AMENDED AND RESTATED BYLAWS
OF
RMR REAL ESTATE INCOME FUND
(Dated as of February 22, 2010)
ARTICLE I
AGREEMENT AND DECLARATION OF TRUST AND PRINCIPAL OFFICE
1.1 Agreement and Declaration of Trust. These Bylaws shall be subject to the
Agreement and Declaration of Trust, as amended or restated from time to time
(the "Declaration of Trust"), of RMR REAL ESTATE INCOME FUND, the Delaware
statutory trust established by the Declaration of Trust (the "Trust").
Capitalized terms used in these Bylaws and not otherwise defined herein
shall have the meanings given to such terms in the Declaration of Trust.
ARTICLE II
TRUSTEES
2.1 General Powers; Qualifications; Trustees Holding Over.
The business and affairs of the Trust shall be managed under the direction
of its Board of Trustees. A Trustee shall be an individual at least 21
years of age who is not under legal disability. To qualify for nomination
or election as a Trustee, an individual, at the time of nomination and
election, shall, without limitation, (a) have substantial expertise or
experience relevant to the business of the Trust and its subsidiaries
(as defined in Section 8.12(f)(iii)), (b) not have been convicted of a
felony and (c) meet the qualifications of an Independent Trustee or a
Managing Trustee, each as defined in Section 2.2, as the case may be,
depending upon the position for which such individual may be nominated
and elected. In case of failure to elect Trustees at an annual meeting
of Shareholders, the incumbent Trustees shall hold over and continue to
direct the management of the business and affairs of the Trust until
they may resign or until their successors are elected and qualify.
2.2 Independent Trustees and Managing Trustees. A majority of
the Trustees holding office shall at all times be Independent Trustees;
provided, however, that upon a failure to comply with this requirement
as a result of the creation of a temporary vacancy which shall be filled
by an Independent Trustee, whether as a result of enlargement of the Board
of Trustees or the resignation, removal or death of a Trustee who is an
Independent Trustee, such requirement shall not be applicable.
An "Independent Trustee" is one who is not an employee of RMR Advisors,
who is not involved in the Trust's day-to-day activities, who is not an
"interested person" of the Trust (as defined in the 1940 Act), except
for the fact of his or her being a Trustee, and who meets the qualifications
of an independent director under the applicable rules of each stock exchange
upon which shares of the Trust are listed for trading and the Securities and
Exchange Commission, as those requirements may be amended from time to time.
If the number of Trustees, at any time, is set at less than five, at least
one Trustee shall be a Managing Trustee. So long as the number of Trustees
shall be five or greater, at least two Trustees shall be Managing Trustees.
"Managing Trustees" shall mean Trustees who are not Independent Trustees
and who have been employees, officers or directors of the investment
advisor of the Trust or involved in the day-to-day activities of the
Trust during the one year prior to their election. If at any time the
Board of Trustees shall not be comprised of a majority of Independent
Trustees, the Board of Trustees shall take such actions as will cure such
condition; provided that the fact that the Board of Trustees does not have
a majority of Independent Trustees or has not taken such action at any time
or from time to time shall not affect the validity of any action taken by
the Board of Trustees. If at any time the Board of Trustees shall not be
comprised of a number of Managing Trustees as is required under this
Section 2.2, the Board of Trustees shall take such actions as will cure
such condition; provided that the fact that the Board of Trustees does not
have the requisite number of Managing Trustees or has not taken such action
at any time or from time to time shall not affect the validity of any action
taken by the Board of Trustees.
2.3 Number of Trustees. The number of Trustees shall be initially
set at five. Each of the Trustees shall be designated as a Class I,
Class II or Class III Trustee as required by the Declaration of Trust.
The number of Trustees constituting the entire Board of Trustees may be
increased or decreased from time to time only by a vote of the Board of
Trustees; provided, however, that the tenure of office of a Trustee shall
not be affected by any decrease in the number of Trustees; provided, further,
that the number of Trustees shall not be less than three.
2.4 Regular Meetings. Regular meetings of the Board of Trustees
may be held without call or notice at such places and at such times as
the Trustees may from time to time determine, provided that notice of the
first regular meeting following any such determination shall be given to
absent Trustees.
2.5 Special Meetings. Special meetings of the Trustees may be called
at any time by any Managing Trustee, the President or pursuant to the
request of any two Trustees then in office. The person or persons authorized
to call special meetings of the Board of Trustees may fix any place, either
within or without the State of Delaware, as the place for holding any
special meeting of the Board of Trustees called by them.
2.6 Notice. Notice of any special meeting shall be given by written
notice delivered personally or by electronic mail, telephoned, facsimile
transmitted, overnight couriered (with proof of delivery) or mailed to
each Trustee at his or her business or residence address. Personally
delivered, telephoned, facsimile transmitted or electronically mailed
notices shall be given at least 24 hours prior to the meeting. Notice
by mail shall be deposited in the U.S.mail at least 72 hours prior to
the meeting. If mailed, such notice shall be deemed to be given when
deposited in the U.S.mail properly addressed, with postage thereon prepaid.
Electronic mail notice shall be deemed to be given upon transmission of
the message to the electronic mail address given to the Trust by the Trustee.
Telephone notice shall be deemed given when the Trustee is personally given
such notice in a telephone call to which he is a party. Facsimile
transmission
notice shall be deemed given upon completion of the transmission of the
message
to the number given to the Trust by the Trustee and receipt of a completed
answer back indicating receipt. If sent by overnight courier, such notice
shall be deemed given when delivered to the courier. Neither the business to
be transacted at, nor the purpose of, any annual, regular or special meeting
of the Trustees need be stated in the notice, unless specifically required by
statute or these Bylaws.
2.7 Quorum. A majority of the Trustees shall constitute a quorum for
transaction of business at any meeting of the Board of Trustees, provided that,
if less than a majority of such Trustees are present at a meeting, a majority
of the Trustees present may adjourn the meeting from time to time without
further notice. The Trustees present at a meeting of the Board of Trustees
which has been duly called and convened and at which a quorum was established
may continue to transact business until adjournment, notwithstanding the
withdrawal of a number of Trustees resulting in less than a quorum then
being present at the meeting. Whether or not a Trustee votes on a matter
at a meeting which he or she attends, he or she will nonetheless be
considered present for purposes of establishing a quorum to consider the
matter.
2.8 Voting. The action of the majority of the Trustees present at a
meeting at which a quorum is or was present shall be the action of the Board
of Trustees, unless the concurrence of a greater proportion is required for
such action by specific provision of an applicable statute, the Declaration
of Trust or these Bylaws. If enough Trustees have withdrawn from a meeting
to leave fewer than are required to establish a quorum, but the meeting is
not adjourned, the action of the majority of that number of Trustees necessary
to constitute a quorum at such meeting shall be the action of the Board of
Trustees, unless the concurrence of a greater proportion is required for
such action by applicable law, the Declaration of Trust or these Bylaws.
2.9 Telephonic Meetings. Except as required by the 1940 Act or other
applicable law, attendance at Board of Trustees meetings may be in person
or by a teleconference or other communications medium by means of which
all persons participating in the meeting can hear and speak with each other.
2.10 Action by Written Consent. Unless specifically otherwise provided
in the Declaration of Trust, any action required or permitted to be taken
at any meeting of the Board of Trustees may be taken without a meeting, if
a majority of the Trustees shall individually or collectively consent in
writing to such action. Such written consent or consents shall be filed
with the records of the Trust and shall have the same force and effect as
the affirmative vote of such Trustees at a duly held meeting of the Board
of Trustees at which a quorum was present.
2.11 Waiver of Notice. The actions taken at any meeting of the Trustees,
however called and noticed or wherever held, shall be as valid as though
taken at a meeting duly held after regular call and notice if a quorum is
present and if, either before or after the meeting, each of the Trustees
not present waives notice, consents to the holding of such meeting or
approves the minutes thereof.
2.12 Vacancies. If for any reason any or all the Trustees cease to
be Trustees, such event shall not terminate the Trust or affect these
Bylaws or the powers of the remaining Trustees hereunder
(even if fewer than three Trustees remain). Subject to the requirements
of the 1940 Act or other applicable law, any vacancies in the Board of
Trustees, including vacancies resulting from increases in the number
of Trustees or otherwise, shall be filled by a majority of the Trustees
then in office, whether or not sufficient to constitute a quorum, or by
a sole remaining Trustee; provided, however, that if the Shareholders of
any class or series of Shares are entitled separately to elect one or
more Trustees, a majority of the remaining Trustees elected by that
class or series or the sole remaining Trustee elected by that class
or series may fill any vacancy among the number of Trustees elected by
that class or series. A Trustee elected by the Trustees to fill any
vacancy occurring in the Board of Trustees, whether occurring due to
an increase in size of the Board of trustees or by the death, resignation
or removal of any Trustee, shall serve until the next annual meeting
of Shareholders at which such Trustee's Class shall be elected and
qualifies, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Any Trustee elected by
Shareholders at an annual meeting to fill any vacancy occurring in the
Board of Trustees, whether occurring due to an increase in size of the
Board of trustees or by the death, resignation or removal of any Trustee,
that has arisen since the preceding annual meeting of Shareholders
(which vacancy has not been filled by election of a new Trustee by the
Trustees) shall hold office for a term which coincides with the remaining
term of the Class of Trustee to which such office was previously assigned.
Any person elected or appointed as a Trustee shall meet the criteria for
office set forth from time to time in the Bylaws.
2.13 Compensation. The Trustees shall be entitled to receive such
reasonable compensation for their services as Trustees as the Trustees
may determine from time to time. Trustees may be reimbursed for expenses
of attendance, if any, at each annual, regular or special meeting of the
Trustees or of any committee thereof; and for their expenses, if any, in
connection with each property visit and any other service or activity
performed or engaged in as Trustees. The Trustees shall be entitled to
receive remuneration for services rendered to the Trust in any other
capacity, and such services may include, without limitation, services as
an officer of the Trust, services as an employee of the Advisor, legal,
accounting or other professional services, or services as a broker,
transfer agent or underwriter, whether performed by a Trustee or any
person affiliated with a Trustee.
2.14 Reliance. Each Trustee, officer, employee and agent of the
Trust shall, in the performance of his or her duties with respect to the
Trust, be entitled to rely on any information, opinion, report or statement,
including any financial statement or other financial data, prepared or
presented by an officer or employee of the Trust or by RMR Advisors,
accountants, appraisers or other experts or consultants selected by the
Board of Trustees or officers of the Trust, regardless of whether such
counsel or expert may also be a Trustee.
2.15 Qualifying Shares Not Required. Trustees need not be Shareholders.
2.16 Emergency Provisions. Notwithstanding any other provision in the
Declaration of Trust or these Bylaws, this Section 2.16 shall apply
during the existence of any catastrophe, or other similar emergency
condition, as a result of which a quorum of the Board of Trustees under
Article II cannot readily be obtained (an "Emergency"). During any
Emergency, unless otherwise provided by the Board of Trustees, (a) a
meeting of the Board of Trustees may be called by any Managing Trustee
or officer of the Trust by any means feasible under the circumstances
and (b) notice of any meeting of the Board of Trustees during such an
Emergency may be given less than 24 hours prior to the meeting to as
many Trustees and by such means as it may be feasible at the time,
including publication, television or radio.
ARTICLE III
OFFICERS
3.1 Enumeration; Qualification. The officers of the Trust shall
be a President, a Treasurer, a Secretary, and such other officers
including a Chairman of the Trustees, if any, as the Trustees
from time to time may in their discretion elect. The Trust may
also have such agents as the Trustees from time to time may in
their discretion appoint. The Chairman of the Trustees, if one
is elected, shall be a Trustee and may but need not be a Shareholder;
and any other officer may but does not need to be a Trustee or a Shareholder.
Any two or more offices may be held by the same person.
3.2 Election. The President, the Treasurer, and the Secretary shall be
elected annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at any time. Vacancies in any office may be filled
by the Board of Trustees at any time.
3.3 Tenure. The Chairman of the Trustees, if one is elected, the President,
the Treasurer and the Secretary shall hold office until their respective
successors are chosen and qualified, or in each case until he or she sooner
dies, resigns, is removed with or without cause or becomes disqualified.
Each other officer shall hold office and each agent of the Trust shall
retain authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these Bylaws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as the Board of
Trustees or any senior officer may from time to time designate.
3.5 Chairman; President; Vice President. Unless the Trustees otherwise
provide, the Chairman of the Trustees or, if there is none or in the absence
of the Chairman, the President shall preside at all meetings of the
Shareholders and of the Trustees. Alternatively, the Trustees may
designate one Trustee or another officer to preside at such meetings.
The Trustees may designate a chief executive officer from among the
Trustees or the elected officers. Any Vice President shall have such
duties and powers as may be designated from time to time by the
Trustees or the President.
3.6 Treasurer; Assistant Treasurer. The Treasurer shall be the chief
financial and chief accounting officer of the Trust, and shall, subject
to any arrangement made by the Trustees with a custodian, investment
adviser, sub-adviser, manager, or transfer, shareholder servicing or
similar agent, be in charge of the valuable papers, books of account and
accounting records of the Trust, and shall have such other duties and
powers as may be designated from time to time by the Trustees or by the
President. Any Assistant Treasurer shall have such duties and powers as
may be designated from time to time by the Trustees, the President or
the Treasurer.
3.7 Secretary; Assistant Secretary. The Secretary
(or his or her designee) 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 Shareholders or
Trustees, an Assistant Secretary, or if there be none or if he or she
is absent, a temporary secretary chosen at such meeting shall record the
proceedings thereof in the aforesaid books. Any Assistant Secretary
shall have such duties and powers as may be designated from time to time
by the Trustees, the President or the Secretary.
3.8 Removal and Resignations. Any officer or agent of the Trust may
be removed by the Trustees if in their judgment the best interests of the
Trust would be served thereby, but the removal shall be without prejudice
to the contract rights, if any, of the person so removed. Any officer
of the Trust may resign at any time by giving written notice of his or
her resignation to the Trustees, the Chairman of the Trustees, the
President or the Secretary. Any resignation shall take effect at any
time specified therein or, if the time when it shall become effective
is not specified therein, immediately upon its receipt. The acceptance
of a resignation shall not be necessary to make it effective unless
otherwise stated in the resignation. A resignation shall be without
prejudice to the contract rights, if any, of the Trust.
ARTICLE IV
COMMITTEES
4.1 Appointment. The powers, duties and responsibilities of the
Trustees maybe delegated to one or more Committees. Trustees, officers
or agents of the Trust may serve on Committees, but all Committees
shall have at least one Trustee who will serve as Chairman of the Committee.
Committees shall have the powers, duties and responsibilities as may
be assigned to them by the Trustees. The Trustees may delegate any of
the powers of the Trustees to Committees appointed under this Section 4.1
and composed solely of Trustees, except as prohibited by law.
4.2 Meetings; Notice. Notice of Committee meetings shall be given in
the same manner as notice for special meetings of the Board of Trustees.
One-third, but not less than one, of the members of any Committee shall
be present in person at any meeting of a Committee in order to constitute
a quorum for the transaction of business at a meeting, and the act of a
majority present at a meeting at the time of a vote if a quorum is then
present shall be the act of a committee. The Chairman of the Committee
shall fix the time and place of a Committee's meetings unless the Board
of Trustees shall otherwise provide.
4.3 Telephonic Meetings. Except as required by the 1940 Act or other
applicable law, members of a Committee may participate in a meeting by
means of a conference telephone or similar communications equipment and
participation in a meeting by these means shall constitute presence in
person at the meeting.
4.4 Action by Written Consent of Committees. Any action required or
permitted to be taken at any meeting of a Committee may be taken without
a meeting, if a consent in writing to such action is signed by a majority
of the Committee and such written consent is filed with the minutes of
proceedings of such Committee.
4.5 Vacancies. Subject to the provisions hereof, the Board of
Trustees shall have the power at any time to change the membership of
any Committee, to fill all vacancies, to designate alternate members
to replace any absent or disqualified member or to dissolve any such
Committee.
ARTICLE V
FISCAL YEAR
5.1 General. Except as from time to time otherwise provided by the
Trustees, the fiscal year of the Trust shall be a calendar year.
ARTICLE VI
SEAL
6.1 General. The Board of Trustees may authorize the adoption
of a seal by the Trust. The Trustees may authorize one or more
duplicate seals. Whenever the Trust is permitted or required to
affix its seal to a document, it shall be sufficient to meet the
requirements of any law, rule or regulation relating to a seal to
place the word "(SEAL)" adjacent to the signature of the person
authorized to execute the document on behalf of the Trust.
ARTICLE VII
EXECUTION OF PAPERS
7.1 General. Except as the Trustees may generally or in particular
cases authorize the execution thereof in some other manner, all deeds,
leases, transfers, contracts, bonds, notes, checks, drafts and other
obligations made, accepted or endorsed by the Trust shall be executed
by the President, any Vice President, the Treasurer or by whomever
else shall be designated for that purpose by vote of the Trustees,
and need not bear the seal of the Trust.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
8.1 Regular and Special Meetings. Except as provided in the next
sentence, regular meetings of the Shareholders for the election of
Trustees and the transaction of such other business as may properly
come before the meeting shall be held, so long as Shares are listed
for trading on the NYSE Amex LLC, on at least an annual basis, on
such day and at such place as shall be designated by the Trustees.
Such regular meetings of the Shareholders shall only be called
by the Board of Trustees. In the event that such a meeting is
not held in any annual period, 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. Except as required by the 1940 Act
or other applicable law, special meetings of Shareholders or any or
all classes or series of Shares may only be called by a majority of
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 Board of Trustees.
8.2 Notice of Regular or Special Meetings. Written notice
specifying the place, day and hour of any regular or special meeting,
the purpose of the meeting, to the extent required by law to be
provided, and all other matters required by law shall be given to
each Shareholder of record entitled to vote, either personally or
by sending a copy thereof by mail, postage prepaid, to his or her
address appearing on the books of the Trust or theretofore given
by him or her to the Trust for the purpose of notice or, if no
address appears or has been given, addressed to the place where
the principal office of the Trust is situated, or by electronic
transmission, including facsimile transmission, to any address
or number of such Shareholder at which the Shareholder receives
electronic transmissions. If mailed, such notice shall be deemed
to be given once deposited in the U.S.mail addressed to the
Shareholder at his or her post office address as it appears on the
records of the Trust, with postage thereon prepaid. It shall be the
duty of the Secretary to give notice of each meeting of Shareholders.
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.
8.3 Notice of Adjourned Meetings. It shall not be necessary to
give notice of the time and place of any adjourned meeting or of the
business to be transacted thereat other than by announcement at the
meeting at which such adjournment is taken.
8.4 Scope of Meetings. Except as otherwise expressly set forth
elsewhere in these Bylaws, no business shall be transacted at meetings
of Shareholders except as specifically designated in the notice or
otherwise properly brought before the Shareholders by or at the direction
of the Board of Trustees.
8.5 Organization of Shareholder Meetings. Every meeting of
Shareholders shall be conducted by a Trustee, the President or
any other officer, as designated by the Board of Trustees, who shall
preside at and act as chairperson of a meeting of Shareholders.
The Secretary, an Assistant Secretary or a person appointed by
the Trustees or, in the absence of such appointment, a person
appointed by the person presiding as chairperson at the meeting
shall act as Secretary of the meeting and record the minutes of
the meeting. If the Secretary presides as chairperson at a meeting
of Shareholders, then the Secretary shall not also act as secretary
of the meeting and record the minutes of the meeting. The order of
business and all other matters of procedure at any meeting of
Shareholders shall be determined by the chairperson of the meeting.
The chairperson of the meeting may prescribe such rules, regulations
and procedures and take such action as, in the discretion of such
chairperson, are appropriate for the proper conduct of the meeting,
including, without limitation: (a) restricting admission to the
time set for the commencement of the meeting; (b) limiting
attendance at the meeting to Shareholders of record of the Trust,
their duly authorized proxies or other such persons as the
chairperson of the meeting may determine; (c) limiting participation
at the meeting on any matter to Shareholders of record of the
Trust entitled to vote on such matter, their duly authorized proxies
or other such persons as the chairperson of the meeting may determine;
(d) limiting the time allotted to questions or comments by participants;
(e) maintaining order and security at the meeting; (f) removing any
Shareholder or other person who refuses to comply with meeting procedures,
rules or guidelines as set forth by the chairperson of the meeting;
(g) concluding a meeting or recessing or adjourning the meeting to a
later date and time and at a place announced at the meeting; and
(h) complying with any state and local laws and regulations concerning
safety and security. Without limiting the generality of the powers
of the chairperson of the meeting pursuant to the foregoing provisions,
the chairperson, subject to review by the Independent Trustees, may
adjourn any meeting of Shareholders for any reason deemed necessary
by the chairperson, including, without limitation, if (i) no quorum
is present for the transaction of the business, (ii) the Board of
Trustees or the chairperson of the meeting determines that adjournment
is necessary or appropriate to enable the Shareholders to consider
fully information that the Board of Trustees or the chairperson
of the meeting determines has not been made sufficiently or timely
available to Shareholders or (iii) the Board of Trustees or the
chairperson of the meeting determines that adjournment is otherwise
in the best interests of the Trust. Unless otherwise determined by
the chairperson of the meeting, meetings of Shareholders shall not
be required to be held in accordance with the general rules of
parliamentary procedure or any otherwise established rules of order.
8.6 Quorum. At any meeting of Shareholders, the presence in
person or by proxy of Shareholders entitled to cast a majority
of all the votes entitled to be cast on a particular matter shall
constitute a quorum for voting on a particular matter or the
transaction of business; but this section shall not affect any
requirement under any statute or the Declaration of Trust for t
he vote necessary for the adoption of any measure. If, however,
such quorum shall not be present at any meeting of Shareholders,
the chairperson of the meeting shall have the power to adjourn
the meeting from time to time without the Trust having to set a
new record date or provide any additional notice of such meeting,
subject to any obligation of the Trust to give notice pursuant to
Section 8.3. At such adjourned meeting at which a quorum shall
be present, any business may be transacted which might have been
transacted at the meeting as originally notified. The Shareholders
present, either in person or by proxy, at a meeting of Shareholders
which has been duly called and convened and at which a quorum was
established may continue to transact business until adjournment,
notwithstanding the withdrawal of enough votes to
leave less than a quorum then being present at the meeting.
8.7 Voting Power.
(a) Each whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote and each fractional Share shall be entitled
to a proportionate fractional vote, except as otherwise provided in the
notice of the meeting forwarded to the Shareholders by the Trustees, the
Declaration of Trust, these Bylaws, or required by the 1940 Act or any
other applicable law. Except as otherwise provided in the notice of the
meeting forwarded to the Shareholders by the Trustees, the Declaration of
Trust, these Bylaws or required by the 1940 Act or any other 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.
(b) With regard to election of a Trustee, and except as may be mandated
by the 1940 Act or any other applicable law or the listing requirements
of the principal exchange on which the Common Shares are listed, subject
to the voting rights of any class or series of Shares as set forth in
these Bylaws: (i) a majority of all the votes cast at a meeting of
Shareholders duly called and at which a quorum is present shall be
sufficient to elect a Trustee in an uncontested election; and (ii)
a majority of all the Shares entitled to vote at a meeting of Shareholders
duly called and at which a quorum is present shall be sufficient to
elect a Trustee in a contested election (which, for purposes of these
Bylaws, is an election at which the number of nominees exceeds the number
of Trustees to be elected at the meeting). Each Share may be voted for
as many individuals as there are Trustees to be elected and for whose
election the Share is entitled to be voted.
(c) With regard to any other matter which may properly come before a
meeting of Shareholders duly called and at which a quorum is present,
and except where a different voting standard is required by the 1940
Act or any other applicable law, by the listing requirements of the
principal exchange on which the Common Shares are listed or by a specific
provision of the Declaration of Trust, (i) if such matter is approved by
at least 60% of the Trustees then in office, including 60% of the
Independent Trustees then in office, a majority of all the votes cast
at the meeting shall be required to approve such matter; and (ii) if
such matter is not approved by at least 60% of the Trustees then in
office, including 60% of the Independent Trustees then in office,
75% of all the Shares entitled to vote at the meeting shall be
required to approve such matter.
8.8 Proxies. A Shareholder may cast the votes entitled to be cast
by him or her either in person or by proxy executed by the Shareholder
or by his or her duly authorized agent in any manner permitted by law.
Such proxy shall be filed with such officer of the Trust or third party
agent as the Board of Trustees shall have designated for such purpose
for verification at or prior to such meeting. Any proxy relating to
the Shares shall be valid until the expiration date therein or, if no
expiration is so indicated, for such period as is permitted pursuant
to Delaware law. At a meeting of Shareholders, all questions concerning
the qualification of voters, the validity of proxies, and the acceptance
or rejection of votes, shall be decided by or on behalf of the chairperson
of the meeting, subject to Section 8.11.
8.9 Record Dates. The Board of Trustees may fix the date for
determination of Shareholders entitled to notice of and to vote at a
meeting of Shareholders. If no date is fixed for the determination
of the Shareholders entitled to vote at any meeting of Shareholders,
only persons in whose names Shares entitled to vote are recorded on
the share records of the Trust at the opening of business on the
day of any meeting of Shareholders shall be entitled to vote at such meeting.
8.10 Voting of Shares by Certain Holders. Shares registered in
the name of a corporation, partnership, trust or other entity, if
entitled to be voted, may be voted by the president or a vice president,
a general partner or trustee thereof, as the case may be, or a proxy
appointed by any of the foregoing individuals, unless some other person
who has been appointed to vote such Shares pursuant to a bylaw or a
resolution of the governing body of such corporation or other entity
or pursuant to an agreement of the partners of the partnership presents
a certified copy of such bylaw, resolution or agreement, in which case
such person may vote such Shares. Any trustee or other fiduciary may
vote Shares registered in his or her name as such fiduciary, either in
person or by proxy.
8.11 Inspectors.
(a) Before or at any meeting of Shareholders, the chairperson of the
meeting may appoint one or more persons as inspectors for such meeting.
Such inspectors shall (i) ascertain and report the number of Shares
represented at the meeting, in person or by proxy, and the validity
and effect of proxies, (ii) receive and tabulate all votes, ballots
or consents, (iii) report such tabulation to the chairperson of the
meeting and (iv) perform such other acts as are proper to conduct
the election or voting at the meeting.
(b) Each report of an inspector shall be in writing and signed by
him or her or by a majority of them if there is more than one inspector
acting at such meeting. If there is more than one inspector, the report
of a majority shall be the report of the inspectors. The report of the
inspector or inspectors on the number of Shares represented at the
meeting and the results of the voting shall be prima facie evidence
thereof.
8.12 Advance Notice of Nominees for Trustee and Other Proposals.
(a) Nominations and Other Proposals to be Considered at Meetings
of Shareholders. Nominations of individuals for election to the
Board of Trustees and the proposal of other business to be considered
by the Shareholders at meetings of Shareholders may be properly brought
before the meeting only as set forth in this Section 8.12. All
judgments and determinations made by the Board of Trustees or the
chairperson of the meeting, as applicable, under this Section 8.12
(including, without limitation, judgments as to whether any matter
or thing is satisfactory to the Board of Trustees and determinations
as to the propriety of a proposed nomination or a proposal of other
business) shall be made in good faith.
(b) Annual Meetings of Shareholders.
(i) Nominations of individuals for election to the Board of Trustees
and the proposal of other business to be considered by the Shareholders
at an annual meeting of Shareholders may be properly brought before the
meeting (A) pursuant to the Trust's notice of meeting or otherwise
properly brought before the meeting by or at the direction of the
Board of Trustees or (B) by any Shareholder of the Trust who (1)
has continuously held at least $2,000 in market value, or 1%, of the
Shares entitled to vote at the meeting on such election or the proposal
for other business, as the case may be, for at least one year from the
date such Shareholder gives the notice provided for in this Section
8.12(b) (or, if such notice is given prior to December 31, 2009,
continuously held Shares since the Shares have been listed for trading on
the NYSE Amex LLC and without regard to the $2,000 market value, or 1%,
requirement), and continuously holds such Shares through and including
the time of the annual meeting (including any adjournment or postponement
thereof), (2) is a Shareholder of record at the time of giving the notice
provided for in this Section 8.12(b) through and including the time of
the annual meeting (including any adjournment or postponement thereof),
(3) is entitled to make nominations or propose other business and to vote
at the meeting on such election, or the proposal for other business, as
the case may be and (4) complies with the notice procedures set forth in
this Section 8.12 as to such nomination or other business. Section
8.12(b)(i)(B) shall be the exclusive means for a Shareholder to make
nominations or propose other business before an annual meeting of
Shareholders, except to the extent of matters which are required to be
presented to Shareholders by applicable law which have been properly
presented in accordance with the requirements of such law. For purposes
of determining compliance with the requirement in subclause
(1) of Section 8.12(b)(i)(B), (A) the market value of Common Shares
held by the applicable Shareholder shall be determined by multiplying
the number of Common Shares such Shareholder continuously held for that
one-year period by the highest selling price of the Common Shares as
reported on the principal exchange on which the Trust's Common Shares
are listed during the 60 calendar days before the date such notice was
submitted and (B) the market value of Preferred Shares held by the
applicable Shareholder shall be determined by multiplying the number
of Preferred Shares such Shareholder continuously held for that one-year
period by the Liquidation Preference (as that term is defined in Article X)
of such Preferred Shares.
(ii) For nominations for election to the Board of Trustees or other
business to be properly brought before an annual meeting by a Shareholder
pursuant to Section 8.12(b)(i)(B), the Shareholder shall have given
timely notice thereof in writing to the Secretary in accordance with
this Section 8.12 and such other business shall otherwise be a proper
matter for action by Shareholders. To be timely, a Shareholder's
notice shall set forth all information required under this Section 8.12
and shall be delivered to the Secretary at the principal executive offices
of the Trust not later than 5:00 p.m.(Eastern Time) on the 120th day
nor earlier than the 150th day prior to the first anniversary of the
date of the proxy statement for the preceding year's annual meeting;
provided that for any nominations or other business to be properly
brought before the annual meeting to occur during 2010 (the "Initial
Annual Meeting") the Shareholder's notice shall be delivered to the
Secretary at the principal executive offices of the Trust not later
than 5:00 p.m.(Eastern Time) on December 31, 2009 nor earlier than
December 1, 2009; provided further, however, that in the event that
the annual meeting is called for a date that is more than 30 days
earlier or later than the first anniversary of the date of the
preceding year's annual meeting, notice by the Shareholder to
be timely shall be so delivered not later than 5:00 p.m.(Eastern Time)
on the 10th day following the earlier of the day on which (A) notice of
the date of the annual meeting is mailed or otherwise made available or
(B) public announcement of the date of the annual meeting is first made
by the Trust. Neither the postponement or adjournment of an annual
meeting, nor the public announcement of such postponement or
adjournment, shall commence a new time period for the giving of a
Shareholder's notice as described above. No Shareholder may give a
notice to the Secretary described in this Section 8.12(b)(ii) unless
such Shareholder holds a certificate for all Shares owned by such
Shareholder during all times described in Section 8.12(b)(i), and a
copy of each such certificate held by such Shareholder at the time
of giving such notice shall accompany such Shareholder's notice to
the Secretary in order for such notice to be effective; provided,
that, if at the time of giving such notice Preferred Shares may
only be held in book-entry form, then such Shareholder shall in
lieu of delivering certificates for all such Preferred Shares
deliver at the time of giving such notice evidence that such
Shareholder is the Beneficial Owner (as that term is defined in
Article X) for all Preferred Shares held by such Shareholder during
all times described in Section 8.12(b)(i).
A Shareholder's notice shall set forth:
A. as to each individual whom the Shareholder proposes to
nominate for election or reelection as a Trustee (a "Proposed Nominee")
and any Proposed Nominee Associated Person (as defined in
Section 8.12(b)(iv)), (1) the name, age, business address and residence
address of such Proposed Nominee and the name and address of such
Proposed Nominee Associated Person, (2) a statement of whether such
Proposed Nominee is proposed for nomination as an Independent
Trustee (as defined in Section 2.2) or a Managing Trustee (as defined
in Section 2.2) and a description of such Proposed Nominee's
qualifications to be an Independent Trustee or Managing Trustee,
as the case may be, and such Proposed Nominee's qualifications to
be a Trustee pursuant to the criteria set forth in Section 2.1,
(3) the class, series and number of any Shares that are, directly
or indirectly, beneficially owned or owned of record by such
Proposed Nominee or by such Proposed Nominee Associated Person,
(4) the date such Shares were acquired and the investment intent
of such acquisition, (5) a description of all purchases and sales
of securities of the Trust by such Proposed Nominee or by such
Proposed Nominee Associated Person during the previous 24 month
period, including the date of the transactions, the class, series
and number of securities involved in the transactions and the
consideration involved, (6) a description of all Derivative Transactions
(as defined in Section 8.12(b)(iv)) by such Proposed Nominee or by
such Proposed Nominee Associated Person during the previous 24 month
period, including the date of the transactions and the class, series
and number of securities involved in, and the material economic terms
of, the transactions, such description to include, without limitation,
all information that such Proposed Nominee or Proposed Nominee
Associated Person would be required to report on an Insider Report
(as defined in Section 8.12(b)(iv)) if such Proposed Nominee or
Proposed Nominee Associated Person were a Trustee of the Trust or
the beneficial owner of more than 10% of any class or series of
Shares at the time of the transactions, (7) any performance
related fees (other than an asset based fee) that such Proposed
Nominee or such Proposed Nominee Associated Person is entitled to
based on any increase or decrease in the value of Shares or
instrument or arrangement of the type contemplated within the
definition of Derivative Transaction, if any, as of the date of
such notice, including, without limitation, any such interests
held by members of such Proposed Nominee's or such Proposed Nominee
Associated Person's immediate family sharing the same household
with such Proposed Nominee or such Proposed Nominee Associated
Person, (8) any proportionate interest in Shares or instrument or
arrangement of the type contemplated within the definition of
Derivative Transaction held, directly or indirectly, by a general or
limited partnership in which such Proposed Nominee or such Proposed
Nominee Associated Person is a general partner or, directly or
indirectly, beneficially owns an interest in a general partner,
(9) a description of all direct and indirect compensation and
other material monetary agreements, arrangements and understandings
during the past three years, and any other material relationships,
between or among such Shareholder, Proposed Nominee Associated Person,
or their respective affiliates and associates, or others acting in
concert therewith, on the one hand, and each Proposed Nominee, or his
or her respective affiliates and associates, or others acting in
concert therewith, on the other hand, including, without limitation,
all information that would be required to be disclosed pursuant to
Item 404 of Regulation S-K promulgated by the Securities and Exchange
Commission (the "SEC") (and any successor regulation), if the
Shareholder making the nomination and any Proposed Nominee Associated
Person on whose behalf the nomination is made, or any affiliate or
associate thereof or person acting in concert therewith, were the
"registrant" for purposes of such rule and the Proposed Nominee were
a director or executive officer of such registrant, (10) any rights
to dividends on the Shares owned beneficially by such Proposed
Nominee or such Proposed Nominee Associated Person that are separated
or separable from the underlying Shares, (11) to the extent known by
such Proposed Nominee or such Proposed Nominee Associated Person, the
name and address of any other person who owns, of record or beneficially,
any Shares and who supports the Proposed Nominee for election or
reelection as a Trustee, (12) all other information relating to such
Proposed Nominee or such Proposed Nominee Associated Person that is
required to be disclosed in solicitations of proxies for election of
Trustees in an election contest (even if an election contest is not
involved), or is otherwise required, in each case, pursuant to
Section 14 (or any successor provision) of the Exchange Act, and the
rules and regulations promulgated thereunder and (13) such Proposed
Nominee's notarized written consent to being named in the
Shareholder's proxy statement as a nominee and to serving as a
Trustee if elected;
B. as to any other business that the Shareholder proposes to
bring before the meeting, (1) a description of such business, (2)
the reasons for proposing such business at the meeting and any
material interest in such business of such Shareholder or any Shareholder
Associated Person (as defined in Section 8.12(b)(iv)), including
any anticipated benefit to such Shareholder or any Shareholder Associated
Person therefrom, (3) a description of all agreements, arrangements
and understandings between such Shareholder and Shareholder Associated
Person amongst themselves or with any other person or persons
(including their names) in connection with the proposal of such business
by such Shareholder and (4) a representation that such Shareholder
intends to appear in person or by proxy at the meeting to bring the
business before the meeting;
C. as to the Shareholder giving the notice and any Shareholder
Associated Person, (1) the class, series and number of all Shares that
are owned of record by such Shareholder or by such Shareholder
Associated Person, if any, (2) the class, series and number of,
and the nominee holder for, any Shares that are owned, directly or
indirectly, beneficially but not of record by such Shareholder or by
such Shareholder Associated Person, if any, (3) with respect to the
foregoing clauses (1) and (2), the date such Shares were acquired
and the investment intent of such acquisition and (4) all information
relating to such Shareholder and Shareholder Associated Person that
is required to be disclosed in connection with the solicitation of
proxies for election of Trustees in an election contest (even if an
election contest is not involved), or is otherwise required, in each
case, pursuant to Section 14 (or any successor provision) of the Exchange
Act and the rules and regulations promulgated thereunder;
D. as to the Shareholder giving the notice and any Shareholder
Associated Person, (1) the name and address of such Shareholder,
as they appear on the Trust's share ledger and the current name and
address, if different, of such Shareholder and Shareholder Associated
Person and (2) the investment strategy or objective, if any, of such
Shareholder or Shareholder Associated Person and a copy of the prospectus,
offering memorandum or similar document, if any, provided to investors or
potential investors in such Shareholder or Shareholder Associated Person;
E. as to the Shareholder giving the notice and any Shareholder
Associated Person, (1) a description of all purchases and sales of
securities of the Trust by such Shareholder or Shareholder Associated
Person during the previous 24 month period, including the date of
the transactions, the class, series and number of securities involved
in the transactions and the consideration involved, (2) a description
of all Derivative Transactions by such Shareholder or Shareholder
Associated Person during the previous 24 month period, including
the date of the transactions and the class, series and number of
securities involved in, and the material economic terms of, the
transactions, such description to include, without limitation,
all information that such Shareholder or Shareholder Associated
Person would be required to report on an Insider Report if such
Shareholder or Shareholder Associated Person were a Trustee of
the Trust or the beneficial owner of more than 10% of any class
or series of Shares at the time of the transactions, (3) any
performance related fees (other than an asset based fee) that
such Shareholder or Shareholder Associated Person is entitled to
based on any increase or decrease in the value of Shares or instrument
or arrangement of the type contemplated within the definition of
Derivative Transaction, if any, as of the date of such notice,
including, without limitation, any such interests held by members
of such Shareholder's or Shareholder Associated Person's immediate
family sharing the same household with such Shareholder or Shareholder
Associated Person, (4) any proportionate interest in Shares or
instrument or arrangement of the type contemplated within the definition
of Derivative Transaction held, directly or indirectly, by a general
or limited partnership in which such Shareholder or Shareholder
Associated Person is a general partner or, directly or indirectly,
beneficially owns an interest in a general partner and (5) any
rights to dividends on the Shares owned beneficially by such Shareholder
or Shareholder Associated Person that are separated or separable
from the underlying Shares;
F. to the extent known by the Shareholder giving the notice,
the name and address of any other Person who owns, beneficially
or of record, any Shares and who supports the nominee for election
or reelection as a Trustee or the proposal of other business; and
G. if more than one class or series of Shares is outstanding,
the class and series of Shares entitled to vote for such Proposed
Nominee and/or Shareholder's proposal, as applicable.
(iii) Notwithstanding anything in the second sentence of Section
8.12(b)(ii) to the contrary, in the event that the number of Trustees
to be elected to the Board of Trustees is increased and there is no
public announcement of such action at least 130 days prior to the first
anniversary of the date of the proxy statement for the preceding
year's annual meeting, a Shareholder's notice required by this
Section 8.12(b) also shall be considered timely, but only with respect
to nominees for any new positions created by such increase, if the
notice is delivered to the Secretary at the principal executive offices
of the Trust not later than 5:00 p.m.(Eastern Time) on the 10th day
immediately following the day on which such public announcement is
first made by the Trust.
(iv) For purposes of this Section 8.12, (i) "Shareholder Associated
Person" of any Shareholder shall mean (A) any Person acting in concert
with, such Shareholder, (B) any direct or indirect beneficial owner of
Shares owned of record or beneficially by such Shareholder and (C) any
Person controlling, controlled by or under common control with such
Shareholder or a Shareholder Associated Person; (ii) "Proposed Nominee
Associated Person" of any Proposed Nominee shall mean (A) any Person
acting in concert with such Proposed Nominee, (B) any direct or indirect
beneficial owner of Shares owned of record or beneficially by such
Proposed Nominee and (C) any Person controlling, controlled by or under
common control with such Proposed Nominee or a Proposed Nominee
Associated Person; (iii) "Derivative Transaction" by a Person shall
mean any (A) transaction in, or arrangement, agreement or understanding
with respect to, any option, warrant, convertible security, stock
appreciation right or similar right with an exercise, conversion or
exchange privilege, or settlement payment or mechanism related to, any
security of the Trust, or similar instrument with a value derived in
whole or in part from the value of a security of the Trust, in any
such case whether or not it is subject to settlement in a security of the
Trust or otherwise or (B) any transaction, arrangement, agreement or
understanding which included or includes an opportunity for such person,
directly or indirectly, to profit or share in any profit derived from any
increase or decrease in the value of any security of the Trust, to
mitigate any loss or manage any risk associated with any increase or
decrease in the value of any security of the Trust or to increase or decrease
the number of securities of the Trust which such person was, is or will
be entitled to vote, in any such case whether or not it is subject to
settlement in a security of the Trust or otherwise; and (iv)
"Insider Report" shall mean a statement required to be filed pursuant to
Section 16 of the Exchange Act (or any successor provisions) by a person
who is a Trustee of the Trust or who is directly or indirectly the
beneficial owner of more than 10% of any class of Shares.
(c) Shareholder Nominations or Other Proposals Causing Covenant
Breaches or Defaults. At the same time as the submission of any
Shareholder nomination or proposal of other business to be considered
at a Shareholders' meeting that, if approved and implemented by the
Trust, would cause the Trust or any subsidiary (as defined in
Section 8.12(f)(iii)) of the Trust to be in breach of any covenant
of the Trust or any subsidiary of the Trust or otherwise cause a
default (in any case, with or without notice or lapse of time) in
any existing debt instrument or agreement of the Trust or any subsidiary
of the Trust or other material contract or agreement of the Trust
or any subsidiary of the Trust, the proponent Shareholder or Shareholders
shall submit to the Secretary at the principal executive offices
of the Trust (i) evidence satisfactory to the Board of Trustees of
the lender's or contracting party's willingness to waive the breach
of covenant or default or (ii) a detailed plan for repayment of the
indebtedness to the lender or curing the contractual breach or
default and satisfying any resulting damage claim, specifically
identifying the actions to be taken or the source of funds, which
plan must be satisfactory to the Board of Trustees in its discretion,
and evidence of the availability to the Trust of substitute credit
or contractual arrangements similar to the credit or contractual
arrangements which are implicated by the Shareholder nomination or
other proposal that are at least as favorable to the Trust, as
determined by the Board of Trustees in its discretion.
(d) Shareholder Nominations or Proposals Requiring Governmental
Action. If (i) submission of any Shareholder nomination or proposal
of other business to be considered at a Shareholders' meeting that
could not be considered or, if approved, implemented by the Trust
without the Trust, any subsidiary of the Trust, the proponent Shareholder,
any Proposed Nominee of such Shareholder, any Proposed Nominee
Associated Person of such Proposed Nominee, any Shareholder Associated
Person of such Shareholder, the holder of proxies or their respective
affiliates or associates filing with or otherwise notifying or
obtaining the consent, approval or other action of any federal,
state, municipal or other governmental or regulatory body
(a "Governmental Action") or (ii) such Shareholder's ownership of Shares
or any solicitation of proxies or votes or holding or exercising
proxies by such Shareholder, any Proposed Nominee of such Shareholder,
any Proposed Nominee Associated Person of such Proposed Nominee, any
Shareholder Associated Person of such Shareholder, or their respective
affiliates or associates would require Governmental Action, then, at
the same time as the submission of any Shareholder nomination or
proposal of other business to be considered at a Shareholders' meeting,
the proponent Shareholder or Shareholders shall submit to the Secretary
at the principal executive offices of the Trust (x) evidence satisfactory
to the Board of Trustees that any and all Governmental Action has been
given or obtained, including, without limitation, such evidence as the
Board of Trustees may require so that any nominee may be determined to
satisfy any suitability or other requirements or (y) if such evidence was
not obtainable from a governmental or regulatory body by such time
despite the Shareholder's diligent and best efforts, a detailed plan for
making or obtaining the Governmental Action prior to the election of
any such Proposed Nominee or the implementation of such proposal, which
plan must be satisfactory to the Board of Trustees in its discretion.
(e) Special Meetings of Shareholders. As set forth in Section 8.4,
only business brought before the meeting pursuant to the Trust's notice
of meeting shall be conducted at a special meeting of Shareholders.
Subject to the requirements of the 1940 Act or any other applicable
laws, nominations of individuals for election to the Board of Trustees
only may be made at a special meeting of Shareholders at which Trustees
are to be elected: (i) pursuant to the Trust's notice of meeting; (ii)
otherwise properly brought before the meeting by or at the direction of
the Board of Trustees; or (iii) provided that the Board of Trustees has
determined that Trustees shall be elected at such special meeting, by
any Shareholder of the Trust who has been for at least one year immediately
preceding such Shareholder giving the notice provided for in this
Section 8.12(e) a Shareholder of record of Shares entitled to vote
at the meeting on such election and continues to be a Shareholder
of record both at the time of giving of notice provided for in this
Section 8.12(e) through and including the time of the special meeting,
who is entitled to vote at the meeting on such election and who has
complied with the notice procedures and other requirements set forth
in this Section 8.12(e). In the event the Trust calls a special
meeting of Shareholders for the purpose of electing one or more Trustees
to the Board of Trustees, any such Shareholder may nominate an
individual or individuals (as the case may be) for election as a
Trustee as specified in the Trust's notice of meeting, if the Shareholder
satisfies the holding period and certificate and/or evidence of being
a Beneficial Owner requirements set forth in Section 8.12(b)(i)
and Section 8.12(b)(ii), the Shareholder's notice contains or is
accompanied by the information and documents required by
Section 8.12 and the Shareholder has given timely notice thereof
in writing to the Secretary at the principal executive offices of the Trust.
To be timely, a Shareholder's notice shall be delivered to the Secretary
at the principal executive offices of the Trust not earlier than the 150th
day prior to such special meeting and not later than 5:00 p.m.
(Eastern Time) on the later of (i) the 120th day prior to such
special meeting or (ii) the 10th day following the day on which
public announcement is first made of the date of the special meeting
and of the nominees proposed by the Trustees to be elected at such meeting.
Neither the postponement or adjournment of a special meeting, nor the
public announcement of such postponement or adjournment, shall commence
a new time period for the giving of a Shareholder's notice as described above.
(f) General.
(i) If information submitted pursuant to this Section 8.12 by any
Shareholder proposing a nominee for election as a Trustee or any proposal
for other business at a meeting of Shareholders shall be deemed by the
Board of Trustees incomplete or inaccurate, any authorized officer or
the Board of Trustees or any Committee may treat such information as not
having been provided in accordance with this Section 8.12. Any notice
submitted by a Shareholder pursuant to this Section 8.12 that is deemed by
the Board of Trustees inaccurate, incomplete or otherwise fails to satisfy
completely any provision of this Section 8.12 shall be deemed defective
and shall thereby render all proposals and nominations set forth in such
notice defective. Upon written request by the Secretary or the Board of
Trustees or any Committee (which may be made from time to time), any
Shareholder proposing a nominee for election as a Trustee or any proposal
for other business at a meeting of Shareholders shall provide, within
three business days after such request (or such other period as may be
specified in such request), (A) written verification, satisfactory to
the Secretary or any other authorized officer or the Board of Trustees
or any Committee, in his, her or its discretion, to demonstrate the
accuracy of any information submitted by the Shareholder pursuant to
this Section 8.12, (B) written responses to information reasonably
requested by the Secretary, the Board of Trustees or any Committee
and (C) a written update, to a current date, of any information
submitted by the Shareholder pursuant to this Section 8.12 as of an
earlier date. If a Shareholder fails to provide such written verification,
information or update within such period, the Secretary or any other
authorized officer or the Board of Trustees may treat the information
which was previously provided and to which the verification, request or
update relates as not having been provided in accordance with this
Section 8.12; provided, however, that no such written verification,
response or update shall cure any incompleteness, inaccuracy or failure
in any notice provided by a Shareholder pursuant to this Section 8.12.
It is the responsibility of a Shareholder who wishes to make a
nomination or other proposal to comply with the requirements of
Section 8.12; nothing in this Section 8.12(f)(i) or otherwise shall
create any duty of the Trust, the Board of Trustees or any Committee
nor any officer of the Trust to inform a Shareholder that the information
submitted pursuant to this Section 8.12 by or on behalf of such
Shareholder is incomplete or inaccurate or not otherwise in accordance
with this Section 8.12 nor require the Trust, the Board of Trustees,
any Committee or any officer of the Trust to request clarification
or updating of information provided by any Shareholder, but the Board
of Trustees, a Committee or the Secretary acting on behalf of the
Board of Trustees or a Committee, may do so in its, his or her discretion.
(ii) Only such individuals who are nominated in accordance with this
Section 8.12 shall be eligible for election by Shareholders as Trustees
and only such business shall be conducted at a meeting of Shareholders
as shall have been properly brought before the meeting in accordance
with this Section 8.12. The chairperson of the meeting and the Board
of Trustees shall each have the power to determine whether a nomination
or any other business proposed to be brought before the meeting was made
or proposed, as the case may be, in accordance with this Section 8.12
and, if any proposed nomination or other business is determined not to
be in compliance with this Section 8.12, to declare that such defective
nomination or proposal be disregarded.
(iii) For purposes of this Section 8.12: (A) "public announcement"
shall mean disclosure in (1) a press release reported by the Dow Xxxxx
News Service, Associated Press, Business Wire, PR Newswire or any other
widely circulated news or wire service or (2) a document publicly filed
by the Trust with the SEC pursuant to the Exchange Act; and (B)
"subsidiary" shall include, with respect to a person, any corporation,
partnership, joint venture or other entity of which such person (1)
owns, directly or indirectly, 10% or more of the outstanding voting
securities or other interests or (2) has a person designated by such
person serving on, or a right, contractual or otherwise, to designate
a person, so to serve on, the board of directors (or analogous
governing body).
(iv) Notwithstanding the foregoing provisions of this Section 8.12,
a Shareholder shall also comply with all applicable legal requirements,
including, without limitation, applicable requirements of state law,
the 1940 Act and the Exchange Act and the rules and regulations
thereunder, with respect to the matters set forth in this Section 8.12.
Nothing in this Section 8.12 shall be deemed to require that a
Shareholder nomination of an individual for election to the Board of
Trustees or a Shareholder proposal relating to other business be
included in the Trust's proxy statement, except as may be required by law.
(v) The Board of Trustees may from time to time require any individual
nominated to serve as a Trustee to agree in writing with regard to
matters of business ethics and confidentiality while such nominee serves
as a Trustee, such agreement to be on the terms and in a form
(the "Agreement") determined satisfactory by the Board of Trustees,
as amended and supplemented from time to time in the discretion of the
Board of Trustees. The terms of the Agreement may be substantially
similar to the Code of Business Conduct and Ethics of the Trust or
any similar code promulgated by the Trust (the "Code of Business Conduct")
or may differ from or supplement the Code of Business Conduct.
(vi) Determinations required or permitted to be made under this
Section 8.12 by the Board of Trustees may be delegated by the Board
of Trustees to a Committee, subject to applicable law.
8.13 No Shareholder Actions by Written Consent. Shareholders shall
not be authorized or permitted to take any action required or
permitted to be taken at a meeting of Shareholders by written consent,
and may take such action only at Shareholders meeting of the Trust.
8.14 Voting by Ballot. Voting on any question or in any election
may be voice vote unless the chairperson of the meeting or any
Shareholder shall demand that voting be by ballot.
8.15 Proposals of Business Which Are Not Proper Matters For Action
By Shareholders. Notwithstanding anything in these Bylaws to the
contrary, subject to the 1940 Act and any other applicable law, any
Shareholder proposal for business the subject matter or effect of
which would be within the exclusive purview of the Board of Trustees
or would reasonably likely, if considered by the Shareholders or
approved or implemented by the Trust, result in an impairment of the
limited liability status for the Trust's Shareholders, shall be
deemed not to be a matter upon which the Shareholders are entitled
to vote. The Board of Trustees in its discretion shall be entitled
to determine whether a Shareholder proposal for business is not a
matter upon which the Shareholders are entitled to vote pursuant to
this Section 8.15, and its decision shall be final and binding unless
determined by a court of competent jurisdiction to have been made
in bad faith.
ARTICLE IX
MISCELLANEOUS
9.1 Amendment of Bylaws. Except for any change for which these
Bylaws requires approval by more than a majority vote of the Trustees,
these Bylaws may be amended, changed, altered or repealed, in whole
or part, only by resolution of the Board of Trustees at any meeting
of the Board of Trustees at which a quorum is present, or by a written
consent signed by a majority of the Trustees then in office.
9.2 Waiver of Notice. Whenever any notice is required to be given
pursuant to the Declaration of Trust, these Bylaws, the 1940 Act or
any other applicable law, a waiver thereof in writing, signed by the
person or persons entitled to such notice, or a waiver by electronic
transmission by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Neither the business to be transacted at
nor the purpose of any meeting need be set forth in the waiver of
notice or waiver by electronic transmission, unless specifically
required by statute. The attendance of any person at any meeting
shall constitute a waiver of notice of such meeting, except where
such person attends a meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not
lawfully called or convened.
9.3 Ratification. The Board of Trustees or the Shareholders may
ratify and make binding on the Trust any action or inaction by the
Trust or its officers to the extent that the Board of Trustees or the
Shareholders could have originally authorized the matter. Moreover,
any action or inaction questioned in any Shareholder's derivative
proceeding or any other proceeding on the ground of lack of authority,
defective or irregular execution, adverse interest of a Trustee,
officer or Shareholder, non-disclosure, miscomputation, the application
of improper principles or practices of accounting, or otherwise, may
be ratified, before or after judgment, by the Board of Trustees or by
the Shareholders and, if so ratified, shall have the same force and
effect as if the questioned action or inaction had been originally
duly authorized, and such ratification shall be binding upon the
Trust and its Shareholders and shall constitute a bar to any claim
or execution of any judgment in respect of such questioned action
or inaction.
9.4 Ambiguity. In the case of an ambiguity in the application
of any provision of these Bylaws or any definition contained in
these Bylaws, the Board of Trustees shall have the sole power to
determine the application of such provisions with respect to any
situation based on the facts known to it and such determination
shall be final and binding unless determined by a court of competent
jurisdiction to have been made in bad faith.
9.5 Construction. If any provision of these Bylaws is determined
to be unlawful by a court or regulatory body of competent jurisdiction,
the remainder of these Bylaws shall remain in full force and effect and
the offending provision shall be construed to achieve the purpose of the
offending provision to the extent legally possible. The re-construction
of an unlawful provision shall be made by the Board of Trustees, or, in
the absence of action by the Board of Trustees, by the court or
regulatory body which determined the provision to be unlawful. These
Bylaws shall be subject to and construed accordance with the 1940 Act.
In the event of a conflict between any provision of these Bylaws and the
1940 Act, such provision shall be construed to achieve the purpose of
the provision to the extent legally possible under the 1940 Act.
9.6 Inspection of Bylaws. The Trustees shall keep at the principal
office for the transaction of business of the Trust the original or a
copy of the Bylaws as amended or otherwise altered to date, certified
by the Secretary, which shall be open to inspection by the Shareholders
at all reasonable times during office hours.
ARTICLE X
PREFERRED SHARES OF BENEFICIAL INTEREST
10.1 Statement Creating Five Series of Preferred Shares.
DESIGNATION
Series F: 1,000 preferred shares, par value $.0001 per share,
liquidation preference $25,000 per share plus an amount equal to
accumulated but unpaid distributions thereon (whether or not
earned or declared), are hereby designated auction preferred shares,
Series F (the "Series F"). Each share of the Series F shall have
an Applicable Rate for its Initial Rate Period determined pursuant
to a resolution of the Board of Trustees and an initial Distribution
Payment Date that shall be set pursuant to a resolution of the Board
of Trustees. The shares of Series F shall constitute a separate series
of Preferred Shares of the Trust.
Series M: 15,000 preferred shares, par value $.0001 per share,
liquidation preference $25,000 per share plus an amount equal to
accumulated but unpaid distributions thereon (whether or not earned
or declared), are hereby designated auction preferred shares, Series
M (the "Series M"). Each share of the Series M shall have an Applicable
Rate for its Initial Rate Period determined pursuant to a resolution of
the Board of Trustees and an initial Distribution Payment Date that shall
be set pursuant to a resolution of the Board of Trustees. The shares of
Series M shall constitute a separate series of Preferred Shares of the Trust.
Series T: 3,000 preferred shares, par value $.0001 per share, liquidation
preference $25,000 per share plus an amount equal to accumulated but unpaid
distributions thereon (whether or not earned or declared), are hereby
designated auction preferred shares, Series T (the "Series T"). Each share
of the Series T shall have an Applicable Rate for its Initial Rate Period
determined pursuant to a resolution of the Board of Trustees and an initial
Distribution Payment Date that shall be set pursuant to a resolution of the
Board of Trustees. The shares of Series T shall constitute a separate
series of Preferred Shares of the Trust.
Series Th: 8,000 preferred shares, par value $.0001 per share, liquidation .
preference $25,000 per share plus an amount equal to accumulated but unpaid
distributions thereon (whether or not earned or declared), are hereby
designated auction preferred shares, Series Th (the "Series Th"). Each
share of the Series Th shall have an Applicable Rate for its Initial Rate
Period determined pursuant to a resolution of the Board of Trustees and an
initial Distribution Payment Date that shall be set pursuant to a resolution
of the Board of Trustees. The shares of Series Th shall constitute a
separate series of Preferred Shares of the Trust.
Series W: 8,000 preferred shares, par value $.0001 per share, liquidation
preference $25,000 per share plus an amount equal to accumulated but unpaid
distributions thereon (whether or not earned or declared), are hereby
designated auction preferred shares, Series W (the "Series W", together
with Series T, Series TH, Series F, and Series M, each a "Series" and
collectively, the "Preferred Shares"). Each share of the Series W shall
have an Applicable Rate for its Initial Rate Period determined pursuant to
a resolution of the Board of Trustees and an initial Distribution Payment
Date that shall be set pursuant to a resolution of the Board of Trustees.
The shares of Series W shall constitute a separate series of Preferred
Shares of the Trust.
Preferred Shares may be marketed under the name "auction preferred shares"
or "Preferred Shares" or such other name as the Board of Trustees may
approve from time to time.
Each Preferred Share shall have such other preferences, rights, voting
powers, restrictions, limitations as to distributions, qualifications
and terms and conditions of redemption, in addition to those required
by applicable law, as are set forth in Parts I and II of Article X of
these Bylaws. Subject to the provisions of Section 5(c) of Part I hereof,
the Board of Trustees of the Trust may, in the future, reclassify additional
shares of the Trust's capital shares as Preferred Shares, with the same
preferences, rights, voting powers, restrictions, limitations as to
distributions, qualifications and terms and conditions of redemption and
other terms herein described, except that the Applicable Rate for the
Initial Rate Period, its initial Payment Date and any other changes in
the terms herein set forth shall be as set forth in the Bylaws reclassifying
such shares as Preferred Shares.
Capitalized terms used in Parts I and II of Article X of these Bylaws shall
have the meanings (with the terms defined in the singular having comparable
meanings when used in the plural and vice versa) provided in the
"Definitions" section immediately following, unless the context
otherwise requires.
DEFINITIONS
As used in Parts I and II of Article X of these Bylaws, the following terms
shall have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
(a) "AUDITOR'S CONFIRMATION" shall have the meaning specified in paragraph
(c) of Section 7 of Part I.
(b) "AFFILIATE" shall mean, for purposes of the definition of
"Outstanding," any Person known to the Auction Agent to be controlled by,
in control of or under common control with the Trust; provided, however,
that for purposes of these Bylaws no Broker-Dealer controlled by, in
control of or under common control with the Trust shall be deemed to be
an Affiliate nor shall any corporation or any Person controlled by,
in control of or under common control with such corporation, one of the
trustees, directors, or executive officers of which is a Trustee of the
Trust, be deemed to be an Affiliate solely because such trustee, director
or executive officer is also a Trustee of the Trust.
(c) "AGENT MEMBER" shall mean a member of or participant in the Securities
Depository that will act on behalf of a Bidder.
(d) "ALL HOLD RATE" shall mean 80% of the Reference Rate.
(e) "ANNUAL VALUATION DATE" shall mean the last Business Day of December
of each year.
(f) "APPLICABLE PERCENTAGE" shall mean the percentage determined based
on the lower of the credit ratings assigned to the Preferred Shares on
such date by Xxxxx'x and Fitch as follows:
With respect to Series F:
Credit Ratings Applicable
Xxxxx'x Fitch Percentage
Aa3 or higher AA- or higher 200%
A3 to A1 A- to A+ 250%
Baa3 to Baa1 BBB- to BBB+ 275%
Ba 1 and lower BB+ and lower 325%
With respect to Series M, T, Th and W:
Credit Ratings Applicable
Xxxxx'x Fitch Percentage
Aa3 or higher AA- or higher 150%
A3 to A1 A- to A+ 200%
Baa3 to Baa1 BBB- to BBB+ 225%
Ba 1 and lower BB+ and lower 275%
For purposes of this definition, the "prevailing rating" of the Preferred
Shares shall be (i) Aaa/AAA if such shares have a rating of Aaa by Xxxxx'x
and AAA by Fitch or the equivalent of such ratings by such agencies or a
substitute rating agency or substitute rating agencies; (ii) if not
Aaa/AAA, then Aa3/AA- if such shares have a rating of Aa3 or better
by Moody's and AA- or better by Fitch or the equivalent of such rating
by such agencies or a substitute rating agency or substitute rating
agencies, (iii) if not Aa3/AA- or higher, then A3/A- if such shares
have a rating of A3 or better by Moody's and A- or better by Fitch or
the equivalent of such ratings by such agencies or a substitute rating
agency or substitute rating agencies, (iv) if not A3/A- or higher, then
Baa3/BBB- if such shares have a rating of Baa3 or better by Moody's
and BBB- or better by Fitch or the equivalent of such ratings by such
agencies or substitute rating agency or substitute rating agencies, (v)
if not Baa3/BBB- or higher, then below Baa3/BBB-.
The Applicable Percentage as so determined shall be further subject to
upward but not downward adjustment in the discretion of the Board of
Trustees of the Trust after consultation with the Broker-Dealers,
provided that immediately following any such increase the Trust would be
in compliance with the Preferred Shares Basic Maintenance Amount. The
Trust shall take all reasonable action necessary to enable Moody's and
Fitch to provide a rating for the Preferred Shares. If Xxxxx'x or Fitch
shall not make such a rating available, the Trust shall select another
rating agency to act as a substitute rating agency. Notwithstanding the
foregoing, the Trust shall not be required to have more than one rating
gency provide a rating for the Preferred Shares.
(g) "APPLICABLE RATE" shall mean, for each Rate Period (i) if Sufficient
Clearing Orders exist for the Auction in respect thereof, the Winning
Bid Rate, (ii) if Sufficient Clearing Orders do not exist for the Auction
in respect thereof, the Maximum Rate, and (iii) in the case of any
Distribution Period if all the Preferred Shares are the subject of
Submitted Hold Orders for the Auction in respect thereof, the All
Hold Rate.
(h) "APPLICABLE SPREAD" means the spread determined based on the
credit rating assigned to Preferred Shares on such date by Xxxxx'x
(if Xxxxx'x is then rating the Preferred Shares) and Fitch
(if Fitch is then rating the Preferred Shares) as follows:
With respect to Series F:
Credit Ratings Applicable
Xxxxx'x Fitch Spread
Aa3 or higher AA- or higher 200 bps
A3 to A1 A- to A+ 250 bps
Baa3 to Baa1 BBB- to BBB+ 275 bps
Ba 1 and lower BB+ and lower 325 bps
With respect to Series M, T, Th, and W:
Credit Ratings Applicable
Xxxxx'x Fitch Spread
Aa3 or higher AA- or higher 150 bps
A3 to A1 A- to A+ 200 bps
Baa3 to Baa1 BBB- to BBB+ 225 bps
Ba 1 and lower BB+ and lower 275 bps
For purposes of this definition, the "prevailing rating" of the Preferred
Shares shall be (i) Aaa/AAA if such shares have a rating of AaaAAA by
Xxxxx'x and AAA by Fitch or the equivalent of such ratings by such agencies
or a substitute rating agency or substitute rating agencies,; (ii) if not
Aaa/AAA, then Aa3/AA- if such shares have a rating of Aa3AA- or better by
Moody's and AA- or better by Fitch or the equivalent of such rating by such
agencies or a substitute rating agency or substitute rating agencies,
(iii) if not Aa3/AA- or higher, then A3/A- if such shares have a rating of
A3A- or better by Moody's and A- or better by Fitch or the equivalent of
such ratings by such agencies or a substitute rating agency or substitute
rating agencies, (iv) if not A3/A- or higher, then Baa3/BBB- if such shares
have a rating of Baa3BBB- or better by Moody's and BBB- or better by
Fitch or the equivalent of such ratings by such agencies or substitute rating
agency or substitute rating agencies, (v) if not Baa3/BBB- or higher,
then below Baa3/BBB-.
The Applicable Spread as so determined shall be further subject to upward
but not downward adjustment in the discretion of the Board of Trustees after
consultation with the Broker-Dealers, provided that immediately following
any such increase the Trust would be in compliance with the Preferred Shares
Basic Maintenance Amount.
(i) "AUCTION" shall mean each periodic implementation of the Auction
Procedures.
(j) "AUCTION AGENCY AGREEMENT" shall mean the agreement between the Trust
and the Auction Agent which provides, among other things, that the Auction
Agent will follow the Auction Procedures for purposes of determining the
Applicable Rate for the Preferred Shares so long as the Applicable Rate for
such Preferred Shares is to be based on the results of an Auction.
(k) "AUCTION AGENT" shall mean the entity appointed as such by a resolution
of the Board of Trustees in accordance with Section 6 of Part II of
Article X.
(l) "AUCTION DATE" with respect to any Rate Period, shall mean the Business
Day next preceding the first day of such Rate Period.
(m) "AUCTION PROCEDURES" shall mean the procedures for conducting Auctions
set forth in Part II of Article X.
(n) "AVAILABLE PREFERRED SHARES" shall have the meaning specified in
paragraph (a) of Section 3 of Part II of Article X.
(o) "BENEFICIAL OWNER" with respect to shares of Preferred Shares, means
a customer (including broker dealers that are not Broker Dealers) of a
Broker-Dealer who is listed on the records of that Broker-Dealer (or, if
applicable, the Auction Agent) as a holder of Preferred Shares.
(p) "BID" and "BIDS" shall have the respective meanings specified in
paragraph (a) of Section 1 of Part II of Article X.
(q) "BIDDER" and "BIDDERS" shall have the respective meanings specified
in paragraph (a) of Section 1 of Part II of Article X; provided, however,
that neither the Trust nor any affiliate thereof shall be permitted to
be a Bidder in an Auction, except that any Broker-Dealer that is an affiliate
of the Trust may be a Bidder in an Auction, but only if the Orders placed
by such Broker-Dealer are not for its own account.
(r) "BOARD OF TRUSTEES" shall mean the Board of Trustees of the Trust or
any duly authorized committee thereof.
(s) "BROKER-DEALER" shall mean any broker-dealer, commercial bank or
other entity permitted by law to perform the functions required of a
Broker-Dealer in Part II of Article X, that is a member of, or a participant
in, the Securities Depository or is an affiliate of such member or
participant, has been selected by the Trust and has entered into a
Broker-Dealer Agreement that remains effective.
(t) "BROKER-DEALER AGREEMENT" shall mean an agreement between the Auction
Agent and a Broker-Dealer pursuant to which such Broker-Dealer agrees to
follow the procedures specified in Part II of Article X.
(u) "BUSINESS DAY" shall mean a day on which the New York Stock Exchange
is open for trading and which is neither a Saturday, Sunday nor any other
day on which banks in New York, New York, are authorized or obligated by
law to close.
(v) "CLOSING TRANSACTION" shall have the meaning specified in paragraph
(a)(i)(A) of Section 13 of Part I of Article X.
(w) "CODE" means the Internal Revenue Code of 1986, as amended.
(x) "COMMON SHARES" shall mean the outstanding common shares, par
value $.001 per share, of the Trust.
(y) "CURE DATE" shall mean the Preferred Shares Basic Maintenance Cure
Date or the 1940 Act Cure Date, as the case may be.
(z) "DATE OF ORIGINAL ISSUE" with respect to the Preferred Shares, shall
mean the date on which the Trust initially issued such shares.
(aa) "DECLARATION OF TRUST" shall have the meaning specified on the
first page.
(bb) "DEPOSIT SECURITIES" shall mean cash and any obligations or
securities, including Short Term Money Market Instruments that are
Eligible Assets, rated at least AAA or F-1 by Fitch, X-0, XXX-0 xx
XXXX-0 by Xxxxx'x or AAA or A-1 by S&P.
(cc) "DISCOUNTED VALUE" as of any Valuation Date, shall mean, (i)
with respect to a Fitch Eligible Asset or Xxxxx'x Eligible Asset that
is not currently callable or prepayable as of such Valuation Date at
the option of the issuer thereof, the quotient of the Market Value thereof
divided by the Fitch Discount Factor for a Fitch Eligible Asset or
Moody's Discount Factor for a Moody's Eligible Asset, (ii) with respect
to a Fitch Eligible Asset or Xxxxx'x Eligible Asset that is currently
callable as of such Valuation Date at the option of the issuer thereof,
the quotient as calculated above or the call price, plus accrued interest
or distributions, as applicable, whichever is lower, and (iii) with
respect to a Fitch Eligible Asset or Moody's Eligible Asset that is
prepayable, the quotient as calculated above or the par value, plus
accrued interest or distribution, as applicable, whichever is lower.
(dd) "DISTRIBUTION PAYMENT DATE" with respect to the Preferred Shares,
shall mean any date on which distributions are payable on the Preferred
Shares pursuant to the provisions of paragraph (d) of Section 2 of
Part I of Article X.
(ee) "DISTRIBUTION PERIOD," with respect to the Preferred Shares,
shall mean the period from and including the Date of Original Issue of
shares of a Series to but excluding the initial Distribution Payment
Date for shares of such Series and thereafter any period from and
including one Distribution Payment Date for shares of such Series to
but excluding the next succeeding Distribution Payment Date for shares
of such Series.
(ff) "EXISTING HOLDER," with respect to shares of Preferred Shares,
shall mean a Broker-Dealer (or any such other Person as may be
permitted by the Trust) that is listed on the records of the Auction
Agent as a holder of shares of any Series.
(gg) "EXPOSURE PERIOD" shall mean the period commencing on a given
Valuation Date and ending 45 days thereafter.
(hh) "FAILURE TO DEPOSIT," with respect to shares of a Series,
shall mean a failure by the Trust to pay to the Auction Agent, not
later than 12:00 noon, Eastern time, (A) on any Distribution Payment
Date for shares of such Series, in funds available on such Distribution
Payment Date in New York, New York, the full amount of any distribution
(whether or not earned or declared) to be paid on such Distribution
Payment Date on any share of such Series or (B) on any redemption date
in funds available on such redemption date for shares of such series
in New York, New York, the Redemption Price to be paid on such redemption
date for any share of such Series after notice of redemption is mailed
pursuant to paragraph (c) of Section 11 of Part I of Article X; provided,
however, that the foregoing clause (B) shall not apply to the Trust's
failure to pay the Redemption Price in respect of Preferred Shares when
the related Notice of Redemption provides that redemption of such shares
is subject to one or more conditions precedent and any such condition
precedent shall not have been satisfied at the time or times and in the
manner specified in such Notice of Redemption.
(ii) "FITCH" shall mean Fitch Ratings and its successors.
(jj) "FITCH DISCOUNT FACTOR" means for the purposes of determining the
Preferred Shares Basic Maintenance Amount, the percentage determined below:
(i) Common Stock and Preferred Stock of REITs and Other Real
Estate Companies:
DISCOUNT FACTOR (1)
REIT or Other Real Estate Company Preferred Shares 154%
REIT or Other Real Estate Company Common Shares 196%
(ii) Common Stocks and Warrants: The Fitch Discount Factor applied to
common stock other than REIT common stock and the common stock of other
real estate companies is:
Large-cap stocks: 200%
Mid-cap stocks: 233%
Small-cap stocks: 286%
Others: 370%
Small-cap stocks refer to stocks with a market capitalization between
$300 million to $2 billion.Mid-cap stocks refer to stocks with a market
capitalization between $2 billion to $10 billion.Large-cap stocks are
companies having a market capitalization greater than $10 billion.
(iii) Preferred Stock: The Fitch Discount Factor applied to preferred
stock other than REIT preferred stock and the preferred stock of other real
estate companies is the percentage determined by reference to the rating
in accordance with the table set forth below:
PREFERRED STOCK (1) DISCOUNT FACTOR
AAA 130%
AA 133%
A 135%
BBB 139%
BB 154%
Not rated or below BB 161%
Investment grade Dividends Received Deduction ("DRD") 164%
Not rated or below investment grade DRD 200%
(iv) Corporate Debt Securities (1)(2):
MATURITY IN YEARS AAA AA A BBB BB B Unrated(1)
1 or less 111% 114% 117% 120% 121% 127% 130%
2 or less (but longer than 1) 116% 123% 125% 127% 132% 137% 141%
3 or less (but longer than 2) 121% 125% 127% 131% 133% 140% 152%
4 or less (but longer than 3) 126% 126% 129% 132% 136% 144% 164%
5 or less (but longer than 4) 131% 132% 135% 139% 144% 149% 185%
7 or less (but longer than 5) 140% 143% 146% 152% 159% 167% 228%
10 or less (but longer than 7) 141% 145% 147% 153% 160% 168% 232%
12 or less (but longer than 10) 144% 147% 150% 157% 165% 174% 249%
15 or less (but longer than 12) 148% 151% 155% 163% 172% 182% 274%
Greater than 20 152% 156% 160% 169% 180% 191% 306%
(1) If a security is unrated by Fitch, but is rated by two other NRSROs,
then the lower of the ratings on the security from the two other NRSROs
should be used to determine the Fitch Discount Factor. If the security
is not rated by Fitch, but has a rating from only one other NRSRO, and the
security is above investment grade, the other rating will be used.
If the security is not rated by Fitch, but has a rating from only one
other NRSRO, and the security is below investment grade, then the security
will use the percentages set forth in the unrated column above.
(2) The Fitch Discount Factors will also apply to interest rate swaps and
caps, whereby the rating on the counterparty will determine the appropriate
Discount Factor to apply.
(v) Convertible Securities:
The Fitch Discount Factor applied to convertible securities is (A) 200% for
investment grade convertibles and (B) 222% for below investment grade
convertibles so long as such convertible securities have neither (x)
conversion premiums greater than 100% nor (y) a yield to maturity or
yield to worst of greater than the comparable term Treasury yields
plus 15 percentage points.
The Fitch Discount Factor applied to convertible securities which have
conversion premiums of greater than 100% is (A) 152% for investment
grade convertibles, and (B) 179% for below investment grade convertibles
so long as a such convertible securities do not have a yield to maturity
or yield to worst of greater than comparable term Treasury yields plus
15 percentage points.
The Fitch Discount Factor applied to convertible securities that have a
yield to maturity or yield to worst of greater than the comparable term
Treasury yield plus 15 percentage points is 370%.
(vi) U.S.Treasury Securities:
REMAINING TERM TO MATURITY DISCOUNT FACTOR
1 year or less 101.5%
2 years or less (but longer than 1 year) 103%
3 years or less (but longer than 2 years) 105%
4 years or less (but longer than 3 years) 107%
5 years or less (but longer than 4 years) 109%
7 years or less (but longer than 5 years) 112%
10 years or less (but longer than 7 years) 114%
15 years or less (but longer than 10 years) 122%
20 years or less (but longer than 15 years) 130%
25 years or less (but longer than 20 years) 146%
30 years or less (but longer than 25 years) 154%
(vii) Short-Term Instruments and Cash: The Fitch Discount Factor applied
to short-term portfolio securities, including without limitation Debt
Securities, Short Term Money Market Instruments and municipal debt
obligations, will be (A) 100%, so long as such portfolio securities mature
or have a demand feature at par exercisable within the Fitch Exposure
Period; (B) 115%, so long as such portfolio securities mature or have a
demand feature at par not exercisable within the Fitch Exposure Period; and
(C) 125%, so long as such portfolio securities neither mature nor have a
demand feature at par exercisable within the Fitch Exposure Period.
A Fitch Discount Factor of 100% will be applied to cash.
(viii) Rule 144A Securities: The Fitch Discount Factor applied to Rule
144A Securities shall be the Discount Factor determined in accordance
with the table above under "Corporate Debt Securities" in subsection (iv),
multiplied by 110% until such securities are registered under the
Securities Act of 1933, as amended from time to time.
(ix) Asset-backed and mortgage-backed securities: The percentage
determined by reference to the asset type in accordance with the
table set forth below.
Asset Type (with time remaining to maturity, if applicable) Discount Factor
U.S.Treasury/agency securities (10 years or less) 118%
U.S.Treasury/agency securities (greater than 10 years) 127%
X.X.xxxxxx sequentials (10 years or less) 128%
X.X.xxxxxx sequentials (greater than 10 years) 142%
X.X.xxxxxx principal only securities 236%
X.X.xxxxxx interest only securities
(with Market Value greater than 40% of par) 696%
X.X.xxxxxx interest only securities (with Market Value less than or
equal to
40% of par)
214%
AAA LockOut securities, interest only 236%
X.X.xxxxxx planned amortization class bonds (10 years or less) 115%
X.X.xxxxxx planned amortization class bonds (greater than 10 years) 136%
AAA sequentials (10 years or less) 118%
AAA sequentials (greater than 10 years) 135%
AAA planned amortization class bonds (10 years or less) 115%
AAA planned amortization class bonds (greater than 10 years) 140%
Jumbo mortgage rated AAA(1) 123%
Jumbo mortgage rated AA(1) 130%
Jumbo mortgage rated A(1) 136%
Jumbo mortgage rated BBB(1) 159%
Commercial mortgage-backed securities rated AAA 131%
Commercial mortgage-backed securities rated AA 139%
Commercial mortgage-backed securities rated A 148%
Commercial mortgage-backed securities rated BBB 177%
Commercial mortgage-backed securities rated BB 283%
Commercial mortgage-backed securities rated B 379%
Commercial mortgage-backed securities rated CCC or not rated 950%
(1) Applies to jumbo mortgages, credit cards, auto loans, home equity loans,
manufactured housing and prime mortgage-backed securities not issued by a
X.X.xxxxxx or instrumentality.
(x) Futures and call options: For purposes of Preferred Shares Basic
Maintenance Amount, futures held by the Trust and call options sold by the
Trust shall not be included as Fitch Eligible Assets. However, such assets
shall be valued at Market Value by subtracting the good faith margin and
the maximum daily trading variance as of the Valuation Date. For call
options purchased by the Trust, the Market Value of the call option will
be included as a Fitch Eligible Asset subject to a Fitch Discount Factor
mutually agreed to between the Trust and Fitch based on the characteristics
of the option contract such as its maturity and the underlying security
of the contract.
(xi) Securities lending: The Trust may engage in securities lending in
an amount not to exceed 10% of the Trust's total gross assets. For
purposes of calculating the Preferred Shares Basic Maintenance Amount,
such securities lent shall be included as Fitch Eligible Assets with
the appropriate Fitch Discount Factor applied to such lent security.
The obligation to return such collateral shall not be included as an
obligation/liability for purposes of calculating the Preferred Shares
Basic Maintenance Amount. However, the Trust may reinvest cash collateral
for securities lent in conformity with its investment objectives and
policies and the provisions of these Xxxxxx.Xx such event, to the extent
that securities lending collateral received is invested by the Trust
in assets that otherwise would be Fitch Eligible Assets and the value
of such assets exceeds the amount of the Trust's obligation to return
the collateral on a Valuation Date, such excess amount shall be included
in the calculation of Fitch Eligible Assets by applying the applicable
Fitch Discount Factor to this amount and adding the product to total
Fitch Eligible Assets.Conversely, if the value of assets in which securities
lending collateral has been invested is less then the amount of the
Trust's obligation to return the collateral on a Valuation Date, such
difference shall be included as an obligation/liability of the Trust for
purposes of calculating the Preferred Shares Basic Maintenance Amount.
Collateral received by the Trust in a securities lending transaction
and maintained by the Trust in the form received shall not be included
as a Fitch Eligible Asset for purposes of calculating the Preferred
Shares Basic Maintenance Amount.
(xii) Swaps (including Total Return Swaps and Interest Rate Swaps):
Total Return and Interest Rate Swaps are subject to the following
provisions:
(a) If the Trust has an outstanding gain from a swap transaction on a
Valuation Date, the gain will be included as a Fitch Eligible Asset
subject to the Fitch Discount Factor on the counterparty to the swap
transaction. At the time a swap is executed, the Trust will only enter
into swap transactions where the counterparty has at least a Fitch rating
of A- or Xxxxx'x rating of A3.
(b) Only the cumulative unsettled profit and loss from a Total Return
Swap transaction will be calculated when determining the Preferred
Shares Basic Maintenance Amount. If the Trust has an outstanding
liability from a swap transaction on a Valuation Date, the Trust will
count such liability as an outstanding liability from the total Fitch
Eligible Assets in calculating the Preferred Shares Basic Maintenance
Amount.
(c) In addition, for swaps other than Total Return Swaps, the Market
Value of the position (positive or negative) will be included as a
Fitch Eligible Asset. The aggregate notional value of all swaps will
not exceed the Liquidation Preference of the Outstanding Preferred Shares.
(d) (1) The underlying securities subject to a credit default swap
sold by the Trust will be subject to the applicable Fitch Discount
Factor for each security subject to the swap; (2) If the Trust purchases
a credit default swap and holds the underlying security, the Market
Value of the credit default swap and the underlying security will be
included as a Fitch Eligible Asset subject to the Fitch Discount Factor
assessed based on the counterparty risk; and (3) the Trust will not
include a credit default swap as a Fitch Eligible Asset purchase by
the Trust without the Trust holding the underlying security or when
the Trust busy a credit default swap for a basket of securities without
holding all the securities in the basket.
(xiii) Senior Loans: The Fitch Discount Factor applied to senior,
secured floating rate Loans made to corporate and other business
entities ("Senior Loans") shall be the percentage specified in the
table below opposite such Fitch Loan Category:
Fitch Loan Category Discount Factor
A 115%
B 130%
C 152%
D 370%
Notwithstanding any other provision contained above, for purposes of
determining whether a Fitch Eligible Asset falls within a specific Fitch
Loan Category, to the extent that any Fitch Eligible Asset would fall
within more than one of the Fitch Loan Categories, such Fitch Eligible
Asset shall be deemed to fall into the Fitch Loan Category with the
lowest applicable Fitch Discount Factor.
(xiv) GNMAs, FNMAs, FHLMCs, etc., MBS, asset-backed and other
mortgage-backed securities:
MBS: U.S.Government Agency (FNMA, FHLMC or GNMA) conforming
mortgage-backed securities with a stated maturity of 30 years shall
have a discount factor of 114% and conforming mortgage-backed
securities with a stated maturity of 15 years shall have a discount
factor of 111%.
Asset-backed and other mortgage-backed securities: The percentage
determined by reference to the asset type in accordance with the
table set forth below.
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%
X.X.xxxxxx sequentials (10 years or less) 120%
X.X.xxxxxx sequentials (greater than 10 years) 142%
X.X.xxxxxx principal only securities 236%
X.X.xxxxxx interest only securities (with Market Value greater than
40% of par) 696%
X.X.xxxxxx interest only securities (with Market Value less than or equal to
40% of par) 271%
AAA Lock-Out securities, interest only 236%
X.X.xxxxxx planned amortization class bonds (10 years or less) 115%
X.X.xxxxxx planned amortization class bonds (greater than 10 years) 136%
AAA sequentials (10 years or less) 118%
AAA sequentials (greater than 10 years) 135%
AAA planned amortization class bonds (10 years or less) 115%
AAA planned amortization class bonds (greater than 10 years) 140%
Jumbo mortgage rated AAA(1) 123%
Jumbo mortgage rated AA(1) 130%
Jumbo mortgage rated A(1) 136%
Jumbo mortgage rated BBB(1) 159%
Commercial mortgage-backed securities rated AAA 131%
Commercial mortgage-backed securities rated AA 139%
Commercial mortgage-backed securities rated A 148%
Commercial mortgage-backed securities rated BBB 177%
Commercial mortgage-backed securities rated BB 283%
Commercial mortgage-backed securities rated B 379%
Commercial mortgage-backed securities rated CCC or not rated 950%
(1) Applies to jumbo mortgages, credit cards, auto loans, home equity loans,
manufactured housing and prime mortgage-backed securities not issued by a U.S.
agency or instrumentality.
(xv) Closed End Registered Investment Companies: The Fitch Discount Factor
applied to Closed End Registered Investment Companies is 286%.
(xvi) Other Securities: The Fitch Discount Factor with respect to securities
other than those described above including ratable securities not rated by
Fitch or any other NRSRO will be the percentage provided in writing by Fitch.
(kk) "FITCH ELIGIBLE ASSET" shall mean the following:
(i) Common stock, preferred stock, and any debt security of REITs and Other
Real Estate Companies.
(ii) Municipal Obligations that interest in cash, (ii) do not have their
Fitch rating, as applicable, suspended by Fitch, and (iii) are part of an
issue of Municipal Obligations of at least $10,000,000. In Addition,
Municipal Obligations in the Trust's portfolio must be within the following
investment guidelines to be Fitch Eligible Assets.
Rating
---------- Minimum
Issue Size
($ Millions) (1)
------------------- Maximum Single Underlying Obligor Issuer (%) (2)
------------------ Maximum State Allowed
(%) (2)(3)
-----------------
AAA 10 100 100
AA 10 20 60
A 10 10 40
BBB 10 6 20
BB 10 4 12
B 10 3 12
CCC 10 2 12
--------------------
(1) Preferred stock has a minimum issue size of $50 million.
(2) The referenced percentage represents maximum cumulation total for
the related rating category and each lower rating category.
(3) Territorial bonds (other than those issued by Puerto Rico and
counted collectively) are each limited to 10% of Fitch Eligible Assets.
For diversification purposes, Puerto Rico will be treated as a state.
For purposes of applying the foregoing requirements and applying the
applicable Fitch Discount Factor, if a Municipal Obligation is not
rated by Fitch but is rated by Moody's and S&P, such Municipal
Obligation (excluding short-term Municipal Obligations) will be deemed
to have the Fitch rating which is the lower of the Moody's and S&P rating.
If a Municipal Obligation is not rated by Fitch but is rated by
Moody's or S&P, such Municipal Obligation (excluding short-term
Municipal Obligations)
will be deemed to have such rating.Eligible Assets shall be calculated
without including cash; and Municipal Obligations rated F1 by Fitch or,
if not rated by Fitch, rated XXX-0, XXXX-0 or P-1 by Moody's; or, if not
rated by Moody's, rated A-1+/AA or SP-1+/AA by S&P shall be considered to
have a long-term rating of A. When the Trust sells a Municipal Obligation
and agrees to repurchase such Municipal Obligation at a future date, such
Municipal Obligation shall be valued at its Discounted Value for purposes
of determining Fitch Eligible Assets, and the amount of the repurchase price
of such Municipal Obligation shall be included as a liability for purposes of
calculating the Preferred Shares Basic Maintenance Amount. When the Trust
purchases a Fitch Eligible Asset and agrees to sell it at a future date, such
Fitch Eligible Asset shall be valued at the amount of cash to be received by
the Trust upon such future date, provided that the counterparty
to the transaction has a long-term debt rating of at least A by Fitch and the
transaction has a term of no more than 30 days; otherwise, such Fitch
Eligible
Asset shall be valued at the Discounted Value of such Fitch Eligible Asset.
Notwithstanding the foregoing, an asset will not be considered a Fitch
Eligible Asset for purposes of determining the Preferred Shares Basic
Maintenance Amount to the extent it is (i) subject to any material lien,
mortgage, pledge, security interest or security agreement of any kind
(collectively, "Liens"), except for (a) Liens which are being contested
in good faith by appropriate proceedings and which Fitch (if Fitch is then
rating the Preferred Shares) has indicated to the Trust will not affect
the status of such asset as a Fitch Eligible Asset, (b) Liens for taxes
that are not then due and payable or that can be paid thereafter without
penalty, (c) Liens to secure payment for services rendered or cash advanced
to the Trust by the investment adviser, custodian or the Auction Agent,
(d) Liens by virtue of any repurchase agreement, and (e) Liens in connection
with any futures margin account; or (ii) deposited irrevocably for the
payment of any liabilities for purposes of determining the Preferred Shares
Basic Maintenance Amount.
(iii) U.S.Government Securities.
(iv) Debt securities, if such securities have been registered under the
Securities Act or are restricted as to resale under federal securities
laws but are eligible for resale pursuant to Rule 144A under the Securities
Act of 1933, as amended from time to time, as determined by the Trust's
investment manager or portfolio manager acting pursuant to procedures
approved by the Board of Trustees of the Trust; and such securities
are issued by (1) a U.S.corporation, limited liability company or
limited partnership, (2) a corporation, limited liability company or
limited partnership domiciled in a member of the European Union, Argentina,
Australia, Brazil, Chile, Japan, Korea, and Mexico or other country if
Fitch does not inform the Trust that including debt securities from such
foreign country will adversely impact Fitch's rating of the Preferred
Shares (the "Approved Foreign Nations"), (3) the government of any
Approved Foreign Nation or any of its agencies, instrumentalities or
political subdivisions (the debt securities of Approved Foreign Nation
issuers being referred to collectively as "Foreign Bonds"), (4) a
corporation, limited liability company or limited partnership domiciled
in Canada or (5) the Canadian government or any of its agencies,
instrumentalities or political subdivisions (the debt securities of
Canadian issuers being referred to collectively as "Canadian Bonds").
Foreign Bonds held by the Trust will qualify as Fitch Eligible Assets
only up to a maximum of 20% of the aggregate Market Value of all assets
constituting Fitch Eligible Assets. Similarly, Canadian Bonds held by
the Trust will qualify as Fitch Eligible Assets only up to a maximum of
20% of the aggregate Market Value of all assets constituting Fitch
Eligible Assets. Notwithstanding the limitations in the two preceding
sentences, Foreign Bonds and Canadian Bonds held by the Trust will
qualify as Fitch Eligible Assets only up to a maximum of 30% of the
aggregate Market Value of all assets constituting Fitch Eligible Assets.
All debt securities satisfying the foregoing requirements and restriction
of this paragraph are herein referred to as "Debt Securities."
(v) Preferred Stocks if (1) such securities provide for the periodic
payment of dividends thereon in cash in U.S.dollars or euros and do
not provide for conversion or exchange into, or have warrants attached
entitling the holder to receive equity capital at any time over the
respective lives of such securities, (2) the issuer or such a preferred
stock has common stock listed on either the New York Stock Exchange,
the NYSE Amex or in the over-the-counter market, and (3) the issuer of
such a preferred stock has a senior debt rating or preferred stock
rating from Fitch of BBB- or higher or the equivalent rating by another
Rating Agency. In addition, the preferred stocks issue must be at
least $50 million.
(vi) Common stocks (1)(a) which are traded on the New York Stock Exchange,
the NYSE Amex or in the over-the-counter market, (b) which, if cash
dividend paying, pay cash dividends in U.S.dollars, and (c) which
may be sold without restriction by the Trust; provided, however,
that (i) common stock which, while a Fitch Eligible Asset owned by the
Trust, ceases paying any regular cash dividend will no longer be considered
a Fitch Eligible Assets until 60 calendar days after the date of the
announcement of such cessation, unless the issuer of the common stock
has senior debt securities rated at least A- by Fitch and (ii) the
aggregate Market Value of the Trust's holdings of the common stock
of any issuer in excess of 5% per U.S.issuer of the number of
Outstanding shares time the Market Value of such common stock shall
not be a Fitch's Eligible Asset; and (2) securities denominated in
any currency other than the U.S.dollar and securities of issuers
formed under the laws of jurisdictions other than the United States,
its states and the District of Columbia for which there are
dollar-denominated American Depository Receipts ("ADRs") which are
traded in the United States on exchanges or over-the-counter and are
issued by banks formed under the laws of the United States, its
states or the District of Columbia; provided, however, that the
aggregate Market Value of the Trust's holdings of securities
denominated in currencies other than the U.S.dollar and ADRs in
excess of 3% of the aggregate Market Value of the Outstanding
shares of common stock of such issuer or in excess of 10% of the
Market Value of the Trust's Fitch Eligible Assets with respect
to issuers formed under the laws of any single such non-U.S.
jurisdiction other than Approved Foreign Nations shall not
be a Fitch Eligible Asset
(vii) Rule 144A Securities.
(viii) Warrants on common stocks described in (vi) above.
(ix) Any common stock, preferred stock or any debt securities of
REITs or real estate companies.
(x) Interest Rate Swaps or Interest Rate Caps entered into
according to International Swap Dealers Association ("ISDA")
standards if (1) the counterparty to the swap transaction has a
short-term rating of not less than F1 by Fitch or the equivalent
by another Rating Agency, or, if the swap counterparty does not
have a short-term rating, the counterparty's senior unsecured
long-term debt rating is AA or higher by Fitch or the equivalent
by another Rating Agency and (2) the original aggregate notional
amount of the Interest Rate Swap or Interest Rate Cap transaction
or transactions is not greater than the Liquidation Preference of
the Preferred Shares originally issued.
(xi) Swaps, including Total Return Swaps entered into according
to ISDA.
(xii) Financial contracts, as such term is defined in
Section 3(c)(2)(B)(ii) of the 1940 Act, not otherwise provided
for in this definition 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
(xiii) Asset-backed and mortgage-backed securities.
(xiv) Senior loans.
(xv) Closed End Registered Investment Companies that (1) have an
equity market capitalization greater than $100 million and (2) have
an average trading volume of 50,000 shares per day.
(xvi) Fitch Hedging Transactions.
Where the Trust sells an asset and agrees to repurchase such asset
in the future, the Discounted Value of such asset will constitute
a Fitch Eligible Asset and the amount the Trust is required to
pay upon repurchase of such asset will count as a liability for
the purposes of the Preferred Shares Basic Maintenance Amount.
Where the Trust purchases an asset and agrees to sell it to a
third party in the future, cash receivable by the Trust thereby
will constitute a Fitch Eligible Asset if the long-term debt of
such other party is rated at least A- by Fitch or the equivalent
by another Rating Agency and such agreement has a term of 30 days
or less; otherwise the Discounted Value of such purchased asset
will constitute a Fitch Eligible Asset.
Notwithstanding the foregoing, an asset will not be considered a
Fitch Eligible Asset to the extent that it has been irrevocably
deposited for the payment of (i)(a) through (i)(e) under the
definition of Preferred Shares Basic Maintenance Amount or to
the extent it is subject to any Liens, except for (a) Liens
which are being contested in good faith by appropriate proceedings
and which Fitch has indicated to the Trust will not affect the
status of such asset as a Fitch Eligible Asset, (b) Liens for
taxes that are not then due and payable or that can be paid
thereafter without penalty, (c) Liens to secure payment for
services rendered or cash advanced to the Trust by its investment
manager or portfolio manager, the Trust's custodian, transfer agent
or registrar or the Auction Agent and (d) Liens arising by virtue
of any repurchase agreement.
Fitch diversification limitations: portfolio holdings as described
below must be within the following diversification and issue size
requirements in order to be included in Fitch's Eligible Assets:
EQUITY SECURITIES Maximum Single Issuer (1)
Large-cap 5%
Mid-cap 5%
Small-cap 5%
(1) Percentages represent both a portion of the aggregate Market
Value and number of outstanding shares of the common stock portfolio.
DEBT SECURITIES
RATED AT LEAST (1) Maximum Single Issuer (2)
Maximum Single Industry (2)(3) Minimum Issue Size ($ in million) (4)
AAA 100% 100% $100
AA- 20% 75% $100
A- 10% 50% $100
BBB- 6% 25% $100
BB- 4% 16% $50
B- 3% 12% $50
CCC 2% 8% $50
(1) Not applicable to corporate debt securities of REITs,
Real Estate Companies, and Lodging Companies.
(2) Percentages represent a portion of the aggregate Market Value of corporate
debt securities.
(3) Industries are determined according to Fitch's Industry Classifications,
as defined herein.
(4) Preferred stock has a minimum issue size of $50 million, and mortgage pass
through issued by Federal Home Loan Mortgage Corporation ("FHLMC"), the
Federal National Mortgage Association ("FNMA") or the Government National
Mortgage Association ("GNMA"), which has no minimum issue size.
If a security is not rated by Fitch but is rated by two other Rating Agencies,
then the lower of the ratings on the security from the two other Rating
Agencies will be used to determine the Fitch Discount Factor (e.g., where
the S&P rating is A and the Xxxxx'x rating is Baa, a Fitch rating of BBB
will be used). If a security is not rated by Fitch but is rated by only
one other Rating Agency, then the rating on the security from the other
Rating Agency will be used to determine the Fitch Discount Factor (e.g.,
where the only rating on a security is an S&P rating of AAA, a Fitch
rating of AAA will be used, and where the only rating on a security is a
Xxxxx'x rating of Ba, a Fitch rating of BB will be used). If a security
is either rated below CCC or not rated by any Rating Agency, the Trust
will treat the security as if it were "CCC" in the table above.
REIT AND OTHER REAL ESTATE COMPANY SECURITIES
5% issuer limitation (including common, preferred, debt and other securities)
CLOSED END REGISTERED INVESTMENT COMPANY SECURITIES
5% issuer limitation(1)
(1) Percentage represents a portion of the aggregate Market Value.
(xvii) Unrated debt securities or preferred shares issued by an issuer
which (1) has not filed for bankruptcy in the past three years; (2) is
current on all interest and principal on such debt security; (3) is
current on distributions on such preferred shares.
(xviii) Interest rate swaps or caps entered into according to
International Swap Dealers Association standards if (1) the counterparty
to the swap transaction has a short-term rating of not less than F-1, or,
if the swap counterparty does not have a short-term rating, the
counterparty's senior unsecured long-term debt rating is AA or higher
by Fitch or the equivalent by another NRSRO and (2) the original
aggregate notional amount of the interest rate swap or cap
transaction or transactions is not greater than the liquidation
preference of the Preferred Shares originally issued.
(xix) U.S.Treasury Securities and U.S.Treasury Strips.
(xx) Short-Term Money Market Instruments as long as (a) such securities
are rated at least F-1 by Fitch or the equivalent by another NRSRO, (b)
in the case of demand deposits, time deposits and overnight funds, the
depository institution or supporting entity is rated at least A by Fitch
or the equivalent by another NRSRO, (c) such securities are of 2a-7 Money
Market Funds, (d) such securities are repurchase agreements or (e) in all
other cases, the supporting entity (1) is rated at least A by Fitch and
the security matures in one month or (2) is rated at least AA by Fitch
and matures within six months.
(xxi) Cash (including, for this purpose, interest and dividends due on
assets rated (a) BBB or higher by Fitch if the payment date is within 5
Business Days of the Valuation Date, (b) A or higher by Fitch if the payment
is within thirty days of the Valuation Date (c) A+ or higher by Fitch if the
payment date is within the Exposure Period; provided, however, that such
interest and dividends may, at the Trust's discretion, be discounted at the
same rate as the related security or on such other basis as Fitch and the
Trust may agree from time to time) and receivables for Fitch Eligible Assets
sold if the receivable is due within five Business Days of the Valuation Date.
(ll) "FITCH EXPOSURE PERIOD" means the period commencing on (and including)
a given Valuation Date and ending 41 days thereafter.
(mm) "FITCH HEDGING TRANSACTION" shall have the meaning specified in
paragraph (b)(1) of Section 13 of Part I of Article X.
(nn) "FORWARD COMMITMENTS" shall have the meaning specified in paragraph
(a)(iv) of Section 13 of Part I of Article X.
(oo) "HOLDER" with respect to shares of a Series, shall mean the registered
holder of such shares as the same appears on the record books of the Trust.
(pp) "HOLD ORDER" and "HOLD ORDERS" shall have the respective meanings
specified in paragraph (a) of Section 1 of Part II of Article X.
(qq) "INDEPENDENT ACCOUNTANT" shall mean a nationally recognized accountant,
or firm of accountants, that is with respect to the Trust an independent public
accountant or firm of independent public accountants under the Securities
Act of 1933, as amended from time to time.
(rr) "INITIAL RATE PERIOD" with respect to each Series, shall be the period
from and including the Date of Original Issue to but excluding the initial
Distribution Payment date for such Series.
(ss) "INTEREST EQUIVALENT" means a yield on a 360-day basis of a discount
basis security, which is equal to the yield on an equivalent
interest-bearing security.
(tt) "LATE CHARGE" shall have the meaning specified in subparagraph (e)(1)
(B) of Section 2 of Part I of Article X.
(uu) "LIBOR Dealers" means RBC Xxxx Xxxxxxxx Inc.and such other dealer or
dealers as the Trust may from time to time appoint, or, in lieu of any
thereof, their respective affiliates or successors.
(vv) "LIBOR Rate" on any Auction Date, means (i) the rate for deposits
in U.S.dollars for the designated Distribution Period, which appears on
display page 3750 of Moneyline's Telerate Service ("Telerate Page 3750")
(or such other page as may replace that page on that service, or such other
service as may be selected by the LIBOR Dealer or its successors that are
LIBOR Dealers) as of 11:00 a.m., London time, on the day that is the London
Business Day preceding the Auction Date (the "LIBOR Determination Date"), or
(ii) if such rate does not appear on Telerate Page 3750 or such other page
as may replace such Telerate Page 3750, (A) the LIBOR Dealer shall determine
the arithmetic mean of the offered quotations of the Reference Banks to l
eading banks in the London interbank market for deposits in U.S.dollars
for the designated Distribution Period in an amount determined by such
LIBOR Dealer by reference to requests for quotations as of approximately
11:00 a.m.(London time) on such date made by such LIBOR Dealer to the
Reference Banks, (B) if at least two of the Reference Banks provide
such quotations, LIBOR Rate shall equal such arithmetic mean of such
quotations, (C) if only one or none of the Reference Banks provide such
quotations, LIBOR Rate shall be deemed to be the arithmetic mean of
the offered quotations that leading banks in The City of New York
selected by the LIBOR Dealer (after obtaining the Trust's approval)
are quoting on the relevant LIBOR Determination Date for deposits in
U.S.dollars for the designated Distribution Period in an amount
determined by the LIBOR Dealer (after obtaining the Trust's approval)
that is representative of a single transaction in such market at such
time by reference to the principal London offices of leading banks in
the London interbank market; provided, however, that if one of the
LIBOR Dealers does not quote a rate required to determine the LIBOR
Rate, the LIBOR Rate will be determined on the basis of the quotation
or quotations furnished by any substitute LIBOR Dealer or substitute
LIBOR Dealers selected by the Trust to provide such rate or rates
not being supplied by the LIBOR Dealer; provided further, that if
the LIBOR Dealer and substitute LIBOR Dealers are required but
unable to determine a rate in accordance with at least one of the
procedures provided above, LIBOR Rate shall be LIBOR Rate as
determined on the previous Auction Date. If the number of
Distribution Period days shall be (i) 7 or more but fewer than
21 days, such rate shall be the seven-day LIBOR rate; (ii)
more than 21 but fewer than 49 days, such rate shall be the
one-month LIBOR rate; (iii) 49 or more but fewer than 77 days,
such rate shall be the two-month LIBOR rate; (iv) 77 or more but
fewer than 112 days, such rate shall be the three-month LIBOR rate;
(v) 112 or more but fewer than 140 days, such rate shall be the
four-month LIBOR rate; (vi) 140 or more but fewer that 168 days,
such rate shall be the five-month LIBOR rate; (vii) 168 or more
but fewer 189 days, such rate shall be the six-month LIBOR rate;
(viii) 189 or more but fewer than 217 days, such rate shall be
the seven-month LIBOR rate; (ix) 217 or more but fewer than 252 days,
such rate shall be the eight-month LIBOR rate; (x) 252 or more but
fewer than 287 days, such rate shall be the nine-month LIBOR rate;
(xi) 287 or more but fewer than 315 days, such rate shall be the
ten-month LIBOR rate; (xii) 315 or more but fewer than 343 days,
such rate shall be the eleven-month LIBOR rate; and (xiii) 343 or
more but fewer than 365 days, such rate shall be the twelve-month
LIBOR rate.
(ww) "LIQUIDATION PREFERENCE" with respect to a given number of
Preferred Shares, means $25,000 times that number.
(xx) "LONDON BUSINESS DAY" means any day on which commercial
banks are generally open for business in London.
(yy) "MARKET VALUE" of any asset of the Trust shall mean the market
value thereof determined in accordance with the pricing procedures
of the Trust.
(zz) "MAXIMUM RATE" shall mean, with respect to Preferred Shares
for any Distribution Period, the greater of (A) the Applicable
Percentage of the Reference Rate or (B) the Applicable Spread plus the
Reference Rate on the Auction Date. The Auction Agent will round
each applicable Maximum Rate to the nearest one-thousandth (0.001)
of one percent per annum, with any such number ending in five
ten-thousandths of one percent being rounded upwards to the nearest
one-thousandth (0.001) of one percent. Generally, the applicable
distribution rate for any Distribution Period for the Preferred
Shares will not be more than the Maximum Rate attributable to
such shares. The Maximum Rate for the Preferred Shares will
depend on the credit rating assigned to such shares and on the
length of the Distribution Period.
(aaa) "MINIMUM RATE PERIOD" shall mean any Rate Period consisting
of 7 Rate Period Days for the Preferred Shares.
(bbb) "MOODY'S" shall mean Xxxxx'x Investors Service, Inc., a
Delaware corporation, and its successors.
(ccc) "MOODY'S DISCOUNT FACTOR" shall mean, for purposes of
determining the Discounted Value of any Moody's Eligible Asset,
the percentage determined as follows.The Moody's Discount
Factor for any Moody's Eligible Asset other than the securities
set forth below will be the percentage provided in writing by Moody's.
(i) Corporate debt securities: The percentage determined by
reference to the rating on such asset with reference to the remaining
term to maturity of such asset, in accordance with the table set
forth below (non convertibles).
Xxxxx'x Rating Category
Term to Maturity of
Corporate Debt Security (2)
Aaa Aa A Baa Ba B Unrated(1)
1 year or less............
...............................109% 112% 115% 118% 137% 150% 250%
2 years or less (but longer than 1 year)
...............................115 118 122 125 146 160 250
3 years or less (but longer than 2 years)
............................... 120 123 127 131 153 168 250
4 years or less (but longer than 3 years)..................
............................... 126 129 133 138 161 176 250
5 years or less (but longer than 4 years)..................
............................... 132 135 139 144 168 185 250
7 years or less (but longer than 5 years).................
.............................. 139 143 147 152 179 197 250
10 years or less (but longer than 7 years)...................
............................. 145 150 155 160 189 208 250
15 years or less (but longer than 10 years).............
............................... 150 155 160 165 196 216 250
20 years or less (but longer than 15 years)................
............................... 150 155 160 165 196 228 250
30 years or less (but longer than 20 years).............
............................... 150 155 160 165 196 229 250
Greater than 30 years...............
.. ........................165 173 181 189 205 240 250
(1) Unless conclusions regarding liquidity risk as well as estimates of both
the probability and severity of default for the Trust's assets can be derived
from other sources, securities rated below B by Xxxxx'x and unrated
securities covered by this
section (i), which are securities rated by neither Xxxxx'x, S&P nor Fitch,
are limited
to 10% of Xxxxx'x Eligible Assets.If a corporate debt security is unrated by
Xxxxx'x, S&P or Fitch, the Fund will use the percentage set forth under
"Unrated" in this table.Ratings assigned by S&P or Fitch are generally
accepted by Xxxxx'x at face value.However, adjustments to face value may
be made to particular categories of credits for which the S&P and/or Fitch
rating does not seem to approximate a Xxxxx'x rating equivalent.Split rated
securities assigned by S&P and Fitch will be accepted at the lower of the
two ratings.
(2) The Xxxxx'x Discount Factors for debt securities shall also be applied
to any derivative transaction, in which case the rating of the counterparty
shall determine the appropriate rating category.
For corporate debt securities that do not pay interest in U.S.dollars, the
fund sponsor will use the applicable currency conversion rates.
Preferred stock: The Xxxxx'x Discount Factor for taxable preferred stock
shall be (1)(2):
Aaa 150%
Aa 155%
A 160%
Baa 165%
Ba 196%
B 216%
