AMENDED AND RESTATED BYLAWS
OF
RMR REAL ESTATE INCOME FUND
(Dated as of February 6, 2012)
ARTICLE I
AGREEMENT AND DECLARATION OF
TRUST
1.1 Agreement and Declaration of Trust.
These Bylaws shall be subject to the Agreement and
Declaration of Trust, as amended or restated from
time to time (the "Declaration of Trust"), of RMR
REAL ESTATE INCOME FUND, the Delaware
statutory trust established by the Declaration of
Trust (the "Trust"). Capitalized terms used in these
Bylaws and not otherwise defined herein shall have
the meanings given to such terms in the Declaration
of Trust.
ARTICLE II
TRUSTEES
2.1 General Powers; Qualifications;
Trustees Holding Over. The business and affairs of
the Trust shall be managed under the direction of its
Board of Trustees. A Trustee shall be an individual
at least 21 years of age who is not under legal
disability. To qualify for nomination or election as
a Trustee, an individual, at the time of nomination
and election, shall, without limitation, (a) have
substantial expertise or experience relevant to the
business of the Trust and its subsidiaries (as defined
in Section 8.12(f)(iii)), (b) not have been convicted
of a felony and (c) meet the qualifications of an
Independent Trustee or a Managing Trustee, each as
defined in Section 2.2, as the case may be,
depending upon the position for which such
individual may be nominated and elected. In case
of failure to elect Trustees at an annual meeting of
Shareholders, the incumbent Trustees shall hold
over and continue to direct the management of the
business and affairs of the Trust until they may
resign or until their successors are elected and
qualify.
2.2 Independent Trustees and Managing
Trustees. A majority of the Trustees holding office
shall at all times be Independent Trustees; provided,
however, that upon a failure to comply with this
requirement as a result of the creation of a
temporary vacancy, whether as a result of
enlargement of the Board of Trustees or the
resignation, removal or death of a Trustee who is an
Independent Trustee, such requirement shall not be
applicable. An "Independent Trustee" is one who is
not an employee of the investment adviser of the
Trust, who is not involved in the Trust's day-to-day
activities, who is not an "interested person" of the
Trust (as defined in the 1940 Act), except for the
fact of his or her being a Trustee, and who meets the
qualifications of an independent director under the
applicable rules of each stock exchange upon which
shares of the Trust are listed for trading and the
Securities and Exchange Commission (the "SEC"),
as those requirements may be amended from time to
time. If the number of Trustees, at any time, is set
at less than five, at least one Trustee shall be a
Managing Trustee. So long as the number of
Trustees shall be five or greater, at least two
Trustees shall be Managing Trustees. "Managing
Trustees" shall mean Trustees who are not
Independent Trustees and who have been
employees, officers or directors of the investment
adviser of the Trust or involved in the day-to-day
activities of the Trust during the one year prior to
their election. If at any time the Board of Trustees
shall not be comprised of a majority of Independent
Trustees or shall not have the requisite number of
Managing Trustees, the Board of Trustees shall take
such actions as will cure the applicable condition;
provided that the fact that the Board of Trustees
does not have a majority of Independent Trustees or
requisite number of Managing Trustees, as the case
may be, or has not taken such action at any time or
from time to time shall not affect the validity of any
action taken by the Board of Trustees.
2.3 Number of Trustees. The number of
Trustees shall be initially set at five. Each of the
Trustees shall be designated as a Class I, Class II or
Class III Trustee as required by the Declaration of
Trust. The number of Trustees constituting the
entire Board of Trustees may be increased or
decreased from time to time only by a vote of the
Board of Trustees; provided, however, that the
tenure of office of a Trustee shall not be affected by
any decrease in the number of Trustees; provided,
further, that the number of Trustees shall not be less
than three.
2.4 Regular Meetings. Regular meetings
of the Board of Trustees may be held without call or
notice at such places and at such times as the
Trustees may from time to time determine; provided
that notice of the first regular meeting following any
such determination shall be given to absent
Trustees.
2.5 Special Meetings. Special meetings
of the Board of Trustees may be called at any time
by any Managing Trustee, the President or pursuant
to the request of any two Trustees then in office.
The person or persons authorized to call special
meetings of the Board of Trustees may fix any
place, either within or without the State of
Delaware, as the place for holding any special
meeting of the Board of Trustees called by them.
2.6 Notice. Notice of any special
meeting shall be given by written notice delivered
personally or by electronic mail, telephoned,
facsimile transmitted, overnight couriered (with
proof of delivery) or mailed to each Trustee at his or
her business or residence address. Personally
delivered, telephoned, facsimile transmitted or
electronically mailed notices shall be given at least
24 hours prior to the meeting. Notice by mail shall
be deposited in the U.S. mail at least 72 hours prior
to the meeting. If mailed, such notice shall be
deemed to be given when deposited in the U.S. mail
properly addressed, with postage thereon prepaid.
Electronic mail notice shall be deemed to be given
upon transmission of the message to the electronic
mail address given to the Trust by the Trustee.
Telephone notice shall be deemed given when the
Trustee is personally given such notice in a
telephone call to which he is a party. Facsimile
transmission notice shall be deemed given upon
completion of the transmission of the message to
the number given to the Trust by the Trustee and
receipt of a completed answer back indicating
receipt. If sent by overnight courier, such notice
shall be deemed given when delivered to the
courier. Neither the business to be transacted at,
nor the purpose of, any annual, regular or special
meeting of the Trustees need be stated in the notice,
unless specifically required by statute or these
Bylaws.
2.7 Quorum. A majority of the Trustees
shall constitute a quorum for transaction of business
at any meeting of the Board of Trustees; provided
that, if less than a majority of such Trustees are
present at a meeting, a majority of the Trustees
present may adjourn the meeting from time to time
without further notice. The Trustees present at a
meeting of the Board of Trustees which has been
duly called and convened and at which a quorum
was established may continue to transact business
until adjournment, notwithstanding the withdrawal
of a number of Trustees resulting in less than a
quorum then being present at the meeting. Whether
or not a Trustee votes on a matter at a meeting
which he or she attends, he or she will nonetheless
be considered present for purposes of establishing a
quorum to consider the matter.
2.8 Voting. The action of the majority
of the Trustees present at a meeting at which a
quorum is or was present shall be the action of the
Board of Trustees, unless the concurrence of a
greater proportion is required for such action by
specific provision of an applicable statute, the
Declaration of Trust or these Bylaws. If enough
Trustees have withdrawn from a meeting to leave
fewer than are required to establish a quorum, but
the meeting is not adjourned, the action of the
majority of that number of Trustees necessary to
constitute a quorum at such meeting shall be the
action of the Board of Trustees, unless the
concurrence of a greater proportion is required for
such action by applicable law, the Declaration of
Trust or these Bylaws.
2.9 Telephonic Meetings. Except as
required by the 1940 Act or other applicable law,
attendance at Board of Trustees meetings may be in
person or by a teleconference or other
communications medium by means of which all
persons participating in the meeting can hear and
speak with each other.
2.10 Action by Written Consent. Unless
specifically otherwise provided in the Declaration
of Trust, any action required or permitted to be
taken at any meeting of the Board of Trustees may
be taken without a meeting, if a majority of the
Trustees shall individually or collectively consent in
writing to such action. Such written consent or
consents shall be filed with the records of the Trust
and shall have the same force and effect as the
affirmative vote of such Trustees at a duly held
meeting of the Board of Trustees at which a quorum
was present.
2.11 Waiver of Notice. The actions taken
at any meeting of the Trustees, however called and
noticed or wherever held, shall be as valid as though
taken at a meeting duly held after regular call and
notice if a quorum is present and if, either before or
after the meeting, each of the Trustees not present
waives notice, consents to the holding of such
meeting or approves the minutes thereof.
2.12 Vacancies. If for any reason any or
all the Trustees cease to be Trustees, such event
shall not terminate the Trust or affect these Bylaws
or the powers of the remaining Trustees hereunder
(even if fewer than three Trustees remain). Subject
to the requirements of the 1940 Act or other
applicable law, any vacancies in the Board of
Trustees, including vacancies resulting from
increases in the number of Trustees or otherwise,
shall be filled by a majority of the Trustees then in
office, whether or not sufficient to constitute a
quorum, or by a sole remaining Trustee; provided,
however, that if the Shareholders of any class or
series of Shares are entitled separately to elect one
or more Trustees, a majority of the remaining
Trustees elected by that class or series or the sole
remaining Trustee elected by that class or series
may fill any vacancy among the number of Trustees
elected by that class or series. A Trustee elected by
the Trustees to fill any vacancy occurring in the
Board of Trustees, whether occurring due to an
increase in size of the Board of Trustees or by the
death, resignation or removal of any Trustee, shall
serve until the next annual meeting of Shareholders
at which such Trustee's Class shall be elected and
qualifies; subject, however, to prior death,
resignation, retirement, disqualification or removal
from office. Any Trustee elected by Shareholders
at an annual meeting to fill any vacancy occurring
in the Board of Trustees, whether occurring due to
an increase in size of the Board of Trustees or by
the death, resignation or removal of any Trustee,
that has arisen since the preceding annual meeting
of Shareholders (which vacancy has not been filled
by election of a new Trustee by the Trustees) shall
hold office for a term which coincides with the
remaining term of the Class of Trustee to which
such office was previously assigned. Any person
elected or appointed as a Trustee shall meet the
criteria for office set forth from time to time in these
Bylaws.
2.13 Compensation. The Trustees shall
be entitled to receive such reasonable compensation
for their services as Trustees as the Trustees may
determine from time to time. Trustees may be
reimbursed for expenses of attendance, if any, at
each annual, regular or special meeting of the Board
of Trustees or of any committee thereof; and for
their expenses, if any, in connection with each
property visit and any other service or activity
performed or engaged in as Trustees. The Trustees
shall be entitled to receive remuneration for services
rendered to the Trust in any other capacity, and such
services may include, without limitation, services as
an officer of the Trust, services as an employee of
RMR Advisors, legal, accounting or other
professional services, or services as a broker,
transfer agent or underwriter, whether performed by
a Trustee or any person affiliated with a Trustee.
2.14 Reliance. Each Trustee, officer,
employee and agent of the Trust shall, in the
performance of his or her duties with respect to the
Trust, be entitled to rely on any information,
opinion, report or statement, including any financial
statement or other financial data, prepared or
presented by an officer or employee of the Trust or
by RMR Advisors, accountants, appraisers or other
experts or consultants selected by the Board of
Trustees or officers of the Trust, regardless of
whether such counsel or expert may also be a
Trustee.
2.15 Qualifying Shares Not Required.
Trustees need not be Shareholders.
2.16 Emergency Provisions.
Notwithstanding any other provision in the
Declaration of Trust or these Bylaws, this Section
2.16 shall apply during the existence of any
catastrophe, or other similar emergency condition,
as a result of which a quorum of the Board of
Trustees under Article II cannot readily be obtained
(an "Emergency"). During any Emergency, unless
otherwise provided by the Board of Trustees, (a) a
meeting of the Board of Trustees may be called by
any Managing Trustee or officer of the Trust by any
means feasible under the circumstances and (b)
notice of any meeting of the Board of Trustees
during such an Emergency may be given less than
24 hours prior to the meeting to as many Trustees
and by such means as it may be feasible at the time,
including publication, television or radio.
ARTICLE III
OFFICERS
3.1 Enumeration; Qualification. The
officers of the Trust shall be a President, a
Treasurer, a Secretary, and such other officers, 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 two or more offices
may be held by the same person.
3.2 Election. The President, the
Treasurer, and the Secretary shall be elected
annually by the Trustees. Other officers, if any,
may be elected or appointed by the Trustees at any
time. Vacancies in any office may be filled by the
Board of Trustees at any time.
3.3 Tenure. Officers of the Trust shall
hold office until their respective successors are
chosen and qualified, or in each case until he or she
sooner dies, resigns, is removed with or without
cause or becomes disqualified. Each 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 of the Trust
shall have, in addition to the duties and powers
herein and in the Declaration of Trust set forth, such
duties and powers as the Board of Trustees may
from time to time designate.
3.5 Chairman; President; Vice President.
Unless the Trustees otherwise provide, the
Chairman of the Trustees or, if there is none or in
the absence of the Chairman, the President shall
preside at all meetings of the Shareholders and of
the Trustees. Alternatively, the Trustees may
designate one Trustee or another officer of the Trust
to preside at such meetings. Any Vice President
shall have such duties and powers as may be
designated from time to time by the Trustees or the
President.
3.6 Treasurer; Assistant Treasurer. The
Treasurer shall be the chief financial and chief
accounting officer of the Trust, and shall, subject to
any arrangement made by the Trustees with a
custodian, investment adviser, sub-adviser,
manager, or transfer, shareholder servicing or
similar agent, be in charge of the valuable papers,
books of account and accounting records of the
Trust, and shall have such other duties and powers
as may be designated from time to time by the
Trustees or by the President. Any Assistant
Treasurer shall have such duties and powers as may
be designated from time to time by the Trustees, the
President or the Treasurer.
3.7 Secretary; Assistant Secretary. The
Secretary (or his or her designee) shall record all
proceedings of the Shareholders and the Trustees in
books to be kept therefor, which books or a copy
thereof shall be kept at the principal office of the
Trust. In the absence of the Secretary from any
meeting of Shareholders or Trustees, an Assistant
Secretary, or if there be none or if he or she is
absent, a temporary secretary chosen at such
meeting shall record the proceedings thereof in the
aforesaid books. Any Assistant Secretary shall have
such duties and powers as may be designated from
time to time by the Trustees, the President or the
Secretary.
3.8 Removal and Resignations. Any
officer or agent of the Trust may be removed by the
Trustees at any time. Any officer of the Trust may
resign at any time by giving written notice of his or
her resignation to the Trustees, the Chairman of the
Trustees, the President or the Secretary. Any
resignation shall take effect at any time specified
therein or, if the time when it shall become effective
is not specified therein, immediately upon its
receipt. The acceptance of a resignation shall not be
necessary to make it effective unless otherwise
stated in the resignation.
ARTICLE IV
COMMITTEES
4.1 Appointment. The powers, duties
and responsibilities of the Trustees maybe delegated
to one or more Committees. Trustees, officers or
agents of the Trust may serve on Committees, but
all Committees shall have at least one Trustee who
will serve as Chairman of the Committee.
Committees shall have the powers, duties and
responsibilities as may be assigned to them by the
Trustees. The Trustees may delegate any of the
powers of the Trustees to Committees appointed
under this Section 4.1 and composed solely of
Trustees, except as prohibited by law.
4.2 Meetings; Notice. Notice of
Committee meetings shall be given in the same
manner as notice for special meetings of the Board
of Trustees. One-third, but not less than one, of the
members of any Committee shall be present in
person at any meeting of a Committee in order to
constitute a quorum for the transaction of business
at a meeting, and the act of a majority present at a
meeting at the time of a vote if a quorum is then
present shall be the act of a Committee. The
Chairman of the Committee shall fix the time and
place of a Committee's meetings unless the Board
of Trustees shall otherwise provide.
4.3 Telephonic Meetings. Except as
required by the 1940 Act or other applicable law,
attendance at Committee meetings may be in person
or by a teleconference or other communications
medium by means of which all persons participating
in the meeting can hear and speak with each other.
4.4 Action by Written Consent of
Committees. Any action required or permitted to be
taken at any meeting of a Committee may be taken
without a meeting, if a consent in writing to such
action is signed by a majority of the Committee and
such written consent is filed with the minutes of
proceedings of such Committee.
4.5 Vacancies. Subject to the provisions
hereof, the Board of Trustees shall have the power
at any time to change the membership of any
Committee, to fill all vacancies, to designate
alternate members to replace any absent or
disqualified member or to dissolve any such
Committee.
ARTICLE V
FISCAL YEAR
5.1 General. Except as from time to
time otherwise provided by the Trustees, the fiscal
year of the Trust shall be a calendar year.
ARTICLE VI
SEAL
6.1 General. The Board of Trustees may
authorize the adoption of a seal by the Trust. The
Trustees may authorize one or more duplicate seals.
Whenever the Trust is permitted or required to affix
its seal to a document, it shall be sufficient to meet
the requirements of any law, rule or regulation
relating to a seal to place the word "(SEAL)"
adjacent to the signature of the person authorized to
execute the document on behalf of the Trust.
ARTICLE VII
EXECUTION OF PAPERS
7.1 General. Except as the Trustees may
generally or in particular cases authorize the
execution thereof in some other manner, all deeds,
leases, transfers, contracts, bonds, notes, checks,
drafts and other obligations made, accepted or
endorsed by the Trust shall be executed by the
President, any Vice President, the Treasurer or by
whomever else shall be designated for that purpose
by vote of the Trustees, and need not bear the seal
of the Trust.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND
MEETINGS
8.1 Regular and Special Meetings.
Except as provided in the next sentence, regular
meetings of the Shareholders for the election of
Trustees and the transaction of such other business
as may properly come before the meeting shall be
held, so long as Shares are listed for trading on the
NYSE Amex LLC, on at least an annual basis, on
such day and at such place as shall be designated by
the Trustees. Such regular meetings of the
Shareholders shall only be called by the Board of
Trustees. In the event that such a meeting is not
held in any annual period, whether the omission be
by oversight or otherwise, a subsequent special
meeting may be called by the Trustees and held in
lieu of such meeting with the same effect as if held
within such annual period. Except as required by
the 1940 Act or other applicable law, special
meetings of Shareholders or any or all classes or
series of Shares may only be called by a majority of
the Trustees from time to time for such other
purposes as may be prescribed by law, by the
Declaration of Trust or by these Bylaws, or for the
purpose of taking action upon any other matter
deemed by the Trustees to be necessary or
desirable. A special meeting of Shareholders may
be held at any such time, day and place as is
designated by the Board of Trustees.
8.2 Notice of Regular or Special
Meetings. Written notice specifying the place, day
and hour of any regular or special meeting, the
purpose of the meeting, to the extent required by
law to be provided, and all other matters required by
law shall be given to each Shareholder of record
entitled to vote, either personally or by sending a
copy thereof by mail, postage prepaid, to his or her
address appearing on the books of the Trust or
theretofore given by him or her to the Trust for the
purpose of notice or, if no address appears or has
been given, addressed to the place where the
principal office of the Trust is situated, or by
electronic transmission, including facsimile
transmission, to any address or number of such
Shareholder at which the Shareholder receives
electronic transmissions. If mailed, such notice
shall be deemed to be given once deposited in the
U.S. mail addressed to the Shareholder at his or her
post office address as it appears on the records of
the Trust, with postage thereon prepaid. It shall be
the duty of the Secretary to give notice of each
meeting of Shareholders. Whenever notice of a
meeting is required to be given to a Shareholder
under the Declaration of Trust or these Bylaws, a
written waiver thereof, executed before or after the
meeting by such Shareholder or his or her attorney
thereunto authorized and filed with the records of
the meeting, shall be deemed equivalent to such
notice. Notice of a meeting need not be given to
any Shareholder who attends the meeting.
8.3 Notice of Adjourned Meetings. It
shall not be necessary to give notice of the time and
place of any adjourned meeting or of the business to
be transacted thereat other than by announcement at
the meeting at which such adjournment is taken.
8.4 Scope of Meetings. Except as
otherwise expressly set forth elsewhere in these
Bylaws, no business shall be transacted at meetings
of Shareholders except as specifically designated in
the notice or otherwise properly brought before the
Shareholders by or at the direction of the Board of
Trustees.
8.5 Organization of Shareholder
Meetings. Every meeting of Shareholders shall be
conducted by a Trustee, the President or any other
officer of the Trust, as designated by the Board of
Trustees, who shall preside at and act as chairperson
of a meeting of Shareholders. The Secretary, an
Assistant Secretary or a person appointed by the
Trustees or, in the absence of such appointment, a
person appointed by the person presiding as
chairperson at the meeting shall act as Secretary of
the meeting and record the minutes of the meeting.
If the Secretary presides as chairperson at a meeting
of Shareholders, then the Secretary shall not also act
as secretary of the meeting and record the minutes
of the meeting. The order of business and all other
matters of procedure at any meeting of Shareholders
shall be determined by the chairperson of the
meeting. The chairperson of the meeting may
prescribe such rules, regulations and procedures and
take such action as, in the discretion of such
chairperson, are appropriate for the proper conduct
of the meeting, including, without limitation: (a)
restricting admission to the time set for the
commencement of the meeting; (b) limiting
attendance at the meeting to Shareholders of record
of the Trust, their duly authorized proxies or other
such persons as the chairperson of the meeting may
determine; (c) limiting participation at the meeting
on any matter to Shareholders of record of the Trust
entitled to vote on such matter, their duly authorized
proxies or other such persons as the chairperson of
the meeting may determine; (d) limiting the time
allotted to questions or comments by participants;
(e) maintaining order and security at the meeting;
(f) removing any Shareholder or other person who
refuses to comply with meeting procedures, rules or
guidelines as set forth by the chairperson of the
meeting; (g) concluding a meeting or recessing or
adjourning the meeting to a later date and time and
at a place announced at the meeting; and (h)
complying with any state and local laws and
regulations concerning safety and security. Without
limiting the generality of the powers of the
chairperson of the meeting pursuant to the
foregoing provisions, the chairperson, subject to
review by the Independent Trustees, may adjourn
any meeting of Shareholders for any reason deemed
necessary by the chairperson, including, without
limitation, if (i) no quorum is present for the
transaction of the business, (ii) the Board of
Trustees or the chairperson of the meeting
determines that adjournment is necessary or
appropriate to enable the Shareholders to consider
fully information that the Board of Trustees or the
chairperson of the meeting determines has not been
made sufficiently or timely available to
Shareholders or (iii) the Board of Trustees or the
chairperson of the meeting determines that
adjournment is otherwise in the best interests of the
Trust. Unless otherwise determined by the
chairperson of the meeting, meetings of
Shareholders shall not be required to be held in
accordance with the general rules of parliamentary
procedure or any otherwise established rules of
order.
8.6 Quorum. At any meeting of
Shareholders, the presence in person or by proxy of
Shareholders entitled to cast a majority of all the
votes entitled to be cast on a particular matter shall
constitute a quorum for voting on a particular matter
or the transaction of business; but this section shall
not affect any requirement under any statute or the
Declaration of Trust for the vote necessary for the
adoption of any measure. If, however, such quorum
shall not be present at any meeting of Shareholders,
the chairperson of the meeting shall have the power
to adjourn the meeting from time to time without
the Trust having to set a new record date or provide
any additional notice of such meeting, subject to
any obligation of the Trust to give notice pursuant
to Section 8.3. At such adjourned meeting at which
a quorum shall be present, any business may be
transacted which might have been transacted at the
meeting as originally notified. The Shareholders
present, either in person or by proxy, at a meeting of
Shareholders which has been duly called and
convened and at which a quorum was established
may continue to transact business until
adjournment, notwithstanding the withdrawal of
enough votes to leave less than a quorum then being
present at the meeting.
8.7 Voting Power.
(a) Each whole Share shall be
entitled to one vote as to any matter on
which it is entitled to vote and each
fractional Share shall be entitled to a
proportionate fractional vote, except as
otherwise provided in the notice of the
meeting forwarded to the Shareholders by
the Trustees, the Declaration of Trust, these
Bylaws, or required by the 1940 Act or any
other applicable law. Except as otherwise
provided in the notice of the meeting
forwarded to the Shareholders by the
Trustees, the Declaration of Trust, these
Bylaws or required by the 1940 Act or any
other applicable law, all Shares of the Trust
then entitled to vote shall be voted in the
aggregate as a single class without regard to
classes or series of Shares. There shall be
no cumulative voting in the election of
Trustees.
(b) With regard to election of a
Trustee, and except as may be mandated by
the 1940 Act or any other applicable law or
the listing requirements of the principal
exchange on which the Common Shares are
listed, subject to the voting rights of any
class or series of Shares as set forth in these
Bylaws: (i) a majority of all the votes cast at
a meeting of Shareholders duly called and at
which a quorum is present shall be sufficient
to elect a Trustee in an uncontested election;
and (ii) a majority of all the Shares entitled
to vote at a meeting of Shareholders duly
called and at which a quorum is present shall
be sufficient to elect a Trustee in a contested
election (which, for purposes of these
Bylaws, is an election at which the number
of nominees exceeds the number of Trustees
to be elected at the meeting). Each Share
may be voted for as many individuals as
there are Trustees to be elected and for
whose election the Share is entitled to be
voted.
(c) With regard to any other matter
which may properly come before a meeting
of Shareholders duly called and at which a
quorum is present, and except where a
different voting standard is required by the
1940 Act or any other applicable law, by the
listing requirements of the principal
exchange on which the Common Shares are
listed or by a specific provision of the
Declaration of Trust, (i) if such matter is
approved by at least 60% of the Trustees
then in office, including 60% of the
Independent Trustees then in office, a
majority of all the votes cast at the meeting
shall be required to approve such matter;
and (ii) if such matter is not approved by at
least 60% of the Trustees then in office,
including 60% of the Independent Trustees
then in office, 75% of all the Shares entitled
to vote at the meeting shall be required to
approve such matter.
8.8 Proxies. A Shareholder may cast the
votes entitled to be cast by him or her either in
person or by proxy executed by the Shareholder or
by his or her duly authorized agent in any manner
permitted by law. Such proxy shall be filed with
such officer of the Trust or third party agent as the
Board of Trustees shall have designated for such
purpose for verification at or prior to such meeting.
Any proxy relating to the Shares shall be valid until
the expiration date therein or, if no expiration is so
indicated, for such period as is permitted pursuant
to Delaware law. At a meeting of Shareholders, all
questions concerning the qualification of voters, the
validity of proxies, and the acceptance or rejection
of votes, shall be decided by or on behalf of the
chairperson of the meeting, subject to Section 8.11.
8.9 Record Dates. The Board of
Trustees may fix the date for determination of
Shareholders entitled to notice of and to vote at a
meeting of Shareholders. If no date is fixed for the
determination of the Shareholders entitled to vote at
any meeting of Shareholders, only persons in whose
names Shares entitled to vote are recorded on the
share records of the Trust at the opening of business
on the day of any meeting of Shareholders shall be
entitled to vote at such meeting.
8.10 Voting of Shares by Certain Holders.
Shares registered in the name of a corporation,
partnership, trust or other entity, if entitled to be
voted, may be voted by the president or a vice
president, a general partner or trustee thereof, as the
case may be, or a proxy appointed by any of the
foregoing individuals, unless some other person
who has been appointed to vote such Shares
pursuant to a bylaw or a resolution of the governing
body of such corporation or other entity or pursuant
to an agreement of the partners of the partnership
presents a certified copy of such bylaw, resolution
or agreement, in which case such person may vote
such Shares. Any trustee or other fiduciary may
vote Shares registered in his or her name as such
fiduciary, either in person or by proxy.
8.11 Inspectors.
(a) Before or at any meeting of
Shareholders, the chairperson of the meeting
may appoint one or more persons as
inspectors for such meeting. Such
inspectors shall (i) ascertain and report the
number of Shares represented at the
meeting, in person or by proxy, and the
validity and effect of proxies, (ii) receive
and tabulate all votes, ballots or consents,
(iii) report such tabulation to the chairperson
of the meeting and (iv) perform such other
acts as are proper to conduct the election or
voting at the meeting.
(b) Each report of an inspector shall
be in writing and signed by him or her or by
a majority of them if there is more than one
inspector acting at such meeting. If there is
more than one inspector, the report of a
majority shall be the report of the inspectors.
The report of the inspector or inspectors on
the number of Shares represented at the
meeting and the results of the voting shall be
prima facie evidence thereof.
8.12 Advance Notice of Nominees for
Trustee and Other Proposals.
(a) Nominations and Other
Proposals to be Considered at Meetings of
Shareholders. Nominations of individuals
for election to the Board of Trustees and the
proposal of other business to be considered
by the Shareholders at meetings of
Shareholders may be properly brought
before the meeting only as set forth in this
Section 8.12. All judgments and
determinations made by the Board of
Trustees or the chairperson of the meeting,
as applicable, under this Section 8.12
(including, without limitation, judgments as
to whether any matter or thing is satisfactory
to the Board of Trustees and determinations
as to the propriety of a proposed nomination
or a proposal of other business for
consideration by Shareholders) shall be final
and binding unless determined by a court of
competent jurisdiction to have been made in
bad faith.
(b) Annual Meetings of
Shareholders.
(i) A Shareholder may
recommend to the Nominating
Committee of the Board of Trustees an
individual as a nominee for election to
the Board of Trustees. Such
recommendation shall be made by
written notice to the Chair of such
committee and the Secretary, which
notice should contain or be accompanied
by the information and documents with
respect to such recommended nominee
and Shareholder that such Shareholder
believes to be relevant or helpful to the
Nominating Committee's deliberations.
In considering such recommendation,
the Nominating Committee may request
additional information concerning the
recommended nominee or the
Shareholder making the
recommendation. The Nominating
Committee of the Board of Trustees will
consider any such recommendation in its
discretion. A Shareholder seeking to
make a nomination of an individual for
election to the Board of Trustees must
make such nomination in accordance
with Section 8.12(b)(ii) or Section
8.12(b)(iii), as applicable.
(ii) Nominations of
individuals for election to the Board of
Trustees by the holders of Preferred
Shares, voting as a separate class
pursuant to Section E(a) or E(b) of Part I
of Article X, at an annual meeting of
Shareholders may be properly brought
before the meeting (A) pursuant to the
Trust's notice of meeting or otherwise
properly brought before the meeting by
or at the direction of the Board of
Trustees or (B) by any holder of
Preferred Shares who (1) has
continuously held at least $2,000 in
market value, or 1%, of the Preferred
Shares entitled to vote at the meeting on
such election for at least one year from
the date such holder of Preferred Shares
gives the notice provided for in this
Section 8.12(b)(ii) (such one year period
of continuous holding to include having
continuously held at least $2,000 in
market value, or 1%, of the preferred
shares of Old RMR Real Estate Income
Fund then outstanding for such period of
time immediately prior to and including
January 20, 2012 as may be necessary to
achieve such one year period if such
notice is given prior to January 20,
2013), and continuously holds such
Preferred Shares through and including
the time of the annual meeting
(including any adjournment or
postponement thereof), (2) is a holder of
record of such Preferred Shares at the
time of giving the notice provided for in
this Section 8.12(b)(ii) through and
including the time of the annual meeting
(including any adjournment or
postponement thereof), (3) is entitled to
make nominations and to vote at the
meeting on such election and (4)
complies with the notice procedures set
forth in this Section 8.12 as to such
nomination. Section 8.12(b)(ii)(B) shall
be the exclusive means for a holder of
Preferred Shares to make nominations of
individuals for election to the Board of
Trustees by the holders of Preferred
Shares voting as a separate class
pursuant to Section E(a) or E(b) of Part I
of Article X. For purposes of
determining compliance with the
requirement in subclause (1) of Section
8.12(b)(ii)(B), the market value of
Preferred Shares held by the applicable
Shareholder shall be determined by
multiplying the number of Preferred
Shares such Shareholder continuously
held for that one-year period by the
Liquidation Preference (as that term is
defined in Article X) of such Preferred
Shares.
(iii) Nominations of
individuals for election to the Board of
Trustees by the holders of Common
Shares and Preferred Shares, voting
together as a single class, at an annual
meeting of Shareholders may be
properly brought before the meeting (A)
pursuant to the Trust's notice of meeting
by or at the direction of the Board of
Trustees or (B) by any one or more
Shareholders of the Trust who (1) (x) at
the date of the giving of the notice
provided for in this Section 8.12(b)(iii),
individually or in the aggregate, hold at
least 3% of the Shares entitled to vote at
the meeting on such election and have
held such Shares continuously for at
least three years, and (y) continuously
hold such Shares through and including
the time of the annual meeting
(including any adjournment or
postponement thereof), (2) are each a
Shareholder of record of the Trust at the
time of giving the notice provided for in
this Section 8.12(b)(iii) through and
including the time of the annual meeting
(including any adjournment or
postponement thereof), (3) are each
entitled to make nominations and to vote
at the meeting on such election and (4)
comply with the notice procedures set
forth in this Section 8.12(b) as to such
nomination. Section 8.12(b)(iii)(B) shall
be the exclusive means for any
Shareholder to make nominations of
individuals for election to the Board of
Trustees by the holders of Common
Shares and Preferred Shares, voting
together as a single class.
(iv) The proposal of business
to be considered by Shareholders at an
annual meeting of Shareholders, other
than the nomination of individuals for
election to the Board of Trustees, may be
properly brought before the meeting (A)
pursuant to the Trust's notice of meeting
by or at the direction of the Board of
Trustees or (B) by any Shareholder of
the Trust who (1) has continuously held
at least $2,000 in market value, or 1%,
of the Shares entitled to vote at the
meeting on the proposal for business for
at least one year from the date such
Shareholder gives the notice provided
for in this Section 8.12(b)(iv), and
continuously holds such Shares through
and including the time of the annual
meeting (including any adjournment or
postponement thereof), (2) is a
Shareholder of record at the time of
giving the notice provided for in this
Section 8.12(b)(iv) through and
including the time of the annual meeting
(including any adjournment or
postponement thereof), (3) is entitled to
propose such business and to vote at the
meeting on the proposal for such
business and (4) complies with the
notice procedures set forth in this
Section 8.12(b) as to such business.
Section 8.12(b)(iv)(B) shall be the
exclusive means for a Shareholder to
propose business before an annual
meeting of Shareholders, except (x) to
the extent of matters which are required
to be presented to Shareholders by
applicable law which have been properly
presented in accordance with the
requirements of such law and (y)
nominations of individuals for election
to the Board of Trustees shall be made in
accordance with Section 8.12(b)(ii)(B)
or Section 8.12(b)(iii)(B), as applicable.
For purposes of determining compliance
with the requirement in subclause (1) of
Section 8.12(b)(iv)(B), (A) the market
value of Common Shares held by the
applicable Shareholder shall be
determined by multiplying the number
of Common Shares such Shareholder
continuously held for that one-year
period by the highest selling price of the
Common Shares as reported on the
principal exchange on which the Trust's
Common Shares are listed during the 60
calendar days before the date such notice
was submitted and (B) the market value
of Preferred Shares held by the
applicable Shareholder shall be
determined by multiplying the number
of Preferred Shares such Shareholder
continuously held for that one-year
period by the Liquidation Preference (as
that term is defined in Article X) of such
Preferred Shares.
(v) For nominations for
election to the Board of Trustees or other
business to be properly brought before
an annual meeting by one or more
Shareholders pursuant to Section
8.12(b), such Shareholder(s) shall have
given timely notice thereof in writing to
the Secretary in accordance with this
Section 8.12 and such other business
shall otherwise be a proper matter for
action by Shareholders. To be timely,
the notice of such Shareholder(s) shall
set forth all information required under
this Section 8.12 and shall be delivered
to the Secretary at the principal
executive offices of the Trust not later
than 5:00 p.m. (Eastern Time) on the
120th day nor earlier than the 150th day
prior to the first anniversary of the date
of the proxy statement for the preceding
year's annual meeting; provided,
however, that in the event that the annual
meeting is called for a date that is more
than 30 days earlier or later than the first
anniversary of the date of the preceding
year's annual meeting, notice by such
Shareholder(s) to be timely shall be so
delivered not later than 5:00 p.m.
(Eastern Time) on the 10th day
following the earlier of the day on which
(A) notice of the date of the annual
meeting is mailed or otherwise made
available or (B) public announcement of
the date of the annual meeting is first
made by the Trust. Neither the
postponement or adjournment of an
annual meeting, nor the public
announcement of such postponement or
adjournment, shall commence a new
time period for the giving of a notice of
one or more Shareholder(s) as described
above. No Shareholder may give a
notice to the Secretary described in this
Section 8.12(b)(v) unless such
Shareholder holds a certificate for all
Shares owned by such Shareholder
during all times described in Section
8.12(b)(ii)(B) or Section 8.12(b)(iii)(B),
as applicable, in the case of a nomination
of one or more individuals for election
the Board of Trustees, or Section
8.12(iv)(B), in the case of the proposal
of other business, and a copy of each
such certificate held by such Shareholder
at the time of giving such notice shall
accompany such Shareholder's notice to
the Secretary in order for such notice to
be effective; provided, that, if at the time
of giving such notice Preferred Shares
may only be held in book-entry form,
then such Shareholder shall in lieu of
delivering certificates for all such
Preferred Shares deliver at the time of
giving such notice evidence satisfactory
to the Board of Trustees that such
Shareholder is the Beneficial Owner (as
that term is defined in Article X) for all
Preferred Shares held by such
Shareholder during all times described in
Section 8.12(b)(ii)(B) or Section
8.12(b)(iii)(B), as applicable, in the case
of a nomination of one or more
individuals for election the Board of
Trustees, or Section 8.12(iv)(B), in the
case of the proposal of other business
(including, for the avoidance of doubt,
during all times when such Shareholder
held preferred shares of Old RMR Real
Estate Income Fund that such
Shareholder is permitted to "tack" to
such Shareholder's period of ownership
of Preferred Shares under Section
8.12(b)(ii)(B)(1)).
A notice of one or more
Shareholders pursuant to this Section 8.12(b) shall
set forth:
A. separately as to each
individual whom such
Shareholder(s)
propose to nominate
for election or
reelection as a Trustee
(a "Proposed
Nominee") and any
Proposed Nominee
Associated Person (as
defined in Section
8.12(b)(viii)), (1) the
name, age, business
address and residence
address of such
Proposed Nominee
and the name and
address of such
Proposed Nominee
Associated Person,
(2) a statement of
whether such
Proposed Nominee is
proposed for
nomination as an
Independent Trustee
(as defined in Section
2.2) or a Managing
Trustee (as defined in
Section 2.2) and a
description of such
Proposed Nominee's
qualifications to be an
Independent Trustee
or Managing Trustee,
as the case may be,
and such Proposed
Nominee's
qualifications to be a
Trustee pursuant to
the criteria set forth in
Section 2.1, (3) the
class, series and
number of any Shares
that are, directly or
indirectly,
beneficially owned or
owned of record by
such Proposed
Nominee or by such
Proposed Nominee
Associated Person,
(4) the date such
Shares were acquired,
whether any "tacking"
provisions contained
in Section
8.12(b)(ii)(B)(1) are
being relied upon and
the investment intent
of such acquisition,
(5) a description of all
purchases and sales of
securities of the Trust
by such Proposed
Nominee or by such
Proposed Nominee
Associated Person
during the previous
36 month period,
including the date of
the transactions, the
class, series and
number of securities
involved in the
transactions and the
consideration
involved, (6) a
description of all
Derivative
Transactions (as
defined in Section
8.12(b)(viii)) by such
Proposed Nominee or
by such Proposed
Nominee Associated
Person during the
previous 36 month
period, including the
date of the
transactions and the
class, series and
number of securities
involved in, and the
material economic
terms of, the
transactions, such
description to include,
without limitation, all
information that such
Proposed Nominee or
Proposed Nominee
Associated Person
would be required to
report on an Insider
Report (as defined in
Section 8.12(b)(viii))
if such Proposed
Nominee or Proposed
Nominee Associated
Person were a Trustee
of the Trust or the
beneficial owner of
more than 10% of any
class or series of
Shares at the time of
the transactions, (7)
any performance
related fees (other
than an asset based
fee) to which such
Proposed Nominee or
such Proposed
Nominee Associated
Person is entitled
based on any increase
or decrease in the
value of Shares or
instrument or
arrangement of the
type contemplated
within the definition
of Derivative
Transaction, if any,
including, without
limitation, any such
interests held by
members of such
Proposed Nominee's
or such Proposed
Nominee Associated
Person's immediate
family sharing the
same household with
such Proposed
Nominee or such
Proposed Nominee
Associated Person,
(8) any proportionate
interest in Shares or
instrument or
arrangement of the
type contemplated
within the definition
of Derivative
Transaction held,
directly or indirectly,
by a general or
limited partnership in
which such Proposed
Nominee or such
Proposed Nominee
Associated Person is a
general partner or,
directly or indirectly,
beneficially owns an
interest in a general
partner, (9) a
description of all
direct and indirect
compensation and
other material
monetary agreements,
arrangements and
understandings during
the past three years,
and any other material
relationships, between
or among any
Shareholder making
the nomination, any
Proposed Nominee
Associated Person, or
any of their respective
affiliates and
associates, or others
acting in concert
therewith, on the one
hand, and each
Proposed Nominee, or
his or her respective
affiliates and
associates, or others
acting in concert
therewith, on the
other hand, including,
without limitation, all
information that
would be required to
be disclosed pursuant
to Item 404 of
Regulation S-K
promulgated by the
SEC (and any
successor regulation),
if any Shareholder
making the
nomination and any
Proposed Nominee
Associated Person on
whose behalf the
nomination is made,
or any affiliate or
associate thereof or
person acting in
concert therewith,
were the "registrant"
for purposes of such
rule and the Proposed
Nominee were a
director or executive
officer of such
registrant, (10) any
rights to dividends on
the Shares owned
beneficially by such
Proposed Nominee or
such Proposed
Nominee Associated
Person that are
separated or separable
from the underlying
Shares, (11) to the
extent known by such
Proposed Nominee or
such Proposed
Nominee Associated
Person, the name and
address of any other
person who owns, of
record or beneficially,
any Shares and who
supports the Proposed
Nominee for election
or reelection as a
Trustee and (12) all
other information
relating to such
Proposed Nominee or
such Proposed
Nominee Associated
Person that is required
to be disclosed in
solicitations of
proxies for election of
Trustees in an
election contest (even
if an election contest
is not involved), or is
otherwise required, in
each case, pursuant to
Section 14 (or any
successor provision)
of the Exchange Act,
and the rules and
regulations
promulgated
thereunder;
B. as to any other
business that the
Shareholder proposes
to bring before the
meeting, (1) a
description of such
business, (2) the
reasons for proposing
such business at the
meeting and any
material interest in
such business of such
Shareholder or any
Shareholder
Associated Person (as
defined in Section
8.12(b)(viii)),
including any
anticipated benefit to
such Shareholder or
any Shareholder
Associated Person
therefrom, (3) a
description of all
agreements,
arrangements and
understandings
between such
Shareholder and
Shareholder
Associated Person
amongst themselves
or with any other
person or persons
(including their
names) in connection
with the proposal of
such business by such
Shareholder and (4) a
representation that
such Shareholder
intends to appear in
person or by proxy at
the meeting to bring
the business before
the meeting;
C. separately as to each
Shareholder giving
the notice and any
Shareholder
Associated Person,
(1) the class, series
and number of all
Shares that are owned
of record by such
Shareholder or by
such Shareholder
Associated Person, if
any, (2) the class,
series and number of,
and the nominee
holder for, any Shares
that are owned,
directly or indirectly,
beneficially but not of
record by such
Shareholder or by
such Shareholder
Associated Person, if
any, (3) with respect
to the Shares
referenced in the
foregoing clauses (1)
and (2), the date such
Shares were acquired,
whether any "tacking"
provisions contained
in Section
8.12(b)(ii)(B)(1) are
being relied upon and
the investment intent
of such acquisition,
and (4) all
information relating
to such Shareholder
and Shareholder
Associated Person
that is required to be
disclosed in
connection with the
solicitation of proxies
for election of
Trustees in an
election contest (even
if an election contest
is not involved), or is
otherwise required, in
each case, pursuant to
Section 14 (or any
successor provision)
of the Exchange Act
and the rules and
regulations
promulgated
thereunder;
D. separately as to each
Shareholder giving
the notice and any
Shareholder
Associated Person,
(1) the name and
address of such
Shareholder, as they
appear on the Trust's
share ledger and the
current name and
address, if different,
of such Shareholder
and Shareholder
Associated Person
and (2) the investment
strategy or objective,
if any, of such
Shareholder or
Shareholder
Associated Person
and a copy of the
prospectus, offering
memorandum or
similar document, if
any, provided to
investors or potential
investors in such
Shareholder or
Shareholder
Associated Person;
E. separately as to each
Shareholder giving
the notice and any
Shareholder
Associated Person,
(1) a description of all
purchases and sales of
securities of the Trust
by such Shareholder
or Shareholder
Associated Person
during the previous
36 month period,
including the date of
the transactions, the
class, series and
number of securities
involved in the
transactions and the
consideration
involved, (2) a
description of all
Derivative
Transactions by such
Shareholder or
Shareholder
Associated Person
during the previous
36 month period,
including the date of
the transactions and
the class, series and
number of securities
involved in, and the
material economic
terms of, the
transactions, such
description to include,
without limitation, all
information that such
Shareholder or
Shareholder
Associated Person
would be required to
report on an Insider
Report if such
Shareholder or
Shareholder
Associated Person
were a Trustee of the
Trust or the beneficial
owner of more than
10% of any class or
series of Shares at the
time of the
transactions, (3) any
performance related
fees (other than an
asset based fee) to
which such
Shareholder or
Shareholder
Associated Person is
entitled based on any
increase or decrease
in the value of Shares
or instrument or
arrangement of the
type contemplated
within the definition
of Derivative
Transaction, if any, as
of the date of such
notice, including,
without limitation,
any such interests
held by members of
such Shareholder's or
Shareholder
Associated Person's
immediate family
sharing the same
household with such
Shareholder or
Shareholder
Associated Person,
(4) any proportionate
interest in Shares or
instrument or
arrangement of the
type contemplated
within the definition
of Derivative
Transaction held,
directly or indirectly,
by a general or
limited partnership in
which such
Shareholder or
Shareholder
Associated Person is a
general partner or,
directly or indirectly,
beneficially owns an
interest in a general
partner and (5) any
rights to dividends on
the Shares owned
beneficially by such
Shareholder or
Shareholder
Associated Person
that are separated or
separable from the
underlying Shares;
F. to the extent known
by the Shareholder
giving the notice, the
name and address of
any other Person who
owns, beneficially or
of record, any Shares
and who supports the
nominee for election
or reelection as a
Trustee or the
proposal of other
business; and
G. if more than one class
or series of Shares is
outstanding, the class
and series of Shares
entitled to vote for
such Proposed
Nominee and/or
Shareholder's
proposal, as
applicable.
(vi) A notice of one or more
Shareholders making a nomination
pursuant to Section 8.12(b)(ii)(B) or
Section 8.12(b)(iii)(B) shall be
accompanied by:
A. a signed and notarized
statement of each
Shareholder giving
the notice certifying
that (1) all
information contained
in the notice is true
and complete in all
respects, (2) the
notice complies with
this Section 8.12(b),
and (3) such
Shareholder will
continue to hold all
Shares referenced in
Section
8.12(b)(ii)(B)(1) or
Section
8.12(b)(iii)(B)(1)(x),
as applicable, through
and including the time
of the annual meeting
(including any
adjournment or
postponement
thereof); and
B. a signed and notarized
certificate of each
Proposed Nominee
(1) certifying that the
information contained
in the notice
regarding such
Proposed Nominee
and any Proposed
Nominee Associated
Person is true and
complete and
complies with this
Section 8.12(b) and
(2) consenting to
being named in the
Shareholder's proxy
statement as a
nominee and to
serving as a Trustee if
elected.
(vii) Notwithstanding
anything in the second sentence of
Section 8.12(b)(v) to the contrary, in the
event that the number of Trustees to be
elected to the Board of Trustees is
increased and there is no public
announcement of such action at least 130
days prior to the first anniversary of the
date of the proxy statement for the
preceding year's annual meeting, a
Shareholder's notice required by this
Section 8.12(b) also shall be considered
timely, but only with respect to
nominees for any new positions created
by such increase, if the notice is
delivered to the Secretary at the principal
executive offices of the Trust not later
than 5:00 p.m. (Eastern Time) on the
10th day immediately following the day
on which such public announcement is
first made by the Trust.
(viii) For purposes of this
Section 8.12, (i) "Shareholder
Associated Person" of any Shareholder
shall mean (A) any Person acting in
concert with, such Shareholder, (B) any
direct or indirect beneficial owner of
Shares owned of record or beneficially
by such Shareholder and (C) any Person
controlling, controlled by or under
common control with such Shareholder
or a Shareholder Associated Person; (ii)
"Proposed Nominee Associated Person"
of any Proposed Nominee shall mean
(A) any Person acting in concert with
such Proposed Nominee, (B) any direct
or indirect beneficial owner of Shares
owned of record or beneficially by such
Proposed Nominee and (C) any Person
controlling, controlled by or under
common control with such Proposed
Nominee or a Proposed Nominee
Associated Person; (iii) "Derivative
Transaction" by a Person shall mean any
(A) transaction in, or arrangement,
agreement or understanding with respect
to, any option, warrant, convertible
security, stock appreciation right or
similar right with an exercise,
conversion or exchange privilege, or
settlement payment or mechanism
related to, any security of the Trust, or
similar instrument with a value derived
in whole or in part from the value of a
security of the Trust, in any such case
whether or not it is subject to settlement
in a security of the Trust or otherwise or
(B) any transaction, arrangement,
agreement or understanding which
included or includes an opportunity for
such person, directly or indirectly, to
profit or share in any profit derived from
any increase or decrease in the value of
any security of the Trust, to mitigate any
loss or manage any risk associated with
any increase or decrease in the value of
any security of the Trust or to increase or
decrease the number of securities of the
Trust which such person was, is or will
be entitled to vote, in any such case
whether or not it is subject to settlement
in a security of the Trust or otherwise;
and (iv) "Insider Report" shall mean a
statement required to be filed pursuant to
Section 16 of the Exchange Act (or any
successor provisions) by a person who is
a Trustee of the Trust or who is directly
or indirectly the beneficial owner of
more than 10% of any class of Shares.
(c) Shareholder Nominations or
Other Proposals Causing Covenant Breaches
or Defaults. At the same time as the
submission of any Shareholder nomination
or proposal of other business to be
considered at a Shareholders' meeting that,
if approved and implemented by the Trust,
would cause the Trust or any subsidiary (as
defined in Section 8.12(f)(iii)) of the Trust
to be in breach of any covenant of the Trust
or any subsidiary of the Trust or otherwise
cause a default (in any case, with or without
notice or lapse of time) in any existing debt
instrument or agreement of the Trust or any
subsidiary of the Trust or other material
contract or agreement of the Trust or any
subsidiary of the Trust, the proponent
Shareholder or Shareholders shall submit to
the Secretary at the principal executive
offices of the Trust (i) evidence satisfactory
to the Board of Trustees of the lender's or
contracting party's willingness to waive the
breach of covenant or default or (ii) a
detailed plan for repayment of the
indebtedness to the lender or curing the
contractual breach or default and satisfying
any resulting damage claim, specifically
identifying the actions to be taken or the
source of funds, which plan must be
satisfactory to the Board of Trustees in its
discretion, and evidence of the availability
to the Trust of substitute credit or
contractual arrangements similar to the
credit or contractual arrangements which are
implicated by the Shareholder nomination or
other proposal that are at least as favorable
to the Trust, as determined by the Board of
Trustees in its discretion. As an example
and not as a limitation, at the time these
Bylaws are being amended and restated, the
Trust is party to a bank credit facility that
contains covenants which prohibit certain
changes in the management and policies of
the Trust without the approval of the lender;
accordingly, a Shareholder nomination or
proposal which implicates these covenants
shall be accompanied by a waiver of these
covenants duly executed by the bank or by
evidence satisfactory to the Board of
Trustees of the availability of funding to the
Trust to repay outstanding indebtedness
under this credit facility and of the
availability of a new credit facility on terms
as favorable to the Trust as the existing
credit facility.
(d) Shareholder Nominations or
Other Proposals Requiring Governmental
Action. If (i) submission of any Shareholder
nomination or proposal of other business to
be considered at a Shareholders' meeting
that could not be considered or, if approved,
implemented by the Trust without the Trust,
any subsidiary of the Trust, the proponent
Shareholder, any Proposed Nominee of such
Shareholder, any Proposed Nominee
Associated Person of such Proposed
Nominee, any Shareholder Associated
Person of such Shareholder, the holder of
proxies or their respective affiliates or
associates filing with or otherwise notifying
or obtaining the consent, approval or other
action of any federal, state, municipal or
other governmental or regulatory body (a
"Governmental Action") or (ii) such
Shareholder's ownership of Shares or any
solicitation of proxies or votes or holding or
exercising proxies by such Shareholder, any
Proposed Nominee of such Shareholder, any
Proposed Nominee Associated Person of
such Proposed Nominee, any Shareholder
Associated Person of such Shareholder, or
their respective affiliates or associates would
require Governmental Action, then, at the
same time as the submission of any
Shareholder nomination or proposal of other
business to be considered at a Shareholders'
meeting, the proponent Shareholder or
Shareholders shall submit to the Secretary at
the principal executive offices of the Trust
(x) evidence satisfactory to the Board of
Trustees that any and all Governmental
Action has been given or obtained,
including, without limitation, such evidence
as the Board of Trustees may require so that
any nominee may be determined to satisfy
any suitability or other requirements or (y) if
such evidence was not obtainable from a
governmental or regulatory body by such
time despite the Shareholder's diligent and
best efforts, a detailed plan for making or
obtaining the Governmental Action prior to
the election of any such Proposed Nominee
or the implementation of such proposal,
which plan must be satisfactory to the Board
of Trustees in its discretion.
(e) Special Meetings of
Shareholders. As set forth in Section 8.4,
only business brought before the meeting
pursuant to the Trust's notice of meeting
shall be conducted at a special meeting of
Shareholders. Subject to the requirements
of the 1940 Act or any other applicable
laws, nominations of individuals for election
to the Board of Trustees only may be made
at a special meeting of Shareholders at
which Trustees are to be elected: (i)
pursuant to the Trust's notice of meeting;
(ii) otherwise properly brought before the
meeting by or at the direction of the Board
of Trustees; or (iii) provided that the Board
of Trustees has determined that Trustees
shall be elected at such special meeting, by
any Shareholder of the Trust who is a
Shareholder of record both at the time of
giving of notice provided for in this Section
8.12(e) through and including the time of the
special meeting, who is entitled to vote at
the meeting on such election and who has
complied with the notice procedures and
other requirements set forth in this Section
8.12(e). In the event the Trust calls a special
meeting of Shareholders for the purpose of
having holders of Preferred Shares, voting
as a separate class pursuant to Section E(a)
or E(b) of Part I of Article X, elect one or
more Trustees to the Board of Trustees, any
such holder of Preferred Shares may
nominate an individual or individuals (as the
case may be) for election as a Trustee as
specified in the Trust's notice of meeting, if
the Shareholder satisfies the holding period
and certificate and/or evidence of being a
Beneficial Owner requirements set forth in
Section 8.12(b)(ii) and Section 8.12(b)(v),
the Shareholder's notice contains or is
accompanied by the information and
documents required by Section 8.12 and the
Shareholder has given timely notice thereof
in writing to the Secretary at the principal
executive offices of the Trust. In the event
the Trust calls a special meeting of
Shareholders for the purpose of having
holders of Common Shares and Preferred
Shares, voting together as a single class,
elect one or more Trustees to the Board of
Trustees, any such Shareholder may
nominate an individual or individuals (as the
case may be) for election as a Trustee as
specified in the Trust's notice of meeting, if
the Shareholder satisfies the holding period
and certificate and/or evidence of being a
Beneficial Owner requirements set forth in
Section 8.12(b)(iii) and Section 8.12(b)(v),
the Shareholder's notice contains or is
accompanied by the information and
documents required by Section 8.12 and the
Shareholder has given timely notice thereof
in writing to the Secretary at the principal
executive offices of the Trust. To be timely,
a Shareholder's notice shall be delivered to
the Secretary at the principal executive
offices of the Trust not earlier than the 150th
day prior to such special meeting and not
later than 5:00 p.m. (Eastern Time) on the
later of (i) the 120th day prior to such
special meeting or (ii) the 10th day
following the day on which public
announcement is first made of the date of
the special meeting and of the nominees
proposed by the Trustees to be elected at
such meeting. Neither the postponement or
adjournment of a special meeting, nor the
public announcement of such postponement
or adjournment, shall commence a new time
period for the giving of a Shareholder's
notice as described above.
(f) General.
(i) If information submitted
pursuant to this Section 8.12 by any
Shareholder proposing a nominee for
election as a Trustee or any proposal for
other business at a meeting of
Shareholders shall be deemed by the
Board of Trustees incomplete or
inaccurate, any authorized officer or the
Board of Trustees or any Committee
may treat such information as not having
been provided in accordance with this
Section 8.12. Any notice submitted by a
Shareholder pursuant to this Section 8.12
that is deemed by the Board of Trustees
inaccurate, incomplete or otherwise fails
to satisfy completely any provision of
this Section 8.12 shall be deemed
defective and shall thereby render all
proposals and nominations set forth in
such notice defective. Upon written
request by the Secretary or the Board of
Trustees or any Committee (which may
be made from time to time), any
Shareholder proposing a nominee for
election as a Trustee or any proposal for
other business at a meeting of
Shareholders shall provide, within three
business days after such request (or such
other period as may be specified in such
request), (A) written verification,
satisfactory to the Secretary or any other
authorized officer or the Board of
Trustees or any Committee, in his, her or
its discretion, to demonstrate the
accuracy of any information submitted
by the Shareholder pursuant to this
Section 8.12, (B) written responses to
information reasonably requested by the
Secretary, the Board of Trustees or any
Committee and (C) a written update, to a
current date, of any information
submitted by the Shareholder pursuant to
this Section 8.12 as of an earlier date. If
a Shareholder fails to provide such
written verification, information or
update within such period, the Secretary
or any other authorized officer or the
Board of Trustees may treat the
information which was previously
provided and to which the verification,
request or update relates as not having
been provided in accordance with this
Section 8.12; provided, however, that no
such written verification, response or
update shall cure any incompleteness,
inaccuracy or failure in any notice
provided by a Shareholder pursuant to
this Section 8.12. It is the responsibility
of a Shareholder who wishes to make a
nomination or other proposal to comply
with the requirements of Section 8.12;
nothing in this Section 8.12(f)(i) or
otherwise shall create any duty of the
Trust, the Board of Trustees or any
Committee nor any officer of the Trust
to inform a Shareholder that the
information submitted pursuant to this
Section 8.12 by or on behalf of such
Shareholder is incomplete or inaccurate
or not otherwise in accordance with this
Section 8.12 nor require the Trust, the
Board of Trustees, any Committee or
any officer of the Trust to request
clarification or updating of information
provided by any Shareholder, but the
Board of Trustees, a Committee or the
Secretary acting on behalf of the Board
of Trustees or a Committee, may do so
in its, his or her discretion.
(ii) Only such individuals who
are nominated in accordance with this
Section 8.12 shall be eligible for election
by Shareholders as Trustees and only
such business shall be conducted at a
meeting of Shareholders as shall have
been properly brought before the
meeting in accordance with this Section
8.12. The chairperson of the meeting
and the Board of Trustees shall each
have the power to determine whether a
nomination or any other business
proposed to be brought before the
meeting was made or proposed, as the
case may be, in accordance with this
Section 8.12 and, if any proposed
nomination or other business is
determined not to be in compliance with
this Section 8.12, to declare that such
defective nomination or proposal be
disregarded.
(iii) For purposes of this
Section 8.12: (A) "public
announcement" shall mean disclosure in
(1) a press release reported by the Dow
Xxxxx News Service, Associated Press,
Business Wire, PR Newswire or any
other widely circulated news or wire
service or (2) a document publicly filed
by the Trust with the SEC pursuant to
the Exchange Act; and (B) "subsidiary"
shall include, with respect to a person,
any corporation, partnership, joint
venture or other entity of which such
person (1) owns, directly or indirectly,
10% or more of the outstanding voting
securities or other interests or (2) has a
person designated by such person
serving on, or a right, contractual or
otherwise, to designate a person, so to
serve on, the board of directors (or
analogous governing body).
(iv) Notwithstanding the
foregoing provisions of this Section
8.12, a Shareholder shall also comply
with all applicable legal requirements,
including, without limitation, applicable
requirements of state law, the 1940 Act
and the Exchange Act and the rules and
regulations thereunder, with respect to
the matters set forth in this Section 8.12.
Nothing in this Section 8.12 shall be
deemed to require that a Shareholder
nomination of an individual for election
to the Board of Trustees or a
Shareholder proposal relating to other
business be included in the Trust's proxy
statement, except as may be required by
law.
(v) The Board of Trustees
may from time to time require any
individual nominated to serve as a
Trustee to agree in writing with regard to
matters of business ethics and
confidentiality while such nominee
serves as a Trustee, such agreement to be
on the terms and in a form (the
"Agreement") determined satisfactory
by the Board of Trustees, as amended
and supplemented from time to time in
the discretion of the Board of Trustees.
The terms of the Agreement may be
substantially similar to the Code of
Business Conduct and Ethics of the
Trust or any similar code promulgated
by the Trust (the "Code of Business
Conduct") or may differ from or
supplement the Code of Business
Conduct.
(vi) Determinations required
or permitted to be made under this
Section 8.12 by the Board of Trustees
may be delegated by the Board of
Trustees to a Committee, subject to
applicable law.
8.13 No Shareholder Actions by Written
Consent. Shareholders shall not be authorized or
permitted to take any action required or permitted to
be taken at a meeting of Shareholders by written
consent, and may take such action only at
Shareholders meeting of the Trust.
8.14 Voting by Ballot. Voting on any
question or in any election may be voice vote unless
the chairperson of the meeting or any Shareholder
shall demand that voting be by ballot.
8.15 Proposals of Business Which Are
Not Proper Matters For Action By Shareholders.
Notwithstanding anything in these Bylaws to the
contrary, subject to the 1940 Act and any other
applicable law, any Shareholder proposal for
business the subject matter or effect of which would
be within the exclusive purview of the Board of
Trustees or would reasonably likely, if considered
by the Shareholders or approved or implemented by
the Trust, result in an impairment of the limited
liability status for the Trust's Shareholders, shall be
deemed not to be a matter upon which the
Shareholders are entitled to vote. The Board of
Trustees in its discretion shall be entitled to
determine whether a Shareholder proposal for
business is not a matter upon which the
Shareholders are entitled to vote pursuant to this
Section 8.15, and its decision shall be final and
binding unless determined by a court of competent
jurisdiction to have been made in bad faith.
ARTICLE IX
MISCELLANEOUS
9.1 Amendment of Bylaws. Except for
any change for which these Bylaws requires
approval by more than a majority vote of the
Trustees, these Bylaws may be amended, changed,
altered or repealed, in whole or part, only by
resolution of the Board of Trustees at any meeting
of the Board of Trustees at which a quorum is
present, or by a written consent signed by a majority
of the Trustees then in office.
9.2 Waiver of Notice. Whenever any
notice is required to be given pursuant to the
Declaration of Trust, these Bylaws, the 1940 Act or
any other applicable law, a waiver thereof in
writing, signed by the person or persons entitled to
such notice, or a waiver by electronic transmission
by the person or persons entitled to such notice,
whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
Neither the business to be transacted at nor the
purpose of any meeting need be set forth in the
waiver of notice or waiver by electronic
transmission, unless specifically required by statute.
The attendance of any person at any meeting shall
constitute a waiver of notice of such meeting,
except where such person attends a meeting for the
express purpose of objecting to the transaction of
any business on the ground that the meeting is not
lawfully called or convened.
9.3 Ratification. The Board of Trustees
or the Shareholders may ratify and make binding on
the Trust any action or inaction by the Trust or its
officers to the extent that the Board of Trustees or
the Shareholders could have originally authorized
the matter. Moreover, any action or inaction
questioned in any Shareholder's derivative
proceeding or any other proceeding on the ground
of lack of authority, defective or irregular
execution, adverse interest of a Trustee, officer or
Shareholder, non-disclosure, miscomputation, the
application of improper principles or practices of
accounting, or otherwise, may be ratified, before or
after judgment, by the Board of Trustees or by the
Shareholders and, if so ratified, shall have the same
force and effect as if the questioned action or
inaction had been originally duly authorized, and
such ratification shall be binding upon the Trust and
its Shareholders and shall constitute a bar to any
claim or execution of any judgment in respect of
such questioned action or inaction.
9.4 Ambiguity. In the case of an
ambiguity in the application of any provision of
these Bylaws or any definition contained in these
Bylaws, the Board of Trustees shall have the sole
power to determine the application of such
provisions with respect to any situation based on the
facts known to it and such determination shall be
final and binding unless determined by a court of
competent jurisdiction to have been made in bad
faith.
9.5 Construction. If any provision of
these Bylaws is determined to be unlawful by a
court or regulatory body of competent jurisdiction,
the remainder of these Bylaws shall remain in full
force and effect and the offending provision shall be
construed to achieve the purpose of the offending
provision to the extent legally possible. The re-
construction of an unlawful provision shall be made
by the Board of Trustees, or, in the absence of
action by the Board of Trustees, by the court or
regulatory body which determined the provision to
be unlawful. These Bylaws shall be subject to and
construed accordance with the 1940 Act. In the
event of a conflict between any provision of these
Bylaws and the 1940 Act, such provision shall be
construed to achieve the purpose of the provision to
the extent legally possible under the 1940 Act.
9.6 Inspection of Bylaws. The Trustees
shall keep at the principal office for the transaction
of business of the Trust the original or a copy of the
Bylaws as amended or otherwise altered to date,
certified by the Secretary, which shall be open to
inspection by the Shareholders at all reasonable
times during office hours.
ARTICLE X
PREFERRED SHARES OF BENEFICIAL
INTEREST
10.1 Statement Creating Five Series of
Preferred Shares.
DESIGNATION
Series F: 1,000 preferred shares, par value
$.0001 per share, liquidation preference $25,000 per
share plus an amount equal to accumulated but
unpaid distributions thereon (whether or not earned
or declared), are hereby designated auction
preferred shares, Series F (the "Series F"). Each
share of the Series F shall have an Applicable Rate
for its Initial Rate Period determined pursuant to a
resolution of the Board of Trustees and an initial
Distribution Payment Date that shall be set pursuant
to a resolution of the Board of Trustees. The shares
of Series F shall constitute a separate series of
Preferred Shares of the Trust.
Series M: 15,000 preferred shares, par value
$.0001 per share, liquidation preference $25,000 per
share plus an amount equal to accumulated but
unpaid distributions thereon (whether or not earned
or declared), are hereby designated auction
preferred shares, Series M (the "Series M"). Each
share of the Series M shall have an Applicable Rate
for its Initial Rate Period determined pursuant to a
resolution of the Board of Trustees and an initial
Distribution Payment Date that shall be set pursuant
to a resolution of the Board of Trustees. The shares
of Series M shall constitute a separate series of
Preferred Shares of the Trust.
Series T: 3,000 preferred shares, par value
$.0001 per share, liquidation preference $25,000 per
share plus an amount equal to accumulated but
unpaid distributions thereon (whether or not earned
or declared), are hereby designated auction
preferred shares, Series T (the "Series T"). Each
share of the Series T shall have an Applicable Rate
for its Initial Rate Period determined pursuant to a
resolution of the Board of Trustees and an initial
Distribution Payment Date that shall be set pursuant
to a resolution of the Board of Trustees. The shares
of Series T shall constitute a separate series of
Preferred Shares of the Trust.
Series Th: 8,000 preferred shares, par value
$.0001 per share, liquidation preference $25,000 per
share plus an amount equal to accumulated but
unpaid distributions thereon (whether or not earned
or declared), are hereby designated auction
preferred shares, Series Th (the "Series Th"). Each
share of the Series Th shall have an Applicable Rate
for its Initial Rate Period determined pursuant to a
resolution of the Board of Trustees and an initial
Distribution Payment Date that shall be set pursuant
to a resolution of the Board of Trustees. The shares
of Series Th shall constitute a separate series of
Preferred Shares of the Trust.
Series W: 8,000 preferred shares, par value
$.0001 per share, liquidation preference $25,000 per
share plus an amount equal to accumulated but
unpaid distributions thereon (whether or not earned
or declared), are hereby designated auction
preferred shares, Series W (the "Series W", together
with Series T, Series TH, Series F, and Series M,
each a "Series" and collectively, the "Preferred
Shares"). Each share of the Series W shall have an
Applicable Rate for its Initial Rate Period
determined pursuant to a resolution of the Board of
Trustees and an initial Distribution Payment Date
that shall be set pursuant to a resolution of the
Board of Trustees. The shares of Series W shall
constitute a separate series of Preferred Shares of
the Trust.
Preferred Shares may be marketed under the
name "auction preferred shares" or "Preferred
Shares" or such other name as the Board of Trustees
may approve from time to time.
Each Preferred Share shall have such other
preferences, rights, voting powers, restrictions,
limitations as to distributions, qualifications and
terms and conditions of redemption, in addition to
those required by applicable law, as are set forth in
Parts I and II of Article X of these Bylaws. Subject
to the provisions of Section E(c) of Part I hereof,
the Board of Trustees of the Trust may, in the
future, reclassify additional shares of the Trust's
capital shares as Preferred Shares, with the same
preferences, rights, voting powers, restrictions,
limitations as to distributions, qualifications and
terms and conditions of redemption and other terms
herein described, except that the Applicable Rate
for the Initial Rate Period, its initial Payment Date
and any other changes in the terms herein set forth
shall be as set forth in the Bylaws reclassifying such
shares as Preferred Shares.
Capitalized terms used in Parts I and II of
Article X of these Bylaws shall have the meanings
(with the terms defined in the singular having
comparable meanings when used in the plural and
vice versa) provided in the "Definitions" section
immediately following, unless the context otherwise
requires.
DEFINITIONS
As used in Parts I and II of Article X of
these Bylaws, the following terms shall have the
following meanings (with terms defined in the
singular having comparable meanings when used in
the plural and vice versa), unless the context
otherwise requires:
(a) "AUDITOR'S
CONFIRMATION" shall have the meaning
specified in paragraph (c) of Section G of
Part I.
(b) "AFFILIATE" shall mean, for
purposes of the definition of "Outstanding,"
any Person known to the Auction Agent to
be controlled by, in control of or under
common control with the Trust; provided,
however, that for purposes of these Bylaws
no Broker-Dealer controlled by, in control
of or under common control with the Trust
shall be deemed to be an Affiliate nor shall
any corporation or any Person controlled by,
in control of or under common control with
such corporation, one of the trustees,
directors, or executive officers of which is a
Trustee of the Trust, be deemed to be an
Affiliate solely because such trustee,
director or executive officer is also a Trustee
of the Trust.
(c) "AGENT MEMBER" shall
mean a member of or participant in the
Securities Depository that will act on behalf
of a Bidder.
(d) "ALL HOLD RATE" shall
mean 80% of the Reference Rate.
(e) "ANNUAL VALUATION
DATE" shall mean the last Business Day of
December of each year.
(f) "APPLICABLE
PERCENTAGE" shall mean the percentage
determined based on the lower of the credit
ratings assigned to the Preferred Shares on
such date by Xxxxx'x and Fitch as follows:
With respect to Series F:
Credit
Ratings
Applicable
Xxxxx'x Fitch
Percentage
Aa3 or higher
AA- or higher
200%
A3 to A1
A- to A+
250%
Baa3 to Baa1
BBB- to BBB+
275%
Ba 1 and
lower
BB+ and lower
325%
With respect to Series M, T, Th and W:
Credit
Ratings
Applicable
Xxxxx'x Fitch
Percentage
Aa3 or higher
AA- or higher
150%
A3 to A1
A- to A+
200%
Baa3 to Baa1
BBB- to BBB+
225%
Ba 1 and
lower
BB+ and lower
275%
For purposes of this definition, the
"prevailing rating" of the Preferred Shares
shall be (i) Aaa/AAA if such shares have a
rating of Aaa by Moody's and AAA by
Fitch or the equivalent of such ratings by
such agencies or a substitute rating agency
or substitute rating agencies; (ii) if not
Aaa/AAA, then Aa3/AA- if such shares
have a rating of Aa3 or better by Moody's
and AA- or better by Fitch or the equivalent
of such rating by such agencies or a
substitute rating agency or substitute rating
agencies, (iii) if not Aa3/AA- or higher, then
A3/A- if such shares have a rating of A3 or
better by Moody's and A- or better by Fitch
or the equivalent of such ratings by such
agencies or a substitute rating agency or
substitute rating agencies, (iv) if not A3/A-
or higher, then Baa3/BBB- if such shares
have a rating of Baa3 or better by Moody's
and BBB- or better by Fitch or the
equivalent of such ratings by such agencies
or substitute rating agency or substitute
rating agencies, (v) if not Baa3/BBB- or
higher, then below Baa3/BBB-.
The Applicable Percentage as so
determined shall be further subject to
upward but not downward adjustment in the
discretion of the Board of Trustees of the
Trust after consultation with the Broker-
Dealers, provided that immediately
following any such increase the Trust would
be in compliance with the Preferred Shares
Basic Maintenance Amount. The Trust shall
take all reasonable action necessary to
enable Moody's and Fitch to provide a
rating for the Preferred Shares. If Xxxxx'x
or Fitch shall not make such a rating
available, the Trust shall select another
rating agency to act as a substitute rating
agency. Notwithstanding the foregoing, the
Trust shall not be required to have more than
one rating agency provide a rating for the
Preferred Shares.
(g) "APPLICABLE RATE" shall
mean, for each Rate Period (i) if Sufficient
Clearing Orders exist for the Auction in
respect thereof, the Winning Bid Rate, (ii) if
Sufficient Clearing Orders do not exist for
the Auction in respect thereof, the
Maximum Rate, and (iii) in the case of any
Distribution Period if all the Preferred
Shares are the subject of Submitted Hold
Orders for the Auction in respect thereof, the
All Hold Rate.
(h) "APPLICABLE SPREAD"
means the spread determined based on the
credit rating assigned to Preferred Shares on
such date by Xxxxx'x (if Xxxxx'x is then
rating the Preferred Shares) and Fitch (if
Fitch is then rating the Preferred Shares) as
follows:
With respect to Series F:
Credit
Ratings
Applicable
Xxxxx'x Fitch
Spread
Aa3 or higher
AA- or higher
200 bps
A3 to A1
A- to A+
250 bps
Baa3 to Baa1
BBB- to BBB+
275 bps
Ba 1 and
lower
BB+ and lower
325 bps
With respect to Series M, T, Th, and W:
Credit
Ratings
Applicable
Xxxxx'x Fitch
Spread
Aa3 or higher
AA- or higher
150 bps
A3 to A1
A- to A+
200 bps
Baa3 to Baa1
BBB- to BBB+
225 bps
Ba 1 and
lower
BB+ and lower
275 bps
For purposes of this definition, the
"prevailing rating" of the Preferred Shares
shall be (i) Aaa/AAA if such shares have a
rating of AaaAAA by Moody's and AAA by
Fitch or the equivalent of such ratings by
such agencies or a substitute rating agency
or substitute rating agencies,; (ii) if not
Aaa/AAA, then Aa3/AA- if such shares
have a rating of Aa3AA- or better by
Moody's and AA- or better by Fitch or the
equivalent of such rating by such agencies
or a substitute rating agency or substitute
rating agencies, (iii) if not Aa3/AA- or
higher, then A3/A- if such shares have a
rating of A3A- or better by Moody's and A-
or better by Fitch or the equivalent of such
ratings by such agencies or a substitute
rating agency or substitute rating agencies,
(iv) if not A3/A- or higher, then Baa3/BBB-
if such shares have a rating of Baa3BBB- or
better by Moody's and BBB- or better by
Fitch or the equivalent of such ratings by
such agencies or substitute rating agency or
substitute rating agencies, (v) if not
Baa3/BBB- or higher, then below
Baa3/BBB-.
The Applicable Spread as so
determined shall be further subject to
upward but not downward adjustment in the
discretion of the Board of Trustees after
consultation with the Broker-Dealers,
provided that immediately following any
such increase the Trust would be in
compliance with the Preferred Shares Basic
Maintenance Amount.
(i) "AUCTION" shall mean each
periodic implementation of the Auction
Procedures.
(j) "AUCTION AGENCY
AGREEMENT" shall mean the agreement
between the Trust and the Auction Agent
which provides, among other things, that the
Auction Agent will follow the Auction
Procedures for purposes of determining the
Applicable Rate for the Preferred Shares so
long as the Applicable Rate for such
Preferred Shares is to be based on the results
of an Auction.
(k) "AUCTION AGENT" shall
mean the entity appointed as such by a
resolution of the Board of Trustees in
accordance with Section F of Part II of
Article X.
(l) "AUCTION DATE" with
respect to any Rate Period, shall mean the
Business Day next preceding the first day of
such Rate Period.
(m) "AUCTION PROCEDURES"
shall mean the procedures for conducting
Auctions set forth in Part II of Article X.
(n) "AVAILABLE PREFERRED
SHARES" shall have the meaning specified
in paragraph (a) of Section C of Part II of
Article X.
(o) "BENEFICIAL OWNER" with
respect to shares of Preferred Shares, means
a customer (including broker dealers that are
not Broker Dealers) of a Broker-Dealer who
is listed on the records of that Broker-Dealer
(or, if applicable, the Auction Agent) as a
holder of Preferred Shares.
(p) "BID" and "BIDS" shall have
the respective meanings specified in
paragraph (a) of Section A of Part II of
Article X.
(q) "BIDDER" and "BIDDERS"
shall have the respective meanings specified
in paragraph (a) of Section A of Part II of
Article X; provided, however, that neither
the Trust nor any affiliate thereof shall be
permitted to be a Bidder in an Auction,
except that any Broker-Dealer that is an
affiliate of the Trust may be a Bidder in an
Auction, but only if the Orders placed by
such Broker-Dealer are not for its own
account.
(r) "BOARD OF TRUSTEES" shall
mean the Board of Trustees of the Trust or
any duly authorized committee thereof.
(s) "BROKER-DEALER" shall
mean any broker-dealer, commercial bank or
other entity permitted by law to perform the
functions required of a Broker-Dealer in Part
II of Article X, that is a member of, or a
participant in, the Securities Depository or is
an affiliate of such member or participant,
has been selected by the Trust and has
entered into a Broker-Dealer Agreement that
remains effective.
(t) "BROKER-DEALER
AGREEMENT" shall mean an agreement
between the Auction Agent and a Broker-
Dealer pursuant to which such Broker-
Dealer agrees to follow the procedures
specified in Part II of Article X.
(u) "BUSINESS DAY" shall mean
a day on which the New York Stock
Exchange is open for trading and which is
neither a Saturday, Sunday nor any other
day on which banks in New York, New
York, are authorized or obligated by law to
close.
(v) "CLOSING TRANSACTION"
shall have the meaning specified in
paragraph (a)(i)(A) of Section M of Part I of
Article X.
(w) "CODE" means the Internal
Revenue Code of 1986, as amended.
(x) "COMMON SHARES" shall
mean the outstanding common shares, par
value $.001 per share, of the Trust.
(y) "CURE DATE" shall mean the
Preferred Shares Basic Maintenance Cure
Date or the 1940 Act Cure Date, as the case
may be.
(z) "DATE OF ORIGINAL
ISSUE" with respect to the Preferred Shares,
shall mean the date on which the Trust
initially issued such shares.
(aa) "DECLARATION OF
TRUST" shall have the meaning specified
on the first page.
(bb) "DEPOSIT SECURITIES"
shall mean cash and any obligations or
securities, including Short Term Money
Market Instruments that are Eligible Assets,
rated at least AAA or F-1 by Fitch, X-0,
XXX-0 xx XXXX-0 by Xxxxx'x or AAA or
A-1 by S&P.
(cc) "DISCOUNTED VALUE" as
of any Valuation Date, shall mean, (i) with
respect to a Fitch Eligible Asset or Xxxxx'x
Eligible Asset that is not currently callable
or prepayable as of such Valuation Date at
the option of the issuer thereof, the quotient
of the Market Value thereof divided by the
Fitch Discount Factor for a Fitch Eligible
Asset or Moody's Discount Factor for a
Moody's Eligible Asset, (ii) with respect to
a Fitch Eligible Asset or Xxxxx'x Eligible
Asset that is currently callable as of such
Valuation Date at the option of the issuer
thereof, the quotient as calculated above or
the call price, plus accrued interest or
distributions, as applicable, whichever is
lower, and (iii) with respect to a Fitch
Eligible Asset or Moody's Eligible Asset
that is prepayable, the quotient as calculated
above or the par value, plus accrued interest
or distribution, as applicable, whichever is
lower.
(dd) "DISTRIBUTION PAYMENT
DATE" with respect to the Preferred Shares,
shall mean any date on which distributions
are payable on the Preferred Shares pursuant
to the provisions of paragraph (d) of Section
B of Part I of Article X.
(ee) "DISTRIBUTION PERIOD,"
with respect to the Preferred Shares, shall
mean the period from and including the Date
of Original Issue of shares of a Series to but
excluding the initial Distribution Payment
Date for shares of such Series and thereafter
any period from and including one
Distribution Payment Date for shares of
such Series to but excluding the next
succeeding Distribution Payment Date for
shares of such Series.
(ff) "EXISTING HOLDER," with
respect to shares of Preferred Shares, shall
mean a Broker-Dealer (or any such other
Person as may be permitted by the Trust)
that is listed on the records of the Auction
Agent as a holder of shares of any Series.
(gg) "EXPOSURE PERIOD" shall
mean the period commencing on a given
Valuation Date and ending 45 days
thereafter.
(hh) "FAILURE TO DEPOSIT,"
with respect to shares of a Series, shall mean
a failure by the Trust to pay to the Auction
Agent, not later than 12:00 noon, Eastern
time, (A) on any Distribution Payment Date
for shares of such Series, in funds available
on such Distribution Payment Date in New
York, New York, the full amount of any
distribution (whether or not earned or
declared) to be paid on such Distribution
Payment Date on any share of such Series or
(B) on any redemption date in funds
available on such redemption date for shares
of such series in New York, New York, the
Redemption Price to be paid on such
redemption date for any share of such Series
after notice of redemption is mailed pursuant
to paragraph (c) of Section K of Part I of
Article X; provided, however, that the
foregoing clause (B) shall not apply to the
Trust's failure to pay the Redemption Price
in respect of Preferred Shares when the
related Notice of Redemption provides that
redemption of such shares is subject to one
or more conditions precedent and any such
condition precedent shall not have been
satisfied at the time or times and in the
manner specified in such Notice of
Redemption.
(ii) "FITCH" shall mean Fitch
Ratings and its successors.
(jj) "FITCH DISCOUNT
FACTOR" means for the purposes of
determining the Preferred Shares Basic
Maintenance Amount, the percentage
determined below:
(i) Common Stock and
Preferred Stock of REITs and Other Real
Estate Companies:
DISCOUNT FACTOR (1)
REIT or Other Real Estate
Company Preferred Shares
154%
REIT or Other Real Estate
Company Common Shares
196%
(ii) Common Stocks and
Warrants: The Fitch Discount Factor
applied to common stock other than
REIT common stock and the common
stock of other real estate companies is:
Large-cap stocks:
200%
Mid-cap stocks:
233%
Small-cap stocks:
286%
Others:
370%
Small-cap stocks refer to
stocks with a market
capitalization between
$300 million to $2
billion. Mid-cap stocks
refer to stocks with a
market capitalization
between $2 billion to $10
billion. Large-cap stocks
are companies having a
market capitalization
greater than $10 billion.
(iii) Preferred Stock: The
Fitch Discount Factor applied to
preferred stock other than REIT
preferred stock and the preferred stock
of other real estate companies is the
percentage determined by reference to
the rating in accordance with the table
set forth below:
PREFERRED STOCK (1)
DISCOUNT
FACTOR
AAA
130%
AA
133%
A
135%
BBB
139%
BB
154%
Not rated or below BB
161%
Investment grade Dividends Received Deduction ("DRD")
164%
Not rated or below investment grade DRD
200%
(iv) Corporate Debt Securities
(1)(2):
MATURITY
IN YEARS
AAA
AA
A
BBB
BB
B
Unrated(1)
1 or less
111%
114%
117%
120%
121%
127%
130%
2 or less (but
longer than
1)
116%
123%
125%
127%
132%
137%
141%
3 or less (but
longer than
2)
121%
125%
127%
131%
133%
140%
152%
4 or less (but
longer than
3)
126%
126%
129%
132%
136%
144%
164%
5 or less (but
longer than
4)
131%
132%
135%
139%
144%
149%
185%
7 or less (but
longer than
5)
140%
143%
146%
152%
159%
167%
228%
10 or less
(but longer
than 7)
141%
145%
147%
153%
160%
168%
232%
12 or less
(but longer
than 10)
144%
147%
150%
157%
165%
174%
249%
15 or less
(but longer
than 12)
148%
151%
155%
163%
172%
182%
274%
Greater than
20
152%
156%
160%
169%
180%
191%
306%
(1) If a security is unrated by Fitch, but is
rated by two other NRSROs, then the lower
of the ratings on the security from the two
other NRSROs should be used to determine
the Fitch Discount Factor. If the security is
not rated by Fitch, but has a rating from only
one other NRSRO, and the security is above
investment grade, the other rating will be
used. If the security is not rated by Fitch, but
has a rating from only one other NRSRO, and
the security is below investment grade, then
the security will use the percentages set forth
in the unrated column above.
(2) The Fitch Discount Factors will also apply
to interest rate swaps and caps, whereby the
rating on the counterparty will determine the
appropriate Discount Factor to apply.
(v) Convertible Securities:
The Fitch Discount Factor
applied to convertible securities is (A)
200% for investment grade convertibles
and (B) 222% for below investment
grade convertibles so long as such
convertible securities have neither (x)
conversion premiums greater than 100%
nor (y) a yield to maturity or yield to
worst of greater than the comparable
term Treasury yields plus 15 percentage
points.
The Fitch Discount Factor
applied to convertible securities which
have conversion premiums of greater
than 100% is (A) 152% for investment
grade convertibles, and (B) 179% for
below investment grade convertibles so
long as a such convertible securities do
not have a yield to maturity or yield to
worst of greater than comparable term
Treasury yields plus 15 percentage
points.
The Fitch Discount Factor
applied to convertible securities that
have a yield to maturity or yield to worst
of greater than the comparable term
Treasury yield plus 15 percentage points
is 370%.
(vi) U.S. Treasury Securities:
REMAINING TERM
TO MATURITY
DISCOUNT FACTOR
1 year or less
101.5%
2 years or less (but
longer than 1 year)
103%
3 years or less (but
longer than 2 years)
105%
4 years or less (but
longer than 3 years)
107%
5 years or less (but
longer than 4 years)
109%
7 years or less (but
longer than 5 years)
112%
10 years or less (but
longer than 7 years)
114%
15 years or less (but
longer than 10 years)
122%
20 years or less (but
longer than 15 years)
130%
25 years or less (but
longer than 20 years)
146%
30 years or less (but
longer than 25 years)
154%
(vii) Short-Term Instruments
and Cash: The Fitch Discount Factor
applied to short-term portfolio securities,
including without limitation Debt
Securities, Short Term Money Market
Instruments and municipal debt
obligations, will be (A) 100%, so long as
such portfolio securities mature or have
a demand feature at par exercisable
within the Fitch Exposure Period;
(B) 115%, so long as such portfolio
securities mature or have a demand
feature at par not exercisable within the
Fitch Exposure Period; and (C) 125%, so
long as such portfolio securities neither
mature nor have a demand feature at par
exercisable within the Fitch Exposure
Period. A Fitch Discount Factor of
100% will be applied to cash.
(viii) Rule 144A Securities:
The Fitch Discount Factor applied to
Rule 144A Securities shall be the
Discount Factor determined in
accordance with the table above under
"Corporate Debt Securities" in
subsection (iv), multiplied by 110% until
such securities are registered under the
Securities Act of 1933, as amended from
time to time.
(ix) Asset-backed and
mortgage-backed securities: The
percentage determined by reference to
the asset type in accordance with the
table set forth below.
Asset Type (with time remaining to maturity, if applicable)
Discount Factor
U.S. Treasury/agency securities (10 years or less)
118%
U.S. Treasury/agency securities (greater than 10 years)
127%
U.S. agency sequentials (10 years or less)
128%
U.S. agency sequentials (greater than 10 years)
142%
U.S. agency principal only securities
236%
U.S. agency interest only securities (with Market Value greater than 40% of
par)
696%
U.S. agency interest only securities (with Market Value less than or equal to
40% of par)
214%
AAA LockOut securities, interest only
236%
U.S. agency planned amortization class bonds (10 years or less)
115%
U.S. agency planned amortization class bonds (greater than 10 years)
136%
AAA sequentials (10 years or less)
118%
AAA sequentials (greater than 10 years)
135%
AAA planned amortization class bonds (10 years or less)
115%
AAA planned amortization class bonds (greater than 10 years)
140%
Jumbo mortgage rated AAA(1)
123%
Jumbo mortgage rated AA(1)
130%
Jumbo mortgage rated A(1)
136%
Jumbo mortgage rated BBB(1)
159%
Commercial mortgage-backed securities rated AAA
131%
Commercial mortgage-backed securities rated AA
139%
Commercial mortgage-backed securities rated A
148%
Commercial mortgage-backed securities rated BBB
177%
Commercial mortgage-backed securities rated BB
283%
Commercial mortgage-backed securities rated B
379%
Commercial mortgage-backed securities rated CCC or not rated
950%
(1) Applies to jumbo mortgages, credit cards,
auto loans, home equity loans, manufactured
housing and prime mortgage-backed
securities not issued by a U.S. agency or
instrumentality.
(x) Futures and call options:
For purposes of Preferred Shares Basic
Maintenance Amount, futures held by
the Trust and call options sold by the
Trust shall not be included as Fitch
Eligible Assets. However, such assets
shall be valued at Market Value by
subtracting the good faith margin and the
maximum daily trading variance as of
the Valuation Date. For call options
purchased by the Trust, the Market
Value of the call option will be included
as a Fitch Eligible Asset subject to a
Fitch Discount Factor mutually agreed to
between the Trust and Fitch based on the
characteristics of the option contract
such as its maturity and the underlying
security of the contract.
(xi) Securities lending: The
Trust may engage in securities lending in
an amount not to exceed 10% of the
Trust's total gross assets. For purposes
of calculating the Preferred Shares Basic
Maintenance Amount, such securities
lent shall be included as Fitch Eligible
Assets with the appropriate Fitch
Discount Factor applied to such lent
security. The obligation to return such
collateral shall not be included as an
obligation/liability for purposes of
calculating the Preferred Shares Basic
Maintenance Amount. However, the
Trust may reinvest cash collateral for
securities lent in conformity with its
investment objectives and policies and
the provisions of these Bylaws. In such
event, to the extent that securities
lending collateral received is invested by
the Trust in assets that otherwise would
be Fitch Eligible Assets and the value of
such assets exceeds the amount of the
Trust's obligation to return the collateral
on a Valuation Date, such excess amount
shall be included in the calculation of
Fitch Eligible Assets by applying the
applicable Fitch Discount Factor to this
amount and adding the product to total
Fitch Eligible Assets. Conversely, if the
value of assets in which securities
lending collateral has been invested is
less then the amount of the Trust's
obligation to return the collateral on a
Valuation Date, such difference shall be
included as an obligation/liability of the
Trust for purposes of calculating the
Preferred Shares Basic Maintenance
Amount. Collateral received by the
Trust in a securities lending transaction
and maintained by the Trust in the form
received shall not be included as a Fitch
Eligible Asset for purposes of
calculating the Preferred Shares Basic
Maintenance Amount.
(xii) Swaps (including Total
Return Swaps and Interest Rate Swaps):
Total Return and Interest Rate Swaps are
subject to the following provisions:
(a) If the Trust has an
outstanding gain from a
swap transaction on a
Valuation Date, the gain
will be included as a
Fitch Eligible Asset
subject to the Fitch
Discount Factor on the
counterparty to the swap
transaction. At the time
a swap is executed, the
Trust will only enter into
swap transactions where
the counterparty has at
least a Fitch rating of A-
or Xxxxx'x rating of
A3.
(b) Only the cumulative
unsettled profit and loss
from a Total Return
Swap transaction will be
calculated when
determining the
Preferred Shares Basic
Maintenance Amount.
If the Trust has an
outstanding liability
from a swap transaction
on a Valuation Date, the
Trust will count such
liability as an
outstanding liability
from the total Fitch
Eligible Assets in
calculating the Preferred
Shares Basic
Maintenance Amount.
(c) In addition, for
swaps other than Total
Return Swaps, the
Market Value of the
position (positive or
negative) will be
included as a Fitch
Eligible Asset. The
aggregate notional value
of all swaps will not
exceed the Liquidation
Preference of the
Outstanding Preferred
Shares.
(d) (1) The underlying
securities subject to a
credit default swap sold
by the Trust will be
subject to the applicable
Fitch Discount Factor
for each security subject
to the swap; (2) If the
Trust purchases a credit
default swap and holds
the underlying security,
the Market Value of the
credit default swap and
the underlying security
will be included as a
Fitch Eligible Asset
subject to the Fitch
Discount Factor
assessed based on the
counterparty risk; and
(3) the Trust will not
include a credit default
swap as a Fitch Eligible
Asset purchase by the
Trust without the Trust
holding the underlying
security or when the
Trust busy a credit
default swap for a basket
of securities without
holding all the securities
in the basket.
(xiii) Senior Loans: The Fitch
Discount Factor applied to senior,
secured floating rate Loans made to
corporate and other business entities
("Senior Loans") shall be the percentage
specified in the table below opposite
such Fitch Loan Category:
Fitch Loan
Category
Discount
Factor
A
115%
B
130%
C
152%
D
370%
Notwithstanding any other provision
contained above, for purposes of determining
whether a Fitch Eligible Asset falls within a specific
Fitch Loan Category, to the extent that any Fitch
Eligible Asset would fall within more than one of
the Fitch Loan Categories, such Fitch Eligible Asset
shall be deemed to fall into the Fitch Loan Category
with the lowest applicable Fitch Discount Factor.
(xiv) GNMAs, FNMAs,
FHLMCs, etc., MBS, asset-backed and
other mortgage-backed securities:
MBS: U.S. Government Agency (FNMA,
FHLMC or GNMA) conforming mortgage-backed
securities with a stated maturity of 30 years shall
have a discount factor of 114% and conforming
mortgage-backed securities with a stated maturity of
15 years shall have a discount factor of 111%.
Asset-backed and other mortgage-backed
securities: The percentage determined by reference
to the asset type in accordance with the table set
forth below.
Asset Type (with time remaining to
maturity, if applicable)
Discount Factor
U.S. Treasury/agency securities (10 years or
less) 118%
U.S. Treasury/agency securities (greater
than 10 years) 127%
U.S. agency sequentials (10 years or less)
120%
U.S. agency sequentials (greater than 10
years) 142%
U.S. agency principal only securities 236%
U.S. agency interest only securities (with
Market Value greater than
40% of par) 696%
U.S. agency interest only securities (with
Market Value less than or equal to
40% of par) 271%
AAA Lock-Out securities, interest only
236%
U.S. agency planned amortization class
bonds (10 years or less) 115%
U.S. agency planned amortization class
bonds (greater than 10 years) 136%
AAA sequentials (10 years or less) 118%
AAA sequentials (greater than 10 years)
135%
AAA planned amortization class bonds (10
years or less) 115%
AAA planned amortization class bonds
(greater than 10 years) 140%
Jumbo mortgage rated AAA(1) 123%
Jumbo mortgage rated AA(1) 130%
Jumbo mortgage rated A(1) 136%
Jumbo mortgage rated BBB(1) 159%
Commercial mortgage-backed securities
rated AAA 131%
Commercial mortgage-backed securities
rated AA 139%
Commercial mortgage-backed securities
rated A 148%
Commercial mortgage-backed securities
rated BBB 177%
Commercial mortgage-backed securities
rated BB 283%
Commercial mortgage-backed securities
rated B 379%
Commercial mortgage-backed securities
rated CCC or not rated 950%
(1) Applies to jumbo mortgages, credit
cards, auto loans, home equity loans,
manufactured housing and prime mortgage-
backed securities not issued by a U.S.
agency or instrumentality.
(xv) Closed End Registered
Investment Companies: The Fitch
Discount Factor applied to Closed End
Registered Investment Companies is
286%.
(xvi) Other Securities: The
Fitch Discount Factor with respect to
securities other than those described
above including ratable securities not
rated by Fitch or any other NRSRO will
be the percentage provided in writing by
Fitch.
(kk) "FITCH ELIGIBLE ASSET"
shall mean the following:
(i) Common stock, preferred
stock, and any debt security of REITs
and Other Real Estate Companies.
(ii) Municipal Obligations that
interest in cash, (ii) do not have their
Fitch rating, as applicable, suspended by
Fitch, and (iii) are part of an issue of
Municipal Obligations of at least
$10,000,000. In Addition, Municipal
Obligations in the Trust's portfolio must
be within the following investment
guidelines to be Fitch Eligible Assets.
Rating
----------
Minimum
Issue Size
($ Millions) (1)
-------------------
Maximum
Single
Underlying
Obligor Issuer
(%) (2)
------------------
Maximum
State Allowed
(%) (2)(3)
-----------------
AAA
10
100
100
XX
00
00
00
X
10
10
40
BBB
10
6
20
BB
10
4
12
B
10
3
12
CCC
10
2
12
--------------------
(1) Preferred stock has a minimum issue size of
$50 million.
(2) The referenced percentage represents
maximum cumulation total for the related
rating category and each lower rating
category.
(3) Territorial bonds (other than those issued by
Puerto Rico and counted collectively) are
each limited to 10% of Fitch Eligible Assets.
For diversification purposes, Puerto Rico
will be treated as a state.
For purposes of applying the foregoing
requirements and applying the applicable
Fitch Discount Factor, if a Municipal
Obligation is not rated by Fitch but is
rated by Xxxxx'x and S&P, such
Municipal Obligation (excluding short-
term Municipal Obligations) will be
deemed to have the Fitch rating which is
the lower of the Xxxxx'x and S&P
rating. If a Municipal Obligation is not
rated by Fitch but is rated by Xxxxx'x or
S&P, such Municipal Obligation
(excluding short-term Municipal
Obligations) will be deemed to have
such rating. Eligible Assets shall be
calculated without including cash; and
Municipal Obligations rated F1 by Fitch
or, if not rated by Fitch, rated XXX-0,
XXXX-0 or P-1 by Xxxxx'x; or, if not
rated by Xxxxx'x, rated A-1+/AA or SP-
1+/AA by S&P shall be considered to
have a long-term rating of A. When the
Trust sells a Municipal Obligation and
agrees to repurchase such Municipal
Obligation at a future date, such
Municipal Obligation shall be valued at
its Discounted Value for purposes of
determining Fitch Eligible Assets, and
the amount of the repurchase price of
such Municipal Obligation shall be
included as a liability for purposes of
calculating the Preferred Shares Basic
Maintenance Amount. When the Trust
purchases a Fitch Eligible Asset and
agrees to sell it at a future date, such
Fitch Eligible Asset shall be valued at
the amount of cash to be received by the
Trust upon such future date, provided
that the counterparty to the transaction
has a long-term debt rating of at least A
by Fitch and the transaction has a term
of no more than 30 days; otherwise, such
Fitch Eligible Asset shall be valued at
the Discounted Value of such Fitch
Eligible Asset.
Notwithstanding the foregoing, an asset
will not be considered a Fitch Eligible
Asset for purposes of determining the
Preferred Shares Basic Maintenance
Amount to the extent it is (i) subject to
any material lien, mortgage, pledge,
security interest or security agreement of
any kind (collectively, "Liens"), except
for (a) Liens which are being contested
in good faith by appropriate proceedings
and which Fitch (if Fitch is then rating
the Preferred Shares) has indicated to the
Trust will not affect the status of such
asset as a Fitch Eligible Asset, (b) Liens
for taxes that are not then due and
payable or that can be paid thereafter
without penalty, (c) Liens to secure
payment for services rendered or cash
advanced to the Trust by the investment
adviser, custodian or the Auction Agent,
(d) Liens by virtue of any repurchase
agreement, and (e) Liens in connection
with any futures margin account; or (ii)
deposited irrevocably for the payment of
any liabilities for purposes of
determining the Preferred Shares Basic
Maintenance Amount.
(iii) U.S. Government
Securities.
(iv) Debt securities, if such
securities have been registered under the
Securities Act or are restricted as to
resale under federal securities laws but
are eligible for resale pursuant to Rule
144A under the Securities Act of 1933,
as amended from time to time, as
determined by the Trust's investment
manager or portfolio manager acting
pursuant to procedures approved by the
Board of Trustees of the Trust; and such
securities are issued by (1) a U.S.
corporation, limited liability company or
limited partnership, (2) a corporation,
limited liability company or limited
partnership domiciled in a member of
the European Union, Argentina,
Australia, Brazil, Chile, Japan, Korea,
and Mexico or other country if Fitch
does not inform the Trust that including
debt securities from such foreign country
will adversely impact Fitch's rating of
the Preferred Shares (the "Approved
Foreign Nations"), (3) the government of
any Approved Foreign Nation or any of
its agencies, instrumentalities or political
subdivisions (the debt securities of
Approved Foreign Nation issuers being
referred to collectively as "Foreign
Bonds"), (4) a corporation, limited
liability company or limited partnership
domiciled in Canada or (5) the Canadian
government or any of its agencies,
instrumentalities or political
subdivisions (the debt securities of
Canadian issuers being referred to
collectively as "Canadian Bonds").
Foreign Bonds held by the Trust will
qualify as Fitch Eligible Assets only up
to a maximum of 20% of the aggregate
Market Value of all assets constituting
Fitch Eligible Assets. Similarly,
Canadian Bonds held by the Trust will
qualify as Fitch Eligible Assets only up
to a maximum of 20% of the aggregate
Market Value of all assets constituting
Fitch Eligible Assets. Notwithstanding
the limitations in the two preceding
sentences, Foreign Bonds and Canadian
Bonds held by the Trust will qualify as
Fitch Eligible Assets only up to a
maximum of 30% of the aggregate
Market Value of all assets constituting
Fitch Eligible Assets. All debt securities
satisfying the foregoing requirements
and restriction of this paragraph are
herein referred to as "Debt Securities."
(v) Preferred Stocks if (1)
such securities provide for the periodic
payment of dividends thereon in cash in
U.S. dollars or euros and do not provide
for conversion or exchange into, or have
warrants attached entitling the holder to
receive equity capital at any time over
the respective lives of such securities,
(2) the issuer or such a preferred stock
has common stock listed on either the
New York Stock Exchange, the NYSE
Amex or in the over-the-counter market,
and (3) the issuer of such a preferred
stock has a senior debt rating or
preferred stock rating from Fitch of
BBB- or higher or the equivalent rating
by another Rating Agency. In addition,
the preferred stocks issue must be at
least $50 million.
(vi) Common stocks (1)(a)
which are traded on the New York Stock
Exchange, the NYSE Amex or in the
over-the-counter market, (b) which, if
cash dividend paying, pay cash
dividends in U.S. dollars, and (c) which
may be sold without restriction by the
Trust; provided, however, that (i)
common stock which, while a Fitch
Eligible Asset owned by the Trust,
ceases paying any regular cash dividend
will no longer be considered a Fitch
Eligible Assets until 60 calendar days
after the date of the announcement of
such cessation, unless the issuer of the
common stock has senior debt securities
rated at least A- by Fitch and (ii) the
aggregate Market Value of the Trust's
holdings of the common stock of any
issuer in excess of 5% per U.S. issuer of
the number of Outstanding shares time
the Market Value of such common stock
shall not be a Fitch's Eligible Asset; and
(2) securities denominated in any
currency other than the U.S. dollar and
securities of issuers formed under the
laws of jurisdictions other than the
United States, its states and the District
of Columbia for which there are dollar-
denominated American Depository
Receipts ("ADRs") which are traded in
the United States on exchanges or over-
the-counter and are issued by banks
formed under the laws of the United
States, its states or the District of
Columbia; provided, however, that the
aggregate Market Value of the Trust's
holdings of securities denominated in
currencies other than the U.S. dollar and
ADRs in excess of 3% of the aggregate
Market Value of the Outstanding shares
of common stock of such issuer or in
excess of 10% of the Market Value of
the Trust's Fitch Eligible Assets with
respect to issuers formed under the laws
of any single such non-U.S. jurisdiction
other than Approved Foreign Nations
shall not be a Fitch Eligible Asset
(vii) Rule 144A Securities.
(viii) Warrants on common
stocks described in (vi) above.
(ix) Any common stock,
preferred stock or any debt securities of
REITs or real estate companies.
(x) Interest Rate Swaps or
Interest Rate Caps entered into
according to International Swap Dealers
Association ("ISDA") standards if (1)
the counterparty to the swap transaction
has a short-term rating of not less than
F1 by Fitch or the equivalent by another
Rating Agency, or, if the swap
counterparty does not have a short-term
rating, the counterparty's senior
unsecured long-term debt rating is AA or
higher by Fitch or the equivalent by
another Rating Agency and (2) the
original aggregate notional amount of
the Interest Rate Swap or Interest Rate
Cap transaction or transactions is not
greater than the Liquidation Preference
of the Preferred Shares originally issued.
(xi) Swaps, including Total
Return Swaps entered into according to
ISDA.
(xii) Financial contracts, as
such term is defined in Section
3(c)(2)(B)(ii) of the 1940 Act, not
otherwise provided for in this definition
may be included in Fitch Eligible Assets,
but, with respect to any financial
contract, only upon receipt by the Trust
of a writing from Fitch specifying any
conditions on including such financial
contract in Fitch Eligible Assets and
assuring the Trust that including such
financial contract in the manner so
specified would not affect the credit
rating assigned by Fitch to the Preferred
Shares
(xiii) Asset-backed and
mortgage-backed securities.
(xiv) Senior loans.
(xv) Closed End Registered
Investment Companies that (1) have an
equity market capitalization greater than
$100 million and (2) have an average
trading volume of 50,000 shares per day.
(xvi) Fitch Hedging
Transactions.
Where the Trust sells an asset and agrees to
repurchase such asset in the future, the Discounted
Value of such asset will constitute a Fitch Eligible
Asset and the amount the Trust is required to pay
upon repurchase of such asset will count as a
liability for the purposes of the Preferred Shares
Basic Maintenance Amount. Where the Trust
purchases an asset and agrees to sell it to a third
party in the future, cash receivable by the Trust
thereby will constitute a Fitch Eligible Asset if the
long-term debt of such other party is rated at least
A- by Fitch or the equivalent by another Rating
Agency and such agreement has a term of 30 days
or less; otherwise the Discounted Value of such
purchased asset will constitute a Fitch Eligible
Asset.
Notwithstanding the foregoing, an asset will
not be considered a Fitch Eligible Asset to the
extent that it has been irrevocably deposited for the
payment of (i)(a) through (i)(e) under the definition
of Preferred Shares Basic Maintenance Amount or
to the extent it is subject to any Liens, except for (a)
Liens which are being contested in good faith by
appropriate proceedings and which Fitch has
indicated to the Trust will not affect the status of
such asset as a Fitch Eligible Asset, (b) Liens for
taxes that are not then due and payable or that can
be paid thereafter without penalty, (c) Liens to
secure payment for services rendered or cash
advanced to the Trust by its investment manager or
portfolio manager, the Trust's custodian, transfer
agent or registrar or the Auction Agent and (d)
Liens arising by virtue of any repurchase
agreement.
Fitch diversification limitations: portfolio
holdings as described below must be within the
following diversification and issue size
requirements in order to be included in Fitch's
Eligible Assets:
EQUITY SECURITIES
Maximum Single Issuer (1)
Large-cap
5%
Mid-cap
5%
Small-cap
5%
(1) Percentages represent both a portion of the
aggregate Market Value and number of
outstanding shares of the common stock
portfolio.
DEBT SECURITIES
RATED AT LEAST (1)
Maximum
Single Issuer
(2)
Maximum Single
Industry (2)(3)
Minimum Issue
Size ($ in million)
(4)
AAA
100%
100%
$100
AA-
20%
75%
$100
A-
10%
50%
$100
BBB-
6%
25%
$100
BB-
4%
16%
$50
B-
3%
12%
$50
CCC
2%
8%
$50
(1) Not applicable to corporate debt securities of
REITs, Real Estate Companies, and Lodging
Companies.
(2) Percentages represent a portion of the
aggregate Market Value of corporate debt
securities.
(3) Industries are determined according to Fitch's
Industry Classifications, as defined herein.
(4) Preferred stock has a minimum issue size of
$50 million, and mortgage pass through issued by
Federal Home Loan Mortgage Corporation
("FHLMC"), the Federal National Mortgage
Association ("FNMA") or the Government
National Mortgage Association ("GNMA"), which
has no minimum issue size.
If a security is not rated by Fitch but is rated
by two other Rating Agencies, then the lower of the
ratings on the security from the two other Rating
Agencies will be used to determine the Fitch
Discount Factor (e.g., where the S&P rating is A
and the Xxxxx'x rating is Baa, a Fitch rating of
BBB will be used). If a security is not rated by
Fitch but is rated by only one other Rating Agency,
then the rating on the security from the other Rating
Agency will be used to determine the Fitch
Discount Factor (e.g., where the only rating on a
security is an S&P rating of AAA, a Fitch rating of
AAA will be used, and where the only rating on a
security is a Xxxxx'x rating of Ba, a Fitch rating of
BB will be used). If a security is either rated below
CCC or not rated by any Rating Agency, the Trust
will treat the security as if it were "CCC" in the
table above.
REIT AND OTHER REAL ESTATE COMPANY
SECURITIES
5% issuer limitation (including common, preferred, debt and
other securities)
CLOSED END REGISTERED INVESTMENT COMPANY
SECURITIES
5% issuer limitation(1)
(1) Percentage represents a portion of
the aggregate Market Value.
(xvii) Unrated debt securities
or preferred shares issued by an issuer
which (1) has not filed for bankruptcy in
the past three years; (2) is current on all
interest and principal on such debt
security; (3) is current on distributions
on such preferred shares.
(xviii) Interest rate swaps or
caps entered into according to
International Swap Dealers Association
standards if (1) the counterparty to the
swap transaction has a short-term rating
of not less than F-1, or, if the swap
counterparty does not have a short-term
rating, the counterparty's senior
unsecured long-term debt rating is AA or
higher by Fitch or the equivalent by
another NRSRO and (2) the original
aggregate notional amount of the interest
rate swap or cap transaction or
transactions is not greater than the
liquidation preference of the Preferred
Shares originally issued.
(xix) U.S. Treasury Securities
and U.S. Treasury Strips.
(xx) Short-Term Money
Market Instruments as long as (a) such
securities are rated at least F-1 by Fitch
or the equivalent by another NRSRO, (b)
in the case of demand deposits, time
deposits and overnight funds, the
depository institution or supporting
entity is rated at least A by Fitch or the
equivalent by another NRSRO, (c) such
securities are of 2a-7 Money Market
Funds, (d) such securities are repurchase
agreements or (e) in all other cases, the
supporting entity (1) is rated at least A
by Fitch and the security matures in one
month or (2) is rated at least AA by
Fitch and matures within six months.
(xxi) Cash (including, for this
purpose, interest and dividends due on
assets rated (a) BBB or higher by Fitch if
the payment date is within 5 Business
Days of the Valuation Date, (b) A or
higher by Fitch if the payment is within
thirty days of the Valuation Date (c) A+
or higher by Fitch if the payment date is
within the Exposure Period; provided,
however, that such interest and
dividends may, at the Trust's discretion,
be discounted at the same rate as the
related security or on such other basis as
Fitch and the Trust may agree from time
to time) and receivables for Fitch
Eligible Assets sold if the receivable is
due within five Business Days of the
Valuation Date.
(ll) "FITCH EXPOSURE
PERIOD" means the period commencing on
(and including) a given Valuation Date and
ending 41 days thereafter.
(mm) "FITCH HEDGING
TRANSACTION" shall have the meaning
specified in paragraph (b)(1) of Section 13
of Part I of Article X.
(nn) "FORWARD
COMMITMENTS" shall have the meaning
specified in paragraph (a)(iv) of Section M
of Part I of Article X.
(oo) "HOLDER" with respect to
shares of a Series, shall mean the registered
holder of such shares as the same appears on
the record books of the Trust.
(pp) "HOLD ORDER" and "HOLD
ORDERS" shall have the respective
meanings specified in paragraph (a) of
Section A of Part II of Article X.
(qq) "INDEPENDENT
ACCOUNTANT" shall mean a nationally
recognized accountant, or firm of
accountants, that is with respect to the Trust
an independent public accountant or firm of
independent public accountants under the
Securities Act of 1933, as amended from
time to time.
(rr) "INITIAL RATE PERIOD"
with respect to each Series, shall be the
period from and including the Date of
Original Issue to but excluding the initial
Distribution Payment date for such Series.
(ss) "INTEREST EQUIVALENT"
means a yield on a 360-day basis of a
discount basis security, which is equal to the
yield on an equivalent interest-bearing
security.
(tt) "LATE CHARGE" shall have
the meaning specified in subparagraph
(e)(i)(B) of Section B of Part I of Article X.
(uu) "LIBOR Dealers" means RBC
Xxxx Xxxxxxxx Inc. and such other dealer or
dealers as the Trust may from time to time
appoint, or, in lieu of any thereof, their
respective affiliates or successors.
(vv) "LIBOR Rate" on any Auction
Date, means (i) the rate for deposits in U.S.
dollars for the designated Distribution
Period, which appears on display page 3750
of Moneyline's Telerate Service ("Telerate
Page 3750") (or such other page as may
replace that page on that service, or such
other service as may be selected by the
LIBOR Dealer or its successors that are
LIBOR Dealers) as of 11:00 a.m., London
time, on the day that is the London Business
Day preceding the Auction Date (the
"LIBOR Determination Date"), or (ii) if
such rate does not appear on Telerate Page
3750 or such other page as may replace such
Telerate Page 3750, (A) the LIBOR Dealer
shall determine the arithmetic mean of the
offered quotations of the Reference Banks to
leading banks in the London interbank
market for deposits in U.S. dollars for the
designated Distribution Period in an amount
determined by such LIBOR Dealer by
reference to requests for quotations as of
approximately 11:00 a.m. (London time) on
such date made by such LIBOR Dealer to
the Reference Banks, (B) if at least two of
the Reference Banks provide such
quotations, LIBOR Rate shall equal such
arithmetic mean of such quotations, (C) if
only one or none of the Reference Banks
provide such quotations, LIBOR Rate shall
be deemed to be the arithmetic mean of the
offered quotations that leading banks in The
City of New York selected by the LIBOR
Dealer (after obtaining the Trust's approval)
are quoting on the relevant LIBOR
Determination Date for deposits in U.S.
dollars for the designated Distribution
Period in an amount determined by the
LIBOR Dealer (after obtaining the Trust's
approval) that is representative of a single
transaction in such market at such time by
reference to the principal London offices of
leading banks in the London interbank
market; provided, however, that if one of the
LIBOR Dealers does not quote a rate
required to determine the LIBOR Rate, the
LIBOR Rate will be determined on the basis
of the quotation or quotations furnished by
any substitute LIBOR Dealer or substitute
LIBOR Dealers selected by the Trust to
provide such rate or rates not being supplied
by the LIBOR Dealer; provided further, that
if the LIBOR Dealer and substitute LIBOR
Dealers are required but unable to determine
a rate in accordance with at least one of the
procedures provided above, LIBOR Rate
shall be LIBOR Rate as determined on the
previous Auction Date. If the number of
Distribution Period days shall be (i) 7 or
more but fewer than 21 days, such rate shall
be the seven-day LIBOR rate; (ii) more than
21 but fewer than 49 days, such rate shall be
the one-month LIBOR rate; (iii) 49 or more
but fewer than 77 days, such rate shall be the
two-month LIBOR rate; (iv) 77 or more but
fewer than 112 days, such rate shall be the
three-month LIBOR rate; (v) 112 or more
but fewer than 140 days, such rate shall be
the four-month LIBOR rate; (vi) 140 or
more but fewer that 168 days, such rate shall
be the five-month LIBOR rate; (vii) 168 or
more but fewer 189 days, such rate shall be
the six-month LIBOR rate; (viii) 189 or
more but fewer than 217 days, such rate
shall be the seven-month LIBOR rate; (ix)
217 or more but fewer than 252 days, such
rate shall be the eight-month LIBOR rate;
(x) 252 or more but fewer than 287 days,
such rate shall be the nine-month LIBOR
rate; (xi) 287 or more but fewer than 315
days, such rate shall be the ten-month
LIBOR rate; (xii) 315 or more but fewer
than 343 days, such rate shall be the eleven-
month LIBOR rate; and (xiii) 343 or more
but fewer than 365 days, such rate shall be
the twelve-month LIBOR rate.
(ww) "LIQUIDATION
PREFERENCE" with respect to a given
number of Preferred Shares, means $25,000
times that number.
(xx) "LONDON BUSINESS DAY"
means any day on which commercial banks
are generally open for business in London.
(yy) "MARKET VALUE" of any
asset of the Trust shall mean the market
value thereof determined in accordance with
the pricing procedures of the Trust.
(zz) "MAXIMUM RATE" shall
mean, with respect to Preferred Shares for
any Distribution Period, the greater of (A)
the Applicable Percentage of the Reference
Rate or (B) the Applicable Spread plus the
Reference Rate on the Auction Date. The
Auction Agent will round each applicable
Maximum Rate to the nearest one-
thousandth (0.001) of one percent per
annum, with any such number ending in five
ten-thousandths of one percent being
rounded upwards to the nearest one-
thousandth (0.001) of one percent.
Generally, the applicable distribution rate
for any Distribution Period for the Preferred
Shares will not be more than the Maximum
Rate attributable to such shares. The
Maximum Rate for the Preferred Shares will
depend on the credit rating assigned to such
shares and on the length of the Distribution
Period.
(aaa) "MINIMUM RATE
PERIOD" shall mean any Rate Period
consisting of 7 Rate Period Days for the
Preferred Shares.
(bbb) "MOODY'S" shall mean
Xxxxx'x Investors Service, Inc., a Delaware
corporation, and its successors.
(ccc) "MOODY'S DISCOUNT
FACTOR" shall mean, for purposes of
determining the Discounted Value of any
Moody's Eligible Asset, the percentage
determined as follows. The Moody's
Discount Factor for any Moody's Eligible
Asset other than the securities set forth
below will be the percentage provided in
writing by Moody's.
(i) Corporate debt
securities: The percentage determined
by reference to the rating on such asset
with reference to the remaining term to
maturity of such asset, in accordance
with the table set forth below (non
convertibles).
Xxxxx'x Rating Category
Term to Maturity of
Corporate Debt Security (2)
Aaa
Aa
A
Baa
Ba
B
Unrated(1)
1 year or less.................................... .
109%
112%
115%
118%
137%
150%
250%
2 years or less (but longer than 1
year) .
115
118
122
125
146
160
250
3 years or less (but longer than 2
years)............................................... .
120
123
127
131
153
168
250
4 years or less (but longer than 3
years)............................................... .
126
129
133
138
161
176
250
5 years or less (but longer than 4
years)............................................... .
132
135
139
144
168
185
250
7 years or less (but longer than 5
years)............................................... .
139
143
147
152
179
197
250
10 years or less (but longer than 7
years)............................................... .
145
150
155
160
189
208
250
15 years or less (but longer than 10
years)............................................... .
150
155
160
165
196
216
250
20 years or less (but longer than 15
years)............................................... .
150
155
160
165
196
228
250
30 years or less (but longer than 20
years)............................................... .
150
155
160
165
196
229
250
Greater than 30 years....................... .
165
173
181
189
205
240
250
(1) Unless conclusions regarding
liquidity risk as well as estimates of both the
probability and severity of default for the Trust's
assets can be derived from other sources, securities
rated below B by Moody's and unrated securities
covered by this section (i), which are securities
rated by neither Moody's, S&P nor Fitch, are
limited to 10% of Moody's Eligible Assets. If a
corporate debt security is unrated by Moody's, S&P
or Fitch, the Fund will use the percentage set forth
under "Unrated" in this table. Ratings assigned by
S&P or Fitch are generally accepted by Moody's at
face value. However, adjustments to face value may
be made to particular categories of credits for which
the S&P and/or Fitch rating does not seem to
approximate a Xxxxx'x rating equivalent. Split
rated securities assigned by S&P and Fitch will be
accepted at the lower of the two ratings.
(2) The Moody's Discount Factors for
debt securities shall also be applied to any
derivative transaction, in which case the rating of
the counterparty shall determine the appropriate
rating category.
For corporate debt securities that do not pay interest
in U.S. dollars, the fund sponsor will use the
applicable currency conversion rates.
Preferred stock: The Xxxxx'x Discount Factor for
taxable preferred stock shall be (1)(2):
Aaa
150%
Aa
155%
A
160%
Baa
165%
Ba
196%
B
216%
