Exhibit 99.(a)(3)
THE MASSACHUSETTS HEALTH &
EDUCATION TAX-EXEMPT TRUST
Restated Amendment No. 1
to
Agreement and Declaration of Trust
Dated August 28, 1996
Tax Identification
No. ▇▇-▇▇▇▇▇▇▇
THE COMMONWEALTH OF MASSACHUSETTS
Office of the Massachusetts Secretary of State
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Secretary
One Ashburton Place, Boston, Mass. 02108
CERTIFICATE OF VOTE OF TRUSTEES RESTATING AMENDMENT NO. 1
REGARDING A CLASS OF PREFERRED SHARES
I, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary of The Massachusetts Health Education Tax
Exempt Trust (the "Trust"), located at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, do
hereby certify that the trustees of the Trust have duly adopted the following
vote restating the relative rights and preferences of the existing class of
preferred shares of beneficial interest effective upon filing this Certificate
with the office of the Massachusetts Secretary of State:
Pursuant to authority vested in the Board of Trustees of the Trust by Article IV
of its Agreement and Declaration of Trust (which, as amended or restated from
time to time, is, together with this Certificate of Vote, hereinafter called the
"Declaration of Trust"), the Board of Trustees hereby restates the preferences,
voting powers, qualifications, and special or relative rights and privileges of
the 400 shares, whether presently outstanding or authorized but unissued, of the
Trust's authorized preferred shares of beneficial interest, par value $.01 per
share ("Preferred Shares"), liquidation preference $50,000 per share, designated
Auction Preferred Shares (the "APS") as follows:
DESIGNATION
APS: The 400 preferred shares of beneficial interest, $.01 par value,
liquidation preference $50,000 per share, are hereby designated "Auction
Preferred Shares" (hereinafter, "APS"). Each share of APS shall have the
preferences, limitations and relative voting rights, in addition to those
required by applicable law, as are set forth in Part I and Part II of this
Certificate of Vote. The APS shall constitute a separate series of Preferred
Shares of beneficial interest of the Trust, and each share of APS shall be
identical except as provided in Section 3 of Part I of this Certificate of Vote.
The Board of Trustees may in its discretion authorize the issuance, and
the Trust may issue, authorized but unissued shares of APS at any time; provided
that the Trust obtains written confirmation from S&P (if S&P is then rating the
APS) or any Other Rating Agency then rating the APS which so requires, that the
issuance of such shares of APS would not impair the rating then assigned by such
rating agency to the APS. In addition, the Board of Trustees may classify or
reclassify additional shares of the Trust's authorized Preferred Shares as APS,
with the same preferences, rights, voting powers, restrictions, limitations as
to dividends, qualifications and terms and conditions of redemption and other
terms of the APS herein described, except that the Applicable Rate for its
initial Dividend Period, its initial Dividend Payment Date and any other changes
in the terms herein set forth shall be as set forth in the Certificate of Vote
classifying or reclassifying such shares as APS. No holder of shall have, solely
by reason of being such a holder of APS, any right to acquire, purchase or
subscribe for any APS, common shares of beneficial interest, par value $.01 per
share, of the Trust or other securities of the Trust which it may hereafter
issue or
sell (whether out of the number of shares authorized by the Declaration of
Trust, or out of any shares acquired by the Trust after the issuance thereof, or
otherwise).
As used in Part I and Part II of this Certificate of Vote, capitalized
terms shall have the respective meanings provided in Section 15 of Part I and
Section 1 of Part II.
PART I
1. Fractional and Redeemed Shares: Ranking. (a) No fractional APS shall be
issued.
(b) Any APS which at any time have been redeemed or purchased by the
Trust shall, after such redemption or purchase, have the status of authorized
but unissued Preferred Shares.
(c) The APS shall rank on a parity with shares of any other series
of Preferred Shares (including any other series of APS) as to the payment of
dividends and the distribution of assets upon dissolution, liquidation or
winding up of the affairs of the Trust.
2. Dividends. (a) The Holder of any of the Outstanding APS shall be
entitled to receive, when, as and if declared by the Board of Trustees, out of
funds legally available therefor, cumulative cash dividends at the Applicable
Rate per annum thereof, determined as set forth in paragraph (c) of this Section
2, and no more (except to the extent set forth in Section 12 of this Part I),
payable on the respective dates (each a "Dividend Payment Date") determined as
set forth in paragraph (b) of this Section 2. Dividends on the APS issued on the
Date of Original Issue shall accumulate at the Applicable Rate per annum from
the Date of Original Issue thereof and with respect to subsequently issued APS,
from the date on which such APS are issued.
(b) (i) Dividends shall be payable with respect to Outstanding
shares of APS, subject to subparagraph (b)(ii) of this Section 2, on each
Thursday, provided that if the Trust, subject to the conditions set forth
in Section 4 of this Part I, designates any Subsequent Dividend period as
a Special Dividend Period, dividends will be payable: (1) with respect to
a Special Dividend Period of fewer than 35 days, the day after the last
day thereof and (2) with respect to a Special Dividend Period of 35 days
or more, the first Business Day of each calendar month thereafter
provided, that in any calendar month in which an Auction Date is scheduled
to occur, dividends shall be payable on the first Business Day next
succeeding such Auction Date.
After any Special Dividend Period, dividends on the APS shall be
payable, subject to subparagraph (b)(ii) of this Section 2, on each
succeeding Thursday, subject to the option of the Trust to designate from
time to time any Subsequent Dividend Period as a Special Dividend Period.
(ii) In the case of dividends that would otherwise be payable on a
Monday, Tuesday, Wednesday, Thursday or Friday as determined by
subparagraph (b)(i) of this Section 2, including clause (1) or (2) of the
proviso thereto, if (i) the Monday or Tuesday that would otherwise be the
Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day that falls after such Monday or Tuesday,
or (ii) the Wednesday, Thursday or Friday that would otherwise be the
Dividend Payment Date is not a
Business Day, then dividends shall be payable on the first Business Day
that falls prior to such Wednesday, Thursday or Friday.
(iii) The Trust shall pay to the Auction Agent not later than 12:00
noon, New York City time, on the Business Day next preceding each Dividend
Payment Date of the APS, an aggregate amount of funds available on the
next Business Day in New York City, equal to the dividends to be paid to
all Holders of Outstanding shares of APS on such Dividend Payment Date.
(iv) All moneys paid to the Auction Agent for the payment of
dividends (or for the payment of any late charges pursuant to subparagraph
(c)(i) of this Section 2) shall be held in trust for the payment of such
dividends (and any such late charge) by the Auction Agent for the benefit
of the Holders specified in subparagraph (b)(v) of this Section 2. Any
moneys paid to the Auction Agent in accordance with the foregoing but not
applied by the Auction Agent to the payment of dividends (and any late
charge) will, to the extent permitted by law, be repaid to the Trust at
the end of 90 days from the date on which such moneys were so to have been
applied.
(v) Each dividend on the Outstanding APS shall be paid on the
Dividend Payment Date therefor to the Holders as their names appear on the
share books 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 books of
the Trust on such date, not exceeding 15 days preceding the payment date
thereof, as may be fixed by the Board of Trustees.
(c) (i) For each Dividend Period of any of the APS Outstanding, the
dividend rate shall be equal to the rate per annum that results from an
Auction for such APS on the Auction Date next preceding such Subsequent
Dividend Period; provided, however, that the Board of Trustees may
establish a dividend rate for any newly issued APS in connection with the
issuance thereof prior to the first Auction with respect to such APS and
stated in a Certificate of Vote; and provided further, however, that if an
Auction for any Subsequent Dividend Period of the APS is not held for any
reason or if a Failure to Deposit occurs with respect to any Dividend
Period and such failure has not been cured as set forth below prior to any
succeeding Dividend Period thereof, then, subject to the next succeeding
provision, the dividend rate on the APS for any such Dividend Period shall
be the Maximum Rate (as defined herein) on the Auction Date for such
Subsequent Dividend Period; provided, further, however, that if any
Failure to Deposit shall have occurred with respect to the APS during any
Rate Period thereof, and prior to 12:00 noon, New York City time, on the
third Business Day next succeeding the date on which such Failure to
Deposit occurred, such Failure to Deposit shall not have been cured in
accordance with the next succeeding sentence, or if the Trust shall not
have paid to the Auction Agent a late charge equal to the sum of (1) if
such Failure to Deposit consisted of the failure timely to pay to the
Auction Agent the full amount of dividends with respect to any Dividend
Period on the APS, an amount computed by multiplying (x) 200% of the
Reference Rate (or Treasury Rate, if applicable) for the Rate Period
during which such Failure to Deposit occurs on the Dividend Payment Date
for such Dividend Period by (y) a fraction, the numerator of which shall
be the number of days for
which such Failure to Deposit has not been cured in accordance with the
next succeeding sentence (including the day such Failure to Deposit occurs
and excluding the day such Failure to Deposit is cured) and the
denominator of which shall be 365, and applying the rate obtained against
the aggregate liquidation preference of the outstanding APS and (2) if
such Failure to Deposit consisted of the failure timely to pay to the
Auction Agent the Redemption Price of the APS, if any, for which Notice of
Redemption has been given by the Trust pursuant to paragraph (b) of
Section 3 of this Part I, an amount computed by multiplying (x) 200% of
the Reference Rate (or Treasury Rate, if applicable) for the Rate Period
during which such Failure to Deposit occurs on the redemption date by (y)
a fraction, the numerator of which shall be the number of days for which
such failure is not cured in accordance with the next succeeding sentence
(including the day such Failure to Deposit occurs and excluding the day
such Failure to Deposit is cured) and the denominator of which shall be
365, and applying the rate obtained against the aggregate liquidation
preference of the Outstanding APS to be redeemed, and such failure shall
not have been cured as described herein, Auctions will be suspended until
such failure is so cured and the dividend rate for the APS for each
Dividend Period thereof commencing after such failure to and including the
Dividend Period, if any, during which such Failure to Deposit is so cured
shall be a rate per annum equal to the Maximum Rate on the Auction Date
for such Subsequent Dividend Period (but with the prevailing rating for
such shares, for purposes of determining such Maximum Rate, being deemed
to be "Below "BBB"") (the rate per annum at which dividends are payable on
the APS for any Rate Period being herein referred to as the "Applicable
Rate"). A Failure to Deposit with respect to the APS shall have been cured
(if such Failure to Deposit is not solely due to the willful failure of
the Trust to make the required payment to the Auction Agent) with respect
to any Rate Period if, not later than 12:00 noon, New York City time, on
the fourth Business Day preceding the Auction Date for the Rate Period
subsequent to such Rate Period the Trust shall have paid to the Auction
Agent (A) all accumulated and unpaid dividends on the APS and (B) without
duplication, the Redemption Price for the APS, if any, for which Notice of
Redemption has been given by the Trust pursuant to paragraph (b) of
Section 3 of this Part I.
(ii) The amount of dividends per share payable on the Outstanding
APS on any date on which dividends shall be payable on shares shall be
computed by multiplying the respective Applicable Rate in effect for such
Dividend Period or Dividend Periods or part thereof for which dividends
have not been paid by a fraction, the numerator of which shall be the
number of days in such Dividend Period or Dividend Periods or part thereof
and the denominator of which shall be 365 if such Dividend Period is a
Rate Period, or is contained in a Rate Period, of less than one year and
360 for all other Dividend Periods, and applying the rate obtained against
$50,000.
(d) Any dividend payment made on the APS shall first be credited against
the earliest accumulated but unpaid dividends due with respect to such APS.
(e) Except as set forth in the next sentence, no dividends shall be
declared or paid or set apart for payment on the shares of any class or series
of shares ranking, as to the payment of dividends, on a parity with the APS for
any period unless full cumulative dividends have been or contemporaneously are
declared and paid on the APS through the most recent Dividend Payment Date. When
dividends are not paid in full upon the APS through their most recent respective
Dividend Payment Dates or upon the shares for any other class or series of
shares ranking on a parity as to the payment of dividends with the APS through
their most recent respective dividend payment dates, all dividends declared upon
the APS and any other such class or series of shares ranking on a parity as to
the payment of dividends with the APS shall be declared pro rata so that the
amount of dividends declared per share on the APS and such other class or series
of shares shall in all cases bear to each other the same ratio that accumulated
dividends per share on the APS and such other class or series of shares bear to
each other (for purposes of this sentence, the amount of dividends declared per
share shall be based on the Applicable Rate or Rates for such shares for the
Dividend Periods during which dividends were not paid in full). Holders of the
APS shall not be entitled to any dividend, whether payable in cash, property or
shares, in excess of full cumulative dividends, as herein provided, on the APS.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the APS which may be in arrears, and, except
to the extent set forth in subsection (c)(i) of this Section 2, no additional
sum of money shall be payable in respect of any such arrearage.
(f) Dividends on the APS shall be designated as exempt-interest
dividends up to the amount of tax-exempt income of the Trust, to the extent
permitted by, and for purposes of, Section 852 of the Internal Revenue Code of
1986, as amended from time to time.
(g) The Board of Trustees shall not declare any dividend (except a
dividend payable in Common Shares), or declare any other distribution, upon the
Common Shares, or purchase Common Shares, unless in every such case the APS
have, at the time of any such declaration or purchase, an asset coverage (as
defined in and pursuant to the ▇▇▇▇ ▇▇▇) of at least 200% (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 stock of a closed-end
investment company as a condition of declaring dividends on its common stock)
after deducting the amount of such dividend, distribution or purchase price, as
the case may be.
3. Redemption. (a) (i) Upon giving a Notice of Redemption, as provided
below, the Trust at its option may redeem the APS, in whole or in part, on the
second Business Day next preceding any Dividend Payment Date applicable to those
APS called for redemption, out of funds legally available therefor, at the
Optional Redemption Price; provided that during a Special Dividend Period of
more than 28 days no APS will be subject to optional redemption during any
Non-Call Period; provided, that the APS may not be redeemed in part if after
such partial redemption fewer than 50 shares remain outstanding.
(ii) If fewer than all of the outstanding APS are to be redeemed
pursuant to subparagraph (a)(i) of this Section 3, the number of APS to be
redeemed shall be determined by the Board of Trustees, and such APS shall
be redeemed pro rata from the Holders in proportion to the number of such
APS held by such Holders.
(iii) No APS shall be redeemed pursuant to subparagraphs (a)(i) or
(a)(ii) of this Section 3 unless, on the date on which the Trust intends
to give notice of such redemption pursuant to paragraph (b) of this
Section 3, the Trust has a Discounted Value of S&P Eligible Assets (if S&P
is then rating the APS) and Other Rating Agency Eligible Assets (if any
Other Rating Agency is then rating the APS and requires such maintenance)
each at least equal the APS Basic Maintenance Amount immediately
subsequent to such redemption, if such redemption were to occur on such
date, and on the date of redemption.
(iv) Subject to Section 3(g), the Trust shall redeem at the
Mandatory Redemption Price certain of the APS if the Trust fails to
maintain a Discounted Value of S&P Eligible Assets (if S&P is then rating
the APS) or Other Rating Agency Eligible Assets (if any Other Rating
Agency is then rating the APS and requires such redemption) in an amount
greater than or equal to the APS Basic Maintenance Amount or fails to
maintain 1940 Act APS Asset Coverage in accordance with the requirements
of the rating agency or agencies then rating the APS and such failure is
not cured on or before the APS Basic Maintenance Cure Date or the 1940 Act
Cure Date, as the case may be. The number of APS to be redeemed shall be
equal to the lesser of (i) the minimum number of APS the redemption of
which, if deemed to have occurred immediately prior to the opening of
business on the Cure Date, together with all other Preferred Shares
subject to redemption or retirement, would result in the satisfaction of
the APS Basic Maintenance Amount or the 1940 Act APS Asset Coverage, as
the case may be, on such Cure Date (provided, that if there is no such
minimum number of APS and other Preferred Shares the redemption of which
would have such result, all the APS and Preferred Shares then outstanding
shall be redeemed), and (ii) the maximum number of APS, together with all
other Preferred Shares subject to redemption or retirement, that can be
redeemed out of funds expected to be legally available therefor. In
determining the APS required to be redeemed in accordance with this
subparagraph (a)(iv), the Trust shall allocate the number required to be
redeemed to satisfy the APS Basic Maintenance Amount or the 1940 Act APS
Asset Coverage, as the case may be, pro rata among the APS and other
Preferred Shares subject to redemption provisions similar to those
contained in this subparagraph (a)(iv) of this Section 3. The Trust shall
effect such redemption not earlier than 20 days and not later than 40 days
after such Cure Date, except that if the Trust does not have funds legally
available for the redemption of all of the required number of APS and
other Preferred Shares which are subject to redemption provisions similar
to those contained in this subparagraph (a)(iv) of this Section 3 or the
Trust otherwise is unable to effect such redemption on or Trust prior to
40 days after such Cure Date, the Trust shall redeem those APS and other
Preferred Shares which it was unable to redeem on the earliest practicable
date on which it is able to effect such redemption. If fewer than all of
the outstanding APS are to be redeemed pursuant to this Section 3(a)(iv),
the number of APS to be redeemed shall be redeemed pro rata from the
Holders of such APS in proportion to the number of shares held by such
Holders.
(b) The Trust is required to give not less than five nor more than
40 days' Notice of Redemption. The Auction Agent will use its reasonable efforts
to provide telephonic notice to each holder of APS called for redemption not
later than the close of business on the Business Day on which the Auction Agent
determines the shares to be redeemed (as described above) (or, during the
occurrence of a Failure to Deposit 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). Such telephonic
notice will be confirmed promptly in writing not later than the close of
business on the third Business Day preceding the redemption date by notice sent
by the Auction Agent to each holder of record of the APS called for redemption,
the Broker-Dealers and the Securities Depository. Every Notice of Redemption and
other redemption notice with respect to APS (other than any such notice required
under the ▇▇▇▇ ▇▇▇) will state: (1) the
redemption date, (2) the number of APS to be redeemed, (3) the redemption price,
(4) that dividends on the APS to be redeemed will cease to accumulate as of such
redemption date and (5) the provision of the APS Provisions pursuant to which
such shares are being redeemed. No defect in the Notice of Redemption or other
redemption notice or in the transmittal or the mailing thereof will affect the
validity of the redemption proceedings, except as required by applicable law. If
fewer than all of the APS held by any Holder are to be redeemed, the Notice of
Redemption mailed to such Holder shall also specify the number of APS to be
redeemed from such Holder.
(c) Notwithstanding the provisions of paragraph (a) of this Section
3, if any dividends on the APS are in arrears, none of the APS shall be redeemed
unless all Outstanding shares of the APS are simultaneously redeemed, and the
Trust shall not purchase or otherwise acquire any such APS; provided, however,
that the foregoing shall not prevent the purchase or acquisition of Outstanding
APS 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 APS.
(d) Upon the giving of Notice of Redemption 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 for any purpose, and all
rights of the Holders of the shares so called for redemption shall cease and
terminate, except the right of such Holders to receive the Optional Redemption
Price or Mandatory Redemption Price: as the case may be, but without any
interest or other additional amount, except as provided in Section 2(c)(i) and
in Section 12. Upon surrender in accordance with the Notice of Redemption of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Trustees shall so require and the Notice of Redemption
shall so state), the Optional Redemption Price or Mandatory Redemption Price, as
the case may be, shall be paid by the Auction Agent to the Holders of the APS
subject to redemption. (The Trust shall pay to the Auction Agent no later than
12:00 Noon, New York City time, on the Business Day next preceding the
redemption date, an aggregate amount of funds equal to the redemption amount
required.) In the case that fewer than all of the shares represented by any such
certificate are redeemed, a new certificate shall be issued, representing the
unredeemed shares, without cost to the Holder thereof. The Trust shall be
entitled to receive from the Auction Agent, promptly after the date fixed for
redemption, any cash deposited with the Auction Agent in excess of (i) the
aggregate Optional Redemption Price of the APS called for redemption on such
date and (ii) all other amounts to which Holders of the APS called for
redemption may be entitled. Any funds so deposited that are unclaimed at the end
of 90 days from such redemption date shall, to the extent permitted by law, be
repaid to the Trust, after which time the Holders of the APS so called for
redemption may look only to the Trust for payment of the Optional Redemption
Price or Mandatory Redemption Price, as the case may be. and all other amounts
to which they may be entitled. The Trust shall be entitled to receive, from time
to time after the date fixed for redemption, any interest on the funds so
deposited.
(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, such redemption shall be made as soon as practicable to the extent
such funds become available. Failure to redeem the APS 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 Auction 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 the
APS for which a Notice of Redemption has been given, dividends may be declared
and paid on the APS and shall include those APS for which a Notice of Redemption
has been given.
(f) All moneys paid to the Auction Agent for payment of the Optional
Redemption Price or Mandatory Redemption Price, as the case may be, of the APS
called for redemption shall be held in trust by the Auction Agent for the
benefit of Holders of shares so to be redeemed.
(g) In effecting any redemption pursuant to this Section 3, the
Trust shall use its best efforts to comply with all applicable procedural
conditions precedent to effecting such redemption under the 1940 Act and
Massachusetts law, but shall effect no redemption except to the extent permitted
by the 1940 Act and Massachusetts law. The Trust shall also have the power and
authority to repurchase APS from Holders from time to time in accordance with
applicable law, provided that the Trust shall be under no obligation to do so.
(h) In the case of any redemption pursuant to this Section 3, only
whole APS shall be redeemed, and in the event that any provision of the
Declaration of Trust would require redemption of a fractional share, the Auction
Agent shall be authorized to round up so that only whole shares are redeemed.
(i) Notwithstanding anything herein to the contrary, including,
without limitation, Section 5(d)(i) of Part I hereof, the Board of Trustees may
authorize, create or issue any class or series of Preferred Shares ranking prior
to or on a parity with the APS with respect to the payment of dividends or the
distribution of assets upon dissolution, liquidation or winding up of the
affairs of the Trust, to the extent permitted by the 1940 Act, as amended, if,
upon issuance, the net proceeds from the sale of such Preferred Shares (or such
portion thereof needed to redeem the Outstanding APS) are deposited with the
Auction Agent in accordance with Section 3(d) of Part I hereof, Notice of
Redemption pursuant to Section 3(b) of Part I hereof has been delivered prior
thereto or is sent promptly thereafter (or. as to any Holder of APS, such Notice
of Redemption is waived in writing by such Holder), and such proceeds are used
to redeem the Outstanding APS.
4. Designation of Special Dividend Periods. (a) The Trust, at its option
and by resolution of the Board of Trustees (including a committee thereof or
action of its delegate as provided below), may designate any succeeding
Subsequent Dividend Period of the APS as a Special Dividend Period; provided,
however, that such designation shall be effective only if (i) notice thereof
shall have been given in accordance with paragraph (b) and clause (i) of
paragraph (c) of this Section 4, (ii) any Failure to Deposit that shall have
occurred with respect to the APS during any Dividend Period shall have been
cured in accordance with the provisions of the third sentence of paragraph
(c)(i) of Section 2 of this Part I, (iii) Sufficient Clearing Bids (as defined
in Section 1 of Part II hereof) for such APS shall have existed in an Auction
held on the Auction Date immediately preceding the first day of such proposed
Special Dividend Period, (iv) any Notice of Redemption shall have been mailed by
the Trust pursuant to paragraph (b) of Section 3 of this Part I with respect to
any of the APS, and (v) in the event the Trust wishes to designate any
succeeding Subsequent Dividend Period for such APS as a Special Dividend Period
consisting of more than 7 Business Days, the Trust has provided notice and an
APS Basic Maintenance Report (A) to S&P (if S&P is then rating the APS) that
states that the Discounted Value of S&P Eligible Assets is greater than or equal
to the APS Basic Maintenance Amount for the duration of the special Dividend
Period and (B) to any Other Rating Agency which is then rating the APS and so
requires stating that the discounted
value of any Other Rating Agency Eligible Assets is greater than or equal to the
amount, if any, required by such Other Rating Agency.
(b) If the Trust proposes to designate any succeeding Subsequent
Dividend Period of the APS as a Special Dividend Period of more than 7 Business
Days pursuant to paragraph (a) of this Section 4, not less than 20 nor more than
30 days prior to the date the Trust proposes to designate as the first day of
such Special Dividend Period (which shall be such day that would otherwise be
the first day of a Minimum Dividend Period), notice shall be (i) published or
caused to be published by the Trust in a newspaper of general circulation to the
financial community in New York City which carries financial news, 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 (i) that
the Trust may exercise its option to designate a succeeding Subsequent Dividend
Period of such APS as a Special Dividend Period, specifying the first day
thereof and (ii) that the Trust will by 11:00 a.m., New York City time, on the
second Business Day next preceding such date notify the Auction Agent of either
(x) its determination, subject to certain conditions, to exercise such option,
in which case the Trust shall specify the Special Dividend Period designated and
the terms of the Specific Redemption Provisions, if any, or (y) its
determination not to exercise such option.
(c) No later than 11:00 a.m., New York City time, on the second
Business Day next preceding the first day of any proposed Special Dividend
Period the Trust shall deliver to the Auction Agent either:
(i) a notice stating (A) that the Trust has determined to
designate the next succeeding Dividend Period as a Special Dividend
Period, specifying the same and the first day thereof, (B) the Auction
Date immediately prior to the first day of such Special Dividend Period,
(C) the terms of the Specific Redemption Provisions, if any, (D) that such
Special Dividend Period shall not commence if (1) on such Auction Date
Sufficient Clearing Bids shall not exist (in which case the succeeding
Rate Period shall be a Minimum Dividend Period) or (2) a Failure to
Deposit shall have occurred prior to the first day of such Special
Dividend Period and (E) the scheduled Dividend Payment Dates for such APS
during such Special Dividend Period; provided, that if such Special
Dividend Period consists of more than 7 Business Days, such notice will be
accompanied by an APS Basic Maintenance Report showing that, as of the
third Business Day next preceding such proposed Special Dividend Period,
(1) a Discounted Value of S&P Eligible Assets (if S&P is then rating the
APS), assuming for the purposes of calculating S&P Eligible Assets in
connection with an APS Basic Maintenance Report required to be prepared
pursuant to this Section 4(C)(i), a S&P Exposure Period of "three business
days" and (2) a discounted value of Other Rating Agency Eligible Assets
(if any Other Rating Agency is then rating the APS and so requires) at
least equal the amount as of such Business Day specified by such Other
Rating Agency, if any; or
(ii) a notice stating that the Trust has determined not to
exercise its option to designate a Special Dividend Period for such APS
and that the next succeeding Dividend Period of such APS shall be a
minimum Dividend Period.
If the Trust fails to deliver either such notice with respect to any designation
of any proposed Special Dividend Period to the Auction Agent by 11:00 a.m., New
York City time, on the second
Business Day next preceding the first day of such proposed Special Dividend
Period, the Trust shall be deemed to have delivered a notice to the Auction
Agent with respect to such Special Dividend Period of the effect such forth in
clause (ii) of the preceding sentence.
(d) Without limitation of any other provision herein or in the
Trust's By-Laws, the Board of Trustees of the Trust shall have the authority and
power from time to time to delegate to a committee of the Board the power to
take all actions contemplated by this Section 4 of Part I with respect to the
establishment of Special Dividend Periods including, without limitation, the
determinations called for by paragraph (c) above, and any such committee may,
with respect to any Special Dividend Period of 90 days or fewer, delegate those
functions to the Trust's investment adviser, subject, in all cases, to the
determination of the Board of Trustees or any such committee, respectively, to
revoke such delegation. S&P will be notified in writing of the Board's intent to
delegate such powers and S&P will be requested to confirm in writing whether
such actions would adversely affect the rating assigned.
5. Voting Rights. (a) Except as otherwise provided in the Declaration of
Trust or as otherwise required by law, (i) each Holder of APS shall be entitled
to one vote for each of the APS held on each matter submitted to a vote of
shareholders of the Trust, and (ii) the holders of outstanding Preferred Shares,
including APS, and of Common Shares shall vote together as a single class;
provided, that at any meeting of the shareholders of the Trust held for the
purpose of electing Trustees, the holders of outstanding Preferred Shares,
including APS, represented in person or by proxy at said meeting, shall elect
two Trustees of the Trust, each Preferred Share, including each of the APS,
entitling the holder thereof to one vote. Subject to paragraph (b) of this
Section 5, the holders of outstanding Common Shares and outstanding Preferred
Shares voting 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"), the number of Trustees constituting the Board of Trustees shall be
automatically increased by the smallest number that, when added to the two
Trustees elected exclusively by the holders of Preferred Shares, including APS,
would constitute a majority of the Board of Trustees as so increased by such
smallest number, and the holders of Preferred Shares, including APS, shall be
entitled, voting as a class on a one-vote-per-share basis (to the exclusion of
the holders of all other securities and classes of capital shares of the Trust),
to elect such smallest number of additional Trustees, together with the two
Trustees that such holders are in any event entitled to elect. A Voting Period
shall commence:
(i) if at the close of business on any Dividend Payment Date
accumulated dividends (whether or not earned or declared) on Preferred
Shares, including any outstanding APS, equal to at least two full years'
dividends shall be due and unpaid and cash or specified securities shall
not have been deposited with the Auction Agent for the payment of such
accumulated dividends;
(ii) if the Trust shall have failed to put on deposit or pay a
Redemption Price for two years after it is obligated to do so; or
(iii) if at any time holders of any other Preferred Shares are
entitled under the 1940 Act to elect a majority of the Trustees of the
Trust.
Such Voting Period shall terminate if (i) the Trust thereafter shall pay or
declare a dividend and deposit cash or securities with the Auction Agent equal
to the accumulated dividends payable on outstanding Preferred Shares; or (ii)
such voting rights of the holders of any other Preferred Shares to elect a
majority of the Trustees of the Trust shall cease. Upon the termination of a
Voting Period, the voting rights described in this paragraph (b) of Section 5
shall cease, subject always, however, to the revesting of such voting rights in
the holders of Preferred Shares upon the further occurrence of any of the events
described in this paragraph (b) of Section 5.
(c) (i) As soon as practicable after the accrual of any right of the
Holders of Preferred Shares to elect additional Trustees as described in
paragraph (b) of this Section 5, the Trust shall notify the Auction Agent
and the Auction Agent shall call a special meeting of such Holders, by
mailing a notice of such special meeting to such holders, such meeting to
be held (subject to adjournment) not less than 10 nor more than 20 days
after the date of mailing of such notice. If the Trust fails to send such
notice to the Auction Agent 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 held
during a Voting Period at which are to be elected, such holders, voting
together as a class (to the exclusion of the holders of all other
securities and classes of capital shares of the Trust), shall be entitled
to elect the number of Trustees prescribed in paragraph (b) of this
Section 5 on a one-vote-per-share basis.
(ii) For purposes of determining any rights of the Holders to
vote on any matter, whether such right is created by this Certificate of
Vote, by the other provisions of the Declaration of Trust, by statute or
otherwise, no Holder shall be entitled to vote and no APS shall be deemed
to be "outstanding" for the purpose of voting or determining the number of
shares required to constitute a quorum if, prior to or concurrently with
the time of determination of shares entitled to vote or shares deemed
outstanding for quorum purposes, as the case may be, the Redemption Price
for the redemption of such shares has been deposited in trust with the
Auction Agent for that purpose and the requisite Notice of Redemption with
respect to such shares shall have been given as provided in Section 3 of
this Part I. None of the APS held by the Trust or any affiliate of the
Trust shall have any voting rights or be deemed to be outstanding for
voting or other purposes.
(iii) The terms of office of all persons who are Trustees of
the Trust at the time of a special meeting of Holders and holders of other
Preferred Shares to elect Trustees shall continue, notwithstanding the
election at such meeting by the Holders and such other holders of the
number of Trustees that they are entitled to elect, and the persons so
elected by the Holders and such other holders, together with the two
incumbent Trustees elected by the Holders and such other holders of
Preferred Shares and the remaining incumbent Trustees elected by the
holders of the Common Shares and the Preferred Shares, shall constitute
the duly elected trustees of the Trust.
(iv) Simultaneously with the termination of a Voting Period,
the terms of office of the additional Trustees elected by the Holders and
holders of other Preferred Shares
pursuant to paragraph (b) of this Section 5 shall terminate, the remaining
Trustees shall constitute the Trustees of the Trust and the voting rights
of the Holders and such other holders to elect additional Trustees
pursuant to paragraph (b) of this Section 5 shall cease, subject to the
provisions of the last sentence of paragraph (b) of this Section 5.
(d) (i) So long as any of the APS are Outstanding, the Trust shall not,
without the two-thirds vote of the Holders of the Outstanding APS: (a)
authorize, create or issue any class or series of shares of beneficial
interest ranking prior to or on a parity with the APS with respect to the
payment of dividends or the distribution of assets upon dissolution,
liquidation or winding up of the affairs of the Trust, or increase the
authorized amount of APS (except that, notwithstanding the foregoing, but
subject to the provisions of Section 13, the Board of Trustees, without
the vote or consent of the Holders of APS, may from time to time authorize
and create, and the Trust may from time to time issue, classes or series
of Preferred Shares, including APS, ranking on a parity with the APS with
respect to the payment of dividends and the distribution of assets upon
dissolution, liquidation or winding up of the affairs of the Trust,
subject to continuing compliance by the Trust with 1940 Act APS Asset
Coverage and APS Basic Maintenance Amount requirements, provided that the
Trust obtains written confirmation from S&P (if S&P is then rating APS)
and any Other Rating Agency (if any Other Rating Agency is then rating APS
and so requires) that the issuance of such class or series would not
impair the rating then assigned by such rating agency to the APS); (b)
amend, alter or repeal the provisions of the Declaration of Trust,
including this Certificate of Vote, whether by merger, consolidation or
otherwise, as so to affect any preferences, right or power of such APS or
the Holders thereof; provided, that (i) none of the actions permitted by
the exception to (a) above will be deemed to affect such preferences,
rights or powers and (ii) the authorization, creation and issuance of
classes or series of shares ranking junior to the APS with respect to the
payment of dividends and the distribution of assets upon dissolution,
liquidation or winding up of the affairs of the Trust, will be deemed to
affect such preferences, rights or powers only if S&P or any Other Rating
Agency which so requires is then rating the APS and such issuance would,
at the time thereof, cause the Trust not to satisfy the 1940 Act APS Asset
Coverage or the APS Basic Maintenance Amount; (c) file a voluntary
application for relief under Federal bankruptcy law or any similar
application under state law for so long as the Trust is solvent and does
not foresee becoming insolvent; (d) petition for liquidation,
reorganization or other relief under applicable laws of any jurisdiction
regarding bankruptcy; or (e) create, incur or cause to exist any lien,
mortgage, pledge, change or security upon any Trust assets.
(ii) The Board of Trustees, without the vote or consent of any
Holder of APS or any other shareholder of the Trust, may from time to time
amend, alter or repeal any or all of the definitions of the terms listed
below, and any such amendment, alteration or repeal will not be deemed to
affect the preferences, rights or powers of the APS or the Holders
thereof, provided, that the Board of Trustees receives written
confirmation from S&P (such confirmation being required to be obtained
only in the event S&P is rating the APS and in no event being required to
be obtained in the case of the definitions relevant only to and adopted in
connection with the rating of the APS by any Other Rating Agency, if any)
that such amendment, alteration or repeal would not impair the rating then
assigned by S&P. In addition, the Board of Trustees, without the vote or
consent of any Holder of APS or any other shareholder of the Trust, may
from time to time adopt, amend, alter or repeal any or all
of additional or other definitions or add covenants and other obligations
of the Trust (e.g., maintenance of minimum liquidity level) or confirm the
applicability of covenants and other obligations set forth herein in
connection with obtaining or maintaining the rating of S&P or any Other
Rating Agency with respect to the APS, and any such amendment, alteration
or repeal will not be deemed to affect the preferences, rights or powers
of the APS or the Holders thereof, provided the Board of Trustees receives
written confirmation from the relevant rating agency (if such rating
agency is then rating the APS and so requires, it being understood that
such confirmation shall be obtained from a particular rating agency only
with respect to definitions relevant to that rating agency) that any such
amendment, alteration or repeal would not adversely affect the rating then
assigned by such rating agency. Any such amendment, alteration or repeal
shall be set forth in a further certificate of vote which shall be filed
by the Trust with the Massachusetts Secretary of State and thereupon
become part of the Declaration of Trust. Notwithstanding anything herein
to the contrary, no amendment or alteration pursuant to this subparagraph
(ii) shall in any event cause the Maximum Rate to fall below the Maximum
Rate that would have resulted absent such amendment or alteration.
Definitions Subject to Change by Trustee Action
APS Basic Maintenance Amount
APS Basic Maintenance Cure Date
APS Basic Maintenance Report
Cure Date
Deposit Securities
Discounted Value
Eligible Assets
Market Value
Maximum Potential Additional Dividends Liability
Maximum Rate
Minimum Dividend Period
S&P Discount Factor
S&P Eligible Asset
S&P Exposure Period
S&P Hedging Transactions
S&P Volatility Factor
Municipal Obligations
1940 Act Cure Date
1940 Act APS Asset Coverage
Quarterly Valuation Date
Receivables for Massachusetts Municipal Obligations Sold
Valuation Date
Variation Margin
(e) Unless otherwise required by law, the Holders of the APS shall
not have any relative rights or preferences or other special rights other than
those specifically set forth herein. The Holders of the APS shall have no
preemptive rights or rights to cumulative voting. In the event that
the Trust fails to pay any dividends on the APS, the exclusive remedy of the
Holders shall be the right to vote for Trustees pursuant to the provisions of
this Section 5.
(f) Unless a higher percentage is provided for in the Declaration of
Trust, the affirmative vote of the Holders of a majority of the outstanding APS,
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 APS 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 S&P (if S&P is then rating the APS) and any Other Rating Agency
which so requires (if any Other Rating Agency is then rating the APS) that such
vote is to be taken and the nature of the action with respect to which such vote
is to be taken. In addition, the Trust shall notify S&P (if S&P is then rating
the APS) and any Other Rating Agency which so requires (if any Other Rating
Agency is then rating the APS) of the results of any vote described in the
proceeding sentence.
6. Liquidation Rights. (a) Upon the dissolution, liquidation or winding up
of the affairs of the Trust, whether voluntary or involuntary, the Holders of
the APS then outstanding shall be entitled to receive and to be paid out of the
assets of the Trust available for distribution to its shareholders, before any
payment or distribution shall be made on the Common Shares or on any other class
of shares of the Trust ranking junior to the APS upon dissolution, liquidation
or winding up, an amount equal to the liquidation preference with respect to
such shares. The liquidation preference for the APS shall be $50,000 per share,
plus an amount equal to all dividends thereon (whether or not earned or
declared) accumulated but unpaid to the date of final distribution in same-day
funds, together with any payments required to be made pursuant to Section 12 in
connection with the liquidation of the Trust.
(b) Neither the sale of all or substantially all of the property or
business of the Trust, nor the merger or consolidation of the Trust into or with
any other corporation nor the merger or consolidation of any other corporation
into or with the Trust shall be a dissolution, liquidation or winding up,
whether voluntary or involuntary, for the purposes of this Section 6 provided
that S&P (if S&P is then rating the APS) has been notified in writing and
requested to confirm whether such action would adversely affect the rating
assigned.
(c) After the payment to the Holders of the APS of the full
preferential amounts provided for in this Section 6, the Holders of the APS as
such shall have no right or claim to any of the remaining assets of the Trust.
(d) In the event the assets of the Trust available for distribution
to the Holders of the APS upon any dissolution, liquidation or winding up of the
affairs of the Trust, whether voluntary or involuntary, shall be insufficient to
pay in full all amounts to which such Holders are entitled pursuant to paragraph
(a) of this Section 6, no such distribution shall be made on account of any
shares of any other class or series of Preferred Shares ranking on a parity with
the APS with respect to the distribution of assets upon such dissolution,
liquidation or winding up unless a proportionate distributive amount shall be
paid on account of the APS, ratably, in proportion to the full distributable
amounts for which holders of all such parity shares are respectively entitled
upon such dissolution, liquidation or winding up.
(e) Subject to the rights of the holders of shares of any series or
class or classes of shares ranking on a parity with the APS with respect to the
distribution of assets upon dissolution, liquidation or winding up of the
affairs of the Trust, after payment shall have been made in full to the Holders
of the APS as provided in paragraph (a) of this Section 6, but not prior
thereto, any other series of class or classes of shares ranking junior to the
APS with respect to the distribution of assets upon dissolution, liquidation or
winding up of the affairs of the Trust shall, subject to the respective terms
and provisions (if any) applying thereto, be entitled to receive any and all
assets remaining to be paid or distributed, and the Holders of the APS shall not
be entitled to share therein.
7. Auction Agent. For so long as any of the APS is outstanding, 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 any of the APS is outstanding, the Board of
Trustees shall use its best efforts promptly thereafter to appoint another
qualified commercial bank, trust company or financial institution to act as the
Auction Agent and such resignation or termination will not be effective until
the successor has accepted its appointment.
8. 1940 Act APS Asset Coverage. The Trust shall maintain, as of the last
Business Day of each month in which any of the APS is outstanding, the 1940 Act
APS Asset Coverage; provided. however, that Section 3(a)(iv) shall be the sole
remedy in the event the Trust fails to do so.
9. APS Basic Maintenance Amount. (a) So long as APS are Outstanding, the
Trust shall maintain, on each Valuation Date, and shall verify to its
satisfaction that it is maintaining on such Valuation Date, (i) S&P Eligible
Assets having an aggregate Discounted Value equal to or greater than the APS
Basic Maintenance Amount (if S&P is then rating the APS) and (ii) Other Rating
Agency Eligible Assets equal to or greater than the APS Basic Maintenance Amount
if any Other Rating Agency then rating the APS so requires; provided, however,
that Section 3(a)(iv) shall be the sole remedy in the event the Trust fails to
do so. In managing the Trust's portfolio, the Trust's investment adviser will
not alter the composition of the Trust's portfolio if, in the reasonable belief
of the Trust's investment adviser, the effect of any such alteration would be to
cause the Trust to have Eligible Assets with an aggregate Discounted Value, as
of the immediately preceding Valuation Date, less than the APS Basic Maintenance
Amount as of such Valuation Date; provided, however, that in the event that, as
of the immediately preceding Valuation Date, the aggregate Discounted Value of
the Trust's Eligible Assets exceeded the APS Basic Maintenance Amount by five
percent or less, the investment adviser will not alter the composition of the
Trust's portfolio in a manner reasonably expected to reduce the aggregate
Discounted Value of the Trust's Eligible Assets unless the Trust shall have
confirmed that, after giving effect to such alteration, the aggregate Discounted
Value of the Trust's Eligible Assets would exceed the APS Basic Maintenance
Amount.
(b) Within three Business Days after this Restatement is effective,
S&P shall be provided with an APS Basic Maintenance Report. On or before 5:00
p.m., New York City time, on the third Business Day after a Valuation Date on
which the Trust fails to maintain a Discounted Value of S&P Eligible Assets (if
S&P is then rating the APS) or Other Rating Agency Eligible
Assets (if any Other Rating Agency is then rating the APS and so requires) in an
amount greater than or equal to the APS Basic Maintenance Amount, and on the
third Business Day after the APS Basic Maintenance Cure Date with respect to
such Valuation Date, the Trust shall complete and deliver to S&P (if S&P is then
rating the APS), any Other Rating Agency which is then rating the APS and so
requires and the Auction Agent (if S&P or any Other Rating Agency which so
requires is then rating the APS) an APS Basic Maintenance Report as of the date
of such failure or such APS Basic Maintenance Cure Date, as the case may be,
which will be deemed to have been delivered to the Auction Agent if the Auction
Agent receives a copy or telecopy, telex or other electronic transcription
thereof and on the same day the Trust mails to the Auction Agent for delivery on
the next Business Day the full APS Basic Maintenance Report. The Trust will also
deliver an APS Basic Maintenance Report to S&P (if S&P is then rating the APS)
and any Other Rating Agency which is then rating the APS and so requires, on any
Valuation Date that (i) the Discounted Value of S&P Eligible Assets (if S&P is
then rating the APS) or Other Rating Agency Eligible Assets as contemplated
above, as the case may be, is greater than the APS Basic Maintenance Amount by
five percent or less or (ii) on any date which the Trust redeems Common Shares
or APS. The Trust will also deliver an APS Basic Maintenance Report to any
rating agency (including S&P) which so requires it upon its request, on each
Quarterly Valuation Date to S&P, upon failure of the APS Basic Maintenance
Amount and its Cure Date to S&P, biweekly to S&P and as requested by S&P. A
failure by the Trust to deliver an APS Basic Maintenance Report under
subparagraph (b) of this Section 9 shall be deemed to be delivery of an APS
Basic Maintenance Report indicating that the Discounted Value for all assets of
the Trust is less than the APS Basic Maintenance Amount, as of the relevant
Valuation Date.
(c) Within ten Business Days after a Quarterly Valuation Date, the
Trust shall cause the Independent Accountant to confirm in writing to S&P (if
S&P is then rating the APS), any Other Rating Agency which is then rating the
APS which so requires and the Auction Agent (if either S&P or any Other Rating
Agency which so requires is then rating the APS) (i) the mathematical accuracy
of the calculations reflected in the APS Basic Maintenance Report prepared by
the Trust on such date (and in any other APS Basic Maintenance Report, randomly
selected by the Independent Accountant, that was delivered by the Trust during
the quarter ending on such Quarterly Valuation Date), that, in such Report (and
in such randomly selected Report), the Trust determined in accordance with this
Certificate of Vote whether the Trust had, at such Quarterly Valuation Date (and
at the Valuation Date addressed in such randomly-selected Report), S&P Eligible
Assets (if S&P is then rating the APS) of an aggregate Discounted Value at least
equal to the APS Basic Maintenance Amount and Other Rating Agency Eligible
Assets (if any Other Rating Agency is then rating the APS and so requires) of an
aggregate Discounted Value at least equal to the APS Basic Maintenance Amount
(such confirmation being herein called the "Accountant's Confirmation") and
(iii) that the Trust has satisfied the requirements of paragraph 13(i),
excluding clauses (A) and (B) in the final sentence of such paragraph. In
preparing such confirmation, the Independent Accountant shall be entitled to
rely, without further investigation, on such interpretations of law by the Trust
as may have been necessary for the Trust to perform the computations contained
in the APS Basic Maintenance Report. The Independent Accountants shall also
provide such written report upon the effectiveness of this Restatement, and at
any time when the Trust fails the APS Basic Maintenance Amount and at the time
when such failure is cured.
(d) Within ten Business Days after the date of delivery of an APS
Basic Maintenance Report in accordance with paragraph (b) of this Section 9
relating to any Valuation
Date on which the Trust failed to maintain a Discounted Value of S&P Eligible
Assets (if S&P is then rating the APS) or Other Rating Agency Eligible Assets
(if applicable) in an amount greater than or equal to the APS Basic Maintenance
Amount, and relating to the APS Basic Maintenance Cure Date with respect to such
failure to exceed or equal the APS Basic Maintenance Amount, the Trust shall
cause the Independent Accountant to provide to S&P (if S&P is then rating the
APS), any Other Rating Agency which is then rating the APS and so requires and
the Auction Agent (if S&P or any Other Rating Agency which is then rating the
APS so requires) an Accountant's Confirmation as to such APS Basic Maintenance
Report.
(e) If any Accountant's Confirmation delivered pursuant to
subparagraph (c) or (d) of this Section 9 shows that an error was made in the
APS Basic Report for a particular Valuation Date for which such Accountant's
Confirmation was required to be delivered, or shows that a lower aggregate
Discounted Value for the aggregate of all S&P Eligible Assets (if S&P is then
rating the APS) or Other Rating Agency Eligible Assets (if any Other Rating
Agency is then rating the APS and so requires), as the case may be, of the Trust
was determined by the Independent Accountant, the calculation or determination
made by such Independent Accountant shall be final and conclusive and shall be
binding on the Trust, and the Trust shall accordingly amend and deliver the APS
Basic Maintenance Report to S&P (if S&P is then rating the APS), any Other
Rating Agency which is then rating the APS and so requires and the Auction Agent
(if S&P or any Other Rating Agency which is then rating the APS so requires)
promptly following receipt by the Trust of such Accountant's Confirmation.
(f) On or before 5:00 p.m., New York City time, on the first
Business Day after the effective date of this Restatement, the Trust shall
complete and deliver to S&P (if S&P is then rating the APS) and to any Other
Rating Agency which is then rating the APS and so requires, an APS Basic
Maintenance Report as of the close of business of such date. Within five
Business Days of such date, the Trust shall cause the Independent Accountant to
confirm in writing to S&P (if S&P is then rating the APS) and to any Other
Rating Agency that is then rating the APS and so requires (i) the mathematical
accuracy of the calculations reflected in such Report and (ii) that the
Discounted Value of Eligible Assets or Other Rating Agency Eligible Assets (if
applicable), as the case may be, reflected thereon equals or exceeds the APS
Basic Maintenance Amount reflected thereon.
10. [Reserved]
11. Restrictions on Certain Distributions. For as long as any of the APS
is Outstanding, and except as set forth in Sections 2(e) and 6(d) of this Part
I, (A) the Trust shall not declare, pay or set apart for payment any dividend or
other distribution (other than a dividend or distribution paid in shares of, or
options, warrants or rights to subscribe for, Common Shares or other shares, if
any, ranking junior to the APS as to the payment of dividends and the
distribution of assets upon dissolution, liquidation or winding up) in respect
of the Common Shares or any other shares of the Trust ranking junior to or on a
parity with the APS as to the payment of dividends or the distribution of assets
upon dissolution, liquidation or winding up, or call for redemption, redeem,
purchase or otherwise acquire for consideration any Common Shares or any other
such junior shares (except by conversion into or exchange for shares of the
Trust ranking junior to the APS as to the payment of dividends and the
distribution of assets upon dissolution, liquidation or winding up), or any such
parity shares (except by conversion into or exchange for shares of the Trust
ranking junior to or on a
parity with APS as to the payment of dividends and the distribution of assets
upon dissolution, liquidation or winding up), unless (i) full cumulative
dividends on the APS through its most recently ended Dividend Period shall have
been paid or shall have been declared and sufficient funds for the payment
thereof deposited with the Auction Agent and (ii) the Trust has redeemed the
full number of shares of APS required to be redeemed by any provision for
mandatory redemption pertaining thereto, and (B) if S&P is then rating the APS
or any Other Rating Agency is then rating the APS and so requires, the Trust
shall not declare, pay or set apart for payment any dividend or other
distribution (other than a dividend or distribution paid in shares of, or
options, warrants or rights to subscribe for Common Shares or other shares, if
any, ranking junior to the APS as to the payment of dividends and the
distribution of assets upon dissolution, liquidation or winding up) in respect
of Common Shares or any other shares of the Trust ranking junior to the APS as
to the payment of dividends or the distribution of assets upon dissolution,
liquidation or winding up, or call for redemption, redeem, purchase or otherwise
acquire for consideration any shares of Common Shares or any other such junior
shares (except by conversion into or exchange for shares of the Trust ranking
junior to the APS as to the payment of dividends and the distribution of assets
upon dissolution, liquidation or winding up), unless immediately after such
transaction the Discounted Value of S&P Eligible Assets (if S&P is then rating
the APS) and Other Rating Agency Eligible Assets (if applicable) would each at
least equal the Basic Maintenance Amount.
12. Additional Dividends. If the Trust retroactively allocates any net
capital gains or other income taxable for Federal income tax purposes to the APS
by reason of the fact that such allocation is made as a result of (i) the
realization of net capital gains or other income taxable for Federal income tax
purposes, (ii) the redemption of all or a portion of the outstanding APS or
(iii) the liquidation of the Trust (such allocation being referred to herein as
a "Retroactive Taxable Allocation"), the Trust will simultaneously, if
practicable, with such allocation but in no event later than 270 days after the
end of the Trust's taxable year in which a Retroactive Taxable Allocation is
made, provide notice thereof to the Auction Agent and to each Holder of such
shares during such taxable year at such Holder's address as the same appears or
last appeared on the share books of the Trust. Such Holders of such shares shall
be entitled to receive, when, as and if declared by the Board of Trustees, out
of funds legally available therefor, dividends in an amount equal to the
aggregate Additional Dividends with respect to all Retroactive Taxable
Allocations made to such shares during the taxable year in question, such
dividends to be payable by the Trust to the Auction Agent, for distribution to
such Holders, within 30 days after the notice described above is given to the
Auction Agent.
13. Certain Other Restrictions. (a) For so long as any of the APS is
outstanding and S&P is then rating such shares, the Trust will seek written
confirmation from S&P that any of the following would not impair the ratings
then assigned by S&P to the APS prior to engaging in any one or more of the
following:
(i) transactions in options on securities, futures contracts
or options on futures contracts, except Closing Transactions, that violate the
following limitations: (A) the Trust shall not own or sell the least of (i) more
than 1,000 outstanding contracts based on the Municipal Index; (ii) outstanding
futures contracts based on the Municipal Index or Treasury Bonds exceeding in
number 25% of the quotient of the Market Value of the Trust's total assets
divided by 100,000; and (iii) outstanding futures contracts based on the
Municipal Index exceeding in number 10% of the average number of daily traded
futures contracts based on the Municipal Index in the
month prior to the time effecting such transactions as reported in the Wall
Street Journal; (B) the Trust shall not own or sell the lessor of: (i)
outstanding futures contracts based on Treasury Bonds or the Municipal Index
exceeding in number 25% of the quotient of the Market Value of the Trust's total
assets divided by 100,000; and (ii) outstanding futures contracts based on
Treasury Bonds exceeding in number 10% of the average number of daily traded
futures contracts based on Treasury Bonds in the month prior to the time
effecting such transactions as reported in the Wall Street Journal; (C) the
Trust shall engage in closing transactions to close out any outstanding futures
contracts that it owns or has sold or any outstanding option thereon owned by
the Trust in the event that (i) the Trust does not have S&P Eligible Assets with
an aggregate Discounted Value equal to or greater than the APS Basic Maintenance
amount on two consecutive Valuation Dates and (ii) the Trust is required to pay
Variation Margin on the second such Valuation Date; and (D) the Trust shall
engage in a Closing Transaction to close out any outstanding futures contract or
option thereon in the month prior to the delivery month under the terms of the
contract or option unless the Trust holds securities deliverable under such
terms.
For purposes of determining whether the Trust has S&P Eligible Assets that
equals or exceeds the APS Basic Maintenance Amount on Valuation Dates where the
Trust has open futures and options positions, the Discounted Value shall be
reduced by an amount equal to: (i) 30% of the aggregate settlement value, as
marked to market, of any outstanding futures contracts based on the Municipal
Index, which are owned by the Trust; plus (ii) 25% of the aggregate settlement
value, as marked to market, of any outstanding futures contracts based on
Treasury Bonds, which are owned by the Trust. No amounts on deposit with the
Trust or broker representing Initial Margin or Variation Margin shall constitute
S&P Eligible Assets.
(ii) incur any indebtedness for borrowed money, without prior
written approval of S&P that such indebtedness for money borrowed would
not adversely affect the then current rating by S&P of the APS except that
the Trust may, without obtaining the written confirmation described above,
incur indebtedness for the purpose of clearing securities transactions if
the Discounted Value of S&P Eligible Assets would be equal or exceed the
APS Basic Maintenance Amount after giving effect to such indebtedness;
provided however, that any such indebtedness shall be repaid within 60
days and will not be extended or renewed;
(iii) issue any class or series of shares ranking prior to or
on a parity with the APS with respect to the payment of dividends or the
distribution of assets upon dissolution, liquidation or winding up of the
Trust, or reissue any APS previously purchased or redeemed by the Trust;
(iv) engage in short sale transactions;
(v) lend portfolio securities;
(vi) engage in reverse repurchase agreements;
(vii) merge or consolidate with another entity; or
(viii) convert to an open-end investment company, as defined
under the 1940 Act.
(b) [Reserved]
14. Notice. All notices or communications, unless otherwise specified in
the By-Laws of the Trust or this Certificate of Vote, shall be sufficiently
given if in writing or mailed by first-class mail, postage prepaid. pursuant to
this Section 14 shall be deemed given on the earlier of the date received or the
date five days after which such notice is mailed.
15. Definitions. As used in Parts I and II hereof, 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:
"'AA' Composite Commercial Paper Rate," on any date for any Rate Period,
shall mean (i) (A) in the case of any Minimum Dividend Period or any Rate Period
between 7 and 28 Rate Period Days, the interest equivalent of the 30-day rate;
provided, however, in the case of any Minimum Dividend Period of 7 days or any
Rate Period with 7 Rate Period Days and if the "AA" Composite Commercial Paper
Rate is being used to determine the Applicable Rate when all of the Outstanding
APS are subject to Submitted Hold Orders, then the interest equivalent of the
7-day rate, and (B) in the case of any Rate Period with more than 28 Rate Period
Days, the interest equivalent of the 180-day rate, on commercial paper placed on
behalf of issuers whose corporate bonds are rated AA by S&P or the equivalent of
such rating by S&P or another rating agency. as made available on a discount
basis or otherwise by the Federal Reserve Bank of New York, for the Business Day
immediately preceding such date; or (ii) in the event that the Federal Reserve
Bank of New York does not make available any such rate, then the arithmetic
average of such rates, as quoted on a discount basis or otherwise, by the
Commercial Paper Dealers to the Auction Agent for the close of business on the
Business Day next preceding such date. If any Commercial Paper Dealer does not
quote a rate required to determine the "AA" Composite Commercial Paper Rate, the
"AA" Composite Commercial Paper Rate shall be determined on the basis of the
quotation or quotations furnished by the remaining Commercial Paper Dealer or
Commercial Paper Dealers and any Substitute Commercial Paper Dealer or
Substitute Commercial Paper Dealers selected by the Trust to provide such rate
or rates not being supplied by any Commercial Paper Dealer or Commercial Paper
Dealers, as the case may be, or, if the Trust does not select any such
Substitute Commercial Paper Dealer or Substitute Paper Dealer or Commercial
Paper Dealers. For purposes of this definition, the "interest equivalent" of a
rate stated on a discount basis (a "discount rate") for commercial paper of a
given days' maturity shall be equal to the quotient (rounded upwards to the next
higher one-thousandth (.001 of 1%) of (A) the discount rate divided by (B) the
difference between (x) 1.00 and (y) a fraction the numerator of which shall be
the product of the discount rate times the number of days in which such
commercial paper matures and the denominator of which shall be 360.
"Accountant's Confirmation" shall have the meaning set forth in paragraph
(c) of Section 9 of this Part I.
"Additional Dividends" shall mean payment to a Holder of APS of an amount
which, when taken together with the aggregate amount of Retroactive Taxable
Allocations made to such Holder
with respect to the taxable year in question, would cause such Holder's
dividends in dollars (after Federal and Massachusetts income tax consequences)
from the aggregate of both the Retroactive Taxable Allocations and the
Additional Dividends to be equal to the dollar amount of the dividends which
would have been received by such Holder if the amount of the aggregate
Retroactive Taxable Allocations had been excludable from the gross income of
such Holder. Such Additional Dividends shall be calculated (i) without
consideration being given to the time value of money; (ii) assuming that no
Holder of APS is subject to the Federal alternative minimum tax with respect to
dividends received from the Trust; and (iii) assuming that each Retroactive
Taxable Allocation and each Additional Dividend, to the extent it consists of
ordinary income or capital gain, would be taxable in the hands of each Holder of
APS at the maximum marginal combined regular Federal and Massachusetts
individual income tax rate applicable to ordinary income or net capital gains,
as applicable (taking into account the Federal income tax deductibility of state
and local income tax paid or incurred), or the maximum marginal regular Federal
corporate income tax rate, whichever is greater, in effect during the taxable
year in question.
"Anticipation Notes" shall mean the following Massachusetts Municipal
Obligations: tax anticipation notes, revenue anticipation notes and tax and
revenue anticipation notes.
"Applicable Rate" shall have the meaning specified in subparagraph (c)(i)
of Section 2 of this Part I.
"APS Basic Maintenance Amount," as of any Valuation Date, shall mean the
dollar amount equal to the sum of (i) (A) the product of the number of APS
Outstanding on such date multiplied by $50,000; (B) the aggregate amount of
dividends that will have accumulated at the Applicable Rate (whether or not
earned or declared) to (but not including) the first Dividend Payment Date for
the APS outstanding that follows such Valuation Date (or to the 46th day after
such Valuation Date, if such 46th day is earlier than the first following
Dividend Payment Date): (C) the amount equal to the Projected Dividend Amount
(based on the number of APS Outstanding on such date); (D) the amount of
anticipated expenses of the Trust for the 90 days subsequent to such Valuation
Date; (E) the amount of the Trust's Maximum Potential Additional Dividend
Liability as of such Valuation Date; (F) the amount of any premium payable
pursuant to a Premium Call Period; and (G) any current liabilities as of such
Valuation Date to the extent not reflected in any of (i)(A) through (i)(F)
(including, without limitation, any amounts described in Section 13 of Part I as
required to be treated as liabilities in connection with the Trust's
transactions in futures and options and including any payables for Municipal
Obligations purchased as of such Valuation Date) less (ii) either (A) the face
value of any of the Trust's assets irrevocably deposited by the Trust for the
payment of any of (i)(A) through (i)(G) if such assets mature prior to or on the
date of payment of the liability for which such assets are deposited and are
either securities backed by the full faith and credit of the United States
Government or securities having a rating assigned by S&P of A-1+ or SP-1+ (or,
with respect to the APS Basic Maintenance Amount requirement if any Other Rating
Agency, if applicable, the equivalent) or (B) the Discounted Value of such
assets.
"APS Basic Maintenance Cure Date", with respect to the failure by the
Trust to satisfy the APS Basic Maintenance Amount (as required by paragraph (a)
of Section 9 of this Part I) as of a given Valuation Date, shall mean the second
Business Day following such Valuation Date.
"APS Basic Maintenance Report" shall mean a report signed by the President
or Treasurer of the Trust or by any officer of ▇▇▇▇▇ ▇▇▇▇▇ Management, the
Trust's administrator, which sets forth, as of the related Valuation Date, the
assets of the Trust, the Market Value and the Discounted Value thereof (seriatim
and in aggregate), and the APS Basic Maintenance Amount.
"Auction" shall mean each periodic implementation of the Auction
Procedures.
"Auction Agency Agreement" shall mean the agreement between the Trust and
the Auction Agent which provides, among other things, that the Auction Agent
will follow the Auction Procedures for purposes of determining the Applicable
Rate for APS so long as the Applicable Rate is to be based on the results of an
Auction.
"Auction Agent" shall mean the entity appointed as such by a resolution of
the Board of Trustees in accordance with Section 7 of this Part I.
"Auction Date," with respect to any Rate Period, shall mean the Business
Day next preceding the first day of such Rate Period; normally each Wednesday,
subject to change as set forth herein.
"Auction Procedures" shall mean the procedures for conducting Auctions set
forth in Part II hereof.
"Board of Trustees" shall mean the Board of Trustees of the Trust or any
duly authorized committee thereof.
"Business Day" shall mean a day on which the New York Stock Exchange is
open for trading and which is neither a Saturday, Sunday nor any other day on
which banks in the City of New York, New York, are authorized by law to close.
"Closing Transactions" shall mean the termination of a futures contract or
option position by taking an equal position opposite thereto in the same
delivery month as such initial position being terminated.
"Commercial Paper Dealers" shall mean ▇▇▇▇▇▇, Peabody & Co. Incorporated,
Sachs & Co., ▇▇▇▇▇▇ Commercial Paper Incorporated and ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated or, in lieu of any thereof, their respective
affiliates or successors, if such entity is a commercial paper dealer.
"Common Shares" shall mean the common shares of beneficial interest, par
value $.01 per share, of the Trust.
"Cure Date" shall mean the APS Basic Maintenance Cure Date or the 1940 Act
Cure Date, as the case may be.
"Date of Original Issue", with respect to the APS already issued by the
Trust and outstanding, shall mean the date on which this Restatement becomes
effective, and with respect to later issued shares of APS, if any, the date on
which such shares of APS are issued by the Trust.
"Deposit Securities" shall mean cash and Massachusetts Municipal
Obligations rated at least A-1+ or SP-1+ by S&P.
"Discounted Value" shall mean, with respect to a S&P Eligible Asset, the
quotient of the Market Value thereof divided by the applicable S&P Discount
Factor, provided that with respect to a S&P Eligible Asset, Discounted Value
shall not exceed the par value of such Asset at any time.
"Dividend Payment Date," with respect to the APS, shall mean any date on
which dividends on shares of such APS are payable pursuant to the provisions of
paragraph (b) of Section 2 of this Part I.
"Dividend Period, with respect to the APS, shall mean the period from and
including the Date of Original Issue to but excluding the initial Dividend
Payment Date and any period thereafter from and including one Dividend Payment
Date to but excluding the next succeeding Dividend Payment Date.
"Eligible Assets" shall mean S&P Eligible Assets at any time S&P is rating
the APS and Other Rating Agency Eligible Assets if any Other Rating Agency is at
any time rating the APS.
"Failure to Deposit", with respect to the APS, shall mean a failure by the
Trust to pay to the Auction Agent, not later than 12:00 noon, New York City
time, (A) on the Business Day next preceding any Dividend Payment Date for such
APS, in funds available on such Dividend Payment Date in New York City, the full
amount of any dividend (whether or not earned or declared) to be paid on such
Dividend Payment Date on any share of such APS or (B) on the Business Day next
preceding any redemption date in funds available on such redemption date for
such APS in New York City, the Redemption Price to be paid on such redemption
date for such APS after notice of redemption is given pursuant to paragraph (b)
of Section 3 of this Part I.
"Holder", with respect to the APS, shall mean the registered holder of
shares of such APS as the same appears on the share books of the Trust.
"Independent Accountant" shall mean a nationally recognized accountant, or
firm of accountants, that is with respect to the Trust an independent accountant
or firm of independent accountants under the Securities Act of 1933, as amended
from time to time.
"Initial Dividend Period," with respect to the APS shall mean the period
from and including the Date of Original Issue thereof to but excluding the
initial Dividend Payment Date which occurs in a month which contains the first
scheduled Auction Date for such APS.
"Initial Margin" shall mean the amount of cash or securities deposited
with a custodial for the benefit of a futures commission merchant as a
good-faith deposit at the time of the initiation of a purchase or sale position
with respect to a futures contract or a sale position with respect to an option
position thereon.
"Interest Equivalent" shall mean a yield on a 360-day basis of a discount
basis security which is equal to the yield on an equivalent interest-bearing
security.
"Mandatory Redemption Price" shall mean $50,000 per share of APS plus an
amount equal to accumulated but unpaid dividends thereon to the date fixed for
redemption (whether or not earned or declared).
"Marginal Tax Rate" shall mean the marginal combined regular Federal and
Massachusetts income tax rate applicable to ordinary income (taking into account
the Federal income tax deductibility of state and local income tax paid or
incurred) or the maximum marginal regular Federal corporate income tax rate,
whichever is greater.
"Market Value" of any asset of the Trust shall mean the market value
thereof determined by the Pricing Service designated from time to time by the
Board of Trustees. Market Value of any asset shall include any interest accrued
thereon. The Pricing Service values portfolio securities at the mean between the
quoted bid and asked price or the yield equivalent when quotations are readily
available. Securities for which quotations are not readily available are valued
at fair value as determined by the Pricing Service using methods which include
consideration of yields or prices or municipal bonds of comparable quality, type
of issue, coupon, maturity and rating, indications as to value from dealers, and
general market conditions. The Pricing Service may employ electronic data
processing techniques and/or a matrix system to determine valuations. In the
event that the Pricing Service is unable to value a security, the security shall
be valued at the lower of two dealer bids, at least one of which shall be in
writing, obtained by the Trust from dealers who are members of the National
Association of Securities Dealers, Inc. and make a market in the security.
"Massachusetts Municipal Obligations" shall mean "Massachusetts Municipal
Obligations" as defined in the Trust's Registration Statement on Form N-2 (File
No. 70304) filed with the Securities and Exchange Commission, as such
Registration Statement may be amended from time to time.
"Maximum Potential Additional Dividends Liability," as of any Valuation
Date, shall mean the aggregate amount of Additional Dividends that would be due
if the were to make Retroactive Taxable Allocations, with respect to any fiscal
year, estimated based upon dividends paid and the amount of undistributed
realized net capital gains and other taxable income earned by the Trust, as of
the end of the calendar month immediately preceding such Valuation Date, and
assuming such Additional Dividends are fully taxable.
"Minimum Dividend Period" shall mean with respect to the APS any Rate
Period consisting of seven Rate Period Days.
"Municipal Index" shall mean The Bond Buyer Municipal Bond Index
"Municipal Obligations" means "Municipal Obligations" as defined in the
Trust's Registration Statement on Form N-2 (File No. 33-70304) filed with the
Securities and Exchange Commission, as such Registration Statement may be
amended from time to time.
"1940 Act" shall mean the Investment Company Act of 1940, as amended from
time to time.
"1940 Act APS Asset Coverage" shall mean asset coverage, as defined in
Section 18(h) of the 1940 Act, of at least 200% with respect to all outstanding
senior securities of the Trust which are
stock, including all outstanding APS (or such other asset coverage as may in the
future be specified in or under the 1940 Act as the minimum asset coverage for
senior securities which are stock of a closed-end investment company as a
condition of declaring dividends on its common stock).
"1940 Act Cure Date," with respect to the failure by the Trust to maintain
the 1940 Act APS Asset Coverage (as required by Section 8 of this Part I) as of
the last Business Day of each month, shall mean the last Business Day of the
following month.
"Non-Call Period" shall have the meaning set forth below under "Specific
Redemption Provisions."
"Notice of Redemption" shall mean any notice with respect to the
redemption of the APS pursuant to Section 3 of this Part I.
"Optional Redemption Price" shall mean (i) $50,000 per share of APS in the
case of a Rate Period of less than one year, including any Special Dividend
Period of less than 365 days or (ii) with respect to a Special Dividend Period
of 365 days or more the Optional Redemption Price set forth in the Specific
Redemption Provisions in connection therewith; in each case plus an amount equal
to accumulated but unpaid dividends thereon to the date of redemption (whether
or not earned or declared).
"Other Rating Agency" shall mean any rating agency other than S&P then
providing a rating for the APS pursuant to the request of the Trust.
"Other Rating Agency Eligible Assets" shall mean 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 the APS.
"Preferred Shares" shall mean the authorized preferred shares of
beneficial interest, par value $.01 per share, of the Trust, and includes the
APS.
"Premium Call Period" shall have the meaning set forth below under
"Specific Redemption Provisions."
"Pricing Service" shall mean ▇▇▇▇▇▇▇ Data Corporation and any successor
pricing service provided that S&P has been notified in writing and requested to
confirm whether a change in pricing service would adversely affect the rating
assigned.
"Projected Dividend Amount" shall mean, with respect to the APS, on any
Valuation Date, an amount equal to (i) the number of days, if any, from and
after the last day of the then current Rate Period, until 47 calendar days from
such Valuation Date, multiplied by (ii) a rate equal to the Maximum Rate for a
Minimum Dividend Period multiplied by the larger of (A) the applicable S&P
Volatility Factor or (B) any other volatility factor then required by any Other
Rating Agency.
"Quarterly Valuation Date" shall mean the last Business Day of each
calendar quarter.
"Rate Period," with respect to APS, shall mean the Initial Dividend Period
thereof and any Subsequent Dividend Period, including any Special Dividend
Period.
"Rate Period Days," for any Rate Period, if such Rate Period is less than
one year, shall mean the number of days (without giving effect to subparagraph
(b)(ii) of Section 2 of this Part I) in such Rate Period.
"Receivables for Massachusetts Municipal Obligations Sold" shall mean for
purposes of calculation of S&P Eligible Assets as of any Valuation Date, no more
than the aggregate of the following: (i) the book value of receivables for
Massachusetts Municipal Obligations sold as of or prior to such Valuation Date
if such receivables are due within five business days of such Valuation Date,
and if the trades which generated such receivables are (x) settled through
clearing house firms with respect to which the Trust has received prior written
authorization from S&P or (y) with counterparties having a long-term debt rating
of at least Baa3; and (ii) the S&P Discounted Value of Massachusetts Municipal
Obligations sold as of or prior to such Valuation Date which generated
receivables, if such receivables are due within the S&P Exposure Period but do
not comply with either of the conditions specified in (i) above.
"Redemption Price" shall mean the Optional Redemption Price or the
Mandatory Redemption Price, as applicable.
"Reference Rate" shall mean, with respect to any Rate Period of less than
one year, the higher of (i) the "AA" Composite Commercial Paper Rate and (ii)
the Taxable Equivalent of the Short-Term Municipal Bond Rate.
"Restatement" means this Amendment to the Trust's Agreement and
Declaration of Trust.
"Retroactive Taxable Allocation" shall have the meaning set forth in
Section 12 hereof.
"S&P" shall mean Standard and Poor's Corporation, and its successors
"S&P Discount Factor" shall mean for purposes of determining the
Discounted Value of an S&P Eligible Asset, the percentage determined by
reference to the S&P bond rating on such asset in accordance with the following:
S&P Discount
Rating Factor
------ ------
AAA 150%
AA 155%
A 170%
BBB 210%
Short-term Massachusetts Municipal Obligations rated A-1+ or SP-1+ by S&P will
have a discount factor of 115% so long as the obligation matures or has demand
features exercisable within 30 days. Short-term Massachusetts Municipal
Obligations with an equivalent rating from a nationally recognized credit agency
other than S&P will have a discount factor of 125%.
"S&P Exposure Period" shall mean the period commencing on a given
Valuation Date and ending 3 Business Days thereafter.
"S&P Hedging Transactions" shall mean transactions in options on
securities, contracts based on the Municipal Index or Treasury Bonds and options
on such futures contracts.
"S&P Eligible Asset" shall mean cash, Receivables for Massachusetts
Municipal Obligations Sold, interest receivable on Municipal Obligations or
publicly traded municipal obligations (the interest on which is exempt from
regular federal income tax and personal income tax) (i) issued by the
Commonwealth of Massachusetts or any of its subdivisions, counties, cities,
towns, villages and school districts, agencies such as authorities and special
districts created by the Commonwealth and certain federally sponsored agencies
such as local housing authorities, which are rated BBB or higher by S&P or if
not rated by S&P, are rated A or better by another nationally recognized credit
rating agency (provided that for purposes of determining the S&P Discount Factor
applicable to any such Municipal Obligation, such municipal obligation shall be
deemed to have an S&P rating which is one full category lower than its S&P or
other rating), (ii) are interest bearing and pay interest at least semiannually,
(iii) such interest and principal are payable in U.S. dollars, and (iv) are
registered in the name of a trustee (or in the name of the Trust). Municipal
obligations which are not rated by S&P but are rated an "A" equivalent or better
by another nationally recognized rating agency may not exceed 50% of the Market
Value of all S&P Eligible Assets. Private placement obligations may not
constitute S&P Eligible Assets. Municipal Obligations must be part of an
original issue size of $10 million or greater unless an issuer's total municipal
debt equals $25 million or greater or unless the issue is rated A or better in
which case an obligation will be an S&P Eligible Asset if it is part of issue
with an original issue size of at least $5 million. A Municipal Obligation from
any one issuer or guarantor, excluding bond insurers, will be considered an S&P
Eligible Asset only if it constitutes no more than 5% of the Market Value of all
S&P Eligible Assets (with 2% added to the applicable S&P Discount Factor for
every 1% by which the Market Value of such obligation exceeds 5% of all S&P
Eligible Assets up to 10%). A security guaranteed (insured) by any one bond
insurer, regardless of its industry sector, will be considered an S&P Eligible
Asset only if it constitutes to no more than 25% of the Market Value of all S&P
Eligible Assets. Massachusetts Municipal Obligations belonging to any one
industry sector and general obligation bonds may not represent more than 20% and
30%, respectively, of the aggregate Market Value of all S&P Eligible Assets.
Such industry sectors consist of the following: (i) teaching and non-teaching
hospitals, and rehabilitation and health centers, (ii) education (grades
kindergarten through 12), (iii) public and private universities and colleges
(iv) capital asset programs, and (v) industrial development bond issues.
Escrowed Massachusetts Municipal Obligations may represent up to 100% of the
Market Value of all S&P Eligible Assets.
Short-term municipal obligations must (i) be rated A-l+ or SP-I+ by S&P or if
not rated by S&P, have an equivalent rating by another nationally recognized
credit rating agency, (ii) mature or have demand features exercisable in 30 days
or less, and meet the above requirements. Securties with demand features must
have a Letter of Credit from an institution with a current A-l+ unsecured
Short-Term Rating from S&P. Such short term municipal obligations not rated by
S&P are limited to no more than 50% of the Market Value of all S&P Eligible
Assets.
"S&P Volatility Factor" means 277% (or as stipulated by S&P or Successor
Rating Agency for any Special Dividend Period).
"Special Dividend Period," with respect to the APS shall mean any
Subsequent Dividend Period commencing on the date designated by the Trust in
accordance with Section 4 of this Part I and ending on the last day of the last
Dividend Period thereof, with such number of consecutive days or whole years as
the Board of Trustees (including a committee thereof) shall specify being at
least 7 Business Days, including the terms of any Specific Redemption
Provisions, if any.
"Specific Redemption Provisions" shall mean, with respect to any Special
Dividend Period of more than 28 days, either, or any combination of, (i) period
(a "Non-Call Period") determined by the Board of Trustees (including a committee
thereof), after consultation with the Broker-Dealers, during which the shares
subject to such Special Dividend Period are not subject to redemption at the
option of the Trust and (ii) a period (a "Premium Call Period"), consisting of a
number of whole years and determined by the Board of Trustees (including a
committee thereof), after consultation with the Dealers, during each year of
which the shares subject to such Special Dividend Period shall be redeemable at
the Trust's option at a price per share equal to $50,000 plus accumulated but
unpaid dividends plus a premium expressed as a percentage or percentages of
$50,000 as determined by the Board of Trustees (including a committee thereof)
after consultation with the Broker-Dealers; provided, that during any Special
Dividend Period of 365 or more days if on the date of determination of the
Applicable Rate, such Applicable Rate equaled or exceeded the Treasury Rate, the
Trust may redeem APS without regard to any Non-Call Period or Premium Call
Period at the Mandatory Redemption Price; in any case the terms of any Specific
Redemption Provisions shall be provided to Holders of APS and maintained as part
of the records of the Trust.
"Subsequent Dividend Period," with respect to the APS, shall mean the
period from and including the first day following the Initial Dividend Period
thereof to but excluding the next Dividend Payment Date which follows a
scheduled Auction and any period thereafter from and including one Dividend
Payment Date which follows a scheduled Auction to but excluding the next
succeeding Dividend Payment Date which follows a scheduled Auction; provided,
however, that if any Dividend Period is also a Special Dividend Period, such
term shall mean the period commencing on the first day of such Special Dividend
Period and ending on the last day of the last Dividend Period thereof.
"Substitute Commercial Paper Dealer"shall mean The First Boston
Corporation or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated or their respective or
successors, if such entity is a commercial paper dealer or any other recognized
commercial paper dealer approved by the Trustees of the Trust; provided, that
none of such entities shall be a Commercial Paper Dealer.
"Substitute U.S. Government Securities Dealer" shall mean The First Boston
Corporation or Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated or their respective
affiliates or successors, if such entity is a U.S. Government securities dealer
or any other recognized U.S. Government securities dealer approved by the
Trustees of the Trust; provided, that none of such entities shall be a U.S.
Government Securities Dealer.
"Taxable Equivalent of the Short-Term Municipal Bond Rate" on any date
shall mean 90% of the quotient of (a) per annum rate expressed on an Interest
Equivalent basis equal to the ▇▇▇▇▇
S&P 30-day High Grade Index or any successor index (the "▇▇▇▇▇ Index"), made
available for the Business Day immediately preceding such date but in any event
not later than 8:30 a.m., New York City time, on such date by ▇▇▇▇▇ Information
Systems Inc. or any successor thereto (provided that the use of such successor
will not result in a reduction or withdrawal of the rating of the APS by S&P, if
S&P is then rating the APS, or by S&P if S&P is then rating the APS), based on
30-day yield evaluations at par of bonds, the interest on which is excludable
for regular Federal income tax purposes, of "high grade" component issuers
selected by ▇▇▇▇▇ Information Systems Inc. or any such successor from time to
time in its discretion, which component issuers shall include, without
limitation, issuers of general obligations bonds but shall exclude any bonds the
interest on which constitutes an item of tax preferences under section 57(a)(5)
of the Internal Revenue Code or successor provisions, for purposes of the AMT,
divided by (b) 1.00 minus the Marginal Tax Rate (expressed as a decimal);
provided, however, that if the ▇▇▇▇▇ Index is not made so available by 8:30
a.m., New York City time, on such date by ▇▇▇▇▇ Information Systems Inc. or any
successor, the Taxable Equivalent of the Term Municipal Bond Rate shall mean the
quotient of (i) the per annum rate expressed on an Interest Equivalent basis
equal to the most recent ▇▇▇▇▇ Index so made available for any preceding
Business Day, divided by (ii) 1.00 minus the Marginal Tax Rate (expressed as a
decimal). For purposes of the foregoing, for so long as the APS are rated by
S&P, the fund will obtain written confirmation from S&P that the appointment of
a successor to ▇▇▇▇▇ Information Systems Inc. would not impair the rating
assigned to the APS by S&P.
"Treasury Bonds" shall mean U.S. Treasury Bonds backed by the full faith
and credit of the U.S. Government with remaining maturities of 10 years or more.
"Treasury Rate," on any date for any Rate Period, shall mean (i) the yield
on the most recently auctioned non-callable direct obligations of the U.S.
Government (excluding "flower" bonds) with a remaining maturity within three
months of the duration of such Rate Period, as quoted in The Wall Street Journal
on such date for the Business Day next preceding such date; or (ii) in the event
that any such rate is not published by The Wall Street Journal, then the
arithmetic average of the yields (expressed as an interest equivalent in the
case of a Rate Period which is one year or less and expressed as a bond
equivalent in the case of any longer Rate Period) on the most recently auctioned
non-callable direct obligations of the U.S. Government (excluding "flower"
bonds) with a remaining maturity within three months of the duration of such
Rate Period as quoted on a discount basis or otherwise by the U.S. Government
Securities Dealers to the Auction Agent for the close of business on the
Business Day immediately preceding such date. If any U.S. Government Securities
Dealer does not provide a rate required to determine the Treasury Rate, the
Treasury Rate shall be determined on the basis of the quotation or quotations
furnished by the remaining U.S. Government Securities Dealer or Government
Securities Dealers selected by the Trust to provide such rate or rates not being
supplied by any U.S. Government Securities Dealer or U.S. Government Securities
Dealers as the case may be, or if the Trust does not select any such Substitute
Government Securities Dealer or U.S. Government Securities Dealers.
"Trust" shall mean The Massachusetts Health & Education Tax-Exempt Trust,
a Massachusetts business trust, which is the issuer of the APS.
"U.S. Government Securities Dealer" shall mean ▇▇▇▇▇▇, Peabody & Co.
Incorporated, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., ▇▇▇▇▇▇ Government Securities Incorporated
and ▇▇▇▇▇▇ Guaranty Trust
Company of New York or their respective or successors, if such entity is a U.S.
Government securities dealer.
"Valuation Date" shall mean, for purposes of determining whether the Trust
is maintaining the APS Basic Maintenance Amount, each Business Day.
"Variation Margin" shall mean, in connection with outstanding purchase or
sale positions in futures contracts and outstanding sales positions with respect
to options thereon, the amount of cash and securities paid to and received from
a futures commission merchant (subsequent to the Initial Margin payment) from
time to time as the value of such position fluctuates.
"Voting Period" shall have the meaning set forth in paragraph (b) of
Section 5 of this Part I.
PART II
1. Certain Definitions. Capitalized terms not defined in Section 1 of this
Part II shall have the respective meanings specified in Part I hereof. As used
in this Part II, the following terms shall have the following meanings, unless
the context otherwise requires:
"Affiliate" shall mean any Person known to the Auction Agent to be
controlled by, in control of or under common control with the Trust, provided,
that no Broker-Dealer controlled by, in control of or under common control with
the Trust shall be deemed to be an Affiliate nor shall any fund or any Person
controlled by, in control of or under common control with such fund, one of the
trustees or executive officers of which is also a Trustee or officer of the
Trust be deemed to be an Affiliate solely because such trustee or executive
officer is also a Trustee or officer of the Trust.
"Agent Member" shall mean a member of or participant in the Securities
Depository that will act on behalf of a Bidder.
"Applicable Percentage" on any Auction Date shall mean the percentage,
determined as set forth below, based on the prevailing rating of such APS in
effect at the close of business on the Business Day next preceding such Auction
Date.
Prevailing Rating Percentage
----------------- ----------
"AAA" or higher....................................110%
"AA"...............................................125%
"A"................................................150%
"BBB"..............................................200%
Below "BBB"........................................250%
provided, however, that in the event the Trust has notified the Auction Agent of
its intent to allocate income taxable for Federal income tax purposes to the APS
prior to the Auction establishing the Applicable Rate for such shares the
applicable percentage in the foregoing table shall be divided by the quantity 1
minus the maximum marginal combined regular Federal and Massachusetts individual
income tax rate applicable to ordinary income (taking into account the Federal
income tax deductibility of state and local income tax paid or incurred) or the
maximum marginal regular Federal corporate income tax paid or rate, whichever is
greater, provided further, however, that the
Applicable Percentage shall be divided in the foregoing manner only to the
extent of the portion of the dividend on the APS for such Rate Period that
represents the allocation of taxable income to the APS.
For purposes of this definition, the "prevailing rating" shall be (i)
"aa3" or higher if the APS have a rating of "AAA" or better by S&P or the
equivalent of such ratings by any other Rating Agency then rating the APS, (ii)
if not "AAA" or higher, then "AA" if the APS have a rating of "AA" or better by
S&P or the equivalent of such rating by any Other Rating Agency then rating the
APS, (iii) if not "AAA" or higher or "AA", then "A" if the APS have a rating of
"A" or better by S&P or the equivalent of such rating by any Other Rating Agency
then rating the APS, (iv) if not "AAA" or higher, "AA" or "A", then "BBB" if the
APS have a rating of "BBB" or better by S&P or better by S&P or the equivalent
of such rating by any Other Rating Agency then rating the APS, and (v) if not
"AAA" or higher, "AA", "A" or "BBB", then Below "BBB", provided, however, that
if the APS are rated by only one rating agency, the prevailing rating will be
determined without reference to the rating of any other rating agency; and
provided further, however, that if more than one rating agency is engaged by the
Trust to provide a rating for the APS, then the "prevailing rating" will be
determined with reference to the lower of such ratings. The Trust shall take all
reasonable action necessary to enable S&P or any Other Rating Agency to provide
a rating for the APS. If S&P shall not make such a rating available, the Trust
in consultation with ▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated or its successor as Broker-Dealer
shall elect a nationally recognized statistical rating organization (as that
term is used in the rules and regulations of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended from time to
time) to act as a substitute rating agency in respect of the APS and the Trust
shall take all reasonable action to enable such rating agency or agencies to
provide a rating for such APS.
"Available APS" shall have the meaning specified in paragraph (a) of
Section 4 of this Part II.
"Bid" and "Bids" shall have the respective meanings specified in paragraph
(a) of Section 2 of this Part II.
"Bidder" and "Bidders" shall have the respective meanings specified in
paragraph (a) of Section 2 of this Part II.
"Beneficial Owner" means a customer of a Broker-Dealer who is listed on
the records of that Broker-Dealer (or, if applicable, the Auction Agent) as a
holder of APS or a Broker-Dealer that holds APS for its own account.
"Broker-Dealer" shall mean any broker-dealer, commercial bank or other
entity permitted by law to perform the functions required of a Broker-Dealer in
this Part II, that is a member of, or a participant in, the Securities
Depository or is an affiliate of such member of participant, has been selected
by the Trust and has entered into a Broker-Dealer Agreement that remains
effective.
"Broker-Dealer Agreement" shall mean an agreement between the Auction
Agent and a Broker-Dealer pursuant to which such Broker-Dealer agrees to follow
the procedures specified in this Part II.
"Existing Holder," means a Broker-Dealer or any such other Person as may
be permitted by the Trust that is listed as the Holder of APS in the records of
the Auction Agent.
"Hold Order" and "Hold Orders" shall have the respective meanings
specified in paragraph (a) of Section 2 of this Part II.
"Maximum Rate," on any Auction Date, shall mean:
(i) in the case of any Auction Date which is not the Auction
Date immediately prior to the first day of any proposed Special Dividend
Period of more than 28 days designated by the Trust pursuant to Section 4
of Part I of the Certificate of Vote, the product of (A) the Reference
Rate on such Auction Date for the next Rate Period and (B) the Applicable
Percentage on such Auction Date, unless the APS has or had a Special
Dividend Period (other than a Special Dividend Period of 28 Rate Period
Days of less) and an Auction at which Clearing Bids existed has not yet
occurred for a Minimum Dividend Period after such Special Dividend Period,
in which case the higher of:
(A) the dividend rate on the APS for the then-ending
Rate Period, and
(B) the product of (1) the higher of (x) the "AA"
Composite Commercial Paper Rate on such Auction Date for the
then-ending Rate Period, if such Rate Period is less than one year,
or the Treasury Rate on such Auction Date for such Rate Period, if
such Rate Period is one year or greater, and (y) the "AA" Composite
Commercial Paper Rate on such Auction Date for such Special Dividend
Period, if such Special Dividend Period is less than one year, or
the Treasury Rate on such Auction Date for such Special Dividend
Period, if such Special Dividend Period is one year or greater and
(2) the Applicable Percentage on such Auction Date: or
(ii) in the case of any Auction Date which is the Auction Date
immediately prior to the first day of any proposed Special Dividend Period
of more than 28 Rate Period Days designated by the Trust pursuant to
Section 4 of Part I of the Certificate of Vote, the product of (A) the
highest of (1) the Reference Rate on such Auction Date for the then-ending
Rate Period, if such Rate Period is less than one year, or the Treasury
Rate on such Auction Date for such Rate Period, if such Rate Period is one
year or greater, (2) the Reference Rate on such Auction Date for the
Special Dividend Period for which the Auction is being held if such
Special Dividend Period is less than one year or the Treasury Rate on such
Auction Date for the Special Dividend Period for which the Auction is
being held if such Special Dividend Period is one year or greater, and (3)
the Reference Rate on such Auction Date for Minimum Dividend Periods and
(B) the Applicable Percentage on such Auction Date.
"Order" and "Orders" shall have the respective meanings specified in
paragraph (a) of Section 2 of this Part II.
"Outstanding" shall mean, as of any Auction Date of APS, the number of
shares theretofore issued by the Trust except, without duplication, (i) any APS
theretofore cancelled or delivered to the Auction Agent for cancellation or
redeemed by the Trust or as to which a notice of redemption shall
have been given by the Trust, (ii) any APS as to which the Trust or any thereof
shall be an Existing Holder and (iii) any APS represented by any certificate in
lieu of which a new certificate has been executed and delivered by the Trust.
"Person" shall mean and include an individual, a partnership, a fund, a
trust, an unincorporated association, a joint venture or other entity or a
government or any agency or political subdivision thereof.
"Potential Beneficial Owner" means a customer of a Broker-Dealer or a
Broker-Dealer that is not a Beneficial Owner of APS but that wishes to purchase
such shares, or that is a Beneficial Owner that wishes to purchase additional
APS.
"Potential Holder" means any Broker-Dealer or any such other Person as may
be permitted by the Trust, including any Existing Holder, who may be interested
in acquiring APS (or, in the case of an Existing Holder, additional APS).
"Securities Depository" shall mean The Depository Trust Company and its
successors and assigns or any other securities depository selected by the Trust
which agrees to follow the procedures required to be followed by such securities
depository in connection with the APS.
"Sell Order" and "Sell Orders" shall have the respective meanings
specified in paragraph (a) of Section 2 of this Part II.
"Service" shall mean the Internal Revenue Service of the United States.
"Submission Deadline" shall mean 1:30 p.m., New York City time, on any
Auction Date or such other time on any Auction Date by which Brokers-Dealers are
required to submit Orders to the Auction Agent as specified by the Auction Agent
from time to time.
"Submitted Bid and "Submitted Bids" shall have the respective meanings
specified in paragraph (a) of Section 4 of this Part II.
"Submitted Hold Order" and "Submitted Hold Orders" shall have the
respective meanings specified in paragraph (a) of Section 4 of this Part II.
"Submitted Order" and "Submitted Orders" shall have the respective
meanings specified in paragraph (a) of Section 4 of this Part II.
"Submitted Sell Order" and "Submitted Sell Orders" shall have the
respective meanings specified in paragraph (a) of Section 4 of this Part II.
"Sufficient Clearing Bids" shall have the meaning specified in paragraph
(a) of Section 4 of this Part II.
"Winning Bid Rate" shall have the meaning specified in paragraph (a) of
Section 4 of this Part II.
2. Orders bv Beneficial Owners, Potential Beneficial Owners, Existing
Holders and Potential Holders. (a) Unless otherwise permitted by the Trust,
Beneficial Owners and Potential Beneficial Owners only may participate in
Auctions through their Broker-Dealers. Brokers-Dealers will submit the Orders of
their respective customers who are Beneficial Owners and Potential Beneficial
Owners to the Auction Agent, designating themselves as Existing Holders in
respect of shares subject to Orders submitted or deemed submitted to them by
Beneficial Owners and as a Potential Holders in respect of shares subject to
Orders submitted to them by Potential Beneficial Owners. A Broker-Dealer also
may hold APS in its own account as a Beneficial Owner. A Broker-Dealer thus may
submit Orders to the Auction Agent as a Beneficial Owner or a Potential
Beneficial Owner and therefore participate in an Auction as an Existing Holder
or Potential Holder on behalf of both itself and its customers. Prior to the
Submission Deadline on each Auction Date:
(i) each Beneficial Owner of APS subject to an Auction on such
Auction Date may submit to its Broker-Dealer by telephone or otherwise
information as to:
(A) the number of Outstanding shares, if any, of APS
held by such Beneficial Owner which such Beneficial Owner desires to
continue to hold without regard to the Applicable Rate for the next
succeeding Rate Period;
(B) the number of Outstanding shares, if any, of APS
which such Beneficial Owner offers to sell if the Applicable Rate
for the next succeeding Rate Period shall be less than the rate per
annum specified by such Beneficial Owner, and/or
(C) the number of outstanding shares, if any, of APS
held by such Beneficial Owner which such Beneficial Owner offers to
sell without regard to the Applicable Rate for the next succeeding
Rate Period;
and
(ii) one or more Broker-Dealers, using lists of Potential
Beneficial Owners, shall in good faith for the purpose of conducting a
competitive Auction in a commercially reasonable manner, contact Potential
Beneficial Owners (by telephone or otherwise), including Persons that are
not Beneficial Owners, on such lists to determine the number of shares, if
any, of APS which each such Potential Beneficial Owner offers to purchase
if the Applicable Rate for the next succeeding Rate Period shall not be
less than the rate per annum specified by such Potential Beneficial Owner.
For the purposes hereof, the communication by a Beneficial Owner or Potential
Beneficial Owner to a Broker-Dealer or the communication by a Broker-Dealer
acting for its own account 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
Owners and each Potential Beneficial Owner placing an Order is hereinafter
referred to as a "Bidder" and collectively as "Bidders"; an Order containing the
information referred to in clause (i)(A) of this paragraph (a) is hereinafter
referred to as a "Hold Order" and collectively as "Hold Orders"; an Order
containing the information
referred to in clause (i)(B) or (ii) of this paragraph (a) is hereinafter
referred to as a "Bid and collectively as "Bids"; and an Order containing the
information referred to in clause (i)(C) of this paragraph (a) is hereinafter
referred to as a "Sell Order" and collectively as "Sell Orders." Inasmuch as a
Broker-Dealer participates in an Auction as an Existing Holder or a Potential
Holder only to represent the interests of a Beneficial Owner or Potential
Beneficial Owner, whether it be its customers or itself, all discussion herein
relating to the consequences of an Auction for Existing Holders and Potential
Holders also applies to the underlying beneficial ownership interests
represented.
(b) (i) A Bid by an Existing Holder of APS subject to an Auction on
any Auction Date shall constitute an irrevocable offer to sell:
(A) the number of Outstanding APS specified in such Bid
if the Applicable Rate determined on such Auction Date shall be less
than the rate specified therein;
(B) such number or a lesser number of Outstanding APS to
be determined as set forth in clause (iv) of paragraph (a) of
Section 5 of this Part II if the Applicable Rate determined on such
Auction Date shall be equal to the rate specified therein; or
(C) the number of Outstanding APS specified in such Bid
if the rate specified therein shall be higher than the Maximum Rate;
or such number or a lesser number of Outstanding APS to be
determined as set forth in clause (iii) of paragraph (b) of Section
5 of this Part II if the rate specified therein shall be higher than
the Maximum Rate and Sufficient Clearing Bids do not exist.
(ii) A Sell Order by an Existing Holder of APS subject to an
Auction on any Auction Date shall constitute an irrevocable offer to sell;
(A) the number of Outstanding APS specified in such Sell
Order; or
(B) such number or a lesser number of Outstanding APS as
set forth in clause (iii) of paragraph (b) of Section 5 of this Part
II if Sufficient Clearing Bids do not exist.
(iii) A Bid by a Potential Holder of APS subject to an Auction
on any Auction Date shall constitute an irrevocable offer to purchase;
(A) the number of Outstanding APS specified in such Bid
if the Applicable Rate determined on such Auction Date shall be
higher than the rate specified therein; or
(B) such number or a lesser number of Outstanding APS as
set forth in clause (v) of paragraph (a) of Section 5 of this Part
II if the Applicable Rate determined on such Auction Date shall be
equal to the rate specified therein.
(c) No Order for any number of APS other than whole share shall be
valid.
3. 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 APS 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 APS that are the subject of such
Order;
(iii) to the extent that such Bidder is an Existing Holder of
APS;
(A) the number of shares, if any, of APS subject to any
Hold Order placed by such Existing Holder;
(B) the number of shares, if any, of APS subject to any
Bid placed by such Existing Holder and the rate specified in such
Bid; and
(C) the number of shares, if any, of APS subject to any
Sell Order placed by such Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder of shares
of APS, the rate and number of APS specified in such Potential Holder's
Bid.
(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 APS 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 on behalf of such Existing Holder covering the number of Outstanding
APS held by such Existing Holder and not subject to Orders submitted to the
Auction Agent.
(d) If any Existing Holder submits through a Broker-Dealer to the
Auction Agent one or more Orders covering in the aggregate more than the number
of Outstanding APS 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 APS shall be considered valid, but
only up to and including in the aggregate the number of Outstanding APS
held by such Existing Holder, and if the number of APS subject to such
Hold Orders exceeds the number of Outstanding APS
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
APS held by such Existing Holder;
(ii) (A) any Bid for APS shall be considered valid up to and
including the excess of the number of Outstanding APS held by such
Existing Holder over the number of APS subject to any Hold Orders referred
to in clause (i) above;
(B) subject to subclause (A), if more than one Bid for
APS with the same rate is submitted by such Existing Holder and the
number of Outstanding APS 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 APS subject to each Bid
with the same rate shall be reduced pro rata to cover the number of
APS equal to such excess;
(C) subject to subclauses (A) and (B), if more than one
Bid for the APS with different rates is submitted by such Existing
Holder, such Bids shall be considered valid in the 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 APS subject to any portion of Bids considered not valid
in whole or in part under the clause (ii) shall be treated as the
subject of a Bid for APS by a Potential Holder at the rate therein
specified; and
(iii) all Sell Orders for the APS shall be considered valid up
to and including the excess of the number of Outstanding APS held by such
Existing Holder over the sum of the APS subject to valid Hold Orders
referred to in clause (i) above and valid Bids by such Existing Holder
referred to in clause (ii) above.
(e) If more than one Bid for APS is submitted 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) An 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.
4. Determination of Sufficient Clearing Bids. Winning Bid Rate and
Applicable Rate. (a) Not earlier than the Submission Deadline on each Auction
Date, the Auction Agent shall assemble all valid Orders submitted or deemed
submitted to it by the Broker-Dealers (each such Order as submitted or deemed
submitted by a Broker-Dealer being hereinafter referred to individually as a
"Submitted Hold Order." a "Submitted Bid" or a "Submitted Sell Order," as the
case may be, or as a "Submitted Order" and collectively as "Submitted Hold
Orders," "Submitted Bids" or "Submitted Sell Orders," as the case may be, or as
"Submitted Orders" and shall for APS for which an Auction is being held
determine:
(i) the excess of the number of Outstanding APS over the
number of Outstanding APS subject to Submitted Hold Orders (such excess
being hereinafter referred to as the "Available APS");
(ii) from the Submitted Orders whether:
(A) the number of Outstanding APS subject to Submitted
Bids by Potential Holders specifying one or more rates equal to or
lower than the Maximum Rate exceeds or is equal to the sum of
(B) the number of Outstanding APS subject to Submitted
Bids by Existing Holders specifying one or more rates higher than
the Maximum Rate; and
(C) the number of Outstanding APS subject to Submitted
Sell Orders
(in the event such excess or such equality exists (other than because the number
of APS in subclauses (B) and (C) above is zero because all of the Outstanding
APS are subject to Submitted Hold Orders), such Submitted Bids in subclause (A)
above being hereinafter referred to collectively as "Sufficient Clearing Bids");
and
(iii) if Sufficient Clearing Bids exist, the lowest rate
specified in such Submitted Bids (the "Winning Bid Rate") which if:
(A) (I) each such Submitted Bid from Existing Holders
specifying such lowest rate and (II) all other such Submitted Bids
from Existing Holders specifying lower rates were rejected, thus
entitling such Existing Holders to continue to hold the APS that are
subject to such Submitted Bids; and
(B) (I) each such Submitted Bid from Potential Holders
specifying such lowest rate and (II) all other such Submitted Bids
from 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 APS which, when added to
the number of Outstanding APS to be purchased by such Potential Holders
described in subclause (B) above, would equal no less than the Available APS.
(b) Promptly after the Auction Agent has made the determination
pursuant to paragraph (a) of this Section 4, the Auction Agent shall advise the
Trust of the Maximum Rate for which an Auction is being held on the Auction Date
and, based on such determination, the Applicable Rate for the next succeeding
Rate Period thereof as follows:
(i) if Sufficient Clearing Bids exist, that the Applicable
Rate for the next succeeding Rate Period thereof shall be equal to the
Winning Bid Rate so determined;
(ii) If Sufficient Clearing Bids do not exist (other than
because all of the Outstanding APS are subject to Submitted Hold Orders),
that the Applicable Rate for the
next succeeding Rate Period, which shall be a Minimum Dividend Period,
thereof shall be equal to the Maximum Rate; or
(iii) if all of the Outstanding APS are subject to Submitted
Hold Orders, that the Applicable Rate for such APS for the next succeeding
Rate Period thereof shall be equal to the product of (A)(I) the "AA"
Composite Commercial Paper Rate on such Auction Date for such Rate Period,
if such Rate Period is less than one year or (II) the Treasury Rate on
such Auction Date for such Rate Period, if such Rate Period is one year or
greater and (B) 1 minus the maximum combined marginal regular Federal and
Massachusetts individual income tax rate applicable to ordinary income
(taking into account the Federal income tax deductibility of state and
local income tax paid or incurred) or the marginal regular Federal
corporate income tax rate, whichever is greater; provided, however, that
if the Trust has notified the Auction Agent of its intent to allocate to
the APS in such Rate Period any net capital gains or other income taxable
for Federal income tax purposes, the Applicable Rate in respect of that
portion of the dividend on the APS for such Rate Period that represents
the allocation of net capital gains or other income taxable for Federal
income tax purposes will be the rate described in the preceding clause or
(A)(I) or (II), as applicable, without being multiplied by the factor set
forth in the preceding clause (B).
5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares. Existing Holders shall continue to hold the APS that
are subject to Submitted Hold Orders, and, based on the determinations made
pursuant to paragraph (a) of Section 4 of this Part II, the Submitted Bids and
Submitted Sell Orders shall be accepted or rejected and the Auction Agent shall
take such other action as set forth below:
(a) If Sufficient Clearing Bids for APS have been made, all
Submitted Sell Orders shall be accepted and, subject to the provisions of
paragraphs (d) and (e) of this Section 5, Submitted Bids shall be accepted or
rejected as follows in the following order of priority and all other Submitted
Bids shall be rejected:
(i) Existing Holders' Submitted Bids for APS specifying any
rate that is higher than the Winning Bid Rate shall be accepted, thus
requiring each such Existing Holder to sell the APS subject to such
Submitted Bids;
(ii) Existing Holders' Submitted Bids for APS specifying any
rate that is lower than the Winning Bid Rate shall be rejected, thus
entitling each such Existing Holder to continue to hold the APS subject to
such Submitted Bids;
(iii) Potential Holders' Submitted Bids for APS specifying any
rate that is lower than the Winning Bid Rate shall be accepted;
(iv) each Existing Holder's Submitted Bid for APS specifying a
rate that is equal to the Winning Bid Rate shall be rejected, thus
entitling such Existing Holder to continue to hold the APS subject to such
Submitted Bid, unless the number of Outstanding APS subject to all such
Submitted Bids shall be greater than the number of APS ("remaining
shares") in the excess of the Available APS over the number of the APS
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 APS subject to such Submitted
Bid, but only in an amount equal to the number of APS obtained by
multiplying the number of remaining shares by a fraction, the numerator of
which shall be the number of Outstanding APS held by such Existing Holder
subject to such Submitted Bid and the denominator of which shall be the
aggregate number of Outstanding APS subject to such Submitted Bids made by
all such Existing Holders that specified a rate equal to the Winning Bid
Rate; and
(v) each Potential Holder's Submitted Bid for APS specifying a
rate that is equal to the Winning Bid Rate shall be accepted but only in
an amount equal to the number of APS obtained by multiplying the number of
shares in the excess of the Available APS over the number of the APS
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 APS subject to such Submitted Bid and the denominator of which
shall be the aggregate number of Outstanding APS subject to such Submitted
Bids made by all such Potential Holders that specified a rate equal to the
Winning Bid Rate; and
(b) If Sufficient Clearing Bids have not been made (other than
because all of the Outstanding APS are subject to Submitted Hold Orders),
subject to the provisions of paragraph (d) of this Section 5, Submitted Orders
shall be accepted or rejected as follows in the following order of priority and
all other Submitted Bids shall be rejected:
(i) Existing Holders' Submitted Bids for APS specifying any
rate that is equal to or lower than the Maximum Rate shall be rejected,
thus entitling such Existing Holders to continue to hold the APS subject
to such Submitted Bids:
(ii) Potential Holders' Submitted Bids for APS specifying any
rate that is equal to or lower than the Maximum Rate shall be accepted;
and
(iii) Each Existing Holder's Submitted Bid for APS specifying
any rate that is higher than the Maximum Rate and the Submitted Sell
Orders for APS of each Existing Holder shall be accepted, thus entitling
each Existing Holder that submitted any such Submitted Bid or Submitted
Sell Order to sell the subject to such Submitted Bid or Submitted Sell
Order, but in both cases only in an amount equal to the number of APS
obtained by multiplying the number of APS subject to Submitted Bids
described in clause (ii) of this paragraph (b) by a fraction, the
numerator of which shall be the number of Outstanding APS 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 APS
subject to all such Submitted Bids and Submitted Sell Orders.
(c) If all of the Outstanding APS are subject to Submitted Holder
Orders, all Submitted Bids 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 5, any
Existing Holder would be entitled or required to sell, or any Potential Holder
would be entitled or required to purchase, a fraction of a share of APS on any
Auction Date, the Auction Agent shall, in such manner as it shall determine in
its sole
discretion, round up or down the number of APS 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 so purchased or sold by each Existing Holder or
Potential Holder on such Auction Date shall be whole shares of APS.
(e) If, as a result of the procedures described in clause (v) of
paragraph (a) of this Section 5, any Potential Holder would be entitled or
required to purchase less than a whole share of APS on any Auction Date, the
Auction Agent shall, in such manner as it shall determine in its sole
discretion, allocate shares of APS for purchase among Potential Holders so that
only whole shares of APS 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 the APS on such Auction Date.
(f) Based on the results of each Auction, the Auction Agent
determine the aggregate number of APS to be purchased and the aggregate number
of APS to be sold by Potential Holders and Existing Holders on whose behalf each
Dealer submitted Bids or Sell Orders and, with respect to each Broker-Dealer, 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
Broker-Dealer or Broker-Dealers acting for one or more purchasers of APS such
Broker-Dealer shall deliver, or from which other Broker-Dealer or Broker-Dealers
acting for one or more sellers of APS such Broker-Dealer shall receive, as the
case may be, of APS.
6. Notification of Allocations. In normal circumstances, whenever the
Trust intends to include any net capital gains or other income taxable for
Federal income tax purposes in any dividend on the APS, the Trust may notify the
Auction Agent of the amount to be so included 15 days prior to the Auction Date
on which the Applicable Rate for such dividend is to be established. Whenever
the Auction Agent receives such notice from the Trust, it will in turn notify
each Broker-Dealer, who, on or prior to such Auction Date, in accordance with
its Broker-Dealer Agreement, will notify its Beneficial Owners and Potential
Beneficial Owners believed by it to be interested in submitting an Order in the
Auction to be held on such Auction Date.
7. Miscellaneous. (a) In addition to and not in lieu of the rights of
amendment and supplement otherwise set forth herein, the Board of Trustees may
interpret or adjust the provisions of this Certificate of Vote to resolve any
inconsistency or ambiguity or to remedy any formal defect, and may amend this
Certificate of Vote with respect to the APS prior to the issuance of the APS.
(b) A Beneficial Owner may sell, transfer or otherwise dispose of
APS only in whole shares and only pursuant to a Bid or Sell Order in accordance
with the procedures described in this Part II or to or through a Broker-Dealer
or to the Trust; provided, that in the case of all transfers other than pursuant
to Auctions, such Beneficial Owner, its Broker-Dealer or its Agent Member
advises the Auction Agent of such transfer.
(c) All of the APS outstanding from time to time shall be
represented by one global certificate registered in the name of the Securities
Depository or its nominee.
(d) Neither the Trust nor any affiliate thereof may submit an Order
in any Auction, except that any Broker-Dealer that is an affiliate of the Trust
may submit Orders in an Auction, but only if such Orders are not for its own
account.
IN WITNESS WHEREOF, the undersigned has caused this Certificate of Vote to
be executed on August 28, 1996.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary
Commonwealth of Massachusetts )
) ss
County of Suffolk )
Then personally appeared before me ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, who acknowledged the
foregoing instrument to be his free act and deed and the free act and deed in
his capacity as Secretary of The Massachusetts Health & Education Tax Exempt
Trust.
Before me,
__________________________
Notary Public
My commission expires: __________________