SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-12
BOULDER TOTAL RETURN FUND, INC.
(Name of Registrant as Specified In Its Charter)
Stephen C. Miller, Esq.
1680 38th Street, Suite 800
Boulder, Colorado 80301
(303) 442-2156
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transactions
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identity the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[GRAPHIC OMITTED] BOULDER TOTAL RETURN FUND, INC.
1680 38TH STREET, SUITE 800
BOULDER, COLORADO 80301
March 27, 2006
Dear Fellow Stockholder,
You are cordially invited to attend the 2006 Annual Meeting of Stockholders
of Boulder Total Return Fund, Inc., a Maryland corporation (the "Fund"), which
will be held on April 24, 2006 at 9:00 a.m. Mountain Standard Time (local time),
at the Scottsdale Plaza Resort, 7200 North Scottsdale Road, Scottsdale, Arizona.
Details of the business to be presented at the meeting can be found in the
accompanying Notice of Annual Meeting and Proxy Statement.
There are two non-routine proposals contained in this Proxy. The first is a
proposal to amend the charter of the Fund (the "Charter") to facilitate a rating
upgrade of the Fund's taxable auction market preferred stock (the "AMPS").
Presently, the Fund is leveraged with $77.5 million in AMPS. The AMPS are
auctioned every 28 days, at which time a new interest rate is set and assigned
to them. Presently the AMPS are rated by two national credit rating
organizations, Moody's Investors Services, Inc. ("Moody's") and Standard &
Poor's ("S&P"). The ratings are presently "Aa1"(Moody's) and "AA" (S&P). In
connection with this proposal, these ratings will be upgraded to "Aaa" and "AAA"
respectively. Since auction interest rates are typically lower for AMPS and
other financial instruments that have higher/better credit ratings, the Fund
anticipates that the upgraded AMPS will receive a better auction interest rate
for the Fund and thus could reduce the expenses associated with the Fund's
leverage. Passage of the proposal will require approval by the holders of a
majority of the AMPS and a majority of the common stock voting together as a
single class, and a majority of the AMPS voting as a separate class. Upgrading
the ratings as described above is not conditioned on the passage of this
proposal as the Fund has other avenues it can pursue to upgrade the ratings
without amending the Charter.
The second non-routine proposal is a housecleaning item that resolves a
conflict between a provision in the Fund's charter that establishes the size of
the Board of Directors at five, and a provision in the terms of the AMPS that
requires an increase in the size of the Board when the AMPS dividends are in
arrears for a period of two years. Under the proposal, the charter provision
would be made subject to the provision in the terms of the AMPS.
As Chairman of the Board, I encourage you to support each of the proposals.
After careful review by those Directors who are not "interested persons" as
defined in the Investment Company Act of 1940 (the "Independent Directors"), the
Board of Directors unanimously approved and has recommended to stockholders that
they approve each of the proposals.
We hope you plan to attend the meeting. Your vote is important. Whether or
not you are able to attend, it is important that your shares be represented at
the Meeting. At your earliest convenience, we ask that you please complete,
sign, date and return the enclosed Proxy Card or authorize proxies via telephone
or the Internet to cast your vote at the meeting.
On behalf of the Board of Directors and the management of the Fund, I
extend our appreciation for your continued support.
Sincerely,
/s/ Richard I. Barr
Richard I. Barr
Chairman of the Board
[GRAPHIC OMITTED] BOULDER TOTAL RETURN FUND, INC.
1680 38TH STREET, SUITE 800
BOULDER, COLORADO 80301
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 24, 2006
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of Boulder
Total Return Fund, Inc., a Maryland corporation (the "Fund"), will be held at
the Scottsdale Plaza Resort, 7200 North Scottsdale Road, Scottsdale, Arizona at
9:00 a.m. Mountain Standard Time (local time), on April 24, 2006, to consider
and vote on the following Proposals, all of which are more fully described in
the accompanying Proxy Statement:
1. The election of Directors of the Fund (Proposal 1).
2. Amendments to the charter of the Fund which will repeal in their
entirety all of the currently existing terms of the Fund's taxable
auction market preferred stock and substitute in lieu thereof the new
terms set forth in the Form of Articles of Amendment attached to the
accompanying Proxy Statement as Exhibit A (Proposal 2).
3. An amendment to the charter of the Fund to provide that the number of
directors of the Fund shall be five, subject to the provisions of any
class or series of Preferred Stock (Proposal 3).
4. To transact such other business as may properly come before the
Meeting or any adjournments and postponements thereof.
The Board of Directors of the Fund has fixed the close of business on March
22, 2006 as the record date for the determination of stockholders of the Fund
entitled to notice of and to vote at the Annual Meeting and any postponements or
adjournments thereof. This Proxy Statement, Notice of Annual Meeting and proxy
card are first being mailed to stockholders on or about March 27, 2006.
By Order of the Board of Directors,
/s/ Stephanie Kelley
STEPHANIE KELLEY
Secretary
March 27, 2006
--------------------------------------------------------------------------------
STOCKHOLDERS ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD OR
AUTHORIZE PROXIES VIA TELEPHONE OR THE INTERNET. THE PROXY CARD SHOULD BE
RETURNED IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH ON
THE INSIDE COVER.
--------------------------------------------------------------------------------
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and may avoid the time and expense to the Fund involved in
validating your vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp., c/o John Doe Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
Trust Accounts
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee, u/t/d 12/28/78 Jane B. Doe
Custodian or Estate Accounts
(1) John B. Smith, Cust., John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith John B. Smith, Jr., Executor
[GRAPHIC OMITTED] BOULDER TOTAL RETURN FUND, INC.
1680 38TH STREET, SUITE 800
BOULDER, COLORADO 80301
QUESTIONS & ANSWERS REGARDING THE MEETING AND PROPOSALS
Question 1: What is the purpose of the Annual Meeting?
Answer: At the Meeting, stockholders will be asked to vote on the election of
directors as well as the approval of amendments to the charter of the Fund which
will repeal in their entirety all of the currently existing terms of the Fund's
taxable auction market preferred stock (the "AMPS") and substitute in lieu
thereof the new terms set forth in the Form of Articles of Amendment attached to
the accompanying Proxy Statement as Exhibit A.
Question 2: Who is being nominated for election at the Meeting?
Answer: The Board has nominated the following five Directors, each to serve a
one-year term until the annual meeting in 2007 and until their successors are
duly elected and qualify: Richard I. Barr, Joel W. Looney, Dr. Dean L. Jacobson,
Susan L. Ciciora, and Dennis R. Causier. The holders of Common Stock will elect
three of the five directors standing for election and the holders of the AMPS
will elect the remaining two directors. Mr. Barr and Ms. Ciciora are being
nominated to represent the interests of the holders of the AMPS.
Question 3: Why is the Board recommending Proposal No. 2
Answer: If adopted, Proposal No. 2 would amend and restate the terms of the AMPS
to facilitate a rating upgrade of the AMPS. Presently, the Fund is leveraged
with $77.5 million of AMPS. The AMPS are auctioned every 28 days, at which time
a new interest rate is set and assigned to them. Presently the AMPS are rated by
two national credit rating organizations, Moody's Investors Services, Inc.
("Moody's") and Standard & Poor's ("S&P"). The ratings are presently
"Aa1"(Moody's) and "AA" (S&P). In connection with this proposal, these ratings
are expected to be upgraded to "Aaa" and "AAA" respectively. Since auction
interest rates are typically lower for AMPS and other financial instruments that
have higher/better credit ratings, the Fund anticipates that the upgraded AMPS
will receive a better auction interest rate for the Fund and thus could reduce
the expenses associated with the Fund's leverage. Upgrading the ratings as
described above is not conditioned on the passage of Proposal No. 2, as the Fund
has other avenues it can pursue to upgrade the ratings without amending the
Fund's charter. Passage of the proposal will require approval by the holders of
a majority of the AMPS and a majority of the common stock voting together as a
single class, and a majority of the AMPS voting as a separate class.
Question 4: How do the Horejsi Affiliates (as defined below at Page 2) intend to
vote on Proposal No. 2?
Answer: The Horejsi Affiliates intend to vote in favor of the proposals.
Question 5: How does the Board recommend that stockholders vote on the various
proposals?
Answer: If no instructions are indicated on your proxy, the representatives
holding proxies will vote in accordance with the recommendations of the Board.
The Board, including all of the non-interested Directors, has unanimously
recommended that stockholders vote FOR all of the Proposals.
Question 6: Who is entitled to vote?
Answer: Stockholders of record at the close of business on March 22, 2006 (the
"Record Date") are entitled to notice of and to vote at the Meeting and any
postponements or adjournments thereof. Each of the shares outstanding on the
Record Date is entitled to one vote on each of the Proposals.
Question 7: What is the required quorum for the Meeting?
Answer: The holders of at least a majority of the outstanding shares of stock
(without regard to class) of the Fund must be represented at the Meeting, either
in person or by proxy, in order to constitute a quorum permitting business to be
conducted at the Meeting. If you have completed, executed and returned valid
proxies (in writing, by phone or by Internet) or attend the Meeting and vote in
person, your shares will be counted for purposes of determining whether there is
a quorum, even if you abstain from voting on any or all matters introduced at
the Meeting.
Question 8: How do I vote?
Answer: Your vote is very important. Stockholders can vote in person at the
Meeting or authorize proxies to cast their votes ("proxy voting") by proxy. Most
stockholders will have a choice of proxy voting over the Internet at
http://www.proxyvote.com, by using a toll-free telephone number or by completing
and signing a Proxy Card and mailing it in the postage-paid envelope provided.
Please refer to your Proxy Card or the information forwarded by your bank,
broker or other nominee to see which options are available to you. If you proxy
vote by Internet or telephone, you do NOT need to return your Proxy Card. If you
vote by proxy, the individuals named on the Proxy Card as proxy holders will
vote your shares in accordance with your instructions. You may specify whether
your shares should be voted for all, some or none of the nominees for director
and whether your shares should be voted for or against the other proposals. If
you execute an otherwise valid proxy but do not provide voting instructions, the
persons named as proxies or their substitutes will cast your votes FOR all of
the Proposals.
Question 9: Can I revoke or change my proxy?
Answer: Yes. You may change or revoke your proxy at any time before the Meeting
by timely delivery of a properly executed, later-dated proxy (including an
Internet or phone proxy), by sending a written revocation to the Secretary of
the Fund at the Fund's address listed on the accompanying Notice of Meeting, or
by attending and voting in person at the Meeting. The powers of the proxy
holders will be suspended with respect to your shares if you attend the meeting
in person and revoke your proxy, but attendance at the Meeting will not by
itself revoke a previously granted proxy.
[GRAPHIC OMITTED] BOULDER TOTAL RETURN FUND, INC.
1680 38TH STREET, SUITE 800
BOULDER, COLORADO 80301
ANNUAL MEETING OF STOCKHOLDERS
April 24, 2006
PROXY STATEMENT
This proxy statement ("Proxy Statement") for Boulder Total Return Fund,
Inc., a Maryland corporation ("BTF" or the "Fund"), is furnished in connection
with the solicitation of proxies by the Fund's Board of Directors (collectively,
the "Board" and individually, the "Directors") for use at the Annual Meeting of
Stockholders of the Fund to be held on Monday, April 24, 2006, at 9:00 a.m.
Mountain Standard Time (local time), at the Scottsdale Plaza Resort, 7200 N.
Scottsdale Drive, Scottsdale, Arizona, and at any adjournments and postponements
thereof (the "Meeting"). A Notice of Annual Meeting of Stockholders and proxy
card accompany this Proxy Statement. Proxy solicitations will be made, beginning
on or about March 27, 2006, primarily by mail, but proxy solicitations may also
be made by telephone, by Internet on the Fund's website, telegraph or personal
interviews conducted by officers of the Fund and PFPC Inc., the transfer agent
of the Fund. Any cost of proxy solicitation and expenses incurred in connection
with the preparation of this Proxy Statement and its enclosures will be paid by
the Fund. The Fund also will reimburse brokerage firms and others for their
expenses in forwarding solicitation material to the beneficial owners of its
shares. The Board has fixed the close of business on March 22, 2006 as the
record date (the "Record Date") for the determination of stockholders entitled
to notice of and to vote at the Meeting and any postponements or adjournments
thereof.
The Annual Report of the Fund, including audited financial statements for
the fiscal year ended November 30, 2005, has been mailed to stockholders.
Additional copies are available upon request, without charge, by calling
1-800-331-1710. The report is also viewable online at the Fund's website at
www.boulderfunds.net. The report is not to be regarded as proxy solicitation
material.
Boulder Investment Advisers, L.L.C. ("BIA"), 1680 38th Street, Suite 800,
Boulder, Colorado 80301 and Stewart Investment Advisers ("SIA"), Bellerive,
Queen Street, St. Peter, Barbados, currently serve as co-investment advisers to
the Fund. BIA and SIA are collectively referred to herein as the "Advisers".
Fund Administrative Services, L.L.C., serves as co-administrator to the Fund and
is located at 1680 38th Street, Suite 800, Boulder, Colorado 80301. Investors
Bank & Trust Company ("IBT") acts as the co-administrator to the Fund and is
located at 200 Clarendon Street, Boston, Massachusetts 02116. PFPC Inc. ("PFPC")
acts as the transfer agent to the Fund and is located at 4400 Computer Drive,
Westborough, Massachusetts 01581.
If the enclosed proxy is properly executed and returned by April 24, 2006
in time to be voted at the Meeting, the Shares (as defined below) represented
thereby will be voted in accordance with the instructions marked thereon. Unless
instructions to the contrary are marked thereon, a proxy will be voted FOR the
election of the nominees for Directors, FOR Proposals 2 and 3 and, in the
discretion of the proxy holder, on any other matters that may properly come
before the Meeting. Any stockholder who has given a proxy has the right to
revoke it at any time prior to its exercise either by attending the Meeting and
casting his or her votes in person or by submitting a letter of revocation or a
later-dated proxy to the Fund's Secretary at the above address prior to the date
of the Meeting.
A quorum of the Fund's stockholders is required for the conduct of business
at the Meeting. Under the Bylaws of the Fund, a quorum is constituted by the
presence in person or by proxy of the holders of a majority of the outstanding
shares (without regard to class) of the Fund as of the Record Date. In the event
that a quorum is not present at the Meeting, or in the event that a quorum is
present but sufficient votes to approve one or more proposals are not received,
the persons named as proxies may propose and vote for one or more adjournments
of the Meeting to permit further solicitation of proxies with respect to any
proposal that did not receive the votes necessary for its passage. With respect
to those proposals for which there is represented a sufficient number of votes
in favor, actions taken at the Meeting will be approved and implemented
irrespective of any adjournments with respect to any other proposals. Any such
adjournment will require the affirmative vote of a majority of votes cast on the
matter at the Meeting. If a quorum is present, the persons named as proxies will
vote those proxies which they are entitled to vote FOR any proposal in favor of
such an adjournment and will vote those proxies required to be voted AGAINST any
proposal against any such adjournment.
The Fund has two classes of stock: common stock, par value $0.01 per share (the
"Common Stock"), and preferred stock, par value $0.01 per share (the "Preferred
Stock"), 1,000 shares of which have been designated as AMPS (the Common Stock
and AMPS are collectively referred to herein as the "Shares"). On the Record
Date, the following number of Shares of the Fund were issued and outstanding:
Common Stock AMPs
Outstanding Outstanding
----------- -----------
12,338,660 775
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. The following table sets
forth certain information regarding the beneficial ownership of the Shares as of
the Record Date by each person who is known by the Fund to beneficially own 5%
or more of the Fund's outstanding Common Stock. To the Fund's knowledge, there
are no 5% or greater beneficial owners of the AMPS.
Name of Owner* Number of Shares Number of Shares Percentage
Directly Owned (1) Beneficially Owned (2) Beneficially Owned
------------------------------------------- ------------------------ -------------------------- ----------------------
Badlands Trust Company, LLC (1)(3) 0 5,382,982 43.63%
Stewart R. Horejsi Trust No. 2A (4) 0 5,382,982 43.63%
Ernest Horejsi Trust No. 1B (1) 3,413,138 3,413,138 27.66%
Lola Brown Trust No. 1B (1) 1,370,515 1,370,515 11.11%
Evergreen Atlantic LLC (1) 343,748 343,748 2.79%
Stewart West Indies Trust (1)(2) 104,627 255,876 2.07%
Susan L. Ciciora Trust (1)(2) 72,176 175,300 1.42%
John S. Horejsi Trust (1)(2) 53,080 104,642 0.85%
Evergreen Trust (1)(2) 25,698 63,510 0.51%
------------------------ -------------------------- ----------------------
Aggregate Shares Owned by Horejsi 5,382,982 5,382,982 43.63%
Affiliates (defined below) **
------------------------------------------- ------------------------ -------------------------- ----------------------
Alter Asset Management, Inc.*** 1,167,234 1,167,234 9.5%
* The address of Evergreen Atlantic LLC is 1680 38th Street, Suite 800,
Boulder, Colorado 80301. The address of each other listed owner is Badlands
Trust Company, LLC, c/o Ron Kukes, Alaska First Bank & Trust, 3301 C
Street, Suite 100, Anchorage, AK 99503.
** Aggregate number and percentage are less than the sum total of amounts
shown for each owner because the same shares may be deemed beneficially
owned by more than one party (see Footnotes 1 through 4 below).
*** As stated in a Schedule 13G Amendment No. 6 filed with the Securities and
Exchange Commission on February 13, 2006.
(1) Direct Ownership. Evergreen Atlantic, LLC ("EALLC"), The Evergreen Trust
(the "Evergreen Trust"), John S. Horejsi Trust ("John Trust"), Susan L.
Ciciora Trust ("Susan Trust"), Stewart West Indies Trust ("SWI Trust"), the
Lola Brown Trust No. 1B (the "Brown Trust"), the Ernest Horejsi Trust No.
1B (the "EH Trust"), Badlands Trust Company, LLC ("Badlands"), the Stewart
R. Horejsi Trust No. 2A (the "SRH Trust") and Stewart R. Horejsi are, as a
group, considered to be a "control person" of the Fund (as that term is
defined in Section 2(a)(9) of the 1940 Act). EALLC, the Evergreen Trust,
John Trust, Susan Trust, SWI Trust, the Brown Trust, the EH Trust and
Badlands (for the purposed of this Proxy are collectively the "Horejsi
Affiliates") directly own the shares indicated for such entity in the table
above, totaling 5,382,982 (43.63%). However, these entities and other
trusts or companies with interlocking management and/or common ownership
may be deemed to indirectly own additional Fund shares, which are included
in the table above.
(2) Indirect Ownership through EALLC. Numbers shown in the table include shares
held directly (see Footnote No. 1) and shares that may be deemed to be
beneficially owned indirectly through ownership of EALLC. The outstanding
membership interests in EALLC are owned by the Evergreen Trust, the Susan
Trust, the John Trust and the SWI Trust in the following percentages - 11%,
30%, 15% and 44%. The Trustees of the Evergreen Trust are Stephen C.
Miller, Larry Dunlap and Badlands. Badlands is the sole trustee for each of
the Susan Trust, the John Trust and the SWI Trust. Mr. Horejsi is not a
beneficiary under any of the foregoing trusts. Badlands has sole discretion
with respect to the Susan Trust, John Trust and SWI Trust while any action
by the Evergreen Trust requires a majority vote of the trustees.
Consequently, both the trusts and each trustee disclaim beneficial
ownership of shares owned by EALLC. Mr. Horejsi is the manager of EALLC.
(3) Ownership by Badlands. The number shown includes shares that may be deemed
to be beneficially owned indirectly by Badlands through direct or indirect
ownership by the Brown Trust, the EH Trust, EALLC, Evergreen Trust, the
Susan Trust, the John Trust and the SWI Trust. Badlands is the sole trustee
of the Susan Trust, the John Trust and the SWI Trust, which together with
the Evergreen Trust control EALLC (see Footnote No. 2), the other two
trustees of Evergreen Trust being Stephen C. Miller and Larry Dunlap.
Badlands, together with Larry Dunlap and Susan Ciciora (Mr. Horejsi's
daughter), is one of three trustees of both the Brown Trust and the EH
Trust.
Badlands is a limited liability company organized under the laws of Alaska
authorized to do business as a trust company, which is wholly owned by the
SRH Trust, an irrevocable trust organized by Mr. Stewart Horejsi for the
benefit of his issue. The Managers of Badlands are Larry Dunlap, Stephen C.
Miller, Laura Tatooles, Laura Rhodenbaugh and Ron Kukes. Badlands and its
managers disclaim beneficial ownership of shares owned directly by the
EALLC, the Evergreen Trust, the Susan Trust, the John Trust, the SWI Trust,
the Brown Trust and the EH Trust.
(4) Indirect Ownership by SRH Trust. The number shown in the table reflects
shares that may be deemed to be beneficially owned indirectly through the
SRH Trust's ownership of Badlands. The trustees of the SRH Trust are
Badlands, Laura Tatooles and Brian Sippy. Both the Trust and its trustees
disclaim beneficial ownership of shares beneficially owned directly or
indirectly by Badlands.
----------------------------
Information as to beneficial ownership in the previous paragraph has been
obtained from a representative of the beneficial owners; all other information
as to beneficial ownership is based on reports filed with the Securities and
Exchange Commission (the "SEC") by such beneficial owners.
As of the Record Date, Cede & Co., a nominee partnership of the Depository
Trust Company, held of record, but not beneficially, 12,285,303 shares or 99.57%
of Common Stock outstanding and 775 shares or 100% of AMPS outstanding.
As of the Record Date, the executive officers and directors of the Fund, as
a group, owned 5,416,378 shares of Common Stock (this amount includes the
aggregate shares of Common Stock owned by the Horejsi Affiliates set forth
above) and 0 shares of AMPS, representing 43.90% of Common Stock outstanding and
0% of AMPS.
In order that your Shares may be represented at the Meeting, you are
requested to vote on the following matters:
PROPOSAL 1
ELECTION OF DIRECTORS OF THE FUND
The Charter provides that all of the Directors stand for election each
year. The Board has nominated the following five Director nominees to stand for
election, each for a one-year term and until their successors are duly elected
and qualify: Richard I. Barr, Joel W. Looney, Dennis R. Causier, Susan L.
Ciciora and Dr. Dean L. Jacobson. Only the Common Stock holders are entitled to
vote on the election of Messrs. Looney, Causier and Jacobson and only the AMPS
holders are entitled to vote on the election of Mr. Barr and Ms. Ciciora. At a
regularly scheduled meeting of the Board of Directors held on January 26, 2006,
Alfred G. Aldridge, Jr. notified the Board that he would not stand for
re-election as a Director of the Fund and the Board (upon recommendation of the
Nominating Committee) nominated Dennis R. Causier to fill his upcoming vacancy.
The above nominees have consented to serve as Directors if elected at the
Meeting for the one-year term. If the designated nominees decline or otherwise
become unavailable for election, however, the proxy confers discretionary power
on the persons named therein to vote in favor of a substitute nominee or
nominees for the Board.
INFORMATION ABOUT DIRECTORS AND OFFICERS. Set forth in the following table
is information about the nominees for election to the Board of Directors:
--------------------------------- ------------------------ ------------------------------------------------ -----------------
Name, Address*, Age Position, Length of Principal Occupation(s) and Other Number of Funds
Term Served, and Term Directorships Held During the Past Five Years in Fund
of Office Complex+
Overseen by
Director
--------------------------------- ------------------------ ------------------------------------------------ -----------------
Independent Directors
Richard I. Barr Director of the Fund Retired. Manager, Advantage Sales and 3
Chairman since 1999. Chairman Marketing, Inc. (food brokerage), 1963-2001;
Age: 67 of the Board since Director, Boulder Growth & Income Fund, Inc.,
2003. Current Nominee since 2002; Director, First Financial Fund,
for a term to expire Inc., since 2001.
at the 2007 annual
meeting.
Joel W. Looney, Director of the Fund Partner, Financial Management Group, LLC 3
Age: 43 since 2001. Current (investment adviser), since July 1999; CFO,
Nominee for a term to Bethany College, 1995-1999; Director, Boulder
expire at the 2007 Growth & Income Fund, Inc., since 2002 and
annual meeting. Chairman of the Board since 2004; Director and
Chairman of the Board, First Financial Fund,
Inc., since 2003.
Dennis R. Causier** Current Nominee for a Retired. Managing Director and Chairman, P.S. 2
Age: 57 term to expire at the Group, PLC (engineering and construction),
2007 annual meeting. 1966-2001; Owner, Professional Yacht
Management Services (yacht management),
2002-present. Director, Boulder Growth &
Income Fund, Inc., since 2004; Director, First
Financial Fund, Inc., since 2004.
Dr. Dean L. Jacobson Director of the Fund Founder and President of Forensic Engineering, 2
Age: 67 since October 2004. Inc. (engineering investigations); since 1997,
Current Nominee for a Professor Emeritus at Arizona State
term to expire at the University; prior to 1997, Professor of
2007 annual meeting. Engineering at Arizona State University;
Director, First Financial Fund, Inc., since
2003.
--------------------------------- ------------------------ ------------------------------------------------ -----------------
Interested Director***
--------------------------------- ------------------------ ------------------------------------------------ -----------------
Susan L. Ciciora Director of the Fund Trustee of the Brown Trust and the EH Trust; 1
Age: 41 since 2001. Current Director of Horejsi Charitable Foundation,
nominee for a term to Inc. (private charitable foundation), since
expire at the 2007 1997; Director, Boulder Growth & Income Fund,
annual meeting. Inc., January 2002 to October 2004; Director,
First Financial Fund, Inc., since 2003.
* Unless otherwise specified, the Directors' respective addresses are c/o
Boulder Total Return Fund, Inc., 1680 38th Street, Suite 800, Boulder, Colorado
80301.
** Mr. Causier is a British citizen and a resident of Spain and substantially
all of his assets are located outside of the United States. As a result, it may
be difficult to realize claims in courts of the United States predicated upon
civil liabilities under federal securities laws of the United States. The Fund
has been advised that there is substantial doubt as to (i) the enforceability in
Spain of such civil remedies and criminal penalties as are afforded by the
federal securities laws of the United States, (ii) whether the Spanish courts
would enforce judgments of United States courts obtained in actions against Mr.
Causier predicated upon the civil liability provisions of the federal securities
laws, or (iii) whether Spanish courts would enforce, in an original action,
liabilities against Mr. Causier predicated solely on federal securities laws.
Mr. Causier has appointed the Secretary of the Fund (presently Stephanie Kelley
in Boulder, Colorado) as his agent for service of process in any legal action in
the United States, thus subjecting him to the jurisdiction of the United States
courts
*** Ms. Ciciora is an "interested person" as a result of the extent of her
beneficial ownership of Fund shares and by virtue of her indirect beneficial
ownership of BIA and FAS.
+ Includes the Fund, Boulder Growth & Income Fund, Inc. and First Financial
Fund, Inc.
----------------------------
From the late 1980's until January, 2001, Mr. Looney served, without
compensation, as one of three trustees of the Mildred Horejsi Trust, an
affiliate of the EH Trust.
The names of the executive officers of the Fund are listed in the table
below. Each officer was elected to office by the Board at a meeting held on
April 26, 2005. This table also shows certain additional information. Officers
are elected annually and each officer will hold such office until a successor
has been elected by the Board.
------------------------------ -------------------------- ----------------------------------------------------------
Position, Length of
Name, Address, Age Term Served, and Term of Principal Occupation(s) and Other Directorships held
Office During the Past Five Years
------------------------------ -------------------------- ----------------------------------------------------------
Stephen C. Miller President of the Fund President of and General Counsel for BIA since 1999;
1680 38th Street, since 1999 and Director Manager, Fund Administrative Services, LLC ("FAS") since
Suite 800 from 1999 through 1999; Vice President of SIA since 1999; Director and
Boulder, CO 80301 October 2004. Appointed President of Boulder Growth & Income Fund, Inc., since
Age: 53 annually. 2002 (resigned as Director in 2004); Director and
President of First Financial Fund, Inc. since 2003 (resigned
as Director and Chairman in 2004); President and General
Counsel, Horejsi, Inc. (liquidated in 1999); General Counsel,
Brown Welding Supply, LLC (sold in 1999); officer of various
other Horejsi Affiliates; Of Counsel, Krassa & Miller, LLC
since 1991.
Carl D. Johns Chief Financial Officer, Vice President and Treasurer of BIA and Assistant
1680 38th Street, Chief Accounting Manager of FAS, since April, 1999; Vice President, Chief
Suite 800 Officer, Vice President Financial Officer and Chief Accounting Officer, Boulder
Boulder, CO 80301 and Treasurer since Growth & Income Fund, Inc., since January 2002 and First
Age: 43 1999. Appointed Financial Fund, Inc., since August 2003.
annually.
Stephanie J. Kelley Secretary since 2000. Secretary, Boulder Growth & Income Fund, Inc., since
1680 38th Street, Appointed annually. January 2002 and First Financial Fund, Inc., since
Suite 800 August 2003; Assistant Secretary and Assistant Treasurer
Boulder, CO 80301 of various other entities affiliated with the Horejsi
Age: 49 family; employee of FAS since March 1999.
Nicole L. Murphey Assistant Secretary Assistant Secretary, Boulder Growth & Income Fund, Inc.
1680 38th Street, since 2000. Appointed since January 2002 and First Financial Fund, Inc. since
Suite 800 annually. August 2003; employee of FAS since July 1999.
Boulder, CO 80301
Age: 29
Set forth in the following table are the nominees for election to the Board
together with the dollar range of equity securities beneficially owned by each
Director as of the Record Date, as well as the aggregate dollar range of the
Fund's equity securities in all funds overseen in a family of investment
companies (i.e., other funds managed by BIA and SIA (collectively, the
"Advisers")).
OWNERSHIP OF THE FUND BY DIRECTORS
---------------------------------------------------------------------------------------------------------
-------------------------------------- -------------------------------- ---------------------------------
Independent Directors and Nominees Dollar Range of Equity Aggregate Dollar Range of
Securities in the Fund Equity Securities in All Funds
in the Family of Investment
Companies
-------------------------------------- -------------------------------- ---------------------------------
Richard I. Barr Over $100,000 Over $100,000
Joel W. Looney $50,001 to $100,000 Over $100,000
Dean L. Jacobson $10,001 to $50,000 $10,001 to $50,000
Dennis R. Causier $10,001 to $50,000 $50,001 to $100,000
Interested Directors and Nominees
-------------------------------------- -------------------------------- ---------------------------------
Susan L. Ciciora Over $100,000+ Over $100,000
+ 3,413,138, 343,748 and 1,370,515 Shares of the Fund are held by the EH Trust,
EALLC and the Lola Trust, respectively. Accordingly, Ms. Ciciora may be deemed
to have indirect beneficial ownership of such Shares. Ms. Ciciora disclaims all
such beneficial ownership. Ms. Ciciora directly owns 6,267 shares of the Fund.
---------------------------
None of the independent Directors or their family members owned
beneficially or of record any securities of the Advisers or any person directly
or indirectly controlling, controlled by, or under common control with the
Advisers.
DIRECTOR AND OFFICER COMPENSATION. The following table sets forth certain
information regarding the compensation of the Fund's Directors for the fiscal
year ended November 30, 2005. No persons (other than the independent Directors,
as set forth below) currently receive compensation from the Fund for acting as a
Director or officer. Directors and executive officers of the Fund do not receive
pension or retirement benefits from the Fund. Non-interested Directors receive
reimbursement for travel and other out of pocket expenses incurred in connection
with Board meetings.
Aggregate
Compensation
Name of Person and Position with the from the Fund Total Compensation from
Fund Paid to the Fund and Fund Complex
Directors Paid to Directors
----------------------------------------- ------------------- ----------------------------
Alfred G. Aldridge, Jr., Director $29,000 $54,000
(2 funds)
Richard I. Barr, Director and Chairman $33,000 $87,000
of the Board (3 funds)
Joel W. Looney, Director $32,000 $100,000
(3 funds)
Dr. Dean Jacobson, Director $29,000 $57,500
(2 funds)
Dennis R. Causier, Director Nominee $0 $53,500
(2 funds)
Susan L. Ciciora, Director $0 $0
Each Director of the Fund who was not a Director, officer or employee of
one of the Advisers, or any of their affiliates, receives a fee of $8,000 per
annum plus $4,000 for each in person meeting, $500 for each Audit Committee
meeting and $500 for each telephonic meeting of the Board. In addition, the
Chairman of the Board and the Chairman of the Audit Committee receives $1,000
per meeting. Each non-interested Director of the Fund is reimbursed for travel
and out-of-pocket expenses associated with attending Board and Committee
meetings. The Board held ten meetings (six of which were held by telephone
conference call) during the fiscal year ended November 30, 2005. Each Director
currently serving in such capacity for the entire fiscal year attended at least
75% of the meetings of Directors and any Committee of which he is a member.
Directors currently serving and who served less than the entire fiscal year
attended at least 75% of such meetings held during their tenure as a Director.
The aggregate remuneration paid to the Directors of the Fund for acting as such
during the fiscal year ended November 30, 2005 amounted to $123,000.
COMMITTEES OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE; REPORT OF AUDIT COMMITTEE. The purpose of the Audit
Committee is to assist Board oversight of the integrity of the Fund's financial
statements, the Fund's compliance with legal and regulatory requirements, the
independent auditor's qualifications and independence and the performance of the
Fund's independent auditors. The Audit Committee reviews the scope and results
of the Fund's annual audit with the Fund's independent accountants and
recommends the engagement of such accountants. Management, however, is
responsible for the preparation, presentation and integrity of the Fund's
financial statements, and the independent accountants are responsible for
planning and carrying out proper audits and reviews. The Board of Directors
adopted a written charter for the Audit Committee on January 23, 2002 and most
recently amended the Charter on January 23, 2004. A copy of the Audit Committee
Charter was attached as an appendix to the Fund's 2004 annual proxy statement.
The Audit Committee is composed entirely of the Fund's independent
Directors, consisting of Messrs. Aldridge, Barr, Jacobson and Looney. The Board
of Directors has determined that Joel Looney qualifies as an "audit committee
financial expert," as defined under the Securities and Exchange Commission's
Regulation S-K, Item 401(h). The Audit Committee is in compliance with
applicable rules of the listing requirements for closed-end fund audit
committees, including the requirement that all members of the audit committee be
"financially literate" and that at least one member of the audit committee have
"accounting or related financial management expertise," as determined by the
Board. The Audit Committee is required to conduct its operations in accordance
with applicable requirements of the Sarbanes-Oxley Act and the Public Company
Accounting Oversight Board, and the members of the Audit Committee are subject
to the fiduciary duty to exercise reasonable care in carrying out their duties.
Each member of the Audit Committee is independent, as that term is defined by
the NYSE Listing Standards. The Audit Committee met four times during the fiscal
year ended November 30, 2005.
In connection with the audited financial statements as of and for the
period ended November 30, 2005, included in the Fund's Annual Report for the
period ended November 30, 2005 (the "Annual Report"), at a meeting held on
January 26, 2006, the Audit Committee considered and discussed the audited
financial statements with management and the independent accountants, and
discussed the audit of such financial statements with the independent
accountants.
The Audit Committee has received the written disclosures and letter from
the independent accountants required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) and has discussed with
independent accountants their independence. The Audit Committee discussed with
the independent accountants the accounting principles applied by the Fund and
such other matters brought to the attention of the Audit Committee by the
independent accountants required by Statement of Auditing Standards No. 61,
Communications With Audit Committees, as currently modified or supplemented.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not employed by the Fund in any
accounting, financial management or internal control capacity. Moreover, the
Audit Committee relies on and makes no independent verification of the facts
presented to it or representations made by management or the independent
accountants. Accordingly, the Audit Committee's oversight does not provide an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles and policies, or internal controls
and procedures, designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions referred to above do not provide assurance that
the audit of the Fund's financial statements has been carried out in accordance
with generally accepted accounting standards or that the financial statements
are presented in accordance with generally accepted accounting principles.
Based on its consideration of the audited financial statements and the
discussions referred to above with management and the independent accountants
and subject to the limitation on the responsibilities and role of the Audit
Committee set forth in the charter and those discussed above, the Audit
Committee of the Fund recommended to the Board that the audited financial
statements be included in the Fund's Annual Report and be mailed to stockholders
and filed with the SEC.
Submitted by the Audit Committee of the Fund's Board of Directors:
Alfred G. Aldridge, Jr.
Richard I. Barr
Dean L. Jacobson
Joel W. Looney
NOMINATING COMMITTEE. The Board of Directors has a nominating committee
(the "Nominating Committee") consisting of Messrs. Looney, Jacobson, Aldridge
and Barr, which is responsible for considering candidates for election to the
Board in the event a position is vacated or created. Each member of the
Nominating Committee is independent, as that term is defined by the NYSE Listing
Standards. The Nominating Committee did not meet during the fiscal year ended
November 30, 2005. The Nominating Committee met on January 16, 2006 and again on
January 26, 2006, to consider the nomination of Dennis R. Causier. Dennis R.
Causier was being considered to fill a vacancy on the Board resulting from the
resignation of Alfred G. Aldridge, Jr. At this meeting, the Nominating Committee
considered the qualifications and determined the suitability of Dennis R.
Causier to be Director and resolved to recommend Dennis R. Causier to
stockholders for election at the 2006 Annual Meeting.
The Board of Directors has adopted a charter for the Nominating Committee that
is available on the Fund's website, www.boulderfunds.net. The Nominating
Committee does not have a formal process for identifying candidates. The
Nominating Committee takes into consideration such factors as it deems
appropriate when nominating candidates. These factors may include judgment,
skill, diversity, experience with investment companies and other organizations
of comparable purpose, complexity, size and subject to similar legal
restrictions and oversight, the interplay of the candidate's experience with the
experience of other Board members, and the extent to which the candidate would
be a desirable addition to the Board and any committees thereof. The Nominating
Committee will consider all qualified candidates in the same manner. The
Nominating Committee may modify its policies and procedures for director
nominees and recommendations in response to changes in the Fund's circumstances,
and as applicable legal or listing standards change.
The Nominating Committee would consider director candidates recommended by
stockholders (if a vacancy were to exist) and submitted in accordance with
applicable law and procedures as described in this Proxy Statement (see
"Submission of Stockholder Proposals" below). Such recommendations should be
forwarded to the Secretary of the Fund.
The Fund does not have a compensation committee.
OTHER BOARD-RELATED MATTERS
Stockholders who wish to send communications to the Board should send them
to the address of the Fund and to the attention of the Board. All such
communications will be directed to the Board's attention.
The Fund does not have a formal policy regarding Board member attendance at
the Annual Meeting of Stockholders; however, all of the Directors of the Fund,
who were Directors at the time, attended the April 26, 2005 Annual Meeting of
Stockholders.
Vote Required. The election of Messrs. Looney, Jacobson and Causier as
Directors of the Fund will require the affirmative vote of a plurality of the
votes cast by holders of the Common Stock at the Meeting in person or by proxy
on Proposal 1. The election of Mr. Barr and Ms. Ciciora as Directors of the Fund
will require the affirmative vote of a plurality of the votes cast by the
holders of the AMPS at the Meeting in person or by proxy on Proposal 1.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION OF ALL THE NOMINEES.
PROPOSAL 2
CHARTER AMENDMENTS RELATING TO THE TERMS OF THE AMPS
The second proposal to be considered at the Meeting is approval of amendments to
the charter of the Fund, which will repeal in their entirety all of the
currently existing terms of the Fund's taxable auction market preferred stock
(the "AMPS") and substitute in lieu thereof the new terms set forth in the
proposed Form of Articles of Amendment for the Fund described below and attached
to this Proxy Statement as Exhibit A (the "Amendments"). The Board proposes and
unanimously recommends that stockholders approve the Amendments.
Purpose of the Amendments. Presently, the Fund is leveraged with $77.5 million
of taxable auction market preferred stock. The AMPS are auctioned through a
Dutch auction process every 28 days at which time a new interest rate is set.
Presently the AMPS are rated by two national credit rating organizations,
Moody's Investors Services, Inc. ("Moody's") and Standard & Poor's ("S&P")
(Moody's and S&P are collectively referred to as the "Rating Agencies"). The
ratings are presently "Aa1" from Moody's and "AA" from S&P (the "Ratings").
Since auction market preferred rates are typically lower for auction market
preferred stocks that have higher/better credit ratings, the Fund anticipates
that, if upgraded, the AMPS will typically receive better auction interest rates
for the Fund, thus reducing the dividend expenses associated with the Fund's
leverage. Accordingly, management has recommended that the Ratings be upgraded
to "Aaa" and "AAA" respectively.
Because the conditions for upgrading the AMPS to "Aaa" and "AAA" rated
instruments are largely a factor of asset coverage, and because most of the
asset coverage definitions and calculations are set forth in the charter of the
Fund, including the current AMPS terms setting forth the terms of the AMPS (the
"Current AMPS Terms"), upgrading the AMPS will require extensive revisions to
the Current AMPS Terms. In addition to amending the coverage definitions and
calculation provisions of the Current AMPS Terms, management has recommended
that the Fund also amend the Current AMPS Terms to deal with market
interruptions resulting from force majeure events such as the 9-11 terrorist
attacks and the termination of AMPS-elected directors upon the Fund's complete
redemption of the AMPS. These last two provisions are commonplace in the
governing documents for recently issued auction market preferred stock. Finally,
the Current AMPS Terms are amended versions from an original that is almost 20
years old which were extensively revised in 2000 to deal with changing rating
agencies and changing from a dividend-received-deduction-eligible product to a
taxable product. Management believes that, since it must extensively amend the
Current AMPS Terms in any event in connection with upgrading the AMPS, the
Amendments will vastly simplify the Current AMPS Terms, eliminate ambiguities
and inconsistencies, and bring the Current AMPS Terms into conformity with
current rating agency and auction market preferred practices. Upgrading the
Ratings as described above is not conditioned on the passage of this Proposal as
the Fund has other avenues it can pursue to upgrade the Ratings without amending
the Current AMPS Terms.
At Board Meetings held in July and October of 2005 and January 2006, the Board
considered recommendations from management to upgrade the AMPS as discussed
above. At the January 2006 Board meeting, the Board approved a recommendation
from management to upgrade the Ratings and, in connection therewith, the
Amendments, subject to shareholder approval and subject to receipt of certain
confirmations from the Rating Agencies. The Board considered a number of factors
in its deliberations, including that (i) upgrading the AMPS from the current
"Aa1" and "AA" ratings to "Aaa" and "AAA" should reduce the Fund's relative cost
of leverage; (ii) extensive amendment of the Current AMPS Terms is necessary to
facilitate the upgrade of the AMPS in any event; (iii) the Amendments will
modernize the Current AMPS Terms and simplify and streamline the auction
procedures, coverage calculations and other testing and oversight procedures of
the Current AMPS Terms; (iv) the Amendments will not adversely affect the AMPS
or the contract rights of the AMPS nor will it impair the ratings by the Rating
Agencies, indeed it will enhance the ratings; (v) with respect to changes to
deal with force majeure events, the Amendments ensure that, if a terrorist
attack or other force majeure event were to occur, the AMPS auction can be
conducted pursuant to clear procedures set forth in the Amendments and without
detriment to the Fund or its holders of Common Stock; and (vi) with respect to
termination of the AMPS directors upon redemption of the AMPS, in the event of a
redemption in full of the AMPS, separate representatives for the AMPS would
serve no valid business purpose. Finally, the Board found that the Amendments
were consistent with current market practice for new issuances of auction market
preferred stock. Indeed, the Fund's sister fund, Boulder Growth & Income Fund,
Inc. recently issued "AAA" rated auction market preferred stock with
substantially the same terms as those proposed under this Proposal. Accordingly,
for the foregoing reasons, the Board found that the Amendments were in the best
interest of the Fund. The Fund has had conversations with both Rating Agencies
about the Amendments. The Rating Agencies have indicated preliminarily that the
changes would not impair their ratings on the AMPS. In any event, the Amendments
will not be implemented unless both Rating Agencies confirm that the Amendments
will not impair the Ratings.
The following Comparison Table summarizes the proposed Amendments to the Current
AMPS Terms. This summary is qualified in its entirety by reference to the
Amendments as set forth in the Form of Articles of Amendment attached to this
Proxy Statement as Exhibit A.
Comparison Table
Current AMPS Terms versus Amended AMPS Terms
Provision or Subject Current AMPS Terms Proposed Amended AMPS Terms
---------------------------- -------------------------------------------------- -------------------------------------------------
Determination and Payment The Fund's auctions are held every fourth There are no substantive changes.
of Dividends Tuesday and dividends for the preceding period
are paid on the Wednesday immediately following
each auction date. The dividend rate is set by
auction.
Auction Procedures There are no substantive changes.
Force Majeure Events The Current AMPS Terms do not provide for The Amendments contain provisions establishing
auction procedures in the event of a terrorist procedures to be followed in instances where an
attack or other force majeure event that affects AMPS auction cannot be held, or the auction
the national markets. agent for the Fund is not able to conduct an
auction in accordance with the established
auction procedures, or the dividend payable
on such date cannot be paid because
the date on which the auction normally would be held
(or thedividend would be paid) is not a business
day because the NYSE is closed because of an
Extraordinary Event (e.g., an act of God, natural
disaster, extreme weather, act of war, civil or
military disturbance, act of terrorism, sabotage,
riots or a loss or malfunction of
utilities or communications services). The
Amendments establish how the dividend rate is
determined, when the dividend will be paid,
and how a dividend period will be established
if an Extraordinary Event occurs.
Voting Voting - General. Under the Current AMPS Terms, Voting - General. No substantive changes.
each AMPS holder is entitled to one vote for
each share of AMPS held on each matter submitted
to a vote of stockholders and the holders of
AMPS and Common Stock vote together as a single
class.
Voting - Directors. Under the Current AMPS Voting - Directors. No substantive changes
Terms, at any director election, the holders of except that, under the Amended AMPS Terms, the
the AMPS are entitled, voting as a single class, holders of the AMPS and Common Stock, voting as
to elect two directors (i.e., the AMPS a single class, elect the non-AMPS directors.
directors). The holders of the Fund's common
stock, voting as a separate class, elect the
balance of the directors.
If the Fund has not paid two year's AMPS dividends,
the number of directors is automatically increased
by the smallest number that, when added to the two
directors elected exclusively by the holders of the
AMPS would constitute a majority of the Board, in
which case the holders of the AMPS are entitled,
voting as a single class, to elect such smallest
number of additional directors, together with the
two directors that the AMPS holders are in any
event entitled to elect.
Termination of AMPS The Current AMPS Terms do not provide for Under the Current AMPS Terms and the 1940
Directors upon termination of the AMPS Directors upon a Act, holders of the AMPS, voting as a single
Redemption of the redemption of the AMPS. class, are entitled to elect two of the Fund's
AMPS directors while holders of the Common Stock are
entitled to elect the remaining directors. The
Amendment provides that directors elected by
holders of the AMPS will terminate automatically
upon full redemption of the AMPS. Notably, in
such a redemption in full, all obligations to
the AMPS holders will cease and separate
representatives for them would serve no valid
business purpose. Moreover, in this circumstance,
the 1940 Act provision requiring separate
representatives for holders of preferred stock
would no longer apply.
Rating Agency
Guidelines The Rating Agency guidelines were The Rating Agency guidelines are only referenced in
incorporated in various provisions throughout the Amendment, thus giving the Rating Agencies the
the text of the Current AMPS Terms. ability to amend the guidelines without amending the
terms of the AMPS.
Amendment or Modification Without the affirmative vote of at least a The provisions in the Amendment are
- Stockholder Approval majority of the AMPS shares, the Fund may not substantially the same as those in the Current
Required amend, alter or repeal the AMPS terms so as to AMPS Terms.
adversely affect in any material respect any of the
contract rights associated with the AMPS or alter,
modify or eliminate any of the rights, preferences
or privileges of the AMPS so as to adversely affect
the AMPS.
Amendment or Modification The Board, without the vote or consent of the The Amendments provide that the rights of the
- No Stockholder Approval AMPS stockholders, may from time to time amend AMPS or the holders thereof, including, without
Required the Current AMPS Terms, if (A) such amendment, limitation, the interpretation or applicability
alteration or repeal is at the request of a of any or all covenants or other obligations of
Rating Agency and (B) it is determined by the the Fund contained in the AMPS terms or of
Board that the amendment will not adversely certain definitions in the AMPS terms, may from
affect the contract rights of shares of AMPS or time to time be modified, altered or repealed
adversely affect the AMPS as supported by the by the Board of Directors in its sole
Fund's counsel's opinion. discretion, based on a determination by the
Board of Directors that such action is
necessary or appropriate in connection with
obtaining or maintaining the rating of any Rating
Agency with respect to the AMPS or revising the
Fund's investment restrictions or policies
consistent with guidelines of any Rating Agency,
and any such modification, alteration or repeal
will not be deemed to affect the preferences,
rights or powers of AMPS or the holders thereof,
provided that the Board of Directors
receives written confirmation from each relevant
Rating Agency that any such modification,
alteration or repeal would not adversely affect
the rating then assigned by such Rating Agency.
Amendment of Certain The Board, without the vote or consent of the The Amendment contains substantially similar
Rating Agency Definitions AMPS stockholders, may from time to time amend language. However, in addition, the Rating
certain rating agency definitions provided that Agency guidelines, which contain most of the the
Board receives confirmation from the Rating Rating Agency definitions, may be amended by
Agencies that the amendment does not impair the the respective Rating Agency without the vote,
Ratings then assigned. consent or approval of the Board, or any holder
of shares of the AMPS, including any series
of AMPS, or any other stockholder of the Fund.
Increases in Capitalization The affirmative vote of at least 80% of the AMPS The Board is permitted to cause the issuance of
shares is required to authorize, create or issue additional shares of the AMPS or other
any class or series of stock ranking prior to or preferred stock ranking on parity with the
on a parity with the AMPS with respect to the AMPS if the Fund obtains written confirmation
payment of dividends or the distribution of from the Rating Agencies that the issuance of a
assets upon dissolution, liquidation or winding class or series would not impair the rating
up of the affairs of the Fund. then assigned by such rating agency to the
AMPS. Otherwise, the affirmative vote of a
majority of outstanding AMPS shares is required to
issue additional AMPS or other preferred shares.
Dividend Payment Dates Every fourth Wednesday, subject to adjustments No changes.
for special rate periods.
Maximum Length of Special There is no express limit on the length of a Designation of special dividend periods longer
Rate Periods special rate period. than 28 days are limited to a maximum of 5
years.
Late Charge on Any Failure The late charge is calculated using 275% of the The late charge is calculated using 300% of the
to Deposit "AA" composite commercial paper rate. LIBOR rate.
Designation of AMPS There are no provisions regarding how AMPS The Board determines which Directors are to be
Directors Directors are designated or which Directors are designated AMPS Directors and elected by the
to be AMPS Directors and elected by the holders holders of the AMPS.
of the AMPS.
Special Meetings to Elect Special meetings for the election of additional Special meetings for the election of additional
Additional AMPS Directors AMPS directors (e.g., if the Fund fails to pay AMPS directors are to be held not less than 10
its AMPS dividend) are to be held not less than nor more than 20 days after mailing the notice.
10 nor more than 30 days after mailing the
notice.
Restrictions on Dividends No dividends may be declared or paid or set No substantive changes.
apart for payment on any of the Fund's
securities ranking, as to the payment of
dividends, on a parity with the AMPS unless full
cumulative dividends have been or
contemporaneously are declared and paid on the
shares of AMPS and any other parity stock
through the most recent dividend payment date.
When dividends are not so paid on the AMPS or
other parity stock, all dividends declared upon
shares of AMPS and any other such parity stock
shall be declared pro rata. The AMPS shall not
be entitled to any dividend, whether payable in
cash, property or stock, in excess of full
cumulative dividends.
As long as any the AMPS are outstanding, the Fund
may not declare, pay or set apart for payment any
dividend or other distribution in respect of the
Common Stock or any other stock of the Fund ranking
junior to the AMPS or call for redemption, redeem,
purchase or otherwise acquire for consideration any
Common Stock or any other shares of the Corporation
ranking junior to the AMPS as to dividends or upon
liquidation, unless (i) immediately thereafter, the
1940 Act asset coverage is met and the various
Rating Agency asset coverage ratios are met, (ii)
full cumulative dividends on all shares of AMPS for
all past rate periods have been paid or declared
and a sum sufficient for the payment of such
dividends set apart for payment; and (iii) the Fund
the Corporation has redeemed the full number of
shares of AMPS required to be redeemed by any
provision for mandatory redemption.
Redemption The Fund may redeem the AMPS in whole but not in The Fund may redeem in whole or part upon prior
part upon prior notice (i.e., not less than 3 notice (i.e., not less than 15 calendar days
nor more than 33 days). and not more than 40 calendar days).
Notice for mandatory redemption is not less than Notice for mandatory redemption is not less than 15
3 nor more than 33 days. calendar days nor more than 40 calendar days.
Status of AMPS Redeemed Redeemed AMPS return to the status of authorized Redeemed AMPS return to the status of
and unissued shares of AMPS. authorized and unissued shares of preferred
stock, without further designation.
Liquidation Rights No substantive changes.
Vote Required. Approval of the Amendments will require the affirmative vote of
(a) a majority of the votes entitled to be cast by the holders of Common Stock
and AMPS, voting together as a single class and (b) a majority of the votes
entitled to be cast by the holders of the AMPS, voting as a separate class.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 2.
PROPOSAL 3
AMENDMENT TO THE CHARTER WITH RESPECT TO THE NUMBER OF DIRECTORS
The Board proposes and unanimously recommends that stockholders approve an
amendment to the Fund's Charter to provide Section 5.1 of the Charter, which
states that the number of directors of the Fund shall be five, be made subject
to the provisions of the AMPS or any new class or series of preferred stock of
the Fund. Both the Current AMPS Terms as well as the Amendments contemplated
under Proposal 2 above provide for increasing the size of the Board under
certain limited circumstances (e.g., if the Fund has not paid the dividends
under the AMPS) so as to give the holders of the AMPS the ability to elect a
majority of the Directors. However, given the language of Section 5.1, it is
unclear whether the size of the Board could be legally increased under the terms
of the Current AMPS Terms in order to give the AMPS holders the majority
contemplated under the 1940 Act.
Section 5.1 of the Charter reads as follows:
The number of directors shall be five.
Proposal 3 would amend Section 5.1 of the Charter to read, in its entirety, as
follows:
Subject to the terms of any class or series of Preferred Stock, the
number of directors shall be five.
Purpose of the Amendment. The purpose of this Proposal is to eliminate the
conflict between (i) the language of Section 5.1 of the Charter which, in its
present form, clearly sets the number of Directors at five, (ii) the
requirements imposed by the AMPS terms for the protection of the holders of the
AMPS and (iii) the requirements imposed by the 1940 Act which require provisions
to be made to allow the holders of the AMPS to elect a majority of the Directors
at any time dividends remain unpaid for a period of two years.
The Board considered this Proposal at a special meeting held on March 6, 2006.
The Board has determined that this Proposal is advisable to conform with the
1940 Act and the intent of the AMPS terms.
Vote Required. Approval of Proposal 3 requires the affirmative vote of a
majority of the votes entitled to be cast on the matter by the holders of the
Common Stock and AMPS, voting as a single class.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 3.
SUBMISSION OF STOCKHOLDER PROPOSALS
Notice is hereby given that for a stockholder proposal to be considered for
inclusion in the Fund's proxy material relating to its 2007 annual meeting of
stockholders, the stockholder proposal must be received by the Fund no later
than November 27, 2006. Any such proposal shall set forth as to each matter the
stockholder proposes to bring before the meeting (i) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting, (ii) the name and address, as they appear on the
Fund's books, of the stockholder proposing such business, (iii) the class and
number of shares of the capital stock of the Fund which are beneficially owned
by the stockholder, and (iv) any material interest of the stockholder in such
business. Stockholder proposals, including any accompanying supporting
statement, may not exceed 500 words. A stockholder desiring to submit a proposal
must be a record or beneficial owner of Shares with a market value of $2,000 and
must have held such Shares for at least one year. Further, the stockholder must
continue to hold such Shares through the date on which the meeting is held.
Documentary support regarding the foregoing must be provided along with the
proposal. There are additional requirements regarding proposals of stockholders,
and a stockholder contemplating submission of a proposal is referred to Rule
14a-8 promulgated under the 1934 Act. The timely submission of a proposal does
not guarantee its inclusion in the Fund's proxy materials.
Pursuant to the Fund's By-laws, at any annual meeting of the stockholders,
only business that has been properly brought before the meeting will be
conducted. To be properly brought before the annual meeting, the business must
be (i) specified in the notice of meeting, (ii) by or at the direction of the
Board of Directors, or (iii) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before the annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Fund. To be timely, a stockholder's notice must be
delivered to the Secretary at 1680 38th Street, Suite 800, Boulder, Colorado
80301 no later than 5:00 p.m., Mountain Time, on the 120th day prior to the
first anniversary of the date of mailing of the notice for the preceding year's
annual meeting. However, if the date of the annual meeting is advanced or
delayed by more than 30 days from the first anniversary of the date of the
preceding year's annual meeting, for notice by the stockholder to be timely, it
must be delivered not later than 5:00 p.m., Mountain Time, on the later of the
120th day prior to the date of such annual meeting or the tenth day following
the day on which public announcement of the date of such meeting is first made.
The public announcement of a postponement or adjournment of an annual meeting
shall not commence a new time period for the giving of a stockholder's notice as
described above.
Pursuant to the Fund's By-laws, such stockholder's notice shall set forth
(i) as to each individual whom the stockholder proposes to nominate for election
or reelection as a director, (A) the name, age, business address and residence
address of such individual, (B) the class, series and number of any shares of
stock of the Fund that are beneficially owned by such individual, (C) the date
such shares were acquired and the investment intent of such acquisition, (D)
whether such stockholder believes any such individual is, or is not, an
"interested person" of the Fund, as defined in the 1940 Act and information
regarding such individual that is sufficient, in the discretion of the Board of
Directors or any committee thereof or any authorized officer of the Fund, to
make such determination and (E) all other information relating to such
individual that is required to be disclosed in solicitations of proxies for
election of directors in an election contest (even if an election contest is not
involved), or is otherwise required, in each case pursuant to Regulation 14A (or
any successor provision) under the Exchange Act and the rules thereunder
(including such individual's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); (ii) as to any
other business that the stockholder proposes to bring before the meeting, a
description of such business, the reasons for proposing such business at the
meeting and any material interest in such business of such stockholder and any
Stockholder Associated Person (as defined below), individually or in the
aggregate, including any anticipated benefit to the stockholder and the
Stockholder Associated Person therefrom; (iii) as to the stockholder giving the
notice and any Stockholder Associated Person, the class, series and number of
all shares of stock of the Fund which are owned by such stockholder and by such
Stockholder Associated Person, if any, and the nominee holder for, and number
of, shares owned beneficially but not of record by such stockholder and by any
such Stockholder Associated Person; (iv) as to the stockholder giving the notice
and any Stockholder Associated Person covered by the immediately preceding
clauses (ii) or (iii), the name and address of such stockholder, as they appear
on the Fund's stock ledger and current name and address, if different, and of
such Stockholder Associated Person; and (v) to the extent known by the
stockholder giving the notice, the name and address of any other stockholder
supporting the nominee for election or reelection as a director or the proposal
of other business on the date of such stockholder's notice. "Stockholder
Associated Person" of any stockholder shall mean (i) any person controlling,
directly or indirectly, or acting in concert with, such stockholder, (ii) any
beneficial owner of shares of stock of the Fund owned of record or beneficially
by such stockholder and (iii) any person controlling, controlled by or under
common control with such Stockholder Associated Person.
ADDITIONAL INFORMATION
INDEPENDENT ACCOUNTANTS. The Audit Committee of the Board, consisting of
those Directors who are not "interested persons" (as defined in the 1940 Act),
will select the Fund's independent accountants for the Fund's fiscal year ending
November 30, 2006 at the Board's regular quarterly meeting in July 2006. KPMG
served as independent accountants for the Fund for the Fund's fiscal year ending
November 30, 2005. A representative of KPMG will not be present at the Meeting
but will be available by telephone and will have an opportunity to make a
statement if the representative so desires and will be available to respond to
appropriate questions.
Set forth below are audit fees and non-audit related fees billed to the
Fund for professional services received from KPMG for the Fund's fiscal years
ended November 30, 2004 and 2005, respectively.
Fiscal Year Ended Audit Fees Audit-Related Fees* Tax Fees** All Other Fees
11/30/2004 $23,600 $16,000 $5,850 $0
11/30/2005 $25,250 $16,800 $6,000 $0
* "Audit Related Fees" are those fees billed to the Fund by KPMG in
connection with their agreed-upon procedures reports under the terms of the
AMPS. Such reports are required quarterly by Moody's Investors Service,
Inc. and Standard & Poor's in connection with maintaining public ratings
for the AMPS.
** "Tax Fees" are those fees billed to each Fund by KPMG in connection with
tax consulting services, including primarily the review of each Fund's
income tax returns.
The Audit Committee Charter requires that the Audit Committee pre-approve
all audit and non-audit services to be provided by the auditors to the Fund, and
all non-audit services to be provided by the auditors to the Fund's investment
adviser and any service providers controlling, controlled by or under common
control with the Funds' investment adviser ("affiliates") that provide on-going
services to each Fund, if the engagement relates directly to the operations and
financial reporting of each Fund, or to establish detailed pre-approval policies
and procedures for such services in accordance with applicable laws. All of the
audit, audit-related and tax services described above for which KPMG billed the
Fund fees for the fiscal years ended November 30, 2004 and November 30, 2005
were pre-approved by the Audit Committee.
KPMG has informed the Fund that it has no direct or indirect financial
interest in the Fund. For the Fund's fiscal year ended November 30, 2005, KPMG
did not provide any non-audit services or bill any fees for such services to the
Funds' investment adviser or any affiliates thereof that provide services to the
Fund. The Horejsi Affiliates have engaged KPMG from time to time in the past to
provide various accounting, auditing and consulting services and currently
engages KPMG as a consultant with respect to ongoing tax related issues. For the
twelve months ended November 30, 2004, the Horejsi Affiliates paid $3,800 to
KPMG for their services. For the twelve months ended November 30, 2005, the
Horejsi Affiliates paid $0 to KPMG for their services. The Audit Committee has
considered and concluded that the provision of non-audit services is compatible
with maintaining the auditors' independence.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 16(a) of
the 1934 Act and Section 30(h) of the 1940 Act requires the Fund's Directors and
officers, persons affiliated with the Fund's investment advisers, and persons
who own more than 10% of a registered class of the Fund's securities, to file
reports of ownership and changes of ownership with the SEC and the New York
Stock Exchange. Directors, officers and greater-than-10% stockholders are
required by SEC regulations to furnish the Fund with copies of all Section 16(a)
forms they file. Based solely upon the Fund's review of the copies of such forms
it receives and written representations from such persons, the Fund believes
that through the date hereof all such filing requirements applicable to such
persons were complied with.
BROKER NON-VOTES AND ABSTENTIONS. An uninstructed proxy for shares held by
brokers or nominees as to which (i) instructions have not been received from the
beneficial owners or the persons entitled to vote and (ii) the broker or nominee
does not have discretionary voting power on a particular matter is a broker
"non-vote". Proxies that reflect abstentions or broker non-votes will be counted
as shares that are present and entitled to vote on the matter for purposes of
determining the presence of a quorum. Abstentions and broker non-votes will have
no effect on the result of the vote in the election of directors in Proposal 1.
Abstentions and broker non-votes will have the same effect as votes against
Proposal 2 and 3.
OTHER MATTERS TO COME BEFORE THE MEETING
The Fund does not intend to present any other business at the Meeting, nor
is it aware that any stockholder intends to do so. If, however, any other
matters are properly brought before the Meeting, the persons named in the
accompanying form of proxy will vote thereon in accordance with their
discretion.
--------------------------------------------------------------------------------
STOCKHOLDERS ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD OR
AUTHORIZE PROXIES VIA TELEPHONE OR THE INTERNET. THE PROXY CARD SHOULD BE
RETURNED IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH ON
THE INSIDE COVER.
--------------------------------------------------------------------------------
EXHIBIT A
BOULDER TOTAL RETURN FUND, INC.
ARTICLES OF AMENDMENT
BOULDER TOTAL RETURN FUND, INC., a Maryland corporation (referred to herein as
the "Fund" or the "Corporation"), certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation (the "Charter") is hereby amended by
deleting in their entirety the terms of the Taxable Auction Market Preferred
Stock of the Corporation incorporated by reference in Section 4.11 of the
Charter and substituting in lieu thereof the following preferences, rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications, and terms and conditions of redemption, which,
upon any restatement of the Charter, shall be made part of Article IV of the
Charter, with any necessary or appropriate renumbering or re-lettering of the
sections or subsections set forth below.
TAXABLE AUCTION MARKET PREFERRED STOCK
DESIGNATION
AMPS: 1,000 shares of preferred stock, par value $0.01 per share, of the
Corporation are classified and designated Taxable Auction Market Preferred
Stock, par value $0.01 per share, liquidation preference $100,000 per share (the
"AMPS"). Each AMPS shall have such other preferences, rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption, in addition to those
required by applicable law or set forth in the Charter applicable to shares of
Preferred Stock ("Preferred Stock"), as are set forth in Part I and Part II of
these terms of the AMPS. The AMPS shall constitute a separate series of
Preferred Stock.
Subject to the provisions of Section 11 of Part I hereof, the Board of Directors
may, in the future, authorize the issuance of additional AMPS with the same
preferences, rights, voting powers, restrictions, limitations as to dividends
and other distributions, qualifications and terms and conditions of redemption
and other terms herein described, except that the Initial Dividend Period, the
Applicable Rate for the Initial Dividend Period and the initial Dividend Payment
Date shall be as set forth in the Articles Supplementary relating to such
additional AMPS.
Capitalized terms used in Part I and Part II of these terms of the AMPS shall
have the meanings (with the terms defined in the singular having comparable
meanings when used in the plural and vice versa) provided in the "Definitions"
section immediately following, unless the context otherwise requires.
DEFINITIONS
As used in Parts I and II of these terms of the AMPS, 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 from time to
time, and the rules and regulations thereunder.
"1940 Act Cure Date", with respect to the failure by the Fund to maintain the
1940 Act Preferred Share Asset Coverage (as required by Section 5 of Part I of
these terms of the AMPS) as of the last Business Day of each month, shall mean
the last Business Day of the following month.
"1940 Act Preferred Share Asset Coverage" shall mean asset coverage, as defined
in Section 18(h) of the 1940 Act, of at least 200% with respect to all
outstanding senior securities of the Fund which are shares of stock including
all Outstanding AMPS (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).
"Affected Series" has the meaning set forth in Section 4(c) of Part I of these
terms of the AMPS.
"Affiliate" means any Person known to the Auction Agent to be controlled by, in
control of, or under common control with, the Fund.
"Agent Member" means a member of, or participant in, the Securities Depository
that will act on behalf of a Beneficial Owner of one or more AMPS or on behalf
of a Potential Beneficial Owner.
"Annual Valuation Date" means the last Friday before the fiscal year end of the
Fund (or if the last Friday is a holiday, then the immediate prior business
day).
"Applicable Percentage" and "Applicable Spread" mean the percentage determined
based on the lower of the credit ratings assigned to the AMPS on such date by
Moody's and S&P (or if Moody's and S&P are not making such rating available, the
equivalent of such rating by a Substitute Rating Agency):
Applicable Percentage Payment Table
Credit Ratings Applicable Applicable Spread
Percentage
Moody's S&P
Aaa AAA 125% 1.25%
Aa3 to Aa1 AA- to AA+ 150% 1.50%
A3 to A1 A- to A+ 200% 2.00%
Baa3 to Baa1 BBB- to BBB+ 250% 2.50%
Ba1 and lower BB+ and lower 300% 3.00%
The Applicable Percentage and the Applicable Spread as so determined shall be
further subject to upward but not downward adjustment in the discretion of the
Board of Directors (as defined below), provided that immediately following any
such increase the Fund would be in compliance with the Preferred Stock Basic
Maintenance Amount (as defined below). The Fund shall take all reasonable action
necessary to enable Moody's and S&P to provide a rating for the AMPS. If both
Moody's and S&P shall not make such a rating available, the Fund shall select
another nationally recognized statistical rating organization to act as the
Substitute Rating Agency. However, the Fund shall not be required to have more
than one such rating organization provide a rating for the AMPS.
"Applicable Rate" means the rate per annum at which cash dividends are payable
on the AMPS for any Dividend Period.
"Approved Price" means the "fair value" as determined by the Fund in accordance
with the valuation procedures adopted from time to time by the Board of
Directors and for which the Fund receives a marked-to-market price (which, for
the purpose of clarity, shall not mean Market Value) from an independent source
at least semi-annually.
"Auction" means a periodic operation of the Auction Procedures.
"Auction Agent" means Deutsche Bank Trust Company Americas unless and until
another commercial bank, trust company or other financial institution appointed
by a resolution of the Board of Directors or a duly authorized committee thereof
enters into an agreement with the Fund to follow the Auction Procedures for the
purpose of determining the Applicable Rate and to act as transfer agent,
registrar, dividend disbursing agent and redemption agent for the AMPS.
"Auction Date" with respect to any Dividend Period shall mean the Business Day
next preceding the first day of such Dividend Period.
"Auction Procedures" means the procedures for conducting Auctions set forth in
Part II of these terms of the AMPS.
"Auditors' Confirmation" has the meaning set forth in Section 6(c) of Part I of
these terms of the AMPS.
"Available AMPS" shall have the meaning specified in paragraph (a) of Section 3
of Part II of these terms of the AMPS.
"Beneficial Owner" means a customer of a Broker-Dealer who is listed on the
records of that Broker-Dealer (or, if applicable, the Auction Agent) as a holder
of AMPS or a Broker-Dealer that holds AMPS for its own account.
"Bid" and "Bids" shall have the respective meanings specified in paragraph (a)
of Section 1 of Part II of these terms of the AMPS.
"Bidder" and "Bidders" shall have the respective meanings specified in paragraph
(a) of Section 1 of Part II of these terms of the AMPS; provided, however, that
neither the Fund nor any affiliate thereof shall be permitted to be a Bidder in
an Auction, except that any Broker-Dealer that is an affiliate of the Fund may
be a Bidder in an Auction, but only if the Orders placed by such Broker-Dealer
are not for its own account.
"Board of Directors" " means the Board of Directors of the Fund.
"Broker-Dealer" means any broker-dealer, or other entity permitted by law to
perform the functions required of a Broker-Dealer in Part II of these terms of
the AMPS, that has been selected by the Fund and has entered into a
Broker-Dealer Agreement with the Auction Agent that remains effective.
"Broker-Dealer Agreement" means an agreement between the Auction Agent and a
Broker-Dealer pursuant to which such Broker-Dealer agrees to follow the
procedures specified in Part II of these terms of the AMPS.
"Business Day" means a day on which the New York Stock Exchange is open for
trading and which is not a Saturday, Sunday or other day on which banks in New
York City are authorized or obligated by law to close.
"Closing Transaction" has the meaning set forth in Section 8(b)(i) of Part I of
these terms of the AMPS.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
Each reference herein to a section of the Code shall be deemed to include the
United States Treasury Regulations in effect thereunder and applicable to the
AMPS or the use of proceeds thereof, and also includes all applicable amendments
or successor provisions unless the context requires otherwise.
"Common Stock" means the common stock, par value $0.01 per share, of the Fund.
"Cure Date" shall mean the Preferred Stock Basic Maintenance Cure Date or the
1940 Act Cure Date.
"Date of Original Issue" means, with respect to any AMPS, the date on which the
Fund first issues such share.
"Deposit Securities" means cash and portfolio securities rated at least A2
(having a remaining maturity of 12 months or less), P-1, VMIG-1 or MIG-1 by
Moody's or A (having a remaining maturity of 12 months or less), A-1+ or SP-1+
by S&P.
"Discount Factor" means an S&P Discount Factor or a Moody's Discount Factor, as
applicable.
"Discounted Value" of any asset of the Fund means the quotient of the Market
Value of an Eligible Asset divided by the applicable Discount Factor.
"Dividend Payment Date," with respect to AMPS, shall mean any date on which
dividends are payable on the AMPS pursuant to the provisions of paragraph (d) of
Section 2 of Part I of these terms of the AMPS.
"Dividend Period" with respect to shares of a series of AMPS, shall mean the
period from and including the Date of Original Issue of shares of such series to
but excluding the initial Dividend Payment Date for shares of such series and
any period thereafter from and including one Dividend Payment Date for shares of
such series to but excluding the next succeeding Dividend Payment Date for
shares of such series.
"Eligible Asset" means an S&P Eligible Asset (if S&P is then rating the AMPS), a
Moody's Eligible Asset (if Moody's is then rating the AMPS) and/or any asset
included in the calculations used by any Rating Agency then rating the AMPS for
purposes of determining such Rating Agency's rating on the AMPS, as applicable.
"Existing Holder" means a Broker-Dealer, or any such other Person that may be
permitted by the Fund, that is listed as the holder of record of AMPS in the
Share Books.
"Exposure Period" on a Valuation Date means the period commencing on such date
and ending 49 days thereafter for Moody's. With respect to S&P, the term shall
have the meaning set forth in the S&P Guidelines for "S&P Exposure Period". The
Exposure Period may be modified by resolution of the Board of Directors;
provided, however, that the Fund shall have received confirmation in writing
from each Rating Agency that any such modification shall not adversely affect
such Rating Agency's then-current rating of the AMPS.
"Failure to Deposit", with respect to shares of a series of AMPS, shall mean a
failure by the Fund to pay to the Auction Agent, not later than 12:00 noon, New
York City time, (A) on the Business Day next preceding any Dividend Payment Date
for shares of such series, in funds available on such Dividend Payment Date in
the City of New York, New York, the full amount of any dividend (whether or not
earned or declared) to be paid on such Dividend Payment Date on any share of
such series or (B) on the Business Day next preceding any redemption date in
funds available on such redemption date for shares of such series 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 mailed pursuant to
paragraph (c) of Section 9 of Part I of these terms of the AMPS; provided,
however, that the foregoing clause (B) shall not apply to the Fund's failure to
pay the Redemption Price in respect of AMPS 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.
"Forward Commitment" has the meaning set forth in Section 8(a)(v) of Part I of
these terms of the AMPS.
"Holder" means a Person identified as a holder of record of AMPS in the Share
Register.
"Hold Order" and "Hold Orders" shall have the respective meanings specified in
paragraph (a) of Section 1 of Part II of these terms of the AMPS.
"Independent Accountant" means a nationally recognized accountant, or firm of
accountants, that is, with respect to the Fund, an independent public accountant
or firm of independent public accountants under the Securities Act and serving
as such for the Fund.
"Initial Dividend Period," with respect to shares of a series of AMPS, shall
have the meaning specified with respect to shares of such series in Section 2(d)
of Part I of these terms of the AMPS.
"Late Charge" shall have the meaning specified in subparagraph (e)(i)(B) of
Section 2 of Part I of these terms of the AMPS.
"LIBOR Dealer" means Merrill Lynch, Pierce, Fenner & Smith Incorporated and such
other dealer or dealers as the Fund from time to time may appoint or, in lieu
thereof, their respective affiliates and successors.
"LIBOR Rate," on any Auction Date, means (i) the rate for deposits in U.S.
dollars for the designated Dividend Period, which appears on display page 3750
of Moneyline's Telerate Service ("Telerate Page 3750") (or such other page as
may replace that page on that service, or such other service as may be selected
by the LIBOR Dealer or its successors that are LIBOR Dealers) as of 11:00 a.m.,
London time, on the day that is the London Business Day preceding the Auction
Date (the "LIBOR Determination Date"), or (ii) if such rate does not appear on
Telerate Page 3750 or such other page as may replace such Telerate Page 3750,
(A) the LIBOR Dealer shall determine the arithmetic mean of the offered
quotations of the Reference Banks to leading banks in the London interbank
market for deposits in U.S. dollars for the designated Dividend Period in an
amount determined by such LIBOR Dealer by reference to requests for quotations
as of approximately 11:00 a.m. (London time) on such date made by such LIBOR
Dealer to the Reference Banks, (B) if at least two of the Reference Banks
provide such quotations, the LIBOR Rate shall equal such arithmetic mean of such
quotations, (C) if only one or none of the Reference Banks provide such
quotations, the LIBOR Rate shall be deemed to be the arithmetic mean of the
offered quotations that leading banks in The City of New York selected by the
LIBOR Dealer (after obtaining the Fund's approval) are quoting on the relevant
LIBOR Determination Date for deposits in U.S. dollars for the designated
Dividend Period in an amount determined by the LIBOR Dealer (after obtaining the
Fund's approval) that is representative of a single transaction in such market
at such time by reference to the principal London offices of leading banks in
the London interbank market; provided, however, that if one of the LIBOR Dealers
does not quote a rate required to determine the LIBOR Rate, the LIBOR Rate will
be determined on the basis of the quotation or quotations furnished by any
Substitute LIBOR Dealer or Substitute LIBOR Dealers selected by the Fund to
provide such rate or rates not being supplied by the LIBOR Dealer; provided
further, that if the LIBOR Dealer and Substitute LIBOR Dealers are required but
unable to determine a rate in accordance with at least one of the procedures
provided above, the LIBOR Rate shall be the LIBOR Rate as determined on the
previous Auction Date. If the number of Dividend Period days shall be (i) 7 or
more but fewer than 21 days, such rate shall be the seven-day LIBOR rate; (ii)
more than 21 but fewer than 49 days, such rate shall be the one-month LIBOR
rate; (iii) 49 or more but fewer than 77 days, such rate shall be the two-month
LIBOR rate; (iv) 77 or more but fewer than 112 days, such rate shall be the
three-month LIBOR rate; (v) 112 or more but fewer than 140 days, such rate shall
be the four-month LIBOR rate; (vi) 140 or more but fewer than 168 days, such
rate shall be the five-month LIBOR rate; (vii) 168 or more but fewer than 189
days, such rate shall be the six-month LIBOR rate; (viii) 189 or more but fewer
than 217 days, such rate shall be the seven-month LIBOR rate; (ix) 217 or more
but fewer than 252 days, such rate shall be the eight-month LIBOR rate; (x) 252
or more but fewer than 287 days, such rate shall be the nine-month LIBOR rate;
(xi) 287 or more but fewer than 315 days, such rate shall be the ten-month LIBOR
rate; (xii) 315 or more but fewer than 343 days, such rate shall be the
eleven-month LIBOR rate; and (xiii) 343 or more but fewer than 365 days, such
rate shall be the twelve-month LIBOR rate.
"Lien" means any material lien, mortgage, pledge, security interest or security
agreement of any kind.
"Liquidation Preference," with respect to a given number of AMPS, means $100,000
times that number.
"London Business Day" means any day on which commercial banks are generally open
for business in London.
"Long Term Dividend Period" means a Special Dividend Period consisting of a
specific period of one whole year or more but not greater than five years.
"Market Value" of any asset of the Fund shall be the market value thereof
determined by a Pricing Service. Market Value of any asset shall include any
interest accrued thereon. A Pricing Service shall value portfolio securities at
the quoted bid prices or the mean between the quoted bid and asked price or the
yield equivalent when quotations are not readily available. Securities for which
quotations are not readily available shall be valued at fair value as determined
by a Pricing Service using methods which include consideration of: yields or
prices of securities of comparable quality, type of issue, coupon, maturity and
rating; indications as to value from dealers; and general market conditions. A
Pricing Service may employ electronic data processing techniques and/or a matrix
system to determine valuations. In the event a Pricing Service is unable to
value a security, the security shall be valued at the lower of two dealer bids
obtained by the Fund from dealers who are members of the National Association of
Securities Dealers, Inc. and who make a market in the security, at least one of
which shall be in writing. Futures contracts and options are valued at closing
prices for such instruments established by the exchange or board of trade on
which they are traded, or if market quotations are not readily available, are
valued at fair value on a consistent basis using methods determined in good
faith by the Board of Directors.
"Maximum Applicable Rate" with respect to AMPS for any Dividend Period is the
higher of the Applicable Percentage of the Reference Rate or the Reference Rate
plus the Applicable Spread. The Applicable Percentage and the Applicable Spread
for any regular dividend period shall be determined based on the lower of the
credit ratings assigned to the AMPS by Moody's and S&P on the auction date for
such period as set forth in the definition of "Applicable Percentage and
Applicable Spread". If Moody's and/or S&P do not make such rating available, the
rate shall be determined by reference to equivalent ratings issued by a
Substitute Rating Agency. In the case of a special rate period, (1) the Maximum
Applicable Rate shall be specified by the Fund in the Notice of Special Dividend
Period for such Dividend Payment Period and (2) the Applicable Percentage and
Applicable Spread shall be determined on the date two business days before the
first day of such Special Dividend Period. The Auction Agent shall round each
applicable Maximum Applicable Rate to the nearest one-thousandth (0.001) of one
percent per annum, with any such number ending in five ten-thousandths of one
percent being rounded upwards to the nearest one-thousandth (0.001) of one
percent.
"Minimum Dividend Period" shall mean any Dividend Period of twenty-eight (28)
days.
"Moody's" means Moody's Investors Service, Inc. or its successors.
"Moody's Discount Factor" means the discount factors set forth in the Moody's
Guidelines for use in calculating the Discounted Value of the Fund's assets in
connection with Moody's ratings of the AMPS.
"Moody's Eligible Assets" means assets of the Fund set forth in the Moody's
Guidelines as eligible for inclusion in calculating the Discounted Value of the
Fund's assets in connection with Moody's ratings of the AMPS.
"Moody's Guidelines" shall mean the Moody's Preferred Stock Guidelines, as
amended from time to time as provided below. The terms of the AMPS are subject
to the Moody's Guidelines for so long as the AMPS are rated by Moody's. The
Moody's Guidelines may be amended by Moody's without the vote, consent or
approval of the Fund, the Board of Directors or any holder of shares of the
AMPS, including any series of AMPS, or any other stockholder of the Fund.
"Municipal Obligations" means municipal obligations, including municipal bonds
and short-term municipal obligations, the interest from which is exempt from
federal income taxes.
"Non-Call Period" has the meaning set forth under the definition of "Specific
Redemption Provisions".
"Non-Payment Period Rate" for any period means, initially, 300% of the
applicable Reference Rate, provided that the Board of Directors shall have the
authority to adjust, modify, alter or change from time to time the initial
Non-Payment Period Rate if the Board of Directors determines and the Rating
Agencies advise the Fund in writing that such adjustment, modification,
alteration or change will not adversely affect its then current ratings on the
AMPS.
"Notice of Redemption" shall mean any notice with respect to the redemption of
AMPS pursuant to paragraph (c) of Section 9 of Part I of these terms of the
AMPS.
"Notice of Special Dividend Period" shall mean any notice with respect to a
Special Dividend Period of AMPS pursuant to paragraph (b) of Section 3 of Part I
of these terms of the AMPS.
"Optional Redemption Price" means $100,000 per share plus an amount equal to
accumulated but unpaid dividends (whether or not earned or declared) to the date
fixed for redemption plus any applicable redemption premium attributable to the
designation of a Premium Call Period.
"Order" and "Orders" shall have the respective meanings specified in paragraph
(a) of Section 1 of Part II of these terms of the AMPS.
"Outstanding" means, as of any date (i) AMPS theretofore issued by the Fund
except, without duplication, (A) any AMPS theretofore canceled or delivered to
the Auction Agent for cancellation, or redeemed by the Fund, or as to which a
Notice of Redemption shall have been given and Deposit Securities shall have
been deposited in trust or segregated by the Fund pursuant to Section 9 of Part
I of these terms of the AMPS and (B) any AMPS as to which the Fund or any
Affiliate (other than an Affiliate that is a Broker-Dealer) thereof shall be a
Beneficial Owner, provided that AMPS held by an Affiliate shall be deemed
outstanding for purposes of calculating the Preferred Stock Basic Maintenance
Amount and (ii) with respect to other preferred stock of the Fund, the meaning
equivalent to that for AMPS as set forth in clause (i) of this paragraph.
"Person" means and includes an individual, a partnership, a trust, an
unincorporated association, a joint venture or other entity or a government or
any agency or political subdivision thereof.
"Potential Beneficial Owner" means a customer of a Broker-Dealer or a
Broker-Dealer that is not a Beneficial Owner of AMPS but that wishes to purchase
such shares, or that is a Beneficial Owner that wishes to purchase additional
AMPS.
"Potential Holder" means any Broker-Dealer or any such other Person as may be
permitted by the Fund, including any Existing Holder, who may be interested in
acquiring AMPS (or, in the case of an Existing Holder, additional AMPS).
"Preferred Stock Basic Maintenance Amount", as of any Valuation Date, shall have
the meaning set forth in the respective Rating Agency Guidelines.
"Preferred Stock Basic Maintenance Cure Date", with respect to the failure by
the Fund to satisfy the Preferred Stock Basic Maintenance Amount (as required by
Section 6 of Part I of these terms of the AMPS) as of a given Valuation Date,
means the sixth Business Day following such Valuation Date.
"Preferred Stock Basic Maintenance Report" means a report as of the related
Valuation Date of the assets of the Fund, the Market Value and the Discounted
Value thereof (seriatim and in aggregate), and the Preferred Stock Basic
Maintenance Amount.
"Preferred Stock Paying Agent" means Deutsche Bank Trust Company Americas unless
and until another bank or trust company has been appointed as Preferred Stock
Paying Agent by a resolution of the Board of Directors and thereafter such
substitute bank or trust company.
"Premium Call Period" has the meaning set forth under the definition of
"Specific Redemption Provisions".
"Pricing Service" means any pricing service designated by the Board of Directors
of the Fund and approved by the Rating Agencies, as applicable, for purposes of
determining whether the Fund has Eligible Assets with an aggregate Discounted
Value that equals or exceeds the Preferred Stock Basic Maintenance Amount.
"Rating Agency" or "Rating Agencies" shall mean, collectively, Moody's and S&P,
or such other nationally recognized rating organization selected by the Fund to
act as the Substitute Rating Agency (defined below) to determine the credit
ratings of the AMPS.
"Rating Agency Guidelines" means the S&P Guidelines (if S&P is then rating
AMPS), Moody's Guidelines (if Moody's is then rating AMPS) and the guidelines of
any Substitute Rating Agency (if a Substitute Rating Agency is then rating
AMPS), whichever is applicable.
"Receivables for Municipal Obligations Sold" shall mean for purposes of
calculation of Eligible Assets as of any Valuation Date, no more than the
aggregate of the following:
(i) the book value of receivables for Municipal Obligations sold as of or
prior to such Valuation Date if such receivables are due within five business
days of such Valuation Date, and if the trades which generated such receivables
are (x) settled through clearing house firms with respect to which the Fund has
received prior written authorization from the Rating Agency or (y) with
counterparties having the Rating Agency's long-term debt rating of at least
Baa3; and
(ii) the Rating Agency's Discounted Value of Municipal Obligations sold
as of or prior to such Valuation Date which generated receivables, if such
receivables are due within five business days of such Valuation Date but do not
comply with either of the conditions specified in (i) above.
"Redemption Price" shall mean the applicable redemption price specified in
paragraph (a) or (b) of Section 9 of Part I of these terms of the AMPS.
"Reference Banks" means Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Citigroup Global Markets Inc., UBS Securities LLC or any other major bank in the
London interbank market chosen by the LIBOR Dealer or Substitute LIBOR Dealer.
"Reference Rate" means (i) with respect to a dividend period having 364 or fewer
days, the applicable LIBOR Rate and (ii) with respect to a dividend period
having 365 or more days, the applicable Treasury Index Rate.
"Rule 2a-7 Money Market Funds" means investment companies registered under the
1940 Act that comply with Rule 2a-7 thereunder.
"Rule 144A Securities" means securities which are restricted as to resale under
federal securities laws but are eligible for resale pursuant to Rule 144A under
the Securities Act as determined by the Fund's investment manager or portfolio
manager acting pursuant to procedures approved by the Board of Directors.
"S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc., or
its successors at law.
"S&P Discount Factor" means the discount factors set forth in the S&P Guidelines
for use in calculating the Discounted Value of the Fund's assets in connection
with S&P's ratings of the AMPS.
"S&P Eligible Assets" means assets of the Fund set forth in the S&P Guidelines
as eligible for inclusion in calculating the Discounted Value of the Fund's
assets in connection with S&P's ratings of the AMPS.
"S&P Guidelines" shall mean the S&P Preferred Stock Guidelines, as amended from
time to time as provided below. The terms of the AMPS are subject to the S&P
Guidelines for so long as the AMPS are rated by S&P. The S&P Guidelines may be
amended by S&P without the vote, consent or approval of the Fund, the Board of
Directors or any holder of shares of the AMPS, including any series of AMPS, or
any other stockholder of the Fund.
"Securities Act" means the Securities Act of 1933, as amended from time to time.
"Securities Depository" means The Depository Trust Company and its successors
and assigns or any successor securities depository selected by the Fund as
securities depository for the AMPS that agrees to follow the procedures required
to be followed by such securities depository in connection with the AMPS.
"Sell Order" and "Sell Orders" shall have the respective meanings specified in
paragraph (a) of Section 1 of Part II of these terms of the AMPS.
"Share Books" means the books maintained by the Auction Agent setting forth at
all times a current list, as determined by the Auction Agent, of Existing
Holders of the AMPS.
"Share Register" means the register of Holders maintained on behalf of the Fund
by the Auction Agent in its capacity as transfer agent and registrar for the
AMPS.
"Short Term Dividend Period" means a Special Dividend Period consisting of a
specified number of days, evenly divisible by seven and not fewer than 28 nor
more than 364.
"Special Dividend Period", with respect to shares of a series of AMPS, shall
have the meaning specified in paragraph (a) of Section 3 of Part I of these
terms of the AMPS.
"Special Redemption Provisions" shall have the meaning specified in subparagraph
(a)(i) of Section 9 of Part I of these terms of the AMPS.
"Specific Redemption Provisions" means, with respect to a Special Dividend
Period either, or both, of
(i) a period (a "Non-Call Period") determined by the Fund, after
consultation with the Auction Agent and the Broker-Dealers, during which the
AMPS subject to such Dividend Period shall not be subject to redemption at the
option of the Fund; and
(ii) a period (a "Premium Call Period") determined by the Fund, after
consultation with the Auction Agent and the Broker-Dealers, during each year of
which the AMPS subject to such Dividend Period shall be redeemable at the Fund's
option at a price per share equal to $100,000 plus accumulated but unpaid
dividends plus a premium expressed as a percentage of $100,000, as determined by
the Fund after consultation with the Auction Agent and the Broker-Dealers.
"Submission Deadline" shall mean 1:00 P.M. New York City time, on any Auction
Date or such other time on any Auction Date by which Broker-Dealers are required
to submit Orders to the Auction Agent as specified by the Auction Agent from
time to time.
"Submitted Bid" and "Submitted Bids" shall have the respective meanings
specified in paragraph (a) of Section 3 of Part II of these terms of the AMPS.
"Submitted Hold Order" and "Submitted Hold Orders" shall have the respective
meanings specified in paragraph (a) of Section 3 of Part II of these terms of
the AMPS.
"Submitted Order" and "Submitted Orders" shall have the respective meanings
specified in paragraph (a) of section 3 of part II of these terms of the AMPS.
"Submitted Sell Order" and "Submitted Sell Orders" shall have the respective
meanings specified in paragraph (a) of Section 3 of Part II of these terms of
the AMPS.
"Subsequent Dividend Period", with respect to shares of a series of AMPS, shall
mean the period from and including the first day following the Initial Dividend
Period of shares of such series to but excluding the next Dividend Payment Date
for shares of such series and any period thereafter from and including one
Dividend Payment Date for shares of such series to but excluding the next
succeeding Dividend Payment Date for shares of such series; provided, however,
that if any Subsequent Dividend Period is also a Special Dividend Period, such
term shall mean the period commencing on the first day of such Special Dividend
Period and ending on the last day of the last Dividend Period thereof.
"Substitute LIBOR Dealer" means any LIBOR dealer selected by the Fund as to
which the Rating Agencies shall not have objected; provided, however, that none
of such entities shall be an existing LIBOR Dealer (as defined above).
"Substitute Rating Agency" means a nationally recognized statistical rating
organization selected by the Fund to act as the substitute rating agency to
determine the credit ratings of the AMPS.
"Substitute U.S. Government Securities Dealer" means any U.S. Government
securities dealer selected by the Fund as to which the Rating Agencies shall not
have objected; provided, however, that none of such entities shall be an
existing U.S. Government Securities Dealer.
"Sufficient Clearing Bids" has the meaning set forth in Section 3 of Part II of
these terms of the AMPS.
"Treasury Index Rate", means the average yield to maturity for actively traded,
marketable U.S. Treasury fixed interest rate securities having the same number
of 30-day periods to maturity as the length of the applicable Dividend Period,
determined, to the extent necessary, by linear interpolation based upon the
yield for such securities having the next shorter and next longer number of
30-day periods to maturity treating all Dividend Periods with a length greater
than the longest maturity for such securities as having a length equal to such
longest maturity, in all cases based upon data set forth in the most recent
weekly statistical release published by the Board of Governors of the Federal
Reserve System (currently in H.15(519)); provided, however, if the most recent
such statistical release shall not have been published during the 15 days
preceding the date of computation, the foregoing computations shall be based
upon the average of comparable data as quoted to the Fund by at least three U.S.
Government Securities Dealers selected by the Fund; provided further, however,
that if one of the U.S. Government Securities Dealers does not quote a rate
required to determine the Treasury Index Rate, the Treasury Index Rate will be
determined on the basis of the quotation or quotations furnished by any
Substitute U.S. Government Securities Dealer or Substitute U.S. Government
Securities Dealers selected by the Fund to provide such rate or rates not being
supplied by the U.S. Government Securities Dealer; provided further, that if the
U.S. Government Securities Dealer and Substitute U.S. Government Securities
Dealers are required but unable to determine a rate in accordance with at least
one of the procedures provided above, the Treasury Index Rate shall be the
Treasury Index Rate as determined on the previous Auction Date.
"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 Treasury Bills, provide for the
periodic payment of interest and the full payment of principal at maturity or
call for redemption.
"U.S. Government Securities Dealer" means Lehman Government Securities
Incorporated, Goldman, Sachs & Co., Salomon Brothers Inc., Morgan Guaranty Trust
Company of New York and any other U.S. Government Securities dealer selected by
the Fund as to which the Rating Agencies shall not have objected or their
respective affiliates or successors, if such entity is a U.S. Government
securities dealer.
"U.S. Treasury Securities" means direct obligations of the United States
Treasury that are entitled to the full faith and credit of the United States.
"U.S. Treasury Strips" means securities based on U.S. Treasury Securities
created through the Separate Trading of Registered Interest and Principal of
Securities program.
"Valuation Date" means, for purposes of determining whether the Fund is
maintaining the Preferred Stock Basic Maintenance Amount, the last Business Day
of each week commencing with the Date of Original Issue.
"Valuation Procedures" means the procedures adopted from time to time by the
Board of Directors for valuing the assets of the Fund.
"Voting Period" has the meaning set forth in Section 4 of Part I of these terms
of the AMPS.
"Winning Bid Rate" shall have the meaning specified in paragraph (a) of Section
3 of Part II of these terms of the AMPS.
PART I
1. NUMBER OF AUTHORIZED SHARES. The number of authorized shares
constituting the AMPS is 1,000, such shares having the preferences, rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption as set
forth herein.
2. DIVIDENDS.
(a) Ranking. The shares of a series of the AMPS shall rank on parity
with each other, with shares of any other series of the AMPS and with
shares of any other series of Preferred Stock as to the payment of
dividends by the Fund.
(b) Cumulative Cash Dividends. The Holders of any series of AMPS shall
be entitled to receive, when, as and if authorized by the Board of
Directors and declared by the Fund, out of funds legally available
therefor, in accordance with these terms of the AMPS and applicable law,
cumulative cash dividends at the Applicable Rate for shares of such series,
determined as set forth in paragraph (e) of this Section 2, and no more,
payable on the Dividend Payment Dates with respect to shares of such series
determined pursuant to paragraph (d) of this Section 2. Holders of AMPS
shall not be entitled to any dividend, whether payable in cash, property or
shares, in excess of full cumulative dividends, as herein provided, on
AMPS. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on AMPS which may be in
arrears, and, except to the extent set forth in subparagraph (e)(i) of this
Section 2, no additional sum of money shall be payable in respect of any
such arrearage. To the extent permitted under the Code, dividends on AMPS
will be designated as exempt-interest dividends. For the purposes of this
section, the term "net tax-exempt income" shall exclude capital gains of
the Fund.
(c) Dividends Cumulative From Date of Original Issue. Dividends on any
series of AMPS shall accumulate at the Applicable Rate for shares of such
series from the Date of Original Issue thereof.
(d) Dividend Payment Dates and Adjustment Thereof.
(i) The Dividend Payment Date with respect to the AMPS, for the
Initial Dividend Period, was September 13, 2000.
(ii) The Dividend Payment Date for any Subsequent Dividend Period
shall be:
(A) with respect to any Minimum Dividend Period and any
Short Term Dividend Period of 35 or fewer days, on the Business
Day next succeeding the last day of such Subsequent Dividend
Period; and
(B) with respect to any Short Term Dividend Period of more
than 35 days and with respect to any Long Term Dividend Period,
monthly on the first Business Day of each calendar month during
such Short Term Dividend Period or Long Term Dividend Period and
on the Business Day next succeeding the last day of such
Subsequent Dividend Period (each such date referred to in clause
(i) or (ii) being herein referred to as a "Normal Dividend
Payment Date"), except that if such Normal Dividend Payment Date
is not a Business Day, then the Dividend Payment Date shall be
the first Business Day next succeeding such Normal Dividend
Payment Date. Although any particular Dividend Payment Date may
not occur on the originally scheduled date because of the
exceptions discussed above, the next succeeding Dividend Payment
Date, subject to such exceptions, will occur on the next
following originally scheduled Dividend Payment Date; and
(iii) Notwithstanding the foregoing, the Fund in its discretion
may establish Dividend Payment Dates other than as provided in
paragraph (d) of this Section 2 of Part I of these terms of the AMPS
in respect of any Special Dividend Period of shares of a series of
AMPS consisting of more than a Minimum Dividend Period (a "Special
Dividend Payment Date"); provided, however, that such Special Dividend
Payment Dates shall be set forth in the Notice of Special Dividend
Period (as defined herein) relating to such Special Dividend Period,
as delivered to the Auction Agent, which Notice of Special Dividend
Period shall be filed with the Secretary of the Fund; and further
provided that (1) any such Special Dividend Payment Date shall be a
Business Day and (2) the last Special Dividend Payment Date in respect
of such Special Dividend Period shall be the Business Day immediately
following the last day thereof.
(e) Dividend Rates and Calculation of Dividends.
(i) Dividend Rates. The dividend rate on the AMPS during the period
from and after the Date of Original Issue of the AMPS to and including the
last day of the Initial Dividend Period of the AMPS was 6.57% per annum.
The initial dividend rate on any series of AMPS subsequently established by
the Fund shall be the rate set forth in or determined in accordance with
the resolutions of the Board of Directors establishing such series. For
each Subsequent Dividend Period of shares of such series thereafter, the
dividend rate on shares of such series shall be equal to the rate per annum
that results from an Auction for shares of such series on the Auction Date
next preceding such Subsequent Dividend Period; provided, however, that if:
A. an Auction for any such Subsequent Dividend Period is not held
for any reason other than as described below, the dividend rate on
shares of such series for such Subsequent Dividend Period will be the
Maximum Applicable Rate for shares of such series on the Auction Date
therefor;
B. any Failure to Deposit shall have occurred with respect to
shares of such series 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 Fund shall have paid to the Auction
Agent a late charge ("Late Charge") equal to the sum of (1) if such
Failure to Deposit consisted of the failure timely to pay to the
Auction Agent the full amount of dividends with respect to any
Dividend Period of the shares of such series, an amount computed by
multiplying (x) 300% of the Reference Rate for the Dividend Period
during which such Failure to Deposit occurs on the Dividend Payment
Date for such Dividend Period by (y) a fraction, the numerator of
which shall be the number of days for which such Failure to Deposit
has not been cured in accordance with 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 and
(2) if such Failure to Deposit consisted of the failure timely to pay
to the Auction Agent the Redemption Price of the shares, if any, of
such series for which Notice of Redemption has been mailed by the Fund
pursuant to paragraph (c) of Section 9 of this Part I, an amount
computed by multiplying (x) 300% of the Reference Rate for the
Dividend Period during which such Failure to Deposit occurs on the
redemption date by (y) a fraction, the numerator of which shall be the
number of days for which such Failure 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,
then no Auction will be held in respect of shares of such series for
the Subsequent Dividend Period thereof and the dividend rate for
shares of such series for such Subsequent Dividend Period will be the
Maximum Applicable Rate for shares of such series on the Auction Date
for such Subsequent Dividend Period; or
C. any Failure to Deposit shall have occurred with respect to
shares of such series during any Dividend Period thereof, and, prior
to 12:00 Noon, New York City time, on the third Business Day next
succeeding the date on which such Failure to Deposit occurred, such
Failure to Deposit shall not have been cured in accordance with
paragraph (f) of this Section 2 or the Fund shall not have paid the
applicable Late Charge to the Auction Agent, then no Auction will be
held in respect of shares of such series for the first Subsequent
Dividend Period thereafter (or for any Dividend Period thereafter to
and including the Dividend Period during which (1) such Failure to
Deposit is cured in accordance with paragraph (f) of this Section 2
and (2) the Fund pays the applicable Late Charge to the Auction Agent
(the condition set forth in this clause (2) to apply only in the event
Moody's is rating such shares at the time the Fund cures such Failure
to Deposit), in each case no later than 12:00 Noon, New York City
time, on the fourth Business Day prior to the end of such Dividend
Period), and the dividend rate for shares of such series for each such
Subsequent Dividend Period shall be a rate per annum equal to the
Non-Payment Period Rate for shares of such series on the Auction Date
for such Subsequent Dividend Period.
(ii) Calculation of Dividends. The amount of dividends per share
payable on shares of a series of AMPS on any date on which dividends shall
be payable on shares of such series shall be computed by multiplying the
Applicable Rate for shares of such series in effect for such Dividend
Period or Dividend Periods or part thereof for which dividends have not
been paid, by a fraction, the numerator of which shall be the number of
days in such Dividend Period or Dividend Periods or part thereof and the
denominator of which shall be 360, and applying the rate obtained against
$100,000, and rounding the amount obtained to the nearest cent.
(f) Curing a Failure to Deposit. A Failure to Deposit with respect to
shares of a series of AMPS shall have been cured (if such Failure to
Deposit is not solely due to the willful failure of the Fund to make the
required payment to the Auction Agent) with respect to any Dividend Period
of shares of such series if, within the respective time periods described
in subparagraph (e)(i) of this Section 2, the Fund shall have paid to the
Auction Agent (A) all accumulated and unpaid dividends and Late Charges on
shares of such Series and (B) without duplication, the Redemption Price for
shares, if any, of such series for which Notice of Redemption has been
mailed by the Fund pursuant to paragraph (c) of Section 9 of Part I of
these terms of the AMPS; provided, however, that the foregoing clause (B)
shall not apply to the Fund's failure to pay the Redemption Price in
respect of AMPS 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 Fund to Auction Agent. The Fund shall pay to
the Auction Agent, not later than 12:00 Noon, New York City time, on the
Business Day next preceding each Dividend Payment Date for shares of a
series of AMPS, an aggregate amount of funds available on the next Business
Day in the City of New York, New York, equal to the dividends to be paid to
all Holders of shares of such series on such Dividend Payment Date.
(h) Auction Agent as Trustee of Dividend Payments by Fund. All moneys
paid to the Auction Agent for the payment of dividends (or for the payment
of any Late Charge) shall be held in trust for the payment of such
dividends (and any such Late Charge) by the Auction Agent for the benefit
of the Holders specified in paragraph (i) of this Section 2. Any moneys
paid to the Auction Agent in accordance with the foregoing but not applied
by the Auction Agent to the payment of dividends (and any such Late Charge)
will, to the extent permitted by law, be repaid to the Fund at the end of
90 days from the date on which such moneys were to have been so applied.
(i) Dividends Paid to Holders. Each dividend on AMPS shall be paid on
the respective Dividend Payment Date to the Holders thereof as their names
appear on the Share Books on the Business Day next preceding such Dividend
Payment Date.
(j) Dividends Credited Against Earliest Accumulated but Unpaid
Dividends. Any dividend payment made on AMPS shall first be credited
against the earliest accumulated but unpaid dividends due with respect to
such 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 Share Books on
such date, not exceeding 15 days preceding the payment date thereof, as may
be fixed by the Board of Directors.
3. DESIGNATION OF SPECIAL DIVIDEND PERIODS.
(a) The Fund, at its option and to the extent permitted by law, by
telephonic and written notice (a "Request for Special Dividend Period") to
the Auction Agent and to each Broker-Dealer, may request that the next
succeeding Dividend Period for any series of AMPS will be a number of days
(other than twenty-eight) evenly divisible by seven, and not more than 364
in the case of a Short Term Dividend Period or one whole year or more but
not greater than five years in the case of a Long Term Dividend Period,
specified in such notice, provided that the Fund may not give a Request for
Special Dividend Period (and any such request will be null and void)
unless, for any Auction occurring after the initial Auction, (i) an Auction
for shares of such series is held on the Auction Date immediately preceding
the first day of such proposed Special Dividend Period, (ii) Sufficient
Clearing Bids were made in such Auction, and (iii) full cumulative
dividends and any amounts due with respect to redemptions have been paid in
full, and provided further that the Fund may not request a Special Dividend
Period unless the Fund shall have received written confirmation from the
Rating Agencies that the Fund's election of the proposed Special Dividend
Period would not impair the rating then assigned by the Rating Agencies of
the applicable series of AMPS and the lead Broker-Dealer designated by the
Fund, initially Merrill Lynch, Pierce, Fenner & Smith Incorporated, does
not object to the declaration of such Special Dividend Period. Such Request
for Special Dividend Period, in the case of a Short Term Dividend Period,
shall be given on or prior to the second Business Day but not more than
seven Business Days prior to an Auction Date for the AMPS of that series
and, in the case of a Long Term Dividend Period, shall be given on or prior
to the second Business Day but not more than twenty-eight days prior to an
Auction Date for the AMPS of that series. Upon receiving such Request for
Special Dividend Period, the Broker-Dealers jointly shall determine the
Optional Redemption Price of the AMPS of that series during such Special
Dividend Period and the Specific Redemption Provisions and shall give the
Fund and the Auction Agent written notice (a "Response") of such
determination by no later than the second Business Day prior to such
Auction date. In making such determination, the Broker-Dealers will
consider (i) existing short-term and long-term market rates and indices of
such short-term and long-term rates, (ii) existing market supply and demand
for short-term and long-term securities, (iii) existing yield curves for
short-term and long-term securities comparable to the AMPS, (iv) industry
and financial conditions which may affect the AMPS of that series, (v) the
investment objectives of the Fund and (vi) the Dividend Periods and
dividend rates at which current and potential beneficial holders of the
AMPS would remain or become beneficial holders.
(b) After providing the Request for Special Dividend Period to the
Auction Agent and each Broker-Dealer as set forth above, the Fund, by no
later than the second Business Day prior to such Auction Date, may give a
notice (a "Notice of Special Dividend Period") to the Auction Agent, the
Securities Depository, each Broker-Dealer and the Rating Agency which
notice will specify the duration of the Special Dividend Period. The Fund
will not give a Notice of Special Dividend Period and, if such Notice of
Special Dividend Period was given already, will give telephonic and written
notice of its revocation (a "Notice of Revocation") to the Auction Agent,
each Broker-Dealer, the Securities Depository and the Rating Agency on or
prior to the Business Day prior to the relevant Auction Date if (x) either
the 1940 Act Preferred Share Asset Coverage or the Preferred Stock Basic
Maintenance Amount is not satisfied, on each of the two Business Days
immediately preceding the Business Day prior to the relevant Auction Date
or (y) sufficient funds for the payment of dividends payable on the
immediately succeeding Dividend Payment Date have not been irrevocably
deposited with the Auction Agent by the close of business on the third
Business Day preceding the Auction Date immediately preceding such Dividend
Payment Date. The Fund also shall provide a copy of such Notice of Special
Dividend Period to each Rating Agency. If the Fund is prohibited from
giving a Notice of Special Dividend Period as a result of the factors
enumerated in clause (x) or (y) above or if the Fund gives a Notice of
Revocation with respect to a Notice of Special Dividend Period, the next
succeeding Dividend Period for that series of AMPS will be a Minimum
Dividend Period. In addition, in the event Sufficient Clearing Bids are not
made in an Auction, or if an Auction is not held for any reason, the next
succeeding Dividend Period will be a Minimum Dividend Period, and the Fund
may not again give a Notice of Special Dividend Period (and any such
attempted notice will be null and void) until Sufficient Clearing Bids have
been made in an Auction with respect to a Minimum Dividend Period.
4. VOTING RIGHTS.
(a) One Vote Per Share of AMPS. Except as otherwise provided in the
Charter or as otherwise required by law, (i) each Holder of AMPS shall be
entitled to one vote for each share of AMPS held by such Holder on each
matter submitted to a vote of stockholders of the Fund, and (ii) the
holders of outstanding AMPS and any other class or series of Preferred
Stock and of Common Stock shall vote together as a single class; provided,
however, that the holders of outstanding AMPS and any other class or series
of Preferred Stock shall be entitled, as a class, to the exclusion of the
holders of all classes and series of stock of the Fund, to elect two
Directors of the Fund out of the entire Board of Directors (regardless of
the number of Directors), each share of the AMPS and any other class or
series of Preferred Stock entitling the holder thereof to one vote;
provided, further, that the Board of Directors shall determine which
Directors are to be elected by the holders of the AMPS and any other class
or series of Preferred Stock and the holders of the AMPS and any other
class or series of Preferred Stock shall be entitled to elect only the
Directors so designated as being elected by the holders of the AMPS and any
other class or series of Preferred Stock, when their term shall have
expired; provided, finally, that, if the Board of Directors is divided into
classes, such Directors elected by the holders of the AMPS any other class
or series of Preferred Stock shall be allocated as evenly as possible among
the classes of Directors as determined by the Board of Directors. Subject
to paragraph (b) of this Section 4, the holders of outstanding Common Stock
and Preferred Stock, voting together as a single class, shall elect the
balance of the Directors.
(b) Voting For Additional Directors.
(i) Voting Period. Except as otherwise provided in the Charter or
as otherwise required by law, during any period in which any one or
more of the conditions described in subparagraphs (A) or (B) of this
subparagraph (b)(i) shall exist (such period being referred to herein
as a "Voting Period"), the number of Directors constituting the Board
of Directors shall automatically increase by the smallest number that,
when added to the two Directors elected exclusively by the holders of
Preferred Stock, including the AMPS, would constitute a majority of
the Board of Directors as so increased by such smallest number, and
the holders of Preferred Stock, including the AMPS, shall be entitled,
voting as a class on a one-vote-per-share basis (to the exclusion of
the holders of all other classes or series of stock of the Fund), to
elect such smallest number of additional Directors, together with the
two Directors 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 AMPS, 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 Auction Agent
for the payment of such accumulated dividends; or
(B) if at any time holders of Preferred Stock, including the
AMPS, are entitled under the 1940 Act to elect a majority of the
Directors of the Fund.
Upon the termination of a Voting Period, the voting rights
described in this subparagraph (b)(i) shall cease, subject
always, however, to the revesting of such voting rights in the
Holders upon the further occurrence of any of the events
described in this subparagraph (b)(i).
(ii) Notice of Special Meeting. As soon as practicable after the
accrual of any right of the Holders of Preferred Stock, including the
AMPS, to elect additional Directors as described in subparagraph
(b)(i) of this Section 4, the Fund shall notify the Auction Agent and
the Auction Agent shall call a special meeting of such Holders, by
mailing a notice of such special meeting to such Holders, such meeting
to be held not less than ten nor more than twenty days after the date
of mailing of such notice. If the Fund fails to send such notice to
the Auction Agent or if the Auction Agent does not call such a special
meeting, it may be called by any such Holder on like notice. The
record date for determining the Holders entitled to notice of and to
vote at such special meeting shall be the close of business on the
fifth Business Day preceding the day on which such notice is mailed.
At any such special meeting and at each meeting of Holders of
Preferred Stock, including the AMPS, held during a Voting Period at
which Directors are to be elected, such Holders, voting together as a
class (to the exclusion of the holders of all other classes or series
of stock of the Fund), shall be entitled to elect the number of
Directors prescribed in subparagraph (b)(i) of this Section 4 on a
one-vote-per-share basis.
(iii) Terms of Office of Existing Directors. The terms of office
of all persons who are Directors of the Fund at the time of a special
meeting of Holders and holders of other Preferred Stock to elect
Directors shall continue, notwithstanding the election at such meeting
by the Holders and such other holders of the number of Directors that
they are entitled to elect, and the persons so elected by the Holders
and such other holders, together with the two incumbent Directors
elected by the Holders and such other holders of Preferred Stock and
the remaining incumbent Directors elected by the holders of the Common
Stock and AMPS, shall constitute the duly elected Directors of the
Fund.
(iv) Terms of Office of Certain Directors to Terminate Upon
Termination of Voting Period. Simultaneously with the termination of a
Voting Period, the terms of office of the additional Directors elected
by the Holders and holders of other classes or series of Preferred
Stock pursuant to subparagraph (b)(i) of this Section 4 shall
terminate, the remaining Directors shall constitute the Directors of
the Fund, the number of Directors constituting the Board of Directors
shall decrease accordingly and the voting rights of the Holders and
such other holders to elect additional Directors pursuant to
subparagraph (b)(i) of this Section 4 shall cease, subject to the
provisions of the last sentence of subparagraph (b)(i) of this Section
4.
(c) Holders of AMPS to Vote on Certain Other Matters.
(i) Increases in Capitalization and Charter Amendments. So long
as any AMPS are outstanding, the Fund shall not, without the
affirmative vote or consent of the Holders of at least a majority of
the AMPS outstanding at the time, in person or by proxy, either in
writing or at a meeting, voting as a separate class: (a) authorize,
create or issue any class or series of shares ranking prior to or on a
parity with the AMPS with respect to the payment of dividends or the
distribution of assets upon dissolution, liquidation or winding up of
the affairs of the Fund, or authorize, create or issue additional
shares of any series of AMPS (except that, notwithstanding the
foregoing, but subject to the provisions of paragraph (c)(i) of
Section 9 of this Part I, the Board of Directors, without the vote or
consent of the Holders of AMPS, may from time to time authorize and
create, and the Fund may from time to time issue, additional shares of
any series of AMPS or classes or series of other Preferred Stock
ranking on a parity with AMPS with respect to the payment of dividends
and the distribution of assets upon dissolution, liquidation or
winding up of the affairs of the Fund, if the Fund obtains written
confirmation from the Rating Agencies that the issuance of a class or
series would not impair the rating then assigned by such rating agency
to the AMPS and the Fund continues to comply with Section 13 of the
1940 Act, the 1940 Act Preferred Share Asset Coverage and the
Preferred Stock Basic Maintenance Amount requirements); or (b) amend,
alter or repeal the provisions of the Charter including these terms of
the AMPS, whether by merger, consolidation or otherwise, so as to
adversely affect any preference, right or power of such AMPS or the
Holders thereof; provided, however, that (i) none of the actions
permitted by the exception to (a) above will be deemed to affect such
preferences, rights or powers, (ii) a division of AMPS will be deemed
to affect such preferences, rights or powers only if the terms of such
division adversely affect the Holders of AMPS and (iii) the
authorization, creation and issuance of classes or series of shares
ranking junior to the AMPS with respect to the payment of dividends
and the distribution of assets upon dissolution, liquidation or
winding up of the affairs of the Fund, will be deemed to affect such
preferences, rights or powers only if Moody's or S&P is then rating
the AMPS and such issuance would, at the time thereof, cause the Fund
not to satisfy the 1940 Act Preferred Share Asset Coverage or the
Preferred Stock Basic Maintenance Amount. So long as any shares of the
AMPS are outstanding, the Fund shall not, without the affirmative vote
or consent of the Holders of at least 66 2/3% of the AMPS outstanding
at the time, in person or by proxy, either in writing or at a meeting,
voting as a separate class, file a voluntary application for relief
under Federal bankruptcy law or any similar application under state
law for so long as the Fund is solvent and does not foresee becoming
insolvent. If any action set forth above would adversely affect the
rights of one or more series (the "Affected Series") of AMPS in a
manner different from any other series of AMPS, the Fund will not
approve any such action without the affirmative vote or consent of the
Holders of at least a majority of the shares of each such Affected
Series outstanding at the time, in person or by proxy, either in
writing or at a meeting (each such Affected Series voting as a
separate class).
(ii) 1940 Act and Other Matters. Unless a higher percentage is
provided for in the Charter, (A) the affirmative vote of the Holders
of at least a majority of the AMPS outstanding at the time, voting as
a separate class, shall be required to approve any conversion of the
Fund from a closed-end to an open-end investment company and (B) the
affirmative vote of the Holders of a "majority of the outstanding
AMPS," voting as a separate class, shall be required to approve any
plan of reorganization (as such term is used in the 1940 Act)
adversely affecting such shares. The affirmative vote of the Holders
of a "majority of the outstanding AMPS," voting as a separate class,
shall be required to approve any action not described in the first
sentence of this Section 4(c)(ii) requiring a vote of security holders
of the Fund under section 13(a) of the 1940 Act. For purposes of this
subparagraph (c)(ii), "majority of the outstanding AMPS" 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 AMPS is required pursuant to the provisions of section
13(a) of the 1940 Act, the Fund shall, not later than ten Business
Days prior to the date on which such vote is to be taken, notify the
Rating Agencies that such vote is to be taken and the nature of the
action with respect to which such vote is to be taken. The Fund shall,
not later than ten Business Days after the date on which such vote is
taken, notify the Rating Agencies of the results of such vote.
(d) Facts Ascertainable Outside Charter. The rights of the AMPS or the
Holders thereof, including, without limitation, the interpretation or
applicability of any or all covenants or other obligations of the Fund
contained herein or of the definitions of the terms listed below, all such
covenants, obligations and definitions having been adopted pursuant to
Rating Agency Guidelines, may from time to time be modified, altered or
repealed by the Board of Directors in its sole discretion, based on a
determination by the Board of Directors that such action is necessary or
appropriate in connection with obtaining or maintaining the rating of any
Rating Agency with respect to the AMPS or revising the Fund's investment
restrictions or policies consistent with guidelines of any Rating Agency,
and any such modification, alteration or repeal will not be deemed to
affect the preferences, rights or powers of AMPS or the Holders thereof,
provided that the Board of Directors receives written confirmation from
each relevant Rating Agency (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 the AMPS) that any such
modification, alteration or repeal would not adversely affect the rating
then assigned by such Rating Agency.
1940 Act Cure Date
1940 Act Preferred Share Asset Coverage
Annual Valuation Date
Applicable Percentage
Auditor's Confirmation
Closing Transaction
Deposit Securities
Discount Factor
Discounted Value
Eligible Asset
Exposure Period
Failure to Deposit
S&P Discount Factor
S&P Eligible Asset
S&P Hedging Transaction
S&P Loan Category
S&P Industry Classification
Forward Commitment
Independent Accountant
Market Value
Maximum Applicable Rate
Moody's Discount Factor
Moody's Eligible Asset
Moody's Hedging Transaction
Moody's Industry Classification
Outstanding
Preferred Stock Basic Maintenance Amount
Preferred Stock Basic Maintenance Cure Date
Preferred Stock Basic Maintenance Report
Pricing Service
Receivables for Municipal Obligations Sold
Reference Rate
Swap
Valuation Date
(e) Rights Set Forth Herein Are Sole Rights; No Appraisal Rights.
Unless otherwise required by law, the Holders of AMPS shall not have any
relative rights or preferences or other special rights other than those
specifically set forth herein. No holder of AMPS shall be entitled to
exercise the rights of an objecting stockholder under Title 3, Subtitle 2
of the Maryland General Corporation Law or any successor statute.
(f) No Preemptive Rights Or Cumulative Voting. The Holders of AMPS
shall have no preemptive rights or rights to cumulative voting.
(g) Voting For Directors Sole Remedy For Trust's Failure To Pay
Dividends. In the event that the Fund fails to pay any dividends on the
AMPS, the exclusive remedy of the Holders shall be the right to vote for
Directors 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
these terms of the AMPS, by the other provisions of the Charter by statute
or otherwise, no Holder shall be entitled to vote any share of AMPS and no
share of AMPS shall be deemed to be Outstanding for the purpose of voting
or determining the number of shares required to constitute a quorum if,
prior to or concurrently with the time of determination of shares entitled
to vote or shares deemed outstanding for quorum purposes, as the case may
be, the requisite Notice of Redemption with respect to such shares shall
have been mailed as provided in paragraph (c) of Section 9 of this Part I
and the Redemption Price for the redemption of such shares shall have been
deposited in trust with the Auction Agent for that purpose. No share of
AMPS held by the Fund or any affiliate of the Fund (except for shares held
by a Broker-Dealer that is an affiliate of the Fund for the account of its
customers) shall have any voting rights or be deemed to be outstanding for
voting or other purposes.
(i) Terms of Office of Certain Directors to Terminate. Simultaneously
with and at the time that none of the issued shares of AMPS are
Outstanding, the terms of office of any Directors elected solely by the
holders of such shares of AMPS shall automatically terminate and the
remaining directors shall constitute the directors of the Fund.
5. 1940 ACT PREFERRED SHARE ASSET COVERAGE. The Fund shall maintain, as of
the last Business Day of each month in which any AMPS are Outstanding, the 1940
Act Preferred Share Asset Coverage.
6. PREFERRED SHARES BASIC MAINTENANCE AMOUNT.
(a) So long as AMPS are Outstanding, the Fund 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 Preferred Stock Basic
Maintenance Amount (if Moody's is then rating the AMPS) and (ii) S&P
Eligible Assets having an aggregate Discounted Value equal to or greater
than the Preferred Stock Basic Maintenance Amount (if S&P is then rating
the AMPS).
(b) On or before 5:00 p.m., New York City time, on the third Business
Day after a Valuation Date on which the Fund fails to satisfy the Preferred
Stock Basic Maintenance Amount, and on the third Business Day after the
Preferred Stock Basic Maintenance Cure Date with respect to such Valuation
Date, the Fund shall complete and deliver to Moody's (if Moody's is then
rating the AMPS), S&P (if S&P is then rating the AMPS) and the Auction
Agent (if either Moody's or S&P is then rating the AMPS) a Preferred Stock
Basic Maintenance Report as of the date of such failure or such Preferred
Stock Basic Maintenance Cure Date, as the case may be, which will be deemed
to have been delivered to the Auction Agent if the Auction Agent receives a
copy or telecopy, telex or other electronic transcription thereof and on
the same day the Fund mails to the Auction Agent for delivery on the next
Business Day the full Preferred Stock Basic Maintenance Report. The Fund
shall also deliver a Preferred Stock Basic Maintenance Report to (i) the
Auction Agent (if either Moody's or S&P is then rating the AMPS) as of the
last Friday of each calendar month (or, if such day is not a Business Day,
the immediately prior Business Day), (ii) Moody's (if Moody's is then
rating the AMPS) and S&P (if S&P is then rating the AMPS) as of the last
Friday of each calendar month (or, if such day is not a Business Day, the
immediately prior Business Day), in each case on or before the third
Business Day after such day. A failure by the Fund to deliver a Preferred
Stock Basic Maintenance Report pursuant to the preceding sentence shall be
deemed to be delivery of a Preferred Stock Basic Maintenance Report
indicating the Discounted Value for all assets of the Fund is less than the
Preferred Stock Basic Maintenance Amount, as of the relevant Valuation
Date.
(c) Within ten Business Days after the date of delivery of a Preferred
Stock Basic Maintenance Report in accordance with paragraph (b) of this
Section 6 relating to an Annual Valuation Date, the Fund shall cause the
Independent Accountant to confirm in writing to Moody's (if Moody's is then
rating the AMPS), S&P (if S&P is then rating the AMPS) and the Auction
Agent (if either Moody's or S&P is then rating the AMPS):
(i) the mathematical accuracy of the calculations reflected in
such Preferred Stock Basic Maintenance Report (and in any other
Preferred Stock Basic Maintenance Report, randomly selected by the
Independent Accountant, that was prepared by the Fund during the
quarter ending on such Quarterly Valuation Date),
(ii) that, in such Preferred Stock Basic Maintenance Report (and
in such randomly selected Preferred Stock Basic Maintenance Report),
the Fund correctly determined in accordance with this Statement the
assets of the Fund which constitute Moody's Eligible Assets (if
Moody's is then rating the AMPS) and S&P Eligible Assets (if S&P is
then rating the AMPS),
(iii) that, in such Preferred Stock Basic Maintenance Report (and
in such randomly selected Preferred Stock Basic Maintenance Report),
the Fund determined whether the Fund had, at such Quarterly Valuation
Date (and at the Valuation Date addressed in such randomly selected
Report) in accordance with this Statement, Moody's Eligible Assets of
an aggregate Discounted Value at least equal to the Preferred Stock
Basic Maintenance Amount and S&P Eligible Assets of an aggregate
Discounted Value at least equal to the Preferred Stock Basic
Maintenance Amount,
(iv) with respect to the S&P ratings on portfolio securities of
the Fund, the issuer name, issue size and coupon rate, if any, listed
in such Report, that the Independent Accountant has requested that S&P
verify such information and the Independent Account and shall provide
a listing in its letter of any differences,
(v) with respect to the Moody's ratings on portfolio securities
of the Fund, the issuer name, issue size and coupon rate, if any,
listed in such Preferred Stock Basic Maintenance Report, that such
information has been verified by Moody's (in the event such
information is not verified by Moody's, the Independent Accountant
will inquire of Moody's what such information is, and provide a
listing in its letter of any differences) and
(vi) with respect to the bid or mean price (or such alternative
permissible factor used in calculating the Market Value) provided by
the custodian of the Fund's assets to the Fund for purposes of valuing
securities in the Fund's portfolio, the Independent Accountant has
traced the price used in such Preferred Stock Basic Maintenance Report
to the bid or mean price listed in such Preferred Stock Basic
Maintenance Report as provided to the Fund and verified that such
information agrees (in the event such information does not agree, the
Independent Accountant will provide a listing in its letter of such
differences) (such confirmation is herein called the "Auditor's
Confirmation").
(d) Within ten Business Days after the date of delivery of a Preferred
Stock Basic Maintenance Report in accordance with paragraph (b) of this
Section 6 relating to any Valuation Date on which the Fund failed to
satisfy the Preferred Stock Basic Maintenance Amount, and relating to the
Preferred Stock Basic Maintenance Cure Date with respect to such failure to
satisfy the Preferred Stock Basic Maintenance Amount, the Fund shall cause
the Independent Auditors to provide to Moody's (if Moody's is then rating
the AMPS), S&P (if S&P is then rating the AMPS) and the Auction Agent (if
either Moody's or S&P is then rating the AMPS) an Auditors' Confirmation as
to such Preferred Stock Basic Maintenance Report.
(e) If any Auditor's Confirmation delivered pursuant to paragraph (c)
or (d) of this Section 6 shows that an error was made in the Preferred
Stock Basic Maintenance Report for a particular Valuation Date for which
such Auditor's Confirmation was required to be delivered, or shows that a
lower aggregate Discounted Value for the aggregate of all Moody's Eligible
Assets (if Moody's is then rating the AMPS) or S&P Eligible Assets (if S&P
is then rating the AMPS), as the case may be, of the Fund was determined by
the Independent Accountant, the calculation or determination made by such
Independent Accountant shall be final and conclusive and shall be binding
on the Fund, and the Fund shall accordingly amend and deliver the Preferred
Stock Basic Maintenance Report to Moody's (if Moody's is then rating the
AMPS), S&P (if S&P is then rating the AMPS) and the Auction Agent (if
either Moody's or S&P is then rating the AMPS) promptly following receipt
by the Fund of such Auditors' Confirmation.
(f) On or before 5:00 p.m., New York City time, on the first Business
Day after the Date of Original Issue of any AMPS, the Fund shall complete
and deliver to Moody's (if Moody's is then rating the AMPS) and S&P (if S&P
is then rating the AMPS) a Preferred Stock Basic Maintenance Report as of
the close of business on such Date of Original Issue. Within five Business
Days of such Date of Original Issue, the Fund shall cause the Independent
Accountant to confirm in writing to the Auction Agent (if either Moody's or
S&P is then rating the AMPS), Moody's (if Moody's is then rating the AMPS)
and S&P (if S&P is then rating the AMPS) (i) the mathematical accuracy of
the calculations reflected in such Report and (ii) that the Discounted
Value of the respective Eligible Assets reflected thereon equals or exceeds
the Preferred Stock Basic Maintenance Amount reflected thereon.
(g) On or before 5:00 p.m., New York City time, on the third Business
Day after either (i) the Fund shall have redeemed Common Stock or (ii) the
ratio of the Discounted Value of Moody's Eligible Assets or the S&P
Eligible Assets to the Preferred Stock Basic Maintenance Amount is less
than or equal to 105%, or (iii) whenever requested by Moody's or S&P, the
Fund shall complete and deliver to Moody's (if Moody's is then rating the
AMPS) or S&P (if S&P is then rating the AMPS), as the case may be, a
Preferred Stock Basic Maintenance Report as of the date of such event.
7. RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS.
(a) Dividends on Shares Other Than the AMPS. 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 stock of the Fund ranking,
as to the payment of dividends, on a parity with the AMPS for any period
unless full cumulative dividends have been or contemporaneously are
declared and paid on the shares of each series of the AMPS through its most
recent Dividend Payment Date. When dividends are not paid in full upon the
shares of each series of the AMPS through its most recent Dividend Payment
Date or upon the shares of any other class or series of stock of the Fund
ranking on a parity as to the payment of dividends with the AMPS through
their most recent respective dividend payment dates, all dividends declared
upon the AMPS and any other such class or series of stock ranking on a
parity as to the payment of dividends with AMPS shall be declared pro rata
so that the amount of dividends declared per share on AMPS and such other
class or series of stock shall in all cases bear to each other the same
ratio that accumulated dividends per share on the Fund and such other class
or series of stock bear to each other (for purposes of this sentence, the
amount of dividends declared per share of AMPS shall be based on the
Applicable Rate for such share for the Dividend Periods during which
dividends were not paid in full).
(b) Dividends and Other Distributions with Respect to Common Stock
Under the 1940 Act. The Fund shall not declare any dividend (except a
dividend payable in Common Stock), or declare any other distribution, upon
the Common Stock, or purchase Common Stock, unless in every such case the
AMPS 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 AMPS are outstanding, and except as set forth in paragraph (a)
of this Section 7 and paragraph (c) of Section 9 of this Part I,
(A) the Fund 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 Stock or other shares, if any, ranking junior to
the AMPS as to the payment of dividends and the distribution of assets
upon dissolution, liquidation or winding up) in respect of the Common
Stock or any other shares of the Fund ranking junior to or on a parity
with the AMPS 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 Stock or any other such junior shares (except by conversion
into or exchange for shares of the Fund ranking junior to the AMPS 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 Fund ranking
junior to or on a parity with AMPS 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
AMPS through its most recently ended Dividend Period shall have been
paid or shall have been declared and sufficient funds for the payment
thereof deposited with the Auction Agent and (ii) the Fund has
redeemed the full number of AMPS required to be redeemed by any
provision for mandatory redemption pertaining thereto, and
(B) the Fund 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 Stock or other shares, if any, ranking junior to
AMPS as to the payment of dividends and the distribution of assets
upon dissolution, liquidation or winding up) in respect of Common
Stock or any other shares of the Fund ranking junior to AMPS 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 Stock or any other such
junior shares (except by conversion into or exchange for shares of the
Fund ranking junior to AMPS 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 AMPS) and S&P
Eligible Assets (if S&P is then rating the AMPS) would at least equal
the Preferred Stock Basic Maintenance Amount.
8. RATING AGENCY RESTRICTIONS.
(a) Moody's Restrictions. For so long as any shares of AMPS are rated
by Moody's, the Fund may buy or sell option contracts or write call options
on portfolio securities, swaps and securities lending, however if the Fund
intends to buy or sell financial futures contracts, write, purchase or sell
call options on financial futures contracts or purchase put options on
financial futures contracts, it must receive written confirmation from
Moody's to engage in such transactions as they could impair the ratings
then assigned to the shares of AMPS by Moody's, (collectively "Moody's
Hedging Transactions"), subject to the following limitations:
(i) Future And Call Options: For purposes of the Preferred Stock
Basic Maintenance Amount, futures held by the Fund and call options
sold by the Fund shall not be included as Moody's Eligible Assets.
Likewise, assets held in segregated accounts, including assets used to
cover good faith margin deposits and maximum daily variation payments,
in connection with such futures and any uncovered call options shall
not be included as Moody's Eligible Assets. For call options purchased
by the Fund, the Market Value of the call options will be included as
Moody's Eligible Asset subject to a Moody's Discount Factor mutually
agreed to between the Fund and Moody's.
(ii) Securities Lending: The Fund may engage in securities
lending in an amount not to exceed 10% of the Fund's total gross
assets or such other percentage as the Fund and Moody's may agree. For
purposes of calculating the Preferred Stock Basic Maintenance Amount,
such securities lent shall be included as Moody's Eligible Assets with
the appropriate Moody's Discount Factor applied to each such lent
security. The obligation to return such collateral shall not be
included as an obligation/liability for purposes of calculating the
Preferred Stock Basic Maintenance Amount. Moreover, the Fund may
reinvest cash collateral for securities lent in conformity with its
investment objectives and policies and the provisions of these terms
of the AMPS in securities that otherwise would qualify as Moody's
Eligible Assets. As collateral for securities lent, the Fund also may
receive securities that otherwise would qualify as Moody's Eligible
Assets. In either such event, to the extent that the securities
lending collateral constitutes Moody's Eligible Assets, if the value
of such collateral exceeds, whether due to appreciation or otherwise,
the value of the securities lent, in each case after applying the
appropriate Moody's Discount Factor, such excess shall be included as
a Moody's Eligible Asset. Conversely, if the discounted value of such
securities lending collateral is less than the discounted value of the
securities lent, such difference shall be included as an
obligation/liability of the Fund for purposes of calculating the
Preferred Stock Basic Maintenance Amount.
If not otherwise provided for in (a)(i)-(ii) above, derivative instruments
shall be treated as follows: Any derivative instruments will be valued
pursuant to the Valuation Procedures on a Valuation Date. The amount of the
net payment obligation and the cost of a closing transaction, as
appropriate, on any derivative instrument on a Valuation Date will be
counted as a liability for purposes of determining the Preferred Stock
Basic Maintenance Amount. Any derivative instrument with respect to which
the Fund is owed payment on the Valuation Date that is not based upon an
individual security or securities that are Moody's Eligible Assets will
either have a mutually agreed upon valuation by Moody's and the Fund for
purposes of determining Moody's Eligible Assets or will be excluded from
Moody's Eligible Assets. Any derivative instrument with respect to which
the Fund is owed payment on the Valuation Date that is based upon an
individual security or securities that are Moody's Eligible Assets (e.g., a
purchased call option on a bond that is in-the-money) will be valued as
follows for purposes of determining Moody's Eligible Assets: (A) For such
derivative instruments that are exchange traded, the value of the
in-the-money amount of the payment obligation to the Fund will be reduced
by applying the Moody's Discount Factor (as it would apply to the
underlying security or securities) and then added to Moody's Eligible
Assets; and (B) for such derivative instruments that are not exchange
traded, the value of the in-the-money amount of the payment obligation to
the Fund will be (1) reduced as described in (A) and (2) further reduced by
applying to the remaining amount the Moody's Discount Factor determined by
reference to the credit rating of the derivative counterparty, with the
remaining amount after these reductions then added to Moody's Eligible
Assets.
For purposes of determining whether the Fund has Moody's Eligible Assets
with an aggregate Discounted Value that equals or exceeds the Preferred
Stock Basic Maintenance Amount, the Discounted Value of all Forward
Commitments (defined below) to which the Fund is a party and of all
securities deliverable to the Fund pursuant to such Forward Commitments
shall be zero.
(iii) Exchange Traded Future, Etc. If the Fund purchases or sells
any exchange-traded futures, option or option on futures contract
based on an index approved by Moody's, it is subject to the following
limitations (transactions that are terminating contracts already held
by the Fund are exempt):
For financial futures contracts based on an index the total
number of contracts purchased should not exceed 10% of the
average open interest for the 30 days preceding the purchase of
such transaction as reported by The Wall Street Journal or other
respectable news source approved by Moody's;
Financial futures contracts based on an index approved by Moody's
are limited to 80% of Moody's Eligible Assets or 50% of the
Fund's holdings, whichever is greater; and
Financial futures contracts based on an index should be limited
to clearinghouses that are rated no lower than A by Moody's (or,
if not rated by Moody's but rated by S&P or Fitch, rated A by S&P
or Fitch).
The Fund may engage in financial futures contracts to close out any
outstanding financial futures contract based on any index approved by
Moody's, if the average open interest for the 30 days preceding the
transaction as reported by The Wall Street Journal or any other respectable
news source approved by Moody's is equal to or greater than the amount to
be closed as determined by Moody's and the Fund.
The Fund will engage in a Closing Transaction (defined below) to close out
any outstanding financial futures contract by no later than the fifth
Business Day of the month in which such contract expires and will engage in
a Closing Transaction to close out any outstanding option on a financial
futures contract by no later than the first Business Day of the month in
which such option expires;
The Fund will engage in Moody's Hedging Transactions only with respect to
financial futures contracts or options thereon having the next settlement
date or the settlement date immediately thereafter;
The Fund will not:
(A) Engage in options and futures transactions for
leveraging or speculative purposes;
(B) Write any call option or sell any financial futures
contracts for the purpose of hedging an anticipated purchase of
an asset;
(C) Enter into an option or futures transaction unless
Moody's has been notified of the Fund's intentions. In addition,
the Fund must present to Moody's that it will continue to have
Moody's Eligible Assets with an aggregate Discounted Value equal
to or greater than the Preferred Stock Basic Maintenance Amount.
For purposes of determining whether the Fund has Moody's Eligible Assets
with an aggregate Discounted Value that equals or exceeds the Preferred
Stock Basic Maintenance Amount, the Discounted Value of Moody's Eligible
Assets which the Fund is obligated to deliver to Moody's shall be as
follows:
(A) The call option written by the Fund must be either
exchange-traded and "readily reversible" or expires within 49 days
after the date of valuation and should be valued at the lesser of:
(i) The Discounted Value, or
(ii) The exercise price of the call option written by
the Fund;
(B) Assets subject to call options written by the Fund not
meeting the requirements of clause (A) of this sentence shall
have no value;
(C) Assets subject to put options written by the Fund shall
be valued at the lesser of:
(i) The exercise price of the put option, or
(ii) The Discounted Value of the subject security; and
(D) Where delivery of a security or class of securities may
be made to the Fund, it shall take delivery of the security or
class of securities with the lowest Discounted Value.
(iv) Adjustments for Options and Futures Contracts. For purposes
of determining whether the Fund has Moody's Eligible Assets with an
aggregate Discounted Value that equals or exceeds the Preferred Stock
Basic Maintenance Amount, the following amounts shall be subtracted
from the aggregate Discounted Value of the Moody's Eligible Assets
held by the Fund:
(A) 10% of the exercise price of a written call option;
(B) The exercise price of any written put option;
(C) The settlement price of the underlying futures contract
if the Fund writes put options on a futures contract; and
(D) 105% of the Market Value of the underlying futures
contracts if the Fund writes call options on a futures contract
and does not own the underlying contract.
(v) Forward Commitments. For so long as any AMPS are rated by
Moody's, the Fund may enter into contracts to purchase securities for
a fixed price at a future date beyond customary settlement time
("Forward Commitments"), provided that:
(A) The Fund will maintain in a segregated account with its
custodian cash, cash equivalents or short-term, fixed-income
securities rated P-1, MTG-1, MIG-1, or Baa or higher by Moody's
or, if not rated by Moody's, rated A1+/AA, SP-1+/AA, A or AA or
higher by S&P, and maturing prior to the date of the Forward
Commitment with a Market Value that equals or exceeds the amount
of the Fund's obligations under any Forward Commitment to which
it is from time to time a party or long-term fixed income
securities with a Market Value that equals or exceeds the amount
of the Fund's obligations under any Forward Commitment to which
it is from time to time a party; and
(B) The Fund will not enter into a Forward Commitment
unless, after giving effect thereto, the Fund would continue to
have Moody's Eligible Assets with an aggregate Discounted Value
equal to or greater than the Preferred Stock Basic Maintenance
Amount.
For purposes of determining whether the Fund has Moody's Eligible
Assets with an aggregate Discounted Value that equals or exceeds
the Preferred Stock Basic Maintenance Amount, the Discounted
Value of Forward Commitments will be calculated by applying the
respective Moody's Discount Factor.
(b) Other Restrictions. For so long as shares of AMPS are rated by
either Moody's or S&P, the Fund will not, unless it has received written
confirmation from Moody's or S&P, as the case may be, that such action
would not impair the ratings then assigned to shares of AMPS by Moody's or
S&P, as the case may be:
(i) borrow money except for the purpose of clearing transactions
in portfolio securities (which borrowings shall under any
circumstances be limited to the lesser of $10 million and an amount
equal to 5% of the Market Value of the Fund's assets at the time of
such borrowings and which borrowings shall be repaid within 60 days
and not be extended or renewed and shall not cause the aggregate
Discounted Value of Moody's Eligible Assets to be less than the
Preferred Stock Basic Maintenance Amount),
(ii) engage in short sales of securities;
(iii) issue any class or series of stock ranking prior to or on a
parity with the AMPS with respect to the payment of dividends or the
distribution of assets upon dissolution, liquidation or winding up of
the Fund;
(iv) reissue any AMPS previously purchased or redeemed by the
Fund;
(v) merge or consolidate into or with any other investment
company or entity;
(vi) change the Pricing Service; or
(vii) engage in reverse repurchase agreements.
9. REDEMPTION.
(a) Optional Redemption.
(i) To the extent permitted under the 1940 Act and Maryland law,
the Fund at its option may, without the consent of the Holders of
AMPS, redeem AMPS having a Dividend Period of one year or less, in
whole or in part, on the business day after the last day of such
Dividend Period upon not less than fifteen calendar days' and not more
than forty calendar days' prior notice. The optional redemption price
per share will be the Liquidation Preference per share, plus an amount
equal to accumulated but unpaid Dividends thereon (whether or not
earned or declared) to the date fixed for redemption. AMPS having a
Dividend Period of more than one year are redeemable at the option of
the Fund, in whole or in part, prior to the end of the relevant
Dividend Period, subject to any specific redemption provision, which
may include the payment of redemption premiums to the extent required
under any applicable specific redemption provisions. The Fund will not
make any optional redemption unless, after giving effect thereto (i)
the Fund has available certain Deposit Securities with maturities or
tender dates not later than the day preceding the applicable
Redemption Date and having a value not less than the amount (including
any applicable premium) due to holders of the AMPS by reasons of the
redemption of the AMPS on such date fixed for the redemption and (ii)
the Fund has eligible assets with an aggregate discounted value at
least equal to the Preferred Stock Basic Maintenance Amount.
Notwithstanding the foregoing, AMPS may not be redeemed at the option
of the Fund unless all dividends in arrears on the outstanding AMPS,
and all other shares of outstanding Preferred Stock have been or are
being contemporaneously paid or set aside for payment. A Notice of
Special Dividend Period relating to a Special Dividend Period of
shares of a series of AMPS, as delivered to the Auction Agent and
filed with the Secretary of the Fund, may provide that shares of such
series shall not be redeemable during the whole or any part of such
Special Dividend Period or shall be redeemable during the whole or any
part of such Special Dividend Period only upon payment of such
redemption premium or premiums as shall be specified therein ("Special
Redemption Provisions").
(ii) If fewer than all of the outstanding shares of a series of
AMPS are to be redeemed pursuant to subparagraph (i) of this paragraph
(a), the number of shares of such series to be redeemed shall be
determined by the Board of Directors, and such shares shall be
redeemed pro rata from the Holders of shares of such series in
proportion to the number of shares of such series held by such
Holders.
(iii) The Fund may not on any date mail a Notice of Redemption
pursuant to paragraph (c) of this Section 9 in respect of a redemption
contemplated to be effected pursuant to this paragraph (a) unless on
such date (A) the Fund has available Deposit Securities with maturity
or tender dates not later than the day preceding the applicable
redemption date and having a value not less than the amount (including
any applicable premium) due to Holders of AMPS by reason of the
redemption of such shares on such redemption date, and (B) the
Discounted Value of Moody's Eligible Assets (if Moody's is then rating
the AMPS) and S&P Eligible Assets (if S&P is then rating the AMPS)
each at least equals the Preferred Stock Basic Maintenance Amount, and
would at least equal the Preferred Stock 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 Preferred Stock Basic Maintenance Amount,
the Moody's Discount Factors applicable to Moody's Eligible Assets
shall be determined by reference to the first Exposure Period longer
than the Exposure Period then applicable to the Fund, as described in
the definition of Moody's Discount Factor herein.
(b) Mandatory Redemption. The Fund shall redeem, at a redemption price
equal to $100,000 per share plus accumulated but unpaid dividends thereon
(whether or not earned or declared) to (but not including) the date fixed
by the Board of Directors for redemption, certain of the AMPS, if the Fund
fails to have either Moody's Eligible Assets or S&P Eligible Assets with a
Discounted Value greater than or equal to the Preferred Stock Basic
Maintenance Amount or fails to maintain the 1940 Act Preferred Share Asset
Coverage, in accordance with the requirements of the Rating Agencies then
rating the AMPS, and such failure is not cured on or before the Preferred
Stock Basic Maintenance Cure Date or the 1940 Act Cure Date, as the case
may be. The number of AMPS to be redeemed shall be equal to the lesser of
(i) the minimum number of AMPS, together with all other Preferred Stock
subject to redemption or retirement, the redemption of which, if deemed to
have occurred immediately prior to the opening of business on the Cure
Date, would have resulted in the Fund's having Moody's Eligible Assets and
S&P Eligible Assets with a Discounted Value greater than or equal to the
Preferred Stock Basic Maintenance Amount or maintaining the 1940 Act
Preferred Stock Asset Coverage, as the case may be, on such Cure Date
(provided, however, that if there is no such minimum number of AMPS and
other Preferred Stock the redemption or retirement of which would have had
such result, all AMPS and other Preferred Stock then outstanding shall be
redeemed), and (ii) the maximum number of AMPS, together with all other
Preferred Stock subject to redemption or retirement, that can be redeemed
out of funds otherwise legally available therefor in accordance with the
Charter and applicable law. In determining the AMPS required to be redeemed
in accordance with the foregoing, the Fund shall allocate the number
required to be redeemed to satisfy the Preferred Stock Basic Maintenance
Amount or the 1940 Act Preferred Share Asset Coverage, as the case may be,
pro rata among AMPS and other Preferred Stock (and, then, pro rata among
each series of AMPS) subject to redemption or retirement. The Fund shall
effect such redemption on the date fixed by the Fund therefor, which date
shall not be earlier than twenty days nor later than forty days after such
Cure Date, except that if the Fund does not have funds legally available
for the redemption of all of the required number of the AMPS and other
Preferred Stock which are subject to redemption or retirement or the Fund
otherwise is unable to effect such redemption on or prior to forty days
after such Cure Date, the Fund shall redeem those AMPS and other Preferred
Stock 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 shares of a series of AMPS are to be redeemed pursuant to this
paragraph (b), the shares of such series to be redeemed shall be selected
by lot or such other method that the Fund deems fair and equitable.
(c) Notice of Redemption. If the Fund determines or is required to
redeem shares of a series of AMPS pursuant to paragraph (a) or (b) of this
Section 9, it shall mail a Notice of Redemption with respect to such
redemption by first-class mail, postage prepaid, to each Holder of the
shares of such series to be redeemed, at such Holder's address as the same
appears on the Share Books on the record date established by the Board of
Directors and to the Auction Agent. Such Notice of Redemption shall be so
mailed not less than fifteen nor more than forty days prior to the date
fixed for redemption. Each such Notice of Redemption shall state: (i) the
redemption date; (ii) the number of AMPS to be redeemed and the series
thereof; (iii) the CUSIP number for shares of such series; (iv) the
Redemption Price; (v) the place or places where the certificate(s) for such
shares (properly endorsed or assigned for transfer, if the Board of
Directors shall so require and the Notice of Redemption shall so state) are
to be surrendered for payment of the Redemption Price; (vi) that dividends
on the shares to be redeemed will cease to accumulate on such redemption
date; (vii) that the Holders of any shares of a series of AMPS being so
redeemed shall not participate in the Auction, if any, immediately
preceding the redemption date; and (viii) the provisions of this Section 9
under which such redemption is made. If fewer than all shares of a series
of AMPS held by any Holder are to be redeemed, the Notice of Redemption
mailed to such Holder shall also specify the number of shares of such
series to be redeemed from such Holder. The Fund may provide in any Notice
of Redemption relating to a redemption contemplated to be effected pursuant
to paragraph (a) of this Section 9 that such redemption is subject to one
or more conditions precedent and that the Fund shall not be required to
effect such redemption unless each such condition shall have been satisfied
at the time or times and in the manner specified in such Notice of
Redemption.
(d) No Redemption Under Certain Circumstances. Notwithstanding the
provisions of paragraphs (a) or (b) of this Section 9, if any dividends on
shares of a series of AMPS (whether or not earned or declared) are in
arrears, no shares of such series shall be redeemed unless all outstanding
shares of such Series are simultaneously redeemed, and the Fund shall not
purchase or otherwise acquire any shares of such series; provided, however,
that the foregoing shall not prevent the purchase or acquisition of all
outstanding shares of such series pursuant to the successful completion of
an otherwise lawful purchase or exchange offer made on the same terms to,
and accepted by, Holders of all outstanding shares of such series.
(e) Absence of Funds Available for Redemption. To the extent that any
redemption for which Notice of Redemption has been mailed 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
AMPS shall be deemed to exist at any time after the date specified for
redemption in a Notice of Redemption when the Fund shall have failed, for
any reason whatsoever, to deposit in trust with the Auction Agent the
Redemption Price with respect to any shares for which such Notice of
Redemption has been mailed; provided, however, that the foregoing shall not
apply in the case of the Fund's failure to deposit in trust with the
Auction Agent the Redemption Price with respect to any shares where (1) 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 Fund may not have redeemed AMPS for which a Notice of
Redemption has been mailed, dividends may be declared and paid on AMPS and
shall include those AMPS for which a Notice of Redemption has been mailed.
(f) Auction Agent as Trustee of Redemption Payments by Trust. All
moneys paid to the Auction Agent for payment of the Redemption Price of
AMPS called for redemption shall be held in trust by the Auction Agent for
the benefit of Holders of shares so to be redeemed.
(g) Shares for Which Notice of Redemption Has Been Given Are no Longer
Outstanding. Provided a Notice of Redemption has been mailed pursuant to
paragraph (c) of this Section 9, upon the deposit with the Auction Agent
(on the Business Day next preceding the date fixed for redemption thereby,
in funds available on the next Business Day in The City of New York, New
York) of funds sufficient to redeem the AMPS that are the subject of such
notice, dividends on such shares shall cease to accumulate and such shares
shall no longer be deemed to be outstanding for any purpose, and all rights
of the Holders of the shares so called for redemption shall cease and
terminate, except the right of such Holders to receive the Redemption
Price, but without any interest or other additional amount, except as
provided in subparagraph (e)(i) of Section 2 of this Part I. The Auction
Agent shall pay the Redemption Price to the Holders of AMPS subject to
redemption upon surrender of the certificates for the shares (properly
endorsed or assigned for transfer, if the Board of Directors shall so
require and the Notice of Redemption shall so state) to be redeemed in
accordance with the Notice of 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 Fund shall be entitled to receive from the
Auction Agent, promptly after the date fixed for redemption, any cash
deposited with the Auction Agent in excess of (i) the aggregate Redemption
Price of the AMPS called for redemption on such date and (ii) all other
amounts to which Holders of AMPS called for redemption may be entitled. Any
funds so deposited that are unclaimed at the end of ninety days from such
redemption date shall, to the extent permitted by law, be repaid to the
Fund, after which time the Holders of AMPS so called for redemption may
look only to the Fund for payment of the Redemption Price and all other
amounts to which they may be entitled.
(h) Compliance with Applicable Law. In effecting any redemption
pursuant to this Section 9, the Fund shall effect no redemption except in
accordance with the 1940 Act and any applicable Maryland law.
(i) Only Whole AMPS May be Redeemed. In the case of any redemption
pursuant to this Section 9, only whole AMPS shall be redeemed, and in the
event that any provision of the Charter would require redemption of a
fractional share, the Auction Agent shall be authorized to round up so that
only whole shares are redeemed.
(j) Modification of Redemption Procedures. Notwithstanding any of the
foregoing provisions of this Section 9, the Fund may modify any or all of
the requirements relating to the Notice of Redemption without the consent
of the Holders of the AMPS or holders of Common Stock, provided that (i)
any such modification does not materially and adversely affect any Holder
of the relevant series of AMPS, and (ii) the Fund receives written notice
from Moody's (if Moody's is then rating the AMPS) and S&P (if S&P is then
rating the AMPS) that such modification would not impair the ratings
assigned by Moody's and S&P to shares of AMPS.
10. LIQUIDATION RIGHTS.
(a) Ranking. The shares of a series of AMPS shall rank on a parity
with each other, with shares of any other series of Preferred Stock and
with shares of any other series of AMPS as to the distribution of assets
upon dissolution, liquidation or winding up of the affairs of the Fund.
(b) Distributions Upon Liquidation. Upon the dissolution, liquidation
or winding up of the affairs of the Fund, whether voluntary or involuntary,
the Holders of AMPS then outstanding shall be entitled to receive and to be
paid out of the assets of the Fund available for distribution to its
stockholders, before any payment or distribution shall be made on the
Common Stock or on any other class of shares of the Fund ranking junior to
the AMPS 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 earned or declared) accumulated
but unpaid to (but not including) the date of final distribution in same
day funds. After the payment to the Holders of the AMPS of the full
preferential amounts provided for in this paragraph (b), the Holders of
AMPS as such shall have no right or claim to any of the remaining assets of
the Fund.
(c) Pro Rata Distributions. In the event the assets of the Fund
available for distribution to the Holders of AMPS upon any dissolution,
liquidation, or winding up of the affairs of the Fund, 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 10, no such
distribution shall be made on account of any shares of any other class or
series of Preferred Stock ranking on a parity with the AMPS 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
AMPS, 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 AMPS with respect to the distribution of assets upon dissolution,
liquidation or winding up of the affairs of the Fund, after payment shall
have been made in full to the Holders of the AMPS as provided in paragraph
(b) of this Section 10, but not prior thereto, any other series or class or
classes of shares ranking junior to the AMPS with respect to the
distribution of assets upon dissolution, liquidation or winding up of the
affairs of the Fund 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 AMPS 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 Fund, nor the
merger or consolidation of the Fund into or with any business trust or
corporation nor the merger or consolidation of any business trust or
corporation into or with the Fund shall be a dissolution, liquidation or
winding up, whether voluntary or involuntary, for the purposes of this
Section 10.
(f) Liquidation Preference Opt-Out. In determining whether a
distribution (other than upon voluntary or involuntary dissolution) by
dividend, redemption or other acquisition of shares of stock of the Fund or
otherwise is permitted under the Maryland General Corporation Law, amounts
that would be needed, if the Fund were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of the
Holders of the AMPS will not be added to the Fund's total liabilities.
11. MISCELLANEOUS.
(a) Modification of Terms. Subject to the provisions of these terms of
the AMPS, the Board of Directors may, without stockholder approval (except
as otherwise provided by these terms of the AMPS or required by applicable
law), modify these terms of the AMPS to reflect any change hereto which the
Board of Directors is entitled to adopt pursuant to the terms of Section 4
hereof, this Section 11 or otherwise without stockholder approval.
(b) No Fractional Shares. No fractional shares of AMPS shall be
issued.
(c) Status of AMPS Redeemed, Exchanged or Otherwise Acquired by the
Fund. AMPS which are redeemed, exchanged or otherwise acquired by the Fund
shall return to the status of authorized and unissued shares of Preferred
Stock without further designation as to class or series.
(d) Board May Resolve Ambiguities. To the extent permitted by
applicable law, the Board of Directors may modify, interpret or adjust the
provisions of these terms of the AMPS to resolve any inconsistency or
ambiguity or to remedy any formal defect, and may amend these terms of the
AMPS with respect to any series of AMPS prior to the issuance of shares of
such series.
(e) Headings Not Determinative. The headings contained in these terms
of the AMPS are for convenience of reference only and shall not affect the
meaning or interpretation hereof.
(f) Notices. All notices or communications, unless otherwise specified
in the By-Laws of the Fund or these terms of the AMPS, shall be
sufficiently given if in writing and delivered in person or mailed by
first-class mail, postage prepaid.
(g) Certificate for AMPS. Except as may be otherwise provided by the
Board of Directors, and subject to Section 7 of Part II of these terms of
the AMPS, Holders of the AMPS are not entitled to certificates representing
the shares of stock held by them.
PART II
1. ORDERS.
(a) Prior to the Submission Deadline on each Auction Date for shares
of a series of AMPS:
(i) each Beneficial Owner of shares of such series may submit to
its Broker-Dealer by telephone or otherwise information as to:
(A) the number of Outstanding shares, if any, of such series
held by such Beneficial Owner which such Beneficial Owner desires
to continue to hold without regard to the Applicable Rate for
shares of such series for the next succeeding Dividend Period of
such shares;
(B) the number of Outstanding shares, if any, of such series
to be purchased or held by such Beneficial Owner, if the
Applicable Rate for shares of such series for the next Dividend
Period is not less than the rate specified in the bid, which
shares such Beneficial Owner shall be deemed to offer to sell if
the Applicable Rate for shares of such series for the next
succeeding Dividend Period of shares of such series shall be less
than the rate per annum specified by such Beneficial Owner;
and/or
(C) the number of Outstanding shares, if any, of such series
held by such Beneficial Owner which such Beneficial Owner offers
to sell without regard to the Applicable Rate for shares of such
series for the next succeeding Dividend Period of shares of such
series; and
(ii) one or more Broker-Dealers, using lists of Potential
Beneficial Owners, shall in good faith for the purpose of conducting a
competitive Auction in a commercially reasonable manner, contact
Potential Beneficial Owners (by telephone or otherwise), including
Persons that are not Beneficial Owners, on such lists to determine the
number of shares, if any, of such series which each such Potential
Beneficial Owner offers to purchase if the Applicable Rate for shares
of such series for the next succeeding Dividend Period of shares of
such series shall not be less than the rate per annum specified by
such Potential Beneficial Owner.
For the purposes hereof, the communication by a Beneficial Owner or Potential
Beneficial Owner to a Broker-Dealer, or by a Broker-Dealer to the Auction Agent,
of information referred to in clause (i) (A), (i) (B), (i) (C) or (ii) of this
paragraph (a) is hereinafter referred to as an "Order" and collectively as
"Orders" and each Beneficial Owner and each Potential Beneficial Owner placing
an Order with a Broker-Dealer, and such Broker-Dealer placing an order with the
Auction Agent, is hereinafter referred to as a "Bidder" and collectively as
"Bidders"; an Order containing the information referred to in clause (i)(A) of
this paragraph (a) is hereinafter referred to as a "Hold Order" and collectively
as "Hold Orders"; an Order containing the information referred to in clause
(i)(B) or (ii) of this paragraph (a) is hereinafter referred to as a "Bid" and
collectively as "Bids"; and an Order containing the information referred to in
clause (i)(C) of this paragraph (a) is hereinafter referred to as a "Sell Order"
and collectively as "Sell Orders."
(b) Bidding and Selling.
(i) A Bid by a Beneficial Owner or an Existing Holder of shares
of a series of AMPS subject to an Auction on any Auction Date shall
constitute an irrevocable offer to sell:
(A) the number of Outstanding shares of such series
specified in such Bid if the Applicable Rate for shares of such
series determined on such Auction Date shall be less than the
rate specified therein;
(B) such number or a lesser number of Outstanding shares of
such series to be determined as set forth in clause (iv) of
paragraph (a) of Section 4 of this Part II if the Applicable Rate
for shares of such series determined on such Auction Date shall
be equal to the rate specified therein; or
(C) the number of Outstanding shares of such series
specified in such Bid if the rate specified therein shall be
higher than the Maximum Applicable Rate for shares of such
series, or such number or a lesser number of Outstanding shares
of such series to be determined as set forth in clause (iii) of
paragraph (b) of Section 4 of this Part II if the rate specified
therein shall be higher than the Maximum Applicable Rate for
shares of such Series and Sufficient Clearing Bids for shares of
such series do not exist.
(ii) A Sell Order by a Beneficial Owner or an Existing Holder of
shares of a series of AMPS subject to an Auction on any Auction Date
shall constitute an irrevocable offer to sell:
(A) the number of Outstanding shares of such series
specified in such Sell Order; or
(B) such number or a lesser number of Outstanding shares of
such series as set forth in clause (iii) of paragraph (b) of
Section 4 of this Part II if Sufficient Clearing Bids for shares
of such series do not exist; provided, however, that a
Broker-Dealer that is an Existing Holder with respect to shares
of a series of AMPS shall not be liable to any Person for failing
to sell such shares pursuant to a Sell Order described in the
proviso to paragraph (c) of Section 2 of this Part II if (1) such
shares were transferred by the Beneficial Owner thereof without
compliance by such Beneficial Owner or its transferee
Broker-Dealer (or other transferee person, if permitted by the
Fund) with the provisions of Section 6 of this Part II or (2)
such Broker-Dealer has informed the Auction Agent pursuant to the
terms of its Broker-Dealer Agreement that, according to such
Broker-Dealer's records, such Broker Dealer believes it is not
the Existing Holder of such shares.
(iii) A Bid by a Potential Beneficial Holder or a Potential
Holder of shares of a series of AMPS subject to an Auction on any
Auction Date shall constitute an irrevocable offer to purchase:
(A) the number of Outstanding shares of such series
specified in such Bid if the Applicable Rate for shares of such
series determined on such Auction Date shall be higher than the
rate specified therein; or
(B) such number or a lesser number of Outstanding shares of
such Series as set forth in clause (v) of paragraph (a) of
Section 4 of this Part II if the Applicable Rate for shares of
such series determined on such Auction Date shall be equal to the
rate specified therein.
(c) No Order for any number of AMPS other than whole shares shall be
valid.
2. SUBMISSION OF ORDERS BY BROKER-DEALERS TO AUCTION AGENT.
(a) Each Broker-Dealer shall submit in writing to the Auction Agent
prior to the Submission Deadline on each Auction Date all Orders for AMPS
of a series subject to an Auction on such Auction Date obtained by such
Broker-Dealer, designating itself (unless otherwise permitted by the Fund)
as an Existing Holder in respect of shares subject to Orders submitted or
deemed submitted to it by Beneficial Owners and as a Potential Holder in
respect of shares subject to Orders submitted to it by Potential Beneficial
Owners, and shall specify with respect to each Order for such shares:
(i) the name of the Bidder placing such Order (which shall be the
Broker-Dealer unless otherwise permitted by the Fund);
(ii) the aggregate number of shares of such series that are the
subject of such Order;
(iii) to the extent that such Bidder is an Existing Holder of
shares of such series:
(A) the number of shares, if any, of such series subject to
any Hold Order of such Existing Holder;
(B) the number of shares, if any, of such series subject to
any Bid of such Existing Holder and the rate specified in such
Bid; and
(C) the number of shares, if any, of such series subject to
any Sell Order of such Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder of shares of
such series, the rate and number of shares of such series specified in
such Potential Holder's Bid.
(b) If any rate specified in any Bid contains more than three figures
to the right of the decimal point, the Auction Agent shall round such rate
up to the next highest one thousandth (.001) of 1%.
(c) If an Order or Orders covering all of the outstanding AMPS of a
series held by any Existing Holder is not submitted to the Auction Agent
prior to the Submission Deadline, the Auction Agent shall deem a Hold Order
to have been submitted by or on behalf of such Existing Holder covering the
number of Outstanding shares of such series held by such Existing Holder
and not subject to Orders submitted to the Auction Agent; provided,
however, that if an Order or Orders covering all of the Outstanding shares
of such series held by any Existing Holder is not submitted to the Auction
Agent prior to the Submission Deadline for an Auction relating to a Special
Dividend Period consisting of more than ninety-one days, the Auction Agent
shall deem a Sell Order to have been submitted by or on behalf of such
Existing Holder covering the number of outstanding shares of such series
held by such Existing Holder and not subject to Orders submitted to the
Auction Agent.
(d) If one or more Orders of an Existing Holder is submitted to the
Auction Agent covering in the aggregate more than the number of Outstanding
AMPS of a series subject to an Auction held by such Existing Holder, such
Orders shall be considered valid in the following order of priority:
(i) all Hold Orders for shares of such series shall be considered
valid, but only up to and including in the aggregate the number of
Outstanding shares of such series held by such Existing Holder, and if
the number of shares of such series subject to such Hold Orders
exceeds the number of Outstanding shares of such series held by such
Existing Holder, the number of shares subject to each such Hold Order
shall be reduced pro rata to cover the number of Outstanding shares of
such series held by such Existing Holder;
(ii) (A) any Bid for shares of such series shall be considered
valid up to and including the excess of the number of Outstanding
shares of such series held by such Existing Holder over the number of
shares of such series subject to any Hold Orders referred to in clause
(i) above;
(B) subject to subclause (A), if more than one Bid of an
Existing Holder for shares of such series is submitted to the
Auction Agent with the same rate and the number of Outstanding
shares of such series subject to such Bids is greater than such
excess, such Bids shall be considered valid up to and including
the amount of such excess, and the number of shares of such
series subject to each Bid with the same rate shall be reduced
pro rata to cover the number of shares of such series equal to
such excess;
(C) subject to subclauses (A) and (B), if more than one Bid
of an Existing Holder for shares of such series is submitted to
the Auction Agent with different rates, such Bids shall be
considered valid in the ascending order of their respective rates
up to and including the amount of such excess; and
(D) in any such event, the number, if any, of such
Outstanding shares of such series subject to any portion of Bids
considered not valid in whole or in part under this clause (ii)
shall be treated as the subject of a Bid for shares of such
Series by or on behalf of a Potential Holder at the rate therein
specified; and
(iii) all Sell Orders for shares of such series shall be
considered valid up to and including the excess of the number of
Outstanding shares of such series held by such Existing Holder over
the sum of shares of such series subject to valid Hold Orders referred
to in clause (i) above and valid Bids referred to in clause (ii)
above.
(e) If more than one Bid for one or more shares of a series of AMPS is
submitted to the Auction Agent by or on behalf of any Potential Holder,
each such Bid submitted shall be a separate Bid with the rate and number of
shares therein specified.
(f) Any Order submitted by a Beneficial Owner or a Potential
Beneficial Owner to its Broker-Dealer, or by a Broker-Dealer to the Auction
Agent, prior to the Submission Deadline on any Auction Date, shall be
irrevocable.
3. DETERMINATION OF SUFFICIENT CLEARING BIDS, WINNING BIDS RATE AND
APPLICABLE RATE.
(a) Not earlier than the Submission Deadline on each Auction Date for
shares of a series of AMPS, the Auction Agent shall assemble all valid
Orders submitted or deemed submitted to it by the Broker-Dealers in respect
of shares of such series (each such Order as submitted or deemed submitted
by a Broker-Dealer being hereinafter referred to individually as a
"Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as
the case may be, or as a "Submitted Order" and collectively as "Submitted
Hold Orders," "Submitted Bids" or "Submitted Sell Orders," as the case may
be, or as "Submitted Orders") and shall determine for such series:
(i) the excess of the number of Outstanding shares of such series
over the number of Outstanding shares of such series subject to
Submitted Hold Orders (such excess being hereinafter referred to as
the "Available AMPS" of such series);
(ii) from the Submitted Orders for shares of such series whether:
(A) the number of Outstanding shares of such series subject
to Submitted Bids of Potential Holders specifying one or more
rates equal to or lower than the Maximum Applicable Rate for
shares of such series; exceeds or is equal to the sum of;
(B) the number of Outstanding shares of such series subject
to Submitted Bids of Existing Holders specifying one or more
rates higher than the Maximum Applicable Rate for shares of such
series; and
(C) the number of Outstanding shares of such series subject
to Submitted Sell Orders (in the event such excess or such
equality exists (other than because the number of shares of such
series in subclauses (B) and (C) above is zero because all of the
Outstanding shares of such series are subject to Submitted Hold
Orders), such Submitted Bids in subclause (A) above being
hereinafter referred to collectively as "Sufficient Clearing
Bids" for shares of such series); and
(iii) if Sufficient Clearing Bids for shares of such series
exist, the lowest rate specified in such Submitted Bids (the "Winning
Bid Rate" for shares of such series) which if:
(A) (I) each such Submitted Bid of Existing Holders
specifying such lowest rate and (II) all other such Submitted
Bids of Existing Holders specifying lower rates were rejected,
thus entitling such Existing Holders to continue to hold the
shares of such series that are subject to such Submitted Bids;
and
(B) (I) each such Submitted Bid of Potential Holders
specifying such lowest rate and (II) all other such Submitted
Bids of Potential Holders specifying lower rates were accepted;
would result in such Existing Holders described in subclause (A)
above continuing to hold an aggregate number of Outstanding
shares of such series which, when added to the number of
Outstanding shares of such series to be purchased by such
Potential Holders described in subclause (B) above, would equal
not less than the Available AMPS of such series.
(b) Promptly after the Auction Agent has made the determinations
pursuant to paragraph (a) of this Section 3, the Auction Agent shall advise
the Fund of the Maximum Applicable Rate for shares of the series of AMPS
for which an Auction is being held on the Auction Date and, based on such
determination the Applicable Rate for shares of such series for the next
succeeding Dividend Period thereof as follows:
(i) if Sufficient Clearing Bids for shares of such series exist,
that the Applicable Rate for all shares of such series for the next
succeeding Dividend Period thereof shall be equal to the Winning Bid
Rate for shares of such series so determined;
(ii) if Sufficient Clearing Bids for shares of such series do not
exist (other than because all of the Outstanding shares of such series
are subject to Submitted Hold Orders), that the Applicable Rate for
all shares of such series for the next succeeding Dividend Period
thereof shall be equal to the Maximum Applicable Rate for shares of
such series; or
(iii) if all of the Outstanding shares of such series are subject
to Submitted Hold Orders, then the Dividend Period to which such
Auction relates shall be a Minimum Dividend Period and the Applicable
Rate for all shares of such series for the next succeeding Dividend
Period thereof shall be 90% of the applicable Reference Rate on such
Auction Date.
4. ACCEPTANCE AND REJECTION OF SUBMITTED BIDS AND SUBMITTED SELL ORDERS AND
ALLOCATION OF SHARES.
Existing Holders shall continue to hold the AMPS that are subject to Submitted
Hold Orders, and, based on the determinations made pursuant to paragraph (a) of
Section 3 of this Part II, the Submitted Bids and Submitted Sell Orders shall be
accepted or rejected by the Auction Agent and the Auction Agent shall take such
other action as set forth below:
(a) If Sufficient Clearing Bids for shares of a series of AMPS have
been made, all Submitted Sell Orders with respect to shares of such series
shall be accepted and, subject to the provisions of paragraphs (d) and (e)
of this section 4, Submitted Bids with respect to shares of such series
shall be accepted or rejected as follows in the following order of priority
and all other Submitted Bids with respect to shares of such series shall be
rejected:
(i) Existing Holders' Submitted Bids for shares of such series
specifying any rate that is higher than the Winning Bid Rate for
shares of such series shall be accepted, thus requiring each such
Existing Holder to sell the AMPS subject to such Submitted Bids;
(ii) Existing Holders' Submitted Bids for shares of such series
specifying any rate that is lower than the Winning Bid Rate for shares
of such series shall be rejected, thus entitling each such Existing
Holder to continue to hold the AMPS subject to such Submitted Bids;
(iii) Potential Holders' Submitted Bids for shares of such series
specifying any rate that is lower than the Winning Bid Rate for shares
of such series shall be accepted;
(iv) each Existing Holder's Submitted Bid for shares of such
series specifying a rate that is equal to the Winning Bid Rate for
shares of such series shall be rejected, thus entitling such Existing
Holder to continue to hold the AMPS subject to such Submitted Bid,
unless the number of Outstanding AMPS subject to all such Submitted
Bids shall be greater than the number of AMPS ("remaining shares") in
the excess of the Available AMPS of such series over the number of
AMPS subject to Submitted Bids described in clauses (ii) and (iii) of
this paragraph (a), in which event such Submitted Bid of such Existing
Holder shall be rejected in part, and such Existing Holder shall be
entitled to continue to hold AMPS subject to such Submitted Bid, but
only in an amount equal to the number of AMPS of such series obtained
by multiplying the number of remaining shares by a fraction, the
numerator of which shall be the number of Outstanding AMPS held by
such Existing Holder subject to such Submitted Bid and the denominator
of which shall be the aggregate number of Outstanding AMPS subject to
such Submitted Bids made by all such Existing Holders that specified a
rate equal to the Winning Bid Rate for shares of such series; and
(v) each Potential Holder's Submitted Bid for shares of such
series specifying a rate that is equal to the Winning Bid Rate for
shares of such series shall be accepted but only in an amount equal to
the number of shares of such series obtained by multiplying the number
of shares in the excess of the Available AMPS of such series over the
number of AMPS subject to Submitted Bids described in clauses (ii)
through (iv) of this paragraph (a) by a fraction, the numerator of
which shall be the number of Outstanding AMPS subject to such
Submitted Bid and the denominator of which shall be the aggregate
number of Outstanding AMPS subject to such Submitted Bids made by all
such Potential Holders that specified a rate equal to the Winning Bid
Rate for shares of such series.
(b) If Sufficient Clearing Bids for shares of a series of AMPS have
not been made (other than because all of the Outstanding shares of such
series are subject to Submitted Hold Orders), subject to the provisions of
paragraph (d) of this Section 4, Submitted Orders for shares of such series
shall be accepted or rejected as follows in the following order of priority
and all other Submitted Bids for shares of such series shall be rejected:
(i) Existing Holders' Submitted Bids for shares of such series
specifying any rate that is equal to or lower than the Maximum
Applicable Rate for shares of such series shall be rejected, thus
entitling such Existing Holders to continue to hold the AMPS subject
to such Submitted Bids;
(ii) Potential Holders' Submitted Bids for shares of such series
specifying any rate that is equal to or lower than the Maximum
Applicable Rate for shares of such series shall be accepted; and
(iii) Each Existing Holder's Submitted Bid for shares of such
series specifying any rate that is higher than the Maximum Applicable
Rate for shares of such series and the Submitted Sell Orders for
shares of such series of each Existing Holder shall be accepted, thus
entitling each Existing Holder that submitted or on whose behalf was
submitted any such Submitted Bid or Submitted Sell Order to sell the
shares of such series subject to such Submitted Bid or Submitted Sell
Order, but in both cases only in an amount equal to the number of
shares of such series obtained by multiplying the number of shares of
such series subject to Submitted Bids described in clause (ii) of this
paragraph (b) by a fraction, the numerator of which shall be the
number of Outstanding shares of such series held by such Existing
Holder subject to such Submitted Bid or Submitted Sell Order and the
denominator of which shall be the aggregate number of Outstanding
shares of such series subject to all such Submitted Bids and Submitted
Sell Orders.
(c) If all of the Outstanding shares of a series of AMPS are subject
to Submitted Hold Orders, all Submitted Bids for shares of such series
shall be rejected.
(d) If, as a result of the procedures described in clause (iv) or (v)
of paragraph (a) or clause (iii) of paragraph (b) of this Section 4, any
Existing Holder would be entitled or required to sell, or any Potential
Holder would be entitled or required to purchase, a fraction of a share of
a series of AMPS on any Auction Date, the Auction Agent shall, in such
manner as it shall determine in its sole discretion, round up or down the
number of AMPS of such series to be purchased or sold by any Existing
Holder or Potential Holder on such Auction Date as a result of such
procedures so that the number of shares so purchased or sold by each
Existing Holder or Potential Holder on such Auction Date shall be whole
AMPS.
(e) If, as a result of the procedures described in clause (v) of
paragraph (a) of this Section 4, any Potential Holder would be entitled or
required to purchase less than a whole share of a series of AMPS on any
Auction Date, the Auction Agent shall, in such manner as it shall determine
in its sole discretion, allocate AMPS of such series for purchase among
Potential Holders so that only whole shares of AMPS of such Series are
purchased on such Auction Date as a result of such procedures by any
Potential Holder, even if such allocation results in one or more Potential
Holders not purchasing AMPS of such series on such Auction Date.
(f) Based on the results of each Auction for shares of a series of
AMPS, the Auction Agent shall determine the aggregate number of shares of
such series to be purchased and the aggregate number of shares of such
series to be sold by Potential Holders and Existing Holders and, with
respect to each Potential Holder and Existing Holder, to the extent that
such aggregate number of shares to be purchased and such aggregate number
of shares to be sold differ, determine to which other Potential Holder(s)
or Existing Holder(s) they shall deliver, or from which other Potential
Holder(s) or Existing Holder(s) they shall receive, as the case may be,
AMPS of such series. Notwithstanding any provision of the Auction
Procedures to the contrary, in the event an Existing Holder or Beneficial
Owner of a series of AMPS with respect to whom a Broker-Dealer submitted a
Bid to the Auction Agent for such shares that was accepted in whole or in
part, or submitted or is deemed to have submitted a Sell Order for such
shares that was accepted in whole or in part, fails to instruct its Agent
Member to deliver such shares against payment therefor, partial deliveries
of AMPS that have been made in respect of Potential Holders' or Potential
Beneficial Owners' submitted Bids for shares of such series that have been
accepted in whole or in part shall constitute good delivery to such
Potential Holders and Potential Beneficial Owners.
(g) None of the Fund, the Advisers, the Auction Agent nor any
affiliate of any of them, shall have any responsibility or liability with
respect to the failure of an Existing Holder, a Potential Holder, a
Beneficial Owner, a Potential Beneficial Owner or its respective Agent
Member to deliver AMPS of any series or to pay for AMPS of any series sold
or purchased pursuant to the Auction Procedures or otherwise.
5. AUCTION AGENT. For so long as any AMPS are outstanding, the Auction
Agent, duly appointed by the Fund to so act, shall be in each case a commercial
bank, trust company or other financial institution independent of the Fund and
its Affiliates (which however may engage or have engaged in business
transactions with the Fund or its Affiliates) and at no time shall the Fund or
any of its affiliates act as the Auction Agent in connection with the Auction
Procedures. If the Auction Agent resigns or for any reason its appointment is
terminated during any period that any AMPS are outstanding, the Board of
Directors shall use its best efforts promptly thereafter to appoint another
qualified commercial bank, trust company or financial institution to act as the
Auction Agent. The Auction Agent's registry of Existing Holders of a series of
AMPS shall be conclusive and binding on the Broker-Dealers. A Broker-Dealer may
inquire of the Auction Agent between 3:00 p.m. on the Business Day preceding an
Auction for a series of AMPS and 9:30 a.m. on the Auction Date for such Auction
to ascertain the number of shares of such series in respect of which the Auction
Agent has determined such Broker-Dealer to be an Existing Holder. If such
Broker-Dealer believes it is the Existing Holder of fewer shares of such series
than specified by the Auction Agent in response to such Broker-Dealer's inquiry,
such Broker-Dealer may so inform the Auction Agent of that belief. Such
Broker-Dealer shall not, in its capacity as Existing Holder of shares of such
series, submit Orders in such Auction in respect of shares of such series
covering in the aggregate more than the number of shares of such series
specified by the Auction Agent in response to such Broker-Dealer's inquiry.
6. TRANSFER OF AMPS. Unless otherwise permitted by the Fund, a Beneficial
Owner or an Existing Holder may sell, transfer or otherwise dispose of AMPS only
in whole shares and only pursuant to a Bid or Sell Order placed with the Auction
Agent in accordance with the procedures described in this Part II or to a
Broker-Dealer; provided, however, that (a) a sale, transfer or other disposition
of AMPS from a customer of a Broker-Dealer who is listed on the records of that
Broker-Dealer as the holder of such shares to that Broker-Dealer or another
customer of that Broker-Dealer shall not be deemed to be a sale, transfer or
other disposition for purposes of this Section 6 if such Broker-Dealer remains
the Existing Holder of the shares so sold, transferred or disposed of
immediately after such sale, transfer or disposition and (b) in the case of all
transfers other than pursuant to Auctions, the Broker-Dealer (or other Person,
if permitted by the Fund) to whom such transfer is made shall advise the Auction
Agent of such transfer.
7. GLOBAL CERTIFICATE. Prior to the commencement of a Voting Period, (i)
all of the shares of a series of AMPS outstanding from time to time shall be
represented by one global certificate registered in the name of the Securities
Depository or its nominee and (ii) no registration of transfer of shares of a
series of AMPS shall be made on the books of the Fund to any Person other than
the Securities Depository or its nominee.
8. FORCE MAJEURE.
(a) Notwithstanding anything else set forth herein, if an Auction Date
is not a Business Day because the New York Stock Exchange is closed for
business due to an act of God, natural disaster, act of war, civil or
military disturbance, act of terrorism, sabotage, riots or a loss or
malfunction of utilities or communications services or the Auction Agent is
not able to conduct an Auction in accordance with the Auction Procedures
for any such reason, then the Auction Rate for the next Dividend Period
shall be the Auction Rate determined on the previous Auction Date.
(b) Notwithstanding anything else set forth herein, if a Dividend
Payment Date is not a Business Day because the New York Stock Exchange is
closed for business due to an act of God, natural disaster, act of war,
civil or military disturbance, act of terrorism, sabotage, riots or a loss
or malfunction of utilities or communications services or the dividend
payable on such date can not be paid for any such reason, then:
(i) the Dividend Payment Date for the affected Dividend Period
shall be the next Business Day on which the Fund and its paying agent,
if any, are able to cause the dividend to be paid using their
reasonable best efforts;
(ii) the affected Dividend Period shall end on the day it would
have ended had such event not occurred and the Dividend Payment Date
had remained the scheduled date; and
(iii) the next Dividend Period will begin and end on the dates on
which it would have begun and ended had such event not occurred and
the Dividend Payment Date remained the scheduled date.
SECOND: The foregoing amendments to the Charter were declared advisable by the
Board of Directors of the Corporation and approved by the stockholders entitled
to vote on the matter.
THIRD: The undersigned President of the Corporation acknowledges these Articles
of Amendment to be the corporate act of the Corporation and, as to all matters
or facts required to be verified under oath, the undersigned President
acknowledges that, to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
to be signed in its name and on its behalf by its President and attested to by
its Secretary on this _____ day of April, 2006.
ATTEST: BOULDER TOTAL RETURN FUND, INC.
_______________________________ By:_________________________________(SEAL)
Stephanie Kelley, Secretary Stephen C. Miller, President
APPENDIX A
SETTLEMENT PROCEDURES
Capitalized terms used herein shall have the respective meanings specified
in the terms of the AMPS.
(a) On each Auction Date, the Auction Agent shall notify by telephone
or through the Auction Agent's auction processing system the Broker-Dealers
that participated in the Auction held on such Auction Date and submitted an
Order on behalf of any Beneficial Owner or Potential Beneficial Owner of:
(i) the Applicable Rate fixed for the next succeeding Dividend
Period;
(ii) whether Sufficient Clearing Bids existed for the
determination of the Applicable Rate;
(iii) if such Broker-Dealer (a "Seller's Broker-Dealer")
submitted a Bid or a Sell Order on behalf of a Beneficial Owner, the
number of AMPS, if any, to be sold by such Beneficial Owner;
(iv) if such Broker-Dealer (a "Buyer's Broker-Dealer") submitted
a Bid on behalf of a Potential Beneficial Owner, the number of AMPS,
if any, to be purchased by such Potential Beneficial Owner;
(v) if the aggregate number of AMPS to be sold by all Beneficial
Owners on whose behalf such Broker-Dealer submitted a Bid or a Sell
Order exceeds the aggregate number of AMPS to be purchased by all
Potential Beneficial Owners on whose behalf such Broker-Dealer
submitted a Bid, the name or names of one or more Buyer's
Broker-Dealers (and the name of the Agent Member, if any, of each such
Buyer's Broker-Dealer) acting for one or more purchasers of such
excess number of AMPS and the number of such shares to be purchased
from one or more Beneficial Owners on whose behalf such Broker-Dealer
acted by one or more Potential Beneficial Owners on whose behalf each
of such Buyer's Broker-Dealers acted;
(vi) if the aggregate number of AMPS to be purchased by all
Potential Beneficial Owners on whose behalf such Broker-Dealer
submitted a Bid exceeds the aggregate number of AMPS to be sold by all
Beneficial Owners on whose behalf such Broker-Dealer submitted a Bid
or a Sell Order, the name or names of one or more Seller's
Broker-Dealers (and the name of the Agent Member, if any, of each such
Seller's Broker-Dealer) acting for one or more sellers of such excess
number of AMPS and the number of such shares to be sold to one or more
Potential Beneficial Owners on whose behalf such Broker-Dealer acted
by one or more Beneficial Owners on whose behalf each of such Seller's
Broker-Dealers acted; and
(vii) the Auction Date of the next succeeding Auction with
respect to the AMPS.
(b) On each Auction Date, each Broker-Dealer that submitted an Order
on behalf of any Beneficial Owner or Potential Beneficial Owner shall:
(i) in the case of a Broker-Dealer that is a Buyer's
Broker-Dealer, instruct each Potential Beneficial Owner on whose
behalf such Broker-Dealer submitted a Bid that was accepted, in whole
or in part, to instruct such Potential Beneficial Owner's Agent Member
to pay to such Broker-Dealer (or its Agent Member) through the
Securities Depository the amount necessary to purchase the number of
AMPS to be purchased pursuant to such Bid against receipt of such
shares and advise such Potential Beneficial Owner of the Applicable
Rate for the next succeeding Dividend Period;
(ii) in the case of a Broker-Dealer that is a Seller's
Broker-Dealer, instruct each Beneficial Owner on whose behalf such
Broker-Dealer submitted a Sell Order that was accepted, in whole or in
part, or a Bid that was accepted, in whole or in part, to instruct
such Beneficial Owner's Agent Member to deliver to such Broker-Dealer
(or its Agent Member) through the Securities Depository the number of
AMPS to be sold pursuant to such Order against payment therefor and
advise any such Beneficial Owner that will continue to hold AMPS of
the Applicable Rate for the next succeeding Dividend Period;
(iii) advise each Beneficial Owner on whose behalf such
Broker-Dealer submitted a Hold Order of the Applicable Rate for the
next succeeding Dividend Period;
(iv) advise each Beneficial Owner on whose behalf such
Broker-Dealer submitted an Order of the Auction Date for the next
succeeding Auction; and
(v) advise each Potential Beneficial Owner on whose behalf such
Broker-Dealer submitted a Bid that was accepted, in whole or in part,
of the Auction Date for the next succeeding Auction.
(c) On the basis of the information provided to it pursuant to (a)
above, each Broker-Dealer that submitted a Bid or a Sell Order on behalf of
a Potential Beneficial Owner or a Beneficial Owner shall, in such manner
and at such time or times as in its sole discretion it may determine,
allocate any funds received by it pursuant to (b)(i) above and any AMPS
received by it pursuant to (b)(ii) above among the Potential Beneficial
Owners, if any, on whose behalf such Broker-Dealer submitted Bids, the
Beneficial Owners, if any, on whose behalf such Broker-Dealer submitted
Bids that were accepted or Sell Orders, and any Broker-Dealer or
Broker-Dealers identified to it by the Auction Agent pursuant to (a)(v) or
(a)(vi) above.
(d) On each Auction Date:
(i) each Potential Beneficial Owner and Beneficial Owner shall
instruct its Agent Member as provided in (b)(i) or (ii) above, as the
case may be;
(ii) each Seller's Broker-Dealer which is not an Agent Member of
the Securities Depository shall instruct its Agent Member to (A) pay
through the Securities Depository to the Agent Member of the
Beneficial Owner delivering shares to such Broker-Dealer pursuant to
(b)(ii) above the amount necessary to purchase such shares against
receipt of such shares, and (B) deliver such shares through the
Securities Depository to a Buyer's Broker-Dealer (or its Agent Member)
identified to such Seller's Broker-Dealer pursuant to (a)(v) above
against payment therefor; and
(iii) each Buyer's Broker-Dealer which is not an Agent Member of
the Securities Depository shall instruct its Agent Member to (A) pay
through the Securities Depository to a Seller's Broker-Dealer (or its
Agent Member) identified pursuant to (a)(vi) above the amount
necessary to purchase the shares to be purchased pursuant to (b)(i)
above against receipt of such shares, and (B) deliver such shares
through the Securities Depository to the Agent Member of the purchaser
thereof against payment therefor.
(e) On the day after the Auction Date:
(i) each Bidder's Agent Member referred to in (d)(i) above shall
instruct the Securities Depository to execute the transactions
described in (b)(i) or (ii) above, and the Securities Depository shall
execute such transactions;
(ii) each Seller's Broker-Dealer or its Agent Member shall
instruct the Securities Depository to execute the transactions
described in (d)(ii) above, and the Securities Depository shall
execute such transactions; and
(iii) each Buyer's Broker-Dealer or its Agent Member shall
instruct the Securities Depository to execute the transactions
described in (d)(iii) above, and the Securities Depository shall
execute such transactions.
(f) If a Beneficial Owner selling AMPS in an Auction fails to deliver
such shares (by authorized book-entry), a Broker-Dealer may deliver to the
Potential Beneficial Owner on behalf of which it submitted a Bid that was
accepted a number of whole AMPS that is less than the number of shares that
otherwise was to be purchased by such Potential Beneficial Owner. In such
event, the number of AMPS to be so delivered shall be determined solely by
such Broker-Dealer. Delivery of such lesser number of shares shall
constitute good delivery. Notwithstanding the foregoing terms of this
paragraph (f), any delivery or non-delivery of shares which shall represent
any departure from the results of an Auction, as determined by the Auction
Agent, shall be of no effect unless and until the Auction Agent shall have
been notified of such delivery or non-delivery in accordance with the
provisions of the Auction Agency Agreement and the Broker-Dealer
Agreements.
PROXY
BOULDER TOTAL RETURN FUND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Common Stock of Boulder Total Return Fund,
Inc., a Maryland corporation (the "Fund"), hereby appoints Stephen C. Miller,
Carl D. Johns, and Jon-Luc Dupuy, or any of them, as proxies for the
undersigned, with full powers of substitution in each of them, to attend the
Annual Meeting of Stockholders (the "Annual Meeting") to be held at the
Scottsdale Plaza Resort, 7200 N. Scottsdale Road, Scottsdale, Arizona at 9:00
a.m. Mountain Standard Time (local time), on April 24, 2006, and any
adjournments or postponements thereof, to cast on behalf of the undersigned all
votes that the undersigned is entitled to cast at the Annual Meeting and to
otherwise represent the undersigned at the Annual Meeting with all the powers
possessed by the undersigned if personally present at the Meeting. The votes
entitled to be cast will be cast as instructed below. If this Proxy is executed
but no instruction is given, the votes entitled to be cast by the undersigned
will be cast "FOR" each of the nominees for Director and "FOR" each of the other
proposals described in the Proxy Statement. The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting and Proxy Statement. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting. A majority of the proxies present and acting
at the Annual Meeting in person or by substitute (or, if only one shall be so
present, then that one) shall have and may exercise all of the power and
authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
Please indicate your vote by an "X" in the appropriate box below.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
Please refer to the Proxy Statement for a discussion of the Proposals.
------------ ------------------------------------------------------------- ----------- ----------------- -------------------------
Election of Directors: Nominees are Joel W. Looney, Dennis FOR____ WITHHOLD___ FOR ALL EXCEPT ___
1. R. Causier., and Dr. Dean L. Jacobson.
----------------------------------------------------------------------------------------------------------------------------------
Instruction: If you do not wish your shares voted "for" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted "For" the remaining nominee(s).
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" ELECTION OF ALL THE NOMINEES
----------------------------------------------------------------------------------------------------------------------------------
2. Amendments to the Fund's charter (the "Charter") which FOR___ AGAINST ___ ABSTAIN ___
will repeal in their entirety all of the currently
existing terms of the Fund's taxable auction market
preferred stock and substitute in lieu thereof the new
terms set forth in the Form of Articles of Amendment.
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THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS
PROPOSAL, AS MORE FULLY DESCRIBED IN THE PROXY STATEMENT
----------------------------------------------------------------------------------------------------------------------------------
3. An amendment to the Charter to provide that the number of FOR___ AGAINST ___ ABSTAIN ___
directors of the Fund shall be five, subject to the
provisions of any class or series of Preferred Stock.
----------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS
PROPOSAL, AS MORE FULLY DESCRIBED IN THE PROXY STATEMENT
----------------------------------------------------------------------------------------------------------------------------------
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name appears on this Proxy. If joint owners,
EACH should sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.
Signature:
-------------------------
Date:
-------------------------
Signature:
-------------------------
Date:
-------------------------
[AMPS PROXY CARD]
PROXY
BOULDER TOTAL RETURN FUND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of the Taxable Auction Market Preferred Stock
("AMPS") of Boulder Total Return Fund, Inc., a Maryland corporation (the
"Fund"), hereby appoints Stephen C. Miller, Carl D. Johns, and Jon-Luc Dupuy, or
any of them as proxies for the undersigned, with full powers of substitution in
each of them, to attend the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at the Scottsdale Plaza Resort, 7200 N. Scottsdale Road,
Scottsdale, Arizona at 9:00 a.m. Mountain Standard Time (local time), on April
24, 2006, and any adjournments or postponements thereof, to cast on behalf of
the undersigned all votes that the undersigned is entitled to cast at the Annual
Meeting and to otherwise represent the undersigned at the Annual Meeting with
all the powers possessed by the undersigned if personally present at the
Meeting. The votes entitled to be cast will be cast as instructed below. If this
Proxy is executed but no instruction is given, the votes entitled to be cast by
the undersigned will be cast "FOR" each of the nominees for Director and "FOR"
each of the other proposals described in the Proxy Statement. The undersigned
hereby acknowledges receipt of the Notice of Annual Meeting and Proxy Statement.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Meeting. A majority of the proxies present and
acting at the Annual Meeting in person or by substitute (or, if only one shall
be so present, then that one) shall have and may exercise all of the power and
authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
Please indicate your vote by an "X" in the appropriate box below.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
Please refer to the Proxy Statement for a discussion of the Proposals.
------------ ------------------------------------------------------------- ----------- ----------------- -------------------------
1. Election of Directors: Nominees are Susan L. Ciciora and FOR____ WITHHOLD___ FOR ALL EXCEPT ___
Richard I. Barr.
----------------------------------------------------------------------------------------------------------------------------------
Instruction: If you do not wish your shares voted "for" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted "For" the remaining nominee(s).
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" ELECTION OF ALL THE NOMINEES
----------------------------------------------------------------------------------------------------------------------------------
2. Amendments to the Fund's charter (the "Charter") which FOR___ AGAINST ___ ABSTAIN ___
will repeal in their entirety all of the currently
existing terms of the Fund's taxable auction market
preferred stock and substitute in lieu thereof the new
terms set forth in the Form of Articles of Amendment.
----------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS
PROPOSAL, AS MORE FULLY DESCRIBED IN THE PROXY STATEMENT
----------------------------------------------------------------------------------------------------------------------------------
3. An amendment to the Charter to provide that the number of FOR___ AGAINST ___ ABSTAIN ___
directors of the Fund shall be five, subject to the
provisions of any class or series of Preferred Stock.
----------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS
PROPOSAL, AS MORE FULLY DESCRIBED IN THE PROXY STATEMENT
----------------------------------------------------------------------------------------------------------------------------------
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name appears on this Proxy. If joint owners,
EACH should sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.
Signature:
-------------------------
Date:
-------------------------
Signature:
-------------------------
Date:
-------------------------