EXHIBIT B.3
AMENDED AND RESTATED BYLAWS
of
AEW REAL ESTATE INCOME FUND
(Dated as of February 4, 2003)
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 Principal Office of the Trust. A principal office of the Trust
shall be located in Boston, Massachusetts. The Trust may have other principal
offices within or without Massachusetts as the Trustees may determine or as they
may authorize.
1.2 Agreement and Declaration of Trust. These Bylaws shall be subject
to the Agreement and Declaration of Trust, as amended or restated from time to
time (the "Declaration of Trust"), of AEW Real Estate Income Fund, the
Massachusetts business trust established by the Declaration of Trust (the
"Trust"). Capitalized terms used in these Bylaws and not otherwise defined
herein shall have the meanings given to such terms in the Declaration of Trust.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees. A regular
meeting of the Trustees may be held without call or notice immediately after and
at the same place as the annual meeting of the Shareholders.
2.2 Special Meetings. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the Chairman of the Trustees, the President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the Secretary
or an Assistant Secretary or by the officer or the Trustees calling the meeting.
2.3 Notice. It shall be sufficient notice to a Trustee of a special
meeting to send notice by mail or overnight courier at least forty-eight hours,
or by facsimile, telegram, telex, telecopy, e-mail or other electronic
transmission method at least twenty-four hours, before the
meeting addressed to the Trustee at his or her usual or last known business or
residence address or to give notice to him or her in person or by telephone at
least twenty-four hours before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him or her,
before or after the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Except as required by law,
neither notice of a meeting nor a waiver of a notice need specify the purposes
of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees
then in office shall constitute a quorum. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice to any Trustee who was present at the time of such adjournment; notice of
the time and place of any adjourned session of such meeting shall, however, be
given in the manner provided in Section 2.3 of these Bylaws to each Trustee who
was not present at the time of such adjournment.
2.5 Action by Vote. When a quorum is present at any meeting, a majority
of Trustees present may take any action, except when a larger vote is expressly
required by law, by the Declaration of Trust or by these Bylaws. Subject to
applicable law, the Trustees by majority vote may delegate to any one of their
number their authority to approve particular matters or take particular actions
on behalf of the Trust.
2.6 Action by Writing. Except as required by law, any action required
or permitted to be taken at any meeting of the Trustees may be taken without a
meeting if a majority of the Trustees (or such larger proportion thereof as
shall be required by any express provision of the Declaration of Trust or these
Bylaws) consent to the action in writing and such written consents are filed
with the records of the meetings of the Trustees. Such consent shall be treated
for all purposes as a vote taken at a meeting of Trustees. Written consents of
the Trustees may be executed in one or more counterparts. Execution of a written
consent or waiver and delivery thereof to the Trust may be accomplished by mail,
overnight courier, facsimile, telex, telecopy, e-mail or other electronic
transmission.
2.7 Presence through Communications Equipment. Except as required by
applicable law, the Trustees may participate in a meeting of Trustees by means
of a conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other at the same time,
and participation by such means shall constitute presence in person at a
meeting.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary, and such other officers, if any, as the
Trustees from time to time may in their discretion elect. The Trust may also
have such agents as the Trustees from time to time
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may in their discretion appoint. The Chairman of the Trustees, if one is
elected, shall be a Trustee, may (but need not) be a Shareholder and shall be
considered an officer of the Trustees and not of the Trust. Any other officer
may but need not be a Trustee or a Shareholder. Any two or more offices may be
held by the same person.
3.2 Election. The President, the Treasurer, and the Secretary shall be
elected annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at the same meeting at which the President, Treasurer
and Secretary are elected, or at any other time. Vacancies in any office may be
filled at any time.
3.3 Tenure. The Chairman of the Trustees, if one is elected, the
President, the Treasurer and the Secretary shall hold office until their
respective successors are chosen and qualified, or in each case until he or she
sooner dies, resigns, is removed with or without cause or becomes disqualified.
Each other officer shall hold office and each agent of the Trust shall retain
authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these Bylaws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to the office occupied by him or her as if the Trust were organized as a
Massachusetts business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5 Chairman; President; Vice President; Chief Operating Officer.
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 Trustees. Unless the Trustees otherwise provide, the President,
or if there is none or in the absence of the President, the Chairman, shall
preside at all meetings of the Shareholders. The Chairman of the Trustees shall
perform such other duties as may be assigned to him by the Trustees. Any Vice
President shall have such duties and powers as may be designated from time to
time by the Trustees or the President. Any Chief Operating Officer shall have
such duties and powers as may be designated from time to time by the Trustees or
the President.
3.6 Treasurer; Assistant Treasurer. The Treasurer shall be the chief
financial and accounting officer of the Trust, and shall, subject to the
provisions of the Declaration of Trust and to any arrangement made by the
Trustees with a custodian, investment adviser, sub-adviser or manager,
administrator or sub-administrator, 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 or
required by law. Any Assistant Treasurer shall have such duties and powers as
may be designated from time to time by the Trustees or the President.
3.7 Secretary; Assistant Secretary. The Secretary shall record all
proceedings of the Shareholders and the Trustees in books to be kept therefor,
which books or a copy thereof shall be kept at the principal office of the
Trust. In the absence of the Secretary from any meeting of the Shareholders or
Trustees, an Assistant Secretary, or if there be none or if he or she is absent,
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a temporary secretary chosen at such meeting shall record the proceedings
thereof in the aforesaid books. Any Assistant Secretary shall have such duties
and powers as may be designated from time to time by the Trustees or the
President.
3.8 Chief Executive Officer. The Chief Executive Officer of the Trust
shall be the President or such other officer as is designated by the Trustees
and shall, subject to the control of the Trustees, have general charge and
supervision of the business of the Trust and, except as the Trustees shall
otherwise determine, preside at all meetings of the Shareholders. If no such
designation is made, the President shall be the Chief Executive Officer.
3.9 Resignations; Removals. Any officer may resign at any time by
written instrument signed by him or her and delivered to the Chairman, if any,
the President or the Secretary, or to a meeting of the Trustees. Such
resignation shall be effective upon receipt unless specified to be effective at
some other time. The Trustees may remove any officer with or without cause.
Except to the extent expressly provided in a written agreement with the Trust,
no officer resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal.
ARTICLE 4
Committees
4.1 Quorum; Voting. Except as provided below or as otherwise
specifically provided in the resolutions constituting a Committee of the
Trustees and providing for the conduct of its meetings, a majority of the
members of any Committee of the Trustees shall constitute a quorum for the
transaction of business, and any action of such a Committee may be taken at a
meeting by a vote of a majority of the members present (a quorum being present)
or evidenced by one or more writings signed by such a majority. Members of a
Committee may participate in a meeting of such Committee by means of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting.
With respect to any committee of the Trustees responsible for valuing
the Trust's portfolio securities, one or more of the Committee members shall
constitute a quorum for the transaction of business.
Except as specifically provided in the resolutions constituting a
Committee of the Trustees and providing for the conduct of its meetings, Article
2, Section 2.3 of these Bylaws relating to special meetings shall govern the
notice requirements for Committee meetings, except that it shall be sufficient
notice to any committee of the Trustees responsible for valuing the Trust's
portfolio securities to send notice by telegram, telex or telecopy or other
electronic means (including by telephone voice-message or e-mail) at least
fifteen minutes before the meeting.
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ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at the time
and in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
6.1 General. Except as from time to time otherwise provided by the
Trustees, the initial fiscal year of the Trust shall end on such date as is
determined in advance or in arrears by the Treasurer, and the subsequent fiscal
years shall end on such date in subsequent years.
ARTICLE 7
Seal
7.1 General. The seal of the Trust shall, subject to alteration by the
Trustees, consist of a flat-faced die with the word "Massachusetts," together
with the name of the Trust and the year of its organization cut or engraved
thereon; provided, however, that unless otherwise required by the Trustees, the
seal shall not be necessary to be placed on, and its absence shall not impair
the validity of, any document, instrument or other paper executed and delivered
by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or in particular
cases authorize the execution thereof in some other manner, all deeds, leases,
transfers, contracts, bonds, notes, checks, drafts and other obligations and all
registration statements and amendments thereto and all applications and
amendments thereto to the Securities and Exchange Commission made, accepted or
endorsed by the Trust shall be executed by the President, any Vice President,
the Treasurer or the Secretary or by whomever else shall be designated for that
purpose by vote of the Trustees, and need not bear the seal of the Trust.
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ARTICLE 9
Issuance of Share Certificates
9.1 Share Certificates. Except as provided in Article 11 hereof, each
Shareholder shall be entitled to a certificate stating the number of Shares
owned by him or her, in such form as shall be prescribed from time to time by
the Trustees. Such certificates shall be signed by the President or any Vice
President and by the Treasurer or any Assistant Treasurer. Such signatures may
be by facsimile if the certificate is signed by a transfer agent, or by a
registrar, other than a Trustee, officer or employee of the Trust. In case any
officer who has signed or whose facsimile signature has been placed on such
certificate shall cease to be such officer before such certificate is issued, it
may be issued by the Trust with the same effect as if he or she were such
officer at the time of its issuance.
Notwithstanding the foregoing, in lieu of issuing certificates for
Shares, the Trustees or the transfer agent may either issue receipts therefor or
may keep accounts upon the books of the Trust for the record holders of such
Shares, who shall in either case be deemed, for all purposes hereunder, to be
the holders of certificates for such Shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
9.2 Loss of Certificates. In case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
9.3 Issuance of New Certificates to Pledgee. A pledgee of Shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificate shall express on its face that it is
held as collateral security, and the name of the pledgor shall be stated
thereon, who alone shall be liable as a Shareholder and entitled to vote
thereon.
9.4 Discontinuance of Issuance of Certificates. Notwithstanding
anything to the contrary in this Article 9, the Trustees may at any time
discontinue the issuance of share certificates and may, by written notice to
each Shareholder, require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect the ownership of
Shares in the Trust.
ARTICLE 10
Shareholders' Voting Powers and Meetings
10.1 Voting Powers. The Shareholders shall have power to vote only (i)
for the election or removal of Trustees as provided in Article IV, Sections 1
and 3 of the Declaration of Trust and Article 11 hereto, (ii) with respect to
any Manager or sub-adviser as provided in Article IV, Section 8 of the
Declaration of Trust to the extent required by the 1940 Act, (iii) with respect
to certain transactions and other matters to the extent and as provided in
Article V,
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Sections 2 and 3 of the Declaration of Trust and Article 11 hereto, (iv) with
respect to any termination of this Trust to the extent and as provided in
Article IX, Section 4 of the Declaration of Trust and Article 11 hereto (for the
avoidance of any doubt, Shareholders shall have no separate right to vote with
respect to the termination of the Trust or a series or class of Shares if the
Trustees (including the Continuing Trustees) exercise their right to terminate
the Trust or such series or class pursuant to clauses (ii) or (y) of Article IX,
Section 4 of the Declaration of Trust), (v) with respect to any amendment of the
Declaration of Trust to the extent and as provided in Article IX, Section 7 of
the Declaration of Trust and Article 11 hereto, (vi) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
and (vii) with respect to such additional matters relating to the Trust as may
be required by law, the Declaration of Trust, these Bylaws or any registration
of the Trust with the Securities and Exchange Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or desirable.
Each whole Share shall be entitled to one vote as to any matter on which it is
entitled to vote and each fractional Share shall be entitled to a proportionate
fractional vote, except as otherwise provided in the Declaration of Trust, these
Bylaws, or required by applicable law. Except as otherwise provided in the
Declaration of Trust or in respect of the terms of a class of preferred shares
of beneficial interest of the Trust as reflected in these Bylaws or required by
applicable law, all Shares of the Trust then entitled to vote shall be voted in
the aggregate as a single class without regard to classes or series of Shares.
There shall be no cumulative voting in the election of Trustees. Shares may be
voted in person or by proxy. A proxy with respect to Shares held in the name of
two or more persons shall be valid if executed by any one of them unless at or
prior to exercise of the proxy the Trust receives a specific written notice to
the contrary from any one of them. The placing of a Shareholder's name on a
proxy pursuant to telephonic or electronically transmitted instructions obtained
pursuant to procedures reasonably designed to verify that such instructions have
been authorized by such Shareholder shall constitute execution of such proxy by
or on behalf of such Shareholder. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the challenger.
Until Shares of a particular class or series are issued, the Trustees may
exercise all rights of Shareholders and may take any action required by law, the
Declaration of Trust or these Bylaws to be taken by Shareholders as to such
class or series.
10.2 Voting Power and Meetings. Except as provided in the next
sentence, regular meetings of the Shareholders for the election of Trustees and
the transaction of such other business as may properly come before the meeting
shall be held, so long as Shares are listed for trading on the American Stock
Exchange, on at least an annual basis, on such day and at such place as shall be
designated by the Trustees. In the event that such a meeting is not held in any
annual period if so required, whether the omission be by oversight or otherwise,
a subsequent special meeting may be called by the Trustees and held in lieu of
such meeting with the same effect as if held within such annual period. Special
meetings of the Shareholders or any or all classes or series of Shares may also
be called by the Trustees from time to time for such other purposes as may be
prescribed by law, by the Declaration of Trust or by these Bylaws, or for the
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purpose of taking action upon any other matter deemed by a majority of the
Trustees and a majority of the Continuing Trustees to be necessary or desirable.
A special meeting of Shareholders may be held at any such time, day and place as
is designated by the Trustees. Written notice of any meeting of Shareholders,
stating the date, time, place and purpose of the meeting, shall be given or
caused to be given by a majority of the Trustees and a majority of the
Continuing Trustees at least ten days before such meeting to each Shareholder
entitled to vote thereat by leaving such notice with the Shareholder at his or
her residence or usual place of business or by mailing such notice, postage
prepaid, to the Shareholder's address as it appears on the records of the Trust.
Such notice may be given by the Secretary or an Assistant Secretary or by any
other officer or agent designated for such purpose by the Trustees. Whenever
notice of a meeting is required to be given to a Shareholder under the
Declaration of Trust or these Bylaws, a written waiver thereof, executed before
or after the meeting by such Shareholder or his or her attorney thereunto
authorized and filed with the records of the meeting, shall be deemed equivalent
to such notice. Notice of a meeting need not be given to any Shareholder who
attends the meeting without protesting prior thereto or at its commencement the
lack of notice to such Shareholder. No ballot shall be required for any election
unless required by a Shareholder present or represented at the meeting and
entitled to vote in such election. Notwithstanding anything to the contrary in
this Section 10.2, no matter shall be properly before any annual or special
meeting of Shareholders and no business shall be transacted thereat unless in
accordance with Section 10.6 of these Bylaws.
10.3 Quorum and Required Vote. Except when a larger quorum is required
by any provision of law, the rules and regulations of the American Stock
Exchange, or the Declaration of Trust or these Bylaws, thirty percent (30%) of
the Shares entitled to vote on a particular matter shall constitute a quorum for
the transaction of business at a Shareholders' meeting, except that where any
provision of law or the Declaration of Trust or these Bylaws permits or requires
that holders of any class or series of Shares shall vote as an individual class
or series, then thirty percent (30%) (unless a larger quorum is required as
specified above) of Shares of that class or series entitled to vote shall be
necessary to constitute a quorum for the transaction of business by that class
or series. Any lesser number shall be sufficient for adjournments. Any adjourned
session or sessions may be held, within a reasonable time after the date set for
the original meeting, without the necessity of further notice. Except when a
different vote is required by any provision of law or the Declaration of Trust
or these Bylaws, a plurality of the quorum of Shares necessary for the
transaction of business at a Shareholders' meeting shall decide any questions
and a plurality of Shares voted shall elect a Trustee, provided that where any
provision of law or of the Declaration of Trust or these Bylaws permits or
requires that the holders of any class or series of Shares shall vote as an
individual class or series, then a plurality of the quorum of Shares of that
class or series necessary for the transaction of business by that class or
series at a Shareholders' meeting shall decide that matter insofar as that class
or series is concerned.
10.4 Action by Written Consent. Any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger proportion thereof as shall be required by any express
provision of law or the Declaration of Trust or these Bylaws) consent to the
action in writing and such written consents are filed with
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the records of the meetings of Shareholders. Such consent shall be treated for
all purposes as a vote taken at a meeting of Shareholders.
10.5 Record Dates. For the purpose of determining the Shareholders who
are entitled to vote or act at any meeting or any adjournment thereof, or who
are entitled to receive payment of any dividend or of any other distribution,
the Trustees may from time to time fix a time, which shall be not more than 90
days before the date of any meeting of Shareholders or the date for the payment
of any dividend or of any other distribution, as the record date for determining
the Shareholders having the right to notice of and to vote at such meeting and
any adjournment thereof or the right to receive such dividend or distribution,
and in such case only Shareholders of record on such record date shall have the
right notwithstanding any transfer of Shares on the books of the Trust after the
record date; or without fixing such record date the Trustees may for any of such
purposes close the register or transfer books for all or any part of such
period.
10.6 Advance Notice of Shareholder Nominees for Trustees and Other
Shareholder Proposals.
(a) As used in this Section 10.6, the term "annual meeting"
refers to any annual meeting of Shareholders as well as any special
meeting held in lieu of an annual meeting as described in the first two
sentences of Section 10.2 of these Bylaws, and the term "special
meeting" refers to all meetings of Shareholders other than an annual
meeting or a special meeting in lieu of an annual meeting.
(b) The matters to be considered and brought before any annual
or special meeting of Shareholders shall be limited to only such
matters, including the nomination and election of Trustees, as shall be
brought properly before such meeting in compliance with the procedures
set forth in this Section 10.6. Only persons who are nominated in
accordance with the procedures set forth in this Section 10.6 shall be
eligible for election as Trustees, and no proposal to fix the number of
Trustees shall be brought before an annual or special meeting of
Shareholders or otherwise transacted unless in accordance with the
procedures set forth in this Section 10.6, except as may be otherwise
provided in these Bylaws with respect to the right of holders of
preferred shares of beneficial interest, if any, of the Trust to
nominate and elect a specified number of Trustees in certain
circumstances.
(c) For any matter to be properly before any annual meeting,
the matter must be (i) specified in the notice of meeting given by or
at the direction of a majority of the Trustees and a majority of the
Continuing Trustees pursuant to Section 10.2 of these Bylaws, (ii)
otherwise brought before the meeting by or at the direction of a
majority of the Continuing Trustees (or any duly authorized committee
thereof), or (iii) brought before the meeting in the manner specified
in this Section 10.6(c) by a Shareholder of record entitled to vote at
the meeting or by a Shareholder (a "Beneficial Owner") that holds
Shares entitled to vote at the meeting through a nominee or "street
name" holder of record and that can demonstrate to the Trust such
indirect ownership and such Beneficial
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Owner's entitlement to vote such Shares, provided that the Shareholder
was the Shareholder of record or the Beneficial Owner held such Shares
at the time the notice provided for in this Section 10.6(c) is
delivered to the Secretary.
In addition to any other requirements under applicable law and
the Declaration of Trust and these Bylaws, persons nominated by
Shareholders for election as Trustees and any other proposals by
Shareholders may be properly brought before an annual meeting only
pursuant to timely notice (the "Shareholder Notice") in writing to the
Secretary. To be timely, the Shareholder Notice must be delivered to or
mailed and received at the principal executive offices of the Trust not
less than forty-five (45) nor more than sixty (60) days prior to the
first anniversary date of the date on which the Trust first mailed its
proxy materials for the prior year's annual meeting; provided, however,
with respect to the annual meeting to be held in the calendar year
2003, the Shareholder Notice must be so delivered or mailed and so
received on or before March 15, 2003; provided further, however, if and
only if the annual meeting is not scheduled to be held within a period
that commences thirty (30) days before the first anniversary date of
the annual meeting for the preceding year and ends thirty (30) days
after such anniversary date (an annual meeting date outside such period
being referred to herein as an "Other Annual Meeting Date"), such
Shareholder Notice must be given in the manner provided herein by the
later of the close of business on (i) the date forty-five (45) days
prior to such Other Annual Meeting Date or (ii) the tenth (10th)
business day following the date such Other Annual Meeting Date is first
publicly announced or disclosed.
Any Shareholder desiring to nominate any person or persons (as
the case may be) for election as a Trustee or Trustees of the Trust
shall deliver, as part of such Shareholder Notice: (i) a statement in
writing setting forth (A) the name, age, date of birth, business
address, residence address and nationality of the person or persons to
be nominated; (B) the class or series and number of all Shares of the
Trust owned of record or beneficially by each such person or persons,
as reported to such Shareholder by such nominee(s); (C) any other
information regarding each such person required by paragraphs (a), (d),
(e) and (f) of Item 401 of Regulation S-K or paragraph (b) of Item 22
of Schedule 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), adopted by the Securities and Exchange Commission
(or the corresponding provisions of any regulation or rule subsequently
adopted by the Securities and Exchange Commission or any successor
agency applicable to the Trust); (D) any other information regarding
the person or persons to be nominated that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitation of proxies for election of Trustees or
directors pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder; and (E) whether such Shareholder
believes any nominee is or will be an "interested person" of the Trust
(as defined in the Investment Company Act of 1940, as amended) and, if
not an "interested person," information regarding each nominee that
will be sufficient for the Trust to make such determination; and (ii)
the written and signed consent of the person or persons to be nominated
to be named as nominees and to serve as Trustees if elected. In
addition, the Trustees may
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require any proposed nominee to furnish such other information as they
may reasonably require or deem necessary to determine the eligibility
of such proposed nominee to serve as a Trustee. Any Shareholder Notice
required by this Section 10.6(c) in respect of a proposal to fix the
number of Trustees shall also set forth a description of and the text
of the proposal, which description and text shall state a fixed number
of Trustees that otherwise complies with applicable law, these Bylaws
and the Declaration of Trust.
Without limiting the foregoing, any Shareholder who gives a
Shareholder Notice of any matter proposed to be brought before a
Shareholder meeting (whether or not involving nominees for Trustees)
shall deliver, as part of such Shareholder Notice: (i) the description
of and text of the proposal to be presented; (ii) a brief written
statement of the reasons why such Shareholder favors the proposal;
(iii) such Shareholder's name and address as they appear on the Trust's
books; (iv) any other information relating to the Shareholder that
would be required to be disclosed in a proxy statement or other filings
required to be made in connection with the solicitation of proxies with
respect to the matter(s) proposed pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder; (v)
the class or series and number of all Shares of the Trust owned
beneficially and of record by such Shareholder; (vi) any material
interest of such Shareholder in the matter proposed (other than as a
Shareholder); (vii) a representation that the Shareholder intends to
appear in person or by proxy at the Shareholder meeting to act on the
matter(s) proposed; (viii) if the proposal involves nominee(s) for
Trustees, a description of all arrangements or understandings between
the Shareholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the nomination(s) are
to be made by the Shareholder; and (ix) in the case of a Beneficial
Owner, evidence establishing such Beneficial Owner's indirect ownership
of, and entitlement to vote, Shares at the meeting of Shareholders. As
used in this Section 10.6, Shares "beneficially owned" shall mean all
Shares which such person is deemed to beneficially own pursuant to
Rules 13d-3 and 13d-5 under the Exchange Act (or the corresponding
provisions of any regulation or rule subsequently adopted by the
Securities and Exchange Commission or any successor agency applicable
to the Trusts).
(d) For any matter to be properly before any special meeting,
the matter must be specified in the notice of meeting given by or at
the direction of a majority of the Trustees and a majority of the
Continuing Trustees pursuant to Section 10.2 of these Bylaws. In the
event the Trust calls a special meeting for the purpose of electing one
or more Trustees, any Shareholder may nominate a person or persons (as
the case may be) for election to such position(s) as specified in the
Trust's notice of meeting if and only if the Shareholder provides a
notice containing the information required in the Shareholder Notice to
the Secretary required with respect to annual meetings by Section
10.6(c) hereof, and such notice is delivered to or mailed and received
at the principal executive office of the Trust not later than the close
of business on the tenth (10th) day following the day on which the date
of the special meeting and of the nominees proposed by the Trustees to
be elected at such meeting are publicly announced or disclosed.
-11-
(e) For purposes of this Section 10.6, a matter shall be
deemed to have been "publicly announced or disclosed" if such matter is
disclosed in a press release reported by the Dow Xxxxx News Service,
Associated Press or comparable national news service, in a document
publicly filed by the Trust with the Securities and Exchange
Commission, or in a Web site accessible to the public maintained by the
Trust or by its investment adviser or an affiliate of such investment
adviser with respect to the Trust.
(f) In no event shall an adjournment or postponement (or a
public announcement thereof) of a meeting of Shareholders commence a
new time period (or extend any time period) for the giving of notice as
provided in this Section 10.6.
(g) The person presiding at any meeting of Shareholders, in
addition to making any other determinations that may be appropriate to
the conduct of the meeting, shall have the power and duty to (i)
determine whether a nomination or proposal of other matters to be
brought before a meeting and notice thereof have been duly made and
given in the manner provided in this Section 10.6 and elsewhere in
these Bylaws and the Declaration of Trust and (ii) if not so made or
given, to direct and declare at the meeting that such nomination and/or
such other matters shall be disregarded and shall not be considered.
Any determination by the person presiding shall be binding on all
parties absent manifest error.
(h) Notwithstanding anything to the contrary in this Section
10.6 or otherwise in these Bylaws, unless required by federal law, no
matter shall be considered at or brought before any annual or special
meeting unless such matter has been approved for these purposes by a
majority of the Continuing Trustees and, in particular, no Beneficial
Owner shall have any rights as a Shareholder except as may be required
by federal law. Furthermore, nothing in this Section 10.6 shall be
construed as creating any implication or presumption as to the
requirements of federal law.
ARTICLE 11
Preferred Shares of Beneficial Interest
DESIGNATION
SERIES M: A series of 1,120 preferred shares of beneficial interest,
par value $0.00001 per share, liquidation preference $25,000 per share, is
hereby designated "Series M Auction Market Preferred Shares" and is referred to
below as the "Preferred Shares" or "Series M." Each of the 1,120 Preferred
Shares may be issued on a date to be determined by the Board of Trustees of the
Trust or pursuant to their delegated authority; have an Initial Dividend Rate
and an Initial Dividend Payment Date as shall be determined in advance of the
issuance thereof by the Board of Trustees of the Trust or pursuant to their
delegated authority; and have such other preferences, voting powers, terms of
redemption and special or relative rights or privileges as are set forth in
these Bylaws, in addition to those required by applicable law or set forth in
the Declaration of Trust. The Preferred Shares shall constitute a separate
series of preferred shares of beneficial
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interest of the Trust, and each Preferred Share shall be identical except as
provided in these Bylaws.
Section 11.1 Statement Creating One Series of Auction Market Preferred
Shares
DEFINITIONS
As used in Parts I and II of this Section 11.1, 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) "'AA' Financial Composite Commercial Paper Rate" on any
date shall mean (i) (A) in the case of any Rate Period of 7 Rate Period
Days or fewer, the interest equivalent of the 7-day rate and, in the
case of any Rate Period of eight or more but fewer than 49 Rate Period
Days, the interest equivalent of the 30-day rate; and (B) in the case
of any Special Rate Period of (1) 49 or more but fewer than 70 Rate
Period Days, the interest equivalent of the 60-day rate, (2) 70 or more
but fewer than 85 Rate Period Days, the arithmetic average of the
interest equivalent of the 60-day and 90-day rates, (3) 85 or more but
fewer than 99 Rate Period Days, the interest equivalent of the 90-day
rate, (4) 99 or more but fewer than 120 Rate Period Days, the
arithmetic average of the interest equivalent of the 90-day and 120-day
rates, (5) 120 or more but fewer than 141 Rate Period Days, the
interest equivalent of the 120-day rate, (6) 141 or more but fewer than
162 Rate Period Days, the arithmetic average of the 120-day and 180-day
rates, and (7) 162 or more but fewer than 184 Rate Period Days, the
interest equivalent of the 180-day rate, in each of the above cases on
commercial paper placed on behalf of financial issuers whose corporate
bonds are rated "AA" by S&P or the equivalent of such rating by S&P or
another Rating Agency selected by the Trust, as made available on a
discount basis or otherwise by the Federal Reserve Bank of New York for
the Business Day next preceding such date; or (ii) in the event that
the Federal Reserve Bank of New York does not make available any such
rate, then the arithmetic average of such rates, as quoted on a
discount basis or otherwise, by the Commercial Paper Dealers to the
Auction Agent for the close of business on the Business Day next
preceding such date. If any Commercial Paper Dealer does not quote a
rate required to determine the "AA" Financial Composite Commercial
Paper Rate, the "AA" Financial Composite Commercial Paper Rate shall be
determined on the basis of the quotation or quotations furnished by the
remaining Commercial Paper Dealer or Commercial Paper Dealers and any
Substitute Commercial Paper Dealer or Substitute Commercial Paper
Dealers selected by the Trust to provide such rate or rates not being
supplied by any Commercial Paper Dealer or Commercial Paper Dealers, as
the case may be, or, if the Trust does not select any such Substitute
Commercial Paper Dealer or Substitute Commercial Paper Dealers, by the
remaining Commercial Paper Dealer or remaining Commercial Paper
Dealers. For purposes of this definition, the "interest equivalent" of
a rate stated on a discount basis (a "discount rate") for commercial
paper of a given number of days' maturity shall be equal to the
quotient (rounded upwards to the next higher one-thousandth (.001) of
1%) of (A) the discount
-13-
rate divided by (B) the difference between (x) 1.00 and (y) a fraction,
the numerator of which shall be the product of the discount rate times
the number of days until such commercial paper matures and the
denominator of which shall be 360.
(b) "Accountant's Confirmation" shall have the meaning
specified in paragraph 6(c) of Part I of this Section 11.1.
(c) "Affected Series" shall have the meaning specified in
paragraph 4(c)(i) of Part I of this Section 11.1.
(d) "Affiliate" shall mean, when used with respect to the
Trust, any Person known to the Auction Agent to be controlled by, in
control of or under common control with the Trust; provided, however,
that no corporation or Person controlled by, in control of or under
common control with such corporation, a trustee, director or executive
officer of which is a Trustee, shall be deemed to be an Affiliate
solely because such trustee, director or executive officer is also a
Trustee.
(e) "Agent Member" shall mean a member of or participant in
the Securities Depository that will act on behalf of a Bidder.
(f) "Applicable Rate" shall have the meaning specified in
paragraph 2(e)(i) of Part I of this Section 11.1.
(g) "Auction" shall mean each periodic implementation of the
Auction Procedures.
(h) "Auction Agent" means Deutsche Bank Trust Company Americas
unless and until another commercial bank, trust company or other
institution appointed by a resolution of the Board of Trustees of the
Trust or a duly authorized committee thereof enters into an agreement
with the Trust to follow the Auction Procedures for the purpose of
determining the Applicable Rate and to act as transfer agent,
registrar, dividend disbursing agent and redemption agent for the
Preferred Shares.
(i) "Auction Date," with respect to any Rate Period, shall
mean the Business Day next preceding the first day of such Rate Period.
(j) "Auction Procedures" shall mean the procedures for
conducting Auctions set forth in Part II of this Section 11.1, as such
procedures may be amended from time to time.
(k) "Available Preferred Shares" shall have the meaning
specified in paragraph 3(a) of Part II of this Section 11.1.
-14-
(l) "Beneficial Owner," with respect to any Preferred Shares,
means a customer of a Broker-Dealer who is listed on the records of
that Broker-Dealer (or, if applicable, the Auction Agent) as a holder
of such Preferred Shares.
(m) "Bid" and "Bids" shall have the respective meanings
specified in paragraph 1(a) of Part II of this Section 11.1.
(n) "Bidder" and "Bidders" shall have the respective meanings
specified in paragraph 1(a) of Part II of this Section 11.1; 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.
(o) "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 this Section 11.1, that is a member
of, or a participant in, the Securities Depository or is an affiliate
of such member or participant, has been selected or approved by the
Trust and has entered into a Broker-Dealer Agreement that remains
effective.
(p) "Broker-Dealer Agreement" shall mean an agreement between
the Auction Agent on behalf of the Trust and a Broker-Dealer pursuant
to which such Broker-Dealer agrees to follow the procedures specified
in Part II of this Section 11.1.
(q) "Business Day" shall mean a day on which the New York
Stock Exchange is open for trading and which is neither a Saturday nor
a Sunday nor any other day on which banks in The City of New York, New
York, are authorized by law to close.
(r) "Commercial Paper Dealers" shall mean Xxxxxx Commercial
Paper Incorporated, Xxxxxxx, Sachs & Co., Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated and any other commercial paper dealer selected by
the Trust as to which Xxxxx'x, Fitch or any Substitute Rating Agency
then rating the Preferred Shares shall not have objected or, in lieu of
any thereof, their respective affiliates or successors, if such
entities are commercial paper dealers.
(s) "Common Shares" shall mean the common shares of beneficial
interest of the Trust.
(t) "Cure Date" shall mean the Preferred Shares Basic
Maintenance Cure Date or the 1940 Act Cure Date, as the case may be.
(u) "Date of Original Issue," with respect to the Preferred
Shares, shall mean the date on which the Trust initially issues the
Preferred Shares.
-15-
(v) "Declaration of Trust" shall mean the Trust's Amended and
Restated Agreement and Declaration of Trust dated October 10, 2002, as
from time to time amended and supplemented.
(w) "Default" has the meaning set forth in paragraph 2(e)(ii)
of Part I of this Section 11.1.
(x) "Default Period" has the meaning set forth in paragraph
2(e) of Part I of this Section 11.1.
(y) "Default Rate" has the meaning set forth in paragraph
2(e)(ii) of Part I of this Section 11.1.
(z) "Deposit Securities" shall mean cash and any obligations
or securities, including Short Term Money Market Instruments that are
Eligible Assets, rated at least AAA, A-1 or SP-1 by S&P, except that,
for purposes of the restriction set forth in paragraph 8(a)(iii) of
Part I of this Section 11.1, obligations or securities will be
considered "Deposit Securities" only if they also are rated at least
P-1 by Xxxxx'x.
(aa) "Discounted Value," as of any Valuation Date, shall mean
with respect to a Fitch Eligible Asset or Xxxxx'x Eligible Asset the
quotient of the Market Value of an Eligible Asset divided by the Fitch
Discount Factor for a Fitch Eligible Asset or the Xxxxx'x Discount
Factor for a Xxxxx'x Eligible Asset, provided that with respect to an
Eligible Asset that is currently callable, Discounted Value will be
equal to the quotient as calculated above or the call price, whichever
is lower, and that with respect to an Eligible Asset that is
prepayable, Discounted Value will be equal to the quotient as
calculated above or the face value, whichever is lower.
(bb) "Dividend Default" has the meaning set forth in paragraph
2(e)(ii) of Part I of this Section 11.1.
(cc) "Dividend Payment Date" with respect to the Preferred
Shares shall mean, for the Initial Rate Period, the Initial Dividend
Payment Date, and for any Subsequent Rate Period, any date on which
dividends are payable on the Preferred Shares pursuant to the
provisions of paragraph 2(d) of Part I of this Section 11.1.
(dd) "Dividend Period," with respect to the Preferred Shares,
shall mean the period from and including the Date of Original Issue to
but excluding the initial Dividend Payment Date and any period
thereafter from and including one Dividend Payment Date to but
excluding the next succeeding Dividend Payment Date.
(ee) "Eligible Asset" means a Fitch Eligible Asset or a
Xxxxx'x Eligible Asset, as applicable.
-16-
(ff) "Existing Holder" 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 Preferred Shares.
(gg) "Exposure Period" shall mean the period commencing on a
given Valuation Date and ending 41 days thereafter.
(hh) "Fitch" shall mean Fitch Ratings and its successors.
(ii) "Fitch Discount Factor" shall mean, for purposes of
determining the Discounted Value of any Fitch Eligible Asset, the
percentage determined as follows.
(i) Common stock and preferred stock of REITs and
Other Real Estate Companies:
Discount
Factor
--------------
REIT or Other Real Estate Company Preferred Stock............. 154%
REIT or Other Real Estate Company Common Stock................ 196%
(ii) Debt Securities of REITs and Other Real Estate
Companies:
Term to Maturity AAA AA A BBB BB B CCC
---------------- ---- ---- ---- ---- ---- ---- ----
1 year 111% 114% 117% 120% 121% 127% 227%
2 year 116% 125% 125% 127% 132% 137% 137%
3 year 121% 123% 127% 131% 133% 140% 225%
4 year 126% 126% 129% 132% 136% 140% 164%
5 year 131% 132% 135% 139% 144% 149% 185%
7 year 140% 143% 146% 152% 159% 167% 228%
10 year 141% 143% 147% 153% 160% 168% 232%
12 year 144% 144% 150% 157% 165% 174% 249%
15 year 148% 151% 155% 163% 172% 182% 274%
20-30 year 152% 156% 160% 169% 180% 191% 306%
(1) The Fitch Discount Factors will also apply to
interest rate swaps and caps, whereby the rating on the
counterparty will determine the appropriate Fitch Discount
Factor to apply.
(2) If a security is unrated 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 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 Rating
Agency, and the security is above investment grade, then the
security will be reduced one rating category for purposes of
computing the Fitch Discount Factor; e.g., where the S&P
rating is AAA+, a Fitch rating
-17-
of AAA will be used; where the S&P rating is AA+, a Fitch
rating of AA will be used. If the security is not rated by
Fitch, but has a rating from only one other Rating Agency, and
the security is below investment grade, then the security will
be reduced two rating categories for purposes of computing the
Fitch Discount Factor; e.g., where the S&P rating is BB+, a
Fitch rating of BB- will be used; where the S&P rating is B+,
a Fitch rating of B- will be used.
(iii) Convertible Debt Securities:
The Fitch Discount Factor applied to convertible debt
securities is (A) 200% for investment grade convertibles and (B) 222%
for below investment grade convertibles so long as such convertible
debt securities have neither (x) conversion premiums greater than 100%
nor (y) a yield to maturity or yield to worst of greater than 15.00%
above the relevant Treasury curve.
The Fitch Discount Factor applied to convertible debt
securities which have conversion premiums of greater than 100% is (A)
152% for investment grade convertibles, and (B) 179% for below
investment grade convertibles so long as such convertible debt
securities do not have a yield to maturity or yield to worst of greater
than 15.00% above the relevant Treasury curve.
The Fitch Discount Factor applied to convertible debt
securities which have a yield to maturity or yield to worst of greater
than 15.00% above the relevant Treasury curve is 370%.
(iv) U.S. Government Securities:
Discount
Remaining Term to Maturity Factor
-------------------------- ------
1 year................................. 101.5%
2 year................................. 103%
3 year................................. 105%
4 year................................. 107%
5 year................................. 109%
5-7 year............................... 112%
7-10 year.............................. 114%
15 year................................ 122%
20 year................................ 130%
25 year................................ 146%
30 year................................ 154%
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(v) Short-Term Money Market Instruments and Cash:
The Fitch Discount Factor applied to Short-Term Money Market
Instruments will be (A) 100%, so long as such portfolio securities
mature or have a demand feature at par exercisable within the Exposure
Period and (B) 125%, so long as such portfolio securities neither
mature nor have a demand feature at par exercisable within the Exposure
Period and are rated at least F1/AA by Fitch, A-1/AA by Xxxxx'x, or
A1/AA by S&P. A Fitch Discount Factor of 100% will be applied to cash.
(vi) Other Securities:
The Fitch Discount Factor with respect to securities other
than those described above will be the percentage provided in writing
by Fitch.
(jj) "Fitch Eligible Assets" shall mean:
(i) Common stock, preferred stock, and any debt
securities of REITs and Other Real Estate Companies.
(ii) Unrated debt securities issued by an issuer
which (1) has not filed for bankruptcy in the past three
years; (2) is current on all payments of interest and
principal on its fixed income obligations; (3) is current on
all preferred stock dividends.
(iii) Interest rate swaps 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 F1, 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
transaction or transactions is not greater than the
Liquidation Preference of the Preferred Shares as of the Date
of Original Issue.
(iv) U.S Treasury Securities and U.S. Treasury
Strips.
(v) Short-Term Money Market Instruments as long as
(i) such securities are rated at least 'F1' by Fitch or the
equivalent by another Rating Agency, (ii) in the case of
demand deposits, time deposits and overnight funds, the
supporting entity is rated at least 'A' by Fitch or the
equivalent by another Rating Agency, or (iii) 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 in six months or less.
(vi) Cash (including, for this purpose, interest and
dividends due on assets rated (i) BBB or higher by Fitch or
the equivalent by another Rating
-19-
Agency if the payment date is within 5 Business Days of the
Valuation Date, (ii) A or higher by Fitch or the equivalent by
another Rating Agency if the payment is within thirty days of
the Valuation Date (iii) A+ or higher by Fitch or the
equivalent by another Rating Agency if the payment date is
within the Exposure Period) and receivables for Fitch Eligible
Assets sold if the receivable is due within five Business Days
of the Valuation Date, and if the trades which are generated
by such receivables are (A) settled through clearing house
firms or (B)(1) with counterparties rated BBB or higher by
Fitch, or (2) with counterparties having a Fitch short-term
rating of at least 'F1'.
(kk) "Holder," with respect to any Preferred Shares, shall
mean the registered holder of such shares as the same appears on the
record books of the Trust.
(ll) "Hold Order" and "Hold Orders" shall have the respective
meanings specified in paragraph 1(a) of Part II of this Section 11.1.
(mm) "Independent Accountant" shall mean a nationally
recognized accountant, or firm of accountants, retained by the Trust
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.
(nn) "Initial Dividend Payment Date" means the date on which
dividends are payable on the Preferred Shares with respect to the
Initial Rate Period, as determined by the Trustees of the Trust or
pursuant to their delegated authority.
(oo) "Initial Dividend Rate" shall mean the rate per annum
applicable to the Initial Rate Period for the Preferred Shares, as
determined by the Trustees or pursuant to their delegated authority.
(pp) "Initial Rate Period," with respect to the Preferred
Shares, shall be the period from and including the Date of Original
Issue thereof to but excluding the Initial Dividend Payment Date.
(qq) "Late Charge" shall have the meaning specified in
paragraph 2(e)(iii) of Part I of this Section 11.1.
(rr) "Lead Broker-Dealer" shall mean a Broker-Dealer
designated as such (solely for purposes of this Section 11.1) by the
Trust from time to time in its discretion. Initially, the Lead
Broker-Dealer shall be Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated.
(ss) "Liquidation Preference," with respect to a given number
of Preferred Shares, means $25,000 times that number.
-20-
(tt) "Market Value" of any asset of the Trust shall mean the
fair market value of such asset as computed as follows: securities
listed on the New York Stock Exchange are valued at the last sale price
reflected on the consolidated tape at the close of the New York Stock
Exchange on the business day as of which such value is being
determined; provided that, if there has been no sale on such day, the
securities are valued at the last reported bid price estimated by a
broker; and provided further that, if no bid prices are quoted on such
day, then the security is valued by such method as the Board of
Trustees or persons acting pursuant to procedures approved by the
Trustees shall determine in good faith to reflect its fair market
value. Readily marketable securities not listed on the New York Stock
Exchange but listed on other domestic or foreign securities exchanges
or admitted to trading on the National Association of Securities
Dealers Automated Quotations, Inc. ("NASDAQ") National List are valued
in a like manner. Portfolio securities traded on more than one
securities exchange are valued at the last sale price on the business
day as of which such value is being determined, as reflected on the
tape at the close of the exchange representing the principal market for
such securities. Readily marketable securities traded in the
over-the-counter market are valued at the last reported bid price in
the over-the-counter market or on the basis of yield equivalents as
obtained from one or more dealers that make a market in the securities
or by reference to such other comparable source as the Trustees or
persons acting pursuant to procedures approved by the Trustees deem
appropriate to reflect their fair market value. The fair market value
of certain fixed-income securities is computed based upon (i) the basis
of prices provided by a Pricing Service or (ii) the lower of the value
set forth in bids from two independent dealers in securities, in each
case with interest accrued added to such computation for those assets
of the Trust where such computation does not include interest accrued.
The independent dealers from whom bids are sought shall be either (a)
market makers in the securities being valued or (b) members of the
National Association of Securities Dealers, Inc. Where securities are
traded on more than one exchange and also over-the-counter, the
securities will generally be valued using the quotations the Trustees
or persons acting pursuant to procedures approved by the Trustees
believe reflect most closely the value of such securities.
(uu) "Maximum Rate" means, on any date on which the Applicable
Rate is determined, the applicable percentage (as determined pursuant
to the chart immediately below) of the Reference Rate on such date
determined as set forth below based on the lower of the credit rating
assigned to the Preferred Shares by Moody's or Fitch, subject to upward
but not downward adjustment in the discretion of the Trustees after
consultation with the Broker-Dealers and subject to paragraph 4(d) of
Part I of this Section 11.1; provided that immediately following any
such increase the Trust would be in compliance with the Preferred
Shares Basic Maintenance Amount. If Moody's or Fitch or both shall not
make such ratings available, the rate shall be determined by reference
to equivalent ratings issued by a Substitute Rating Agency.
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Credit Ratings
--------------------------------------------------- Applicable
Xxxxx'x Fitch Percentage:
-------------------- --------------------- ----------------
"Aa3" or higher AA- or higher 150%
"A3" to "A1" A- to A+ 200%
"Baa3" to "Baa1" BBB- to BBB+ 225%
Below "Baa3" Below BBB- 275%
(vv) "Minimum Rate Period" shall mean any Rate Period
consisting of 7 Rate Period Days.
(ww) "Moody's" shall mean Xxxxx'x Investors Service, Inc., a
Delaware corporation, and its successors.
(xx) "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 Xxxxx'x.
(i) Common stock and preferred stock of REITs and
Other Real Estate Companies:
Discount
Factor/(1)(2)(3)/
-----------------
Common Stock of REITs 154%
Preferred Stock of REITs
with Senior Unsecured Xxxxx'x (or S&P) rating 154%
without Senior Unsecured Moody's (or S&P) rating: 208%
Preferred Stock of Other Real Estate Companies
with Senior Unsecured Moody's (or S&P) rating: 208%
without Senior Unsecured Moody's (or S&P) rating: 250%
(1) A Discount Factor of 250% will be applied to those
assets in a single Moody's Real Estate
Industry/Property Sector Classification which exceed
30% of Moody's Eligible Assets but are not greater than
35% of Moody's Eligible Assets.
(2) A Discount Factor of 250% will be applied if dividends
on such securities have not been paid consistently
(either quarterly or annually) over the previous three
years, or for such shorter time period that such
securities have been outstanding.
(3) A Discount Factor of 250% will be applied if the market
capitalization (including common stock and preferred
stock) of an issuer is below $500 million.
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(ii) Debt Securities of REITs and Other Real Estate Companies(1):
------------------- -------- ------- -------- ------- -------- -------- -------
Maturity in Years Aaa Aa A Baa Ba B NR(2)
------------------- -------- ------- -------- ------- -------- -------- -------
1 109% 112% 115% 118% 119% 125% 250%
------------------- -------- ------- -------- ------- -------- -------- -------
2 115% 118% 122% 125% 127% 133% 250%
------------------- -------- ------- -------- ------- -------- -------- -------
3 120% 123% 127% 131% 133% 140% 250%
------------------- -------- ------- -------- ------- -------- -------- -------
4 126% 129% 133% 138% 140% 147% 250%
------------------- -------- ------- -------- ------- -------- -------- -------
5 132% 135% 139% 144% 146% 154% 250%
------------------- -------- ------- -------- ------- -------- -------- -------
7 139% 143% 147% 152% 156% 164% 250%
------------------- -------- ------- -------- ------- -------- -------- -------
10 145% 150% 155% 160% 164% 173% 250%
------------------- -------- ------- -------- ------- -------- -------- -------
15 150% 155% 160% 165% 170% 180% 250%
------------------- -------- ------- -------- ------- -------- -------- -------
20 150% 155% 160% 165% 170% 190% 250%
------------------- -------- ------- -------- ------- -------- -------- -------
30 150% 155% 160% 165% 170% 191% 250%
------------------- -------- ------- -------- ------- -------- -------- -------
(1) The Moody's Discount Factors for debt securities shall
also be applied to any interest rate swap or cap, in
which case the rating of the counterparty shall determine
the appropriate rating category.
(2) Unrated debt securities are limited to 10% of discounted
Moody's Eligible Assets. If a security is unrated by
Moody's but is rated by S&P, a rating two numeric ratings
below the S&P rating will be used, e.g., where the S&P
rating is AAA, a Xxxxx'x rating of Aa2 will be used;
where the S&P rating is AA+, a Xxxxx'x rating of Aa3 will
be used. If a security is unrated by either Moody's or
S&P, the percentage set forth under "NR" in this table
will be used.
(iii) U.S. Treasury Securities and U.S. Treasury Strips:
-------------------------------------------------------- ------------------- ------------------
U.S Treasury U.S. Treasury
Securities Strips
Discount Factor Discount Factor
-------------------------------------------------------- ------------------- ------------------
1 year or less......................................... 107% 107%
-------------------------------------------------------- ------------------- ------------------
2 years or less (but longer than 1 year)............... 113% 114%
-------------------------------------------------------- ------------------- ------------------
3 years or less (but longer than 2 years).............. 118% 120%
-------------------------------------------------------- ------------------- ------------------
4 years or less (but longer than 3 years).............. 123% 127%
-------------------------------------------------------- ------------------- ------------------
5 years or less (but longer than 4 years).............. 128% 133%
-------------------------------------------------------- ------------------- ------------------
7 years or less (but longer than 5 years).............. 135% 145%
-------------------------------------------------------- ------------------- ------------------
10 years or less (but longer than 7 years)............. 141% 159%
-------------------------------------------------------- ------------------- ------------------
15 years or less (but longer than 10 years)............ 146% 184%
-------------------------------------------------------- ------------------- ------------------
20 years or less (but longer than 15 years)............ 154% 211%
-------------------------------------------------------- ------------------- ------------------
30 years or less (but longer than 20 years)............ 154% 236%
-------------------------------------------------------- ------------------- ------------------
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(iv) Short-Term Money Market Instruments and Cash. The Moody's
Discount Factor applied to Moody's Eligible Assets that are Short-Term
Money Market Instruments will be
(1) 100%, so long as such portfolio securities mature
or have a demand feature at par exercisable within 49 days of
the relevant Valuation Date,
(2) 102%, so long as such portfolio securities mature
or have a demand feature at par not exercisable within 49 days
of the relevant Valuation Date, and
(3) 125%, if such securities are not rated by
Moody's, so long as such portfolio securities are rated at
least A-1+/AA or SP- 1+/AA by S&P and mature or have a demand
feature at par exercisable within 49 days of the relevant
Valuation Date.
(4) A Xxxxx'x Discount Factor of 100% will be applied
to cash.
(yy) "Xxxxx'x Eligible Assets" means
(i) Common stock, preferred stock and any debt security of
REITs and Other Real Estate Companies.
(1) Common stock of REITs and preferred stock and any
debt security of REITs and Other Real Estate Companies: (A)
which comprise at least 7 of the 14 Moody's Real Estate
Industry/Property Sector Classifications listed below and of
which no more than 35% may constitute a single such
classification; (B) which in the aggregate constitute at least
40 separate classes of common stock, preferred stock, and debt
securities, issued by at least 30 issuers; (C) issued by a
single issuer which in the aggregate constitute no more than
7.0% of the Market Value of Moody's Eligible Assets, and (D)
issued by a single issuer which, with respect to 50% of the
Market Value of Moody's Eligible Assets, constitute in the
aggregate no more than 5% of the Market Value of Moody's
Eligible Assets; and
(2) Unrated debt securities issued by an issuer
which: (A) has not filed for bankruptcy within the past three
years; (B) is current on all payments of principal and
interest on its fixed income obligations; (C) is current on
all preferred stock dividends; and (D) possesses a current,
unqualified auditor's report without qualified, explanatory
language; which unrated debt securities in the aggregate do
not exceed 10% of the discounted Moody's Eligible Assets;
-24-
(ii) Interest rate swaps 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 P-1 or, if the counterparty
does not have a short-term rating, the counterparty's senior
unsecured long-term debt rating is Aa3 or higher; and
(2) the original aggregate notional amount of the
interest rate swap transaction or transactions is not to be
greater than the Liquidation Preference of the Preferred
Shares on the Date of Original Issue. Interest rate swap
transactions will be marked-to-market daily;
(iii) U.S. Treasury Securities and Treasury Strips;
(iv) Short-Term Money Market Instruments so long as (A) such
securities are rated at least P-1, (B) in the case of demand deposits,
time deposits and overnight funds, the supporting entity is rated at
least A2, or (C) in all other cases, the supporting entity (1) is rated
A2 and the security matures within one month, (2) is rated A1 and the
security matures within three months or (3) is rated at least Aa3 and
the security matures within six months; provided, however, that for
purposes of this definition, such instruments (other than commercial
paper rated by S&P and not rated by Moody's) need not meet any
otherwise applicable Xxxxx'x rating criteria; and
(v) Cash (including, for this purpose, interest and dividends
due on assets rated (A) Baa3 or higher by Moody's if the payment date
is within five Business Days of the Valuation Date, (B) A2 or higher if
the payment date is within thirty days of the Valuation Date, and (C)
A1 or higher if the payment date is within 49 days of the relevant
valuation date) and receivables for Moody's Eligible Assets sold if the
receivable is due within five Business Days of the Valuation Date, and
if the trades which generated such receivables are (A) settled through
clearing house firms or (B) (1) with counterparties having a Moody's
long-term debt rating of at least Baa3 or (2) with counterparties
having a Moody's Short-Term Money Market Instrument rating of at least
P-1.
(zz) "Moody's Real Estate Industry/ Property Sector Classification"
means, for the purposes of determining Moody's Eligible Assets, each of the
following Industry Classifications (as defined by the National Association of
Real Estate Investment Trusts ("NAREIT")):
(i) Office
(ii) Industrial
-25-
(iii) Mixed
(iv) Shopping Centers
(v) Regional Malls
(vi) Free Standing
(vii) Apartments
(viii) Manufactured Homes
(ix) Diversified
(x) Lodging/Resorts
(xi) Health Care
(xii) Home Financing
(xiii) Commercial Financing
(xiv) Self Storage
The Trust will use its discretion in determining which NAREIT Industry
Classification is applicable to a particular investment in consultation with the
Independent Accountant and/or Moody's, as necessary.
(aaa) "1940 Act" shall mean the Investment Company Act of 1940, as
amended from time to time.
(bbb) "1940 Act Cure Date," with respect to the failure by the Trust to
maintain the 1940 Act Preferred Shares Asset Coverage (as required by paragraph
5 of Part I of this Section 11.1) as of the last Business Day of each month,
shall mean the last Business Day of the following month.
(ccc) "1940 Act Preferred Shares Asset Coverage" shall mean asset
coverage, as defined in Section 18(h) of the 1940 Act, of at least 200% with
respect to all outstanding senior securities of the Trust which are shares of
beneficial interest, including all outstanding Preferred Shares (or such other
asset coverage as may in the future be specified in or under the 1940 Act as the
minimum asset coverage for senior securities which are shares or stock of a
closed-end investment company as a condition of declaring dividends on its
common shares or stock), determined on the basis of values calculated as of a
time within 48 hours (not including Sundays or holidays) next preceding the time
of such determination.
-26-
(ddd) "Non-Call Period" has the meaning set forth under the definition
of "Special Redemption Provisions."
(eee) "Notice of Redemption" shall mean any notice with respect to the
redemption of Preferred Shares pursuant to paragraph 8(c) of Part I of this
Section 11.1.
(fff) "Notice of Special Rate Period" shall mean any notice with
respect to a Special Rate Period of Preferred Shares pursuant to paragraph 3(b)
of Part I of this Section 11.1.
(ggg) "Order" and "Orders" shall have the respective meanings specified
in paragraph 1(a) of Part II of this Section 11.1.
(hhh) "Other Real Estate Companies" means companies (other than REITs)
which, in the judgment of the Trust's investment manager, generally derive at
least 50% of their revenue from real estate or have at least 50% of their assets
in real estate.
(iii) "Outstanding" shall mean, as of any date, the number of Preferred
Shares theretofore issued by the Trust except, without duplication, (i) any
Preferred Shares theretofore canceled, redeemed or repurchased by the Trust, or
delivered to the Auction Agent for cancellation, redemption or repurchase or
with respect to which the Trust has given notice of cancellation, redemption or
repurchase and irrevocably deposited with the Auction Agent sufficient funds to
redeem or repurchase such shares and (ii) any Preferred Shares represented by
any certificate in lieu of which a new certificate has been executed and
delivered by the Trust. Notwithstanding the foregoing, (A) in connection with
any Auction, any Preferred Shares as to which the Trust or an Affiliate (other
than an Affiliate that is a Broker-Dealer) is the Existing Holder will be
disregarded and not deemed Outstanding; (B) for purposes of determining the
Preferred Shares Basic Maintenance Amount, Preferred Shares held by the Trust
will be disregarded and not deemed Outstanding.
(jjj) "Person" shall mean and include an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or other
entity or a government or any agency or political subdivision thereof.
(kkk) "Potential Beneficial Owner" with respect to the Preferred
Shares, shall mean a customer of a Broker-Dealer that is not a Beneficial Owner
of Preferred Shares but that wishes to purchase Preferred Shares, or that is a
Beneficial Owner of Preferred Shares that wishes to purchase additional
Preferred Shares.
(lll) "Potential Holder" with respect to the Preferred Shares, shall
mean a Broker-Dealer (or any such other person as may be permitted by the Trust)
that is not an Existing Holder of Preferred Shares or that is an Existing Holder
of Preferred Shares that wishes to become the Existing Holder of additional
Preferred Shares.
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(mmm) "Preferred Shares" shall have the meaning set forth under
"DESIGNATION" above.
(nnn) "Preferred Shares Basic Maintenance Amount" as of any Valuation
Date, shall mean the dollar amount equal to the sum of:
(i) the sum of (A) the products resulting from multiplying the
number of Outstanding Preferred Shares on such date by the Liquidation
Preference (and applicable redemption premium, if any) per share; (B)
the aggregate amount of dividends that will have accumulated at the
Applicable Rate (whether or not earned or declared) for each
Outstanding Preferred Share to the 30th day after such Valuation Date
(or, with respect to a Special Rate Period, to the next Dividend
Payment Date); (C) the amount of anticipated non-interest expenses of
the Trust for the 90 days subsequent to such Valuation Date; (D) the
amount of the current outstanding balances of any indebtedness which is
senior to the Preferred Shares plus interest thereon actually accrued
to such Valuation Date, together with 30 days' additional interest on
the current outstanding balances calculated at the current rate; and
(E) any other current liabilities payable during the 30 days subsequent
to such Valuation Date, including, without limitation, other
indebtedness due within one year and any redemption premium due with
respect to a redemption of the Preferred Shares for which a Notice of
Redemption has been given, as of such Valuation Date, to the extent not
reflected in any of (i)(A) through (i)(D);
less
(ii) the sum of any cash plus the value of any of the Trust's
assets irrevocably deposited by the Trust for the payment of any (i)(B)
through (i)(E) ("value," for purposes of this clause (ii), means the
Discounted Value of the security, except that if a security matures
prior to the relevant redemption payment date and is either fully
guaranteed by the U.S. Government or is rated at least P-1 by Moody's,
it will be valued at its face value).
(ooo) "Preferred Shares Basic Maintenance Cure Date," with respect to
the failure by the Trust to satisfy the Preferred Shares Basic Maintenance
Amount (as required by paragraph 6(a) of Part I of this Section 11.1) as of a
given Valuation Date, shall mean the tenth Business Day following such Valuation
Date.
(ppp) "Preferred Shares Basic Maintenance Report" shall mean a report
signed by the President, Chief Operating Officer, Treasurer or any Vice
President of the Trust which sets forth, as of the related Valuation Date, the
assets of the Trust, the Market Value and the Discounted Value thereof (seriatim
and in aggregate), and the Preferred Shares Basic Maintenance Amount.
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(qqq) "Premium Call Period" has the meaning set forth under the
definition of "Special Redemption Provisions."
(rrr) "Pricing Service" means any of the following: Bloomberg, Bridge
Information Services, Xxxxxx Capital Partners, CIBC World Markets, Thomson
Financial Securities Management, Data Resources Inc., FRI Corporation, FT
Interactive Data, International Securities Market Association, XX Xxxxxx Pricing
Services, Loan Pricing Corporation, Xxxxxx, Xxxxxxxx & Co,. Inc., Xxxxxxx Xxxxx
Securities Pricing Service, Xxxxxx Data Corp., Reuters, S&P/X.X. Xxxxx, Xxxxxxx
Financial Securities Management, Telerate, Xxxxx Pricing, Van Xxxxxx Xxxxxxx
Investment Advisory Corp Pricing Service and Wood Gundy.
(sss) "Quarterly Valuation Date" shall mean the last Valuation Date of
each fiscal quarter of the Trust.
(ttt) "Rate Period" shall mean the Initial Rate Period and any
Subsequent Rate Period, including any Special Rate Period.
(uuu) "Rate Period Days," for any Rate Period or Dividend Period, means
the number of days that would constitute such Rate Period or Dividend Period but
for the application of paragraph 2(d) of Part I of this Section 11.1.
(vvv) "Rating Agency" means a nationally recognized statistical rating
organization.
(www) "Redemption Default" has the meaning set forth in paragraph
2(e)(ii) of Part I of this Section 11.1.
(xxx) "Redemption Price" shall mean the applicable redemption price
specified in paragraph 8(a) or paragraph 8(b), as the case may be, of Part I of
this Section 11.1.
(yyy) "Reference Rate" means the applicable "AA" Financial Composite
Commercial Paper Rate (for a Dividend Period of fewer than 184 days) or the
applicable Treasury Index Rate (for a Dividend Period of 184 days or more).
(zzz) "REIT" means a real estate investment trust.
(aaaa) "Remaining Shares" shall have the meaning specified in paragraph
4(a)(iv) of Part II of this Section 11.1.
(bbbb) "S&P" shall mean Standard & Poor's, a division of The
XxXxxx-Xxxx Companies, Inc., or its successors.
(cccc) "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
-29-
(dddd) "Securities Depository" shall mean The Depository Trust Company
and its successors and assigns or any other securities depository selected by
the Trust which agrees to follow the procedures required to be followed by such
securities depository in connection with the Preferred Shares.
(eeee) "Sell Order" and "Sell Orders" shall have the respective
meanings specified in paragraph 1(a) of Part II of this Section 11.1.
(ffff) "Senior Unsecured Rating" shall mean the opinion of a Rating
Agency of the ability of an entity to honor senior unsecured financial
obligations and contracts denominated in foreign and/or domestic currency.
(gggg) "Series M" shall mean the Series M Auction Market Preferred
Shares.
(hhhh) "Short-Term Money Market Instruments" shall mean the following
types of instruments if, on the date of purchase or other acquisition thereof by
the Trust, the remaining term to maturity thereof is not in excess of 180 days:
(i) commercial paper rated A-1 if such commercial paper
matures in 30 days or A-1+ if such commercial paper matures in over 30
days;
(ii) demand or time deposits in, and banker's acceptances and
certificates of deposit of (A) a depository institution or trust
company incorporated under the laws of the United States of America or
any state thereof or the District of Columbia or (B) a United States
branch office or agency of a foreign depository institution (provided
that such branch office or agency is subject to banking regulation
under the laws of the United States, any state thereof or the District
of Columbia);
(iii) overnight funds; and
(iv) U.S. Government Securities.
(iiii) "Special Rate Period" shall have the meaning specified in
paragraph 3(a) of Part I of this Section 11.1. For the avoidance of doubt, a
Minimum Rate Period shall not be deemed to be a Special Rate Period.
(jjjj) "Special Redemption Provisions" means, with respect to any
Special Rate Period of more than one year, either, or any combination of (i) a
period (a "Non-Call Period") determined by the Board of Trustees after
consultation with the Broker-Dealers, during which the shares subject to such
Special Rate Period are not subject to redemption at the option of the Trust and
(ii) a period (a "Premium Call Period"), consisting of a number of whole years
as determined by the Board of Trustees after consultation with the
Broker-Dealers, during each year of which the shares subject to such Special
Rate Period will be redeemable at the Trust's option at a price per share equal
to $25,000 plus
-30-
accumulated but unpaid dividends (whether or not earned or declared) to (but not
including) the date fixed for redemption plus a premium expressed as a
percentage or percentages of $25,000 or expressed as a formula using specified
variables, in each case as determined by the Board of Trustees after
consultation with the Broker-Dealers.
(kkkk) "Submission Deadline" shall mean 1:30 P.M., New York City time,
on any Auction Date or such other time on any Auction Date by which
Broker-Dealers are required to submit Orders to the Auction Agent as specified
by the Auction Agent from time to time
(llll) "Submitted Bid" and "Submitted Bids" shall have the respective
meanings specified in paragraph 3(a) of Part II of this Section 11.1.
(mmmm) "Submitted Hold Order" and "Submitted Hold Orders" shall have
the respective meanings specified in paragraph 3(a) of Part II of this Section
11.1.
(nnnn) "Submitted Order" and "Submitted Orders" shall have the
respective meanings specified in paragraph 3(a) of Part II of this Section 11.1.
(oooo) "Submitted Sell Order" and "Submitted Sell Orders" shall have
the respective meanings specified in paragraph 3(a) of Part II of this Section
11.1.
(pppp) "Subsequent Rate Period" shall mean the period from and
including the first day following the Initial Rate Period to but excluding the
next Dividend Payment Date and any period thereafter from and including one
Dividend Payment Date to but excluding the next succeeding Dividend Payment
Date; provided, however, that if any Subsequent Rate Period is also a Special
Rate Period, such term shall mean the period commencing on the first day of such
Special Rate Period and ending on the last day of the last Dividend Period
thereof.
(qqqq) "Substitute Commercial Paper Dealer" shall mean Credit Suisse
First Boston or Xxxxxx Xxxxxxx & Co., Incorporated or their respective
affiliates or successors, if such entities are commercial paper dealers;
provided, however, that none of the entities named above shall be a Commercial
Paper Dealer.
(rrrr) "Substitute Rating Agency" means a Rating Agency selected by the
Trust to act as a substitute Rating Agency to determine the credit rating of the
Preferred Shares.
(ssss) "Sufficient Clearing Bids" shall have the meaning specified in
paragraph 3(a) of Part II of this Section 11.1.
(tttt) "Treasury Xxxx" shall mean a direct obligation of the U.S.
Government having a maturity at the time of issuance of 364 days or less.
-31-
(uuuu) "Treasury Index Rate" shall mean the average yield to maturity
for actively traded marketable U.S. Treasury fixed interest rate securities
having the same number of 30-day periods to maturity as the applicable Dividend
Period, determined, to the extent necessary, by linear interpolation based upon
the yield for such securities having the next shorter and next longer number of
30-day periods to maturity, treating all Dividend Periods with a length greater
than the longest maturity for such securities as having a length equal to such
longest maturity, in all cases based upon data set forth in the most recent
weekly statistical release published by the Board of Governors of the Federal
Reserve System (currently in H.15 (519)); provided, however, if the most recent
such statistical release shall not have been published during the 15 days
preceding the date of computation, then the foregoing computations shall be
based upon the average of comparable data as quoted to the Trust by at least
three U.S. Government Securities Dealers.
(vvvv) "Trust" shall mean AEW Real Estate Income Fund.
(wwww) "Trustees" shall mean the trustees of the Trust.
(xxxx) "U.S. Government Securities" shall mean direct obligations of
the United States or of its agencies or instrumentalities that are entitled to
the full faith and credit of the United States and that, other than Treasury
Bills, provide for the periodic payment of interest and the full payment of
principal at maturity or call for redemption, including, without limitation,
U.S. Treasury Securities and U.S. Treasury Strips.
(yyyy) "U.S. Government Securities Dealer" shall mean Xxxxxx Government
Securities Incorporated, Xxxxxxx, Sachs & Co., Salomon Brothers Inc., Xxxxxx
Guaranty Trust Company of New York and any other U.S. Government Securities
dealer selected by the Trust as to which Xxxxx'x (if Xxxxx'x is then rating the
Preferred Shares) or Fitch (if Fitch is then rating the Preferred Shares) shall
not have objected, and in each case their respective affiliates or successors,
if such entities are U.S. Government Securities dealers.
(zzzz) "U.S. Treasury Securities" shall mean direct obligations of the
United States Treasury that are entitled to the full faith and credit of the
United States.
(aaaaa) "U.S. Treasury Strips" shall mean securities based on U.S.
Treasury Securities created through the Separate Trading of Registered Interest
and Principal of Securities program of the U.S. Treasury.
(bbbbb) "Valuation Date" shall mean, for purposes of determining
whether the Trust is maintaining the Preferred Shares Basic Maintenance Amount,
the last Business Day of each week or such other date as the Trust and Fitch (if
Fitch is then rating the Preferred Shares) and Xxxxx'x (if Xxxxx'x is then
rating the Preferred Shares) may agree to for purposes of determining the
Preferred Shares Basic Maintenance Amount.
-32-
(ccccc) "Voting Period" shall have the meaning specified in paragraph
4(b)(i) of Part I of this Section 11.1.
(ddddd) "Winning Bid Rate" shall have the meaning specified in
paragraph 3(a) of Part II of this Section 11.1.
-33-
PART 1.
1. Number of Authorized Shares.
The number of authorized shares constituting Series M shall be
1,120 shares.
2. Dividends.
(a) Ranking. The Preferred Shares shall rank on a parity with
one another and with shares of any other series of preferred shares of
beneficial interest issued by the Trust as to the payment of dividends
by the Trust and the distribution of assets upon liquidation of the
Trust.
(b) Cumulative Cash Dividends. The Holders of Preferred Shares
shall be entitled to receive, when, as and if declared by the Trustees,
out of funds legally available therefor in accordance with the
Declaration of Trust and applicable law, cumulative cash dividends at
the Applicable Rate, determined as set forth in paragraph 2(e) of this
Part I, and no more, payable on the Dividend Payment Dates determined
pursuant to paragraph 2(d) of this Part I. Holders of Preferred Shares
shall not be entitled to any dividend, whether payable in cash,
property or shares, in excess of full cumulative dividends, as herein
provided, on the Preferred Shares. No interest, or sum of money in lieu
of interest, shall be payable in respect of any dividend payment or
payments on the Preferred Shares which may be in arrears, and, except
to the extent set forth in paragraph 2(e)(iii) of this Part I, no
additional sum of money shall be payable in respect of any such
arrearage.
(c) Dividends Cumulative from Date of Original Issue.
Dividends on the Preferred Shares shall accumulate at the Applicable
Rate from the Date of Original Issue thereof.
(d) Dividend Payment Dates and Adjustment Thereof. Dividends
shall be payable on the Preferred Shares for the Initial Rate Period on
the Initial Dividend Payment Date, and on each 7th day thereafter (each
date being a "Dividend Payment Date"); provided, however, that:
(i) if the day on which dividends would otherwise be
payable is not a Business Day, then such dividends shall be
payable on the first Business Day that falls after such day
(subject to paragraph 7 of Part II of this Section 11.1); and
(ii) notwithstanding this paragraph 2(d), the
Dividend Payment Dates with respect to a Special Rate Period
shall be determined in the discretion of the Trust and set
forth in the Notice of Special Rate Period relating to such
Special Rate Period, as delivered to the Auction Agent, which
Notice of Special Rate Period shall be filed with the
Secretary of the Trust; provided, however, that with respect
to any Special Rate Period consisting of more than 30 days,
dividends shall be payable on first Business Day of each
calendar month within such Special
-34-
Rate Period, if applicable, and on the Business Day following
the last day of such Special Rate Period.
(iii) Each Dividend Payment Date determined pursuant
to this paragraph 2(d) shall be a Business Day when determined
(and if not a Business Day at the time of payment, the
provisions of clause (i) above will apply, subject to
paragraph 7 of Part II of this Section 11.1);
(iv) Although any particular Dividend Payment Date
may not occur on the originally scheduled date because of the
provisions hereof, the next succeeding Dividend Payment Date,
subject to such provisions, will occur on the next following
originally scheduled date; and
(v) notwithstanding the above, if for any reason a
Dividend Period for the Preferred Shares is scheduled to begin
on the same day and end on the same day as a Dividend Period
for any other series of preferred shares of beneficial
interest of the Trust, then the last day of such Dividend
Period for such other series of preferred shares of beneficial
interest shall be the second Business Day next succeeding such
scheduled day unless the Trust obtains the opinion of tax
counsel referred to in this paragraph. Subject to the
limitation in the next sentence, if for any reason a Dividend
Payment Date cannot be fixed as described above, then the
Trustees shall otherwise fix the Dividend Payment Date. In no
event, however, may the Dividend Period of the Preferred
Shares be co-extensive with any dividend period of any other
series of preferred shares of beneficial interest unless the
Trust has received an opinion of tax counsel that having such
co-extensive periods will not affect the deductibility, for
federal income tax purposes, of dividends paid on the
different series of preferred shares of beneficial interest.
(e) Dividend Rates and Calculation of Dividends.
(i) Dividend Rates. The dividend rate on the
Preferred Shares during the period from and after the Date of
Original Issue to and including the last day of the Initial
Rate Period shall be the Initial Dividend Rate. For each
Subsequent Rate Period thereafter, the dividend rate on the
Preferred Shares shall be equal to the rate per annum that
results from an Auction (but the rate set at the Auction may
not exceed the Maximum Rate) on the Auction Date next
preceding such Subsequent Rate Period; provided, however, that
if an Auction for any such Subsequent Rate Period is not held
for any reason (except as provided in paragraph 7 of Part II
of this Section 11.1), the dividend rate for such Subsequent
Rate Period will be the Maximum Rate on the Auction Date
therefore (except (A) during a Default Period when the
dividend rate shall be the Default Rate, as set forth in
paragraph 2(e)(ii) below, or (ii) after a Default Period and
prior to the beginning of the next Dividend Period, when the
dividend rate shall be the
-35-
Maximum Rate at the close of business on the last day of such
Default Period). The rate per annum at which dividends are
payable on the Preferred Shares for any Rate Period thereof in
accordance with this Section 11.1 is herein referred to as the
"Applicable Rate."
(ii) Default Period. Subject to the cure provisions
in paragraph 2(e)(iii) below, a "Default Period" will commence
on any date the Trust fails to deposit irrevocably in trust
with the Auction Agent, not later than 12:00 Noon, New York
City time, (A) on any Dividend Payment Date, in funds
available on such Dividend Payment Date in The City of New
York, New York, the full amount of any dividend (whether or
not earned or declared) to be paid on such Dividend Payment
Date on the Preferred Shares (a "Dividend Default") or (B) on
any redemption date set by the Trust with respect to any
Preferred Shares, in funds available on such redemption date
in The City of New York, New York, the full amount of any
Redemption Price to be paid on such redemption date for any
Preferred Shares with respect to which a Notice of Redemption
has been mailed pursuant to paragraph 8(c) of Part I of this
Section 11.1 (a "Redemption Default," and together with a
Dividend Default, hereinafter referred to as a "Default");
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.
Subject to the cure provisions of paragraph 2(e)(iii)
below, a Default Period with respect to a Dividend Default or
a Redemption Default shall end on the Business Day on which,
by 12:00 noon, New York City time, all unpaid dividends and
any unpaid Redemption Price, as applicable, shall have been
deposited irrevocably in trust in same-day funds with the
Auction Agent. The Applicable Rate for each Dividend Period
commencing during a Default Period will be equal to the
Default Rate, and each subsequent Dividend Period commencing
during a Default Period shall be a Minimum Rate Period;
provided, however, that the commencement of a Default Period
will not by itself cause the commencement of a new Dividend
Period. No Auction shall be held during a Default Period. The
"Default Rate" shall be equal to the Reference Rate multiplied
by three (3).
(iii) Curing a Default. No Default Period with
respect to a Dividend Default or Redemption Default shall be
deemed to commence if the amount of any dividend or any
Redemption Price due (if such default is not solely due to the
willful failure of the Trust to pay such dividend or
Redemption Price) is deposited irrevocably in trust, in
same-day funds with the Auction Agent by 12:00 noon, New York
City time, within three Business Days after the applicable
Dividend
-36-
Payment Date or redemption date set by the Trust, together
with an amount equal to the Default Rate applied to the amount
of such non-payment based on the actual number of days
comprising the period beginning on the applicable Dividend
Payment Date or redemption date and ending on the date of such
deposit, divided by 360 (a "Late Charge"). In the case of a
default that is solely due to the willful failure of the Trust
to pay a dividend or Redemption Price when due, the provisions
of paragraph 2(e)(ii) above shall apply.
(iv) Calculation of Dividends. The amount of
dividends per share payable on the Preferred Shares on any
date on which dividends shall be payable on the Preferred
Shares shall be computed by multiplying the Applicable Rate in
effect for such Dividend Period or Dividend Periods or part
thereof for which dividends have not been paid by a fraction,
the numerator of which shall be the number of days in such
Dividend Period or Dividend Periods or part thereof that such
share was outstanding and the denominator of which shall be
360; and multiplying the rate obtained by $25,000, and
rounding the amount so obtained to the nearest cent.
(f) Dividend Payments by Trust to Auction Agent. The Trust
shall pay to the Auction Agent, not later than 12:00 noon, New York
City time on each Dividend Payment Date for the Preferred Shares, an
aggregate amount of funds available on such Dividend Payment Date equal
to the dividends to be paid to all Holders of the Preferred Shares on
such Dividend Payment Date. The Trust shall not be required to
establish any reserves for payment of dividends on the Preferred
Shares.
(g) Auction Agent as Trustee of Dividend Payments by Trust.
All moneys paid to the Auction Agent for the payment of dividends or
any Redemption Price (or for the payment of any Late Charge) shall be
held in trust for the payment of such dividends or any Redemption Price
(and any such Late Charge) by the Auction Agent for the benefit of the
Holders specified in paragraph 2(i) of this Part I of this Section
11.1. Any moneys paid to the Auction Agent in accordance with the
foregoing but not applied by the Auction Agent to the payment of such
dividends or Redemption Price (and any such Late Charge) will, to the
extent permitted by law, be repaid to the Trust at the end of 90 days
from the date on which such moneys were so to have been applied.
(h) Dividends Paid to Holders. Each dividend on Preferred
Shares shall be paid on the Dividend Payment Date therefor to the
Holders thereof as their names appear on the record books of the Trust
on the Business Day next preceding such Dividend Payment Date.
(i) Dividends Credited Against Earliest Accumulated But Unpaid
Dividends. Any dividend payment made on Preferred Shares shall first be
credited against the earliest accumulated but unpaid dividends due with
respect to such shares. Dividends in arrears for any past Dividend
Period may be declared and paid on any date as may be
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fixed by the Trustees, without reference to any regular Dividend
Payment Date, to the Holders as their names appear on the record books
of the Trust on the record date fixed by the Trustees, not exceeding 15
days preceding the payment date thereof.
3. Designation of Special Rate Periods.
(a) Length of and Preconditions for Special Rate Period. The
Trust, in consultation with the Lead Broker-Dealer, may designate any
succeeding Subsequent Rate Period for the Preferred Shares as a
"Special Rate Period" consisting of a specified number of Rate Period
Days evenly divisible by 7 and not more than 1,820. A designation of a
Special Rate Period shall be effective only if (A) notice thereof shall
have been given as provided herein, (B) an Auction shall have been held
on the Auction Date immediately preceding the first day of such
proposed Special Rate Period and Sufficient Clearing Bids shall have
existed in such Auction, (C) if any Notice of Redemption shall have
been mailed by the Trust pursuant to paragraph 8(c) of this Part I with
respect to any Preferred Shares, the Redemption Price with respect to
such shares shall have been deposited with the Auction Agent and, if
such redemption is subject to one or more conditions precedent, each
such condition shall have been satisfied at the time or times and in
the manner specified in such Notice of Redemption, (D) full cumulative
dividends on the Preferred Shares shall have been paid in full or
deposited with the Auction Agent, (E) the Trust shall have obtained
written confirmation from Xxxxx'x and Fitch, if Xxxxx'x and Fitch are
then rating the Preferred Shares, and from any Substitute Rating Agency
then rating the Preferred Shares, that such proposed Special Rate
Period will not impair the rating then assigned by Xxxxx'x, Fitch or
such Substitute Rating Agency to the Preferred Shares, and (F) the Lead
Broker-Dealer shall not have objected to the declaration of the
proposed Special Rate Period in writing.
(b) Notice of Proposed Special Rate Period. If the Trust
proposes to designate any succeeding Rate Period as a Special Rate
Period pursuant to paragraph 3(a) of this Part I, not fewer than seven
Business Days (or two Business Days in the event the duration of the
Dividend Period prior to such Special Rate Period is fewer than eight
days) nor more than 30 Business Days prior to the date the Trust
proposes to designate as the first day of such Special Rate Period,
notice shall be (i) made by press release and (ii) communicated by the
Trust by telephonic or other means to the Auction Agent and each
Broker-Dealer and confirmed in writing promptly thereafter. Each such
notice (a "Notice of Special Rate Period") shall state (A) that the
Trust proposes to exercise its option to designate a Special Rate
Period, specifying the first and last days thereof and the Maximum Rate
for such Special Rate Period and (B) that the Trust will by 3:00 P.M.,
New York City time, on the second Business Day next preceding the first
day of such Special Rate Period, notify the Auction Agent, who will
promptly notify the Broker-Dealers, of either (x) its determination,
subject to certain conditions, to proceed with such Special Rate
Period, subject to the terms of any Special Redemption Provisions, or
(y) its determination not to proceed with such Special Rate Period, in
which latter event the succeeding Dividend Period shall be a Minimum
Rate Period. No later than 3:00 P.M.,
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New York City time, on the second Business Day next preceding the first
day of any proposed Special Rate Period, the Trust shall deliver to the
Auction Agent, who will promptly deliver to the Broker-Dealers and
Existing Holders, either:
(I) a notice stating (A) that the Trust has
determined to designate the next succeeding Rate Period as a
Special Rate Period, specifying the first and last days
thereof and (B) the terms of any Special Redemption
Provisions; or
(II) a notice stating that the Trust has determined
not to exercise its option to designate a Special Rate Period.
If the Trust fails to deliver the notices required by this provision
with respect to any designation of any proposed Special Rate Period to the
Auction Agent by 3:00 P.M., New York City time, on the second Business Day next
preceding the first day of such proposed Special Rate Period, the Trust shall be
deemed to have delivered a notice to the Auction Agent with respect to such
Dividend Period to the effect set forth in clause (II) above.
(c) Special Redemption Provisions. Subject to the next
sentence, the Notice of Special Rate Period relating to a Special Rate
Period of the Preferred Shares, as delivered to the Auction Agent and
Broker-Dealers and filed with the Secretary of the Trust, shall set
forth any Special Redemption Provisions with respect to such Special
Rate Period. A Notice of Special Rate Period may contain Special
Redemption Provisions only if the Trustees, after consultation with the
Broker-Dealers, determine that such Special Redemption Provisions are
in the best interest of the Trust.
4. Voting Rights.
(a) One Vote Per Share of Preferred Shares. Except as
otherwise provided herein or in the Declaration of Trust or as
otherwise required by law, (i) each Holder of Preferred Shares shall be
entitled to one vote for each Preferred Share held by such Holder on
each matter submitted to a vote of shareholders of the Trust, and (ii)
the holders of outstanding preferred shares of beneficial interest of
the Trust, including the Preferred Shares, and of Common Shares shall
vote together as a single class; provided, however, that, subject to
the division of the Trustees into classes with respect to their
respective terms of office, as provided in the Declaration of Trust, at
any meeting of the shareholders of the Trust held for the election of
Trustees, the holders of outstanding preferred shares of beneficial
interest of the Trust, including the Preferred Shares, represented in
person or by proxy at said meeting shall be entitled, as a class, to
the exclusion of the holders of all other securities and classes of
shares of beneficial interest of the Trust, to elect two Trustees of
the Trust, each Preferred Share entitling the holder thereof to one
vote. Subject to paragraph 4(b) of this Part I, the holders of
outstanding Common Shares and preferred shares of beneficial interest,
including the Preferred Shares, voting together as a single class,
shall elect the balance of the Trustees.
(b) Voting for Additional Trustees.
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(i) Voting Period. Except as otherwise provided in the
Declaration of Trust or as otherwise required by law, during any period
in which any one or more of the conditions described in subparagraphs
(A) or (B) of this subparagraph (b)(i) shall exist (such period being
referred to herein as a "Voting Period"), the number of trustees
constituting the Trustees shall be automatically increased by the
smallest number that, when added to the two Trustees elected
exclusively by the holders of preferred shares of beneficial interest,
including the Preferred Shares, would constitute a majority of the
Trustees as so increased by such smallest number, and the holders of
preferred shares of beneficial interest, including the Preferred
Shares, shall be entitled, voting as a class on a one-vote-per-share
basis (to the exclusion of the holders of all other securities and
classes of shares of beneficial interest of the Trust), to elect such
smallest number of additional Trustees, together with the two Trustees
that such holders are in any event entitled to elect. A Voting Period
shall commence:
(A) if at the close of business on any Dividend
Payment Date accumulated dividends (whether or not earned or
declared) on any outstanding preferred shares of beneficial
interest, including the Preferred Shares, equal to at least
two full years' dividends shall be due and unpaid and
sufficient cash or specified securities shall not have been
deposited with the Auction Agent for the payment of such
accumulated dividends; or
(B) if at any time holders of preferred shares of
beneficial interest, including the Preferred Shares, are
entitled under the 1940 Act to elect a majority of the
Trustees of the Trust.
Upon the termination of a Voting Period, the voting rights
described in this subparagraph (b)(i) shall cease, subject always,
however, to the revesting of such voting rights in the holders of
preferred shares of beneficial interest upon the further occurrence of
any of the events described in this subparagraph (b)(i).
(ii) Notice of Special Meeting. As soon as practicable after
the accrual of any right of the holders of preferred shares of
beneficial interest, including the Preferred Shares, to elect
additional Trustees as described in paragraph 4(b)(i) of this Part I,
the Trust shall so notify the Auction Agent and a special meeting of
such holders shall be called by mailing a notice of such special
meeting to such holders, such meeting to be held not less than 10 nor
more than 90 days after the date of mailing of such notice. If the
Trust fails to send such notice to the Auction Agent or if such special
meeting is not called, it may be called by any such holder on like
notice. The record date for determining the holders entitled to notice
of and to vote at such special meeting shall be the close of business
on the fifth Business Day preceding the day on which such notice is
mailed. At any such special meeting and at each meeting of holders of
preferred shares of beneficial interest, including the Preferred
Shares, held during a Voting Period at which
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Trustees are to be elected, such holders, voting together as a class
(to the exclusion of the holders of all other securities and classes of
shares of beneficial interest of the Trust), shall be entitled to elect
the number of Trustees prescribed in paragraph 4(b)(i) of this Part I
on a one-vote-per-share basis.
(iii) Terms of Office of Existing Trustees. The terms of
office of all persons who are Trustees of the Trust at the time of a
special meeting of Holders and holders of other preferred shares of
beneficial interest to elect Trustees shall continue, notwithstanding
the election at such meeting by the Holders and such other holders of
the number of Trustees that they are entitled to elect, and the persons
so elected by the Holders and such other holders, together with the two
incumbent Trustees elected by the Holders and such other holders of
preferred shares of beneficial interest and the remaining incumbent
Trustees elected by the holders of the Common Shares and preferred
shares of beneficial interest, shall constitute the duly elected
Trustees.
(iv) Terms of Office of Certain Trustees to Terminate upon
Termination of Voting Period. Simultaneously with the termination of a
Voting Period, the terms of office of the additional Trustees elected
by the Holders and holders of other Preferred Shares pursuant to
paragraph 4(b)(i) of this Part I shall automatically terminate, the
remaining Trustees shall constitute the Trustees of the Trust and the
voting rights of the Holders and such other holders to elect additional
Trustees pursuant to paragraph 4(b)(i) of this Part I shall cease,
subject to the provisions of the last sentence of paragraph 4(b)(i) of
this Part I.
(c) Holders of Preferred Shares to Vote on Certain Other Matters.
(i) Increase in Capitalization; Voluntary Petition for
Bankruptcy. So long as any Preferred Shares are outstanding, the Trust
shall not, without the affirmative vote or consent of the Holders of at
least a "majority of the outstanding" Preferred Shares (unless a higher
percentage is provided for herein or in the Declaration of Trust or by
applicable law), in person or by proxy, either in writing or at a
meeting, voting as a separate class, authorize, create or issue any
class or series of shares ranking prior to or on a parity with the
Preferred Shares with respect to the payment of dividends or the
distribution of assets upon dissolution, liquidation or winding up of
the affairs of the Trust, or authorize, create or issue additional
Preferred Shares (except that, notwithstanding the foregoing, but
subject to the provisions of these Bylaws, the Trustees, without the
vote or consent of the Holders of Preferred Shares, may from time to
time authorize and create, and the Trust may from time to time issue,
additional Preferred Shares or classes or series of other preferred
shares of beneficial interest ranking on a parity with Preferred Shares
with respect to the payment of dividends and the distribution of assets
upon dissolution, liquidation or winding up of the affairs of the Trust
if the Trust receives written confirmation from
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Xxxxx'x (if Xxxxx'x is then rating the Preferred Shares) and Fitch (if
Fitch is then rating the Preferred Shares) and from any Substitute
Rating Agency then rating the Preferred Shares that such authorization,
creation or issuance would not impair the rating then assigned by such
Rating Agency to the Preferred Shares). So long as any Preferred Shares
are outstanding, the Trust shall not, without the affirmative vote or
consent of the Holders of at least a "majority of the outstanding"
Preferred Shares (unless a higher percentage is provided for herein or
in the Declaration of Trust or by applicable law), in person or by
proxy, either in writing or at a meeting, voting as a separate class,
file a voluntary application for relief under Federal bankruptcy law or
any similar application under state law for so long as the Trust is
solvent and does not foresee becoming insolvent.
For purposes of paragraph 4 of this Part I, "majority of the
outstanding" Preferred Shares (or any other series of preferred shares
of beneficial interest of the Trust, as applicable) means (i) 67% or
more of such shares present at a meeting or represented by proxy, if
the Holders of more than 50% of such shares are present or represented
by proxy, or (ii) more than 50% of such shares, whichever is less.
To the extent not prohibited by these Bylaws, the Declaration
of Trust or applicable law, in the event more than one series of
preferred shares of beneficial interest of the Trust is outstanding, if
any action with respect to which Holders of Preferred Shares or of
other preferred shares of beneficial interest of the Trust are granted
voting rights under paragraph 4 of this Part I (including without
limitation paragraphs 4(c) and 4(d)) would adversely affect the rights
of one or more series of the Trust's preferred shares of beneficial
interest (including the Preferred Shares) (each an "Affected Series")
in a manner different from any other series of preferred shares of
beneficial interest of the Trust, the Trust will not approve any such
action without the affirmative vote or consent of the Holders of at
least a "majority of outstanding" shares of each such Affected Series
outstanding at the time, in person or by proxy, either in writing or at
a meeting (each such Affected Series voting as a separate class).
(ii) 1940 Act Matters. Unless a higher percentage is provided
for herein or in the Declaration of Trust or by applicable law, (A) the
affirmative vote of the Holders of at least a "majority of the
outstanding" Preferred Shares, voting as a separate class, shall be
required to approve any conversion of the Trust from a closed-end to an
open-end investment company and (B) the affirmative vote of the Holders
of a "majority of the outstanding" Preferred Shares, voting as a
separate class, shall be required to approve any plan of
"reorganization" (as such term is defined in Section 2(a)(33) of the
0000 Xxx) adversely affecting such shares. The affirmative vote of the
Holders of at least a "majority of the outstanding" Preferred Shares,
voting as a separate class, shall be required to approve any action not
described in the first sentence of this paragraph 4(c)(ii)
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requiring a vote of security holders of the Trust under section 13(a)
of the 1940 Act. In the event a vote of Holders of Preferred Shares is
required pursuant to the provisions of Section 13(a) of the 1940 Act,
the Trust shall, not later than ten Business Days prior to the date on
which such vote is to be taken, notify Moody's (if Xxxxx'x is then
rating the Preferred Shares) and Fitch (if Fitch is then rating the
Preferred Shares) that such vote is to be taken and the nature of the
action with respect to which such vote is to be taken. The Trust shall,
not later than ten Business Days after the date on which such vote is
taken, notify Moody's (if Xxxxx'x is then rating the Preferred Shares)
and Fitch (if Fitch is then rating the Preferred Shares) of the results
of such vote.
(d) Board May Take Certain Actions Without Shareholder Approval. The
Trustees, without the vote or consent of the shareholders of the Trust, may from
time to time amend, alter or repeal any provision of this Section 11.1 if such
amendment, alteration or repeal would not adversely affect the preferences,
rights or powers of the Holders of Preferred Shares or the holders of any other
preferred shares of beneficial interest of the Trust expressly set forth in the
Declaration of Trust or Bylaws; provided, however, that the Trustees receive
written confirmation from Moody's (such confirmation being required to be
obtained only in the event Xxxxx'x is then rating the Preferred Shares) or Fitch
(such confirmation being required to be obtained only in the event that Fitch is
then rating the Preferred Shares) that any such amendment, alteration or repeal
would not impair the ratings then assigned by Moody's (if Xxxxx'x is then rating
the Preferred Shares) or Fitch (if Fitch is then rating the Preferred Shares) to
the Preferred Shares. To the extent any shareholder vote is required under
paragraph 4(d) of this Part I, (i) the affirmative vote of the Holders of at
least a "majority of outstanding" Preferred Shares (or other series of preferred
shares of beneficial interest of the Trust, as applicable) shall be required
(unless a higher percentage is provided for herein or in the Declaration of
Trust or by applicable law) and (ii) holders of Common Shares will have no
rights unless required by law, the Declaration of Trust or these Bylaws.
For purposes of the foregoing and paragraph 4(c) above, no matter shall
be deemed adversely to affect any preference, right or power of a Holder of
Preferred Shares or a holder of any other preferred shares of beneficial
interest of the Trust unless such matter (a) adversely alters or abolishes any
preferential right of such shares; (b) creates, adversely alters or abolishes
any right in respect of redemption of such shares; or (c) creates or adversely
alters (other than to abolish) any restriction on transfer applicable to such
shares.
Notwithstanding the foregoing, the Trustees may, without the vote or
consent of the Holders of the Preferred Shares, from time to time amend, alter
or repeal any or all of the provisions of paragraph 10 of this Part I, as well
as any or all of the definitions contained within this Section 11.1 (and any
terms defined within, or related to, such definitions), and any such amendment,
alteration or repeal will be deemed not to affect the preferences, rights or
powers of the Preferred Shares or the Holders thereof, provided
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the Trustees receive written confirmation from Moody's (if Xxxxx'x is then
rating the Preferred Shares) and Fitch (if Fitch is then rating the Preferred
Shares) that any such amendment, alteration or repeal would not impair the
ratings then assigned to the Preferred Shares by Moody's (if Xxxxx'x is then
rating the Preferred Shares) or Fitch (if Fitch is then rating the Preferred
Shares); provided, however, that such confirmation shall in no event be required
to be obtained from a particular Rating Agency with respect to definitions or
other provisions relevant only to and adopted in connection with another Rating
Agency's rating of the Preferred Shares.
(e) Voting Rights Set Forth Herein Are Sole Voting Rights. Unless
otherwise required by law, the Holders of Preferred Shares shall not have any
relative rights or preferences or other special rights other than those
specifically set forth herein.
(f) No Preemptive Rights or Cumulative Voting. The Holders of Preferred
Shares shall have no preemptive rights or rights to cumulative voting.
(g) Voting for Trustees Sole Remedy for Trust's Failure to Pay
Dividends. In the event that the Trust fails to pay any dividends on the
Preferred Shares, the exclusive remedy of the Holders shall be the right to vote
for Trustees pursuant to the provisions of this paragraph 4.
(h) Holders Entitled to Vote. For purposes of determining any rights of
the Holders to vote on any matter, whether such right is created by this Section
11.1, by provisions of the Declaration of Trust, by statute or otherwise, no
Holder shall be entitled to vote any Preferred Share and no Preferred Share
shall be deemed to be "outstanding" for the purpose of voting or determining the
number of shares required to constitute a quorum if, prior to or concurrently
with the time of determination of shares entitled to vote or shares deemed
outstanding for quorum purposes, as the case may be, the requisite Notice of
Redemption with respect to such shares shall have been mailed as provided in
paragraph 8(c) of this Part I and the Redemption Price for the redemption of
such shares shall have been deposited in trust with the Auction Agent for that
purpose. No Preferred Shares held by the Trust shall have any voting rights or
be deemed to be outstanding for voting or other purposes.
5. 1940 Act Preferred Shares Asset Coverage.
The Trust shall maintain, as of the last Business Day of each month in
which any Preferred Shares are outstanding, the 1940 Act Preferred Shares Asset
Coverage.
6. Preferred Shares Basic Maintenance Amount.
(a) So long as Preferred Shares are outstanding, the Trust shall
maintain, on each Valuation Date, and shall verify to its satisfaction that it
is maintaining on such Valuation Date, Fitch Eligible Assets having an aggregate
Discounted Value equal to or greater than the Preferred Shares Basic Maintenance
Amount (if Fitch is then rating the
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Preferred Shares) and Moody's Eligible Assets having an aggregate
Discounted Value equal to or greater than the Preferred Shares Basic
Maintenance Amount (if Xxxxx'x is then rating the Preferred Shares).
(b) (i) On or before 5:00 P.M., New York City time, on the
third Business Day after a Valuation Date on which the Trust fails to
satisfy the Preferred Shares Basic Maintenance Amount, and on the third
Business Day after the Preferred Shares Basic Maintenance Cure Date
with respect to such Valuation Date, the Trust shall complete and
deliver to Xxxxx'x (if Xxxxx'x is then rating the Preferred Shares) and
Fitch (if Fitch is then rating the Preferred Shares) and the Auction
Agent (if either Moody's or Fitch is then rating the Preferred Shares)
a Preferred Shares Basic Maintenance Report as of the date of such
failure or such Preferred Shares Basic Maintenance Cure Date, as the
case may be, which will be deemed to have been delivered to each such
party if such party receives a copy or telecopy, telex or other
electronic transcription thereof and on the same day the Trust mails to
such party for delivery on the next Business Day the full Preferred
Shares Basic Maintenance Report.
(i) The Trust shall also deliver a Preferred Shares
Basic Maintenance Report to Xxxxx'x (if Xxxxx'x is then rating
the Preferred Shares) and Fitch (if Fitch is then rating the
Preferred Shares):
(A) As of the last Valuation Date of each
calendar month (or, if such day is not a Business
Day, the immediately preceding Business Day), and
(B) As of any Quarterly Valuation Date, in
each case on or before the third Business Day after
such day.
A failure by the Trust to deliver a Preferred Shares Basic Maintenance
Report pursuant to the preceding sentence shall be deemed to be delivery of a
Preferred Shares Basic Maintenance Report indicating the Discounted Value for
all assets of the Trust is less than the Preferred Shares Basic Maintenance
Amount, as of the relevant Valuation Date.
(c) Within ten Business Days after the date of delivery of a
Preferred Shares Basic Maintenance Report in accordance with paragraph
6(b)(ii)(B) of this Part I relating to a Quarterly Valuation Date, the
Trust shall deliver to Xxxxx'x (if Xxxxx'x is then rating the Preferred
Shares), Fitch (if Fitch is then rating the Preferred Shares) and the
Auction Agent (if either Moody's or Fitch is then rating the Preferred
Shares) a letter from the Independent Accountant (an "Accountant's
Confirmation") regarding the mathematical accuracy of the calculations
reflected in such Preferred Shares Basic Maintenance Report (and in any
other Preferred Shares Basic Maintenance Report, randomly selected by
the Independent Accountant, that was prepared by the Trust during the
quarter ending on such Quarterly Valuation Date).
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(d) Within ten Business Days after the date of delivery of a
Preferred Shares Basic Maintenance Report in accordance with paragraph
6(b)(i) of this Part I relating to any Valuation Date on which the
Trust failed to satisfy the Preferred Shares Basic Maintenance Amount,
and relating to the Preferred Shares Basic Maintenance Cure Date with
respect to such failure to satisfy the Preferred Shares Basic
Maintenance Amount, the Trust shall cause the Independent Accountant to
provide to Moody's (if Xxxxx'x is then rating the Preferred Shares),
Fitch (if Fitch is then rating the Preferred Shares) and the Auction
Agent (if either Moody's or Fitch is then rating the Preferred Shares)
an Accountant's Confirmation regarding the mathematical accuracy of the
calculations set forth in such Preferred Shares Basic Maintenance
Report.
(e) If any Accountant's Confirmation delivered pursuant to
paragraph 6(c) or 6(d) of this Part I shows that an error was made in
the Preferred Shares Basic Maintenance Report for a particular
Valuation Date for which such Accountant's Confirmation was required to
be delivered, or shows that a lower aggregate Discounted Value for the
aggregate of all Moody's Eligible Assets (if Xxxxx'x is then rating the
Preferred Shares) or Fitch Eligible Assets (if Fitch is then rating the
Preferred Shares), as the case may be, of the Trust was determined by
the Independent Accountant, the calculation or determination made by
such Independent Accountant shall be final and conclusive and shall be
binding on the Trust, and the Trust shall accordingly amend and deliver
the Preferred Shares Basic Maintenance Report to Moody's (if Xxxxx'x is
then rating the Preferred Share), Fitch (if Fitch is then rating the
Preferred Shares) and the Auction Agent (if either Moody's or Fitch is
then rating the Preferred Shares) promptly following receipt by the
Trust of such Accountant's Confirmation.
(f) On or before 5:00 p.m., New York City time, on the first
Business Day after the Date of Original Issue of the Preferred Shares,
the Trust shall complete and deliver to Moody's (if Xxxxx'x is then
rating the Preferred Shares) and Fitch (if Fitch is then rating the
Preferred Shares) a Preferred Shares Basic Maintenance Report as of the
close of business on such Date of Original Issue. Within ten Business
Days of such Date of Original Issue, the Trust shall cause the
Independent Accountant to deliver in writing to Moody's (if Xxxxx'x is
then rating the Preferred Shares) and Fitch (if Fitch is then rating
the Preferred Shares) an Accountant's Confirmation regarding the
mathematical accuracy of the calculations reflected in such Preferred
Shares Basic Maintenance Report.
(g) On or before 5:00 p.m., New York City time, on the third
Business Day after:
(i) the Trust shall have redeemed Common Shares,
(ii) the ratio of the Discounted Value of Moody's
Eligible Assets to the Preferred Shares Basic Maintenance
Amount is less than or equal to 115%, if Xxxxx'x is then
rating the Preferred Shares,
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(iii) the ratio of the Discounted Value of Fitch
Eligible Assets to the Preferred Shares Basic Maintenance
Amount is less than or equal to 115%, if Fitch is then rating
the Preferred Shares, or
(iv) a written request by Moody's (if Xxxxx'x is then
rating the Preferred Shares) or Fitch (if Fitch is then rating
the Preferred Shares),
the Trust shall complete and deliver to Xxxxx'x (if Xxxxx'x is then
rating the Preferred Shares) or Fitch (if Fitch is then rating the
Preferred Shares), as the case may be, a Preferred Shares Basic
Maintenance Report as of the date of such event.
7. Restrictions on Dividends and Other Distributions.
(a) Dividends on Parity Shares. Except as set forth in the
next sentence, no dividends shall be declared or paid or set apart for
payment on the shares of any class or series of shares of beneficial
interest of the Trust ranking, as to the payment of dividends, on a
parity with the Preferred Shares for any period unless full cumulative
dividends have been or contemporaneously are declared and paid on the
Preferred Shares through their most recent Dividend Payment Date. When
dividends are not paid in full upon the Preferred Shares through their
most recent Dividend Payment Date or upon the shares of any other class
or series of shares of beneficial interest of the Trust ranking on a
parity as to the payment of dividends with the Preferred Shares through
their most recent respective dividend payment dates, all dividends
declared upon the Preferred Shares and any other such class or series
of shares of beneficial interest ranking on a parity as to the payment
of dividends with the Preferred Shares shall be declared pro rata so
that the amount of dividends declared per share on the Preferred Shares
and such other class or series of shares of beneficial interest shall
in all cases bear to each other the same ratio that accumulated
dividends per share on the Preferred Shares and such other class or
series of shares of beneficial interest bear to each other.
(b) Dividends and Other Distributions with Respect to Common
Shares Under the 0000 Xxx. The Trustees shall not declare any dividend
(except a dividend payable in Common Shares), or declare any other
distribution, upon the Common Shares, or purchase Common Shares, unless
in every such case the Trust maintains, at the time of any such
declaration or purchase, the 1940 Act Preferred Shares Asset Coverage
after deducting the amount of such dividend, distribution or purchase
price, as the case may be.
(c) Other Restrictions on Dividends and Other Distributions.
For so long as any Preferred Shares are outstanding, and except as
otherwise contemplated by these Bylaws, (A) the Trust shall not
declare, pay or set apart for payment any dividend or other
distribution (other than a dividend or distribution paid in shares of,
or in options, warrants or rights to subscribe for or purchase, Common
Shares or other shares, if any, ranking junior to the Preferred Shares
as to the payment of dividends and the distribution of assets upon
dissolution, liquidation or winding up) in respect of the Common Shares
or
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any other shares of the Trust ranking junior to the Preferred Shares as
to the payment of dividends or the distribution of assets upon
dissolution, liquidation or winding up, or call for redemption, redeem,
purchase or otherwise acquire for consideration any Common Shares or
any other such junior shares (except by conversion into or exchange for
shares of the Trust ranking junior to the Preferred Shares as to the
payment of dividends and the distribution of assets upon dissolution,
liquidation or winding up), unless (i) full cumulative dividends on the
Preferred Shares through their most recently ended Dividend Period
shall have been paid or shall have been declared and sufficient funds
for the payment thereof deposited with the Auction Agent and (ii) the
Trust has redeemed the full number of Preferred Shares required to be
redeemed by any provision for mandatory redemption pertaining thereto,
and (iii) immediately after such transaction the Discounted Value of
Moody's Eligible Assets (if Xxxxx'x is then rating the Preferred
Shares) and Fitch Eligible Assets (if Fitch is then rating the
Preferred Shares) would each at least equal the Preferred Shares Basic
Maintenance Amount.
8. Redemption.
(a) Optional Redemption.
(i) Subject to the provisions of subparagraph (iii)
of this paragraph 8(a) and to any applicable Special
Redemption Provisions, Preferred Shares may be redeemed from
time to time, at the option of the Trust, in whole or in part,
on any Dividend Payment Date, out of funds legally available
therefor, at a redemption price per share equal to the sum of
$25,000 plus an amount equal to accumulated but unpaid
dividends thereon (whether or not earned or declared) to (but
not including) the date fixed for redemption; provided,
however, that Preferred Shares may not be redeemed at the
option of the Trust during the Initial Rate Period.
(ii) If fewer than all of the outstanding Preferred
Shares are to be redeemed pursuant to subparagraph (i) of this
paragraph 8(a), the number of shares to be redeemed shall be
determined by the Trustees, and such shares shall be redeemed
pro rata from the Holders of Preferred Shares in proportion to
the number of Preferred Shares held by such Holders.
(iii) The Trust may not on any date give a Notice of
Redemption pursuant to paragraph 8(c) of this Part I in
respect of a redemption contemplated to be effected pursuant
to this paragraph (a) unless on such date (1) the Trust has
available Deposit Securities with maturity or tender dates not
later than the day preceding the applicable redemption date
and having a value not less than the amount (including any
applicable premium) due to Holders of Preferred Shares by
reason of the redemption of such shares on such redemption
date and (2) the Discounted Value of Moody's Eligible Assets
(if Xxxxx'x is then rating the Preferred Shares) and Fitch
Eligible Assets (if Fitch is then rating the Preferred
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Shares) each at least equals the Preferred Shares Basic
Maintenance Amount and would at least equal the Preferred
Shares Basic Maintenance Amount immediately subsequent to such
redemption if such redemption were to occur on such date. The
Trust shall not be required to have available Deposit
Securities as described in clause (1) of this subparagraph
(iii) in respect of a redemption of the Preferred Shares, in
whole or in part, contemplated to be effected pursuant to
paragraph 8(a) where such redemption is subject to the
issuance of shares of any other series of preferred shares of
beneficial interest of the Trust.
(b) Mandatory Redemption. The Trust shall redeem Preferred
Shares, at a redemption price equal to $25,000 per share plus
accumulated but unpaid dividends thereon (whether or not earned or
declared) to (but not including) the date fixed by the Trustees for
redemption, if the Trust fails to have either Moody's Eligible Assets
(if Xxxxx'x is then rating the Preferred Shares) or Fitch Eligible
Assets (if Fitch is then rating the Preferred Shares) with a Discounted
Value greater than or equal to the Preferred Shares Basic Maintenance
Amount or fails to maintain the 1940 Act Preferred Shares Asset
Coverage, in each case in accordance with the terms of this Section
11.1, and such failure is not cured on or before the Preferred Shares
Basic Maintenance Cure Date or the 1940 Act Cure Date, as the case may
be. The number of Preferred Shares to be redeemed shall be equal to the
lesser of:
(i) the minimum number of Preferred Shares, together
with all other preferred shares of beneficial interest subject
to redemption or retirement, the redemption of which, if
deemed to have occurred immediately prior to the opening of
business on the Preferred Shares Basic Maintenance Cure Date
or the 1940 Act Cure Date, as the case may be, would have
resulted in the Trust's (A) having Moody's Eligible Assets (if
Xxxxx'x is then rating the Preferred Shares) and Fitch
Eligible Assets (if Fitch is then rating the Preferred Shares)
with a Discounted Value greater than or equal to the Preferred
Shares Basic Maintenance Amount or (B) maintaining the 1940
Act Preferred Shares Asset Coverage, as the case may be, on
such Cure Date (provided, however, that if there is no such
minimum number of Preferred Shares and other preferred shares
of beneficial interest the redemption or retirement of which
would have had such result, all Preferred Shares and other
preferred shares of beneficial interest then outstanding shall
be redeemed), and
(ii) the maximum number of Preferred Shares, together
with all other preferred shares of beneficial interest subject
to redemption or retirement, that can be redeemed out of funds
expected to be legally available therefor in accordance with
the Declaration of Trust and applicable law.
In determining the Preferred Shares required to be redeemed in
accordance with the foregoing, the Trust shall allocate the number
required to be redeemed to satisfy the Preferred Shares Basic
Maintenance Amount or the 1940 Act Preferred Shares Asset
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Coverage, as the case may be, pro rata among Preferred Shares and other
preferred shares of beneficial interest (and, then, pro rata among the
Preferred Shares) subject to redemption or retirement.
The Trust shall effect such redemption on the date fixed by
the Trust therefor, which date shall not be earlier than 20 days nor
later than 40 days after such Cure Date, except that if the Trust does
not have funds legally available for the redemption of all of the
required number of the Preferred Shares and other preferred shares of
beneficial interest that are required to be redeemed pursuant to (i)
above but which cannot be redeemed because of the operation of (ii)
above or the Trust otherwise is unable to effect such redemption on or
prior to 40 days after such Cure Date, the Trust shall redeem those
Preferred Shares and other preferred shares which it was unable to
redeem on the earliest practicable date on which it is able to effect
such redemption. If fewer than all of the outstanding Preferred Shares
are to be redeemed pursuant to this paragraph 8(b), the number of
Preferred Shares to be redeemed shall be redeemed pro rata from the
Holders of Preferred Shares in proportion to the number of Preferred
Shares held by such Holders.
(c) Notice of Redemption. If the Trust shall determine or be
required to redeem Preferred Shares pursuant to paragraph 8(a) or 8(b)
of this Part I, it shall mail a notice (a "Notice of Redemption") with
respect to such redemption by first-class mail, postage prepaid, to
each Holder of the Preferred Shares, at such Holder's address as the
same appears on the record books of the Trust on the record date
established by the Trustees, and shall provide such notice to the
Auction Agent. Such Notice of Redemption shall be so mailed not less
than 20 nor more than 45 days prior to the date fixed for redemption.
Each such Notice of Redemption shall state:
(1) the redemption date;
(2) the number of Preferred Shares to be redeemed;
(3) the CUSIP number for the Preferred Shares;
(4) the Redemption Price;
(5) that dividends on the Preferred Shares to be
redeemed will cease to accumulate on such redemption date; and
(6) the provisions of this paragraph 8 under which
such redemption is made.
If fewer than all the Preferred Shares held by any Holder are
to be redeemed, the Notice of Redemption mailed to such Holder shall
also specify the number of Preferred Shares to be redeemed from such
Holder. The Trust may provide in any Notice of Redemption relating to
a redemption contemplated to be effected pursuant to paragraph 8(a) of
this Part I that such redemption is subject to one or more conditions
precedent and
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that the Trust shall not be required to effect such redemption unless
each such condition shall have been satisfied at the time or times and
in the manner specified in such Notice of Redemption. No defect in the
Notice of Redemption or in the transmittal or mailing thereof will
affect the validity of the redemption proceedings, except as required
by applicable law.
(d) No Redemption Under Certain Circumstances.
(i) Notwithstanding the provisions of paragraphs 8(a)
or 8(b) of this Part I, if any dividends on the Preferred
Shares (whether or not earned or declared) are in arrears, no
Preferred Shares shall be redeemed unless all outstanding
Preferred Shares are simultaneously redeemed, and the Trust
shall not purchase or otherwise acquire any Preferred Shares;
provided, however, that the foregoing shall not prevent the
purchase or acquisition of outstanding Preferred Shares
pursuant to the successful completion of an otherwise lawful
purchase or exchange offer made on the same terms to Holders
of all outstanding Preferred Shares.
(ii) To the extent that any redemption for which a
Notice of Redemption has been mailed is not made by reason of
the absence of legally available funds therefor in accordance
with the Declaration of Trust and applicable law, such
redemption shall be made as soon as practicable to the extent
such funds become available. Failure to redeem Preferred
Shares shall be deemed to exist at any time there is a
Redemption Default with respect to a redemption specified in a
Notice of Redemption.
Notwithstanding the fact that the Trust may not have redeemed
Preferred Shares for which a Notice of Redemption has been mailed,
dividends may be declared and paid on Preferred Shares and shall
include those Preferred Shares for which a Notice of Redemption has
been mailed.
(e) Auction Agent as Trustee of Redemption Payments by Trust.
All moneys paid to the Auction Agent for payment of the Redemption
Price of Preferred Shares called for redemption shall be held in trust
by the Auction Agent for the benefit of Holders of shares so to be
redeemed.
(f) Shares for Which Notice of Redemption Has Been Given Are
No Longer Outstanding. Provided a Notice of Redemption has been mailed
pursuant to paragraph 8(c) of this Part I, upon the deposit with the
Auction Agent (not later than 12:00 Noon, New York City time, on the
date fixed for redemption thereby, in funds available on such date in
The City of New York, New York) of funds sufficient to redeem the
Preferred Shares that are the subject of such notice, dividends on such
shares shall cease to accumulate and such shares shall no longer be
deemed to be Outstanding for any purpose, and all rights of the Holders
of the shares so called for redemption shall cease and terminate
(including without limitation voting rights), except the right of such
Holders to
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receive the Redemption Price, but without any interest or other
additional amount, except as provided in subparagraph 2(e)(iii) of this
Part I. Upon surrender in accordance with the Notice of Redemption of
the certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Trustees shall so require and the Notice
of Redemption shall so state), the Redemption Price shall be paid by
the Auction Agent to the Holders of Preferred Shares subject to
redemption. In the case that fewer than all of the shares represented
by any such certificate are redeemed, a new certificate shall be
issued, representing the unredeemed shares, without cost to the Holder
thereof. The Trust shall be entitled to receive from the Auction Agent,
promptly after the date fixed for redemption, any cash deposited with
the Auction Agent in excess of:
(i) the aggregate Redemption Price of the Preferred
Shares called for redemption on such date, and
(ii) all other amounts to which Holders of Preferred
Shares called for redemption may be entitled.
Any funds so deposited that are unclaimed at the end
of 90 days from such redemption date shall, to the extent
permitted by law, be repaid to the Trust, after which time
the Holders of Preferred Shares so called for redemption may
look only to the Trust for payment of the Redemption Price
and all other amounts to which they may be entitled. The
Trust shall be entitled to receive, from time to time after
the date fixed for redemption, any interest on the funds so
deposited.
(g) Compliance with Applicable Law. In effecting any
redemption pursuant to this paragraph 8, the Trust shall use its best
efforts to comply with all applicable conditions precedent to effecting
such redemption under the 1940 Act and any applicable Massachusetts
law, and shall effect no redemption except in accordance with the 1940
Act and any applicable Massachusetts law.
(h) Only Whole Preferred Shares May Be Redeemed. In the case
of any redemption pursuant to this paragraph 8, only whole Preferred
Shares shall be redeemed, and in the event that any provision of the
Declaration of Trust would require redemption of a fractional share,
the Auction Agent shall be authorized to round up so that only whole
shares are redeemed.
9. Liquidation Rights.
(a) Ranking. The Preferred Shares shall rank on a parity with
one another and with shares of any other series of preferred shares of
beneficial interest as to the distribution of assets upon dissolution,
liquidation or winding up of the affairs of the Trust.
(b) Distributions upon Liquidation. Upon the dissolution,
liquidation or winding up of the affairs of the Trust, whether
voluntary or involuntary, the Holders of
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Preferred Shares then outstanding shall be entitled to receive and to
be paid out of the assets of the Trust available for distribution to
its shareholders, before any payment or distribution shall be made on
the Common Shares or on any other class of shares of the Trust ranking
junior to the Preferred Shares upon dissolution, liquidation or winding
up, an amount equal to the Liquidation Preference with respect to such
shares plus an amount equal to all dividends thereon (whether or not
earned or declared) accumulated but unpaid to (but not including) the
date of final distribution in same-day funds. After the payment to the
Holders of the Preferred Shares of the full preferential amounts
provided for in this paragraph 9(b), the Holders of Preferred Shares as
such shall have no right or claim to any of the remaining assets of the
Trust.
(c) Pro Rata Distributions. In the event the assets of the
Trust available for distribution to the Holders of Preferred Shares
upon any dissolution, liquidation, or winding up of the affairs of the
Trust, whether voluntary or involuntary, shall be insufficient to pay
in full all amounts to which such Holders are entitled pursuant to
paragraph 9(b) of this Part I, no such distribution shall be made on
account of any shares of any other class or series of preferred shares
of beneficial interest ranking on a parity with the Preferred Shares
with respect to the distribution of assets upon such dissolution,
liquidation or winding up unless proportionate distributive amounts
shall be paid on account of the Preferred Shares, ratably, in
proportion to the full distributable amounts for which holders of all
such parity shares are respectively entitled upon such dissolution,
liquidation or winding up.
(d) Rights of Junior Shares. Subject to the rights of the
holders of shares of any series or class or classes of shares ranking
on a parity with the Preferred Shares with respect to the distribution
of assets upon dissolution, liquidation or winding up of the affairs of
the Trust, after payment shall have been made in full to the Holders of
the Preferred Shares as provided in paragraph 9(b) of this Part I, but
not prior thereto, any other series or class or classes of shares
ranking junior to the Preferred Shares with respect to the distribution
of assets upon dissolution, liquidation or winding up of the affairs of
the Trust shall, subject to the respective terms and provisions (if
any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the Holders of the Preferred
Shares shall not be entitled to share therein.
(e) Certain Events Not Constituting Liquidation. Neither the
sale of all or substantially all, or any portion of, the property or
business of the Trust, nor the merger or consolidation of the Trust
into or with any business trust or other entity nor the merger or
consolidation of any business trust or other entity into or with the
Trust shall be a dissolution, liquidation or winding up, whether
voluntary or involuntary, for the purposes of this paragraph 9.
10. Certain Other Restrictions. So long as any Preferred Shares are
Outstanding and Fitch or Moody's so requires, the Trust will not, unless it has
received written confirmation from Fitch (if Fitch is then rating the Preferred
Shares) and Moody's (if Xxxxx'x is then rating the Preferred
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Shares) that any such action would not impair the rating then assigned by such
Rating Agency to the Preferred Shares, engage in any one or more of the
following transactions:
(a) purchase or sell futures contracts or options thereon with
respect to portfolio securities or write put or call options on
portfolio securities;
(b) except in connection with a refinancing of the Preferred
Shares, issue additional shares of any series of preferred shares of
beneficial interest, including the Preferred Shares, or reissue any
preferred shares of beneficial interest, including any Preferred
Shares, previously purchased or redeemed by the Trust;
(c) engage in any short sales of securities;
(d) lend portfolio securities; or
(e) merge or consolidate into or with any other fund.
For purposes of determining Moody's Eligible Assets: (i) if the Trust
writes a call option, the underlying asset will be valued as follows: (A) if the
option is exchange-traded and may be offset readily or if the option expires
before the earliest possible redemption of the Preferred Shares, at the lower of
the Discounted Value of the underlying security of the option and the exercise
price of the option or (B) otherwise, it will be considered to have a value of
$0; (ii) if the Trust writes a put option, the underlying asset will be valued
as follows: the lesser of (A) the exercise price and (B) the Discounted Value of
the underlying security; and (iii) call or put option contracts which the Trust
buys will be considered to have a value of $0.
For so long as the Preferred Shares are rated by Moody's: (A) the Trust
will not engage in options transactions for leveraging or speculative purposes,
(B) the Trust will not write or sell any anticipatory contracts pursuant to
which the Trust xxxxxx the anticipated purchase of an asset prior to completion
of such purchase; (C) the Trust will not enter into an option transaction with
respect to portfolio securities unless, after giving effect thereto, the Trust
would continue to have Moody's Eligible Assets with an aggregate Discounted
Value equal to or greater than the Preferred Shares Basic Maintenance Amount;
(D) the Trust will not enter into an option transaction with respect to
portfolio securities unless after giving effect to such transaction the Trust
would continue to be in compliance with the provisions of this Section 11.1
relating to the Preferred Shares Basic Maintenance Amount; (E) for purposes of
the Preferred Shares Basic Maintenance Amount, assets in margin accounts are not
Moody's Eligible Assets; (F) the Trust shall write only exchange-traded options
on exchanges approved by Moody's; (G) where delivery may be made to the Trust
with any one or more of a class of securities, the Trust shall assume for
purposes of the Preferred Shares Basic Maintenance Amount that it takes delivery
of that security which yields the lowest valuation; (H) the Trust will not
engage in forward contracts; and (I) there shall be a quarterly audit made of
the Trust's options transactions by the Independent Accountant to confirm that
the Trust is in compliance with these standards; provided, however, that the
audit referenced in the preceding clause shall not be required, with
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respect to a quarterly period, if the Trust has not engaged in options
transactions during such quarterly period.
11. Miscellaneous.
(a) No Fractional Shares. No fractional Preferred Shares shall
be issued.
(b) Status of Preferred Shares Redeemed, Exchanged or
Otherwise Acquired by the Trust. Preferred Shares which are redeemed,
exchanged or otherwise acquired by the Trust shall return to the status
of authorized and unissued preferred shares of beneficial interest
without designation as to series.
(c) Board May Resolve Ambiguities. To the extent permitted by
applicable law, the Trustees may interpret or adjust the provisions of
this Section 11.1 to resolve any inconsistency or ambiguity or to
remedy any formal defect, and may amend this Section 11.1 with respect
to the Preferred Shares prior to the issuance of the Preferred Shares.
(d) Heading Not Determinative. The headings contained in this
Section 11.1 are for convenience of reference only and shall not affect
the meaning or interpretation of this Section 11.1.
(e) Notices. All notices or communications to be given
pursuant to this Section 11.1, unless otherwise specified in this
Section 11.1, shall be sufficiently given if in writing and delivered
in person or mailed by first-class mail, postage prepaid.
PART II.
1. Orders. Unless otherwise permitted by the Trust, Beneficial Owners and
Potential Beneficial Owners may only participate in Auctions through
their Broker-Dealers. Broker-Dealers will submit the Orders of their
respective customers who are Beneficial Owners and Potential Beneficial
Owners to the Auction Agent, designating themselves as Existing Holders
in respect of shares subject to Orders submitted or deemed submitted to
them by Beneficial Owners and as Potential Holders in respect of shares
subject to Orders submitted to them by Potential Beneficial Owners. A
Broker-Dealer may also hold in its own account as a Beneficial Owner;
provided, however, that a Broker-Dealer that is an Affiliate of the
Trust may not hold Preferred Shares in its own account as a Beneficial
Owner. A Broker-Dealer may thus submit Orders to the Auction Agent as a
Beneficial Owner or a Potential Beneficial Owner and therefore
participate in an Auction as an Existing Holder or Potential Holder on
behalf of both itself and its customers. A Broker-Dealer that is an
Affiliate of the Trust may submit Orders to the Auction Agent as
provided herein, but only if such Orders are not for its own account.
(a) Prior to the Submission Deadline on each Auction Date for
the Preferred Shares:
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(i) each Beneficial Owner of Preferred Shares may submit to
its Broker-Dealer by telephone or otherwise information as to:
(A) the number of Outstanding Preferred Shares, if
any, held by such Beneficial Owner which such Beneficial Owner
desires to continue to hold without regard to the Applicable
Rate for Preferred Shares for the next succeeding Rate Period;
(B) the number of Outstanding Preferred Shares, if
any, held by such Beneficial Owner which such Beneficial Owner
offers to sell if the Applicable Rate for Preferred Shares for
the next succeeding Rate Period for the Preferred Shares shall
be less than the rate per annum specified by such Beneficial
Owner; and/or
(C) the number of Outstanding Preferred Shares, if
any, held by such Beneficial Owner which such Beneficial Owner
offers to sell without regard to the Applicable Rate for the
Preferred Shares for the next succeeding Rate Period; and
(ii) one or more Broker-Dealers, using lists of Potential
Beneficial Owners, shall in good faith, for the purpose of conducting a
competitive Auction in a commercially reasonable manner, contact
Potential Beneficial Owners (by telephone or otherwise), including
Persons that are not Beneficial Owners, on such lists to determine the
number of Preferred Shares, if any, which each such Potential
Beneficial Owner offers to purchase if the Applicable Rate for
Preferred Shares for the next succeeding Rate Period shall not be less
than the rate per annum specified by such Potential Beneficial Owner.
For the purposes hereof, the communication by a Beneficial Owner or
Potential Beneficial Owner to a Broker-Dealer, or by a Broker-Dealer to the
Auction Agent, of information referred to in clause (i)(A), (i)(B), (i)(C) or
(ii) of this paragraph 1(a) is hereinafter referred to as an "Order" and
collectively as "Orders," and each Beneficial Owner and each Potential
Beneficial Owner placing an Order with a Broker-Dealer, and such Broker-Dealer
placing an order with the Auction Agent, is hereinafter referred to as a
"Bidder" and collectively as "Bidders"; an Order containing the information
referred to in clause (i)(A) of this paragraph (a) is hereinafter referred to as
a "Hold Order" and collectively as "Hold Orders"; an Order containing the
information referred to in clause (i)(B) or (ii) of this paragraph (a) is
hereinafter referred to as a "Bid" and collectively as "Bids"; and an Order
containing the information referred to in clause (i)(C) of this paragraph (a) is
hereinafter referred to as a "Sell Order" and collectively as "Sell Orders."
Inasmuch as a Broker-Dealer participates in an Auction as an Existing Holder or
a Potential Holder only to represent the interests of a Beneficial Owner or
Potential Beneficial Owner, whether it be its customers or itself, all
discussion herein relating to the consequences of an Auction for Existing
Holders and Potential Holders also applies to the underlying beneficial
ownership interests represented.
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(b) (i) A Bid by a Beneficial Owner or an Existing Holder of
Preferred Shares subject to an Auction on any Auction Date shall
constitute an irrevocable offer to sell:
(A) the number of Outstanding Preferred Shares
specified in such Bid if the Applicable Rate for Preferred
Shares determined on such Auction Date shall be less than the
rate specified therein;
(B) such number or a lesser number of Outstanding
Preferred Shares to be determined as set forth in clause (iv)
of paragraph 4(a) of this Part II if the Applicable Rate for
Preferred Shares determined on such Auction Date shall be
equal to the rate specified therein; or
(C) the number of Outstanding Preferred Shares
specified in such Bid if the rate specified therein shall be
higher than the Maximum Rate for Preferred Shares, or such
number or a lesser number of Outstanding Preferred Shares to
be determined as set forth in clause (iii) of paragraph 4(b)
of this Part II if the rate specified therein shall be higher
than the Maximum Rate for Preferred Shares and Sufficient
Clearing Bids for the Preferred Shares do not exist.
(ii) A Sell Order by a Beneficial Owner or an Existing Holder
of Preferred Shares Preferred Shares subject to an Auction on any
Auction Date shall constitute an irrevocable offer to sell:
(A) the number of Outstanding Preferred Shares
specified in such Sell Order; or
(B) such number or a lesser number of Outstanding
Preferred Shares as set forth in clause (iii) of paragraph
4(b) of this Part II if Sufficient Clearing Bids for the
Preferred Shares do not exist; provided, however, that a
Broker-Dealer that is an Existing Holder with respect to
Preferred Shares shall not be liable to any Person for failing
to sell such shares pursuant to a Sell Order described in the
proviso to paragraph 2(c) of this Part II if (1) such shares
were transferred by the Beneficial Owner thereof without
compliance by such Beneficial Owner or its transferee
Broker-Dealer (or other transferee person, if permitted by the
Trust) with the provisions of paragraph 5 of this Part II or
(2) such Broker-Dealer reasonably believes it is not the
Existing Holder of such shares, and such Broker-Dealer has
informed the Auction Agent of such belief pursuant to the
terms of its Broker-Dealer Agreement.
(iii) A Bid by a Potential Beneficial Holder or a Potential
Holder of Preferred Shares subject to an Auction on any Auction Date
shall constitute an irrevocable offer to purchase:
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(A) the number of Outstanding Preferred Shares
specified in such Bid if the Applicable Rate for Preferred
Shares determined on such Auction Date shall be higher than
the rate specified therein; or
(B) such number or a lesser number of Outstanding
Preferred Shares as set forth in clause (v) of paragraph 4(a)
of this Part II if the Applicable Rate for Preferred Shares
determined on such Auction Date shall be equal to the rate
specified therein.
(c) No Order for any number of Preferred Shares other than
whole shares shall be valid.
2. Submission of Orders by Broker-Dealers to Auction Agent.
(a) Each Broker-Dealer shall submit in writing or through the
Auction Agent's auction processing system to the Auction Agent prior to
the Submission Deadline on each Auction Date all Orders for Preferred
Shares subject to an Auction on such Auction Date obtained by such
Broker-Dealer, designating itself (unless otherwise permitted by the
Trust) as an Existing Holder in respect of shares subject to Orders
submitted or deemed submitted to it by Beneficial Owners and as a
Potential Holder in respect of shares subject to Orders submitted to it
by Potential Beneficial Owners, and shall specify with respect to each
Order for such shares:
(i) the name of the Bidder placing such Order (which
shall be the Broker- Dealer unless otherwise permitted by the
Trust);
(ii) the aggregate number of Outstanding Preferred
Shares that are the subject of such Order;
(iii) to the extent that such Bidder is an Existing
Holder of Preferred Shares:
(A) the number of Preferred Shares, if any,
subject to any Hold Order of such Existing Holder;
(B) the number of Preferred Shares, if any,
subject to any Bid of such Existing Holder and the
rate specified in such Bid; and
(C) the number of Preferred Shares, if any,
subject to any Sell Order of such Existing Holder;
and
(iv) to the extent such Bidder is a Potential Holder
of Preferred Shares, the rate and number of Preferred Shares
specified in such Potential Holder's Bid.
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(b) If any rate specified in any Bid contains more than three
figures to the right of the decimal point, the Auction Agent shall
round such rate up to the next highest one thousandth (.001) of 1%.
(c) If an Order or Orders covering all of the outstanding
Preferred Shares held by any Existing Holder is not submitted to the
Auction Agent prior to the Submission Deadline, the Auction Agent shall
deem a Hold Order to have been submitted by or on behalf of such
Existing Holder covering the number of Outstanding Preferred Shares
held by such Existing Holder and not subject to Orders submitted to the
Auction Agent; provided, however, that if an Order or Orders covering
all of the Outstanding Preferred Shares held by any Existing Holder is
not submitted to the Auction Agent prior to the Submission Deadline for
an Auction relating to a Special Rate Period consisting of more than 91
Rate Period Days, the Auction Agent shall deem a Sell Order to have
been submitted by or on behalf of such Existing Holder covering the
number of Outstanding Preferred Shares held by such Existing Holder and
not subject to Orders submitted to the Auction Agent.
(d) If one or more Orders of an Existing Holder are submitted
to the Auction Agent covering in the aggregate more than the number of
Outstanding Preferred Shares subject to an Auction held by such
Existing Holder, such Orders shall be considered valid in the following
order of priority:
(i) all Hold Orders shall be considered valid, but
only up to and including in the aggregate the number of
Outstanding Preferred Shares held by such Existing Holder, and
if the number of Preferred Shares subject to such Hold Orders
exceeds the number of Outstanding Preferred Shares held by
such Existing Holder, the number of shares subject to each
such Hold Order shall be reduced pro rata to cover exactly the
number of Outstanding Preferred Shares held by such Existing
Holder;
(ii) (A) any Bid shall be considered valid up to and
including the excess of the number of Outstanding Preferred
Shares held by such Existing Holder over the Preferred Shares
subject to any Hold Orders referred to in clause (i) above;
(B) subject to subclause (A), if more than
one Bid of an Existing Holder for Preferred Shares is
submitted to the Auction Agent with the same rate and
the number of Outstanding Preferred Shares subject to
such Bids is greater than the excess of the number of
Outstanding Preferred Shares held by such Existing
Holder over the Preferred Shares subject to any Hold
Orders referred to in clause (i) above, such Bids
shall be considered valid up to and including the
amount of such excess, and the number of Preferred
Shares subject to each Bid with the same rate shall
be
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reduced pro rata to cover exactly the number of
Preferred Shares equal to such excess;
(C) subject to subclauses (A) and (B), if
more than one Bid of an Existing Holder for Preferred
Shares is submitted to the Auction Agent with
different rates, such Bids shall be considered valid
in the ascending order of their respective rates up
to and including the amount of the excess of the
number of Outstanding Preferred Shares held by such
Existing Holder over the Preferred Shares subject to
any Hold Orders referred to in clause (i) above; and
(D) in any such event, the number, if any,
of such Outstanding Preferred Shares subject to any
portion of Bids considered not valid in whole or in
part under this clause (ii) shall be treated as the
subject of a Bid for Preferred Shares by or on behalf
of a Potential Holder at the rate therein specified;
and
(iii) all Sell Orders shall be considered valid up to
and including the excess of the number of Outstanding
Preferred Shares held by such Existing Holder over the sum of
the Preferred Shares subject to valid Hold Orders referred to
in clause (i) above and valid Bids referred to in clause (ii)
above.
(e) If more than one Bid is submitted to the Auction Agent by
or on behalf of any Potential Holder, each such Bid submitted shall be
a separate Bid, with the rate and number of shares therein specified.
(f) Any Order submitted by a Beneficial Owner or a Potential
Beneficial Owner to its Broker-Dealer, or by a Broker-Dealer to the
Auction Agent, prior to the Submission Deadline on any Auction Date,
shall be irrevocable.
(g) The Trust shall not be responsible for a Broker-Dealer's
failure to act in accordance with the instructions of Beneficial Owners
or Potential Beneficial Owners or failure to comply with the Auction
Procedures contained in this Part II of Section 11.1.
3. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
(a) Not earlier than the Submission Deadline on each Auction
Date for the Preferred Shares, the Auction Agent shall assemble all
valid Orders submitted or deemed submitted to it by the Broker-Dealers
(each such Order as submitted or deemed submitted by a Broker-Dealer
being hereinafter referred to individually as a "Submitted Hold Order,"
a "Submitted Bid" or a "Submitted Sell Order," as the case may be, or
as a "Submitted Order" and collectively as "Submitted Hold Orders,"
"Submitted Bids" or "Submitted Sell Orders," as the case may be, or as
"Submitted Orders") and shall determine:
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(i) the excess of the number of Outstanding Preferred Shares
over the number of Outstanding Preferred Shares subject to Submitted
Hold Orders (such excess being hereinafter referred to as the
"Available Preferred Shares");
(ii) from the Submitted Orders whether:
(A) the number of Outstanding Preferred Shares
subject to Submitted Bids of Potential Holders specifying one
or more rates equal to or lower than the Maximum Rate; exceeds
or is equal to the sum of:
(B) the number of Outstanding Preferred Shares
subject to Submitted Bids of Existing Holders specifying one
or more rates higher than the Maximum Rate; and
(C) the number of Outstanding Preferred Shares
subject to Submitted Sell Orders
(in the event such excess or such equality exists (other than
because the number of Preferred Shares in subclauses (B) and
(C) above is zero because all of the Outstanding Preferred
Shares are subject to Submitted Hold Orders), such Submitted
Bids in subclause (A) above being hereinafter referred to
collectively as "Sufficient Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the lowest rate
specified in such Submitted Bids (the "Winning Bid Rate") which if:
(A) (I) each such Submitted Bid of Existing Holders
specifying the Winning Bid Rate and (II) all other such
Submitted Bids of Existing Holders specifying lower rates were
rejected, thus entitling such Existing Holders to continue to
hold the Preferred Shares that are subject to such Submitted
Bids; and
(B) (I) each such Submitted Bid of Potential Holders
specifying such Winning Bid Rate and (II) all other such
Submitted Bids of Potential Holders specifying lower rates
were accepted, thus entitling such Potential Holders to
purchase the number of Preferred Shares that are subject to
such Submitted Bids;
would result in such Existing Holders described in subclause
(A) above continuing to hold an aggregate number of
Outstanding Preferred Shares which, when added to the number
of Outstanding Preferred Shares to be purchased by such
Potential Holders described in subclause (B) above, would
equal not less than the Available Preferred Shares.
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(b) Promptly after the Auction Agent has made the
determinations pursuant to paragraph 3(a) of this Part II, the Auction
Agent shall advise the Trust of the Maximum Rate for the Preferred
Shares for which an Auction is being held on the Auction Date and,
based on such determination, the Applicable Rate for Preferred Shares
for the next succeeding Rate Period thereof as follows:
(i) if Sufficient Clearing Bids for Preferred Shares
exist, that the Applicable Rate for all Preferred Shares for
the next Succeeding Rate Period thereof shall be equal to the
Winning Bid Rate so determined;
(ii) if Sufficient Clearing Bids do not exist (other
than because all of the Outstanding Preferred Shares are
subject to Submitted Hold Orders), that the Applicable Rate
for all Preferred Shares for the next succeeding Rate Period
thereof shall be equal to the Maximum Rate; or
(iii) if all of the Outstanding Preferred Shares are
subject to Submitted Hold Orders, that the Dividend Period
next succeeding the Auction shall automatically be the same
length as the immediately preceding Dividend Period and the
Applicable Rate for all Preferred Shares for the next
succeeding Dividend Period thereof shall be 80% of the
Reference Rate.
4. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares.
Existing Holders shall continue to hold the Preferred Shares that are
subject to Submitted Hold Orders, and, based on the determinations made pursuant
to paragraph 3(a) of this Part II, the Submitted Bids and Submitted Sell Orders
shall be accepted or rejected by the Auction Agent and the Auction Agent shall
take such other action as set forth below:
(a) If Sufficient Clearing Bids have been made, all Submitted
Sell Orders shall be accepted and, subject to the provisions of
paragraphs 4(d) and 4(e) of this Part II, Submitted Bids shall be
accepted or rejected as follows in the following order of priority and
all other Submitted Bids shall be rejected:
(i) Existing Holders' Submitted Bids specifying any
rate that is higher than the Winning Bid Rate shall be
accepted, thus requiring each such Existing Holder to sell the
Preferred Shares subject to such Submitted Bids;
(ii) Existing Holders' Submitted Bids specifying any
rate that is lower than the Winning Bid Rate shall be
rejected, thus entitling each such Existing Holder to continue
to hold the Preferred Shares subject to such Submitted Bids;
(iii) Potential Holders' Submitted Bids specifying
any rate that is lower than the Winning Bid Rate shall be
accepted;
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(iv) Each Existing Holder's Submitted Bid specifying
a rate that is equal to the Winning Bid Rate shall be
rejected, thus entitling such Existing Holder to continue to
hold the Preferred Shares subject to such Submitted Bid,
unless the number of Outstanding Preferred Shares subject to
all such Submitted Bids shall be greater than the number of
Preferred Shares ("Remaining Shares") equal to the excess of
the Available Preferred Shares over the number of Preferred
Shares subject to Submitted Bids described in clauses (ii) and
(iii) of this paragraph 4(a), in which event such Submitted
Bid of such Existing Holder shall be rejected in part, and
such Existing Holder shall be entitled to continue to hold
Preferred Shares subject to such Submitted Bid, but only in an
amount equal to the number of Preferred Shares obtained by
multiplying the number of Remaining Shares by a fraction, the
numerator of which shall be the number of Outstanding
Preferred Shares held by such Existing Holder subject to such
Submitted Bid and the denominator of which shall be the
aggregate number of Outstanding Preferred Shares subject to
such Submitted Bids made by all such Existing Holders that
specified a rate equal to the Winning Bid Rate; and
(v) each Potential Holder's Submitted Bid specifying
a rate that is equal to the Winning Bid Rate shall be accepted
but only in an amount equal to the number of Preferred Shares
obtained by multiplying the number of shares in the excess of
the Available Preferred Shares over the number of Preferred
Shares subject to Submitted Bids described in clauses (ii)
through (iv) of this paragraph 4(a) by a fraction, the
numerator of which shall be the number of Outstanding
Preferred Shares subject to such Submitted Bid and the
denominator of which shall be the aggregate number of
Outstanding Preferred Shares subject to such Submitted Bids
made by all such Potential Holders that specified a rate equal
to the Winning Bid Rate.
(b) If Sufficient Clearing Bids have not been made (other than
because all of the Outstanding Preferred Shares are subject to
Submitted Hold Orders), subject to the provisions of paragraph 4(d) of
this Part II, Submitted Orders shall be accepted or rejected as follows
in the following order of priority and all other Submitted Bids shall
be rejected:
(i) Existing Holders' Submitted Bids specifying any
rate that is equal to or lower than the Maximum Rate shall be
rejected, thus entitling such Existing Holders to continue to
hold the Preferred Shares subject to such Submitted Bids;
(ii) Potential Holders' Submitted Bids specifying any
rate that is equal to or lower than the Maximum Rate shall be
accepted; and
(iii) Each Existing Holder's Submitted Bid specifying
any rate that is higher than the Maximum Rate and the
Submitted Sell Orders of each Existing Holder shall be
accepted, thus entitling each Existing Holder that submitted
or on
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whose behalf was submitted any such Submitted Bid or Submitted
Sell Order to sell the shares subject to such Submitted Bid or
Submitted Sell Order, but in both cases only in an amount
equal to the number of Preferred Shares obtained by
multiplying the number of Preferred Shares subject to
Submitted Bids described in clause (ii) of this paragraph (b)
by a fraction, the numerator of which shall be the number of
Outstanding Preferred Shares held by such Existing Holder
subject to such Submitted Bid or Submitted Sell Order and the
denominator of which shall be the aggregate number of
Outstanding Preferred Shares subject to all such Submitted
Bids and Submitted Sell Orders.
(c) If all of the Outstanding Preferred Shares are subject to
Submitted Hold Orders, all Submitted Bids shall be rejected.
(d) If, as a result of the procedures described in clause (iv)
or (v) of paragraph 4(a) or clause (iii) of paragraph 4(b) of this Part
II, any Existing Holder would be entitled or required to sell, or any
Potential Holder would be entitled or required to purchase, a fraction
of a Preferred Share on any Auction Date, the Auction Agent shall, in
such manner as it shall determine in its sole discretion, round up or
down the number of Preferred Shares to be purchased or sold by any
Existing Holder or Potential Holder on such Auction Date as a result of
such procedures so that the number of shares so purchased or sold by
each Existing Holder or Potential Holder on such Auction Date shall be
whole Preferred Shares.
(e) If, as a result of the procedures described in clause (v)
of paragraph 4(a) of this Part II, any Potential Holder would be
entitled or required to purchase less than a whole Preferred Share on
any Auction Date, the Auction Agent shall, in such manner as it shall
determine in its sole discretion, allocate Preferred Shares for
purchase among Potential Holders so that only whole shares of Preferred
Shares are purchased on such Auction Date as a result of such
procedures by any Potential Holder, even if such allocation results in
one or more Potential Holders not purchasing Preferred Shares on such
Auction Date.
(f) Based on the results of each Auction, the Auction Agent
shall determine the aggregate number of Preferred Shares to be
purchased and the aggregate number of Preferred Shares to be sold by
Potential Holders and Existing Holders and, with respect to each
Potential Holder and Existing Holder, to the extent that such aggregate
number of shares to be purchased and such aggregate number of shares to
be sold differ, determine to which other Potential Holder(s) or
Existing Holder(s) they shall deliver, or from which other Potential
Holder(s) or Existing Holder(s) they shall receive, as the case may be,
Preferred Shares. Notwithstanding any provision of the Auction
Procedures to the contrary, in the event an Existing Holder or
Beneficial Owner with respect to whom a Broker-Dealer submitted a Bid
to the Auction Agent for such shares that was accepted in whole or in
part, or submitted or is deemed to have submitted a Sell Order for such
shares that was accepted in whole or in part, fails to instruct its
Agent Member to deliver such
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shares against payment therefor, partial deliveries of Preferred Shares
that have been made in respect of Potential Holders' or Potential
Beneficial Owners' Submitted Bids that have been accepted in whole or
in part shall constitute good delivery to such Potential Holders and
Potential Beneficial Owners.
(g) Neither the Trust nor the Auction Agent nor any affiliate
of either shall have any responsibility or liability with respect to
the failure of an Existing Holder, a Potential Holder, a Beneficial
Owner, a Potential Beneficial Owner or its respective Agent Member to
deliver Preferred Shares or to pay for Preferred Shares sold or
purchased pursuant to the Auction Procedures or otherwise.
5. Transfer of Preferred Shares.
Unless otherwise permitted by the Trust, a Beneficial Owner or an
Existing Holder may sell, transfer or otherwise dispose of Preferred Shares only
in whole shares and only pursuant to a Bid or Sell Order placed with the Auction
Agent in accordance with the procedures described in this Part II or to a
Broker-Dealer; provided, however, that (a) a sale, transfer or other disposition
of Preferred Shares from a customer of a Broker-Dealer who is listed on the
records of that Broker-Dealer as the holder of such shares to that Broker-Dealer
or another customer of that Broker-Dealer shall not be deemed to be a sale,
transfer or other disposition for purposes of this paragraph 5 if such
Broker-Dealer remains the Existing Holder of the shares so sold, transferred or
disposed of immediately after such sale, transfer or disposition and (b) in the
case of all transfers other than pursuant to Auctions, the Broker-Dealer (or
other Person, if permitted by the Trust) to whom such transfer is made shall
advise the Auction Agent of such transfer.
6. Global Certificate.
Prior to the commencement of a Voting Period, (i) all of the Preferred
Shares outstanding from time to time shall be represented by one global
certificate registered in the name of the Securities Depository or its nominee
and (ii) no registration of transfer of Preferred Shares shall be made on the
books of the Trust to any Person other than the Securities Depository or its
nominee.
7. Force Majeure.
(a) Notwithstanding anything else set forth herein, if an
Auction Date is not a Business Day because the New York Stock Exchange
is closed for business due to an act of God, natural disaster, extreme
weather, act of war, civil or military disturbance, act of terrorism,
sabotage, riots or a loss or malfunction of utilities or communications
services, or if the Auction Agent is not able to conduct an Auction in
accordance with the Auction Procedures for any such reason, then the
Applicable Rate for the next Dividend Period shall be the Applicable
Rate determined on the previous Auction Date.
(b) Notwithstanding anything else set forth herein, if a
Dividend Payment Date is not a Business Day because the New York Stock
Exchange is closed for business
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due to an act of God, natural disaster, extreme weather, act of war,
civil or military disturbance, act of terrorism, sabotage, riots or a
loss or malfunction of utilities or communications services, or if the
dividend payable on such date can not be paid for any such reason,
then:
(i) The Dividend Payment Date for the affected
Dividend Period shall be the next Business Day on which the
Trust and the Auction Agent are able to cause the dividend to
be paid using commercially reasonable best efforts;
(ii) The affected Dividend Period shall end on the
day it would have ended had such event not occurred and the
Dividend Payment Date had remained the scheduled date; and
(iii) The next Dividend Period will begin and end on
the dates on which it would have begun and ended had such
event not occurred and the Dividend Payment Date remained the
scheduled date
8. Auction Agent. For so long as any Preferred Shares are outstanding,
the Auction Agent, duly appointed by the Trust so to act, shall be in each case
a commercial bank, trust company or other institution independent of the Trust
and its Affiliates (which, however, may engage or have engaged in business
transactions with the Trust or its Affiliates), and at no time shall the Trust
or any of its Affiliates act as the Auction Agent in connection with the Auction
Procedures. If the Auction Agent resigns or for any reason its appointment is
terminated during any period that any Preferred Shares are outstanding, the
Trustees shall attempt to appoint another qualified commercial bank, trust
company or other institution to act as the Auction Agent. The Auction Agent's
registry of Existing Holders of the Preferred Shares shall be conclusive and
binding on the Broker-Dealers.
ARTICLE 12
Amendment to the Bylaws
12.1 General. Except to the extent that the Declaration of Trust or
applicable law requires a vote or consent of Shareholders or a higher vote or
consent by the Trustees and/or the Continuing Trustees, these Bylaws may be
amended, changed, altered or repealed, in whole or part, only by resolution of a
majority of the Trustees and a majority of the Continuing Trustees then in
office at any meeting of the Trustees, or by one or more writings signed by such
Trustees and Continuing Trustees.
12.2 Article 11. Notwithstanding the provisions of Section 12.1, the
Board of Trustees of the Trust may, by resolution duly adopted, without
shareholder approval (except as otherwise required by Article 11 or required by
applicable law), amend Article 11 to (a) reflect any amendments hereto which the
Board of Trustees of the Trust is entitled to adopt pursuant to the terms of
Article 11 without shareholder approval or (b) add additional series of
preferred shares
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of beneficial interest or additional shares of a series of preferred shares of
beneficial interest (and terms relating thereto) to the series and shares of
preferred shares of beneficial interest described herein; provided, however,
that notwithstanding anything in these Bylaws to the contrary, the Trust shall
not issue shares of a series of preferred shares of beneficial interest other
than the Preferred Shares unless it has received an opinion of tax counsel that
such issuance will not affect the deductibility, for federal income tax
purposes, of dividends paid on the different series of preferred shares of
beneficial interest of the Trust. Each such additional series and all such
additional preferred shares of beneficial interest shall be governed by the
terms of Article 11.
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