Pre-Effective Amendment to Registration Statement of a Closed-End Investment Company — Form N-2
Filing Table of Contents
Document/Exhibit Description Pages Size
1: N-2/A Pre-Effective Amendment to Registration Statement 190± 765K
of a Closed-End Investment Company
2: EX-99 Exhibit 99(A)(Iii) 38± 138K
3: EX-99 Exhibit 99(A)(Iv) 61± 232K
4: EX-99 Exhibit 99(D)(I)(A) 2 11K
5: EX-99 Exhibit 99(D)(Ii)(B) 3± 12K
9: EX-99 Exhibit 99(H) - Underwriting Agreement 32± 124K
6: EX-99 Exhibit 99(K)(Ii) 23± 79K
7: EX-99 Exhibit 99(K)(Iii) 17± 60K
8: EX-99 Exhibit 99(K)(Iv) 2± 9K
10: EX-99 Exhibit 99(L) 2± 10K
11: EX-99 Exhibit N(1) 1 7K
Exhibit 99(a)(iv)
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
ARTICLES SUPPLEMENTARY
CREATING AND FIXING THE RIGHTS OF
SERIES C AUCTION RATE CUMULATIVE PREFERRED STOCK
The Gabelli Global Multimedia Trust Inc., a Maryland
corporation having its principal office in Baltimore City, Maryland (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of the State of Maryland that:
FIRST: The Board of Directors of the Corporation, at a meeting
duly convened and held on February 19, 2003, pursuant to authority expressly
vested in it by Article V of the Charter of the Corporation, adopted a
resolution designating [__] authorized and unissued shares of Preferred Stock as
"Series C Auction Rate Pre ferred Stock."
SECOND: The preferences, rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption of the Series C Auction Rate Cumulative Preferred Stock, par value
$.001 per share, as set by the Board of Directors are as follows:
DESIGNATION
Series C Preferred Stock: A series of [__] preferred shares,
par value $0.001 per share, liquidation preference $25,000 per share, is hereby
designated "Series C Auction Rate Cumulative Preferred Stock" (the "Series C
Preferred Stock"). Each share of Series C Preferred Stock may be issued on a
date to be determined by the Board of Directors of the Corporation; have an
initial dividend rate per annum, an initial Dividend Period and an initial
Dividend Payment Date as shall be determined in advance of the issuance thereof
by the Board of Directors of the Corporation; and have such other preferences,
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption, in addition to those required by
applicable law or set forth in the Charter applicable to Preferred Stock of the
Corporation, as are set forth in these Articles Supplementary. The Series C
Preferred Stock shall constitute a separate series of Preferred Stock.
As used in these Articles Supplementary, unless the context
requires otherwise, each capitalized term shall have the meaning ascribed to it
in paragraph 13 of Article I and paragraph 1 of Article II of these Articles
Supplementary.
Article I: Series C Preferred Stock Terms
1. Number of Shares; Ranking.
(a) The initial number of authorized shares constituting the
Series C Preferred Stock is [__]. No fractional shares of Series C Preferred
Stock shall be issued.
(b) Shares of Series C Preferred Stock which at any time have
been redeemed or purchased by the Corporation shall, after such redemption or
purchase, have the status of authorized but unissued shares of Preferred Stock.
(c) The Series C Preferred Stock shall rank on a parity with
any other series of Preferred Stock as to the payment of dividends to which such
stock is entitled.
(d) No Holder of Series C Preferred Stock shall have, solely
by reason of being such a holder, any preemptive or other right to acquire,
purchase or subscribe for any shares of any Preferred Stock or Common Stock or
other securities of the Corporation which it may hereafter issue or sell.
2. Dividends.
(a) The Holders of Series C Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors, out of funds
legally available therefor, cumulative cash dividends on their shares of Series
C Preferred Stock at the dividend rate determined by the Board of Directors in
the manner described under "Designation" above during the period from and after
the date on which such shares are originally issued and including the last day
of the initial Dividend Period and, thereafter, at the rate, determined as set
forth in paragraph 2(c), and no more, payable on the respective dates determined
as set forth in paragraph 2(b). Dividends on the Outstanding shares of Series C
Preferred Stock shall accumu late from the date on which such shares are
originally issued.
(b) (i) Dividends shall be payable when, as and if declared by
the Board of Directors following the initial Dividend Payment Date, subject to
paragraph 2(b)(ii), on the Series C Preferred Stock as follows:
(A) with respect to any Dividend Period of one year
or less, on the first Business Day following the last day of such Dividend
Period; provided, however, if the Dividend Period is more than 91 days then on
the 91st, 181st and 271st days within such period, if applicable, and on the
first Business Day following the last day of such Dividend Period; and
(B) with respect to any Dividend Period of more than
one year, on a quarterly basis on each March 26th, June 26th, September 26th and
Decem ber 26th within such Dividend Period and on the first Business Day
following the last day of such Dividend Period.
(ii) If a day for payment of dividends resulting from
the application of paragraph 2(b)(i) above is not a Business Day, then the
Dividend Payment Date shall be the first Business Day following such day for
payment of dividends.
(iii) The Corporation shall pay to the Paying Agent
not later than 12:00 noon, New York City time, on the Business Day immediately
preceding each Dividend Payment Date for Series C Preferred Stock, an aggregate
amount of immediately available funds equal to the dividends to be paid to all
Holders of such Series C Preferred Stock on such Dividend Payment Date. The
Corporation shall not be required to establish any reserves for the payment of
dividends.
(iv) All moneys paid to the Paying Agent for the
payment of dividends shall be held in trust for the payment of such dividends by
the Paying Agent for the benefit of the Holders specified in paragraph 2(b)(v).
Unless instructed by the Corporation in writing the Paying Agent will hold such
moneys uninvested. Any moneys paid to the Paying Agent in accordance with the
foregoing but not applied by the Paying Agent to the payment of dividends,
including interest earned, if any, on such moneys, will, to the extent permitted
by law, be repaid to the Corpora tion at the end of 90 days from the date on
which such moneys were to have been so applied.
(v) Each dividend on Series C Preferred Stock shall
be paid on the Dividend Payment Date therefor to the Holders of Series C
Preferred Stock as their names appear on the stock ledger or stock records of
the Corporation on the Business Day immediately preceding such Dividend Payment
Date; provided, however, that if dividends are in arrears, they may be declared
and paid at any time to Holders as their names appear on the stock ledger or
stock records of the Corporation on such date not exceeding 15 days preceding
the payment date thereof, as may be fixed by the Board of Directors. No interest
will be payable in respect of any dividend payment or payments which may be in
arrears.
(c) (i) For each Dividend Period after the initial Dividend
Period for the Outstanding shares of Series C Preferred Stock, the dividend rate
shall be equal to the rate (stated as a rate per annum) that results from an
Auction (but the rate set at the Auction will not exceed the Maximum Rate);
provided, however, that if an Auction for any subsequent Dividend Period is not
held for any reason (other than as provided in the immediately following
sentence) or if Sufficient Clearing Bids have not been made in an Auction (other
than as a result of all shares of Series C Preferred Stock being the subject of
Submitted Hold Orders), then the dividend rate on each Outstanding share of
Series C Preferred Stock for any such Dividend Period shall be the Maximum Rate,
except as provided in 2(c)(ii) below. If an Auction is not held because an
unforeseen event or unforeseen events cause a day that otherwise would have been
an Auction Date not to be a Business Day, then the length of the then- current
Dividend Period shall be extended by seven days (or a multiple thereof if
necessary because of such unforeseen event or events), the Applicable Rate for
such period shall be the Applicable Rate for the Dividend Period so extended and
the Dividend Payment Date for such Dividend Period shall be the first Business
Day immediately succeeding the end of such period.
(ii) Subject to the cure provisions in paragraph
2(c)(iii) below, a Default Period with respect to the Outstanding shares of
Series C Preferred Stock will commence if the Corporation fails to deposit
irrevocably in trust in same- day funds, with the Paying Agent by 12:00 noon,
New York City time on the Business Day immediately preceding the relevant
Dividend Payment Date, the full amount of any declared dividend on the
Outstanding shares of Series C Preferred Stock then payable on that Dividend
Payment Date (a "Dividend Default").
Subject to the cure provisions of paragraph 2(c)(iii) below, a
Default Period with respect to a Dividend Default or a Redemption Default shall
end on the Business Day on which, by 12:00 noon, New York City time, all unpaid
dividends and any unpaid Redemption Price in respect of such shares of Series C
Preferred Stock shall have been deposited irrevocably in trust in same-day funds
with the Paying Agent. In the case of a Default Period, the following shall
apply:
A. Each Dividend Period that commences during a Default
Period will be a Standard Dividend Period.
B. The dividend rate for each Dividend Period that
commences and concludes during a Default Period will
be equal to the Default Rate.
C. In the event a Holder sells Series C Preferred Stock
at an Auction that takes place on the day a Dividend
Default occurs and the Default is not cured in
accordance with paragraph 2(c)(iii) below, such
former Holder shall be entitled to receive the
Default Rate with respect to the shares of Series C
Pre ferred Stock such Holder sold at the Auction for
the Dividend Period with respect to which the Default
occurred.
D. In the event a Dividend Period commences during a
Default Period and such Dividend Period continues
after such Default Period has ended (a) the dividend
rate for the portion of such Dividend Period that
occurs during the Default Period will be the Default
Rate and (b) the dividend rate for the portion of
such Dividend Period that falls outside the Default
Period will be (i) the Applicable Rate, in the case
of the first Dividend Period following a Default, or
(ii) the Maximum Rate, in the case of any other
Dividend Period commencing during a Default Period.
E. The commencement of a Default Period will not by
itself cause the commencement of a new Dividend
Period.
F. No Auction will be held during an applicable Default
Period; provided, however, that if a Default Period
shall end prior to the end of a Standard Dividend
Period that had commenced during such Default Period,
an Auction will be held on the last day of such
Standard Dividend Period.
(iii) No Default Period with respect to a Dividend
Default or Redemption Default shall be deemed to have commenced, unless such
default is due solely to the willful failure of the Corporation, if the amount
of any dividend or any Redemption Price due is deposited irrevocably in trust in
same-day funds with the Paying Agent by 12:00 noon, New York City time within
three Business Days after the applicable Dividend Payment Date or Redemption
Date, together with an amount in respect of such shares of Series C Preferred
Stock equal to the Default Rate applied to the amount of such non-payment based
on the actual number of days that would otherwise have comprised the Default
Period divided by 360. The "Default Rate" shall be equal to the Reference Rate
multiplied by three (3).
(iv) The amount of dividends per share of Series C
Pre ferred Stock payable (if declared) on each Dividend Payment Date of each
Dividend Period of less than one year (or in respect of dividends on another
date in connection with a redemption during such Dividend Period) shall be
computed by multiplying the relevant Applicable Rate, Default Rate or Maximum
Rate, as the case may be, for such Dividend Period (or a portion thereof) by a
fraction, the numerator of which will be the number of days in such Dividend
Period (or portion thereof) that such share of Series C Preferred Stock was
Outstanding and for which the Applicable Rate, Maximum Rate or the Default Rate
was applicable (but in no event shall the numerator exceed 360) and the
denominator of which will be 360, multiplying the amount so obtained by $25,000,
and rounding the amount so obtained to the nearest cent. During any Dividend
Period of one year or more, the amount of dividends per share of Series C
Preferred Stock payable on any Dividend Payment Date (or in respect of dividends
on another date in connection with a redemption during such Dividend Period)
will be computed as described in the preceding sentence except that the
numerator, with respect to any full twelve month period, will be 360.
(d) Any dividend payment made on shares of Series C Preferred
Stock shall first be credited against the earliest accumulated but unpaid
dividends due with respect to such shares.
(e) For so long as shares of the Series C Preferred Stock are
Outstanding, except as otherwise contemplated by Article I of these Articles
Supple mentary, the Corporation shall not pay 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 Stock or other stock, if any,
ranking junior to the Series C Preferred Stock as to dividends and upon
liquidation) with respect to Common Stock or any other capital stock of the
Corporation ranking junior to the Series C Preferred Stock as to dividends or
upon liquidation, or call for redemption, redeem, purchase or otherwise acquire
for consideration any Common Stock or other capital stock ranking junior to the
Series C Preferred Stock (except by conversion into or ex change for shares of
the Corporation ranking junior to the Series C Preferred Stock as to dividends
and upon liquidation), unless, in each case, (i) immediately after such
transaction, the Corporation would have Eligible Assets with an aggregate Dis
counted Value at least equal to the Basic Maintenance Amount and the Asset
Coverage would be achieved, (ii) all cumulative and unpaid dividends due on or
prior to the date of the transaction have been declared and paid in full with
respect to the Corporation's Preferred Stock, including the Series C Preferred
Stock (or shall have been declared and sufficient funds for the payment thereof
deposited with the applicable Paying Agent) and (iii) the Corporation has
redeemed the full number of shares of Preferred Stock to be redeemed mandatorily
pursuant to any provision for mandatory redemption contained herein, including,
without limitation, any such provision contained in paragraph 3(a)(ii).
(f) No full dividends shall be declared or paid on the Series
C Preferred Stock for any Dividend Period or part thereof, unless full
cumulative dividends due through the most recent Dividend Payment Dates therefor
for all Outstanding series of Preferred Stock of the Corporation ranking on a
parity with the Series C Preferred Stock as to the payment of dividends have
been or contemporane ously are declared and paid through the most recent
Dividend Payment Dates therefor. If full cumulative dividends due have not been
paid on all Outstanding shares of such Preferred Stock, any dividends being paid
on such shares of Preferred Stock (including the Series C Preferred Stock) will
be paid as nearly pro rata as possible in proportion to the respective amounts
of dividends accumulated but unpaid on each such series of Preferred Stock then
Outstanding on the relevant Dividend Payment Date.
3. Redemption.
(a) (i) Optional Redemption. After the initial Dividend
Period, subject to any Non-Call Period and the provisions of this paragraph 3
and to the extent permitted under the 1940 Act and Maryland law, the Corporation
may, at its option, redeem in whole or in part out of funds legally available
therefor, shares of Series C Preferred Stock by delivering a notice of
redemption not less than 7 calen dar days and not more than 40 calendar days
prior to the Redemption Date, in the case of shares herein designated as (A)
having a Dividend Period of one year or less, on the next Business Day after the
last day of such Dividend Period, at a redemption price per share equal to
$25,000, plus an amount equal to accumulated but unpaid dividends thereon
(whether or not earned or declared) to the Redemption Date ("Redemption Price"),
or (B) having a Dividend Period of more than one year, on any Business Day prior
to the end of the relevant Dividend Period, at the Redemption Price subject to
any applicable Specific Redemption Provisions. Notwithstanding the foregoing,
the Corporation shall not give a notice of any redemption pursuant to this
paragraph 3(a)(i) unless, on the date on which the Corporation gives such notice
(x) the Corporation reasonably believes that, assuming the fulfillment of any
conditions precedent specified in such notice, it will be able to deposit with
the Paying Agent when due Deposit Assets with maturity or tender dates not later
than the day preced ing the applicable Redemption Date and having a value not
less than the amount (including any applicable premium) due to Holders of the
Series C Preferred Stock to be redeemed on the Redemption Date and (y) the
Corporation would have Eligible Assets with an aggregate Discounted Value at
least equal to the Basic Maintenance Amount and the Asset Coverage immediately
subsequent to such redemption, if such redemption were to occur on such date, it
being understood that the provisions of paragraph 3(d) shall be applicable in
such circumstances in the event the Corporation makes the deposit and takes the
other action required thereby.
(ii) Mandatory Redemption. So long as shares of
Series C Preferred Stock are Outstanding, if the Corporation fails (A) as of any
Valuation Date to meet the Basic Maintenance Test and such failure is not cured
by the Basic Maintenance Amount Cure Date or (B) as of any Valuation Date to
meet the 1940 Act Asset Coverage and such failure is not cured by the Series C
Asset Coverage Cure Date or (C) as of any valuation or measuring date applicable
to any other series of Preferred Stock to meet any applicable maintenance amount
test and such failure is not cured by the relevant cure date (any such cure
date, together with any Basic Maintenance Amount Cure Date or Series C Asset
Coverage Cure Date, a "Cure Date"), Preferred Stock, which at the Corporation's
determination may include Series C Preferred Stock, will be subject to mandatory
redemption out of funds legally available therefor. The series and number of
shares of Preferred Stock to be re deemed in such circumstances will be
determined by the Corporation, subject to the limitations of the 1940 Act and
Maryland law, from among all series of Preferred Stock then Outstanding and may
include any proportion of Series C Preferred Stock or any other series of
Preferred Stock. The amount of Preferred Stock to be mandatorily redeemed under
such circumstances shall, in the aggregate, equal the lesser of (1) the minimum
amount of Preferred Stock (including the Series C Preferred Stock if so
determined by the Corporation) the redemption of which, if deemed to have
occurred immediately prior to the opening of business on the relevant Cure Date,
would result in the Corporation meeting, as the case may be, the Basic
Maintenance Test, the Asset Coverage and any other then applicable mainte nance
amount test, in each case as of the relevant Cure Date (provided that, if there
is no such minimum amount of Preferred Stock the redemption of which would have
such result, all Series C Preferred Stock then Outstanding will be redeemed),
and (2) the maximum amount of Preferred Stock that can be redeemed out of funds
expected to be available therefor on the Mandatory Redemption Date at the
Mandatory Redemption Price; provided, that in the event that Preferred Stock is
redeemed mandatorily pursuant to this paragraph 3, the Corporation may, but is
not required to, redeem a sufficient amount of additional shares of Series C
Preferred Stock, which when aggregated with other shares of Preferred Stock
redeemed by the Corporation, permits the Corporation to have (x) Eligible Assets
with Adjusted Value with respect to the Preferred Stock remaining Outstanding of
as great as 110% of the Basic Maintenance Amount and (y) Asset Coverage with
respect to the Preferred Stock remaining Outstanding of as much as 220%.
(iii) Subject to the Articles Supplementary
establishing each series of Preferred Stock and the 1940 Act, the Corporation
may determine the shares and series of Preferred Stock to be redeemed in
accordance with the paragraph 3(a)(ii) above, subject to the further provisions
of this paragraph 3(a)(iii). Subject to the immediately preceding sentence, the
Corporation shall effect any mandatory redemption of Series C Preferred Stock
relating to: (A) a failure to meet the Basic Maintenance Test, no later than 25
business days after the Corporation last met the Basic Maintenance Test, (B) a
failure to meet the Asset Coverage, no later than 30 days after the Series C
Asset Coverage Cure Date or (C) a failure to meet any other then applicable
maintenance amount test in accordance with the requirements of such test (in
each case the date specified for such redemption being, the "Mandatory
Redemption Date"), except that if the Corporation does not have funds legally
available for the redemption of, or is not otherwise legally permitted to
redeem, the amount of Preferred Stock which would be mandatorily redeemed by the
Corporation under subparagraph 3(a)(ii) if sufficient funds were available, or
the Corporation otherwise is unable to effect such redemption on or prior to the
applicable Mandatory Redemption Date, the Corporation shall redeem on such
redemption date the number of shares of Series C Preferred Stock and other
Preferred Stock with respect to which it has given notice of redemption as it
shall have legally available funds, or is otherwise able, to redeem ratably on
the basis of Redemption Price from each holder whose shares are to be redeemed
and the remainder of the Series C Preferred Stock and other Preferred Stock
which it was unable to redeem on the earliest practicable date on which the
Corporation will have such funds available upon notice, in the case of Series C
Preferred Stock pursuant to paragraph 3(b) to Holders of shares of Series C
Preferred Stock to be redeemed. The Corporation will deposit with the Paying
Agent funds sufficient to redeem the specified number of shares of Series C Pre
ferred Stock subject to a redemption under paragraph 3(a)(ii), by 1:00 P.M., New
York City time, of the Business Day immediately preceding the Mandatory Redemp
tion Date. If fewer than all of the Outstanding shares of Series C Preferred
Stock are to be redeemed pursuant to this paragraph 3(a)(iii), the number of
shares of Series C Preferred Stock to be redeemed shall be redeemed pro rata
from the Holders of such shares in proportion to the number of shares of Series
C Preferred Stock held by such Holders, by lot or by such other method as the
Corporation shall deem fair and equitable, subject, however, to the terms of any
applicable Specific Redemption Provisions.
(b) In the event of a redemption of Series C Preferred Stock
pursuant to paragraph 3(a) above, the Corporation will have filed or will file
a notice of its intention to redeem with the Commission, in either case so as
to provide at least the minimum notice required under Rule 23c-2 under the
1940 Act or any successor provision. In addition, the Corporation shall
deliver a notice of redemption to the Auction Agent (the "Notice of
Redemption") containing the information set forth below (i) in the case of an
optional redemption pursuant to paragraph 3(a)(i) above, one Business Day
prior to the giving of notice to the Holders and (ii) in the case of a
mandatory redemption pursuant to paragraph 3(a)(ii) above, on or prior to the
7th day preceding the Mandatory Redemption Date. The Auction Agent will use
its reasonable efforts to provide telephonic, electronic or written notice to
each Holder of any shares of Series C Preferred Stock called for redemption
not later than the close of business on the Business Day immediately following
the day on which the Corporation determines the shares to be redeemed (or,
during a Default Period with respect to such shares, not later than the close
of business on the Business Day immediately following the day on which the
Auction Agent receives Notice of Redemption from the Corporation). The Auction
Agent shall confirm a telephonic notice in writing not later than the close of
business on the third Business Day preceding the date fixed for redemption by
providing the Notice of Redemption to each Holder of shares called for
redemption, the Paying Agent (if different from the Auction Agent) and the
Securities Depository. Notice of Redemption will be addressed to the Holders
of Series C Preferred Stock at their addresses appearing on the share records
of the Corporation. Such Notice of Redemption will set forth (s) the date
fixed for redemption, (t) the number or percentage of shares of Series C
Preferred Stock to be redeemed, (u) the CUSIP number(s) of such shares, (v)
the Redemption Price (specifying the amount of accumulated dividends to be
included therein), (w) the place or places where such shares are to be
redeemed, (x) that dividends on the shares to be redeemed will cease to
accumulate on such date fixed for redemption, (y) the provision of these
Articles Supplementary under which redemption shall be made, and (z) in the
case of a redemption pursuant to paragraph 3(a)(i), any conditions precedent
to such redemption. If fewer than all the Outstanding shares of Series C
Preferred Stock held by any Holder are to be redeemed, the Notice of
Redemption mailed to such Holder shall also specify the number or percentage
of shares of Series C Preferred Stock to be re deemed from such Holder. No
defect in the Notice of Redemption or in the transmit tal or mailing thereof
will affect the validity of the redemption proceedings, except as required by
applicable law.
(c) Notwithstanding the provisions of paragraph 3(a), the
Corporation shall not redeem shares of Preferred Stock unless all accumulated
and unpaid dividends on all Outstanding shares of Series C Preferred Stock and
other Preferred Stock ranking on a parity with the Series C Preferred Stock with
respect to dividends for all applicable past Dividend Periods (whether or not
earned or declared by the Corporation) have been or are contemporaneously paid
or declared and Deposit Assets for the payment of such dividends have been
deposited with the Paying Agent; provided, however, that the foregoing shall not
prevent the purchase or acquisition of outstanding shares of Preferred Stock
pursuant to the successful completion of an otherwise lawful purchase or
exchange offer made on the same terms to holders of all Outstanding shares of
Preferred Stock.
(d) Upon the deposit of funds sufficient to redeem shares of
Series C Preferred Stock with the Paying Agent and the giving of the Notice of
Redemption to the Auction Agent under paragraph 3(b) above, dividends on such
shares shall cease to accumulate and such shares shall no longer be deemed to be
Outstanding for any purpose (including, without limitation, for purposes of
calculating whether the Corporation has met the Basic Maintenance Test or the
Asset Coverage), and all rights of the Holders of the shares of Series C
Preferred Stock so called for redemp tion shall cease and terminate, except the
right of such Holder to receive the Re demption Price specified herein, but
without any interest or other additional amount. Such Redemption Price shall be
paid by the Paying Agent to the nominee of the Securities Depository. The
Corporation shall be entitled to receive from the Paying Agent, promptly after
the date fixed for redemption, any cash deposited with the Paying Agent in
excess of (i) the aggregate Redemption Price of the shares of Series C Preferred
Stock called for redemption on such date and (ii) such other amounts, if any, to
which Holders of the Series C Preferred Stock called for redemption may be
entitled. Any funds so deposited that are unclaimed at the end of two years from
such redemption date shall, to the extent permitted by law, be paid to the
Corpora tion, after which time the Holders of shares of Series C Preferred Stock
so called for redemption may look only to the Corporation for payment of the
Redemption Price and all other amounts, if any, to which they may be entitled;
provided, however, that the Paying Agent shall notify all Holders whose funds
are unclaimed by placing a notice in The Wall Street Journal concerning the
availability of such funds for three consecutive weeks. The Corporation shall be
entitled to receive, from time to time after the date fixed for redemption, any
interest earned on the funds so deposited.
(e) A Default Period with respect to the Outstanding shares of
Series C Preferred Stock will commence if the Corporation fails to deposit
irrevoca bly in trust in same-day funds, with the Paying Agent by 12:00 noon,
New York City time on the Business Day preceding the redemption date specified
in the Notice of Redemption (the "Redemption Date") the full amount of any
Redemption Price payable on such Redemption Date (a "Redemption Default");
provided, that no Redemption Default shall be deemed to have occurred in respect
of Series C Pre ferred Stock when the related redemption notice provides that
the redemption of such Series C Preferred Stock is subject to one or more
conditions precedent and each such condition precedent shall not have been
satisfied at the time or times or in the manner specified in such Notice of
Redemption. To the extent a Redemption Default occurs with respect to Series C
Preferred Stock or that any redemption for which Notice of Redemption has been
given is otherwise prohibited, such redemption shall be made as soon as
practicable to the extent such funds become legally available or such redemption
is no longer otherwise prohibited. Notwithstanding the fact that a Redemption
Default has occurred and is continuing or that the Corporation has otherwise
failed to redeem shares of Series C Preferred Stock for which a Notice of
Redemption has been given, dividends may be declared and if so declared will be
paid on Series C Preferred Stock, which shall include those shares of Series C
Preferred Stock for which Notice of Redemption has been given but for which
deposit of funds has not been made.
(f) All moneys paid to the Paying Agent for payment of the
Redemption Price of shares of Series C Preferred Stock called for redemption
shall be held in trust by the Paying Agent for the benefit of Holders of the
Series C Preferred Stock so to be redeemed. A Redemption Default will occur on
account of the Corporation's failure to timely deposit any required Redemption
Price with the Paying Agent and any resulting Default Period will end in
accordance with paragraph 2(c).
(g) So long as the Series C Preferred Stock is held of record
by the nominee of the Securities Depository, the Redemption Price for such
shares will be paid on the date fixed for redemption to the nominee of the
Securities Depository for distribution to Agent Members for distribution to the
Persons for whom they are acting as agent.
(h) Except for the provisions described above, nothing
contained in these Articles Supplementary limits any right of the Corporation to
purchase or otherwise acquire Series C Preferred Stock outside of an Auction at
any price, whether higher or lower than the price that would be paid in
connection with an optional or mandatory redemption, so long as, at the time of
any such purchase, there is no arrearage in the payment of dividends on, or the
mandatory or optional Re demption Price with respect to, any shares of Series C
Preferred Stock for which Notice of Redemption has been given and the
Corporation meets the Asset Coverage and the Basic Maintenance Test after giving
effect to such purchase or acquisition on the date thereof. Any shares of Series
C Preferred Stock which are purchased, redeemed or otherwise acquired by the
Corporation shall have no voting rights. If fewer than all the Outstanding
shares of Series C Preferred Stock are redeemed or otherwise acquired by the
Corporation, the Corporation shall give notice of such transaction to the
Auction Agent.
(i) In the case of any redemption pursuant to this paragraph
3, only whole shares of Series C Preferred Stock shall be redeemed, and in the
event that any provision of the Charter would require redemption of a fractional
share, the Auction Agent shall be authorized to round up so that only whole
shares are re deemed.
(j) Notwithstanding anything herein to the contrary, the Board
of Directors may authorize, create or issue other series of Preferred Stock
ranking on a parity with the Series C Preferred Stock with respect to the
payment of dividends or the distribution of assets upon dissolution, liquidation
or winding up of the affairs of the Corporation, to the extent permitted by the
1940 Act, if upon issuance of any such series, either (i) the net proceeds from
the sale of such stock (or such portion thereof needed to redeem or repurchase
the Outstanding shares of Series C Preferred Stock) are deposited with the
Auction Agent, Notice of Redemption as contemplated by paragraph 3(b) has been
delivered prior thereto or is sent promptly thereafter, and such proceeds are
used to redeem all Outstanding shares of Series C Preferred Stock or (ii) the
Corporation would meet the Asset Coverage, the Basic Maintenance Test and the
requirements of paragraph 9 immediately following any redemption of Preferred
Stock (which may include a portion of the Series C Preferred Stock) to be
effected with the proceeds of such issuance.
4. Designation of Dividend Period.
(a) The initial Dividend Period for the Series C Preferred
Stock shall be as determined in the manner under "Designation" above. The
Corporation shall designate the duration of subsequent Dividend Periods of the
Series C Preferred Stock; provided, however, that no such designation shall be
necessary for a Standard Dividend Period and, provided further, that any
designation of a Special Dividend Period for the Series C Preferred shall be
effective only if (i) notice thereof shall have been given as provided herein,
(ii) any failure to pay in a timely manner to the Auction Agent the full amount
of any dividend on, or the Redemption Price of, the Series C Preferred Stock
shall have been cured as provided for herein, (iii) Sufficient Clearing Orders
shall have existed in an Auction held for the Series C Preferred Stock on the
Auction Date immediately preceding the first day of such proposed Special
Dividend Period, (iv) if the Corporation shall have mailed a Notice of
Redemption with respect to any shares of Series C Preferred Stock, the
Redemption Price with respect to such shares shall have been deposited with the
Paying Agent and (v) the Corporation has confirmed that as of the Auction Date
next preceding the first day of such Special Dividend Period, it has Eligible
Assets with an aggregate Discounted Value at least equal to the Basic
Maintenance Amount, and the Corpora tion has consulted with the Broker-Dealers
and has provided notice of such designa tion and a Basic Maintenance Report to
each Rating Agency.
(b) If the Corporation proposes to designate any Special
Dividend Period, not fewer than seven Business Days (or two Business Days in the
event the duration of the Dividend Period prior to such Special Dividend Period
is fewer than eight days) nor more than 30 Business Days prior to the first day
of such Special Dividend Period, notice shall be (i) made by press release and
(ii) communicated by the Corporation by telephonic or other means to the Auction
Agent and confirmed in writing promptly thereafter. Each such notice shall state
(x) that the Corporation proposes to exercise its option to designate a
succeeding Special Dividend Period, specifying the first and last days thereof
and (y) that the Corporation will by 3:00 P.M., New York City time, on the
second Business Day next preceding the first day of such Special Dividend
Period, notify the Auction Agent, who will promptly notify the Broker-Dealers,
of either (A) its determination, subject to certain conditions, to proceed with
such Special Dividend Period, subject to the terms of any Specific Redemption
Provisions, or (B) its determination not to proceed with such Special Dividend
Period, in which latter event the succeeding Dividend Period shall be a Standard
Dividend Period. No later than 3:00 P.M., New York City time, on the second
Business Day next preceding the first day of any proposed Special Dividend
Period, the Corporation shall deliver to the Auction Agent, who will promptly
deliver to the Broker-Dealers and Existing Holders, either:
(1) a notice stating (a) that the
Corporation has determined to designate the next succeeding Dividend Period as a
Special Dividend Period, (b) the first and last days thereof and (c) the terms
of any Specific Redemp tion Provisions; or
(2) a notice stating that the Corporation
has determined not to exercise its option to designate a Special Dividend
Period.
If the Corporation fails to deliver either such notice with respect to
the designation of any proposed Special Dividend Period to the Auction Agent or
is unable to make the confirmation provided in paragraph 4(a)(v) by 3:00 P.M.,
New York City time, on the second Business Day next preceding the first day of
such proposed Special Dividend Period, the Corporation shall be deemed to have
deliv ered a notice to the Auction Agent with respect to such Dividend Period to
the effect set forth in clause (2) above, thereby resulting in a Standard
Dividend Period.
5. Restrictions on Transfer.
Series C Preferred Stock may be transferred only (a) pursuant to an
Order placed in an Auction, (b) to or through a Broker-Dealer or (c) to the
Corporation or any Affiliate. Notwithstanding the foregoing, a transfer other
than pursuant to an Auction will not be effective unless the selling Existing
Holder or the Agent Member of such Existing Holder (in the case of an Existing
Holder whose shares are listed in its own name on the books of the Auction
Agent), or the Broker-Dealer or Agent Member of such Broker-Dealer (in the case
of a transfer between persons holding shares of any Series C Preferred Stock
through different Broker-Dealers), advises the Auction Agent of such transfer.
Any certificates representing Series C Preferred Stock issued to the Securities
Depository will bear legends with respect to the restrictions described above
and stop-transfer instructions will be issued to the Transfer Agent and/or
Registrar.
6. Voting Rights.
(a) General.
Except as otherwise provided by law or as specified in the
Charter, each Holder of Series C Preferred Stock and any other Preferred Stock
shall be entitled to one vote for each share held on each matter submitted to a
vote of stock holders of the Corporation, and the Holders of Outstanding shares
of Preferred Stock and Common Stock shall vote together as a single class;
provided, however, that at any meeting of the stockholders of the Corporation
held for the election of directors, the Holders of Outstanding shares of
Preferred Stock, including the Series C Pre ferred Stock, shall be entitled, as
a class, to the exclusion of the Holders of all other securities and classes of
capital stock of the Corporation, to elect a number of Corporation's directors,
such that following the election of directors at the meeting of the
stockholders, the Corporation's Board of Directors shall contain two directors
elected by the Holders of the Outstanding shares of Preferred Stock as a class.
Subject to paragraph 6(b), the Holders of outstanding shares of capital stock of
the Corporation, including the Holders of Outstanding shares of Preferred Stock,
includ ing Series C Preferred Stock, voting as a single class, shall elect the
balance of the directors.
(b) Right to Elect Majority of Board of Directors.
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 directors constituting the Board of Directors shall be
automatically increased by the smallest number of additional directors that,
when added to the two directors elected exclusively by the Holders of shares of
Preferred Stock pursuant to paragraph 6(a) above, would constitute a majority of
the Board of Directors as so increased by such smallest number; and the Holders
of shares of Pre ferred Stock shall be entitled, voting separately as one class
(to the exclusion of the holders of all other securities and classes of capital
stock of the Corporation), to elect such smallest number of additional
directors, together with the two directors that such Holders are in any event
entitled to elect pursuant to paragraph 6(a) above. The Corporation and the
Board of Directors shall take all necessary action, including amending the
Corporation's by-laws, to effect an increase in the number of directors as
described in the preceding sentence. 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 Series C Preferred Stock equal
to at least two full years' dividends shall have become due and unpaid and
sufficient cash or specified securities shall not have been deposited with the
Paying Agent for the payment in full of such accumulated dividends; or
(ii) if at any time holders of any other shares of
Preferred Stock are entitled to elect a majority of the directors of the
Corporation under the 1940 Act or the Articles Supplementary creating such
shares.
Upon the termination of a Voting Period, the voting rights described in
this paragraph 6(b) shall cease, subject always, however, to the reverting of
such voting rights in the holders of Preferred Stock upon the further occurrence
of any of the events described in this paragraph 6(b).
(c) Right to Vote with Respect to Certain Other Matters.
So long as the Series C Preferred Stock is Outstanding, the
Corpora tion shall not, without the affirmative vote of the holders of a
majority of the shares of Preferred Stock Outstanding at the time, voting
separately as one class, amend, alter or repeal the provisions of the Charter,
whether by merger, consolidation or otherwise, so as to materially adversely
affect any of the contract rights expressly set forth in the Charter of Holders
of Series C Preferred Stock or any other Preferred Stock. To the extent
permitted under the 1940 Act, in the event shares of more than one series of
Preferred Stock are Outstanding, the Corporation shall not effect any of the
actions set forth in the preceding sentence which materially adversely affects
the contract rights expressly set forth in the Charter of a Holder of shares of
a series of Preferred Stock differently than those of a Holder of shares of any
other series of Preferred Stock without the affirmative vote of the Holders of
at least a majority of the shares of Preferred Stock of each series materially
adversely affected and Outstanding at such time (each such materially adversely
affected series voting separately as a class to the extent its rights are
affected differently). The Corporation shall notify each Rating Agency ten
Business Days prior to any such vote described above. Unless a higher percentage
is provided for under the Charter or applicable provisions of the Maryland
General Corporation Law, the affirmative vote of the Holders of a majority of
the Outstanding shares of Preferred Stock, including the Series C Preferred
Stock, voting together as a single class, will be required to approve any plan
of reorganization adversely affecting such shares or any action requiring a vote
of security holders under Section 13(a) of the 1940 Act. For purposes of this
paragraph 6(c), the phrase "vote of the Holders of a majority of the Outstanding
shares of Preferred Stock" (or any like phrase) shall mean, in accordance with
Section 2(a)(42) of the 1940 Act, the vote, at the annual or a special meeting
of the stockholders of the Corporation duly called (A) of 67 percent or more of
the shares of Preferred Stock present at such meeting, if the Holders of more
than 50 percent of the Outstanding shares of Preferred Stock are present or
represented by proxy; or (B) of more than 50 percent of the Outstanding shares
of Preferred Stock, whichever is less. The class vote of Holders of shares of
Preferred Stock described above will in each case be in addition to a separate
vote of the requisite percentage of shares of Common Stock and shares of
Preferred Stock, including the Series C Preferred Stock, voting together as a
single class, necessary to authorize the action in question. An increase in the
number of authorized shares of Preferred Stock pursu ant to the Charter or the
issuance of additional shares of any series of Preferred Stock (including the
Series C Preferred Stock) pursuant to the Charter shall not in and of itself be
considered to adversely affect the contract rights of the Holders of Preferred
Stock. The provisions of this paragraph 6(c) are subject to the provisions of
para graph 10.
(d) Voting Procedures.
(i) As soon as practicable after the accrual of any
right of the Holders of shares of Preferred Stock, including the Series C
Preferred Stock, to elect additional directors as described in paragraph 6(b),
the Corporation shall call a special meeting of such Holders and instruct the
Auction Agent to mail a notice of such special meeting to the Holders of Series
C Preferred Stock, such meeting to be held not less than 10 nor more than 20
days after the date of mailing of such notice. If the Corporation fails to send
such notice to the Auction Agent or if the Corporation 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 day on which such notice
is mailed or such other day as the Board of Directors shall determine. At any
such special meeting and at each meeting held during a Voting Period, such
Holders of Preferred Stock, voting together as a class (to the exclusion of the
holders of all other securities and classes of capital stock of the
Corporation), shall be entitled to elect the number of directors prescribed in
paragraph 6(b) on a one-vote-per-share basis. At any such meeting or adjournment
thereof in the absence of a quorum, a majority of the Holders of shares of
Preferred Stock, including the Series C Preferred Stock, 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 date not more than 120 days after the
original record date.
(ii) For purposes of determining any rights of the
Holders of the shares of Preferred Stock, including the Series C Preferred
Stock, to vote on any matter, whether such right is created by these Articles
Supplementary, by the other provisions of the Charter, by statute or otherwise,
a share of Series C Preferred Stock which is not Outstanding shall not be
counted.
(iii) The terms of office of all persons who are
directors of the Corporation at the time of a special meeting of Holders of
Preferred Stock, including the Series C Preferred Stock, to elect directors
shall continue, notwithstanding the election at such meeting by such Holders of
the number of directors that they are entitled to elect, and the persons so
elected by such Holders, together with the two incumbent directors elected by
the Holders of Preferred Stock, including the Series C Preferred Stock, and the
remaining incumbent directors elected by the holders of the Common Stock and
Preferred Stock, shall constitute the duly elected directors of the Corporation.
(iv) Upon the expiration of a Voting Period, the
terms of office of the additional directors elected by the Holders of Preferred
Stock pursuant to paragraph 6(b) above shall expire, and the remaining directors
shall constitute the directors of the Corporation and the voting rights of such
Holders of Preferred Stock, including Series C Preferred Stock, to elect
additional directors pursuant to paragraph 6(b) above shall cease, subject to
the provisions of the last sentence of paragraph 6(b). Upon the expiration of
the terms of the directors elected by the holders of Preferred Stock pursuant to
paragraph 6(b) above, the number of directors shall be automatically reduced to
the number and composition of directors on the Board immediately preceding such
Voting Period.
(e) Exclusive Remedy.
Unless otherwise required by law, the Holders of Series C
Preferred Stock shall not have any rights or preferences other than those
specifically set forth herein. The Holders of Series C Preferred Stock shall
have no preemptive rights or rights to cumulative voting. In the event that the
Corporation fails to pay any dividends on the Series C Preferred Stock, the
exclusive remedy of the Holders shall be the right to vote for directors
pursuant to the provisions of this paragraph 6.
(f) Notification to Rating Agency.
In the event a vote of Holders of Preferred Stock is required
pursuant to the provisions of Section 13(a) of the 1940 Act, as long as the
Series C Preferred Stock is rated by a Rating Agency at the request of the
Corporation, the Corporation shall, not later than ten Business Days prior to
the date on which such vote is to be taken, notify each Rating Agency that such
vote is to be taken and the nature of the action with respect to which such vote
is to be taken and, not later than ten Business Days after the date on which
such vote is taken, notify each Rating Agency of the result of such vote.
7. Liquidation Rights.
(a) In the event of any liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or involuntary, the Holders
of Series C Preferred Stock shall be entitled to receive out of the assets of
the Corpora tion available for distribution to stockholders, after claims of
creditors but before any distribution or payment shall be made in respect of the
Common Stock or any other stock of the Corporation ranking junior to the Series
C Preferred Stock as to liquida tion payments, a liquidation distribution in the
amount of $25,000.00 per share (the "Liquidation Preference"), plus an amount
equal to all unpaid dividends accumulated to and including the date fixed for
such distribution or payment (whether or not earned or declared by the
Corporation, but excluding interest thereon), and such Holders shall be entitled
to no further participation in any distribution or payment in connection with
any such liquidation, dissolution or winding up.
(b) If, upon any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the assets of the
Corporation available for distribution among the Holders of all Outstanding
shares of Series C Preferred Stock, and any other Outstanding class or series of
Preferred Stock ranking on a parity with the Series C Preferred Stock as to
payment upon liquidation, shall be insufficient to permit the payment in full to
such Holders of Series C Preferred Stock of the Liquidation Preference plus
accumulated and unpaid dividends and the amounts due upon liquidation with
respect to such other Preferred Stock, then such available assets shall be
distributed among the Holders of Series C Preferred Stock and such other
Preferred Stock ratably in proportion to the respective preferential amounts to
which they are entitled. Unless and until the Liquidation Preference plus
accumulated and unpaid dividends has been paid in full to the Hold ers of shares
of Series C Preferred Stock, no dividends or distributions will be made to
holders of shares of the Common Stock or any other stock of the Corporation
ranking junior to the Series C Preferred Stock as to liquidation.
8. Auction Agent.
For so long as shares of the Series C Preferred Stock are Outstanding,
the Auction Agent, duly appointed by the Corporation to so act, shall be in each
case a commercial bank, trust company or other financial institution independent
of the Corporation and its Affiliates (which, however, may engage or have
engaged in business transactions with the Corporation or its Affiliates) and at
no time shall the Corporation or any of its Affiliates act as the Auction Agent
in connection with the Auction Procedures. If the Auction Agent resigns or for
any reason its appointment is terminated during any period that any shares of
Series C Preferred Stock are Outstanding, the Corporation shall use its best
efforts promptly thereafter to appoint another qualified commercial bank, trust
company or financial institution to act as the Auction Agent.
9. Coverage Tests.
(a) Determination of Compliance.
For so long as shares of the Series C Preferred Stock are
Outstanding, the Corporation shall make the following determinations:
(i) Asset Coverage as follows:
(A) As of each Valuation Date, the Corporation shall
determine whether the Asset Coverage is met as of that date.
(B) The Corporation shall deliver to each Rating
Agency an "Asset Coverage Certificate" which sets forth the determination of
paragraph 9(a)(i)(A) above (1) as of the Date of Original Issue and, thereafter,
(2) as of (x) the last Business Day of each March, June, September and December
and (y) a Business Day on or before any Series C Asset Coverage Cure Date
following a failure to meet Asset Coverage. Such Asset Coverage Certificate
shall be delivered in the case of clause (1) on the Date of Original Issue and
in the case of clause (2) on or before the seventh Business Day after the last
Business Day of such March, June, September and December, as the case may be, or
the relevant Cure Date.
(ii) Basic Maintenance Amount as follows:
(A) For so long as the Series C Preferred Stock is
rated by Moody's and/or Fitch at the Corporation's request, the Corporation
shall maintain, on each Valuation Date, Eligible Assets having an Adjusted Value
at least equal to the Basic Maintenance Amount, as of such Valuation Date. Upon
any failure to main tain Eligible Assets having an Adjusted Value at least equal
to the Basic Mainte nance Amount, the Corporation shall use all commercially
reasonable efforts to re-at tain Eligible Assets having an Adjusted Value at
least equal to the Basic Mainte nance Amount on or prior to the Basic
Maintenance Amount Cure Date, by altering the composition of its portfolio or
otherwise.
(B) On or before 5:00 P.M., New York City time, on
the fifth Business Day after a Valuation Date on which the Corporation fails to
satisfy the Basic Maintenance Amount, and on the fifth Business Day after the
Basic Maintenance Amount Cure Date with respect to such Valuation Date, the
Corpora tion shall complete and deliver to each Rating Agency a Basic
Maintenance Report as of the date of such failure or such Basic Maintenance
Amount Cure Date, as the case may be, which will be deemed to have been
delivered to such Rating Agency, as the case may be, if such Rating Agency
receives a copy or facsimile or other elec tronic transcription or transmission
thereof and on the same day the Corporation mails or sends to such Rating Agency
for delivery on the next Business Day the full Basic Maintenance Report. The
Corporation shall also deliver a Basic Maintenance Report to each Rating Agency
as of any Annual Valuation Date, in each case on or before the fifth Business
Day after such day. A failure by the Corporation to deliver a Basic Maintenance
Report pursuant to the preceding sentence shall be deemed to be delivery of a
Basic Maintenance Report indicating the Discounted Value for all assets of the
Corporation is less than the Basic Maintenance Amount, as of the relevant
Valuation Date.
(C) Within ten Business Days after the date of
delivery of a Basic Maintenance Report in accordance with paragraph 9(a)(ii)(B)
relating to any Annual Valuation Date, the Corporation shall cause the
Independent Accountant to send an Accountant's Confirmation to each Rating
Agency with respect to such Basic Maintenance Report.
(D) Within ten Business Days after the date of
delivery of a Basic Maintenance Report in accordance with paragraph 9(a)(ii)(B)
relating to each, if any, Valuation Date on which the Corporation failed to
satisfy the Basic Mainte nance Amount and the Basic Maintenance Amount Cure Date
with respect to such failure to satisfy the Basic Maintenance Amount, the
Corporation shall cause the Independent Accountant to provide to each Rating
Agency an Accountant's Confir mation as to such Basic Maintenance Report.
(E) If any Accountant's Confirmation delivered
pursuant to paragraph (C) or (D) of this paragraph 9(a)(ii) does not agree with
the Corporation's calculation of the 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
Eligible Assets in respect of any Rating Agency than was determined by the
Corporation, the calculation or determi nation made by such Independent
Accountant shall be final and conclusive and shall be binding on the
Corporation, and the Corporation shall accordingly amend and deliver the Basic
Maintenance Report to the relevant Rating Agency promptly following receipt by
the Corporation of such Accountant's Confirmation.
(F) On or before 5:00 p.m., New York City time, on
the fifth Business Day after the Date of Original Issue of Series C Preferred
Stock, the Corporation shall complete and deliver to each Rating Agency a Basic
Maintenance Report as of the close of business on such Date of Original Issue.
(G) On or before 5:00 p.m., New York City time, on
the fifth Business Day after either (1) the Corporation shall have redeemed
Series C Preferred Stock or (2) the ratio of the Discounted Value of Eligible
Assets in respect of any Rating Agency to the Basic Maintenance Amount is less
than or equal to 110%, the Corporation shall complete and deliver to, in the
case of clause (1), each Rating Agency, or, in the case of clause (2), any
relevant Rating Agency, a Basic Maintenance Report as of the date of either such
event.
(b) Failure to Meet Asset Coverage Requirements.
If the Corporation fails to have Asset Coverage as provided in
paragraph 9(a)(i) or to have Eligible Assets having an Adjusted Value at least
equal to the Basic Maintenance Amount as provided in paragraph 9(a)(ii)(A) and
such failure is not cured by the applicable Cure Date, Preferred Stock, which at
the Corporation's determination (to the extent permitted by the 1940 Act and
Maryland law) may include any proportion of Series C Preferred Stock, will be
subject to mandatory redemption as set forth in paragraph 3.
(c) Status of Series C Preferred Stock Called for redemption.
For purposes of determining whether the requirements of
paragraphs 9(a)(i) and 9(a)(ii)(A) hereof are satisfied, (i) no share of the
Series C Preferred Stock or other Preferred Stock shall be deemed to be
Outstanding for purposes of any computation if, prior to or concurrently with
such determination, sufficient Deposit Assets to pay the full Redemption Price
for such share shall have been deposited in trust with the Paying Agent (or
applicable dividend-disbursing agent) and the requisite Notice of Redemption
shall have been given, and (ii) such Deposit Assets deposited with the Paying
Agent (or dividend-disbursing agent) shall not be included.
10. Certain Other Restrictions.
(a) For so long as the shares of Series C Preferred are rated
by a Rating Agency at the Corporation's request, the Corporation will not, and
will cause the Adviser not to, (i) knowingly and willfully purchase or sell any
asset for the specific purpose of causing, and with the actual knowledge that
the effect of such purchase or sale will be to cause, the Corporation to have
Eligible Assets having an Adjusted Value as of the date of such purchase or sale
to be less than the Basic Maintenance Amount as of such date, (ii) in the event
that, as of the immediately preceding Valuation Date, the Adjusted Value of the
Corporation's Eligible Assets exceeded the Basic Maintenance Amount by 5% or
less, alter the composition of the Corporation's assets in a manner reasonably
expected to reduce the Adjusted Value of the Corporation's Eligible Assets,
unless the Corporation shall have confirmed that, after giving effect to such
alteration, the Adjusted Value of the Corporation's Eligible Assets exceeded the
Basic Maintenance Amount or (iii) declare or pay any dividend or other
distribution on any Common Stock or repurchase any Common Stock, unless the
Corporation shall have confirmed that, after giving effect to such declaration,
other distribution or repurchase, the Corporation continued to satisfy the
requirements of paragraph 9(a)(ii).
(b) For so long as the shares of Series C Preferred Stock are
rated by any Rating Agency at the Corporation's request, unless the Corporation
shall have received written confirmation from each such Rating Agency, the
Corporation may engage in the lending of its portfolio securities only in an
amount of up to 5% of the Corporation's total assets, provided that the
Corporation receives cash collateral for such loaned securities that is
maintained at all times in an amount equal to at least 100% of the then current
market value of the loaned securities and, if invested, is invested only in
Short-Term Money Market Instruments or in money market mutual funds meeting the
requirements of Rule 2a-7 under the 1940 Act that maintain a constant $1.00 per
share net asset value and treat the loaned securities rather than the collateral
as the assets of the Corporation for purposes of determining compliance with
paragraph 9.
(c) For so long as the shares of Series C Preferred Stock are
rated by Rating Agency at the Corporation's request, the Corporation shall not
consolidate with, merge into, sell or otherwise transfer all or substantially
all of its assets to another Person or adopt a plan of liquidation of the
Corporation, in each case without providing prior written notification to each
Rating Agency.
11. Limitation on Incurrence of Additional Indebtedness, Certain
Transactions and Issuance of Additional Preferred Stock
(a) So long as the shares of Series C Preferred Stock are
Outstand ing, the Corporation may issue and sell one or more series of a class
of senior securities of the Corporation representing indebtedness under Section
18 of the 1940 Act and/or otherwise create or incur indebtedness, provided that
immediately after giving effect to the incurrence of such indebtedness and to
its receipt and application of the proceeds thereof, the Corporation shall have
an "asset coverage" for all senior securities representing indebtedness, as
defined in Section 18(h) of the1940 Act, of at least 300% of the amount of all
indebtedness of the Corporation then Outstanding and no such additional
indebtedness shall have any preference or priority over any other indebtedness
of the Corporation upon the distribution of the assets of the Corporation upon
the distribution of the assets of the Corporation or in respect of the payment
of interest. Any possible liability resulting from lending and/or borrowing
portfolio securities, entering into reverse repurchase agreements, entering into
futures contracts and writing options, to the extent such transactions are made
in accordance with the investment restrictions of the Corporation then in
effect, shall not be considered to be indebtedness limited by this paragraph
11(a).
(b) So long as the shares Series C Preferred Stock are
Outstand ing, the Corporation may issue and sell shares of one or more other
series of Pre ferred Stock constituting a series of a class of senior securities
of the Corporation representing stock under Section 18 of the 1940 Act in
addition to the Series C Preferred Stock and other Preferred Stock then
Outstanding, provided that (i) the Corporation shall, immediately after giving
effect to the issuance of such additional shares of Preferred Stock and to its
receipt and application of the proceeds thereof (including, without limitation,
to the Redemption of Preferred Stock for which a Notice of Redemption has been
mailed prior to such issuance), have an "asset cover age" for all senior
securities which are stock, as defined in Section 18(h) of the 1940 Act, of at
least 200% of the Series C Preferred Stock and all other Preferred Stock of the
Corporation then Outstanding, and (ii) no such additional Preferred Stock
(including any additional Series C Preferred Stock) shall have any preference or
priority over any other Preferred Stock of the Corporation upon the distribution
of the assets of the Corporation or in respect of the payment of dividends.
12. Termination.
In the event that no shares of Series C Preferred Stock are
Outstanding, all rights and preferences of such shares established and
designated hereunder shall cease and terminate, and all obligations of the
Corporation under these Articles Supplementary shall terminate.
13. Definitions.
Unless the context or use indicates another or different meaning or
intent, each of the following terms when used in these Articles Supplementary
shall have the meaning ascribed to it below, whether such term is used in the
singular or plural and regardless of tense:
"'AA' Financial Composite Commercial Paper Rate" on any date means
(i) the interest equivalent of the 7-day rate, in the case of a
Dividend Period of seven days or shorter; for Dividend Periods greater than 7
days but fewer than or equal to 31 days, the 30-day rate; for Dividend Periods
greater than 31 days but fewer than or equal to 61 days, the 60-day rate; for
Dividend Periods greater than 61 days but fewer than or equal to 91 days, the
90 day rate; for Dividend Periods greater than 91 days but fewer than or equal
to 270 days, the rate described in (ii) below; for Dividend Periods greater
than 270 days, the Treasury Index Rate; on commercial paper on behalf of
issuers whose corporate bonds are rated "AA" by S&P, or the equiva lent of
such rating by another nationally recognized rating agency, as announced by
the Federal Reserve Bank of New York for the close of business on the Business
Day immediately preceding such date; or (ii) if the Federal Reserve Bank of
New York does not make available such a rate, then the arithmetic average of
the interest equivalent of such rates on commercial paper placed on behalf of
such issuers, as quoted on a discount basis or otherwise by the Commercial
Paper Dealers to the Auction Agent for the close of business on the Business
Day immediately preceding such date (rounded to the next highest .001 of 1%).
If any Commercial Paper Dealer does not quote a rate required to determine the
"AA" Financial Composite Commercial Paper Rate, such rate shall be determined
on the basis of the quota tions (or quotation) furnished by the remaining
Commercial Paper Dealers (or Dealer), if any, or, if there are no such
Commercial Paper Dealers, by the Auction Agent pursuant to instructions from
the Corporation. For purposes of this definition, (A) "Commercial Paper
Dealers" shall mean (1) Salomon Smith Barney Inc., Lehman Brothers Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Goldman Sachs & Co.;
(2) in lieu of any thereof, its respective Affili ate or successor; and (3) in
the event that any of the foregoing shall cease to quote rates for commercial
paper of issuers of the sort de scribed above, in substitution therefor, a
nationally recognized dealer in commercial paper of such issuers then making
such quotations selected by the Corporation, and (B) "interest equivalent" of
a rate stated on a discount basis for commercial paper of a given number of
days' maturity shall mean a number equal to the quotient (rounded upward to
the next higher one-thousandth of 1%) of (1) such rate expressed as a decimal,
divided by (2) the difference between (x) 1.00 and (y) a fraction, the
numerator of which shall be the product of such rate expressed as a decimal,
multiplied by the number of days in which such commercial paper shall mature
and the denominator of which shall be 360.
"Accountant's Confirmation" means a letter from an Independent Accoun
tant delivered to each Rating Agency with respect to certain Basic Maintenance
Reports substantially to the effect that:
(a) the Independent Accountant has read the Basic Maintenance Report or
Reports prepared by the Administrator during the referenced calendar year that
are referred to in such letter;
(b) with respect to the issue size compliance, issuer diversification
and industry diversification calculations, such calculations and the resulting
Market Value of the relevant Eligible Assets included in the Reports and the
Adjusted Value of the such Eligible Assets included in the Reports are
numerically correct;
(c) with respect to the excess or deficiency of the Adjusted Value of
the relevant Eligible Assets included in the Reports when compared to the Basic
Mainte nance Amount calculated for such Rating Agency the results of the
calculation set forth in the Reports have been recalculated and are numerically
correct;
(d) with respect to the Rating Agency ratings on corporate evidences of
indebtedness, convertible corporate evidences of indebtedness and preferred
stock listed in the Reports, that information has been traced and agrees with
the informa tion provided directly or indirectly by the respective Rating
Agencies (in the event such information does not agree or such information is
not listed in the accounting records of the Corporation, the Independent
Accountants will inquire of the Rating Agencies what such information is and
provide a listing in their letter of such differences, if any);
(e) with respect to issuer name and coupon or dividend rate listed in
the Reports, that information has been traced and agrees with information listed
in the accounting records of the Corporation;
(f) with respect to issue size listed in the Reports, that information
has been traced and agrees with information provided by a Pricing Service or
such other services as the relevant Rating Agency may authorize from time to
time;
(g) with respect to the prices (or alternative permissible factors used
in calculating the Market Value as provided by these Articles Supplementary)
provided by the Administrator of the Corporation's assets for purposes of
valuing securities in the portfolio, the Independent Accountant has traced the
price used in the Reports to the price provided by such Administrator (in
accordance with the procedures provided in these Articles Supplementary) and
verified that such information agrees (in the event such information does not
agree, the Independent Accountants will provide a listing in their letter of
such differences); and
(h) with respect to the description of each security included in the
Reports, the description of the relevant Eligible Assets has been compared to
the definition of such Rating Agency's Eligible Assets contained in these
Articles Supplementary, and the description as appearing in the Reports agrees
with the definition of such Rating Agency's Eligible Assets as described in
these Articles Supplementary.
Each such letter may state that: (i) such Independent Accountant has
made no independent verification of the accuracy of the description of the
investment securi ties listed in the Reports or the Market Value of those
securities nor has it performed any procedures other than those specifically
outlined above for the purposes of issuing such letter; (ii) unless otherwise
stated in the letter, the procedures specified therein were limited to a
comparison of numbers or a verification of specified computations applicable to
numbers appearing in the Reports and the schedule(s) thereto; (iii) the
foregoing procedures do not constitute an examination in accordance with
generally accepted auditing standards and the Reports contained in the letter do
not extend to any of the Corporation's financial statements taken as a whole;
(iv) such Independent Accountant does not express an opinion as to whether such
procedures would enable such Independent Accountant to determine that the
methods followed in the preparation of the Reports would correctly determine the
Market Value or Discounted Value of the investment portfolio; and (v)
accordingly, such Independent Accountant expresses no opinion as to the
information set forth in the Reports or in the schedule(s) thereto and makes no
representation as to the suffi ciency of the procedures performed for the
purposes of these Articles Supplementary; and such other statements as are
acceptable to the Rating Agencies.
Such letter shall also state that the Independent Accountant
is an "independent accountant" with respect to the Corporation within the
meaning of the 1933 Act and the related published rules and regulations
thereunder.
"Adjusted Value" of each Eligible Asset shall be computed as follows:
(a) cash shall be valued at 100% of the face value thereof;
and
(b) all other Eligible Assets shall be valued at the
applicable Dis counted Value thereof; and
(c) each asset that is not an Eligible Asset shall be valued
at zero.
"Administrator" means the other party to the Administration Agreement
with the Corporation which shall initially be Gabelli Funds, LLC.
"ADRs" means U.S. dollar-denominated American Depository Receipts.
"Adviser" means Gabelli Funds, LLC, a New York limited liability com
pany, or such other Person that is then serving as the investment adviser of the
Corporation.
"Affiliate" means, with respect to the Auction Agent, any person known
to the Auction Agent to be controlled by, in control of or under common control
with the Corporation; provided, however, that no Broker-Dealer controlled by, in
control of or under common control with the Corporation shall be deemed to be an
Affiliate nor shall any corporation or any Person controlled by, in control of
or under common control with such corporation, one of the directors or executive
officers of which is a director of the Corporation be deemed to be an Affiliate
solely because such director or executive officer is also a director of the
Corporation.
"All Hold Rate" means 80% of the "AA" Financial Composite Commercial
Paper Rate.
"Annual Valuation Date" means the Valuation Date each calendar year so
designated by the Corporation, commencing in the calendar year 2003.
"Applicable Rate" means, with respect to the Series C Preferred Stock,
for each Dividend Period (i) if Sufficient Clearing Bids exist for the Auction
in respect thereof, the Winning Bid Rate, (ii) if Sufficient Clearing Orders do
not exist for the Auction in respect thereof, or an Auction does not take place
with respect to such Dividend Period because of the commencement of a Default
Period, the Maximum Rate and (iii) if all shares of Series C Preferred Stock are
the subject of Submitted Hold Orders for the Auction in respect thereof, the All
Hold Rate.
"Asset Coverage" means asset coverage, as determined in accordance with
Section 18(h) of the 1940 Act, of at least 200% with respect to all outstanding
senior securities of the Corporation which are stock, including all Outstanding
shares of Series C Preferred Stock (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 securi ties which are stock of a closed-end investment company as a
condition of declaring dividends on its common stock), determined on the basis
of values calculated as of a time within 48 hours (not including Saturdays,
Sundays or holidays) next preceding the time of such determination.
"Asset Coverage Certificate" means the certificate required to be
delivered by the Corporation pursuant to paragraph 9(a)(i)(B) of Article I of
these Articles Supplementary.
"Auction" means each periodic operation of the Auction Procedures.
"Auction Agent" means The Bank of New York unless and until another
commercial bank, trust company, or other financial institution appointed by a
resolution of the Board of Directors enters into an agreement with the
Corporation to follow the Auction Procedures for the purpose of determining the
Applicable Rate.
"Auction Date" means the last day of the initial Dividend Period and
each seventh day after the immediately preceding Auction Date; provided,
however, that if any such seventh day is not a Business Day, such Auction Date
shall be the first preceding day that is a Business Day and the next Auction
Date, if for a Standard Dividend Period, shall (subject to the same advancement
procedure) be the seventh day after the date that the preceding Auction Date
would have been if not for the advancement procedure; provided further, however,
that the Auction Date for the Auction at the conclusion of any Special Dividend
Period shall be the last Business Day in such Special Dividend Period and that
no more than one Auction shall be held during any Dividend Period; provided
further, however, that the Auction Date following a Default Period shall be the
last Business Day in the Standard Dividend Period that commenced during such
Default Period. Notwithstanding the foregoing, in the event an auction is not
held because an unforeseen event or unforeseen events cause a day that otherwise
would have been an Auction Date not to be a Business Day, then the length of the
then current dividend period will be extended by seven days (or a multiple
thereof if necessary because of such unforeseen event or events).
"Auction Procedures" means the procedures for conducting Auctions as
set forth in Article II of these Articles Supplementary.
"Basic Maintenance Amount" means, with respect to the Series C
Preferred Stock, as of any Valuation Date, the dollar amount equal to (a) the
sum of (i) the product of the number of shares of each class or series of
Preferred Stock Outstand ing on such Valuation Date multiplied, in the case of
each such series or class, by the per share Liquidation Preference applicable to
each such series or class; (ii) to the extent not included in (i) the aggregate
amount of cash dividends (whether or not earned or declared) that will have
accumulated for each Outstanding share of Preferred Stock from the most recent
applicable dividend payment date to which dividends have been paid or duly
provided for (or, in the event the Basic Mainte nance Amount is calculated on a
date prior to the initial Dividend Payment Date with respect to a class or
series of the Preferred Stock, then from the Date of Original Issue of such
shares) through the Valuation Date plus all dividends to accumulate on the
Preferred Stock then Outstanding during the 70 days following such Valuation
Date or, if less, during the number of days following such Valuation Date that
shares of Preferred Stock called for redemption are scheduled to remain
Outstanding at the applicable rate or default rate then in effect with respect
to such shares; (iii) the Corporation's other liabilities due and payable as of
such Valuation Date (except that dividends and other distributions payable by
the Corporation on Common Stock shall not be included as a liability) and such
liabilities projected to become due and payable by the Corporation during the 90
days following such Valuation Date (excluding liabilities for investments to be
purchased and for dividends and other distributions not declared as of such
Valuation Date); and (iv) any current liabilities of the Corporation as of such
Valuation Date to the extent not reflected in (or specifically excluded by) any
of (a)(i) through (a)(iii) (including, without limitation, and immediately upon
determination, any amounts due and payable by the Corpora tion pursuant to
reverse repurchase agreements and any payables for assets purchased as of such
Valuation Date) less (b) (i) the Adjusted Value of any of the Corporation's
assets or (ii) the face value of any of the Corporation's assets if, in the case
of both (b)(i) and (b)(ii), such assets are either cash or evidences of
indebtedness which mature prior to or on the date of redemption or repurchase of
shares of Preferred Stock or payment of another liability and are either U.S.
Government Obligations or evidences of indebtedness which have a rating assigned
by Moody's of at least Aaa, P-1, VMIG-1 or MIG-1 or by S&P of at least AAA,
SP-1+ or A-1+, and are irrevoca bly held by the Corporation's custodian bank in
a segregated account or deposited by the Corporation with the
dividend-disbursing agent or Paying Agent, as the case may be, for the payment
of the amounts needed to redeem or repurchase Preferred Stock subject to
redemption or repurchase or any of (a)(ii) through (a)(iv); and provided that in
the event the Corporation has repurchased Preferred Stock and irrevocably
segregated or deposited assets as described above with its custodian bank, the
dividend-disbursing agent or Paying Agent for the payment of the repurchase
price the Corporation may deduct 100% of the Liquidation Preference of such
Preferred Stock to be repurchased from (a) above. Basic Maintenance Amount
shall, for the purposes of these Articles Supplementary, have a correlative
meaning with respect to any other class or series of Preferred Stock.
"Basic Maintenance Amount Cure Date" means, with respect to the Series
C Preferred Stock, 10 Business Days following a Valuation Date, such date being
the last day upon which the Corporation's failure to comply with paragraph
9(a)(ii)(A) of Article I of these Articles Supplementary could be cured, and
shall, for the purposes of these Articles Supplementary, have a correlative
meaning with respect to any other class or series of Preferred Stock.
"Basic Maintenance Test" means, with respect to the Series C Preferred
Stock, a test which is met if the lower of the aggregate Discounted Values of
the Moody's Eligible Assets or the Fitch Eligible Assets if both Moody's and
Fitch are then rating the Series C Preferred Stock at the request of the
Corporation, or the Eligible Assets of whichever of Moody's or Fitch is then
doing so if only one of Moody's or Fitch is then rating the Series C Preferred
Stock at the request of the Corporation, meets or exceeds the Basic Maintenance
Amount.
"Basic Maintenance Report" or "Report" means, with respect to the
Series C Preferred Stock, a report prepared by the Administrator which sets
forth, as of the related Valuation Date, Moody's Eligible Assets and Fitch
Eligible Assets sufficient to meet or exceed the Basic Maintenance Amount, the
Market Value and Discounted Value thereof (seriatim and in the aggregate), and
the Basic Maintenance Amount, and shall, for the purposes of these Articles
Supplementary, have a correla tive meaning with respect to any other class or
series of Preferred Stock.
"Beneficial Owner," with respect to the shares of Series C Preferred
Stock, means a customer of a Broker-Dealer who is listed on the records of that
Broker- Dealer (or, if applicable, the Auction Agent) as a holder of Series C
Preferred Stock.
"Bid" has the meaning set forth in paragraph 2(a) of Article II of
these Articles Supplementary.
"Bidder" has the meaning set forth in paragraph 2(a) of Article II of
these Articles Supplementary, provided however that neither the Corporation nor
any Affiliate shall be permitted to be Bidder in an Auction.
"Board of Directors" or "Board" means the Board of Directors of the
Corporation or any duly authorized committee thereof as permitted by applicable
law.
"Broker-Dealer" means any broker-dealer or broker-dealers, or other
entity permitted by law to perform the functions required of a Broker-Dealer by
the Auction Procedures, that has been selected by the Corporation and has
entered into a Broker- Dealer Agreement that remains effective.
"Broker-Dealer Agreement" means an agreement between the Auction Agent
and a Broker-Dealer, pursuant to which such Broker-Dealer agrees to follow the
Auction Procedures.
"Business Day" means a day on which the New York Stock Exchange is open
for trading and which is not a Saturday, Sunday or other day on which banks in
The City of New York, New York are authorized or obligated by law to close.
"Charter" means the Articles of Amendment and Restatement of the
Corporation, as amended or supplemented (including these Articles
Supplementary), as filed with the State Department of Assessments and Taxation
of the State of Maryland.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the shares of the Corporation's common stock, par
value $.001 per share.
"Corporation" means The Gabelli Global Multimedia Trust Inc., a Mary
land corporation.
"Cure Date" has the meaning set forth in paragraph 3(a)(ii) of Article
I of these Articles Supplementary.
"Date of Original Issue" means [__], 2003, and, for the purposes of
these Articles Supplementary, shall have a correlative meaning with respect to
any other class or series of Preferred Stock.
"Default" has the meaning set forth in paragraph 2(c)(ii) of Article I
of these Articles Supplementary.
"Default Period" means a Dividend Default or a Redemption Default.
"Default Rate" has the meaning set forth in paragraph 2(c)(iii) of
Article I of these Articles Supplementary.
"Deposit Assets" means cash, Short-Term Money Market Instruments and
U.S. Government Obligations. Except for determining whether the Corporation has
Eligible Assets with an Adjusted Value equal to or greater than the Basic Mainte
nance Amount, each Deposit Asset shall be deemed to have a value equal to its
principal or face amount payable at maturity plus any interest payable thereon
after delivery of such Deposit Asset but only if payable on or prior to the
applicable payment date in advance of which the relevant deposit is made.
"Discount Factor" means (a) so long as Moody's is rating the Series C
Preferred Stock at the Corporation's request, the Moody's Discount Factor, (b)
so long as Fitch is rating the Series C Preferred Stock at the Corporation's
request, the Fitch Discount Factor, and/or (c) any applicable discount factor
established by any Other Rating Agency, whichever is applicable.
"Discounted Value" means, as applicable, (a) the quotient of the Market
Value of an Eligible Asset divided by the applicable Discount Factor or (b) such
other formula for determining the discounted value of an Eligible Asset as may
be established by an applicable Rating Agency, provided, in either case that
with respect to an Eligible Asset that is currently callable, Discounted Value
will be equal to the applicable quotient or product as calculated above or the
call price, whichever is lower, and that with respect to an Eligible Asset that
is prepayable, Discounted Value will be equal to the applicable quotient or
product as calculated above or the par value, whichever is lower.
"Dividend Default" has the meaning set forth in paragraph 2(c)(ii) of
Article I of these Articles Supplementary.
"Dividend Payment Date" means with respect to the Series C Preferred
Stock, any date on which dividends declared by the Board of Directors thereon
are payable pursuant to the provisions of paragraph 2(b) of Article I of these
Articles Supplementary and shall for the purposes of these Articles
Supplementary have a correlative meaning with respect to any other class or
series of Preferred Stock.
"Dividend Period" means, with respect to Series C Preferred Stock, the
initial period determined in the manner set forth under "Designation" above, and
thereafter, the period commencing on the Business Day following each Auction
Date and ending on the next Auction Date or, if such next Auction Date is not
immedi ately followed by a Business Day, on the latest day prior to the next
succeeding Business Day, and shall, for the purposes of these Articles
Supplementary, have a correlative meaning with respect to any other class or
series of Preferred Stock.
"Eligible Assets" means Moody's Eligible Assets (if Moody's is then
rating the Series C Preferred Stock at the request of the Corporation), Fitch
Eligible Assets (if Fitch is then rating the Series C Preferred Stock at the
request of the Corporation), and/or Other Rating Agency Eligible Assets,
whichever is applicable.
"Fitch" means Fitch Ratings.
"Fitch Discount Factor" means, for the purposes of determining the
Discounted Value of any Fitch Eligible Asset, the percentage determined as
follows. The Fitch Discount Factor for any Fitch Eligible Asset other than the
securities set forth below will be the percentage provided in writing by Fitch.
The Fitch Discount Factors for Fitch Eligible Assets are as follows,
provided however, that for unhedged foreign investments a discount factor of
105% shall be applied to the Market Value thereof otherwise determined in
accordance with the procedures below, provided further that, if the foreign
issuer of such unhedged foreign investment is from a country whose sovereign
debt rating in a non-local currency is not assigned a rating of 'AA' or better
by Fitch, a discount factor of 117% shall be applied to the Market Value thereof
otherwise determined in accordance with the procedures below.
(i) Equity: Equity and Illiquid Debt - Discounted at 300.00%
(ii) Corporate debt securities: The percentage determined by reference to the
rating of a corporate debt security in accordance with the table set forth
below.
[Enlarge/Download Table]
Term to Maturity of Corporate AAA AA A BBB BB Not
Debt Security Unrated(1) Rated or
Below BB
3 years or less (but longer than 1 106.38% 108.11% 109.89% 111.73% 129.87% 151.52%
year)
5 years or less (but longer than 3 111.11 112.99 114.94 116.96 134.24 151.52
years)
7 years or less (but longer than 5 113.64 115.61 117.65 119.76 135.66 151.52
years)
10 years or less (but longer than 7 115.61 117.65 119.76 121.95 136.74 151.52
years)
15 years or less (but longer than 119.76 121.95 124.22 126.58 139.05 151.52
10 years)
More than 15 years 124.22 126.58 129.03 131.58 144.55 151.52
(1) If a security is not rated by Fitch but is rated by two other Rating
Agencies, then the lower of the ratings on the security from the two other
Rating Agencies will be used to determine the Fitch Discount Factor (e.g., where
the S&P rating is A- and the Moody's rating is Baa1, a Fitch rating of BBB+ will
be used). If a security is not rated by Fitch but is rated by only one other
Rating Agency, then the rating on the security from the other Rating Agency will
be used to determine the Fitch Discount Factor (e.g., where the only rating on a
security is an S&P rating of AAA, a Fitch rating of AAA will be used, and where
the only rating on a security is a Moody's rating of Ba3, a Fitch rating of BB-
will be used). If a security is not rated by any Rating Agency, the Trust will
use the percentage set forth under "Unrated" in this table.
(iii) Convertible debt securities. The Fitch Discount Factor applied to
convertible debt securities is (A) 200% for investment grade convertibles and
(B) 222% for below investment grade convertibles so long as such convertible
debt securities have neither (x) conversion premium greater than 100% nor (y)
have a yield to maturity or yield to worst of > 15.00% above the relevant
Treasury curve.
The Fitch Discount Factor applied to convertible debt securities which
have conversion premiums of greater than 100% is (A) 152% for investment grade
convertibles and (B) 179% for below investment grade convertibles so long as
such convertible debt securities do not have a yield to maturity or yield to
worst of > 15.00% above the relevant Treasury curve.
The Fitch Discount Factor applied to convertible debt securities which
have a yield to maturity or yield to worst of > 15.00% above the relevant
Treasury curve is 370%.
If a security is not rated by Fitch but is rated by two other Rating
Agencies, then the lower of the ratings on the security from the two other
Rating Agencies will be used to determine the Fitch Discount Factor (e.g., where
the S&P rating is A- and the Moody's rating is Baa1, a Fitch rating of BBB+ will
be used). If a security is not rated by Fitch but is rated by only one other
Rating Agency, then the rating on the security from the other Rating Agency will
be used to determine the Fitch Discount Factor (e.g., where the only rating on a
security is an S&P rating of AAA, a Fitch rating of AAA will be used, and where
the only rating on a security is a Moody's rating of Ba3, a Fitch rating of BB-
will be used). If a security is not rated by any Rating Agency, the Trust will
treat the security as if it were below investment grade.
(iv) Preferred securities: The percentage determined by reference to the rating
of a preferred security in accordance with the table set forth below.
[Download Table]
Preferred Security(1) AAA AA A BBB BB Not
Rated or
Below BB
Taxable Preferred 130.58% 133.19% 135.91% 138.73% 153.23% 161.08%
Dividend-Received Deduction 163.40% 163.40% 163.40% 163.40% 201.21% 201.21%
(DRD) Preferred
(1) If a security is not rated by Fitch but is rated by two other Rating
Agencies, then the lower of the ratings on the security from the two other
Rating Agencies will be used to determine the Fitch Discount Factor (e.g., where
the S&P rating is A- and the Moody's rating is Baa1, a Fitch rating of BBB+ will
be used). If a security is not rated by Fitch but is rated by only one other
Rating Agency, then the rating on the security from the other Rating Agency will
be used to determine the Fitch Discount Factor (e.g., where the only rating on a
security is an S&P rating of AAA, a Fitch rating of AAA will be used, and where
the only rating on a security is a Moody's rating of Ba3, a Fitch rating of BB-
will be used). If a security is not rated by any Rating Agency, the Trust will
use the percentage set forth under "Unrated" in this table.
(v) U.S. Government Obligations and U.S. Treasury Strips:
Discount
Time Remaining to Maturity Factor
1 year or less 101.5%
2 years or less (but longer than 1 year) 103%
3 years or less (but longer than 2 year) 105%
4 years or less (but longer than 3 year) 107%
5 years or less (but longer than 4 year) 109%
7 years or less (but longer than 5 year) 112%
10 years or less (but longer than 7 year) 114%
Greater than 10 years 122%
"Fitch Diversification Limitations" means, with respect to qualifying
for inclusion in Fitch Eligible Assets, the following diversification and issue
size requirements:
[Download Table]
Security Rated Maximum Single Maximum Single Minimum Issue Size
At Least Issuer(1) Industry(1),(2) ($ in million)(3)
AAA 100% 100% $100
AA- 20 75 100
A- 10 50 100
BBB- 6 25 100
BB- 4 16 50
B- 3 12 50
CCC 2 8 50
(1) Percentages represent a portion of the aggregate market value of corporate
debt securities. (2) Industries are determined according to Fitch's Industry
Classifications, as defined herein. (3) Preferred stock has a minimum issue size
of $50 million.
"Fitch Eligible Assets" means, subject to Fitch Diversification
Limitations:
(i) cash (including interest and dividends due on assets rated (A) BBB or
higher by Fitch or the equivalent by another Rating Agency if the payment date
is within five Business Days of the Valuation Date, (B) A or higher by Fitch or
the equivalent by another Rating Agency if the payment date is within thirty
days of the Valuation Date, and (C) A+ or higher by Fitch or the equivalent by
another Rating Agency if the payment date is within the Fitch Exposure Period)
and receivables for Fitch Eligible Assets sold if the receivable is due within
five Business Days of the Valua tion Date, and if the trades which generated
such receivables are settled within five business days;
(ii) Short Term Money Market Instruments so long as (A) such securities are
rated at least F1+ by Fitch or the equivalent by another Rating Agency, (B) in
the case of demand deposits, time deposits and overnight funds, the supporting
entity is rated at least A by Fitch or the equivalent by another Rating Agency,
or (C) in all other cases, the supporting entity (1) is rated at least A by
Fitch or the equivalent by another Rating Agency and the security matures within
one month, (2) is rated at least A by Fitch or the equivalent by another Rating
Agency and the security matures within three months or (3) is rated at least AA
by Fitch or the equivalent by another Rating Agency and the security matures
within six months;
(iii) U.S. Government Obligations and U.S. Treasury Strips;
(iv) debt securities if such securities have been registered under the
Securities Act or are restricted as to resale under federal securities laws but
are eligible for resale pursuant to Rule 144A under the Securities Act as
determined by the Trust's investment manager or portfolio manager acting
pursuant to procedures approved by the Board of Trustees of the Trust; and (C)
such securities are issued by (1) a U.S. corporation, limited liability company
or limited partnership, (2) a corporation, limited liability company or limited
partnership domiciled in Argentina, Australia, Brazil, Chile, France, Germany,
Italy, Japan, Korea, Mexico, Spain or the United Kingdom (the "Approved Foreign
Nations"), (3) the government of any Approved Foreign Nation or any of its
agencies, instrumentalities or political subdivisions (the debt securities of
Approved Foreign Nation issuers being referred to collectively as "Foreign
Bonds"), (4) a corporation, limited liability company or limited partnership
domiciled in Canada or (5) the Canadian government or any of its agencies,
instru mentalities or political subdivisions (the debt securities of Canadian
issuers being referred to collectively as "Canadian Bonds"). Foreign Bonds held
by the Trust will qualify as Fitch Eligible Assets only up to a maximum of 20%
of the aggregate Market Value of all assets constituting Fitch Eligible Assets.
Similarly, Canadian Bonds held by the Trust will qualify as Fitch Eligible
Assets only up to a maximum of 20% of the aggregate Market Value of all assets
constituting Fitch Eligible Assets. Notwithstanding the limitations in the two
preceding sentences, Foreign Bonds and Canadian Bonds held by the Trust will
qualify as Fitch Eligible Assets only up to a maximum of 30% of the aggregate
Market Value of all assets constituting Fitch Eligible Assets. In addition,
bonds which are issued in connection with a reorganiza tion under U.S. federal
bankruptcy law ("Reorganization Bonds") will be considered debt securities
constituting Fitch Eligible Assets if (a) they provide for periodic payment of
interest in cash in U.S. dollars or euros; (b) they do not provide for
conversion or exchange into equity capital at any time over their lives; (c)
they have been registered under the Securities Act or are restricted as to
resale under federal securities laws but are eligible for trading under Rule
144A promulgated pursuant to the Securities Act as determined by the Trust's
investment manager or portfolio manager acting pursuant to procedures approved
by the Board of Trustees of the Trust; (d) they were issued by a U.S.
corporation, limited liability company or limited partnership; and (e) at the
time of purchase at least one year had elapsed since the issuer's
reorganization. Reorganization Bonds may also be considered debt securities
constituting Fitch Eligible Assets if they have been approved by Fitch, which
approval shall not be unreasonably withheld. All debt securities satisfying the
foregoing requirements and restrictions of this paragraph (iv) are herein
referred to as "Debt Securities."
(v) Common stocks (i) (A) which are traded on the New York Stock Exchange,
the American Stock Exchange or in the over-the-counter market, (B) which, if
cash dividend paying, pay cash dividends in U.S. dollars, and (C) which may be
sold without restriction by the Corporation; provided, however, that (1) common
stock which, while a Fitch Eligible Asset owned by the Corporation, ceases
paying any regular cash dividend will no longer be considered a Fitch Eligible
Asset until 60 calendar days after the date of the announcement of such
cessation, unless the issuer of the common stock has senior debt securities
rated at least A- by Fitch and (2) the aggregate Market Value of the
Corporation's holdings of the common stock of any issuer in excess of 5% per US
issuer of the number of Outstanding shares times the Market Value of such common
stock shall not be a Fitch's Eligible Asset; (ii) securities denominated in any
currency other than the U.S. dollar and securities of issuers formed under the
laws of jurisdictions other than the United States, its states and the District
of Columbia for which there are dollar-denominated ADRs which are traded in the
United States on exchanges or over-the-counter and are issued by banks formed
under the laws of the United States, its states or the District of Colum bia;
provided, however, that the aggregate Market Value of the Corporation's holdings
of securities denominated in currencies other than the U.S. dollar and ADRs in
excess of 3% of the aggregate Market Value of the Outstanding shares of common
stock of such issuer or in excess of 10% of the Market Value of the
Corporation's Fitch Eligible Assets with respect to issuers formed under the
laws of any single such non-U.S. jurisdiction other than Argentina, Australia,
Brazil, Chile, France, Ger many, Italy, Japan, Korea, Mexico, Spain or the
United Kingdom (the "Approved Foreign Nations") shall not be a Fitch Eligible
Asset;
(vi) Preferred stocks if (A) dividends on such preferred stock are
cumulative, (B) such securities provide for the periodic payment of dividends
thereon in cash in U.S. dollars or euros and do not provide for conversion or
exchange into, or have warrants attached entitling the holder to receive equity
capital at any time over the respective lives of such securities, (C) the issuer
of such a preferred stock has common stock listed on either the New York Stock
Exchange or the American Stock Exchange, (D) the issuer of such a preferred
stock has a senior debt rating or preferred stock rating from Fitch of BBB- or
higher or the equivalent rating by another Rating Agency. In addition, the
preferred stocks issue must be at least $50 million
(vii) Asset-backed and mortgage-backed securities;
(viii) Rule 144A Securities;
(ix) Bank Loans;
(x) Municipal debt obligation that (A) pays interest in cash (B) is part of
an issue of municipal debt obligations of at least $5 million, except for
municipal debt obligations rated below A by Fitch or the equivalent rating by
another Rating Agency, in which case the minimum issue size is $10 million;
(xi) Tradable credit baskets (e.g., Traded Custody Receipts or TRACERS and
Targeted Return Index Securities Trust or TRAINS)
(xii) Convertible debt and convertible preferred stocks
Financial contracts, as such term is defined in Section 3(c)(2)(B)(ii) of
the Investment Company Act, not otherwise provided for in this definition may be
included in Fitch Eligible Assets, but, with respect to any financial contract,
only upon receipt by the Trust of a writing from Fitch specifying any conditions
on including such financial contract in Fitch Eligible Assets and assuring the
Trust that including such financial contract in the manner so specified would
not affect the credit rating assigned by Fitch to the AMPS.
Where the Trust sells an asset and agrees to repurchase such asset in the
future, the Discounted Value of such asset will constitute a Fitch Eligible
Asset and the amount the Trust is required to pay upon repurchase of such asset
will count as a liability for the purposes of the Preferred Shares Basic
Maintenance Amount. Where the Trust purchases an asset and agrees to sell it to
a third party in the future, cash receivable by the Trust thereby will
constitute a Fitch Eligible Asset if the long-term debt of such other party is
rated at least A- by Fitch or the equivalent by another Rating Agency and such
agreement has a term of 30 days or less; otherwise the Discounted Value of such
purchased asset will constitute a Fitch Eligible Asset.
Notwithstanding the foregoing, an asset will not be considered a Fitch
Eligible Asset to the extent that it has been irrevocably deposited for the
payment of (i)(A) through (i)(E) under the definition of Preferred Shares Basic
Maintenance Amount or to the extent it is subject to any Liens, except for (A)
Liens which are being contested in good faith by appropriate proceedings and
which Fitch has indicated to the Trust will not affect the status of such asset
as a Fitch Eligible Asset, (B) Liens for taxes that are not then due and payable
or that can be paid thereafter without penalty, (C) Liens to secure payment for
services rendered or cash advanced to the Trust by its investment manager or
portfolio manager, the Trust's custodian, transfer agent or registrar or the
Auction Agent and (D) Liens arising by virtue of any repurchase agreement.
"Fitch Exposure Period" means the period commencing on (and including) a
given Valuation Date and ending 49 days thereafter.
"Fitch Hedging Transactions" means purchases or sales of exchange-traded
financial futures contracts based on any index approved by Fitch or Treasury
Bonds, and purchases, writings or sales of exchange-traded put options on such
futures contracts, any index approved by Fitch or Treasury Bonds and purchases,
writings or sales of exchange-traded call options on such financial futures
contracts, any index approved by Fitch or Treasury bonds ("Fitch Hedging
Transactions"), subject to the following limitations:
(a) The Corporation may not engage in any Fitch Hedging Transaction
based on any index approved by Fitch (other than transactions that terminate a
futures contract or option held by the Corporation by the Corporation's taking
the opposite position thereto ("closing transactions")) that would cause the
Corporation at the time of such transaction to own or have sold outstanding
financial futures contracts based on such index exceeding in number 10% of the
average number of daily traded financial futures contracts based on such index
in the 30 days preceding the time of effecting such transaction as reported by
The Wall Street Journal.
(b) The Corporation will not engage in any Fitch Hedging Transaction
based on Treasury Bonds (other than closing transactions) that would cause the
Corporation at the time of such transaction to own or have sold:
(i) Outstanding financial futures contracts based on Treasury
Bonds with such contracts having an aggregate market value exceeding
20% of the aggregate market value of Fitch Eligible Assets owned by the
Corporation and rated AA by Fitch (or, if not rated by Fitch Ratings,
rated Aa by Moody's; or, if not rated by Moody's, rated AAA by S&P) or
(ii) Outstanding financial futures contracts based on Treasury
Bonds with such contracts having an aggregate market value exceeding
40% of the aggregate market value of all Fitch Eligible Assets owned by
the Corporation (other than Fitch Eligible Assets already subject to a
Fitch Hedging Transac tion) and rated A or BBB by Fitch (or, if not
rated by Fitch Ratings, rated Baa by Moody's; or, if not rated by
Moody's, rated A or AA by S&P) (for pur poses of the foregoing clauses
(a) and (b), the Corporation shall be deemed to own futures contracts
that underlie any outstanding options written by the Corporation);
(c) The Corporation may engage in closing transactions to close out any
outstanding financial futures contract based on any index approved by Fitch if
the amount of open interest in such index as reported by The Wall Street Journal
is less than an amount to be mutually determined by Fitch and the Corporation.
(d) The Corporation may not enter into an option or futures transaction
unless, after giving effect thereto, the Corporation would continue to have
Fitch Eligible Assets with an aggregate Discounted Value equal to or greater
than the Preferred Shares Basic Maintenance Amount.
"Fitch Industry Classifications" means, for the purposes of determining
Fitch Eligible Assets, each of the following industry classifications:
Fitch Industry Classifications SIC Code (Major Groups)
1. Aerospace and Defense 37, 45
2. Automobiles 37, 55
3. Banking, Finance and Real Estate 60, 65, 67
4. Broadcasting and Media 27, 48
5. Building and Materials 15-17, 32, 52
6. Cable 48
7. Chemicals 28, 30
8. Computers and Electronics 35, 36
9. Consumer Products 23, 51
10. Energy 13, 29, 49
11. Environmental Services 87
12. Farming and Agriculture 1-3, 7-9
13. Food, Beverage and Tobacco 20, 21, 54
14. Gaming, Lodging and Restaurants 70, 58
15. Health Care and Pharmaceuticals 38, 28, 80
16. Industrial/Manufacturing 35
17. Insurance 63, 64
18. Leisure and Entertainment 78, 79
19. Metals and Mining 10, 12, 14, 33, 34
20. Miscellaneous 50, 72-76, 99
21. Paper and Forest Products 8, 24, 26
22. Retail 53, 56, 59
23. Sovereign NA
24. Supermarkets and Drug Stores 54
25. Telecommunications 48
26. Textiles and Furniture 22, 25, 31, 57
27. Transportation 40, 42-47
28. Utilities 49
29. Structured Finance Obligations NA
30. Packaging and Containers 26, 32, 34
31. Business Services 73, 87
"Holder" means, with respect to the Preferred Stock, including the
Series C Preferred Stock, the registered holder of such shares as the same
appears on the stock ledger or stock records of the Corporation or records of
the Auction Agent, as the case may be.
"Independent Accountant" means a nationally recognized accountant, or
firm of accountants, that is with respect to the Corporation an independent
public accountant or firm of independent public accountants under the 1933 Act.
"Industry Classification" means a six-digit industry classification in
the Standard Industry Classification system published by the United States.
"Liquidation Preference" shall, with respect to each share of Series C
Preferred Stock, have the meaning set forth in paragraph 7(a) of Article I of
these Articles Supplementary and shall, for the purposes of these Articles
Supplementary, have a correlative meaning with respect to any other class or
series of Preferred Stock.
"Mandatory Redemption Date" has the meaning set forth in paragraph
3(a)(iii) of Article I of these Articles Supplementary.
"Mandatory Redemption Price" means the Redemption Price plus (in the
case of a Dividend Period of one year or more only) a redemption premium, if
any, determined by the Board of Directors after consultation with the
Broker-Dealers and set forth in the notice describing any applicable Specific
Redemption Provisions.
"Market Value" means the amount determined by the Corporation with
respect to specific Eligible Assets in accordance with valuation policies
adopted from time to time by the Board of Directors as being in compliance with
the requirements of the 1940 Act.
Notwithstanding the foregoing, "Market Value" may, at the option of the
Corporation with respect to any of its assets, mean the amount determined with
respect to specific Eligible Assets of the Corporation in the manner set forth
below:
(a) as to any common or preferred stock which is an Eligible
Asset, (i) if the stock is traded on a national securities exchange or quoted on
the Nasdaq System, the last sales price reported on the Valuation Date or (ii)
if there was no reported sales price on the Valuation Date, the lower of two bid
prices for such stock provided to the Administrator by two recognized securities
dealers with minimum capitalizations of $25,000,000 (or otherwise approved for
such purpose by Moody's and Fitch) or by one such securities dealer and any
other source (provided that the utilization of such source would not adversely
affect Moody's and Fitch's then- current rating of the Series C Preferred
Stock), at least one of which shall be pro vided in writing or by telecopy,
telex, other electronic transcription, computer obtained quotation reducible to
written form or similar means, and in turn provided to the Corporation by any
such means by such Administrator, or, if two bid prices cannot be obtained, such
Eligible Asset shall have a Market Value of zero;
(b) as to any U.S. Government Obligation, Short-Term Money
Market Instrument (other than demand deposits, federal funds, bankers'
acceptances and next Business Day repurchase agreements) and commercial paper,
with a matu rity of greater than 60 days, the product of (i) the principal
amount (accreted princi pal to the extent such instrument accretes interest) of
such instrument, and (ii) the lower of the bid prices for the same kind of
instruments having, as nearly as practica ble, comparable interest rates and
maturities provided by two recognized securities dealers having minimum
capitalization of $25,000,000 (or otherwise approved for such purpose by Moody's
and Fitch) or by one such dealer and any other source (provided that the
utilization of such source would not adversely affect Moody's and Fitch's
then-current rating of the Series C Preferred Stock) to the Administrator, at
least one of which shall be provided in writing or by telecopy, telex, other
electronic transcription, computer obtained quotation reducible to written form
or similar means, and in turn provided to the Corporation by any such means by
such Admin istrator, or, if two bid prices cannot be obtained, such Eligible
Asset will have a Market Value of zero;
(c) as to cash, demand deposits, federal funds, bankers'
acceptances and next Business Day repurchase agreements included in Short-Term
Money Market Instruments, the face value thereof;
(d) as to any U.S. Government Obligation, Short-Term Money
Market Instrument or commercial paper with a maturity of 60 days or fewer, amor
tized cost unless the Board of Directors determines that such value does not
consti tute fair value;
(e) as to any other evidence of indebtedness which is an
Eligible Asset, (i) the product of (A) the unpaid principal balance of such
indebtedness as of the Valuation Date and (B)(1) if such indebtedness is traded
on a national securities exchange or quoted on the Nasdaq System, the last sales
price reported on the Valuation Date or (2) if there was no reported sales price
on the Valuation Date or if such indebtedness is not traded on a national
securities exchange or quoted on the Nasdaq System, the lower of two bid prices
for such indebtedness provided by two recognized dealers with a minimum
capitalization of $25,000,000 (or otherwise approved for such purpose by Moody's
and Fitch) or by one such dealer and any other source (provided that the
utilization of such source would not adversely affect Moody's and Fitch's
then-current rating of the Series C Preferred Stock) to the Administrator, at
least one of which shall be provided in writing or by telecopy, telex, other
electronic transcription, computer obtained quotation reducible to written form
or similar means, and in turn provided to the Corporation by any such means by
such Administrator, plus (ii) accrued interest on such indebtedness.
"Maximum Rate" means, on any date on which the Applicable Rate is
determined, the applicable percentage of (i) in the case of a dividend period of
184 days or less, the "AA" Financial Composite Commercial Paper Rate on the date
of such Auction determined as set forth below based on the lower of the credit
ratings assigned to the Series C Preferred by Moody's and Fitch subject to
upward but not downward adjustment in the discretion of the Board of Directors
after consultation with the Broker-Dealers; provided that immediately following
any such increase the Corporation would be in compliance with the Basic
Maintenance Amount or (ii) in the case of a dividend period of longer than 184
days, the Treasury Index Rate.
[Enlarge/Download Table]
Moody's Credit Rating Fitch Credit Rating Applicable Percentage
-------------------------------- -------------------------------- ---------------------------------
Aa3 or higher AA- or higher 150%
A3 to A1 A- to A+ 175%
Baa3 to Baa1 BBB- to BBB+ 250%
Below Baa3 Below BBB- 275%
"Moody's" means Moody's Investors Service, Inc. and its successors at
law.
"Moody's Discount Factor" means, with respect to a Moody's Eligible
Asset specified below, the following applicable number:
[Enlarge/Download Table]
Moody's
Type of Moody's Eligible Asset: Discount Factor:
Short Term Money Market Instruments (other than U.S. Govern
ment Obligations set forth below) and other commercial paper:
U.S. Treasury Securities with final maturities that are less 1.00
than or equal to 60 days........................................
Demand or time deposits, certificates of deposit and bankers'
acceptances includible in Moody's Short Term Money Market
Instruments..................................................... 1.00
Commercial paper rated P-1 by Moody's maturing in 30 days
or less......................................................... 1.00
Commercial paper rated P-1 by Moody's maturing in more
than 30 days but in 270 days or less............................ 1.15
Commercial paper rated A-1+ by S&P maturing in 270 days
or less......................................................... 1.25
Repurchase obligations includible in Moody's Short Term
Money Market Instruments if term is less than 30 days and
counterparty is rated at least A2............................... 1.00
Other repurchase obligations.................................... Discount Factor applicable to
the underlying assets
U.S. Common Stocks and Common Stocks of foreign issuers for
which ADRs are traded................................................ 3.00
Common Stocks of foreign issuers (in existence for at least five
years) for which no ADRs are traded.................................. 4.00
Convertible Preferred Stocks......................................... 3.00
Preferred stocks:
Auction rate preferred stocks................................... 3.50
Other preferred stocks issued by issuers in the financial and
industrial industries........................................... 1.62
Other preferred stocks issued by issuers in the utilities indus
try............................................................. 1.40
U.S. Government Obligations (other than U.S. Treasury Securities
Strips set forth below) with remaining terms to maturity of:
1 year or less.................................................. 1.04
2 years or less................................................. 1.09
3 years or less................................................. 1.12
4 years or less................................................. 1.15
5 years or less................................................. 1.18
7 years of less................................................. 1.21
10 years or less................................................ 1.24
15 years or less................................................ 1.25
20 years or less................................................ 1.26
30 years or less................................................ 1.26
U.S. Treasury Securities Strips with remaining terms to maturity of:
1 year or less........................................... 1.04
2 years or less.......................................... 1.10
3 years or less.......................................... 1.14
4 years or less.......................................... 1.18
5 years or less.......................................... 1.21
7 years or less.......................................... 1.27
10 years or less......................................... 1.34
15 years or less......................................... 1.45
20 years or less......................................... 1.54
30 years or less......................................... 1.66
Corporate evidences of indebtedness:
Corporate evidences of indebtedness rated at least Aaa3 with
remaining terms to maturity of:
1 year or less.............................................. 1.10
2 years or less............................................. 1.13
3 years or less............................................. 1.18
4 years or less............................................. 1.21
5 years or less............................................. 1.23
7 years or less............................................. 1.27
10 years or less............................................ 1.30
15 years or less............................................ 1.31
20 years or less............................................ 1.32
30 years or less............................................ 1.33
Corporate evidences of indebtedness rated at least Aa3 with
remaining terms to maturity of:
1 year or less.............................................. 1.15
2 years of less............................................. 1.20
3 years or less............................................. 1.23
4 years or less............................................. 1.27
5 years or less............................................. 1.29
7 years or less............................................. 1.33
10 years or less............................................ 1.36
15 years or less............................................ 1.37
20 years or less............................................ 1.38
30 years or less............................................ 1.39
Corporate evidences of indebtedness rated at least A3 with re
maining terms to maturity of:
1 year or less.............................................. 1.20
2 years or less............................................. 1.26
3 years or less............................................. 1.29
4 years or less............................................. 1.33
5 years or less............................................. 1.35
7 years or less............................................. 1.39
10 years or less............................................ 1.42
15 years or less............................................ 1.43
20 years or less............................................ 1.45
30 years or less............................................ 1.45
Corporate evidences of indebtedness rated at least Baa3 with
remaining terms of maturity of:
1 year or less.............................................. 1.25
2 years or less............................................. 1.31
3 years or less............................................. 1.35
4 years or less............................................. 1.38
5 years or less............................................. 1.41
7 years or less............................................. 1.45
10 years or less............................................ 1.48
15 years or less............................................ 1.50
20 years or less............................................ 1.51
30 years or less............................................ 1.52
Corporate evidences of indebtedness rated at least Ba3 with
remaining terms of maturity of:
1 year or less.............................................. 1.36
2 years or less............................................. 1.42
3 years or less............................................. 1.46
4 years or less............................................. 1.50
5 years or less............................................. 1.53
7 years or less............................................. 1.57
10 years or less............................................ 1.61
15 years or less............................................ 1.62
20 years or less............................................ 1.64
30 years or less............................................ 1.64
Corporate evidences of indebtedness rated at least B1 and B2
with remaining terms of maturity of:
1 year or less.............................................. 1.46
2 years or less............................................. 1.53
3 years or less............................................. 1.57
4 years or less............................................. 1.61
5 years or less............................................. 1.65
7 years or less............................................. 1.70
10 years or less............................................ 1.73
15 years or less............................................ 1.75
20 years or less............................................ 1.76
30 years or less............................................ 1.77
Convertible corporate evidences of indebtedness with senior debt
securities rated at least Aa3 issued by the following type of issuers:
Utility......................................................... 1.28
Industrial...................................................... 1.75
Financial....................................................... 1.53
Transportation.................................................. 2.13
Convertible corporate evidences of indebtedness with senior debt
securities rated at least A3 issued by the following type of issuers:
Utility......................................................... 1.33
Industrial...................................................... 1.80
Financial....................................................... 1.58
Transportation.................................................. 2.18
Convertible corporate evidences of indebtedness with senior debt
securities rated at least Baa3 issued by the following type of issuers:
Utility......................................................... 1.48
Industrial...................................................... 1.95
Financial....................................................... 1.73
Transportation.................................................. 2.33
Convertible corporate evidences of indebtedness with senior debt
securities rated at least Ba3 issued by the following type of issuers:
Utility......................................................... 1.49
Industrial...................................................... 1.96
Financial....................................................... 1.74
Transportation.................................................. 2.34
Convertible corporate evidences of indebtedness with senior debt
securities rated at least B2 issued by the following type of issuers:
Utility......................................................... 1.59
Industrial...................................................... 2.06
Financial....................................................... 1.84
Transportation.................................................. 2.44
"Moody's Eligible Assets" means:
(a) cash (including, for this purpose, receivables for investments sold
to a counterparty whose senior debt securities are rated at least Baa3 by
Moody's or a counterparty approved by Moody's and payable within five Business
Days following such Valuation Date and dividends and interest receivable within
70 days on invest ments);
(b) Short-Term Money Market Instruments;
(c) commercial paper that is not includible as a Short-Term Money
Market Instrument having on the Valuation Date a rating from Moody's of at least
P-1 and maturing within 270 days;
(d) preferred stocks (i) which either (A) are issued by issuers whose
senior debt securities are rated at least Baa1 by Moody's or (B) are rated at
least Baa3 by Moody's or (C) in the event an issuer's senior debt securities or
preferred stock is not rated by Moody's, which either (1) are issued by an
issuer whose senior debt securi ties are rated at least A- by S&P or (2) are
rated at least A- by S&P and for this purpose have been assigned a Moody's
equivalent rating of at least Baa3, (ii) of issuers which have (or, in the case
of issuers which are special purpose corporations, whose parent companies have)
common stock listed on the New York Stock Ex change, the American Stock Exchange
or the Nasdaq National Market System, (iii) which have a minimum issue size
(when taken together with other of the issuer's issues of similar tenor) of
$50,000,000, (iv) which have paid cash dividends consis tently during the
preceding three-year period (or, in the case of new issues without a dividend
history, are rated at least A1 by Moody's or, if not rated by Moody's, are rated
at least AA- by S&P), (v) which pay cumulative cash dividends in US dollars,
(vi) which are not convertible into any other class of stock and do not have
warrants attached, (vii) which are not issued by issuers in the transportation
industry and (viii) in the case of auction rate preferred stocks, which are
rated at least Aa3 by Moody's, or if not rated by Moody's, AAA by S&P or are
otherwise approved in writing by Moody's and have never had a failed auction;
provided, however, that for this purpose the aggregate Market Value of the
Company's holdings of any single issue of auction rate preferred stock shall not
be more than 1% of the Corporation's total assets.
(e) common stocks (i) (A) which are traded on a nationally recognized
stock exchange or in the over-the-counter market, (B) if cash dividend paying,
pay cash dividends in US dollars and (C) which may be sold without restriction
by the Corporation; provided, however, that (y) common stock which, while a
Moody's Eligible Asset owned by the Corporation, ceases paying any regular cash
dividend will no longer be considered a Moody's Eligible Asset until 71 days
after the date of the announcement of such cessation, unless the issuer of the
common stock has senior debt securities rated at least A3 by Moody's and (z) the
aggregate Market Value of the Corporation's holdings of the common stock of any
issuer in excess of 4% in the case of utility common stock and 6% in the case of
non-utility common stock of the aggregate Market Value of the Corporation's
holdings shall not be Moody's Eligible Assets, (ii) which are securities
denominated in any currency other than the US dollar or securities of issuers
formed under the laws of jurisdictions other than the United States, its states
and the District of Columbia for which there are dollar-denominated American
Depository Receipts ("ADRs") or their equivalents which are traded in the United
States on exchanges or over-the-counter and are issued by banks formed under the
laws of the United States, its states or the District of Columbia or (iii) which
are securities of issuers formed under the laws of jurisdic tions other than the
United States (and in existence for at least five years) for which no ADRs are
traded; provided, however, that the aggregate Market Value of the Corporation's
holdings of securities denominated in currencies other than the US dollar and
ADRs in excess of (A) 6% of the aggregate Market Value of the Out standing
shares of common stock of such issuer thereof or (B) in excess of 10% of the
Market Value of the Corporation's Moody's Eligible Assets with respect to
issuers formed under the laws of any single such non-U.S. jurisdiction other
than Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland,
Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland
and the United Kingdom, shall not be a Moody's Eligible Asset;
(f) ADR securities, based on the following guidelines: (i) Sponsored
ADR program or (ii) Level II or Level III ADRs. Private placement Rule 144A ADRs
are not eligible for collateral consideration. Global GDR programs will be
evaluated on a case by case basis;
(g) U.S. Government Obligations;
(h) corporate evidences of indebtedness (i) which may be sold without
restriction by the Corporation which are rated at least B3 (Caa subordinate) by
Moody's (or, in the event the security is not rated by Moody's, the security is
rated at least BB- by S&P and which for this purpose is assigned a Moody's
equivalent rating of one full rating category lower), with such rating confirmed
on each Valuation Date, (ii) which have a minimum issue size of at least (A)
$100,000,000 if rated at least Baa3 or (B) $50,000,000 if rated B or Ba3, (iii)
which are not convertible or exchangeable into equity of the issuing corporation
and have a maturity of not more than 30 years and (iv) for which, if rated below
Baa3 or not rated, the aggregate Market Value of the Company's holdings do not
exceed 10% of the aggregate Market Value of any individual issue of corporate
evidences of indebtedness calculated at the time of original issuance; and
(i) convertible corporate evidences of indebtedness (i) which are
issued by issuers whose senior debt securities are rated at least B2 by Moody's
(or, in the event an issuer's senior debt securities are not rated by Moody's,
which are issued by issuers whose senior debt securities are rated at least BB
by S&P and which for this purpose is assigned a Moody's equivalent rating of one
full rating category lower), (ii) which are convertible into common stocks which
are traded on the New York Stock Exchange or the American Stock Exchange or are
quoted on the Nasdaq National Market System and (iii) which, if cash dividend
paying, pay cash dividends in US dollars; provided, however, that once
convertible corporate evidences of indebtedness have been converted into common
stock, the common stock issued upon conversion must satisfy the criteria set
forth in clause (e) above and other relevant criteria set forth in this
definition in order to be a Moody's Eligible Asset; provided, however, that the
Corporation's investments in auction rate preferred stocks described in clause
(d) above shall be included in Moody's Eligible Assets only to the extent that
the aggregate Market Value of such stocks does not exceed 10% of the aggregate
Market Value of all of the Corporation's investments meeting the criteria set
forth in clauses (a) through (g) above less the aggregate Market Value of those
investments excluded from Moody's Eligible Assets pursuant to the paragraph
appearing after clause (i) below; and
(j) no assets which are subject to any lien or irrevocably deposited by
the Corporation for the payment of amounts needed to meet the obligations
described in clauses (a)(i) through (a)(iv) of the definition of "Basic
Maintenance Amount" may be includible in Moody's Eligible Assets.
Notwithstanding anything to the contrary in the preceding clauses (a)-(j),
the Corporation's investment in preferred stock, common stock, corporate
evidences of indebtedness and convertible corporate evidences of indebtedness
shall not be treated as Moody's Eligible Assets except to the extent they
satisfy the following diversifica tion requirements (utilizing Moody's Industry
and Sub-industry Categories) with respect to the Market Value of the
Corporation's holdings:
Issuer:
Non-Utility Utility
Maximum Single Maximum Single
Moody's Rating(1)(2) Issuer(3)(4) Issuer(3)(4)
Aaa 100% 100%
Aa 20% 20%
A 10% 10%
CS/CB, Baa(5) 6% 4%
Ba 4% 4%
B1/B2 3% 3%
B3 (Caa subordinate) 2% 2%
Industry and State:
[Download Table]
Utility
Non-Utility Maximum Utility
Maximum Single Single Sub- Maximum Single
Moody's Rating(1) Industry(3) Industry(3)(6) State(3)
Aaa 100% 100% 100%
Aa 60% 60% 20%
A 40% 50% 10%(7)
CS/CB, Baa(5) 20% 50% 7%(7)
Ba 12% 12% 0%
B1/B2 8% 8% 0%
B3 (Caa subordinate) 5% 5% 0%
______________
(1) The equivalent Moody's rating must be lowered one full rating category
for preferred stocks, corporate evidences of indebtedness and
convertible corporate evidences of indebtedness rated by S&P but not by
Moody's.
(2) Corporate evidences of indebtedness from issues ranging $50,000,000 to
$100,000,000 are limited to 20% of Moody's Eligible Assets.
(3) The referenced percentages represent maximum cumulative totals only for
the related Moody's rating category and each lower Moody's rating
category.
(4) Issuers subject to common ownership of 25% or more are considered as
one name.
(5) CS/CB refers to common stock and convertible corporate evidences of
indebtedness, which are diversified independently from the rating level.
(6) In the case of utility common stock, utility preferred stock, utility
evidences of indebtedness and utility convertible evidences of
indebtedness, the definition of industry refers to sub-industries
(electric, water, hydro power, gas, diversified). Investments in other
sub-industries are eligible only to the extent that the combined sum
represents a percentage position of the Moody's Eligible Assets less
than or equal to the percentage limits in the diversification tables
above.
(7) Such percentage shall be 15% in the case of utilities regulated by
California, New York and Texas.
"Moody's Hedging Transactions" means purchases or sales of exchange-traded
financial futures contracts based on any index approved by Moody's or Treasury
Bonds, and purchases, writings or sales of exchange-traded put options on such
financial futures contracts, any index approved by Moody's or Treasury Bonds,
and purchases, writings or sales of exchange-traded call options on such
financial futures contracts, any index approved by Moody's or Treasury Bonds,
subject to the follow ing limitations:
(a) the Corporation will not engage in any Moody's Hedging Transaction
based on any index approved by Moody's (other than Closing Transactions) that
would cause the Corporation at the time of such transaction to own or have sold:
(i) Outstanding financial futures contracts based on such
index exceeding in number 10% of the average number of daily traded financial
futures contracts based on such index in the 30 days preceding the time of
effecting such transaction as reported by The Wall Street Journal; or
(ii) Outstanding financial futures contracts based on any
index ap proved by Moody's having a Market Value exceeding 50% of the Market
Value of all portfolio securities of the Corporation constituting Moody's
Eligible Assets owned by the Corporation;
(b) The Corporation will not engage in any Moody's Hedging Transaction
based on Treasury Bonds (other than Closing Transactions) that would cause the
Corporation at the time of such transaction to own or have sold:
(i) Outstanding financial futures contracts based on Treasury
Bonds with such contracts having an aggregate Market Value exceeding 20% of the
aggregate Market Value of Moody's Eligible Assets owned by the Corpora tion and
rated Aa by Moody's (or, if not rated by Moody's but rated by S&P, rated AAA by
S & P); or
(ii) Outstanding financial futures contracts based on Treasury
Bonds with such contracts having an aggregate Market Value exceeding 50% of the
aggregate Market Value of all portfolio securities of the Corporation consti
tuting Moody's Eligible Assets owned by the Corporation (other than Moody's
Eligible Assets already subject to a Moody's Hedging Transaction) and rated Baa
or A by Moody's (or, if not rated by Moody's but rated by S&P, rated A or AA by
S & P);
(c) The Corporation will engage in Closing Transactions to close out
any outstanding financial futures contract based on any index approved by
Moody's if the amount of open interest in such index as reported by The Wall
Street Journal is less than an amount to be mutually determined by Moody's and
the Corporation;
(d) The Corporation will engage in a Closing Transaction to close out
any outstanding financial futures contract by no later than the fifth Business
Day of the month in which such contract expires and will engage in a Closing
Transaction to close out any outstanding option on a financial futures contract
by no later than the first Business Day of the month in which such option
expires;
(e) The Corporation will engage in Moody's Hedging Transactions only
with respect to financial futures contracts or options thereon having the next
settlement date or the settlement date immediately thereafter;
(f) The Corporation (i) will not engage in options and futures
transactions for leveraging or speculative purposes, except that an option or
futures transaction shall not for these purposes be considered a leveraged
position or speculative and (ii) will not write any call options or sell any
financial futures contracts for the purpose of hedging the anticipated purchase
of an asset prior to completion of such purchase; and
(g) The Corporation will not enter into an option or futures
transaction unless, after giving effect thereto, the Corporation would continue
to have Moody's Eligible Assets with an aggregate Discounted Value equal to or
greater than the Preferred Shares Basic Maintenance Amount.
"Moody's Industry Classifications" means, for the purposes of determining
Moody's Eligible Assets, each of the following industry classifications (or such
other classifications as Moody's may from time to time approve for application
to the Series C Preferred Stock).
1. Aerospace and Defense: Major Contractor, Subsystems, Research,
Aircraft Manufacturing, Arms, Ammunition.
2. Automobile: Automobile Equipment, Auto-Manufacturing, Auto
Parts Manufacturing, Personal Use Trailers, Motor Homes,
Dealers.
3. Banking: Bank Holding, Savings and Loans, Consumer Credit,
Small Loan, Agency, Factoring, Receivables.
4. Beverage, Food and Tobacco: Beer and Ale, Distillers, Wines
and Liquors, Distributors, Soft Drink Syrup, Bottlers, Bakery,
Mill Sugar, Canned Foods, Corn Refiners, Dairy Products, Meat
Products, Poultry Products, Snacks, Packaged Foods,
Distributors, Candy, Gum, Sea food, Frozen Food, Cigarettes,
Cigars, Leaf/Snuff, Vegetable Oil.
5. Buildings and Real Estate: Brick, Cement, Climate Controls,
Con tracting, Engineering, Construction, Hardware, Forest
Products (building-related only), Plumbing, Roofing,
Wallboard, Real Estate, Real Estate Development, REITs, Land
Development.
6. Chemicals, Plastics and Rubber: Chemicals (non-agricultural),
Indus trial Gases, Sulphur, Plastics, Plastic Products,
Abrasives, Coatings, Paints, Varnish, Fabricating Containers.
7. Packaging and Glass: Glass, Fiberglass, Containers made of:
Glass, Metal, Paper, Plastic, Wood or Fiberglass.
8. Personal and Non-Durable Consumer Products (Manufacturing
Only): Soaps, Perfumes, Cosmetics, Toiletries, Cleaning
Supplies, School Supplies.
9. Diversified/Conglomerate Manufacturing.
10. Diversified/Conglomerate Service.
11. Diversified Natural Resources, Precious Metals and Minerals:
Fabri cating, Distribution.
12. Ecological: Pollution Control, Waste Removal, Waste Treatment
and Waste Disposal.
13. Electronics: Computer Hardware, Electric Equipment,
Components, Controllers, Motors, Household Appliances,
Information Service Communication Systems, Radios, TVs, Tape
Machines, Speakers, Printers, Drivers, Technology.
14. Finance: Investment Brokerage, Leasing, Syndication,
Securities.
15. Farming and Agriculture: Livestock, Grains, Produce,
Agriculture Chemicals, Agricultural Equipment, Fertilizers.
16. Grocery: Grocery Stores, Convenience Food Stores.
17. Healthcare, Education and Childcare: Ethical Drugs,
Proprietary Drugs, Research, Health Care Centers, Nursing
Homes, HMOs, Hospitals, Hospital Supplies, Medical Equipment.
18. Home and Office Furnishings, Housewares, and Durable Consumer
Products: Carpets, Floor Coverings, Furniture, Cooking,
Ranges.
19. Hotels, Motels, Inns and Gaming.
20. Insurance: Life, Property and Casualty, Broker, Agent, Surety.
21. Leisure, Amusement, Motion Pictures, Entertainment: Boating,
Bowling, Billiards, Musical Instruments, Fishing, Photo
Equipment, Records, Tapes, Sports, Outdoor Equipment
(Camping), Tourism, Resorts, Games, Toy Manufacturing, Motion
Picture Production Theaters, Motion Picture Distribution.
22. Machinery (Non-Agricultural, Non-Construction,
Non-Electronic): Industrial, Machine Tools, Steam Generators.
23. Mining, Steel, Iron and Non-Precious Metals: Coal, Copper,
Lead, Uranium, Zinc, Aluminum, Stainless Steel, Integrated
Steel, Ore Production, Refractories, Steel Mill Machinery,
Mini-Mills, Fabricat ing, Distribution and Sales of the
foregoing.
24. Oil and Gas: Crude Producer, Retailer, Well Supply, Service
and Drilling.
25. Printing, Publishing, and Broadcasting: Graphic Arts, Paper,
Paper Products, Business Forms, Magazines, Books, Periodicals,
Newspa pers, Textbooks, Radio, T.V., Cable Broadcasting
Equipment.
26. Cargo Transport: Rail, Shipping, Railroads, Rail-car Builders,
Ship Builders, Containers, Container Builders, Parts,
Overnight Mail, Trucking, Truck Manufacturing, Trailer
Manufacturing, Air Cargo, Transport.
27. Retail Stores: Apparel, Toy, Variety, Drugs, Department, Mail
Order Catalog, Showroom.
28. Telecommunications: Local, Long Distance, Independent,
Telephone, Telegraph, Satellite, Equipment, Research,
Cellular.
29. Textiles and Leather: Producer, Synthetic Fiber, Apparel
Manufac turer, Leather Shoes.
30. Personal Transportation: Air, Bus, Rail, Car Rental.
31. Utilities: Electric, Water, Hydro Power, Gas.
32. Diversified Sovereigns: Semi-sovereigns, Canadian Provinces,
Supra-national Agencies.
The Corporation will use SIC codes in determining which industry
classifica tion is applicable to a particular investment in consultation with
the Independent Accountant and Moody's, to the extent the Corporation considers
necessary.
"1933 Act" means the Securities Act of 1933, as amended, or any successor
statute.
"1940 Act" means the Investment Company Act of 1940, as amended, or any
successor statute.
"Non-Call Period" means a period determined by the Board of Directors after
consultation with the Broker-Dealers, during which the Series C Preferred Stock
subject to such Special Dividend Period is not subject to redemption at the
option of the Corporation but only to mandatory redemption.
"Notice of Redemption" means any notice with respect to the redemption of
Series C Preferred Stock pursuant to paragraph 3 of Article I of these Articles
Supplementary.
"Other Rating Agency" means any rating agency other than Moody's or Fitch
then providing a rating for the Series C Preferred Stock at the request of the
Corpora tion.
"Other Rating Agency Eligible Assets" means assets of the Corporation
designated by any Other Rating Agency as eligible for inclusion in calculating
the discounted value of the Corporation's assets in connection with such Other
Rating Agency's rating of the Series C Preferred Stock.
"Outstanding" means, as of any date, shares of Preferred Stock theretofore
issued by the Corporation except:
(a) any such share of Preferred Stock theretofore cancelled by the
Corpora tion or delivered to the Corporation for cancellation;
(b) any such share of Preferred Stock other than auction rate Preferred
Stock as to which a notice of redemption shall have been given and for whose
payment at the redemption thereof Deposit Assets in the necessary amount are
held by the Corporation in trust for or were paid by the Corporation to the
holder of such share pursuant to the Articles Supplementary with respect
thereto;
(c) in the case of shares auction rate Preferred Stock, including the
Series C Preferred Stock, any such shares theretofore delivered to the
applicable auction agent for cancellation or with respect to which the
Corporation has given notice of redemption and irrevocably deposited with the
applicable paying agent sufficient funds to redeem such shares; and
(d) any such share in exchange for or in lieu of which other shares
have been issued and delivered.
Notwithstanding the foregoing, (i) for purposes of voting rights
(including the determination of the number of shares required to constitute a
quorum), any Preferred Stock as to which any subsidiary of the Corporation is
the holder or Existing Holder, as applicable, will be disregarded and deemed not
Outstanding and (ii) in connection with any auction, any auction rate Preferred
Stock as to which any Person known to the auction agent to be a subsidiary of
the Corporation is the holder or Existing Holder, as applicable, will be
disregarded and not deemed Outstanding.
"Paying Agent" means The Bank of New York unless and until another entity
appointed by a resolution of the Board of Directors enters into an agreement
with the Corporation to serve as paying agent, which paying agent may be the
same as the Auction Agent and, with respect to any other class or series of
Preferred Stock, the Person appointed by the Corporation as dividend-disbursing
or paying agent with respect to such class or series.
"Person" means and includes an individual, a partnership, the Corporation,
a trust, a corporation, a limited liability company, an unincorporated
association, a joint venture or other entity or a government or any agency or
political subdivision thereof.
"Preferred Stock" means the preferred stock, par value $.001 per share, of
the Corporation, and includes the shares of Series C Preferred Stock.
"Premium Call Period" means a period consisting of a number of whole years
as determined by the Board of Directors after consultation with the
Broker-Dealers, during each year of which the shares subject to such Special
Dividend Period will be redeemable at the Corporation's option at a price per
share equal to the Liquidation Preference plus accumulated but unpaid dividends
(whether or not earned or de clared) plus a premium expressed as a percentage or
percentages of the Liquidation Preference or expressed as a formula using
specified variables as determined by the Board of Directors after consultation
with the Broker-Dealers.
"Pricing Service" means any of the following: Bloomberg Financial Service,
Bridge Information Services, Data Resources Inc., FT Interactive, International
Securities Market Association, Merrill Lynch Securities Pricing Service, Muller
Data Corp., Reuters, S&P/J.J. Kenny, Telerate, Trepp Pricing and Wood Gundy.
"Rating Agency" means Moody's and Fitch as long as such rating agency is
then rating the Series C Preferred Stock at the Corporation's request or any
other rating agency then rating the Series C Preferred Stock at the
Corporation's request.
"Redemption Date" has the meaning set forth in paragraph 3(e) of Article I
of these Articles Supplementary.
"Redemption Default" has the meaning set forth in paragraph 3(e) of Article
I of these Articles Supplementary.
"Redemption Price" has the meaning set forth in paragraph 3(a)(i) of
Article I of these Articles Supplementary, and shall, for the purposes of these
Articles Supple mentary, have a correlative meaning with respect to any other
class or series of Preferred Stock.
"Reference Rate" means, with respect to the determination of the Default
Rate, the applicable "AA" Financial Composite Commercial Paper Rate for a
Dividend Period of 184 days or fewer or the applicable Treasury Index Rate for a
Dividend Period of longer than 184 days and, with respect to the determination
of the Maxi mum Rate, the "AA" Financial Composite Commercial Paper Rate or the
Treasury Index Rate, as appropriate.
"Registrar" means The Bank of New York, unless and until another entity
appointed by a resolution of the Board of Directors enters into an agreement
with the Corporation to serve as registrar.
"S&P" means Standard & Poor's Ratings Services, or its successors at law.
"Securities Depository" means The Depository Trust Company and its succes
sors and assigns or any successor securities depository selected by the
Corporation that agrees to follow the procedures required to be followed by such
securities depository in connection with the Series C Preferred Stock.
"Series C Asset Coverage Cure Date" means, with respect to the failure by
the Corporation to maintain Asset Coverage (as required by paragraph 9(a)(i) of
Article I of these Articles Supplementary) as of the last Business Day of each
March, June, September and December of each year, 10 days following such
Business Day.
"Series C Preferred Stock" means shares of the Corporation's Series C
Auction Rate Cumulative Preferred Stock, par value $.001 per share, liquidation
preference $25,000 per share.
"Short-Term Money Market Instrument" means the following types of
instruments if, on the date of purchase or other acquisition thereof by the
Corpora tion, the remaining term to maturity thereof is not in excess of 180
days:
(i) commercial paper rated A-1 if such
commercial paper matures in 30 days or A-1+ if such commercial paper matures in
over 30 days;
(ii)demand or time deposits in, and banker's
acceptances and certificates of deposit of (A) a depository institution or trust
company incorporated under the laws of the United States of America or any state
thereof or the District of Columbia or (B) a United States branch office or
agency of a foreign depository institution (provided that such branch office or
agency is subject to banking regulation under the laws of the United States, any
state thereof or the District of Columbia);
(iii) overnight funds; and
(iv) U.S. Government Obligations.
"Special Dividend Period" means a Dividend Period that is not a Standard
Dividend Period.
"Specific Redemption Provisions" means, with respect to any Special
Dividend Period of more than one year, either, or any combination of (i) a
Non-Call Period and (ii) a Premium Call Period.
"Standard Dividend Period" means a Dividend Period of seven days, subject
to increase or decrease to the extent necessary for the next Auction Date and
Dividend Payment Date to each be Business Days.
"Submission Deadline" means 1:00 p.m., New York City time, on any Auction
Date or such other time on any Auction Date by which Broker-Dealers are required
to submit Orders to the Auction Agent as specified by the Auction Agent from
time to time.
"Transfer Agent" means The Bank of New York, unless and until another
entity appointed by a resolution of the Board of Directors enters into an
agreement with the Corporation to serve as transfer agent.
"Treasury Index Rate" means the average yield to maturity for actively
traded marketable U.S. Treasury fixed interest rate securities having the same
number of 30- day periods to maturity as the length of the applicable Dividend
Period, determined, to the extent necessary, by linear interpolation based upon
the yield for such securi ties having the next shorter and next longer number of
30-day periods to maturity treating all Dividend Periods with a length greater
than the longest maturity for such securities as having a length equal to such
longest maturity, in all cases based upon data set forth in the most recent
weekly statistical release published by the Board of Governors of the Federal
Reserve System (currently in H.15 (519)); provided, however, if the most recent
such statistical release shall not have been published during the 15 days
preceding the date of computation, the foregoing computations shall be based
upon the average of comparable data as quoted to the Corporation by at least
three recognized dealers in U.S. Government Obligations selected by the
Corporation.
"U.S. Government Obligations" means direct obligations of the United States
or by its agencies or instrumentalities that are entitled to the full faith and
credit of the United States and that, other than United States Treasury Bills,
provide for the periodic payment of interest and the full payment of principal
at maturity or call for redemption.
"Valuation Date" means the last Business Day of each month, or such other
date as the Corporation and Rating Agencies may agree to for purposes of
determin ing the Basic Maintenance Amount.
"Voting Period" has the meaning set forth in paragraph 6(b) of Article I of
these Articles Supplementary.
14. Interpretation. References to sections, subsections, clauses, sub-
clauses, paragraphs and subparagraphs that do not reference a specific Article
of these Articles Supplementary or another document shall refer to the Article
of these Articles Supplementary in which the reference occurs, unless the
context otherwise requires.
Article II: Auction Procedures
1. Certain Definitions. Unless the context or use indicates
another or different meaning or intent, each of the following terms when used in
these Articles Supplementary shall have the meaning ascribed to it below,
whether such term is used in the singular or plural and regardless of tense:
"Agent Member" means a member of or participant in the Securities
Depository that will act on behalf of a Bidder.
"Available Preferred Shares" has the meaning set forth in paragraph 4(a)(i)
of Article II of these Articles Supplementary.
"Existing Holder" means (a) a Person who beneficially owns those shares of
Preferred Stock, including Series C Preferred Stock, listed in that Person's
name in the records of the Corporation or Auction Agent, as the case may be, or
(b) the beneficial owner of those shares of Series C Preferred Stock which are
listed under such person's Broker-Dealer's name in the records of the Auction
Agent, which Broker-Dealer shall have signed a Master Purchaser's Letter.
"Hold Order" has the meaning set forth in paragraph 2(a) of Article II of
these Articles Supplementary.
"Master Purchaser's Letter" means the letter which is required to be
executed by each prospective purchaser of Series C Preferred Stock or by the
Broker-Dealer through whom the shares will be held.
"Order" has the meaning set forth in paragraph 2(a) of Article II of these
Articles Supplementary.
"Potential Holder" means (a) any Existing Holder who may be interested in
acquiring additional Series C Preferred Stock or (b) any other Person who may be
interested in acquiring Series C Preferred Stock and who has signed a Master
Purchaser's Letter or whose shares will be listed under such person's
Broker-Dealer's name on the records of the Auction Agent which Broker-Dealer
shall have executed a Master Purchaser's Letter.
"Sell Order" has the meaning set forth in paragraph 2(a) of Article II of
these Articles Supplementary.
"Submitted Bid" has the meaning set forth in paragraph 4(a) of Article II
of these Articles Supplementary.
"Submitted Hold Order" has the meaning set forth in paragraph 4(a) of
Article II of these Articles Supplementary.
"Submitted Order" has the meaning set forth in paragraph 4(a) of Article II
of these Articles Supplementary.
"Submitted Sell Order" has the meaning set forth in paragraph 4(a) of
Article II of these Articles Supplementary.
"Sufficient Clearing Bids" has the meaning set forth in paragraph 4(a)(ii)
of Article II of these Articles Supplementary.
"Sufficient Clearing Orders" means that all shares of Series C Preferred
Stock are the subject of Submitted Hold Orders or that the number of shares of
Series C Preferred Stock that are the subject of Submitted Bids by Potential
Holders specify ing one or more rates equal to or less than the Maximum Rate
exceeds or equals the sum of (a) the number of shares of Series C Preferred
Stock that are subject of Submitted Bids by Existing Holders specifying one or
more rates higher than the Maximum Rate and (b) the number of shares of Series C
Preferred Stock that are subject to Submitted Sell Orders.
"Winning Bid Rate" means the lowest rate specified in the Submitted Bids
which if:
(a) (i) each such Submitted Bid of Existing Holders specifying such lowest
rate and
(ii) all other such Submitted Bids of Existing Holders specifying
lower rates were rejected, thus entitling such Existing
Holders to continue to hold the shares of such series that are
subject to such Submitted Bids; and
(b) (i) each such Submitted Bid of Potential Holders specifying such lowest
rate and
(ii) all other such Submitted Bids of Potential Holders specifying
lower rates were accepted;
would result in such Existing Holders described in subclause (a) above
continuing to hold an aggregate number of Outstanding shares of Series C
Preferred Stock which, when added to the number of Outstanding shares of Series
C Preferred Stock to be purchased by such Potential Holders described in
subclause (b) above, would equal not less than the Available Preferred Shares.
2. Orders.
(a) On or prior to the Submission Deadline on each Auction
Date for Series C Preferred Stock:
(i) each Beneficial Owner of Series C Preferred Stock
may submit to its Broker-Dealer by telephone or otherwise information as to:
(A) the number of Outstanding shares of
Series C Preferred Stock, if any, held by such Beneficial Owner which such
Beneficial Owner desires to continue to hold without regard to the Applicable
Rate for the next succeeding Dividend Period;
(B) the number of Outstanding shares of
Series C Preferred Stock, if any, held by such Beneficial Owner which such
Beneficial Owner offers to sell if the Applicable Rate for the next succeeding
Dividend Period shall be less than the rate per annum specified by such
Beneficial Owner; and/or
(C) the number of Outstanding shares of
Series C Preferred Stock, if any, held by such Beneficial Owner which such
Beneficial Owner offers to sell without regard to the Applicable Rate for the
next succeeding Dividend Period; and
(ii)each Broker-Dealer, using lists of potential
Beneficial Owners, shall in good faith for the purpose of conducting a
competitive Auction in a commercially reasonable manner, contact potential
Beneficial Owners (by telephone or otherwise), including Persons that are not
Beneficial Owners, on such lists to determine the number of shares of Series C
Preferred Stock, if any, that each such potential Beneficial Owner offers to
purchase if the Applicable Rate for the next succeeding Dividend Period shall
not be less than the rate per annum specified by such potential Beneficial
Owner.
For the purposes hereof, the communication by a Beneficial Owner or potential
Beneficial Owner to a Broker-Dealer, or by a Broker-Dealer to the Auction Agent,
of information referred to in clauses (a)(i) or (a)(ii) of this paragraph (2) is
hereinafter referred to as an "Order" and collectively as "Orders" and each
Beneficial Owner and each potential Beneficial Owner placing an Order with a
Broker-Dealer, and such Broker-Dealer placing an Order with the Auction Agent,
is hereinafter referred to as a "Bidder" and collectively as "Bidders;" an Order
containing the information referred to in clause (a)(i)(A) of this paragraph (2)
is hereinafter referred to as a "Hold Order" and collectively as "Hold Orders;"
an Order containing the information referred to in clauses (a)(i)(B) or (a)(ii)
of this paragraph (2) is hereinafter referred to as a "Bid" and collectively as
"Bids;" and an Order containing the information referred to in clause (a)(i)(C)
of this paragraph (2) is hereinafter referred to as a "Sell Order" and
collectively as "Sell Orders."
(b) (i) A Bid by a Beneficial Owner or an Existing Holder
of Series C Preferred Stock subject to an Auction on any Auction Date shall
consti tute an irrevocable offer to sell if:
(A) the number of Outstanding shares of
Series C Preferred Stock specified in such Bid if the Applicable Rate determined
on such Auction Date shall be less than the rate specified therein;
(B) such number or a lesser number of
Outstanding shares of Series C Preferred Stock to be determined as set forth in
paragraph 5(a)(iv) if the Applicable Rate for Series C Pre ferred Stock
determined on such Auction Date shall be equal to the rate specified therein; or
(C) the number of Outstanding shares of
Series C Preferred Stock specified in such Bid if the rate specified therein
shall be higher than the Maximum Rate, or such number or a lesser number of
Outstanding shares of Series C Preferred Stock to be determined as set forth in
paragraph 5(b)(iii) if the rate specified therein shall be higher than the
Maximum Rate and Sufficient Clear ing Bids do not exist.
(ii) A Sell Order by a Beneficial Owner or an
Existing Holder of Series C Preferred Stock subject to an Auction on any
Auction Date shall constitute an irrevocable offer to sell:
(A) the number of Outstanding shares of
Series C Preferred Stock specified in such Sell Order; or
(B) such number or a lesser number of
Outstanding shares of Series C Preferred Stock as set forth in para graph
5(b)(iii) if Sufficient Clearing Bids do not exist; provided, however, that a
Broker-Dealer that is an Existing Holder with respect to Series C Preferred
Stock shall not be liable to any Person for failing to sell such shares pursuant
to a Sell Order described in the proviso to paragraph 3(c) if (1) such shares
were transferred by the Beneficial Owner thereof without compliance by such
Beneficial Owner or its transferee Broker-Dealer (or other transferee Person, if
permitted by the Corporation) with the provisions of paragraph 6 or (2) such
Broker-Dealer has informed the Auction Agent pursuant to the terms of its
Broker-Dealer Agreement that, according to such Broker- Dealer's records, such
Broker-Dealer believes it is not the Existing Holder of such shares.
(iii) A Bid by a Potential Holder of Series C
Preferred Stock subject to an Auction on any Auction Date shall constitute an
irrevocable offer to purchase if:
(A) the number of Outstanding shares of
Series C Preferred Stock specified in such Bid if the Applicable Rate determined
on such Auction Date shall be higher than the rate specified therein; or
(B) such number or a lesser number of
Outstanding shares of Series C Preferred Stock as set forth in para graph
5(a)(v) if the Applicable Rate determined on such Auction Date shall be equal to
the rate specified therein.
(c) No Order for any number of shares of Series C Preferred
Stock other than whole shares shall be valid.
3. Submission of Orders by Broker-Dealers to Auction Agent.
(a) Each Broker-Dealer shall submit in writing to the Auction
Agent prior to the Submission Deadline on each Auction Date all Orders for
Series C Preferred Stock subject to an Auction on such Auction Date obtained by
such Broker-Dealer, designating itself (unless otherwise permitted by the
Corpora tion) as an Existing Holder in respect of shares subject to Orders
submitted or deemed submitted to it by Beneficial Owners and as a Potential
Holder in respect of shares subject to Orders submitted to it by potential
Beneficial Owners, and shall specify with respect to each Order for such shares:
(i) the name of the Bidder placing such Order (which
shall be the Broker-Dealer unless otherwise permitted by the Corpora tion);
(ii) the aggregate number of shares of Series C
Preferred Stock that are the subject of such Order;
(iii) to the extent that such Bidder is an Existing
Holder of Series C Preferred Stock:
(A) the number of shares of Series C
Preferred Stock, if any, subject to any Hold Order of such Existing Holder;
(B) the number of shares of Series C
Preferred Stock, if any, subject to any Bid of such Existing Holder and the rate
specified in such Bid; and
(C) the number of shares of Series C
Preferred Stock, if any, subject to any Sell Order of such Existing Holder; and
(iv) to the extent such Bidder is a
Potential Holder of Series C Preferred Stock, the rate and number of shares of
Series C Preferred Stock specified in such Potential Holder's Bid.
(b) If any rate specified in any Bid contains more than three
figures to the right of the decimal point, the Auction Agent shall round such
rate up to the next highest one thousandth (.001) of 1%.
(c) If an Order or Orders covering all of the Outstanding
shares of Series C Preferred Stock held by any Existing Holder is not submitted
to the Auction Agent prior to the Submission Deadline, the Auction Agent shall
deem a Hold Order to have been submitted by or on behalf of such Existing Holder
covering the number of Outstanding shares of Series C Preferred Stock held by
such Existing Holder and not subject to Orders submitted to the Auction Agent;
provided, however, that if an Order or Orders covering all of the Outstanding
Series C Preferred Stock held by any Existing Holder is not submitted to the
Auction Agent prior to the Submission Deadline for an Auction relating to a
Special Dividend Period consisting of more than 28 calendar days, the Auction
Agent shall deem a Sell Order to have been submitted by or on behalf of such
Existing Holder covering the number of Outstanding shares of Series C Preferred
Stock held by such Existing Holder and not subject to Orders submitted to the
Auction Agent.
(d) If one or more Orders of an Existing Holder is submitted
to the Auction Agent covering in the aggregate more than the number of
Outstanding shares of Series C Preferred Stock subject to an Auction held by
such Existing Holder, such Orders shall be considered valid in the following
order of priority:
(i) all Hold Orders shall be considered valid, but
only up to and including in the aggregate the number of Outstanding shares of
Series C Preferred Stock held by such Existing Holder, and if the number of
shares subject to such Hold Orders exceeds the number of Outstanding shares of
Series C Preferred Stock held by such Existing Holder, the number of shares
subject to each such Hold Order shall be reduced pro rata to cover the number of
Outstanding shares of Series C Preferred Stock held by such Existing Holder;
(ii)(A) any Bid for Series C Preferred Stock shall be
considered valid up to and including the excess of the number of Outstand ing
shares of Series C Preferred Stock held by such Existing Holder over the number
of shares of Series C Preferred Stock subject to any Hold Orders referred to in
clause (d)(i) above;
(B) subject to subclause (d)(ii)(A), if more
than one Bid of an Existing Holder for Series C Preferred Stock is submitted to
the Auction Agent with the same rate and the number of Outstanding shares of
Series C Preferred Stock subject to such Bids is greater than such excess, such
Bids shall be considered valid up to and including the amount of such excess,
and the number of shares of Series C Preferred Stock subject to each Bid with
the same rate shall be reduced pro rata to cover the number of shares equal to
such excess;
(C) subject to subclauses (d)(ii)(A) and
(B), if more than one Bid of an Existing Holder for Series C Preferred Stock is
submitted to the Auction Agent with different rates, such Bids shall be
considered valid in the ascending order of their respec tive rates up to and
including the amount of such excess; and
(D) in any such event, the number, if any,
of such Outstanding shares of Series C Preferred Stock subject to any portion of
Bids considered not valid in whole or in part under this paragraph 3(d)(ii)
shall be treated as the subject of a Bid by or on behalf of a Potential Holder
at the rate specified therein; and
(iii) all Sell Orders for Series C Preferred Stock
shall be considered valid up to and including the excess of the number of
Outstanding shares of Series C Preferred Stock held by such Existing Holder over
the sum of Outstanding shares of Series C Preferred Stock subject to valid Hold
Orders referred to in paragraph 3(d)(i) above and valid Bids referred to in
paragraph 3(d)(ii) above.
(e) If more than one Bid for Series C Preferred Stock
issubmitted to the Auction Agent by or on behalf of any Potential Holder, each
such Bid submitted shall be a separate Bid with the rate and number of shares
therein specified.
(f) Any Order submitted by a Beneficial Owner or a potential
Beneficial Owner to its Broker-Dealer, or by a Broker-Dealer to the Auction
Agent, prior to the Submission Deadline on any Auction Date, shall be
irrevocable.
4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
(a) Not earlier than the Submission Deadline on each Auction
Date for Series C Preferred Stock, the Auction Agent shall assemble all valid
Orders submitted or deemed submitted to it by the Broker-Dealers (each such
Order as submitted or deemed submitted by a Broker-Dealer being hereinafter
referred to individually as a "Submitted Hold Order," a "Submitted Bid" or a
"Sub mitted Sell Order," as the case may be, or as a "Submitted Order" and
collectively as "Submitted Hold Orders," "Submitted Bids" or "Submitted Sell
Orders," as the case may be, or as "Submitted Orders") and shall determine:
(i) the excess of the number of Outstanding shares of
Series C Preferred Stock over the number of Outstanding shares of Series C
Preferred Stock subject to Submitted Hold Orders (such excess being hereinafter
referred to as the "Available Preferred Shares");
(ii)from the Submitted Orders for Series C Pre ferred
Stock whether:
(A) the number of Outstanding shares of
Series C Preferred Stock subject to Submitted Bids of Potential Holders
specifying one or more rates equal to or lower than the Maximum Rate exceeds or
is equal to the sum of
(B) the number of Outstanding shares of
Series C Preferred Stock subject to Submitted Bids of Existing Holders
specifying one or more rates higher than the Maximum Rate; and
(C) the number of Outstanding shares of
Series C Preferred Stock subject to Submitted Sell Orders (in the event such
excess or such equality exists (other than because the number of shares of
Series C Preferred Stock in clauses (a)(ii)(A) and (B) above is zero because all
of the Outstanding shares of Series C Preferred Stock are subject to Submitted
Hold Orders), such Submit ted Bids in clause (a)(ii)(A) above being hereinafter
referred to collec tively as "Sufficient Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the Winning
Bid Rate.
(b) Not later than 9:30 A.M., New York City time, on each
Auction Date, the Auction Agent shall advise the Corporation of the Maximum Rate
for the Series C Preferred Stock for which an Auction is being held on the
Auction Date and, based on such determination, promptly after the Auction Agent
has made the determinations pursuant to paragraph 4(a), the Auction Agent shall
advise the Corporation of the Applicable Rate for the next succeeding Dividend
Period thereof as follows:
(i) if Sufficient Clearing Bids exist, that the
Applicable Rate for the next succeeding Dividend Period thereof shall be equal
to the Winning Bid Rate so determined;
(ii) if Sufficient Clearing Bids do not exist (other
than because all of the Outstanding shares of such series are subject to
Submitted Hold Orders), that the Applicable Rate for the next succeeding
Dividend Period thereof shall be equal to the Maximum Rate; or
(iii) if all of the Outstanding shares of Series C
Preferred Stock are subject to Submitted Hold Orders, that the Applicable Rate
for the next succeeding Dividend Period thereof shall be the All Hold Rate.
5. Acceptance and Rejection of Submitted Bids and Submitted Sell
Orders and Allocation.
Existing Holders shall continue to hold the shares of Series C Preferred
Stock that are subject to Submitted Hold Orders, and, based on the
determinations made pursuant to paragraph 4(a), the Submitted Bids and Submitted
Sell Orders shall be accepted or rejected by the Auction Agent and the Auction
Agent shall take such other action as set forth below:
(a) If Sufficient Clearing Bids for shares of Series C
Preferred Stock have been made, all Submitted Sell Orders shall be accepted and,
subject to the provisions of paragraphs 5(d) and 5(e), Submitted Bids shall be
accepted or rejected as follows in the following order of priority and all other
Submitted Bids shall be rejected:
(i) Existing Holders' Submitted Bids for Series C
Preferred Stock specifying any rate that is higher than the Winning Bid Rate
shall be accepted, thus requiring each such Existing Holder to sell the Series C
Preferred Stock subject to such Submitted Bids;
(ii) Existing Holders' Submitted Bids for shares
Series C Preferred Stock specifying any rate that is lower than the Winning Bid
Rate shall be rejected, thus entitling each such Existing Holder to con tinue to
hold the Series C Preferred Stock subject to such Submitted Bids;
(iii) Potential Holders' Submitted Bids for shares of
Series C Preferred Stock specifying any rate that is lower than the Winning Bid
Rate shall be accepted;
(iv) each Existing Holder's Submitted Bid for shares
of Series C Preferred Stock specifying a rate that is equal to the Winning Bid
Rate shall be rejected, thus entitling such Existing Holder to continue to hold
the Series C Preferred Stock subject to such Submitted Bid, unless the number of
Outstanding shares of Series C Preferred Stock subject to all such Submitted
Bids shall be greater than the number of shares of Series C Preferred Stock
("remaining shares") in the excess of the Available Preferred Shares over the
number of shares of Series C Preferred Stock subject to Submitted Bids described
in paragraphs 5(a)(ii) and 5(a)(iii), in which event such Submitted Bid of such
Existing Holder shall be rejected in part, and such Existing Holder shall be
entitled to continue to hold Series C Preferred Stock subject to such Submitted
Bid, but only in an amount equal to the shares of Series C Preferred Stock
obtained by multiplying the number of remaining shares by a fraction, the
numerator of which shall be the number of Outstanding shares of Series C
Preferred Stock held by such Existing Holder subject to such Submitted Bid and
the denominator of which shall be the aggregate number of Outstanding shares of
Series C Preferred Stock subject to such Submitted Bids made by all such
Existing Holders that specified a rate equal to the Winning Bid Rate; and
(v) each Potential Holder's Submitted Bid for Series
C Preferred Stock specifying a rate that is equal to the Winning Bid Rate shall
be accepted but only in an amount equal to the number of shares obtained by
multiplying the number of shares of Series C Preferred Stock in the excess of
the Available Preferred Shares over the number of shares of Series C Preferred
Stock subject to Submitted Bids described in paragraph 5(a)(ii) through (iv) by
a fraction, the numerator of which shall be the number of Outstanding shares of
Series C Preferred Stock subject to such Submitted Bid and the denominator of
which shall be the aggregate number of Outstand ing shares of Series C Preferred
Stock subject to such Submitted Bids made by all such Potential Holders that
specified a rate equal to the Winning Bid Rate.
(b) If Sufficient Clearing Bids for Series C Preferred Stock
have not been made (other than because all of the Outstanding shares are subject
to Submitted Hold Orders), subject to the provisions of paragraph 5(d),
Submitted Orders shall be accepted or rejected as follows in the following order
of priority and all other Submitted Bids for Series C Preferred Stock shall be
rejected:
(i) Existing Holders' Submitted Bids for Series C
Preferred Stock specifying any rate that is equal to or lower than the Maxi mum
Rate shall be rejected, thus entitling such Existing Holders to continue to hold
the Series C Preferred Stock subject to such Submitted Bids;
(ii) Potential Holders' Submitted Bids for Series C
Preferred Stock specifying any rate that is equal to or lower than the Maxi mum
Rate shall be accepted; and
(iii) Each Existing Holder's Submitted Bid for
Series C Preferred Stock specifying any rate that is higher than the Maximum
Rate and the Submitted Sell Orders of each Existing Holder shall be accepted,
thus entitling each Existing Holder that submitted or on whose behalf was
submitted any such Submitted Bid or Submitted Sell Order to sell Series C
Preferred Stock subject to such Submitted Bid or Submitted Sell Order, but in
both cases only in an amount equal to the number of shares of Series C
Preferred Stock obtained by multiplying the number of shares of Series C
Preferred Stock subject to Submitted Bids described in paragraph 5(b)(ii) by a
fraction, the numerator of which shall be the number of Out standing shares of
Series C Preferred Stock held by such Existing Holder subject to such
Submitted Bid or Submitted Sell Order and the denominator of which shall be
the aggregate number of Outstanding shares of Series C Preferred Stock subject
to all such Submitted Bids and Submitted Sell Orders.
(c) If all of the Outstanding shares of Series C Preferred
Stock are subject to Submitted Hold Orders, all Submitted Bids for such shares
shall be rejected.
(d) If, as a result of the procedures described in paragraph
5(a)(iv) or (v) or paragraph 5(b)(iii), any Existing Holder would be entitled or
required to sell, or any Potential Holder would be entitled or required to
purchase, a fraction of a share of Series C Preferred Stock on any Auction Date,
the Auction Agent shall, in such manner as it shall determine in its sole
discretion, round up or down the number of shares of Series C Preferred Stock to
be purchased or sold by any Existing Holder or Potential Holder on such Auction
Date as a result of such procedures so that the number of shares so purchased or
sold by each Existing Holder or Potential Holder on such Auction Date shall be
whole shares.
(e) If, as a result of the procedures described in paragraph
5(a)(v) any Potential Holder would be entitled or required to purchase less than
a whole share of Series C Preferred Stock on any Auction Date, the Auction Agent
shall, in such manner as it shall determine in its sole discretion, allocate
Series C Preferred Shares for purchase among Potential Holders so that only
whole shares are purchased on such Auction Date as a result of such procedures
by any Potential Holder, even if such allocation results in one or more
Potential Holders not purchas ing Series C Preferred Stock on such Auction Date.
(f) Based on the results of each Auction for Series C
Preferred Stock, the Auction Agent shall determine the aggregate number of such
shares to be purchased and the aggregate number of such shares to be sold by
Potential Holders and Existing Holders and, with respect to each Potential
Holder and Existing Holder, to the extent that such aggregate number of shares
to be purchased and such aggregate number of shares to be sold differ, determine
to which other Potential Holder(s) or Existing Holder(s) they shall deliver, or
from which other Potential Holder(s) or Existing Holder(s) they shall receive,
as the case may be, Series C Preferred Stock. Notwithstanding any provision of
the Auction Procedures to the contrary, in the event an Existing Holder or
Beneficial Owner of Series C Preferred Stock with respect to whom a
Broker-Dealer submitted a Bid to the Auction Agent for such shares that was
accepted in whole or in part, or submitted or is deemed to have submitted a Sell
Order for such shares that was accepted in whole or in part, fails to instruct
its Agent Member to deliver such shares against payment therefor, partial
deliveries of shares of Series C Preferred Stock that have been made in respect
of Potential Holders' or Potential Beneficial Owners' Submitted Bids for Series
C Preferred Stock that have been accepted in whole or in part shall constitute
good delivery to such Potential Holders and Potential Beneficial Owners.
(g) Neither the Corporation nor the Auction Agent nor any
affiliate of either shall have any responsibility or liability with respect to
the failure of an Existing Holder, a Potential Holder, a Beneficial Owner, a
Potential Beneficial Owner or its respective Agent Member to deliver shares of
Series C Preferred Stock or to pay for Series C Preferred Stock sold or
purchased pursuant to the Auction Procedures or otherwise.
6. Transfer of Series C Preferred Stock.
Unless otherwise permitted by the Corporation, a Beneficial Owner or an
Existing Holder may sell, transfer or otherwise dispose of Series C Preferred
Stock only in whole shares and only pursuant to a Bid or Sell Order placed with
the Auction Agent in accordance with the procedures described in this Article II
or to a Broker-Dealer; provided, however, that (a) a sale, transfer or other
disposition of Series C Preferred Stock from a customer of a Broker-Dealer who
is listed on the records of that Broker-Dealer as the Holder of such shares to
that Broker-Dealer or another customer of that Broker-Dealer shall not be deemed
to be a sale, transfer or other disposition for purposes of this paragraph 6 if
such Broker-Dealer remains the Existing Holder of the shares so sold,
transferred or disposed of immediately after such sale, transfer or disposition
and (b) in the case of all transfers other than pursuant to Auctions, the
Broker-Dealer (or other Person, if permitted by the Corpo ration) to whom such
transfer is made shall advise the Auction Agent of such transfer.
ARTICLE III
ABILITY OF BOARD OF DIRECTORS TO MODIFY THE ARTICLES
SUPPLEMENTARY
The calculation of Adjusted Value, Basic Maintenance Amount and the
elements of each of them and the definitions of such terms and elements may be
modified by action of the Board of Directors without further action by the
stockholders if the Board of Directors determines that such modification is
necessary to prevent a reduc tion in rating of the shares of Preferred Stock by
the Rating Agencies rating such shares at the request of the Corporation or is
in the best interests of the holders of Common Stock and is not adverse to the
Holders of Preferred Stock in view of advice to the Corporation by the relevant
Rating Agencies that such modification would not adversely affect the
then-current rating of the Series C Preferred Stock. To the extent the
Corporation is unable to obtain an opinion of counsel to the effect that
operation of the foregoing sentence is enforceable in the circumstances then
obtaining, the calculation of Adjusted Value, Basic Maintenance Amount and the
elements of each of them and the definitions of such terms and the elements
thereof shall be adjusted from time to time without further action by the Board
of Directors and the stockholders only to reflect changes made thereto
independently by a Rating Agency then rating Preferred Stock at the request of
the Corporation if such Rating Agency has advised the Corporation in writing
separately (a) of such adjustments and (b) that the revised calculation
definition would not cause such Rating Agency to reduce or withdraw its
then-current rating of the shares of Preferred Stock or any other Rating Agency
then rating Preferred Stock at the request of the Corporation to reduce or
withdraw its then-current rating. The adjustments contemplated by the pre ceding
sentence shall be made effective upon the time the Corporation receives the
notice from such Rating Agency to the effect specified in clause (b) of the
preceding sentence. Any such modification may be rescinded or further modified
by action of the Board of Directors and stockholders.
In addition, subject to compliance with applicable law, the Board of
Directors may amend the definition of Maximum Rate to increase the applicable
percentage by which the Reference Rate is multiplied to determine the Maximum
Rate shown therein without the vote or consent of the Holders of shares of
Preferred Stock, including the Series C Preferred Stock, or any other
stockholder of the Corporation, after consultation with the Broker-Dealers, and
with confirmation from each Rating Agency that immediately following any such
increase the Corporation would meet the Basic Maintenance Test.
Notwithstanding the provisions of the preceding paragraph, to the extent
permit ted by law, the Board of Directors, without the vote of the Holders of
the Series C Preferred Stock or any other capital stock of the Corporation, may
amend the provisions of these Articles Supplementary to resolve any
inconsistency or ambiguity or to remedy any formal defect so long as the
amendment does not materially adversely affect any of the contract rights of
holders of shares of the Series C Preferred Stock or any other capital stock of
the Corporation or adversely affect the then current rating on the Series C
Preferred Stock by any Rating Agency.
IN WITNESS WHEREOF, The Gabelli Global Multimedia Trust Inc. has caused
these presents to be signed in its name and on its behalf by a duly authorized
officer, and its corporate seal to be hereunto affixed and attested by its
Secretary, and the said officers of the Corporation further acknowledge said
instrument to be the corporate act of the Corporation, and state that to the
best of their knowledge, information and belief under penalty of perjury the
matters and facts herein set forth with respect to approval are true in all
material respects, all on [__], 2003.
By
____________________________
Name:
Title:
Attest:
___________________________
Name:
Title:
Dates Referenced Herein
| This ‘N-2/A’ Filing | | Date | | Other Filings |
|---|
| |  |
| Filed on: | | 3/21/03 | | None on these Dates |
| | 2/19/03 |
| List all Filings |
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