REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the
Board of Trustees/Directors of BlackRock Investment Quality Municipal Trust,
Inc., BlackRock Municipal Income Trust, BlackRock Municipal Income Trust II,
BlackRock MuniHoldings Fund, Inc., BlackRock MuniVest Fund, Inc., BlackRock
MuniVest Fund II, Inc., and BlackRock MuniYield Quality Fund II, Inc.:
In
planning and performing our audits of the financial statements of BlackRock
Investment Quality Municipal Trust, Inc., BlackRock Municipal Income Trust,
BlackRock Municipal Income Trust II, BlackRock MuniHoldings Fund, Inc.,
BlackRock MuniVest Fund, Inc., BlackRock MuniVest Fund II, Inc., and BlackRock
MuniYield Quality Fund II, Inc. (the “Funds”), as of and for the year ended July 31,
2024, in accordance with the standards of the Public Company Accounting
Oversight Board (United States) (PCAOB), we considered the Funds’ internal
control over financial reporting, including controls over safeguarding
securities, as a basis for designing our auditing procedures for the purpose of
expressing our opinion on the financial statements and to comply with the
requirements of Form N-CEN, but not for the purpose of expressing an opinion on
the effectiveness of the Funds’ internal control over financial reporting.
Accordingly, we express no such opinion.
The management of the Funds is responsible for
establishing and maintaining effective internal control over financial
reporting. In fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
controls. A company's internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company's internal
control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of a company's assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control
over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions
or that the degree of compliance with the policies or procedures may
deteriorate.
A deficiency in internal control over financial
reporting exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned
functions, to prevent or detect misstatements on a timely basis. A material
weakness is a deficiency, or a combination of deficiencies, in internal control
over financial reporting, such that there is a reasonable possibility that a
material misstatement of the company’s annual or interim financial statements
will not be prevented or detected on a timely basis.
Our consideration of the Funds’ internal control over
financial reporting was for the limited purpose described in the first
paragraph and would not necessarily disclose all deficiencies in internal
control that might be material weaknesses under standards established by the
PCAOB. However, we noted no deficiencies in the Funds’ internal control over
financial reporting and its operation, including controls over safeguarding
securities, that we consider to be a material weakness, as defined above, as of
July 31, 2024.
This report is intended solely for the information and
use of management and the Board of Trustees/Directors of the Funds and the
Securities and Exchange Commission and is not intended to be and should not be
used by anyone other than these specified parties.
/s/ Deloitte & Touche
LLP
Boston, Massachusetts
September 20, 2024
BLACKROCK MUNICIPAL INCOME TRUST
STATEMENT OF PREFERENCES OF
VARIABLE RATE MUNI TERM PREFERRED SHARES
BLACKROCK MUNICIPAL INCOME TRUST
STATEMENT OF PREFERENCES OF
VARIABLE RATE MUNI TERM PREFERRED SHARES
BlackRock Municipal Income Trust, a Delaware statutory
trust (the “Trust”), hereby certifies that:
FIRST: Pursuant to
authority expressly vested in the Board of Trustees of the Trust by Article VI
of the Trust’s Agreement and Declaration of Trust (the “Charter”), the Board of
Trustees of the Trust, by resolution duly adopted on November 14, 2023, approved
the issuance of 1,541 preferred shares of beneficial interest in the Trust, par
value $0.001 per share, as Variable Rate Muni Term Preferred Shares (the “VMTP
Preferred Shares”). The VMTP Preferred Shares may be issued in one or more
series, as designated and authorized by the Board of Trustees or a duly
authorized committee thereof from time to time (each series of VMTP Preferred
Shares that may be authorized and issued, a “Series”).
SECOND: The preferences (including liquidation
preference), voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption, of the shares of each
Series of VMTP Preferred Shares are as follows or as set forth in an amendment
to these Statement of Preferences or otherwise in the Charter (each such Series
being referred to herein as a “Series of VMTP Preferred Shares”):
DESIGNATION
Series W-7: A series of preferred
shares of beneficial interest in the Trust, par value $0.001 per share,
liquidation preference $100,000 per share, is hereby authorized and designated
“Series W-7 VMTP Preferred Shares”. The number of Series W-7 VMTP Preferred
Shares approved for issuance is 1,541. Each Series W-7 VMTP Preferred Share
shall be issued on a date or dates determined by the Board of Trustees of the
Trust or pursuant to their delegated authority; have an Applicable Rate
commencing on December 20, 2023 equal to the sum of the applicable Ratings
Spread (as defined herein) and 75% of Daily SOFR (as defined herein) on the
applicable Rate Determination Date; and have such other preferences, voting
powers, restrictions, limitations as to dividends and distributions,
qualifications and terms and conditions of redemption, required by Applicable
Law and that are expressly set forth in this Statement of Preferences and the
Declaration of Trust. The Series W-7 VMTP Preferred Shares shall constitute a separate
series of preferred shares of beneficial interest in the Trust and, except as
otherwise provided herein, each Series W-7 VMTP Preferred Share shall be
identical. Except as otherwise provided with respect to any additional Series
of VMTP Preferred Shares or unless the context requires otherwise, the terms
and conditions of this Statement of Preferences apply to each Series of VMTP
Preferred Shares and each share of each Series.
DEFINITIONS
The following terms shall have the following meanings
(with terms defined in the singular having comparable meanings when used in the
plural and vice versa), unless the context otherwise requires:
“1940 Act” means the
Investment Company Act of 1940, as amended.
“Additional Amount” shall have the meaning
specified in Section 2(e)(i)(B) of this Statement of Preferences.
“Affected Series” shall have the meaning set forth
in Section 5(d) of this Statement of Preferences.
“Agent Member” means a Person with an account at
the Securities Depository that holds one or more VMTP Preferred Shares through
the Securities Depository, directly or indirectly, for a Beneficial Owner and
that will be authorized and instructed, directly or indirectly, by a Beneficial
Owner to disclose information to the Redemption and Paying Agent with respect
to such Beneficial Owner.
“Applicable Base Rate” means 75% of Daily SOFR on the
applicable Rate Determination Date.
“Applicable Law” means Delaware state law, the
federal law of the United States of America (including, without limitation, the
1940 Act), and those provisions incorporated by reference in Section 13(v) of
this Statement of Preferences.
“Applicable Rate” means the dividend rate per annum
on any VMTP Preferred Shares for a Rate Period determined as set forth in
paragraph (e)(i) of Section 2 of this Statement of Preferences or in the
definition of “Maximum Rate”, as applicable.
“Applicable Rate Determination” means each periodic
operation of the process of determining the Applicable Rate for the VMTP
Preferred Shares for a Subsequent Rate Period.
“Basic Maintenance Amount,” as of any Valuation
Date, shall have the meaning set forth in the Rating Agency Guidelines.
“Basic Maintenance Cure Date,” with respect to the
failure by the Trust to satisfy the Basic Maintenance Amount (as required by
paragraph (a) of Section 7 of this Statement of Preferences) as of a given
Valuation Date, shall have the meaning set forth in the Rating Agency
Guidelines, but in no event shall it be longer than 10 Business Days following
such Valuation Date.
“Basic Maintenance Report” shall have the meaning
set forth in the Rating Agency Guidelines.
“Beneficial Owner” means a Person in whose name
VMTP Preferred Shares are recorded as beneficial owner of such VMTP Preferred
Shares by the Securities Depository, an Agent Member or other securities
intermediary on the records of such Securities Depository, Agent Member or
securities intermediary, as the case may be, or such Person’s subrogee.
“Board of Trustees” means the Board of Trustees of
the Trust or any duly authorized committee thereof.
“Business Day” means a day
(a) other than a day on which commercial banks in The City of New York, New
York are required or authorized by law or executive order to close and (b) on
which the New York Stock Exchange is not closed.
“Charter” means the Agreement and Declaration of
Trust, as amended and supplemented (including by the Statement of Preferences),
of the Trust.
“Closed-End Funds” shall have the meaning set forth
in Section 12 of this Statement of Preferences.
“Closing Date” means December 20, 2023.
“Code” means the U.S. Internal Revenue Code of
1986, as amended.
“Common Shares” means the common shares of
beneficial interest, par value $0.001 per share, of the Trust.
“Conditional Acceptance” means a conditional
acceptance by the Total Holders to extend the Term Redemption Date of the VMTP
Preferred Shares.
“Cure Date” means the Basic Maintenance Cure Date,
the Minimum Asset Coverage Cure Date or the last day of the Effective Leverage
Ratio Cure Period, as the case may be.
“Custodian” means a bank, as defined in Section
2(a)(5) of the 1940 Act, that has the qualifications prescribed in paragraph 1
of Section 26(a) of the 1940 Act, or such other entity as shall be providing
custodian services to the Trust as permitted by the 1940 Act or any rule,
regulation, or order thereunder, and shall include, as appropriate, any
similarly qualified sub-custodian duly appointed by the Custodian.
“Daily SOFR” means:
(1) With
respect to any Business Day means the secured overnight financing rate
published for such day by the Federal Reserve Bank of New York, as the
administrator of the benchmark (or a successor administrator) on the Federal
Reserve Bank of New York’s website (or any successor source) as of 4:00 p.m.
New York City time (such rate being initially published for such day at 8:00
a.m. and may be revised until 2:30 p.m., New York City time).
(2) If the
secured overnight financing rate cannot be determined with respect to any
Business Day as specified in paragraph (1), unless both a SOFR Index Cessation
Event and a SOFR Index Cessation Date have occurred, then the Redemption and
Paying Agent shall use the secured overnight financing rate in respect of the
last Business Day for which such secured overnight financing rate was published
on the Federal Reserve Bank of New York’s website.
(3) If a SOFR
Index Cessation Event and SOFR Index Cessation Date have occurred, the
Redemption and Paying Agent shall determine the Applicable Base Rate as if the
reference to “75% of Daily SOFR” were a reference to the rate that was
recommended as the replacement for the secured overnight financing rate by the
Federal Reserve Board and/or the Federal Reserve Bank of New York or a
committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York for the
purpose of recommending a replacement for the secured overnight financing rate
(which rate may be produced by a Federal Reserve Bank or other designated
administrator, which rate may include any adjustments or spreads, and which
rate will be reasonably expected to measure contemporaneous variations in the
cost of newly borrowed funds in U.S. dollars). If no such rate has been
recommended within one Business Day of the SOFR Index Cessation Event, then the
Redemption and Paying Agent shall use the OBFR published on the Federal Reserve
Bank of New York’s website for any Business Day after the SOFR Index Cessation
Date (it being understood that the OBFR for any such Business Day will be the
Overnight Bank Funding Rate on the Federal Reserve Bank of New York’s website
as of 4:00 p.m., New York City time).
(4) If
the Redemption and Paying Agent is required to use the OBFR in paragraph (3)
above and an OBFR Index Cessation Event has occurred, then for any Business Day
after the OBFR Index Cessation Date, the Redemption and Paying Agent shall use
the short-term interest rate target set by the Federal Open Market Committee
and published on the Federal Reserve Bank of New York’s website, or if the
Federal Open Market Committee has not set a single rate, the mid-point of the
short-term interest rate target range set by the Federal Open Market Committee
and published on the Federal Reserve Bank of New York’s website (calculated as
the arithmetic average of the upper bound of the target range and the lower
bound of the target range).
(5) If Daily SOFR
determined as above would be less than zero, then such rate shall be deemed to
be zero.
“Date of Original Issue” means, with respect to
each share of a Series of VMTP Preferred Shares, the date on which the Trust
issued such VMTP Preferred Share.
“Defeased Securities” means a security for which
cash, cash equivalents or other eligible property has been pledged in an amount
sufficient to make all required payments on such security to and including
maturity (including any accelerated maturity pursuant to a permitted redemption),
in accordance with the instrument governing the issuance of such security.
“Deposit Securities” means, as of any date, any
United States dollar-denominated security or other investment of a type
described below that either (i) is a demand obligation payable to the holder
thereof on any Business Day or (ii) has a maturity date, mandatory redemption
date or mandatory payment date, on its face or at the option of the holder,
preceding the relevant payment date in respect of which such security or other
investment has been deposited or set aside as a Deposit Security:
(1)
cash or any cash equivalent;
(2)
any U.S. Government Security; any Municipal Obligation that has a credit
rating from at least one NRSRO that is the highest applicable rating generally
ascribed by such NRSRO to Municipal Obligations with substantially similar
terms as of the date of this Statement of Preferences (or such rating’s future
equivalent), including (A) any such Municipal Obligation that has been
pre-refunded by the issuer thereof with the proceeds of such refunding having
been irrevocably deposited in trust or escrow for the repayment
thereof and (B) any such fixed or variable rate Municipal Obligation that
qualifies as an eligible security under Rule 2a-7 under the 1940 Act as amended
or as in effect on the Date of Original Issue;
(3)
any investment in any money market fund registered under the 1940 Act
that qualifies under Rule 2a-7, or similar investment vehicle described in Rule
12d1-1(b)(2) under the 1940 Act, that invests principally in Municipal
Obligations or U.S. Government Securities or any combination thereof; or
(4)
any letter of credit from a bank or other financial institution that has
a credit rating from at least one NRSRO that is the highest applicable rating
generally ascribed by such NRSRO to bank deposits or short-term debt of similar
banks or other financial institutions as of the date of this Statement of
Preferences (or such rating’s future equivalent).
“Derivative Contract” means (a) any and all rate
swap transactions, basis swaps, credit derivative transactions, forward rate
transactions, commodity swaps, commodity options, forward commodity contracts,
forward swap transactions, equity or equity index swaps or options, bond or
bond price or bond index swaps or options or forward bond or forward bond price
or forward bond index transactions, futures contracts, repurchase transaction,
interest rate options, forward foreign exchange transactions, cap transactions,
floor transactions, collar transactions, currency swap transactions,
cross-currency rate swap transactions, currency options, spot contracts, or any
other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any
such transaction is governed by or subject to any master agreement, and (b) any
and all transactions of any kind, and the related confirmations, which are
subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., any International Foreign Exchange Master Agreement, or any other master
agreement (any such master agreement, together with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any Master
Agreement.
“Derivative Termination Value” means, in respect of
any one or more Derivative Contracts, after taking into account the effect of
any legally enforceable netting agreement relating to such Derivative
Contracts, (a) for any date on or after the date such Derivative Contracts have
been closed out and termination value(s) determined in accordance therewith,
such termination value(s), and (b) for any date prior to the date referenced in
clause (a), the amount(s) determined as the mark-to-market value(s) for such
Derivative Contracts, as determined based upon one or more mid-market or other
readily available quotations provided by any recognized dealer in such
Derivative Contracts (which may include a Holder or an affiliate of the
Holder).
“Discounted Value” as of any Valuation Date, shall
have the meaning set forth in the Rating Agency Guidelines.
“Dividend Payment Date” means the date that is the
first Business Day of each calendar month.
“Dividend Period” means,
with respect to the Series W-7 VMTP Preferred Shares, in the case of the first
Dividend Period for the shares of such Series issued on December 20, 2023, the
period beginning on December 20, 2023 and ending on and including December 31,
2023 for each subsequent Dividend Period for all shares of such Series, the
period beginning on and including the first calendar day of the month following
the month in which the previous Dividend Period ended and ending on and
including the last calendar day of such month.
“Effective Leverage Ratio” means the quotient of:
(A)
the sum of (i) the aggregate liquidation preference of the Trust’s “senior
securities” (as that term is defined in the 1940 Act) that are shares of
beneficial interest in the Trust, plus any accumulated but unpaid dividends
thereon, excluding, without duplication, (x) any such senior securities for
which the Trust has issued a notice of redemption and either has delivered
Deposit Securities or sufficient funds (in accordance with the terms of such
senior securities) to the paying agent for such senior securities or otherwise
has adequate Deposit Securities on hand and segregated on the books and records
of the Custodian for the purpose of such redemption and (y) the Trust’s
outstanding Preferred Shares to be redeemed with the gross proceeds from the
sale of the VMTP Preferred Shares, for which the Trust either has delivered
Deposit Securities or sufficient funds (in accordance with the terms of such
senior securities) to the paying agent for such senior securities or otherwise
has adequate Deposit Securities on hand and segregated on the books and records
of the Custodian for the purpose of such redemption; (ii) the aggregate
principal amount of a Trust’s “senior securities representing indebtedness”
(as that term is defined in the 1940 Act), plus any accrued but unpaid interest
thereon; (iii) the aggregate principal amount of floating rate trust
certificates corresponding to the associated residual floating rate trust
certificates owned by the Trust (less the aggregate principal amount of any
such floating rate trust certificates owned by the Trust and corresponding to
the associated residual floating rate trust certificates owned by the Trust);
and (iv) the aggregate amount of the Trust’s repurchase obligations under
repurchase agreements.
divided by
(B)
the sum of (i) the Market Value of the Trust’s total assets (including
amounts attributable to senior securities but excluding, any assets consisting
of Deposit Securities relating to senior securities for which the Trust has
issued a notice of redemption and either has delivered Deposit Securities or
sufficient funds (in accordance with the terms of such senior securities) to
the paying agent for such senior securities or otherwise has adequate Deposit
Securities on hand and segregated on the books and records of the Custodian for
the purpose of such redemption), less the sum of (A) the amount of the Trust’s
accrued liabilities (which accrued liabilities shall include net obligations of
the Trust under each Derivative Contract in an amount equal to the Derivative
Termination Value thereof payable by the Trust to the related counterparty),
other than liabilities for the aggregate principal amount of senior securities
representing indebtedness, and (B) the Overconcentration Amount; and (ii) the
aggregate principal amount of floating rate trust certificates corresponding to
the associated residual floating rate trust certificates owned by the Trust
(less the aggregate principal amount of any such floating rate trust
certificates owned by the Trust and corresponding to the associated residual
floating rate trust certificates owned by the Trust).
“Effective Leverage Ratio Cure
Period” shall have the meaning specified in Section 6(b) of this Statement
of Preferences.
“Electronic Means” means email transmission,
facsimile transmission or other similar electronic means of communication
providing evidence of transmission (but excluding online communications systems
covered by a separate agreement) acceptable to the sending party and the
receiving party, in any case if operative as between any two parties, or, if
not operative, by telephone (promptly confirmed by any other method set forth
in this definition), which, in the case of notices to the Redemption and Paying
Agent, shall be sent by such means as set forth in the Redemption and Paying
Agent Agreement.
“Eligible Assets” means the instruments listed on
Appendix A hereto.
“Exchange Act” means the U.S. Securities Exchange
Act of 1934, as amended.
“Failure to Deposit” means, with respect to VMTP
Preferred Shares, a failure by the Trust to pay to the Redemption and Paying
Agent, not later than 12:00 noon, New York City time, (A) on the Business Day
immediately preceding any Dividend Payment Date for such VMTP Preferred Shares,
in funds available on such Dividend Payment Date in The City of New York, New
York, the full amount of any dividend to be paid on such Dividend Payment Date
on any share of such Series or (B) on the Business Day immediately preceding
any Redemption Date in funds available on such Redemption Date for such VMTP
Preferred Shares in The City of New York, New York, the Redemption Price to be
paid on such Redemption Date for any share of such Series after Notice of
Redemption is provided pursuant to paragraph (c) of Section 10 of this
Statement of Preferences; provided, however, that notwithstanding anything
expressed or implied herein to the contrary, (i) the foregoing clause (B) shall
not apply to the Trust’s failure to pay the Redemption Price in respect of VMTP
Preferred Shares when the related Notice of Redemption provides that redemption
of such shares is subject to one or more conditions precedent and any such
condition precedent shall not have been satisfied at the time or times and in
the manner specified in such Notice of Redemption, and (ii) a Failure to
Deposit shall not be deemed to have occurred if the Trust is unable to make the
payments in clause (A) or clause (B) due to the lack of legally available funds
under Applicable Law or because of any other Applicable Law restrictions on
such payments.
“Fitch” means Fitch Ratings, a part of the Fitch
Group, which is a majority-owned subsidiary of Fimalac, S.A, or any successor
thereto.
“Fitch Discount Factor” means the discount factors
set forth in the Fitch Guidelines for use in calculating the Discounted Value
of the Trust’s assets in connection with Fitch ratings of VMTP Preferred Shares
at the request of the Trust.
“Fitch Eligible Assets” means assets of the Trust
set forth in the Fitch Guidelines as eligible for inclusion in calculating the
Discounted Value of the Trust’s assets in connection with Fitch ratings of VMTP
Preferred Shares at the request of the Trust.
“Fitch Guidelines” means the guidelines applicable
to Fitch’s then current ratings of the VMTP Preferred Shares provided by Fitch
in connection with Fitch’s ratings of the VMTP Preferred Shares at the request
of the Trust (a copy of which is available on request to the Trust), in effect
on the date hereof and as may be amended from time to time, provided, however
that any such amendment will not be effective for
thirty (30) days from the date that Fitch provides final notice of such
amendment to the Trust or such earlier date as the Trust may elect.
“Fitch Provisions” means Sections 7, 8(c)(B) and 9
of this Statement of Preferences with respect to Fitch, and any other
provisions hereof with respect to Fitch’s ratings of VMTP Preferred Shares at
the request of the Trust, including any provisions with respect to obtaining
and maintaining a rating on VMTP Preferred Shares from Fitch. The Trust is
required to comply with the Fitch Provisions only if Fitch is then rating VMTP
Preferred Shares at the request of the Trust.
“Gross-up Payment” means payment to a Beneficial
Owner of an amount which, when taken together with the aggregate amount of
Taxable Allocations made to such Beneficial Owner to which such Gross-up
Payment relates, would cause such Beneficial Owner’s dividends in dollars (after
giving effect to regular federal income tax consequences) from the aggregate of
such Taxable Allocations and the related Gross-up Payment to be equal to the
dollar amount of the dividends which would have been received by such Beneficial
Owner if the amount of such aggregate Taxable Allocations would have been
excludable from the gross income of such Beneficial Owner. Such Gross-up
Payment shall be calculated (i) without consideration being given to the time
value of money; (ii) assuming that no Beneficial Owner of VMTP Preferred Shares
is subject to the federal alternative minimum tax with respect to dividends
received from the Trust; (iii) assuming that each Taxable Allocation and each
Gross-up Payment (except to the extent such Gross-up Payment is properly
designated as an exempt-interest dividend under Section 852(b)(5) of the Code
or successor provisions) would be taxable in the hands of each Beneficial Owner
of VMTP Preferred Shares at the maximum marginal regular federal individual
income tax rate applicable to ordinary income or net capital gains, as
applicable, or the maximum marginal regular federal corporate income tax rate
applicable to ordinary income or net capital gains, as applicable, whichever is
greater, in effect at the time such Gross-up Payment is made; and (iv) assuming
that each Taxable Allocation and each Gross-up Payment would not be subject to
the tax imposed by Section 1411 of the Code or any similar Medicare or other
surtax.
“Holder” means a Person in whose name a VMTP
Preferred Share is registered in the registration books of the Trust maintained
by the Redemption and Paying Agent.
“Increased Rate Event”
means the occurrence of any of the following events:
(a)
failure by the Trust to pay when due the full amount of accrued but
unpaid dividends on any Dividend Payment Date (other than a failure by the
Trust to so pay due to the lack of legally available funds under Applicable Law
or because of any other Applicable Law restrictions on such payments). This
Increased Rate Event shall be considered cured on the date the Trust pays the
full amount of such accrued but unpaid dividends;
(b)
failure by the Trust to make any redemption payment pursuant to Section
10 of this Statement of Preferences (other than a failure by the Trust to so
pay due to the lack of legally available funds under Applicable Law or because
of any other Applicable Law restrictions on such payments). This Increased Rate
Event shall be considered cured on the date the Trust makes such redemption
payment;
(c)
failure by the Trust to pay when due the full amount of accrued but
unpaid dividends in respect of Gross-up Payments required to be paid pursuant
to Section 3(b), (other than a failure by the Trust to so pay due to the lack
of legally available funds under Applicable Law or because of any other
Applicable Law restrictions on such payments). This Increased Rate Event shall
be considered cured on the date the Trust pays the full amount of such accrued
but unpaid dividends in respect of Gross-up Payments required to paid pursuant
to Section 3(b);
(d)
failure by the Trust to have cured on or before the applicable Asset
Coverage Cure Date any failure to maintain Minimum Asset Coverage as required
by Section 6(a). This Increased Rate Event shall be considered cured on the
date the Trust next achieves Minimum Asset Coverage;
(e)
failure by the Trust on the last day of an applicable Effective Leverage
Ratio Cure Period to have an Effective Leverage Ratio of not greater than 45%.
This Increased Rate Event shall be considered cured on the date the Trust next
has an Effective Leverage Ratio of not greater than 45%;
(f)
failure by the Trust to make investments only in Eligible Assets as
required by Section 6(c). This Increased Rate Event shall be considered cured
on the date the Trust has disposed of any investments made in violation of
Section 6(c); provided, that any failure by the Trust to comply with the
divestiture requirement set forth in the last proviso of Section 6(c) shall not
result in an Increased Rate Event;
(g)
failure by the Trust to maintain compliance with Section 6(d). This
Increased Rate Event shall be considered cured on the date the Trust returns to
compliance with Section 6(d);
(h)
the creation, incurrence, or existence of any lien in violation of
Section 6(e). This Increased Rate Event shall be considered cured on the date
that such lien is released or discharged;
(i)
failure by the Trust on the Basic Maintenance Cure Date to satisfy the
Basic Maintenance Amount as of the Valuation Date pertaining to such Basic
Maintenance Cure Date. This Increased Rate Event shall be considered cured on
the date that the Trust satisfies the Basic Maintenance Amount as of such
Valuation Date;
(j)
the declaration, payment or setting apart for payments any dividend or
other distribution in violation of Section 8. Such Increased Rate Event shall
be considered cured (i) in the case of any declaration or setting apart for
payment of any dividend or other distribution, on the date such action is
effectively rescinded, set aside, reversed, revoked, or otherwise rendered null
and (ii) in any other case, on the first date thereafter that the Trust is not
prohibited pursuant to Section 8 from declaring, paying or setting apart for
payment a cash dividend or other cash distribution in respect of the Common
Shares;
(k)
unless pursuant to an order of the court of competent jurisdiction, the
payment or distribution of any assets of the Trust in violation of Section
11(b) or 11(c);
(l)
failure of the Trust to comply with Section 13(h). This Increased Rate
Event will be considered cured on the date the Trust shall next maintain
settlement of VMTP Preferred Shares in global book entry form through the
Securities Depository;
(m)
failure of the Trust to comply with Section 13(i). This Increased Rate
Event will be considered cured on the date such filing or application has been
withdrawn, rescinded or dismissed;
(n)
failure of the Trust to comply with Section 13(u). This Increased Rate
Event will be considered cured on the date the Trust produces financial
statements audited in accordance with the standards of the Public Company
Accounting Oversight Board (United States);
(o)
any determination is made by the Trust or the IRS that the VMTP
Preferred Shares are not equity in a regulated investment company for federal
income tax purposes. This Increased Rate Event will be considered cured on the
date such determination is reversed, revoked or rescinded;
(p)
a Registration Rights Failure occurs. This Increased Rate Event will be
considered cured on the date such Registration Rights Failure no longer exists;
(q)
failure by the Trust to have duly authorized any Related Document. This
Increased Rate Event shall be considered cured on the date the Trust duly
authorizes each such Related Document that was not previously duly authorized;
or
(r)
failure by the Trust to provide the information required by Section
12(b) and such failure is not cured by the fifth Business Day following written
request. This Increased Rate Event shall be considered cured on the date the
Trust furnishes the information specified in the foregoing sentence.
“Information Statement” means the information
statement of the Trust relating to the offering and sale of VMTP Preferred
Shares, dated December 20, 2023.
“Initial Rate Period” with respect to the VMTP
Preferred Shares of any Series, means the period commencing on and including
the Date of Original Issue thereof and ending on, and including the next
succeeding Wednesday.
“Investment Adviser” shall mean BlackRock Advisors,
LLC, or any successor investment advisor to the Trust.
“Liquidation Preference” means $100,000 per share.
“Liquidity Account” shall have the meaning
specified in paragraph (b)(ii)(A) of Section 10 of this Statement of
Preferences.
“Liquidity Account Initial Date” means the date
which is six-months prior to the Term Redemption Date.
“Liquidity Account Investments” means Deposit
Securities or any other security or investment owned by the Trust that is rated
not less than A-/A3 or the equivalent rating (or any such rating’s future
equivalent) by each NRSRO then rating such security or investment (or if rated
by only one NRSRO, by such NRSRO) or, if no NRSRO is then rating such security,
deemed to be of an equivalent rating by the Investment Adviser on the Trusts
books and records.
“Liquidity Requirement”
shall have the meaning specified in paragraph (b)(ii)(B) of Section 10 of this
Statement of Preferences.
“Majority” means the Holders of more than 50% of
the aggregate Outstanding amount of the VMTP Preferred Shares.
“Managed Assets” means the Trust’s total assets
(including any assets attributable to money borrowed for investment purposes)
minus the sum of the Trust’s accrued liabilities (other than money borrowed for
investment purposes). For the avoidance of doubt, assets attributable to money
borrowed for investment purposes includes the portion of the Trust’s assets in
a tender option bond trust of which the Trust owns the residual interest
(without regard to the value of the residual interest to avoid double
counting).
“Market Value” of any asset of the Trust means the
market value thereof determined by an independent third-party pricing service
designated pursuant to the Trust’s valuation policies and procedures approved
from time to time by the Board of Trustees for use in connection with the
determination of the Trust’s net asset value. Market Value of any asset shall
include any interest or dividends, as applicable, accrued thereon. The pricing
service values portfolio securities at the mean between the quoted bid and
asked price or the yield equivalent when quotations are readily available.
Securities for which quotations are not readily available are valued at fair
value as determined by the pricing service using methods which include
consideration of: yields or prices of municipal bonds of comparable quality,
type of issue, coupon, maturity and rating; indications as to value from
dealers; and general market conditions. The pricing service may employ
electronic data processing techniques or a matrix system, or both, to determine
valuations.
“Maximum Rate” means 15% per annum,
increased by any applicable Gross-up Payment due and payable in accordance with
Section 3 of this Statement of Preferences.
“Minimum Asset Coverage” means asset coverage, as
defined in Section 18(h) of the 1940 Act as in effect on the Date of Original
Issue (excluding from (1) the denominator of such asset coverage test (i) any
such senior securities for which the Trust has issued a notice of redemption
and either has delivered Deposit Securities or sufficient funds (in accordance
with the terms of such senior securities) to the paying agent for such senior
securities or otherwise has adequate Deposit Securities or sufficient deposits
on hand and segregated on the books and records of the Custodian for the
purpose of such redemption and (ii) the Trust’s outstanding Preferred Shares to
be redeemed with the gross proceeds from the sale of the VMTP Preferred Shares,
for which the Trust either has delivered Deposit Securities or sufficient funds
(in accordance with the terms of such senior securities) to the paying agent
for such senior securities or otherwise has adequate Deposit Securities or
sufficient deposits on hand and segregated on the books and records of the
Custodian for the purpose of such redemption and (2) from the numerator of such
asset coverage test, any Deposit Securities referred to in the previous clause
(1)(i) and (ii)) of at least 225% with respect to all outstanding senior
securities of the Trust which are shares of beneficial interest in the Trust,
including all Outstanding VMTP Preferred Shares (or, if higher, such other
asset coverage as may be specified in or under the 1940 Act as in effect from
time to time as the minimum asset coverage for senior securities which are
stock of a closed-end investment company as a condition of declaring dividends
on its common shares or stock).
“Minimum Asset Coverage Cure
Date,” with respect to the failure by the Trust to maintain the Minimum
Asset Coverage (as required by Section 6 of this Statement of Preferences),
means the tenth Business Day following such failure.
“Minimum Rate Period” means any Rate Period
consisting of seven (7) Rate Period Days, as adjusted to reflect any changes
when the regular day that is a Rate Determination Date is not a Business Day.
“Moody’s” means Moody’s Investors Service, Inc., a
Delaware corporation, or any successor thereto.
“Moody’s Discount Factor” means the discount
factors set forth in the Moody’s Guidelines for use in calculating the
Discounted Value of the Trust’s assets in connection with Moody’s ratings of
VMTP Preferred Shares at the request of the Trust.
“Moody’s Eligible Assets” means assets of the Trust
set forth in the Moody’s Guidelines as eligible for inclusion in calculating
the Discounted Value of the Trust’s assets in connection with Moody’s ratings
of VMTP Preferred Shares at the request of the Trust.
“Moody’s Guidelines” means the guidelines
applicable to Moody’s then current ratings of the VMTP Preferred Shares,
provided by Moody’s in connection with Moody’s ratings of the VMTP Preferred
Shares at the request of the Trust (a copy of which is available on request to
the Trust), in effect on the date hereof and as may be amended from time to
time, provided, however that any such amendment will not be effective for
thirty (30) days from the date that Moody’s provides final notice of such
amendment to the Trust or such earlier date as the Trust may elect.
“Moody’s Provisions” means Sections 7, 8(c)(B) and
9 of this Statement of Preferences with respect to Moody’s, and any other
provisions hereof with respect to Moody’s ratings of VMTP Preferred Shares at
the request of the Trust, including any provisions with respect to obtaining
and maintaining a rating on VMTP Preferred Shares from Moody’s. The Trust is
required to comply with the Moody’s Provisions only if Moody’s is then rating
VMTP Preferred Shares at the request of the Trust.
“Municipal Obligations” has the meaning set forth
in the Glossary of the Information Statement.
“Net Tax-Exempt Income” means the excess of the
amount of interest excludable from gross income under Section 103(a) of the
Code over the amounts disallowed as deductions under Sections 265 and 171(a)(2)
of the Code.
“Notice of Redemption” means any notice with
respect to the redemption of VMTP Preferred Shares pursuant to paragraph (c) of
Section 10 of this Statement of Preferences.
“NRSRO” means a “nationally recognized
statistical rating organization” within the meaning of Section 3(a)(62) of
the Exchange Act that is not an “affiliated person” (as defined in
Section 2(a)(3) of the 1940 Act) of the Trust, including, at the date hereof,
Moody’s and Fitch.
“OBFR” means, with respect to any
Business Day, the Overnight Bank Funding Rate on the Federal Reserve Bank of
New York’s website as of 4:00 p.m., New York City time.
“OBFR Index Cessation Date” means, in respect of an OBFR
Index Cessation Event, the date on which the Federal Reserve Bank of New York
(or any successor administrator of the OBFR), ceases to publish the OBFR, or
the date as of which the OBFR may no longer be used.
“OBFR Index Cessation Event” means
the occurrence of one or more of the following events:
(1) a public statement by the Federal Reserve Bank of New York (or a
successor administrator of the OBFR) announcing that it has ceased to publish
or provide the OBFR permanently or indefinitely, provided that, at that time,
there is no successor administrator that will continue to publish or provide an
OBFR; or
(2) the publication of information which reasonably confirms that the
Federal Reserve Bank of New York (or a successor administrator of the OBFR) has
ceased to provide the OBFR permanently or indefinitely, provided that, at that
time, there is no successor administrator that will continue to publish or
provide the OBFR.
“Other Rating Agency” means each NRSRO, if any,
other than Fitch or Moody’s then providing a rating for the VMTP Preferred
Shares at the request of the Trust.
“Other Rating Agency Eligible Assets” means assets
of the Trust set forth in the Other Rating Agency Guidelines as eligible for
inclusion in calculating the Discounted Value of the Trust’s assets in
connection with Other Rating Agency ratings of VMTP Preferred Shares at the
request of the Trust.
“Other Rating Agency Guidelines” means the
guidelines applicable to each Other Rating Agency’s ratings of the VMTP
Preferred Shares, provided by such Other Rating Agency in connection with such
Other Rating Agency’s ratings of the VMTP Preferred Shares at the request of
the Trust (a copy of which is available on request to the Trust), as may be
amended from time to time, provided, however that any such amendment will not
be effective except as agreed between such Other Rating Agency and the Trust or
such earlier date as the Trust may elect.
“Other Rating Agency Provisions” means Sections 7,
8(c)(B) and 9 of this Statement of Preferences with respect to any Other Rating
Agency then rating the VMTP Preferred Shares at the request of the Trust, and
any other provisions hereof with respect to such Other Rating Agency’s ratings
of VMTP Preferred Shares, including any provisions with respect to obtaining
and maintaining a rating on VMTP Preferred Shares from such Other Rating
Agency. The Trust is required to comply with the Other Rating Agency Provisions
of an Other Rating Agency only if such Other Rating Agency is then rating VMTP
Preferred Shares at the request of the Trust.
“Outstanding” means, as of any date with respect to
the VMTP Preferred Shares of any Series, the number of VMTP Preferred Shares of
such Series theretofore issued by the Trust except, without duplication, (i)
any VMTP Preferred Shares of such Series theretofore cancelled or delivered to
the Redemption and Paying Agent for cancellation or redemption by the Trust,
(ii) any VMTP Preferred Shares of such Series with
respect to which the Trust has given a Notice of Redemption and irrevocably
deposited with the Redemption and Paying Agent sufficient Deposit Securities to
redeem such VMTP Preferred Shares, pursuant to Section 10 of this Statement of
Preferences, (iii) any VMTP Preferred Shares of such Series as to which the
Trust shall be a Beneficial Owner, and (iv) any VMTP Preferred Shares of such
Series represented by any certificate in lieu of which a new certificate has
been executed and delivered by the Trust.
“Overconcentration Amount” means as of any date of
calculation of the Effective Leverage Ratio, an amount equal to the sum of: (i)
the Market Value of the Trust’s assets in a single state or territory in excess
of 20%; (ii) the Market Value of the Trust’s assets in a single state or
territory rated lower than A2 by Moody’s or A by S&P or Fitch in excess of
15%; (iii) the Market Value of the Trust’s assets in a single state or
territory rated lower than Baa3 by Moody’s or BBB- by S&P or Fitch in
excess of 10%; (iv) the Market Value of the Trust’s assets that constitute
tobacco obligations (excluding tobacco obligations that are Defeased Securities
and tobacco obligations backed by state appropriation) in excess of 10%; (v)
the Market Value of the Trust’s assets paying less frequently than
semi-annually in excess of 20%; and (vi) the Market Value of the Trust’s assets
that constitute tobacco obligations backed by state appropriation in excess of
10%; in each case, as a percentage of the Market Value of the Trust’s Managed
Assets.
“Person” means and includes an individual, a
partnership, a corporation, a trust, an unincorporated association, a joint
venture or other entity or a government or any agency or political subdivision
thereof.
“Placement Agent” means BlackRock Investments, LLC.
“Placement Agreement” means the placement
agreement, dated as of the Closing Date, between the Trust and the Placement
Agent with respect to the offering and sale of the VMTP Preferred Shares.
“Preferred Shares” mean the preferred shares of
beneficial interest in the Trust, and includes the VMTP Preferred Shares.
“Purchase Agreement” means the VMTP Preferred
Shares Purchase Agreement, dated as of the Closing Date, between the Trust and
the Purchaser, as amended, modified or supplemented from time to time.
“Purchaser” means the purchaser on the Date of
Original Issue as set forth in the Purchase Agreement.
“QIB” means a “qualified institutional buyer”
as defined in Rule 144A under the Securities Act.
“Rate Determination Date” means, with respect to
any Series of VMTP Preferred Shares, (i) with respect to the Initial Rate
Period for any Series of VMTP Preferred Shares, the Business Day immediately
preceding the Date of Original Issue of such Series and (ii) with respect to any
Subsequent Rate Period, the last day of a Rate Period for such Series, or if
such day is not a Business Day, the next succeeding Business Day; provided,
however, that the next succeeding Rate
Determination Date will be the day of the week that is the regular Rate
Determination Date if such day is a Business Day.
“Rate Period,” with respect to VMTP Preferred
Shares, means the Initial Rate Period and any Subsequent Rate Period.
“Rate Period Days,” for any Rate Period, means the
number of days that would constitute such Rate Period.
“Rating Agency” means each of Fitch (if Fitch is
then rating VMTP Preferred Shares at the request of the Trust), Moody’s (if
Moody’s is then rating VMTP Preferred Shares at the request of the Trust) and
any Other Rating Agency (if such Other Rating Agency is then rating VMTP
Preferred Shares at the request of the Trust).
“Rating Agency Certificate” has the meaning
specified in paragraph (b) of Section 7 of this Statement of Preferences.
“Rating Agency Eligible Assets” means assets of the
Trust set forth in the Rating Agency Guidelines as eligible for inclusion in
calculating the Discounted Value of the Trust’s assets in connection with a
Rating Agency’s ratings of VMTP Preferred Shares at the request of the Trust.
“Rating Agency Guidelines” means Moody’s Guidelines
(if Moody’s is then rating VMTP Preferred Shares at the request of the Trust),
Fitch Guidelines (if Fitch is then rating VMTP Preferred Shares at the request
of the Trust) and any Other Rating Agency Guidelines (if such Other Rating
Agency is then rating VMTP Preferred Shares at the request of the Trust).
“Rating Agency Provisions” means the Moody’s
Provisions (if Moody’s is then rating VMTP Preferred Shares at the request of
the Trust), the Fitch Provisions (if Fitch is then rating VMTP Preferred Shares
at the request of the Trust) and any Other Rating Agency Provisions (if such
Other Rating Agency is then rating VMTP Preferred Shares at the request of the
Trust). The Trust is required to comply with the Rating Agency Provisions of a
Rating Agency only if such Rating Agency is then rating VMTP Preferred Shares
at the request of the Trust.
“Ratings Spread” means, with respect to any Rate Period for any Series of
VMTP Preferred Shares, the percentage per annum set forth opposite the highest
applicable credit rating assigned to such Series, unless the lowest applicable
credit rating is at or below A1/A+, in which case it shall mean the percentage
per annum set forth opposite the lowest applicable credit rating assigned to
such Series, by either Moody’s (if Moody’s is then rating the VMTP Preferred
Shares at the request of the Trust), Fitch (if Fitch is then rating the VMTP
Preferred Shares at the request of the Trust) or Other Rating Agency (if such
Other Rating Agency is then rating the VMTP Preferred Shares at the request of
the Trust) in the table below on the Rate Determination Date for such Rate
Period:
Moody’s/Fitch*
|
Percentage
|
Aa2/AA
to Aaa/AAA
|
0.90%
|
Aa3/AA-
|
0.90%
|
A1/A+
|
1.30%
|
A2/A
|
1.55%
|
A3/A-
|
1.70%
|
Baa1/BBB+
|
2.05%
|
Baa2/BBB
|
2.30%
|
Baa3/BBB-
|
2.80%
|
Non-investment
grade or NR
|
3.30%
|
*And/or
the equivalent ratings of an Other Rating Agency then rating the VMTP Preferred
Shares at the request of the Trust.
“Redemption Date” has
the meaning specified in paragraph (c) of Section 10 of this Statement of
Preferences.
“Redemption and Paying Agent” means The Bank of New
York Mellon which has entered into an agreement with the Trust to act in such
capacity as the Trust’s transfer agent, registrar, dividend disbursing agent,
paying agent, redemption price disbursing agent and calculation agent in connection
with the payment of regularly scheduled dividends with respect to each Series
of VMTP Preferred Shares, or any successor by operation of law or any successor
who acquires all or substantially all of the assets and assumes all of the
liabilities of the Redemption and Paying Agent being replaced, either directly
or by operation of law, provided that such successor is a licensed banking
entity with trust powers or a trust company and have total assets of at least
$50 million.
“Redemption and Paying Agent Agreement” means the
redemption and paying agent agreement dated as of the Closing Date, between the
Trust and the Redemption and Paying Agent pursuant to which The Bank of New
York Mellon, or any successor, acts as Redemption and Paying Agent, as amended,
modified or supplemented from time to time.
“Redemption Premium” means with respect of a VMTP
Preferred Share rated above A1/A+ and its equivalent by all Rating Agencies
then rating such VMTP Preferred Share at the request of the Trust and subject
to any redemption, other than redemptions required to comply with Minimum Asset
Coverage requirements or exceed compliance with the Minimum Asset Coverage
requirements up to 240%, an amount equal to the product of 1% and the
Liquidation Preference of the VMTP Preferred Shares subject to redemption if
the Redemption Date is greater than or equal to 15 months from the Term
Redemption Date, provided, up to 25% of the Trust’s VMTP Preferred Shares
Outstanding as of the Closing Date may be redeemed at any time without a
Redemption Premium.
Any VMTP Preferred
Share exchanged for the preferred share of a surviving entity in connection
with a reorganization, merger, or redomestication of the Trust in another state
that had been previously approved by the Holders of VMTP Preferred Shares or that
otherwise does not require the vote or consent of the Holders of VMTP Preferred
Shares shall not be subject to the Redemption Premium.
“Redemption Price” means the sum of (i) the
Liquidation Preference, (ii) accumulated but unpaid dividends thereon (whether
or not declared) to, but not including, the date fixed for redemption and (iii)
the Redemption Premium, if any.
“Registration Rights Agreement”
means the registration rights agreement dated as of the Closing Date between
the Trust and DNT Asset Trust, as amended, modified or supplemented from time
to time.
“Registration Rights Failure” means any failure by
the Trust to (i) use its commercially reasonable efforts to make effective a
Registration Statement with the Securities and Exchange Commission in violation
of the Trust’s obligations under the Registration Rights Agreement, or (ii)
comply in any material respect with any other material provision of the
Registration Rights Agreement necessary to effect the Registration Statement
(as defined in the Registration Rights Agreement) which has not been cured within
30 Business Days of the date of such violation.
“Related Documents” means this Statement of
Preferences, the Charter, the Purchase Agreement, the Registration Rights
Agreement, the VMTP Preferred Shares and the Placement Agreement.
“Rule 2a-7” means Rule 2a-7 under the 1940 Act.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the U.S. Securities Act of
1933, as amended.
“Securities Depository” means The Depository Trust
Company, New York, New York, and any substitute for or successor to such
securities depository that shall maintain a book-entry system with respect to
the VMTP Preferred Shares.
“Series of VMTP Preferred Shares” shall have the
meaning as set forth in the Recitals of this Statement of Preferences.
“Series” shall have the meaning as set forth in the
Recitals of this Statement of Preferences.
“SOFR Index Cessation Date” means, in respect of a SOFR Index
Cessation Event, the date on which the Federal Reserve Bank of New York (or any
successor administrator of the secured overnight financing rate) ceases to
publish the secured overnight financing rate or the date as of which the
secured overnight financing rate may no longer be used.
“SOFR Index Cessation Event” means the occurrence of one or more
of the following
events as it
relates to Daily SOFR:
(1) a public statement by the
Federal Reserve Bank of New York (or a successor administrator of the secured
overnight financing rate) announcing that it has ceased to publish or provide
the secured overnight financing rate permanently or indefinitely, provided
that, at that time, there is no successor administrator that will continue to
publish or provide a secured overnight financing rate; or
(2) the publication of information
which reasonably confirms that the Federal Reserve Bank of New York (or a
successor administrator of the secured overnight financing rate) has ceased to
provide the secured overnight financing rate permanently or indefinitely, provided that, at that time, there is no successor
administrator that will continue to publish or provide the secured overnight
financing rate.
“Statement of Preferences” means this Statement of
Preferences of the VMTP Preferred Shares, as amended, modified or supplemented
from time to time.
“Subsequent Rate Period,” with respect to VMTP
Preferred Shares, means the period from, and including, the first day following
the Initial Rate Period of such VMTP Preferred Shares to, and including, the
next Rate Determination Date for such VMTP Preferred Shares and any period
thereafter from, and including, the first day following a Rate Determination
Date for such VMTP Preferred Shares to, and including, the next succeeding Rate
Determination Date for such VMTP Preferred Shares. Each Subsequent Rate Period
will be a Minimum Rate Period.
“Taxable Allocation” means any payment or portion
of a payment of a dividend that is not designated by the Trust as an
exempt-interest dividend (as defined in Section 852(b)(5) of the Code).
“Term Redemption Amount” shall have the meaning
specified in paragraph (b)(ii)(A) of Section 10 of this Statement of
Preferences.
“Term Redemption Date” means, July 2, 2025, or such
later date to which it may be extended in accordance with Section 10(b)(i)(A)
of this Statement of Preferences.
“Total Holders” means, the Holders of 100% of the
aggregate Outstanding amount of the VMTP Preferred Shares.
“Trust” shall have the meaning as set forth in the
Recitals of this Statement of Preferences.
“U.S. Government Securities” means direct
obligations of the United States or of 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, for purposes of determining
whether the Trust is maintaining the Basic Maintenance Amount, each Monday that
is a Business Day, or for any Monday that is not a Business Day, the
immediately preceding Business Day, and the Date of Original Issue, commencing
with the Date of Original Issue.
“VMTP Preferred Shares” shall have the meaning as
set forth in the Recitals of this Statement of Preferences.
“Voting Period” shall have the meaning specified in
paragraph (b)(i) of Section 4 of this Statement of Preferences.
TERMS
1.
Number of Authorized Shares.
(a)
Authorized Shares. The number of authorized shares of VMTP
Preferred Shares is 1,541.
(b)
Capitalization. So long as any VMTP Preferred Shares are
Outstanding, the Trust shall not, issue (i) any class or series of shares
ranking prior to or on a parity with VMTP Preferred Shares with respect to the
payment of dividends or the distribution of assets upon dissolution,
liquidation or winding up of the affairs, or (ii) any other “senior security”
(as defined in the 1940 Act as of the Date of Original Issue) of the Trust
other than the Trust's use of tender option bonds, futures, forwards, swaps and
other derivative transactions, except as may be issued in connection with any
issuance of preferred shares or other senior securities some or all of the
proceeds from which issuance are used to redeem all of the Outstanding VMTP
Preferred Shares (provided that the Trust delivers the proceeds from such
issuance necessary to redeem all of the Outstanding VMTP Preferred Shares to
the Redemption and Paying Agent for investment in Deposit Securities for the
purpose of redeeming such VMTP Preferred Shares and issues a Notice of
Redemption and redeems such VMTP Preferred Shares as soon as practicable in
accordance with the terms of this Statement of Preferences). For the avoidance
of doubt, the foregoing restrictions on issuance set forth in this paragraph
(b) shall not apply to the issuance of any shares of any Series of VMTP
Preferred Shares.
2.
Dividends.
(a)
Ranking. The shares of any Series of VMTP Preferred Shares shall
rank on a parity with each other, with shares of any other Series of VMTP
Preferred Shares and with shares of any other Series of Preferred Shares as to
the payment of dividends by the Trust.
(b)
Cumulative Cash Dividends. The Holders of VMTP Preferred Shares
of any Series shall be entitled to receive, when, as and if declared by the
Board of Trustees, out of funds legally available therefor under Applicable Law
and otherwise in accordance with the Charter and Applicable Law, cumulative
cash dividends at the Applicable Rate for such VMTP Preferred Shares,
determined as set forth in paragraph (e) of this Section 2, and no more (except
to the extent set forth in Section 3 of this Statement of Preferences), payable
on the Dividend Payment Dates with respect to such VMTP Preferred Shares
determined pursuant to paragraph (d) of this Section 2. Holders of VMTP
Preferred Shares shall not be entitled to any dividend, whether payable in
cash, property or shares, in excess of full cumulative dividends, as herein
provided, on VMTP Preferred Shares. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on
VMTP Preferred Shares which may be in arrears, and no additional sum of money
shall be payable in respect of such arrearage, except that the Trust shall pay
as a supplemental dividend out of funds legally available therefor under
Applicable Law and otherwise in accordance with Applicable Law, the Additional
Amount (as defined below in paragraph (e)(i)(B) of this Section 2) on account
of a Failure to Deposit, if any, in respect of each day during the period
commencing on the day a Failure to Deposit occurs through and including the day
immediately preceding the earlier of (i) the day the Failure to Deposit is
cured and (ii) the third Business Day next succeeding the day on which the
Failure to Deposit occurred.
(c)
Dividends Cumulative from Date of Original Issue. Dividends on
VMTP Preferred Shares of any Series shall be declared daily and accumulate at
the Applicable Rate for such VMTP Preferred Shares from the Date of Original
Issue thereof.
(d)
Dividend Payment Dates. The Dividend Payment Date with respect to
VMTP Preferred Shares shall be the first Business Day of each calendar month.
(e)
Applicable Rates and Calculation of Dividends.
(i)
Applicable Rates. The dividend rate on VMTP Preferred Shares of any
Series during the period from and after the Date of Original Issue of such VMTP
Preferred Shares to and including the last day of the Initial Rate Period of
such VMTP Preferred Shares shall be calculated by the Redemption and Paying
Agent and shall equal to the rate per annum set forth with respect to
the shares of such Series under “Designation” above. Each Subsequent
Rate Period will be a Minimum Rate Period. For each Subsequent Rate Period of
VMTP Preferred Shares thereafter, the dividend rate on such VMTP Preferred
Shares shall be calculated by the Redemption and Paying Agent and shall be equal
to the rate per annum that results from the Applicable Rate Determination for
such VMTP Preferred Shares on the Rate Determination Date immediately preceding
such Subsequent Rate Period which shall be the sum of the (1) Applicable Base
Rate and (2) Ratings Spread; provided, however, that:
(A)
if an Applicable Rate Determination for any such Subsequent Rate Period
is not held for any reason, the dividend rate on such VMTP Preferred Shares for
such Subsequent Rate Period will be adjusted to the Maximum Rate for such VMTP
Preferred Shares on the Rate Determination Date therefor;
(B)
if any Failure to Deposit shall have occurred with respect to such VMTP
Preferred Shares during any Dividend Period thereof, but, prior to 12:00 noon,
New York City time, on the third Business Day next succeeding the date on which
such Failure to Deposit occurred, such Failure to Deposit shall have been cured
in accordance with paragraph (f) of this Section 2 and the Trust shall have
paid to the Redemption and Paying Agent, an additional amount out of legally
available funds therefor under Applicable Law and otherwise in accordance with
Applicable Law (the “Additional Amount”), daily supplemental dividends
equal in the aggregate to the sum of (1) if such Failure to Deposit consisted
of the failure to timely pay to the Redemption and Paying Agent the full amount
of dividends with respect to any Dividend Period of such VMTP Preferred Shares,
an amount computed by multiplying (x) the Applicable Rate for the Rate Period
during which such Failure to Deposit occurs on the Dividend Payment Date for
such Dividend Period plus 2.00% by (y) a fraction, the numerator of which shall
be the number of days for which such Failure to Deposit has not been cured in
accordance with paragraph (f) of this Section 2 (including the day such Failure
to Deposit occurs and excluding the day such Failure to Deposit is cured) and
the denominator of which shall be 360, and applying the rate obtained against
the aggregate Liquidation Preference of the Outstanding shares of such Series
(with the amount for each individual day that such Failure to Deposit occurs or
continues uncured being declared as a supplemental dividend on that day) and
(2) if such Failure to Deposit consisted of the failure to timely pay to the
Redemption and Paying Agent the Redemption Price of the shares, if any, of such
Series for which Notice of Redemption has been provided by the Trust pursuant
to paragraph (c) of Section 10 of this Statement of Preferences, an amount
computed by multiplying, (x) for the
Rate Period
during which such Failure to Deposit occurs on the Redemption Date, the
Applicable Rate plus 2.00% by (y) a fraction, the numerator of which shall be
the number of days for which such Failure to Deposit is not cured in accordance
with paragraph (f) of this Section 2 (including the day such Failure to Deposit
occurs and excluding the day such Failure to Deposit is cured) and the
denominator of which shall be 360, and applying the rate obtained against the
aggregate Liquidation Preference of the Outstanding shares of such Series to be
redeemed (with the amount for each individual day that such Failure to Deposit
occurs or continues uncured being declared as a supplemental dividend on that
day), and if a Rate Determination Date occurs on the date on which such Failure
to Deposit occurred or on either of the two Business Days succeeding that date,
and the Failure to Deposit has not been cured on such Rate Determination Date
in accordance with paragraph (f) of this Section 2, no Applicable Rate
Determination will be held in respect of such VMTP Preferred Shares for the
Subsequent Rate Period relating to such Rate Determination Date and the
dividend rate for such VMTP Preferred Shares for such Subsequent Rate Period
will be the Maximum Rate for such VMTP Preferred Shares on the Rate
Determination Date for such Subsequent Rate Period; or
(C)
Upon the occurrence of an Increased Rate Event, for each day from (and
including) the day the Increased Rate Event first occurs to (and excluding) the
day the Increased Rate Event is cured, the dividend rate shall be a rate equal
to the lesser of (x) the sum of (I) the dividend rate otherwise determined
pursuant to the provisions of Section 2(e)(i)(A) and (B) and (II) 2.00% and (y)
the Maximum Rate.
Each dividend rate determined in accordance with this
paragraph (e)(i) of Section 2 of this Statement of Preferences shall be an “Applicable
Rate.”
(ii)
Calculation of Dividends. The amount of dividends per share
payable on VMTP Preferred Shares of a Series on any Dividend Payment Date shall
be calculated by the Redemption and Paying Agent and shall equal the sum of the
dividends accumulated but not yet paid for each Rate Period (or part thereof)
in the related Dividend Period or Dividend Periods. The amount of dividends
accumulated for each such Rate Period (or part thereof) shall be computed by
multiplying the Applicable Rate in effect for VMTP Preferred Shares of such
Series for such Rate Period (or part thereof) by a fraction, the numerator of
which shall be the number of days in such Rate Period (or part thereof) and the
denominator of which shall be the actual number of days in the year (365 or
366), and multiplying such product by $100,000.
(f)
Curing a Failure to Deposit. A Failure to Deposit with respect to
shares of a Series of VMTP Preferred Shares shall have been cured (if such
Failure to Deposit is not solely due to the willful failure of the Trust to
make the required payment to the Redemption and Paying Agent) with respect to
any Dividend Period of such VMTP Preferred Shares if, within the respective
time periods described in paragraph (e)(i) of this Section 2, the Trust shall
have paid to the Redemption and Paying Agent (A) all accumulated but unpaid
dividends on such VMTP Preferred Shares and (B) without duplication, the
Redemption Price for shares, if any, of such Series for which Notice of
Redemption has been provided by the Trust pursuant to paragraph (c) of Section
10 of this Statement of Preferences; provided, however, that the foregoing
clause (B) shall not apply to the Trust’s failure to pay the Redemption Price
in respect of VMTP Preferred Shares when the related Notice of Redemption
provides that redemption of such shares is subject to one or more conditions
precedent and any such condition precedent shall not have
been satisfied at the time or times and in the manner specified in such Notice
of Redemption.
(g)
Dividend Payments by Trust to Redemption and Paying Agent. In
connection with each Dividend Payment Date for VMTP Preferred Shares, the Trust
shall pay to the Redemption and Paying Agent, not later than 12:00 noon, New
York City time, on the earlier of (A) the third (3rd) Business Day next
succeeding the Rate Determination Date immediately preceding the Dividend
Payment Date and (B) the Business Day immediately preceding the Dividend
Payment Date, an aggregate amount of Deposit Securities equal to the dividends
to be paid to all Holders of VMTP Preferred Shares on such Dividend Payment
Date as determined in accordance with Section 2(e)(ii) of this Statement of
Preferences or as otherwise provided for. If an aggregate amount of funds equal
to the dividends to be paid to all Holders of VMTP Preferred Shares on such
Dividend Payment Date are not available in New York, New York, by 12:00 noon,
New York City time, on the Business Day immediately preceding such Dividend
Payment Date, the Redemption and Paying Agent will notify the Holders by
Electronic Means of such fact prior to the close of business on such day.
(h)
Redemption and Paying Agent as Trustee of Dividend Payments by Trust.
All Deposit Securities paid to the Redemption and Paying Agent for the payment
of dividends shall be held in trust for the payment of such dividends by the
Redemption and Paying Agent for the benefit of the Holders specified in
paragraph (i) of this Section 2. The Redemption and Paying Agent shall notify
the Trust by Electronic Means of the amount of any funds deposited with the
Redemption and Paying Agent by the Trust for any reason under the Redemption
and Paying Agent Agreement, including for the payment of dividends or the
redemption of VMTP Preferred Shares, that remain with the Redemption and Paying
Agent after ninety (90) days from the date of such deposit and such amount
shall, to the extent permitted by law, be repaid to the Trust by the Redemption
and Paying Agent upon request by Electronic Means of the Trust. The Trust’s
obligation to pay dividends to Holders in accordance with the provisions of
this Statement of Preferences shall be satisfied upon payment by the Redemption
and Paying Agent of such Dividends to the Securities Depository on the relevant
Dividend Payment Date.
(i)
Dividends Paid to Holders. Each dividend on VMTP Preferred Shares
shall be declared daily to the Holders thereof at the close of business on each
such day and paid on each Dividend Payment Date to the Holders thereof at the
close of business on the day immediately preceding such Dividend Payment Date.
In connection with any transfer of VMTP Preferred Shares, the transferor as
Beneficial Owner of VMTP Preferred Shares shall be deemed to have agreed
pursuant to the terms of the VMTP Preferred Shares to transfer to the
transferee the right to receive from the Trust any dividends declared and
unpaid for each day prior to the transferee becoming the Beneficial Owner of
the VMTP Preferred Shares in exchange for payment of the purchase price for
such VMTP Preferred Shares by the transferee. In connection with any transfer
of VMTP Preferred Shares, the transferee as Beneficial Owner of VMTP Preferred
Shares shall be deemed to have agreed pursuant to the terms of the VMTP
Preferred Shares to transfer to the transferor (or prior Holder) the right to
receive from the Trust any dividends in the nature of Gross-up Payments that
relate to dividends paid during the transferor’s (or prior Holder’s) holding
period.
(j)
Dividends Credited Against Earliest Accumulated But Unpaid Dividends.
Any dividend payment made on VMTP Preferred Shares that is insufficient to
cover the entire amount of
dividends payable shall
first be credited against the earliest accumulated but unpaid dividends due
with respect to such VMTP Preferred Shares. Dividends in arrears for any past
Dividend Period may be declared and paid at any time, without reference to any
regular Dividend Payment Date, to the Holders as their names appear on the
record books of the Trust on such date, not exceeding 15 days preceding the payment
date thereof, as may be fixed by the Board of Trustees.
(k)
Dividends Designated as Exempt-Interest Dividends. Dividends on
VMTP Preferred Shares shall be designated as exempt-interest dividends up to
the amount of the Net Tax-Exempt Income of the Trust, to the extent permitted
by, and for purposes of, Section 852 of the Code.
3.
Gross-Up Payments and Notice of Allocations. Holders
of VMTP Preferred Shares shall be entitled to receive, when, as and if declared
by the Board of Trustees, out of funds legally available therefor under
Applicable Law and otherwise in accordance with Applicable Law, dividends in an
amount equal to the aggregate Gross-up Payments as follows:
(a)
Whenever the Trust intends or expects to include any net capital gains
or ordinary income taxable for regular federal income tax purposes in any
dividend on VMTP Preferred Shares, the Trust shall notify the Redemption and
Paying Agent of the amount to be so included (i) not later than 14 calendar
days preceding the first Rate Determination Date on which the Applicable Rate
for such dividend is to be established, and (ii) for any successive Rate
Determination Date on which the Applicable Rate for such dividend is to be
established, not later than the close of business on the immediately preceding
Rate Determination Date. Whenever such advance notice is received from the
Trust, the Redemption and Paying Agent will notify each Holder and each
potential Beneficial Owner or its Agent Member. With respect to a Rate Period
for which such advance notice was given and whose dividends are comprised
partly of such ordinary income or capital gains and partly of exempt-interest
income, the different types of income will be paid in the same relative
proportions for each day during the Rate Period.
(b)
(i) If the Trust allocates, under Subchapter M of Chapter 1 of the Code,
any net capital gains or ordinary income taxable for regular federal income tax
purposes to a dividend paid on VMTP Preferred Shares the Trust shall to the
extent practical simultaneously increase such dividend payment by an additional
amount equal to the Gross-up Payment and direct the Redemption and Paying Agent
to send notice with such dividend describing the Gross-up Payment and (ii) if
the Trust allocates, under Subchapter M of Chapter 1 of the Code, any net
capital gains or ordinary income taxable for regular federal income tax
purposes to a dividend paid on VMTP Preferred Shares without simultaneously
increasing such dividend as describe in clause (i) above the Trust shall, prior
to the end of the calendar year in which such dividend was paid, direct the
Redemption and Paying Agent to send notice with a Gross-up Payment to the
Holder that was entitled to such dividend payment during such calendar year at
such Holder’s address as the same appears or last appeared on the record books
of the Trust.
(c)
The Trust shall not be required to make Gross-up Payments with respect
to any net capital gains or ordinary income determined by the Internal Revenue
Service to be allocable in a manner different from the manner used by the
Trust.
4.
Voting Rights.
(a)
One Vote Per VMTP Preferred Share. Except as otherwise provided
in the Charter or as otherwise required by law, (i) each Holder of VMTP
Preferred Shares shall be entitled to one vote for each VMTP Preferred Share
held by such Holder on each matter submitted to a vote of shareholders of the
Trust, and (ii) the holders of outstanding Preferred Shares, including each
VMTP Preferred Share, and of Common Shares shall vote together as a single
class; provided, however, that the holders of outstanding
Preferred Shares, including VMTP Preferred Shares, voting together as a class,
to the exclusion of the holders of all other securities and classes of shares
of beneficial interest in the Trust, shall be entitled to elect two trustees of
the Trust at all times, each Preferred Share, including each VMTP Preferred
Share, entitling the holder thereof to one vote. Subject to paragraph (b) of
this Section 4, the holders of outstanding Common Shares and Preferred Shares,
including VMTP Preferred Shares, voting together as a single class, shall elect
the balance of the trustees.
(b)
Voting for Additional Trustees.
(i)
Voting Period. During any period in which any one or more of the
conditions described in subparagraphs (A) or (B) of this paragraph (b)(i) shall
exist (such period being referred to herein as a “Voting Period”), the
number of trustees constituting the Board of Trustees shall be automatically
increased by the smallest number that, when added to the two trustees elected
exclusively by the holders of Preferred Shares, including VMTP Preferred
Shares, would constitute a majority of the Board of Trustees as so increased by
such smallest number; and the holders of Preferred Shares, including VMTP
Preferred Shares, shall be entitled, voting together as a single class on a
one-vote-per-share basis (to the exclusion of the holders of all other
securities and classes of shares of beneficial interest in the Trust), to elect
such smallest number of additional trustees, together with the two trustees
that such holders are in any event entitled to elect. A Voting Period shall
commence:
(A)
if at the close of business on any Dividend Payment Date accumulated
dividends (whether or not earned or declared) on any outstanding Preferred
Shares, including VMTP Preferred Shares, equal to at least two full years’
dividends shall be due and unpaid and sufficient cash or specified securities
shall not have been deposited with the Redemption and Paying Agent for the
payment of such accumulated dividends; or
(B)
if at any time holders of Preferred Shares are entitled under the 1940
Act to elect a majority of the trustees of the Trust.
Upon the termination of a
Voting Period, the voting rights described in this paragraph (b)(i) shall
cease, subject always, however, to the revesting of such voting rights in the
holders of Preferred Shares upon the further occurrence of any of the events
described in this paragraph (b)(i).
(ii)
Notice of Special Meeting. As soon as reasonably practicable
after the accrual of any right of the holders of Preferred Shares to elect
additional trustees as described in paragraph (b)(i) of this Section 4, the
Trust may call a special meeting of such holders, such call to be made by
notice as provided in the bylaws of the Trust, such meeting to be held not less
than ten (10) nor more than sixty (60) days after the date of mailing of such
notice. If a special meeting is not called by the Trust, 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 not less than ten (10) days nor more than sixty (60) prior to
the date of such special meeting. At any such special meeting and at each
meeting of holders of Preferred Shares held during a Voting Period at which
trustees are to be elected, such holders, voting together as a class (to the
exclusion of the holders of all other securities and classes of shares of
beneficial interest in the Trust), shall be entitled to elect the number of
trustees prescribed in paragraph (b)(i) of this Section 4 on a
one-vote-per-share basis.
(iii)
Terms of Office of Existing Trustees. The terms of office of all
persons who are trustees of the Trust at the time of a special meeting of
Holders and holders of other Preferred Shares to elect trustees shall continue,
notwithstanding the election at such meeting by the Holders and such other
holders of other Preferred Shares of the number of trustees that they are
entitled to elect, and the persons so elected by the Holders and such other
holders of other Preferred Shares, together with the two incumbent trustees
elected by the Holders and such other holders of other Preferred Shares and the
remaining incumbent trustees elected by the holders of the Common Shares and
Preferred Shares, shall constitute the duly elected trustees of the Trust.
(iv)
Terms of Office of Certain Trustees to Terminate Upon Termination of
Voting Period. Simultaneously with the termination of a Voting Period, the
terms of office of the additional trustees elected by the Holders and holders
of other Preferred Shares pursuant to paragraph (b)(i) of this Section 4 shall
terminate, the remaining trustees shall constitute the trustees of the Trust
and the voting rights of the Holders and such other holders to elect additional
trustees pursuant to paragraph (b)(i) of this Section 4 shall cease, subject to
the provisions of the last sentence of paragraph (b)(i) of this Section 4.
(c)
1940 Act Matters. The affirmative vote of the holders of a
“majority of the outstanding Preferred Shares,” including the VMTP Preferred
Shares, Outstanding at the time, voting as a separate class, shall be required
to approve (A) any conversion of the Trust from a closed-end to an open-end
investment company, (B) any plan of reorganization (as such term is used in the
1940 Act) adversely affecting such shares and (C) any action requiring a vote
of security holders of the Trust under Section 13(a) of the 1940 Act.
For purposes of the foregoing, “majority of the
outstanding Preferred Shares” means (i) 67% or more of such shares present
at a meeting, if the Holders of more than 50% of such shares are present or
represented by proxy, or (ii) more than 50% of such shares, whichever is less.
In the event a vote of Holders of VMTP Preferred Shares is required pursuant to
the provisions of Section 13(a) of the 1940 Act, the Trust shall, not later
than 10 Business Days prior to the date on which such vote is to be taken, notify
Moody’s (if Moody’s is then rating the VMTP Preferred Shares at the request of
the Trust), Fitch (if Fitch is then rating the VMTP Preferred Shares at the
request of the Trust) and Other Rating Agency (if any Other Rating Agency is
then rating the VMTP Preferred Shares at the request of the Trust) that such
vote is to be taken and the nature of the action with respect to which such
vote is to be taken.
(d)
Exclusive Right to Vote on Certain Charter Matters.
Notwithstanding the foregoing, and except as otherwise required by the Charter
or Applicable Law, (i) Holders of Outstanding VMTP Preferred Shares will be
entitled as a Series, to the exclusion of the holders of all other securities,
including other Preferred Shares, Common Shares and other classes of shares of
beneficial interest in the Trust, to vote on matters adversely affecting VMTP
Preferred Shares that do not adversely
affect any
of the rights of holders of such other securities, including other Preferred
Shares, Common Shares and other classes of shares of beneficial interest in the
Trust and (ii) Holders of Outstanding VMTP Preferred Shares will not be
entitled to vote on matters adversely affecting any other Preferred Shares,
Common Shares and other classes of shares of beneficial interest in the Trust
that do not adversely affect any of the rights of Holders of the VMTP Preferred
Shares.
(e)
Voting Rights Set Forth Herein are Sole Voting Rights. Unless
otherwise required by law, the Holders of VMTP Preferred Shares shall not have
any relative rights or preferences or other special rights other than those
specifically set forth herein.
(f)
No Preemptive Rights or Cumulative Voting. The Holders of VMTP
Preferred Shares shall have no preemptive rights or rights to cumulative
voting.
(g)
Voting for Trustees Sole Remedy for Trust’s Failure to Pay Dividends.
In the event that the Trust fails to pay any dividends on the VMTP Preferred
Shares, the exclusive remedy of the Holders shall be the right to vote for
trustees pursuant to the provisions of this Section 4.
(h)
Holders Entitled to Vote. For purposes of determining any rights
of the Holders to vote on any matter, whether such right is created by this
Statement of Preferences, by the other provisions of the Charter, by statute or
otherwise by Applicable Law, no Holder shall be entitled to vote any VMTP
Preferred Shares and no VMTP Preferred Shares shall be deemed to be “Outstanding”
for the purpose of voting or determining the number of VMTP Preferred Shares
required to constitute a quorum if prior to or concurrently with the time of
determination of VMTP Preferred Shares entitled to vote or VMTP Preferred
Shares deemed Outstanding for quorum purposes, as the case may be, the
requisite Notice of Redemption with respect to such VMTP Preferred Shares shall
have been provided as set forth in paragraph (c) of Section 10 of this
Statement of Preferences and Deposit Securities in an amount equal to the
Redemption Price for the redemption of such VMTP Preferred Shares shall have
been deposited in trust with the Redemption and Paying Agent for that purpose.
VMTP Preferred Shares held (legally or beneficially) by the Trust or any
affiliate of the Trust or otherwise controlled by the Trust shall not have any
voting rights or be deemed to be Outstanding for voting or for calculating the
voting percentage required on any other matter or other purposes.
(i)
Grant of Irrevocable Proxy. To the fullest extent permitted by
Applicable Law, each Holder may in its discretion grant an irrevocable proxy.
(j) Exemption from Delaware Control Beneficial Interest
Acquisition Provisions. All VMTP Shares Outstanding as of the Closing Date
and the acquisition thereof by the Holder(s) or Beneficial Owner(s) thereof or
any other Person(s), including any transfer and acquisition after the Closing
Date, will be exempt from Subchapter III of the Delaware Statutory Trust Act.
5.
Amendments. (a) Except as may be otherwise
expressly provided in respect of a particular provision of this Statement of
Preferences or as otherwise required by Applicable Law, this Statement of
Preferences may be amended only upon the affirmative vote or written consent of
(1) a majority of the Board of Trustees and (2) the Holders of a majority of
the Outstanding VMTP Preferred Shares.
(b)
Notwithstanding Section 5(a) of this Statement of Preferences, except as
may be otherwise expressly provided by Sections 5(f), 5(g) or 5(h) of this
Statement of Preferences or as otherwise required by Applicable Law, so long as
any VMTP Preferred Shares are Outstanding, (x) the definitions of “Eligible
Assets” (including Appendix A hereto) and “Minimum Asset Coverage” and (y)
Sections 1(b), 6(a), 6(b), 6(c), 6(d), paragraphs (A) through (D) of 10(b)(ii),
13(h) and 13(i) of this Statement of Preferences may be amended only upon the
affirmative vote or written consent of (1) a majority of the Board of Trustees
and (2) the Holders of 66 2/3% of the Outstanding VMTP Preferred Shares. No
amendment to paragraphs (A) through (D) of Section 10(b)(ii) of this Statement
of Preferences shall be effective unless the Trust has received written
confirmation from each Rating Agency, as applicable, then rating the VMTP
Preferred Shares at the request of the Trust, that such amendment will not
adversely affect the rating then assigned by such Rating Agency to the VMTP
Preferred Shares.
(c)
Notwithstanding Sections 5(a) and 5(b) of this Statement of Preferences,
except as may be otherwise expressly provided by Sections 5(f), 5(g) or 5(h) of
this Statement of Preferences or as otherwise required by Applicable Law, the
provisions of this Statement of Preferences set forth under (x) the caption
“Designation” (but only with respect to any VMTP Preferred Shares already
issued and Outstanding), (y) Sections 1(a) (but only with respect to any VMTP
Preferred Shares already issued and Outstanding), 2(a), 2(b), 2(c), 2(d),
2(e)(i), 2(e)(ii), 2(k), 3(b), 8, 10(a)(i), 10(b)(i), 10(h), 11(a), 11(b) or
11(c) of this Statement of Preferences and (z) the definitions “Additional
Amount”, “Applicable Base Rate”, “Applicable Rate”, “Dividend Payment Date”,
“Dividend Period”, “Effective Leverage Ratio”, “Failure to Deposit”, “Gross-up
Payment”, “Liquidation Preference”, “Maximum Rate”, “Outstanding”, “Rate
Determination Date”, “Ratings Spread”, “Redemption Premium”, “Redemption
Price”, “Subsequent Rate Period” or “Term Redemption Date” (i) (A) may be
amended so as to adversely affect the amount, timing, priority or taxability of
any dividend, redemption or other payment or distribution due to the Holders or
(B) may amend the definition of “Effective Leverage Ratio” or the calculation
thereof, in each case, only upon the affirmative vote or written consent of (1)
a majority of the Board of Trustees and (2) the Total Holders and (ii) may be
otherwise amended upon the affirmative vote or written consent of (1) a majority
of the Board of Trustees and (2) the holders of 66 2/3% of the Outstanding VMTP
Preferred Shares.
(d)
If any action set forth above in Sections 5(a) to 5(c) would adversely
affect the rights of one or more Series (the “Affected Series”) of VMTP
Preferred Shares in a manner different from any other Series of VMTP Preferred
Shares, except as may be otherwise expressly provided as to a particular
provision of this Statement of Preferences or as otherwise required by
Applicable Law, the affirmative vote or consent of Holders of the corresponding
percentage of the Affected Series Outstanding (as set forth in Section 5(a),
(b) or (c)), shall also be required.
(e)
Any amendment that amends a provision of this Statement of Preferences,
the Charter or the VMTP Preferred Shares that requires the vote or consent of
Holders of a percentage greater than a Majority shall require such specified
percentage to approve any such proposed amendment.
(f)
Notwithstanding paragraphs (a) through (e) above or anything expressed
or implied to the contrary in this Statement of Preferences, but subject to
Applicable Law, a majority of the Board of Trustees may, by resolution duly
adopted, without shareholder approval, but with at least 20 Business Days prior
written notice to the Holders, amend or supplement this Statement of Preferences (1) to the extent not adverse to any Holder,
to supply any omission, or cure, correct or supplement any ambiguous, defective
or inconsistent provision hereof; provided that if Holders of at least 66 2/3%
of the VMTP Preferred Shares Outstanding, indicate in writing that they are
adversely affected thereby not later than five (5) Business Days prior to the
effective date of any such amendment or supplement, the Trust either shall not
make any such amendment or supplement or may seek arbitration with respect to
such matter (at the expense of the Trust), or (2) to reflect any amendments or
supplements hereto which the Board of Trustees is expressly entitled to adopt
pursuant to the terms of this Statement of Preferences without shareholder
approval, including without limitation, (i) amendments pursuant to Section 5(g)
of this Statement of Preferences, (ii) amendments the Board of Trustees deem
necessary to conform this Statement of Preferences to the requirements of
Applicable Law or the requirements of the Internal Revenue Code, (iii)
amendments to effect or implement any plan of reorganization among the Trust
and any registered investment companies under the 1940 Act that has been
approved by the requisite vote of the Trust’s shareholders, or (iv) to
designate additional Series of VMTP Preferred Shares (and terms relating
thereto) to the extent permitted by this Statement of Preferences, the VMTP
Preferred Shares or the Charter. Any arbitration commenced pursuant to clause 1
of the immediately preceding sentence shall be conducted in New York, New York
and in accordance with the American Arbitration Association rules.
(g)
Notwithstanding anything expressed or implied to the contrary in this
Statement of Preferences, the Board of Trustees may, subject to this Section
5(g), at any time, terminate the services of a Rating Agency then providing a
rating for VMTP Preferred Shares of such Series with or without replacement, in
either case, without the approval of Holders of VMTP Preferred Shares of such
Series or other shareholders of the Trust.
(i)
Notwithstanding anything herein to the contrary, the Board of Trustees,
without the approval of Holders of VMTP Preferred Shares or other shareholders
of the Trust, may terminate the services of any Rating Agency then providing a
rating for a Series of VMTP Preferred Shares and replace it with another Rating
Agency, provided that the Trust provides seven (7) days’ notice by Electronic
Means to Holders of VMTP Preferred Shares of such Series prior to terminating
the services of a Rating Agency and replacing it with another Rating Agency. In
the event a Rating Agency ceases to furnish a preferred share rating or the
Trust terminates a Rating Agency with replacement in accordance with this
clause (i), the Trust shall no longer be required to comply with the Rating
Agency Provisions of the Rating Agency so terminated and, as applicable, the
Trust shall be required to thereafter comply with the Rating Agency Provisions
of each Rating Agency then providing a rating for the VMTP Preferred Shares of
such Series at the request of the Trust.
(ii)
(A) Notwithstanding anything herein to the contrary, the Board of
Trustees, without the approval of Holders of VMTP Preferred Shares or other
shareholders of the Trust, may terminate the services of any Rating Agency then
providing a rating for a Series of VMTP Preferred Shares without replacement,
provided that (I) the Trust has given the Redemption and Paying Agent, such
terminated Rating Agency, and Holders of VMTP Preferred Shares of such Series
at least 45 calendar days’ advance written notice of such termination of
services, (II) the Trust is in compliance with the Rating Agency Provisions of
such terminated Rating Agency at the time the notice required in clause (I)
hereof is given and at the time of the termination of services, and (III) the
VMTP Preferred Shares of such Series continue to be rated by at least one NRSRO
at and after the time of the termination of services.
(B)
On the date that the notice is given as described in the preceding
clause (A) and on the date that the services of the applicable Rating Agency is
terminated, the Trust shall provide the Redemption and Paying Agent and such
terminated Rating Agency with an officers’ certificate as to the compliance
with the provisions of the preceding clause (A), and, on such later date and
thereafter, the Trust shall no longer be required to comply with the Rating
Agency Provisions of the Rating Agency whose services were terminated.
(iii)
Notwithstanding anything herein to the contrary, but subject to this
Section 5(g), the Rating Agency Guidelines, as they may be amended from time to
time by the respective Rating Agency, will be reflected in a written document
and may be amended by the respective Rating Agency without the vote, consent or
approval of the Trust, the Board of Trustees or any holder of Preferred Shares,
including any Series of VMTP Preferred Shares, or any other shareholder of the
Trust. The Board of Trustees, without the vote or consent of any holder of
Preferred Shares, including any Series of VMTP Preferred Shares, or any other
shareholder of the Trust, may from time to time take such actions as may be
reasonably required in connection with obtaining, maintaining or changing the
rating of any Rating Agency that is then rating the VMTP Preferred Shares at
the request of the Trust, and any such action will not be deemed to affect the
preferences, rights or powers of Preferred Shares, including VMTP Preferred
Shares, or the Holders thereof, provided that the Board of Trustees receives
written confirmation from such Rating Agency, as applicable, then rating the
VMTP Preferred Shares at the request of the Trust (with such confirmation in no
event being required to be obtained from a particular Rating Agency with
respect to definitions or other provisions relevant only to and adopted in
connection with another Rating Agency’s rating of any Series of VMTP Preferred
Shares) that any such action would not adversely affect the rating then
assigned by such Rating Agency.
(h)
Notwithstanding the foregoing, nothing in this Section 5 is intended in
any way to limit the ability of the Board of Trustees to, subject to Applicable
Law, amend or alter any provisions of this Statement of Preferences at any time
that there are no VMTP Preferred Shares Outstanding.
6.
Minimum Asset Coverage and Other Financial Requirements.
(a)
Minimum Asset Coverage. The Trust shall maintain, as of the last
Business Day of each week in which any VMTP Preferred Share is Outstanding, the
Minimum Asset Coverage.
(b)
Effective Leverage Ratio. The Trust shall maintain an
Effective Leverage Ratio of not greater than 45% (other than solely by reason
of fluctuations in the market value of its portfolio securities). In the event
that the Trust’s Effective Leverage Ratio exceeds 45% (whether by reason of
fluctuations in the market value of its portfolio securities or otherwise), the
Trust shall cause the Effective Leverage Ratio to be 45% or lower within ten
(10) Business Days (“Effective Leverage Ratio Cure Period”).
(c)
Eligible Assets. The Trust shall make investments only in the
Eligible Assets in accordance with the Trust’s investment objectives and
investment policies.
(d)
Credit Quality. Under normal market conditions, the Trust shall
invest at least 80% of its Managed Assets in Municipal Obligations rated, at
the time of investment, in one of the four
highest
rating categories by at least one NRSRO or, if unrated, determined to be of
comparable quality by the Investment Adviser.
(e)
Liens. The Trust shall not create or incur or suffer to be
incurred or to exist any lien on any funds, accounts or other property held
under the Charter, except as permitted by the Charter or as arising by
operation of law and except for (i) any lien of the Custodian or any other
Person with respect to the payment of fees or repayment for advances or
otherwise, (ii) any lien arising in connection with any overdrafts incurred by
the Trust in connection with custody accounts that it maintains, (iii) any lien
that may be incurred in connection with the Trust’s use of tender option bonds,
(iv) any lien arising in connection with futures, forwards, swaps and other
derivative transactions, and (v) any lien that may be incurred in connection
with the Trust’s proposed redemption or repurchase of all of the Outstanding
VMTP Preferred Shares (provided that the Trust delivers to the Redemption and
Paying Agent sufficient Deposit Securities for the purpose of redeeming the
VMTP Preferred Shares, issues a Notice of Redemption for the VMTP Preferred
Shares and redeems such VMTP Preferred Shares in accordance with the terms of
this Statement of Preferences) as soon as practicable after the incurrence of
such lien.
7.
Basic Maintenance Amount.
(a)
So long as VMTP Preferred Shares are Outstanding, the Trust shall
maintain, on each Valuation Date, and shall verify to its satisfaction that it
is maintaining on such Valuation Date, (i) Moody’s Eligible Assets having an
aggregate Discounted Value equal to or greater than the Basic Maintenance
Amount (if Moody’s is then rating the VMTP Preferred Shares at the request of
the Trust), (ii) Fitch Eligible Assets having an aggregate Discounted Value
equal to or greater than the Basic Maintenance Amount (if Fitch is then rating
the VMTP Preferred Shares at the request of the Trust), and (iii) Other Rating
Agency Eligible Assets having an aggregate Discounted Value equal to or greater
than the Basic Maintenance Amount (if any Other Rating Agency is then rating the
VMTP Preferred Shares at the request of the Trust).
(b)
The Trust shall deliver to each Rating Agency which is then rating VMTP
Preferred Shares at the request of the Trust and any other party specified in
the Rating Agency Guidelines all certificates that are set forth in the
respective Rating Agency Guidelines regarding Minimum Asset Coverage, Basic
Maintenance Amount and/or related calculations at such times and containing
such information as set forth in the respective Rating Agency Guidelines (each,
a “Rating Agency Certificate”). A failure by the Trust to deliver a Rating
Agency Certificate with respect to the Basic Maintenance Amount shall be deemed
to be delivery of a Rating Agency Certificate indicating the Discounted Value
for all assets of the Trust is less than the Basic Maintenance Amount, as of the
relevant Valuation Date; provided, however, that the Trust shall
have the ability to cure such failure to deliver a Rating Agency Certificate
within one day of receipt of notice from such Rating Agency that the Trust
failed to deliver such Rating Agency Certificate.
8.
Restrictions on Dividends and Other Distributions.
(a)
Dividends on Preferred Shares Other Than VMTP Preferred Shares.
Except as set forth in the next sentence, no dividends shall be declared or
paid or set apart for payment on the shares of any class or series of shares of
beneficial interest in the Trust ranking, as to the payment of dividends, on a
parity with VMTP Preferred Shares for any period unless full cumulative
dividends
have been or contemporaneously are
declared and paid on the shares of each Series of VMTP Preferred Shares through
their most recent Dividend Payment Date. When dividends are not paid in full upon
the VMTP Preferred Shares through their most recent Dividend Payment Date or
upon the shares of any other class or series of shares of beneficial interest
in the Trust ranking on a parity as to the payment of dividends with VMTP
Preferred Shares through their most recent respective dividend payment dates,
all dividends declared upon VMTP Preferred Shares and any other such class or
series of shares of beneficial interest ranking on a parity as to the payment
of dividends with VMTP Preferred Shares shall be declared pro rata so
that the amount of dividends declared per share on VMTP Preferred Shares and
such other class or series of shares of beneficial interest in the Trust shall
in all cases bear to each other the same ratio that accumulated dividends per
share on the VMTP Preferred Shares and such other class or series of shares of
beneficial interest in the Trust bear to each other (for purposes of this
sentence, the amount of dividends declared per VMTP Preferred Share shall be
based on the Applicable Rate for such VMTP Preferred Share effective during the
Dividend Periods during which dividends were not paid in full).
(b)
Dividends and Other Distributions With Respect to Common Shares Under
the 1940 Act. The Board of Trustees shall not declare any dividend (except
a dividend payable in Common Shares), or declare any other distribution, upon
the Common Shares, or purchase Common Shares, unless in every such case the
Preferred Shares have, at the time of any such declaration or purchase, an
asset coverage (as defined in and determined pursuant to the 1940 Act) of at
least 200% (or such other asset coverage as may in the future be specified in
or under the 1940 Act as the minimum asset coverage for senior securities which
are shares or stock of a closed-end investment company as a condition of
declaring dividends on its common shares or stock) after deducting the amount
of such dividend, distribution or purchase price, as the case may be.
(c)
Other Restrictions on Dividends and Other Distributions. For so
long as any VMTP Preferred Share is Outstanding, and except as set forth in
paragraph (a) of this Section 8 and paragraph (c) of Section 11 of this
Statement of Preferences, (A) the Trust shall not declare, pay or set apart for
payment any dividend or other distribution (other than a dividend or
distribution paid in shares of, or in options, warrants or rights to subscribe
for or purchase, Common Shares or other shares, if any, ranking junior to the
VMTP Preferred Shares as to the payment of dividends and the distribution of
assets upon dissolution, liquidation or winding up) in respect of the Common
Shares or any other shares of the Trust ranking junior to or on a parity with
the VMTP Preferred Shares as to the payment of dividends or the distribution of
assets upon dissolution, liquidation or winding up, or call for redemption,
redeem, purchase or otherwise acquire for consideration any Common Shares or
any other such junior shares (except by conversion into or exchange for shares
of the Trust ranking junior to the VMTP Preferred Shares as to the payment of
dividends and the distribution of assets upon dissolution, liquidation or
winding up), or any such parity shares (except by conversion into or exchange
for shares of the Trust ranking junior to or on a parity with VMTP Preferred
Shares as to the payment of dividends and the distribution of assets upon
dissolution, liquidation or winding up), unless (i) full cumulative dividends
on shares of each Series of VMTP Preferred Shares through its most recently
ended Dividend Period shall have been paid or shall have been declared and
sufficient funds for the payment thereof deposited with the Redemption and
Paying Agent and (ii) the Trust has redeemed the full number of VMTP Preferred
Shares required to be redeemed by any provision for mandatory redemption
pertaining thereto, and (B) the Trust shall not declare, pay or set apart for
payment any dividend or other distribution (other than a dividend or
distribution paid in shares of, or in options, warrants or rights
to subscribe for or purchase, Common Shares or other
shares, if any, ranking junior to VMTP Preferred Shares as to the payment of
dividends and the distribution of assets upon dissolution, liquidation or
winding up) in respect of Common Shares or any other shares of the Trust
ranking junior to VMTP Preferred Shares as to the payment of dividends or the
distribution of assets upon dissolution, liquidation or winding up, or call for
redemption, redeem, purchase or otherwise acquire for consideration any Common
Shares or any other such junior shares (except by conversion into or exchange
for shares of the Trust ranking junior to VMTP Preferred Shares as to the
payment of dividends and the distribution of assets upon dissolution,
liquidation or winding up), unless immediately after such transaction the
Discounted Value of Moody’s Eligible Assets (if Moody’s is then rating the VMTP
Preferred Shares at the request of the Trust), Fitch Eligible Assets (if Fitch
is then rating the VMTP Preferred Shares at the request of the Trust) and Other
Rating Agency Eligible Assets (if any Other Rating Agency is then rating the
VMTP Preferred Shares at the request of the Trust) would each at least equal
the Basic Maintenance Amount.
9.
Rating Agency Restrictions. For so long as any VMTP
Preferred Shares are Outstanding and any Rating Agency is then rating the VMTP
Preferred Shares at the request of the Trust, the Trust will not engage in
certain proscribed transactions set forth in the Rating Agency Guidelines,
unless it has received written confirmation from each such Rating Agency that
proscribes the applicable transaction in its Rating Agency Guidelines that any
such action would not impair the rating then assigned by such Rating Agency to
a Series of VMTP Preferred Shares.
10.
Redemption.
(a)
Optional Redemption.
(i)
Subject to the provisions of subparagraph (iii) of this paragraph (a),
VMTP Preferred Shares of any Series may be redeemed, at the option of the
Trust, at any time, as a whole or from time to time in part, out of funds
legally available therefor under Applicable Law and otherwise in accordance
with Applicable Law, at the Redemption Price; provided, however, that (A) VMTP
Preferred Shares may not be redeemed in part if after such partial redemption
fewer than 50 VMTP Shares of such Series would remain outstanding; and (B) VMTP
Preferred Shares are not redeemable by the Trust during the Initial Rate
Period.
(ii)
If fewer than all of the Outstanding VMTP Preferred Shares of a Series
are to be redeemed pursuant to subparagraph (i) of this paragraph (a), the
number of VMTP Preferred Shares of such Series to be redeemed shall be selected
either pro rata from the Holders of VMTP Preferred Shares of such Series
in proportion to the number of VMTP Preferred Shares of such Series held by
such Holders or by lot or other fair method as determined by the Trust’s Board
of Trustees. The Trust’s Board of Trustees will have the full power and
authority to prescribe the terms and conditions upon which VMTP Preferred
Shares will be redeemed from time to time.
(iii)
The Trust may not on any date send a Notice of Redemption pursuant to
paragraph (c) of this Section 10 in respect of a redemption contemplated to be
effected pursuant to this paragraph (a) unless on such date (A) the Trust has
available Deposit Securities with maturity or tender dates not later than the
day preceding the applicable Redemption Date and having a Market Value not less
than the amount (including any applicable Redemption Premium) due to Holders of
VMTP Preferred Shares by reason of the redemption of such VMTP Preferred Shares
on such Redemption
Date and (B) the Discounted Value
of Moody’s Eligible Assets (if Moody’s is then rating the VMTP Preferred Shares
at the request of the Trust), the Discounted Value of Fitch Eligible Assets (if
Fitch is then rating the VMTP Preferred Shares at the request of the Trust) and
the Discounted Value of Other Rating Agency Eligible Assets (if any Other
Rating Agency is then rating the VMTP Preferred Shares at the request of the
Trust) each at least equals the Basic Maintenance Amount, and would at least
equal the Basic Maintenance Amount immediately subsequent to such redemption if
such redemption were to occur on such date. For purposes of determining in
clause (B) of the preceding sentence whether the Discounted Value of Moody’s
Eligible Assets at least equals the Basic Maintenance Amount, the Moody’s
Discount Factors applicable to Moody’s Eligible Assets shall be determined by
reference to the first Exposure Period (as defined in the Moody’s Guidelines)
longer than the Exposure Period then applicable to the Trust, as described in
the definition of Moody’s Discount Factor herein.
(b)
Term/Mandatory Redemption.
(i) (A) Term Redemption. The Trust
shall redeem, out of funds legally available therefor and otherwise in
accordance with Applicable Law, all Outstanding VMTP Preferred Shares on the
Term Redemption Date at the Redemption Price; provided, however, the Trust
shall have the right, exercisable at any time no earlier than 9 months prior
to the Term Redemption Date, to request that the Total Holders extend the term
of the Term Redemption Date for an additional period as may be agreed upon by
the Trust and the Total Holders, which request may be conditioned upon terms
and conditions that are different from the terms and conditions herein. Each
Holder shall, no later than the deadline specified in such request, which shall
not be less than 30 days after such Holder's receipt of such request unless
otherwise agreed to by such Holder, notify the Trust of its acceptance or
rejection of such request, which acceptance by any such Holder may be a
Conditional Acceptance conditioned upon terms and conditions which are
different from the terms and conditions herein or the terms and conditions
proposed by the Trust in making an extension request. If any Holder fails to
notify the Trust of its acceptance or rejection of the Trust's request for
extension by the deadline specified in such request, the Trust may either deem
such failure to respond as a rejection of such request or extend the deadline
for such request with respect to such Holder, provided, however, in all cases
any acceptance by a Holder of a request to extend, if any, shall be made
pursuant to an affirmative written acceptance by the Total Holders. If the
Total Holders (or any thereof) provide a Conditional Acceptance, then the Trust
shall, no later than the deadline specified in the Conditional Acceptance,
which shall not be less than 30 days after the Trust's receipt of the Conditional
Acceptance unless otherwise agreed to by the Trust, notify the Total Holders of
its acceptance or rejection of the terms and conditions specified in the
Conditional Acceptance. If the Trust fails to notify the Total Holders by the
deadline specified in the Conditional Acceptance, the Total Holders may either
deem such failure to respond as a rejection of the terms and conditions
specified in the Conditional Acceptance or extend the deadline for such
response by the Trust, provided, however, in all cases any acceptance by a
Holder of a request to extend, if any, shall be made pursuant to an affirmative
written acceptance by the Total Holders. Each Holder may grant or deny any
request for extension of the Term Redemption Date in its sole and absolute discretion.
(B)
Basic Maintenance Amount, Minimum Asset Coverage and Effective
Leverage Ratio Mandatory Redemption. The Trust also shall redeem, out of
funds legally available therefor under Applicable Law and otherwise in
accordance with Applicable Law, at the Redemption Price,
certain
of the VMTP Preferred Shares, if the Trust fails to have either Moody’s
Eligible Assets (if Moody’s is then rating the VMTP Preferred Shares at the
request of the Trust) with a Discounted Value, Fitch Eligible Assets (if Fitch
is then rating the VMTP Preferred Shares at the request of the Trust) with a
Discounted Value, or Other Rating Agency Eligible Assets (if any Other Rating
Agency is then rating the VMTP Preferred Shares at the request of the Trust)
with a Discounted Value greater than or equal to the Basic Maintenance Amount,
fails to maintain the Minimum Asset Coverage in accordance with this Statement
of Preferences or fails to maintain the Effective Leverage Ratio in accordance
with paragraph (b) of Section 6 of this Statement of Preferences, and such
failure is not cured on or before the applicable Cure Date. If a redemption pursuant
to this Section 10(b)(i)(B) is to occur, the Trust shall cause a Notice of
Redemption to be sent to Holders in accordance with Section 10(c) and cause to
be deposited Deposit Securities or other sufficient funds, out of funds legally
available therefor under Applicable Law and otherwise in accordance with
Applicable Law, in trust with the Redemption and Paying Agent or other
applicable paying agent, in each case in accordance with the terms of the VMTP
Preferred Shares to be redeemed. The number of VMTP Preferred Shares to be
redeemed shall be equal to the lesser of (A) the sum of (x) the minimum number
of VMTP Preferred Shares, together with all other Preferred Shares subject to
redemption or retirement, the redemption of which, if deemed to have occurred
immediately prior to the opening of business on the applicable Cure Date, would
result in the Trust’s having each of Moody’s Eligible Assets (if Moody’s is
then rating the VMTP Preferred Shares at the request of the Trust) with a
Discounted Value, Fitch Eligible Assets (if Fitch is then rating the VMTP
Preferred Shares at the request of the Trust) with a Discounted Value and Other
Rating Agency Eligible Assets (if any Other Rating Agency is then rating the
VMTP Preferred Shares at the request of the Trust) with a Discounted Value
greater than or equal to the Basic Maintenance Amount, maintaining the Minimum
Asset Coverage or satisfying the Effective Leverage Ratio, as the case may be,
on the applicable Cure Date and (y) the number of additional VMTP Preferred
Shares of the Trust may elect to simultaneously redeem (provided, however,
that if there is no such minimum number of VMTP Preferred Shares and other
Preferred Shares the redemption or retirement of which would have such result,
all VMTP Preferred Shares and Preferred Shares then outstanding shall be
redeemed), and (B) the maximum number of VMTP Preferred Shares, together with
all other Preferred Shares subject to redemption or retirement, that can be
redeemed out of funds legally available therefor under Applicable Law and
otherwise in accordance with the Charter and Applicable Law. In determining the
VMTP Preferred Shares required to be redeemed in accordance with the foregoing,
the Trust shall allocate the number required to be redeemed to satisfy the
Basic Maintenance Amount, the Minimum Asset Coverage or the Effective Leverage
Ratio, as the case may be, pro rata, by lot or other fair method as determined
by the Trust’s Board of Trustees, among VMTP Preferred Shares and other
Preferred Shares (and, then, pro rata, by lot or other fair method as
determined by the Trust’s Board of Trustees, among each Series of VMTP
Preferred Shares) subject to redemption or retirement. The Trust shall effect
such redemption on the date fixed by the Trust therefor, which date shall not
be earlier than 10 Business Days nor later than 60 days after the applicable
Cure Date, except that if the Trust does not have funds legally available under
Applicable Law for the redemption of all of the required number of VMTP Preferred
Shares and other Preferred Shares which are subject to redemption or retirement
or the Trust otherwise is unable as a result of Applicable Law to effect such
redemption on or prior to 60 days after the applicable Cure Date, the Trust
shall redeem those VMTP Preferred Shares and other Preferred Shares which it
was unable to redeem on the earliest practicable date on which it is able to
effect such redemption. If fewer than all of the Outstanding
VMTP Preferred Shares are to be redeemed pursuant to this
paragraph (b), the number of VMTP Preferred Shares to be redeemed shall be
redeemed pro rata, by lot or other fair method as determined by the Trust’s
Board of Trustees from the Holders of the VMTP Preferred Shares in proportion
to the number of VMTP Preferred Shares held by such Holders.
(ii)
(A) On or prior to the Liquidity Account Initial Date with respect
to any Series of VMTP Preferred Shares, the Trust shall cause the Custodian to
segregate, by means of appropriate identification on its books and records or
otherwise in accordance with the Custodian’s normal procedures, from the other
assets of the Trust (a “Liquidity Account”) Liquidity Account
Investments with a Market Value equal to at least 110% of the Term Redemption
Amount with respect to such Series. The “Term Redemption Amount” for any
Series of VMTP Preferred Shares shall be equal to the Redemption Price to be
paid on the Term Redemption Date for such Series, based on the number of shares
of such Series then Outstanding, assuming for this purpose that the Applicable
Rate for such Series in effect at the time of the creation of the Liquidity
Account for such Series will be the Daily SOFR as in effect at such time
of creation until the Term Redemption Date for such Series. If, on any date
after the Liquidity Account Initial Date, the aggregate Market Value of the
Liquidity Account Investments included in the Liquidity Account for a Series of
VMTP Preferred Shares as of the close of business on any Business Day is less
than 110% of the Term Redemption Amount with respect to such Series, then the
Trust shall cause the Custodian and the Investment Adviser to segregate
additional or substitute assets of the Trust as Liquidity Account Investments,
so that the aggregate Market Value of the Liquidity Account Investments
included in the Liquidity Account for such Series is at least equal to 110% of
the Term Redemption Amount with respect to such Series not later than the close
of business on the next succeeding Business Day. With respect to assets of the
Trust segregated as Liquidity Account Investments, the Investment Adviser, on
behalf of the Trust, shall be entitled to instruct the Custodian on any date to
release any Liquidity Account Investments from such segregation and to
substitute therefor other Liquidity Account Investments, so long as (x) the
assets of the Trust segregated as Liquidity Account Investments at the close of
business on such date have a Market Value equal to at least 110% of the Term
Redemption Amount with respect to such Series and (y) the assets of the Trust
designated and segregated as Deposit Securities at the close of business on
such date have a Market Value equal to at least the Liquidity Requirement (if
any) determined in accordance with paragraph (B) below with respect to such
Series for such date. The Trust shall cause the Custodian not to permit any
lien, security interest or encumbrance to be created or permitted to exist on
or in respect of any Liquidity Account Investments included in the Liquidity
Account for any Series of VMTP Preferred Shares, other than liens, security
interests or encumbrances arising by operation of law and any lien of the
Custodian with respect to the payment of its fees or repayment for its
advances. Notwithstanding anything expressed or implied herein to the contrary,
the assets of the Liquidity Account shall continue to be assets of the Trust
subject to the interests of all creditors and shareholders of the Trust.
(B)
The Market Value of the Deposit Securities held in the Liquidity Account
for a Series of VMTP Preferred Shares, from and after the 15th day of the
calendar month (or if such day is not a Business Day, the next succeeding
Business Day) that is the number of months preceding the month of the Term
Redemption Date for such Series specified in the table set forth below, shall
not be less than the percentage of the Term Redemption Amount for such Series
set forth below opposite such number of months (the “Liquidity Requirement”),
but in all cases subject to the cure provisions of paragraph (C) below:
Number of Months
Preceding
|
Value of Deposit Securities
as Percentage of Term Redemption Amount
|
5
|
20%
|
4
|
40%
|
3
|
60%
|
2
|
80%
|
1
|
100%
|
(C)
If the aggregate Market Value of the Deposit Securities included in the
Liquidity Account for a Series of VMTP Preferred Shares as of the close of
business on any Business Day is less than the Liquidity Requirement in respect
of such Series for such Business Day, then the Trust shall cause the
segregation of additional or substitute Deposit Securities in respect of the
Liquidity Account for such Series, so that the aggregate Market Value of the
Deposit Securities included in the Liquidity Account for such Series is at
least equal to the Liquidity Requirement for such Series not later than the
close of business on the next succeeding Business Day. With respect to Deposit
Securities included in the Liquidity Account, the Investment Adviser, on behalf
of the Trust, shall be entitled to instruct the Custodian on any date to
release any Deposit Securities from the Liquidity Account and to substitute
therefor other Deposit Securities, so long as the aggregate Market Value of the
Deposit Securities included in the Liquidity Account for such Series is at
least equal to the Liquidity Requirement for such Series not later than the
close of business on the next succeeding Business Day.
(D)
The Deposit Securities included in the Liquidity Account for a Series of
VMTP Preferred Shares may be liquidated by the Trust, in its discretion, and
the proceeds applied towards payment of the Term Redemption Amount for such
Series. Upon the deposit by the Trust on the Term Redemption Date with the
Redemption and Paying Agent of the proceeds from the liquidation of the Deposit
Securities having an initial combined Market Value sufficient to effect the
redemption of the VMTP Preferred Shares of a Series on the Term Redemption Date
for such Series, the requirement of the Trust to maintain a Liquidity Account
for such Series as contemplated by this Section 10(b)(ii) shall lapse and be of
no further force and effect.
(c)
Notice of Redemption. If the Trust shall determine or be required
to redeem, in whole or in part, VMTP Preferred Shares pursuant to paragraph (a)
or (b)(i) of this Section 10, the Trust will send a notice of redemption (the “Notice
of Redemption”), by Electronic Means (or by first class mail, postage
prepaid, in the case where the VMTP Preferred Shares are in physical form) to
Holders thereof, or request the Redemption and Paying Agent, on behalf of the
Trust to promptly do so by Electronic Means (or by first class mail, postage
prepaid, in the case where the VMTP Preferred Shares are in physical form) so
long as the Notice of Redemption is furnished by the Trust to the Redemption
and Paying Agent in electronic format at least five (5) Business Days prior to
the date a Notice of Redemption is required to be delivered to the Holders,
unless a shorter period of time shall be acceptable to the Redemption and
Paying Agent. A Notice of Redemption shall be sent to Holders not less than ten
(10) days prior to the date fixed for redemption in such
Notice of Redemption (the “Redemption Date”). Each
such Notice of Redemption shall state: (i) the Redemption Date; (ii) the number
of VMTP Preferred Shares to be redeemed and the Series thereof; (iii) the CUSIP
number for VMTP Preferred Shares of such Series; (iv) the Redemption Price; (v)
the place or places where the certificate(s), if any, for such shares (properly
endorsed or assigned for transfer, if the Board of Trustees requires and the
Notice of Redemption states) are to be surrendered for payment of the
Redemption Price; (vi) that dividends on the VMTP Preferred Shares to be
redeemed will cease to accumulate from and after such Redemption Date; and
(vii) the provisions of this Statement of Preferences under which such
redemption is made. If fewer than all VMTP Preferred Shares held by any Holder
are to be redeemed, the Notice of Redemption delivered to such Holder shall
also specify the number of VMTP Preferred Shares to be redeemed from such
Holder. The Trust may provide in any Notice of Redemption relating to (i) an
optional redemption contemplated to be effected pursuant to Section 10(a) of
this Statement of Preferences or (ii) any redemption of VMTP Preferred Shares
not required to be redeemed pursuant to Section 10(b)(i) of this Statement of
Preferences in accordance with the terms therein that such redemption is
subject to one or more conditions precedent not otherwise expressly stated
herein and that the Trust shall not be required to effect such redemption
unless each such condition has been satisfied at the time or times and in the
manner specified in such Notice of Redemption. No defect in the Notice of
Redemption or delivery thereof shall affect the validity of redemption
proceedings, except as required by Applicable Law.
(d)
No Redemption Under Certain Circumstances. Notwithstanding the
provisions of paragraphs (a) or (b) of this Section 10, if any dividends on
VMTP Preferred Shares of a Series (whether or not earned or declared) are in
arrears, no VMTP Preferred Shares of such Series shall be redeemed unless all Outstanding
VMTP Preferred Shares of such Series are simultaneously redeemed, and the Trust
shall not otherwise purchase or acquire any VMTP Preferred Shares of such
Series; provided, however, that the foregoing shall not prevent
the purchase or acquisition of Outstanding VMTP Preferred Shares of such Series
pursuant to the successful completion of an otherwise lawful purchase or
exchange offer made on the same terms to Holders of all Outstanding VMTP
Preferred Shares of such Series.
(e)
Absence of Funds Available for Redemption. To the extent that any
redemption for which Notice of Redemption has been provided is not made by
reason of the absence of legally available funds therefor in accordance with
the Charter and Applicable Law, such redemption shall be made as soon as practicable
to the extent such funds become available. Failure to redeem VMTP Preferred
Shares shall be deemed to exist at any time after the date specified for
redemption in a Notice of Redemption when the Trust shall have failed, for any
reason whatsoever, to deposit in trust with the Redemption and Paying Agent the
Redemption Price with respect to any shares for which such Notice of Redemption
has been sent; provided, however, that the foregoing shall not
apply in the case of the Trust’s failure to deposit in trust with the
Redemption and Paying Agent the Redemption Price with respect to any shares
where (I) the Notice of Redemption relating to such redemption, provided,
that such redemption was subject to one or more conditions precedent and (2)
any such condition precedent shall not have been satisfied at the time or times
and in the manner specified in such Notice of Redemption. Notwithstanding the
fact that the Trust may not have redeemed VMTP Preferred Shares for which a Notice
of Redemption has been provided, dividends may be declared and paid on VMTP
Preferred Shares and shall include those VMTP Preferred Shares for which a
Notice of Redemption has been provided.
(f)
Redemption and Paying Agent as Trustee of Redemption Payments by
Trust. All moneys paid to the Redemption and Paying Agent for payment of
the Redemption Price of VMTP Preferred Shares called for redemption shall be
held in trust by the Redemption and Paying Agent for the benefit of Holders of
shares so to be redeemed. The Trust’s obligation to pay the Redemption Price of
VMTP Preferred Shares called for redemption in accordance with this Statement
of Preferences shall be satisfied upon payment of such Redemption Price by the
Redemption and Paying Agent to the Securities Depository on the relevant
Redemption Date.
(g)
Shares for Which Notice of Redemption Has Been Given Are No Longer
Outstanding. Provided a Notice of Redemption has been provided pursuant to
paragraph (c) of this Section 10, the Trust shall irrevocably (except to the
extent set forth below in this paragraph (g)) deposit with the Redemption and
Paying Agent, no later than 12:00 noon, New York City time, on a Business Day
not less than ten (10) Business Days preceding the Redemption Date specified in
such notice, Deposit Securities in an aggregate amount equal to the Redemption
Price to be paid on the Redemption Date in respect of any VMTP Preferred Shares
that are subject to such Notice of Redemption. Provided a Notice of Redemption
has been provided pursuant to paragraph (c) of this Section 10, upon the
deposit with the Redemption and Paying Agent of Deposit Securities in an amount
sufficient to redeem the VMTP Preferred Shares that are the subject of such
notice, dividends on such VMTP Preferred Shares shall cease to accumulate as of
the Redemption Date and such VMTP Preferred Shares shall no longer be deemed to
be Outstanding for any purpose, and all rights of the Holders of the VMTP
Preferred Shares so called for redemption shall cease and terminate, except the
right of such Holders to receive the Redemption Price, but without any interest
or other additional amount, except as provided in paragraph (e)(i) of Section 2
and in Section 3 of this Statement of Preferences. Upon surrender in accordance
with the Notice of Redemption of the certificates for any VMTP Preferred Shares
so redeemed (properly endorsed or assigned for transfer, if the Board of
Trustees shall so require and the Notice of Redemption shall so state), the
Redemption Price shall be paid by the Redemption and Paying Agent to the
Holders of VMTP Preferred Shares subject to redemption. In the case that fewer
than all of the shares represented by any such certificate are redeemed, a new
certificate shall be issued, representing the unredeemed shares, without cost
to the Holder thereof. The Trust shall be entitled to receive from the
Redemption and Paying Agent, promptly after the date fixed for redemption, any
cash or other Deposit Securities deposited with the Redemption and Paying Agent
in excess of (i) the aggregate Redemption Price of the VMTP Preferred Shares
called for redemption on such date and (ii) all other amounts to which Holders
of VMTP Preferred Shares called for redemption may be entitled pursuant to this
Statement of Preferences. Any funds so deposited that are unclaimed at the end
of 90 days from such Redemption Date shall, to the extent permitted by law, be repaid
to the Trust, after which time the Holders of VMTP Preferred Shares so called
for redemption may look only to the Trust for payment of the Redemption Price
and all other amounts to which they may be entitled pursuant to this Statement
of Preferences. The Trust shall be entitled to receive, from time to time after
the date fixed for redemption, any interest on the funds so deposited.
(h)
Compliance With Applicable Law. In effecting any redemption
pursuant to this Section 10, the Trust shall use its best efforts to comply
with all applicable conditions precedent to effecting such redemption under any
Applicable Law, and shall effect no redemption except in accordance with
Applicable Law.
(i)
Only Whole VMTP Preferred Shares May Be Redeemed. In the case of
any redemption pursuant to this Section 10, only whole VMTP Preferred Shares
shall be redeemed.
(j)
Modification of Redemption Procedures. Notwithstanding the
foregoing provisions of this Section 10, the Trust may, in its sole discretion,
modify the procedures set forth above with respect to notification of
redemption for the VMTP Preferred Shares, provided that such modification does
not materially and adversely affect the Holders of the VMTP Preferred Shares or
cause the Trust to violate any law, rule or regulation, or shall in any way
alter the obligations of the Redemption and Paying Agent without the Redemption
and Paying Agent’s prior written consent. Furthermore, if in the sole
discretion of the Board of Trustees, after consultation with counsel,
modification of the foregoing redemption provisions (x) are permissible under
the rules and regulations or interpretations of the SEC and under other
Applicable Law and (y) would not cause a material risk as to the treatment of
the VMTP Preferred Shares as equity for U.S. federal income tax purposes, the
Board of Trustees, without shareholder approval, by resolution may modify such
redemption procedures.
11.
Liquidation Rights.
(a)
Ranking. The VMTP Preferred Shares shall rank on a parity with
each other, with shares of any other Series of VMTP Preferred Shares and with
shares of any other series of Preferred Shares as to the distribution of assets
upon dissolution, liquidation or winding up of the affairs of the Trust.
(b)
Distributions Upon Liquidation. Upon the dissolution, liquidation
or winding up of the affairs of the Trust, whether voluntary or involuntary,
the Holders of VMTP Preferred Shares then Outstanding shall be entitled to
receive and to be paid out of the assets of the Trust legally available for
distribution to its shareholders under Applicable Law and otherwise in
accordance with Applicable Law, before any payment or distribution shall be
made on the Common Shares or on any other class of shares of the Trust ranking
junior to the VMTP Preferred Shares upon dissolution, liquidation or winding
up, an amount equal to the Liquidation Preference with respect to such shares plus
an amount equal to all dividends thereon (whether or not declared) accumulated
but unpaid to (but not including) the date of final distribution in same day
funds, together with any payments required to be made pursuant to Section 3 of
this Statement of Preferences in connection with the liquidation of the Trust.
After the payment to the Holders of the VMTP Preferred Shares of the full
preferential amounts provided for in this paragraph (b), the Holders of VMTP
Preferred Shares as such shall have no right or claim to any of the remaining
assets of the Trust.
(c)
Pro Rata Distributions. In the event the assets of the Trust
available for distribution to the Holders of VMTP Preferred Shares upon any
dissolution, liquidation or winding up of the affairs of the Trust, whether
voluntary or involuntary, shall be insufficient to pay in full all amounts to
which such Holders are entitled pursuant to paragraph (b) of this Section 11,
no such distribution shall be made on account of any shares of any other class
or series of Preferred Shares ranking on a parity with the VMTP Preferred
Shares with respect to the distribution of assets upon such dissolution,
liquidation or winding up unless proportionate distributive amounts shall be
paid on account of the VMTP Preferred Shares, ratably, in proportion to the
full distributable amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up.
(d)
Rights of Junior Shares. Subject to the rights of the holders of
shares of any series or class or classes of shares ranking on a parity with the
VMTP Preferred Shares with respect to the distribution of assets upon
dissolution, liquidation or winding up of the affairs of the Trust, after
payment shall have been made in full to the Holders of the VMTP Preferred
Shares as provided in paragraph (b) of this Section 11, but not prior thereto,
any other series or class or classes of shares ranking junior to the VMTP
Preferred Shares with respect to the distribution of assets upon dissolution,
liquidation or winding up of the affairs of the Trust shall, subject to the
respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the Holders
of the VMTP Preferred Shares shall not be entitled to share therein.
(e)
Certain Events Not Constituting Liquidation. Neither the sale of
all or substantially all the property or business of the Trust, nor the merger,
consolidation or reorganization of the Trust into or with any business or
statutory trust, corporation or other entity nor the merger, consolidation or reorganization
of any business or statutory trust, corporation or other entity into or with
the Trust shall be a dissolution, liquidation or winding up, whether voluntary
or involuntary, for the purposes of this Section 11.
12.
Transfers.
(a)
Unless otherwise approved in writing by the Trust, a Beneficial Owner or
Holder may sell, transfer or otherwise dispose of VMTP Preferred Shares only in
whole shares and only to persons it reasonably believes are (i) QIBs that are
either registered closed-end management investment companies, the shares of
which are traded on a national securities exchange (“Closed-End Funds”), banks,
insurance companies, companies that are included in the S&P 500 Index (and
their direct or indirect wholly-owned subsidiaries) or registered open-end
management investment companies or (ii) tender option bond trusts in which all
Beneficial Owners are QIBs that are Closed-End Funds, banks, insurance
companies, companies that are included in the S&P 500 Index (and their direct
or indirect wholly-owned subsidiaries) or registered open-end management
investment companies, in each case, pursuant to Rule 144A of the Securities Act
or another available exemption from registration under the Securities Act, in a
manner not involving any public offering within the meaning of Section 4(2) of
the Securities Act. Any transfer in violation of the foregoing restrictions
shall be void ab initio and any transferee of VMTP Preferred Shares
transferred in violation of the foregoing restrictions shall be deemed to agree
to hold all payments it received on any such improperly transferred VMTP
Preferred Shares in trust for the benefit of the transferor of such VMTP
Preferred Shares. The foregoing restrictions on transfer shall not apply to any
VMTP Preferred Shares registered under the Securities Act pursuant to the
Registration Rights Agreement or any subsequent transfer of such VMTP Preferred
Shares thereafter.
(b)
If at any time the Trust is not furnishing information to the SEC
pursuant to Section 13 or 15(d) of the Exchange Act, in order to preserve the
exemption for resales and transfers under Rule 144A of the Securities Act, the
Trust shall furnish, or cause to be furnished, to Holders of VMTP Preferred
Shares and prospective purchasers of VMTP Preferred Shares, upon request,
information with respect to the Trust satisfying the requirements of subsection
(d)(4) of Rule 144A of the Securities Act.
13.
Miscellaneous.
(a)
No Fractional Shares. No fractional VMTP Preferred Shares shall
be issued.
(b)
Status of VMTP Preferred Shares Redeemed, Exchanged or Otherwise
Acquired by the Trust. VMTP Preferred Shares which are redeemed, exchanged
or otherwise acquired by the Trust shall return to the status of authorized and
unissued Preferred Shares without designation as to series. Any VMTP Preferred
Shares which are provisionally delivered by the Trust to or for the account of
an agent of the Trust or to or for the account of a purchaser of the VMTP
Preferred Shares, but for which final payment is not received by the Trust as
agreed, shall return to the status of authorized and unissued VMTP Preferred
Shares.
(c)
Treatment of VMTP Preferred Shares as Equity. The Trust shall,
and each Holder and Beneficial Owner, by virtue of acquiring VMTP Preferred
Shares, is deemed to have agreed to, treat the VMTP Preferred Shares as equity
in the Trust for U.S. federal, state, local income and other tax purposes.
(d)
Board May Resolve Ambiguities. Subject to Section 5 of this
Statement of Preferences and to the extent permitted by Applicable Law, the
Board of Trustees may interpret and give effect to the provisions of this
Statement of Preferences in good faith so as to resolve any inconsistency or
ambiguity or to remedy any formal defect. Notwithstanding anything expressed or
implied to the contrary in this Statement of Preferences, but subject to
Section 5, the Board of Trustees may amend this Statement of Preferences with
respect to any Series of VMTP Preferred Shares prior to the issuance of VMTP
Preferred Shares of such Series.
(e)
Headings Not Determinative. The headings contained in this
Statement of Preferences are for convenience of reference only and shall not
affect the meaning or interpretation of this Statement of Preferences.
(f)
Notices. All notices or communications, unless otherwise
specified in the By-laws of the Trust or this Statement of Preferences, shall
be sufficiently given if in writing and delivered in person, by Electronic
Means or mailed by first-class mail, postage prepaid.
(g)
Redemption and Paying Agent. The Trust shall use its commercially
reasonable best efforts to engage at all times a Redemption and Paying Agent to
perform the duties specified in this Statement of Preferences.
(h)
Securities Depository. The Trust shall maintain settlement of
VMTP Preferred Shares in global book entry form through the Securities
Depository.
(i)
Voluntary Bankruptcy. The Trust shall not file a voluntary
application for relief under federal bankruptcy law or any similar application
under state law for so long as the Trust is solvent and does not reasonably
foresee becoming insolvent.
(j)
Applicable Law Restrictions and Requirements. Notwithstanding
anything expressed or implied to the contrary in this Statement of Preferences,
all dividends, redemptions and other payments by the Trust on or in respect of
the VMTP Preferred Shares shall be paid only out of funds legally available
therefor under Applicable Law and otherwise in accordance with Applicable Law.
(k)
Information. Without limitation of other provisions of this
Statement of Preferences, the Trust shall deliver, or cause to be delivered by
the Redemption and Paying Agent, to each Holder:
(i)
as promptly as practicable after the preparation and filing thereof with
the Securities and Exchange Commission, each annual and semi-annual report
prepared with respect to the Trust, which delivery may be made by means of the
electronic availability of any such document on a public website;
(ii)
notice of any change (including being put on Credit Watch or Watchlist),
suspension or termination in or of the ratings on the VMTP Preferred Shares by
any NRSRO then rating the VMTP Preferred Shares at the request of the Trust as
promptly as practicable upon the occurrence thereof, to the extent such
information is publicly available;
(iii)
notice of any failure to pay in full when due any dividend required to
be paid by Section 2 of this Statement of Preferences that remains uncured for
more than three Business Days as soon as reasonably practicable, but in no
event later than one Business Day after expiration of the grace period;
(iv)
notice of insufficient deposit to provide for a properly noticed
redemption or liquidation as soon as reasonably practicable, but in no event,
later than two Business Days after discovery of insufficient deposits, to the
extent such information is publicly available;
(v)
notice of any failure to comply with (A) a provision of the Rating
Agency Guidelines when failure continues for more than five consecutive
Business Days or (B) the Minimum Asset Coverage that continues for more than
five consecutive Business Days as soon as reasonably practicable after
discovery of such failure, but in no event, later than one Business Day after
the later of (x) the expiration of the grace period or (y) the earlier of (1)
the discovery of such failure and (2) information confirming such failure
becomes publicly available;
(vi)
notice of any change to any investment adviser or sub-adviser of the
Trust within two Business Days after a resignation or a notice of removal has
been received from or sent to any investment adviser or sub-adviser; provided,
however, that this clause shall not apply to personnel changes of the
investment adviser or sub-adviser, to the extent such information is publicly
available;
(vii)
notice of any proxy solicitation as soon as reasonably practicable, but
in no event, later than five Business Days after mailing thereof by the Trust’s
proxy agent;
(viii)
notice one Business Day after the occurrence thereof of (A) the failure
of the Trust to pay the amount due on any senior securities or other debt at
the time outstanding, and any period of grace or cure with respect thereto
shall have expired; (B) the failure of the Trust to pay, or admitting in
writing its inability to pay, its debts generally as they become due; or (C)
the failure of the Trust to pay accumulated dividends on any additional
preferred shares of beneficial interest in the Trust ranking pari passu
with the VMTP Preferred Shares, and any period of grace or cure with respect
thereto shall have expired, in each case, to the extent such information is
publicly available;
(ix)
notice of the occurrence of any Increased Rate Event and any subsequent
cure thereof as soon as reasonably practicable, but in no event, later than
five days after knowledge of senior
management of the
Trust thereof; provided that the Trust shall not be required to disclose the
reason for such Increased Rate Event unless such information is otherwise
publicly available;
(x)
notice of any action, suit, proceeding or investigation formally
commenced or threatened in writing against the Trust or the Investment Adviser
in any court or before any governmental authority concerning this Statement of
Preferences, the Charter, the VMTP Preferred Shares or any Related Document, as
promptly as practicable, but in no event, later than 10 Business Days after
knowledge of senior management of the Trust thereof, in each case, to the
extent such information is publicly available;
(xi)
notice on each Friday, provided that if a Friday is not a Business Day,
notice shall be given on the next succeeding Business Day, of the Trust’s then
current Effective Leverage Ratio, Minimum Asset Coverage and balances in the
Term Redemption Liquidity Account as of the close of business on the
immediately preceding Business Day which delivery may be made by means of
posting on a publicly available section of the Trust’s website;
(xii)
a report of portfolio holdings of the Trust as of the end of each month
15 days after the end of each month; and
(xiii)
when available, publicly available financial statements of the Trust’s
most recent fiscal year-end and the auditors’ report with respect thereto,
which shall present fairly, in all material respects, the financial position of
the Trust at such date and for such period, in conformity with accounting
principles generally accepted in the United States of America.
The Trust shall require the Investment Adviser to inform
the Trust as soon as reasonably practicable after the Investment Adviser’s
knowledge or discovery of the occurrence of any of the items set forth in
Sections 13(i)(ix) and 13(i)(x) of this Statement of Preferences.
(l)
Tax Status of the Trust. The Trust will use its best efforts to
qualify as a Regulated Investment Company within the meaning of Section 851(a)
of the Code and to qualify the dividends made with respect to the VMTP
Preferred Shares as tax-exempt dividends to the extent designated by the Trust.
(m)
Maintenance of Existence. At any time the VMTP Preferred Shares
are outstanding, the Trust shall use its best efforts to maintain its existence
as a Delaware statutory trust under the laws of the State of Delaware, with
requisite power to issue the VMTP Preferred Shares and to perform its
obligations under this Statement of Preferences and each other Related Document
to which it is a party.
(n)
Use of Proceeds. The Trust shall use the gross proceeds from the
sale of VMTP Preferred Shares to the Purchaser pursuant to the Purchase
Agreement to redeem the Trust’s outstanding Series W-7 Variable Rate Muni Term
Preferred Shares as set forth in this Section 13(n). The Trust shall give a
notice of redemption of the fund’s outstanding Series W-7 Variable Rate Muni
Term Preferred Shares on or prior to the Closing Date, for redemption of the
outstanding Series W-7 Variable Rate Muni Term Preferred Shares at the earliest
practicable date pursuant to the governing documents of the Trust’s outstanding
Series W-7 Variable Rate Muni Term Preferred Shares, which date is not to be
greater than 60 days from the Closing Date. If the foregoing requirements of
the prior sentence are not complied with the Trust shall redeem, out of funds
legally available
therefor under Applicable Law
and otherwise in accordance with Applicable Law, the VMTP Preferred Shares as
promptly as possible.
(o)
Compliance with Law. At any time the VMTP Preferred Shares are
outstanding, the Trust shall use commercially reasonable best efforts to comply
with all laws, ordinances, orders, rules and regulations that are applicable to
it if the failure to comply should reasonably be expected to have a material
adverse effect on the Trust’s ability to comply with its obligations under this
Statement of Preferences, any of the VMTP Preferred Shares, and the other
Related Documents to which it is a party.
(p)
Maintenance of Approvals; Filings, Etc. At any time the VMTP
Preferred Shares are outstanding, the Trust shall at all times use commercially
reasonable best efforts to maintain in effect, renew and comply with all the
terms and conditions of all consents, filings, licenses, approvals and authorizations
as are required under any Applicable Law for its performance of its obligations
under this Statement of Preferences and the other Related Documents to which it
is a party, except those as to which the failure to do so should not reasonably
be expected to have a material adverse effect on the Trust’s ability to comply
with its obligations under this Statement of Preferences, the VMTP Preferred
Shares, and the other Related Documents to which it is a party.
(q)
1940 Act Registration. At any time the VMTP Preferred Shares are
outstanding, the Trust shall use best efforts to maintain its registration as a
closed-end management investment company under the 1940 Act.
(r)
Compliance with Eligible Assets Definition. At any time the VMTP
Preferred Shares are outstanding, the Trust shall maintain policies and
procedures that it believes are reasonably designed to ensure compliance with
Section 6(c) of this Statement of Preferences.
(s)
Access to Information Relating to Compliance with Eligible Assets
Definition. The Trust shall, upon request, provide a Beneficial Owner and
such of its internal and external auditors and inspectors as a Beneficial Owner
may from time to time designate, with reasonable access to publicly available
information and records of the Trust relevant to the Trust’s compliance with
Section 6(c) of this Statement of Preferences, but only for the purposes of
internal and external audit.
(t)
Purchase by Affiliates. The Trust shall not, nor shall it permit,
or cause to be permitted, the Investment Adviser, or any account or entity over
which the Trust or the Investment Adviser exercises discretionary authority or
control or any of their respective affiliates (other than by the Trust, in the
case of a redemption permitted by this Statement of Preferences, the VMTP
Preferred Shares which are subject to such redemption, are to be cancelled by
the Trust upon such redemption), to purchase in the aggregate more than 25% of
the Outstanding VMTP Preferred Shares without the prior written consent of a
Majority of the Holders of the VMTP Preferred Shares Outstanding, and any such
purchases shall be void ab initio.
(u)
Audits. The audits of the Trust’s financial statements shall be
conducted in accordance with the standards of the Public Company Accounting
Oversight Board (United States).
(v)
Applicable State Law for Trusts. For purposes of the section
entitled “Designation” contained in this Statement of Preferences and of
all of the provisions in this Statement of Preferences relating to any payment
of dividends, purchase or redemption of shares, and payment and distribution to
shareholders upon dissolution of the Trust on or in respect of the VMTP
Preferred Shares, including, without limitation, the definition of Increased
Rate Event and Sections 2, 3, 10, 11 and 13(j) of this Statement of
Preferences, Applicable Law shall include sections 151, 160, 170, 173 and 281
of the Delaware General Corporation Law, including any successor provisions, as
if the Trust were a Delaware corporation subject to the Delaware General
Corporation Law and the VMTP Preferred Shares were shares of a Delaware
corporation subject to the Delaware General Corporation Law. Accordingly, and
without limiting the scope of the preceding sentence, any payment of dividends,
purchase or redemption of shares, and payment and distribution to shareholders
upon dissolution of the Trust on or in respect of the VMTP Preferred Shares,
including, without limitation, pursuant to Sections 2, 3, 10, and 11 of this
Statement Preferences, shall be subject to the restrictions and limitations of
sections 151, 160, 170, 173 and 281 of the Delaware General Corporation Law,
including any successor provisions, as if the Trust were a Delaware corporation
subject to the Delaware General Corporation Law.
14.
Global Certificate.
Prior to the commencement of a Voting Period, (i) all of
the VMTP Preferred Shares Outstanding from time to time shall be represented by
one or more global certificates registered in the name of the Securities
Depository or its nominee and countersigned by the Redemption and Paying Agent
and (ii) no registration of transfer of VMTP Preferred Shares shall be made on
the books of the Trust to any Person other than the Securities Depository or
its nominee.
The foregoing restriction on registration of transfer
shall be conspicuously noted on the face or back of the certificates of VMTP
Preferred Shares in such a manner as to comply with the requirements of Section
8-204 of the Uniform Commercial Code as in effect in the State of Delaware, or
any successor provisions.
IN WITNESS WHEREOF, BlackRock
Municipal Income Trust has caused these presents to be signed as of December
20, 2023 in its name and on its behalf by its Vice President and attested by
its Assistant Secretary. Said officers of the Trust have executed this
Statement as officers and not individually, and the obligations and rights set
forth in this Statement are not binding upon any such officers, or the trustees
or shareholders of the Trust, individually, but are binding only upon the
assets and property of the Trust.
BLACKROCK MUNICIPAL INCOME TRUST
By: /s/ Jonathan
Diorio
Name: Jonathan Diorio
Title: Vice President
ATTEST:
/s/Janey Ahn
Name: Janey Ahn
Title: Secretary
Appendix A
ELIGIBLE ASSETS
On the Date of Original
Issue and at all
times thereafter that the VMTP Preferred Shares
are Outstanding:
1.
“Eligible Assets” are defined
to consist only of assets
that conform to the following requirements as of the time of
investment:
A.
Debt obligations. The following debt obligations which are not in payment default at the time of investment:
i.
“Municipal securities,” defined as obligations of a State, the
District of Columbia, a U.S. territory, or a political subdivision thereof
and including general obligations, limited obligation bonds, revenue
bonds, and obligations that satisfy the requirements of section 142(b)(1) of
the Internal Revenue Code of 1986
issued by or on behalf of any State, the District of Columbia, any U.S.
territory or any political subdivision thereof, including any municipal
corporate instrumentality of 1 or more States, or any public agency or
authority of any State, the District of Columbia, any U.S. territory or any
political subdivision thereof. The
purchase of any municipal security will be based upon the Investment Adviser’s
assessment of an asset’s relative
value in terms of current yield, price, credit quality, and future prospects; and the Investment Adviser will monitor the
creditworthiness of the Trust’s portfolio investments and analyze economic,
political and demographic trends affecting the markets for such assets.
ii.
Debt obligations of the United
States.
iii.
Debt obligations issued, insured, or guaranteed by a department
or an agency of the U.S. Government, if the obligation, insurance, or guarantee
commits the full faith and credit of the United States for the repayment of the
obligation.
iv.
Debt obligations of the Washington Metropolitan Area Transit
Authority guaranteed by the Secretary of Transportation under Section 9 of the
National Capital Transportation Act of 1969.
v.
Debt obligations of the Federal
Home Loan Banks.
vi.
Debt obligations, participations or other instruments of or
issued by the Federal National Mortgage Association or the Government National
Mortgage Association.
vii.
Debt obligations which are or ever have been sold by the Federal
Home Loan Mortgage Corporation pursuant to sections 305
or 306 of the Federal Home Loan Mortgage Corporation Act.
viii.
Debt obligations of any agency named in 12 U.S.C. § 24(Seventh)
as eligible to issue obligations that a national bank may underwrite, deal in,
purchase and sell for the bank’s own account, including qualified Canadian government obligations.
ix.
Debt obligations of issuers other than those specified in (i)
through (viii) above that are rated in one of
the three highest rating categories by two or more NRSROs, or by one
NRSRO if the security has been rated by only one NRSRO, and which have been
determined by the Trust, based on the Trust’s internal credit due diligence, to
be securities where the issuer has adequate capacity to meet financial
commitments under the security for the
projected life of the security such that the lack of default on the security such that
the risk of default on the security is low, and the full and timely repayment of principal and
interest is expected, and that are “marketable”. For these purposes, an obligation is “marketable” if:
•
it is registered under the Securities Act;
•
it is offered and sold pursuant
to Securities and Exchange
Commission Rule 144A; 17 CFR 230.144A; or
•
it can be sold with reasonable
promptness at a price that corresponds reasonably to its fair value.
x.
Certificates or other securities evidencing ownership interests
in a municipal bond trust structure (generally referred to as a tender option
bond structure) that invests in (a) debt obligations of the types described
in
(i) above or (b) depository
receipts reflecting ownership interests in accounts holding debt obligations of
the types described in (i) above.
An asset shall not fail to qualify as an Eligible
Asset solely by virtue of the fact that:
•
it provides for repayment of principal and interest in any form
including fixed and floating rate, zero interest, capital appreciation,
discount, leases, and payment in kind; or
•
it is for long-term or short-term financing purposes.
B.
Derivatives
i.
Interest rate derivatives; or
ii.
Swaps, credit default swaps, futures, forwards, structured notes,
options and swaptions related to Eligible Assets or on an index related to
Eligible Assets.
C.
Other Assets
i.
(A) Shares of other investment companies registered under Section
8 of the Investment Company Act of
1940 (open- or closed-end funds and ETFs) the assets of which consist entirely
of Eligible Assets based on the Investment Adviser’s assessment of the assets
of each such investment company taking into account the investment company’s
most recent publicly available schedule of investments and publicly disclosed
investment policies.
(B) Notwithstanding Paragraph C.i.(A)
above, the Trust shall be permitted,
subject to Applicable Law, to invest up to five percent (5%) of the Trust’s
Managed Assets as of the time of investment in securities issued by a money-market fund (each, an “Eligible
Money-Market Fund”) that is (a) registered under the Investment Company Act of
1940, and (b) affiliated with the Investment Adviser; provided that if the
Investment Advisor represents that the Eligible Money-Market Fund meets the
requirements of Paragraph C.i.(A) above, the amount of such Managed Assets
invested in any such Eligible Money-Market Fund meeting the requirements of
Paragraph C.i.(A) above shall be excluded from the foregoing five percent (5%)
limitation.
ii.
Cash.
iii.
Repurchase agreements on assets described in A above.
iv.
Taxable fixed-income securities issued by an issuer described in Paragraph
1(A) (a “Permitted Issuer”) that are not in default at the time of acquisition, acquired for the purpose of
influencing control over such Permitted Issuer or creditor group of municipal
bonds of such Permitted Issuer (a) the Trust already owns and (b) which have
deteriorated or are expected shortly to deteriorate, with the expectation that
such investment should enable the Trust to better maximize the value of its
existing investment in such issuer, provided that the taxable fixed-income securities of such issuer so acquired do
not constitute more than 0.5% of the Trust’s Managed Assets as of the time of
investment.
2.
The Trust has instituted policies and procedures that it believes are
sufficient to ensure that the Trust comply with the representations, warranties
and covenants contained in this Appendix A to the Statement of Preferences.
3.
The Trust will, upon request, provide DNT Asset Trust and its internal
and external auditors and inspectors as DNT Asset Trust may from time to time
designate, with all reasonable assistance and access to information and records
of the Trust relevant to the Trust’s compliance with and performance of the
representations, warranties and covenants contained in this Appendix A to the Statement
of Preferences, but only for the purposes of internal and external audit.
BLACKROCK MUNICIPAL INCOME TRUST
AMENDMENT
TO
STATEMENT
OF PREFERENCES OF
VARIABLE
RATE MUNI TERM PREFERRED SHARES (“VMTP SHARES”)
DATED
DECEMBER 15, 2011
(THE
“STATEMENT OF PREFERENCES”)
The undersigned officer
of BlackRock Municipal
Income Trust (the “Trust”), a Delaware
statutory trust, hereby certifies as follows:
1.
The Board of Trustees of the Trust
(with the consent of the Holders (as defined in the Statement of Preferences)
of the VMTP Shares required under Section 5 of the Statement of Preferences)
has adopted resolutions to amend the Statement of Preferences as follows:
from time to time.
The Statement of Preferences of the Trust is hereby
amended by deleting Section 10(g) in its entirety and replacing it with the
following as of December 6, 2023:
(g) Shares for Which Notice of Redemption Has
Been Given Are No Longer Outstanding. Provided a Notice of Redemption has
been provided pursuant to paragraph (c) of this Section 10, the Trust shall
irrevocably (except to the extent set forth below in this paragraph (g))
deposit with the Redemption and Paying Agent, no later than the Redemption Date
specified in such notice, Deposit Securities in an aggregate amount equal to
the Redemption Price to be paid on the Redemption Date in respect of any VMTP
Preferred Shares that are subject to such Notice of Redemption. Provided a
Notice of Redemption has been provided pursuant to paragraph (c) of this
Section 10, upon the deposit with the Redemption and Paying Agent of Deposit
Securities in an amount sufficient to redeem the VMTP Preferred Shares that are
the subject of such notice, dividends on such VMTP Preferred Shares shall cease
to accumulate as of the Redemption Date and such VMTP Preferred Shares shall no
longer be deemed to be Outstanding for any purpose, and all rights of the
Holders of the VMTP Preferred Shares so called for redemption shall cease and
terminate, except the right of such Holders to receive the Redemption Price,
but without any interest or other additional amount, except as provided in
paragraph (e)(i) of Section 2 and in Section 3 of this Statement of
Preferences. Upon surrender in accordance with the Notice of Redemption of the
certificates for any VMTP Preferred Shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Trustees shall so require and the Notice
of Redemption shall so state), the Redemption Price shall be paid by the
Redemption and Paying Agent to the Holders of VMTP Preferred Shares subject to
redemption. In the case that fewer than all of the shares represented by any
such certificate are redeemed, a new certificate shall be issued, representing
the unredeemed shares, without cost to the Holder thereof. The Trust shall be
entitled to receive from the Redemption and Paying Agent, promptly after the
date fixed for redemption, any cash or other Deposit Securities deposited with
the Redemption and Paying Agent in excess of (i) the aggregate Redemption Price
of the VMTP Preferred Shares called for redemption on such date and (ii) all
other amounts to which Holders of VMTP Preferred Shares called for redemption
may be entitled pursuant to this Statement of Preferences. Any funds so
deposited that are unclaimed at the end of 90 days from
such Redemption Date shall, to the extent permitted by law, be repaid to the
Trust, after which time the Holders of VMTP Preferred Shares so called for
redemption may look only to the Trust for payment of the Redemption Price and
all other amounts to which they may be entitled pursuant to this Statement of
Preferences. The Trust shall be entitled to receive, from time to time after
the date fixed for redemption, any interest on the funds so deposited.
2.
Except as amended hereby, the
Statement of Preferences remains in full force and effect.
3.
An original copy of this
amendment shall be lodged with the records of the Trust and filed in such
places as the Trustees deem appropriate.
[Signature
Page Follows]
IN WITNESS WHEREOF, BlackRock Municipal Income Trust has caused these
presents to be signed as of December 4, 2023 in its name and on its behalf by
its Vice President and attested by its Secretary. Said officers of the Trust
have executed this amendment as officers and not individually, and the
obligations and rights set forth in this amendment are not binding upon any
such officers, or the trustees or shareholders of the Trust, individually, but
are binding only upon the assets and property of the Trust.
BLACKROCK MUNICIPAL INCOME TRUST
By:
/s/Jonathan Diorio
Name: Jonathan
Diorio
Title: Vice President
ATTEST:
By: /s/Janey Ahn
Name: Janey Ahn
Title: Secretary
[Signature Page – BFK Amendment
to Statement of Preferences]
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