EXHIBIT 2(b)(1)
AMENDED AND RESTATED BYLAWS
OF
▇▇▇▇▇▇ MUNICIPAL OPPORTUNITIES TRUST
TABLE OF CONTENTS
Page
ARTICLE 1 Agreement and Declaration of Trust and Principal Office ......... 1
1.1 Agreement and Declaration of Trust ........................... 1
1.2 Principal Office of the Trust .............................. 1
ARTICLE 2 Meetings of Trustees ............................................. 1
2.1 Regular Meetings ............................................. 1
2.2 Special Meetings ............................................. 1
2.3 Notice of Special Meetings ................................. 1
2.4 Quorum ...................................................... 1
2.5 Notice of Certain Actions by Consent ........................ 2
ARTICLE 3 Officers ......................................................... 2
3.1 Enumeration; Qualification ................................. 2
3.2 Election ................................................... 2
3.3 Tenure ...................................................... 2
3.4 Powers ...................................................... 2
3.5 Chairman; President .......................................... 2
3.6 Treasurer ................................................... 2
3.7 Clerk ...................................................... 3
3.8 Resignations and Removals .................................... 3
ARTICLE 4 Committees ...................................................... 3
4.1 Quorum; Voting ............................................. 3
ARTICLE 5 Reports ......................................................... 3
5.1 General ...................................................... 3
ARTICLE 6 Fiscal Year ..................................................... 4
6.1 General ..................................................... 4
ARTICLE 7 Seal ........................................................... 4
7.1 General ..................................................... 4
ARTICLE 8 Execution of Papers ............................................ 4
8.1 General ..................................................... 4
ARTICLE 9 Issuance of Shares and Share Certificates ....................... 4
9.1 Sale of Shares ............................................ 4
9.2 Share Certificates ......................................... 4
9.3 Loss of Certificates ...................................... 5
9.4 Issuance of New Certificate to Pledgee .................... 5
9.5 Discontinuance of Issuance of Certificates ................. 5
ARTICLE 10 Provisions Relating to the Conduct of the Trust's Business ..... 5
10.1 Certain Definitions ...................................... 5
10.2 Limitations on Dealings with Officers or Trustees ........ 6
10.3 Securities and Cash of the Trust to be held by Custodian
Subject to Certain Terms and Conditions .................... 6
10.4 Reports to Shareholders ................................... 7
10.5 Valuation of Assets ...................................... 7
ARTICLE 11 Shareholders .................................................. 7
11.1 Annual Meeting ............................................ 7
11.2 Record Dates ............................................... 7
11.3 Proxies .................................................. 8
ARTICLE 12 Shares of Beneficial Interest ................................... 8
12.1 Statement Creating Three Series of Remarketed Preferred
Shares .................................................... 8
PART I DESIGNATION ................................................... 8
1. Definitions ............................................. 11
2. Fractional Shares ....................................... 29
3. Dividends ................................................ 29
4. Redemption ................................................ 36
5. Liquidation ............................................. 41
6. Voting Rights ............................................. 42
7. 1940 Act RP Asset Coverage .............................. 46
8. RP Basic Maintenance Amount .............................. 46
9. [RESERVED] ................................................ 49
10. Restrictions on Certain Distributions .................. 49
11. Notice ................................................... 49
12. Futures and Options Transactions; Forward Commitments ... 49
13. Certain Other Restrictions .............................. 53
14. Legally Available Funds ................................. 54
PART II REMARKETING PROCEDURES ....................................... 55
1. Remarketing Schedule .................................... 55
2. Procedure for Tendering ................................. 55
3. Determination of Applicable Dividend Rates ............... 57
4. Allocation of Shares; Failure to Remarket at
Liquidation Preference .................................... 58
5. Notification of Results; Settlement ..................... 59
6. Purchase of Shares of RP by Remarketing Agents ............ 60
7. Applicable Dividend Rate During a Non-Payment Period ...... 60
8. Transfers ................................................ 60
9. Miscellaneous ............................................. 60
10. Securities Depository; Share Certificates ............... 61
ARTICLE 13 Amendments to the Bylaws .................................... 61
13.1 General ................................................ 61
AMENDED AND RESTATED BYLAWS
OF
▇▇▇▇▇▇ MUNICIPAL OPPORTUNITIES TRUST
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 Agreement and Declaration of Trust. These Bylaws shall be subject to
the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of the Massachusetts business trust established by the
Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust shall
be located in Boston, Massachusetts.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from time to
time determine, provided that notice of the first regular meeting following any
such determination shall be given to absent Trustees.
2.2 Special Meetings. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting when called by the
Chairman of the Trustees, the President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the Clerk or
an Assistant Clerk or by the officer or the Trustees calling the meeting.
2.3 Notice of Special Meetings. It shall be sufficient notice to a Trustee
of a special meeting to send notice by mail at least forty-eight hours or by
telegram at least twenty-four hours before the meeting addressed to the Trustee
at his or her usual or last known business or residence address or to give
notice to him or her in person or by telephone at least twenty-four hours before
the meeting. Notice of a special meeting need not be given to any Trustee if a
written waiver of notice, executed by him or her before or after the meeting, is
filed with the records of the meeting, or to any Trustee who attends the meeting
without protesting prior thereto or at its commencement the lack of notice to
him or her. Neither notice of a meeting nor a waiver of a notice need specify
the purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees then
in office shall constitute a quorum. Any meeting may be adjourned from time to
time by a majority of the votes cast upon the question, whether or not a quorum
is present, and the meeting may be held as adjourned without further notice.
2.5 Notice of Certain Actions by Consent. If in accordance with the
provisions of the Declaration of Trust any action is taken by the Trustees by
written consent of less than all of the Trustees, then prompt notice of any such
action shall be furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action shall not be impaired by
any delay or failure to furnish such notice.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the Trust shall be a
Chairman of the Trustees, a President, a Treasurer, a Clerk and such other
officers, if any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from time to time may
in their discretion appoint. The Chairman of the Trustees and the President
shall be a Trustee and may but need not be a shareholder; and any other officer
may but need not be a Trustee or a shareholder. Any two or more offices may be
held by the same person. A Trustee may but need not be a shareholder.
3.2 Election. The Chairman of the Trustees, the President, the Treasurer
and the Clerk shall be elected by the Trustees upon the occurrence of any
vacancy in any such office. Other officers, if any, may be elected or appointed
by the Trustees at any time. Vacancies in any such other office may be filled at
any time.
3.3 Tenure. The Chairman of the Trustees, the President, the Treasurer and
the Clerk shall hold office in each case until he or she dies, resigns, is
removed or becomes disqualified. Each other officer shall hold office and each
agent shall retain authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these Bylaws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to the
office occupied by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 Chairman; President. Unless the Trustees otherwise provide, the
Chairman of the Trustees or, if there is none or in the absence of the Chairman
of the Trustees, the President shall preside at all meetings of the shareholders
and of the Trustees. Unless the Trustees otherwise provide, the President shall
be the chief executive officer.
3.6 Treasurer. Unless the Trustees shall provide otherwise, the Treasurer
shall be the chief financial and accounting officer of the Trust, and shall,
subject to the provisions of the Declaration of Trust and to any arrangement
made by the Trustees with a custodian, investment adviser or manager, or
transfer, shareholder servicing or similar agent, be in charge of the valuable
papers, books of account and accounting records of the Trust, and shall
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have such other duties and powers as may be designated from time to time by the
Trustees or by the President. The chief accounting officer of the Trust shall be
elected by the Trustees and shall have tenure as provided in Paragraph 3.3 of
these Bylaws.
3.7 Clerk. The Clerk shall record all proceedings of the shareholders and
the Trustees in books to be kept therefor, which books or a copy thereof shall
be kept at the principal office of the Trust. In the absence of the Clerk from
any meeting of the shareholders or Trustees, an Assistant Clerk, or if there be
none or if he or she is absent, a temporary Clerk chosen at such meeting shall
record the proceedings thereof in the aforesaid books.
3.8 Resignations and Removals. Any Trustee or officer may resign at any
time by written instrument signed by him or her and delivered to the Chairman of
the Trustees, the President or the Clerk or to a meeting of the Trustees. Such
resignation shall be effective upon receipt unless specified to be effective at
some other time. The Trustees may remove any officer elected by them with or
without cause. Except to the extent expressly provided in a written agreement
with the Trust, no Trustee or officer resigning and no officer removed shall
have any right to any compensation for any period following his or her
resignation or removal, or any right to damages on account of such removal.
ARTICLE 4
Committees
4.1 Quorum; Voting. A majority of the members of any Committee of the
Trustees shall constitute a quorum for the transaction of business, and any
action of such a Committee may be taken at a meeting by a vote of a majority of
the members present (a quorum being present) or evidenced by one or more
writings signed by such a majority. Members of a Committee may participate in a
meeting of such Committee by means of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at the time and
in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
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ARTICLE 6
Fiscal Year
6.1 General. Except as from time to time otherwise provided by the
Trustees, the initial fiscal year of the Trust shall end on such date as is
determined in advance or in arrears by the Treasurer, and subsequent fiscal
years shall end on such date in subsequent years.
ARTICLE 7
Seal
7.1 General. The seal of the Trust shall consist of a flat-faced die with
the word "Massachusetts", together with the name of the Trust and the year of
its organization cut or engraved thereon but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or in particular cases
authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President, Vice Chairman, a Vice President or the Treasurer and need not
bear the seal of the Trust.
ARTICLE 9
Issuance of Shares and Share Certificates
9.1 Sale of Shares. Except as otherwise determined by the Trustees, the
Trust will issue and sell for cash or securities from time to time, full and
fractional shares of its shares of beneficial interest, such shares to be issued
and sold at a price of not less than the par value per share, if any, and not
less than the net asset value per share, if any, as from time to time determined
in accordance with the Declaration of Trust and these Bylaws and, in the case of
fractional shares, at a proportionate reduction in such price. In the case of
shares sold for securities, such securities shall be valued in accordance with
the provisions for determining the value of the assets of the Trust as stated in
the Declaration of Trust and these Bylaws. The officers of the Trust are
severally authorized to take all such actions as may be necessary or desirable
to carry out this Paragraph 9.1.
9.2 Share Certificates. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
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The Trustees may at any time authorize the issuance of share certificates.
In that event, each shareholder shall be entitled to a certificate stating the
number of shares owned by him or her, in such form as shall be prescribed from
time to time by the Trustees. Such certificate shall be signed by the President
or a Vice President and by the Treasurer or an Assistant Treasurer. Such
signatures may be facsimile if the certificate is signed by a transfer agent or
by a registrar. In case any officer who has signed or whose facsimile signature
has been placed on such certificate shall cease to be such officer before such
certificate is issued, it may be issued by the Trust with the same effect as if
he or she were such officer at the time of its issue.
9.3 Loss of Certificates. The transfer agent of the Trust, with the
approval of any two officers of the Trust, is authorized to issue and
countersign replacement certificates for the shares of the Trust which have been
lost, stolen or destroyed upon (i) receipt of an affidavit or affidavits of loss
or non-receipt and of an indemnity agreement executed by the registered holder
or his or her legal representative and supported by an open penalty surety bond,
said agreement and said bond in all cases to be in form and content satisfactory
to and approved by the President or the Treasurer, or (ii) receipt of such other
documents as may be approved by the Trustees.
9.4 Issuance of New Certificate to Pledgee. A pledgee of shares transferred
as collateral security shall be entitled to a new certificate if the instrument
of transfer substantially describes the debt or duty that is intended to be
secured thereby. Such new certificate shall express on its face that it is held
as collateral security, and the name of the pledgor shall be stated thereon, who
alone shall be liable as a shareholder and entitled to vote thereon.
9.5 Discontinuance of Issuance of Certificates. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
ARTICLE 10
Provisions Relating to the Conduct of the Trust's Business
10.1 Certain Definitions. When used herein the following words shall have
the following meanings: "Distributor" shall mean any one or more corporations,
firms or associations which have distributor's or principal underwriter's
contracts in effect with the Trust. "Manager" shall mean any corporation, firm
or association which may at the time have an advisory or management contract
with the Trust.
10.2 Limitations on Dealings with Officers or Trustees. The Trust will not
lend any of its assets to the Distributor or Manager or to any officer or
director of the Distributor or Manager or any officer or Trustee of the Trust,
and shall not permit any officer or Trustee of the Trust or any officer or
director of the Distributor or Manager to deal for or on behalf of the
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Trust with himself or herself as principal or agent, or with any partnership,
association or corporation in which he or she has a financial interest; provided
that the foregoing provisions shall not prevent (a) officers and Trustees of the
Trust or officers and directors of the Distributor or Manager from buying,
holding or selling shares in the Trust or from being partners, officers or
directors or otherwise financially interested in the Distributor or the Manager;
(b) purchases or sales of securities or other property if such transaction is
permitted by or is exempt or exempted from the provisions of the Investment
Company Act of 1940 or any Rule or Regulation thereunder, all as amended from
time to time, and if such transaction does not involve any commission or profit
to any security dealer who is, or one or more of whose partners, shareholders,
officers or directors is, an officer or Trustee of the Trust or an officer or
director of the Distributor or Manager; (c) employment of legal counsel,
registrar, transfer agent, shareholder servicing agent, dividend disbursing
agent or custodian who is, or has a partner, shareholder, officer or director
who is, an officer or Trustee of the Trust or an officer or director of the
Distributor or Manager; and (d) sharing statistical, research, legal and
management expenses and office hire and expenses with any other investment
company in which an officer or Trustee of the Trust or an officer or director of
the Distributor or Manager is an officer or director or otherwise financially
interested.
10.3 Securities and Cash of the Trust to be held by Custodian Subject to
Certain Terms and Conditions.
(a) All securities and cash owned by the Trust shall be held by or
deposited with one or more banks or trust companies having (according to its
last published report) not less than $5,000,000 aggregate capital, surplus and
undivided profits (any such bank or trust company being hereby designated as
"Custodian"), provided such a Custodian can be found ready and willing to act;
subject to such rules, regulations and orders, if any, as the Securities and
Exchange Commission may adopt, the Trust may, or may permit any Custodian to,
deposit all or any part of the securities owned by the Trust in a system for the
central handling of securities pursuant to which all securities of any
particular class or series of any issue deposited within the system may be
transferred or pledged by bookkeeping entry, without physical delivery. The
Custodian may appoint, subject to the approval of the Trustees, one or more
subcustodians.
(b) The Trust shall enter into a written contract with each Custodian
regarding the powers, duties and compensation of such Custodian with respect to
the cash and securities of the Trust held by such Custodian. Said contract and
all amendments thereto shall be approved by the Trustees.
(c) The Trust shall upon the resignation or inability to serve of any
Custodian or upon change of any Custodian:
(i) in case of such resignation or inability to serve, use its best
efforts to obtain a successor Custodian;
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(ii) require that the cash and securities owned by the Trust be
delivered directly to the successor Custodian; and
(iii) in the event that no successor Custodian can be found, submit to
the shareholders, before permitting delivery of the cash and
securities owned by the Trust otherwise than to a successor
Custodian, the question whether the Trust shall be liquidated or
shall function without a Custodian.
10.4 Reports to Shareholders. The Trust shall send to each shareholder of
record at least semi-annually a statement of the condition of the Trust and of
the results of its operations, containing all information required by applicable
laws or regulations.
10.5 Valuation of Assets. In valuing the portfolio investments of the
Trust, securities for which market quotations are readily available shall be
valued at prices which, in the opinion of the Trustees or the person designated
by the Trustees to make the determination, most nearly represent the market
value of such securities, and other securities and assets shall be valued at
their fair value as determined by or pursuant to the direction of the Trustees,
which in the case of debt obligations, commercial paper and repurchase
agreements may, but need not, be on the basis of yields for securities of
comparable maturity, quality and type, or on the basis of amortized cost.
Expenses and liabilities of the Trust shall be accrued each day. Liabilities may
include such reserves for taxes, estimated accrued expenses and contingencies as
the Trustees or their designates may in their sole discretion deem fair and
reasonable under the circumstances. No accruals shall be made in respect of
taxes on unrealized appreciation of securities owned unless the Trustees shall
otherwise determine.
ARTICLE 11
Shareholders
11.1 Annual Meeting. The annual meeting of the shareholders of the Trust
shall be held on the last Friday in April in each year or on such other day as
may be fixed by the Trustees. The meeting shall be held at such time as the
Chairman of the Trustees or the Trustees may fix in the notice of the meeting or
otherwise. Purposes for which an annual meeting is to be held, additional to
those prescribed by law or these Bylaws, may be specified by the Chairman of the
Trustees or by the Trustees.
11.2 Record Dates. For the purpose of determining the shareholders of any
series or class of shares of the Trust who are entitled to vote or act at any
meeting or any adjournment thereof, or who are entitled to receive payment of
any dividend or of any other distribution, the Trustees may from time to time
fix a time, which shall be not more than 90 days before the date of any meeting
of shareholders or more than 60 days before the date of payment of any dividend
or of any other distribution, as the record date for determining the
shareholders of such series or class having the right to notice of and to vote
at such meeting and any adjournment thereof or the right to receive such
dividend or distribution, and in such case only shareholders of record on such
record date shall have such right notwithstanding any transfer
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of shares on the books of the Trust after the record date; or without fixing
such record date the Trustees may for any such purposes close the register or
transfer books for all or part of such period.
11.3 Proxies. The placing of a shareholder's name on a proxy pursuant to
telephone or electronically transmitted instructions obtained pursuant to
procedures reasonably designed to verify that such instructions have been
authorized by such shareholder shall constitute execution of such proxy by or on
behalf of such shareholder.
ARTICLE 12
Shares of Beneficial Interest
12. The Trust has an unlimited number of Common Shares, without par value, which
may be issued from time to time by the Trustees of the Trust. The Trust also has
a class of 6,000 preferred shares, without par value, which may be issued by the
Trustees from time to time in one or more series.
12.1 Statement Creating Three Series of Remarketed Preferred(R) Shares.
There are three series of Remarketed Preferred(R) Shares.
PART I
DESIGNATION
SERIES A: A series of 800 shares of preferred shares, without par value,
liquidation preference $50,000 per share plus accumulated but unpaid dividends,
if any, thereon (whether or not earned or declared), is hereby designated
"Remarketed Preferred Shares, Series A" and is referred to below as "Series A
RP(R)". Each share of Series A RP shall be issued on a date to be determined by
the Trustees, by any duly authorized committee thereof or by any of the
President, the Vice Chairman, any Executive Vice President or the Treasurer of
the Trust; have such initial dividend rate as shall be determined in advance of
the issuance thereof by the Trustees, by any duly authorized committee thereof
or by any of the President, the Vice Chairman, any Executive Vice President or
the Treasurer of the Trust; have an Initial Dividend Period and an Initial
Dividend Payment Date to be determined by the Trustees of the Trust, by a duly
authorized committee thereof or by any of the President, the Vice Chairman, any
Executive Vice President or the Treasurer of the Trust; be redeemed (unless such
share shall have been otherwise redeemed pursuant to paragraph 4 of Part I of
this Section 12.1 by the Trust on a date to be determined by the Trustees of the
Trust) at the option of the Trust at a redemption price of $50,000 per share
plus accumulated but unpaid dividends to the date fixed for redemption (whether
or not earned or declared) plus the premium, if any, resulting from the
designation of a Premium Call Period; and have such other preferences,
limitations and
------------
(R) Registered trademark of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
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relative voting rights, in addition to those required by applicable law or set
forth in the Trust's Declaration of Trust applicable to preferred shares of the
Trust, as are set forth in Part I and Part II of this Section 12.1. Series A RP
shall constitute a separate series of preferred shares of the Trust, and each
share of Series A RP shall be identical except as provided in paragraph 4 of
this Part I of this Section 12.1.
SERIES B: A series of 1,620 shares of preferred shares, without par value,
liquidation preference $25,000 per share plus accumulated but unpaid dividends,
if any, thereon (whether or not earned or declared), is hereby designated
"Remarketed Preferred Shares, Series B" and is referred to below as "Series B
RP". Each share of Series B RP shall be issued on a date to be determined by the
Trustees, by any duly authorized committee thereof or by any of the President,
the Vice Chairman, any Executive Vice President or the Treasurer of the Trust;
have such initial dividend rate as shall be determined in advance of the
issuance thereof by the Trustees, by any duly authorized committee thereof or by
any of the President, the Vice Chairman, any Executive Vice President or the
Treasurer of the Trust; have an Initial Dividend Period and an Initial Dividend
Payment Date to be determined by the Trustees of the Trust, by a duly authorized
committee thereof or by any of the President, the Vice Chairman, any Executive
Vice President or the Treasurer of the Trust; be redeemed (unless such share
shall have been otherwise redeemed pursuant to paragraph 4 of Part I of this
Section 12.1 by the Trust on a date to be determined by the Trustees of the
Trust) at the option of the Trust at a redemption price of $25,000 per share
plus accumulated but unpaid dividends to the date fixed for redemption (whether
or not earned or declared) plus the premium, if any, resulting from the
designation of a Premium Call Period; and have such other preferences,
limitations and relative voting rights, in addition to those required by
applicable law or set forth in the Trust's Declaration of Trust applicable to
preferred shares of the Trust, as are set forth in Part I and Part II of this
Section 12.1. Series B RP shall constitute a separate series of preferred shares
of the Trust, and each share of Series B RP shall be identical except as
provided in paragraph 4 of this Part I of this Section 12.1.
SERIES C: A series of 1,620 shares of preferred shares, without par value,
liquidation preference $25,000 per share plus accumulated but unpaid dividends,
if any, thereon (whether or not earned or declared), is hereby designated
"Remarketed Preferred Shares, Series C" and is referred to below as "Series C
RP". Each share of Series C RP shall be issued on a date to be determined by the
Trustees, by any duly authorized committee thereof or by any of the President,
the Vice Chairman, any Executive Vice President or the Treasurer of the Trust;
have such initial dividend rate as shall be determined in advance of the
issuance thereof by the Trustees, by any duly authorized committee thereof or by
any of the President, the Vice Chairman, any Executive Vice President or the
Treasurer of the Trust; have an Initial Dividend Period and an Initial Dividend
Payment Date to be determined by the Trustees of the Trust, by a duly authorized
committee thereof or by any of the President, the Vice Chairman, any Executive
Vice President or the Treasurer of the Trust; be redeemed (unless such share
shall have been otherwise redeemed pursuant to paragraph 4 of Part I of this
Section 12.1 by the Trust on a date to be determined by the Trustees of the
Trust) at the option of the Trust at a redemption price of $25,000 per share
plus accumulated but unpaid dividends to the date fixed
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for redemption (whether or not earned or declared) plus the premium, if any,
resulting from the designation of a Premium Call Period; and have such other
preferences, limitations and relative voting rights, in addition to those
required by applicable law or set forth in the Trust's Declaration of Trust
applicable to preferred shares of the Trust, as are set forth in Part I and Part
II of this Section 12.1. Series C RP shall constitute a separate series of
preferred shares of the Trust, and each share of Series C RP shall be identical
except as provided in paragraph 4 of this Part I of this Section 12.1.
1. Definitions. Unless the context or use indicates another or different
meaning or intent, in this Section 12.1 the following terms have the following
meanings, whether used in the singular or plural:
"'AA' Composite Commercial Paper Rate," on any date of determination, means
(i) the Interest Equivalent of the rate on commercial paper placed on behalf of
issuers whose corporate bonds are rated "AA" by S&P or "Aa" by Moody's or the
equivalent of such rating by another nationally recognized rating agency, as
such rate is made available on a discount basis or otherwise by the Federal
Reserve Bank of New York for the Business Day immediately preceding such date,
or (ii) in the event that the Federal Reserve Bank of New York does not make
available such a rate, then the arithmetic average of the Interest Equivalent of
the rate on commercial paper placed on behalf of such issuers, as quoted on a
discount basis or otherwise by the Commercial Paper Dealers to the Remarketing
Agents for the close of business on the Business Day immediately preceding such
date. If one of the Commercial Paper Dealers does not quote a rate required to
determine the "AA" Composite Commercial Paper Rate, the "AA" Composite
Commercial Paper Rate will be determined on the basis of the quotation or
quotations furnished by any Substitute Commercial Paper Dealer or Substitute
Commercial Paper Dealers selected by the Trust to provide such rate or rates not
being supplied by the Commercial Paper Dealer. If the number of Dividend Period
days (in each case determined without regard to any adjustment in the length of
a Dividend Period or in the remarketing schedule in respect of non-Business
Days, as provided herein) shall be (i) 7 or more days but fewer than 49 days,
such rate shall be the Interest Equivalent of the 30-day rate on such commercial
paper; (ii) 49 or more days but fewer than 70 days, such rate shall be the
Interest Equivalent of the 60-day rate on such commercial paper; (iii) 70 or
more days but fewer than 85 days, such rate shall be the arithmetic average of
the Interest Equivalent of the 60-day and 90-day rates on such commercial paper;
(iv) 85 or more days but fewer than 99 days, such rate shall be the Interest
Equivalent of the 90-day rate on such commercial paper; (v) 99 or more days but
fewer than 120 days, such rate shall be the arithmetic average of the Interest
Equivalent of the 90-day and 120-day rates on such commercial paper; (vi) 120 or
more days but fewer than 141 days, such rate shall be the Interest Equivalent of
the 120-day rate on such commercial paper; (vii) 141 or more days but fewer than
162 days, such rate shall be the arithmetic average of the Interest Equivalent
of the 120-day and 180-day rates on such commercial paper; and (viii) 162 or
more days but fewer than 183 days, such rate shall be the Interest Equivalent of
the 180-day rate on such commercial paper.
10
"Accountant's Confirmation" has the meaning set forth in paragraph 8(g) of
this Part I of Section 12.1.
"Additional Dividend" has the meaning set forth in paragraph 3(k) of this
Part I of Section 12.1.
"Adviser" means the Trust's investment manager which is ▇▇▇▇▇▇ Investment
Management, Inc.
"Agent Member" means a member of the Securities Depository that will
maintain records for a Beneficial Owner of one or more shares of RP.
"Alternate Treasury ▇▇▇▇ Rate" has the meaning set forth under "U.S.
Treasury ▇▇▇▇ Rate" below.
"Alternate Treasury Note Rate" has the meaning set forth under "U.S.
Treasury Note Rate" below.
"Anticipation Notes" shall mean the following Municipal Bonds: revenue
anticipation notes, tax anticipation notes, tax and revenue anticipation notes,
grant anticipation notes and bond anticipation notes.
"Applicable Dividend Rate" means, with respect to the Initial Dividend
Period, the rate of dividend per annum established by the Trustees, by a duly
authorized committee thereof or by any of the President, the Vice Chairman, any
Executive Vice President or the Treasurer of the Trust and, for each subsequent
Dividend Period, means the rate of dividend per annum that (i) except for a
Dividend Period commencing during a Non-Payment Period, will be equal to the
lower of the rate of dividend per annum that the Remarketing Agents advise
results on the Remarketing Date preceding the first day of such Dividend Period
from implementation of the remarketing procedures set forth in Part II hereof
and the Maximum Dividend Rate or (ii) for each Dividend Period commencing during
a Non-Payment Period, will be equal to the NonPayment Period Rate.
"Applicable Percentage" has the meaning set forth under "Maximum Dividend
Rate" below.
"Authorized Newspaper" means a newspaper of general circulation in the
English language generally published on Business Days in The City of New York.
"Beneficial Owner" means a person that is listed as the beneficial owner of
one or more shares of RP in the records of the Paying Agent or, with respect to
any share of RP not registered in the name of the Securities Depository on the
share transfer books of the Trust, the person in whose name such share is so
registered.
11
"Business Day" means a day on which the New York Stock Exchange, Inc. is
open for trading, and which is not a day on which banks in The City of New York
are authorized or obligated by law to close.
"By-laws" means these By-laws of the Trust, as amended from time to time.
"Closing Transactions" has the meaning set forth in paragraph 12(a) of this
Part I of Section 12.1.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commercial Paper Dealers" means ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated and such other commercial paper dealer or dealers as the Trust may
from time to time appoint, or, in lieu of any thereof, their respective
affiliates or successors.
"Common Shares" means the common shares of beneficial interest, without par
value, of the Trust.
"Date of Original Issue" means, with respect to any share of RP, the date
on which the Trust originally issues such share.
"Declaration of Trust" means the Agreement and Declaration of Trust dated
April 1, 1993 of the Trust on file with the Secretary of State of The
Commonwealth of Massachusetts.
"Deposit Securities" means cash and Municipal Bonds rated at least AAA,
A-1+ or SP-1+ by S&P.
"Discounted Value" means (i) with respect to an S&P Eligible Asset, the
quotient of the Market Value thereof divided by the applicable S&P Discount
Factor and (ii) with respect to a Moody's Eligible Asset, the lower of par and
the quotient of the Market Value thereof divided by the applicable Moody's
Discount Factor.
"Dividend Payment Date," with respect to RP, means, (i) with respect to the
Initial Dividend Period for RP, the Initial Dividend Payment Date; (ii) with
respect to any 7-day Dividend Period (in the case of Series B RP and Series C
RP) or 28-day Dividend Period (in the case of Series A RP) and any Short Term
Dividend Period of 35 or fewer days, the day next succeeding the last day
thereof; and (iii) with respect to any Short Term Dividend Period of more than
35 days and with respect to any Long Term Dividend Period, the first Business
Day of each calendar month during such Short Term Dividend Period or Long Term
Dividend Period and the day next succeeding the last day of such period (each
such date referred to in clause (i), (ii) or (iii) being herein referred to as a
"Normal Dividend Payment Date"), except that if such Normal Dividend Payment
Date is not a Business Day, then (a) the Dividend Payment Date shall be the
first Business Day next succeeding such Normal Dividend Payment Date if such
Normal Dividend Payment Date is a Monday, Tuesday, Wednesday or Thursday,
12
or (b) the Dividend Payment Date shall be the first Business Day next preceding
such Normal Dividend Payment Date if such Normal Dividend Payment Date is a
Friday, and in each case the length of the current Dividend Period will be
adjusted accordingly, if necessary. If, however, in the case of clause (b) in
the preceding sentence, the Securities Depository shall make available to its
participants and members in funds immediately available in New York City on
Dividend Payment Dates the amount due as dividends on such Dividend Payment
Dates (and the Securities Depository shall have so advised the Trust), and if
the Normal Dividend Payment Date is not a Business Day, then the Dividend
Payment Date shall be the next succeeding Business Day and the length of the
current Dividend Period will be adjusted accordingly, if necessary. Although any
particular Dividend Payment Date may not occur on the originally scheduled date
because of the exceptions discussed above, the next succeeding Dividend Payment
Date, subject to such exceptions, will occur on the next following originally
scheduled date, and in each case the length of the next succeeding Dividend
Period will be adjusted accordingly, if necessary. If for any reason a Dividend
Payment Date cannot be fixed as described above, then the Trustees shall fix the
Dividend Payment Date and the length of the current Dividend Period will be
adjusted accordingly, if necessary. The Initial Dividend Period, 7-day Dividend
Periods (in the case of Series B RP and Series C RP), 28-day Dividend Periods
(in the case of Series A RP) and Special Dividend Periods are hereinafter
sometimes referred to as "Dividend Periods." Each dividend payment date
determined as provided above is hereinafter referred to as a "Dividend Payment
Date."
"Dividend Period" means with respect to any share of RP, the Initial
Dividend Period for such share and thereafter a period which shall commence on
each (but not the final) Dividend Payment Date for such share; provided,
however, that any Dividend Payment Date occurring after commencement of and
during a Special Dividend Period of more than 35 days, other than the last
Dividend Payment Date during such Dividend Period, will not give rise to a new
Dividend Period. Subject to the adjustment of Dividend Payment Dates as provided
elsewhere herein, each such subsequent Dividend Period for such share will be
comprised of, beginning with and including the day upon which it commences, 7
consecutive days (in the case of Series B RP and Series C RP) or 28 consecutive
days (in the case of Series A RP); or in the case of a Special Dividend Period,
the number of consecutive days as shall be specified by the Trustees in
accordance with the provisions set forth in paragraph 3(j) of this Part I at the
time the Trustees designate a Special Dividend Period. Notwithstanding the
foregoing, the Dividend Periods for each of Series A RP, Series B RP and Series
C RP will never be co-extensive with the Dividend Period of any other Series of
RP unless the Trust has received an opinion of tax counsel that having such
co-extensive periods will not affect the tax opinion relating to the
deductibility of dividends paid on the different Series of RP. Further, any
adjustment of the remarketing schedule or the length of a Dividend Period as
provided herein shall also cause an adjustment of the relevant Settlement Date,
if necessary, so that such Settlement Date will be the first day of the next
Dividend Period.
"Forward Commitments" shall have the meaning specified in paragraph 12(c)
of this Part I of Section 12.1.
"Gross-Up Tax Rate" has the meaning set forth in paragraph 3(k) of this
Part I of Section 12.1.
"Holder" means, with respect to any share of RP, the person whose name
appears on the share transfer books of the Trust as the registered holder of
such share.
"Independent Accountant" means a nationally recognized accountant, or firm
of accountants, that is, with respect to the Trust, an independent public
accountant or firm of independent public accountants under the Securities Act of
1933, as amended.
"Initial Dividend Payment Date" means August 30, 1993 with respect to
Series A RP, [ ] with respect to Series B RP and [ ] with respect to Series C
RP.
"Initial Dividend Period" means, with respect to RP, the period commencing
on and including the Date of Original Issue of such RP and ending on and
including the day prior to the Initial Dividend Payment Date for such RP.
"Initial Margin" means the amount of cash or securities deposited with a
broker as a margin payment at the time of purchase or sale of a futures contract
or an option thereon.
"Interest Equivalent" means a yield on a 360-day basis of a discount basis
security which is equal to the yield on an equivalent interest-bearing security.
"▇▇▇▇▇ Index" has the meaning set forth under "Taxable Equivalent of the
Short-Term Municipal Bond Rate."
"Long Term Dividend Period" means a Special Dividend Period consisting of a
specified period of one whole year or more but not greater than five years.
13
"Mandatory Redemption Price" means $25,000 per share of Series B RP and
Series C RP, or $50,000 per share of Series A RP, plus in the case of each
series of RP an amount equal to accumulated but unpaid dividends thereon
(whether or not earned or declared) to the date fixed for redemption.
"Marginal Tax Rate" means the maximum marginal regular Federal individual
income tax rate applicable to ordinary income or the maximum marginal regular
Federal corporate income tax rate, whichever is greater.
"Market Value" of any asset of the Trust means the market value thereof
determined by the Pricing Service. The Market Value of any asset shall include
any interest accrued thereon. The Pricing Service shall value 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 shall be valued at fair value as determined
by the Pricing Service using methods which include consideration of: yields or
prices of 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 the Pricing
Service is unable to value a security, the security shall be valued at the
lower of two dealer bids obtained by the Trust from dealers who are members of
the National Association of Securities Dealers, Inc. and make a market in the
security, at least one of which shall be in writing. Futures contracts and
options are valued at closing prices for such instruments established by the
exchange or board of trade on which they are traded, or if market quotations are
not readily available, are valued at fair value on a consistent basis using
methods determined in good faith by the Trustees.
"Maximum Dividend Rate" for any Dividend Period shall be the Applicable
Percentage of the Reference Rate determined as of the relevant Remarketing Date
or the Date of Original Issue, as the case may be, for such RP. The Applicable
Percentage on any date will be determined based on (i) the lower of the credit
rating or ratings assigned on such date to shares of such RP by Moody's and S&P
(or if Moody's or S&P or both shall not make such rating available, the
equivalent of either or both of such ratings by a Substitute Rating Agency or
two Substitute Rating Agencies or, in the event that only one such rating shall
be available, such rating) and (ii) whether the Trust has provided to the
Remarketing Agents prior to the Remarketing establishing the Applicable Dividend
Rate notification pursuant to paragraph 3(m) of this Part I of Section 12.1 that
net capital gain or other income subject to regular Federal income tax will be
included in a dividend on shares of such RP during such Dividend Period as
follows:
Applicable Applicable
Percentage of Percentages of
Credit Ratings Reference Reference
---------------------------------------- Rate Rate -
Moody's S&P No Notification Notification
------------------ ------------------- ----------------- ---------------
"aa3" or higher AA-or higher 110% 150%
"a3" to "a1" A- to A+ 125% 160%
"baa3" to "baa1" BBB- to BBB+ 150% 250%
Below "baa3" Below BBB- 200% 275%
The Remarketing Agents shall round each applicable Maximum Dividend Rate to
the nearest one-thousandth (0.001) of one percent per annum, with any such
number ending in five ten-thousandths (0.0005) of one percent being rounded
upwards to the nearest one-thousandth (0.001) of one percent. The Remarketing
Agents shall not round the Reference Rate as part of their calculation of any
Maximum Dividend Rate.
"Maximum Potential Additional Dividend Liability," as of any Valuation
Date, means the aggregate amount of Additional Dividends that would be payable
with respect to RP if the Trust were to make Retroactive Taxable Allocations,
with respect to any fiscal year, estimated based upon dividends paid and the
amount of undistributed realized net capital gain and other income subject to
regular Federal income tax earned by the Trust, as of the end of the calendar
14
month immediately preceding such Valuation Date and assuming such Additional
Dividends are fully taxable.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. or its successors.
"Moody's Discount Factor" means, for purposes of determining the Discounted
Value of any Municipal Bond which constitutes a Moody's Eligible Asset, the
percentage determined by reference to (a) the rating by Moody's or S&P on such
Bond and (b) the Moody's Exposure Period, in accordance with the table set forth
below:
Moody's Exposure Period Rating Category
----------------------------------------- ------------------------------------------------------------------------
Aaa* Aa* A* Baa* Other** VMIG-1*** SP-1+****
7 weeks or less 151% 159% 168% 202% 229% 136% 148%
8 weeks or less but greater than 7 weeks 154 164 173 205 235 137 149
9 weeks or less but greater than 8 weeks 158 169 179 209 242 138 150
* ▇▇▇▇▇'▇ rating.
** Municipal Bonds not rated by Moody's but rated BBB-, BBB or BBB+ by S&P.
*** Municipal Bonds rated ▇▇▇-▇, ▇▇▇▇-▇ or P-1 by Moody's which do not mature
or have a demand feature at par exercisable within the Moody's Exposure
Period and which do not have a long-term rating. For the purpose of the
definition of Moody's Eligible Assets, these securities will have an
assumed rating of 'A' by Moody's.
**** Municipal Bonds rated SP-1+ or A-1+ by S&P which do not mature or have a
demand feature at par exercisable within the Moody's Exposure Period and
which do not have a long-term rating. For the purposes of the definition of
Moody's Eligible Assets, these securities will have an assumed rating of
'A' by Moody's.
Notwithstanding the foregoing, (i) no Moody's Discount Factor will be
applied to short-term Municipal Bonds, so long as such Municipal Bonds are rated
at least ▇▇▇-▇, ▇▇▇▇-▇ or P-1 by Moody's and mature or have a demand feature at
par exercisable within the Moody's Exposure Period, and the Moody's Discount
Factor for such Bonds will be 125% if such Bonds are not rated by Moody's but
are rated A-l+ or SP-l+ or AA by S&P and mature or have a demand feature at par
exercisable within the Moody's Exposure Period, and (ii) no Moody's Discount
Factor will be applied to cash or to Receivables for Municipal Bonds Sold.
"Receivables for Municipal Bonds Sold," for purposes of calculating Moody's
Eligible Assets as of any Valuation Date, means the aggregate of the following:
(i) the book value of receivables for Municipal Bonds 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 Moody's or (y) with counterparties
having a Moody's long-term debt rating of at least Baa3; and (ii) the Discounted
Value of Municipal Bonds sold (applying the relevant Moody's Discount Factor to
such Bonds) as of or prior to such Valuation Date which generated such
receivables, if such receivables are due within five
15
Business Days of such Valuation Date but do not comply with either of conditions
(x) or (y) of the preceding clause (i).
"Moody's Eligible Asset" means cash, Receivables for Municipal Bonds Sold,
a short-term Municipal Bond rated ▇▇▇▇-▇, ▇▇▇-▇ or P-1 by Moody's or SP-1+ or
A-1+ by S&P or a Municipal Bond that (i) pays interest in cash; (ii) is publicly
rated Baa or higher by Moody's or, if not rated by Moody's but rated by S&P, is
rated at least BBB- by S&P (provided that, for purposes of determining the
Moody's Discount Factor applicable to any such S&P-rated Municipal Bond, such
Municipal Bond (excluding any short-term Municipal Bond and any Municipal Bond
rated BBB-, BBB or BBB+) will be deemed to have a ▇▇▇▇▇'▇ rating which is one
full rating category lower than its S&P rating); (iii) does not have its ▇▇▇▇▇'▇
rating suspended by Moody's; and (iv) is part of an issue of Municipal Bonds of
at least $10,000,000. In addition, Municipal Bonds in the Trust's portfolio will
be included as Moody's Eligible Assets only to the extent they meet the
following diversification requirements:
Minimum Maximum Maximum
Issue Size Underlying State or Territory
Rating ($ Millions) Obligor (%)(1) Concentration (%)(1)(3)
---------- -------------- ---------------- ------------------------
Aaa 10 100 100
Aa 10 20 60
A 10 10 40
Baa 10 6 20
Other(2) 10 4 12
(1) The referenced percentages represent maximum cumulative totals for the
related rating category and each lower rating category.
(2) Municipal Bonds not rated by Moody's but rated BBB-, BBB or BBB+ by S&P.
(3) Territorial bonds (other than those issued by Puerto Rico and counted
collectively) of any territory are limited to 10% of Moody's Eligible Assets.
For purposes of the maximum underlying obligor requirement described above, any
such Bond backed by a guaranty, letter of credit or insurance issued by a third
party will be deemed to be issued by such third party if the issuance of such
third party credit is the sole determinant of the rating on such Bond.
When the Trust sells a Municipal Bond and agrees to repurchase it at a
future date, such Bond will constitute a Moody's Eligible Asset and the amount
the Trust is required to pay
▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ of such Bond will count as a liability for purposes of
calculating the RP Basic Maintenance Amount. When the Trust purchases a
Municipal Bond and agrees to sell it at a future date to another party, cash
receivable by the Trust in connection therewith will constitute a Moody's
Eligible Asset if the long-term debt of such other party is rated at least A2 by
Moody's and such agreement has a term of 30 days or less; otherwise such Bond
will constitute a Moody's Eligible Asset.
Notwithstanding the foregoing, an asset will not be considered a Moody's
Eligible Asset if it is (i) held in a margin account, (ii) subject to any
material lien, mortgage, pledge, security interest or security agreement of any
kind, (iii) held for the purchase of a security pursuant to a Forward Commitment
or (iv) irrevocably deposited by the Trust for the payment of dividends or
redemption.
"Moody's Exposure Period" means the period commencing on and including a
given Valuation Date and ending 48 days thereafter.
"Moody's Hedging Transaction" has the meaning set forth in paragraph 12(b)
of this Part I of Section 12.1.
"Moody's Volatility Factor" means 272% as long as there has not been
enacted an increase to the Marginal Tax Rate. If an increase is enacted to the
Marginal Tax Rate but not yet implemented, the Moody's Volatility Factor shall
be as follows:
% Change in Moody's Volatility
Marginal Tax Rate Factor
---------------------------------------------- -------------------
less than or equal to 5% 292%
greater than 5% but less than but equal to 10% 313%
greater than 10% but less than or equal to 15% 338%
greater than 15% but less than or equal to 20% 364%
greater than 20% but less than or equal to 25% 396%
greater than 25% but less than or equal to 30% 432%
greater than 30% but less than or equal to 35% 472%
greater than 35% but less than or equal to 40% 520%
Notwithstanding the foregoing, the Moody's Volatility Factor may mean such other
potential dividend rate increase factor as Moody's advises the Trust in writing
is applicable.
"Municipal Bonds" means obligations issued by or on behalf of states,
territories and possessions of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities, the interest
on which, in the opinion of bond counsel or other counsel to the issuer of such
securities, is at the time of issuance not includable in gross income for
Federal income tax purposes.
17
"Municipal Index" has the meaning set forth in paragraph 12(a) of this Part
I of Section 12.1.
"1940 Act" means the Investment Company Act of 1940, as amended from time
to time.
"1940 Act Cure Date," with respect to the failure by the Trust to maintain
the 1940 Act RP Asset Coverage (as required by paragraph 7 of this Part I of
Section 12.1) as of the last Business Day of each month, means the last Business
Day of the following month.
"1940 Act RP Asset Coverage" means asset coverage, as defined in section
18(h) of the 1940 Act, of at least 200% with respect to all outstanding senior
securities of the Trust which are shares, including all outstanding shares of
each series of RP (or such other asset coverage as may in the future be
specified in or under the 1940 Act as the minimum asset coverage for senior
securities which are shares of a closed-end investment company as a condition of
paying dividends on its common shares).
"Non-Call Period" has the meaning described under "Specific Redemption
Provisions" below.
"Non-Payment Period" with respect to any shares of RP means any period
commencing on and including the day on which the Trust shall fail to (i)
declare, prior to 12:00 noon, New York City time, on any Dividend Payment Date
for shares of such RP, for payment on or (to the extent permitted below) within
three Business Days after such Dividend Payment Date to the Holders of such
shares as of 12:00 noon, New York City time, on the Business Day preceding such
Dividend Payment Date, the full amount of any dividend on such shares payable on
such Dividend Payment Date or (ii) deposit, irrevocably in trust, in same-day
funds, with the Paying Agent by 12:00 noon, New York City time, (A) on or (to
the extent permitted below) within three Business Days after any Dividend
Payment Date for any shares of RP the full amount of any dividend on such shares
(whether or not earned or declared) payable on such Dividend Payment Date or (B)
on or (to the extent permitted below) within three Business Days after any
redemption date for any shares of RP called for redemption, the Mandatory
Redemption Price or Optional Redemption Price, as the case may be, and ending on
and including the Business Day on which, by 12:00 noon, New York City time, all
unpaid dividends and unpaid redemption prices shall have been so deposited or
shall have otherwise been made available to Holders in same-day funds; provided
that a Non-Payment Period shall not end during the first seven days thereof
unless the Trust shall have given at least three days' written notice to the
Paying Agent, the Remarketing Agents and the Securities Depository and
thereafter shall not end unless the Trust shall have given at least fourteen
days' written notice to the Paying Agent, the Remarketing Agents, the Securities
Depository and all Holders. Any dividend on shares of RP due on any Dividend
Payment Date for such shares (if, prior to 12:00 noon, New York City time, on
such Dividend Payment Date, the Trust has declared such dividend payable on or
within three Business Days after such Dividend Payment Date to the Holders who
held such shares as of 12:00 noon, New York City time, on the Business Day
18
preceding such Dividend Payment Date) or redemption price with respect to shares
of RP not paid to Holders when due may (if such non-payment occurs because the
Trust is prevented from doing so by these By-laws or applicable law) be paid pro
rata to such Holders in the same form of funds by 12:00 noon, New York City
time, on any of the first three Business Days after such Dividend Payment Date
or due date, as the case may be, provided that such amount is accompanied by a
late charge calculated for such period of non-payment at the NonPayment Period
Rate applied to the amount of such non-payment based on the actual number of
days comprising such period divided by 365.
"Non-Payment Period Rate" means 200% of the applicable Reference Rate (or
275% of such rate if the Trust has provided notification to the Remarketing
Agents prior to the Remarketing Date establishing the Applicable Dividend Rate
for the relevant dividend pursuant to paragraph 3(m) hereof that net capital
gain or other income subject to regular Federal income tax will be included in
such dividend on shares of RP), provided that the Trustees shall have the
authority to adjust, modify, alter or change from time to time the Non-Payment
Period Rate if the Trustees determine and Moody's and S&P (or any Substitute
Rating Agency in lieu of Moody's or S&P in the event either of such parties
shall not rate the RP) advise the Trust in writing that such adjustment,
modification, alteration or change will not adversely affect the then-current
ratings of the RP.
"Normal Dividend Payment Date" has the meaning set forth under "Dividend
Payment Date."
"Notice of Redemption" means any notice with respect to the redemption of
shares of RP pursuant to paragraph 4 of this Part I of Section 12.1.
"Notice of Revocation" has the meaning set forth in paragraph 3(j) of this
Part I of Section 12.1.
"Notice of Special Dividend Period" has the meaning set forth in paragraph
3(j) of this Part I of Section 12.1.
"Optional Redemption Price" shall mean $25,000 per share of Series B RP or
Series C RP, or $50,000 per share of Series A RP, as the case may be, plus in
the case of each series of RP an amount equal to accumulated but unpaid
dividends (whether or not earned or declared) to the date fixed for redemption
plus any applicable redemption premium per share attributable to the designation
of a Premium Call Period for such share.
"Paragraph 3(a) Dividend" has the meaning set forth in paragraph 3(k) of
this Part I of Section 12.1.
"Paying Agent" means [ ] or any successor company or entity, which has
entered into a Paying Agent Agreement with the Trust to act for the Trust, among
other things, as the transfer agent, registrar, dividend and redemption price
disbursing agent, settlement agent and
19
agent for certain notifications in connection with the shares of RP in
accordance with such agreement.
"Paying Agent Agreement" means an agreement to be entered into between the
Trust and the Paying Agent.
"Preferred Shares" means the preferred shares of the Trust, and includes
RP.
"Premium Call Period" has the meaning specified in "Specific Redemption
Provisions," below.
"Pricing Service" means ▇▇▇▇▇▇ Investdata Corp., or any successor company
or entity, or any other entity designated from time to time by the Trustees.
Notwithstanding the foregoing, the Trustees will not designate a new Pricing
Service unless the Trust has received a written confirmation from Moody's and
S&P that such action would not impair the ratings then assigned by Moody's and
S&P to any series of RP.
"Quarterly Valuation Date" means the last Business Day of each fiscal
quarter of the Trust in each fiscal year of the Trust, commencing July 31, 1993.
"Receivables for Municipal Bonds Sold" for Moody's has the meaning set
forth under the definition of Moody's Discount Factor, and for S&P has the
meaning set forth under the definition of S&P Discount Factor.
"Reference Rate" means: (i) with respect to a Dividend Period having 28 or
fewer days, the higher of the applicable "AA" Composite Commercial Paper Rate
and the Taxable Equivalent of the Short-Term Municipal Bond Rate, (ii) with
respect to any Short Term Dividend Period having more than 28 but fewer than 183
days, the applicable "AA" Composite Commercial Paper Rate, (iii) with respect to
any Short Term Dividend Period having 183 or more but fewer than 365 days, the
U.S. Treasury ▇▇▇▇ Rate and (iv) with respect to any Long Term Dividend Period,
the applicable U.S. Treasury Note Rate.
"Remarketing" means each periodic operation of the process for remarketing
shares of RP as described in Part II of Section 12.1.
"Remarketing Agents" means ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated and any additional or successor companies or entities, if any,
which have entered into an agreement with the Trust to follow the remarketing
procedures for the purpose of determining the Applicable Dividend Rate.
"Remarketing Agreement" means an agreement entered into between the Trust
and the Remarketing Agents with respect to Remarketing.
20
"Remarketing Date" means any date on which (i) each Beneficial Owner of
shares of RP must provide to the Remarketing Agents irrevocable telephonic
notice of intent to tender shares in a Remarketing and (ii) the Remarketing
Agents (A) determine the Applicable Dividend Rate for the ensuing Dividend
Period, (B) notify Holders, purchasers and tendering Beneficial Owners of shares
of RP by telephone, telex or otherwise of the results of the Remarketing and (C)
announce the Applicable Dividend Rate.
"Request for Special Dividend Period" has the meaning set forth in
paragraph 3(j) of this Part I of Section 12.1.
"Response" has the meaning set forth in paragraph 3(j) of this Part I of
Section 12.1.
"Retroactive Taxable Allocation" has the meaning set forth in paragraph
3(k) of this Part I of Section 12.1.
"Right" has the meaning set forth in paragraph 3(k) of this Part I of
Section 12.1.
"RP" means, as the case may be, the Series A RP; the Series B RP; or the
Series C RP; or if the context shall so indicate, all such series.
"RP Basic Maintenance Amount," as of any Valuation Date, means the dollar
amount equal to (i) the sum of (A) the product of the number of shares of Series
A RP outstanding on such Valuation Date multiplied by the sum of (a) $50,000 and
(b) any applicable redemption premium per share attributable to the designation
of a Premium Call Period; (B) the product of the number of shares of Series B RP
and Series C RP outstanding on such Valuation Date multiplied by the sum of (a)
$25,000 and (b) any applicable redemption premium per share of each series
attributable to the designation of a Premium Call Period; (C) the aggregate
amount of cash dividends (whether or not earned or declared) that will have
accumulated for each series of RP outstanding, in each case, to (but not
including) the end of the current Dividend Period for such series of RP that
follows such Valuation Date or to (but not including) the 49th day after such
Valuation Date, whichever is sooner; (D) the aggregate amount of cash dividends
that would accumulate at the Maximum Dividend Rate applicable to a Dividend
Period of 28 days (in the case of shares of Series A RP) and 7 days (in the case
of shares of Series B RP and Series C RP) outstanding from the end of such
Dividend Period through the 49th day after such Valuation Date, multiplied by
the larger of the Moody's Volatility Factor and the S&P Volatility Factor,
determined from time to time by ▇▇▇▇▇'▇ and S&P, respectively (except that if
such Valuation Date occurs during a Non-Payment Period, the cash dividend for
purposes of calculation would accumulate at the then current Non-Payment Period
Rate); (E) the amount of anticipated expenses of the Trust for the 90 days
subsequent to such Valuation Date; (F) the amount of the Trust's Maximum
Potential Additional Dividend Liability as of such Valuation Date; 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 due and
payable by the Trust pursuant to repurchase agreements and any payables for
Municipal Bonds purchased as of such Valuation Date) less (ii) either (A) the
Discounted
21
Value of any of the Trust's assets, or (B) the face value of any of the Trust's
assets if such assets mature prior to or on the date of redemption of any shares
of RP or payment of a liability and are either securities issued or guaranteed
by the U.S. Government or, with respect to Moody's, have a rating assigned by
Moody's of at least ▇▇▇, ▇-▇, ▇▇▇▇-▇ or MIG-1 and, with respect to S&P, have a
rating assigned by S&P of at least AAA, SP-1+ or A-1+, in both cases irrevocably
deposited by the Trust for the payment of the amount needed to redeem shares of
RP subject to redemption or any of (i)(C) through (i)(G).
"RP Basic Maintenance Cure Date," with respect to the failure by the Trust to
satisfy the RP Basic Maintenance Amount (as required by paragraph 8(a) of this
Part I of Section 12.1) as of a given Valuation Date, means the sixth Business
Day following such Valuation Date.
"RP Basic Maintenance Report" means a report signed by the President, Treasurer
or any Executive Vice President or Vice President of the Trust which sets forth,
as of the related Valuation Date, the assets of the Trust, the Market Value and
the Discounted Value thereof (seriatim and in the aggregate), and the RP Basic
Maintenance Amount.
"S&P" means Standard & Poor's Rating Services or its successors.
"S&P Discount Factor" means, for purposes of determining the Discounted Value of
any Municipal Bond which constitutes an S&P Eligible Asset, the percentage
determined by reference to (a) the rating by S&P or Moody's on such Bond and (b)
the S&P Exposure Period, in accordance with the table set forth below:
Rating Category
--------------------------------
S&P Exposure Period AAA AA A BBB
--------------------- ------ ------ ------ -----
40 Business Days 190% 195% 210% 250%
22 Business Days 170 175 190 230
10 Business Days 155 160 175 215
7 Business Days 150 155 170 210
3 Business Days 130 135 150 190
Notwithstanding the foregoing, (i) the S&P Discount Factor for short-term
Municipal Bonds will be 115%, so long as such Municipal Bonds are rated A-l+ or
SP-l+ by S&P and mature or have a demand feature exercisable in 30 days or less,
or 125% if such Municipal Bonds are not rated by S&P but are rated ▇▇▇▇-▇, ▇-▇
or MIG-1 by Moody's, and such short-term Municipal Bonds referred to in this
clause (i) shall qualify as S&P Eligible Assets; provided, however, such
short-term Municipal Bonds rated by Moody's but not rated by S&P having a demand
feature exercisable in 30 days or less must be backed by a letter of credit,
liquidity facility or guarantee from a bank or other financial institution
having a short-term rating of at least A-l+ from S&P; and further provided that
such short-term Municipal Bonds rated by
22
Moody's but not rated by S&P may comprise no more than 50% of short-term
Municipal Bonds that qualify as S&P Eligible Assets and (ii) no S&P Discount
Factor will be applied to cash or to Receivables for Municipal Bonds Sold.
"Receivables for Municipal Bonds Sold," for purposes of calculating S&P Eligible
Assets as of any Valuation Date, means the book value of receivables for
Municipal Bonds sold as of or prior to such Valuation Date if such receivables
are due within five Business Days of such Valuation Date. For purposes of the
foregoing, Anticipation Notes rated SP-l+ or, if not rated by S&P, rated VMIG-1
by Moody's, whether or not they mature or have a demand feature exercisable in
30 days and which do not have a long-term rating, shall be considered to be
short-term Municipal Bonds and shall qualify as S&P Eligible Assets.
"S&P Eligible Asset" means cash, Receivables for Municipal Bonds Sold or a
Municipal Bond that (i) is issued by any of the 50 states, any territory or
possession of the United States, the District of Columbia, and any political
subdivision, instrumentality, county, city, town, village, school district or
agency (such as authorities and special districts created by the states) of any
of the foregoing, and certain federally sponsored agencies such as local housing
authorities; (ii) is interest bearing and pays interest at least semi-annually;
(iii) is payable with respect to principal and interest in United States
Dollars; (iv) is publicly rated BBB or higher by S&P or, except in the case of
Anticipation Notes that are grant anticipation notes or bond anticipation notes
which must be rated by S&P to be included in S&P Eligible Assets, if not rated
by S&P but rated by ▇▇▇▇▇'▇, is rated at least A by Moody's (provided that such
Moody's-rated Municipal Bonds will be included in S&P Eligible Assets only to
the extent the Market Value of such Municipal Bonds does not exceed 50% of the
aggregate Market Value of the S&P Eligible Assets; and further provided that,
for purposes of determining the S&P Discount Factor applicable to any such
Moody's-rated Municipal Bond, such Municipal Bond will be deemed to have an S&P
rating which is one full rating category lower than its ▇▇▇▇▇'▇ rating); (v) is
not subject to a covered call or covered put option written by the Trust; (vi)
is not part of a private placement of Municipal Bonds; and (vii) is part of an
issue of Municipal Bonds with an original issue size of at least $20 million or,
if of an issue with an original issue size below $20 million (but in no event
below $10 million), is issued by an issuer with a total of at least $50 million
of securities outstanding. Notwithstanding the foregoing:
(1) Municipal Bonds of any one issuer will be considered S&P Eligible Assets
only to the extent the Market Value of such Municipal Bonds does not exceed 10%
of the aggregate Market Value of the S&P Eligible Assets, provided that 2% is
added to the applicable S&P Discount Factor for every 1% by which the Market
Value of such Municipal Bonds exceeds 5% of the aggregate Market Value of the
S&P Eligible Assets; and
(2) Municipal Bonds issued by issuers in any one state or territory will be
considered S&P Eligible Assets only to the extent the Market Value of such
Municipal Bonds does not exceed 20% of the aggregate Market Value of S&P
Eligible Assets.
23
"S&P Exposure Period" means the maximum period of time following a Valuation
Date, including the Valuation Date and the RP Basic Maintenance Cure Date, that
the Trust has under this Section 12.1 to cure any failure to maintain, as of
such Valuation Date, a Discounted Value of its portfolio at least equal to the
RP Basic Maintenance Amount (as described in paragraph 8(a) of this Section
12.1).
"S&P Hedging Transactions" has the meaning set forth in paragraph 12(a) of this
Section 12.1.
"S&P Volatility Factor" means 277% or such other potential dividend rate
increase factor as S&P advises the Trust in writing is applicable.
"Securities Depository" means The Depository Trust Company or any successor
company or other entity selected by the Trust as securities depository of the
shares of RP that agrees to follow the procedures required to be followed by
such securities depository in connection with shares of RP.
"Series A RP" means the Remarketed Preferred Shares, Series A.
"Series B RP" means the Remarketed Preferred Shares, Series B.
"Series C RP" means the Remarketed Preferred Shares, Series C.
"Service" means the Internal Revenue Service.
"Settlement Date" means the first Business Day after a Remarketing Date
applicable to a share of RP.
"7-day Dividend Period" means, with respect to Series B RP and Series C RP, a
Dividend Period consisting of seven days.
"Short Term Dividend Period" means a Special Dividend Period consisting of a
specified number of days (other than 28, in the case of Series A RP, or seven,
in the case of Series B RP and Series C RP), evenly divisible by seven and not
fewer than seven or more than 364.
"Special Dividend Period" means a Dividend Period consisting of (i) a specified
number of days (other than 28, in the case of Series A RP, or seven, in the case
of Series B RP and Series C RP), evenly divisible by seven and not fewer than
seven nor more than 364 or (ii) a specified period of one whole year or more but
not greater than five years (in each case subject to adjustment as provided
herein). Except as otherwise provides in this Section 12.1, the Dividend Periods
for the Series A RP, Series B RP and Series C RP will never be co-extensive.
"Specific Redemption Provisions" means, with respect to a Special Dividend
Period of 365 or more days, either, or any combination of, the designation of
(i) a period (a "Non-Call
24
Period") determined by the Trustees, after consultation with the Remarketing
Agents, during which the shares of RP subject to such Dividend Period shall not
be subject to redemption at the option of the Trust and (ii) a period (a
"Premium Call Period"), consisting of a number of whole years and determined by
the Trustees, after consultation with the Remarketing Agents, during each year
of which the shares of RP subject to such Dividend Period shall be redeemable at
the Trust's option at a price per share equal to $50,000 (in the case of Series
A RP), or $25,000 (in the case of Series B RP or Series C RP), plus in the case
of each series of RP accumulated but unpaid dividends plus an applicable
premium, as determined by the Trustees after consultation with the Remarketing
Agents.
"Substitute Commercial Paper Dealers" means such substitute commercial
paper dealer or dealers as the Trust may from time to time appoint or, in lieu
of any thereof, their respective affiliates or successors.
"Substitute Rating Agency" and "Substitute Rating Agencies" mean a
nationally recognized statistical rating organization or two nationally
recognized statistical rating organizations, respectively, selected by the Trust
to act as the substitute rating agency or substitute rating agencies, as the
case may be, to determine the credit ratings of the shares of RP.
"Taxable Equivalent of the Short-Term Municipal Bond Rate" on any date
means 90% of the quotient of (A) the per annum rate expressed on an Interest
Equivalent basis equal to the ▇▇▇▇▇ S&P 30-day High Grade Index or any
comparable index based upon 30-day yield evaluations at par of bonds the
interest on which is excludable for regular Federal income tax purposes under
the Code of "high grade" component issuers selected by ▇▇▇▇▇ Information Systems
Inc. (or any successor thereto from time to time selected by the Trust in its
discretion), which component issuers shall include, without limitation, issuers
of general obligation bonds but shall exclude any bonds the interest on which
constitutes an item of tax preference under Section 57(a)(5) of the Code, or
successor provisions, for purposes of the "alternative minimum tax," (as defined
in the Code) (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 such
successor), 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 such successor), the Taxable Equivalent of the Short-Term Municipal Bond
Rate shall mean the quotient of (A) the per annum rate expressed on an Interest
Equivalent basis equal to the most recent ▇▇▇▇▇ Index so made available, divided
by (B) 1.00 minus the Marginal Tax Rate (expressed as a decimal). No successor
to ▇▇▇▇▇ Information Systems Inc. shall be chosen without first obtaining
written confirmation from Moody's and S&P that the choice of such successor
would not impair the rating then assigned to any series of RP by Moody's or S&P.
25
"Tender and Dividend Reset" means the process pursuant to which shares of
RP may be tendered in a Remarketing or held and become subject to the new
Applicable Dividend Rate determined by the Remarketing Agents in such
Remarketing.
"Treasury Bonds" shall have the meaning set forth in paragraph 12(a) of
this Part I of Section 12.1.
"Trust" means ▇▇▇▇▇▇ Municipal Opportunities Trust, a Massachusetts
business trust.
"28-day Dividend Period" means, with respect to Series A RP, a Dividend
Period consisting of 28 days.
"Trustees" means the Trustees of the Trust.
"U.S. Treasury ▇▇▇▇ Rate" on any date of determination means (i) the
Interest Equivalent of the rate on the actively traded Treasury ▇▇▇▇ with a
maturity most nearly comparable to the length of the related Dividend Period, as
such rate is made available on a discount basis or otherwise on the Business Day
immediately preceding such date by the Federal Reserve Bank of New York in its
Composite 3:30 P.M. Quotations for U.S. Government Securities report for such
Business Day, or (ii) if such yield as so calculated is not available, the
Alternate Treasury ▇▇▇▇ Rate on such date. "Alternate Treasury ▇▇▇▇ Rate" on any
date means the Interest Equivalent of the yield as calculated by reference to
the arithmetic average of the bid price quotations of the actively traded
Treasury ▇▇▇▇ with a maturity most nearly comparable to the length of the
related Dividend Period, as determined by bid price quotations as of any time on
the Business Day immediately preceding such date, obtained from at least three
recognized primary U.S. Government securities dealers selected by the
Remarketing Agents.
"U.S. Treasury Note Rate" on any date of determination means (i) the yield
as calculated by reference to the bid price quotation of the actively traded,
current coupon Treasury Note with a maturity most nearly comparable to the
length of the related Dividend Period, as such bid price quotation is published
on the Business Day immediately preceding such date by the Federal Reserve Bank
of New York in its Composite 3:30 P.M. Quotations for U.S. Government Securities
report for such Business Day, or (ii) if such yield as so calculated is not
available, the Alternate Treasury Note Rate on such date. "Alternate Treasury
Note Rate" on any date means the yield as calculated by reference to the
arithmetic average of the bid price quotations of the actively traded, current
coupon Treasury Note with a maturity most nearly comparable to the length of the
related Dividend Period, as determined by the bid price quotations as of any
time on the Business Day immediately preceding such date, obtained from at least
three recognized primary U.S. Government securities dealers selected by the
Remarketing Agents.
26
"Valuation Date" means, for purposes of determining whether the Trust is
maintaining the RP Basic Maintenance Amount, each Business Day commencing with
the Date of Original Issue.
"Voting Period" has the meaning set forth in paragraph 6(b) of this Part I
of Section 12.1.
"Variation Margin" means, in connection with an outstanding futures
contract or option thereon owned or sold by the Trust, the amount of cash or
securities paid to or received from a broker (subsequent to the Initial Margin
payment) from time to time as the price of such futures contract or option
fluctuates.
2. Fractional Shares. No fractional shares of RP shall be issued.
3. Dividends.
(a) The Holders of RP as of 12:00 noon, New York City time, on the Business
Day preceding the applicable Dividend Payment Date, shall be entitled to
receive, when, as and if declared by the Trustees, out of funds legally
available therefor, (i) cumulative dividends, at the Applicable Dividend Rate,
(ii) a Right (as defined in paragraph 3(k) of this Part I of Section 12.1) to
receive an Additional Dividend or Additional Dividends in certain circumstances,
and (iii) any additional amounts as set forth in paragraph 3(m) of this Part I
of Section 12.1. Each share of RP shall remain on a parity with other shares of
RP with respect to the payment of dividends at the rates fixed for the
respective series. No dividends on any series of RP shall be paid or declared if
there shall exist a Non-Payment Period with respect to any other series of RP
unless dividends in ratable proportion are declared and paid on such other
series. Dividends on the shares of RP so declared and payable shall be paid in
preference to and in priority over any dividends declared and payable on the
Common Shares.
(b) Dividends on each share of RP shall accumulate from its Date of
Original Issue and will be payable, when, as and if declared by the Trustees, on
each Dividend Payment Date applicable to such share of RP.
(c) Each declared dividend shall be payable on the applicable Dividend
Payment Date to the Holder or Holders of such shares of RP as set forth in
paragraph 3(a) of this Part I of Section 12.1. Dividends on shares of RP in
arrears with respect to any past Dividend Payment Date may be declared and paid
at any time, without reference to any regular Dividend Payment Date, pro rata to
the Holders of such shares as of a date not exceeding five Business Days
preceding the date of payment thereof as may be fixed by the Trustees. Any
dividend payment made on any share of RP shall be first credited against the
dividends accumulated but unpaid (whether or not earned or declared) with
respect to the earliest Dividend Payment Date on which dividends were not paid.
27
(d) Neither Holders nor Beneficial Owners of shares of RP shall be entitled
to any dividends on the shares of RP, whether payable in cash, property or
stock, in excess of full cumulative dividends thereon (which include any amounts
actually due and payable pursuant to paragraph 3(k), 3(l) or 3(m) of this Part I
of Section 12.1). Except as provided in paragraph 3(h) of this Part I of Section
12.1, neither Holders nor Beneficial Owners of shares of RP shall be entitled to
any interest, or other additional amount, on any dividend payment on any share
of RP which may be in arrears.
(e) Except as otherwise provided herein, the Applicable Dividend Rate on
each share of RP for each Dividend Period with respect to such share shall be
equal to the lower of the rate per annum that results from implementation of the
remarketing procedures described in Part II hereof and the Maximum Dividend
Rate.
(f) The amount of declared dividends for each share of RP payable on the
Initial Dividend Payment Date, the Dividend Payment Date for each 7-day Dividend
Period, the Dividend Payment Date for each 28-day Dividend Period and the
Dividend Payment Date or Dates for each Short-Term Dividend Period shall be
computed by the Trust by multiplying the Applicable Dividend Rate in effect with
respect to dividends payable on such share on such Dividend Payment Date by a
fraction the numerator of which shall be the number of days in such Dividend
Period such share was outstanding from and including its Date of Original Issue
or the preceding Dividend Payment Date, as the case may be, to and including the
day preceding such Dividend Payment Date, and the denominator of which shall be
365, then multiplying the amount so obtained by $50,000 (in the case of Series A
RP) or $25,000 (in the case of Series B RP and Series C RP) and rounding the
amount so obtained to the nearest cent. During any Long Term Dividend Period,
the amount of dividends per share payable on any Dividend Payment Date shall be
computed by dividing the Applicable Dividend Rate for such Dividend Period by
twelve, multiplying the amount so obtained by $50,000 (in the case of Series A
RP) or $25,000 (in the case of Series B RP and Series C RP), and rounding the
amount so obtained to the nearest cent; provided, however, that, if the number
of days from and including the Date of Original Issue or the preceding Dividend
Payment Date, as the case may be, to and including the day preceding such
Dividend Payment Date is less than 30 and such days do not constitute a full
calendar month, then the amount of dividends per share payable on such Dividend
Payment Date shall be computed by multiplying the Applicable Dividend Rate for
such Dividend Period by a fraction, the numerator of which will be such number
of days and the denominator of which will be 360, multiplying the amount so
obtained by $50,000 (in the case of Series A RP) or $25,000 (in the case of
Series B RP and Series C RP), and rounding the amount so obtained to the nearest
cent.
(g) No later than 12:00 noon, New York City time, on each Dividend Payment
Date, the Trust shall deposit in same-day funds with the Paying Agent the full
amount of any dividend declared and payable on such Dividend Payment Date on any
share of RP.
(h) The Applicable Dividend Rate for each Dividend Period commencing during
a Non-Payment Period shall be equal to the Non-Payment Period Rate and any share
of RP for
28
which a Special Dividend Period would otherwise have commenced on the first day
of or during a Non-Payment Period shall have a 28-day Dividend Period (in the
case of Series A RP) or a 7-day Dividend Period (in the case of Series B RP and
Series C RP). Any amount of any dividend due on any Dividend Payment Date for
any shares of RP (if, prior to 12:00 noon, New York City time, on such Dividend
Payment Date, the Trust has declared such dividend payable on or within three
Business Days after such Dividend Payment Date to the Holders who held such
shares of RP as of 12:00 noon, New York City time, on the Business Day preceding
such Dividend Payment Date) or redemption price with respect to any shares of RP
not paid to Holders when due but paid to such Holders in the same form of funds
by 12:00 noon, New York City time, on any of the first three Business Days after
such Dividend Payment Date or due date, as the case may be, shall incur a late
charge to be paid therewith to such Holders and calculated for such period of
non-payment at the Non-Payment Period Rate applied to the amount of such non-
payment based on the actual number of days comprising such period divided by
365. If the Trust fails to pay a dividend on a Dividend Payment Date or to
redeem any shares of RP on the date set for such redemption (otherwise than
because it is prevented from doing so by these By-laws or by applicable law),
the preceding sentence shall not apply and the Applicable Dividend Rate for the
Dividend Period commencing during the Non-Payment Period resulting from such
failure shall be the Non-Payment Period Rate. For the purposes of the foregoing
and paragraphs 3(g) and 4(g) of this Part I of Section 12.1, payment to a person
in New York Clearing House (next-day) funds on any Business Day at any time
shall be considered equivalent to payment to such person in same-day funds at
the same time on the next Business Day, and any payment made after 12:00 noon,
New York City time, on any Business Day shall be considered to have been made
instead in the same form of funds and to the same person before 12:00 noon, New
York City time, on the next Business Day.
(i) Except during a Non-Payment Period, by 12:00 noon, New York City time,
on the Remarketing Date in the Remarketing at the end of the Initial Dividend
Period applicable to a share of RP, and by 12:00 noon, New York City time, on
the Remarketing Date in the Remarketing at the end of each subsequent Dividend
Period applicable to a share of RP, the Beneficial Owner of such share of RP may
elect to tender such share or hold such share for the next Dividend Period to
the extent provided in Part II of Section 12.1.
(j) The Trust may, at its sole option and to the extent permitted by law,
by telephonic or written notice (a "Request for Special Dividend Period") to the
Remarketing Agents, request that the next succeeding Dividend Period for a
series of RP be the number of days (other than 28, in the case of Series A RP,
or seven, in the case of Series B RP or Series C RP) evenly divisible by seven,
and not fewer than seven or more than 364 in the case of a Short Term Dividend
Period or one whole year or more but not greater than five years in the case of
a Long Term Dividend Period, specified in such notice, provided that the Trust
may not give a Request for Special Dividend Period of greater than 28 days, in
the case of Series A RP, or seven days, in the case of Series B RP or Series C
RP (and any such request shall be null and void) unless the Trust has given
written notice thereof to ▇▇▇▇▇'▇ and S&P and unless, with respect to such
series of RP, full cumulative dividends, any amounts due with respect to
redemptions, and any Additional Dividends payable prior to such date have been
paid in full
29
and, for any Remarketing occurring after the initial Remarketing, all shares
tendered were remarketed in the last occurring Remarketing. Except as otherwise
provided in this Section 12.1, the Dividend Periods for the Series A RP, Series
B RP and Series C RP will never be co-extensive. Such Request for Special
Dividend Period, in the case of a Short Term Dividend Period, shall be given on
or prior to the fourth Business Day but not more than seven Business Days prior
to a Remarketing Date and, in the case of a Long Term Dividend Period, shall be
given on or prior to the 14th day but not more than 28 days prior to a
Remarketing Date. Upon receiving such Request for a Special Dividend Period, the
Remarketing Agents shall determine (i) whether, given the factors set forth
below, it is advisable that the Trust issue a Notice of Special Dividend Period
for such RP as contemplated by such Request for Special Dividend Period, (ii)
the Optional Redemption Price of such RP during such Special Dividend Period and
(iii) the Specific Redemption Provisions and shall give the Trust written notice
(a "Response") of such determination by no later than the third Business Day
prior to such Remarketing Date. In making such determination the Remarketing
Agents will consider (1) existing short-term and long-term market rates and
indices of such short- term and long-term rates, (2) existing market supply and
demand for short-term and long-term securities, (3) existing yield curves for
short-term and long-term securities comparable to the RP, (4) industry and
financial conditions which may affect such RP, (5) the investment objective of
the Trust, and (6) the Dividend Periods and dividend rates at which current and
potential Beneficial Owners of such RP would remain or become Beneficial Owners.
If the Remarketing Agents shall not give the Trust a Response by such third
Business Day or if the Response states that given the factors set forth above it
is not advisable that the Trust give a Notice of Special Dividend Period, the
Trust may not give a Notice of Special Dividend Period in respect of such
Request for Special Dividend Period. In the event the Response indicates that it
is advisable that the Trust give a Notice of Special Dividend Period, the Trust
may by no later than the second Business Day prior to such Remarketing Date give
a notice (a "Notice of Special Dividend Period") to the Remarketing Agents and
to the Securities Depository which notice will specify (i) the duration of the
Special Dividend Period, (ii) the Optional Redemption Price as specified in the
related Response and (iii) the Specific Redemption Provisions, if any, as
specified in the related Response. The Trust shall not give a Notice of Special
Dividend Period and, if the Trust has given a Notice of Special Dividend Period,
the Trust is required to give telephonic or written notice of its revocation (a
"Notice of Revocation") to the Remarketing Agents (in the case of clauses (x)
and (y)) and the Securities Depository (in the case of clauses (x), (y) and (z))
on or prior to the Business Day prior to the relevant Remarketing Date if (x)
either the 1940 Act RP Asset Coverage is not satisfied or the Trust shall fail
to maintain S&P Eligible Assets and ▇▇▇▇▇'▇ Eligible Assets each with an
aggregate Discounted Value at least equal to the RP Basic Maintenance Amount, in
each case on each of the two Valuation Dates immediately preceding the Business
Day prior to the relevant Remarketing Date on an actual basis and on a pro forma
basis giving effect to the proposed Special Dividend Period (using as a pro
forma dividend rate with respect to such Special Dividend Period the dividend
rate which the Remarketing Agents shall advise the Trust is an approximately
equal rate for securities similar to the RP with an equal dividend period),
provided that (unless ▇▇▇▇▇'▇ advises the Trust to the contrary), in calculating
the aggregate Discounted Value of ▇▇▇▇▇'▇ Eligible Assets for this purpose, the
▇▇▇▇▇'▇ Exposure Period shall be deemed to be one week longer than the ▇▇▇▇▇'▇
Exposure Period that would otherwise apply as of the date of the Notice of
Special Dividend Period, (y)
30
sufficient funds for the payment of dividends payable on the immediately
succeeding Dividend Payment Date for RP have not been irrevocably deposited with
the Paying Agent by the close of business on the third Business Day preceding
the relevant Remarketing Date or (z) the Remarketing Agents advise the Trust
that after consideration of the factors listed above, it is advisable to give a
Notice of Revocation. If the Trust is prohibited from giving a Notice of Special
Dividend Period as a result of any of the factors enumerated in clause (x), (y)
or (z) of the prior sentence or if the Trust gives a Notice of Revocation with
respect to a Notice of Special Dividend Period for RP, the next succeeding
Dividend Period will be a 28-day Dividend Period (in the case of Series A RP) or
a 7-day Dividend Period (in the case of Series B RP or Series C RP), provided
that if the then current Dividend Period for RP is a Special Dividend Period of
less than 28 days (in the case of Series A RP), the next succeeding Dividend
Period will be the same length as the current Dividend Period. In addition, in
the event all shares of RP tendered for which the Trust has given a Notice of
Special Dividend Period are not remarketed or a Remarketing for RP is not held
for any reason, the Trust may not again give a Notice of Special Dividend Period
with respect to RP (and any such attempted notice shall be null and void) until
all shares of such RP tendered in a subsequent Remarketing with respect to a
28-day Dividend Period (in the case of Series A RP) or a 7-day Dividend Period
(in the case of Series B RP or Series C RP) have been Remarketed.
(k) Simultaneously with the declaration of each dividend at the Applicable
Dividend Rate to a Holder determined as set forth in paragraph 3(a) of this Part
I of Section 12.1 (each, a "Paragraph 3(a) Dividend"), the Trustees shall also
declare a dividend to the same Holder consisting of one right (a "Right") to
receive an Additional Dividend in respect of such Paragraph 3(a) Dividend. If,
after the close of its fiscal year, the Trust characterizes all or a portion of
a Paragraph 3(a) Dividend paid on shares of RP during such previous fiscal year
as consisting of net capital gain or other income subject to regular Federal
income tax, without having either given advance notice to the Remarketing Agents
of the inclusion of such taxable income in such Paragraph 3(a) Dividend prior to
the setting of the Applicable Dividend Rate for such Paragraph 3(a) Dividend or
included an additional amount in the Paragraph 3(a) Dividend to offset the tax
effect of the inclusion therein of such taxable income, in each case as provided
in paragraph 3(m) hereof, and the Trust so characterizes all or a portion of the
Paragraph 3(a) Dividend solely because (i) the Trust has redeemed all or a
portion of the outstanding shares of RP or the Trust has liquidated and (ii) the
Trust, in its judgment, believes it is required, in order to comply with a
published position of the Internal Revenue Service concerning the allocation of
different types of income between different classes and series of shares, Rev.
Rul. 89-81, 1989-1 C.B. 226, to allocate such taxable income to the RP (the
amount so characterized referred to herein as a "Retroactive Taxable
Allocation"), the Trust will, within 90 days after the end of such fiscal year,
provide notice of the Retroactive Taxable Allocation made with respect to the
Paragraph 3(a) Dividend to the Paying Agent and to each Holder who received such
Paragraph 3(a) Dividend and the corresponding Right, at such Holder's address as
the same appears or last appeared on the share books of the Trust. The Trust
will, within 30 days after such notice is given to the Paying Agent, pay to the
Paying Agent (who will then distribute to such holders of Rights), out of funds
legally available therefor, an amount equal to the aggregate of the Additional
Dividends payable in respect of
31
such Retroactive Taxable Allocation. The Trust may direct the Paying Agent to
invest any such available funds in Deposit Securities (provided that such
Deposit Securities are also rated at least ▇-▇, ▇▇▇-▇ ▇▇ ▇▇▇▇-▇ by ▇▇▇▇▇'▇)
provided that the proceeds of any such investment will be available in The City
of New York at the opening of business on the payment date for such Additional
Dividends. All such funds (to the extent necessary to pay the full amount of
such Additional Dividends) shall be held in trust for the benefit of the holders
of Rights. An Additional Dividend or Additional Dividends declared in respect of
a Right shall be paid to the Holder that received such Right, whether or not
such Holder continues to own the shares of RP in respect of which such Right was
issued. Rights shall be nontransferable except by operation of law, and no
purported transfer of a Right will be recognized by the Trust. No certificates
will be issued evidencing Rights.
An "Additional Dividend" in respect of any Paragraph 3(a) Dividend means
payment to a present or former Holder of a share of RP of an amount which,
giving effect to the Retroactive Taxable Allocation made with respect to such
Paragraph 3(a) Dividend, would cause such Holder's after-tax return (taking into
account both the Paragraph 3(a) Dividend and the Additional Dividend and
assuming such Holder is taxable at the Gross-Up Tax Rate) to be equal to the
after-tax return which the Holder would have realized if the retroactive
allocation of taxable income had not been made. Such Additional Dividend shall
be calculated (i) without consideration being given to the time value of money;
(ii) assuming that no Holder or former Holder of shares of RP is subject to the
Federal alternative minimum tax with respect to dividends received from the
Trust; and (iii) assuming that the Holder of the share of RP in respect of which
a Retroactive Taxable Allocation was made is taxable at the Gross-Up Tax Rate.
An Additional Dividend will not include an amount to compensate for the fact
that the Additional Dividend or the retroactive allocation of taxable income may
be subject to state and local taxes. The Gross-Up Tax Rate shall be equal to the
sum of (i) the percentage of the taxable income included in the Paragraph 3(a)
Dividend that is taxable for Federal income tax purposes as ordinary income,
multiplied by the greater of (A) the highest marginal Federal corporate income
tax rate (without regard to the phase-out of graduated rates) applicable to
ordinary income and (B) the highest marginal Federal individual income tax rate
applicable to ordinary income (including any surtax but without regard to any
phase-out of personal exemptions or any limitation on itemized deductions), and
(ii) the percentage of the taxable income included in the Paragraph 3(a)
Dividend that is taxable for Federal income tax purposes as long-term capital
gain, multiplied by the greater of (A) the highest marginal Federal corporate
income tax rate (without regard to the phase-out of graduated rates) applicable
to long-term capital gain and (B) the highest marginal Federal individual income
tax rate applicable to long-term capital gain (including any surtax, but without
regard to any phase-out of personal exemptions or any limitation on itemized
deductions).
Except as provided above, no Additional Dividend shall for any reason be
payable in respect of any Paragraph 3(a) Dividend previously paid to a Holder.
In particular, and without limiting the generality of the foregoing, no
Additional Dividend shall be payable as a result of any Internal Revenue Service
challenge to, among other things, the characterization of the RP as equity, the
Trust's method of allocating various types of income between dividends paid on
32
different classes or series of shares or between dividends paid on the same
class or series of shares, or the designations made by the Trust relating to
distributions made with respect to an earlier taxable year.
(l) The Trustees may in their sole discretion from time to time declare a
special dividend (each, a "special dividend") in an amount determined in their
sole judgment to be necessary or desirable to cause the Trust to comply with any
distribution requirements of the Code and thereby to avoid the incurrence by the
Trust of any income or excise tax under the Code, provided that the Trustees
shall not declare a special dividend if the declaration thereof causes the Trust
to fail to maintain the RP Basic Maintenance Amount or the 1940 Act RP Asset
Coverage. Any such special dividend shall be payable on a date specified by the
Trustees to Holders of record on a date specified by the Trustees consistent
with these Bylaws. The Trust shall deposit with the Paying Agent sufficient
funds for the payment of any such special dividend not later than noon on the
Business Day immediately preceding the date on which such special dividend
becomes payable and shall give the Paying Agent irrevocable instructions to
apply such funds and, if applicable, the income and proceeds therefrom, to
payment of such special dividends. The Trust may direct the Paying Agent to
invest any such available funds in Deposit Securities (provided that such
Deposit Securities are also rated at least ▇-▇, ▇▇▇-▇ ▇▇ ▇▇▇▇-▇ by ▇▇▇▇▇'▇)
provided that the proceeds of any such investment will be available in The City
of New York at the opening of business on the payment date for such special
dividend. All such funds (to the extent necessary to pay the full amount of such
special dividend) shall be held in trust for the benefit of the Holders.
(m) Whenever the Trust intends to include any net capital gain or other
income subject to regular Federal income tax in a dividend on shares of RP
solely because the Trust, in its judgment, believes it is required, in order to
comply with Rev. Rul. 89-81 described in paragraph 3(k) of this Part I of
Section 12.1, to allocate taxable income to shares of RP, the Trust may notify
the Remarketing Agents of the amount to be so included at least five Business
Days prior to the Remarketing Date on which the Applicable Dividend Rate for
such dividend is to be established. In the event the Trust has provided such
notice to the Remarketing Agents, yet, after giving such notice and prior to
paying the dividend the Trust intends to include additional income subject to
regular Federal income tax beyond the amount set forth in such Notice in such
dividend because the Trust, in its sole judgment, believes it is required, in
order to comply with such Rev. Rul. 89-81, to allocate such additional income to
such shares of the series of RP, the Trust will (i) increase the dividend by an
amount such that the return to a Holder of RP with respect to such dividend (as
so increased and after giving effect to Federal income tax at the Gross-Up Tax
Rate) shall equal the return such Holder of RP would have received, after
application of Federal income tax, if such additional amount of taxable income
had not been included in such dividend (and such dividend had not been increased
to take account of any additional amount of taxable income) and (ii) notify the
Paying Agent of the additional amount to be included in the dividend at least
five Business Days prior to the applicable Dividend Payment Date. Alternatively,
if the Trust has not provided the notice referred to in the second preceding
sentence, yet nevertheless prior to paying the dividend intends to include
income subject to regular Federal income tax in a dividend on shares of RP
33
solely because the Trust, in its judgment, believes it is required, in order to
comply with such Rev. Rul. 89-81, to allocate such income to shares of RP, the
Trust will (i) increase the dividend by an amount such that the return to a
Holder of RP with respect to such dividend (as so increased and after giving
effect to tax at the Gross-Up Tax Rate) equals the Applicable Dividend Rate and
(ii) notify the Paying Agent of the additional amount to be included in the
dividend at least five Business Days prior to the applicable Dividend Payment
Date. The Trust will not be required to notify any Holder of RP of the
prospective inclusion of, or to increase any dividend as a result of the
inclusion of, any taxable income in any dividend other than as provided in this
paragraph 3(m) or in paragraph 3(k) of this Part I of Section 12.1.
4. Redemption. Shares of RP shall be redeemable by the Trust as provided
below:
(a) To the extent permitted under the 1940 Act, upon giving a Notice of
Redemption, the Trust at its option may redeem shares of any series of RP, in
whole or in part, on the next succeeding scheduled Dividend Payment Date
applicable to those shares of RP called for redemption, out of funds legally
available therefor, at the Optional Redemption Price per share; provided that no
share of RP shall be subject to redemption pursuant to this paragraph 4(a) on
any Dividend Payment Date during (A) the Initial Dividend Period with respect to
such share or (B) a Non- Call Period to which such share is subject; and
provided further that the Trust shall effect no redemption pursuant to this
paragraph 4(a) if as a result of such redemption the Trust shall have failed to
maintain S&P Eligible Assets and ▇▇▇▇▇'▇ Eligible Assets with an aggregate
Discounted Value at least equal to the RP Basic Maintenance Amount or to
maintain the 1940 Act RP Asset Coverage. For so long as S&P rates any series of
RP, the Trust may not give a Notice of Redemption relating to an optional
redemption as described in paragraph 4(a) unless, at the time of giving such
Notice of Redemption, the Trust has available Deposit Securities with maturity
or tender dates not later than the day preceding the applicable redemption date
and having a Discounted Value not less than the amount due to Holders by reason
of the redemption of shares of such series of RP on such redemption date.
(b) The Trust shall redeem, out of funds legally available therefor, at the
Mandatory Redemption Price per share, certain of the shares of RP, to the extent
permitted under the 1940 Act, if the Trust fails to maintain S&P Eligible Assets
and ▇▇▇▇▇'▇ Eligible Assets with an aggregate Discounted Value at least equal to
the RP Basic Maintenance Amount or to maintain the 1940 Act RP Asset Coverage
and such failure is not cured on or before the RP Basic Maintenance Cure Date or
the 1940 Act Cure Date (each herein referred to as a "Cure Date"), as the case
may be. The number of shares of RP to be redeemed shall be equal to the lesser
of (i) the minimum number of shares of all series of RP 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 RP Basic Maintenance Amount
or the 1940 Act RP Asset Coverage, as the case may be, on such Cure Date
(provided that, if there is no such minimum number of shares of all series of RP
and other Preferred Shares the redemption of which would have such result, all
shares of all series of RP then outstanding shall be redeemed) and (ii) the
maximum number of shares of RP, together with all other Preferred Shares subject
to redemption or retirement, that can be
34
redeemed out of funds expected to be legally available therefor. In determining
the number of shares of RP required to be redeemed in accordance with the
foregoing, the Trust shall allocate the number required to be redeemed to
satisfy the RP Basic Maintenance Amount or the 1940 Act RP Asset Coverage, as
the case may be, pro rata among shares of all series of RP and other Preferred
Shares (as determined by the liquidation preferences of such series of RP and
other Preferred Shares) subject to redemption provisions similar to those
contained in this paragraph 4(b). The Trust shall effect such redemption not
later than 35 days after such Cure Date, except that if the Trust does not have
funds legally available for the redemption of all of the required number of
shares of all series of RP and other Preferred Shares which are subject to
mandatory redemption or the Trust otherwise is unable to effect such redemption
on or prior to 35 days after such Cure Date, the Trust shall redeem those shares
of all series of RP and other Preferred Shares which it was unable to redeem on
the earliest practicable date on which it is able to effect such redemption.
Any share of RP shall be subject to mandatory redemption regardless of
whether such share is subject to a Non-Call Period, provided that shares of RP
subject to a Non-Call Period will only be subject to redemption to the extent
that the other shares of such series of RP not subject to a Non-Call Period or
other Preferred Shares are not available to satisfy the number of shares
required to be redeemed. In such event, such shares subject to a Non-Call Period
will be selected for redemption in an ascending order of outstanding Non-Call
Period (with shares with the lowest number of days remaining in the respective
Dividend Period to be called first) and by lot in the event of equal outstanding
Non-Call Periods.
(c) Subject to paragraph 4(d) of this Part I of Section 12.1, if fewer than
all the outstanding shares of any series of RP are to be redeemed pursuant to
this paragraph 4, the number of such shares of such series of RP so to be
redeemed shall be a whole number of shares and shall be determined by the
Trustees, and the Trust shall give a Notice of Redemption as provided in
paragraph 4(e) of this Part I, provided that no such share of RP will be subject
to optional redemption on any Dividend Payment Date during a Non-Call Period to
which it is subject and shares of RP subject to a Non-Call Period will be
subject to mandatory redemption only on the basis described under paragraph 4(b)
of this Part I. Unless certificates representing shares of RP are held by
Holders other than the Securities Depository or its nominee, the Securities
Depository, upon receipt of such notice, shall determine by lot (or otherwise in
accordance with procedures in effect at the time which shall be consistent with
the ▇▇▇▇ ▇▇▇) the number of shares of such series of RP to be redeemed from the
account of each Agent Member (which may include an Agent Member, including a
Remarketing Agent, holding shares for its own account) and notify the Paying
Agent of such determination. The Paying Agent, upon receipt of such notice,
shall in turn determine by lot the number of shares of such series of RP to be
redeemed from the accounts of the Beneficial Owners of the shares of such series
of RP whose Agent Members have been selected by the Securities Depository and
give notice of such determination to the Remarketing Agents. In doing so, the
Paying Agent may determine that shares of RP shall be redeemed from the accounts
of some Beneficial Owners, which may include the Remarketing Agents, without
shares of RP being redeemed from the accounts of other Beneficial Owners.
35
(d) Notwithstanding paragraph 4(c) of this Part I, if any certificates
representing shares of any series of RP are held by Holders other than the
Securities Depository or its nominee, then the shares of such series of RP to be
redeemed shall be selected by the Paying Agent by lot.
(e) Any Notice of Redemption with respect to shares of RP shall be given
(A) in the case of a redemption pursuant to paragraph 4(a) of this Part I, by
the Trust to the Paying Agent, the Securities Depository (and any other Holder)
and the Remarketing Agents, by telephone, not later than 1:00 p.m. New York City
time (and later confirmed in writing) not less than 20 nor more than 30 days
prior to the earliest date upon which any such redemption may occur and (B) in
the case of a mandatory redemption pursuant to paragraph 4(b) of this Part I, by
the Trust to the Paying Agent, the Securities Depository (and any other Holder)
and the Remarketing Agents, by telephone, not later than 1:00 p.m., New York
City time (and later confirmed in writing) not less than 20 nor more than 30
days prior to the redemption date established by the Trustees and specified in
such notice. In the case of a partial redemption of the shares of any series of
RP, the Paying Agent shall use its reasonable efforts to provide telephonic
notice to each Beneficial Owner of shares of RP called for redemption not later
than the close of business on the Business Day on which the Paying Agent
determines the shares to be redeemed, as described in paragraphs 4(c) and 4(d)
of this Part I of Section 12.1 (or, during a Non-Payment Period with respect to
such shares, not later than the close of business on the Business Day
immediately following the day on which the Paying Agent receives a Notice of
Redemption from the Trust). Such telephonic notice shall be confirmed promptly
in writing to the Remarketing Agents, the Securities Depository and each
Beneficial Owner of shares of RP called for redemption not later than the close
of business on the Business Day immediately following the day on which the
Paying Agent determines the shares to be redeemed. In the case of a redemption
in whole of the shares of any series of RP, the Paying Agent shall use its
reasonable efforts to provide telephonic notice to each Beneficial Owner of
shares of RP called for redemption not later than the close of business on the
Business Day immediately following the day on which it receives a Notice of
Redemption from the Trust. Such telephonic notice shall be confirmed promptly in
writing to each Beneficial Owner of shares of RP called for redemption, the
Remarketing Agents and the Securities Depository not later than the close of
business on the second Business Day following the day on which the Paying Agent
receives a Notice of Redemption.
(f) Every Notice of Redemption and other redemption notice shall state: (i)
the redemption date; (ii) the number of shares of RP to be redeemed; (iii) the
redemption price; (iv) that dividends on the shares of RP to be redeemed shall
cease to accumulate as of such redemption date; and (v) the provision of the
Declaration of Trust or the By-laws pursuant to which such shares are being
redeemed. In addition, notice of redemption given to a Beneficial Owner by the
Paying Agent shall state the CUSIP number, if any, of the shares of RP to be
redeemed and the manner in which the Beneficial Owners of such shares may obtain
payment of the redemption price. No defect in the Notice of Redemption or other
redemption notice or in the transmittal or the mailing thereof shall affect the
validity of the redemption proceedings,
36
except as required by applicable law. The Paying Agent shall use its reasonable
efforts to cause the publication of a Notice of Redemption in an Authorized
Newspaper within two Business Days of the date of the Notice of Redemption, but
failure so to publish such notification shall not affect the validity or
effectiveness of any such redemption proceedings.
(g) On any redemption date, the Trust shall deposit, irrevocably in trust,
in same-day funds, with the Paying Agent, by 12:00 noon, New York City time, the
Optional Redemption Price or Mandatory Redemption Price, as the case may be, for
each share of RP called for redemption.
(h) In connection with any redemption, upon the giving of a Notice of
Redemption and the deposit of sufficient funds necessary for such redemption
with the Paying Agent in accordance with this paragraph 4, shares of RP so
called for redemption shall no longer be deemed outstanding for any purpose and
all rights of the Holders of shares of RP so called for redemption shall cease
and terminate, except the right of the Holders thereof to receive the Optional
Redemption Price or the Mandatory Redemption Price, as the case may be, but
without any interest or other additional amount (except as provided in paragraph
3(k) of this Part I of Section 12.1). The Trust shall be entitled to receive
from the Paying Agent, promptly after the date fixed for redemption, any cash
deposited with the Paying Agent as aforesaid in excess of the sum of (i) the
aggregate redemption price of the shares of RP called for redemption on such
date and (ii) all other amounts to which Holders of shares of RP called for
redemption may be entitled. The Trust shall be entitled to receive, from time to
time after the date fixed for redemption, any interest on any funds deposited in
respect of such redemption. Any funds so deposited with the Paying Agent which
are unclaimed at the end of ninety days from such redemption date shall, to the
extent permitted by law, be repaid to the Trust, after which time the Holders of
shares of RP so called for redemption shall look only to the Trust for payment
of the redemption price and all other amounts to which they may be entitled. For
so long as S&P rates any series of RP, if any such unclaimed funds relating to
shares of such series of RP are repaid to the Trust, the Trust shall invest such
unclaimed funds in Deposit Securities with a maturity of no more than one
Business Day until such time as there are no unclaimed funds.
(i) 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 shares of RP 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 funds with the Paying Agent pursuant to paragraph 4(g) of this Part I of
Section 12.1 with respect to any shares for which such Notice of Redemption has
been given.
(j) Notwithstanding any of the foregoing provisions of this paragraph 4,
the Remarketing Agents may, in their sole discretion, modify the procedures set
forth above with respect to notification of redemption, provided that any such
modification does not adversely affect any Holder of shares of RP or materially
alter the obligations of the Paying Agent or the
37
Fund; and further provided that the Trust receives written confirmation from S&P
or ▇▇▇▇▇'▇ that any such modification would not impair the ratings then assigned
by S&P or ▇▇▇▇▇'▇ to shares of any series of RP.
(k) In effecting any redemption pursuant to this paragraph 4, the Trust
shall use all reasonable efforts to satisfy all applicable procedural conditions
precedent to effecting such redemption under the 1940 Act and Massachusetts law.
(l) Notwithstanding the foregoing, (i) no share of RP may be redeemed
pursuant to paragraph 4(a) of this Part I of Section 12.1 unless the full amount
of accumulated but unpaid dividends to the date fixed for redemption for each
such share of RP called for redemption shall have been declared, and (ii) no
share of RP may be redeemed unless all outstanding shares of such series of RP
are simultaneously redeemed, nor may any shares of RP be purchased or otherwise
acquired by the Trust except in accordance with a purchase offer made on
substantially equivalent terms by the Trust for all outstanding shares of RP,
unless, in each such instance, dividends (other than dividends, if any, to be
paid pursuant to paragraph 3(k) or 3(l) of this Part I of Section 12.1 which
have not yet become due and payable) on all outstanding shares of RP through the
most recent Dividend Payment Date shall have been paid or declared and
sufficient funds for the payment thereof deposited with the Paying Agent.
(m) Except as set forth in this paragraph 4 with respect to redemptions and
subject to paragraph 4(l) of this Part I of Section 12.1, nothing contained
herein shall limit any legal right of the Trust or any affiliate to purchase or
otherwise acquire any share of RP at any price. Any shares of RP which have been
redeemed, purchased or otherwise acquired by the Trust or any affiliate thereof
may be resold if, after the resale, the Trust has Moody's Eligible Assets with
an aggregate Discounted Value equal to or greater than the RP Basic Maintenance
Amount as provided in Paragraph 8(a) of this Part I of Section 12.1. In lieu of
redeeming shares called for redemption, the Trust shall have the right to
arrange for other purchasers to purchase from Holders all shares of RP to be
redeemed pursuant to this paragraph 4, except those shares of RP to be redeemed
pursuant to paragraph 4(b) of this Part I of Section 12.1, by their paying to
such Holders on or before the close of business on the redemption date an amount
equal to not less than the redemption price payable by the Trust on the
redemption of such shares, and the obligation of the Trust to pay such
redemption price shall be satisfied and discharged to the extent such payment is
so made by such purchasers. Prior to the purchase of such shares by such
purchasers, the Trust shall notify each purchaser that such shares have been
called for redemption.
5. Liquidation.
(a) Upon a liquidation, dissolution or winding up of the affairs of the
Trust, whether voluntary or involuntary, the Holders of each share of RP shall
be entitled, whether from capital or surplus, before any assets of the Trust
shall be distributed among or paid over to holders of Common Shares or any other
class or series of shares of the Trust ranking junior to the RP as to
liquidation payments, to be paid the amount of $50,000 per share of Series A RP,
38
and $25,000 per share of Series B RP and Series C RP, as the case may be, plus
in the case of each series of RP an amount equal to all accumulated but unpaid
dividends thereon (whether or not earned or declared) to but excluding the date
of final distribution, in same-day funds. After any such payment, the Holders
shall not be entitled to any further participation in any distribution of assets
of the Trust, except as provided in paragraph 3(k) of this Part I of Section
12.1.
(b) If, upon any such liquidation, dissolution or winding up of the Trust,
the assets of the Trust shall be insufficient to make such full payments to the
Holders of shares of RP and the holders of any Preferred Shares ranking as to
liquidation, dissolution or winding up on a parity with the RP, then such assets
shall be distributed among the Holders of shares of each series of RP and such
parity holders ratably in accordance with the respective amounts which would be
payable on such shares of RP and any other such parity Preferred Shares if all
amounts thereof were paid in full.
(c) Neither the consolidation nor the merger of the Trust with or into any
other entity or entities nor a reorganization of the Trust alone nor the sale,
lease or transfer by the Trust of all or substantially all of its assets shall
be deemed to be a dissolution or liquidation of the Trust.
6. Voting Rights.
(a) General. Except as otherwise provided in the Declaration of Trust or
By-laws, each Holder of shares of RP and each record holder of Common Shares
shall be entitled to one vote for each share held on each matter submitted to a
vote of shareholders of the Trust, and the holders of outstanding Preferred
Shares, including each series of RP, 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 election of Trustees, the holders of Preferred Shares, including
each series of RP, present in person or represented by proxy at said meeting,
shall be entitled, as a class, to the exclusion of the holders of all other
securities and classes of capital shares of the Trust, to elect two Trustees of
the Trust, each Preferred Share, including each share of each series of RP,
entitling the holder thereof to one vote. Subject to paragraph 6(b) of this Part
I of Section 12.1, the holders of outstanding Common Shares and Preferred
Shares, including each series of RP, voting as a single class, shall elect the
balance of the Trustees.
(b) Right to Elect Majority of Trustees. 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 shall be
automatically increased by the smallest number that, when added to the two
Trustees elected exclusively by the holders of Preferred Shares (including each
series of RP), would constitute a majority of the Trustees as so increased by
such smallest number; and the holders of Preferred Shares (including each series
of RP) 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
39
additional Trustees, together with the two Trustees that such holders are in any
event entitled to elect. A Voting Period shall commence:
(i) if at any time accumulated dividends (whether or not earned or
declared, and whether or not funds are then legally available in an amount
sufficient therefor) on the outstanding shares of any series of RP equal to at
least two full years' dividends shall be due and unpaid and sufficient cash or
securities shall not have been deposited with the Paying Agent for the payment
of such accumulated dividends; or
(ii) if at any time holders of any Preferred Shares other than the RP are
entitled to elect a majority of the Trustees of the Trust.
Upon the termination of a Voting Period, the voting rights described in
this paragraph 6(b) shall cease, subject always, however, to the revesting of
such voting rights in the Holders upon the further occurrence of any of the
events described in this paragraph 6(b). A Voting Period shall terminate when
all dividends in arrears shall have been paid or otherwise provided for.
(c) Other Actions. Except as otherwise provided herein, so long as any
shares of RP are outstanding, the Trust shall not, without the affirmative vote
or consent of the Holders of at least a majority of the shares of RP outstanding
at the time, in person or by proxy, either in writing or at a meeting (voting
separately as one class): (i) authorize, create or issue, or increase or
decrease the authorized or issued amount of, any class or series of shares of
beneficial interest ranking prior to or on a parity with the RP with respect to
payment of dividends or the distribution of assets on liquidation, or increase
or decrease the number of authorized Preferred Shares (although the Trust may,
to the extent of the amount of Preferred Shares authorized from time to time,
issue additional shares of RP or other series of Preferred Shares on a parity
with the RP with respect to payment of dividends and the distribution of assets
on liquidation (including Preferred Shares with different dividend rates and
periods) without such vote or consent); (ii) amend, alter or repeal the
provisions of the Declaration of Trust and the By-laws, including this Section
12.1, whether by merger, consolidation or otherwise, so as to affect materially
and adversely any preference, right or power of such shares of RP or the Holders
thereof; or (iii) take any other action (including without limitation bankruptcy
proceedings) which pursuant to Section 18(a)(2)(D) of the 1940 Act requires such
approval by the Holders; provided that (i) the issuance of not more than the
6,000 Preferred Shares presently authorized and (ii) the creation and issuance
of series of Preferred Shares ranking junior to the RP with respect to payment
of dividends and the distribution of assets on liquidation, will not be deemed
to affect such preferences, rights or powers unless such issuance would, at the
time thereof, cause the Trust not to satisfy the 1940 Act RP Asset Coverage or
the RP Basic Maintenance Amount.
In the event of an amendment, alteration or repeal of the provisions of the
Declaration of Trust or the By-Laws, whether by merger, consolidation or
otherwise, so as to affect materially and adversely any preference, right or
power of shares of any series of RP or the
40
Holders thereof, the affirmative vote or consent of the Holders of at least a
majority of the outstanding shares of such series, in person or by proxy, either
in writing or at a meeting voting as a separate series shall be required.
The foregoing voting provisions shall not apply with respect to shares of
RP if, at or prior to the time when a vote is required, such shares of RP shall
have been (i) redeemed or (ii) called for redemption and sufficient funds (in
the form of cash or Municipal Bonds rated at least ▇-▇, ▇▇▇-▇ ▇▇ ▇▇▇▇-▇ by
Moody's and which mature prior to the redemption date) shall have been deposited
in trust to effect such redemption.
Notwithstanding the foregoing, the Trustees may, without the vote or
consent of the Holders of any series of RP, from time to time amend, alter or
repeal any or all of the provisions of paragraphs 12(a), 12(b), 12(c), 13(a) and
13(b) of this Part I of Section 12.1, as well as any or all of the definitions
of the terms listed below, and any such amendment, alteration or repeal will be
deemed not to affect the preferences, rights or powers of shares of RP or the
Holders thereof, provided the Trustees receive written confirmation from
Moody's, in the case of any such action with respect to paragraphs 12(b), 12(c),
13(a) and 13(b), or from S&P, in the case of any such action with respect to
paragraphs 12(a), 13(a) and 13(b), or from both Moody's and S&P, in the case of
any such action with respect to the definitions of the terms listed below, that
any such amendment, alteration or repeal would not impair the ratings then
assigned to any series of RP by the rating agency providing such confirmation:
Accountant's Confirmation Municipal Bonds
Anticipation Notes Municipal Index
Closing Transactions Non-Payment Period Rate
Deposit Securities Quarterly Valuation Date
Discounted Value Receivables for Municipal
Forward Commitments Bonds Sold
Independent Accountant RP Basic Maintenance Amount
Initial Margin RP Basic Maintenance Cure Date
Market Value RP Basic Maintenance Report
Maximum Potential Additional S&P Discount Factor
Dividend Liability S&P Eligible Asset
Moody's Discount Factor S&P Hedging Transaction
Moody's Eligible Asset S&P Exposure Period
Moody's Hedging Transaction S&P Volatility Factor
Moody's Exposure Period Treasury Bonds
Moody's Volatility Factor Valuation Date
1940 Act Cure Date Variation Margin
1940 Act RP Asset Coverage
41
(d) Voting Procedures.
(i) As soon as practicable after the accrual of any right of the
holders of shares of Preferred Shares (including shares of each series of
RP) to elect additional Trustees as described in paragraph 6(b) above, the
Trust shall notify the Paying Agent and the Paying 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 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 Paying Agent or if the Paying 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 held during a Voting Period, such
holders, voting together as a class (to the exclusion of the holders of all
other securities and classes of capital shares of the Trust), shall be
entitled to elect the number of Trustees prescribed in paragraph 6(b) above
on a one-vote-per-share basis. At any such meeting or adjournment thereof
in the absence of a quorum, a majority of such holders present in person or
by proxy shall have the power to adjourn the meeting without notice, other
than an announcement at the meeting, until a quorum is present.
(ii) For purposes of determining any rights of the Holders of shares
of any series of RP to vote on any matter, whether such right is created by
this Section 12.1, by the other provisions of the Declaration of Trust or
the By-laws, by statute or otherwise, no Holder of shares of any series of
RP shall be entitled to vote and no share of any series of RP 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,
sufficient funds (in the form of cash or Municipal Bonds rated at least
▇-▇, ▇▇▇-▇ ▇▇ ▇▇▇▇-▇ by Moody's and A-1+ or SP-1+ by S&P and which mature
prior to the redemption date) for the redemption of such shares have been
deposited in trust with the Paying Agent for that purpose and the requisite
Notice of Redemption with respect to such shares shall have been given as
provided in paragraph 4 of this Part I of Section 12.1. No share of RP held
by the Trust or any affiliate of the Trust shall have any voting rights or
be deemed to be outstanding for voting purposes.
(iii) The terms of office of all persons who are Trustees of the Trust
at the time of a special meeting of Holders of shares of RP and holders of
other Preferred Shares to elect Trustees shall continue, notwithstanding
the
42
election at such meeting by the Holders of shares of RP and such other
holders of the number of Trustees that they are entitled to elect, and the
persons so elected by the Holders of shares of RP and such other holders of
Preferred Shares, together with the two incumbent Trustees elected by the
Holders of shares of RP and such other holders of Preferred Shares and the
remaining incumbent Trustees elected by the holders of the Common Shares
and Preferred Shares, shall constitute the duly elected Trustees of the
Trust.
(iv) Simultaneously with the expiration of a Voting Period, the terms
of office of the additional Trustees elected by the Holders of shares of RP
and holders of other Preferred Shares pursuant to paragraph 6(b) of this
Part I of Section 12.1 shall terminate, the remaining Trustees shall
constitute the Trustees of the Trust and the voting rights of the Holders
of shares of RP and such other holders to elect additional Trustees
pursuant to paragraph 6(b) of this Part I of Section 12.1 shall cease,
subject to the provisions of the penultimate sentence of paragraph 6(b).
(e) Exclusive Remedy. Unless otherwise required by law, the Holders of
shares of RP shall not have any relative rights or preferences or other special
rights other than those specifically set forth herein. The Holders of shares of
RP shall have no preemptive rights or rights to cumulative voting. In the event
that the Trust fails to pay any dividends on the shares of RP, the exclusive
remedy of the Holders of shares of RP shall be the right to vote for Trustees
pursuant to the provisions of this paragraph 6. In no event shall the Holders of
shares of RP have any right to ▇▇▇ for, or bring a proceeding with respect to,
such dividends or redemptions or damages for the failure to receive any
dividends or the proceeds of a redemption.
(f) Notification to Moody's and S&P. In the event a vote of Holders of
shares of RP is required pursuant to the provisions of Section 13(a) of the 1940
Act, the Trust shall, not later than ten Business Days prior to the date on
which such vote is to be taken, notify Moody's and S&P that such vote is to be
taken, the nature of the action with respect to which such vote is to be taken
and, not later than 10 Business Days following the vote, the results of the
vote.
7. 1940 Act RP Asset Coverage. The Trust shall maintain, as of the last
Business Day of each month in which any share of RP is outstanding, the 1940 Act
RP Asset Coverage.
8. RP Basic Maintenance Amount.
(a) The Trust shall maintain, on each Valuation Date, and shall verify to
its satisfaction that it is maintaining on such Valuation Date, S&P Eligible
Assets having an aggregate Discounted Value equal to or greater than the RP
Basic Maintenance Amount and Moody's Eligible Assets having an aggregate
Discounted Value equal to or greater than the RP Basic Maintenance Amount. Upon
any failure to maintain the required Discounted Value, the Trust
43
will use its best efforts to alter the composition of its portfolio to reattain
the RP Basic Maintenance Amount on or prior to the RP Basic Maintenance Cure
Date. If, on any Valuation Date, the Trust shall have Moody's Eligible Assets
with a Discounted Value which exceeds the RP Basic Maintenance Amount by not
more than 5%, the Adviser shall not alter the composition of the Trust's
portfolio unless it determines that such action will not cause the Trust to have
Moody's Eligible Assets with a Discounted Value less than the RP Basic
Maintenance Amount.
(b) The Trust will deliver an RP Basic Maintenance Report to the
Remarketing Agents, the Paying Agent, ▇▇▇▇▇'▇ and S&P as of (i) each Quarterly
Valuation Date, (ii) the first day of a Special Dividend Period, and (iii) any
other time when specifically requested by either Moody's or S&P, in each case at
or before 5:00 p.m., New York City time, on the third Business Day after such
day.
(c) At 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 Moody's Eligible
Assets or S&P Eligible Assets, as the case may be, with an aggregate Discounted
Value which exceeds the RP Basic Maintenance Amount by 5% or more or to satisfy
the RP Basic Maintenance Amount, the Trust shall complete and deliver to the
Remarketing Agents, the Paying Agent, Moody's and S&P an RP Basic Maintenance
Report as of the date of such failure.
(d) At or before 5:00 p.m., New York City time, on the third Business Day
after a Valuation Date on which the Trust cures any failure to satisfy the RP
Basic Maintenance Amount, the Trust shall complete and deliver to the
Remarketing Agents, the Paying Agent, Moody's and S&P an RP Basic Maintenance
Report as of the date of such cure.
(e) An RP Basic Maintenance Report or Accountant's Confirmation will be
deemed to have been delivered to the Remarketing Agents, the Paying Agent,
Moody's and S&P if the Remarketing Agents, the Paying Agent, Moody's and S&P
receive a copy or telecopy, telex or other electronic transcription thereof and
on the same day the Trust mails to the Remarketing Agents, the Paying Agent,
Moody's and S&P for delivery on the next Business Day the full RP Basic
Maintenance Report. A failure by the Trust to deliver an RP Basic Maintenance
Report under subparagraph (b), (c) or (d) of this paragraph 8 shall be deemed to
be delivery of an RP Basic Maintenance Report indicating that the Discounted
Value for all assets of the Trust is less than the RP Basic Maintenance Amount,
as of the relevant Valuation Date.
(f) Within ten Business Days after the date of delivery to the Remarketing
Agents, the Paying Agent, S&P and ▇▇▇▇▇'▇ of an RP Basic Maintenance Report in
accordance with paragraph 8(b) above relating to a Quarterly Valuation Date, the
Independent Accountant will confirm in writing to the Remarketing Agents, the
Paying Agent, S&P and ▇▇▇▇▇'▇ (i) the mathematical accuracy of the calculations
reflected in such Report (and, in any other RP Basic Maintenance Report that was
delivered by the Trust during the quarter ending on such Quarterly Valuation
Date, if any, with such RP Basic Maintenance Report to be randomly selected by
the Independent Accountant); (ii) that, in such Report (and in such randomly
44
selected Report, if any), (a) the Trust determined in accordance with this
Section 12.1 whether the Trust had, at such Quarterly Valuation Date (and at the
Valuation Date addressed in such randomly selected Report, if any), S&P Eligible
Assets of an aggregate Discounted Value at least equal to the RP Basic
Maintenance Amount and Moody's Eligible Assets of an aggregate Discounted Value
at least equal to the RP Basic Maintenance Amount, and (b) it has obtained
confirmation from the Pricing Service that the Market Value of portfolio
securities as determined by the Pricing Service equals the mean between the
quoted bid and asked prices or the yield equivalent (when quotations are readily
available); (iii) that the Trust has excluded from the RP Basic Maintenance
Report assets not qualifying as Eligible Assets; and (iv) with respect to such
confirmation to Moody's, that the Trust has satisfied the requirements of
paragraph 12(b) of this Part I of Section 12.1 as of the Quarterly Valuation
Date (and at the Valuation Date addressed in such randomly selected Report, if
any) (such confirmation is herein called the "Accountant's Confirmation"). In
preparing the Accountant's 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 RP Basic Maintenance Report.
(g) Within ten Business Days after the date of delivery to the Remarketing
Agents, the Paying Agent, S&P and ▇▇▇▇▇'▇ of an RP Basic Maintenance Report in
accordance with paragraph 8(c) above relating to any Valuation Date on which the
Trust failed to satisfy the RP Basic Maintenance Amount, the Independent
Accountant will provide to the Remarketing Agents, the Paying Agent, S&P and
Moody's an Accountant's Confirmation as to such RP Basic Maintenance Report.
(h) Within ten Business Days after the date of delivery to the Remarketing
Agents, the Paying Agent, S&P and ▇▇▇▇▇'▇ of an RP Basic Maintenance Report in
accordance with paragraph 8(d) above relating to any Valuation Date on which the
Trust cured any failure to satisfy the RP Basic Maintenance Amount, the
Independent Accountant will provide to the Remarketing Agents, the Paying Agent,
S&P and Moody's an Accountant's Confirmation as to such RP Basic Maintenance
Report.
(i) If any Accountant's Confirmation delivered pursuant to subparagraph
(g), (h) or (i) of this paragraph 8 shows that an error was made in the RP Basic
Maintenance Report for a particular Valuation Date for which such Accountant's
Confirmation was required to be delivered, or shows that a lower aggregate
Discounted Value for the aggregate of all S&P Eligible Assets or Moody's
Eligible Assets, 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 RP Basic
Maintenance Report to the Remarketing Agents, the Paying Agent, S&P and Moody's
promptly following receipt by the Trust of such Accountant's Confirmation.
(j) At or before 5:00 p.m., New York City time, on the first Business Day
after the Date of Original Issue of the shares of RP, the Trust will complete
and deliver to Moody's and
45
S&P an RP Basic Maintenance Report as of the close of business on such Date of
Original Issue. Within five Business Days of such Date of Original Issue, the
Independent Accountant will provide to Moody's and S&P an Accountant's
Confirmation as to such RP Basic Maintenance Report.
(k) At or before 5:00 p.m., New York City time, on the first Business Day
following any date on which the Trust repurchases any outstanding Common Shares,
the Trust will complete and deliver to ▇▇▇▇▇'▇ and S&P an RP Basic Maintenance
Report as of the close of business on the date of the repurchase.
9. [RESERVED]
10. Restrictions on Certain Distributions. For so long as any share of RP
is outstanding, the Trust shall not declare, pay or set apart for payment any
dividend or other distribution (other than a dividend or distribution paid in
shares of, or options, warrants or rights to subscribe for or purchase, Common
Shares or other shares, if any, ranking junior to the shares of RP as to
dividends and upon liquidation) in respect of Common Shares or any other shares
of the Trust ranking junior to or on a parity with the shares of RP as to
dividends or upon liquidation, or call for redemption, redeem, purchase or
otherwise acquire for consideration any Common Shares or any other such junior
shares or parity shares (except by conversion into or exchange for shares of the
Trust ranking junior to the shares of RP as to dividends and upon liquidation),
unless (i) full cumulative dividends on shares of RP through the most recent
Dividend Payment Date shall have been paid or shall have been declared and
sufficient funds for the payment thereof deposited with the Paying Agent, (ii)
the Trust has redeemed the full number of shares of RP required to be redeemed
by any provision for mandatory redemption pertaining thereto, (iii) immediately
after such transaction the aggregate Discounted Value of Moody's Eligible Assets
and S&P Eligible Assets would at least equal the RP Basic Maintenance Amount and
(iv) the Trust meets the applicable requirements of Section 18(a)(2)(B) of the
1940 Act.
11. Notice. All notices or communications, unless otherwise specified in
these Bylaws, shall be sufficiently given if in writing and delivered in person
or mailed by first-class mail, postage prepaid. Notice shall be deemed given on
the earlier of the date received or the date seven days after which such notice
is mailed.
12. Futures and Options Transactions; Forward Commitments. (a) For so long
as any shares of RP are rated by S&P, the Trust will not purchase or sell
futures contracts, write, purchase or sell options on futures contracts or write
put options (except covered put options) or call options (except covered call
options) on portfolio securities unless it receives written confirmation from
S&P that engaging in such transactions will not impair the rating then assigned
to such shares of RP by S&P, except that the Trust may purchase or sell futures
contracts based on the Bond Buyer Municipal Bond Index (the "Municipal Index")
or U.S. Treasury Bonds with remaining maturities of ten years or more ("Treasury
Bonds") and write,
46
purchase or sell put and call options on such contracts (collectively "S&P
Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Hedging Transaction based on the
Municipal Index (other than transactions which terminate a futures
contract or option held by the Trust by the Trust's taking an opposite
position thereto ("Closing Transactions")), which would cause the
Trust at the time of such transaction to own or have sold (1) 1,001 or
more outstanding futures contracts based on the Municipal Index, (2)
outstanding futures contracts based on the Municipal Index and on
Treasury Bonds exceeding in number 25% of the quotient of the Market
Value of the Trust's total assets divided by $100,000 or (3)
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 thirty days preceding the time of
effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Hedging Transaction based on
Treasury Bonds (other than Closing Transactions) which would cause the
Trust at the time of such transaction to own or have sold (1)
outstanding futures contracts based on Treasury Bonds and on the
Municipal Index exceeding in number 25% of the quotient of the Market
Value of the Trust's total assets divided by $100,000 or (2)
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 thirty days preceding the time of
effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any
outstanding futures contract which the Trust owns or has sold or any
outstanding option thereon owned by the Trust in the event (i) the
Trust does not have S&P Eligible Assets with an aggregate Discounted
Value equal to or greater than the RP Basic Maintenance Amount on two
consecutive Valuation Dates and (ii) the Trust is required to pay
Variation Margin on the second such Valuation Date;
(D) the Trust will 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 such futures contract or option
thereon unless the Trust holds the securities deliverable under such
terms; and
(E) when the Trust writes a futures contract or option thereon (including
a futures contract or option thereon which requires delivery of an
underlying security), it will either maintain an amount of cash, cash
equivalents or short-term, fixed-income securities in a segregated
account with the Trust's custodian, so that the amount so segregated
plus the amount of Initial Margin and Variation Margin held in the
account of or on behalf of the Trust's broker with respect to such
futures contract or option equals the Market Value of the futures
contract or option, or, in the event the Trust
47
writes a futures contract or option thereon which requires delivery of
an underlying security, it shall hold such underlying security in its
portfolio.
For purposes of determining whether the Trust has S&P Eligible Assets
with a Discounted Value that equals or exceeds the RP Basic
Maintenance Amount, such Discounted Value shall, unless the Trust
receives written confirmation from S&P to the contrary, 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 contracts are owned by
the Trust.
(b) For so long as any shares of RP are rated by Moody's, the Trust will
not buy or sell futures contracts, write, purchase or sell put or call options
on futures contracts or write put or call options (except covered call or put
options) on portfolio securities unless it receives written confirmation from
Moody's that engaging in such transactions would not impair the rating then
assigned to any shares of RP by Moody's, except that the Trust may purchase or
sell exchange-traded futures contracts based on the Municipal Index or Treasury
Bonds and purchase, write or sell exchange-traded put options on such futures
contracts and purchase, write or sell exchange-traded call options on such
futures contracts (collectively "Moody's Hedging Transactions"), subject to the
following limitations:
(A) the Trust will not engage in any Moody's Hedging Transaction based on
the Municipal Index (other than Closing Transactions) which would
cause the Trust at the time of such transaction to own or have sold
(1) 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 thirty days preceding
the time of effecting such transaction as reported by The Wall Street
Journal or (2) outstanding futures contracts based on the Municipal
Index having a Market Value exceeding the Market Value of Municipal
Bonds constituting Moody's Eligible Assets owned by the Trust;
(B) the Trust will not engage in any Moody's Hedging Transaction based on
Treasury Bonds (other than Closing Transactions) which would cause the
Trust at the time of such transaction to own or have sold in the
aggregate (1) outstanding futures contracts based on Treasury Bonds
having an aggregate Market Value exceeding 10% of the aggregate Market
Value of all Moody's Eligible Assets owned by the Trust and rated Aaa
by Moody's, (2) outstanding futures contracts based on Treasury Bonds
having an aggregate Market Value exceeding 50% of the aggregate Market
Value of all Moody's Eligible Assets owned by the Trust and rated Aa
by Moody's (or, if not rated by Moody's but rated by S&P, rated AAA by
S&P) or (3) outstanding futures contracts based on Treasury Bonds
having an aggregate Market Value exceeding 90% of the aggregate Market
Value of Moody's Eligible Assets owned by the Trust and rated Baa or A
by Moody's (or, if not rated by Moody's but rated by S&P, rated A or
AA by S&P) (for purposes of the foregoing clauses (A) and (B), the
Trust shall be deemed to
48
own the number of futures contracts that underlie any outstanding
options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any
outstanding futures contract based on the Municipal Index if the
amount of open interest in the Municipal Index as reported by The Wall
Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any
outstanding futures contract by no later than the fifth Business Day
of the month in which such contract expires and will engage in a
Closing Transaction to close out any outstanding option on a futures
contract by no later than the first Business Day of the month in which
such option expires;
(E) the Trust will engage in Moody's Hedging Transactions only with
respect to futures contracts or options thereon having the next
settlement date for such type of futures contract or option, or the
settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for
leveraging or speculative purposes unless Moody's shall advise the
Trust that to do so would not adversely affect Moody's' then current
rating of the shares of RP; provided, however, that the Trust will not
be deemed to have engaged in a futures or options transaction for
leveraging or speculative purposes so long as it has done so otherwise
in accordance with this paragraph 12; and
(G) the Trust will not enter into an option or futures transaction unless,
after giving effect thereto, the Trust would continue to have Moody's
Eligible Assets with an aggregate Discounted Value equal to or greater
than the RP Basic Maintenance Amount.
For purposes of determining whether the Trust has Moody's Eligible Assets
with an aggregate Discounted Value that equals or exceeds the RP Basic
Maintenance Amount, the Discounted Value of Moody's Eligible Assets which
the Trust is obligated to deliver or receive pursuant to an outstanding
futures contract or option shall be as follows (unless the Trust receives
written confirmation to the contrary from Moody's): (i) assets subject to
call options written by the Trust which are either exchange-traded and
"readily reversible" or which expire within 48 days after the date as of
which such valuation is made shall be valued at the lesser of (a)
Discounted Value and (b) the exercise price of the call option written by
the Trust; (ii) assets subject to call options written by the Trust not
meeting the requirements of clause (i) of this sentence shall have no
value; (iii) assets subject to put options written by the Trust shall be
valued at the lesser of (a) the exercise price and (b) the Discounted Value
of such security; and (iv) futures contracts shall be valued at the lesser
of (a) settlement price and (b) the Discounted Value of the subject
security, provided that, if a contract matures within 48 days after the
date as of which such valuation is made, where the Trust is the seller the
contract may be valued at
49
the settlement price and where the Trust is the buyer the contract may be
valued at the Discounted Value of the subject securities.
For purposes of determining whether the Trust has Moody's Eligible Assets
with an aggregate Discounted Value that equals or exceeds the RP Basic
Maintenance Amount, the following amounts shall be added to the RP Basic
Maintenance Amount required to be maintained by the Trust under paragraph
8(a) of this Part I of Section 12.1 (unless the Trust receives written
confirmation to the contrary from Moody's): (i) 10% of the exercise price
of a written call option; (ii) the exercise price of any written put
option; (iii) where the Trust is the seller under a futures contract, 10%
of the settlement price of the futures contract; (iv) where the Trust is
the purchaser under a futures contract, the settlement price of assets to
be purchased under such futures contract; (v) the settlement price of the
underlying futures contract if the Trust writes put options on a futures
contract; and (vi) 105% of the Market Value of the underlying futures
contracts if the Trust writes call options on futures contracts and does
not own the underlying contract.
(c) For so long as any shares of RP are rated by Moody's, the Trust will
not enter into any contract to purchase securities for a fixed price at a future
date beyond customary settlement time (other than such contracts that constitute
Moody's Hedging Transactions that are permitted under paragraph 12(b) of this
Part I of Section 12.1) unless it receives written confirmation from Moody's
that engaging in such transactions would not impair the rating then assigned to
such shares of RP by Moody's except that the Trust may enter into such contracts
to purchase newly- issued securities on the date such securities are issued
("Forward Commitments"), subject to the following limitations:
(A) the Trust will maintain in a segregated account with its custodian
cash, cash equivalents or short-term, fixed income securities rated
▇-▇, ▇▇▇-▇ ▇▇ ▇▇▇▇-▇ by Moody's and maturing prior to the date of the
Forward Commitment with a face value that equals or exceeds the amount
of the Trust's obligations under any Forward Commitments to which it
is from time to time a party or long-term fixed income securities with
a Discounted Value that equals or exceeds the amount of the Trust's
obligations under any Forward Commitments to which it is from time to
time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after
giving effect thereto, the Trust would continue to have Moody's
Eligible Assets with an aggregate Discounted Value equal to or greater
than the RP Basic Maintenance Amount.
For purposes of determining whether the Trust has Moody's Eligible Assets
with an aggregate Discounted Value that equals or exceeds the RP Basic
Maintenance Amount, the Discounted Value of all Forward Commitments to
which the Trust is a party and of all securities deliverable to the Trust
pursuant to such Forward Commitments shall be zero.
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13. Certain Other Restrictions.
(a) For so long as any shares of RP are outstanding, the Trust will not,
unless it has received written confirmation from Moody's and S&P that any such
action would not impair the ratings then assigned by Moody's and S&P to any
shares of RP, engage in any one or more of the following transactions:
(i) borrow any money except as may be necessary for the clearance of
purchases and sales of portfolio securities and which borrowings shall be repaid
within 60 days and not be extended or renewed (provided that no such borrowing
will be permitted unless the Trust, after giving effect to such borrowing,
maintains Moody's Eligible Assets and S&P Eligible Assets at least equal to the
RP Basic Maintenance Amount);
(ii) lend portfolio securities;
(iii) designate a new Pricing Service;
(iv) engage in short sales;
(v) merge or consolidate with any other entity;
(vi) engage in reverse repurchase agreements; or
(vii) issue a class or series of shares of beneficial interest ranking
prior to or on a parity with the RP with respect to payment of dividends or the
distribution of assets on liquidation.
(b) For so long as any shares of RP are rated by Moody's or S&P, the Trust
shall give to Moody's or S&P, as the case may be, prompt written notice of the
following circumstances:
(i) any change to the Declaration of Trust or Article 12 of the Bylaws;
(ii) any failure to declare or pay any dividend on the shares of RP;
(iii) any mandatory or optional redemption of the shares of RP;
(iv) any assumption of control of the Trustees by the Holders of shares of
RP pursuant to Section 6(b) of this Part I of Section 12.1;
(v) in the event the Trust shall not be a party to a pricing services
agreement and dealer quotes on assets are not available;
(vi) in the event that the Applicable Dividend Rate equals or exceeds 95%
of the applicable Reference Rate;
(vii) any person owning of record more than 5% of the Trust's Common
Shares;
(viii) a change in Internal Revenue Service rules on Additional Dividends
relating to the operation of the Trust; and
(ix) ▇▇▇▇▇▇ Investment Management, Inc. is no longer the Trust's investment
manager.
14. Legally Available Funds. For purposes of this Section 12.1, funds shall
not be "legally available" for the payment of dividends or the redemption price
with respect to any share of RP if the Trust is insolvent at the time such
payment would be made or to the extent that such payment cannot be made without
rendering the Trust insolvent.
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PART II
REMARKETING PROCEDURES
The provisions of this Part II of Section 12.1 and other provisions of
these Bylaws describe the procedures pursuant to which the Applicable Dividend
Rate shall, except as otherwise provided in these Bylaws, be determined for any
Dividend Period for any series of RP. In the event that any of the Remarketing
Agents, Paying Agent, Securities Depository, Agent Members and Beneficial Owners
fail for any reason to perform any of the acts or obligations to be performed by
him or it as described herein, then no Holder or Beneficial Owner of any shares
of such series of RP shall have any right in respect thereof against the Trust
or any Trustee or officer of the Trust, and the sole obligation of the Trust in
respect of the determination of the amount and the payment of any dividend shall
be to pay to the Holders of such series of RP as shown on the share transfer
books of the Trust from time to time dividends as determined in accordance with
the terms of this Part II of Section 12.1 and any other applicable provisions of
these Bylaws. Notwithstanding any provision of these Bylaws, the Trust shall
have no obligation at any time to provide notice (other than to the Remarketing
Agents, the Paying Agent, the Securities Depository, S&P and Moody's), or to
make any payment (in respect of any dividend or otherwise), to any person other
than the Holders of the shares of RP shown on the share transfer books of the
Trust from time to time, and the providing of any notice or the payment of any
amount to such Holders (or to such other entities) shall discharge in full for
all purposes (including without limitation as against all Beneficial Owners of
any shares of RP) the Trust's obligation to provide any notice or to make any
payment.
1. Remarketing Schedule. Each Remarketing shall take place over a
two-Business Day period consisting of the Remarketing Date and the Settlement
Date. Such dates or the method of establishing such dates shall be determined by
the Trustees from time to time and until further action by the Trustees, a
Remarketing Date shall occur on the last Business Day of a Dividend Period for a
series of RP (except for the last Dividend Period for such RP) and the related
Settlement Date shall occur on the first Business Day of the succeeding Dividend
Period.
2. Procedure for Tendering.
(a) Each share of RP is subject to Tender and Dividend Reset at the end of
each Dividend Period for such RP and may be tendered in the Remarketing which
commences on the Remarketing Date immediately prior to the end of the current
Dividend Period. By 9:00 a.m., New York City time, on each such Remarketing
Date, the Remarketing Agents shall, after canvassing the market and considering
prevailing market conditions at the time for shares of such RP and similar
securities, provide Beneficial Owners of such RP non-binding indications of the
Applicable Dividend Rate for the next succeeding 28-day Dividend Period (in the
case of Series A RP) or 7-day Dividend Period (in the case of Series B RP or
Series C RP) or, if applicable, a Special Dividend Period; provided that, if the
Trust has designated the next Dividend Period for such RP as a Special Dividend
Period, the Remarketing Agents will
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provide to Beneficial Owners a non-binding indication only of the Applicable
Dividend Rate for such Special Dividend Period. The actual Applicable Dividend
Rate for such Dividend Period may be greater than or less than the rate per
annum indicated in such non-binding indications (but not greater than the
applicable Maximum Dividend Rate). By 12:00 noon, New York City time, on such
Remarketing Date, each Beneficial Owner of a share of RP must notify a
Remarketing Agent of its desire, on a share-by-share basis, either to tender
such share of RP at a price of $50,000 per share (in the case of Series A RP) or
$25,000 per share (in the case of Series B RP or Series C RP) or to continue to
hold such share for the next 28-day Dividend Period (in the case of Series A RP)
or 7-day Dividend Period (in the case of Series B RP or Series C RP) or, if
applicable, the next Special Dividend Period. Beneficial Owners who do not
provide such notice shall be deemed to have elected (i) to hold all their shares
of RP if each of the current Dividend Period and succeeding Dividend Period is a
28-day Dividend Period (in the case of Series A RP) or 7-day Dividend Period (in
the case of Series B RP or Series C RP) or a Special Dividend Period of 60 days
or less, and (ii) to tender all their shares of RP if the current Dividend
Period or succeeding Dividend Period is a Special Dividend Period of more than
60 days. Any notice given to a Remarketing Agent to tender or hold shares for a
particular Dividend Period shall be irrevocable and shall not be conditioned
upon the level at which the Applicable Dividend Rate is established. A
Remarketing Agent may, in its sole discretion, (i) at the request of a
Beneficial Owner that has tendered one or more shares to such Remarketing Agent,
waive such Beneficial Owner's tender, and thereby enable such Beneficial Owner
to continue to hold the share or shares for the next 28-day Dividend Period (in
the case of Series A RP) or 7-day Dividend Period (in the case of Series B RP or
Series C RP) or, if applicable, a designated Special Dividend Period, as agreed
to by such Beneficial Owner and such Remarketing Agent at such time, so long as
such tendering Beneficial Owner has indicated to such Remarketing Agent that it
would accept the new Applicable Dividend Rate for such Dividend Period, such
waiver to be contingent upon the Remarketing Agents' ability to remarket all
shares of RP tendered in such Remarketing, and (ii) at the request of a
Beneficial Owner that has elected to hold one or more of its shares of RP, waive
such Beneficial Owner's election with respect thereto, such waiver to be
contingent upon the Remarketing Agents' ability to remarket all shares of RP
tendered in such Remarketing.
(b) The ability of each Beneficial Owner to tender shares of RP in a
Remarketing shall be limited to the extent that (i) the Remarketing Agents
conduct a Remarketing pursuant to the terms of the Remarketing Agreement, (ii)
shares tendered have not been called for redemption and (iii) the Remarketing
Agents are able to find a purchaser or purchasers for tendered shares of RP at
an Applicable Dividend Rate for the next applicable Dividend Period that is not
in excess of the Maximum Dividend Rate for such Dividend Period.
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3. Determination of Applicable Dividend Rates.
(a) By 3:00 p.m., New York City time, on each Remarketing Date for a series
of RP, the Remarketing Agents shall determine the Applicable Dividend Rate to
the nearest one-thousandth (0.001) of one percent per annum for the next 28-day
Dividend Period (in the case of Series A RP) or 7-day Dividend Period (in the
case of Series B RP or Series C RP), or, if designated, Special Dividend Period.
The Applicable Dividend Rate for each such Dividend Period, except as otherwise
required herein, shall be the dividend rate per annum which the Remarketing
Agents determine, in their sole judgment, to be the lowest rate that will enable
them to remarket on behalf of the Beneficial Owners thereof all shares of RP
subject to Tender and Dividend Reset in such Remarketing and tendered to them on
such Remarketing Date at a price of $50,000 per share (in the case of Series A
RP) or $25,000 per share (in the case of Series B RP and Series C RP).
(b) For any series of RP, if no Applicable Dividend Rate shall have been
established on a Remarketing Date in a Remarketing for the next 28-day Dividend
Period (in the case of Series A RP) or 7-day Dividend Period (in the case of
Series B RP or Series C RP), or Special Dividend Period, if any, for any reason
(other than because there are no Remarketing Agents, the Remarketing Agents are
not required to conduct a Remarketing pursuant to the terms of the Remarketing
Agreement or the Remarketing Agents are unable to remarket on the Remarketing
Date all shares of RP tendered (or deemed tendered) to them at a price of
$50,000 per share (in the case of Series A RP) or $25,000 per share (in the case
of Series B RP and Series C RP)), then the Remarketing Agents, in their sole
discretion, shall, if necessary and except during a Non-Payment Period, after
taking into account market conditions as reflected in the prevailing yields on
fixed and variable rate taxable and tax exempt debt securities and the
prevailing dividend yields of fixed and variable rate preferred stock, determine
the Applicable Dividend Rate that would be the rate per annum that would be the
initial dividend rate fixed in an offering on such Remarketing Date, assuming in
each case a comparable dividend period, issuer and security. If there is no
Remarketing for such series of RP because there are no Remarketing Agents or the
Remarketing Agents are not required to conduct a Remarketing pursuant to the
Remarketing Agreement or if the Remarketing Agents are unable to remarket on the
Remarketing Date all shares of RP tendered (or deemed tendered) to them at a
price of $50,000 per share (in the case of Series A RP) or $25,000 per share (in
the case of Series B RP or Series C RP), then, except during a Non-
Payment Period, the Applicable Dividend Rate for the subsequent Dividend Period
for RP and for each subsequent Dividend Period for RP for which no Remarketing
takes place because of the foregoing shall be the applicable Maximum Dividend
Rate for a 28-day Dividend Period (in the case of Series A RP) or 7-day Dividend
Period (in the case of Series B RP or Series C RP) and the next Dividend Period
for RP and each such subsequent Dividend Period shall be a 28- day Dividend
Period (in the case of Series A RP) or 7-day Dividend Period (in the case of
Series B RP or Series C RP).
(c) In determining the Applicable Dividend Rate for a series of RP, the
Remarketing Agents shall, after taking into account market conditions as
reflected in the prevailing yields on
54
fixed and variable rate taxable and tax exempt debt securities and the
prevailing dividend yields of fixed and variable rate preferred stock determined
for the purpose of providing non-binding indications of the Applicable Dividend
Rate to Beneficial Owners and potential purchasers of shares of RP, (i) consider
the number of shares of RP tendered and the number of shares of RP potential
purchasers are willing to purchase and (ii) contact by telephone or otherwise
current and potential Beneficial Owners of shares of RP subject to Tender and
Dividend Reset to ascertain the dividend rates at which they would be willing to
hold shares of RP.
(d) The Applicable Dividend Rate for each series of RP shall be determined
as aforesaid by the Remarketing Agents in their sole discretion (except as
otherwise provided in this Section 12.1 with respect to an Applicable Dividend
Rate that shall be the Non-Payment Period Rate or the Maximum Dividend Rate) and
shall be conclusive and binding on Holders and Beneficial Owners.
(e) Except during a Non-Payment Period, the Applicable Dividend Rate for
any Dividend Period for each series of RP shall not be more than the applicable
Maximum Dividend Rate.
4. Allocation of Shares; Failure to Remarket at Liquidation Preference.
(a) If the Remarketing Agents are unable to remarket by 3:00 p.m., New York
City time, on a Remarketing Date all shares of RP tendered (or deemed tendered)
to them in the related Remarketing at a price of $50,000 per share (in the case
of Series A RP) or $25,000 per share (in the case of Series B RP or Series C
RP), (i) each Beneficial Owner that tendered or was deemed to have tendered
shares of RP for sale shall sell a number of shares of RP on a pro rata basis,
to the extent practicable, or by lot, as determined by the Remarketing Agents in
their sole discretion, based on the number of orders to purchase shares of RP in
such Remarketing, and (ii) the Applicable Dividend Rate for the next Dividend
Period for RP, which shall be a 28-day Dividend Period, shall be the Maximum
Dividend Rate for such 28- day Dividend Period (in the case of Series A RP) or
7-day Dividend Period (in the case of Series B RP or Series C RP).
(b) If the allocation procedures described above would result in the sale
of a fraction of a share of RP, the Remarketing Agents shall, in their sole
discretion, round up or down the number of shares of RP sold by each Beneficial
Owner on the applicable Remarketing Date so that each share sold by a Beneficial
Owner shall be a whole share of RP, and the total number of shares sold equals
the total number of shares purchased on such Remarketing Date.
5. Notification of Results; Settlement.
(a) By telephone at approximately 3:30 p.m., New York City time, on each
Remarketing Date, the Remarketing Agents shall advise each Beneficial Owner of
tendered shares and each purchaser thereof (or the Agent Member thereof) (i) of
the number of shares such Beneficial Owner or purchaser is to sell or purchase
and (ii) to give instructions to its
55
Agent Member to deliver such shares against payment therefor or to pay the
purchase price against delivery as appropriate. The Remarketing Agents will also
advise each Beneficial Owner or purchaser that is to continue to hold, or to
purchase, shares with a Dividend Period beginning on the Business Day following
such Remarketing Date of the Applicable Dividend Rate for such shares.
(b) In accordance with the Securities Depository's normal procedures, on
the Settlement Date, the transactions described above with respect to each share
of RP shall be executed through the Securities Depository, if the Securities
Depository or its nominee holds or is to hold the certificate relating to the
shares to be purchased, and the accounts of the respective Agent Members of the
Securities Depository shall be debited and credited and shares delivered by book
entry as necessary to effect the purchases and sales of shares of RP in the
related Remarketing. Purchasers of such shares of RP shall make payment to the
Paying Agent in same-day funds against delivery to such purchasers or their
nominees of one or more certificates representing such shares of RP, or, if the
Securities Depository or its nominee holds or is to hold the certificate
relating to such shares to be purchased, through their Agent Members in same-day
funds to the Securities Depository against delivery by book entry of such shares
of RP through their Agent Members. The Securities Depository shall make payment
in accordance with its normal procedures.
(c) If any Beneficial Owner selling shares of RP in a Remarketing fails to
deliver such shares, the Agent Member of such selling Beneficial Owner and of
any other person that was to have purchased shares of RP in such Remarketing may
deliver to any such other person a number of whole shares of RP that is less
than the number of shares that otherwise was to be purchased by such person. In
such event, the number of shares of RP to be so delivered shall be determined by
such Agent Member. Delivery of such lesser number of shares of RP shall
constitute good delivery of such number of shares.
(d) The Remarketing Agents, the Paying Agent and the Securities Depository
each will use its reasonable commercial efforts to meet the timing requirements
set forth in paragraphs (a) and (b) above; provided that, in the event that
there is a delay in the occurrence of any delivery or other event connected with
a Remarketing, the Remarketing Agents, the Paying Agent and the Securities
Depository each will use its reasonable commercial efforts to accommodate such
delivery in furtherance of the Remarketing.
(e) Notwithstanding any of the foregoing provisions of this paragraph 5,
the Remarketing Agents may, in their sole discretion, modify the settlement
procedures set forth above with respect to any Remarketing, provided any such
modification does not adversely affect the Beneficial Owners or the Holders of
RP or the Trust.
(f) Neither the Trust, the Paying Agent nor any of the Remarketing Agents
shall be obligated in any case to provide funds to make payment to a Beneficial
Owner upon such Beneficial Owner's tender of its shares of RP in a Remarketing,
unless, in each case, such
56
shares of RP were acquired for the account of the Trust, the Paying Agent or any
of the Remarketing Agents, as the case may be.
6. Purchase of Shares of RP by Remarketing Agents. The Remarketing Agents
may purchase for their own account shares of RP in a Remarketing, provided that
they purchase all tendered (or deemed tendered) shares of RP not sold in such
Remarketing to other purchasers. If the Remarketing Agents hold shares of RP for
their own account upon completion of a Remarketing, they must establish an
Applicable Dividend Rate with respect to such shares in such Remarketing that is
not higher than the Applicable Dividend Rate that would have been established if
the Remarketing Agents did not hold or had not purchased such shares. Except as
provided in the first sentence of this paragraph 6, the Remarketing Agents shall
not be obligated to purchase any shares of RP that would otherwise remain unsold
in a Remarketing. If the Remarketing Agents hold for their own account any
shares of RP subject to a Remarketing immediately prior to such Remarketing and
if all other shares subject to such Remarketing and tendered for sale by other
Beneficial Owners of shares of RP (including circumstances where any of the
Remarketing Agents hold such shares as nominee) have been sold in such
Remarketing, then the Remarketing Agents may sell such number of their shares in
such Remarketing as there are outstanding orders to purchase that have not been
filled by shares tendered for sale by other Beneficial Owners.
7. Applicable Dividend Rate During a Non-Payment Period. So long as a
NonPayment Period for any series of RP shall continue, paragraphs 1, 2, 3, 4, 5
and 6 of this Part II of Section 12.1 shall not be applicable to any of the
shares of all series of RP and the shares of all series of RP shall not be
subject to Tender and Dividend Reset.
8. Transfers. Unless the Trust has elected, during a Non-Payment Period, to
waive this requirement, ownership of shares of RP will be maintained in book
entry form by the Securities Depository, for the account of a designated Agent
Member which, in turn, shall maintain records of such purchaser's beneficial
ownership.
9. Miscellaneous.
(a) To the extent permitted by applicable law, the Trustees may interpret
or adjust the provisions hereof to resolve any inconsistency or ambiguity, or to
remedy any formal defect.
(b) Notwithstanding any provision of these Bylaws, (i) no Remarketing
Agent, Paying Agent, Securities Depository or Agent Member shall have any
obligation in respect of any person having any interest in any share of RP other
than the Beneficial Owner thereof, and the Paying Agent shall have no obligation
to record any transfer of beneficial ownership in any share unless and until it
shall have received proper notice and evidence of such transfer and the right of
the transferee in accordance with its procedures in effect from time to time,
and (ii) the record books of the Trust as kept by the Paying Agent shall be
conclusive as to who is the Holder of any share of RP and as to the number of
shares of RP held from time to time by any
57
Holder, and the Trust shall have no obligation in respect of any share of RP to
any person other than such Holder.
10. Securities Depository; Share Certificates.
(a) If there is a Securities Depository, one certificate for all of the
shares of each series of RP shall be issued to the Securities Depository and
registered in the name of the Securities Depository or its nominee. Any such
certificate shall bear a legend to the effect that such certificate is issued
subject to the provisions contained in this Section 12.1. Unless the Trust shall
have elected, during a Non-Payment Period, to waive this requirement, the Trust
will also issue stop-transfer instructions to this effect to the Paying Agent
for the shares of RP. Except as provided in paragraph (b) below, the Securities
Depository or its nominee will be the Holder, and no Beneficial Owner shall
receive certificates representing its ownership interest in such shares.
(b) If the Applicable Dividend Rate applicable to all shares of any series
of RP shall be the Non-Payment Period Rate or there is no Securities Depository,
the Trust may at its option issue one or more new certificates with respect to
such shares (without the legend referred to in paragraph 10(a) of this Part II
of Section 12.1) registered in the names of the Beneficial Owners or their
nominees and rescind the stop-transfer instructions referred to in paragraph
10(a) of this Part II of Section 12.1 with respect to such shares.
ARTICLE 13
Amendments to the Bylaws
13.1 General. Except as otherwise expressly stated herein, these Bylaws may
be amended or repealed, in whole or in part, by a majority of the Trustees then
in office at any meeting of the Trustees, or by one or more writings signed by
such a majority.
59