AMENDED AND RESTATED
BYLAWS
of
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II
(Amended and Restated as of December 11, 2008)
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 Principal Office of the Trust. A principal office of the Trust shall be
located in New York, New York. The Trust may have other principal offices within
or without Massachusetts as the Trustees may determine or as they may authorize.
1.2 Agreement and Declaration of Trust. These Amended and Restated Bylaws
(the "Bylaws") shall be subject to the Agreement and Declaration of Trust, as
amended or restated from time to time (the "Declaration of Trust"), of PIMCO
California Municipal Income Fund II, 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 at least forty-eight hours, or by telegram, telex or
telecopy or other electronic facsimile transmission method at least twenty-four
hours, before the meeting addressed to the Trustee at his or her usual or last
known business or residence address or to give notice to him or her in person or
by telephone at least twenty-four hours before the meeting. Notice of a meeting
need not be given to any Trustee if a written waiver of notice, executed by him
or her, before or after the meeting, is filed with the records of the meeting,
or to any Trustee who attends the meeting without protesting prior thereto or at
its commencement the lack of notice to him or her. Neither notice of a meeting
nor a waiver of a notice need specify the purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees then
in office shall constitute a quorum. Any meeting may be adjourned from time to
time by a majority of the votes cast upon the question, whether or not a quorum
is present, and the meeting may be held as adjourned without further notice.
ARTICLE 3
Officers and Chairman of the Trustees
3.1 Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary, a Chief Compliance Officer and such other
officers, if any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from time to time may
in their discretion appoint. Any officer may but need not be a Trustee or a
Shareholder. Any two or more offices may be held by the same person.
3.2 Election. The President, the Treasurer, and the Secretary shall be
elected annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at the same meeting at which the President, Treasurer
and Secretary are elected, or at any other time. If required by the 1940 Act,
the Chief Compliance Officer shall be elected or appointed by a majority of the
trustees, as well as a majority of the Trustees who are not Interested Persons
of the Trust ("Independent Trustees"), and otherwise in accordance with Rule
38a-1 (or any successor rule) under the 1940 Act, as such rule may be amended
from time to time ("Rule 38a-1"). Vacancies in any office may be filled at any
time.
3.3 Tenure. The Chairman of the Trustees, if one is elected, the President,
the Treasurer, the Secretary and the Chief Compliance Officer shall hold office
until their respective successors are chosen and qualified, or in each case
until he or she sooner dies, resigns, is removed with or without cause or
becomes disqualified, provided that, if required by the 1940 Act, any renewal of
the Chief Compliance Officer shall be in accordance with Rule 38a-1. Each other
officer shall hold office and each agent of the Trust shall retain authority at
the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these Bylaws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to the
office occupied by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 Chairman of the Trustees. There shall be an office of the Chairman of
the Trustees, which shall serve of behalf of the Trustees, but shall not be an
officer of the Trust. The office of the Chairman of the Trustees may be held by
more than one person. Any Chairman of
-2-
the Trustees shall be elected by a majority of the Trustees, as well as a
majority of the Independent Trustees if required by the 1940 Act. If required by
the 1940 Act, any Chairman of the Trustees shall be an Independent Trustee and
may, but need not, be a shareholder. The powers and the duties of the Chairman
of the Trustees shall include any and all such powers and duties relating to the
operations of the Trustees as, from time to time, may be conferred upon or
assigned to such office by the Trustees or as may be required by law, provided
that the Chairman of the Trustees shall have no individual authority to act for
the Trust as an officer of the Trust. In carrying out the responsibilities and
duties of the office, the Chairman of the Trustees may seek assistance and input
from other Trustees or Committees of the Trustees, officers of the Trust and the
Trust's investment adviser(s) and other service providers, as deemed necessary
or appropriate. The Trustees, including a majority of the Independent Trustees
if required by the 1940 Act, may appoint one or more persons to perform the
duties of the Chairman of the Trustees, in the event of his absence at any
meeting or in the event of his disability.
3.6 President; Vice President. The President shall be the chief executive
officer. Any Vice President shall have such duties and powers as may be
designated from time to time by the Trustees or the President.
3.7 Treasurer; Assistant Treasurer. The Treasurer shall be the chief
financial and accounting officer of the Trust, and shall, subject to the
provisions of the Declaration of Trust and to any arrangement made by the
Trustees with a custodian, investment adviser, sub-adviser or manager, or
transfer, shareholder servicing or similar agent, be in charge of the valuable
papers, books of account and accounting records of the Trust, and shall have
such other duties and powers as may be designated from time to time by the
Trustees or by the President. Any Assistant Treasurer shall have such duties and
powers as may be designated from time to time by the Trustees or the President.
3.8 Secretary; Assistant Secretary. The Secretary shall record all
proceedings of the Shareholders and the Trustees in books to be kept therefor,
which books or a copy thereof shall be kept at the principal office of the
Trust. In the absence of the Secretary from any meeting of the Shareholders or
Trustees, an Assistant Secretary, or if there be none or if he or she is absent,
a temporary secretary chosen at such meeting shall record the proceedings
thereof in the aforesaid books. Any Assistant Secretary shall have such duties
and powers as may be designated from time to time by the Trustees or the
President.
3.9 Chief Compliance Officer. The Chief Compliance Officer shall perform
the duties and have the responsibilities of the chief compliance officer of the
Trust, including if required by the 1940 Act any such duties and
responsibilities imposed by Rule 38a-1, and shall have such other duties and
powers as may be designated from time to time by the Trustees.
3.10 Resignations. Any officer may resign at any time by written instrument
signed by him or her and delivered to the Chairman of the Trustees, if any, the
President or the Secretary, or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. Except to the extent expressly provided in a written agreement with the
Trust, no officer resigning and no officer removed shall have any right to any
-3-
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal.
ARTICLE 4
Committees
4.1 Quorum; Voting. Except as provided below or as otherwise specifically
provided in the resolutions constituting a Committee of the Trustees and
providing for the conduct of its meetings, a majority of the members of any
Committee of the Trustees shall constitute a quorum for the transaction of
business, and any action of such a Committee may be taken at a meeting by a vote
of a majority of the members present (a quorum being present) or evidenced by
one or more writings signed by such a majority. Members of a Committee may
participate in a meeting of such Committee by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting.
With respect to a Valuation Committee of the Trustees, one or more of the
Committee members shall constitute a quorum for the transaction of business.
Except as specifically provided in the resolutions constituting a Committee
of the Trustees and providing for the conduct of its meetings, Article 2,
Section 2.3 of these Bylaws relating to special meetings shall govern the notice
requirements for Committee meetings, except that it shall be sufficient notice
to a Valuation Committee of the Trustees to send notice by telegram, telex or
telecopy or other electronic means (including by telephone voice-message or
e-mail) at least fifteen minutes before the meeting.
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
-4-
required by the Trustees, the seal shall not be necessary to be placed on, and
its absence shall not impair the validity of, any document, instrument or other
paper executed and delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or in particular cases
authorize the execution thereof in some other manner, all deeds, leases,
transfers, contracts, bonds, notes, checks, drafts and other obligations made,
accepted or endorsed by the Trust shall be executed by the President, any Vice
President, the Treasurer or by whomever else shall be designated for that
purpose by vote of the Trustees, and need not bear the seal of the Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Share Certificates. Except as provided in Article 11 hereof, each
Shareholder shall be entitled to a certificate stating the number of Shares
owned by him or her, in such form as shall be prescribed from time to time by
the Trustees. Such certificates shall be signed by the President or any Vice
President and by the Treasurer or any Assistant Treasurer. Such signatures may
be by facsimile if the certificate is signed by a transfer agent, or by a
registrar, other than a Trustee, officer or employee of the Trust. In case any
officer who has signed or whose facsimile signature has been placed on such
certificate shall cease to be such officer before such certificate is issued, it
may be issued by the Trust with the same effect as if he or she were such
officer at the time of its issuance.
Notwithstanding the foregoing, in lieu of issuing certificates for Shares,
the Trustees or the transfer agent may either issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such Shares,
who shall in either case be deemed, for all purposes hereunder, to be the
holders of certificates for such Shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
9.2 Loss of Certificates. In case of the alleged loss or destruction or the
mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
9.3 Issuance of New Certificates to Pledgee. A pledgee of Shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificate shall express on its face that it is
held as collateral security, and the name of pledgor shall be stated thereon,
who alone shall be liable as a Shareholder and entitled to vote thereon.
9.4 Discontinuance of Issuance of Certificates. Notwithstanding anything to
the contrary in this Article 9, the Trustees may at any time discontinue the
issuance of share certificates and may, by written notice to each Shareholder,
require the surrender of share
-5-
certificates to the Trust for cancellation. Such surrender and cancellation
shall not effect the ownership of Shares in the Trust.
ARTICLE 10
Shareholders' Voting Powers and Meetings
10.1 Voting Powers. The Shareholders shall have power to vote only (i) for
the election or removal of Trustees as provided in Article IV, Sections 1 and 3
of the Declaration of Trust and Article 11 hereto, (ii) with respect to any
Manager or sub-adviser as provided in Article IV, Section 8 of the Declaration
of Trust to the extent required by the 1940 Act, (iii) with respect to certain
transactions and other matters to the extent and as provided in Article V,
Sections 2 and 3 of the Declaration of Trust and Article 11 hereto, (iv) with
respect to any termination of this Trust to the extent and as provided in
Article IX, Section 4 of the Declaration of Trust 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.
-6-
10.2 Voting Power and Meetings. Except as provided in the next sentence,
regular meetings of the Shareholders for the election of Trustees and the
transaction of such other business as may properly come before the meeting shall
be held, so long as Shares are listed for trading on the New York Stock
Exchange, on at least an annual basis, on such day and at such place as shall be
designated by the Trustees. In the event that such a meeting is not held in any
annual period if so required, whether the omission be by oversight or otherwise,
a subsequent special meeting may be called by the Trustees and held in lieu of
such meeting with the same effect as if held within such annual period. Special
meetings of the Shareholders or any or all classes or series of Shares may also
be called by the Trustees from time to time for such other purposes as may be
prescribed by law, by the Declaration of Trust or by these Bylaws, or for the
purpose of taking action upon any other matter deemed by a majority of the
Trustees and a majority of the Continuing Trustees to be necessary or desirable.
A special meeting of Shareholders may be held at any such time, day and place as
is designated by the Trustees. Written notice of any meeting of Shareholders,
stating the date, time, place and purpose of the meeting, shall be given or
caused to be given by a majority of the Trustees and a majority of the
Continuing Trustees at least seven days before such meeting to each Shareholder
entitled to vote thereat by leaving such notice with the Shareholder at his or
her residence or usual place of business or by mailing such notice, postage
prepaid, to the Shareholder's address as it appears on the records of the Trust.
Such notice may be given by the Secretary or an Assistant Secretary or by any
other officer or agent designated for such purpose by the Trustees. Whenever
notice of a meeting is required to be given to a Shareholder under the
Declaration of Trust or these Bylaws, a written waiver thereof, executed before
or after the meeting by such Shareholder or his or her attorney thereunto
authorized and filed with the records of the meeting, shall be deemed equivalent
to such notice. Notice of a meeting need not be given to any Shareholder who
attends the meeting without protesting prior thereto or at its commencement the
lack of notice to such Shareholder. No ballot shall be required for any election
unless required by a Shareholder present or represented at the meeting and
entitled to vote in such election. Notwithstanding anything to the contrary in
this Section 10.2, no matter shall be properly before any annual or special
meeting of Shareholders and no business shall be transacted thereat unless in
accordance with Section 10.6 of these Bylaws.
10.3 Quorum and Required Vote. Except when a larger quorum is required by
any provision of law or the Declaration of Trust or these Bylaws, thirty percent
(30%) of the Shares entitled to vote on a particular matter shall constitute a
quorum for the transaction of business at a Shareholders' meeting, except that
where any provision of law or the Declaration of Trust or these Bylaws permits
or requires that holders of any class or series of Shares shall vote as an
individual class or series, then thirty percent (30%) (unless a larger quorum is
required as specified above) of Shares of that class or series entitled to vote
shall be necessary to constitute a quorum for the transaction of business by
that class or series. Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held, within a reasonable time after
the date set for the original meeting, without the necessity of further notice.
Except when a different vote is required by any provision of law or the
Declaration of Trust or these Bylaws, a plurality of the quorum of Shares
necessary for the transaction of business at a Shareholders' meeting shall
decide any questions and a plurality of Shares voted shall elect a Trustee,
provided that where any provision of law or of the Declaration of Trust or these
Bylaws
-7-
permits or requires that the holders of any class or series of Shares shall vote
as an individual class or series, then a plurality of the quorum of Shares of
that class or series necessary for the transaction of business by that class or
series at a Shareholders' meeting shall decide that matter insofar as that class
or series is concerned.
10.4 Action by Written Consent. Any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger proportion thereof as shall be required by any express
provision of law or the Declaration of Trust or these Bylaws) consent to the
action in writing and such written consents are filed with the records of the
meetings of Shareholders. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.
10.5 Record Dates. For the purpose of determining the Shareholders who are
entitled to vote or act at any meeting or any adjournment thereof, or who are
entitled to receive payment of any dividend or of any other distribution, the
Trustees may from time to time fix a time, which shall be not more than 90 days
before the date of any meeting of Shareholders or the date for the payment of
any dividend or of any other distribution, as the record date for determining
the Shareholders having the right to notice of and to vote at such meeting and
any adjournment thereof or the right to receive such dividend or distribution,
and in such case only Shareholders of record on such record date shall have the
right notwithstanding any transfer of Shares on the books of the Trust after the
record date; or without fixing such record date the Trustees may for any of such
purposes close the register or transfer books for all or any part of such
period.
10.6 Advance Notice of Shareholder Nominees for Trustees and Other
Shareholder Proposals.
(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
-8-
majority of the Continuing Trustees pursuant to Section 10.2 of these Bylaws,
(ii) otherwise brought before the meeting by or at the direction of a majority
of the Continuing Trustees (or any duly authorized committee thereof), or (iii)
brought before the meeting in the manner specified in this Section 10.6(c) by a
Shareholder of record entitled to vote at the meeting or by a Shareholder (a
"Beneficial Owner") that holds Shares entitled to vote at the meeting through a
nominee or "street name" holder of record and that can demonstrate to the Trust
such indirect ownership and such Beneficial Owner's entitlement to vote such
Shares, provided that the Shareholder was the Shareholder of record or the
Beneficial Owner held such Shares at the time the notice provided for in this
Section 10.6(c) is delivered to the Secretary.
In addition to any other requirements under applicable law and the
Declaration of Trust and these Bylaws, persons nominated by Shareholders for
election as Trustees and any other proposals by Shareholders may be properly
brought before an annual meeting only pursuant to timely notice (the
"Shareholder Notice") in writing to the Secretary. To be timely, the Shareholder
Notice must be delivered to or mailed and received at the principal executive
offices of the Trust not less than forty-five (45) nor more than sixty (60) days
prior to the first anniversary date of the date on which the Trust first mailed
its proxy materials for the prior year's annual meeting; provided, however, with
respect to the annual meeting to be held in the calendar year 2003, the
Shareholder Notice must be so delivered or mailed and so received on or before
May 1, 2003; provided further, however, if and only if the annual meeting is not
scheduled to be held within a period that commences thirty (30) days before the
first anniversary date of the annual meeting for the preceding year and ends
thirty (30) days after such anniversary date (an annual meeting date outside
such period being referred to herein as an "Other Annual Meeting Date"), such
Shareholder Notice must be given in the manner provided herein by the later of
the close of business on (i) the date forty-five (45) days prior to such Other
Annual Meeting Date or (ii) the tenth (10th) business day following the date
such Other Annual Meeting Date is first publicly announced or disclosed.
Any Shareholder desiring to nominate any person or persons (as the case may
be) for election as a Trustee or Trustees of the Trust shall deliver, as part of
such Shareholder Notice: (i) a statement in writing setting forth (A) the name,
age, date of birth, business address, residence address and nationality of the
person or persons to be nominated; (B) the class or series and number of all
Shares of the Trust owned of record or beneficially by each such person or
persons, as reported to such Shareholder by such nominee(s); (C) any other
information regarding each such person required by paragraphs (a), (d), (e) and
(f) of Item 401 of Regulation S-K or paragraph (b) of Item 22 of Rule 14a-101
(Schedule 14A) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), adopted by the Securities and Exchange Commission (or the
corresponding provisions of any regulation or rule subsequently adopted by the
Securities and Exchange Commission or any successor agency applicable to the
Trust); (D) any other information regarding the person or persons to be
nominated that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitation of proxies for
election of Trustees or directors pursuant to Section 14 of the Exchange Act and
the rules and regulations promulgated thereunder; and (E) whether such
Shareholder believes any nominee is or will be an "interested person" of the
Trust (as defined in the Investment Company Act of 1940, as amended) and, if not
an "interested person,"
-9-
information regarding each nominee that will be sufficient for the Trust to make
such determination; and (ii) the written and signed consent of the person or
persons to be nominated to be named as nominees and to serve as Trustees if
elected. In addition, the Trustees may require any proposed nominee to furnish
such other information as they may reasonably require or deem necessary to
determine the eligibility of such proposed nominee to serve as a Trustee. Any
Shareholder Notice required by this Section 10.6(c) in respect of a proposal to
fix the number of Trustees shall also set forth a description of and the text of
the proposal, which description and text shall state a fixed number of Trustees
that otherwise complies with applicable law, these Bylaws and the Declaration of
Trust.
Without limiting the foregoing, any Shareholder who gives a Shareholder
Notice of any matter proposed to be brought before a Shareholder meeting
(whether or not involving nominees for Trustees) shall deliver, as part of such
Shareholder Notice: (i) the description of and text of the proposal to be
presented; (ii) a brief written statement of the reasons why such Shareholder
favors the proposal; (iii) such Shareholder's name and address as they appear on
the Trust's books; (iv) any other information relating to the Shareholder that
would be required to be disclosed in a proxy statement or other filings required
to be made in connection with the solicitation of proxies with respect to the
matter(s) proposed pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder; (v) the class or series and number of all
Shares of the Trust owned beneficially and of record by such Shareholder; (vi)
any material interest of such Shareholder in the matter proposed (other than as
a Shareholder); (vii) a representation that the Shareholder intends to appear in
person or by proxy at the Shareholder meeting to act on the matter(s) proposed;
(viii) if the proposal involves nominee(s) for Trustees, a description of all
arrangements or understandings between the Shareholder and each proposed nominee
and any other person or persons (including their names) pursuant to which the
nomination(s) are to be made by the Shareholder; and (ix) in the case of a
Beneficial Owner, evidence establishing such Beneficial Owner's indirect
ownership of, and entitlement to vote, Shares at the meeting of Shareholders. As
used in this Section 10.6, Shares "beneficially owned" shall mean all Shares
which such person is deemed to beneficially own pursuant to Rules 13d-3 and
13d-5 under the Exchange Act.
(d) For any matter to be properly before any special meeting, the matter
must be specified in the notice of meeting given by or at the direction of a
majority of the Trustees and a majority of the Continuing Trustees pursuant to
Section 10.2 of these Bylaws. In the event the Trust calls a special meeting for
the purpose of electing one or more Trustees, any Shareholder may nominate a
person or persons (as the case may be) for election to such position(s) as
specified in the Trust's notice of meeting if and only if the Shareholder
provides a notice containing the information required in the Shareholder Notice
to the Secretary required with respect to annual meetings by Section 10.6(c)
hereof, and such notice is delivered to or mailed and received at the principal
executive office of the Trust not later than the close of business on the tenth
(10th) day following the day on which the date of the special meeting and of the
nominees proposed by the Trustees to be elected at such meeting are publicly
announced or disclosed.
-10-
(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 determine (i) whether a nomination or
proposal of other matters to be brought before a meeting and notice thereof have
been duly made and given in the manner provided in this Section 10.6 and
elsewhere in these Bylaws and the Declaration of Trust and (ii) if not so made
or given, to direct and declare at the meeting that such nomination and/or such
other matters shall be disregarded and shall not be considered. Any
determination by the person presiding shall be binding on all parties absent
manifest error.
(h) Notwithstanding anything to the contrary in this Section 10.6 or
otherwise in these Bylaws, unless required by federal law, no matter shall be
considered at or brought before any annual or special meeting unless such matter
has been approved for these purposes by a majority of the Continuing Trustees
and, in particular, no Beneficial Owner shall have any rights as a Shareholder
except as may be required by federal law. Furthermore, nothing in this Section
10.6 shall be construed as creating any implication or presumption as to the
requirements of federal law.
ARTICLE 11
Statement Creating Five Series of Auction Preferred Shares
Auction Preferred Shares, Series A: 2,080 shares of beneficial interest of
Preferred Shares, par value $0.00001 per share, liquidation preference $25,000
per share plus an amount equal to accumulated but unpaid dividends (whether or
not earned or declared) thereon, is hereby designated "Auction Preferred Shares,
Series A." Each share of Auction Preferred Shares, Series A (sometimes referred
to herein as "Series A APS") may be issued on a date to be determined by the
Board of Trustees of the Trust or pursuant to their delegated authority; have an
Initial Dividend Rate and an Initial Dividend Payment Date as shall be
determined in advance of the issuance thereof by the Board of Trustees of the
Trust or pursuant to their delegated authority; and have such other preferences,
voting powers, limitations as to dividends, qualifications and terms and
conditions of redemption as are set forth in these Bylaws. The Series A APS
shall constitute a separate series of Preferred Shares of the Trust, and each
share of Series A APS shall be identical.
-11-
Auction Preferred Shares, Series B: 2,080 shares of beneficial interest of
Preferred Shares, par value $0.00001 per share, liquidation preference $25,000
per share plus an amount equal to accumulated but unpaid dividends (whether or
not earned or declared) thereon, is hereby designated "Auction Preferred Shares,
Series B." Each share of Auction Preferred Shares, Series B (sometimes referred
to herein as "Series B APS") may be issued on a date to be determined by the
Board of Trustees of the Trust or pursuant to their delegated authority; have an
Initial Dividend Rate and an Initial Dividend Payment Date as shall be
determined in advance of the issuance thereof by the Board of Trustees of the
Trust or pursuant to their delegated authority; and have such other preferences,
voting powers, limitations as to dividends, qualifications and terms and
conditions of redemption as are set forth in these Bylaws. The Series B APS
shall constitute a separate series of Preferred Shares of the Trust, and each
share of Series B APS shall be identical.
Auction Preferred Shares, Series C: 2,080 shares of beneficial interest of
Preferred Shares, par value $0.00001 per share, liquidation preference $25,000
per share plus an amount equal to accumulated but unpaid dividends (whether or
not earned or declared) thereon, is hereby designated "Auction Preferred Shares,
Series C." Each share of Auction Preferred Shares, Series C (sometimes referred
to herein as "Series C APS") may be issued on a date to be determined by the
Board of Trustees of the Trust or pursuant to their delegated authority; have an
Initial Dividend Rate and an Initial Dividend Payment Date as shall be
determined in advance of the issuance thereof by the Board of Trustees of the
Trust or pursuant to their delegated authority; and have such other preferences,
voting powers, limitations as to dividends, qualifications and terms and
conditions of redemption as are set forth in these Bylaws. The Series C APS
shall constitute a separate series of Preferred Shares of the Trust, and each
share of Series C APS shall be identical.
Auction Preferred Shares, Series D: 2,080 shares of beneficial interest of
Preferred Shares, par value $0.00001 per share, liquidation preference $25,000
per share plus an amount equal to accumulated but unpaid dividends (whether or
not earned or declared) thereon, is hereby designated "Auction Preferred Shares,
Series D." Each share of Auction Preferred Shares, Series D (sometimes referred
to herein as "Series D APS") may be issued on a date to be determined by the
Board of Trustees of the Trust or pursuant to their delegated authority; have an
Initial Dividend Rate and an Initial Dividend Payment Date as shall be
determined in advance of the issuance thereof by the Board of Trustees of the
Trust or pursuant to their delegated authority; and have such other preferences,
voting powers, limitations as to dividends, qualifications and terms and
conditions of redemption as are set forth in these Bylaws. The Series D APS
shall constitute a separate series of Preferred Shares of the Trust, and each
share of Series D APS shall be identical.
Auction Preferred Shares, Series E: 2,080 shares of beneficial interest of
Preferred Shares, par value $0.00001 per share, liquidation preference $25,000
per share plus an amount equal to accumulated but unpaid dividends (whether or
not earned or declared) thereon, is hereby designated "Auction Preferred Shares,
Series E." Each share of Auction Preferred Shares, Series E (sometimes referred
to herein as "Series E APS") 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
-12-
Dividend Rate and an Initial Dividend Payment Date as shall be determined in
advance of the issuance thereof by the Board of Trustees of the Trust or
pursuant to their delegated authority; and have such other preferences, voting
powers, limitations as to dividends, qualifications and terms and conditions of
redemption as are set forth in these Bylaws. The Series E APS shall constitute a
separate series of Preferred Shares of the Trust, and each share of Series E APS
shall be identical.
11.1 Definitions. (a) Unless the context or use indicates another or
different meaning or intent, in Article 11 of these Bylaws the following terms
have the following meanings, whether used in the singular or plural:
"'AA' Composite Commercial Paper Rate," on any Valuation Date, means (i)
the Interest Equivalent of the rate on commercial paper placed on behalf of
issuers whose corporate bonds are rated "AA" by S&P or "Aa" by Moody's or the
equivalent of such rating by another Rating Agency, as such rate is made
available on a discount basis or otherwise by the Federal Reserve Bank of New
York for the Business Day immediately preceding such date, or (ii) in the event
that the Federal Reserve Bank of New York does not make available such a rate,
then the arithmetic average of the Interest Equivalent of the rate on commercial
paper placed on behalf of such issuers, as quoted on a discount basis or
otherwise by UBS Warburg LLC or Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated or their respective successors that are Commercial Paper Dealers,
to the Auction Agent for the close of business on the Business Day immediately
preceding such date. If one of the Commercial Paper Dealers does not quote a
rate required to determine the "AA" Composite Commercial Paper Rate, the "AA"
Composite Commercial Paper Rate will be determined on the basis of the quotation
or quotations furnished by any Substitute Commercial Paper Dealer or Substitute
Commercial Paper Dealers selected by the Trust to provide such rate or rates not
being supplied by the Commercial Paper Dealer. If the number of Dividend Period
days shall be (i) 7 or more but fewer than 49 days, such rate shall be the
Interest Equivalent of the 30-day rate on such commercial paper; (ii) 49 or more
but fewer than 70 days, such rate shall be the Interest Equivalent of the 60-day
rate on such commercial paper; (iii) 70 or more days but fewer than 85 days,
such rate shall be the arithmetic average of the Interest Equivalent on the
60-day and 90-day rates on such commercial paper; (iv) 85 or more days but fewer
than 99 days, such rate shall be the Interest Equivalent of the 90-day rate on
such commercial paper; (v) 99 or more days but fewer than 120 days, such rate
shall be the arithmetic average of the Interest Equivalent of the 90-day and
120-day rates on such commercial paper; (vi) 120 or more days but fewer than 141
days, such rate shall be the Interest Equivalent of the 120-day rate on such
commercial paper; (vii) 141 or more days but fewer than 162 days, such rate
shall be the arithmetic average of the Interest Equivalent of the 120-day and
180-day rates on such commercial paper; and (viii) 162 or more days but fewer
than 183 days, such rate shall be the Interest Equivalent of the 180-day rate on
such commercial paper.
"Accountant's Confirmation" has the meaning set forth in Section 11.7(c) of
these Bylaws.
"Adviser" means the Trust's investment adviser which initially shall be
PIMCO Funds Advisors LLC.
-13-
"Affiliate" means any Person, other than UBS Warburg LLC or its successors,
known to the Auction Agent to be controlled by, in control of, or under common
control with, the Trust.
"Agent Member" means a member of the Securities Depository that will act on
behalf of a Beneficial Owner of one or more APS or on behalf of a Potential
Beneficial Owner.
"Applicable Percentage" has the meaning set forth in Section 11.10(a)(vii)
of these Bylaws.
"Applicable Rate" means the rate per annum at which cash dividends are
payable on the APS for any Dividend Period.
"APS" means the Series A APS, the Series B APS, the Series C APS, the
Series D APS and the Series E APS.
"APS Basic Maintenance Amount," as of any Valuation Date, means the dollar
amount equal to the sum of (i)(A) the product of the number of shares of APS
Outstanding on such date multiplied by $25,000 (plus the product of the number
of shares of any other series of Preferred Shares Outstanding on such date
multiplied by the liquidation preference of such shares), plus any redemption
premium applicable to APS (or other Preferred Shares) then subject to
redemption; (B) the aggregate amount of dividends that will have accumulated at
the respective Applicable Rates (whether or not earned or declared) to (but not
including) the first respective Dividend Payment Dates for each series of APS
Outstanding that follow such Valuation Date (plus the aggregate amount of
dividends, whether or not earned or declared, that will have accumulated in
respect of other Outstanding Preferred Shares to (but not including) the first
respective dividend payment dates for such other shares that follow such
Valuation Date); (C) the aggregate amount of dividends that would accumulate on
shares of each series of APS Outstanding from such first respective Dividend
Payment Date therefor through the 49th day after such Valuation Date, at the
Maximum Applicable Rate (calculated as if such Valuation Date were the Auction
Date for the Dividend Period commencing on such Dividend Payment Date) for a
7-Day Dividend Period of shares of such series to commence on such Dividend
Payment Date, assuming, solely for purposes of the foregoing, that if on such
Valuation Date the Trust shall have delivered a Notice of Special Dividend
Period to the Auction Agent with respect to shares of such series, such Maximum
Applicable Rate shall be the higher of (a) the Maximum Applicable Rate for the
Special Dividend Period of shares of such series to commence on such Dividend
Payment Date and (b) the Maximum Applicable Rate for a 7-Day Rate Period of
shares of such series to commence on such Dividend Payment Date, multiplied by
the Moody's Volatility Factor applicable to a 7-Day Dividend Period, or, in the
event the Trust shall have delivered a Notice of Special Dividend Period to the
Auction Agent with respect to shares of such series designating a Special
Dividend Period consisting of 49 days or more, the Moody's Volatility Factor
applicable to a Special Dividend Period of that length (plus the aggregate
amount of dividends that would accumulate at the maximum dividend rate or rates
on any other Preferred Shares Outstanding from such respective dividend payment
dates through the 49th day after such Valuation Date, as established by or
pursuant to the respective statements establishing and fixing the rights and
preferences of such other Preferred Shares) (except that (1) if such
-14-
Valuation Date occurs during a Non-Payment Period (or, in the case of Preferred
Shares other than APS, a period similar to a Non-Payment Period), the dividend
for purposes of calculation would accumulate at the then current Non-Payment
Period Rate (or similar rate for Preferred Shares other than APS) and (2) for
those days during the period described in this subparagraph (C) in respect of
which the Applicable Rate in effect immediately prior to such Dividend Payment
Date will remain in effect (or, in the case of Preferred Shares other than APS,
in respect of which the dividend rate or rates in effect immediately prior to
such respective dividend payment dates will remain in effect), the dividend for
purposes of calculation would accumulate at such Applicable Rate (or other rate
or rates, as the case may be) in respect of those days); (D) the amount of
anticipated expenses of the Trust for the 90 days subsequent to such Valuation
Date; (E) the amount of the Trust's Maximum Potential Gross-up Dividend
Liability in respect of shares of APS (and similar amounts payable in respect of
other Preferred Shares) as of such Valuation Date; and (F) any current
liabilities as of such Valuation Date to the extent not reflected in any of
(i)(A) through (i)(E) (including, without limitation, any payables for Municipal
Obligations purchased as of such Valuation Date and any liabilities incurred for
the purpose of clearing securities transactions) less (ii) the value (i.e., the
face value of cash, short-term Municipal Obligations rated XXX-0, XXXX-0 xx X-0,
and short-term securities that are the direct obligation of the U.S. government,
provided in each case that such securities mature on or prior to the date upon
which any of (i)(A) through (i)(F) become payable, otherwise the Moody's
Discounted Value) of any of the Trust's assets irrevocably deposited by the
Trust for the payment of any of (i)(A) through (i)(F).
"APS Basic Maintenance Cure Date," with respect to the failure by the Trust
to satisfy the APS Basic Maintenance Amount (as required by Section 11.7(a) of
these Bylaws) as of a given Valuation Date, means the tenth Business Day
following such Valuation Date.
"APS Basic Maintenance Report" means a report signed by any of the
President, Treasurer, any Senior Vice President or any Vice President of the
Trust which sets forth, as of the related Valuation Date, the assets of the
Trust, the Market Value and the Discounted Value thereof (seriatim and in
aggregate), and the APS Basic Maintenance Amount.
"Auction" means a periodic operation of the Auction Procedures.
"Auction Agent" means Deutsche Bank Trust Company Americas unless and until
another commercial bank, trust company or other financial institution appointed
by a resolution 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 APS.
"Auction Date" has the meaning set forth in Section 11.10(a)(ii) of these
Bylaws.
"Auction Procedures" means the procedures for conducting Auctions set forth
in Section 11.10 of these Bylaws.
-15-
"Beneficial Owner" means a customer of a Broker-Dealer who is listed on the
records of that Broker-Dealer (or, if applicable, the Auction Agent) as a holder
of APS or a Broker-Dealer that holds APS for its own account.
"Broker-Dealer" means any broker-dealer, or other entity permitted by law
to perform the functions required of a Broker-Dealer pursuant to Section 11.10
of these Bylaws, that has been selected by the Trust and has entered into a
Broker-Dealer Agreement with the Auction Agent that remains effective.
"Broker-Dealer Agreement" means an agreement between the Auction Agent and
a Broker-Dealer pursuant to which such Broker-Dealer agrees to follow the
procedures specified in Section 11.10 of these Bylaws.
"Business Day" means a day on which the New York Stock Exchange is open for
trading and which is not a Saturday, Sunday or other day on which banks in New
York City are authorized or obligated by law to close.
"Closing Transactions" has the meaning set forth in Section 11.8(a) of
these Bylaws.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commercial Paper Dealers" means UBS Warburg LLC, Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated and such other commercial paper dealer or dealers as
the Trust may from time to time appoint or, in lieu thereof, their respective
affiliates or successors.
"Common Shares" means the shares of beneficial interest designated as
common shares, no par value, of the Trust.
"Cure Date" has the meaning set forth in Section 11.4(a)(ii) of these
Bylaws.
"Date of Original Issue" means, with respect to any share of APS, the date
on which the Trust first issues such share.
"Declaration of Trust" means the Amended and Restated Agreement and
Declaration of Trust of the Trust dated June 18, 2002, as from time to time
amended and supplemented.
"Deposit Securities" means cash and Municipal Obligations rated at least A2
(having a remaining maturity of 12 months or less), X-0, XXXX-0 xx XXX-0 by
Moody's or A (having a remaining maturity of 12 months or less), A-1+ or SP-1+
by S&P.
"Discount Factor" means a Moody's Discount Factor.
"Discounted Value" of any asset of the Trust means, with respect to a
Moody's Eligible Asset, the quotient of the Market Value thereof divided by the
applicable Moody's Discount Factor.
-16-
"Dividend Payment Date," with respect to APS, has the meaning set forth in
Section 11.2(b)(i) of these Bylaws.
"Dividend Period" means the Initial Dividend Period, any 7-Day Dividend
Period and any Special Dividend Period.
"Eligible Assets" means Moody's Eligible Assets.
"Existing Holder" means a Broker-Dealer, or any such other Person that may
be permitted by the Trust, that is listed as the holder of record of APS in the
Share Books.
"Extension Period" has the meaning set forth in Section 11.2(c)(iii) of
these Bylaws.
"Federal Tax Rate Increase" has the meaning set forth under the definition
of "Moody's Volatility Factor" below.
"Forward Commitment" has the meaning set forth in Section 11.8(d) of these
Bylaws.
"Gross-Up Dividend" has the meaning set forth in Section 11.2(e) of these
Bylaws.
"Holder" means a Person identified as a holder of record of APS in the
Share Register.
"Independent Accountant" means a nationally recognized accountant, or firm
of accountants, that is, with respect to the Trust, an independent public
accountant or firm of independent public accountants under the Securities Act of
1933, as amended, and serving as such for the Trust.
"Initial Dividend Payment Date" means, with respect to a series of APS, the
Initial Dividend Payment Date as determined by the Board of Trustees of the
Trust or pursuant to their delegated authority with respect to such series.
"Initial Dividend Period" has the meaning set forth in Section 11.2(c)(i)
of these Bylaws.
"Initial Dividend Rate" means, with respect to a series of APS, the rate
per annum applicable to the Initial Dividend Period for such series of APS.
"Interest Equivalent" means a yield on a 360-day basis of a discount basis
security which is equal to the yield on an equivalent interest-bearing security.
"Issue Type Category" means, with respect to a Municipal Obligation
acquired by the Trust, for purposes of calculating Moody's Eligible Assets as of
any Valuation Date, one of the following categories into which such Municipal
Obligation falls based upon a good faith determination by the Trust: health care
issues (including issues related to teaching and non-teaching hospitals, public
or private, and elder-care facilities, including nursing homes); housing issues
(including issues related to single- and multi-family housing projects);
educational facilities issues (including issues related to public and private
schools); student loan issues;
-17-
resource recovery issues; transportation issues (including issues related to
mass transit, airports and highways); industrial development bond issues
(including issues related to pollution control facilities); utility issues
(including issues related to the provision of gas, water, sewers and
electricity); general obligation issues; lease obligations (including
certificates of participation); escrowed bonds; issues backed by tobacco
settlement funds; and other issues ("Other Issues") not falling within one of
the aforementioned categories. The general obligation issue category includes
any issue that is directly or indirectly guaranteed by any state or any
political subdivision of a state. Utility issues are included in the general
obligation issue category if the issue is directly or indirectly guaranteed by a
state or any political subdivision of a state. Municipal Obligations in the
utility issue category will be classified within one of the three following
sub-categories: (i) electric, gas and combination issues (if the combination
issue includes an electric issue); (ii) water and sewer utilities and
combination issues (if the combination issues does not include an electric
issue); and (iii) irrigation, resource recovery, solid waste and other
utilities. Municipal Obligations in the transportation issue category will be
classified within one of the two following sub-categories: (i) streets and
highways, toll roads, bridges and tunnels, airports and multi-purpose port
authorities (multiple revenue streams generated by toll roads, airports, real
estate, bridges); (ii) mass transit, parking seaports and others.
"Long Term Dividend Period" means a Special Dividend Period consisting of a
specified period of one whole year or more but not greater than five years.
"Liens" shall have the meaning set forth in the definition of "Moody's
Eligible Asset" below.
"Mandatory Redemption Price" means $25,000 per share of APS plus an amount
equal to accumulated but unpaid dividends (whether or not earned or declared) to
the date fixed for redemption, but excluding Gross-up Dividends.
"Marginal Tax Rate" means the maximum marginal regular federal individual
income tax rate applicable to an individual's or a corporation's ordinary
income, whichever is greater.
"Market Value" of any asset of the Trust shall be the market value thereof
determined by the Pricing Service. Market Value of any asset shall include any
interest accrued thereon. The Pricing Service shall value portfolio securities
at the quoted bid prices or the mean between the quoted bid and asked price or
the yield equivalent when quotations are not readily available. Securities for
which quotations are not readily available shall be valued at fair value as
determined by the Pricing Service using methods which include consideration of:
yields or prices of securities of comparable quality, type of issue, coupon,
maturity and rating; indications as to value from dealers; and general market
conditions. The Pricing Service may employ electronic data processing techniques
and/or a matrix system to determine valuations. In the event the Pricing Service
is unable to value a security, the security shall be valued at the lower of two
dealer bids obtained by the Trust from dealers who are members of the National
Association of Securities Dealers, Inc. and who make a market in the security,
at least one of which shall be in writing. Futures contracts and options are
valued at closing prices for such instruments
-18-
established by the exchange or board of trade on which they are traded, or if
market quotations are not readily available, are valued at fair value on a
consistent basis using methods determined in good faith by the Board of Trustees
of the Trust.
"Maximum Applicable Rate," with respect to APS, has the meaning set forth
in Section 11.10(a)(vii) of these Bylaws.
"Maximum Potential Gross-Up Dividend Liability" means, as of any Valuation
Date, the aggregate amount of Gross-Up Dividends that would be due if the Trust
were to make Retroactive Taxable Allocations, with respect to any fiscal year,
estimated based upon dividends paid and the amount of undistributed realized net
capital gains and other taxable income earned by the Trust, as of the end of the
calendar month immediately preceding such Valuation Date and assuming such
Gross-Up Dividends are fully taxable.
"Moody's" means Xxxxx'x Investors Service, Inc. or its successors.
"Moody's Discount Factor" shall mean, for purposes of determining the
Discounted Value of any Moody's Eligible Asset, the percentage determined by
reference to the rating on such asset and the shortest Exposure Period set forth
opposite such rating that is the same length as or is longer than the Moody's
Exposure Period, in accordance with the table set forth below:
Exposure Period Aaa* Aa* A* Baa* Other** (V)MIG-1*** SP-1+**** Unrated*****
---------------------------- ---- --- --- ---- ------- ----------- --------- ------------
7 weeks 151% 159% 166% 173% 187% 136% 148% 225%
8 weeks or less but greater
than seven weeks. 154 161 168 176 190 137 149 231
9 weeks or less but greater
than eight weeks 158 163 170 177 192 138 150 240
* Xxxxx'x rating.
** Municipal Obligations not rated by Moody's but rated BBB by S&P.
*** Municipal Obligations rated MIG-1 or VMIG-1, which do not mature or have a
demand feature at par exercisable in 30 days and which do not have a
long-term rating.
**** Municipal Obligations not rated by Moody's but rated SP-1+ by S&P, which
do not mature or have a demand feature at par exercisable in 30 days and
which do not have a long-term rating.
***** Municipal Obligations rated less than Baa3 or not rated by Moody's and
less than BBB or not rated by S&P, not to exceed 10% of Moody's Eligible
Assets.
Notwithstanding the foregoing, (i) except as provided in clause (ii) below, the
Moody's Discount Factor for short-term Municipal Obligations will be 115%, so
long as such Municipal Obligations are rated at least MIG-1, VMIG-l or P-1 by
Moody's and mature or have a demand
-19-
feature at par exercisable in 30 days or less, or 125%, as long as such
Municipal Obligations are rated at least A-1+/AA or SP-1+/AA by S&P and mature
or have a demand feature at par exercisable in 30 days or less, (ii) the Moody's
Discount Factor for residual interest municipal bonds and structured notes shall
be the product of (x) the percentage determined by reference to the rating on
the security underlying such residual interest municipal bond multiplied by (y)
1.25 (provided that the trust in which such residual interest municipal bond is
held may be terminated within five business days), and (iii) except as provided
in clause (ii) above, no Moody's Discount Factor will be applied to cash,
Receivables for Municipal Obligations Sold, or futures, options and similar
instruments (to the extent such securities are Moody's Eligible Assets);
provided, however, that for purposes of determining the Moody's Discount Factor
applicable to a Municipal Obligation, any Municipal Obligation (excluding any
short-term Municipal Obligation) not rated by Moody's but rated by S&P shall be
deemed to have a Xxxxx'x rating which is one full rating category lower than its
S&P rating.
"Moody's Eligible Asset" shall mean cash, Receivables for Municipal
Obligations Sold, futures and options (to the extent entered into in Moody's
Hedging Transactions) and similar instruments (including residual interest
municipal bonds (provided that the trust in which such residual interest
municipal bond is held may be terminated within five business days) and
structured notes), or a Municipal Obligation that (i) pays interest in cash,
(ii) does not have its Xxxxx'x rating, as applicable, suspended by Moody's, and
(iii) is part of an issue of Municipal Obligations of at least $5,000,000,
except that the minimum issue size is $10,000,000 for Municipal Obligations
rated below A by Moody's and Municipal Obligations within the healthcare Issuer
Type Category and, in the case of residual interests municipal bonds, the
minimum issue size of the Municipal Obligation underlying the residual interest
municipal bond is $10,000,000. For purposes of the foregoing, an "issue" of a
residual interest municipal bond shall be interpreted to refer to all similar
securities issued by the trust in which the residual interest municipal bond is
held and not only to the particular securities issued to the Trust. Except for
general obligation bonds, Municipal Obligations issued by any one issuer and
rated BBB or lower or not rated by S&P and rated Ba or B or not rated by Moody's
("Other Securities") may comprise no more than 4% of total Moody's Eligible
Assets; such Other Securities, if any, together with any Municipal Obligations
issued by the same issuer and rated Baa by Moody's or A by S&P, may comprise no
more than 6% of total Moody's Eligible Assets; such Other Securities, Baa and
A-rated Municipal Obligations, if any, together with any Municipal Obligations
issued by the same issuer and rated A by Moody's or AA by S&P, may comprise no
more than 10% of total Moody's Eligible Assets; and such Other Securities, Baa,
A and AA-rated Municipal Obligations, if any, together with any Municipal
Obligations issued by the same issuer and rated Aa by Moody's or AAA by S&P, may
comprise no more than 20% of total Moody's Eligible Assets. For purposes of the
foregoing sentence, any Municipal Obligation backed by the guaranty, letter of
credit or insurance issued by a third party shall be deemed to be issued by such
third party if the issuance of such third party credit is the sole determinant
of the rating on such Municipal Obligation. Other Securities falling within a
particular Issue Type Category may comprise no more than 12% of total Moody's
Eligible Assets; such Other Securities, if any, together with any Municipal
Obligations falling within a particular Issue Type Category and rated Baa by
Moody's or A by S&P, may comprise no more than 20% of total Moody's Eligible
Assets; such Other Securities, Baa and A-rated Municipal
-20-
Obligations, if any, together with any Municipal Obligations falling within a
particular Issue Type Category and rated A by Moody's or AA by S&P, may comprise
no more than 40% of total Moody's Eligible Assets; and such Other Securities,
Baa, A and AA-rated Municipal Obligations, if any, together with any Municipal
Obligations falling within a particular Issue Type Category and rated Aa by
Moody's or AAA by S&P, may comprise no more than 60% of total Moody's Eligible
Assets. For purposes of this definition, a Municipal Obligation shall be deemed
to be rated BBB by S&P if rated BBB-, BBB or BBB+ by S&P. Notwithstanding any
other provision of this definition, in no event may (i) student loan Municipal
Obligations comprise more than 10% of Moody's Eligible Assets; (ii) resource
recovery Municipal Obligations comprise more than 10% of Moody's Eligible
Assets; and (iii) Other Issues comprise more than 10% of Moody's Eligible
Assets. For purposes of applying the foregoing requirements, Municipal
Obligations rated XXX-0, XXXX-0 or P-1 or, if not rated by Moody's, rated
A-1+/AA or SP-1+/AA by S&P, shall be considered to have a long-term rating of A.
When the Trust sells a Municipal Obligation and agrees to repurchase such
Municipal Obligation at a future date, such Municipal Obligation shall be valued
at its Discounted Value for purposes of determining Moody's Eligible Assets, and
the amount of the repurchase price of such Municipal Obligation shall be
included as a liability for purposes of calculating the APS Basic Maintenance
Amount. When the Trust purchases a Moody's Eligible Asset and agrees to sell it
at a future date, such Eligible Asset shall be valued at the amount of cash to
be received by the Trust upon such future date, provided that the counterparty
to the transaction has a long-term debt rating of at least A2 from Moody's and
the transaction has a term of no more than 30 days, otherwise such Eligible
Asset shall be valued at the Discounted Value of such Eligible Asset.
Notwithstanding the foregoing, an asset will not be considered a Moody's
Eligible Asset to the extent it is (i) subject to any material lien, mortgage,
pledge, security interest or security agreement of any kind (collectively,
"Liens"), except for (A) Liens which are being contested in good faith by
appropriate proceedings and which Moody's has indicated to the Trust will not
affect the status of such asset as a Moody's Eligible Asset, (B) Liens for taxes
that are not then due and payable or that can be paid thereafter without
penalty, (C) Liens to secure payment for services rendered or cash advanced to
the Trust by its investment manager or portfolio manager, the Trust's custodian,
transfer agent or registrar or the Auction Agent and (D) Liens arising by virtue
of any repurchase agreement; (ii) deposited irrevocably for the payment of any
liabilities for purposes of determining the APS Basic Maintenance Amount; or
(iii) held in a margin account.
"Moody's Exposure Period" means the period commencing on a given Valuation
Date and ending 49 days thereafter.
"Moody's Hedging Transactions" has the meaning set forth in Section 11.8(a)
of these Bylaws.
"Xxxxx'x Volatility Factor" means as of any Valuation Date, (i) in the case
of any 7-Day Dividend Period, any Special Dividend Period of 28 days or fewer,
or any Special Dividend Period of 57 days or more, a multiplicative factor equal
to 275%, except as otherwise provided in the last sentence of this definition;
(ii) in the case of any Special Dividend Period of more than
-21-
28 but fewer than 36 days, a multiplicative factor equal to 203%; (iii) in the
case of any Special Dividend Period of more than 35 but fewer than 43 days, a
multiplicative factor equal to 217%; (iv) in the case of any Special Dividend
Period of more than 42 but fewer than 50 days, a multiplicative factor equal to
226%; and (v) in the case of any Special Dividend Period of more than 49 but
fewer than 57 days, a multiplicative factor equal to 235%. If, as a result of
the enactment of changes to the Code, the Marginal Tax Rate will increase, such
increase being rounded up to the next five percentage points (the "Federal Tax
Rate Increase"), until the effective date of such increase, the Moody's
Volatility Factor in the case of any Dividend Period described in (i) above in
this definition instead shall be determined by reference to the following table:
Volatility
Federal Tax Rate Increase Factor
------------------------- ----------
5%...................... 295%
10%...................... 317%
15%...................... 341%
20%...................... 369%
25%...................... 400%
30%...................... 436%
35%...................... 477%
40%...................... 525%
"Municipal Obligations" means municipal obligations, including municipal
bonds and short-term municipal obligations, the interest from which is exempt
from federal income taxes.
"Municipal Index" means the Bond Buyer Municipal Bond Index or any
successor index approved by Moody's.
"1940 Act" means the Investment Company Act of 1940, as amended from time
to time.
"1940 Act APS Asset Coverage" means asset coverage, as defined in section
18(h) of the 1940 Act, of at least 200% with respect to all Outstanding senior
securities of the Trust which are shares of beneficial interest, including APS
(or such other asset coverage as may in the future be specified in or under the
1940 Act as the minimum asset coverage for senior securities which are shares of
beneficial interest of a closed-end investment company as a condition of paying
dividends on its common shares).
"1940 Act Cure Date," with respect to the failure by the Trust to maintain
the 1940 Act APS Asset Coverage (as required by these Bylaws) as of the last
Business Day of each month, means the last Business Day of the following month.
"Non-Call Period" has the meaning set forth under the definition of
"Specific Redemption Provisions."
-22-
"Non-Payment Period" means a period commencing on and including a Dividend
Payment Date or redemption date for which the Trust shall fail to (i) declare,
prior to the close of business on the second Business Day preceding such
Dividend Payment Date, for payment on or (to the extent permitted by Section
11.2(c)(i) of these Bylaws) within three Business Days after such Dividend
Payment Date to the Holders as of 12:00 noon, New York City time, on the
Business Day preceding such Dividend Payment Date, the full amount of any
dividend on APS payable on such Dividend Payment Date, provided, however, that
if the Trust is not able to make such declaration in compliance with the
foregoing because an unforeseen event or unforeseen events causes or cause a day
that otherwise would have been a Business Day not to be a Business Day, then the
Trust may make such declaration on the Business Day immediately preceding the
Dividend Payment Date, if possible, or, if not possible, on the Dividend Payment
Date, and in such case the Trust shall not be deemed to have failed to declare a
dividend otherwise required to be declared, or (ii) deposit, irrevocably in
trust, in same-day funds, with the Auction Agent by 12:00 noon, New York City
time, (A) on such Dividend Payment Date the full amount of any cash dividend on
such shares payable (if declared) on such Dividend Payment Date or (B) on any
such redemption date for any shares of APS called for redemption, the Mandatory
Redemption Price per share of such APS or, in the case of an optional
redemption, the Optional Redemption Price per share, and ending on and including
the Business Day on which, by 12:00 noon, New York City time, all unpaid cash
dividends and unpaid redemption prices shall have been so deposited or shall
have otherwise been made available to Holders in same-day funds; provided that,
a Non-Payment Period shall not end unless the Trust shall have given at least
five days' but no more than 30 days' written notice of such deposit or
availability to the Auction Agent, all Existing Holders (at their addresses
appearing in the Share Books) and the Securities Depository. Notwithstanding the
foregoing, the failure by the Trust to deposit funds as provided for by clauses
(ii)(A) or (ii)(B) above within three Business Days after any Dividend Payment
Date or redemption date, as the case may be, in each case to the extent
contemplated by Section 11.2(c)(i) of these Bylaws, shall not constitute a
"Non-Payment Period."
"Non-Payment Period Rate" means, initially, 200% of the applicable
Reference Rate (or 275% of such rate if the Trust has provided notification to
the Auction Agent prior to the Auction establishing the Applicable Rate for any
dividend that net capital gains or other taxable income will be included in such
dividend the APS), provided that the Board of Trustees of the Trust shall have
the authority to adjust, modify, alter or change from time to time the initial
Non-Payment Period Rate if the Board of Trustees of the Trust determines and
Moody's (and any Substitute Rating Agency in lieu of Moody's in the event
Moody's shall not rate the APS) advise the Trust in writing that such
adjustment, modification, alteration or change will not adversely affect its
then current ratings on the APS.
"Normal Dividend Payment Date" has the meaning set forth in Section
11.2(b)(i) of these Bylaws.
"Notice of Redemption" means any notice with respect to the redemption of
shares of APS pursuant to Section 11.4 of these Bylaws.
"Notice of Revocation" has the meaning set forth in Section 11.2(c)(iii) of
these Bylaws.
-23-
"Notice of Special Dividend Period" has the meaning set forth in Section
11.2(c)(iii) of these Bylaws.
"Optional Redemption Price" means $25,000 per share plus an amount equal to
accumulated but unpaid dividends (whether or not earned or declared) to the date
fixed for redemption plus any applicable redemption premium attributable to the
designation of a Premium Call Period, but excluding Gross-up Dividends.
"Other Issues" has the meaning set forth in the definition of "Issue Type
Category."
"Other Securities" has the meaning set forth in the definition of "Moody's
Eligible Asset."
"Outstanding" means, as of any date (i) with respect to APS, shares of APS
theretofore issued by the Trust except, without duplication, (A) any shares of
APS theretofore canceled or delivered to the Auction Agent for cancellation, or
redeemed by the Trust, or as to which a Notice of Redemption shall have been
given and Deposit Securities shall have been deposited in trust or segregated by
the Trust pursuant to Section 11.4(c) hereto and (B) any shares of APS as to
which the Trust or any Affiliate (other than an Affiliate that is a
Broker-Dealer) thereof shall be a Beneficial Owner, provided that shares of APS
held by an Affiliate shall be deemed outstanding for purposes of calculating the
APS Basic Maintenance Amount and (ii) with respect to other Preferred Shares,
has the equivalent meaning.
"Parity Shares" means the APS and each other outstanding series of
Preferred Shares the holders of which, together with the holders of the APS,
shall be entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in proportion to the
full respective preferential amounts to which they are entitled, without
preference or priority one over the other.
"Person" means and includes an individual, a partnership, a trust, an
unincorporated association, a joint venture or other entity or a government or
any agency or political subdivision thereof.
"Potential Beneficial Owner" means a customer of a Broker-Dealer or a
Broker-Dealer that is not a Beneficial Owner of APS but that wishes to purchase
such shares, or that is a Beneficial Owner that wishes to purchase additional
APS.
"Potential Holder" means any Broker-Dealer or any such other Person as may
be permitted by the Trust, including any Existing Holder, who may be interested
in acquiring APS (or, in the case of an Existing Holder, additional APS).
"Preferred Shares" means preferred shares of beneficial interest of the
Trust, and includes APS.
"Premium Call Period" has the meaning set forth under the definition of
"Specific Redemption Provisions."
-24-
"Pricing Service" means Standard & Poor's/X.X. Xxxxx or any pricing service
designated by the Board of Trustees of the Trust for purposes of determining
whether the Trust has Moody's Eligible Assets with an aggregate Discounted Value
that equals or exceeds the APS Basic Maintenance Amount.
"Quarterly Valuation Date" means the last Business Day of the last month of
each fiscal quarter of the Trust in each fiscal year of the Trust, commencing
November 29, 2002.
"Rating Agency" means a nationally recognized statistical rating
organization.
"Receivables for Municipal Obligations Sold" shall mean for purposes of
calculation of Moody's Eligible Assets as of any Valuation Date, no more than
the aggregate of the following: (i) the book value of receivables for Municipal
Obligations sold as of or prior to such Valuation Date if such receivables are
due within five business days of such Valuation Date, and if the trades which
generated such receivables are (x) settled through clearing house firms with
respect to which the Fund has received prior written authorization from Moody's
or (y) with counterparties having a Moody's long-term debt rating of at least
Baa3; and (ii) the Moody's Discounted Value of Municipal Obligations sold as of
or prior to such Valuation Date which generated receivables, if such receivables
are due within five business days of such Valuation Date but do not comply with
either of the conditions specified in (i) above.
"Reference Rate" means: (i) with respect to a Dividend Period or a Short
Term Dividend Period having 28 or fewer days, the higher of the applicable "AA"
Composite Commercial Paper Rate and the Taxable Equivalent of the Short-Term
Municipal Obligation Rate, (ii) with respect to any Short Term Dividend Period
having more than 28 but fewer than 183 days, the applicable "AA" Composite
Commercial Paper Rate, (iii) with respect to any Short Term Dividend Period
having 183 or more but fewer than 364 days, the applicable U.S. Treasury Xxxx
Rate and (iv) with respect to any Long Term Dividend Period, the applicable U.S.
Treasury Note Rate.
"Request for Special Dividend Period" has the meaning set forth in Section
11.2(c)(iii) of these Bylaws.
"Response" has the meaning set forth in Section 11.2(c)(ii) of these
Bylaws.
"Retroactive Taxable Allocation" has the meaning set forth in Section
11.2(e) of these Bylaws.
"Right" has the meaning set forth in Section 11.2(e) of these Bylaws.
"S&P" means Standard & Poor's, a division of The XxXxxx-Xxxx Companies,
Inc., or its successors.
"Securities Depository" means The Depository Trust Company and its
successors and assigns or any successor securities depository selected by the
Trust as securities depository for
-25-
the APS that agrees to follow the procedures required to be followed by such
securities depository in connection with the APS.
"Service" means the United States Internal Revenue Service.
"Series A APS" means the Auction Preferred Shares, Series A.
"Series B APS" means the Auction Preferred Shares, Series B.
"Series C APS" means the Auction Preferred Shares, Series C.
"Series D APS" means the Auction Preferred Shares, Series D.
"Series E APS" means the Auction Preferred Shares, Series E.
"7-Day Dividend Period" means a Dividend Period consisting of seven days.
"Share Books" means the books maintained by the Auction Agent setting forth
at all times a current list, as determined by the Auction Agent, of Existing
Holders of the APS.
"Share Register" means the register of Holders maintained on behalf of the
Trust by the Auction Agent in its capacity as transfer agent and registrar for
the APS.
"Short Term Dividend Period" means a Special Dividend Period consisting of
a specified number of days, evenly divisible by seven and not fewer than
fourteen nor more than 364.
"Special Dividend Period" means a Short Term Dividend Period or a Long Term
Dividend Period.
"Specific Redemption Provisions" means, with respect to a Special Dividend
Period either, or both of, (i) a period (a "Non-Call Period") determined by the
Board of Trustees of the Trust, after consultation with the Auction Agent and
the Broker-Dealers, during which the APS subject to such Dividend Period shall
not be subject to redemption at the option of the Trust and (ii) a period (a
"Premium Call Period"), consisting of a number of whole years and determined by
the Board of Trustees of the Trust, after consultation with the Auction Agent
and the Broker-Dealers, during each year of which the APS subject to such
Dividend Period shall be redeemable at the Trust's option at a price per share
equal to $25,000 plus accumulated but unpaid dividends plus a premium expressed
as a percentage of $25,000, as determined by the Board of Trustees of the Trust
after consultation with the Auction Agent and the Broker-Dealers.
"Subsequent Dividend Period" has the meaning set forth in Section
11.2(c)(i) of these Bylaws.
"Substitute Commercial Paper Dealers" means such substitute commercial
paper dealer or dealers as the Trust may from time to time appoint or, in lieu
of any thereof, their respective affiliates or successors.
-26-
"Substitute Rating Agency" means a Rating Agency selected by UBS Warburg
LLC and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, or their respective
affiliates and successors, after consultation with the Trust, to act as the
substitute Rating Agency to determine the credit ratings of the APS.
"Sufficient Clearing Bids" has the meaning set forth in Section
11.10(a)(xv) of these Bylaws.
"Taxable Equivalent of the Short-Term Municipal Obligations Rate" on any
date means 90% of the quotient of (A) the per annum rate expressed on an
interest equivalent basis equal to the Xxxxx S&P 30 day High Grade Index or any
successor index (the "Xxxxx Index"), made available for the Business Day
immediately preceding such date but in any event not later than 8:30 A.M., New
York City time, on such date by Xxxxx Information Systems Inc. or any successor
thereto, based upon 30-day yield evaluations at par of short-term bonds the
interest on which is excludable for regular federal income tax purposes under
the Code of "high grade" component issuers selected by Xxxxx Information Systems
Inc. or any such successor from time to time in its discretion, which component
issuers shall include, without limitation, issuers of general obligation bonds
but shall exclude any bonds the interest on which constitutes an item of tax
preference for purposes of the federal alternative minimum tax for individuals,
divided by (B) 1.00 minus the Marginal Tax Rate (expressed as a decimal);
provided, however, that if the Xxxxx Index is not made so available by 8:30
A.M., New York City time, on such date by Xxxxx Information Systems Inc. or any
successor, the Taxable Equivalent of the Short-Term Municipal Obligation Rate
shall mean the quotient of (A) the per annum rate expressed on an interest
equivalent basis equal to the most recent Xxxxx Index so made available for any
preceding Business Day, divided by (B) 1.00 minus the Marginal Tax Rate
(expressed as a decimal). The Trust may not utilize a successor index to the
Xxxxx Index unless Moody's provides the Trust with written confirmation that the
use of such successor index will not adversely affect the then-current Xxxxx'x
rating of the APS.
"Treasury Bonds" means United States Treasury Bonds or Notes.
"U.S. Treasury Xxxx Rate" on any date means (i) the Interest Equivalent of
the rate on the actively traded Treasury Xxxx with a maturity most nearly
comparable to the length of the related Dividend Period, as such rate is made
available on a discount basis or otherwise by the Federal Reserve Bank of New
York in its Composite 3:30 P.M. Quotations for U.S. Government Securities report
for such Business Day, or (ii) if such yield as so calculated is not available,
the Alternate Treasury Xxxx Rate on such date. For purposes of determining the
"U.S. Treasury Xxxx Rate" the "Alternate Treasury Xxxx Rate" on any date means
the Interest Equivalent of the yield as calculated by reference to the
arithmetic average of the bid price quotations of the actively traded Treasury
Xxxx with a maturity most nearly comparable to the length of the related
Dividend Period, as determined by bid price quotations as of any time on the
Business Day immediately preceding such date, obtained from at least three
recognized primary U.S. Government securities dealers selected by the Auction
Agent.
-27-
"U.S. Treasury Note Rate" on any date means (i) the yield as calculated by
reference to the bid price quotation of the actively traded, current coupon
Treasury Note with a maturity most nearly comparable to the length of the
related Dividend Period, as such bid price quotation is published on the
Business Day immediately preceding such date by the Federal Reserve Bank of New
York in its Composite 3:30 P.M. Quotations for U.S. Government Securities report
for such Business Day, or (ii) if such yield as so calculated is not available,
the Alternate Treasury Note Rate on such date. For purposes of determining the
U.S. Treasury Note Rate, the "Alternate Treasury Note Rate" on any date means
the yield as calculated by reference to the arithmetic average of the bid price
quotations of the actively traded, current coupon Treasury Note with a maturity
most nearly comparable to the length of the related Dividend Period, as
determined by the bid price quotations as of any time on the Business Day
immediately preceding such date, obtained from at least three recognized primary
U.S. Government securities dealers selected by the Auction Agent.
"Valuation Date" means, for purposes of determining whether the Trust is
maintaining the APS Basic Maintenance Amount, the last Business Day of each week
commencing with the Date of Original Issue.
"Voting Period" has the meaning set forth in Section 11.5(b) of these
Bylaws.
(b) The foregoing definitions of Accountant's Confirmation, APS Basic
Maintenance Amount, APS Basic Maintenance Cure Date, APS Basic Maintenance
Report, Closing Transactions, Deposit Securities, Discounted Value, Forward
Commitment, Independent Accountant, Market Value, Maximum Applicable Rate,
Maximum Potential Gross-Up Dividend Liability, Moody's Discount Factor, Moody's
Eligible Asset, Moody's Exposure Period, Moody's Hedging Transactions, Moody's
Volatility Factor, Municipal Index, 1940 Act APS Asset Coverage, 1940 Act Cure
Date, Treasury Bonds and Valuation Date (and any terms defined within such
definitions) have been determined by the Board of Trustees of the Trust in order
to obtain a "Aaa" rating from Moody's on the APS on their Date of Original
Issue; and the Board of Trustees of the Trust shall have the authority, without
shareholder approval, to amend, alter or repeal from time to time the foregoing
definitions and the restrictions and guidelines set forth thereunder if Moody's
or any Substitute Rating Agency advises the Trust in writing that such
amendment, alteration or repeal will not adversely affect its then current
rating on the APS.
11.2 Dividends. (a) The Holders of a particular series of APS shall be
entitled to receive, when, as and if declared by the Board of Trustees of the
Trust, out of funds legally available therefor, cumulative dividends each
consisting of (i) cash at the Applicable Rate, (ii) a Right to receive cash as
set forth in Section 11.2(e) below, and (iii) any additional amounts as set
forth in Section 11.2(f) below, and no more, payable on the respective dates set
forth below. Dividends on the shares of each series of APS so declared and
payable shall be paid (i) in preference to and in priority over any dividends
declared and payable on the Common Shares, and (ii) to the extent permitted
under the Code and to the extent available, out of net tax-exempt income earned
on the Trust's investments. To the extent permitted under the Code, dividends on
APS will be designated as exempt-interest dividends. For the purposes of this
section, the term "net tax-exempt income" shall exclude capital gains of the
Trust.
-28-
(b) (i) Cash dividends on shares of each series of APS shall accumulate
from the Date of Original Issue and shall be payable, when, as and if declared
by the Board of Trustees of the Trust, out of funds legally available therefor,
commencing on the Initial Dividend Payment Date. Following the Initial Dividend
Payment Date for a series of APS, dividends on that series of APS will be
payable, at the option of the Trust, either (i) with respect to any 7-Day
Dividend Period and any Short Term Dividend Period of 35 or fewer days, on the
day next succeeding the last day thereof, or (ii) with respect to any Short Term
Dividend Period of more than 35 days and with respect to any Long Term Dividend
Period, monthly on the first Business Day of each calendar month during such
Short Term Dividend Period or Long Term Dividend Period and on the day next
succeeding the last day thereof (each such date referred to in clause (i) or
(ii) being herein referred to as a "Normal Dividend Payment Date"), except that
if such Normal Dividend Payment Date is not a Business Day, then the Dividend
Payment Date shall be the first Business Day next succeeding such Normal
Dividend Payment Date. Although any particular Dividend Payment Date may not
occur on the originally scheduled date because of the exceptions discussed
above, the next succeeding Dividend Payment Date, subject to such exceptions,
will occur on the next following originally scheduled date. If for any reason a
Dividend Period for a series of APS is scheduled to begin on the same day and
end on the same day as a Dividend Period for another series of APS, then the
last day of such Dividend Period for such other series of APS shall be the
second Business Day next succeeding such scheduled day unless the Trust obtains
the opinion of tax counsel referred to in this paragraph. Subject to the
limitation in the next sentence, if for any reason a Dividend Payment Date
cannot be fixed as described above, then the Board of Trustees of the Trust
shall fix the Dividend Payment Date. However, no Dividend Period of any series
of APS shall be co-extensive with any Dividend Period of any other series of APS
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 APS. The Board of
Trustees of the Trust before authorizing a dividend may change a Dividend
Payment Date if such change does not adversely affect the contract rights of the
Holders of APS set forth in the Declaration of Trust or the Bylaws. The Initial
Dividend Period, 7-Day Dividend Periods and Special Dividend Periods with
respect to a series of APS are hereinafter sometimes referred to as "Dividend
Periods." Each dividend payment date determined as provided above is hereinafter
referred to as a "Dividend Payment Date."
(ii) Each dividend shall be paid to the Holders as they appear in the
Stock Register as of 12:00 noon, New York City time, on the Dividend
Payment Date. Dividends in arrears for any past Dividend Period may be
declared and paid at any time, without reference to any regular Dividend
Payment Date, to the Holders as they appear on the Stock Register on a
date, not exceeding 15 days prior to the payment date therefor, as may be
fixed by the Board of Trustees of the Trust.
(c) (i) During the period from and including the Date of Original Issue to
but excluding the Initial Dividend Payment Date for a series of APS (the
"Initial Dividend Period"), the Applicable Rate for such series of APS shall be
the Initial Dividend Rate. Commencing on the Initial Dividend Payment Date for a
series of APS, the Applicable Rate on that series for each subsequent dividend
period (hereinafter referred to as a "Subsequent Dividend Period"), which
-29-
Subsequent Dividend Period shall commence on and include a Dividend Payment Date
and shall end on and include the calendar day prior to the next Dividend Payment
Date (or last Dividend Payment Date in a Dividend Period if there is more than
one Dividend Payment Date), shall be equal to the rate per annum that results
from implementation of the Auction Procedures.
For a series of APS, the Applicable Rate for such series for each Dividend
Period commencing during a Non-Payment Period shall be equal to the Non-Payment
Period Rate; and each Dividend Period, commencing after the first day of, and
during, but not after the end of, a Non-Payment Period shall be a 7-Day Dividend
Period. Except in the case of the willful failure of the Trust to pay a dividend
on a Dividend Payment Date or to redeem any shares of APS on the date set for
such redemption, any amount of any dividend due on any Dividend Payment Date
(if, prior to the close of business on the second Business Day preceding such
Dividend Payment Date, the Trust has declared such dividend payable on such
Dividend Payment Date to the Holders of such shares of APS as of 12:00 noon, New
York City time, on the Business Day preceding such Dividend Payment Date) or
redemption price with respect to any shares of APS not paid to such Holders when
due may be paid to such Holders in the same form of funds by 12:00 noon, New
York City time, on any of the first three Business Days after such Dividend
Payment Date or due date, as the case may be, provided that, such amount is
accompanied by a late charge calculated for such period of non-payment at the
Non-Payment Period Rate applied to the amount of such non-payment based on the
actual number of days comprising such period (excluding any days that would have
been Business Days but for the occurrence of any unforeseen event or unforeseen
events that caused such days not to be Business Days) divided by 365, and in
such case such period shall not constitute a Non-Payment Period; provided,
however, that the Trust shall not be required to pay any late charge if it
declares a dividend on the Dividend Payment Date or the Business Day immediately
preceding such Dividend Payment Date in accordance with clause (i) of the
definition of "Non-Payment Period" and deposits payment for such dividend as
contemplated by clause (ii)(A) of the definition of "Non-Payment Period" on or
before the second Business Day succeeding the day on which the dividend was
declared. In the case of a willful failure of the Trust to pay a dividend on a
Dividend Payment Date or to redeem any shares of APS on the date set for such
redemption, the preceding sentence shall not apply and the Applicable Rate for
the Dividend Period commencing during the Non-Payment Period resulting from such
failure shall be the Non-Payment Period Rate. For the purposes of the foregoing,
payment to a person in same-day funds on any Business Day at any time shall be
considered equivalent to payment to such person in New York Clearing House
(next-day) funds at the same time on the preceding Business Day, and any payment
made after 12:00 noon, New York City time, on any Business Day shall be
considered to have been made instead in the same form of funds and to the same
person before 12:00 noon, New York City time, on the next Business Day.
(ii) The amount of cash dividends per share of any series of APS
payable (if declared) on the Initial Dividend Payment Date, each 7-Day
Dividend Period and each Dividend Payment Date of each Short Term Dividend
Period shall be computed by multiplying the Applicable Rate for such
Dividend Period by a fraction, the numerator of which will be the number of
days in such Dividend Period or part thereof that such share was
outstanding and the denominator of which will be 365, multiplying the
amount so obtained by $25,000, and rounding the amount so
-30-
obtained to the nearest cent. During any Long Term Dividend Period, the
amount of cash dividends per share of a series of APS payable (if declared)
on any Dividend Payment Date shall be computed by multiplying the
Applicable Rate for such Dividend Period by a fraction, the numerator of
which will be such number of days in such part of such Dividend Period that
such share was outstanding and for which dividends are payable on such
Dividend Payment Date and the denominator of which will be 360, multiplying
the amount so obtained by $25,000, and rounding the amount so obtained to
the nearest cent.
(iii) The Trust may, at its sole option and to the extent permitted by
law, by telephonic and written notice (a "Request for Special Dividend
Period") to the Auction Agent and to each Broker-Dealer, request that the
next succeeding Dividend Period for a series of APS be a number of days
(other than seven), evenly divisible by seven and not fewer than fourteen
nor more than 364 in the case of a Short Term Dividend Period or one whole
year or more but not greater than five years in the case of a Long Term
Dividend Period, specified in such notice, provided that the Trust may not
give a Request for Special Dividend Period for a Dividend Period of greater
than 28 days (and any such request shall be null and void) unless, for any
Auction occurring after the initial Auction, Sufficient Clearing Bids were
made in the last occurring Auction and unless full cumulative dividends,
any amounts due with respect to redemptions, and any Gross-Up Dividends
payable prior to such date have been paid in full. Such Request for Special
Dividend Period, in the case of a Short Term Dividend Period, shall be
given on or prior to the second Business Day but not more than seven
Business Days prior to an Auction Date for a series of APS and, in the case
of a Long Term Dividend Period, shall be given on or prior to the second
Business Day but not more than 28 days prior to an Auction Date for a
series of APS. Upon receiving such Request for Special Dividend Period, the
Broker-Dealer(s) shall jointly determine the Optional Redemption Price of
the APS during such Special Dividend Period and the Specific Redemption
Provisions and shall give the Trust and the Auction Agent written notice (a
"Response") of such determination by no later than the second Business Day
prior to such Auction Date. In making such determination the
Broker-Dealer(s) will consider (1) existing short-term and long-term market
rates and indices of such short-term and long-term rates, (2) existing
market supply and demand for short-term and long-term securities, (3)
existing yield curves for short-term and long-term securities comparable to
the APS, (4) industry and financial conditions which may affect the APS,
(5) the investment objective of the Trust, and (6) the Dividend Periods and
dividend rates at which current and potential beneficial holders of the APS
would remain or become beneficial holders. After providing the Request for
Special Dividend Period to the Auction Agent and each Broker-Dealer as set
forth above, the Trust may by no later than the second Business Day prior
to such Auction Date give a notice (a "Notice of Special Dividend Period")
to the Auction Agent, the Securities Depository and each Broker-Dealer
which notice will specify (i) the duration of the Special Dividend Period,
(ii) the Optional Redemption Price as specified in the related Response and
(iii) the Specific Redemption Provisions, if any, as specified in the
related Response. The Trust also shall provide a copy of such Notice of
Special Dividend Period to Xxxxx'x. The Trust shall not give a Notice of
Special Dividend Period and, if the Trust has given a Notice of Special
Dividend Period, the Trust is required to give telephonic and written
notice of its revocation (a "Notice of Revocation") to the Auction Agent,
each Broker-Dealer, and the Securities Depository on or prior to the
Business Day prior to the relevant Auction Date if (x) either the 1940 Act
APS Asset Coverage is not
-31-
satisfied or the Trust shall fail to maintain Xxxxx'x Eligible Assets with
an aggregate Discounted Value at least equal to the APS Basic Maintenance
Amount, on each of the two Valuation Dates immediately preceding the
Business Day prior to the relevant Auction Date on an actual basis and on a
pro forma basis giving effect to the proposed Special Dividend Period
(using as a pro forma dividend rate with respect to such Special Dividend
Period the dividend rate which the Broker-Dealers shall advise the Trust is
an approximately equal rate for securities similar to the APS with an equal
dividend period) or (y) sufficient funds for the payment of dividends
payable on the immediately succeeding Dividend Payment Date have not been
irrevocably deposited with the Auction Agent by the close of business on
the third Business Day preceding the Auction Date immediately preceding
such Dividend Payment Date. The Trust also shall provide a copy of such
Notice of Revocation to Xxxxx'x. If the Trust is prohibited from giving a
Notice of Special Dividend Period as a result of any of the factors
enumerated in clause (x) or (y) above or if the Trust gives a Notice of
Revocation with respect to a Notice of Special Dividend Period for any
series of APS, the next succeeding Dividend Period will be a 7-Day Dividend
Period. In addition, in the event Sufficient Clearing Bids are not made in
an Auction, or if an Auction is not held for any reason, such next
succeeding Dividend Period will be a 7-Day Dividend Period and the Trust
may not again give a Notice of Special Dividend Period for the APS (and any
such attempted notice shall be null and void) until Sufficient Clearing
Bids have been made in an Auction with respect to a 7-Day Dividend Period.
If an Auction is not held because an unforeseen event or unforeseen events
cause a day that otherwise would have been a Dividend Payment Date or an
Auction Date not to be a Business Day, then the length of the Dividend
Period relating to such Dividend Payment Date shall be extended by seven
days (or a multiple thereof if necessary because of such unforeseen event
or events) (an "Extension Period"), the Applicable Rate for such Extension
Period shall be the Applicable Rate for the Dividend Period so extended and
the Dividend Payment Date for such Dividend Period shall be the first
Business Day next succeeding the end of such Extension Period.
(d) (i) Holders shall not be entitled to any dividends, whether payable in
cash, property or shares on APS, in excess of full cumulative dividends as
herein provided (except for Gross-up Dividends as provided in Section 11.2(e)
hereof). Except for the late charge payable pursuant to Section 11.2(c)(i)
hereof, no interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment on the shares of APS that may be in arrears.
(ii) For so long as any share of APS is Outstanding, the Trust shall
not declare, pay or set apart for payment any dividend or other
distribution (other than a dividend or distribution paid in shares of, or
options, warrants or rights to subscribe for or purchase, Common Shares or
other shares of beneficial interest, if any, ranking junior to the shares
of APS as to dividends or upon liquidation) in respect of the Common Shares
or any other shares of beneficial interest of the Trust ranking junior to
or on a parity with the shares of APS as to dividends or upon liquidation,
or call for redemption, redeem, purchase or otherwise acquire for
consideration any shares of the Common Shares or any other such junior
shares (except by conversion into or exchange for shares of the Trust
ranking junior to the shares of APS as to dividends and upon liquidation)
or any other such Parity Shares (except by conversion into or exchange for
stock of the Trust ranking junior to or on a parity with the shares of APS
as to dividends and upon liquidation), unless (A) immediately after such
transaction, the Trust shall have Xxxxx'x Eligible Assets with
-32-
an aggregate Discounted Value equal to or greater than the APS Basic
Maintenance Amount and the Trust shall maintain the 1940 Act APS Asset
Coverage, (B) full cumulative dividends on shares of APS due on or prior to
the date of the transaction have been declared and paid or shall have been
declared and sufficient funds for the payment thereof deposited with the
Auction Agent, (C) any Gross-up Dividend required to be paid pursuant to
Section 11.2(e) below on or before the date of such declaration or payment
has been paid and (D) the Trust has redeemed the full number of APS
required to be redeemed by any provision for mandatory redemption contained
herein.
(e) Each dividend shall consist of (i) cash at the Applicable Rate, (ii) an
uncertificated right (a "Right") to receive a Gross-up Dividend (as defined
below), and (iii) any additional amounts as set forth in Section 11.2(f) below.
Each Right shall thereafter be independent of the share or shares of APS on
which the dividend was paid. The Trust shall cause to be maintained a record of
each Right received by the respective Holders. A Right may not be transferred
other than by operation of law. If the Trust retroactively allocates any net
capital gains or other income subject to regular federal income taxes to shares
of APS solely by reason of the fact that such allocation is made as a result of
the redemption of all or a portion of the outstanding shares of APS or the
liquidation of the Trust (the amount of such allocation referred to herein as a
"Retroactive Taxable Allocation"), the Trust will, if it has not given advance
notice thereof to the Auction Agent as described in Section 11.2(f) hereof,
within 90 days (and generally within 60 days) after the end of the Trust's
fiscal year for which a Retroactive Taxable Allocation is made, provide notice
thereof to the Auction Agent and to each holder of a Right applicable to such
shares of APS (initially as nominee of The Depository Trust Company) during such
fiscal year at such holder's address as the same appears or last appeared on the
Stock Books of the Trust. The Trust will, within 30 days after such notice is
given to the Auction Agent, pay to the Auction Agent (who will then distribute
to such holders of Rights), out of funds legally available therefor, an amount
equal to the aggregate Gross-up Dividends with respect to all Retroactive
Taxable Allocations made to such holders during the fiscal year in question.
A "Gross-Up Dividend" means payment to a present or former Holder of shares
of APS of an amount which, giving effect to the Retroactive Taxable Allocation,
if any, made to such Holder with respect to the fiscal year in question, would
cause such Holder's after-tax return (taking into account both the Retroactive
Taxable Allocation and the Gross-up Dividend) to be equal to the after-tax
return such holder would have received if there had been no Retroactive Taxable
Allocation. Such Gross-up Dividend shall be calculated (i) without consideration
being given to the time value of money; (ii) assuming that no holder of shares
of APS is subject to the federal alternative minimum tax with respect to
dividends received from the Trust; and (iii) assuming that each Retroactive
Taxable Allocation would be taxable in the hands of each holder of APS at the
greater of: (x) the maximum combined effective marginal regular federal and
California State individual income tax rate applicable to ordinary income or
capital gains depending on the taxable character of the distribution (including
any surtax); or (y) the maximum combined effective marginal regular federal and
California State corporate income tax rate applicable to ordinary income or
capital gains depending on the taxable character of the distribution
(disregarding in both (x) and (y) the effect of any local taxes and the phase
out of, or
-33-
provision limiting, personal exemptions, itemized deductions, or the benefit of
lower tax brackets).
(f) Except as provided below, whenever the Trust is aware that it will
include any net capital gains or other income subject to regular federal income
taxes in any dividend on shares of APS, the Trust will notify the Auction Agent
of the amount to be so included at least five Business Days prior to the Auction
Date on which the Applicable Rate for such dividend is to be established. The
Trust may also include such income in a dividend on shares of a series of APS
without giving advance notice thereof if it increases the dividend by an
additional amount calculated as if such income were the subject of a Retroactive
Taxable Allocation and the additional amount were a Gross-up Dividend, provided
that the Trust will notify the Auction Agent of the additional amounts to be
included in such dividend at least five Business Days prior to the applicable
Dividend Payment Date. The Trust shall not be required to pay Gross-up Dividends
with respect to any net capital gain or other taxable income determined by the
Internal Revenue Service to be allocable in a manner different from that
allocated by the Trust.
(g) No fractional shares of APS shall be issued.
(h) Solely for purposes of the proviso in clause (i) under the definition
of "Non-Payment Period," the second parenthetical in the second sentence of the
second paragraph of Section 11.2(c)(i) of these Bylaws and the last sentence of
Section 11.2(c)(iii) of these Bylaws, any day on which banks in New York City
generally are closed, for any reason, while the New York Stock Exchange remains
open for trading and any day which otherwise would be a Business Day as defined
in these Bylaws on which the Auction Agent is closed for business, for any
reason, shall be considered a day which is not a Business Day.
11.3 Liquidation Rights. Upon any liquidation, dissolution or winding up of
the Trust, whether voluntary or involuntary, the Holders shall be entitled to
receive, out of the assets of the Trust available for distribution to
shareholders, before any distribution or payment is made upon any Common Shares
or any other shares of beneficial interest ranking junior in right of payment
upon liquidation to the APS, the sum of $25,000 per share plus accumulated but
unpaid dividends (whether or not earned or declared) thereon to the date of
distribution, and after such payment the Holders will be entitled to no other
payments other than Gross-up Dividends as provided in Section 11.2(e) hereof. If
upon any liquidation, dissolution or winding up of the Trust, the amounts
payable with respect to the APS and any other Outstanding class or series of
Preferred Shares of the Trust ranking on a parity with the APS as to payment
upon liquidation are not paid in full, the Holders and the holders of such other
class or series will share ratably in any such distribution of assets in
proportion to the respective preferential amounts to which they are entitled.
After payment of the full amount of the liquidating distribution to which they
are entitled, the Holders will not be entitled to any further participation in
any distribution of assets by the Trust except for any Gross-up Dividends. A
consolidation, merger or statutory share exchange of the Trust with or into any
other Trust or entity or a sale, whether for cash, shares of stock, securities
or properties, of all or substantially all or any part of the assets of the
Trust shall not be deemed or construed to be a liquidation, dissolution or
winding up of the Trust.
-34-
11.4 Redemption. (a) Shares of APS shall be redeemable by the Trust as
provided below:
(i) To the extent permitted under the 1940 Act and Massachusetts law,
upon giving a Notice of Redemption, the Trust at its option may redeem
shares of any series of APS, in whole or in part, out of funds legally
available therefor, at the Optional Redemption Price per share, on any
Dividend Payment Date; provided that no share of APS may be redeemed at the
option of the Trust during (A) the Initial Dividend Period with respect to
a series of shares or (B) a Non-Call Period to which such share is subject.
In addition, holders of APS which are redeemed shall be entitled to receive
Gross-Up Dividends to the extent provided herein.
(ii) The Trust shall redeem, out of funds legally available therefor,
at the Mandatory Redemption Price per share, shares of APS to the extent
permitted under the 1940 Act and Massachusetts law, on a date fixed by the
Board of Trustees of the Trust, if the Trust fails to maintain Xxxxx'x
Eligible Assets with an aggregate Discounted Value equal to or greater than
the APS Basic Maintenance Amount as provided in Section 11.7(a) or to
satisfy the 1940 Act APS Asset Coverage as provided in Section 6 and such
failure is not cured on or before the APS Basic Maintenance Cure Date or
the 1940 Act Cure Date (herein collectively referred to as a "Cure Date"),
as the case may be. In addition, holders of APS so redeemed shall be
entitled to receive Gross-Up Dividends to the extent provided herein. The
number of APS to be redeemed shall be equal to the lesser of (i) the
minimum number of APS the redemption of which, if deemed to have occurred
immediately prior to the opening of business on the Cure Date, together
with all shares of other Preferred Shares subject to redemption or
retirement, would result in the Trust having Xxxxx'x Eligible Assets with
an aggregate Discounted Value equal to or greater than the APS Basic
Maintenance Amount or satisfaction of the 1940 Act APS Asset Coverage, as
the case may be, on such Cure Date (provided that, if there is no such
minimum number of shares of APS and shares of other Preferred Shares the
redemption of which would have such result, all shares of APS and shares of
other Preferred Shares then Outstanding shall be redeemed), and (ii) the
maximum number of shares of APS, together with all shares of other
Preferred Shares subject to redemption or retirement, that can be redeemed
out of funds expected to be legally available therefor on such redemption
date. In determining the number of APS required to be redeemed in
accordance with the foregoing, the Trust shall allocate the number required
to be redeemed which would result in the Trust having Xxxxx'x Eligible
Assets with an aggregate Discounted Value equal to or greater than the APS
Basic Maintenance Amount or satisfaction of the 1940 Act APS Asset
Coverage, as the case may be, pro rata among shares of APS of all series
and other Preferred Shares subject to redemption pursuant to provisions
similar to those contained in this Section 11.4(a)(ii); provided that,
shares of APS which may not be redeemed at the option of the Trust due to
the designation of a Non-Call Period applicable to such shares (A) will be
subject to mandatory redemption only to the extent that other shares are
not available to satisfy the number of shares required to be redeemed and
(B) will be selected for redemption in an ascending order of outstanding
number of days in the Non-Call Period (with shares with the lowest number
of days to be redeemed first) and by lot in the event of shares having an
equal number of days in such Non-Call Period. The Trust shall effect such
redemption on a Business Day which is not later than 35 days after such
Cure Date, except that if the Trust does not have funds legally available
for the redemption of all of the required number of APS
-35-
and other Preferred Shares which are subject to mandatory redemption or the
Trust otherwise is unable to effect such redemption on or prior to 35 days
after such Cure Date, the Trust shall redeem those APS which it is unable
to redeem on the earliest practicable date on which it is able to effect
such redemption out of funds legally available therefor.
(b) Notwithstanding any other provision of this Section 11.4, no shares of
APS may be redeemed pursuant to Section 11.4(a)(i) of these Bylaws (i) unless
all dividends in arrears on all remaining outstanding shares of Parity Shares
shall have been or are being contemporaneously paid or declared and set apart
for payment and (ii) if redemption thereof would result in the Trust's failure
to maintain Xxxxx'x Eligible Assets with an aggregate Discounted Value equal to
or greater than the APS Basic Maintenance Amount. In the event that less than
all the outstanding shares of a series of APS are to be redeemed and there is
more than one Holder, the shares of that series of APS to be redeemed shall be
selected by lot or such other method as the Trust shall deem fair and equitable.
(c) Whenever shares of APS are to be redeemed, the Trust, not less than 17
nor more than 30 days prior to the date fixed for redemption, shall mail a
notice ("Notice of Redemption") by first-class mail, postage prepaid, to each
Holder of APS to be redeemed and to the Auction Agent. The Notice of Redemption
shall set forth (i) the redemption date, (ii) the amount of the redemption
price, (iii) the aggregate number of APS of such series to be redeemed, (iv) the
place or places where APS of such series are to be surrendered for payment of
the redemption price, (v) a statement that dividends on the shares to be
redeemed shall cease to accumulate on such redemption date (except that holders
may be entitled to Gross-up Dividends) and (vi) the provision of these Bylaws
pursuant to which such shares are being redeemed. No defect in the Notice of
Redemption or in the mailing or publication thereof shall affect the validity of
the redemption proceedings, except as required by applicable law.
If the Notice of Redemption shall have been given as aforesaid and,
concurrently or thereafter, the Trust shall have deposited in trust with the
Auction Agent, or segregated in an account at the Trust's custodian bank for the
benefit of the Auction Agent, Deposit Securities (with a right of substitution)
having an aggregate Discounted Value equal to the redemption payment for the APS
as to which such Notice of Redemption has been given with irrevocable
instructions and authority to pay the redemption price to the Holders of such
shares, then upon the date of such deposit or, if no such deposit is made, then
upon such date fixed for redemption (unless the Trust shall default in making
the redemption payment), all rights (including without limitation voting rights)
of the Holders of such shares as shareholders of the Trust by reason of the
ownership of such shares will cease and terminate (except their right to receive
the redemption price in respect thereof and any Gross-up Dividends, but without
interest), and such shares shall no longer be deemed Outstanding. The Trust
shall be entitled to receive, from time to time, from the Auction Agent the
interest, if any, on such Deposit Securities deposited with it and the Holders
of any shares so redeemed shall have no claim to any of such interest. In case
the Holder of any shares so called for redemption shall not claim the redemption
payment for his shares within one year after the date of redemption, the Auction
Agent shall, upon demand, pay over to the Trust such amount remaining on deposit
and the Auction Agent shall thereupon be
-36-
relieved of all responsibility to the Holder of such shares called for
redemption and such Holder thereafter shall look only to the Trust for the
redemption payment.
11.5 Voting Rights. (a) General. Except as otherwise provided in the
Declaration of Trust or Bylaws, each Holder of APS shall be entitled to one vote
for each share held on each matter submitted to a vote of shareholders of the
Trust, and the holders of outstanding shares of Preferred Shares, including APS,
and of shares of Common Shares shall vote together as a single class; provided
that the holders of outstanding shares of Preferred Shares, including APS, shall
be entitled, as a class, to the exclusion of the holders of all other securities
and classes of capital stock of the Trust, to elect two trustees of the Trust.
Subject to Section 11.5(b) hereof, the holders of outstanding shares of
beneficial interest of the Trust, including the holders of outstanding shares of
Preferred Shares, including APS, voting as a single class, shall elect the
balance of the trustees.
(b) Right to Elect Majority of Board of Trustees of the Trust. During any
period in which any one or more of the conditions described below shall exist
(such period being referred to herein as a "Voting Period"), the number of
trustees constituting the Board of Trustees of the Trust shall be automatically
increased by the smallest number that, when added to the two trustees elected
exclusively by the holders of shares of Preferred Shares, would constitute a
majority of the Board of Trustees of the Trust as so increased by such smallest
number; and the holders of Preferred Shares shall be entitled, voting separately
as one class (to the exclusion of the holders of all other securities and
classes of shares of beneficial interest of the Trust), to elect such smallest
number of additional trustees, together with the two trustees that such holders
are in any event entitled to elect.
A Voting Period shall commence:
(i) if at any time accumulated dividends (whether or not earned or
declared, and whether or not funds are then legally available in an amount
sufficient therefor) on the outstanding APS equal to at least two full
years' dividends shall be due and unpaid and sufficient cash or specified
securities shall not have been deposited with the Auction Agent for the
payment of such accumulated dividends; or
(ii) if at any time holders of any Preferred Shares, including the
holders of APS, are entitled to elect a majority of the trustees of the
Trust under the 1940 Act.
Upon the termination of a Voting Period, the voting rights described in
this Section 11.5(b) shall cease, subject always, however, to the reverting of
such voting rights in the Holders upon the further occurrence of any of the
events described in Section 11.5(b).
(c) Right to Vote with Respect to Certain Other Matters. So long as any
shares of APS are outstanding, the Trust shall not, without the affirmative vote
of the holders of a majority of the shares of Preferred Shares Outstanding at
the time, voting separately as one class: (i) authorize, create or issue any
class or series of shares of beneficial interest ranking prior to the APS or any
other series of Preferred Shares with respect to payment of dividends or the
distribution of assets on liquidation; provided, however, that no vote is
required to authorize the
-37-
issuance of another series of APS or another class of Preferred Shares that is
substantially identical in all respects to the APS, or (ii) amend, alter or
repeal the provisions of the Declaration of Trust or Bylaws, whether by merger,
consolidation or otherwise, so as to adversely affect any of the contract rights
expressly set forth in the Declaration of Trust or Bylaws of holders of APS or
any other Preferred Shares. To the extent permitted under the 1940 Act, in the
event shares of more than one series of APS are outstanding, the Trust shall not
approve any of the actions set forth in clause (i) or (ii) which adversely
affects the contract rights expressly set forth in the Declaration of Trust or
Bylaws of a Holder of a series of APS differently than those of a Holder of any
other series of APS without the affirmative vote of the holders of at least a
majority of the APS of each series adversely affected and Outstanding at such
time (each such adversely affected series voting separately as a class). Unless
a higher percentage is provided for under the Declaration of Trust, the
affirmative vote of the holders of a majority of the outstanding shares of
Preferred Shares, including APS, voting together as a single class, will be
required to approve any plan of reorganization (including bankruptcy
proceedings) adversely affecting such shares or any action requiring a vote of
security holders under Section 13(a) of the 1940 Act. To the extent permitted
under the 1940 Act, in the event shares of more than one series of APS are
outstanding, with respect to any action requiring Shareholder approval pursuant
to the operation of Section 2 or Section 3 of Article V of the Declaration of
Trust, the affirmative vote of at least seventy-five percent of the APS of each
series Outstanding at such time (each such series voting separately as a class)
shall also be required. The class (and where applicable, series) vote of holders
of Preferred Shares, including APS, described above will in each case be in
addition to a separate vote of the requisite percentage of Common Shares and
Preferred Shares, including APS, voting together as a single class necessary to
authorize the action in question.
(d) Voting Procedures.
(i) As soon as practicable after the accrual of any right of the
holders of Preferred Shares to elect additional trustees as described in
Section 11.5(b) above, the Trust shall call a special meeting of such
holders and instruct the Auction Agent and any other registrar for
Preferred Shares to mail a notice of such special meeting to such holders,
such meeting to be held not less than 10 nor more than 20 days after the
date of mailing of such notice. If the Trust fails to send such notice to
the Auction Agent and any other applicable registrar, or if the Trust does
not call such a special meeting, it may be called by any such holder on
like notice. The record date for determining the holders entitled to notice
of and to vote at such special meeting shall be the close of business on
the fifth Business Day preceding the day on which such notice is mailed. At
any such special meeting and at each meeting held during a Voting Period,
such holders, voting together as a class (to the exclusion of the holders
of all other securities and classes of shares of beneficial interest of the
Trust), shall be entitled to elect the number of directors prescribed in
Section 11.5(b) above. At any such meeting or adjournment thereof in the
absence of a quorum, a majority of such holders present in person or by
proxy shall have the power to adjourn the meeting without notice, other
than by an announcement at the meeting, to a date not more than 120 days
after the original record date.
(ii) Except as otherwise required by applicable law, for purposes of
determining any rights of the Holders to vote on any matter or the number
of shares required to constitute a
-38-
quorum, whether such right is created by these Bylaws, by the other
provisions of the Declaration of Trust, by statute or otherwise, a share of
APS which is not Outstanding shall not be counted.
(iii) The terms of office of all persons who are trustees of the Trust
at the time of a special meeting of Holders and holders of other Preferred
Shares 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 and the
remaining incumbent trustees elected by the holders of the Common Shares
and Preferred Shares, shall constitute the duly elected trustees of the
Trust.
(iv) Simultaneously with the expiration of a Voting Period, the terms
of office of the additional trustees elected by the Holders and holders of
other Preferred Shares pursuant to Section 11.5(b) above shall terminate,
the remaining trustees shall constitute the trustees of the Trust and the
voting rights of the Holders and such other holders to elect additional
trustees pursuant to Section 11.5(b) above shall cease, subject to the
provisions of the last sentence of Section 11.5(b).
(e) Exclusive Remedy. Unless otherwise required by law, the Holders of APS
shall not have any rights or preferences other than those specifically set forth
herein. The Holders of APS shall have no preemptive rights or rights to
cumulative voting. In the event that the Trust fails to pay any dividends on the
APS, the exclusive remedy of the Holders shall be the right to vote for trustees
pursuant to the provisions of this Section 11.5.
11.6 1940 Act APS Asset Coverage. The Trust shall maintain, as of the last
Business Day of each month in which any APS are outstanding, the 1940 Act APS
Asset Coverage.
11.7 APS Basic Maintenance Amount. (a) The Trust shall maintain, on each
Valuation Date, and shall verify to its satisfaction that it is maintaining on
such Valuation Date Moody's Eligible Assets having an aggregate Discounted Value
equal to or greater than the APS Basic Maintenance Amount. Upon any failure to
maintain the required Discounted Value, the Trust will use its best efforts to
alter the composition of its portfolio to retain a Discounted Value at least
equal to the APS Basic Maintenance Amount on or prior to the APS Basic
Maintenance Cure Date.
(b) On or before 5:00 p.m., New York City time, on the third Business Day
after a Valuation Date on which the Trust fails to satisfy the APS Basic
Maintenance Amount, the Trust shall complete and deliver to the Auction Agent
and Moody's a complete APS Basic Maintenance Report as of the date of such
failure, which will be deemed to have been delivered to such recipient if the
recipient receives a copy or telecopy, telex or other electronic transcription
thereof and on the same day the Trust mails to the recipient for delivery on the
next Business Day the complete APS Basic Maintenance Report. The Trust will
deliver an APS Basic Maintenance Report to the Auction Agent and Moody's, on or
before 5:00 p.m., New York City time, on the third Business Day after a
Valuation Date on which the Trust cures its failure to
-39-
maintain Moody's Eligible Assets with an aggregate Discounted Value equal to or
greater than the APS Basic Maintenance Amount or on which the Trust fails to
maintain Moody's Eligible Assets with an aggregate Discounted Value which
exceeds the APS Basic Maintenance Amount by 5% or more. The Trust will also
deliver an APS Basic Maintenance Report to the Auction Agent and Moody's as of
each Quarterly Valuation Date on or before the third Business Day after such
date. Additionally, on or before 5:00 p.m., New York City time, on the third
Business Day after the first day of a Special Dividend Period, the Trust will
deliver an APS Basic Maintenance Report to Moody's and the Auction Agent. The
Trust shall also provide Moody's with an APS Basic Maintenance Report when
specifically requested by Moody's.
(c) Within ten Business Days after the date of delivery of an APS Basic
Maintenance Report in accordance with Section 11.7(b) above relating to a
Quarterly Valuation Date (except as described in the following sentence), the
Independent Accountant will confirm in writing to the Auction Agent and Moody's,
(i) the mathematical accuracy of the calculations reflected in such Report, (ii)
that, in such Report, the Trust correctly determined the assets of the Trust
which constitute Moody's Eligible Assets at such Quarterly Valuation Date in
accordance with these Bylaws, (iii) that, in such Report, the Trust determined
whether the Trust had, at such Quarterly Valuation Date in accordance with these
Bylaws, Moody's Eligible Assets with an aggregate Discounted Value at least
equal to the APS Basic Maintenance Amount, (iv) with respect to the S&P or Fitch
ratings on portfolio securities of the Trust, the issuer name, issue size and
coupon rate, if any, listed in such Report, that the Independent Accountant has
verified such information in reference to third-party information sources (such
as Reuters or Bloomberg) and the Independent Accountant shall provide a listing
in its letter of any differences, (v) with respect to the Moody's ratings on
portfolio securities of the Trust, the issuer name, issue size and coupon rate,
if any, listed in such Report, that the Independent Accountant has verified such
information in reference to third-party information sources (such as Reuters or
Bloomberg) and (vi) that the Independent Accountant has compared the prices in
such Report to the prices in the applicable pricing appraisal report provided by
the custodian of the Trust's assets to the Trust for purposes of valuing
securities in the Trust's portfolio and verified that such information agrees
(in the event such information does not agree, the Independent Accountant will
provide a listing in its letter of such differences) (such confirmation is
herein called the "Accountant's Confirmation"). Notwithstanding the foregoing
sentence, the Independent Accountant will provide the confirmation described in
the foregoing sentence with respect to APS Basic Maintenance Reports delivered
pursuant to the third sentence of Section 11.7(b) above only for such APS Basic
Maintenance Reports relating to the last fiscal quarter of each fiscal year.
(d) Within ten Business Days after the date of delivery to the Auction
Agent and Moody's of an APS Basic Maintenance Report in accordance with Section
11.7(b) above relating to the APS Basic Maintenance Cure Date with respect to
such failure, the Trust shall cause the Independent Accountant to provide to the
Auction Agent and Moody's an Accountant's Confirmation as to such APS Basic
Maintenance Report.
(e) If any Accountant's Confirmation delivered pursuant to subparagraph (c)
or (d) of this Section 11.7 shows that an error was made in the APS Basic
Maintenance Report for a particular Valuation Date for which such Accountant's
Confirmation as required to be delivered,
-40-
or shows that a lower aggregate Discounted Value for the aggregate of all
Moody's Eligible Assets of the Trust was determined by the Independent
Accountant, the calculation or determination made by such Independent Accountant
shall be final and conclusive and shall be binding on the Trust, and the Trust
shall accordingly amend and deliver the APS Basic Maintenance Report to the
Auction Agent and 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 APS, the Trust will complete and deliver
to Moody's an APS Basic Maintenance Report as of the close of business on such
Date of Original Issue. Also, on or before 5:00 p.m., New York City time, on the
first Business Day after shares of Common Shares are repurchased by the Trust,
the Trust will complete and deliver to Xxxxx'x an APS Basic Maintenance Report
as of the close of business on such date that Common Shares are repurchased.
11.8 Certain Other Restrictions. (a) For so long as any APS are rated by
Xxxxx'x, the Trust will not buy or sell financial futures contracts, write,
purchase or sell call options on financial futures contracts or purchase put
options on financial futures contracts or write call options (except covered
call options) on portfolio securities unless it receives written confirmation
from Moody's that engaging in such transactions would not impair the ratings
then assigned to the APS by Moody's, except that the Trust may purchase or sell
exchange-traded financial futures contracts based on the Municipal Index or
Treasury Bonds, and purchase, write or sell exchange-traded put options on such
financial futures contracts, the Municipal Index or Treasury Bonds, and
purchase, write or sell exchange-traded call options on such financial futures
contracts, the Municipal Index or Treasury Bonds (collectively "Moody's Hedging
Transactions"), subject to the following limitations:
(i) the Trust will not engage in any Moody's Hedging Transaction based
on the Municipal Index (other than transactions that terminate a futures
contract or option held by the Trust by the Trust's taking the opposite
position thereto ("Closing Transactions")) that would cause the Trust at
the time of such transaction to own or have sold:
(A) outstanding financial futures contracts based on the
Municipal Index exceeding in number 10% (or such higher percentage as
Moody's may approve) of the average number of daily traded financial
futures contracts based on the Municipal Index in the 30 days
preceding the time of effecting such transaction as reported by The
Wall Street Journal; or
(B) outstanding financial futures contracts based on the
Municipal Index having a Market Value exceeding 50% (or such higher
percentage as Moody's may approve) of the Market Value of all
Municipal Obligations constituting Moody's Eligible Assets owned by
the Trust (other than Moody's Eligible Assets already subject to a
Moody's Hedging Transaction);
-41-
(ii) the Trust will not engage in any Moody's Hedging Transaction
based on Treasury Bonds (other than Closing Transactions) that would cause
the Trust at the time of such transaction to own or have sold:
(A) outstanding financial futures contracts based on Treasury
Bonds with such contracts having an aggregate Market Value exceeding
20% (or such higher percentage as Moody's may approve) of the
aggregate Market Value of Moody's Eligible Assets owned by the Trust
and rated Aa or higher by Moody's (or, if not rated by Moody's but
rated by S&P, rated AAA by S&P); or
(B) outstanding financial futures contracts based on Treasury
Bonds with such contracts having an aggregate Market Value exceeding
80% of the aggregate Market Value of all Municipal Obligations
constituting Moody's Eligible Assets owned by the Trust (other than
Moody's Eligible Assets already subject to a Moody's Hedging
Transaction) and rated Baa or A by Moody's (or, if not rated by
Moody's but rated by S&P, rated A or AA by S&P)
(for purposes of the foregoing clauses (i) and (ii), the Trust shall be
deemed to own the number of financial futures contracts that underlie any
outstanding options written by the Trust);
(iii) the Trust will engage in Closing Transactions to close out any
outstanding financial futures contract based on the Municipal Index if the
amount of open interest in the Municipal Index as reported by The Wall
Street Journal is less than 5,000 (or such lower number as Moody's may
approve);
(iv) the Trust will engage in a Closing Transaction to close out any
outstanding financial futures contract by no later than the fifth Business
Day of the month in which such contract expires and will engage in a
Closing Transaction to close out any outstanding option on a financial
futures contract by no later than the first Business Day of the month in
which such option expires;
(v) the Trust will engage in Moody's Hedging Transactions only with
respect to financial futures contracts or options thereon having the next
settlement date or the settlement date immediately thereafter;
(vi) the Trust (A) will not engage in options and futures transactions
for leveraging or speculative purposes, except that an option or futures
transaction shall not for these purposes be considered a leveraged position
or speculative so long as the combination of the Fund's non-derivative
positions, together with the relevant option or futures transaction,
produces a synthetic investment position, or the same economic result, that
could be achieved by an investment, consistent with the Fund's investment
objective and policies, in a security that is not an option or futures
transaction, and (B) will not write any call options or sell any financial
futures contracts for the purpose of hedging the anticipated purchase of an
asset prior to completion of such purchase; and
-42-
(vii) while the Trust may use options and futures transactions for
hedging and risk management purposes, it will not enter into an option or
futures transaction unless, after giving effect thereto, the Trust would
continue to have Moody's Eligible Assets with an aggregate Discounted Value
equal to or greater than the APS Basic Maintenance Amount.
(b) For purposes of determining whether the Trust has Moody's Eligible
Assets with an aggregate Discounted Value that equals or exceeds the APS Basic
Maintenance Amount, the Discounted Value of Moody's Eligible Assets that the
Trust is obligated to deliver or receive pursuant to an outstanding futures
contract or option shall be as follows:
(i) assets subject to call options written by the Trust that are
either exchange-traded and "readily reversible" or that expire within 49
days after the date as of which such valuation is made shall be valued at
the lesser of (A) Discounted Value and (B) the exercise price of the call
option written by the Trust;
(ii) assets subject to call options written by the Trust not meeting
the requirements of clause (i) of this sentence shall have no value;
(iii) assets subject to put options written by the Trust shall be
valued at the lesser of (A) the exercise price and (B) the Discounted Value
of the assets subject to the option;
(iv) futures contracts shall be valued at the lesser of (A) settlement
price and (B) the Discounted Value of the assets subject to the futures
contract, provided that, if a contract matures within 49 days after the
date as of which such valuation is made, where the Trust is the seller the
contract may be valued at the settlement price and where the Trust is the
buyer the contract may be valued at the Discounted Value of the assets
subject to the futures contract; and
(v) where delivery may be made to the Trust with any security of a
class of securities, the Trust shall assume that it will take delivery of
the security with the lowest Discounted Value.
(c) For purposes of determining whether the Trust has Moody's Eligible
Assets with an aggregate Discounted Value that equals or exceeds the APS Basic
Maintenance Amount, the following amounts shall be subtracted from the aggregate
Discounted Value of the Moody's Eligible Assets held by the Trust to the extent
the relevant asset is a Moody's Eligible Asset:
(i) 10% of the exercise price of a written call option;
(ii) the exercise price of any written put option;
(iii) where the Trust is the seller under a financial futures
contract, 10% of the settlement price of the financial futures contract;
-43-
(iv) where the Trust is the purchaser under a financial futures
contract, any amounts payable by the Trust under such financial futures
contract;
(v) the settlement price of the underlying financial futures contract
if the Trust writes put options on a financial futures contract; and
(vi) 105% of the Market Value of the underlying financial futures
contract if the Trust writes call options on a financial futures contract
and does not own the underlying contract.
(d) For so long as any APS are rated by Moody's, the Trust will not enter
into any "Forward Commitment," herein defined as any contract to purchase
securities for a fixed price at a future date beyond customary settlement time
(other than such contracts that constitute Moody's Hedging Transactions), except
that the Trust may enter into Forward Commitments subject to the following
limitations:
(i) for each Forward Commitment, the Trust will maintain with its
custodian (A) cash, cash equivalents or short-term, fixed-income securities
rated X-0, XXX-0 xx XXXX-0 by Moody's or A-1 by S&P and maturing in one
year or less with a fair market value that equals or exceeds the amount by
which the Trust's obligations under any Forward Commitments to which it is
from time to time a party exceed obligations to the Trust arising from
securities sales by the Trust that are scheduled to settle at a future
date, or (B) long-term, fixed-income securities with a then current market
value that equals or exceeds the amount by which the Trust's obligations
under any Forward Commitments to which it is from time to time a party
exceed obligations to the Trust arising from securities sales by the Trust
that are scheduled to settle on a future date, or (C) a combination of
assets described in (A) and (B) above that in the aggregate equals or
exceeds the amount by which the Trust's obligations under any Forward
Commitments to which it is from time to time a party exceed obligations to
the Trust arising from securities sales by the Trust that are scheduled to
settle on a future date; and
(ii) the Trust will not enter into a Forward Commitment unless, after
giving effect thereto, the Trust would continue to have Moody's Eligible
Assets with an aggregate Discounted Value equal to or greater than the APS
Basic Maintenance Amount.
For purposes of determining whether the Trust has Moody's Eligible Assets with
an aggregate Discounted Value that equals or exceeds the APS Basic Maintenance
Amount, the Discounted Value of all Forward Commitments to which the Trust is a
party and of all securities deliverable to the Trust pursuant to such Forward
Commitments shall be zero.
(e) For so long as APS are Outstanding and rated by Moody's, the Trust,
unless it has received written confirmation from Moody's that such action would
not impair the ratings then assigned to the APS by Moody's, will not:
(i) borrow money except for the purpose of clearing transactions in
portfolio securities (which borrowings under any circumstances shall be
limited to an amount
-44-
equal to 5% of the Market Value of the Trust's assets at the time of such
borrowings and which borrowings shall be repaid within 60 days and not be
extended or renewed and shall not cause the aggregate Discounted Value of
Moody's Eligible Assets to be less than the APS Basic Maintenance Amount);
(ii) engage in short sales of securities;
(iii) lend any securities;
(iv) issue any class or series of shares of beneficial interest
ranking prior to or on a parity with the APS with respect to the payment of
dividends or the distribution of assets upon dissolution, liquidation or
winding up of the Trust;
(v) merge or consolidate into or with any other corporation or entity;
and
(vi) change the Trust's Pricing Service.
11.9 Notice. All notices or communications, unless otherwise specified in
these Bylaws, shall be sufficiently given if in writing and delivered in person
or mailed by first-class mail, postage prepaid. Notice shall be deemed given on
the earlier of the date received or the date seven days after which such notice
is mailed.
11.10 Auction Procedures. (a) Certain Definitions. As used in this Section
11.10, the following terms shall have the following meanings, unless the context
otherwise requires:
(i) "APS" means the shares of APS being auctioned pursuant to this
Section 11.10.
(ii) "Auction Date" means the first Business Day preceding the first
day of a Dividend Period.
(iii) "Available APS" has the meaning specified in Section 11.10(d)(i)
below.
(iv) "Bid" has the meaning specified in Section 11.10(b)(i) below.
(v) "Bidder" has the meaning specified in Section 11.10(b)(i) below.
(vi) "Hold Order" has the meaning specified in Section 11.10(b)(i)
below.
(vii) "Maximum Applicable Rate" for any Dividend Period will be the
Applicable Percentage of the Reference Rate. The Auction Agent will round
each applicable Maximum Applicable Rate to the nearest one-thousandth
(0.001) of one percent per annum, with any such number ending in five
ten-thousandths of one percent being rounded upwards to the nearest
one-thousandth (0.001) of one percent. The Auction Agent will not round the
applicable Reference Rate as part of its calculation of the Maximum
Applicable Rate. The "Applicable Percentage" shall be the percentage
-45-
determined based on (i) the credit rating assigned on such date to such
shares by Moody's (or, if Moody's shall not make such rating available, the
equivalent of such rating by a Substitute Rating Agency) and (ii) whether
the Trust has provided notification to the Auction Agent prior to the
Auction establishing the Applicable Rate for any dividend that net capital
gains or other taxable income will be included in such dividend on shares
of APS as follows:
Percentage of Percentage of
Moody's Credit Reference Rate - Reference Rate -
Ratings on APS No Notification Notification
-------------- ---------------- ----------------
Aa3 or higher 110% 150%
A 125% 160%
Baa 150% 250%
Below Baa 200% 275%
The Trust shall take all reasonable action necessary to enable Moody's to
provide a rating for each series of APS. If Moody's shall not make such a rating
available, UBS Warburg LLC or its affiliates and successors, after consultation
with the Trust, shall select another Rating Agency to act as a Substitute Rating
Agency.
(viii) "Order" has the meaning specified in Section 11.10(b)(i) below.
(ix) "Sell Order" has the meaning specified in Section 11.10(b)(i)
below.
(x) "Submission Deadline" means 1:00 p.m., New York City time, on any
Auction Date or such other time on any Auction Date as may be specified by
the Auction Agent from time to time as the time by which each Broker-Dealer
must submit to the Auction Agent in writing all Orders obtained by it for
the Auction to be conducted on such Auction Date.
(xi) "Submitted Bid" has the meaning specified in Section 11.10(d)(i)
below.
(xii) "Submitted Hold Order" has the meaning specified in Section
11.10(d)(i) below.
(xiii) "Submitted Order" has the meaning specified in Section
11.10(d)(i) below.
(xiv) "Submitted Sell Order" has the meaning specified in Section
11.10(d)(i) below.
(xv) "Sufficient Clearing Bids" has the meaning specified in Section
11.10(d)(i) below.
-46-
(xvi) "Winning Bid Rate" has the meaning specified in Section
11.10(d)(i) below.
(b) Orders by Beneficial Owners, Potential Beneficial Owners, Existing
Holders and Potential Holders.
(i) Unless otherwise permitted by the Trust, Beneficial Owners and
Potential Beneficial Owners may only participate in Auctions through their
Broker-Dealers. Broker-Dealers will submit the Orders of their respective
customers who are Beneficial Owners and Potential Beneficial Owners to the
Auction Agent, designating themselves as Existing Holders in respect of
shares subject to Orders submitted or deemed submitted to them by
Beneficial Owners and as Potential Holders in respect of shares subject to
Orders submitted to them by Potential Beneficial Owners. A Broker-Dealer
may also hold shares of APS in its own account as a Beneficial Owner. A
Broker-Dealer may thus submit Orders to the Auction Agent as a Beneficial
Owner or a Potential Beneficial Owner and therefore participate in an
Auction as an Existing Holder or Potential Holder on behalf of both itself
and its customers. On or prior to the Submission Deadline on each Auction
Date:
(A) each Beneficial Owner may submit to its Broker-Dealer
information as to:
(1) the number of Outstanding shares, if any, of APS held by
such Beneficial Owner which such Beneficial Owner desires to
continue to hold without regard to the Applicable Rate for the
next succeeding Dividend Period for such shares;
(2) the number of Outstanding shares, if any, of APS held by
such Beneficial Owner which such Beneficial Owner desires to
continue to hold, provided that the Applicable Rate for the next
succeeding Dividend Period for such shares shall not be less than
the rate per annum specified by such Beneficial Owner; and/or
(3) the number of Outstanding shares, if any, of APS held by
such Beneficial Owner which such Beneficial Owner offers to sell
without regard to the Applicable Rate for the next succeeding
Dividend Period; and
(B) each Broker-Dealer, using a list of Potential Beneficial
Owners that shall be maintained in good faith for the purpose of
conducting a competitive Auction, shall contact Potential Beneficial
Owners, including Persons that are not Beneficial Owners, on such list
to determine the number of Outstanding shares, if any, of APS which
each such Potential Beneficial Owner offers to purchase, provided that
the Applicable Rate for the next succeeding Dividend Period shall not
be less than the rate per annum specified by such Potential Beneficial
Owner.
-47-
For the purposes hereof, the communication by a Beneficial
Owner or Potential Beneficial Owner to a Broker-Dealer, or the
communication by a Broker-Dealer acting for its own account to the
Auction Agent, of information referred to in clause (A) or (B) of this
Section 11.10(b)(i) is hereinafter referred to as an "Order" and each
Beneficial Owner and each Potential Beneficial Owner placing an Order,
including a Broker-Dealer acting in such capacity for its own account,
is hereinafter referred to as a "Bidder"; an Order containing the
information referred to in clause (A)(1) of this Section 11.10(b)(i)
is hereinafter referred to as a "Hold Order"; an Order containing the
information referred to in clause (A)(2) or (B) of this Section
11.10(b)(i) is hereinafter referred to as a "Bid"; and an Order
containing the information referred to in clause (A)(3) of this
Section 11.10(b)(i) is hereinafter referred to as a "Sell Order".
Inasmuch as a Broker-Dealer participates in an Auction as an Existing
Holder or a Potential Holder only to represent the interests of a
Beneficial Owner or Potential Beneficial Owner, whether it be its
customers or itself, all discussion herein relating to the
consequences of an Auction for Existing Holders and Potential Holders
also applies to the underlying beneficial ownership interests
represented.
(ii) (A) A Bid by an Existing Holder shall constitute an irrevocable
offer to sell:
(1) the number of Outstanding shares of APS specified in
such Bid if the Applicable Rate determined on such Auction Date
shall be less than the rate per annum specified in such Bid; or
(2) such number or a lesser number of Outstanding shares of
APS to be determined as set forth in Section 11.10(e)(i)(D) if
the Applicable Rate determined on such Auction Date shall be
equal to the rate per annum specified therein; or
(3) a lesser number of Outstanding shares of APS to be
determined as set forth in Section 11.10(e)(ii)(C) if such
specified rate per annum shall be higher than the Maximum
Applicable Rate and Sufficient Clearing Bids do not exist.
(B) A Sell Order by an Existing Holder shall constitute an
irrevocable offer to sell:
(1) the number of Outstanding shares of APS specified in
such Sell Order; or
(2) such number or a lesser number of Outstanding shares of
APS to be determined as set forth in Section 11.10(e)(ii)(C) if
Sufficient Clearing Bids do not exist.
(C) A Bid by a Potential Holder shall constitute an irrevocable
offer to purchase:
-48-
(1) the number of Outstanding shares of APS specified in
such Bid if the Applicable Rate determined on such Auction Date
shall be higher than the rate per annum specified in such Bid; or
(2) such number or a lesser number of Outstanding shares of
APS to be determined as set forth in Section 11.10(e)(i)(E) if
the Applicable Rate determined on such Auction Date shall be
equal to the rate per annum specified therein.
(c) Submission of Orders by Broker-Dealers to Auction Agent.
(i) Each Broker-Dealer shall submit in writing or through the Auction
Agent's auction processing system to the Auction Agent prior to the
Submission Deadline on each Auction Date all Orders obtained by such
Broker-Dealer, designating itself (unless otherwise permitted by the Trust)
as an Existing Holder in respect of shares subject to Orders submitted or
deemed submitted to it by Beneficial Owners and as a Potential Holder in
respect of shares subject to Orders submitted to it by Potential Beneficial
Owners, and specifying with respect to each Order:
(A) the name of the Bidder placing such Order (which shall be the
Broker-Dealer unless otherwise permitted by the Trust);
(B) the aggregate number of Outstanding shares of APS that are
the subject of such Order;
(C) to the extent that such Bidder is an Existing Holder:
(1) the number of Outstanding shares, if any, of APS subject
to any Hold Order placed by such Existing Holder;
(2) the number of Outstanding shares, if any, of APS subject
to any Bid placed by such Existing Holder and the rate per annum
specified in such Bid; and
(3) the number of Outstanding shares, if any, of APS subject
to any Sell Order placed by such Existing Holder; and
(D) to the extent such Bidder is a Potential Holder, the rate per
annum specified in such Potential Holder's Bid.
(ii) If any rate per annum specified in any Bid contains more than
three figures to the right of the decimal point, the Auction Agent shall
round such rate up to the next highest one-thousandth (.001) of 1%.
(iii) If an Order or Orders covering all of the Outstanding shares of
APS held by an Existing Holder are not submitted to the Auction Agent prior
to the Submission
-49-
Deadline, the Auction Agent shall deem a Hold Order (in the case of an
Auction relating to a Special Dividend Period of 91 days or less) or a Sell
Order (in the case of an Auction relating to a Special Dividend Period of
longer than 91 days) to have been submitted on behalf of such Existing
Holder covering the number of Outstanding shares of APS held by such
Existing Holder and not subject to Orders submitted to the Auction Agent.
(iv) If one or more Orders on behalf of an Existing Holder covering in
the aggregate more than the number of Outstanding shares of APS held by
such Existing Holder are submitted to the Auction Agent, such Order shall
be considered valid as follows and in the following order of priority:
(A) any Hold Order submitted on behalf of such Existing Holder
shall be considered valid up to and including the number of
Outstanding shares of APS held by such Existing Holder; provided that
if more than one Hold Order is submitted on behalf of such Existing
Holder and the number of shares of APS subject to such Hold Orders
exceeds the number of Outstanding shares of APS held by such Existing
Holder, the number of shares of APS subject to each of such Hold
Orders shall be reduced pro rata so that such Hold Orders, in the
aggregate, will cover exactly the number of Outstanding shares of APS
held by such Existing Holder;
(B) any Bids submitted on behalf of such Existing Holder shall be
considered valid, in the ascending order of their respective rates per
annum if more than one Bid is submitted on behalf of such Existing
Holder, up to and including the excess of the number of Outstanding
shares of APS held by such Existing Holder over the number of shares
of APS subject to any Hold Order referred to in Section
11.10(c)(iv)(A) above (and if more than one Bid submitted on behalf of
such Existing Holder specifies the same rate per annum and together
they cover more than the remaining number of shares that can be the
subject of valid Bids after application of Section 11.10(c)(iv)(A)
above and of the foregoing portion of this Section 11.10(c)(iv)(B) to
any Bid or Bids specifying a lower rate or rates per annum, the number
of shares subject to each of such Bids shall be reduced pro rata so
that such Bids, in the aggregate, cover exactly such remaining number
of shares); and the number of shares, if any, subject to Bids not
valid under this Section 11.10(c)(iv)(B) shall be treated as the
subject of a Bid by a Potential Holder; and
(C) any Sell Order shall be considered valid up to and including
the excess of the number of Outstanding shares of APS held by such
Existing Holder over the number of shares of APS subject to Hold
Orders referred to in Section 11.10(c)(iv)(A) and Bids referred to in
Section 11.10(c)(iv)(B); provided that if more than one Sell Order is
submitted on behalf of any Existing Holder and the number of shares of
APS subject to such Sell Orders is greater than such excess, the
number of shares of APS subject to each of such Sell Orders shall be
reduced
-50-
pro rata so that such Sell Orders, in the aggregate, cover exactly the
number of shares of APS equal to such excess.
(v) If more than one Bid is submitted on behalf of any Potential
Holder, each Bid submitted shall be a separate Bid with the rate per annum
and number of shares of APS therein specified.
(vi) Any Order submitted by a Beneficial Owner as a Potential
Beneficial Owner to its Broker-Dealer, or by a Broker-Dealer to the Auction
Agent, prior to the Submission Deadline on any Auction Date shall be
irrevocable.
(vii) The Trust shall not be responsible for a Broker-Dealer's failure
to act in accordance with the instructions of Beneficial Owners or
Potential Beneficial Owners or failure to comply with the provisions of
this Section 11.10.
(d) Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
(i) Not earlier than the Submission Deadline on each Auction Date, the
Auction Agent shall assemble all Orders submitted or deemed submitted to it
by the Broker-Dealers (each such Order as submitted or deemed submitted by
a Broker-Dealer being hereinafter referred to individually as a "Submitted
Hold Order", a "Submitted Bid" or a "Submitted Sell Order", as the case may
be, or as a "Submitted Order") and shall determine:
(A) the excess of the total number of Outstanding shares of APS
over the number of Outstanding shares of APS that are the subject of
Submitted Hold Orders (such excess being hereinafter referred to as
the "Available APS");
(B) from the Submitted Orders whether the number of Outstanding
shares of APS that are the subject of Submitted Bids by Potential
Holders specifying one or more rates per annum equal to or lower than
the Maximum Applicable Rate exceeds or is equal to the sum of:
(1) the number of Outstanding shares of APS that are the
subject of Submitted Bids by Existing Holders specifying one or
more rates per annum higher than the Maximum Applicable Rate, and
(2) the number of Outstanding shares of APS that are subject
to Submitted Sell Orders (if such excess or such equality exists
(other than because the number of Outstanding shares of APS in
clause (1) above and this clause (2) are each zero because all of
the Outstanding shares of APS are the subject of Submitted Hold
Orders), such Submitted Bids by Potential Holders being
hereinafter referred to collectively as "Sufficient Clearing
Bids"); and
(C) if Sufficient Clearing Bids exist, the lowest rate per annum
specified in the Submitted Bids (the "Winning Bid Rate") that if:
-51-
(1) each Submitted Bid from Existing Holders specifying the
Winning Bid Rate and all other Submitted Bids from Existing
Holders specifying lower rates per annum were rejected, thus
entitling such Existing Holders to continue to hold the shares of
APS that are the subject of such Submitted Bids, and
(2) each Submitted Bid from Potential Holders specifying the
Winning Bid Rate and all other Submitted Bids from Potential
Holders specifying lower rates per annum were accepted, thus
entitling the Potential Holders to purchase the shares of APS
that are the subject of such Submitted Bids, would result in the
number of shares subject to all Submitted Bids specifying the
Winning Bid Rate or a lower rate per annum being at least equal
to the Available APS.
(ii) Promptly after the Auction Agent has made the determinations
pursuant to Section 11.10(d)(i), the Auction Agent shall advise the Trust
of the Maximum Applicable Rate and, based on such determinations, the
Applicable Rate for the next succeeding Dividend Period as follows:
(A) if Sufficient Clearing Bids exist, that the Applicable Rate
for the next succeeding Dividend Period shall be equal to the Winning
Bid Rate;
(B) if Sufficient Clearing Bids do not exist (other than because
all of the Outstanding shares of APS are the subject of Submitted Hold
Orders), that the Applicable Rate for the next succeeding Dividend
Period shall be equal to the Maximum Applicable Rate; or
(C) if all of the Outstanding shares of APS are the subject of
Submitted Hold Orders, that the Dividend Period next succeeding the
Auction shall automatically be the same length as the immediately
preceding Dividend Period and the Applicable Rate for the next
succeeding Dividend Period shall be equal to 40% of the Reference Rate
(or 60% of such rate if the Trust has provided notification to the
Auction Agent prior to the Auction establishing the Applicable Rate
for any dividend pursuant to Section 11.2(f) hereof that net capital
gains or other taxable income will be included in such dividend on
shares of APS) on the date of the Auction.
(e) Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares. Based on the determinations made pursuant to Section
11.10(d)(i), the Submitted Bids and Submitted Sell Orders shall be accepted or
rejected and the Auction Agent shall take such other action as set forth below:
(i) If Sufficient Clearing Bids have been made, subject to the
provisions of Section 11.10(e)(iii) and Section 11.10(e)(iv), Submitted
Bids and Submitted Sell Orders shall be accepted or rejected in the
following order of priority and all other Submitted Bids shall be rejected:
-52-
(A) the Submitted Sell Orders of Existing Holders shall be
accepted and the Submitted Bid of each of the Existing Holders
specifying any rate per annum that is higher than the Winning Bid Rate
shall be accepted, thus requiring each such Existing Holder to sell
the Outstanding shares of APS that are the subject of such Submitted
Sell Order or Submitted Bid;
(B) the Submitted Bid of each of the Existing Holders specifying
any rate per annum that is lower than the Winning Bid Rate shall be
rejected, thus entitling each such Existing Holder to continue to hold
the Outstanding shares of APS that are the subject of such Submitted
Bid;
(C) the Submitted Bid of each of the Potential Holders specifying
any rate per annum that is lower than the Winning Bid Rate shall be
accepted;
(D) the Submitted Bid of each of the Existing Holders specifying
a rate per annum that is equal to the Winning Bid Rate shall be
rejected, thus entitling each such Existing Holder to continue to hold
the Outstanding shares of APS that are the subject of such Submitted
Bid, unless the number of Outstanding shares of APS subject to all
such Submitted Bids shall be greater than the number of Outstanding
shares of APS ("Remaining Shares") equal to the excess of the
Available APS over the number of Outstanding shares of APS subject to
Submitted Bids described in Section 11.10(e)(i)(B) and Section
11.10(e)(i)(C), in which event the Submitted Bids of each such
Existing Holder shall be accepted, and each such Existing Holder shall
be required to sell Outstanding shares of APS, but only in an amount
equal to the difference between (1) the number of Outstanding shares
of APS then held by such Existing Holder subject to such Submitted Bid
and (2) the number of shares of APS obtained by multiplying (x) the
number of Remaining Shares by (y) a fraction the numerator of which
shall be the number of Outstanding shares of APS held by such Existing
Holder subject to such Submitted Bid and the denominator of which
shall be the sum of the number of Outstanding shares of APS subject to
such Submitted Bids made by all such Existing Holders that specified a
rate per annum equal to the Winning Bid Rate; and
(E) the Submitted Bid of each of the Potential Holders specifying
a rate per annum that is equal to the Winning Bid Rate shall be
accepted but only in an amount equal to the number of Outstanding
shares of APS obtained by multiplying (x) the difference between the
Available APS and the number of Outstanding shares of APS subject to
Submitted Bids described in Section 11.10(e)(i)(B), Section
11.10(e)(i)(C) and Section 11.10(e)(i)(D) by (y) a fraction the
numerator of which shall be the number of Outstanding shares of APS
subject to such Submitted Bid and the denominator of which shall be
the sum of the number of Outstanding shares of APS subject to such
Submitted Bids made by all such Potential Holders that specified rates
per annum equal to the Winning Bid Rate.
-53-
(ii) If Sufficient Clearing Bids have not been made (other than
because all of the Outstanding shares of APS are subject to Submitted Hold
Orders), subject to the provisions of Section 11.10(e)(iii), Submitted
Orders shall be accepted or rejected as follows in the following order of
priority and all other Submitted Bids shall be rejected:
(A) the Submitted Bid of each Existing Holder specifying any rate
per annum that is equal to or lower than the Maximum Applicable Rate
shall be rejected, thus entitling such Existing Holder to continue to
hold the Outstanding shares of APS that are the subject of such
Submitted Bid;
(B) the Submitted Bid of each Potential Holder specifying any
rate per annum that is equal to or lower than the Maximum Applicable
Rate shall be accepted, thus requiring such Potential Holder to
purchase the Outstanding shares of APS that are the subject of such
Submitted Bid; and
(C) the Submitted Bids of each Existing Holder specifying any
rate per annum that is higher than the Maximum Applicable Rate shall
be accepted and the Submitted Sell Orders of each Existing Holder
shall be accepted, in both cases only in an amount equal to the
difference between (1) the number of Outstanding shares of APS then
held by such Existing Holder subject to such Submitted Bid or
Submitted Sell Order and (2) the number of shares of APS obtained by
multiplying (x) the difference between the Available APS and the
aggregate number of Outstanding shares of APS subject to Submitted
Bids described in Section 11.10(e)(ii)(A) and Section 11.10(e)(ii)(B)
by (y) a fraction the numerator of which shall be the number of
Outstanding shares of APS held by such Existing Holder subject to such
Submitted Bid or Submitted Sell Order and the denominator of which
shall be the number of Outstanding shares of APS subject to all such
Submitted Bids and Submitted Sell Orders.
(iii) If, as a result of the procedures described in Section 11.10(e),
any Existing Holder would be entitled or required to sell, or any Potential
Holder would be entitled or required to purchase, a fraction of a share of
APS on any Auction Date, the Auction Agent shall, in such manner as in its
sole discretion it shall determine, round up or down the number of shares
of APS to be purchased or sold by any Existing Holder or Potential Holder
on such Auction Date so that each Outstanding share of APS purchased or
sold by each Existing Holder or Potential Holder on such Auction Date shall
be a whole share of APS.
(iv) If, as a result of the procedures described in Section 11.10(e),
any Potential Holder would be entitled or required to purchase less than a
whole share of APS on any Auction Date, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, allocate shares of APS
for purchase among Potential Holders so that only whole shares of APS are
purchased on such Auction Date by any Potential Holder, even if such
allocation results in one or more of such Potential Holders not purchasing
any shares of APS on such Auction Date.
-54-
(v) Based on the results of each Auction, the Auction Agent shall
determine, with respect to each Broker-Dealer that submitted Bids or Sell
Orders on behalf of Existing Holders or Potential Holders, the aggregate
number of Outstanding shares of APS to be purchased and the aggregate
number of the Outstanding shares of APS to be sold by such Potential
Holders and Existing Holders and, to the extent that such aggregate number
of Outstanding shares to be purchased and such aggregate number of
Outstanding shares to be sold differ, the Auction Agent shall determine to
which other Broker-Dealer or Broker-Dealers acting for one or more
purchasers such Broker-Dealer shall deliver, or from which other
Broker-Dealer or Broker-Dealers acting for one or more sellers such
Broker-Dealer shall receive, as the case may be, Outstanding shares of APS.
(f) Miscellaneous.
(i) The Trust may interpret the provisions of this Section 11.10 to
resolve any inconsistency or ambiguity, remedy any formal defect or make
any other change or modification that does not substantially adversely
affect the rights of Beneficial Owners of APS.
(ii) A Beneficial Owner or an Existing Holder (A) may sell, transfer
or otherwise dispose of shares of APS only pursuant to a Bid or Sell Order
in accordance with the procedures described in this Section 11.10 or to or
through a Broker-Dealer or to such other persons as may be permitted by the
Fund, provided that in the case of all transfers other than pursuant to
Auctions such Beneficial Owner or Existing Holder, its Broker-Dealer, if
applicable, or its Agent Member advises the Auction Agent of such transfer
and (B) except as otherwise required by law, shall have the ownership of
the shares of APS held by it maintained in book entry form by the
Securities Depository in the account of its Agent Member, which in turn
will maintain records of such Beneficial Owner's beneficial ownership. The
Trust may not submit an Order in any Auction.
(iii) All of the Outstanding shares of APS of a series shall be
registered in the name of the nominee of the Securities Depository unless
otherwise required by law or unless there is no Securities Depository. If
there is no Securities Depository, at the Trust's option and upon its
receipt of such documents as it deems appropriate, any shares of APS may be
registered in the Stock Register in the name of the Beneficial Owner
thereof and such Beneficial Owner thereupon will be entitled to receive
certificates therefor and required to deliver certificates therefor upon
transfer or exchange thereof.
11.11 Securities Depository; Stock Certificates. (a) If there is a
Securities Depository, all of the shares of APS of each series shall be issued
to the Securities Depository and registered in the name of the Securities
Depository or its nominee. Certificates may be issued as necessary to represent
shares of APS. All such certificates shall bear a legend to the effect that such
certificates are issued subject to the provisions restricting the transfer of
shares of APS contained in these Bylaws. Unless the Trust shall have elected,
during a Non-Payment Period, to waive this requirement, the Trust will also
issue stop-transfer instructions to the Auction Agent for the shares of APS.
Except as provided in paragraph (b) below, the Securities Depository or its
-55-
nominee will be the Holder, and no Beneficial Owner shall receive certificates
representing its ownership interest in such shares.
(b) If the Applicable Rate applicable to all shares of APS of a series
shall be the Non-Payment Period Rate or there is no Securities Depository, the
Trust may at its option issue one or more new certificates with respect to such
shares (without the legend referred to in Section 11.11(a)) registered in the
names of the Beneficial Owners or their nominees and rescind the stop-transfer
instructions referred to in Section 11.11(a) with respect to such shares.
ARTICLE 12
Amendment to the Bylaws
12.1 General. Except to the extent that the Declaration of Trust or
applicable law requires a vote or consent of Shareholders or a higher vote or
consent by the Trustees and/or the Continuing Trustees, these Bylaws may be
amended, changed, altered or repealed, in whole or part, only by resolution of a
majority of the Trustees and a majority of the Continuing Trustees then in
office at any meeting of the Trustees, or by one or more writings signed by such
Trustees and Continuing Trustees.
12.2 Article 11. Without limiting the provisions of Section 12.1, the Board
of Trustees of the Trust may, by resolution duly adopted, without shareholder
approval (except as otherwise required by Article 11 or required by applicable
law), amend Article 11 to (a) reflect any amendments hereto which the Board of
Trustees of the Trust is entitled to adopt pursuant to the terms of Article 11
without shareholder approval or (b) add additional series of APS or additional
shares of a series of APS (and terms relating thereto) to the series and shares
of APS described herein. Each such additional series and all such additional APS
shall be governed by the terms of Article 11.
-56-
