
Bylaws.
"Auction Procedures" means the procedures for conducting Auctions set forth
in Section 11.10 of these Bylaws.
"Bank Loans" means direct purchases of, assignments of, participations in
and other interests in (a) any bank loan or (b) any loan made by an investment
bank, investment fund or other financial institution, provided that such loan
under this clause (b) is similar to those typically made, syndicated, purchased
or participated by a commercial bank or institutional loan investor in the
ordinary course of business.
"Beneficial Owner" means a customer of a Broker-Dealer who is listed on the
records of that Broker-Dealer (or, if applicable, the Auction Agent) as a holder
of Preferred Shares or a Broker-Dealer that holds Preferred Shares for its own
account.
"Broker-Dealer" means any broker-dealer, or other entity permitted by law
to perform the functions required of a Broker-Dealer pursuant to Section 11.10
of these Bylaws, that has been selected by the Trust and has entered into a
Broker-Dealer Agreement with the Auction Agent that remains effective.
"Broker-Dealer Agreement" means an agreement between the Auction Agent and
a Broker-Dealer pursuant to which such Broker-Dealer agrees to follow the
procedures specified in Section 11.10 of these Bylaws.
-14-
$$/BREAK/$$END
"Business Day" means a day on which the New York Stock Exchange is open for
trading and which is not a Saturday, Sunday or other day on which banks in New
York City are authorized or obligated by law to close.
"Canadian Bonds" has the meaning set forth in the definition of "Fitch
Eligible Assets."
"Closing Transactions" has the meaning set forth in Section 11.8(a)(i) of
these Bylaws.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commercial Paper Dealers" has the meaning set forth in the definition of
"'AA' Financial Composite Commercial Paper Rate."
"Common Shares" means the shares of beneficial interest designated as
common shares, par value $0.00001 per share, of the Trust.
"Cure Date" has the meaning set forth in Section 11.4(a)(ii) of these
Bylaws.
"Date of Original Issue" means, with respect to any Preferred Share, the
date on which the Trust first issues such share.
"Debt Securities" has the meaning set forth in paragraph (iv) of the
definition of "Fitch Eligible Assets."
"Declaration of Trust" means the Amended and Restated Agreement and
Declaration of Trust of the Trust dated November 12, 2001, as from time to time
amended and supplemented.
"Deposit Securities" means cash and portfolio securities rated at least A2
(having a remaining maturity of 12 months or less), X-0, XXXX-0 xx XXX-0 by
Moody's or A (having a remaining maturity of 12 months or less), A-1+ or SP-1+
by S&P.
"Discount Factor" means a Fitch Discount Factor or a Moody's Discount
Factor, as applicable.
"Discounted Value" of any asset of the Trust means the quotient of the
Market Value of an Eligible Asset divided by the applicable Discount Factor,
provided that with respect to an Eligible Asset that is currently callable, the
Discounted Value will be equal to the quotient as calculated above or the call
price, whichever is lower, and that with respect to an Eligible Asset that is
prepayable, the Discounted Value will be equal to the quotient as calculated
above or the par value, whichever is lower.
"Dividend Payment Date," with respect to Preferred Shares, has the meaning
set forth in Section 11.2(b)(i) of these Bylaws.
"Dividend Period" means the Initial Dividend Period, any 7-Day Dividend
Period and any Special Dividend Period.
-15-
$$/BREAK/$$END
"Eligible Asset" means a Fitch Eligible Asset (if Fitch is then rating the
Preferred Shares), a Moody's Eligible Asset (if Xxxxx'x is then rating the
Preferred Shares) and/or any asset included in the calculations used by any
Rating Agency then rating the Preferred Shares for purposes of determining such
Rating Agency's rating on the Preferred Shares, as applicable.
"Existing Holder" means a Broker-Dealer, or any such other Person that may
be permitted by the Trust, that is listed as the holder of record of Preferred
Shares in the Share Books.
"Extension Period" has the meaning set forth in Section 11.2(c)(iii) of
these Bylaws.
"FHLB, FNMA and FFCB Debentures" has the meaning set forth in paragraph
(viii) of the definition of "Moody's Eligible Assets."
"Fitch" means Fitch, Inc. or its successors.
"Fitch 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) Debt Securities: The percentage determined by reference to the
rating of the Debt Security in accordance with the table set forth below.
Fitch Rating Category
AAA AA A BBB BB B CCC Unrated/1/
--- --- --- --- --- --- --- ----------
123% 125% 128% 131% 157% 196% 202% 225%
------------
/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 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). If a
security is not rated by any Rating Agency, the Trust will use the
percentage set forth under "Unrated" in this table.
The Fitch Discount Factors presented in the immediately preceding table
apply to Debt Securities that are Performing and have a Market Price determined
by a Pricing Service or 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 CCC by
Fitch shall apply to any non-Performing Debt Security with a price less than
$0.90 but equal to or greater than $0.20. If a Debt Security does not have a
Market Value determined by a Pricing Source or an Approved Price, a rating one
rating category below the actual rating on the Debt Security will be used (e.g.,
where the actual rating is A-, the rating for Debt Securities rated BBB- will be
used). The Fitch
-16-
$$/BREAK/$$END
Discount Factor for a Debt Security issued by a limited partnership 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 (i) interest rate swaps and caps, whereby the rating of the
counterparty to the swap or cap will be the rating used to determine the Fitch
Discount Factor in the table; and (ii) TRACERs, whereby the ratings in the table
will be applied to the underlying securities and the Market Value of each
underlying security will be its proportionate amount of the Market Value of the
TRACER. The Fitch Discount Factors presented in the immediately preceding table
will also apply to corporate obligations backed by a guaranty, a letter of
credit or insurance issued by a third party. If the third-party credit rating is
the basis for the rating on the obligation, then the rating on the third party
will be used to determine the Fitch Discount Factor in the table. The Fitch
Discount Factors presented in the immediately preceding table will also apply to
preferred trust certificates, the rating on which will by determined by the
underlying debt instruments in the trust, unless such preferred trust
certificates are determined by Fitch to qualify for a traditional equity
discount factor, in which case the Fitch Discount Factor shall be 370%.
(ii) Short-term instruments: 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 par exercisable within
the Fitch Exposure Period. A Fitch Discount factor of 100% will be applied to
cash.
(iii) U.S. Government Securities and U.S. Treasury Strips:
Time Remaining to Maturity Discount Factor
-------------------------- ---------------
1 year or less 100%
2 years or less (but longer than 1 year) 103
3 years or less (but longer than 2 years) 105
4 years or less (but longer than 3 years) 107
5 years or less (but longer than 4 years) 109
7 years or less (but longer than 5 years) 112
10 years or less (but longer than 7 years) 114
Greater than 10 years 122
(iv) Rule 144A Securities: The Fitch Discount Factor applied to Rule 144A
Securities will be 110% of the Fitch Discount Factor which would apply were the
securities registered under the Securities Act.
(v) Asset-backed and mortgage-backed securities: The percentage determined
by reference to the asset type in accordance with the table set forth below.
-17-
$$/BREAK/$$END
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 LockOut securities, interest only.................................. 236%
U.S. agency planned amortization class bonds (10 years or less)........ 115%
U.S. agency planned amortization class bonds (greater than 10 years)... 136%
AAA sequentials (10 years or less)..................................... 118%
AAA sequentials (greater than 10 years)................................ 135%
AAA planned amortization class bonds (10 years or less)................ 115%
AAA planned amortization class bonds (greater than 10 years)........... 140%
Jumbo mortgages rated AAA/1/........................................... 123%
Jumbo mortgages rated AA/1/............................................ 130%
Jumbo mortgages rated A/1/............................................. 136%
Jumbo mortgages rated BBB/1/........................................... 159%
Commercial mortgage-backed securities rated AAA........................ 131%
Commercial mortgage-backed securities rated AA......................... 139%
Commercial mortgage-backed securities rated A.......................... 148%
Commercial mortgage-backed securities rated BBB........................ 177%
Commercial mortgage-backed securities rated BB......................... 283%
Commercial mortgage-backed securities rated B.......................... 379%
Commercial mortgage-backed securities rated CCC or not rated........... 950%
------------
/1/ Applies to jumbo mortgages, credit cards, auto loans, home equity loans,
manufactured housing and prime mortgage-backed securities not issued by a
U.S. agency or instrumentality.
(vi) Bank Loans: The percentage determined by reference to the Fitch Loan
Category in accordance with the table set forth below.
Fitch Loan Category Discount Factor
------------------- ---------------
A ................. 126%
B ................. 157
C ................. 184
D ................. 433
The Fitch Discount Factors presented in the immediately preceding table
will also apply to interest rate swaps and caps, and the rating of the
counterparty to the swap or cap will be the rating used to determine the Fitch
Discount Factor in the table.
(vii) Municipal debt obligations: The Fitch Discount Factor applied to
municipal debt obligations will be the percentage determined by reference to the
table set forth below:
-18-
$$/BREAK/$$END
Fitch Rating Category
Fitch Exposure Period AAA/1/ AA/1/ A/1/ BBB/1/ F1/2/ Unrated/3/
--------------------- ------ ----- ---- ------ ----- ----------
7 weeks................ 151% 159% 166% 173% 136% 225%
8 weeks or less but
greater than 7 weeks... 154 161 168 176 137 231
9 weeks or less but
greater than 8 weeks... 158 163 170 177 138 240
----------
/1/ Fitch rating.
/2/ Municipal debt obligations rated by Fitch which do not mature or have a
demand feature at par exercisable in 30 days and which do not have a
long-term rating.
/3/ 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 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). If a
security is not rated by any Rating Agency, the Trust will use the
percentage set forth under "Unrated" in this table.
The Fitch Discount Factors presented in the immediately preceding table
will also apply to interest rate swaps and caps, and the rating of the
counterparty to the swap or cap will be the rating used to determine the Fitch
Discount Factor in the table. The Fitch Discount Factors presented in the
immediately preceding table will also apply to municipal debt obligations backed
by a guaranty, a letter of credit or insurance issued by a third party. If the
third-party credit rating is the basis for the rating on the securities, then
the rating on the third party will be used to determine the Fitch Discount
Factor in the table.
(viii) Foreign Bonds: The Fitch Discount Factor (A) for a Foreign Bond the
principal of which (if not denominated in U.S. dollars) is subject to a currency
hedging transaction will be the Fitch Discount Factor that would otherwise apply
to such Foreign Bonds in accordance with this definition and (B) for (1) a
Foreign Bond the principal of which (if not denominated in U.S. dollars) is not
subject to a currency hedging transaction and (2) a bond issued in a currency
other than U.S. dollars by a corporation, limited liability company or limited
partnership domiciled in, or the government or any agency, instrumentality or
political subdivision of, a nation other than an Approved Foreign Nation, will
be 370%.
(ix) Structured Notes: The Fitch Discount Factor applied to Structured
Notes will be (A) in the case of a corporate issuer, the Fitch Discount Factor
determined in accordance with paragraph (i) under this definition, whereby the
rating on the issuer of the Structured Note will be the rating on the Structured
Note for purposes of determining the Fitch Discount Factor in the table in
paragraph (i); and (B) in the case of an issuer that is the U.S. government or
an agency or instrumentality thereof, the Fitch Discount Factor determined in
accordance with paragraph (iii) under this definition.
-19-
$$/BREAK/$$END
"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 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
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 Business Days of the Valuation Date, and if the trades which generated such
receivables are (A) settled through clearing house firms with respect to which
the Trust has received prior written authorization from Fitch or (B) (1) with
counterparties having a long-term debt rating of at least BBB- from Fitch or the
equivalent from another Rating Agency or (2) with counterparties having a Short
Term Money Market Instrument rating of at least F1+ by Fitch or the equivalent
by another Rating Agency;
(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, 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 cases, 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) U.S. Government Securities and U.S. Treasury Strips;
(iv) debt securities if (A) such securities do not provide for conversion
or exchange into equity capital at any time over their lives; (B) 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 (C) 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
Argentina, Australia, Austria, Brazil, Belgium, Chile, Denmark, Finland, France,
Germany, Greece, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands,
New Zealand, Norway, Portugal, Russia, Spain, Sweden, Turkey or the United
Kingdom (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
-20-
$$/BREAK/$$END
maximum of 20% of the aggregate Market Value of all assets constituting Fitch
Eligible Assets. Similarly, Canadian Bonds held by the Trust will qualify as
Fitch Eligible Assets only up to a maximum of 20% of the aggregate Market Value
of all assets constituting Fitch Eligible Assets. Notwithstanding the
limitations in the two preceding sentences, Foreign Bonds and Canadian Bonds
held by the Trust will qualify as Fitch Eligible Assets only up to a maximum of
30% of the aggregate Market Value of all assets constituting Fitch Eligible
Assets. In addition, bonds which are issued in connection with a reorganization
under U.S. federal bankruptcy law ("Reorganization Bonds") will be considered
debt securities constituting Fitch Eligible Assets if (a) they provide for
periodic payment of interest in cash in U.S. dollars or euros; (b) they do not
provide for conversion or exchange into equity capital at any time over their
lives; (c) they have been registered under the Securities Act or are restricted
as to resale under federal securities laws but are eligible for trading under
Rule 144A promulgated pursuant to the Securities Act as determined by the
Trust's investment manager or portfolio manager acting pursuant to procedures
approved by the Board of Trustees of the Trust; (d) they were issued by a U.S.
corporation, limited liability company or limited partnership; and (e) at the
time of purchase at least one year had elapsed since the issuer's
reorganization. Reorganization Bonds may also be considered debt securities
constituting Fitch Eligible Assets if they have been approved by Fitch, which
approval shall not be unreasonably withheld. All debt securities satisfying the
foregoing requirements and restrictions of this paragraph (iv) are herein
referred to as "Debt Securities."
(v) asset-backed and mortgage-backed securities;
(vi) preferred stocks;
(vii) Rule 144A Securities;
(viii)Bank Loans;
(ix) municipal debt obligations; and
(x) TRACERs and Structured Notes.
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.
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
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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 Exposure Period" means the period commencing on (and including) a
given Valuation Date and ending 49 days thereafter.
"Fitch Hedging Transactions" has the meaning set forth in Section 11.8(f)
of these Bylaws.
"Fitch Industry Classifications" means, for the purposes of determining
Fitch Eligible Assets, each of the following industry classifications:
Aerospace & Defense
Automobiles
Banking, Finance & Insurance
Building & Materials
Chemicals
Computers & Electronics
Consumer Products
Energy
Environmental Services
Farming & Agriculture
Food, Beverage & Tobacco
Healthcare & Pharmaceuticals
Industrial Machinery
Media, Leisure & Entertainment
Metals & Mining
Miscellaneous
Paper & Forest Products
Retail
Sovereigns
Textiles & Furniture
Transportation
Utilities
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The Trust shall use its discretion in determining which industry
classification is applicable to a particular investment.
"Fitch Loan Category" means the following four categories (and, for
purposes of this categorization, the Market Value of a Fitch Eligible Asset
trading at par is equal to $1.00):
(i) "Fitch Loan Category A" means Performing Bank Loans which have a
Market Value or an Approved Price greater than or equal to $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'x 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.
"Foreign Bonds" has the meaning set forth in the definition of "Fitch
Eligible Assets."
"Forward Commitment" has the meaning set forth in Section 11.8(d) of these
Bylaws.
"Holder" means a Person identified as a holder of record of Preferred
Shares in the Share Register.
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"Independent Accountant" means a nationally recognized accountant, or firm
of accountants, that is, with respect to the Trust, an independent public
accountant or firm of independent public accountants under the Securities Act
and serving as such for the Trust.
"Initial Dividend Payment Date" means, with respect to a series of
Preferred Shares, the Initial Dividend Payment Date as determined by the Board
of Trustees of the Trust or pursuant to their delegated authority with respect
to such series.
"Initial Dividend Period" has the meaning set forth in Section 11.2(c)(i)
of these Bylaws.
"Initial Dividend Rate" means, with respect to a series of Preferred
Shares, the rate per annum applicable to the Initial Dividend Period for such
series of Preferred Shares.
"Interest Equivalent" has the meaning set forth in the definition of "'AA'
Financial Composite Commercial Paper Rate."
"Lien" means any material lien, mortgage, pledge, security interest or
security agreement of any kind.
"Long Term Dividend Period" means a Special Dividend Period consisting of a
specified period of one whole year or more but not greater than five years.
"Mandatory Redemption Price" means $25,000 per Preferred Share plus an
amount equal to accumulated but unpaid dividends (whether or not earned or
declared) to the date fixed for redemption.
"Market Value" of any asset of the Trust shall be the market value thereof
determined by a Pricing Service. Market Value of any asset shall include any
interest accrued thereon. A Pricing Service shall value portfolio securities at
the quoted bid prices or the mean between the quoted bid and asked price or the
yield equivalent when quotations are not readily available. Securities for which
quotations are not readily available shall be valued at fair value as determined
by a Pricing Service using methods which include consideration of: yields or
prices of securities of comparable quality, type of issue, coupon, maturity and
rating; indications as to value from dealers; and general market conditions. A
Pricing Service may employ electronic data processing techniques and/or a matrix
system to determine valuations. In the event a Pricing Service is unable to
value a security, the security shall be valued at the lower of two dealer bids
obtained by the Trust from dealers who are members of the National Association
of Securities Dealers, Inc. and who make a market in the security, at least one
of which shall be in writing. Futures contracts and options are valued at
closing prices for such instruments established by the exchange or board of
trade on which they are traded, or if market quotations are not readily
available, are valued at fair value on a consistent basis using methods
determined in good faith by the Board of Trustees of the Trust.
"Maximum Applicable Rate," with respect to Preferred Shares, has the
meaning set forth in Section 11.10(a)(vi) of these Bylaws.
"Moody's" means Xxxxx'x Investors Service, Inc. or its successors.
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$$/BREAK/$$END
"Moody's Discount Factor" means, for purposes of determining the Discounted
Value of any Moody's Eligible Asset, the percentage determined as follows. The
Moody's Discount Factor for any Moody's Eligible Asset other than the securities
set forth below will be the percentage provided in writing by Moody's.
(i) Corporate debt securities: The percentage determined by reference
to the rating on such asset with reference to the remaining term to
maturity of such asset, in accordance with the table set forth below.
Xxxxx'x Rating Category
Term to Maturity of -------------------------------------------------------------
Corporate Debt Security Aaa Aa A Baa Ba B Caa Unrated/1/
----------------------- ---- ---- ---- ----- ---- ---- ----- ----------
1 year or less ................................ 109% 112% 115% 118% 119% 125% 205% 225%
2 years or less (but longer than 1 year) ...... 115 118 122 125 127 133 205 225
3 years or less (but longer than 2 years) ..... 120 123 127 131 133 140 205 225
4 years or less (but longer than 3 years) ..... 126 129 133 138 140 147 205 225
5 years or less (but longer than 4 years) ..... 132 135 139 144 146 154 205 225
7 years or less (but longer than 5 years) ..... 139 143 147 152 156 164 205 225
10 years or less (but longer than 7 years) .... 145 150 155 160 164 173 205 225
15 years or less (but longer than 10 years) ... 150 155 160 165 170 180 205 225
20 years or less (but longer than 15 years) ... 150 155 160 165 170 190 205 225
30 years or less (but longer than 20 years) ... 150 155 160 165 170 191 205 225
Greater than 30 years ......................... 165 173 181 189 205 221 221 225
------------
/1/ Unrated corporate debt securities, which are corporate debt securities
rated by neither Moody's nor S & P, are limited to 10% of discounted
Moody's Eligible Assets. If a corporate debt security is unrated by Moody's
but is rated by S & P, a rating two numeric ratings below the S & P rating
will be used (e.g., where the S & P rating is AAA, a Xxxxx'x rating of Aa1
will be used; where the S & P rating is AA+, a Xxxxx'x rating of Aa3 will
be used). If a corporate debt security is unrated by both Moody's and S &
P, the Trust will use the percentage set forth under "Unrated" in this
table.
The Moody's Discount Factors presented in the immediately preceding
table will also apply to Moody's Eligible Assets that are FHLB, FNMA and
FFCB Debentures and to rated TRACERs, whereby the ratings in the table will
be applied to the underlying securities and the Market Value of each
underlying security will be its proportionate amount of the Market Value of
the TRACER. The Moody's Discount Factors presented in the immediately
preceding table will also apply to corporate debt securities that do not
pay interest in U.S. dollars or euros, provided that the Moody's Discount
Factor determined from the table shall be multiplied by a factor of 110%
for purposes of calculating the Discounted Value of such securities.
(ii) Preferred stock: The Moody's Discount Factor for preferred stock
shall be (A) for preferred stocks issued by a utility, 155%; (B) for
preferred stocks of industrial and financial issuers, 209%; and (C) for
auction rate preferred stocks, 350%.
(iii) Short-term instruments: The Moody's Discount Factor applied to
short-term portfolio securities, including without limitation corporate
debt securities, Short Term Money Market Instruments and municipal debt
obligations, will be (A) 100%, so long as such portfolio securities mature
or have a demand feature at par exercisable within the
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Moody's Exposure Period; (B) 115%, so long as such portfolio securities
mature or have a demand feature at par not exercisable within the Moody's
Exposure Period; and (C) 125%, if such securities are not rated by Moody's,
so long as such portfolio securities are rated at least A-1+/AA or SP-1+/AA
by S & P and mature or have a demand feature at par exercisable within the
Moody's Exposure Period. A Moody's Discount Factor of 100% will be applied
to cash.
(iv) U.S. Government Securities and U.S. Treasury Strips:
U.S. Government U.S. Treasury
Securities Strips
Remaining Term to Maturity Discount Factor Discount Factor
-------------------------- --------------- ---------------
1 year or less 107% 107%
2 years or less (but longer than 1 year) 113 115
3 years or less (but longer than 2 years) 118 121
4 years or less (but longer than 3 years) 123 128
5 years or less (but longer than 4 years) 128 135
7 years or less (but longer than 5 years) 135 147
10 years or less (but longer than 7 years) 141 163
15 years or less (but longer than 10 years) 146 191
20 years or less (but longer than 15 years) 154 218
30 years or less (but longer than 20 years) 154 244
(v) Rule 144A Securities: The Moody's Discount Factor applied to Rule
144A Securities whose terms include rights to registration under the
Securities Act exercisable within 1 year of the applicable date shall be
100% of the Moody's Discount Factor that would apply were the securities
registered under the Securities Act. The Moody's Discount Factor applied to
Rule 144A Securities whose terms include rights to registration under the
Securities Act that are not exercisable within one year of the applicable
date shall be 120% of the Moody's Discount Factor that would apply were the
securities registered under the Securities Act. The Moody's Discount Factor
applied to Rule 144A Securities whose terms do not include rights to
registration under the Securities Act shall be 130% of the Moody's Discount
Factor that would apply were the securities registered under the Securities
Act.
(vi) Bank Loans: The Moody's Discount Factor applied to senior Bank
Loans ("Senior Loans") shall be the percentage specified in the table below
opposite such Moody's Loan Category:
Moody's Loan Category Discount Factor
--------------------- ---------------
A 118%
B 137%
C 161%
D 222%
E 222%
(vii) Asset-backed securities: The Moody's Discount Factor applied to
asset-backed securities shall be 131%. Mortgage-backed securities: The
Moody's Discount Factor applied to collateralized mortgage obligations,
planned amortization class bonds and targeted amortization class bonds
shall be determined by reference to the weighted
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average life of the security and whether cash flow is retained (i.e.,
controlled by a trustee) or excluded (i.e., not controlled by a trustee),
in accordance with the table set forth below.
Cash Flow Cash Flow
Remaining Term to Maturity Retained Excluded
-------------------------- --------- ---------
3 years or less 133% 141%
7 years or less (but longer than 3 years) 142 151
10 years or less (but longer than 7 years) 158 168
20 years or less (but longer than 10 years) 174 185
The Moody's Discount Factor applied to residential mortgage
pass-throughs (including private-placement mortgage pass-throughs) shall be
determined by reference to the coupon paid by such security and whether
cash flow is retained (i.e., controlled by a trustee) or excluded (i.e.,
not controlled by a trustee), in accordance with the table set forth below.
Cash Flow Cash Flow
Coupon Retained Excluded
---------- --------- ---------
5% 166% 173%
6% 162 169
7% 158 165
8% 154 161
9% 151 157
10% 148 154
11% 144 154
12% 142 151
13% 139 148
adjustable 165 172
The Moody's Discount Factor applied to fixed-rate pass-throughs that are
not rated by Moody's and are serviced by a servicer approved by Moody's
shall be determined by reference to the table in the following paragraph.
The Moody's Discount Factor applied to whole loans shall be determined
by reference to the coupon paid by such security and whether cash flow is
retained (i.e., controlled by a trustee) or excluded (i.e., not controlled
by a trustee), in accordance with the table set forth below.
Cash Flow Cash Flow
Coupon Retained Excluded
---------- --------- ---------
5% 172% 179%
6% 167 174
7% 163 170
8% 159 165
9% 155 161
10% 151 158
11% 148 157
12% 145 154
13% 142 151
adjustable 170 177
(viii)Municipal debt obligations: The Moody's Discount Factor applied
to municipal debt obligations shall be the percentage determined by
reference to the rating on such
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asset and the shortest Exposure Period set forth opposite such rating that
is the same length as or is longer than the Moody's Exposure Period, in
accordance with the table set forth below (provided that any municipal
obligation (excluding any short-term municipal obligation) not rated by
Moody's but rated by S & P shall be deemed to have a Xxxxx'x rating which
is one full rating category lower than its S & P rating):
Exposure Period Aaa/1/ Aa/1/ A/1/ Baa/1/ Other/2/ (V)MIG-1/3/ SP-1+/4/ Unrated/5/
--------------- ------ ----- ---- ------ -------- ----------- -------- ----------
7 weeks 151% 159% 166% 173% 187% 136% 148% 225%
8 weeks or less but 154 161 168 176 190 137 149 231
greater than seven weeks
9 weeks or less but 158 163 170 177 192 138 150 240
greater than eight weeks
------------
/1/ Xxxxx'x rating.
/2/ Municipal debt obligations not rated by Moody's but rated BBB by S & P.
/3/ Municipal debt obligations rated MIG-1 or VMIG-1, which do not mature or
have a demand feature at par exercisable in 30 days and which do not have a
long-term rating.
/4/ Municipal debt obligations not rated by Moody's but rated SP-1+ by S & P,
which do not mature or have a demand feature at par exercisable in 30 days
and which do not have a long-term rating.
/5/ Municipal debt obligations rated less than Baa3 or not rated by Moody's and
less than BBB or not rated by S & P, not to exceed 10% of Moody's Eligible
Assets.
(ix) Structured Notes: The Moody's Discount Factor applied to
Structured Notes will be (A) in the case of a corporate issuer, the Moody's
Discount Factor determined in accordance with paragraph (i) under this
definition, whereby the rating on the issuer of the Structured Note will be
the rating on the Structured Note for purposes of determining the Moody's
Discount Factor in the table in paragraph (i); and (B) in the case of an
issuer that is the U.S. government or an agency or instrumentality thereof,
the Moody's Discount Factor determined in accordance with paragraph (iii)
under this definition.
(x) Convertible securities (including convertible preferred stock):
(1) For convertible securities having a Delta between 0.4 and 0.0, the
Moody's Discount Factor shall be 100% of the Moody's Discount Factor
applied to non-convertible corporate debt securities (i.e. using the
Moody's Discount Factors found in the subsection (ii) of this definition),
(2) for convertible securities having a Delta between 0.8 and 0.4, the
Moody's Discount Factor shall be 192% for securities rated Baa or above and
226% for securities rated Ba and below, and (3) for convertible securities
having a Delta between 1.0 and 0.8, the Moody's Discount Factor shall be
195% for securities rated Baa or above and 229% for securities rated Ba and
below; provided, however, that for any unrated convertible security, the
Moody's Discount Factor shall be 250%./1,2/
/1/ Unless conclusions regarding liquidity risk as well as estimates of both
the probability and severity of default for applicable Trust assets can be
derived from other sources as well as combined with a number of sources as
presented by the Trust to Moody's, unrated fixed-income and convertible
securities, which are securities that are not rated by any of Moody's, S &
P or Fitch
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Ratings, are limited to 10% of Moody's Eligible Assets for purposes of
calculations related to the Preferred Shares Basic Maintenance Amount. If a
convertible security is not rated by any of Xxxxx'x, S & P or Fitch
Ratings, the Trust will consider the security unrated for the purposes of
the discounts discussed above. Ratings assigned by S & P and/or Fitch
Ratings are generally accepted at face value. However, adjustments to face
value may be made to particular categories of credits for which the ratings
by S & P and/or Fitch Ratings do not seem to approximate a Xxxxx'x rating
equivalent. Split-rated securities assigned by S & P and Fitch Ratings
(i.e., these Rating Agencies assign different rating categories to the
security) will be accepted at the lower of the two ratings.
/2/ Discount factors are for 7-week exposure period.
For the purposes of determining such discount factors, "Delta", which is
intended to express the change in the price of the convertible security per
unit of change in the price of the common stock into which the convertible
security is convertible, shall be the number provided by Xxxxxxx Lynch,
Pierce, Xxxxxx and Xxxxx, Incorporated or such other provider as the Trust
shall determine from time to time. The Trust shall use commercially
reasonable efforts to update such Delta figures monthly.
Upon conversion to common stock, the Discount Factors applicable to common
stock will apply:
Common Stocks/1/ Large-Cap Mid-Cap Small Cap
---------------- --------- ------- ---------
7 week exposure period 200% 205% 220%
/1/ Market cap for Large-cap stocks are $10 billion and up, Mid-cap stocks
range between $2 billion and $10 billion, and Small-cap stocks are $2
billion and below."
"Moody's Eligible Assets" means
(i) cash (including interest and dividends due on assets rated (A)
Baa3 or higher by Moody's if the payment date is within five Business Days
of the Valuation Date, (B) A2 or higher if the payment date is within
thirty days of the Valuation Date, and (C) A1 or higher if the payment date
is within the Moody's Exposure Period) and receivables for Moody's Eligible
Assets sold if the receivable is due within five Business Days of the
Valuation Date, and if the trades which generated such receivables are (A)
settled through clearing house firms with respect to which the Trust has
received prior written authorization from Moody's or (B) (1) with
counterparties having a Moody's long-term debt rating of at least Baa3 or
(2) with counterparties having a Moody's Short Term Money Market Instrument
rating of at least P-1;
(ii) Short Term Money Market Instruments so long as (A) such
securities are rated at least P-1, (B) in the case of demand deposits, time
deposits and overnight funds, the supporting entity is rated at least A2,
or (C) in all other cases, the supporting entity (1) is rated A2 and the
security matures within one month, (2) is rated A1 and the security matures
within three months or (3) is rated at least Aa3 and the security matures
within six months; provided, however, that for purposes of this definition,
such instruments (other than commercial paper rated by S & P and not rated
by Moody's) need not meet any otherwise applicable S & P rating criteria;
-29-
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(iii) U.S. Government Securities and U.S. Treasury Strips;
(iv) Rule 144A Securities;
(v) Senior Loans and other Bank Loans approved by Moody's;
(vi) Corporate debt securities if (A) such securities are rated Caa or
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; (C) for securities
which provide for conversion or exchange into equity capital at some time
over their lives, the issuer must be rated at least B3 by Moody's and the
discount factor will be 250%; (D) for debt securities rated Ba1 and below,
no more than 10% of the original amount of such issue may constitute
Moody's Eligible Assets; (E) such securities have been registered under the
Securities Act or are restricted as to resale under federal securities laws
but are eligible for resale pursuant to Rule 144A under the Securities Act
as determined by the 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 (F)
such securities are not subject to extended settlement.
Notwithstanding the foregoing limitations, (x) corporate debt
securities not rated at least Caa 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 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.
(vii) Preferred stocks if (A) dividends on such preferred stock are
cumulative, (B) such securities provide for the periodic payment of
dividends thereon in cash in U.S. dollars or euros and do not provide for
conversion or exchange into, or have warrants attached entitling the holder
to receive, equity capital at any time over the respective lives of such
securities, (C) the issuer of such a preferred stock has common stock
listed on either the New York Stock Exchange or the American Stock
Exchange, (D) the issuer of such a preferred stock has a senior debt rating
from Moody's of Baa1 or higher or a preferred stock rating from Xxxxx'x of
Baa3 or higher and (E) such preferred stock has
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$$/BREAK/$$END
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 Moody's Eligible Assets;
(viii)Asset-backed and mortgage-backed securities:
(A) Asset-backed securities if (1) such securities are rated at
least Aa3 by Moody's or at least AA by S & P, (2) the securities are
part of an issue that is $250 million or greater, or the issuer of
such securities has a total of $500 million or greater of asset-backed
securities outstanding at the time of purchase of the securities by
the Trust and (3) the expected average life of the securities is not
greater than 4 years;
(B) Collateralized mortgage obligations ("CMOs"), including CMOs
with interest rates that float at a multiple of the change in the
underlying index according to a pre-set formula, provided that any CMO
held by the Trust (1) has been rated Aaa by Moody's or AAA by S & P,
(2) does not have a coupon which floats inversely, (3) is not
portioned as an interest-only or principal-only strip and (4) is part
of an issuance that had an original issue size of at least $100
million;
(C) Planned amortization class bonds ("PACs") and targeted
amortization class bonds ("TACs") provided that such PACs or TACs are
(1) backed by certificates of either the Federal National Mortgage
Association ("FNMA"), the Government National Mortgage Association
("GNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC")
representing ownership in single-family first lien mortgage loans with
original terms of 30 years, (2) part of an issuance that had an
original issue size of at least $10 million, (3) part of PAC or TAC
classes that have payment priority over other PAC or TAC classes, (4)
if TACs, TACs that do not support PAC classes, and (5) if TACs, not
considered reverse TACs (i.e., do not protect against extension risk);
(D) Consolidated senior debt obligations of Federal Home Loan
Banks ("FHLBs"), senior long-term debt of the FNMA, and consolidated
systemwide bonds and FCS Financial Assistance Corporation Bonds of
Federal Farm Credit Banks ("FFCBs") (collectively, "FHLB, FNMA and
FFCB Debentures"), provided that such FHLB, FNMA and FFCB Debentures
are (1) direct issuance corporate debt rated Aaa by Moody's, (2)
senior debt obligations backed by the FHLBs, FFCBs or FNMA, (3) part
of an issue entirely denominated in U.S. dollars and (4) not callable
or exchangeable debt issues;
-31-
$$/BREAK/$$END
(E) Mortgage pass-throughs rated at least Aa by Moody's and
pass-throughs issued prior to 1987 (if rated AA by S & P and based on
fixed-rate mortgage loans) by Travelers Mortgage Services, Citicorp
Homeowners, Citibank, N.A., Sears Mortgage Security or RFC - Salomon
Brothers Mortgage Securities, Inc., provided that (1) certificates
must evidence a proportional, undivided interest in specified pools of
fixed or adjustable rate mortgage loans, secured by a valid first
lien, on one- to four-family residential properties and (2) the
securities are publicly registered (not issued by FNMA, GNMA or
FHLMC);
(F) Private-placement mortgage pass-throughs provided that (1)
certificates represent a proportional undivided interest in specified
pools of fixed-rate mortgage loans, secured by a valid first lien, on
one- to four-family residential properties, (2) documentation is held
by a trustee or independent custodian, (3) pools of mortgage loans are
serviced by servicers that have been approved by FNMA or FHLMC and
funds shall be advanced to meet deficiencies to the extent provided in
the pooling and servicing agreements creating such certificates, and
(4) pools have been rated Aa or better by Xxxxx'x; and
(G) Whole loans (e.g., direct investments in mortgages) provided
that (1) at least 65% of such loans (a) have seasoning of no less than
6 months, (b) are secured by single-family detached residences, (c)
are owner-occupied primary residences, (d) are secured by a
first-lien, fully-documented mortgage, (e) are neither currently
delinquent (30 days or more) nor delinquent during the preceding year,
(f) have loan-to-value ratios of 80% or below, (g) carry normal hazard
insurance and title insurance, as well as special hazard insurance, if
applicable, (h) have original terms to maturity not greater than 30
years, with at least one year remaining to maturity, (i) have a
minimum of $10,000 remaining principal balance, (j) for loans
underwritten after January 1, 1978, FNMA and/or FHLMC forms are used
for fixed-rate loans, and (k) such loans are whole loans and not
participations; (2) for loans that do not satisfy the requirements set
forth in the foregoing clause (1), (a) non-owner occupied properties
represent no greater than 15% of the aggregate of either the
adjustable-rate pool or the fixed-rate pool, (b) multi-family
properties (those with five or more units) represent no greater than
15% of the aggregate of either the adjustable-rate pool or the
fixed-rate pool, (c) condominiums represent no greater than 10% of the
aggregate of either the adjustable-rate pool or the fixed-rate pool,
and any condominium project must be 80% occupied at the time the loan
is originated, (d) properties with loan-to-value ratios exceeding 80%
represent no greater than 25% of the aggregate of either the
adjustable-rate pool or the fixed-rate pool and the portion of the
mortgage on any such property that exceeds a loan-to-value ratio of
80% is insured with Primary Mortgage Insurance from an insurer rated
at least Baa3 by Xxxxx'x and (e) loan balances in excess of the
current FHLMC limit plus $75,000 represent no greater than 25% of the
aggregate of either the adjustable-rate pool or the fixed-rate pool,
loan balances in excess of $350,000 represent no greater than 10% of
the aggregate of either the adjustable-rate pool or the fixed-rate
pool, and loan balances in excess of $1,000,000 represent no greater
than 5% of the aggregate of either the adjustable-rate pool or the
fixed-rate pool; (3) no greater than 5% of the pool of loans is
concentrated
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$$/BREAK/$$END
in any one zip code; (4) the pool of loans contains at least 100 loans
or $2 million in loans per servicer; (5) for adjustable-rate mortgages
("ARMs"), (a) any ARM is indexed to the National Cost of Funds index,
the 11th District Cost of Funds index, the 1-year Treasury or the
6-month Treasury, (b) the margin over the given index is between 0.15%
and 0.25% for either cost-of-funds index and between 0.175% and 0.325%
for Treasuries, (c) the maximum yearly interest rate increase is 2%,
(d) the maximum life-time interest rate increase is 6.25% and (e) ARMs
may include Federal Housing Administration and Department of Veterans
Affairs loans; (6) for "teaser" loans, (a) the initial discount from
the current ARM market rate is no greater than 2%, (b) the loan is
underwritten at the market rate for ARMs, not the "teaser" rate, and
(c) the loan is seasoned six months beyond the "teaser" period.
(ix) Any municipal debt obligation that (A) pays interest in cash, (B)
does not have a Xxxxx'x rating, as applicable, suspended by Moody's, and
(C) is part of an issue of municipal debt obligations of at least
$5,000,000, except for municipal debt obligations rated below A by Moody's,
in which case the minimum issue size is $10,000,000;
(x) Structured Notes and rated TRACERs;
(xi) Financial contracts, as such term is defined in Section
3(c)(2)(B)(ii) of the 1940 Act, not otherwise provided for in this
definition but only upon receipt by the Trust of a letter from Moody's
specifying any conditions on including such financial contract in Moody's
Eligible Assets and assuring the Trust that including such financial
contract in the manner so specified would not affect the credit rating
assigned by Xxxxx'x to the Preferred Shares;
(xii) Convertible securities (including convertible preferred stock),
provided that (A) the issuer of common stock must have a Xxxxx'x senior
unsecured debt of Caa or better, or an S & P or Fitch rating of CCC or
better, (B) the common stocks must be traded on the New York Stock
Exchange, the American Stock Exchange, or the NASDAQ, (C) dividends must be
paid in U.S. dollars, (D) the portfolio of convertible bonds must be
diversified as set forth in the table set forth below, (E) the company
shall not hold shares exceeding the average weekly trading volume during
the preceding month, and (F) synthetic convertibles are excluded from asset
eligibility.
Convertible Bonds Diversification Guidelines
------------------------------------------------
Maximum Single Maximum Single Maximum Single
Type Issuer (%)/1/ Industry (%) State (%)/1/
----- -------------- -------------- --------------
Utility 4 50 7/2/
Other 6 20 n/a
------------
/1/ Percentage represent a portion of the aggregate market value and number of
outstanding shares of the convertible stock portfolio.
/2/ Utility companies operating in more than one state should be diversified
according to the state in which they generate the largest part of their
revenues. Publicly available information on utility company revenues by
state is available from the Uniform Statistical Report (USR) or the Federal
Energy Regulation Commission (FERC)."
-33-
$$/BREAK/$$END
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 the
portfolio holdings.
/4/ Industries are determined according to Xxxxx'x Industry Classifications, as
defined herein.
/5/ Except for preferred stock, which has a minimum issue size of $50 million.
/6/ Portfolio holdings from issues ranging from $50 million to $100 million are
limited to 20% of the Fund's total assets.
Where the Trust sells an asset and agrees to repurchase such asset in the
future, the Discounted Value of such asset will constitute a Moody's 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 Moody's Eligible Asset if the long-term debt of such other party is
rated at least A2 by Moody's and such agreement has a term of 30 days or less;
otherwise the Discounted Value of such purchased asset will constitute a Moody's
Eligible Asset. For the purposes of calculation of Moody's Eligible Assets,
portfolio securities which have been called for redemption by the issuer thereof
shall be valued at the lower of Market Value or the call price of such portfolio
securities.
Notwithstanding the foregoing, an asset will not be considered a Moody's
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 Moody's has indicated to the Trust will not affect the status of such
asset as a Moody's Eligible Asset, (B) Liens for taxes that are not then due and
payable or that can be paid thereafter without penalty, (C) Liens to secure
payment for services rendered or cash advanced to the Trust by its investment
manager or portfolio manager, the Trust's custodian, transfer agent or registrar
or the Auction Agent and (D) Liens arising by virtue of any repurchase
agreement.
"Xxxxx'x Exposure Period" means the period commencing on a given Valuation
Date and ending 49 days thereafter.
"Xxxxx'x Hedging Transactions" has the meaning set forth in Section 11.8(a)
of these Bylaws.
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$$/BREAK/$$END
"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 Xxxxx'x may from time to time approve for application
to the Preferred Shares):
1. Aerospace and Defense: Major Contractor, Subsystems, Research,
Aircraft Manufacturing, Arms, Ammunition
2. Automobile: Automobile Equipment, Auto-Manufacturing, Auto Parts
Manufacturing, Personal Use Trailers, Motor Homes, Dealers
3. Banking: Bank Holding, Savings and Loans, Consumer Credit, Small Loan,
Agency, Factoring, Receivables
4. Beverage, Food and Tobacco: Beer and Ale, Distillers, Wines and
Liquors, Distributors, Soft Drink Syrup, Bottlers, Bakery, Mill Sugar,
Canned Foods, Corn Refiners, Dairy Products, Meat Products, Poultry
Products, Snacks, Packaged Foods, Candy, Gum, Seafood, Frozen Food,
Cigarettes, Cigars, Leaf/Snuff, Vegetable Oil
5. Buildings and Real Estate: Brick, Cement, Climate Controls,
Contracting, Engineering, Construction, Hardware, Forest Products
(building-related only), Plumbing, Roofing, Wallboard, Real Estate,
Real Estate Development, REITs, Land Development
6. Chemicals, Plastics and Rubber: Chemicals (non-agricultural),
Industrial Gases, Sulfur, Plastics, Plastic Products, Abrasives,
Coatings, Paints, Varnish, Fabricating
7. Containers, Packaging and Glass: Glass, Fiberglass, Containers made
of: Glass, Metal, Paper, Plastic, Wood or Fiberglass
8. Personal and Non-Durable Consumer Products (Manufacturing Only):
Soaps, Perfumes, Cosmetics, Toiletries, Cleaning Supplies, School
Supplies
9. Diversified/Conglomerate Manufacturing
10. Diversified/Conglomerate Service
11. Diversified Natural Resources, Precious Metals and Minerals:
Fabricating, Distribution
12. Ecological: Pollution Control, Waste Removal, Waste Treatment and
Waste Disposal
13. Electronics: Computer Hardware, Electric Equipment, Components,
Controllers, Motors, Household Appliances, Information Service
Communicating Systems, Radios, TVs, Tape Machines, Speakers, Printers,
Drivers, Technology
14. Finance: Investment Brokerage, Leasing, Syndication, Securities
-35-
$$/BREAK/$$END
15. Farming and Agriculture: Livestock, Grains, Produce, Agriculture
Chemicals, Agricultural Equipment, Fertilizers
16. Grocery: Grocery Stores, Convenience Food Stores
17. Healthcare, Education and Childcare: Ethical Drugs, Proprietary Drugs,
Research, Health Care Centers, Nursing Homes, HMOs, Hospitals,
Hospital Supplies, Medical Equipment
18. Home and Office Furnishings, Housewares, and Durable Consumer
Products: Carpets, Floor Coverings, Furniture, Cooking, Ranges
19. Hotels, Motels, Inns and Gaming
20. Insurance: Life, Property and Casualty, Broker, Agent, Surety
21. Leisure, Amusement, Motion Pictures, Entertainment: Boating, Bowling,
Billiards, Musical Instruments, Fishing, Photo Equipment, Records,
Tapes, Sports, Outdoor Equipment (Camping), Tourism, Resorts, Games,
Toy Manufacturing, Motion Picture Production Theaters, Motion Picture
Distribution
22. Machinery (Non-Agricultural, Non-Construction, Non-Electronic):
Industrial, Machine Tools, Steam Generators
23. Mining, Steel, Iron and Non-Precious Metals: Coal, Copper, Lead,
Uranium, Zinc, Aluminum, Stainless Steel, Integrated Steel, Ore
Production, Refractories, Steel Mill Machinery, Mini-Xxxxx,
Fabricating, Distribution and Sales of the foregoing
24. Oil and Gas: Crude Producer, Retailer, Well Supply, Service and
Drilling
25. Printing, Publishing, and Broadcasting: Graphic Arts, Paper, Paper
Products, Business Forms, Magazines, Books, Periodicals, Newspapers,
Textbooks, Radio, 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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$$/BREAK/$$END
29. Textiles and Leather: Producer, Synthetic Fiber, Apparel Manufacturer,
Leather Shoes
30. Personal Transportation: Air, Bus, Rail, Car Rental
31. Utilities: Electric, Water, Hydro Power, Gas
32. Diversified Sovereigns: Semi-sovereigns, Canadian Provinces,
Supra-national Agencies
The Trust will use its discretion in determining which industry
classification is applicable to a particular investment in consultation with the
Independent Accountant and Xxxxx'x, to the extent the Trust considers necessary.
"Xxxxx'x Loan Category" means the following five categories (and, for
purposes of this categorization, the Market Value of a Xxxxx'x Eligible Asset
trading at par is equal to $1.00):
(i) "Xxxxx'x Loan Category A" means Performing Senior Loans which have
a Market Value or an Approved Price greater than or equal to $0.90.
(ii) "Xxxxx'x Loan Category B" means: (A) Performing Senior Loans
which have a Market Value or an Approved Price of greater than or equal to
$0.80 but less than $0.90; and (B) non-Performing Senior Loans which have a
Market Value or an Approved Price greater than or equal to $0.85.
(iii) "Xxxxx'x Loan Category C" means: (A) Performing Senior Loans
which have a Market Value or an Approved Price of greater than or equal to
$0.70 but less than $0.80; and (B) non-Performing Senior Loans which have a
Market Value or an Approved Price of greater than or equal to $0.75 but
less than $0.85.
(iv) "Xxxxx'x Loan Category D" means Senior Loans which have a Market
Value or an Approved Price less than $0.75.
(v) "Xxxxx'x Loan Category E" means non-Senior Loans which have a
Market Value or an Approved Price.
Notwithstanding any other provision contained above, for purposes of
determining whether a Moody's Eligible Asset falls within a specific Xxxxx'x
Loan Category, to the extent that any Xxxxx'x Eligible Asset would fall in more
than one of the Xxxxx'x Loan Categories, such Xxxxx'x Eligible Asset shall be
deemed to fall into the Xxxxx'x Loan Category with the lowest applicable Xxxxx'x
Discount Factor.
"1940 Act" means the Investment Company Act of 1940, as amended from time
to time.
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$$/BREAK/$$END
"1940 Act Cure Date," with respect to the failure by the Trust to maintain
the 1940 Act Preferred Shares Asset Coverage (as required by these Bylaws) as of
the last Business Day of each month, means the last Business Day of the
following month.
"1940 Act Preferred Shares Asset Coverage" means asset coverage, as defined
in Section 18(h) of the 1940 Act, of at least 200% with respect to all
outstanding senior securities of the Trust which are shares of beneficial
interest, including Preferred Shares (or such other asset coverage as may in the
future be specified in or under the 1940 Act as the minimum asset coverage for
senior securities which are shares of beneficial interest of a closed-end
investment company as a condition of paying dividends on its common shares).
"Non-Call Period" has the meaning set forth under the definition of
"Specific Redemption Provisions."
"Non-Payment Period" means a period commencing on and including a Dividend
Payment Date or redemption date for which the Trust shall fail to (i) declare,
prior to the close of business on the second Business Day preceding such
Dividend Payment Date, for payment on or (to the extent permitted by Section
11.2(c)(i) of these Bylaws) within three Business Days after such Dividend
Payment Date to the Holders as of 12:00 noon, New York City time, on the
Business Day preceding such Dividend Payment Date, the full amount of any
dividend on Preferred Shares payable on such Dividend Payment Date, provided,
however, that if the Trust is not able to make such declaration in compliance
with the foregoing because an unforeseen event or unforeseen events causes or
cause a day that otherwise would have been a Business Day not to be a Business
Day, then the Trust may make such declaration on the Business Day immediately
preceding the Dividend Payment Date, if possible, or, if not possible, on the
Dividend Payment Date, and in such case the Trust shall not be deemed to have
failed to declare a dividend otherwise required to be declared, or (ii) deposit,
irrevocably in trust, in same-day funds, with the Auction Agent by 12:00 noon,
New York City time, (A) on such Dividend Payment Date the full amount of any
cash dividend on such shares payable (if declared) on such Dividend Payment Date
or (B) on any such redemption date for any Preferred Shares called for
redemption, the Mandatory Redemption Price per share of such Preferred Shares
or, in the case of an optional redemption, the Optional Redemption Price per
share, and ending on and including the Business Day on which, by 12:00 noon, New
York City time, all unpaid cash dividends and unpaid redemption prices shall
have been so deposited or shall have otherwise been made available to Holders in
same-day funds; provided that a Non-Payment Period shall not end unless the
Trust shall have given at least five days' but no more than 30 days' written
notice of such deposit or availability to the Auction Agent, all Existing
Holders (at their addresses appearing in the Share Books) and the Securities
Depository. Notwithstanding the foregoing, the failure by the Trust to deposit
funds as provided for by clauses (ii)(A) or (ii)(B) above within three Business
Days after any Dividend Payment Date or redemption date, as the case may be, in
each case to the extent contemplated by Section 11.2(c)(i) of these Bylaws,
shall not constitute a "Non-Payment Period."
"Non-Payment Period Rate" means, initially, 300% of the applicable
Reference Rate, provided that the Board of Trustees of the Trust shall have the
authority to adjust, modify, alter or change from time to time the initial
Non-Payment Period Rate if the Board of Trustees of the
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$$/BREAK/$$END
Trust determines and each of Fitch and Xxxxx'x (and any Substitute Rating Agency
in lieu of Fitch or Moody's in the event Fitch or Moody's shall not rate the
Preferred Shares) advises the Trust in writing that such adjustment,
modification, alteration or change will not adversely affect its then current
ratings on the Preferred Shares.
"Normal Dividend Payment Date" has the meaning set forth in Section
11.2(b)(i) of these Bylaws.
"Notice of Redemption" means any notice with respect to the redemption of
Preferred Shares pursuant to Section 11.4 of these Bylaws.
"Notice of Revocation" has the meaning set forth in Section 11.2(c)(iii) of
these Bylaws.
"Notice of Special Dividend Period" has the meaning set forth in Section
11.2(c)(iii) of these Bylaws.
"Optional Redemption Price" means $25,000 per share plus an amount equal to
accumulated but unpaid dividends (whether or not earned or declared) to the date
fixed for redemption plus any applicable redemption premium attributable to the
designation of a Premium Call Period.
"Outstanding" means, as of any date (i) with respect to Preferred Shares,
Preferred Shares theretofore issued by the Trust except, without duplication,
(A) any Preferred Shares theretofore canceled or delivered to the Auction Agent
for cancellation, or redeemed by the Trust, or as to which a Notice of
Redemption shall have been given and Deposit Securities shall have been
deposited in trust or segregated by the Trust pursuant to Section 11.4(c) hereto
and (B) any Preferred Shares as to which the Trust or any Affiliate (other than
an Affiliate that is a Broker-Dealer) thereof shall be a Beneficial Owner,
provided that Preferred Shares held by an Affiliate shall be deemed outstanding
for purposes of calculating the Preferred Shares Basic Maintenance Amount and
(ii) with respect to other preferred shares of beneficial interest of the Trust,
the meaning equivalent to that for Preferred Shares as set forth in clause (i).
"Parity Shares" means the Preferred Shares and each other outstanding
series of preferred shares of beneficial interest of the Trust the holders of
which, together with the holders of the Preferred Shares, shall be entitled to
the receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in proportion to the full
respective preferential amounts to which they are entitled, without preference
or priority one over the other.
"Performing" means with respect to any asset that is a Bank Loan or other
debt, the issuer of such investment is not in default of any payment obligations
in respect thereof.
"Person" means and includes an individual, a partnership, a trust, an
unincorporated association, a joint venture or other entity or a government or
any agency or political subdivision thereof.
-39-
$$/BREAK/$$END
"Potential Beneficial Owner" means a customer of a Broker-Dealer or a
Broker-Dealer that is not a Beneficial Owner of Preferred Shares but that wishes
to purchase such shares, or that is a Beneficial Owner that wishes to purchase
additional Preferred Shares.
"Potential Holder" means any Broker-Dealer or any such other Person as may
be permitted by the Trust, including any Existing Holder, who may be interested
in acquiring Preferred Shares (or, in the case of an Existing Holder, additional
Preferred Shares).
"Preferred Shares" means the Series M Preferred Shares, the Series T
Preferred Shares, the Series W Preferred Shares, the Series Th Preferred Shares
and the Series F Preferred Shares.
"Preferred Shares Basic Maintenance Amount," as of any Valuation Date,
means the dollar amount equal to the sum of (i)(A) the product of the number of
Preferred Shares Outstanding on such date multiplied by $25,000, plus any
redemption premium applicable to Preferred Shares then subject to redemption;
(B) the aggregate amount of dividends that will have accumulated at the
respective Applicable Rates (whether or not earned or declared) to (but not
including) the first respective Dividend Payment Dates for each series of
Preferred Shares Outstanding that follow such Valuation Date; (C) the aggregate
amount of dividends that would accumulate on shares of each series of Preferred
Shares Outstanding from such first respective Dividend Payment Date therefor
through the 49th day after such Valuation Date, at the Maximum Applicable Rate
(calculated as if such Valuation Date were the Auction Date for the Dividend
Period commencing on such Dividend Payment Date) for a 7-Day Dividend Period of
shares of such series to commence on such Dividend Payment Date, multiplied by
the Volatility Factor (except that (1) if such Valuation Date occurs during a
Non-Payment Period, the dividend for purposes of calculation would accumulate at
the then current Non-Payment Period Rate and (2) for those days during the
period described in this clause (C) in respect of which the Applicable Rate in
effect immediately prior to such Dividend Payment Date will remain in effect,
the dividend for purposes of calculation would accumulate at such Applicable
Rate in respect of those days); (D) the amount of anticipated expenses of the
Trust for the 90 days subsequent to such Valuation Date; and (E) any current
liabilities as of such Valuation Date to the extent not reflected in any of
(i)(A) through (i)(D) (including, without limitation, any payables for portfolio
securities of the Trust purchased as of such Valuation Date and any liabilities
incurred for the purpose of clearing securities transactions) less (ii) the
value (i.e., the face value of cash, short-term securities rated XXX-0, XXXX-0
xx X-0, and short-term securities that are the direct obligation of the U.S.
government, provided in each case that such securities mature on or prior to the
date upon which any of (i)(A) through (i)(E) become payable, otherwise the
Discounted Value) of any of the Trust's assets irrevocably deposited by the
Trust for the payment of any of (i)(A) through (i)(E).
"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 Section 11.7(a) of these Bylaws) as of a given Valuation Date, means
the tenth Business Day following such Valuation Date.
"Preferred Shares Basic Maintenance Report" means a report signed by any of
the President, Treasurer, any Senior Vice President or any Vice President of the
Trust which sets
-40-
$$/BREAK/$$END
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.
"Premium Call Period" has the meaning set forth under the definition of
"Specific Redemption Provisions."
"Pricing Service" means any pricing service designated by the Board of
Trustees of the Trust and approved by Fitch or Xxxxx'x, as applicable, for
purposes of determining whether the Trust has Eligible Assets with an aggregate
Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance
Amount.
"Quarterly Valuation Date" means the last Business Day of the last month of
each fiscal quarter of the Trust in each fiscal year of the Trust, commencing
April 30, 2002.
"Rating Agency" means a nationally recognized statistical rating
organization.
"Reference Rate" means the applicable "AA" Financial Composite Commercial
Paper Rate (for a Dividend Period of fewer than 184 days) or the applicable
Treasury Index Rate (for a Dividend Period of 184 days or more).
"Reorganization Bonds" has the meaning set forth under the definition of
"Fitch Eligible Assets."
"Request for Special Dividend Period" has the meaning set forth in Section
11.2(c)(iii) of these Bylaws.
"Response" has the meaning set forth in Section 11.2(c)(iii) of these
Bylaws.
"Rule 144A Securities" means securities which are restricted as to resale
under federal securities laws but are eligible for resale pursuant to Rule 144A
under the Securities Act as determined by the Trust's investment manager or
portfolio manager acting pursuant to procedures approved by the Board of
Trustees of the Trust.
"S & P" means Standard & Poor's, a division of The XxXxxx-Xxxx Companies,
Inc., or its successors.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Securities Depository" means The Depository Trust Company and its
successors and assigns or any successor securities depository selected by the
Trust as securities depository for the Preferred Shares that agrees to follow
the procedures required to be followed by such securities depository in
connection with the Preferred Shares.
"Senior Loans" has the meaning set forth under the definition of "Xxxxx'x
Discount Factor."
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$$/BREAK/$$END
"Series F Preferred Shares" means the Auction Rate Cumulative Preferred
Shares, Series F.
"Series M Preferred Shares" means the Auction Rate Cumulative Preferred
Shares, Series M.
"Series T Preferred Shares" means the Auction Rate Cumulative Preferred
Shares, Series T.
"Series Th Preferred Shares" means the Auction Rate Cumulative Preferred
Shares, Series Th.
"Series F Preferred Shares" means the Auction Rate Cumulative Preferred
Shares, Series F.
"7-Day Dividend Period" means a Dividend Period consisting of seven days.
"Share Books" means the books maintained by the Auction Agent setting forth
at all times a current list, as determined by the Auction Agent, of Existing
Holders of the Preferred Shares.
"Share Register" means the register of Holders maintained on behalf of the
Trust by the Auction Agent in its capacity as transfer agent and registrar for
the Preferred Shares.
"Short Term Dividend Period" means a Special Dividend Period consisting of
a specified number of days, evenly divisible by seven and not fewer than
fourteen nor more than 364.
"Short Term Money Market Instruments" means the following types of
instruments if, on the date of purchase or other acquisition thereof by the
Trust, the remaining term to maturity thereof is not in excess of 180 days (or
270 days for instruments rated at least Aaa for purposes of determining Xxxxx'x
Eligible Assets):
(i) commercial paper rated either F1 by Fitch or A-1 by S & P if such
commercial paper matures in 30 days or P-1 by Xxxxx'x and either F1+ by
Fitch or A-1+ by S & P if such commercial paper matures in over 30 days;
(ii) demand or time deposits in, and banker's acceptances and
certificates of deposit of (A) a depository institution or trust company
incorporated under the laws of the United States of America or any state
thereof or the District of Columbia or (B) a United States branch office or
agency of a foreign depository institution (provided that such branch
office or agency is subject to banking regulation under the laws of the
United States, any state thereof or the District of Columbia);
(iii) overnight funds;
(iv) U.S. Government Securities; and
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(v) Eurodollar demand or time deposits in, or certificates of deposit
of, the head office or the London branch office of a depository institution
or trust company if the certificates of deposit, if any, and the long-term
unsecured debt obligations (other than such obligations the ratings of
which are based on the credit of a person or entity other than such
depository institution or trust company) of such depository institution or
trust company that have (1) credit ratings on each Valuation Date of at
least P-1 from Xxxxx'x and either F1+ from Fitch or A-1+ from S & P, in the
case of commercial paper or certificates of deposit, and (2) credit ratings
on each Valuation Date of at least Aa3 from Xxxxx'x and either AA- from
Fitch or AA- from S & P, in the case of long-term unsecured debt
obligations; provided, however, that in the case of any such investment
that matures in no more than one Business Day from the date of purchase or
other acquisition by the Trust, all of the foregoing requirements shall be
applicable except that the required long-term unsecured debt credit rating
of such depository institution or trust company from Xxxxx'x, Fitch and S &
P shall be at least A2, A and A, respectively; and provided further,
however, that the foregoing credit rating requirements shall be deemed to
be met with respect to a depository institution or trust company if (1)
such depository institution or trust company is the principal depository
institution in a holding company system, (2) the certificates of deposit,
if any, of such depository institution or trust company are not rated on
any Valuation Date below P-1 by Xxxxx'x, F1+ by Fitch or A-1+ by S & P and
there is no long-term rating, and (3) the holding company shall meet all of
the foregoing credit rating requirements (including the preceding proviso
in the case of investments that mature in no more than one Business Day
from the date of purchase or other acquisition by the Trust); and provided
further, that the interest receivable by the Trust shall not be subject to
any withholding or similar taxes.
"Special Dividend Period" means a Short Term Dividend Period or a Long Term
Dividend Period.
"Specific Redemption Provisions" means, with respect to a Special Dividend
Period either, or both of, (i) a period (a "Non-Call Period") determined by the
Board of Trustees of the Trust, after consultation with the Auction Agent and
the Broker-Dealers, during which the Preferred Shares subject to such Dividend
Period shall not be subject to redemption at the option of the Trust and (ii) a
period (a "Premium Call Period"), consisting of a number of whole years and
determined by the Board of Trustees of the Trust, after consultation with the
Auction Agent and the Broker-Dealers, during each year of which the Preferred
Shares subject to such Dividend Period shall be redeemable at the Trust's option
at a price per share equal to $25,000 plus accumulated but unpaid dividends plus
a premium expressed as a percentage of $25,000, as determined by the Board of
Trustees of the Trust after consultation with the Auction Agent and the
Broker-Dealers.
"Structured Notes" means privately negotiated debt obligations where the
principal and/or interest is determined by reference to the performance of a
benchmark asset or market (an "embedded index"), such as selected securities or
an index of securities, or the differential performance of two assets or
markets, such as indices reflecting bonds.
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"Subsequent Dividend Period" has the meaning set forth in Section
11.2(c)(i) of these Bylaws.
"Substitute Commercial Paper Dealers" means such substitute commercial
paper dealer or dealers as the Trust may from time to time appoint or, in lieu
of any thereof, their respective affiliates or successors.
"Substitute Rating Agency" means a Rating Agency selected by Xxxxxxx Xxxxx
Xxxxxx Inc. or its affiliates and successors, after consultation with the Trust,
to act as the substitute Rating Agency to determine the credit ratings of the
Preferred Shares.
"Sufficient Clearing Bids" has the meaning set forth in Section
11.10(a)(xv) of these Bylaws.
"TRACERs" means traded custody receipts representing direct ownership in a
portfolio of underlying securities.
"Treasury Xxxx" means a direct obligation of the U.S. government having a
maturity at the time of issuance of 364 days or less.
"Treasury Bonds" means United States Treasury Bonds or Notes.
"Treasury Index Rate" means the average yield to maturity for actively
traded marketable U.S. Treasury fixed interest rate securities having the same
number of 30-day periods to maturity as the length of the applicable Dividend
Period, determined, to the extent necessary, by linear interpolation based upon
the yield for such securities having the next shorter and next longer number of
30-day periods to maturity treating all Dividend Periods with a length greater
than the longest maturity for such securities as having a length equal to such
longest maturity, in all cases based upon data set forth in the most recent
weekly statistical release published by the Board of Governors of the Federal
Reserve System (currently in H.15 (519)); provided, however, if the most recent
such statistical release shall not have been published during the 15 days
preceding the date of computation, the foregoing computations shall be based
upon the average of comparable data as quoted to the Trust by at least three
recognized dealers in U.S. government securities selected by the Trust.
"U.S. Government Securities" means direct obligations of the United States
or of its agencies or instrumentalities that are entitled to the full faith and
credit of the United States and that, other than Treasury Bills, provide for the
periodic payment of interest and the full payment of principal at maturity or
call for redemption.
"U.S. Treasury Securities" means direct obligations of the United States
Treasury that are entitled to the full faith and credit of the United States.
"U.S. Treasury Strips" means securities based on U.S. Treasury Securities
created through the Separate Trading of Registered Interest and Principal of
Securities program.
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"Valuation Date" means, for purposes of determining whether the Trust is
maintaining the Preferred Shares Basic Maintenance Amount, the last Business Day
of each week commencing with the Date of Original Issue.
"Volatility Factor" means 1.89.
"Voting Period" has the meaning set forth in Section 11.5(b) of these
Bylaws.
(b) The foregoing definitions of Accountant's Confirmation, Closing
Transactions, Debt Securities, Deposit Securities, Discounted Value, Fitch
Discount Factor, Fitch Eligible Assets, Fitch Exposure Period, Fitch Hedging
Transactions, Fitch Industry Classifications, Forward Commitment, Independent
Accountant, Market Value, Maximum Applicable Rate, Xxxxx'x Advance Rate, Xxxxx'x
Discount Factor, Xxxxx'x Eligible Assets, Xxxxx'x Exposure Period, Xxxxx'x
Hedging Transactions, Xxxxx'x Industry Classification, Xxxxx'x Loan Category,
1940 Act Cure Date, 1940 Act Preferred Shares Asset Coverage, Preferred Shares
Basic Maintenance Amount, Preferred Shares Basic Maintenance Cure Date,
Preferred Shares Basic Maintenance Report, Short Term Money Market Instruments,
Treasury Bonds, Valuation Date and Volatility Factor (and any terms defined
within such definitions) have been determined by the Board of Trustees of the
Trust in order to obtain a rating of "AAA" from Fitch and a rating of "Aaa" from
Xxxxx'x on the Preferred Shares on their Date of Original Issue; and the Board
of Trustees of the Trust shall have the authority, without shareholder approval,
to amend, alter or repeal from time to time the foregoing definitions (and any
terms defined within such definitions) and the restrictions and guidelines set
forth thereunder if Fitch, Xxxxx'x or any Substitute Rating Agency advises the
Trust in writing that such amendment, alteration or repeal will not adversely
affect its then current rating on the Preferred Shares.
11.2 Dividends. (a) The Holders of a particular series of Preferred Shares
shall be entitled to receive, when, as and if declared by the Board of Trustees
of the Trust, out of funds legally available therefor, cumulative dividends each
consisting of cash at the Applicable Rate and no more, payable on the respective
dates set forth below. Dividends on the shares of each series of Preferred
Shares so declared and payable shall be paid in preference to and in priority
over any dividends declared and payable on the Common Shares.
(b) (i) Cash dividends on shares of each series of Preferred Shares shall
accumulate from the Date of Original Issue and shall be payable, when, as and if
declared by the Board of Trustees of the Trust, out of funds legally available
therefor, commencing on the Initial Dividend Payment Date. Following the Initial
Dividend Payment Date for a series of Preferred Shares, dividends on that series
of Preferred Shares will be payable, at the option of the Trust, either (i) with
respect to any 7-Day Dividend Period and any Short Term Dividend Period of 35 or
fewer days, on the day next succeeding the last day thereof, or (ii) with
respect to any Short Term Dividend Period of more than 35 days and with respect
to any Long Term Dividend Period, monthly on the first Business Day of each
calendar month during such Short Term Dividend Period or Long Term Dividend
Period and on the day next succeeding the last day thereof (each such date
referred to in clause (i) or (ii) being herein referred to as a "Normal Dividend
Payment Date"), except that if such Normal Dividend Payment Date is not a
Business Day, then the Dividend Payment Date shall be the first Business Day
next succeeding such Normal Dividend
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Payment Date. Although any particular Dividend Payment Date may not occur on the
originally scheduled date because of the exceptions discussed above, the next
succeeding Dividend Payment Date, subject to such exceptions, will occur on the
next following originally scheduled date. If for any reason a Dividend Period
for a series of Preferred Shares is scheduled to begin on the same day and end
on the same day as a Dividend Period for another series of Preferred Shares,
then the last day of such Dividend Period for such other series of Preferred
Shares shall be the second Business Day next succeeding such scheduled day
unless the Trust obtains the opinion of tax counsel referred to in this
paragraph. Subject to the limitation in the next sentence, if for any reason a
Dividend Payment Date cannot be fixed as described above, then the Board of
Trustees of the Trust shall fix the Dividend Payment Date. However, no Dividend
Period of any series of Preferred Shares shall be co-extensive with any Dividend
Period of any other series of Preferred Shares unless the Trust has received an
opinion of tax counsel that having such co-extensive periods will not affect the
deductibility, for federal income tax purposes, of dividends paid on the
different series of Preferred Shares. The Board of Trustees of the Trust before
authorizing a dividend may change a Dividend Payment Date if such change does
not adversely affect the contract rights of the Holders of Preferred Shares set
forth in the Declaration of Trust or the Bylaws. The Initial Dividend Period,
7-Day Dividend Periods and Special Dividend Periods with respect to a series of
Preferred Shares are hereinafter sometimes referred to as "Dividend Periods."
Each dividend payment date determined as provided above is hereinafter referred
to as a "Dividend Payment Date."
(ii) Each dividend shall be paid to the Holders as they appear in the Stock
Register as of 12:00 noon, New York City time, on the Business Day preceding the
Dividend Payment Date. Dividends in arrears for any past Dividend Period may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to the Holders as they appear on the Stock Register on a date, not
exceeding 15 days prior to the payment date therefor, as may be fixed by the
Board of Trustees of the Trust.
(c) (i) During the period from and including the Date of Original Issue to
but excluding the Initial Dividend Payment Date for a series of Preferred Shares
(the "Initial Dividend Period"), the Applicable Rate for such series of
Preferred Shares shall be the Initial Dividend Rate. Commencing on the Initial
Dividend Payment Date for a series of Preferred Shares, the Applicable Rate on
that series for each subsequent dividend period (hereinafter referred to as a
"Subsequent Dividend Period"), which Subsequent Dividend Period shall commence
on and include a Dividend Payment Date and shall end on and include the calendar
day prior to the next Dividend Payment Date (or last Dividend Payment Date in a
Dividend Period if there is more than one Dividend Payment Date), shall be equal
to the rate per annum that results from implementation of the Auction
Procedures.
For a series of Preferred Shares, the Applicable Rate for such series for
each Dividend Period commencing during a Non-Payment Period shall be equal to
the Non-Payment Period Rate; and each Dividend Period, commencing after the
first day of and during, but not after the end of, a Non-Payment Period shall be
a 7-Day Dividend Period. Except in the case of the willful failure of the Trust
to pay a dividend on a Dividend Payment Date or to redeem any Preferred Shares
on the date set for such redemption, any amount of any dividend due on any
Dividend Payment Date (if, prior to the close of business on the second Business
Day preceding
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such Dividend Payment Date, the Trust has declared such dividend payable on such
Dividend Payment Date to the Holders of such Preferred Shares as of 12:00 noon,
New York City time, on the Business Day preceding such Dividend Payment Date) or
redemption price with respect to any Preferred Shares not paid to such Holders
when due may be paid to such Holders in the same form of funds by 12:00 noon,
New York City time, on any of the first three Business Days after such Dividend
Payment Date or due date, as the case may be, provided that such amount is
accompanied by a late charge calculated for such period of non-payment at the
Non-Payment Period Rate applied to the amount of such non-payment based on the
actual number of days comprising such period (excluding any days that would have
been Business Days but for the occurrence of any unforeseen event or unforeseen
events that caused such days not to be Business Days) divided by 365, and in
such case such period shall not constitute a Non-Payment Period; provided,
however, that the Trust shall not be required to pay any late charge if it
declares a dividend on the Dividend Payment Date or the Business Day immediately
preceding such Dividend Payment Date in accordance with clause (i) of the
definition of "Non-Payment Period" and deposits payment for such dividend as
contemplated by clause (ii)(A) of the definition of "Non-Payment Period" on or
before the second Business Day succeeding the day on which the dividend was
declared. In the case of a willful failure of the Trust to pay a dividend on a
Dividend Payment Date or to redeem any Preferred Shares on the date set for such
redemption, the preceding sentence shall not apply and the Applicable Rate for
the Dividend Period commencing during the Non-Payment Period resulting from such
failure shall be the Non-Payment Period Rate. For the purposes of the foregoing,
payment to a person in same-day funds on any Business Day at any time shall be
considered equivalent to payment to such person in New York Clearing House
(next-day) funds at the same time on the preceding Business Day, and any payment
made after 12:00 noon, New York City time, on any Business Day shall be
considered to have been made instead in the same form of funds and to the same
person before 12:00 noon, New York City time, on the next Business Day.
(ii) The amount of cash dividends per share of any series of Preferred
Shares payable (if declared) on the Initial Dividend Payment Date, each 7-Day
Dividend Period and each Dividend Payment Date of each Short Term Dividend
Period shall be computed by multiplying the Applicable Rate for such Dividend
Period by a fraction, the numerator of which will be the number of days in such
Dividend Period or part thereof that such share was outstanding and the
denominator of which will be 365, multiplying the amount so obtained by $25,000,
and rounding the amount so obtained to the nearest cent. During any Long Term
Dividend Period, the amount of cash dividends per share of a series of Preferred
Shares payable (if declared) on any Dividend Payment Date shall be computed by
multiplying the Applicable Rate for such Dividend Period by a fraction, the
numerator of which will be such number of days in such part of such Dividend
Period that such share was outstanding and for which dividends are payable on
such Dividend Payment Date and the denominator of which will be 360, multiplying
the amount so obtained by $25,000, and rounding the amount so obtained to the
nearest cent.
(iii) The Trust may, at its sole option and to the extent permitted by law,
by telephonic and written notice (a "Request for Special Dividend Period") to
the Auction Agent and to each Broker-Dealer, request that the next succeeding
Dividend Period for a series of Preferred Shares be a number of days (other than
seven), evenly divisible by seven and not fewer than fourteen nor more than 364
in the case of a Short Term Dividend Period or one whole year or more but
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not greater than five years in the case of a Long Term Dividend Period,
specified in such notice, provided that the Trust may not give a Request for
Special Dividend Period for a Dividend Period of greater than 28 days (and any
such request shall be null and void) unless, for any Auction occurring after the
initial Auction, Sufficient Clearing Bids were made in the last occurring
Auction and unless full cumulative dividends and any amounts due with respect to
redemptions have been paid in full. Such Request for Special Dividend Period, in
the case of a Short Term Dividend Period, shall be given on or prior to the
second Business Day but not more than seven Business Days prior to an Auction
Date for a series of Preferred Shares and, in the case of a Long Term Dividend
Period, shall be given on or prior to the second Business Day but not more than
28 days prior to an Auction Date for a series of Preferred Shares. Upon
receiving such Request for Special Dividend Period, the Broker-Dealer(s) shall
jointly determine the Optional Redemption Price of the Preferred Shares during
such Special Dividend Period and the Specific Redemption Provisions and shall
give the Trust and the Auction Agent written notice (a "Response") of such
determination by no later than the second Business Day prior to such Auction
Date. In making such determination the Broker-Dealer(s) will consider (1)
existing short-term and long-term market rates and indices of such short-term
and long-term rates, (2) existing market supply and demand for short-term and
long-term securities, (3) existing yield curves for short-term and long-term
securities comparable to the Preferred Shares, (4) industry and financial
conditions which may affect the Preferred Shares, (5) the investment objectives
of the Trust, and (6) the Dividend Periods and dividend rates at which current
and potential beneficial holders of the Preferred Shares would remain or become
beneficial holders. After providing the Request for Special Dividend Period to
the Auction Agent and each Broker-Dealer as set forth above, the Trust may by no
later than the second Business Day prior to such Auction Date give a notice (a
"Notice of Special Dividend Period") to the Auction Agent, the Securities
Depository and each Broker-Dealer which notice will specify (i) the duration of
the Special Dividend Period, (ii) the Optional Redemption Price as specified in
the related Response and (iii) the Specific Redemption Provisions, if any, as
specified in the related Response. The Trust also shall provide a copy of such
Notice of Special Dividend Period to Fitch, Xxxxx'x and any Substitute Rating
Agency. The Trust shall not give a Notice of Special Dividend Period and, if the
Trust has given a Notice of Special Dividend Period, the Trust is required to
give telephonic and written notice of its revocation (a "Notice of Revocation")
to the Auction Agent, each Broker-Dealer, and the Securities Depository on or
prior to the Business Day prior to the relevant Auction Date if (x) either the
1940 Act Preferred Shares Asset Coverage is not satisfied or the Trust shall
fail to maintain Fitch Eligible Assets and Xxxxx'x Eligible Assets each with an
aggregate Discounted Value at least equal to the Preferred Shares Basic
Maintenance Amount, on each of the two Valuation Dates immediately preceding the
Business Day prior to the relevant Auction Date on an actual basis and on a pro
forma basis giving effect to the proposed Special Dividend Period (using as a
pro forma dividend rate with respect to such Special Dividend Period the
dividend rate which the Broker-Dealers shall advise the Trust is an
approximately equal rate for securities similar to the Preferred Shares with an
equal dividend period) or (y) sufficient funds for the payment of dividends
payable on the immediately succeeding Dividend Payment Date have not been
irrevocably deposited with the Auction Agent by the close of business on the
third Business Day preceding the Auction Date immediately preceding such
Dividend Payment Date. The Trust also shall provide a copy of such Notice of
Revocation to Fitch, Xxxxx'x and any Substitute Rating Agency. If the Trust is
prohibited from giving a
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Notice of Special Dividend Period as a result of any of the factors enumerated
in clause (x) or (y) above or if the Trust gives a Notice of Revocation with
respect to a Notice of Special Dividend Period for any series of Preferred
Shares, the next succeeding Dividend Period will be a 7-Day Dividend Period. In
addition, in the event Sufficient Clearing Bids are not made in an Auction, or
if an Auction is not held for any reason, such next succeeding Dividend Period
will be a 7-Day Dividend Period and the Trust may not again give a Notice of
Special Dividend Period for the Preferred Shares (and any such attempted notice
shall be null and void) until Sufficient Clearing Bids have been made in an
Auction with respect to a 7-Day Dividend Period. If an Auction is not held
because an unforeseen event or unforeseen events cause a day that otherwise
would have been a Dividend Payment Date or an Auction Date not to be a Business
Day, then the length of the Dividend Period relating to such Dividend Payment
Date shall be extended by seven days (or a multiple thereof if necessary because
of such unforeseen event or events) (an "Extension Period"), the Applicable Rate
for such Extension Period shall be the Applicable Rate for the Dividend Period
so extended and the Dividend Payment Date for such Dividend Period shall be the
first Business Day next succeeding the end of such Extension Period.
(d) (i) Holders shall not be entitled to any dividends, whether payable in
cash, property or Preferred Shares, in excess of full cumulative dividends as
herein provided. Except for the late charge payable pursuant to Section
11.2(c)(i) hereof, no interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment on the Preferred Shares that may be
in arrears.
(ii) For so long as any Preferred Share is Outstanding, the Trust shall not
declare, pay or set apart for payment any dividend or other distribution (other
than a dividend or distribution paid in shares of, or options, warrants or
rights to subscribe for or purchase, Common Shares or other shares of beneficial
interest, if any, ranking junior to the Preferred Shares as to dividends or upon
liquidation) in respect of the Common Shares or any other shares of beneficial
interest of the Trust ranking junior to or on a parity with the Preferred Shares
as to dividends or upon liquidation, or call for redemption, redeem, purchase or
otherwise acquire for consideration any Common Shares or any other such junior
shares (except by conversion into or exchange for shares of the Trust ranking
junior to the Preferred Shares as to dividends and upon liquidation) or any
other such Parity Shares (except by conversion into or exchange for stock of the
Trust ranking junior to or on a parity with the Preferred Shares as to dividends
and upon liquidation), unless (A) immediately after such transaction, the Trust
shall have Fitch Eligible Assets and Xxxxx'x Eligible Assets each with an
aggregate Discounted Value equal to or greater than the Preferred Shares Basic
Maintenance Amount and the Trust shall maintain the 1940 Act Preferred Shares
Asset Coverage, (B) full cumulative dividends on Preferred Shares due on or
prior to the date of the transaction have been declared and paid or shall have
been declared and sufficient funds for the payment thereof deposited with the
Auction Agent and (C) the Trust has redeemed the full number of Preferred Shares
required to be redeemed by any provision for mandatory redemption contained
herein.
(e) Each dividend shall consist of cash at the Applicable Rate.
(f) No fractional Preferred Shares shall be issued.
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(g) Solely for purposes of the proviso in clause (i) under the definition
of "Non-Payment Period," the second parenthetical in the second sentence of the
second paragraph of Section 11.2(c)(i) of these Bylaws and the last sentence of
Section 11.2(c)(iii) of these Bylaws, any day on which banks in New York City
generally are closed, for any reason, while the New York Stock Exchange remains
open for trading and any day which otherwise would be a Business Day as defined
in these Bylaws on which the Auction Agent is closed for business, for any
reason, shall be considered a day which is not a Business Day.
11.3 Liquidation Rights. Upon any liquidation, dissolution or winding up of
the Trust, whether voluntary or involuntary, the Holders shall be entitled to
receive, out of the assets of the Trust available for distribution to
shareholders, before any distribution or payment is made upon any Common Shares
or any other shares of beneficial interest ranking junior in right of payment
upon liquidation to the Preferred Shares, the sum of $25,000 per share plus
accumulated but unpaid dividends (whether or not earned or declared) thereon to
the date of distribution, and after such payment the Holders will be entitled to
no other payments. If upon any liquidation, dissolution or winding up of the
Trust, the amounts payable with respect to the Preferred Shares and any other
Outstanding class or series of preferred shares of beneficial interest of the
Trust ranking on a parity with the Preferred Shares as to payment upon
liquidation are not paid in full, the Holders and the holders of such other
class or series will share ratably in any such distribution of assets in
proportion to the respective preferential amounts to which they are entitled.
After payment of the full amount of the liquidating distribution to which they
are entitled, the Holders will not be entitled to any further participation in
any distribution of assets by the Trust. A consolidation, merger or statutory
share exchange of the Trust with or into any other Trust or entity or a sale,
whether for cash, shares of stock, securities or properties, of all or
substantially all or any part of the assets of the Trust shall not be deemed or
construed to be a liquidation, dissolution or winding up of the Trust.
11.4 Redemption. (a) Preferred Shares shall be redeemable by the Trust as
provided below:
(i) To the extent permitted under the 1940 Act and Massachusetts law, upon
giving a Notice of Redemption, the Trust at its option may redeem shares of any
series of Preferred Shares, in whole or in part, out of funds legally available
therefor, at the Optional Redemption Price per share, on any Dividend Payment
Date; provided that no Preferred Share may be redeemed at the option of the
Trust during (A) the Initial Dividend Period with respect to a series of shares
or (B) a Non-Call Period to which such share is subject.
(ii) The Trust shall redeem, out of funds legally available therefor, at
the Mandatory Redemption Price per share, Preferred Shares to the extent
permitted under the 1940 Act and Massachusetts law, on a date fixed by the Board
of Trustees of the Trust, if the Trust fails to maintain Fitch Eligible Assets
and Xxxxx'x Eligible Assets each with an aggregate Discounted Value equal to or
greater than the Preferred Shares Basic Maintenance Amount as provided in
Section 11.7(a) or to satisfy the 1940 Act Preferred Shares Asset Coverage as
provided in Section 11.6 and such failure is not cured on or before the
Preferred Shares Basic Maintenance Cure Date or the 1940 Act Cure Date (herein
collectively referred to as a "Cure Date"), as the case may be. The number of
Preferred Shares to be redeemed shall be equal to the lesser of (i)
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the minimum number of Preferred Shares the redemption of which, if deemed to
have occurred immediately prior to the opening of business on the Cure Date,
together with all other preferred shares of beneficial interest of the Trust
subject to redemption or retirement, would result in the Trust having Fitch
Eligible Assets and Xxxxx'x Eligible Assets each with an aggregate Discounted
Value equal to or greater than the Preferred Shares Basic Maintenance Amount or
satisfaction of the 1940 Act Preferred Shares Asset Coverage, as the case may
be, on such Cure Date (provided that, if there is no such minimum number of
Preferred Shares and other preferred shares of beneficial interest of the Trust
the redemption of which would have such result, all Preferred Shares and other
preferred shares of beneficial interest of the Trust then Outstanding shall be
redeemed), and (ii) the maximum number of Preferred Shares, together with all
other preferred shares of beneficial interest of the Trust subject to redemption
or retirement, that can be redeemed out of funds expected to be legally
available therefor on such redemption date. In determining the number of
Preferred Shares required to be redeemed in accordance with the foregoing, the
Trust shall allocate the number required to be redeemed which would result in
the Trust having Fitch Eligible Assets and Xxxxx'x Eligible Assets each with an
aggregate Discounted Value equal to or greater than the Preferred Shares Basic
Maintenance Amount or satisfaction of the 1940 Act Preferred Shares Asset
Coverage, as the case may be, pro rata among Preferred Shares of all series and
other preferred shares of beneficial interest of the Trust subject to redemption
pursuant to provisions similar to those contained in this Section 11.4(a)(ii);
provided that Preferred Shares which may not be redeemed at the option of the
Trust due to the designation of a Non-Call Period applicable to such shares (A)
will be subject to mandatory redemption only to the extent that other shares are
not available to satisfy the number of shares required to be redeemed and (B)
will be selected for redemption in an ascending order of outstanding number of
days in the Non-Call Period (with shares with the lowest number of days to be
redeemed first) and by lot in the event of shares having an equal number of days
in such Non-Call Period. The Trust shall effect such redemption on a Business
Day which is not later than 35 days after such Cure Date, except that if the
Trust does not have funds legally available for the redemption of all of the
required number of Preferred Shares and other preferred shares of beneficial
interest of the Trust which are subject to mandatory redemption or the Trust
otherwise is unable to effect such redemption on or prior to 35 days after such
Cure Date, the Trust shall redeem those Preferred Shares which it is unable to
redeem on the earliest practicable date on which it is able to effect such
redemption out of funds legally available therefor.
(b) Notwithstanding any other provision of this Section 11.4, no Preferred
Shares may be redeemed pursuant to Section 11.4(a)(i) of these Bylaws (i) unless
all dividends in arrears on all remaining outstanding Parity Shares shall have
been or are being contemporaneously paid or declared and set apart for payment
and (ii) if redemption thereof would result in the Trust's failure to maintain
Fitch Eligible Assets or Xxxxx'x Eligible Assets with an aggregate Discounted
Value equal to or greater than the Preferred Shares Basic Maintenance Amount. In
the event that less than all the outstanding shares of a series of Preferred
Shares are to be redeemed and there is more than one Holder, the shares of that
series of Preferred Shares to be redeemed shall be selected by lot or such other
method as the Trust shall deem fair and equitable.
(c) Whenever Preferred Shares are to be redeemed, the Trust, not less than
17 nor more than 30 days prior to the date fixed for redemption, shall mail a
notice ("Notice of Redemption") by first-class mail, postage prepaid, to each
Holder of Preferred Shares to be redeemed and to the
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Auction Agent. The Notice of Redemption shall set forth (i) the redemption date,
(ii) the amount of the redemption price, (iii) the aggregate number of Preferred
Shares of such series to be redeemed, (iv) the place or places where Preferred
Shares of such series are to be surrendered for payment of the redemption price,
(v) a statement that dividends on the shares to be redeemed shall cease to
accumulate on such redemption date and (vi) the provision of these Bylaws
pursuant to which such shares are being redeemed. No defect in the Notice of
Redemption or in the mailing or publication thereof shall affect the validity of
the redemption proceedings, except as required by applicable law.
If the Notice of Redemption shall have been given as aforesaid and,
concurrently or thereafter, the Trust shall have deposited in trust with the
Auction Agent, or segregated in an account at the Trust's custodian bank for the
benefit of the Auction Agent, Deposit Securities (with a right of substitution)
having an aggregate Discounted Value equal to the redemption payment for the
Preferred Shares as to which such Notice of Redemption has been given with
irrevocable instructions and authority to pay the redemption price to the
Holders of such shares, then upon the date of such deposit or, if no such
deposit is made, then upon such date fixed for redemption (unless the Trust
shall default in making the redemption payment), all rights (including without
limitation voting rights) of the Holders of such shares as shareholders of the
Trust by reason of the ownership of such shares will cease and terminate (except
their right to receive the redemption price in respect thereof, but without
interest), and such shares shall no longer be deemed Outstanding. The Trust
shall be entitled to receive, from time to time, from the Auction Agent the
interest, if any, on such Deposit Securities deposited with it and the Holders
of any shares so redeemed shall have no claim to any of such interest. In case
the Holder of any shares so called for redemption shall not claim the redemption
payment for his shares within one year after the date of redemption, the Auction
Agent shall, upon demand, pay over to the Trust such amount remaining on deposit
and the Auction Agent shall thereupon be relieved of all responsibility to the
Holder of such shares called for redemption and such Holder thereafter shall
look only to the Trust for the redemption payment.
11.5 Voting Rights. (a) General. Except as otherwise provided in the
Declaration of Trust or Bylaws, each Holder of Preferred Shares shall be
entitled to one vote for each share held on each matter submitted to a vote of
shareholders of the Trust, and the holders of preferred shares of beneficial
interest of the Trust, including Preferred Shares, and of Common Shares shall
vote together as a single class; provided that the holders of preferred shares
of beneficial interest of the Trust, including Preferred Shares, shall be
entitled, as a class, to the exclusion of the holders of all other securities
and classes of shares of beneficial interest of the Trust, to elect two trustees
of the Trust. Subject to Section 11.5(b) hereof, the holders of shares of
beneficial interest of the Trust, including the holders of preferred shares of
beneficial interest of the Trust, including Preferred Shares, voting as a single
class, shall elect the balance of the trustees.
(b) Right to Elect Majority of Board of Trustees. During any period in
which any one or more of the conditions described below shall exist (such period
being referred to herein as a "Voting Period"), the number of trustees
constituting the Board of Trustees of the Trust shall be automatically increased
by the smallest number that, when added to the two trustees elected exclusively
by the holders of preferred shares of beneficial interest of the Trust, would
constitute a majority of the Board of Trustees of the Trust as so increased by
such smallest number; and the
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holders of preferred shares of beneficial interest of the Trust shall be
entitled, voting separately as one class (to the exclusion of the holders of all
other securities and classes of shares of beneficial interest of the Trust), to
elect such smallest number of additional trustees, together with the two
trustees that such holders are in any event entitled to elect.
A Voting Period shall commence:
(i) if at any time accumulated dividends (whether or not earned or
declared, and whether or not funds are then legally available in an amount
sufficient therefor) on the outstanding Preferred Shares equal to at least two
full years' dividends shall be due and unpaid and sufficient cash or specified
securities shall not have been deposited with the Auction Agent for the payment
of such accumulated dividends; or
(ii) if at any time holders of any preferred shares of beneficial interest
of the Trust, including the holders of Preferred Shares, are entitled to elect a
majority of the trustees of the Trust under the 1940 Act.
Upon the termination of a Voting Period, the voting rights described in
this Section 11.5(b) shall cease, subject always, however, to the reverting of
such voting rights in the Holders upon the further occurrence of any of the
events described in Section 11.5(b).
(c) Right to Vote with Respect to Certain Other Matters. So long as any
Preferred Shares are outstanding, the Trust shall not, without the affirmative
vote of the holders of a majority of the Preferred Shares Outstanding at the
time, voting separately as one class: (i) authorize, create or issue any class
or series of shares of beneficial interest ranking prior to the Preferred Shares
or any other series of preferred shares of beneficial interest of the Trust with
respect to payment of dividends or the distribution of assets on liquidation;
provided, however, that no vote is required to authorize the issuance of another
series of Preferred Shares or another class of preferred shares of beneficial
interest of the Trust that is substantially identical in all respects to the
Preferred Shares, or (ii) amend, alter or repeal the provisions of the
Declaration of Trust or Bylaws, whether by merger, consolidation or otherwise,
so as to adversely affect any of the contract rights expressly set forth in the
Declaration of Trust or Bylaws of holders of Preferred Shares or any other
preferred shares of beneficial interest of the Trust. To the extent permitted
under the 1940 Act, in the event shares of more than one series of Preferred
Shares are outstanding, the Trust shall not approve any of the actions set forth
in clause (i) or (ii) which adversely affects the contract rights expressly set
forth in the Declaration of Trust or Bylaws of a Holder of a series of Preferred
Shares differently than those of a Holder of any other series of Preferred
Shares without the affirmative vote of the holders of at least a majority of the
Preferred Shares of each series adversely affected and Outstanding at such time
(each such adversely affected series voting separately as a class). Unless a
higher percentage is provided for under the Declaration of Trust or these
Bylaws, the affirmative vote of the holders of a majority of the outstanding
preferred shares of beneficial interest of the Trust, including Preferred
Shares, voting together as a single class, will be required to approve any plan
of reorganization (including bankruptcy proceedings) adversely affecting such
shares or any action requiring a vote of security holders under Section 13(a) of
the 1940 Act. To the extent permitted under the 1940 Act, in the event shares of
more than one series of Preferred Shares are outstanding, with respect
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to any action requiring Shareholder approval pursuant to the operation of
Section 2 or Section 3 of Article V of the Declaration of Trust, the affirmative
vote of at least seventy-five percent of the Preferred Shares of each series
Outstanding at such time (each such series voting separately as a class) shall
also be required. The class (and, where applicable, series) vote of holders of
preferred shares of beneficial interest of the Trust, including Preferred
Shares, described above will in each case be in addition to a separate vote of
the requisite percentage of Common Shares and preferred shares of beneficial
interest of the Trust, including Preferred Shares, voting together as a single
class necessary to authorize the action in question.
(d) Voting Procedures.
(i) As soon as practicable after the accrual of any right of the holders of
preferred shares of beneficial interest of the Trust to elect additional
trustees as described in Section 11.5(b) above, the Trust shall call a special
meeting of such holders and instruct the Auction Agent and any other registrar
for preferred shares of beneficial interest of the Trust other than Preferred
Shares to mail a notice of such special meeting to such holders, such meeting to
be held not less than 10 nor more than 20 days after the date of mailing of such
notice. If the Trust fails to send such notice to the Auction Agent and any
other applicable registrar, or if the Trust does not call such a special
meeting, it may be called by any such holder on like notice. The record date for
determining the holders entitled to notice of and to vote at such special
meeting shall be the close of business on the fifth Business Day preceding the
day on which such notice is mailed. At any such special meeting and at each
meeting held during a Voting Period, such holders, voting together as a class
(to the exclusion of the holders of all other securities and classes of shares
of beneficial interest of the Trust), shall be entitled to elect the number of
directors prescribed in Section 11.5(b) above. At any such meeting or
adjournment thereof in the absence of a quorum, a majority of such holders
present in person or by proxy shall have the power to adjourn the meeting
without notice, other than by an announcement at the meeting, to a date not more
than 120 days after the original record date.
(ii) Except as otherwise required by applicable law, for purposes of
determining any rights of the Holders to vote on any matter or the number of
shares required to constitute a quorum, whether such right is created by these
Bylaws, by the other provisions of the Declaration of Trust, by statute or
otherwise, a Preferred Share which is not Outstanding shall not be counted.
(iii) The terms of office of all persons who are trustees of the Trust at
the time of a special meeting of Holders and holders of other preferred shares
of beneficial interest of the Trust to elect trustees shall continue,
notwithstanding the election at such meeting by the Holders and such other
holders of the number of trustees that they are entitled to elect, and the
persons so elected by the Holders and such other holders, together with the two
incumbent trustees elected by the Holders and such other holders of preferred
shares of beneficial interest of the Trust and the remaining incumbent trustees
elected by the holders of the Common Shares and preferred shares of beneficial
interest of the Trust, shall constitute the duly elected trustees of the Trust.
(iv) Simultaneously with the expiration of a Voting Period, the terms of
office of the additional trustees elected by the Holders and holders of other
preferred shares of beneficial
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interest of the Trust pursuant to Section 11.5(b) above shall terminate, the
remaining trustees shall constitute the trustees of the Trust and the voting
rights of the Holders and such other holders to elect additional trustees
pursuant to Section 11.5(b) above shall cease, subject to the provisions of the
last sentence of Section 11.5(b).
(e) Exclusive Remedy. Unless otherwise required by law, the Holders shall
not have any rights or preferences other than those specifically set forth
herein. The Holders shall have no preemptive rights or rights to cumulative
voting. In the event that the Trust fails to pay any dividends on the Preferred
Shares, the exclusive remedy of the Holders shall be the right to vote for
trustees pursuant to the provisions of this Section 11.5.
11.6 1940 Act Preferred Shares Asset Coverage. The Trust shall maintain, as
of the last Business Day of each month in which any Preferred Shares are
outstanding, the 1940 Act Preferred Shares Asset Coverage.
11.7 Preferred Shares Basic Maintenance Amount. (a) The Trust shall
maintain, on each Valuation Date, and shall verify to its satisfaction that it
is maintaining on such Valuation Date, Fitch Eligible Assets and Xxxxx'x
Eligible Assets each having an aggregate Discounted Value equal to or greater
than the Preferred Shares Basic Maintenance Amount. Upon any failure to maintain
the required Discounted Value, the Trust will use its best efforts to alter the
composition of its portfolio to retain a Discounted Value of both Fitch Eligible
Assets and Xxxxx'x Eligible Assets at least equal to the Preferred Shares Basic
Maintenance Amount on or prior to the Preferred Shares Basic Maintenance Cure
Date.
(b) On or before 5:00 p.m., New York City time, on the third Business Day
after a Valuation Date on which the Trust fails to satisfy the Preferred Shares
Basic Maintenance Amount, the Trust shall complete and deliver to (i) the
Auction Agent and (ii) Fitch, Xxxxx'x and/or any Rating Agency then rating the
Preferred Shares the Discounted Value of whose Eligible Assets fails to satisfy
the Preferred Shares Basic Maintenance Amount, as applicable, a complete
Preferred Shares Basic Maintenance Report as of the date of such failure, which
will be deemed to have been delivered to such recipient if the recipient
receives a copy or telecopy, telex or other electronic transcription thereof and
on the same day the Trust mails to the recipient for delivery on the next
Business Day the complete Preferred Shares Basic Maintenance Report. The Trust
will deliver a Preferred Shares Basic Maintenance Report to each applicable
Rating Agency on or before 5:00 p.m., New York City time, on the third Business
Day after a Valuation Date on which the Trust cures its failure to maintain
Eligible Assets of each applicable Rating Agency with an aggregate Discounted
Value equal to or greater than the Preferred Shares Basic Maintenance Amount or
on which the Trust fails to maintain Eligible Assets of each applicable Rating
Agency with an aggregate Discounted Value which exceeds the Preferred Shares
Basic Maintenance Amount by 5% or more. The Trust will also deliver a Preferred
Shares Basic Maintenance Report to the Auction Agent, Fitch and Xxxxx'x as of
each Quarterly Valuation Date on or before the third Business Day after such
date. Additionally, on or before 5:00 p.m., New York City time, on the third
Business Day after the first day of a Special Dividend Period, the Trust will
deliver a Preferred Shares Basic Maintenance Report to the Auction Agent, Fitch
and Xxxxx'x. The Trust shall also provide Fitch or Xxxxx'x with a Preferred
Shares Basic Maintenance Report when specifically requested by Fitch or Xxxxx'x,
respectively.
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(c) Within ten Business Days after the date of delivery of a Preferred
Shares Basic Maintenance Report in accordance with Section 11.7(b) above
relating to a Quarterly Valuation Date (except as described in the following
sentence), the Independent Accountant will confirm in writing to the Auction
Agent and Xxxxx'x, (i) the mathematical accuracy of the calculations reflected
in such Report, (ii) that, in such Report, the Trust correctly determined the
assets of the Trust which constitute Fitch Eligible Assets and Xxxxx'x Eligible
Assets at such Quarterly Valuation Date in accordance with these Bylaws, (iii)
that, in such Report, the Trust determined whether the Trust had, at such
Quarterly Valuation Date in accordance with these Bylaws, Fitch Eligible Assets
and Xxxxx'x Eligible Assets each with an aggregate Discounted Value at least
equal to the Preferred Shares Basic Maintenance Amount, (iv) with respect to the
S & P ratings on portfolio securities of the Trust, the issuer name, issue size
and coupon rate, if any, listed in such Report, that the Independent Accountant
has verified such information in reference to third-party information sources
(such as Reuters or Bloomberg) and the Independent Accountant shall provide a
listing in its letter of any differences, (v) with respect to the Fitch ratings
on portfolio securities of the Trust, the issuer name, issue size and coupon
rate, if any, listed in such Report, that the Independent Accountant has
verified such information in reference to third-party information sources (such
as Reuters or Bloomberg) and the Independent Accountant shall provide a listing
in its letter of any differences, (vi) with respect to the Xxxxx'x ratings on
portfolio securities of the Trust, the issuer name, issue size and coupon rate,
if any, listed in such Report, that the Independent Accountant has verified such
information in reference to third-party information sources (such as Reuters or
Bloomberg) and the Independent Accountant shall provide a listing in its letter
of any differences and (vii) that the Independent Accountant has compared the
prices in such Report to the prices in the applicable pricing appraisal report
provided by the custodian of the Trust's assets to the Trust for purposes of
valuing securities in the Trust's portfolio and verified that such information
agrees (in the event such information does not agree, the Independent Accountant
will provide a listing in its letter of such differences) (such confirmation is
herein called the "Accountant's Confirmation"). Notwithstanding the foregoing
sentence, the Independent Accountant will provide the confirmation described in
the foregoing sentence with respect to Preferred Shares Basic Maintenance
Reports delivered pursuant to the third sentence of Section 11.7(b) above only
for such Preferred Shares Basic Maintenance Reports relating to the last fiscal
quarter of each fiscal year.
(d) Within ten Business Days after the date of delivery to the Auction
Agent and Xxxxx'x of a Preferred Shares Basic Maintenance Report in accordance
with Section 11.7(b) above relating to the Preferred Shares Basic Maintenance
Cure Date with respect to such failure, the Trust shall cause the Independent
Accountant to provide to the Auction Agent and Xxxxx'x an Accountant's
Confirmation as to such Preferred Shares Basic Maintenance Report.
(e) If any Accountant's Confirmation delivered pursuant to subparagraph (c)
or (d) of this Section 11.7 shows that an error was made in the Preferred Shares
Basic Maintenance Report for a particular Valuation Date for which such
Accountant's Confirmation was required to be delivered, or shows that a lower
aggregate Discounted Value for the aggregate of all Fitch Eligible Assets or
Xxxxx'x Eligible Assets of the Trust was determined by the Independent
Accountant, the calculation or determination made by such Independent Accountant
shall be final and conclusive and shall be binding on the Trust, and the Trust
shall accordingly amend and
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deliver the Preferred Shares Basic Maintenance Report to the Auction Agent and
each applicable Rating Agency promptly following receipt by the Trust of such
Accountant's Confirmation.
(f) On or before 5:00 p.m., New York City time, on the first Business Day
after the Date of Original Issue of the Preferred Shares, the Trust will
complete and deliver to Fitch and Xxxxx'x a Preferred Shares Basic Maintenance
Report as of the close of business on such Date of Original Issue. Within five
Business Days of such Date of Original Issue, the Independent Accountant will
confirm in writing to Fitch and Xxxxx'x (i) the mathematical accuracy of the
calculations reflected in such Report and (ii) that the aggregate Discounted
Value of Fitch Eligible Assets and Xxxxx'x Eligible Assets reflected thereon
equals or exceeds the Preferred Shares Basic Maintenance Amount reflected
thereon. Also, on or before 5:00 p.m., New York City time, on the first Business
Day after Common Shares are repurchased by the Trust, the Trust will complete
and deliver to Fitch and Xxxxx'x a Preferred Shares Basic Maintenance Report as
of the close of business on such date that Common Shares are repurchased.
11.8 Certain Other Restrictions. (a) For so long as any Preferred Shares
are rated by Xxxxx'x, the Trust will not buy or sell financial futures
contracts, write, purchase or sell call options on financial futures contracts
or purchase put options on financial futures contracts or write call options
(except covered call options) on portfolio securities unless it receives written
confirmation from Xxxxx'x that engaging in such transactions would not impair
the ratings then assigned to the Preferred Shares by Xxxxx'x, except that the
Trust may purchase or sell exchange-traded financial futures contracts based on
any index approved by Xxxxx'x or Treasury Bonds, and purchase, write or sell
exchange-traded put options on such financial futures contracts, any index
approved by Xxxxx'x or Treasury Bonds, and purchase, write or sell
exchange-traded call options on such financial futures contracts, any index
approved by Xxxxx'x or Treasury Bonds (collectively "Xxxxx'x Hedging
Transactions"), subject to the following limitations:
(i) the Trust will not engage in any Xxxxx'x Hedging Transaction based
on any index approved by Xxxxx'x (other than transactions that terminate a
futures contract or option held by the Trust by the Trust's taking the
opposite position thereto ("Closing Transactions")) that would cause the
Trust at the time of such transaction to own or have sold:
(A) outstanding financial futures contracts based on such index
exceeding in number 10% of the average number of daily traded
financial futures contracts based on such index in the 30 days
preceding the time of effecting such transaction as reported by The
Wall Street Journal; or
(B) outstanding financial futures contracts based on any index
approved by Xxxxx'x having a Market Value exceeding 50% of the Market
Value of all portfolio securities of the Trust constituting Xxxxx'x
Eligible Assets owned by the Trust (other than Xxxxx'x Eligible Assets
already subject to a Xxxxx'x Hedging Transaction);
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(ii) the Trust will not engage in any Xxxxx'x Hedging Transaction
based on Treasury Bonds (other than Closing Transactions) that would cause
the Trust at the time of such transaction to own or have sold:
(A) outstanding financial futures contracts based on Treasury
Bonds with such contracts having an aggregate Market Value exceeding
20% of the aggregate Market Value of Xxxxx'x Eligible Assets owned by
the Trust and rated Aa by Xxxxx'x (or, if not rated by Xxxxx'x but
rated by S & P, rated AAA by S & P); or
(B) outstanding financial futures contracts based on Treasury
Bonds with such contracts having an aggregate Market Value exceeding
80% of the aggregate Market Value of all portfolio securities of the
Trust constituting Xxxxx'x Eligible Assets owned by the Trust (other
than Xxxxx'x Eligible Assets already subject to a Xxxxx'x Hedging
Transaction) and rated Baa or A by Xxxxx'x (or, if not rated by
Xxxxx'x but rated by S & P, rated A or AA by S & P)
(for purposes of the foregoing clauses (i) and (ii), the Trust shall be
deemed to own the number of financial futures contracts that underlie any
outstanding options written by the Trust);
(iii) the Trust will engage in Closing Transactions to close out any
outstanding financial futures contract based on any index approved by
Xxxxx'x if the amount of open interest in such index as reported by The
Wall Street Journal is less than an amount to be mutually determined by
Xxxxx'x and the Trust;
(iv) the Trust will engage in a Closing Transaction to close out any
outstanding financial futures contract by no later than the fifth Business
Day of the month in which such contract expires and will engage in a
Closing Transaction to close out any outstanding option on a financial
futures contract by no later than the first Business Day of the month in
which such option expires;
(v) the Trust will engage in Xxxxx'x Hedging Transactions only with
respect to financial futures contracts or options thereon having the next
settlement date or the settlement date immediately thereafter;
(vi) the Trust (A) will not engage in options and futures transactions
for leveraging or speculative purposes, except that an option or futures
transaction shall not for these purposes be considered a leveraged position
or speculative so long as the combination of the Fund's non-derivative
positions, together with the relevant option or futures transaction,
produces a synthetic investment position, or the same economic result, that
could be achieved by an investment, consistent with the Fund's investment
objectives and policies, in a security that is not an option or futures
transaction, and (B) will not write any call options or sell any financial
futures contracts for the purpose of hedging the anticipated purchase of an
asset prior to completion of such purchase; and
(vii) the Trust will not enter into an option or futures transaction
unless, after giving effect thereto, the Trust would continue to have
Xxxxx'x Eligible Assets with an
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aggregate Discounted Value equal to or greater than the Preferred Shares
Basic Maintenance Amount.
(b) For purposes of determining whether the Trust has Xxxxx'x Eligible
Assets with an aggregate Discounted Value that equals or exceeds the Preferred
Shares Basic Maintenance Amount, the Discounted Value of Xxxxx'x Eligible Assets
that the Trust is obligated to deliver or receive pursuant to an outstanding
futures contract or option shall be as follows:
(i) assets subject to call options written by the Trust that are
either exchange-traded and "readily reversible" or that expire within 49
days after the date as of which such valuation is made shall be valued at
the lesser of (A) Discounted Value and (B) the exercise price of the call
option written by the Trust;
(ii) assets subject to call options written by the Trust not meeting
the requirements of clause (i) of this sentence shall have no value;
(iii) assets subject to put options written by the Trust shall be
valued at the lesser of (A) the exercise price and (B) the Discounted Value
of the assets subject to the option;
(iv) futures contracts shall be valued at the lesser of (A) settlement
price and (B) the Discounted Value of the assets subject to the futures
contract, provided that, if a contract matures within 49 days after the
date as of which such valuation is made, where the Trust is the seller the
contract may be valued at the settlement price and where the Trust is the
buyer the contract may be valued at the Discounted Value of the assets
subject to the futures contract; and
(v) where delivery may be made to the Trust with any security of a
class of securities, the Trust shall assume that it will take delivery of
the security with the lowest Discounted Value.
(c) For purposes of determining whether the Trust has Xxxxx'x Eligible
Assets with an aggregate Discounted Value that equals or exceeds the Preferred
Shares Basic Maintenance Amount, the following amounts shall be subtracted from
the aggregate Discounted Value of the Xxxxx'x Eligible Assets held by the Trust
to the extent the relevant asset is a Xxxxx'x Eligible Asset:
(i) 10% of the exercise price of a written call option;
(ii) the exercise price of any written put option;
(iii) where the Trust is the seller under a financial futures
contract, 10% of the settlement price of the financial futures contract;
(iv) where the Trust is the purchaser under a financial futures
contract, any amounts payable by the Trust under such financial futures
contract;
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(v) the settlement price of the underlying financial futures contract
if the Trust writes put options on a financial futures contract; and
(vi) 105% of the Market Value of the underlying financial futures
contract if the Trust writes call options on a financial futures contract
and does not own the underlying contract.
(d) For so long as any Preferred Shares are rated by Xxxxx'x, the Trust
will not enter into any "Forward Commitment," herein defined as any contract to
purchase securities for a fixed price at a future date beyond customary
settlement time (other than such contracts that constitute Fitch Hedging
Transactions or Xxxxx'x Hedging Transactions, as applicable), except that the
Trust may enter into Forward Commitments subject to the following limitations:
(i) for each Forward Commitment, the Trust will maintain with its
custodian (A) cash, cash equivalents or short-term, fixed-income securities
rated X-0, XXX-0 xx XXXX-0 by Xxxxx'x or A-1 by S & P and maturing in one
year or less with a fair market value that equals or exceeds the amount by
which the Trust's obligations under any Forward Commitments to which it is
from time to time a party exceed obligations to the Trust arising from
securities sales by the Trust that are scheduled to settle at a future
date, or (B) long-term, fixed-income securities with a then current market
value that equals or exceeds the amount by which the Trust's obligations
under any Forward Commitments to which it is from time to time a party
exceed obligations to the Trust arising from securities sales by the Trust
that are scheduled to settle on a future date, or (C) a combination of
assets described in (A) and (B) above that in the aggregate equals or
exceeds the amount by which the Trust's obligations under any Forward
Commitments to which it is from time to time a party exceed obligations to
the Trust arising from securities sales by the Trust that are scheduled to
settle on a future date; and
(ii) the Trust will not enter into a Forward Commitment unless, after
giving effect thereto, the Trust would continue to have Xxxxx'x Eligible
Assets with an aggregate Discounted Value equal to or greater than the
Preferred Shares Basic Maintenance Amount.
For purposes of determining whether the Trust has Xxxxx'x Eligible Assets with
an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic
Maintenance Amount, the Discounted Value of all Forward Commitments to which the
Trust is a party and of all securities deliverable to the Trust pursuant to such
Forward Commitments shall be zero.
(e) For so long as any Preferred Shares are Outstanding and Fitch or
Xxxxx'x or both is rating such shares, the Trust, unless it has received written
confirmation from Fitch or Xxxxx'x or both, as applicable, that such action
would not impair the rating then assigned to the Preferred Shares by Fitch or
Xxxxx'x or both, as applicable, will not:
(i) borrow money except for the purpose of clearing transactions in
portfolio securities (which borrowings under any circumstances shall be
limited to an amount equal to 5% of the Market Value of the Trust's assets
at the time of such borrowings and
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which borrowings shall be repaid within 60 days and not be extended or
renewed and shall not cause the aggregate Discounted Value of Fitch
Eligible Assets or Xxxxx'x Eligible Assets, as applicable, to be less than
the Preferred Shares Basic Maintenance Amount);
(ii) engage in short sales of securities;
(iii) lend any securities;
(iv) issue any class or series of shares of beneficial interest
ranking prior to or on a parity with the Preferred Shares with respect to
the payment of dividends or the distribution of assets upon dissolution,
liquidation or winding up of the Trust;
(v) merge or consolidate into or with any other corporation or entity;
and
(vi) change any Pricing Service of the Trust.
(f) For so long as any Preferred Shares are rated by Fitch, the Trust will
not buy or sell financial futures contracts, write, purchase or sell call
options on financial futures contracts or purchase put options on financial
futures contracts or write call options (except covered call options) on
portfolio securities unless it receives written confirmation from Fitch that
engaging in such transactions would not impair the ratings then assigned to the
Preferred Shares by Fitch, except that the Trust may purchase or sell
exchange-traded financial futures contracts based on any index approved by Fitch
or Treasury Bonds, and purchase, write or sell exchange-traded put options on
such financial futures contracts, any index approved by Fitch or Treasury Bonds
and purchase, write or sell exchange-traded call options on such financial
futures contracts, any index approved by Fitch or Treasury Bonds (collectively
"Fitch Hedging Transactions"), subject to the following limitations:
(i) the Trust will not engage in any Fitch Hedging Transaction based
on any index approved by Fitch (other than Closing Transactions) that would
cause the Trust at the time of such transaction to own or have sold
outstanding financial futures contracts based on such index exceeding in
number 10% of the average number of daily traded financial futures
contracts based on such index in the 30 days preceding the time of
effecting such transaction as reported by The Wall Street Journal;
(ii) the Trust will not engage in any Fitch Hedging Transaction based
on Treasury Bonds (other than Closing Transactions) that would cause the
Trust at the time of such transaction to own or have sold:
(A) outstanding financial futures contracts based on Treasury
Bonds with such contracts having an aggregate Market Value exceeding
20% of the aggregate Market Value of Fitch Eligible Assets owned by
the Trust and rated AA by Fitch (or, if not rated by Fitch, rated Aa
by Xxxxx'x; or, if not rated by Xxxxx'x, rated AAA by S & P); or
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(B) outstanding financial futures contracts based on Treasury
Bonds with such contracts having an aggregate Market Value exceeding
40% of the aggregate Market Value of all Fitch Eligible Assets owned
by the Trust (other than Fitch Eligible Assets already subject to a
Fitch Hedging Transaction) and rated A or BBB by Fitch (or, if not
rated by Fitch, rated Baa by Xxxxx'x; or, if not rated by Xxxxx'x,
rated A or AA by S & P)
(for purposes of the foregoing clauses (i) and (ii), the Trust shall be
deemed to own futures contracts that underlie any outstanding options
written by the Trust);
(iii) the Trust will engage in Closing Transactions to close out any
outstanding financial futures contract based on any index approved by Fitch
if the amount of open interest in such index as reported by The Wall Street
Journal is less than an amount to be mutually determined by Fitch and the
Trust; and
(iv) the Trust will not enter into an option or futures transaction
unless, after giving effect thereto, the Trust would continue to have Fitch
Eligible Assets with an aggregate Discounted Value equal to or greater than
the Preferred Shares Basic Maintenance Amount.
(g) For purposes of determining whether the Trust has Fitch Eligible Assets
with an aggregate Discounted Value that equals or exceeds the Preferred Shares
Basic Maintenance Amount, the Discounted Value of Fitch Eligible Assets that the
Trust is obligated to deliver or receive pursuant to an outstanding futures
contract or option shall be as follows:
(i) assets subject to call options written by the Trust that are
either exchange-traded and "readily reversible" or that expire within 49
days after the date as of which such valuation is made shall be valued at
the lesser of (A) Discounted Value and (B) the exercise price of the call
option written by the Trust;
(ii) assets subject to call options written by the Trust not meeting
the requirements of clause (i) of this sentence shall have no value;
(iii) assets subject to put options written by the Trust shall be
valued at the lesser of (A) the exercise price and (B) the Discounted Value
of the assets subject to the option;
(iv) futures contracts shall be valued at the lesser of (A) settlement
price and (B) the Discounted Value of the assets subject to the futures
contract, provided that, if a contract matures within 49 days after the
date as of which such valuation is made, where the Trust is the seller the
contract may be valued at the settlement price and where the Trust is the
buyer the contract may be valued at the Discounted Value of the assets
subject to the futures contract; and
(v) where delivery may be made to the Trust with any security of a
class of securities, the Trust shall assume that it will take delivery of
the security with the lowest Discounted Value.
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(h) For purposes of determining whether the Trust has Fitch Eligible Assets
with an aggregate Discounted Value that equals or exceeds the Preferred Shares
Basic Maintenance Amount, the following amounts shall be subtracted from the
aggregate Discounted Value of the Fitch Eligible Assets held by the Trust to the
extent the relevant asset is a Fitch Eligible Asset:
(i) 10% of the exercise price of a written call option;
(ii) the exercise price of any written put option;
(iii) where the Trust is the seller under a financial futures
contract, 10% of the settlement price of the financial futures contract;
(iv) where the Trust is the purchaser under a financial futures
contract, the settlement price of assets purchased under such financial
futures contract;
(v) the settlement price of the underlying financial futures contract
if the Trust writes put options on a financial futures contract and does
not own the underlying contract; and
(vi) 105% of the Market Value of the underlying financial futures
contracts if the Trust writes call options on a financial futures contract
and does not own the underlying contract.
(i) For so long as any Preferred Shares are rated by Fitch, the Trust will
not enter into any Forward Commitments, except that the Trust may enter into
Forward Commitments subject to the following limitations:
(i) the Trust will maintain in a segregated account with its custodian
cash, cash equivalents or short-term, fixed-income securities rated F1 or
better by Fitch (or, if not rated by Fitch, rated P-1 by Xxxxx'x) and
maturing prior to the date of the Forward Commitment with a Market Value
that equals or exceeds the amount of the Trust's obligations under any
Forward Commitments to which it is from time to time a party or long-term
fixed income securities with a Discounted Value that equals or exceeds the
amount of the Trust's obligations under any Forward Commitment to which it
is from time to time a party; and
(ii) the Trust will not enter into a Forward Commitment unless, after
giving effect thereto, the Trust would continue to have Fitch Eligible
Assets with an aggregate Discounted Value equal to or greater than the
Preferred Shares Basic Maintenance Amount.
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.
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11.9 Notice. All notices or communications, unless otherwise specified in
these Bylaws, shall be sufficiently given if in writing and delivered in person
or mailed by first-class mail, postage prepaid. Notice shall be deemed given on
the earlier of the date received or the date seven days after which such notice
is mailed.
11.10 Auction Procedures. (a) Certain Definitions. As used in this Section
11.10, the following terms shall have the following meanings, unless the context
otherwise requires:
(i) "Auction Date" means the first Business Day preceding the first
day of a Dividend Period.
(ii) "Available Preferred Shares" has the meaning specified in Section
11.10(d)(i) below.
(iii) "Bid" has the meaning specified in Section 11.10(b)(i) below.
(iv) "Bidder" has the meaning specified in Section 11.10(b)(i) below.
(v) "Hold Order" has the meaning specified in Section 11.10(b)(i)
below.
(vi) "Maximum Applicable Rate" for any Dividend Period will be the
Applicable Percentage of the Reference Rate. The Auction Agent will round
each applicable Maximum Applicable Rate to the nearest one-thousandth
(0.001) of one percent per annum, with any such number ending in five
ten-thousandths of one percent being rounded upwards to the nearest
one-thousandth (0.001) of one percent. The Auction Agent will not round the
applicable Reference Rate as part of its calculation of the Maximum
Applicable Rate. The "Applicable Percentage" shall be the percentage
determined based on the lower of the credit ratings assigned on such date
by Xxxxx'x and Fitch as follows:
Xxxxx'x Fitch Applicable
Credit Rating Credit Rating Percentage
------------- ------------- ----------
Aa3 or above AA- or above 150%
A3 to A1 A- to A+ 160%
Baa3 to Baa1 BBB- to BBB+ 250%
Below Baa3 Below BBB- 275%
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 Xxxxx'x and Fitch to
provide a rating for each series of Preferred Shares. If Xxxxx'x or Fitch
shall not make such a rating available, Xxxxxxx Xxxxx Xxxxxx Inc. or its
affiliates and successors, after consultation with the Trust, shall select
another Rating Agency to act as a Substitute Rating Agency.
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(vii) "Order" has the meaning specified in Section 11.10(b)(i) below.
(viii) "Preferred Shares" means the Preferred Shares being auctioned
pursuant to this Section 11.10.
(ix) "Sell Order" has the meaning specified in Section 11.10(b)(i)
below.
(x) "Submission Deadline" means 1:00 p.m., New York City time, on any
Auction Date or such other time on any Auction Date as may be specified by
the Auction Agent from time to time as the time by which each Broker-Dealer
must submit to the Auction Agent in writing all Orders obtained by it for
the Auction to be conducted on such Auction Date.
(xi) "Submitted Bid" has the meaning specified in Section 11.10(d)(i)
below.
(xii) "Submitted Hold Order" has the meaning specified in Section
11.10(d)(i) below.
(xiii) "Submitted Order" has the meaning specified in Section
11.10(d)(i) below.
(xiv) "Submitted Sell Order" has the meaning specified in Section
11.10(d)(i) below.
(xv) "Sufficient Clearing Bids" has the meaning specified in Section
11.10(d)(i) below.
(xvi) "Winning Bid Rate" has the meaning specified in Section
11.10(d)(i) below.
(b) Orders by Beneficial Owners, Potential Beneficial Owners, Existing
Holders and Potential Holders.
(i) Unless otherwise permitted by the Trust, Beneficial Owners and
Potential Beneficial Owners may only participate in Auctions through their
Broker-Dealers. Broker-Dealers will submit the Orders of their respective
customers who are Beneficial Owners and Potential Beneficial Owners to the
Auction Agent, designating themselves as Existing Holders in respect of
shares subject to Orders submitted or deemed submitted to them by
Beneficial Owners and as Potential Holders in respect of shares subject to
Orders submitted to them by Potential Beneficial Owners. A Broker-Dealer
may also hold Preferred Shares in its own account as a Beneficial Owner. A
Broker-Dealer may thus submit Orders to the Auction Agent as a Beneficial
Owner or a Potential Beneficial Owner and therefore participate in an
Auction as an Existing Holder or Potential Holder on behalf of both itself
and its customers. On or prior to the Submission Deadline on each Auction
Date:
(A) each Beneficial Owner may submit to its Broker-Dealer
information as to:
(1) the number of Outstanding Preferred Shares, if any, held
by such Beneficial Owner which such Beneficial Owner desires to
continue to hold
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without regard to the Applicable Rate for the next succeeding
Dividend Period for such shares;
(2) the number of Outstanding Preferred Shares, if any, held
by such Beneficial Owner which such Beneficial Owner desires to
continue to hold, provided that the Applicable Rate for the next
succeeding Dividend Period for such shares shall not be less than
the rate per annum specified by such Beneficial Owner; and/or
(3) the number of Outstanding Preferred Shares, if any, held
by such Beneficial Owner which such Beneficial Owner offers to
sell without regard to the Applicable Rate for the next
succeeding Dividend Period; and
(B) each Broker-Dealer, using a list of Potential Beneficial
Owners that shall be maintained in good faith for the purpose of
conducting a competitive Auction, shall contact Potential Beneficial
Owners, including Persons that are not Beneficial Owners, on such list
to determine the number of Outstanding Preferred Shares, if any, which
each such Potential Beneficial Owner offers to purchase, provided that
the Applicable Rate for the next succeeding Dividend Period shall not
be less than the rate per annum specified by such Potential Beneficial
Owner.
For the purposes hereof, the communication by a Beneficial Owner
or Potential Beneficial Owner to a Broker-Dealer, or the communication
by a Broker-Dealer acting for its own account to the Auction Agent, of
information referred to in clause (A) or (B) of this Section
11.10(b)(i) is hereinafter referred to as an "Order" and each
Beneficial Owner and each Potential Beneficial Owner placing an Order,
including a Broker-Dealer acting in such capacity for its own account,
is hereinafter referred to as a "Bidder"; an Order containing the
information referred to in clause (A)(1) of this Section 11.10(b)(i)
is hereinafter referred to as a "Hold Order"; an Order containing the
information referred to in clause (A)(2) or (B) of this Section
11.10(b)(i) is hereinafter referred to as a "Bid"; and an Order
containing the information referred to in clause (A)(3) of this
Section 11.10(b)(i) is hereinafter referred to as a "Sell Order."
Inasmuch as a Broker-Dealer participates in an Auction as an Existing
Holder or a Potential Holder only to represent the interests of a
Beneficial Owner or Potential Beneficial Owner, whether it be its
customers or itself, all discussion herein relating to the
consequences of an Auction for Existing Holders and Potential Holders
also applies to the underlying beneficial ownership interests
represented.
(ii) (A) A Bid by an Existing Holder shall constitute an irrevocable
offer to sell:
(1) the number of Outstanding Preferred Shares specified in
such Bid if the Applicable Rate determined on such Auction Date
shall be less than the rate per annum specified in such Bid; or
(2) such number or a lesser number of Outstanding Preferred
Shares to be determined as set forth in Section 11.10(e)(i)(D) if
the Applicable Rate
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determined on such Auction Date shall be equal to the rate per
annum specified therein; or
(3) a lesser number of Outstanding Preferred Shares to be
determined as set forth in Section 11.10(e)(ii)(C) if such
specified rate per annum shall be higher than the Maximum
Applicable Rate and Sufficient Clearing Bids do not exist.
(B) A Sell Order by an Existing Holder shall constitute an
irrevocable offer to sell:
(1) the number of Outstanding Preferred Shares specified in
such Sell Order; or
(2) such number or a lesser number of Outstanding Preferred
Shares to be determined as set forth in Section 11.10(e)(ii)(C)
if Sufficient Clearing Bids do not exist.
(C) A Bid by a Potential Holder shall constitute an irrevocable
offer to purchase:
(1) the number of Outstanding Preferred Shares specified in
such Bid if the Applicable Rate determined on such Auction Date
shall be higher than the rate per annum specified in such Bid; or
(2) such number or a lesser number of Outstanding Preferred
Shares to be determined as set forth in Section 11.10(e)(i)(E) if
the Applicable Rate determined on such Auction Date shall be
equal to the rate per annum specified therein.
(c) Submission of Orders by Broker-Dealers to Auction Agent.
(i) Each Broker-Dealer shall submit in writing or through the Auction
Agent's auction processing system to the Auction Agent prior to the
Submission Deadline on each Auction Date all Orders obtained by such
Broker-Dealer, designating itself (unless otherwise permitted by the Trust)
as an Existing Holder in respect of shares subject to Orders submitted or
deemed submitted to it by Beneficial Owners and as a Potential Holder in
respect of shares subject to Orders submitted to it by Potential Beneficial
Owners, and specifying with respect to each Order:
(A) the name of the Bidder placing such Order (which shall be the
Broker-Dealer unless otherwise permitted by the Trust);
(B) the aggregate number of Outstanding Preferred Shares that are
the subject of such Order;
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(C) to the extent that such Bidder is an Existing Holder:
(1) the number of Outstanding Preferred Shares, if any,
subject to any Hold Order placed by such Existing Holder;
(2) the number of Outstanding Preferred Shares, if any,
subject to any Bid placed by such Existing Holder and the rate
per annum specified in such Bid; and
(3) the number of Outstanding Preferred Shares, if any,
subject to any Sell Order placed by such Existing Holder; and
(D) to the extent such Bidder is a Potential Holder, the rate per
annum specified in such Potential Holder's Bid.
(ii) If any rate per annum specified in any Bid contains more than
three figures to the right of the decimal point, the Auction Agent shall
round such rate up to the next highest one-thousandth (.001) of 1%.
(iii) If an Order or Orders covering all of the Outstanding Preferred
Shares held by an Existing Holder are not submitted to the Auction Agent
prior to the Submission Deadline, the Auction Agent shall deem a Hold Order
(in the case of an Auction relating to a Special Dividend Period of 28 days
or less) or a Sell Order (in the case of an Auction relating to a Special
Dividend Period of longer than 28 days) to have been submitted on behalf of
such Existing Holder covering the number of Outstanding Preferred Shares
held by such Existing Holder and not subject to Orders submitted to the
Auction Agent.
(iv) If one or more Orders on behalf of an Existing Holder covering in
the aggregate more than the number of Outstanding Preferred Shares held by
such Existing Holder are submitted to the Auction Agent, such Order shall
be considered valid as follows and in the following order of priority:
(A) any Hold Order submitted on behalf of such Existing Holder
shall be considered valid up to and including the number of
Outstanding Preferred Shares held by such Existing Holder; provided
that if more than one Hold Order is submitted on behalf of such
Existing Holder and the number of Preferred Shares subject to such
Hold Orders exceeds the number of Outstanding Preferred Shares held by
such Existing Holder, the number of Preferred Shares subject to each
of such Hold Orders shall be reduced pro rata so that such Hold
Orders, in the aggregate, will cover exactly the number of Outstanding
Preferred Shares held by such Existing Holder;
(B) any Bids submitted on behalf of such Existing Holder shall be
considered valid, in the ascending order of their respective rates per
annum if more than one Bid is submitted on behalf of such Existing
Holder, up to and including the excess of the number of Outstanding
Preferred Shares held by such Existing Holder over the number of
Preferred Shares subject to any Hold Order referred to in Section
11.10(c)(iv)(A) above (and if more than one Bid submitted on behalf of
such Existing Holder specifies the same rate per annum and together
they cover more than the
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remaining number of shares that can be the subject of valid Bids after
application of Section 11.10(c)(iv)(A) above and of the foregoing
portion of this Section 11.10(c)(iv)(B) to any Bid or Bids specifying
a lower rate or rates per annum, the number of shares subject to each
of such Bids shall be reduced pro rata so that such Bids, in the
aggregate, cover exactly such remaining number of shares); and the
number of shares, if any, subject to Bids not valid under this Section
11.10(c)(iv)(B) shall be treated as the subject of a Bid by a
Potential Holder; and
(C) any Sell Order shall be considered valid up to and including
the excess of the number of Outstanding Preferred Shares held by such
Existing Holder over the number of Preferred Shares subject to Hold
Orders referred to in Section 11.10(c)(iv)(A) and Bids referred to in
Section 11.10(c)(iv)(B); provided that if more than one Sell Order is
submitted on behalf of any Existing Holder and the number of Preferred
Shares subject to such Sell Orders is greater than such excess, the
number of Preferred Shares subject to each of such Sell Orders shall
be reduced pro rata so that such Sell Orders, in the aggregate, cover
exactly the number of Preferred Shares equal to such excess.
(v) If more than one Bid is submitted on behalf of any Potential
Holder, each Bid submitted shall be a separate Bid with the rate per annum
and number of Preferred Shares therein specified.
(vi) Any Order submitted by a Beneficial Owner as a Potential
Beneficial Owner to its Broker-Dealer, or by a Broker-Dealer to the Auction
Agent, prior to the Submission Deadline on any Auction Date shall be
irrevocable.
(vii) The Trust shall not be responsible for a Broker-Dealer's failure
to act in accordance with the instructions of Beneficial Owners or
Potential Beneficial Owners or failure to comply with the provisions of
this Section 11.10.
(d) Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
(i) Not earlier than the Submission Deadline on each Auction Date, the
Auction Agent shall assemble all Orders submitted or deemed submitted to it
by the Broker-Dealers (each such Order as submitted or deemed submitted by
a Broker-Dealer being hereinafter referred to individually as a "Submitted
Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as the case may
be, or as a "Submitted Order") and shall determine:
(A) the excess of the total number of Outstanding Preferred
Shares over the number of Outstanding Preferred Shares that are the
subject of Submitted Hold Orders (such excess being hereinafter
referred to as the "Available Preferred Shares");
(B) from the Submitted Orders whether the number of Outstanding
Preferred Shares that are the subject of Submitted Bids by Potential
Holders specifying one or more rates per annum equal to or lower than
the Maximum Applicable Rate exceeds or is equal to the sum of:
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(1) the number of Outstanding Preferred Shares that are the
subject of Submitted Bids by Existing Holders specifying one or
more rates per annum higher than the Maximum Applicable Rate, and
(2) the number of Outstanding Preferred Shares that are
subject to Submitted Sell Orders (if such excess or such equality
exists (other than because the number of Outstanding Preferred
Shares in clause (1) above and this clause (2) are each zero
because all of the Outstanding Preferred Shares are the subject
of Submitted Hold Orders), such Submitted Bids by Potential
Holders being hereinafter referred to collectively as "Sufficient
Clearing Bids"); and
(C) if Sufficient Clearing Bids exist, the lowest rate per annum
specified in the Submitted Bids (the "Winning Bid Rate") that if:
(1) each Submitted Bid from Existing Holders specifying the
Winning Bid Rate and all other Submitted Bids from Existing
Holders specifying lower rates per annum were rejected, thus
entitling such Existing Holders to continue to hold the Preferred
Shares that are the subject of such Submitted Bids, and
(2) each Submitted Bid from Potential Holders specifying the
Winning Bid Rate and all other Submitted Bids from Potential
Holders specifying lower rates per annum were accepted, thus
entitling the Potential Holders to purchase the Preferred Shares
that are the subject of such Submitted Bids, would result in the
number of shares subject to all Submitted Bids specifying the
Winning Bid Rate or a lower rate per annum being at least equal
to the Available Preferred Shares.
(ii) Promptly after the Auction Agent has made the determinations
pursuant to Section 11.10(d)(i), the Auction Agent shall advise the Trust
of the Maximum Applicable Rate and, based on such determinations, the
Applicable Rate for the next succeeding Dividend Period as follows:
(A) if Sufficient Clearing Bids exist, that the Applicable Rate
for the next succeeding Dividend Period shall be equal to the Winning
Bid Rate;
(B) if Sufficient Clearing Bids do not exist (other than because
all of the Outstanding Preferred Shares are the subject of Submitted
Hold Orders), that the Applicable Rate for the next succeeding
Dividend Period shall be equal to the Maximum Applicable Rate; or
(C) if all of the Outstanding Preferred Shares are the subject of
Submitted Hold Orders, that the Dividend Period next succeeding the
Auction shall automatically be the same length as the immediately
preceding Dividend Period and the Applicable Rate for the next
succeeding Dividend Period shall be equal to 80% of the Reference Rate
on the date of the Auction.
(e) Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares. Based on the determinations made pursuant to Section
11.10(d)(i), the
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Submitted Bids and Submitted Sell Orders shall be accepted or rejected and the
Auction Agent shall take such other action as set forth below:
(i) If Sufficient Clearing Bids have been made, subject to the
provisions of Section 11.10(e)(iii) and Section 11.10(e)(iv), Submitted
Bids and Submitted Sell Orders shall be accepted or rejected in the
following order of priority and all other Submitted Bids shall be rejected:
(A) the Submitted Sell Orders of Existing Holders shall be
accepted and the Submitted Bid of each of the Existing Holders
specifying any rate per annum that is higher than the Winning Bid Rate
shall be accepted, thus requiring each such Existing Holder to sell
the Outstanding Preferred Shares that are the subject of such
Submitted Sell Order or Submitted Bid;
(B) the Submitted Bid of each of the Existing Holders specifying
any rate per annum that is lower than the Winning Bid Rate shall be
rejected, thus entitling each such Existing Holder to continue to hold
the Outstanding Preferred Shares that are the subject of such
Submitted Bid;
(C) the Submitted Bid of each of the Potential Holders specifying
any rate per annum that is lower than the Winning Bid Rate shall be
accepted;
(D) the Submitted Bid of each of the Existing Holders specifying
a rate per annum that is equal to the Winning Bid Rate shall be
rejected, thus entitling each such Existing Holder to continue to hold
the Outstanding Preferred Shares that are the subject of such
Submitted Bid, unless the number of Outstanding Preferred Shares
subject to all such Submitted Bids shall be greater than the number of
Outstanding Preferred Shares ("Remaining Shares") equal to the excess
of the Available Preferred Shares over the number of Outstanding
Preferred Shares subject to Submitted Bids described in Section
11.10(e)(i)(B) and Section 11.10(e)(i)(C), in which event the
Submitted Bids of each such Existing Holder shall be accepted, and
each such Existing Holder shall be required to sell Outstanding
Preferred Shares, but only in an amount equal to the difference
between (1) the number of Outstanding Preferred Shares then held by
such Existing Holder subject to such Submitted Bid and (2) the number
of Preferred Shares obtained by multiplying (x) the number of
Remaining Shares by (y) a fraction the numerator of which shall be the
number of Outstanding Preferred Shares held by such Existing Holder
subject to such Submitted Bid and the denominator of which shall be
the sum of the number of Outstanding Preferred Shares subject to such
Submitted Bids made by all such Existing Holders that specified a rate
per annum equal to the Winning Bid Rate; and
(E) the Submitted Bid of each of the Potential Holders specifying
a rate per annum that is equal to the Winning Bid Rate shall be
accepted but only in an amount equal to the number of Outstanding
Preferred Shares obtained by multiplying (x) the difference between
the Available Preferred Shares and the number of Outstanding Preferred
Shares subject to Submitted Bids described in Section 11.10(e)(i)(B),
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Section 11.10(e)(i)(C) and Section 11.10(e)(i)(D) by (y) a fraction
the numerator of which shall be the number of Outstanding Preferred
Shares subject to such Submitted Bid and the denominator of which
shall be the sum of the number of Outstanding Preferred Shares subject
to such Submitted Bids made by all such Potential Holders that
specified rates per annum equal to the Winning Bid Rate.
(ii) If Sufficient Clearing Bids have not been made (other than
because all of the Outstanding Preferred Shares are subject to Submitted
Hold Orders), subject to the provisions of Section 11.10(e)(iii), Submitted
Orders shall be accepted or rejected as follows in the following order of
priority and all other Submitted Bids shall be rejected:
(A) the Submitted Bid of each Existing Holder specifying any rate
per annum that is equal to or lower than the Maximum Applicable Rate
shall be rejected, thus entitling such Existing Holder to continue to
hold the Outstanding Preferred Shares that are the subject of such
Submitted Bid;
(B) the Submitted Bid of each Potential Holder specifying any
rate per annum that is equal to or lower than the Maximum Applicable
Rate shall be accepted, thus requiring such Potential Holder to
purchase the Outstanding Preferred Shares that are the subject of such
Submitted Bid; and
(C) the Submitted Bids of each Existing Holder specifying any
rate per annum that is higher than the Maximum Applicable Rate shall
be accepted and the Submitted Sell Orders of each Existing Holder
shall be accepted, in both cases only in an amount equal to the
difference between (1) the number of Outstanding Preferred Shares then
held by such Existing Holder subject to such Submitted Bid or
Submitted Sell Order and (2) the number of Preferred Shares obtained
by multiplying (x) the difference between the Available Preferred
Shares and the aggregate number of Outstanding Preferred Shares
subject to Submitted Bids described in Section 11.10(e)(ii)(A) and
Section 11.10(e)(ii)(B) by (y) a fraction the numerator of which shall
be the number of Outstanding Preferred Shares held by such Existing
Holder subject to such Submitted Bid or Submitted Sell Order and the
denominator of which shall be the number of Outstanding Preferred
Shares subject to all such Submitted Bids and Submitted Sell Orders.
(iii) If, as a result of the procedures described in Section 11.10(e),
any Existing Holder would be entitled or required to sell, or any Potential
Holder would be entitled or required to purchase, a fraction of a Preferred
Share on any Auction Date, the Auction Agent shall, in such manner as in
its sole discretion it shall determine, round up or down the number of
Preferred Shares to be purchased or sold by any Existing Holder or
Potential Holder on such Auction Date so that each Outstanding Preferred
Share purchased or sold by each Existing Holder or Potential Holder on such
Auction Date shall be a whole Preferred Share.
(iv) If, as a result of the procedures described in Section 11.10(e),
any Potential Holder would be entitled or required to purchase less than a
whole Preferred Share on
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any Auction Date, the Auction Agent shall, in such manner as in its sole
discretion it shall determine, allocate Preferred Shares for purchase among
Potential Holders so that only whole Preferred Shares are purchased on such
Auction Date by any Potential Holder, even if such allocation results in
one or more of such Potential Holders not purchasing any Preferred Shares
on such Auction Date.
(v) Based on the results of each Auction, the Auction Agent shall
determine, with respect to each Broker-Dealer that submitted Bids or Sell
Orders on behalf of Existing Holders or Potential Holders, the aggregate
number of Outstanding Preferred Shares to be purchased and the aggregate
number of the Outstanding Preferred Shares to be sold by such Potential
Holders and Existing Holders and, to the extent that such aggregate number
of Outstanding shares to be purchased and such aggregate number of
Outstanding shares to be sold differ, the Auction Agent shall determine to
which other Broker-Dealer or Broker-Dealers acting for one or more
purchasers such Broker-Dealer shall deliver, or from which other
Broker-Dealer or Broker-Dealers acting for one or more sellers such
Broker-Dealer shall receive, as the case may be, Outstanding Preferred
Shares.
(f) Miscellaneous.
(i) The Trust may interpret the provisions of this Section 11.10 to
resolve any inconsistency or ambiguity, remedy any formal defect or make
any other change or modification that does not substantially adversely
affect the rights of Beneficial Owners of Preferred Shares.
(ii) A Beneficial Owner or an Existing Holder (A) may sell, transfer
or otherwise dispose of Preferred Shares only pursuant to a Bid or Sell
Order in accordance with the procedures described in this Section 11.10 or
to or through a Broker-Dealer or to such other persons as may be permitted
by the Trust, provided that in the case of all transfers other than
pursuant to Auctions such Beneficial Owner or Existing Holder, its
Broker-Dealer, if applicable, or its Agent Member advises the Auction Agent
of such transfer and (B) except as otherwise required by law, shall have
the ownership of the Preferred Shares held by it maintained in book entry
form by the Securities Depository in the account of its Agent Member, which
in turn will maintain records of such Beneficial Owner's beneficial
ownership. The Trust may not submit an Order in any Auction.
(iii) All of the Outstanding Preferred Shares of a series shall be
registered in the name of the nominee of the Securities Depository unless
otherwise required by law or unless there is no Securities Depository. If
there is no Securities Depository, at the Trust's option and upon its
receipt of such documents as it deems appropriate, any Preferred Shares may
be registered in the Stock Register in the name of the Beneficial Owner
thereof and such Beneficial Owner thereupon will be entitled to receive
certificates therefor and required to deliver certificates therefor upon
transfer or exchange thereof.
11.11 Securities Depository; Stock Certificates. (a) If there is a
Securities Depository, all of the Preferred Shares of each series shall be
issued to the Securities Depository and
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registered in the name of the Securities Depository or its nominee. Certificates
may be issued as necessary to represent Preferred Shares. All such certificates
shall bear a legend to the effect that such certificates are issued subject to
the provisions restricting the transfer of Preferred Shares contained in these
Bylaws. Unless the Trust shall have elected, during a Non-Payment Period, to
waive this requirement, the Trust will also issue stop-transfer instructions to
the Auction Agent for the Preferred Shares. Except as provided in paragraph (b)
below, the Securities Depository or its nominee will be the Holder, and no
Beneficial Owner shall receive certificates representing its ownership interest
in such shares.
(b) If the Applicable Rate applicable to all Preferred Shares of a series
shall be the Non-Payment Period Rate or there is no Securities Depository, the
Trust may at its option issue one or more new certificates with respect to such
shares (without the legend referred to in Section 11.11(a)) registered in the
names of the Beneficial Owners or their nominees and rescind the stop-transfer
instructions referred to in Section 11.11(a) with respect to such shares.
ARTICLE 12
Amendment to the Bylaws
12.1 General. Except to the extent that the Declaration of Trust or
applicable law require a vote or consent of Shareholders, these Bylaws may be
amended, changed, altered or repealed, in whole or part, only by resolution of a
majority of the Trustees then in office at any meeting of the Trustees, or by
one or more writings signed by such Trustees.
12.2 Article 11. Without limiting the provisions of Section 12.1, the Board
of Trustees of the Trust may, by resolution duly adopted, without shareholder
approval (except as otherwise required by Article 11 or required by applicable
law), amend Article 11 to (a) reflect any amendments hereto which the Board of
Trustees of the Trust is entitled to adopt pursuant to the terms of Article 11
without shareholder approval or (b) add additional series of Preferred Shares or
additional shares of a series of Preferred Shares (and terms relating thereto)
to the series and Preferred Shares described herein. Each such additional series
and all such additional Preferred Shares shall be governed by the terms of
Article 11.
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