SUB-ITEM 77Q1(A)
AMENDMENT NO. 1
TO THE
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
OF
AIM SELECT REAL ESTATE INCOME FUND
This Amendment No. 1 amends the Amended and Restated Agreement and
Declaration of Trust dated March 11, 2002, as previously amended and restated
dated May 15, 2002, and further amended and restated effective as of September
14, 2005 (the "Declaration") of AIM Select Real Estate Income Fund (the
"Trust").
WHEREAS, by unanimous consent of the Board of Trustees of the Trust
effective as of June 30, 2003, the Trustees amended the Declaration by adopting
resolutions amending and restating the Statement Establishing and Fixing the
Rights and Preferences of Auction Rate Preferred Shares (as amended and
restated, the "Second Revised Statement");
WHEREAS, the Board of Trustees incorporated the resolutions into the
Declaration by affixing the Second Revised Statement thereto pursuant to a
Second Amended and Restated Amendment No. 1 to the Declaration; and
WHEREAS, the Board of Trustees has, as of even date herewith, amended
and restated the Declaration, and therefore desires to incorporate the
resolutions into the Declaration by affixing the Second Revised Statement to the
Declaration.
NOW THEREFORE,
1. The Declaration is hereby amended by adding, as Attachment A thereto,
the Second Revised Statement, which Second Revised Statement is attached as
Attachment I to this Amendment No. 1.
2. All references in the Declaration to "this Agreement" shall mean the
Declaration as amended by this Amendment No. 1.
3. Except as specifically amended by this Amendment No. 1, the Declaration
is hereby confirmed and remains in full force and effect.
4. This Amendment is effective as of September 14, 2005.
5. Pursuant to Section 9.7 of the Declaration, this Amendment No. 1 may be
executed by a duly authorized officer of the Trust.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the
Trust, has executed this Amendment as of September 14, 2005.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President, Vice Chair and
Principal Executive Officer
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ATTACHMENT I
AIM SELECT REAL ESTATE INCOME FUND
SECOND AMENDED AND RESTATED
STATEMENT ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES OF
AUCTION RATE PREFERRED SHARES (THE "STATEMENT")
The Trust hereby certifies that:
FIRST: Pursuant to the authority expressly vested in the Board of Trustees
by Article II of the Trust's Amended and Restated Agreement and Declaration of
Trust (which, as hereafter restated or amended from time to time, is together
with this Statement called the "Declaration"), the Board of Trustees has, by
resolution, established the Preferred Shares as an additional Class of shares of
beneficial interest of the Portfolio and authorized the issuance of an unlimited
number of Preferred Shares, $0.001 par value, designated as Auction Rate
Preferred Shares ("ARPS") and further classified as ARPS Series M, W, R and F
(each such series, together with additional series of ARPS the issuance of which
may be authorized, a "Series"), each with a liquidation preference of $25,000
per share.
SECOND: The preferences, rights, voting powers, restrictions, limitations
as to dividends, qualifications and terms and conditions of redemption of ARPS
and each Series are as follows:
DESIGNATION
Series M: A series of Preferred Shares, liquidation preference $25,000 per
Share, is hereby designated "Series M Auction Rate Preferred Shares" ("ARPS
Series M"). Each Share of ARPS Series M shall have an Applicable Rate for its
initial Dividend Period (which Dividend Period shall commence as of the Date of
Original Issue of ARPS Series M and shall continue through and including the day
immediately preceding the initial Dividend Payment Date) equal to 1.85% per
annum and an initial Dividend Payment Date of August 6, 2002 and each Share of
ARPS Series M shall have such other preferences, rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption, in addition to those required by applicable law or set
forth in this Declaration applicable to Preferred Shares of the Trust, as are
set forth in Part I and Part II of this Statement. ARPS Series M shall
constitute a separate series of Preferred Shares of the Trust.
Series W: A series of Preferred Shares, liquidation preference $25,000 per
Share, is hereby designated "Series W Auction Rate Preferred Shares" ("ARPS
Series W"). Each Share of ARPS Series W shall have an Applicable Rate for its
initial Dividend Period (which Dividend Period shall commence as of the Date of
Original Issue of ARPS Series W and shall continue through and including the day
immediately preceding the initial Dividend Payment Date)equal to 1.85% per annum
and an initial Dividend Payment Date of August 8, 2002, and each Share of ARPS
Series W shall have such other preferences, rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption, in addition to those required by applicable law or set forth in this
Declaration applicable to Preferred Shares of the
Trust, as are set forth in Part I and Part II of this Statement. ARPS Series W
shall constitute a separate series of Preferred Shares of the Trust.
Series R: A series of Preferred Shares, liquidation preference $25,000 per
Share, is hereby designated "Series R Auction Rate Preferred Shares" ("ARPS
Series R"). Each Share of ARPS Series R shall have an Applicable Rate for its
initial Dividend Period (which Dividend Period shall commence as of the Date of
Original Issue of ARPS Series R and shall continue through and including the day
immediately preceding the initial Dividend Payment Date)equal to 1.85% per annum
and an initial Dividend Payment Date of August 9, 2002, and each Share of ARPS
Series R shall have such other preferences, rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption, in addition to those required by applicable law or set forth in this
Declaration applicable to Preferred Shares of the Trust, as are set forth in
Part I and Part II of this Statement. ARPS Series R shall constitute a separate
series of Preferred Shares of the Trust.
Series F: A series of Preferred Shares, liquidation preference $25,000 per
Share, is hereby designated "Series F Auction Rate Preferred Shares" ("ARPS
Series F"). Each Share of ARPS Series F shall have an Applicable Rate for its
initial Dividend Period (which Dividend Period shall commence as of the Date of
Original Issue of ARPS Series F and shall continue through and including the day
immediately preceding the initial Dividend Payment Date)equal to 1.85% per annum
and an initial Dividend Payment Date of August 5, 2002, and each Share of ARPS
Series F shall have such other preferences, rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption, in addition to those required by applicable law or set forth in this
Declaration applicable to Preferred Shares of the Trust, as are set forth in
Part I and Part II of this Statement. ARPS Series F shall constitute a separate
series of Preferred Shares of the Trust.
As used in Part I and Part II of this Statement, capitalized terms shall
have the meanings provided in Part III of this Statement or otherwise in this
Declaration; provided, however, that solely for purposes of this Statement, if
there are any inconsistencies between the definitions in Part III of this
Statement and the definitions otherwise in this Declaration, the definitions in
Part III of this Statement shall control.
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PART I: ARPS TERMS
1. Number of Shares; Ranking.
(a) The initial number of ARPS Series M, ARPS Series W, ARPS Series R
and ARPS Series F shares that are authorized for issuance is 2,050 shares, 2,050
shares, 2,050 shares and 2,050 shares, respectively. Notwithstanding any other
provision in this Declaration, no fractional shares of ARPS Series M, ARPS
Series W, ARPS Series R or ARPS Series F shall be issued.
(b) Any Shares of a Series that at any time have been redeemed or
repurchased by the Trust shall, after such redemption or repurchase, be deemed
to be canceled.
(c) The Shares of each Series shall rank on a parity with any other
Preferred Shares (including any other ARPS) as to the payment of dividends to
which such Shares are entitled and the distribution of assets upon dissolution,
liquidation or termination of the Trust.
(d) No holder of Shares of any Series shall have, solely by reason of
being such a holder, any preemptive or other right to acquire, purchase or
subscribe for any Shares of any Series, Common Shares or other securities of the
Trust that it may hereafter issue or sell.
(e) Subject to the provisions of Sections 6(f) and 11(b) of Part I of
this Statement, the Board of Trustees may, in the future, authorize the issuance
of additional Preferred Shares, designated as ARPS Series M, W, R or F, with the
same preferences, rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption and other terms
of the respective Series herein described, except that the Applicable Rate for
their initial Dividend Period, their initial Dividend Payment Date and any other
changes in the terms herein set forth shall be as set forth in an amendment to
this Declaration.
2. Dividends.
(a) The Holders of Shares of any Series shall be entitled to receive,
when, as and if declared by the Board of Trustees, out of funds legally
available therefor, cumulative cash dividends on their Shares at the Applicable
Rate, determined as set forth in paragraph (c) of this Section 2, and no more,
payable on the respective dates determined as set forth in paragraph (b) of this
Section 2. Dividends on the Outstanding ARPS of any Series issued on the Date of
Original Issue shall accumulate from the Date of Original Issue.
(b) (1) Dividends shall be payable when, as and if declared by the
Board of Trustees following the initial Dividend Payment Date, subject
to subparagraph (b)(ii) of this Section 2, on the Shares of each
Series, with respect to any Dividend Period on the first Business Day
following the last day of such Dividend Period; provided, however, if
the Dividend Period is greater than 30 days then on a monthly basis on
the first Business Day of each month within such Dividend Period and
on the first Business Day following the last day of such Dividend
Period.
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(ii) If a day for payment of dividends resulting from the
application of subparagraph (b)(i) above is not a Business Day, then
the Dividend Payment Date shall be the first Business Day following
such day for payment of dividends.
(iii) The Trust shall pay to the Paying Agent not later than
12:00 Noon, New York City time, on each Dividend Payment Date for the
Shares of each Series, an aggregate amount of funds available on such
Dividend Payment Date in the City of New York, New York, equal to the
dividends to be paid to all Holders of such Shares on such Dividend
Payment Date. The Trust shall not be required to establish any
reserves for the payment of dividends.
(iv) All moneys paid to the Paying Agent for the payment of
dividends shall be held in trust for the payment of such dividends by
the Paying Agent for the benefit of the Holders specified in
subparagraph (b)(v) of this Section 2. Any moneys paid to the Paying
Agent in accordance with the foregoing but not applied by the Paying
Agent to the payment of dividends, including interest earned on such
moneys, will, to the extent permitted by applicable law, be repaid to
the Trust at the end of 90 days from the date on which such moneys
were to have been so applied.
(v) Each dividend on a Series shall be paid on the Dividend
Payment Date therefor to the Holders of that Series as their names
appear on the share ledger or share records of the Trust on the
Business Day next preceding such Dividend Payment Date. Dividends in
arrears for any past Dividend Period may be declared and paid at any
time, without reference to any regular Dividend Payment Date, to the
Holders as their names appear on the share ledger or share records of
the Trust on such date, not exceeding 15 days preceding the payment
date thereof, as may be fixed by the Board of Trustees. No interest
will be payable in respect of any dividend payment or payments which
may be in arrears.
(c) (i) The dividend rate on Outstanding ARPS of each Series during
the period from and after the Date of Original Issue to and including
the last day of the initial Dividend Period therefor shall be equal to
the rate per annum set forth under "Designation" above. For each
subsequent Dividend Period with respect to the Outstanding ARPS of
ARPS Series M, W, R and F thereafter, the dividend rate shall be equal
to the rate per annum that results from an Auction; provided, however,
that if an Auction for any subsequent Dividend Period of a Series is
not held for any reason or if Sufficient Clearing Bids have not been
made in an Auction (other than as a result of all Shares of a Series
being the subject of Submitted Hold Orders), then the dividend rate on
the Shares of a Series for any such Dividend Period shall be the
Maximum Rate (except (i) during a Default Period when the dividend
rate shall be the Default Rate, as set forth in Section 2(c)(ii)
below; or (ii) after a Default Period and prior to the beginning of
the next Dividend Period when the dividend rate shall be the Maximum
Rate at the close of business on the last Business Day of such Default
Period). The All Hold Rate will apply automatically following an
Auction in which all of the Outstanding ARPS of a Series are subject
(or are deemed to be subject) to Hold Orders. The
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rate per annum at which dividends are payable on Shares of a Series as
determined pursuant to this Section 2(c)(i) shall be the "Applicable
Rate."
(ii) Subject to the cure provisions below, a "Default Period"
with respect to a particular Series will commence on any date the
Trust fails to deposit irrevocably in trust in same-day funds with the
Paying Agent as of the date and time required in Section 2(b)(iii)
hereof with respect to dividends and Section 3(a)(iii) hereof with
respect to redemptions, whether because of the restrictions set forth
in Section 2(f) of this Part I or otherwise, (A) the full amount of
any dividend on that Series payable on the Dividend Payment Date (a
"Dividend Default") or (B) the full amount of any redemption price
(the "Redemption Price") payable on the date fixed for redemption (the
"Redemption Date") (a "Redemption Default," and together with a
Dividend Default, hereinafter referred to as "Default"). Subject to
the cure provisions of Section 2(c)(iii) below, a Default Period with
respect to a Dividend Default or a Redemption Default shall end on the
Business Day on which, by 12:00 noon, New York City time, all unpaid
dividends and any unpaid Redemption Price shall have been deposited
irrevocably in trust in same-day funds with the Paying Agent. In the
case of a Dividend Default, the Applicable Rate for each Dividend
Period commencing during a Default Period will be equal to the Default
Rate, and each subsequent Dividend Period commencing after the
beginning of a Default Period shall be a Standard Rate Period;
provided, however, that the commencement of a Default Period will not
by itself cause the commencement of a new Dividend Period. No Auction
shall be held during a Default Period applicable to that Series.
(iii) No Default Period with respect to a Dividend Default or
Redemption Default shall be deemed to commence if the amount of any
dividend or any Redemption Price due (if such default is not solely
due to the willful failure of the Trust) is deposited irrevocably in
trust, in same-day funds with the Paying Agent by 12:00 noon, New York
City time within three Business Days after the applicable Dividend
Payment Date or Redemption Date, together with an amount equal to the
Default Rate applied to the amount of such non-payment based on the
actual number of days comprising such period divided by 360 for each
Series. The Default Rate shall be equal to the Reference Rate
multiplied by three (3).
(iv) The amount of dividends per Share payable (if declared) on
each Dividend Payment Date of each Dividend Period of less than one
(1) year (or in respect of dividends on another date in connection
with a redemption during such Dividend Period) shall be computed by
multiplying the Applicable Rate (or the Default Rate) for such
Dividend Period (or a portion thereof) by a fraction, the numerator of
which will be the number of days in such Dividend Period (or portion
thereof) that such Share was an Outstanding ARPS and for which the
Applicable Rate or the Default Rate was applicable and the denominator
of which will be 365, multiplying the amount so obtained by $25,000,
and rounding the amount so obtained to the nearest cent. During any
Dividend Period of one (1) year or more, the amount of dividends per
Share payable on any Dividend
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Payment Date (or in respect of dividends on another date in connection
with a redemption during such Dividend Period) shall be computed as
described in the preceding sentence, except that it will be determined
on the basis of a year consisting of twelve 30-day months.
(d) Any dividend payment made on Shares of any Series shall first be
credited against the earliest accumulated but unpaid dividends due with respect
to such Series.
(e) Notwithstanding any other provision in this Declaration, for so
long as there are any Outstanding ARPS, except as contemplated by Part I of this
Statement, the Trust will not declare, pay or set apart for payment any dividend
or other distribution (other than a dividend or distribution paid in, or
options, warrants or rights to subscribe for or purchase, Common Shares or other
shares of beneficial interest of the Trust, if any, ranking junior to ARPS as to
dividends or upon liquidation) in respect of Common Shares or any other shares
of beneficial interest of the Trust ranking junior to or on a parity with ARPS
as to dividends or upon liquidation, or call for redemption, redeem, purchase or
otherwise acquire for consideration any Common Shares or any other such junior
shares (except by conversion into or exchange for shares of beneficial interest
of the Trust ranking junior to ARPS as to dividends and upon liquidation) or any
such parity shares (except by conversion into or exchange for shares of
beneficial ownership of the Trust ranking junior to or on a parity with ARPS as
to dividends and upon liquidation), unless (i) immediately after such
transaction, the Trust would have Eligible Assets with an aggregate Discounted
Value at least equal to the ARPS Basic Maintenance Amount and the 1940 Act ARPS
Asset Coverage would be achieved, (ii) full cumulative dividends on ARPS due on
or prior to the date of the transaction have been declared and paid and (iii)
the Trust has redeemed the full number of ARPS required to be redeemed by any
provision for mandatory redemption contained in Section 3(a)(ii).
(f) The Trust will not declare any dividend (except a dividend payable
in Shares of the Trust), or declare any other distribution, upon any class of
Shares of the Trust, or purchase any such Shares, unless, in every such case,
any class of senior securities representing indebtedness (as defined in the 0000
Xxx) has at the time of the declaration of any such dividend or distribution or
at the time of any such purchase an asset coverage (as defined in the 0000 Xxx)
of at least 300 per centum after deducting the amount of such dividend,
distribution, or purchase price, as the case may be, except that dividends may
be declared upon any Preferred Shares if such senior security representing
indebtedness has an asset coverage (as defined in the 0000 Xxx) of at least 200
per centum at the time of declaration thereof after deducting the amount of such
dividend.
3. Redemption.
(a) (1) After the initial Dividend Period, subject to the provisions
of this Section 3 and to the extent permitted under the 1940 Act and
Delaware law, the Trust may, at its option, redeem in whole or in part
out of funds legally available therefor Shares of a Series (A) herein
designated as having a Dividend Period of one year or less on the
first Business Day after the last day of such Dividend Period by
delivering a notice of redemption not less than 30 days and not more
than 60 days prior to the date fixed for such redemption, at a
redemption price per
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Share equal to $25,000, plus an amount equal to accumulated but unpaid
dividends thereon (whether or not earned or declared) to the date
fixed for redemption ("Redemption Price"), or (B) herein designated as
having a Dividend Period of more than one year on any Business Day
prior to the end of the relevant Dividend Period by delivering a
notice of redemption not less than 30 days and not more than 60 days
prior to the date fixed for such redemption, at the Redemption Price,
plus a redemption premium, if any, determined by the Board of Trustees
after consultation with the Broker-Dealers and set forth in any
applicable Specific Redemption Provisions at the time of the
designation of such Dividend Period as set forth in Section 4 of this
Statement; provided, however, that during a Dividend Period of more
than one year no Shares of a Series will be subject to optional
redemption except in accordance with any Specific Redemption
Provisions approved by the Board of Trustees after consultation with
the Broker-Dealers at the time of the designation of such Dividend
Period. Notwithstanding the foregoing, the Trust shall not give a
notice of or effect any redemption pursuant to this Section 3(a)(i)
unless, on the date on which the Trust intends to give such notice and
on the date of redemption (a) the Trust has available certain Deposit
Securities with maturity or tender dates not later than the Business
Day preceding the applicable redemption date and having a value not
less than the amount (including any applicable premium) due to Holders
of a Series by reason of the redemption of such Series on such date
fixed for the redemption and (b) the Trust would have Eligible Assets
with an aggregate Discounted Value at least equal the ARPS Basic
Maintenance Amount immediately subsequent to such redemption, if such
redemption were to occur on such date, it being understood that the
provisions of paragraph (d) of this Section 3 shall be applicable in
such circumstances in the event the Trust makes the deposit and takes
the other action required thereby.
(ii) If the Trust fails to maintain, as of any Valuation Date,
Eligible Assets with an aggregate Discounted Value at least equal to
the ARPS Basic Maintenance Amount or, as of the last Business Day of
any month, the 1940 Act ARPS Asset Coverage, and such failure is not
cured within ten Business Days following such Valuation Date in the
case of a failure to maintain the ARPS Basic Maintenance Amount or on
the last Business Day of the following month in the case of a failure
to maintain the 1940 Act ARPS Asset Coverage as of such last Business
Day (each an "Asset Coverage Cure Date"), ARPS will be subject to
mandatory redemption out of funds legally available therefor. The
number of ARPS to be redeemed in such circumstances will be equal to
the lesser of (A) the minimum number of ARPS the redemption of which,
if deemed to have occurred immediately prior to the opening of
business on the relevant Asset Coverage Cure Date, would result in the
Trust having Eligible Assets with an aggregate Discounted Value at
least equal to the ARPS Basic Maintenance Amount, or sufficient to
satisfy 1940 Act ARPS Asset Coverage, as the case may be, in either
case as of the relevant Asset Coverage Cure Date (provided that, if
there is no such minimum number of ARPS the redemption of which would
have such result, all Outstanding ARPS will be redeemed), and (B) the
maximum number of ARPS that can be redeemed out of funds expected to
be available therefor on the
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Mandatory Redemption Date at the Mandatory Redemption Price set forth
in subparagraph (a)(iii) of this Section 3.
(iii) The Trust shall allocate the number of ARPS required to be
redeemed pursuant to the foregoing Section 3(a)(ii) to satisfy the
ARPS Basic Maintenance Amount or the 1940 Act ARPS Asset Coverage, as
the case may be, pro rata among the Holders of ARPS in proportion to
the number of ARPS that they hold plus the number of other Preferred
Shares subject to mandatory redemption provisions similar to those
contained in this Section 3, subject to the further provisions of this
subparagraph (iii). The Trust shall effect any required mandatory
redemption pursuant to subparagraph (a)(ii) or (a)(iii) of this
Section 3 no later than 30 days after the Asset Coverage Cure Date
(the "Mandatory Redemption Date"), except that if the Trust does not
have funds legally available for the redemption of, or is not
otherwise legally permitted to redeem, the number of ARPS which would
be required to be redeemed by the Trust under clause (A) of
subparagraph (a)(ii) or subparagraph (a)(iii) of this Section 3 if
sufficient funds were available, together with other Preferred Shares
which are subject to mandatory redemption under provisions similar to
those contained in this Section 3, or the Trust otherwise is unable to
effect such redemption on or prior to such Mandatory Redemption Date,
the Trust shall redeem those ARPS, and other Preferred Shares which it
was unable to redeem, on the earliest practicable date on which the
Trust will have such funds available, upon notice pursuant to Section
3(b) to record owners of ARPS to be redeemed and the Paying Agent. The
Trust will deposit with the Paying Agent funds sufficient to redeem
the specified number of ARPS with respect to a redemption required
under subparagraph (a)(ii) or subparagraph (a)(iii) of this Section 3,
by 1:00 p.m., New York City time, of the Business Day immediately
preceding the Mandatory Redemption Date. If fewer than all of the
Outstanding ARPS are to be redeemed pursuant to this Section
3(a)(iii), the number of ARPS to be redeemed shall be redeemed pro
rata from the Holders of such ARPS in proportion to the number of ARPS
held by such Holders, by lot or by such other method as the Trust
shall deem fair and equitable, subject, however, to the terms of any
applicable Specific Redemption Provisions. "Mandatory Redemption
Price" means the Redemption Price plus (in the case of a Dividend
Period of one year or more only) a redemption premium, if any,
determined by the Board of Trustees after consultation with the
Broker-Dealers and set forth in any applicable Specific Redemption
Provisions.
(b) In the event of a redemption pursuant to Section 3(a) hereof, the
Trust will file a notice of its intention to redeem with the Securities and
Exchange Commission so as to provide at least the minimum notice required under
Rule 23c-2 under the 1940 Act or any successor provision. In addition, the Trust
shall deliver a notice of redemption to the Auction Agent (the "Notice of
Redemption") containing the information set forth below (i) in the case of an
optional redemption pursuant to subparagraph (a)(i) above, one Business Day
prior to the giving of notice to the Holders, (ii) in the case of a mandatory
redemption pursuant to subparagraph (a)(ii) above, on or prior to the 30th day
preceding the Mandatory Redemption Date. The Auction Agent will use its
reasonable efforts to provide telephonic notice to each Holder of Shares of each
Series called for redemption not later than the close of business on the
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Business Day immediately following the day on which the Auction Agent determines
the Shares to be redeemed (or, during a Default Period with respect to such
Shares, not later than the close of business on the Business Day immediately
following the day on which the Auction Agent receives Notice of Redemption from
the Trust). The Auction Agent shall confirm such telephonic notice in writing
not later than the close of business on the third Business Day preceding the
date fixed for redemption by providing the Notice of Redemption to each Holder
of Shares called for redemption, the Paying Agent (if different from the Auction
Agent) and the Securities Depository. Notice of Redemption will be addressed to
the registered owners of each Series at their addresses appearing on the share
records of the Trust. Such Notice of Redemption will set forth (i) the date
fixed for redemption, (ii) the number and identity of ARPS to be redeemed, (iii)
the redemption price (specifying the amount of accumulated dividends to be
included therein), (iv) that dividends on ARPS to be redeemed will cease to
accumulate on such date fixed for redemption, and (v) the provision under which
redemption shall be made. No defect in the Notice of Redemption or in the
transmittal or mailing thereof will affect the validity of the redemption
proceedings, except as required by applicable law. If fewer than all ARPS held
by any Holder are to be redeemed, the Notice of Redemption mailed to such Holder
shall also specify the number of ARPS to be redeemed from such Holder.
(c) Notwithstanding the provisions of paragraph (a) of this Section 3,
but subject to Section 7(e) hereof, no ARPS may be redeemed unless all dividends
in arrears on the Outstanding ARPS and all shares of beneficial interest of the
Trust ranking on a parity with ARPS with respect to payment of dividends or upon
liquidation, have been or are being contemporaneously paid or set aside for
payment; provided, however, that the foregoing shall not prevent the purchase or
acquisition of all Outstanding ARPS pursuant to the successful completion of an
otherwise lawful purchase or exchange offer made on the same terms to, and
accepted by, Holders of all Outstanding ARPS.
(d) Upon the deposit of funds sufficient to redeem Shares of any
Series with the Paying Agent and the giving of the Notice of Redemption to the
Auction Agent under paragraph (b) of this Section 3, dividends on such Shares
shall cease to accumulate and such Shares shall no longer be deemed to be
Outstanding ARPS for any purpose (including, without limitation, for purposes of
calculating whether the Trust has maintained the requisite ARPS Basic
Maintenance Amount or the 1940 Act ARPS Asset Coverage), and all rights of the
Holder of the Shares so called for redemption shall cease and terminate, except
the right of such Holder to receive the redemption price specified herein, but
without any interest or other additional amount. Such redemption price shall be
paid by the Paying Agent in accordance with Section 3(g) hereof. The Trust shall
be entitled to receive from the Paying Agent, promptly after the date fixed for
redemption, any cash deposited with the Paying Agent in excess of (i) the
aggregate redemption price of ARPS called for redemption on such date and (ii)
such other amounts, if any, to which Holders of Shares of each Series called for
redemption may be entitled. Any funds so deposited that are unclaimed at the end
of two years from such redemption date shall, to the extent permitted by
applicable law, be paid to the Trust, after which time the Holders of ARPS so
called for redemption may look only to the Trust for payment of the redemption
price and all other amounts, if any, to which they may be entitled. The Trust
shall be entitled to receive, from time to time after the date fixed for
redemption, any interest earned on the funds so deposited.
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(e) To the extent that any redemption for which Notice of Redemption
has been given is not made by reason of the absence of legally available funds
therefor, or is otherwise prohibited, such redemption shall be made as soon as
practicable to the extent such funds become legally available or such redemption
is no longer otherwise prohibited. Failure to redeem Shares of any Series shall
be deemed to exist at any time after the date specified for redemption in a
Notice of Redemption when the Trust shall have failed, for any reason
whatsoever, to deposit in trust with the Paying Agent the redemption price with
respect to any Shares for which such Notice of Redemption has been given.
Notwithstanding the fact that the Trust may not have redeemed Shares of any
Series for which a Notice of Redemption has been given, dividends may be
declared and paid on ARPS and shall include those ARPS for which Notice of
Redemption has been given but for which deposit of funds has not been made.
(f) All moneys paid to the Paying Agent for payment of the redemption
price of Shares of any Series called for redemption shall be held in trust by
the Paying Agent for the benefit of Holders of Shares so to be redeemed.
(g) So long as any Shares of any Series are held of record by the
nominee of the Securities Depository, the redemption price for such Shares will
be paid on the date fixed for redemption to the nominee of the Securities
Depository for distribution to Agent Members for distribution to the persons for
whom they are acting as agent.
(h) Except for the provisions described above, nothing contained in
this Statement limits any right of the Trust to repurchase or otherwise acquire
any Shares of each Series outside of an Auction at any price, whether higher or
lower than the price that would be paid in connection with an optional or
mandatory redemption, so long as, at the time of any such repurchase, there is
no arrearage in the payment of dividends on, or the mandatory or optional
redemption price with respect to, any Shares of any Series for which Notice of
Redemption has been given and the Trust is in compliance with the 1940 Act ARPS
Asset Coverage and has Eligible Assets with an aggregate Discounted Value at
least equal to the ARPS Basic Maintenance Amount after giving effect to such
repurchase or acquisition on the date thereof. Any Shares which are repurchased,
redeemed or otherwise acquired by the Trust shall have no voting rights. If
fewer than all the Outstanding ARPS of any Series are redeemed or otherwise
acquired by the Trust, the Trust shall give notice of such transaction to the
Auction Agent, in accordance with the procedures agreed upon by the Board of
Trustees.
(i) In the case of any redemption pursuant to this Section 3, only
whole ARPS shall be redeemed, and in the event that any provision of this
Declaration would require redemption of a fractional share, the Auction Agent
shall be authorized to round up so that only whole ARPS are redeemed.
(j) Notwithstanding anything herein to the contrary, including,
without limitation, Sections 2(e), 6(f) and 11 of Part I hereof, the Board of
Trustees may establish and issue additional series of Preferred Shares,
including other Series, ranking prior to or on a parity with ARPS with respect
to the payment of dividends or the distribution of assets upon the dissolution
or liquidation of the Trust or the termination of the Trust or the Preferred
Shares, to the extent permitted by the 1940 Act only if, upon issuance, either
(A) the net proceeds from the sale of Shares of such additional series (or such
portion thereof needed to redeem or repurchase
10
the Outstanding ARPS) are deposited with the Paying Agent in accordance with
Section 3(d) of Part I hereof, Notice of Redemption as contemplated by Section
3(b) of Part I hereof has been delivered prior thereto or is sent promptly
thereafter, and such proceeds are used to redeem all Outstanding ARPS or (B) the
Trust would meet the 1940 Act ARPS Asset Coverage, the ARPS Basic Maintenance
Amount and the requirements of Section 11 of Part I hereof.
4. Designation of Dividend Period.
(a) The initial Dividend Period for each Series is as set forth under
"Designation" above. The Trust will designate the duration of subsequent
Dividend Periods of each Series; provided, however, that no such designation is
necessary for a Standard Rate Period and, provided further, that any designation
of a Special Rate Period shall be effective only if (i) notice thereof shall
have been given as provided herein, (ii) any failure to pay in a timely manner
to the Paying Agent the full amount of any dividend on, or the redemption price
of, ARPS shall have been cured as provided above, (iii) Sufficient Clearing Bids
shall have existed in an Auction held on the Auction Date immediately preceding
the first day of such proposed Special Rate Period, (iv) if the Trust shall have
mailed a Notice of Redemption with respect to any ARPS, the redemption price
with respect to such ARPS shall have been deposited with the Paying Agent, and
(v) the Trust has confirmed that as of the Auction Date next preceding the first
day of such Special Rate Period, it has Eligible Assets with an aggregate
Discounted Value at least equal to the ARPS Basic Maintenance Amount, and the
Trust has consulted with the Broker-Dealers and has provided notice of such
designation and an ARPS Basic Maintenance Certificate to Moody's (if Xxxxx'x is
then rating ARPS), S&P (if S&P is then rating ARPS) and any Other Rating Agency
which is then rating ARPS and so requires.
(b) If the Trust proposes to designate any Special Rate Period, not
fewer than seven Business Days (or two Business Days in the event the duration
of the Dividend Period prior to such Special Rate Period is fewer than eight
days) nor more than thirty Business Days prior to the first day of such Special
Rate Period, notice shall be (i) made by press release and (ii) communicated by
the Trust by telephonic or other means to the Auction Agent and confirmed in
writing promptly thereafter. Each such notice shall state (A) that the Trust
proposes to exercise its option to designate a succeeding Special Rate Period,
specifying the first and last days thereof and (B) that the Trust will by 3:00
p.m., New York City time, on the second Business Day next preceding the first
day of such Special Rate Period, notify the Auction Agent, who will promptly
notify the Broker-Dealers, of either (x) its determination, subject to certain
conditions, to proceed with such Special Rate Period, subject to the terms of
any Specific Redemption Provisions, or (y) its determination not to proceed with
such Special Rate Period, in which latter event the succeeding Dividend Period
shall be a Standard Rate Period.
No later than 3:00 p.m., New York City time, on the second Business Day
next preceding the first day of any proposed Special Rate Period, the Trust
shall deliver to the Auction Agent, who will promptly deliver to the
Broker-Dealers and Existing Holders, either:
(i) a notice stating (A) that the Trust has determined to
designate the next succeeding Dividend Period as a Special Rate
Period, specifying the first and last days thereof and (B) the terms
of any Specific Redemption Provisions; or
11
(ii) a notice stating that the Trust has determined not to
exercise its option to designate a Special Rate Period.
If the Trust fails to deliver either such notice with respect to any designation
of any proposed Special Rate Period to the Auction Agent or is unable to make
the confirmation provided in clause (v) of paragraph (a) of this Section 4 by
3:00 p.m., New York City time, on the second Business Day next preceding the
first day of such proposed Special Rate Period, the Trust shall be deemed to
have delivered a notice to the Auction Agent with respect to such Dividend
Period to the effect set forth in clause (ii) above, thereby resulting in a
Standard Rate Period.
5. Restrictions on Transfer. Shares of a Series may be transferred only (a)
pursuant to an order placed in an Auction, (b) to or through a Broker-Dealer or
(c) to the Trust or any Affiliate. Notwithstanding the foregoing, a transfer
other than pursuant to an Auction will not be effective unless the selling
Existing Holder or the Agent Member of such Existing Holder, in the case of an
Existing Holder whose Shares are listed in its own name on the books of the
Auction Agent, or the Broker-Dealer or Agent Member of such Broker-Dealer, in
the case of a transfer between persons holding ARPS through different
Broker-Dealers, advises the Auction Agent of such transfer. The certificates
representing the Shares of a Series issued to the Securities Depository will
bear legends with respect to the restrictions described above and stop-transfer
instructions will be issued to the Transfer Agent and/or Registrar.
6. Voting Rights.
(a) Except as otherwise provided in this Declaration or as otherwise
required by applicable law, (i) each Holder of Shares of any Series shall be
entitled to one vote for each Share of any Series held on each matter submitted
to a vote of shareholders of the Trust, and (ii) the holders of Outstanding
Preferred Shares, including each Series, and Common Shares shall vote together
as a single Class on all matters submitted to shareholders; provided, however,
that, at any meeting of the shareholders of the Trust held for the election of a
class of Trustees that includes a Preferred Share Trustee, the holders of the
Outstanding Preferred Shares, including each Series, represented in person or by
proxy at said meeting, shall be entitled, as a Class and to the exclusion of the
holders of Common Shares and all other securities of the Trust, to elect such
Preferred Share Trustee, each Preferred Share entitling the holder thereof to
one vote. The identity of the nominees for Preferred Share Trustees may be fixed
by the Board of Trustees pursuant to the Bylaws. Subject to paragraph (b) of
this Section 6, the holders of Common Shares that are Outstanding Shares and the
holders of Outstanding Preferred Shares, including each Series, voting together
as a single Class, shall elect the balance of the Trustees.
(b) During any period in which any one or more of the conditions
described below shall exist (such period being referred to herein as a "Voting
Period"), and notwithstanding the maximum number of Trustees set forth in this
Declaration, the number of Trustees constituting the Board of Trustees shall be
automatically increased by the smallest number that, when added to the two
Preferred Share Trustees elected exclusively by the holders of Preferred Shares,
including each Series, would constitute a majority of the Board of Trustees as
so increased by such smallest number; and the holders of the Outstanding
Preferred Shares, including each Series, shall be entitled, voting as a Class on
a one-vote-per-Share basis and to the exclusion of the holders of Common Shares
and all other securities of the Trust, to elect such
12
smallest number of additional Trustees, together with the two Trustees that such
holders are in any event entitled to elect. A Voting Period shall commence:
(i) if at the close of business on any Dividend Payment Date
accumulated dividends (whether or not earned or declared) on Preferred
Shares equal to at least two full years' dividends shall be due and
unpaid; or
(ii) if at any time holders of any Preferred Shares are entitled
under the 1940 Act to elect a majority of the Trustees of the Trust.
Upon the termination of a Voting Period, the voting rights described in this
paragraph (b) of Section 6 shall cease, subject always, however, to the
revesting of such voting rights in the holders of Preferred Shares, including
each Series, upon the further occurrence of any of the events described in this
paragraph (b) of Section 6.
(c) As soon as practicable after the accrual of any right of the
holders of Preferred Shares, including each Series, to elect additional Trustees
as described in paragraph (b) of this Section 6, the Trust shall notify the
Auction Agent and shall call a special meeting of such holders. The Trust shall
instruct the Auction Agent to mail a notice of such special meeting to such
holders and, notwithstanding any other provision of the Bylaws, such meeting
shall be held not less than 10 nor more than 30 days after the date of mailing
of such notice. If the Trust fails to send such notice to the Auction Agent or
if the Auction Agent does not call such a special meeting, it may be called by
any such holder on like notice. The record date for determining the holders
entitled to notice of and to vote at such special meeting shall be the close of
business on the fifth Business Day preceding the day on which such notice is
mailed. At any such special meeting and at each meeting of holders of Preferred
Shares, including each Series, held during a Voting Period at which Trustees are
to be elected, such holders, voting together as a Class and to the exclusion the
holders of Common Shares and all other securities of the Trust, shall be
entitled to elect the number of Trustees prescribed in paragraph (b) of this
Section 6 on a one-vote-per-share basis.
(d) During the Voting Period, the terms of office of all persons who
are Trustees at the time of a special meeting of Holders of ARPS and holders of
other Preferred Shares to elect Trustees shall continue, notwithstanding the
election at such meeting by such holders of the number of Trustees that they are
entitled to elect, and the persons so elected by such holders, together with the
two incumbent Trustees elected by such holders and the remaining incumbent
Trustees elected by the holders of Common Shares and Preferred Shares, shall
constitute the duly elected Trustees of the Trust, notwithstanding the maximum
number of Trustees set forth in this Declaration.
(e) Notwithstanding any other provision in this Declaration,
simultaneously with the termination of a Voting Period, the terms of office of
the additional Trustees elected by the Holders of ARPS and the holders of other
Preferred Shares pursuant to paragraph (b) of this Section 6 shall terminate,
the remaining Trustees shall constitute the Trustees of the Trust and the voting
rights of such holders to elect additional Trustees pursuant to paragraph (b) of
this Section 6 shall cease, subject to the provisions of the last sentence of
paragraph (b) of this Section 6.
13
(f) Notwithstanding any other provision in this Declaration, so long
as there are any Outstanding Preferred Shares, the Trust will not, without the
affirmative Majority Shareholder Vote of the Preferred Shares, voting as a
separate Class (i) amend, alter or repeal any of the preferences, rights or
powers of the Preferred Shares so as to affect materially and adversely such
preferences, rights or powers as defined in Section 6(h) below; (ii) increase
the number of Preferred Shares authorized for issuance; (iii) establish or issue
any class of shares of beneficial interest of the Trust or any series thereof,
including additional Preferred Shares or series thereof, ranking senior to or on
a parity with the existing Preferred Shares with respect to the payment of
dividends or the distribution of assets, or any securities convertible into, or
warrants, options or similar rights to purchase, acquire or receive, such shares
of beneficial interest or series thereof ranking senior to or on a parity with
the existing Preferred Shares or reclassify any authorized Shares into any
Shares ranking senior to or on a parity with the existing Preferred Shares
(except that, notwithstanding the foregoing, but subject to the provisions of
either Section 3(j) or Section 11 hereof, as applicable, the Board of Trustees,
without the vote or consent of the holders of the Preferred Shares, may from
time to time establish, designate and classify, and the Trust may from time to
time issue, additional Preferred Shares and series thereof, including other
Series of ARPS, ranking on a parity with ARPS with respect to the payment of
dividends and the distribution of assets upon dissolution, liquidation or
termination of the Trust, and may reclassify and/or issue any additional Shares
of each Series, subject to continuing compliance by the Trust with 1940 Act ARPS
Asset Coverage and ARPS Basic Maintenance Amount requirements); (iv) institute
any proceedings to be adjudicated bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against it, or file a
petition seeking or consenting to reorganization or relief under any applicable
federal or state law relating to bankruptcy or insolvency, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Trust or a substantial part of its property, or make
any assignment for the benefit of creditors, or, except as may be required by
applicable law, admit in writing its inability to pay its debts generally as
they become due or take any trust action in furtherance of any such action; (v)
create, incur or suffer to exist, or agree to create, incur or suffer to exist,
or consent to cause or permit in the future (upon the happening of a contingency
or otherwise) the creation, incurrence or existence of any material lien,
mortgage, pledge, charge, security interest, security agreement, conditional
sale or trust receipt or other material encumbrance of any kind upon any of the
Trust's assets as a whole, except (A) liens the validity of which are being
contested in good faith by appropriate proceedings, (B) liens for taxes that are
not then due and payable or that can be paid thereafter without penalty, (C)
liens, pledges, charges, security interests, security agreements or other
encumbrances arising in connection with any indebtedness senior to ARPS, (D)
liens, pledges, charges, security interests, security agreements or other
encumbrances arising in connection with any indebtedness excepted under clause
(vi) below or as otherwise permitted by the Trust's investment policies and
restrictions, (E) liens to secure payment for services rendered including,
without limitation, services rendered by the Trust's custodian and the Auction
Agent, and (F) liens, pledges, security interests or other encumbrances arising
from swap agreements; or (vi) create, authorize, issue, incur or suffer to exist
any indebtedness for borrowed money or any direct or indirect guarantee of such
indebtedness for borrowed money or any direct or indirect guarantee of such
indebtedness, except the Trust may borrow as may be permitted by the Trust's
investment policies and restrictions; provided, however, that transfers of
assets by the Trust subject to an obligation to repurchase shall not be deemed
to be indebtedness for purposes of this provision to
14
the extent that after any such transaction the Trust has Eligible Assets with an
aggregate Discounted Value at least equal to the ARPS Basic Maintenance Amount
as of the immediately preceding Valuation Date.
(g) The affirmative Majority Shareholder Vote of the Outstanding
Preferred Shares, including each Series, voting as a separate Class, shall be
required to approve any plan of reorganization (as such term is used in the 1940
Act) adversely affecting such Shares or any action requiring a vote of security
holders of the Trust under Section 13(a) of the 1940 Act. In the event a vote of
holders of Preferred Shares is required pursuant to the provisions of Section
13(a) of the 1940 Act, the Trust shall, not later than ten Business Days prior
to the date on which such vote is to be taken, notify Moody's (if Xxxxx'x is
then rating ARPS), S&P (if S&P is then rating ARPS) and any Other Rating Agency
which is then rating ARPS and which so requires that such vote is to be taken
and the nature of the action with respect to which such vote is to be taken and
shall, not later than ten Business Days after the date on which such vote is
taken, notify Moody's, S&P and any such Other Rating Agency, as applicable, of
the results of such vote.
(h) The affirmative Majority Shareholder Vote of the Outstanding ARPS
of a Series, voting separately from any other Series or other series of
Preferred Shares, shall be required with respect to any matter that materially
and adversely affects the rights, preferences, or powers of that Series in a
manner different from that of other Series or series of Preferred Shares. For
purposes of the foregoing, no matter shall be deemed to adversely affect any
right, preference or power unless such matter (i) alters or abolishes any
preferential right of such Series; (ii) creates, alters or abolishes any right
in respect of redemption of such Series; or (iii) creates or alters (other than
to abolish) any restriction on transfer applicable to such Series. The vote of
Holders of Shares of any Series described in this Section 6(h) will in each case
be in addition to and not in lieu of any separate vote of the requisite
percentage of Common Shares and/or Preferred Shares that is necessary to
authorize the action in question.
(i) The Board of Trustees, without the vote or consent of any holder
of Preferred Shares, including any Series, or any other shareholder of the
Trust, may from time to time amend, alter or repeal any or all of the
definitions contained herein, add covenants and other obligations of the Trust,
or confirm the applicability of covenants and other obligations set forth
herein, all in connection with obtaining or maintaining the rating of Moody's
(if Xxxxx'x is then rating ARPS), S&P (if S&P is then rating ARPS) and any Other
Rating Agency which is then rating ARPS, and any such amendment, alteration or
repeal will not be deemed to affect the preferences, rights or powers of
Preferred Shares, including ARPS, or the holders thereof, provided that the
Board of Trustees receives written confirmation from Moody's, S&P or such Other
Rating Agency, as applicable (with such confirmation in no event being required
to be obtained from a particular rating agency with respect to definitions or
other provisions relevant only to and adopted in connection with another rating
agency's rating of any Series) that any such amendment, alteration or repeal
would not adversely affect the rating then assigned by such rating agency.
In addition, subject to compliance with applicable law, the Board of
Trustees may amend the definition of Maximum Rate to increase the percentage
amount by which the Reference Rate is multiplied to determine the Maximum Rate
shown therein without the vote or consent of the
15
holders of the Preferred Shares, including any Series, or any other shareholder
of the Trust, and without receiving any confirmation from Moody's, S&P or any
Other Rating Agency, as applicable, after consultation with the Broker-Dealers,
provided that immediately following any such increase the Trust would be in
compliance with the ARPS Basic Maintenance Amount.
(j) Unless otherwise required by applicable law, Holders of Shares of
any Series shall not have any relative rights or preferences or other special
rights other than those specifically set forth in this Declaration. The Holders
of Shares of any Series shall have no rights to cumulative voting. In the event
that the Trust fails to pay any dividends on the Shares of any Series, the
exclusive remedy of the Holders thereof shall be the right to vote for Trustees
pursuant to the provisions of this Section 6.
(k) The foregoing voting provisions will not apply with respect to any
Series if, at or prior to the time when a vote is required, such Series has been
(i) redeemed or (ii) called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.
(l) Notwithstanding anything to the contrary in this Section 6, to the
extent that Article VI of this Declaration establishes a higher voting
requirement for Preferred Shares with respect to any voting right described in
this Section 6, such higher voting requirement in Article VI shall control.
7. Liquidation Rights.
(a) Upon the dissolution, liquidation or termination of the Trust,
whether voluntary or involuntary, the Holders of Outstanding ARPS of each
Series, together with holders of any Shares ranking on a parity with each Series
upon dissolution, liquidation or termination of the Trust, shall be entitled to
receive and to be paid out of the assets of the Trust (or the proceeds thereof)
available for distribution to its shareholders after satisfaction of claims of
creditors of the Trust an amount equal to the liquidation preference with
respect to such Shares. The liquidation preference for each Series shall be
$25,000 per Share, plus an amount equal to all accumulated dividends thereon
(whether or not earned or declared but without interest) to the date payment of
such distribution is made in full or a sum sufficient for the payment thereof is
set apart with the Paying Agent. No redemption premium shall be paid upon any
liquidation even if such redemption premium would be paid upon optional or
mandatory redemption of the relevant Shares.
(b) If, upon any such liquidation, dissolution or termination of the
Trust, whether voluntary or involuntary, the assets of the Trust available for
distribution among the holders of all Outstanding Preferred Shares, including
ARPS, shall be insufficient to permit the payment in full to such holders of the
amounts to which they are entitled, then such available assets shall be
distributed among the holders of all Outstanding Preferred Shares, including
ARPS, ratably in any such distribution of assets according to the respective
amounts which would be payable on all such Shares if all amounts thereon were
paid in full.
(c) Upon the dissolution, liquidation or termination of the Trust,
whether voluntary or involuntary, until payment in full is made to the Holders
of ARPS of the liquidation distribution to which they are entitled, no dividend
or other distribution shall be made to the
16
holders of Common Shares or any other shares of beneficial interest of the Trust
ranking junior to ARPS upon the dissolution, liquidation or termination of the
Trust and no repurchase, redemption or other acquisition for any consideration
by the Trust shall be made in respect of the Common Shares or any other shares
of beneficial interest of the Trust ranking junior to ARPS upon dissolution,
liquidation or termination of the Trust.
(d) A consolidation, reorganization or merger of the Trust with or
into any other Person, or a sale, lease or exchange of all or substantially all
of the assets of the Trust in consideration for the issuance of equity
securities of another Person, shall not be deemed to be a liquidation,
dissolution or termination of the Trust, whether voluntary or involuntary, for
the purposes of this Section 7.
(e) After the payment to the holders of Preferred Shares, including
ARPS, of the full preferential amounts provided for in this Section 7, the
holders of Preferred Shares, including ARPS, as such shall have no right or
claim to any of the remaining assets of the Trust.
(f) In the event the assets of the Trust or proceeds thereof available
for distribution to the Holders of ARPS, upon any dissolution, liquidation or
termination of the Trust, whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which such Holders are entitled
pursuant to paragraph (a) of this Section 7, no such distribution shall be made
on account of any Shares ranking on a parity with ARPS unless proportionate
distributive amounts shall be paid on account of ARPS, ratably, in proportion to
the full distributable amounts to which holders of all such parity Shares are
entitled upon such dissolution, liquidation or termination.
(g) Subject to the rights of the holders of Shares ranking on a parity
with ARPS with respect to the distribution of assets upon the dissolution,
liquidation or termination of the Trust, after payment shall have been made in
full to the Holders of ARPS as provided in paragraph (a) of this Section 7, but
not prior thereto, any Shares ranking junior to ARPS with respect to the
distribution of assets upon the dissolution, liquidation or termination of the
Trust shall, subject to any respective terms and provisions (if any) applying
thereto, be entitled to receive any and all assets remaining to be paid or
distributed, and the Holders of ARPS shall not be entitled to share therein.
8. Auction Agent. For so long as there are any Outstanding ARPS, the
Auction Agent, duly appointed by the Trust to so act, shall be in each case a
commercial bank, trust company or other financial institution independent of the
Trust and its Affiliates (which, however, may engage or have engaged in business
transactions with the Trust or its Affiliates) and at no time shall the Trust or
any of its Affiliates act as the Auction Agent in connection with the Auction
Procedures. If the Auction Agent resigns or for any reason its appointment is
terminated during any period that there are any Outstanding ARPS, the Trust
shall use its best efforts promptly thereafter to appoint another qualified
commercial bank, trust company or financial institution to act as the Auction
Agent.
9. 1940 Act ARPS Asset Coverage. The Trust shall maintain, as of the last
Business Day of each month in which there are any Outstanding ARPS, asset
coverage with respect to
17
ARPS which is equal to or greater than the 1940 Act ARPS Asset Coverage;
provided, however, that Section 3(a)(ii) hereof shall be the sole remedy in the
event the Trust fails to do so.
10. ARPS Basic Maintenance Amount. So long as there are any Outstanding
ARPS and Moody's, S&P or any Other Rating Agency which so requires is then
rating ARPS, the Trust shall maintain, as of each Valuation Date, Moody's
Eligible Assets (if Xxxxx'x is then rating ARPS), S&P Eligible Assets (if S&P is
then rating ARPS) and (if applicable) Other Rating Agency Eligible Assets having
an aggregate Discounted Value equal to or greater than the ARPS Basic
Maintenance Amount; provided, however, that Section 3(a)(ii) hereof shall be the
sole remedy in the event the Trust fails to do so.
11. Certain Other Restrictions. Notwithstanding any other provision in this
Declaration, for so long as there are any Outstanding ARPS and Moody's, S&P or
any Other Rating Agency which so requires is then rating such ARPS, the Trust
will not, unless it has received written confirmation from Moody's (if Xxxxx'x
is then rating ARPS), S&P (if S&P is then rating ARPS) and (if applicable) such
Other Rating Agency that any such action would not impair the rating then
assigned by such rating agency to a Series, engage in any one or more of the
following activities or transactions:
(a) purchase or sell futures contracts or options thereon with respect
to portfolio securities or write unsecured put or uncovered call options on
portfolio securities;
(b) issue additional ARPS or any Shares ranking prior to or on a
parity with ARPS with respect to the payment of dividends or the distribution of
assets upon dissolution, liquidation or termination of the Trust;
(c) engage in any short sales of securities;
(d) merge or consolidate into or with any other Person;
(e) utilize any pricing service other than FT Interactive Data,
Reuters, Telekurs, Bloomberg Financial Markets, X.X. Xxxxxx Pricing Service,
Xxxxxxx Xxxxx Securities Pricing Service or Bridge Data Corp., or any other
pricing service then permitted by S&P and Moody's, or fail to notify S&P and
Moody's upon a change of the Trust's then-current pricing service provider; or
(f) enter into any interest rate swap or cap agreement, unless: (1)
the value of such agreement is marked to market daily by the counterparty; (2)
upon failure of the trust to maintain Eligible Assets with an aggregate
Discounted Value at least equal to the ARPS Basic Maintenance Amount, the Trust
will have the right to terminate such agreement and the Trust shall terminate
such agreement; (3) the counterparty to such agreement agrees that it will not
institute against the Trust any bankruptcy, reorganization, insolvency,
arrangement or liquidation proceedings under the laws of the United States or
any state thereof; and (4) the Trust obtains such rating agency confirmation
with respect to any amendment to, or transfer of, such agreement.
For purposes of valuation of Moody's Eligible Assets: (A) if the Trust
writes a call option, the underlying asset will be valued as follows: (1) if the
option is exchange-traded and
18
may be offset readily or if the option expires before the earliest possible
redemption of ARPS, at the lower of the Discounted Value of the underlying
security of the option and the exercise price of the option or (2) otherwise, it
has no value; (B) if the Trust writes a put option, the underlying asset will be
valued as follows: the lesser of (1) exercise price and (2) the Discounted Value
of the underlying security; and (C) call or put option contracts which the Trust
buys have no value. For so long as ARPS are rated by Moody's: (A) the Trust will
not engage in options transactions for leveraging or speculative purposes; (B)
the Trust will not write or sell any anticipatory contracts pursuant to which
the Trust xxxxxx the anticipated purchase of an asset prior to completion of
such purchase; (C) the Trust will not enter into an option transaction with
respect to portfolio securities unless, after giving effect thereto, the Trust
would continue to have Eligible Assets with an aggregate Discounted Value equal
to or greater than the ARPS Basic Maintenance Amount; (D) the Trust will not
enter into an option transaction with respect to portfolio securities unless
after giving effect to such transaction the Trust would continue to be in
compliance with the provisions relating to the ARPS Basic Maintenance Amount;
(E) for purposes of the ARPS Basic Maintenance Amount assets in margin accounts
are not Eligible Assets; (F) the Trust shall write only exchange-traded options
on exchanges approved by Moody's; (G) where delivery may be made to the Trust
with any of a class of securities, the Trust shall assume for purposes of the
ARPS Basic Maintenance Amount that it takes delivery of that security which
yields it the least value; (H) the Trust will not engage in forward contracts;
and (I) there shall be a quarterly audit made of the Trust's options
transactions by the Trust's independent accountants to confirm that the Trust is
in compliance with these standards.
12. Compliance Procedures. For so long as there are any Outstanding ARPS
and Moody's, S&P or any Other Rating Agency which so requires is then rating
such ARPS:
(a) As of each Valuation Date, the Trust shall determine in accordance
with the procedures specified herein (i) the Market Value of each Eligible Asset
owned by the Trust on that date, (ii) the Discounted Value of each such Eligible
Asset using the Discount Factors, (iii) whether the ARPS Basic Maintenance
Amount is met in accordance with Section 10 as of that date, (iv) the value of
the total assets of the Trust, less all liabilities, and (v) whether the 1940
Act ARPS Asset Coverage is met as of that date. Upon any failure to maintain the
ARPS Basic Maintenance Amount in the case of clause (iii) or 1940 Act ARPS Asset
Coverage in the case of clause (v), the Trust shall notify via fax or e-mail,
the Auction Agent, Moody's (if Xxxxx'x is then rating ARPS), S&P (if S&P is then
rating ARPS) and any Other Rating Agency which is then rating ARPS before 5:00
p.m. EST on the first Business Day after the relevant Valuation Date.
(b) Upon any failure to maintain the required ARPS Basic Maintenance
Amount or 1940 Act ARPS Asset Coverage on any Valuation Date, the Trust may use
reasonable commercial efforts (including, without limitation, altering the
composition of its portfolio, purchasing ARPS outside of an Auction or in the
event of a failure to file a certificate on a timely basis, submitting the
requisite certificate), subject to the fiduciary obligations of the Board of
Trustees, to reattain (or certify in the case of a failure to file on a timely
basis, as the case may be) the required ARPS Basic Maintenance Amount or 1940
Act ARPS Asset Coverage on or prior to the Asset Coverage Cure Date.
19
(c) Compliance with the ARPS Basic Maintenance Amount and 1940 Act
ARPS Asset Coverage tests shall be determined with reference only to the
Outstanding ARPS.
(d) The Trust shall deliver to the Auction Agent and Moody's (if
Xxxxx'x is then rating ARPS), S&P (if S&P is then rating ARPS) and any Other
Rating Agency which is then rating ARPS and which so requires a certificate
which sets forth a determination of items (i)-(iii) of paragraph (a) of this
Section 12 and any other information as such rating agencies may require (a
"ARPS Basic Maintenance Certificate") as of (A) the Date of Original Issue, (B)
the last Valuation Date of each month, (C) any date requested by any such rating
agency, (D) a Business Day on or before any Asset Coverage Cure Date relating to
the Trust's cure of a failure to meet the ARPS Basic Maintenance Amount Test,
(E) any day that Common Shares or Preferred Shares, including ARPS, are redeemed
and (F) any day the Eligible Assets have an aggregate discounted value less than
or equal to 115% of the ARPS Basic Maintenance Amount. Such ARPS Basic
Maintenance Certificate shall be delivered via fax or e-mail on or before the
fifth Business Day after the relevant Valuation Date or Asset Coverage Cure Date
except that such ARPS Basic Maintenance Certificate shall be delivered in the
case of clause (D) and (F) on the first Business Day after the relevant
Valuation Date or the Asset Coverage Cure Date.
(e) The Trust shall deliver to the Auction Agent, Moody's (if Xxxxx'x
is then rating ARPS), S&P (if S&P is then rating ARPS) and any Other Rating
Agency which is then rating ARPS and which so requires a certificate with
respect to the calculation of the 1940 Act ARPS Asset Coverage, the value of the
portfolio holdings of the Trust and any other information as such rating
agencies may require (a "1940 Act ARPS Asset Coverage Certificate") (i) as of
the Date of Original Issue, and (ii) as of (A) the last Valuation Date of each
month thereafter, and (B) as of the Business Day on or before the Asset Coverage
Cure Date relating to the failure to satisfy the 1940 Act ARPS Asset Coverage.
Such 1940 Act ARPS Asset Coverage Certificate shall be delivered via fax or
e-mail in the case of clause (i) on the Date of Original Issue, in the case of
clause (ii)(A) on or before the fifth Business Day after the relevant Valuation
Date and in the case of clause (ii)(B) on or before the first Business Day after
the relevant the Asset Coverage Cure Date. The certificates of (d) and (e) of
this Section 12 may be combined into a single certificate.
(f) Within ten Business Days of the Date of Original Issue, the Trust
shall deliver to the Auction Agent, Moody's (if Xxxxx'x is then rating ARPS),
S&P (if S&P is then rating ARPS) and any Other Rating Agency which is then
rating ARPS and which so requires a letter prepared by the Trust's independent
accountants (an "Accountant's Certificate") regarding the accuracy of the
calculations made by the Trust in the ARPS Basic Maintenance Certificate and the
1940 Act ARPS Asset Coverage Certificate required to be delivered by the Trust
as of the Date of Original Issue. As soon as practicable and in no event later
than ten Business Days after the Trust has filed its Certified Shareholder
Report on Form N-CSR with respect to a fiscal year of the Trust (the "Annual
Form N-CSR"), the Trust will deliver to the Auction Agent, Moody's (if Xxxxx'x
is then rating ARPS), S&P (if S&P is then rating ARPS) and any Other Rating
Agency which is then rating ARPS and which so requires an Accountant's
Certificate regarding the accuracy of the calculations made by the Trust in its
ARPS Basic Maintenance Certificate for the last Valuation Date of the fiscal
year of the Trust: (i) such Accountant's Certificate, and (ii) a copy of the
Annual Form N-CSR. Such Accountant's Certificate will take into account the
audited financial statements of the Trust contained in Annual Form N-CSR. As
20
soon as practicable and in no event later than ten Business Days after the Trust
has filed its Annual Form N-CSR, the Trust will deliver to the Auction Agent,
Moody's (if Xxxxx'x is then rating ARPS), S&P (if S&P is then rating ARPS) and
any Other Rating Agency which is then rating ARPS and which so requires an
Accountant's Certificate regarding the accuracy of the calculations made by the
Trust in its 1940 Act ARPS Asset Coverage Certificate for the last Valuation
Date of the fiscal year of the Trust, such Accountant's Certificate. Such
Accountant's Certificate will take into account the audited financial statements
of the Trust contained in Annual Form N-CSR. In addition, the Trust will deliver
to the relevant persons specified in the preceding sentence an Accountant's
Certificate regarding the accuracy of the calculations made by the Trust on each
ARPS Basic Maintenance Certificate and 1940 Act ARPS Asset Coverage Certificate
delivered pursuant to clause (D) of paragraph (d) or clause (ii)(B) of paragraph
(e) of this Section 12, as the case may be, within ten days after the relevant
Asset Coverage Cure Date. If an Accountant's Certificate delivered with respect
to an Asset Coverage Cure Date shows an error was made in the Trust's report
with respect to such Asset Coverage Cure Date, the calculation or determination
made by the Trust's independent accountants will be conclusive and binding on
the Trust with respect to such reports. If any other Accountant's Certificate
shows that an error was made in any such report, the calculation or
determination made by the Trust's independent accountants will be conclusive and
binding on the Trust; provided, however, any errors shown in the Accountant's
Certificate filed on an annual basis shall not be deemed to be a failure to
maintain the ARPS Basic Maintenance Amount on any prior Valuation Dates.
(g) The Accountant's Certificates referred to in paragraph (f) of this
Section 12 will confirm, based upon the independent accountant's review, (i) the
mathematical accuracy of the calculations reflected in the related ARPS Basic
Maintenance Amount and 1940 Act ARPS Asset Coverage Certificates, as the case
may be, and (ii) that the Trust determined whether the Trust had, at such
Valuation Date, Eligible Assets with an aggregate Discounted Value at least
equal to the Basic Maintenance Amount in accordance with this Declaration.
(h) In the event that an ARPS Basic Maintenance Certificate or 1940
Act ARPS Asset Coverage Certificate with respect to an applicable Valuation Date
is not delivered within the time periods specified in this Section 12, the Trust
shall be deemed to have failed to maintain the ARPS Basic Maintenance Amount or
the 1940 Act ARPS Asset Coverage, as the case may be, on such Valuation Date for
purposes of Section 12(b) hereof. In the event that an ARPS Basic Maintenance
Certificate or 1940 Act ARPS Asset Coverage Certificate or the applicable
Accountant's Certificates with respect to an applicable Asset Coverage Cure Date
are not delivered within the time periods specified herein, the Trust shall be
deemed to have failed to have Eligible Assets with an aggregate Discounted Value
at least equal to the ARPS Basic Maintenance Amount or the 1940 ARPS Asset
Coverage, as the case may be, as of the related Valuation Date, and such failure
shall be deemed not to have been cured as of such Asset Coverage Cure Date for
purposes of the mandatory redemption provisions.
13. Notice. All notices or communications hereunder, unless otherwise
specified in this Statement, shall be sufficiently given if in writing and
delivered in person, via fax, via e-mail, by telecopier or mailed by first-class
mail, postage prepaid. Notices delivered pursuant to this Section 13 shall be
deemed given on the earlier of the date received or the date five days after
which such notice is mailed.
21
14. Waiver. Holders of at least two-thirds of the Outstanding Preferred
Shares, acting collectively, or each Series, acting separately, may waive any
provision hereof intended for their respective benefit in accordance with such
procedures as may from time to time be established by the Board of Trustees.
15. Termination. In the event that there are no Outstanding ARPS, all
rights and preferences of ARPS established and designated hereunder shall cease
and terminate, and all obligations of the Trust under this Statement shall
terminate.
16. Amendment. Subject to the provisions of this Statement, so long as
shareholder approval is not required pursuant to this Declaration, the Board of
Trustees may, by resolution duly adopted and without shareholder approval, amend
this Statement. To the extent permitted by applicable law, the Board of Trustees
may interpret, amend or adjust the provisions of this Statement to resolve any
inconsistency or ambiguity or to remedy any patent defect.
22
PART II: AUCTION PROCEDURES
1. Orders
(a) Prior to the Submission Deadline on each Auction Date for Shares
of a Series:
(i) each Beneficial Owner of Shares of such Series may submit to
its Broker-Dealer by telephone or otherwise information as to:
(A) the number of Outstanding ARPS, if any, of such Series
held by such Beneficial Owner which such Beneficial Owner desires
to continue to hold without regard to the Applicable Rate for
Shares of such Series for the next succeeding Rate Period of such
Shares;
(B) the number of Outstanding ARPS, if any, of such Series
held by such Beneficial Owner which such Beneficial Owner offers
to sell if the Applicable Rate for Shares of such Series for the
next succeeding Rate Period of Shares of such Series shall be
less than the rate per annum specified by such Beneficial Owner;
and/or
(C) the number of Outstanding ARPS, if any, of such Series
held by such Beneficial Owner which such Beneficial Owner offers
to sell without regard to the Applicable Rate for Shares of such
Series for the next succeeding Rate Period of Shares of such
Series;
and
(ii) one or more Broker-Dealers, using lists of Potential
Beneficial Owners, shall in good faith for the purpose of conducting a
competitive Auction in a commercially reasonable manner, contact
Potential Beneficial Owners (by telephone or otherwise), including
persons that are not Beneficial Owners, on such lists to determine the
number of Shares, if any, of such Series which each such Potential
Beneficial Owner offers to purchase if the Applicable Rate for Shares
of such Series for the next succeeding Rate Period of Shares of such
Series shall not be less than the rate per annum specified by such
Potential Beneficial Owner.
For the purposes hereof, the communication by a Beneficial Owner or
Potential Beneficial Owner to a Broker-Dealer, or by a Broker-Dealer to the
Auction Agent, of information referred to in clause (i) (A), (i) (B), (i) (C) or
(ii) of this paragraph (a) is hereinafter referred to as an "Order" and
collectively as "Orders" and each Beneficial Owner and each Potential Beneficial
Owner placing an Order with a Broker-Dealer, and such Broker-Dealer placing an
Order with the Auction Agent, is hereinafter referred to as a "Bidder" and
collectively as "Bidders"; an Order containing the information referred to in
clause (i)(A) of this paragraph (a) is hereinafter referred to as a "Hold Order"
and collectively as "Hold Orders"; an Order containing the information referred
to in clause (i)(B) or (ii) of this paragraph (a) is hereinafter referred to as
a "Bid" and collectively as "Bids"; and an Order containing the information
23
referred to in clause (i)(C) of this paragraph (a) is hereinafter referred to as
a "Sell Order" and collectively as "Sell Orders."
(b) (i) A Bid by a Beneficial Owner or an Existing Holder of Shares of
a Series subject to an Auction on any Auction Date shall constitute an
irrevocable offer to sell:
(A) the number of Outstanding ARPS of such Series specified in
such Bid if the Applicable Rate for Shares of such Series determined
on such Auction Date shall be less than the rate specified therein;
(B) such number or a lesser number of Outstanding ARPS of such
Series to be determined as set forth in clause (iv) of paragraph (a)
of Section 4 of this Part II if the Applicable Rate for Shares of such
Series determined on such Auction Date shall be equal to the rate
specified therein; or
(C) the number of Outstanding ARPS of such Series specified in
such Bid if the rate specified therein shall be higher than the
Maximum Rate for Shares of such Series, or such number or a lesser
number of Outstanding ARPS of such Series to be determined as set
forth in clause (iii) of paragraph (b) of Section 4 of this Part II if
the rate specified therein shall be higher than the Maximum Rate for
Shares of such Series and Sufficient Clearing Bids for Shares of such
Series do not exist.
(ii) A Sell Order by a Beneficial Owner or an Existing Holder of
Shares of a Series subject to an Auction on any Auction Date shall
constitute an irrevocable offer to sell:
(A) the number of Outstanding ARPS of such Series specified in
such Sell Order; or
(B) such number or a lesser number of Outstanding ARPS of such
Series as set forth in clause (iii) of paragraph (b) of Section 4 of
this Part II if Sufficient Clearing Bids for Shares of such Series do
not exist;
PROVIDED, HOWEVER, that a Broker-Dealer that is an Existing Holder
with respect to Shares of a Series shall not be liable to any person
for failing to sell such Shares pursuant to a Sell Order described in
the proviso to paragraph (c) of Section 2 of this Part II if (1) such
Shares were transferred by the Beneficial Owner thereof without
compliance by such Beneficial Owner or its transferee Broker-Dealer
(or other transferee person, if permitted by the Trust) with the
provisions of Section 5 of Part I hereof or (2) such Broker-Dealer has
informed the Auction Agent pursuant to the terms of its Broker-Dealer
Agreement that, according to such Broker-Dealer's records, such
Broker-Dealer believes in good faith that it is not the Existing
Holder of such Shares.
24
(iii) A Bid by a Potential Beneficial Holder or a Potential Holder of
Shares of a Series subject to an Auction on any Auction Date shall
constitute an irrevocable offer to purchase:
(A) the number of Outstanding ARPS of such Series specified in
such Bid if the Applicable Rate for Shares of such Series determined
on such Auction Date shall be higher than the rate specified therein;
or
(B) such number or a lesser number of Outstanding ARPS of such
Series as set forth in clause (v) of paragraph (a) of Section 4 of
this Part II if the Applicable Rate for Shares of such Series
determined on such Auction Date shall be equal to the rate specified
therein.
(c) No Order for any number of ARPS other than whole numbers of ARPS
shall be valid.
2. Submission of Orders by Broker-Dealers to Auction Agent
(a) Each Broker-Dealer shall submit in writing to the Auction Agent
prior to the Submission Deadline on each Auction Date all Orders for Shares of a
Series subject to an Auction on such Auction Date obtained by such
Broker-Dealer, designating itself (unless otherwise permitted by the Trust) as
an Existing Holder in respect of Shares subject to Orders submitted or deemed
submitted to it by Beneficial Owners and as a Potential Holder in respect of
Shares subject to Orders submitted to it by Potential Beneficial Owners, and
shall specify with respect to each Order for such Shares:
(i) the name of the Bidder placing such Order (which shall be the
Broker-Dealer unless otherwise permitted by the Trust);
(ii) the aggregate number of Shares of such Series that are the
subject of such Order;
(iii) to the extent that such Bidder is an Existing Holder of
Shares of such Series:
(A) the number of Shares, if any, of such Series subject to
any Hold Order of such Existing Holder;
(B) the number of Shares, if any, of such Series subject to
any Bid of such Existing Holder and the rate specified in such
Bid; and
(C) the number of Shares, if any, of such Series subject to
any Sell Order of such Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder of Shares of
such series, the rate and number of Shares of such Series specified in
such Potential Holder's Bid.
25
(b) If any rate specified in any Bid contains more than three figures
to the right of the decimal point, the Auction Agent shall round such rate up to
the next highest one thousandth (.001) of 1%.
(c) If an Order or Orders covering all of the Outstanding ARPS of a
Series held by any Existing Holder is not submitted to the Auction Agent prior
to the Submission Deadline, the Auction Agent shall deem a Hold Order to have
been submitted by or on behalf of such Existing Holder covering the number of
Outstanding ARPS of such Series held by such Existing Holder and not subject to
Orders submitted to the Auction Agent; provided, however, that if an Order or
Orders covering all of the Outstanding ARPS of such Series held by any Existing
Holder is not submitted to the Auction Agent prior to the Submission Deadline
for an Auction relating to a Special Rate Period consisting of more than 28 Rate
Period Days, the Auction Agent shall deem a Sell Order to have been submitted by
or on behalf of such Existing Holder covering the number of Outstanding ARPS of
such Series held by such Existing Holder and not subject to Orders submitted to
the Auction Agent.
(d) If one or more Orders of an Existing Holder is submitted to the
Auction Agent covering in the aggregate more than the number of Outstanding ARPS
of a Series subject to an Auction held by such Existing Holder, such Orders
shall be considered valid in the following order of priority:
(i) all Hold Orders for Shares of such Series shall be considered
valid, but only up to and including in the aggregate the number of
Outstanding ARPS of such Series held by such Existing Holder, and if
the number of Shares of such Series subject to such Hold Orders
exceeds the number of Outstanding ARPS of such Series held by such
Existing Holder, the number of Shares subject to each such Hold Order
shall be reduced pro rata to cover the number of Outstanding ARPS of
such Series held by such Existing Holder;
(ii) (A) any Bid for Shares of such Series shall be considered
valid up to and including the excess of the number of Outstanding ARPS
of such Series held by such Existing Holder over the number of Shares
of such Series subject to any Hold Orders referred to in clause (i)
above;
(B) subject to subclause (A), if more than one Bid of an
Existing Holder for Shares of such Series is submitted to the
Auction Agent with the same rate and the number of Outstanding
ARPS of such Series subject to such Bids is greater than such
excess, such Bids shall be considered valid up to and including
the amount of such excess, and the number of Shares of such
Series subject to each Bid with the same rate shall be reduced
pro rata to cover the number of Shares of such Series equal to
such excess;
(C) subject to subclauses (A) and (B), if more than one Bid
of an Existing Holder for Shares of such Series is submitted to
the Auction Agent with different rates, such Bids shall be
considered valid in the
26
ascending order of their respective rates up to and including the
amount of such excess; and
(D) in any such event, the number, if any, of such
Outstanding ARPS of such Series subject to any portion of Bids
considered not valid in whole or in part under this clause (ii)
shall be treated as the subject of a Bid for Shares of such
Series by or on behalf of a Potential Holder at the rate therein
specified; and
(iii) all Sell Orders for Shares of such Series shall be
considered valid up to and including the excess of the number of
Outstanding ARPS of such Series held by such Existing Holder over the
sum of Shares of such Series subject to valid Hold Orders referred to
in clause (i) above and valid Bids referred to in clause (ii) above.
(e) If more than one Bid for one or more Shares of a Series is
submitted to the Auction Agent by or on behalf of any Potential Holder, each
such Bid submitted shall be a separate Bid with the rate and number of Shares
therein specified.
(f) Any Order submitted by a Beneficial Owner or a Potential
Beneficial Owner to its Broker-Dealer, or by a Broker-Dealer to the Auction
Agent, prior to the Submission Deadline on any Auction Date, shall be
irrevocable.
3. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate
(a) Not earlier than the Submission Deadline on each Auction Date for
Shares of a Series, the Auction Agent shall assemble all valid Orders submitted
or deemed submitted to it by the Broker-Dealers in respect of Shares of such
Series (each such Order as submitted or deemed submitted by a Broker-Dealer
being hereinafter referred to individually as a "Submitted Hold Order," a
"Submitted Bid" or a "Submitted Sell Order," as the case may be, or as a
"Submitted Order" and collectively as "Submitted Hold Orders," "Submitted Bids"
or "Submitted Sell Orders," as the case may be, or as "Submitted Orders") and
shall determine for such Series:
(i) the excess of the number of Outstanding ARPS of such Series
over the number of Outstanding ARPS of such Series subject to
Submitted Hold Orders (such excess being hereinafter referred to as
the "Available ARPS" of such series);
(ii) from the Submitted Orders for Shares of such Series whether:
(A) the number of Outstanding ARPS of such Series subject to
Submitted Bids of Potential Holders specifying one or more rates
less than or equal to the Maximum Rate for Shares of such Series;
exceeds or is equal to the sum of:
27
(B) the number of Outstanding ARPS of such Series subject to
Submitted Bids of Existing Holders specifying one or more rates
less than or equal to the Maximum Rate for Shares of such Series;
and
(C) the number of Outstanding ARPS of such Series subject to
Submitted Sell Orders
(in the event such excess or such equality exists (other than because the
number of Shares of such Series in subclauses (B) and (C) above is zero
because all of the Outstanding ARPS of such Series are subject to Submitted
Hold Orders), such Submitted Bids in subclause (A) above being hereinafter
referred to collectively as "Sufficient Clearing Bids" for Shares of such
Series); and
(iii) if Sufficient Clearing Bids for Shares of such Series
exist, the lowest rate specified in such Submitted Bids (the "Winning
Bid Rate" for Shares of such Series) which if:
(A) (I) each such Submitted Bid of Existing Holders
specifying such lowest rate and (II) all other such Submitted
Bids of Existing Holders specifying lower rates were rejected,
thus entitling such Existing Holders to continue to hold the
Shares of such Series that are subject to such Submitted Bids;
and
(B) (I) each such Submitted Bid of Potential Holders
specifying such lowest rate and (II) all other such Submitted
Bids of Potential Holders specifying lower rates were accepted;
would result in such Existing Holders described in subclause (A) above
continuing to hold an aggregate number of Outstanding ARPS of such Series
which, when added to the number of Outstanding ARPS of such Series to be
purchased by such Potential Holders described in subclause (B) above, would
equal not less than the Available ARPS of such Series.
(b) Promptly after the Auction Agent has made the determinations
pursuant to paragraph (a) of this Section 3, the Auction Agent shall advise the
Trust of the Maximum Rate for Shares of the Series for which an Auction is being
held on the Auction Date and, based on such determination, the Applicable Rate
for Shares of such Series for the next succeeding Rate Period thereof as
follows:
(i) if Sufficient Clearing Bids for Shares of such Series exist,
that the Applicable Rate for all Shares of such Series for the next
succeeding Rate Period thereof shall be equal to the Winning Bid Rate
for Shares of such Series so determined;
(ii) if Sufficient Clearing Bids for Shares of such Series do not
exist (other than because all of the Outstanding ARPS of such Series
are subject to Submitted Hold Orders), that the Applicable Rate for
all Shares of such Series for
28
the next succeeding Rate Period thereof shall be equal to the Maximum
Rate for Shares of such Series; or
(iii) if all of the Outstanding ARPS of such Series are subject
to Submitted Hold Orders, that the Applicable Rate for all Shares of
such Series for the next succeeding Rate Period thereof shall be All
Hold Rate.
4. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares
Existing Holders shall continue to hold ARPS that are subject to Submitted
Hold Orders, and, based on the determinations made pursuant to paragraph (a) of
Section 3 of this Part II, the Submitted Bids and Submitted Sell Orders shall be
accepted or rejected by the Auction Agent and the Auction Agent shall take such
other action as set forth below:
(a) If Sufficient Clearing Bids for Shares of a Series have been made,
all Submitted Sell Orders with respect to Shares of such Series shall be
accepted and, subject to the provisions of paragraphs (d) and (e) of this
Section 4, Submitted Bids with respect to Shares of such Series shall be
accepted or rejected as follows in the following order of priority and all other
Submitted Bids with respect to Shares of such Series shall be rejected:
(i) Existing Holders' Submitted Bids for Shares of such Series
specifying any rate that is higher than the Winning Bid Rate for
Shares of such Series shall be accepted, thus requiring each such
Existing Holder to sell ARPS subject to such Submitted Bids;
(ii) Existing Holders' Submitted Bids for Shares of such Series
specifying any rate that is lower than the Winning Bid Rate for Shares
of such Series shall be rejected, thus entitling each such Existing
Holder to continue to hold ARPS subject to such Submitted Bids;
(iii) Potential Holders' Submitted Bids for Shares of such Series
specifying any rate that is lower than the Winning Bid Rate for Shares
of such Series shall be accepted;
(iv) each Existing Holder's Submitted Bid for Shares of such
Series specifying a rate that is equal to the Winning Bid Rate for
Shares of such Series shall be rejected, thus entitling such Existing
Holder to continue to hold ARPS subject to such Submitted Bid, unless
the number of Outstanding ARPS subject to all such Submitted Bids
shall be greater than the number of ARPS ("remaining Shares") in the
excess of the Available ARPS of such Series over the number of ARPS
subject to Submitted Bids described in clauses (ii) and (iii) of this
paragraph (a), in which event such Submitted Bid of such Existing
Holder shall be rejected in part, and such Existing Holder shall be
entitled to continue to hold ARPS subject to such Submitted Bid, but
only in an amount equal to the number of ARPS of such Series obtained
by multiplying the number of remaining Shares by a fraction, the
numerator of which shall be the number of Outstanding ARPS held by
such Existing Holder subject to such Submitted Bid and the denominator
29
of which shall be the aggregate number of Outstanding ARPS subject to
such Submitted Bids made by all such Existing Holders that specified a
rate equal to the Winning Bid Rate for Shares of such Series; and
(v) each Potential Holder's Submitted Bid for Shares of such
Series specifying a rate that is equal to the Winning Bid Rate for
Shares of such Series shall be accepted but only in an amount equal to
the number of Shares of such Series obtained by multiplying the number
of Shares in the excess of the Available ARPS of such Series over the
number of ARPS subject to Submitted Bids described in clauses (ii)
through (iv) of this paragraph (a) by a fraction, the numerator of
which shall be the number of Outstanding ARPS subject to such
Submitted Bid and the denominator of which shall be the aggregate
number of Outstanding ARPS subject to such Submitted Bids made by all
such Potential Holders that specified a rate equal to the Winning Bid
Rate for Shares of such Series.
(b) If Sufficient Clearing Bids for Shares of a Series have not been
made (other than because all of the Outstanding ARPS of such Series are subject
to Submitted Hold Orders), subject to the provisions of paragraph (d) of this
Section 4, Submitted Orders for Shares of such Series shall be accepted or
rejected as follows in the following order of priority and all other Submitted
Bids for Shares of such Series shall be rejected:
(i) Existing Holders' Submitted Bids for Shares of such Series
specifying any rate that is equal to or lower than the Maximum Rate
for Shares of such Series shall be rejected, thus entitling such
Existing Holders to continue to hold ARPS subject to such Submitted
Bids;
(ii) Potential Holders' Submitted Bids for Shares of such Series
specifying any rate that is equal to or lower than the Maximum Rate
for Shares of such Series shall be accepted; and
(iii) Each Existing Holder's Submitted Bid for Shares of such
Series specifying any rate that is higher than the Maximum Rate for
Shares of such Series and the Submitted Sell Orders for Shares of such
Series of each Existing Holder shall be accepted, thus entitling each
Existing Holder that submitted or on whose behalf was submitted any
such Submitted Bid or Submitted Sell Order to sell the Shares of such
Series subject to such Submitted Bid or Submitted Sell Order, but in
both cases only in an amount equal to the number of Shares of such
Series obtained by multiplying the number of Shares of such Series
subject to Submitted Bids described in clause (ii) of this paragraph
by a fraction, the numerator of which shall be the number of
Outstanding ARPS of such Series held by such Existing Holder subject
to such Submitted Bid or Submitted Sell Order and the denominator of
which shall be the aggregate number of Outstanding ARPS of such Series
subject to all such Submitted Bids and Submitted Sell Orders.
30
(c) If all of the Outstanding ARPS of a Series are subject to
Submitted Hold Orders, all Submitted Bids for Shares of such Series shall be
rejected.
(d) If, as a result of the procedures described in clause (iv) or (v)
of paragraph (a) or clause (iii) of paragraph (b) of this Section 4, any
Existing Holder would be entitled or required to sell, or any Potential Holder
would be entitled or required to purchase, a fraction of a share of a Series on
any Auction Date, the Auction Agent shall, in such manner as it shall determine
in its sole discretion, round up or down the number of ARPS of such Series to be
purchased or sold by any Existing Holder or Potential Holder on such Auction
Date as a result of such procedures so that the number of Shares so purchased or
sold by each Existing Holder or Potential Holder on such Auction Date shall be a
whole number of ARPS.
(e) If, as a result of the procedures described in clause (v) of
paragraph (a) of this Section 4, any Potential Holder would be entitled or
required to purchase less than a whole number of ARPS on any Auction Date, the
Auction Agent shall, in such manner as it shall determine in its sole
discretion, allocate ARPS of such Series for purchase among Potential Holders so
that only whole numbers of ARPS of such Series are purchased on such Auction
Date as a result of such procedures by any Potential Holder, even if such
allocation results in one or more Potential Holders not purchasing ARPS of such
Series on such Auction Date.
(f) Based on the results of each Auction for Shares of a Series, the
Auction Agent shall determine the aggregate number of Shares of such Series to
be purchased and the aggregate number of Shares of such Series to be sold by
Potential Holders and Existing Holders and, with respect to each Potential
Holder and Existing Holder, to the extent that such aggregate number of Shares
to be purchased and such aggregate number of Shares to be sold differ, determine
to which other Potential Holder(s) or Existing Holder(s) they shall deliver, or
from which other Potential Holder(s) or Existing Holder(s) they shall receive,
as the case may be, ARPS of such Series. Notwithstanding any provision of the
Auction Procedures or the Settlement Procedures to the contrary, in the event an
Existing Holder or Beneficial Owner of Shares of a Series with respect to whom a
Broker-Dealer submitted a Bid to the Auction Agent for such Shares that was
accepted in whole or in part, or submitted or is deemed to have submitted a Sell
Order for such Shares that was accepted in whole or in part, fails to instruct
its Agent Member to deliver such Shares against payment therefor, partial
deliveries of ARPS that have been made in respect of Potential Holders' or
Potential Beneficial Owners' Submitted Bids for Shares of such Series that have
been accepted in whole or in part shall constitute good delivery to such
Potential Holders and Potential Beneficial Owners.
(g) Neither the Trust nor the Auction Agent nor any affiliate of
either shall have any responsibility or liability with respect to the failure of
an Existing Holder, a Potential Holder, a Beneficial Owner, a Potential
Beneficial Owner or its respective Agent Member to deliver Shares of ARPS of any
Series or to pay for ARPS of any Series sold or purchased pursuant to the
Auction Procedures or otherwise.
31
PART III: DEFINITIONS
1. As used in Part I and Part II of this Statement, capitalized terms shall
have the meanings provided in Part III of this Statement or otherwise in this
Declaration; provided, however, that solely for purposes of this Statement, if
there are any inconsistencies between the definitions in Part III of this
Statement and the definitions otherwise in this Declaration, the definitions in
Part III of this Statement shall control. As used in Part I and Part II of this
Statement, the following terms shall have the following meanings (with terms
defined in the singular having comparable meanings when used in the plural and
vice versa), unless the context otherwise requires:
(a) "'AA' Composite Commercial Paper Rate" on any date means (i) the
interest equivalent of the 7-day rate, in the case of a Dividend Period which is
a Standard Dividend Period or shorter; for Dividend Periods greater than 7 days
but fewer than or equal to 31 days, the 30-day rate; for Dividend Periods
greater than 31 days but fewer than or equal to 61 days, the 60-day rate; for
Dividend Periods greater than 61 days but fewer than or equal to 91 days, the
90-day rate; for Dividend Periods greater than 91 days but fewer than or equal
to 270 days, the rate described in (ii); for Dividend Periods greater than 270
days, the Treasury Index Rate; on commercial paper on behalf of issuers whose
corporate bonds are rated "AA" by S&P, or the equivalent of such rating by
another nationally recognized rating agency, as announced by the Federal Reserve
Bank of New York for the close of business on the Business Day immediately
preceding such date; or (ii) if the Federal Reserve Bank of New York does not
make available such a rate, then the arithmetic average of the interest
equivalent of such rates on commercial paper placed on behalf of such issuers,
as quoted on a discount basis or otherwise by the Commercial Paper Dealers to
the Auction Agent for the close of business on the Business Day immediately
preceding such date (rounded to the next highest .001 of 1%). If any Commercial
Paper Dealer does not quote a rate required to determine the "AA" Composite
Commercial Paper Rate, such rate shall be determined on the basis of the
quotations (or quotation) furnished by the remaining Commercial Paper Dealers
(or Dealer), if any, or, if there are no such Commercial Paper Dealers, by the
Auction Agent. For purposes of this definition, (A) "Commercial Paper Dealers"
shall mean (1) Xxxxxxx Xxxxx Xxxxxx Inc., Xxxxxx Brothers Inc., Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated and Xxxxxxx Sachs & Co.; (2) in lieu of any
thereof, its respective Affiliate or successor; and (3) in the event that any of
the foregoing shall cease to quote rates for commercial paper of issuers of the
sort described above, in substitution therefore, a nationally recognized dealer
in commercial paper of such issuers then making such quotations selected by the
Trust, and (B) "interest equivalent" of a rate stated on a discount basis for
commercial paper of a given number of days' maturity shall mean a number equal
to the quotient (rounded upward to the next higher one-thousandth of 1%) of (1)
such rate expressed as a decimal, divided by (2) the difference between (x) 1.00
and (y) a fraction, the numerator of which shall be the product of such rate
expressed as a decimal, multiplied by the number of days in which such
commercial paper shall mature and the denominator of which shall be 360.
(b) "Accountant's Certificate" has the meaning set forth in Section
12(f) of Part I hereof.
32
(c) "Affiliate" means any Person controlling, controlled by or under
common control with the Trust; provided, however, that no Broker-Dealer
controlling, controlled by or under common control with the Trust shall be
deemed to be an Affiliate; nor shall any Person or any Person controlling,
controlled by or under common control with such Person, one of the trustees,
directors or executive officers of which is also 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.
(d) "Agent Member" means a member of or participant in the Securities
Depository that will act on behalf of a Bidder.
(e) "All Hold Rate" means 80% of the "AA" Composite Commercial Paper
Rate.
(f) "Applicable Rate" means, with respect to each Series for each
Dividend 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 Applicable Rate and (iii)
in the case where all ARPS are the subject of Hold Orders for the Auction in
respect thereof, the All Hold Rate.
(g) "ARPS" means Auction Rate Preferred Shares, liquidation preference
$25,000 per Share.
(h) "ARPS Basic Maintenance Amount" as of any Valuation Date means the
dollar amount equal to
(i) the sum of (A) the sum of the products resulting from
multiplying the number of Outstanding ARPS on such date by the
liquidation preference (and redemption premium, if any) per Share; (B)
the aggregate amount of dividends that will have accumulated at the
Applicable Rate (whether or not earned or declared) to and including
the first Dividend Payment Date for each Outstanding ARPS that follows
such Valuation Date (or to the 37th Business Day after such Valuation
Date, if such 37th Business Day occurs before the first following
Dividend Payment Date); (C) the amount of anticipated Trust
non-interest expenses for the 90 days subsequent to such Valuation
Date; (D) the amount of the current outstanding balances of any
indebtedness which is senior to ARPS plus interest actually accrued
together with 37 Business Days additional interest on the current
outstanding balances calculated at the current rate; (E) 100 per cent
of the termination value of any swap, if payable by the Trust, marked
to market daily as determined by the swap counterparty; (F) any
current liabilities, payable during the 37 Business Days subsequent to
such Valuation Date, including, without limitation, indebtedness due
within one year and any redemption premium due with respect to
Preferred Shares for which a notice of redemption has been given, as
of such Valuation Date, to the extent not reflected in any of (i)(A)
through (i)(E); and (G) liabilities arising from any additional series
of Preferred Shares, including other Series, ranking prior to or on a
parity with ARPS with respect to the payment of dividends or the
distribution of assets upon
33
the dissolution or liquidation of the Trust or the termination of the
Trust or the Preferred Shares; less
(ii) the sum of any cash plus the value of any of the Trust's
assets irrevocably deposited by the Trust for the payment of any
(i)(B) through (i)(G) ("value," for purposes of this clause (ii),
means the Discounted Value of the security, except that if the
security matures prior to the relevant redemption payment date and is
either fully guaranteed by the U.S. Government or is rated at least
P-1 by Moody's and A-1+ by S&P, it will be valued at its face value).
(i) "ARPS Basic Maintenance Certificate" has the meaning set forth in
Section 12(d) of Part I hereof.
(j) "ARPS Series M, W, R and F" means the Shares of Series M, W, R and
F of ARPS or any other Preferred Shares hereinafter designated as Shares of
Series M, W, R and F of ARPS.
(k) "Asset Coverage Cure Date" has the meaning set forth in Section
3(a)(ii) of Part I hereof.
(l) "Auction" means each periodic operation of the procedures set
forth under "Auction Procedures."
(m) "Auction Agent" means Deutsche Bank Trust Company Americas unless
and until another commercial bank, trust company, or other financial institution
appointed by a resolution of the Board of Trustees enters into an agreement with
the Trust to follow the Auction Procedures for the purpose of determining the
Applicable Rate.
(n) "Auction Date" means the first Business Day next preceding the
first day of a Dividend Period for each Series.
(o) "Auction Procedures" means the procedures for conducting Auctions
set forth in Part II hereof.
(p) "Beneficial Owner," with respect to Shares of each Series, means a
customer of a Broker-Dealer who is listed on the records of that Broker-Dealer
(or, if applicable, the Auction Agent) as a holder of such Shares.
(q) "Bid" shall have the meaning specified in paragraph (a) of Section
1 of Part II hereof.
(r) "Bidder" shall have the meaning specified in paragraph (a) of
Section 1 of Part II hereof; 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.
(s) "Board of Trustees" or "Board" means the Board of Trustees of the
Trust.
34
(t) "Broker-Dealer" means any broker-dealer or broker-dealers, or
other entity permitted by applicable law to perform the functions required of a
Broker-Dealer by the Auction Procedures, that has been selected by the Trust and
has entered into a Broker-Dealer Agreement that remains effective.
(u) "Broker-Dealer Agreement" means an agreement among the Auction
Agent and a Broker-Dealer, pursuant to which such Broker-Dealer agrees to follow
the Auction Procedures.
(v) "Business Day" means a day on which the New York Stock Exchange is
open for trading and which is not a Saturday, Sunday or other day on which banks
in the City of New York, New York are authorized or obligated by applicable law
to close.
(w) "Code" means the Internal Revenue Code of 1986, as amended.
(x) "Commercial Paper Dealers" has the meaning set forth in the
definition of AA Composite Commercial Paper Rate.
(y) "Date of Original Issue" means the date on which a Series is
originally issued by the Trust.
(z) "Default" has the meaning set forth in Section 2(c)(ii) of Part I
hereof.
(aa) "Default Period" has the meaning set forth in Section 2(c)(ii) of
Part I hereof.
(bb) "Default Rate" means the Reference Rate multiplied by three (3).
(cc) "Deposit Securities" means cash and any obligations or
securities, including Short Term Money Market Instruments that are Eligible
Assets, rated at least AAA, A-2 or SP-2 by S&P, except that, for purposes of
Section 3(a)(i) of Part I hereof, such obligations or securities shall be
considered "Deposit Securities" only if they are also rated at least P-2 by
Moody's.
(dd) "Discount Factor" means the Moody's Discount Factor (if Xxxxx'x
is then rating ARPS), the S&P Discount Factor (if S&P is then rating ARPS) or
the discount factor established by any Other Rating Agency which is then rating
ARPS and which so requires, whichever is applicable.
(ee) "Discounted Value" means the quotient of the Market Value of an
Eligible Asset divided by the applicable Discount Factor, provided that with
respect to an Eligible Asset that is currently callable, Discounted Value will
be equal to the quotient as calculated above or the call price, whichever is
lower, and that with respect to an Eligible Asset that is prepayable, Discounted
Value will be equal to the quotient as calculated above or the par value,
whichever is lower.
(ff) "Dividend Default" has the meaning set forth in Section 2(c)(ii)
of Part I hereof.
35
(gg) "Dividend Payment Date" with respect to a Series means any date
on which dividends are payable pursuant to Section 2(b) of Part I hereof.
(hh) "Dividend Period" means, with respect to a Series, the period
commencing on the Date of Original Issue thereof and ending on the date
specified herein for such Series and thereafter, as to such Series, the period
commencing on the day following each Dividend Period for such Series and ending
on the day established for such Series by the Trust.
(ii) "Eligible Assets" means Moody's Eligible Assets, S&P's Eligible
Assets (if Moody's or S&P are then rating ARPS) and/or Other Rating Agency
Eligible Assets if any Other Rating Agency is then rating ARPS, whichever is
applicable.
(jj) "Existing Holder," with respect to Shares of a Series, 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 such Shares.
(kk) Reserved.
(ll) Reserved.
(mm) Reserved.
(nn) Reserved.
(oo) "Holder" means, with respect to ARPS, the registered holder of
Shares of each Series as the same appears on the share ledger or share records
of the Trust.
(pp) "Hold Order" shall have the meaning specified in paragraph (a) of
Section 1 of Part II hereof.
(qq) "Mandatory Redemption Date" has the meaning set forth in Section
3(a)(iii) of Part I hereof.
(rr) "Mandatory Redemption Price" has the meaning set forth in Section
3(a)(iii) of Part I hereof.
(ss) "Market Value" means the fair market value of an asset of the
Trust as computed as follows: Each security (excluding convertible bonds) held
by the Trust is valued at its last sales price on the exchange where the
security is principally traded or, lacking any sales on a particular day, the
security is valued at the closing bid price on that day. Each security traded in
the over-the-counter market (but not including securities reported on the NASDAQ
National Market System) is valued at the closing bid price furnished by
independent pricing services or market makers. Each security reported on the
NASDAQ National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the closing bid price on that day; option
contracts are valued at the mean between the closing bid and asked prices on the
exchange where the contracts are principally traded; futures contracts are
valued at final settlement price quotations from the primary exchange on which
they are traded. Debt securities (including convertible bonds) are valued on the
basis of prices provided by an
36
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to special securities, dividend rate, yield,
quality, coupon rate, maturity, type of issue, individual trading
characteristics and other market data. Securities for which market prices are
not provided by any of the above methods are valued based upon the lower of two
dealer bid prices from dealers making a market in such security. For U.S.
securities, the dealers must be members of the National Association of
Securities Dealers Inc. For non-U.S. securities, the dealers must be members of
a dealer panel. At least one of the bids must be in writing and securities that
are priced using models may require additional quotes. Securities for which
market quotations are not readily available or are questionable are valued at
fair value as determined in good faith by or under the supervision of the
Trust's officers in a manner specifically authorized by the Board of Trustees.
Further, if events occur that materially affect the value of a security between
the time trading ends on the security and the close of the customary trading
session of the New York Stock Exchange, the Trust may value the security at its
fair value as determined in good faith by or under the supervision of the Board
of Trustees. Short-term investments are valued at amortized cost when the
security has 60 days or less to maturity. Foreign securities are converted into
U.S. dollars using exchange rates as of the close of the New York Stock
Exchange. Generally, trading in foreign securities, corporate bonds, U.S.
Government securities and money market instruments is substantially completed
each day at various times prior to the close of the customary trading session of
the New York Stock Exchange. The values of such securities are determined as of
the close of the respective markets. Occasionally, events affecting the values
of such securities may occur between the times at which such values are
determined and the close of the customary trading session of the New York Stock
Exchange which will not be reflected in the computation of the Market Value of
an asset of the Trust. If a development/event has actually caused that closing
price to no longer reflect actual value, the closing price, as of the close of
the applicable market, may be adjusted to reflect the fair value of the affected
securities as of the close of the New York Stock Exchange as determined in good
faith by or under the supervision of the Board of Trustees. Any swap transaction
that the Trust enters into may, depending on the applicable interest rate
environment, have a positive or negative value. Any cap transaction that the
Trust enters into may, depending on the applicable interest rate environment,
have no value or a positive value. In addition, accrued payments to the Trust
under such transactions will be assets of the Trust and accrued payments by the
Trust will be liabilities of the Trust.
37
(tt) "Maximum Rate" means, on any date on which the Applicable Rate is
determined, the applicable percentage of the Reference Rate determined as set
forth below based on the lower of the credit ratings assigned to the ARPS by
Moody's and S&P, 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 ARPS Basic Maintenance Amount.
MOODY'S CREDIT RATING S&P CREDIT RATING APPLICABLE PERCENTAGE
--------------------- ----------------- ---------------------
aa3 or Above AA- or Above 150%
a3 to a1 A- to A+ 175%
baa3 to baa1 BBB- to BBB+ 250%
Below baa3 Below BBB- 275%
(uu) Reserved.
(vv) "Moody's" means Xxxxx'x Investors Service, Inc. and its
successors at law.
(ww) "Moody's Discount Factor" means, for the purposes of determining
the ARPS Basic Maintenance Amount, the percentage determined below:
(i) Common shares and preferred shares of REITs and Other Real
Estate Companies:
DISCOUNT FACTOR(1)(2)(3)
------------------------
Common Shares of REITs............................... 154%
Preferred Shares of REITs with Senior Implied
Xxxxx'x (or S&P) rating:.......................... 154%
without Senior Implied Xxxxx'x (or S&P) rating:... 208%
Preferred Shares of Other Real Estate Companies with
Senior Implied Xxxxx'x (or S&P) rating:........... 208%
without Senior Implied Xxxxx'x (or S&P) rating:... 250%
----------
(1) A Discount Factor of 250% will be applied to those assets in a single
Xxxxx'x Real Estate Industry/Property Sector Classification which exceed
30% of Xxxxx'x Eligible Assets but are not greater than 35% of Xxxxx'x
Eligible Assets.
(2) A Discount Factor of 250% will be applied if dividends on such securities
have not been paid consistently (either quarterly or annually) over the
previous three years, or for such shorter time period that such securities
have been outstanding.
38
(3) A Discount Factor of 250% will be applied if the market capitalization
(including common stock and preferred stock) of an issuer is between $150
million and $500 million.
(ii) Debt Securities of REITs and Other Real Estate Companies(1):
MATURITY
IN YEARS Aaa Aa A Baa Ba B Caa NR(2)
-------- --- --- --- --- --- --- --- -----
1 109% 112% 115% 118% 119% 125% 225% 250%
2 115% 118% 122% 125% 127% 133% 225% 250%
3 120% 123% 127% 131% 133% 140% 225% 250%
4 126% 129% 133% 138% 140% 147% 225% 250%
5 132% 135% 139% 144% 146% 154% 225% 250%
7 139% 143% 147% 152% 156% 164% 225% 250%
10 145% 150% 155% 160% 164% 173% 225% 250%
15 150% 155% 160% 165% 170% 180% 225% 250%
20 150% 155% 160% 165% 170% 190% 225% 250%
30 150% 155% 160% 165% 170% 191% 225% 250%
----------
(1) The Xxxxx'x Discount Factors for debt securities shall also be applied to
any interest rate swap or cap, in which case the rating of the counterparty
shall determine the appropriate rating category.
(2) Unrated debt securities are limited to 10% of discounted Eligible Assets.
If a security is unrated by Xxxxx'x but is rated by S&P, a rating two
numeric ratings below the S&P rating will be used, e.g., where the S&P
rating is AAA, a Xxxxx'x rating of Aa2 will be used; where the S&P rating
is AA+, a Xxxxx'x rating of Aa3 will be used. If a security is unrated by
either Xxxxx'x or S&P, the Trust will use the percentage set forth under
"NR" in this table.
(iii) U.S. Treasury Securities and U.S. Treasury Strips (as
defined by Xxxxx'x):
U.S. TREASURY U.S. TREASURY
SECURITIES STRIPS
REMAINING TERM TO MATURITY DISCOUNT FACTOR DISCOUNT FACTOR
-------------------------- --------------- ---------------
1 year or less 107% 107%
2 years or less (but longer than year) 113% 114%
3 years or less (but longer than 2 years) 118% 120%
4 years or less (but longer than 3 years) 123% 127%
5 years or less (but longer than 4 years) 128% 133%
7 years or less (but longer than 5 years) 135% 145%
10 years or less (but longer than 7 years) 141% 159%
39
15 years or less (but longer than 10 years) 146% 184%
20 years or less (but longer than 15 years) 154% 211%
30 years or less (but longer than 20 years) 154% 236%
(iv) Short-Term Instruments and Cash. The Xxxxx'x Discount Factor
applied to Xxxxx'x Eligible Assets that are short term money
instruments (as defined by Xxxxx'x) will be (i) 100%, so long as such
portfolio securities mature or have a demand feature at par
exercisable within 49 days of the relevant valuation date, (ii) 102%,
so long as such portfolio securities mature or have a demand feature
at par not exercisable within 49 days of the relevant valuation date,
and (iii) 125%, if such securities are not rated by Xxxxx'x, so long
as such portfolio securities are rated at least A-1+/AA or SP-1+/AA by
S&P and mature or have a demand feature at par exercisable within 49
days of the relevant valuation date. A Xxxxx'x Discount Factor of 100%
will be applied to cash.
(xx) "Xxxxx'x Eligible Asset" means the following:
(i) Common shares of REITs and preferred shares and any debt
security of REITs and Other Real Estate Companies: (A) which comprise
at least 7 of the 14 Xxxxx'x Real Estate Industry/Property Sector
Classifications ("Xxxxx'x Sector Classifications") listed below and of
which no more than 35% may constitute a single such classification;
(B) which in the aggregate constitute at least 40 separate classes of
common shares, preferred shares, and debt securities, issued by at
least 30 issuers; (C) issued by a single issuer which in the aggregate
constitute no more than 7.0% of the Market Value of Xxxxx'x Eligible
Assets, (D) issued by a single issuer which, with respect to 50% of
the Market Value of Xxxxx'x Eligible Assets, constitute in the
aggregate no more than 5% of Market Value of Xxxxx'x Eligible Assets;
and (E) and which are issued by REITs or Other Real Estate Companies
with a minimum market capitalization (including common shares and
preferred shares) of $150 million;
(ii) Unrated debt securities issued by an issuer which: (A) has
not filed for bankruptcy within the past three years; (B) is current
on all principal and interest on its fixed income obligations; (C) is
current on all preferred stock dividends; (D) possesses a current,
unqualified auditor's report without qualified, explanatory language
and (E) in the aggregate, do not exceed 10% of the discounted Xxxxx'x
Eligible Assets;
(iii) Interest rate swaps entered into according to International
Swaps and Derivatives Association, Inc. ("ISDA") standards if (i) the
counterparty to the swap transaction has a short-term rating of not
less than P-1 or, if the counterparty does not have a short-term
rating, the counterparty's senior unsecured long-term debt rating is
Aa3 or higher and (ii) the original aggregate notional amount of the
interest rate swap transaction or transactions is not to be greater
than the liquidation preference of the Preferred Shares originally
issued. The interest rate swap transaction will be marked-to-market
daily;
40
(iv) U.S. Treasury Securities and Treasury Strips (as defined by
Xxxxx'x);
(v) Short-Term Money Market Instruments so long as (A) such
securities are rated at least P-1, (B) in the case of demand deposits,
time deposits and overnight funds, the supporting entity is rated at
least A2, or (C) in all other cases, the supporting entity (1) is
rated A2 and the security matures within one month, (2) is rated A1
and the security matures within three months or (3) is rated at least
Aa3 and the security matures within six months; provided, however,
that for purposes of this definition, such instruments (other than
commercial paper rated by S&P and not rated by Xxxxx'x) need not meet
any otherwise applicable Xxxxx'x rating criteria; and
(vi) Cash (including, for this purpose, interest and dividends
due on assets rated (A) Baa3 or higher by Xxxxx'x if the payment date
is within five Business Days of the Valuation Date, (B) A2 or higher
if the payment date is within thirty days of the Valuation Date, and
(C) A1 or higher if the payment date is within 49 days of the relevant
valuation date) and receivables for Xxxxx'x Eligible Assets sold if
the receivable is due within five Business Days of the Valuation Date,
and if the trades which generated such receivables are (A) settled
through clearing house firms with respect to which the Trust has
received prior written authorization from Xxxxx'x or (B) (1) with
counterparties having a Xxxxx'x long-term debt rating of at least Baa3
or (2) with counterparties having a Xxxxx'x Short-Term Money Market
Instrument rating of at least P-1.
Notwithstanding the foregoing, an asset will not be considered a Xxxxx'x
Eligible Asset to the extent it is: (i) subject to any material lien, mortgage,
pledge, security interest or security agreement of any kind (collectively,
"Liens"), except for (a) Liens which are being contested in good faith by
appropriate proceedings and which Xxxxx'x has indicated to the Trust will not
affect the status of such asset as a Xxxxx'x 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 Trust's advisors, subadviser, custodian, transfer agent or Auction
Agent and (d) Liens by virtue of any repurchase agreement; or (ii) deposited
irrevocably for the payment of any liabilities for purposes of determining the
ARPS Basic Maintenance Amount.
(yy) "Xxxxx'x Real Estate Industry/Property Sector Classification"
means, for the purposes of determining Xxxxx'x Eligible Assets, each of the
following Industry Classifications (as defined by the National Association of
Real Estate Investment Trusts, NAREIT):
(i) Office
(ii) Industrial
(iii) Mixed
41
(iv) Shopping Centers
(v) Regional Malls
(vi) Free Standing
(vii) Apartments
(viii) Manufactured Homes
(ix) Diversified
(x) Lodging/Resorts
(xi) Health Care
(xii) Home Financing
(xiii) Commercial Financing
(xiv) Self Storage
(xv) Specialty
The Trust will use its discretion in determining which NAREIT Industry
Classification is applicable to a particular investment in consultation with the
independent auditor and/ or Xxxxx'x, as necessary.
(zz) "1940 Act ARPS Asset Coverage" means asset coverage, as
determined in accordance with Section 18(h) of the 1940 Act, of at least 200%
with respect to each outstanding class of senior securities of the Trust which
are equity securities, including all Outstanding ARPS (or such other asset
coverage as may in the future be specified in or under the 1940 Act as the
minimum asset coverage for senior securities which are equity securities of a
closed-end investment company as a condition of declaring dividends on its
common shares), determined on the basis of values calculated as of a time within
48 hours next preceding the time of such determination.
(aaa) "1940 Act ARPS Asset Coverage Certificate" means the certificate
required to be delivered by the Trust pursuant to Section 12(e) of Part I
hereof.
(bbb) "Notice of Redemption" means any notice with respect to the
redemption of Shares of ARPS pursuant to Section 3 of Part I hereof.
(ccc) "Order" shall have the meaning specified in paragraph (a) of
Section 1 of Part II hereof.
(ddd) "Other Rating Agency" means any rating agency other than Xxxxx'x
or S&P then providing a rating for ARPS pursuant to the request of the Trust.
42
(eee) "Other Rating Agency Eligible Assets" means assets of the Trust
designated by any Other Rating Agency as eligible for inclusion in calculating
the discounted value of the Trust's assets in connection with such Other Rating
Agency's rating of ARPS.
(fff) "Other Real Estate Companies" means companies which generally
derive at least 50% of their revenue from real estate or have at least 50% of
their assets in real estate, but not including REITS.
(ggg) "Outstanding ARPS" means, as of any date, ARPS theretofore
issued by the Trust except, without duplication, (i) any ARPS theretofore
canceled, redeemed or repurchased by the Trust, or delivered to the Auction
Agent for cancellation or with respect to which the Trust has given notice of
redemption and irrevocably deposited with the Paying Agent sufficient funds to
redeem such ARPS and (ii) any ARPS represented by any certificate in lieu of
which a new certificate has been executed and delivered by the Trust.
Notwithstanding the foregoing, (A) for purposes of voting rights (including the
determination of the number of ARPS required to constitute a quorum), any ARPS
of which any Affiliate of the Trust shall be the Existing Holder shall be
disregarded and not deemed outstanding; (B) in connection with any Auction, any
ARPS as to which any Person known to the Auction Agent to be an Affiliate of the
Trust shall be the Existing Holder thereof shall be disregarded and deemed not
to be outstanding; and (C) for purposes of determining the ARPS Basic
Maintenance Amount, ARPS held by any Affiliate of the Trust shall be deemed
outstanding.
(hhh) "Outstanding Preferred Shares" means, as of any date, Preferred
Shares theretofore issued by the Trust except, without duplication, (i) any
Preferred Shares theretofore canceled, redeemed or repurchased by the Trust, or
delivered to the Auction Agent for cancellation or with respect to which the
Trust has given notice of redemption and irrevocably deposited with the Paying
Agent sufficient funds to redeem such Preferred Shares and (ii) any Preferred
Shares represented by any certificate in lieu of which a new certificate has
been executed and delivered by the Trust. Notwithstanding the foregoing, (A) for
purposes of voting rights (including the determination of the number of
Preferred Shares required to constitute a quorum), any Preferred Shares of which
any Affiliate of the Trust shall be the Existing Holder shall be disregarded and
not deemed outstanding; (B) in connection with any Auction, any Preferred Shares
as to which any Person known to the Auction Agent to be an Affiliate of the
Trust shall be the Existing Holder thereof shall be disregarded and deemed not
to be outstanding; and (C) for purposes of determining the ARPS Basic
Maintenance Amount, Preferred Shares held by any Affiliate of the Trust shall be
deemed outstanding.
(iii) "Paying Agent" means Deutsche Bank Trust Company Americas unless
and until another entity appointed by a resolution of the Board of Trustees
enters into an agreement with the Trust to serve as paying agent, which paying
agent may be the same as the Auction Agent.
(jjj) "Potential Beneficial Owner," with respect to Shares of a
Series, shall mean a customer of a Broker-Dealer that is not a Beneficial Owner
of Shares of such Series but that wishes to purchase Shares of such Series, or
that is a Beneficial Owner of Shares of such Series that wishes to purchase
additional Shares of such Series.
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(kkk) "Redemption Default" has the meaning set forth in Section
2(c)(ii) of Part I hereof.
(lll) "Redemption Price" has the meaning set forth in Section 3(a)(i)
of Part I hereof.
(mmm) "Reference Rate" means, with respect to the determination of the
Maximum Rate and Default Rate, the applicable AA Composite Commercial Paper Rate
(for a Dividend Period of fewer than 184 days) or the applicable Treasury Index
Rate (for a Dividend Period of 184 days or more).
(nnn) "REIT" or real estate investment trust, means a company
dedicated to owning, and usually operating, income producing real estate, or to
financing real estate.
(ooo) "S&P" means Standard & Poor's, a division of The XxXxxx-Xxxx
Companies, Inc., and its successors at law.
(ppp) "S&P Discount Factor" means, for purposes of determining the
Discounted Value of any S&P Eligible Asset, the percentage determined as
follows. The S&P Discount Factor for any S&P Eligible Asset other than the
securities set forth below will be the percentage provided in writing by S&P:
(a) Common shares and preferred shares of REITs and Other Real
Estate Companies:
Diversification Standard
-----------------------------------------------
Xxxxx 0 Xxxxx 0 Xxxxx 0 Xxxxx 0 Xxxxx 5
------- ------- ------- ------- -------
Minimum Number of:
Issuers (1) 50 44 40 44 30
Real Estate Industry/Property Sectors (2) 12 10 8 7 7
Percent of Assets in:
Largest Real Estate Industry/Property Sector 15% 17% 25% 30% 30%
2nd Largest Real Estate Industry/Property Sector 12% 15% 20% 25% 25%
3rd Largest Real Estate Industry/Property Sector 12% 12% 15% 15% 15%
4th Largest Real Estate Industry/Property Sector 10% 12% 12% 12% 12%
Balance 51% 44% 28% 18% 18%
S&P Discount Factor:
common stock 178% 190% 208% 223% 231%
preferred stock (3) 145% 157% 167% 174% 178%
----------
(1) The three largest issuers may each constitute 6% of the total portfolio;
the next four largest issuers may each constitute 5% of the total
portfolio.
(2) As defined by NAREIT.
(3) Applies to preferred stock assets, subject to diversification guidelines
whereby at least 34% of the preferred stock assets are rated BB (or Xxxxx'x
equivalent) or
44
greater; at least 33% are rated B (or Xxxxx'x equivalent) or greater; and
the balance of the preferred assets is rated B- (or Xxxxx'x equivalent) or
is unrated.
(4) Excess concentrations within an Industry/Property Sector or per the 7
largest issuers will not qualify as an S&P Eligible Asset.
(5) Not more than 20% of the total S&P Eligible Assets may consist of
non-investment grade or non-rated securities.
(b) Debt Securities:
Diversification Standard
-----------------------------------------------
Bond Rating (1) Xxxxx 0 Xxxxx 0 Xxxxx 0 Xxxxx 0 Xxxxx 5
--------------- ------- ------- ------- ------- -------
A 115% 116% 117% 119% 118%
X- 000% 117% 119% 120% 120%
BBB+ 118% 119% 121% 122% 122%
BBB 119% 121% 122% 124% 124%
BBB- 121% 122% 124% 126% 126%
BB+ 125% 127% 130% 133% 132%
BB 130% 133% 137% 141% 139%
BB- 135% 139% 144% 149% 147%
B+ 146% 152% 159% 166% 164%
B 155% 163% 172% 182% 179%
B- 165% 176% 188% 202% 197%
CCC+ 189% 198% 212% 230% 224%
CCC 215% 236% 262% 295% 284%
----------
(1) The S&P Discount Factors for debt securities shall also be applied to any
interest rate swap or cap, in which case the rating of the counterparty
shall determine the appropriate rating category.
(2) If a security is unrated by S&P but is rated by Xxxxx'x, the conversion
chart under S&P OC Test Rating Chart will apply.
(c) U.S. Treasury Securities, including Treasury interest-only
Strips and Treasury principal-only Strips, as set forth below:
52-week Treasury Bills* 102%
Two-Year Treasury Notes 104%
Three-Year Treasury Notes 108%
Five-Year Treasury Notes 109%
10-Year Treasury Notes 115%
30-Year Treasury Notes 126%
45
----------
* Treasury Bills with maturities of less than 52 weeks will be discounted at
the appropriate Short-Term Money Market Instrument levels. Treasury Bills
that mature the next day are considered cash equivalents and are valued at
100%.
Treasury Strips: Treasury interest-only Strips will apply the
discount factor for the Treasury category set forth above
following the maturity of the Treasury Strip, e.g., a Treasury
interest-only Strip with a maturity of seven years will apply the
discount factor for the U.S. Treasury securities with a 10-year
maturity. Treasury principal-only Strips will apply the discount
factor that is two categories greater than its maturity, e.g., a
Treasury principal-only Strip with a maturity of seven years will
apply the discount factor for U.S. Treasury securities with a
30-year maturity.
(d) Cash and Cash Equivalents: The S&P Discount Factor
applied to Cash and Cash Equivalents will be (A) 100% and (B)
102% for those portfolio securities which mature in 181 to 360
calendar days.
(qqq) "S&P Eligible Assets" means the following:
(a) Publicly listed common shares and preferred shares of
REITs with a market capitalization of greater than $100 million
issued by U.S. issuers and any debt securities of REITs and Real
Estate Companies issued by U.S. issuers;
(b) Interest rate swaps entered into according to ISDA
standards if (i) the counterparty to the swap transaction has a
short-term rating of not less than A-1 or, if the counterparty
does not have a short-term rating, the counterparty's senior
unsecured long-term debt rating is AA - or higher and (ii) the
original aggregate notional amount of the interest rate swap
transaction or transactions is not to be greater than the
liquidation preference of the ARPS originally issued. The
interest rate swap transaction will be marked-to-market daily by
the swap counterparty;
(c) U.S. Treasury Securities and Treasury Strips (as defined
by S & P);
(d) Short-Term Money Market Instruments so long as (A) such
securities are issued by an institution, which, at the time of
investment, is a permitted bank (including commercial paper
issued by a corporation which complies with the applicable
assumptions that follow) ("permitted bank" means any bank,
domestic or foreign, whose commercial paper is rated A-1+)
provided, however, that Short-Term Money Market Instruments with
maturities of 30 days or less, invested in an institution rated
A-1 may comprise up to 20% of eligible portfolio assets; and
46
(e) Cash, which is any immediately available funds in U.S.
dollars or any currency other than U.S. dollars which is a freely
convertible currency, and Cash Equivalents, which means
investments (other than Cash) that are one or more of the
following obligations or securities: (i) U.S. Government
Securities; (ii) certificates of deposits of, banker's
acceptances issued by or money market accounts in any depository
institution or trust company incorporated under the laws of the
United States of America or any state thereof and subject to
supervision and examination by Federal and/or state banking
authorities, so long as the deposits offered by such depository
institution or trust company at the time of such investments are
rated and have a rating of at least "P-1" by Xxxxx'x and "A-1+"
by S&P (or, in the case of the principal depository institution
in a holding company system whose deposits are not so rated, the
long term debt obligations of such holding company are rated and
such rating is at least "A-1" by Xxxxx'x and "A+" by S & P);
(iii) commercial paper issued by any depository institution or
trust company incorporated under the laws of the United States of
America or any state thereof and subject to supervision and
examination by Federal and/or state banking authorities, or any
corporation incorporated under the laws of the United States of
America or any state thereof, so long as the commercial paper of
such issuer is rated and has at the time of such investment a
short term rating of at least "P-1" by Xxxxx'x and "A-1+" by S&P
on its commercial paper; (iv) securities bearing interest or sold
at a discount issued by any corporation incorporated under the
laws of the United States of America or any state thereof the
obligations of which at the time of such investment are rated and
that have a credit rating of at least "P-1" by Xxxxx'x and "A-1+"
by S&P either at the time of such investment or the making of a
contractual commitment providing for such investment; (v) shares
of any money market fund organized under the laws of a
jurisdiction other than the United States, so long as such money
market fund is rated and has at the time of such investment a
short-term rating of at least "AAAm" or "AAAg" by S&P and "Aaa"
by Xxxxx'x and ownership of such investments will not cause the
issuer to become engaged in a trade or business within the United
States for U.S. Federal income tax purposes or subject the issuer
to tax on a net income basis; and (vi) unleveraged overnight
repurchase obligations on customary terms with respect to
investments described in clauses (i) through (iv) above entered
into a depository institution, trust company or corporation that
has a short-term rating of at least "A-1+" by S & P; provided,
that (i) in no event shall Cash Equivalents include any
obligation that provides for payment of interest along; (ii) Cash
Equivalents referred to in clauses (ii) and (iii) above shall
mature within 183 days of issuance; (iii) either Xxxxx'x or S&P
changes in its rating system, then any ratings included in this
definition shall be deemed to be an equivalent rating in a
successor rating category of Xxxxx'x or S&P, as the case may be
(iv) if either Xxxxx'x or S&P is not in the business of rating
securities, then any ratings included in this
47
definition shall be deemed to be an equivalent rating from
another Rating Agency; (v) Cash Equivalents (other than U.S.
Government Securities or money market funds maintained by the
Custodian) shall not include any such investment of more than
$100 million in any single issuer; and (vi) in no event shall
Cash Equivalents include any obligation that is not denominated
in Dollars, any synthetic securities, any Securities with ratings
containing an "r" subscript, and IOs or any POs (other than
commercial paper with a maturity within 183 days of issuance).
(rrr) "S&P OC Test Rating Chart" means the chart set forth below:
Xxxxx'x Rating Mapped S&P Rating
--------------- -----------------
Aaa AA
Aa1 AA
Aa2 AA-
Aa3 A+
A1 A
A2 A-
A3 BBB+
Baa1 BBB
Xxx0 XXX-
Xxx0 XXx
Xx0 XX-
Xx0 B+
Ba3 B
B1 B-
B2 CCC+
B3 CCC
Caa CCC-
NR or below Caa NR
(sss) "S&P Real Estate Industry/Property Sector Classification" means,
for the purposes of determining S&P Eligible Assets, each of the following
Industry Classifications (as defined by NAREIT):
1. Office
2. Industrial
3. Mixed
4. Shopping Centers
5. Regional Malls
6. Free Standing
48
7. Apartments
8. Manufactured Homes
9. Diversified
10. Lodging/Resorts
11. Health Care
12. Home Financing
13. Commercial Financing
14. Self Storage
15. Specialty
The Trust will use its discretion in determining which NAREIT
Industry Classification is applicable to a particular investment, and,
when necessary will consult with the independent auditor and/or S&P,
as necessary.
(ttt) "Securities Act" means the Securities Act of 1933, as amended
from time to time.
(uuu) "Securities Depository" means The Depository Trust Company and
its successors and assigns or any successor securities depository selected by
the Trust that agrees to follow the procedures required to be followed by such
securities depository in connection with the Shares of ARPS Series M, W, R and
F.
(vvv) "Sell Order" shall have the meaning specified in paragraph (a)
of Section 1 of Part II hereof.
(www) "Short-Term Money Market Instrument" means the following types
of instruments if, on the date of purchase or other acquisition thereof by the
Trust, the remaining term to maturity thereof is not in excess of 180 days:
(i) commercial paper rated A-1 if such commercial paper matures
in 30 days or A-1+ if such commercial paper matures in over 30 days;
(ii) demand or time deposits in, and banker's acceptances and
certificates of deposit of (A) a depository institution or trust
company incorporated under the laws of the United States of America or
any state thereof or the District of Columbia or (B) a United States
branch office or agency of a foreign depository institution (provided
that such branch office or agency is subject to banking regulation
under the laws of the United States, any state thereof or the District
of Columbia);
(iii) overnight funds; and
49
(iv) U.S. Government Securities.
(xxx) "Special Rate Period" means a Dividend Period that is not a
Standard Rate Period.
(yyy) "Specific Redemption Provisions" means, with respect to any
Special Rate Period of more than one year, either, or any combination of (i) a
period (a "Non-Call Period") determined by the Board of Trustees after
consultation with the Broker-Dealers, during which the Shares subject to such
Special Rate Period are not subject to redemption at the option of the Trust
pursuant to Section 3(a)(i) of Part I hereof and (ii) a period (a "Premium Call
Period"), consisting of a number of whole years as determined by the Board of
Trustees after consultation with the Broker-Dealers, during each year of which
the Shares subject to such Special Rate Period shall be redeemable at the
Trust's option pursuant to Section 3(a)(i) of Part I hereof and/or in connection
with any mandatory redemption pursuant to Section 3(a)(ii) of Part I hereof at a
price per share equal to $25,000 plus accumulated but unpaid dividends plus a
premium expressed as a percentage or percentages of $25,000 or expressed as a
formula using specified variables as determined by the Board of Trustees after
consultation with the Broker-Dealers.
(zzz) "Standard Rate Period" means a Dividend Period of 7 days.
(aaaa) "Submission Deadline" means 1:30 P.M., New York City time, on
any Auction Date or such other time on any Auction Date by which Broker-Dealers
are required to submit Orders to the Auction Agent as specified by the Auction
Agent from time to time.
(bbbb) "Submitted Bid" shall have the meaning specified in paragraph
(a) of Section 3 of Part II hereof.
(cccc) "Submitted Hold Order" shall have the meaning specified in
paragraph (a) of Section 3 of Part II hereof.
(dddd) "Submitted Order" shall have the meaning specified in paragraph
(a) of Section 3 of Part II hereof.
(eeee) "Submitted Sell Order" shall have the meaning specified in
paragraph (a) of Section 3 of Part II hereof.
(ffff) "Sufficient Clearing Bids" shall have the meaning specified in
paragraph (a) of Section 3 of Part II hereof.
(gggg) "Treasury Index Rate" means the average yield to maturity for
actively traded marketable U.S. Treasury fixed interest rate securities having
the same number of 30-day periods to maturity as the length of the applicable
Dividend Period, determined, to the extent necessary, by linear interpolation
based upon the yield for such securities having the next shorter and next longer
number of 30-day periods to maturity treating all Dividend Periods with a length
greater than the longest maturity for such securities as having a length equal
to such longest maturity, in all cases based upon data set forth in the most
recent weekly statistical release published by the Board of Governors of the
Federal Reserve System (currently in H.15(519)); provided, however, if the most
recent such statistical release shall not have been published
50
during the 15 days preceding the date of computation, the foregoing computations
shall be based upon the average of comparable data as quoted to the Trust by at
least three recognized dealers in U.S. Government securities selected by the
Trust.
(hhhh) "U.S. Government Securities" mean securities that are direct
obligations of, and obligations the timely payment of principal and interest on
which is fully guaranteed by, the United States of America or any agency or
instrumentality of the United States of America, the obligations of which are
backed by the full faith and credit of the United States of America and in the
form of conventional bills, bonds and notes.
(iiii) "Valuation Date" means every Friday, or, if such day is not a
Business Day, the next preceding Business Day; provided, however, that the first
Valuation Date may occur on any other date established by the Trust; provided,
further, however, that such date shall be not more than one week from the date
on which ARPS Series M, W, R or F initially are issued.
(jjjj) "Winning Bid Rate" has the meaning set forth in Section
3(a)(iii) of Part II hereof.
2. Interpretation. References to sections, subsections, clauses,
sub-clauses, paragraphs and subparagraphs are to such sections, subsections,
clauses, sub-clauses, paragraphs and subparagraphs contained in Part I, Part II
or Part III of this Statement, as the case may be, unless specifically
identified otherwise.
[End of Statement]
51
