1940 Act File No. 811-07555
As filed with the Securities and Exchange Commission on May 2, 1996.
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
REGISTRATION STATEMENT UNDER
/X/ THE INVESTMENT COMPANY ACT OF 1940
Huron Investment Fund, Inc.
(Exact name of Registrant as Specified in Charter)
Huron Investment Fund, Inc.
c/o Global Debt Financing Desk
Merrill Lynch & Co.
250 Vesey Street, North Tower
World Financial Center
New York, NY 10281-1316
Attention: Jeffrey B. Craig
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (313) 222-3263
James A. McIntosh
Comerica Bank
411 W. Lafayette Avenue
Detroit, MI 48226
(Name and Address of Agent for Service)
Richard T. Prins, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
(212) 735-3000
PART A -- INFORMATION REQUIRED IN A PROSPECTUS
Item 1. OUTSIDE FRONT COVER.
Not applicable.
Item 2. INSIDE FRONT AND OUTSIDE BACK COVER PAGE.
Not applicable.
Item 3. FEE TABLE AND SYNOPSIS.
1. Costs and Expenses.
SHAREHOLDER TRANSACTION EXPENSES
Sales Load (as a percentage of
offering price) . . . . . . . . . . . . None
Dividend Reinvestment and Cash
Purchase Plan Fees . . . . . . . . . . . None
ANNUAL EXPENSES (AS A PERCENTAGE OF NET
ASSETS ATTRIBUTABLE TO COMMON SHARES)
Management Fees . . . . . . . . . . . . . 0.04%
Interest Payments on Borrowed Funds . . . *
Other Expenses . . . . . . . . . . . . . . 0.19%
TOTAL ANNUAL EXPENSES . . . . . . . . . . 0.23%
__________
* Less than .005%
Example 1 year 3 years 5 years 10 years
You would pay the
following expenses
on a $1,000 invest-
ment, assuming a 5%
annual return: $ 2 $ 7 $ 12 $ 24
This example should not be considered a representation
of future expenses, which may be greater or lesser than
those shown.
2. Synopsis.
Not applicable.
Item 4. FINANCIAL HIGHLIGHTS.
Not applicable.
Item 5. PLAN OF DISTRIBUTION.
Not applicable.
Item 6. SELLING SHAREHOLDERS.
Not applicable.
Item 7. USE OF PROCEEDS.
Not applicable.
Item 8. GENERAL DESCRIPTION OF THE REGISTRANT.
1. General.
Huron Investment Fund, Inc. (the "Company") is a
closed-end diversified management investment company
which was incorporated under the laws of the State of
Maryland on October 12, 1995.
2.-4. Investment Objectives and Policies; Risk
Factors and Other Policies.
The Company's investment objective is long term capital
appreciation with income as a secondary objective. The
Company will seek to realize its investment objective
primarily through investing and trading in securities
of various types, including common stock, preferred
stock, convertible debentures, non-convertible
debentures, bonds, notes and various money market
instruments such as commercial paper, bankers
acceptances and money market funds. Such securities
may be issued by U.S. or non-U.S. issuers, may be
denominated in U.S. dollars or any non-U.S. currency,
may be, if a debt obligation, of any term, either
secured or unsecured and of any credit quality at least
investment grade at the time of investment, and may be
traded primarily in the U.S. or in non-U.S. markets.
The Company intends to issue preferred stock and, so
long as any preferred stock is outstanding, expects to
invest primarily in common stocks of large, medium and
small capitalization U.S. companies, non-U.S. companies
whose shares are listed on a U.S. exchange and American
depositary receipts ("ADRs") of non-U.S. companies that
are traded in the U.S.
The Company's investment objective is fundamental and
cannot be changed without shareholder approval. There
can be no assurance that the Company will achieve its
investment objective.
The following sets forth certain of the Company's
significant investment policies, which are not
fundamental and may be changed without shareholder
approval. The Company will provide prior notice to its
securityholders if it determines to commence any
practice as to which it states herein that it does not
currently propose to engage in such practice or to
expand materially any practice identified herein as
insignificant to the Company.
Foreign Securities. From time to time, the Company may
invest and trade in securities of non-U.S. issuers and
securities denominated or quoted in non-U.S.
currencies. Investments in securities of non-U.S.
issuers and securities denominated or whose prices are
quoted in non-U.S. currencies pose currency exchange
risks (including blockage, devaluation and non-
exchange-ability) as well as a range of other potential
risks which could include, depending on the country
involved, expropriation, confiscatory taxation,
political or social instability, illiquidity, price
volatility and market manipulation. In addition, less
information may be available regarding securities of
non-U.S. issuers and non-U.S. issuers may not be
subject to accounting, auditing and financial reporting
standards and requirements comparable to or as uniform
as those of U.S. issuers. Transaction costs of
investing in non-U.S. securities markets are generally
higher than in the U.S. There is generally less
government supervision and regulation of exchanges,
brokers and issuers than there is in the U.S. The
Company might have greater difficulty taking
appropriate legal action in non-U.S. courts. Non-U.S.
markets also have different clearance and settlement
procedures which, in some markets, have at times failed
to keep pace with the volume of transactions, thereby
creating substantial delays and settlement failures
that could adversely affect the Company's performance.
The Company may purchase ADRs, which are receipts
issued by U.S. banks or trust companies in respect of
securities of foreign issuers held on deposit for use
in the U.S. securities markets. While ADRs may not
necessarily be denominated in the same currency as the
securities into which they may be converted, many of
the risks associated with foreign securities may also
apply to ADRs.
Investment Grade Fixed Income Securities. The Company
may also invest and trade in (i) mortgage-backed
securities and other securities issued or guaranteed by
the U.S. government or its agencies and
instrumentalities, (ii) mortgage-backed and asset-
backed securities rated AAA by Standard & Poor's
Ratings Services ("S&P") and (iii) corporate debt
securities rated at the time of investment no lower
than the fourth highest rating category by S&P.
Securities rated in the fourth highest rating category
"BBB" (including those rated as low as BBB-) by S&P are
investment grade securities and are considered by S&P
"as having an adequate capacity to pay interest and
repay principal. Such securities normally exhibit
adequate protection parameters, but adverse economic
conditions or changing circumstances are more likely to
lead to a weakened capacity to pay. Interest payments
and principal security appear adequate for the present
but certain protective elements may be lacking or may
be characteristically unreliable over any great length
of time. Such bonds lack outstanding investment
characteristics and in fact have speculative
characteristics as well."
Lending Securities. By lending its portfolio
securities, the Company attempts to increase its income
through the receipt of interest on the loan. Any gain
or loss in the market price of the securities loaned
that may occur during the term of the loan will be for
the account of the Company. The Company may lend its
portfolio securities so long as the terms and the
structure of such loans are not inconsistent with
requirements of the Investment Company Act of 1940 (the
"1940 Act"), which currently require that (i) the
borrower pledge and maintain with the Company
collateral consisting of cash, a letter of credit
issued by a domestic U.S. bank, or securities issued or
guaranteed by the U.S. Government having a value at all
times not less than 100% of the value of the securities
loaned, (ii) the borrower add to such collateral
whenever the price of the securities loaned rises
(i.e., the value of the loan is "marked to the market"
on a daily basis), (iii) the loan be made subject to
termination by the Company at any time and (iv) the
Company receive reasonable interest on the loan (which
may include the Company's investing any cash collateral
in interest bearing short-term investments), any
distributions on the loaned securities and any increase
in their market value. The Company will not lend
portfolio securities if, as a result, the aggregate of
such loans exceeds the value of the Company's total
assets (including such loans). Loan arrangements made
by the Company will comply with all other applicable
regulatory requirements. All relevant facts and
circumstances, including the creditworthiness of the
institution to which the loan is made, will be
monitored by the Company, and will be considered in
making decisions with respect to lending of securities,
subject to review by the Company's Board of Directors.
The Company may pay reasonable negotiated fees in
connection with loaned securities, so long as such fees
are set forth in a written contract and approved by the
Company's Board of Directors. In addition, voting
rights may pass with the loaned securities, but if a
material event were to occur affecting such securities,
the loan must be called and the securities voted.
Short Selling. The Company may make short sales of
securities. A short sale is a transaction in which the
Company sells a security it does not own in
anticipation that the market price of that security
will decline. The Company may make short sales both as
a form of hedging to offset potential declines in long
positions in similar securities and in order to
maintain portfolio flexibility.
When the Company makes a short sale, it must borrow the
security sold short and deliver it to the broker-dealer
through which it made the short sale as collateral for
its obligation to deliver the security upon conclusion
of the sale. The Company may have to pay a fee to
borrow particular securities and is often obligated to
pay over any payments received on such borrowed
securities.
The Company's obligation to replace the borrowed
security will be secured by collateral deposited with
the broker-dealer, usually cash, U.S. government
securities or other high grade liquid securities
similar to those borrowed. The Company will also be
required to deposit similar collateral with its
custodian to the extent, if any, necessary so that the
value of both collateral deposits in the aggregate is
at all times equal to at least 100% of the current
market value of the security sold short. Depending on
arrangements made with the broker-dealer from which it
borrowed the security regarding payment over any
payments received by the Company on such security, the
Company may not receive any payments (including
interest) on its collateral deposited with such broker-
dealer.
If the price of the security sold short increases
between the time of the short sale and the time the
Company replaces the borrowed security, the Company
will incur a loss; conversely, if the price declines,
the Company will realize a gain. Any gain will be
decreased, and any loss increased, by the transaction
costs described above. Although the Company's gain is
limited to the price at which it sold the security
short, its potential loss is theoretically unlimited.
The Company may also make short sales "against the
box," which involves the short sale of a security
already owned by the Company with delivery of other
units of such security borrowed from others.
When-Issued and Forward Commitment Securities. The
Company may purchase securities on a "when-issued"
basis and may purchase or sell securities on a "forward
commitment" basis in order to hedge against anticipated
changes in interest rates and prices. When such
transactions are negotiated, the price, which is
generally expressed in yield terms, is fixed at the
time the commitment is made, but delivery and payment
for the securities take place at a later date. When-
issued securities and forward commitments may be sold
prior to the settlement date, but the Company will
enter into when-issued and forward commitments only
with the intention of actually receiving or delivering
the securities, as the case may be. If the Company
disposes of the right to acquire a when-issued security
prior to its acquisition or disposes of its right to
deliver or receive against a forward commitment, it can
incur a gain or loss. At the time the Company enters
into a transaction on a when-issued or forward
commitment basis, it will segregate with the custodian
cash or other liquid high grade debt securities with a
value not less than the value of the when-issued or
forward commitment securities. The value of these
assets will be monitored daily to ensure that their
marked to market value will at all times exceed the
corresponding obligations of the Company. There is
always a risk that the securities may not be delivered
and that the Company may incur a loss. Settlements in
the ordinary course are not treated by the Company as
when-issued or forward commitment transactions and
accordingly are not subject to the foregoing
restrictions.
Leverage. The Company has issued and outstanding 4000
shares of auction market preferred stock, liquidation
preference $100,000 per share (the "Preferred Stock"),
which were sold in transactions not involving any
public offering of securities. The Preferred Stock
consists of $100 million in Series A Preferred Stock,
$100 million in Series B Preferred Stock, $100 million
in Series C Preferred Stock and $100 million in Series
D Preferred Stock. The issuance of the Preferred Stock
has resulted in the leveraging of the Common Stock.
Utilization of leverage through the issuance of
preferred stock involves certain risks. So long as the
Company is able to realize a higher net return on its
incremental investment portfolio than the then current
dividend rate of any Preferred Stock together with
other related expenses, the effect of the leverage will
be to cause holders of Common Stock to realize a higher
current net investment income than if the Company were
not so leveraged. On the other hand, to the extent
that the then current dividend rate on any Preferred
Stock approaches the net return on the Company's
incremental investment portfolio, the benefit of
leverage to holders of Common Stock will be reduced,
and if the then current dividend rate on any Preferred
Stock were to exceed the net return on the Company's
incremental portfolio, the Company's leveraged capital
structure would result in a lower rate of return to
holders of Common Stock than if the Company were not so
leveraged. If the Company's current investment income
were not sufficient to meet dividend requirements on
any Preferred Stock and other expenses, it could be
necessary for the Company to liquidate certain of its
investments, thereby reducing the net asset value
attributable to the Company's Common Stock.
Under the requirements of the 1940 Act, the value of
the Company's total assets, less all liabilities and
indebtedness of the Company, must at least be equal,
immediately after any such issuance of preferred stock,
to 200% of the aggregate liquidation value of any
outstanding Preferred Stock. Such percentage must also
be met any time the Company pays a dividend or makes
any other distribution on Common Stock (other than a
distribution in Common Stock) or any time the Company
repurchases Common Stock, in each case after giving
effect to such dividend, distribution or repurchase.
In order to maintain passthrough tax status under
Subchapter M of the Internal Revenue Code of 1986 (the
"Code"), the Company must distribute at least 90% of
its investment income each year. Failure to maintain
such status might impair the ability of the Company to
make required payments on its Preferred Stock.
Under the 1940 Act, the holders of Preferred Stock,
voting as a class, must have the right to elect at
least two directors at all times, and, subject to the
prior rights, if any, of the holders of any other class
of senior securities outstanding, to elect a majority
of the directors if at any time dividends on such class
of securities shall be unpaid in an amount equal to two
full years' dividends on such securities, and to
continue to be so represented until all dividends in
arrears shall have been paid or otherwise provided for.
In addition, the vote of a majority of the holders of
Preferred Stock, voting as a class, is required to
approve any plan of reorganization adversely affecting
the Preferred Stock, or any action requiring a vote of
security holders pursuant to Section 13(a) of the 1940
Act, including, among other things, changes in the
Company's subclassification as a closed-end investment
company or changes in its fundamental investment
policies.
The Company is authorized to borrow money from banks or
otherwise. The Company has borrowed $222,500 through
the issuance of long-term notes in transactions not
involving the public offering of any securities. The
Company also expects to borrow money in connection with
short term clearance of transactions and other
temporary uses. The Company expects that its average
borrowings outstanding will not affect the return to
the holders of its Common Stock by more than .005% and
would not adversely affect the return to the holders of
its Common Stock by more than .02% even if its negative
return on its portfolio securities is 10% per year.
Borrowing by the Company creates an opportunity for
increased net income but, at the same time, creates
special risk considerations. For example, leveraging
may exaggerate changes in the net asset value of the
Company's shares and in the yield on the Company's
portfolio. Although the principal amount of such
borrowings will be fixed, the Company's assets may
change in value during the time the borrowing is
outstanding. Borrowing will create interest expenses
for the Company which can exceed the income from the
assets retained. To the extent the income derived from
securities purchased with borrowed funds exceeds the
interest the Company will have to pay, the Company's
net income will be greater than if borrowing were not
used. Conversely, if the income from the assets
obtained with borrowed funds is not sufficient to cover
the cost of borrowing, the net income of the Company
will be less than if borrowing were not used, and
therefore the amount available for distribution to
stockholders as dividends will be reduced.
The Company expects that some of its borrowings may be
made on a secured basis. In such situations, either the
custodian will segregate the pledged assets for the
benefit of the lender or arrangements will be made with
(i) the lender to act as a subcustodian if the lender
is a bank or otherwise qualifies as a custodian of
investment company assets or (ii) a suitable
subcustodian.
Although the Company may purchase and sell futures
contracts and options thereon on stock and bond
indices, as well as options on particular securities,
the Company does not expect to do so.
5. Share Price Data.
Not Applicable.
6. Business Development Companies.
Not Applicable.
Item 9. MANAGEMENT.
1. General.
a. Board of Directors. The business and affairs
of the Company will be managed under the
direction of the Board of Directors. All
powers of the Company may be exercised by or
under the authority of the Board of Directors
except as conferred on or reserved to the
stockholders by law or by the charter or by-
laws of the Company.
b. Investment Advisers. The Company's investment
activities will be managed by World Asset
Management, its investment adviser pursuant to
an investment advisory agreement (the
"Advisory Agreement") between the Company and
World Asset Management, and the Company's
other activities and affairs will be managed
by its administrator, in each case subject to
overall supervision by its Board of Directors,
which is responsible under Maryland law to act
in what it believes is the best interests of
the Company.
World Asset Management (the "Adviser") is a
Delaware general partnership with principal
offices at 255 East Brown Street, Suite 250,
Birmingham, Michigan 48009. The principal
general partner of World Asset Management with
a 99% partnership interest is Munder Capital
Management, a Delaware general partnership,
the general partners of which are WAM
Holdings, Inc. and Woodbridge Capital
Management, Inc. (the "Comerica Partners"),
Old MCM, Inc. and Munder Group, L.L.C. The
Comerica Partners have offices at One Detroit
Center, 500 Woodward Avenue, Detroit, Michigan
48226 and are wholly owned subsidiaries of
Comerica Bank-Ann Arbor, N.A., which, in turn,
is a wholly owned subsidiary of Comerica
Incorporated, a publicly held bank holding
company. Mr. Lee P. Munder, Munder Capital
Management's chief executive officer, owns a
controlling stock interest in Old MCM, Inc.
and a controlling membership interest in
Munder Group, L.L.C., which have offices at
480 Pierce Street, Birmingham, Michigan 48009.
Currently, Old MCM, Inc. holds more than a 50%
partnership interest in World Asset
Management, as represented by the partners'
capital accounts. As a result, Mr. Munder,
who is not affiliated with Comerica Bank, may
be deemed to control World Asset Management.
In addition, employees of Munder Capital
Management may acquire additional partnership
interests in Munder Capital Management from
time to time through Munder Group, L.L.C.
World Asset Management is an independent
investment adviser with more than $9 billion
under management in domestic and foreign
equity and domestic fixed income assets. Its
business was developed in the last 15 years,
first as a department and then as wholly-owned
incorporated subsidiary of Comerica
Incorporated and one of its predecessors,
Manufacturers Bank, N.A.
World Asset Management will have the
discretion to supervise, manage and direct the
Company's assets, in accordance with the
objectives, policies and restrictions set
forth in response to Item 8 under "Investment
Objectives and Policies," as amended from time
to time, or as set forth in written
instructions furnished by the Company. It
will be the Company's responsibility to advise
World Asset Management of any modifications
thereof as they occur. World Asset Management
may, without prior consultation with the
Company and at such times when World Asset
Management deems appropriate, (a) purchase,
sell, invest, reinvest, exchange, convert,
trade in and otherwise deal with such assets;
and (b) place all orders for the purchase or
sale of portfolio securities with or through
brokers, dealers or issuers selected by it or
designated by the Company. World Asset
Management will vote the proxies solicited by
or with respect to the issuers of the
Company's portfolio securities.
The fees for services as Adviser will be one
hundredth of one percent per annum (0.01%) of
the average of the month end aggregate fair
market value of the equity securities held in
the Company's portfolio and will be computed
and payable as of the last business day of
each calendar quarter. In the event that
services commence or terminate other than at
the beginning of a quarter, the fee will be
prorated accordingly.
The Advisory Agreement also provides that in
the absence of willful misfeasance, bad faith
or negligence in the performance of its
duties, or by reason of its reckless disregard
of its obligations and duties thereunder,
World Asset Management is not liable to the
Company for any act or omission by World Asset
Management in the supervision or management of
its respective investment activities or for
any loss sustained by the Company. The
Advisory Agreement may be terminated at any
time on 30 days notice by one party to the
other; provided that such termination by the
Company must be directed or approved in
accordance with the 1940 Act.
Mr. James A. McIntosh, a Director and
President of the Company, is an officer of
Comerica Bank, a wholly owned subsidiary of
Comerica Incorporated which is affiliated with
World Asset Management as described above. On
March 4, 1996, the Company entered into
agreements with Comerica Bank by which it
undertook to act as the custodian of the
Company's assets, and to provide
administrative services to the Company. Mr.
David C. Gylfe, a Director of the Company, is
also a Vice President of Comerica Bank. Mr.
Robert H. Bockrath II, the Secretary and
Treasurer of the Company, is also a Trust
Officer of Comerica Bank.
World Asset Management is registered as an
investment adviser under the Investment
Advisers Act of 1940, as amended, and such
registration is currently effective.
c. Portfolio Management. Mr. Todd B. Johnson
will be primarily responsible for making day-
to-day portfolio decisions. Mr. Johnson has
been a Chief Investment Officer of World Asset
Management since 1996, a Director of World
Asset Management from 1994 to 1996, a
Portfolio Manager of Woodbridge Capital
Management from 1992 to 1994 and Second Vice
President and Investment Officer,
Manufacturers Bank, N.A. (formerly
Manufacturers National Bank of Detroit) from
1992 to 1994; Investment Officer of
Manufacturers National Bank of Detroit from
1990 to 1992; and Investment Analyst for
Manufacturers National Bank of Detroit from
1988 to 1990.
d. Administrators. See Response to Item 10.e.
below.
e. Custodians. Comerica Bank, with principal
offices at One Detroit Center, 500 Woodward
Avenue, Detroit, Michigan 48226, will act as
the Company's custodian and will provide
administrative services to the extent not
provided by the Company's officers,
accountants and counsel. Comerica Bank will
be paid fees, consisting of base fees and a
percentage of assets, which are expected to be
approximately $135,000 per year in the
aggregate.
IBJ Schroder Bank & Trust Company, with
principal offices at One State Street, New
York, New York 10004, will act as the
Company's transfer agent and dividend paying
agent.
f. Expenses. The Company is responsible for all
of its expenses, including organization
expenses, brokerage expense, management of its
assets and business affairs, custody of its
assets, insurance, legal counsel, accounting
services and interest on indebtedness.
g. Affiliated Brokerage. Not Applicable.
2. Non-resident Managers.
Not Applicable
3. Control Persons.
As of the date hereof, Comerica Bank, as trustee for
various employee benefit plans, owns all of the
outstanding common stock of the Company. No officer or
director of the Company owns any common stock of the
Company. Comerica Incorporated is the ultimate parent
of Comerica Bank.
Item 10. CAPITAL STOCK, LONG-TERM DEBT AND OTHER SECURITIES.
1. Capital Stock.
The aggregate number of shares of capital stock which
the Company shall have authority to issue is 200
million shares, par value $.01 per share.
Except as the Board of Directors shall provide
otherwise, pursuant to the authority granted in the
Company's Articles of Incorporation, all the authorized
shares of the Company are designated as common stock.
The shares of common stock have no preemptive,
conversion, exchange or redemption rights. Each share
of common stock has equal voting, dividend,
distribution and liquidation rights. Shares of common
stock are not subject to further calls or to assessment
by the Company.
The Board of Directors is authorized to classify or
reclassify any unissued shares of stock (into one or
more series or classes of common stock or preferred
stock) by setting, changing or eliminating the
preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends,
qualifications or terms and conditions of or rights to
require redemption of the stock.
The Company's Articles of Incorporation provide that if
the Company issues preferred stock the Company's
existence will terminate 30 days after all preferred
stock outstanding is redeemed unless the Board of
Directors within such time period determines by
resolution that the Company's existence shall not
terminate.
The outstanding Preferred Stock of the Company is
preferred to the Common Stock with respect to the
payment of dividends and rights upon liquidation and
each series of Preferred Stock is redeemable at any
time at the option of the Company, in whole but not in
part, and is subject to mandatory redemption in whole
or in part upon the occurrence of certain events such
as failure to maintain adequate asset coverage to
support a AAA rating from S&P. Dividends on the
outstanding Preferred Stock of the Company are
cumulative. The 1940 Act requires, among other things,
that the holders of Preferred Stock and any other
preferred stock, voting together as a separate class,
have the right to elect at least two directors at all
times. If at any time accumulated dividends on the
outstanding shares of Preferred Stock equal to at least
two full years' dividends are due and unpaid, then
until the full amount of such unpaid dividends are paid
or duly provided for, holders of the shares of
Preferred Stock (together with the holders of shares of
any other preferred stock entitled to elect a majority
of the directors of the Company) will be entitled to
elect the smallest number of new directors that, when
added to the number of directors then constituting the
Board of Directors, will constitute a majority of the
Board of Directors. The holders of Preferred Stock
have certain other voting rights as required under the
Company's Articles of Incorporation, Maryland law and
the 1940 Act.
The Company will distribute to the holders of its
Common Stock from time to time during each year
substantially all of its taxable investment income in
excess of the dividends paid to holders of the
Preferred Stock and any other preferred stock. No
dividend distributions will be made to the holders of
the Common Stock if dividends on the Preferred Stock
are in arrears or if, after giving effect thereto, an
S&P Required Asset Coverage test would not be satisfied
or the asset coverage (as defined in the 1940 Act) with
respect to the outstanding shares of Preferred Stock
would be less than 200%. Certain amendments affecting
definitions in the Articles Supplementary of the
Company governing the Preferred Stock may be made
without shareholder approval.
The outstanding Preferred Stock of the Company has no
preemptive, conversion or exchange rights and is not
subject to any further call or assessment by the
Company. No dividends may be paid on the Company's
common stock while any dividends on the Preferred Stock
remain unpaid.
2. Long-Term Debt.
The Company has issued $222,500 in principal amount of
Floating Rate Notes Due 2021 (the "Notes") in
transactions not involving any public offering of
securities. The Notes are unsecured and are not
subordinated to other indebtedness of the Company. The
Notes are issued in registered form, without coupons.
The Notes are not subject to any sinking fund. The
Notes are redeemable at the option of the Company or as
a result of a Mandatory Redemption Event (as defined
below). In addition, each holder of Notes will have
the option to require the Company to redeem his Notes
on each anniversary of the date of issuance, upon 60
days' prior written notice.
Interest on the Notes will be payable on March 15 and
September 15 of each year, commencing on September 15,
1996, and at maturity (each, an "Interest Payment
Date"). Interest payable on each Interest Payment Date
will include interest accrued from and including the
immediately preceding Interest Payment Date (or the
date of original issue in the case of the first
Interest Payment Date) to and excluding such Interest
Payment Date. The Notes will bear interest from the
date of issuance to and including March 14, 1997 at the
rate of 8.50% per annum. Thereafter, the Notes will
bear interest, based on their principal amount, for
each Interest Period (as defined below), until
maturity, at a rate per annum equal to the sum of (i)
the Treasury Bill Rate (as defined in the Note) as of
the first day of such Interest Period and (ii) 3.50%
per annum. Interest on the Notes will be computed and
paid on the basis of a 360-day year consisting of
twelve months of 30 days each, and in the case of
incomplete months, on the number of days actually
elapsed divided by 30 days. The interest rate on the
Notes will in no event be higher than the maximum rate
permitted by applicable law. "Interest Period" shall
mean a yearly period beginning on March 15 and ending
on March 14 of the following year.
The Notes are subject to mandatory redemption in whole
in the event of a Mandatory Redemption Event, at a
redemption price equal to 100% of the principal amount
thereof, together with accrued interest to but
excluding the date fixed for redemption. A "Mandatory
Redemption Event" will be deemed to have occurred if
the aggregate net asset value of the Company as
determined for purposes of the 1940 Act does not exceed
the aggregate principal amount of the Company's
liabilities for money borrowed, including the Notes, by
a ratio of at least 200 to 1. The Notes may be
redeemed on any Interest Payment Date, upon not less
than 30 nor more than 60 days' notice by mail, at the
option of the Company, in whole or from time to time in
part, at a redemption price equal to 100% of the
principal amount thereof, together with accrued
interest to but excluding the date fixed for
redemption; provided that, if less than all the
outstanding Notes are to be redeemed, the redemption
will be made by lot, on a pro rata basis, or in such
other manner as will not discriminate unfairly against
any holder of the Notes. The Notes held by each holder
are subject to redemption, in whole or in part (in
whole multiples of $500), at the option of such holder
on each anniversary date of their initial issuance,
upon not less than 60 nor more than 90 day's notice to
the Company, at a redemption price equal to 100% of the
principal amount thereof, together with accrued
interest to but excluding the date fixed for
redemption.
Pursuant to certain restrictive covenants contained in
the Notes, the Company may not: (1) incur any
indebtedness for money borrowed except (a) the
indebtedness evidenced by the Notes, (b) in connection
with the redemption of one or more series of preferred
stock or (c) other indebtedness in a principal amount
not to exceed at any one time outstanding an amount
equal to 10% of the Company's net asset value; (2)
declare dividends or make other distributions on shares
of its capital stock or purchase any such shares if, at
the time of the declaration, distribution or purchase,
as applicable (and after giving effect thereto), asset
coverage (as defined in the 1940 Act) with respect to
the Notes would be less than 300% (or such other
percentage as may in the future be required by law or,
if lower, such other percentage as may in the future be
permitted by order of the Securities and Exchange
Commission ("SEC")), except that dividends may be
declared upon any preferred stock if asset coverage
with respect to the Notes would equal or exceed 200%
(or such other percentage as may in the future be
required by law or, if lower, such other percentage as
may in the future be permitted by order of the SEC); or
(3) consolidate or merge with or into any other
corporation or sell or transfer all or substantially
all of its properties and assets to another corporation
unless (a) the successor corporation is a corporation
organized and existing under the laws of the United
States of America or a State thereof or the District of
Columbia and assumes payment of the principal of and
interest on the Notes and the performance and the
observance of the other terms of the Notes, and (b) no
default or event of default under the Notes shall have
happened and be continuing.
Modifications and amendments of the Notes may be made
by the Company with the consent of the holders of a
majority in principal amount of the outstanding Notes;
provided, however, that no such modification or
amendment may, without the consent of the holder of
each outstanding Note affected thereby, (a) change the
stated maturity date of the principal of, or any
installment of principal of or interest on, any Note,
(b) reduce the principal amount of, or interest on, any
Note, or (c) reduce the percentage in principal amount
of outstanding Notes, the consent of the holders of
which is required for modification or amendment of the
Notes or for waiver of compliance with certain
provisions of the Notes or for waiver of certain
defaults. Modifications and amendments of the Notes
may be made by the Company without the consent of any
holder of Notes to evidence a successor to the Company,
to add to the Company's covenants or Events of Default,
to change or eliminate any provision not adversely
affecting any interests of holders of outstanding Notes
in any material respect or to cure any ambiguity or
inconsistency. The holders of a majority in principal
amount of the outstanding Notes may on behalf of the
holders of all Notes waive compliance by the Company
with certain restrictive provisions of the Notes or
waive any past default under the Notes, except a
default in the payment of the principal of, or interest
on, any Note or in respect of any provision which under
the Notes cannot be modified or amended without the
consent of the holder of each outstanding Note
affected.
3. General.
Not Applicable.
4. Taxes.
The Company intends to qualify each year and elect to
be treated as a regulated investment company for
federal income tax purposes. In order to so qualify,
the Company must, among other things, (a) derive at
least 90% of its gross income from dividends, interest,
payments with respect to loans of securities and gains
from the sale or other disposition of securities or
certain other related income; (b) generally derive less
than 30% of its gross income from gains from the sale
or other disposition of securities and certain other
investments held for less than three months; and (c)
diversify its holdings so that at the end of each
fiscal quarter (i) at least 50% of the value of the
Company's assets is represented by cash, U.S.
government securities, securities of other regulated
investment companies, and other securities which, with
respect to any one issuer, do not represent more than
5% of the value of the Company's assets nor more than
10% of the voting securities of such issuer, and (ii)
not more than 25% of the value of the Company's assets
is invested in the securities of any one issuer (other
than U.S. government securities or the securities of
other regulated investment companies).
If the Company qualifies as a regulated investment
company and distributes to its stockholders at least
90% of its net investment income (including tax-exempt
interest and net short-term capital gain but not net
capital gain, which is the excess of net long-term
capital gains over net short-term capital losses), then
the Company will not be subject to federal income tax
on the income so distributed. However, the Company
would be subject to corporate income tax (currently at
a maximum marginal rate of 35%) on any undistributed
income other than tax-exempt income. In addition, the
Company will be subject to a nondeductible 4% excise
tax on the amount by which the income it distributes in
any calendar year is less than a required amount. The
required distribution for a calendar year equals the
sum of (a) 98% of the Company's ordinary income
(excluding tax-exempt interest income) for such
calendar year; (b) 98% of the excess of capital gains
over capital losses for the one-year period ending
October 31; and (c) 100% of the undistributed ordinary
income and gains from prior years. For purposes of the
excise tax, any income or capital gains retained by,
and taxed in the hands of, the Company will be treated
as having been distributed.
Any capital losses resulting from the disposition of
securities can only be used to offset capital gains and
cannot be used to reduce the Company's ordinary income.
Such capital losses may be carried forward by the
Company for eight years.
Except as described below, in general all distributions
to stockholders attributable to the Company's net
investment income (including any tax-exempt interest
income distributed) will be taxable as ordinary income.
To the extent the Company realizes net capital gains,
it intends to distribute such gains at least annually
and designate them as capital gain dividends. Capital
gain dividends are taxable as long-term capital gains,
regardless of how long the shares have been held. The
Company may elect to retain net capital gains and pay
corporate income tax thereon. In such event, the
Company would most likely make an election which would
require each stockholder of record on the last day of
the Company's taxable year to include in income for tax
purposes his proportionate share of the Company's
undistributed net capital gain. If such an election is
made, each stockholder would be entitled to credit his
proportionate share of the tax paid by the Company
against his federal income tax liabilities and to claim
refunds to the extent that the credit exceeds such
liabilities. In addition, the stockholder would be
entitled to increase the basis of his shares for
federal income tax purposes by an amount equal to 65%
of his proportionate share of the undistributed net
capital gain.
Dividends distributed by the Company will be eligible
for the dividends received deduction in the hands of
corporate stockholders to the extent the Company
derives eligible income from dividends paid by U.S.
corporations. In order to qualify for the dividends
received deduction, the Company must hold the shares
with respect to which the dividends are paid for more
than 45 consecutive days. The 45-day holding period is
reduced for periods in which the shares are subject to
diminished risk of loss. The dividends received
deduction is also reduced by the percentage, if any, of
the cost of the shares that is debt-financed.
Liquidating distributions which in the aggregate exceed
a stockholder's basis in shares will be treated as gain
from the sale of the shares; if a stockholder receives
in the aggregate liquidating distributions which are
less than such basis, such stockholder will recognize a
loss to that extent.
Dividends and other distributions by the Company are
generally taxable to the stockholders at the time the
dividend or distribution is made. Any dividends
declared by the Company in October, November or
December and made payable to stockholders of record in
such a month would be taxable to stockholders as of
December 31, provided that the dividend is paid in the
following January.
If a stockholder purchases shares at a cost that
reflects an anticipated dividend, such dividend will be
taxable even though it represents economically in whole
or in part a return of the purchase price. Investors
should consider the tax implications of buying shares
shortly prior to a dividend distribution.
The Company will, within 60 days after the close of its
taxable year, send written notices to stockholders
regarding the tax status of all distributions made
during the year.
In general, if a share is sold, the seller will
recognize gain or loss equal to the difference between
the amount realized on the sale and the seller's
adjusted basis in the share. However, any loss
recognized by a stockholder within six months of
purchasing the shares will be treated as a long-term
capital loss to the extent of any long-term capital
gain distributions received by the stockholder and the
stockholder's share of undistributed long-term capital
gains. In addition, any loss realized on a sale of
shares will be disallowed to the extent the shares
disposed of are replaced within a 61-day period
beginning 30 days before and ending 30 days after the
disposition of the shares. In such a case, the basis
of the shares acquired will be adjusted to reflect the
disallowed loss. Any gain or loss realized upon a sale
of shares by a stockholder who is not a dealer in
securities will be treated as capital gain or loss.
The Company may be required to withhold federal income
tax at the rate of 31% of any payments made to a
stockholder if the stockholder has not provided a
correct taxpayer identification number and certain
required certifications to the Company, or if the
Secretary of the Treasury notifies the Company that the
number provided by a stockholder is not correct or that
the stockholder has not reported all interest and
dividend income required to be shown on the
stockholder's federal income tax return.
The Company expects to pay dividends on its shares out
of its net investment income at least once each year.
The Company expects to pay capital gains distributions
on its net long-term capital gains, if any, at least
once each year unless the Company elects to retain such
distributions and pay corporate tax as described above.
The Company has no dividend reinvestment plan.
5. Outstanding Securities.
(1) (2) (3) (4)
Amount Held by Amount Outstanding
Amount the Company or Exclusive of
Title of Class Authorized for its Account Amount in (3)
Common Stock 199,996,000 0 61,376,240.2
shares shares
Preferred Stock 4,000 0 4,000
shares shares
Notes $500,000 0 $222,500
6. Securities Ratings
Not applicable.
Item 11. DEFAULTS AND ARREARS ON SENIOR SECURITIES.
Not applicable.
Item 12. LEGAL PROCEEDINGS.
The Company is not subject to any pending or, to its
knowledge, threatened legal proceedings.
Item 13. TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL
INFORMATION.
Not Applicable
PART B -- INFORMATION REQUIRED IN A STATEMENT OF
ADDITIONAL INFORMATION
Item 14. COVER PAGE.
Not Applicable
Item 15. TABLE OF CONTENTS.
Not Applicable
Item 16. GENERAL INFORMATION AND HISTORY.
Not Applicable
Item 17. INVESTMENT OBJECTIVE AND POLICIES.
The Company's investment objective and the following
investment restrictions are fundamental and cannot be
changed without the approval of the holders of a
majority of the Company's outstanding voting securities
(defined in the 1940 Act as the lesser of (a) more than
50 percent of the outstanding shares or (b) 67 percent
or more of the shares represented at a meeting at which
more than 50 percent of the outstanding shares are
represented). In addition, changes in any of such
restrictions would require approval by the holders of
Preferred Stock of the Company voting as a separate
class. All other investment policies or practices are
considered by the Company not to be fundamental and,
accordingly, may be changed without stockholder
approval. If a percentage restriction on investment or
use of assets set forth below is adhered to at the time
a transaction is effected, later changes in percentage
resulting from changing market values will not be
considered a deviation from policy. The Company may
not:
1. invest more than 25 percent of the value of its
total assets in any one industry;
2. issue senior securities other than (a) preferred
stock not in excess of the maximum amount permitted by
the 1940 Act or by the SEC by rule or by order,
whichever is greater, (b) senior securities other than
preferred stock (including borrowing money, including
on margin if margin securities are owned, and providing
guaranties) not in excess of the maximum amount
permitted by the 1940 Act or by the SEC by rule or by
order, whichever is greater, and (c) borrowings up to
five percent of its total assets for temporary purposes
without regard to the amount of senior securities
outstanding under clauses (a) and (b) above; provided,
however, that the Company's obligations under reverse
repurchase agreements, interest rate swaps, when issued
and forward commitment transactions and similar
transactions are not treated as senior securities if
covering assets are appropriately segregated; or pledge
its assets other than to secure such issuances or in
connection with hedging transactions, short sales,
when-issued and forward commitment transactions and
similar investment strategies;
3. make loans of money or property to any person,
except through loans and guaranties to entities, the
acquisition of fixed income obligations consistent with
the Company's investment objective and policies, the
acquisition of securities subject to repurchase
agreements and the loan of portfolio securities in
accordance with such regulatory requirements as may be
applicable at the time of a particular loan;
4. underwrite the securities of other issuers, except
to the extent that in connection with the disposition
of portfolio securities or the sale of its own
securities the Company may be deemed to be an
underwriter;
5. purchase or sell real estate or interests therein
in excess of the Company's total assets;
6. purchase or sell commodities or purchase or sell
commodity contracts except for hedging purposes; or
7. make any short sale of securities except in
conformity with applicable laws, rules and regulations
and unless, giving effect to such sale, the market
value of the Company's aggregate short sales of a
particular class of securities, except short sales
"against the box" which are not subject to such
limitation, does not exceed 25 percent of the then-
outstanding securities of that class.
Although the Company expects that most of its
investments will be relatively long term in nature,
changes in particular portfolio holdings may be made at
any time a particular security is no longer considered
to be appropriate.
Item 18. MANAGEMENT.
Set forth below are the names, ages, addresses,
positions held with the Company and principal
occupations during the last five years of the directors
and officers of the Company. There are no family
relationships between any of the persons listed.
Directors who are interested persons of the Company are
denoted by an asterisk (*).
(1) (2) (3)
Name, Positions Held Principal Occupations
Age and Address With Company during Past 5 Years
James A. McIntosh, President First Vice
45* and President, Comerica
411 W. Lafayette Director Bank, since 1994;
Avenue Vice President,
Detroit, MI 48226 Comerica Bank, from
1992 to 1994; Vice
President
Manufacturers Bank,
N.A. (formerly
Manufacturers
National Bank of
Detroit) from 1987
to 1992.
David C. Gylfe, Director Vice President,
33* Comerica Bank, since
411 W. Lafayette 1994; Assistant Vice
Avenue President, Comerica
Detroit, MI 48226 Bank, from 1992 to
1994, Second Vice
president and Trust
Officer,
Manufacturers Bank,
N.A. (formerly
Manufacturers
National Bank of
Detroit) from 1991
to 1992; Trust
Officer,
Manufacturers
National Bank of
Detroit, from 1989
to 1991.
William R. Latham Director Chairman, Department
III, 51 of Economics,
Department of University of
Economics Delaware, since
University of 1990; Director,
Delaware Secretary and
Newark, DE 19716 Treasurer of First
Federal Capital
Funding II, Inc.,
from 1986 to 1992.
Has served on the
editorial board of
the Review of
Regional Studies and
published several
articles in various
publications.
Donald J. Puglisi, Director Managing Director of
50 Puglisi &
1500 Casho Mill Associates, an
Road investment
Suite 3 management,
P.O. Box 885 accounting and
Newark, DE 19715 administrative
services consulting
firm which he
founded in 1973.
Member of the
faculty of the
University of
Delaware since 1971.
Has served as a
University of
Delaware Public
Service Fellow with
the Office of the
Treasurer of the
State of Delaware
and as a visiting
Research Scholar
with the Federal
Home Loan Bank
Board, where he
received two
Outstanding Service
Awards.
John F. Sase, 45 Director Head of research
18823 San Quentin project, Focus Hope,
Lathrup Village, since 1992;
MI 48076 Consultant, Sase
Associates, since
1992; Member of the
faculty at School of
Business
Administration,
Oakland University,
since 1992; Ph.D.
Urban Industrial
Economics, Wayne
State University.
Robert H. Bockrath Secretary Trust Officer,
II, 28 and Comerica Bank, since
411 W. Lafayette Treasurer 1995.
Avenue
Detroit, MI 48226
No director or officer of the Company, no affiliated person
of the Company and no affiliated person of an affiliated
person or principal underwriter of the Company will receive
as much as $60,000 in aggregate remuneration from the
Company for any fiscal year or any annual pension or
retirement benefits. Messrs. Latham, Puglisi and Sase will
each receive approximately $3,000 per year as non-interested
directors for the Company. They will each receive $17,000
per year in total compensation as non-interested directors
for the Company and other investment companies that have the
same investment adviser.
Item 19. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
See response to Item 9.3.
Item 20. INVESTMENT ADVISORY AND OTHER SERVICES.
See Response to Item 9.1.
Comerica Bank, 411 W. Lafayette Avenue, Detroit, Michigan
48226, is the Company's custodian. Comerica Bank is
chartered by the State of Michigan and engages in the
customary business of a commercial bank with trust powers.
Comerica Bank will act as custodian for all of the Company's
assets, calculate its net asset value and compliance with
various financial requirements and will also act as
administrator.
KPMG Peat Marwick, 345 Park Avenue, New York, New York
10154, are the Company's independent public accountants.
Such firm will provide accounting and auditing services and
tax services for the Company.
Item 21. BROKERAGE ALLOCATION AND OTHER PRACTICES.
Subject to the policies established by the Board of
Directors of the Company, World Asset Management is
primarily responsible for the execution of the Company's
portfolio transactions and the allocation of brokerage. In
executing such transactions, consideration is given to such
factors as price of the security, the size and difficulty of
the order, the reliability, integrity, financial condition
and general execution and operational capabilities of
competitive brokers and dealers and their expertise in
particular markets. Although World Asset Management will
generally seek reasonably competitive commission rates, the
Company will not necessarily pay the lowest commission
available. The Company has no obligations to deal with any
broker or group of brokers in executing transactions in
portfolio securities.
Under the 1940 Act, affiliated persons of the Company are
prohibited from dealing with the Company as principal in the
purchase and sale of securities. Because transactions in
the over-the-counter market usually involve transactions
with dealers acting as principal for their own account, the
Company will not deal with affiliated persons of the Company
in connection with such transactions. However, affiliated
persons of the Company may serve as its broker in the over-
the-counter market and other transactions conducted on an
agency basis subject to compliance with applicable
regulatory requirements.
The Board of Directors of the Company has adopted certain
policies incorporating the standards of Rule 17e-1 issued by
the SEC under the 1940 Act, which require that the
commissions paid to certain affiliated persons of the
Company must be reasonable and fair compared to the
commissions, fees or other remuneration received or to be
received by other brokers in connection with comparable
transactions involving similar securities during a
comparable period of time. The rule and procedures also
contain review requirements and require the Company to
furnish reports to the Board of Directors of the Company and
to maintain records in connection with such reviews.
Item 22. TAX STATUS.
See Response to Item 10.4.
Item 23. FINANCIAL STATEMENTS.
None.
PART C -- OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
1. Financial Statements
None.
2. Exhibits
a. Charter of the Company.
b. By-laws of the Company.
c. Not applicable.
d. Not applicable.
e. Not applicable.
f. Form of Floating Rate Note due 2021 of the Company
g. Investment Management Agreement between the
Company and World Asset Management.
h. Not applicable.
i. Not applicable.
j. Custodian Contract between the Company and
Comerica Bank.
k. Administration Agreement between the Company and
Comerica Bank.
l. Not applicable.
m. Not applicable.
n. Not applicable.
o. Not applicable.
p. Not applicable.
q. Not applicable.
r. Not applicable.
Item 25. MARKETING ARRANGEMENTS.
Not applicable.
Item 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Not applicable.
Item 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
COMPANY.
See Response to Items 9.3 and 19. The common stock of
Select Asset Fund, Series 1, Inc., Select Asset Fund, Series
2, Inc. and Great Lakes Fund, Inc., each of which is a
Maryland corporation, is wholly-owned by Comerica Bank as
trustee for various employee benefit plans and accordingly
the Company may be deemed to be under common control with
such other companies.
Item 28. NUMBER OF HOLDERS OF SECURITIES.
(1) (2)
Number of
Title of Class Record Holders
Common Stock 1
Auction Market Preferred
Stock, Series A 1*
Auction Market Preferred
Stock, Series B 1*
Auction Market Preferred
Stock, Series C 1*
Auction Market Preferred
Stock, Series D 1*
Floating Rate Notes
Due 2021 89
__________
* On the date hereof, the Auction Market Preferred Stock,
Series A, the Auction Market Preferred Stock, Series B,
the Auction Market Preferred Stock, Series C, and the
Auction Market Preferred Stock, Series D, are held
through The Depository Trust Company for the account of
approximately 25, 25, 25 and 25 holders, respectively.
Item 29. INDEMNIFICATION.
Under the Company's Articles of Incorporation and By-
laws, the directors and officers of the Company will be
indemnified to the fullest extent allowed and in the
manner provided by Maryland law and applicable
provisions of the 1940 Act, including advancing of
expenses incurred in connection therewith.
Indemnification shall not be provided however to any
officer or director against any liability to the
Company or its securityholders to which he or she would
otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her
office.
Article 2, Section 405.2 of the Maryland General
Corporation Law provides that the articles of
incorporation of a Maryland corporation may limit the
extent to which directors or officers may be personally
liable to the Company or its stockholders for money
damages in certain instances. The Company's Articles
of Incorporation provide that, to the fullest extent
permitted by Maryland law, as it may be amended or
interpreted from time to time, no director or officer
of the Company shall be personally liable to the
Company or its stockholders. The Company's Articles of
Incorporation also provide that no amendment of the
Company's Articles of Incorporation or repeal of any of
its provisions shall limit or eliminate any of the
benefits provided to directors and officers in respect
of any act or omission that occurred prior to such
amendment or repeal.
Item 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
See Exhibit filed in response to Item 24.2.g.
Item 31. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required to be
maintained by Section 31(a) of the 1940 Act and the
rules promulgated thereunder are maintained at Comerica
Bank, 411 W. Lafayette Avenue, Detroit, MI 48226, IBJ
Schroder Bank & Trust Company, One State Street, New
York, NY 10004, and Merrill Lynch & Co., 250 Vesey
Street, North Tower, World Financial Center, New York,
NY 10281-1316
Item 32. MANAGEMENT SERVICES.
Not applicable.
Item 33. UNDERTAKINGS.
Not applicable.
SIGNATURE
Pursuant to the requirements of the Investment Company
Act of 1940, the Company has duly caused this registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Detroit, and State of
Michigan, on the 2nd of May, 1996.
Huron Investment Fund, Inc.
By:/s/ James A. McIntosh
Name: James A. McIntosh
Title: President
INDEX TO EXHIBITS
Exhibit
2.a. Charter of the Company.
2.b. By-laws of the Company.
2.f. Form of Floating Rate Note due 2021 of the Company
2.g. Investment Management Agreement between
the Company and World Asset Management.
2.j. Custodian Contract between the Company
and Comerica Bank.
2.k. Administration Agreement between the
Company and Comerica Bank.
STATE OF MARYLAND
394169
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
301 West Preston Street, Baltimore, Maryland 21201
DATE: OCTOBER 12, 1995
THIS IS TO ADVISE YOU THAT THE ARTICLES OF
INCORPORATION FOR SELECT ASSET FUND, SERIES 3, INC.
WERE RECEIVED AND APPROVED FOR RECORD ON OCTOBER 12, 1995
AT 12:05 PM.
FEE PAID: 386.00
HARRY J. NOONAN
CHARTER SPECIALIST
AT5-031
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
10/12/95 AT 12:05 P.M. RECEIVED
'95 OCT 12 PM 12:05
ARTICLES OF INCORPORATION ASSESS & TAX.
OF
SELECT ASSET FUND, SERIES 3, INC.
* * * * *
ARTICLE I
THE UNDERSIGNED, Henry J. Suelau, whose post
office address is 10 Light Street, Baltimore, Maryland
21202, being at least eighteen (18) years of age, hereby
forms a corporation under and by virtue of the Maryland
General Corporation Law.
ARTICLE II
NAME
The name of the Corporation is Select Asset
Fund, Series 3, Inc. (the "Corporation").
ARTICLE III
PURPOSES AND POWERS
The purposes for which the Corporation is
formed are to exercise and enjoy all of the general
powers, rights and privileges granted to, or conferred
upon, corporations by the Maryland General Corporation
Law now or hereafter in force.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office
of the Corporation in the State of Maryland is c/o The
Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The name of the resident
agent of the
STATE OF MARYLAND
I hereby certify that this is a true and complete copy of
the 11 page document on file in this office. DATED: 10-
12-95.
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: Gloria J. Walsan, Custodian
This stamp replaces our previous certification system.
Effective: 6/95
Corporation in the State of Maryland is The Corporation
Trust Incorporated, a corporation of the State of
Maryland, and the post office address of the resident
agent is 32 South Street, Baltimore, Maryland 21202.
ARTICLE V
CAPITAL STOCK
(1) The total number of shares of capital
stock of all classes which the Corporation shall have
authority to issue is Two Hundred Million (200,000,000)
shares, each of which shall have a par value of one cent
($.01) per share and all of which shall have an aggregate
par value of Two Million Dollars ($2,000,000).
(2) (a) The Board of Directors of the
Corporation is authorized to classify or to reclassify,
from time to time, any unissued shares of stock of the
Corporation, whether now or hereafter authorized, by
setting, changing or eliminating the preference,
conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms and
conditions of or rights to require redemption of the
stock.
(b) Without limiting the generality of
the foregoing, the dividends and distributions or other
payments with respect to the stock of the Corporation,
and with respect to each class that hereafter may be
created, shall be in such amount as may be declared from
time to time by the Board of Directors, and such
dividends and distributions may vary from class to class
to such extent and for such purpose as the Board of
Directors may deem appropriate, including, but not
limited to, the purpose of complying with requirements of
regulatory or legislative authorities.
(c) Until such time as the Board of
Directors shall provide otherwise pursuant to the
authority granted in this section (2) all the authorized
shares of the Corporation are designated as Common Stock.
Shares of the Common Stock and the holders thereof, and
shares of any class and the holders thereof, shall be
subject to the following provisions, provided, however,
that if no shares of any class other than Common Stock
are outstanding, the shares of the Common Stock and the
holders thereof shall nevertheless be subject to the
following provisions except to the extent that such
provisions are by their terms applicable only when shares
of two or more classes are outstanding.
(3) Shares of each class of stock shall
be entitled to such dividends or distributions, in stock
or in cash or both, as may be declared from time to time
by the Board of Directors, acting in its sole discretion,
with respect to such class.
(4) In the event of the liquidation or
dissolution of the Corporation, the holders of the Common
Stock shall be entitled to receive all the assets of the
Corporation not attributable to other classes of stock
through any preference. The assets so distributable to
the stockholders shall be distributed among such
stockholders in proportion to the number of shares of
that class held by them and recorded on the books of the
Corporation.
(5) Unless otherwise expressly provided
in the Charter of the Corporation, and except as required
under applicable law, on each matter submitted to a vote
of stockholders for approval, each holder of a share of
capital stock of the Corporation shall be entitled to one
vote for each share standing in such holder's name on the
books of the Corporation, irrespective of the class or
series thereof, and all shares of all classes or series
of capital stock shall vote together as a single class;
provided, however, that (i) as to any matter with respect
to which a separate vote of any class or series is
required by the Investment Company Act of 1940 (the "1940
Act"), the Maryland General Corporation Law or the
Charter of the Corporation, such class or series shall
vote separately as a class or series with respect to such
matter in addition to the vote of the holders of all
classes or series of capital stock of the Corporation
voting together as a single class (unless the 1940 Act,
the Maryland General Corporation Law or the Charter of
the Corporation shall provide that the separate vote of
such class or series shall apply in lieu of the vote of
all the holders of all classes or series, in which case,
such class or series shall vote separately as a class or
series with respect to such matter and no vote of any
other class or series shall be necessary with respect to
such matter; and (ii) as to any matter which does not
affect the express contract rights as set forth in the
Charter of the Corporation of any particular class or
series, including the liquidation of a particular class
or series as described in subsection (1) above, only the
holders of shares of the one or more affected classes or
series shall be entitled to vote thereon.
(6) Except as otherwise provided in the
Charter of the Corporation creating any class or series
of capital stock, the Corporation shall be entitled to
purchase shares of its capital stock, to the extent that
the Corporation may lawfully effect such purchase under
the laws of the State of Maryland, upon such terms and
conditions and for such consideration as the Board of
Directors shall deem advisable.
(7) Except as otherwise provided in the
Charter of the Corporation creating any class or series
of capital stock, all shares purchased by the Corporation
shall constitute authorized but unissued shares and the
number of the authorized shares of stock of the
Corporation shall not be reduced by the number of any
shares purchased by it. Unless and until their
classification is changed in accordance with section (2)
of this Article V, all shares of capital stock so
purchased shall continue to belong to the same class to
which they belonged at the time of their purchase.
(8) The Corporation may issue shares of
stock in fractional denominations to the same extent as
its whole shares, and shares in fractional denominations
shall be shares of capital stock having proportionately
to the respective fractions represented thereby all the
rights of whole shares, including without limitation, the
right to vote, the right to receive dividends and
distributions, and the right to participate upon
liquidation of the Corporation, but excluding the right
to receive a stock certificate representing fractional
shares.
(9) All persons who shall acquire capital
stock or other securities of the Corporation shall
acquire the same subject to the provisions of the Charter
of the Corporation and the By-Laws of the Corporation, as
each may be amended from time to time.
ARTICLE VI
PROVISIONS FOR DEFINING, LIMITING AND
REGULATING CERTAIN POWERS OF THE CORPORATION
AND OF THE DIRECTORS AND STOCKHOLDERS
(1) The number of directors of the Corporation
shall initially be five (5), which number may be
increased or decreased by or pursuant to the By-Laws of
the Corporation but shall never be less than two (2),
unless the Corporation has three (3) or more stockholders
during which time the number of directors shall never be
less than three (3). The names of the persons who shall
act as directors until their successors are duly elected
and qualified are:
James A. McIntosh
David C. Gylfe
William R. Latham III
Donald J. Puglisi
John F. Sase
A director shall hold office until his
successor shall be elected and shall qualify, subject,
however, to prior death, resignation, retirement,
disqualification or removal from office. In no case
shall a decrease in the number of directors shorten the
term of any incumbent director. Any vacancy on the Board
of Directors that results from an increase in the number
of directors may be filled by a majority of the entire
Board of Directors, provided that a quorum is present,
and any other vacancy occurring in the Board of Directors
may be filled by a majority of the directors then in
office, whether or not sufficient to constitute a quorum,
or by a sole remaining director; provided, however, that
if the stockholders of any class of the Corporation's
capital stock are entitled separately to elect one or
more directors, a majority of the remaining directors
elected by that class or series or the sole remaining
director elected by that class or series may fill any
vacancy among the number of directors elected by that
class or series. A director elected by the Board of
Directors to fill any vacancy in the Board of Directors
shall serve until his successor shall be elected and
shall qualify, subject, however, to prior death,
resignation, retirement, disqualification or removal from
office. At any meeting of stockholders, stockholders
shall be entitled to elect directors to fill any
vacancies in the Board of Directors that have arisen
since the preceding annual meeting of stockholders
(whether or not any such vacancy has been filled by
election of a new director by the Board of Directors),
and any director so elected by the stockholders shall
hold office until the next annual meeting of stockholders
or until death, resignation or retirement or until a
successor is elected and qualified; provided, however,
that if the stockholders of any class or series of the
capital stock of the Corporation are entitled separately
to elect one or more directors, only the stockholders of
that class or series may elect a successor to fill a
vacancy on the Board of Directors which results from the
removal of a director elected by that class or series. A
director may be removed with or without cause and only by
the affirmative vote of a majority of all the votes
entitled to be cast in an election of such Director;
provided, however, that if the stockholders of any class
or series are entitled separately to elect one or more
directors, the director elected by a class or series may
not be removed without cause except by the affirmative
vote of a majority of all of the votes of that class or
series.
(2) The Board of Directors of the Corporation
is hereby empowered to authorize the issuance from time
to time of shares of capital stock, whether now or
hereafter authorized, for such consideration as the Board
of Directors may deem advisable, subject to such
limitations as may be set forth in the Charter or in the
By-Laws of the Corporation or under applicable law.
(3) Each person who at any time is or was a
director or officer of the Corporation shall be
indemnified by the Corporation to the fullest extent
permitted by the Maryland General Corporation Law as it
may be amended or interpreted from time to time,
including the advancing of expenses, subject to any
limitations imposed by applicable law. Furthermore, to
the fullest extent permitted by Maryland law, as it may
be amended or interpreted from time to time, but subject
to the limitations imposed by any other applicable law,
no director or officer of the Corporation shall be
personally liable to the Corporation or its stockholders
for money damages. No amendment of the Charter of the
Corporation or repeal of any of its provisions shall
limit or eliminate any of the benefits provided to any
person who at any time is or was a director or officer of
the Corporation under this section (3) in respect of any
act or omission that occurred prior to such amendment or
repeal.
(4) The Board of Directors of the Corporation
shall have the exclusive authority to make, alter or
repeal from time to time any of the By-Laws of the
Corporation except any particular By-Law which is
specified as not subject to alteration or repeal by the
Board of Directors, subject to the requirements of
applicable law.
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No stockholder of the Corporation shall by
reason of his holding shares of capital stock have any
preemptive or preferential right to purchase or subscribe
to any shares of capital stock of the Corporation, now or
hereafter authorized, or any notes, debentures, bonds or
other securities convertible into shares of capital
stock, now or hereafter to be authorized, whether or not
the issuance of any such shares of capital stock, or
notes, debentures, bonds or other securities would
adversely affect the dividend or voting rights of such
stockholder; and the Board of Directors may issue shares
of any class of capital stock of the Corporation, or any
notes, debentures, bonds, or other securities convertible
into shares of any class of capital stock of the
Corporation, either whole or in part, to the existing
stockholders.
ARTICLE VIII
CERTAIN VOTES OF STOCKHOLDERS
At all meetings of the stockholders, the
holders of a majority of the shares of stock of the
Corporation entitled to vote at the meeting, present in
person or by proxy, shall constitute a quorum for the
transaction of any business, except as otherwise provided
by Maryland General Corporation Law or the 1940 Act. In
the absence of a quorum, no business may be transacted,
except that the holders of a majority of the shares of
stock present in person or by proxy and entitled to vote
may adjourn the meeting from time to time, without notice
other than announcement thereat or notice otherwise
required by the By-Laws of the Corporation, until the
holders of the requisite amount of shares of stock shall
be so present. At any such adjourned meeting at which a
quorum may be present any business may be transacted
which might have been transacted at the meeting as
originally called. The absence from any meeting, in
person or by proxy, of holders of the number of shares of
stock of the Corporation in excess of a majority thereof
which may be required by the laws of the State of
Maryland, the 1940 Act, or other applicable statute, the
Charter of the Corporation, or the By-Laws of the
Corporation, for action upon any given matter shall not
prevent action at such meeting upon any other matter or
matters which may properly come before the meeting, if
there shall be present thereat, in person or by proxy,
holders of the number of shares of stock of the
Corporation required for action in respect of such other
matter or matters. A quorum shall be present with
respect to matters as to which only the holders of one
class or series of stock may vote if a majority of the
shares of that class or series are present at the meeting
in person or by proxy, and the absence of holders of a
majority of shares with respect to one class or series
shall have no effect with respect to any other class or
series of stock.
Except as otherwise provided in the Charter of
the Corporation and notwithstanding any provision of the
Maryland General Corporation Law requiring approval by
the stockholders (or any class of stockholders or any
series thereof) of any action by the affirmative vote of
a greater proportion than a majority of the votes
entitled to be cast on the matter, any such action may be
taken or authorized upon the concurrence of a majority of
the number of votes entitled to be cast thereon (or a
majority of the votes entitled to be cast thereon as a
separate class or any series thereof).
ARTICLE IX
DETERMINATION BINDING
Any determination made in good faith, so far as
accounting matters are involved, in accordance with
accepted accounting practice by or pursuant to the
authority of the direction of the Board of Directors, as
to the amount of assets, obligations or liabilities of
the Corporation, as to the amount of net income of the
Corporation from dividends and interest for any period or
amounts at any time legally available for the payment of
dividends, as to the amount of any reserves or charges
set up and the propriety thereof, as to the time of or
purpose for creating reserves or as to the use,
alteration or cancellation of any reserves or charges
(whether or not any obligation or liability for which
such reserves or charges shall have been created, shall
have been paid or discharged or shall be then or
thereafter required to be paid or discharged), as to the
price of any security owned by the Corporation or as to
any other matters relating to the issuance, sale,
redemption or other acquisition or disposition of
securities or shares of capital stock of the Corporation,
and any reasonable determination made in good faith by
the Board of Directors shall be final and conclusive, and
shall be binding upon the Corporation and all holders of
its capital stock, past, present and future, and shares
of the capital stock of the Corporation are issued and
sold on the condition and understanding, evidenced by the
purchase of shares of capital stock or acceptance of
share certificates, that any and all such determinations
shall be binding as aforesaid. No provision of these
Articles of Incorporation shall be effective to (a)
require a waiver of compliance with any provision of
applicable law or (b) protect or purport to protect any
director or officer of the Corporation against any
liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office.
ARTICLE X
PRIVATE PROPERTY OF STOCKHOLDERS
The private property of stockholders shall not
be subject to the payment of corporate debts to any
extent whatsoever.
ARTICLE XI
TERM OF EXISTENCE
The Corporation's existence shall be perpetual;
provided, however, that if the Corporation shall
hereafter issue any capital stock which ranks prior to
the Corporation's Common stock with respect to the
payment of dividends or the distribution of assets upon
liquidation, which shall thereafter be redeemed by the
Corporation,the Corporation's existence shall terminate
thirty (30) days after the earliest date as of which all
such preferred stock shall have been redeemed, unless the
Board of Directors, prior to the expiration of said
thirty (30) day period, determines to continue the
Corporation's existence, in which case the Corporation's
existence thereafter shall be perpetually subject, as
often as may be necessary, to the foregoing provision and
exception.
ARTICLE XII
AMENDMENT
The Corporation reserves the right to amend,
alter, change or repeal any provision contained in the
Charter of the Corporation, in the manner now or
hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this
reservation.
IN WITNESS WHEREOF, the undersigned
incorporator of Select Asset Fund, Series 3, Inc. hereby
executes the foregoing Articles of Incorporation and
acknowledges the same to be his act and further
acknowledges that, to the best of his knowledge, the
matters and facts set forth therein are true in all
material respects under the penalties of perjury.
Dated the 12th day of October, 1995.
/s/ Henry J. Suelau
STATE OF MARYLAND
419904
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
301 West Preston Street, Baltimore, Maryland 21201
DATE: FEBRUARY 6, 1996
THIS IS TO ADVISE YOU THAT THE ARTICLES OF AMENDMENT
WITH A NAME CHANGE FOR SELECT ASSET FUND, SERIES 3, INC.
CHANGING TO HURON INVESTMENT FUND, INC.
WERE RECEIVED AND APPROVED FOR RECORD ON FEBRUARY 6, 1996
AT 11:19 AM.
FEE PAID: 50.00
JOSEPH J. STEWART
CHARTER SPECIALIST
AT5-031
ARTICLES OF AMENDMENT
OF
SELECT ASSET FUND, SERIES 3, INC.
SELECT ASSET FUND, SERIES 3, INC., a Maryland
corporation (the "Corporation"), hereby certifies as
follows:
FIRST: The Charter of the Corporation is hereby
amended by deleting the provisions of ARTICLE TWO thereof
and inserting in lieu of such provisions the following:
"The name of the corporation (the
"Corporation") is
Huron Investment Fund, Inc."
SECOND: The foregoing amendment to the Charter of
the Corporation was approved at a meeting of the Board of
Directors on January 29, 1996. No stock entitled to be
voted on the matter was outstanding or subscribed for at
the time of the approval of such amendment.
IN WITNESS WHEREOF, the Corporation has caused these
Articles of Amendment to be executed in its name, and on
its behalf, by its President and attested to by its
Secretary on this 2nd day of February, 1996.
ATTEST: SELECT ASSET FUND, SERIES 3, INC.
/s/ Robert H. Bockrath By: /s/ James A. McIntosh
Robert H. Bockrath, II James A. McIntosh
Secretary President
The undersigned, being the duly elected and qualified
President of Select Asset Fund, Series 3, Inc., hereby
acknowledges that the foregoing Articles of Amendment, of
which this certificate is a part, are the act of the
Corporation and certifies that, to the best of his
knowledge, information and belief, under the penalties for
perjury, that the matters and facts set forth therein are
true in all material respects.
/s/ James A. McIntosh
James A. McIntosh
President
STATE OF MARYLAND
425287
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
301 West Preston Street, Baltimore, Maryland 21201
DATE: MARCH 01, 1996
THIS IS TO ADVISE YOU THAT THE ARTICLES SUPPLEMENTARY
FOR HURON INVESTMENT FUND, INC. WERE RECEIVED AND APPROVED
FOR RECORD ON MARCH 1, 1996 AT 11:33 AM.
FEE PAID: 50.00
WILLIAM B. MARKER
CHARTER SPECIALIST
AT5-031
ARTICLES SUPPLEMENTARY
OF HURON INVESTMENT FUND, INC.
HURON INVESTMENT FUND, INC., a Maryland
corporation having its principal Maryland office in the City
of Baltimore (the "Corporation"), certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in
the Board of Directors of the Corporation by Article V of
its Amended Articles of Incorporation, the Board of
Directors has reclassified an aggregate of 4,000 shares of
its authorized but unissued capital stock as four (4)
separate series of preferred stock, the first series
consisting of 1,000 shares, the second series consisting of
1,000 shares, the third series consisting of 1,000 shares
and the fourth series consisting of 1,000 shares, and has
fixed the preferences, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and
conditions of redemption, of the shares of each such series
of preferred stock as follows:
DESIGNATION
Series A AMPS: A series of 1,000 shares of
preferred stock, par value $.01 per share,
liquidation preference $100,000 per share, plus an
amount equal to accumulated but unpaid dividends
(whether or not earned or declared) thereon plus
the premium, if any, resulting from a redemption
or liquidation, is hereby designated "Auction
Market Preferred Stock, Series A" ("Series A
AMPS"). Each share of Series A AMPS shall
accumulate dividends from the Date of Original
Issue (this initially capitalized term and other
initially capitalized terms not otherwise defined
herein shall have the meanings specified in
Section 1.1 hereof) thereof and shall have such
other preferences, limitations and relative voting
rights, in addition to those required by
applicable law or set forth in the Charter of the
Corporation which are applicable to preferred
stock of the Corporation, as are set forth in
these Articles Supplementary. The Series A AMPS
shall constitute a separate series of preferred
stock of the Corporation, and each share of Series
A AMPS shall be identical.
Series B AMPS: A series of 1,000 shares of
preferred stock, par value $.01 per share,
liquidation preference $100,000 per share, plus an
amount equal to accumulated but unpaid dividends
(whether or not earned or declared) thereon plus
the premium, if any, resulting from a redemption
or liquidation, is hereby designated "Auction
Market Preferred Stock, Series B" ("Series B
AMPS"). Each share of Series B AMPS shall
accumulate dividends from the Date of Original
Issue (this initially capitalized term and other
initially capitalized terms not otherwise defined
herein shall have the meanings specified in
Section 1.1 hereof) thereof and shall have such
other preferences, limitations and relative voting
rights, in addition to those required by
applicable law or set forth in the Charter of the
Corporation which are applicable to preferred
stock of the Corporation, as are set forth in
these Articles Supplementary. The Series B AMPS
shall constitute a separate series of preferred
stock of the Corporation, and each share of Series
B AMPS shall be identical.
Series C AMPS: A series of 1,000 shares of
preferred stock, par value $.01 per share,
liquidation preference $100,000 per share, plus an
amount equal to accumulated but unpaid dividends
(whether or not earned or declared) thereon plus
the premium, if any, resulting from a redemption
or liquidation, is hereby designated "Auction
Market Preferred Stock, Series C" ("Series C
AMPS"). Each share of Series C AMPS shall
accumulate dividends from the Date of Original
Issue (this initially capitalized term and other
initially capitalized terms not otherwise defined
herein shall have the meanings specified in
Section 1.1 hereof) thereof and shall have such
other preferences, limitations and relative voting
rights, in addition to those required by
applicable law or set forth in the Charter of the
Corporation which are applicable to preferred
stock of the Corporation, as are set forth in
these Articles Supplementary. The Series C AMPS
shall constitute a separate series of preferred
stock of the Corporation, and each share of Series
C AMPS shall be identical.
Series D AMPS: A series of 1,000 shares of
preferred stock, par value $.01 per share,
liquidation preference $100,000 per share, plus an
amount equal to accumulated but unpaid dividends
(whether or not earned or declared) thereon plus
the premium, if any, resulting from a redemption
or liquidation, is hereby designated "Auction
Market Preferred Stock, Series D" ("Series D
AMPS"). Each share of Series D AMPS shall
accumulate dividends from the Date of Original
Issue (this initially capitalized term and other
initially capitalized terms not otherwise defined
herein shall have the meanings specified in
Section 1.1 hereof) thereof and shall have such
other preferences, limitations and relative voting
rights, in addition to those required by
applicable law or set forth in the Charter of the
Corporation which are applicable to preferred
stock of the Corporation, as are set forth in
these Articles Supplementary. The Series D AMPS
shall constitute a separate series of preferred
stock of the Corporation, and each share of Series
D AMPS shall be identical.
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1. Certain Definitions. The following terms
shall have the following meanings, unless the context
otherwise requires:
"'AA' Composite Commercial Paper Rate" for any
period less than 183 days as of any date means (i) the
Interest Equivalent of the rate on commercial paper for such
period placed on behalf of issuers whose corporate bonds are
rated "AA" by S&P or Moody's, or the equivalent of such
rating by S&P or Moody's or another nationally recognized
statistical rating organization, as the rate for such period
is made available on a discount basis or otherwise by the
Federal Reserve Bank of New York for the Business Day
immediately preceding such date, or (ii) in the event that
the Federal Reserve Bank of New York does not make available
such a rate, then the arithmetic average of the Interest
Equivalent of the rate on commercial paper for such period
placed on behalf of such issuers, as quoted to the Auction
Agent on a discount basis or otherwise by the Commercial
Paper Dealers for the close of business on the Business Day
immediately preceding such date. If a Commercial Paper
Dealer does not quote a rate required to determine the "AA"
Composite Commercial Paper Rate for such period, the "AA"
Composite Commercial Paper Rate for such period will be
determined on the basis of the quotation or quotations
furnished by any Substitute Commercial Paper Dealer or
Substitute Commercial Paper Dealers selected by the
Corporation to provide such rate or rates not being supplied
by the Commercial Paper Dealer.
"Accountant's Certificate" shall mean a letter or
certificate signed by or on behalf of a nationally
recognized independent public accounting firm.
"Additional Dividends" shall have the meaning set
forth in Section 3.5(a) of these Articles Supplementary.
"Adjusted Value" of each Moody's Eligible Asset
and each S&P Eligible Asset is computed as follows:
(i) Cash shall be valued at 100% of the face
value thereof; and
(ii) Each common stock shall be valued at the
amount obtained by dividing the Fair Market Value thereof by
the applicable Discount Factor.
The calculation of Adjusted Value, Moody's
Required Asset Coverage and S&P Required Asset Coverage may
be made on bases other than those set forth therein if the
relevant Rating Agency has advised the Corporation in
writing that the revised calculation of Adjusted Value,
Moody's Required Asset Coverage and S&P Required Asset
Coverage would not adversely affect its then-current rating
of the shares of AMPS.
To the extent operation of the foregoing sentence
is not enforceable, the calculation of Adjusted Value,
Moody's Required Asset Coverage and S&P Required Asset
Coverage and the elements thereof (including Moody's
Eligible Assets and S&P Eligible Assets and the elements
thereof) and the definitions of such elements shall be
adjusted from time to time and without further action by the
Board of Directors and the Stockholders to reflect changes
made thereto independently by the relevant Rating Agency if
the relevant Rating Agency has advised the Corporation in
writing separately (a) of such adjustments and (b) that the
revised calculation of Adjusted Value, Moody's Required
Asset Coverage and S&P Required Asset Coverage would not
cause such Rating Agency to reduce or withdraw its
then-current rating of the shares of AMPS. The adjustments
contemplated by the preceding sentence shall be made
effective upon the time the Corporation receives the written
notice from the Rating Agency to the effect specified in
clause (b) of the preceding sentence.
"Administration Agreement" shall mean the
Administration Agreement dated as of March 4, 1996 between
the Corporation and the Administrator, and any similar
agreement with a successor or substitute administrator, in
each case, as from time to time amended or supplemented.
"Administrator" shall mean the other party to the
Administration Agreement with the Corporation and which
shall initially be Comerica Bank.
"Agent Member" shall mean a member of, or
participant in, the Securities Depository.
"AMPS" means, collectively, the Series A AMPS, the
Series B AMPS, the Series C AMPS and the Series D AMPS.
"AMPS Dividend Amount" shall have the meaning set
forth in Section 3.4 of these Articles Supplementary.
"AMPS Rate" shall have the meaning set forth in
Section 3.3 of these Articles Supplementary.
"AMPS Redemption Amount" shall have the meaning
specified in Section 4.4 of these Articles Supplementary.
"Articles Supplementary" shall mean these Articles
Supplementary of the Corporation.
"Auction" shall mean each periodic implementation
of the Auction Procedures.
"Auction Agent" shall mean (a) a bank or trust
company duly organized under the laws of the United States
of America or any state or territory thereof having its
principal place of business in the Borough of Manhattan in
the City of New York, and having a combined capital stock,
surplus and undivided profits of at least $15,000,000, or
(b) a member of the National Association of Securities
Dealers, Inc., having capitalization of at least $15,000,000
and which initially shall be IBJ Schroder Bank & Trust
Company.
"Auction Agent Agreement" shall mean the Auction
Agent Agreement dated as of March 4, 1996 between the
Corporation and the Auction Agent and any similar agreement
with a successor or substitute Auction Agent, in each case
as from time to time amended or supplemented.
"Auction Date" shall mean the Business Day
immediately preceding the first day of each Dividend Period,
other than the Initial Dividend Period applicable thereto.
"Auction Procedures" shall mean the procedures set
forth in Section 3.8 of these Articles Supplementary.
"Auction Rate" shall have the meaning set forth in
Section 3.8(c)(ii) of these Articles Supplementary.
"Auction Record Date" shall mean the second
Business Day next preceding the first day of any Dividend
Period applicable thereto.
"Authorized Officer" shall mean the Chairman of
the Board, each Executive Officer, President, Senior Vice
President, Executive Vice President, Vice President,
Assistant Vice President, Treasurer and Assistant Treasurer
of the Custodian or the Auction Agent, as the case may be,
and every other officer or employee of the Custodian or the
Auction Agent, as the case may be, designated as such by any
of the foregoing.
"Available AMPS" shall have the meaning set forth
in Section 3.8(c)(i)(A) of these Articles Supplementary.
"Bid" shall have the meaning set forth in Section
3.8(a)(i) of these Articles Supplementary.
"Bidder" shall have the meaning set forth in
Section 3.8(a)(i) of these Articles Supplementary.
"Board of Directors" or "Board" means the Board of
Directors of the Corporation or any duly authorized
committee thereof.
"Broker-Dealer" shall mean Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
"Broker-Dealer Agreement" shall mean the
Broker-Dealer Agreement dated as of March 4, 1996, among the
Corporation, the Auction Agent and the Broker-Dealer
pursuant to which the Broker-Dealer agrees to participate in
Auctions as set forth in the Auction Procedures, and any
similar agreement with a successor or substitute Auction
Agent, in each case, as from time to time amended or
supplemented.
"Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and is not a
Saturday, Sunday or other day on which banks in New York,
New York are authorized or obligated by law or executive
order to close.
"Cash" shall mean (i) checks certified in United
States dollars by a bank whose short-term rating is P-1 (or
higher) by Moody's (if the AMPS are rated by Moody's) and
A-1+ by S&P (if the AMPS are rated by S&P) and (ii) demand
deposits maintained at a bank whose short-term rating is P-1
(or higher) by Moody's (if the AMPS are rated by Moody's)
and A-1+ by S&P (if the AMPS are rated by S&P).
"Certificate of Moody's Required Asset Coverage"
shall have the meaning set forth in Section 5.1 of these
Articles Supplementary.
"Certificate of S&P Required Asset Coverage" shall
have the meaning set forth in Section 5.3 of these Articles
Supplementary.
"Charter" shall mean the Articles of
Incorporation, as amended and supplemented from time to time
(including these Articles Supplementary) of the Corporation.
"Closed Period" shall mean, with respect to each
Series of AMPS, (i) each period commencing at 11:00 A.M.,
New York City time, on the third Business Day immediately
preceding each Dividend Distribution Date applicable thereto
and ending immediately prior to the opening of business on
such Dividend Distribution Date, and (ii) any time after the
Corporation ascertains that a Mandatory Redemption Event has
occurred.
"Code" shall mean the Internal Revenue Code of
1986, as amended from time to time. Each reference to a
section of the Code herein shall be deemed to include the
United States Treasury Regulations proposed or in effect
thereunder and applicable to the AMPS or the use of proceeds
thereof, and also includes all applicable amendments and
successor provisions unless the context clearly requires
otherwise.
"Commercial Paper Dealers" shall mean Merrill
Lynch, Pierce, Fenner & Smith Incorporated and such other
commercial paper dealer or dealers as the Auction Agent may
from time to time select in consultation with the
Corporation, or, in lieu of any thereof, their respective
affiliates or successors.
"Common Stock" shall mean the common stock, par
value $.01 per share, of the Corporation.
"Commission" shall mean the Securities and
Exchange Commission.
"Cure Date" shall mean the second Business Day
after each Business Day as of which the aggregate Adjusted
Value of all Moody's Eligible Assets or S&P Eligible Assets
is less than the Moody's Required Asset Coverage or the S&P
Required Asset Coverage, respectively, or as of which the
aggregate Fair Market Value of the Securities and other
assets of the Corporation is less than 130% of the sum of
the aggregate AMPS Redemption Amount for all shares of AMPS
then Outstanding and the aggregate AMPS Redemption Amount
(as defined in the applicable articles supplementary
relating to any other Preferred Stock issued by the
Corporation and rated by the Rating Agencies) applicable to
any other Preferred Stock of the Corporation outstanding on
such date.
"Current Additional Dividend Amount" shall be
calculated as the product of:
(A) the square of a fraction (i) the numerator of
which is one minus the product of (x) 100% minus the
percentage specified in Section 243(a)(1) of the Code to be
used in calculating the dividends received deduction
multiplied by (y) the highest Federal regular tax rate
applicable to ordinary income recognized by corporations and
(ii) the denominator of which is one minus the highest
Federal regular tax rate applicable to net capital gain
recognized by corporations;
(B) the aggregate amount of net capital gains
realized by the Corporation during the period commencing on
the first day of the taxable year in which such date of
determination occurs and ending on the last day (which day
shall be subsequent to the first day of such taxable year)
of the calendar month next preceding such date of
determination; and
(C) the quotient of (1) Current AMPS Dividends
and (2) the sum of (x) Current AMPS Dividends and (y) the
amount of the distributions paid to the holders of the
Common Stock as dividends during the current fiscal year to
date; provided, however, that, in the event the amount of
liabilities used in the calculation of either of the Moody's
Required Asset Coverage or the S&P Required Asset Coverage
includes any redemption price payable with respect to the
shares of AMPS called for redemption, Current AMPS Dividends
shall be determined outstanding, for purposes of this clause
(C), without including such shares of AMPS called for
redemption.
"Current AMPS Dividends" shall mean the amount of
the distributions paid to Holders of AMPS and of any other
Preferred Stock as dividends during (and that are
attributable to) the current fiscal year to date.
"Custodian" shall mean one or more banks or trust
companies authorized under the laws of the United States of
America, the State of New York or the State of Michigan to
engage in the bank or trust business within the State of New
York or the State of Michigan and designated as a depositary
of the assets of the Corporation, and which initially shall
be Comerica Bank.
"Custodian Agreement" shall mean the Custodian
Contract dated as of March 4, 1996, by and between the
Custodian and the Corporation, and any similar agreement
with a successor or substitute Custodian, in each case, as
from time to time amended or supplemented.
"Date of Original Issue" shall mean the date on
which the Corporation initially issues the shares of AMPS.
"Deposit Assets" shall mean, collectively, (a)
Cash or (b) non-callable direct obligations of the United
States government or debt securities rated P-1 (or higher)
by Moody's (if the AMPS are rated by Moody's) and A-1+ by
S&P (if the AMPS are rated by S&P), in each case which
mature on or before the Business Day prior to (i) the
applicable Redemption Date, in the case of a deposit in
connection with a redemption of AMPS or (ii) the applicable
Dividend Distribution Date, in the case of a deposit in
connection with the payment of any dividends on the AMPS.
"Discount Factor" shall mean, with respect to any
asset specified below, the following applicable number:
Type of Eligible Asset Discount Factors
For S&P For S&P
For Moody's Seasoned Unseasoned
Eligible Eligible Eligible
Assets Assets Assets
Common stocks issued
by utilities . . . . . . 1.22 1.85 2.44
Common stocks issued
by industrial
companies . . . . . . . . 1.36 1.85 2.44
Common stocks issued by
financial companies . . . 1.36 1.85 2.44
Common stocks issued by
transportation companies . . 1.51 1.85 2.44
Common stocks issued by
other companies . . . . . - 1.85 2.44
"Dividend Distribution Date" shall have the
meaning set forth in Section 3.1(b) of these Articles
Supplementary.
"Dividend Period" shall have the meaning set forth
in Section 3.3 of these Articles Supplementary.
"Dividends Received Deduction" shall mean the
dividends received deduction available to those corporate
holders of AMPS who satisfy the holding period and other
applicable requirements of the Code as provided by Sections
243 and 854 of the Code.
"Excess Interest Coverage Amount," as of any date
of determination of Moody's Required Asset Coverage or S&P
Required Asset Coverage, shall mean, with respect to any
Indebtedness of the Corporation, (a) zero, if the next
interest payment date in respect of such Indebtedness
succeeding such date of determination is equal to or greater
than sixteen (16) days after such date of determination and
(b) if the number of days referred to in the preceding
clause (a) is less than sixteen (16), an amount equal to the
aggregate principal amount of such Indebtedness outstanding
on such date of determination multiplied by (i) 130%
multiplied by (ii) the then current rate per annum at which
such Indebtedness bears interest multiplied by (iii) a
fraction, the numerator of which is sixteen (16) minus the
number of days referred to in the preceding clause (a) and
the denominator of which is 365.
"Existing Holder" shall mean a person who is
listed as the record owner of AMPS (which are not called for
redemption) in the Stock Register of the Auction Agent.
"Fair Market Value" as of any date in question
shall mean (a) with respect to securities, the Market Price
(as defined below) of such security as of the close of
business on the Business Day immediately preceding the date
in question, (b) with respect to Cash, the dollar amount
thereof or (c) with respect to any other property, the fair
market value thereof, as determined by the Corporation in
good faith, using any method reasonable under the
circumstances. The "Market Price" shall be: the lower of
(i) the lower of the bid prices, if any, quoted to the
Corporation by two or more New York Stock Exchange member
firms or National Association of Securities Dealers member
firms (at least one of such quotes being in writing) or (ii)
the price quoted to the Corporation by the Pricing Service.
If such bids are not so quoted and the Pricing Service
reports no such price, the Fair Market Value of such
security (x) for purposes of Section 4.2(b) and the
definition of "Market Capitalization", shall be determined
in accordance with clause (c) of the second preceding
sentence and (y) shall be zero for all other purposes.
"Holder" shall mean a person in whose name a share
of AMPS is registered in the Stock Register.
"Hold Order" shall have the meaning set forth in
Section 3.8(a)(i) of these Articles Supplementary.
"Indebtedness" shall mean, with respect to the
Corporation, any indebtedness of the Corporation in respect
of borrowed money or evidenced by bonds, notes, debentures
or similar instruments, if and to the extent any of the
foregoing would appear as a liability upon a balance sheet
of the Corporation prepared in accordance with generally
accepted accounting principles.
"Industry Classification" means a six-digit
industry classification in the Standard Industry
Classification system published by the United States.
"Initial Dividend Period" shall have the meaning
set forth in Section 3.3 of these Articles Supplementary.
"Interest Equivalent" means a yield on a 360-day
basis of a discount basis security which is equal to the
yield on an equivalent interest-bearing security.
"Issuer" shall mean any one or all (as the context
requires) of the issuers of the Securities.
"Liquidation Premium" shall have the meaning set
forth in Section 6.1 of these Articles Supplementary.
"Mandatory Redemption Event" shall have the
meaning set forth in Section 4.2 of these Articles
Supplementary.
"Market Capitalization" shall mean, with respect
to any issue of common stock, as of any date, the product of
(a) the number of shares of such common stock issued and
outstanding as of the close of business on the date of
determination thereof and (b) the Fair Market Value per
share of such common stock as of the close of business on
the date of determination thereof.
"Maximum Rate", on any date of determination,
shall mean the rate (rounded up to the next highest one
one-thousandth (.001) of 1%) determined by multiplying (a)
for any Dividend Period other than a Special Dividend
Period, the 60 Day "AA" Composite Commercial Paper Rate as
of the close of business on the Business Day immediately
preceding the Auction Date in question, and, for any Special
Dividend Period, the Special Dividend Period Reference Rate
as of the close of business on the Business Day immediately
preceding the date on which the notice of Special Dividend
Period relating to the Auction Date in question is given, in
each case by (b) 125%.
"Moody's" shall mean Moody's Investors Service,
Inc., a corporation organized and existing under the laws of
the State of Delaware, its successors and their assigns or,
if Moody's shall no longer be assigning a rating to the
AMPS, such other nationally recognized rating agency so
rating the AMPS.
"Moody's Eligible Assets" shall mean any of the
following held by the Corporation: (a) Deposit Assets and
(b) common stocks that satisfy all of the following
conditions: (i) the senior unsecured debt of the issuer of
such common stock is rated Baa3 or better by Moody's or A-
or better by S&P, (ii) such common stock is traded on the
New York Stock Exchange or the American Stock Exchange,
(iii) the Market Capitalization of such issue of common
stock exceeds $500 million, (iv) the issuer of such common
stock has paid cash dividends on a regular basis during the
period of thirty-six (36) months immediately prior thereto
and (v) dividends on such common stock are paid in United
States dollars; provided, however, that the number of shares
of common stock of any single issuer held by the Corporation
shall be included in Moody's Eligible Assets only to the
extent that such number does not exceed the average weekly
trading volume of such common stock during the preceding 30
day period. In addition, (i) common stock issued by any one
issuer in a Non-Utility Industry may comprise no more than
6% of Moody's Eligible Assets, (ii) common stock issued by
any one issuer in a Utility Industry may comprise no more
than 4% of Moody's Eligible Assets, (iii) common stock
issued by issuers within the same Non-Utility Industry may
comprise no more than 20% of Moody's Eligible Assets, (iv)
common stock issued by issuers within the same Utility
Industry may comprise no more than 50% of Moody's Eligible
Assets and (v) common stock issued by issuers within any
Utility Industry and located within the same state may
comprise no more than 7% of Moody's Eligible Assets.
Notwithstanding the foregoing, an asset will not be
considered a Moody's Eligible Asset if it (i) is held in a
margin account, (ii) is subject to any material lien,
mortgage, pledge, security interest or security agreement of
any kind or (iii) has been deposited irrevocably for the
payment of dividends, redemption payments or any other
payment or obligation hereunder.
"Moody's Excess Dividend Coverage Amount," for a
particular Series of AMPS, as of any date of determination
of Moody's Required Asset Coverage, shall mean (a) zero, if
the next Dividend Distribution Date applicable to such
Series of AMPS succeeding such date of determination is
equal to or greater than sixteen (16) days after such date
of determination and (b) if the number of days referred to
in the preceding clause (a) is less than sixteen (16), an
amount equal to the aggregate liquidation preference of such
Series of AMPS multiplied by (i) 154% multiplied by (ii) the
Maximum Rate as of such date of determination multiplied by
(iii) a fraction, the numerator of which is sixteen (16)
minus the number of days referred to in the preceding clause
(a) and the denominator of which is 365.
"Moody's Required Asset Coverage" as of any date
of determination shall mean the sum of, without duplication,
(a) the aggregate liquidation preference of all shares of
AMPS Outstanding on such date, (b) the aggregate amount of
all accrued and unpaid dividends on such AMPS to and
including such date, (c) to the extent not already included
in clause (a) or (b) above, (i) if the Dividend Distribution
Date with respect to a particular Series of AMPS next
succeeding such date of determination is sixteen days or
more after such date, the amount of dividends which will
accrue on such Series of AMPS for the next sixteen days, or
(ii) in all other cases, the amount of dividends which will
accrue on such Series of AMPS to the next Dividend
Distribution Date applicable thereto, (d) an amount (but not
less than zero) equal to the Current Additional Dividend
Amount, (e) the Moody's Excess Dividend Coverage Amount, if
any, for the AMPS, (f) 300% of the aggregate principal
amount of all Indebtedness of the Corporation outstanding on
such date, (g) the aggregate amount of all accrued and
unpaid interest, to and including such date, on all
Indebtedness of the Corporation outstanding on such date,
(h) the Excess Interest Coverage Amount, if any, with
respect to all Indebtedness of the Corporation outstanding
on such date, (i) the amount of anticipated expenses of the
Corporation for the number of days subsequent to such date
of determination and prior to the next Dividend Distribution
Date, but not less than 49 days, and any current liabilities
of the Corporation as of such date of determination to the
extent not included above, (j) the Moody's Required Asset
Coverage (as defined in the applicable articles
supplementary relating to any other Preferred Stock issued
by the Corporation and rated by Moody's), if any, applicable
to any other Preferred Stock of the Corporation outstanding
on such date (without counting the Moody's Required Asset
Coverage, or any component thereof, for any such Preferred
Stock more than once) and (k) from and after the date of
call for redemption, the premium, if any, on any Optional
Redemption of one or more Series of AMPS.
"Nasdaq" shall mean The Nasdaq Stock Market, owned
and operated by the National Association of Securities
Dealers, Inc., providing brokers and dealers with price
quotations for securities traded over-the-counter.
"Net After-Tax Return" shall mean, with respect to
any dividend paid on the AMPS, the amount of such dividend
less the federal corporate income tax to which such dividend
would be subject, giving effect to the actual or assumed (as
the case may be) amount of such dividend effectively
designated under Section 854 of the Code as eligible for the
Dividends Received Deduction. For this purpose, in the case
of any dividend (i) the applicable income tax rate shall be
assumed to be the highest marginal federal income tax rate
applicable to ordinary income received by corporations under
the law in effect at the time of the payment of such
dividend if received by a domestic corporation reporting
taxable income based on a calendar year, without
consideration being given to the time value of money and
assuming that no Holder of AMPS is subject to the Federal
alternative minimum tax with respect to dividends received
from the Corporation and (ii) assuming the full amount of
such dividend were effectively designated under Section 854
of the Code (or any successor provision) as eligible for the
Dividends Received Deduction, the holder receiving such
dividend shall be assumed to be entitled to the Dividends
Received Deduction with respect to such dividend in an
amount equal to the maximum amount provided in Section
243(a)(1) of the Code (or any successor provision) as in
effect at the time of payment of such dividend.
"1940 Act" shall mean the Investment Company Act
of 1940.
"1940 Act AMPS Asset Coverage Requirement" 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 Corporation which are stock, including all
Outstanding AMPS and other Preferred Stock (or such other
asset coverage as may in the future be specified in or under
the 1940 Act as the minimum asset coverage for senior
securities which are stock of a closed-end investment
company), as a condition of paying dividends on its Common
Stock or, if lower, such other percentage as may be
permitted to the Corporation by order of the Commission.
"Non-Call Period" shall have the meaning set forth
under "Specific Redemption Provisions" below.
"Non-Utility Industry" shall mean the following:
1. Aerospace and Defense: Major Contractor,
Subsystems, Research, Aircraft Manufacturing,
Arms, Ammunition
2. Automobile: Automotive Equipment,
Auto-Manufacturing, Auto Parts Manufacturing,
Personal Use Trailers, Motor Homes, Dealers
3. Banking: Bank Holding, Savings and Loans,
Consumer Credit, Small Loan, Agency,
Factoring, Receivables
4. Beverage, Food and Tobacco: Beer and Ale,
Distillers, Wines and Liquors, Distributors,
Soft Drink Syrup, Bottlers, Bakery, Mill
Sugar, Canned Foods, Corn Refiners, Dairy
Products, Meat Products, Poultry Products,
Snacks, Packaged Foods, Distributors, Candy,
Gum, Seafood, Frozen Food, Cigarettes,
Cigars, Leaf/Snuff, Vegetable Oil
5. Buildings and Real Estate: Brick, Cement,
Climate Controls, Contracting, Engineering,
Construction, Hardware, Forest Products
(building-related only), Plumbing, Roofing,
Wallboard, Real Estate, Real Estate
Development, REITS, Land Development
6. Chemicals, Plastics and Rubber: Chemicals
(non-agriculture), Industrial Gases, Sulphur,
Plastics, Plastic Products, Abrasives,
Coatings, Paints, Varnish, Fabricating
7. Containers, Packaging and Glass: Glass,
Fiberglass, Containers made of: Glass,
Metal, Paper, Plastic, Wood or Fiberglass
8. Personal and Non-Durable Consumer Products
(Manufacturing Only): Soaps, Perfumes,
cosmetics, Toiletries, Cleaning Supplies,
School Supplies
9. Diversified/Conglomerate Manufacturing
10. Diversified/Conglomerate Service
11. Diversified Natural Resources, Precious
Metals and Minerals: Fabricating,
Distribution Mining and Sales
12. Ecological: Pollution Control, Waste
Removal, Waste Treatment, Waste Disposal
13. Electronics: Computer Hardware, Electric
Equipment, Components, Controllers, Motors,
Household Appliances, Information Service
Communication Systems, Radios, TVs, Tape
Machines, Speakers, Printers, Drivers,
Technology
14. Finance: Investment Brokerage, Leasing,
Syndication, Securities
15. Farming and Agriculture: Livestock, Grains,
Produce; Agricultural Chemicals, Agricultural
Equipment, Fertilizers
16. Grocery: Grocery Stores, Convenience Food
Stores
17. Healthcare, Education and Childcare: Ethical
Drugs, Proprietary Drugs, Research, Health
Care Centers, Nursing Homes, HMOs, Hospitals,
Hospital Supplies, Medical Equipment
18. Home and Office Furnishings, Housewares and
Durable Consumer Products: Carpets, Floor
Coverings, Furniture, Cooking, Ranges
19. Hotels, Motels, Inns and Gaming
20. Insurance: Life, Property and Casualty,
Broker, Agent, Surety
21. Leisure, Amusement, Motion Pictures,
Entertainment: Boating, Bowling, Billiards,
Musical Instruments, Fishing, Photo
Equipment, Records, Tapes, Sports, Outdoor
Equipment (Camping), Tourism, Resorts, Games,
Toy Manufacturing, Motion Picture Production
Theaters, Motion Picture Distribution
22. Machinery (Non-Agriculture, Non-Construction,
Non-Electronic): Industrial, Machine Tools,
Steam Generators
23. Mining, Steel, Iron and Non Precious Metals:
Coal, Copper, Lead, Uranium, Zinc, Aluminum,
Stainless Steel, Integrated Steel, Ore
Production, Refractories, Steel Mill
Machinery, Mini-Mills, Fabricating,
Distribution and Sales
24. Oil and Gas: Crude Producer, Retailer, Well
Supply, Service and Drilling
25. Personal, Food and Miscellaneous Services
26. Printing, Publishing and Broadcasting:
Graphic Arts, Paper, Paper Products, Business
Forms, Magazines, Books, Periodicals,
Newspapers, Textbooks, Radio, T.V., Cable,
Broadcasting Equipment
27. Cargo Transport: Rail, Shipping, Railroads,
Rail-car Builders, Ship Builders, Containers,
Container Builders, Parts, Overnight Mail,
Trucking, Truck Manufacturing, Trailer
Manufacturing, Air Cargo, Transport
28. Retail Stores: Apparel, Toy, Variety, Drugs,
Department, Mail Order Catalog, Showroom
29. Telecommunications: Local, Long Distance,
Independent, Telephone, Telegraph, Satellite,
Equipment, Research, Cellular
30. Textiles and Leather: Producer, Synthetic
Fiber, Apparel Manufacturer, Leather Shoes
31. Personal Transportation: Air, Bus, Rail, Car
Rental
32. Sovereigns: Semi-sovereigns, Canadian
Provinces, Supra-National Agencies
"Normal Dividend Distribution Date" shall have the
meaning set forth in Section 3.1(b) of these Articles
Supplementary.
"Notice of Revocation" shall have the meaning set
forth in paragraph 3.1(g) of these Articles Supplementary.
"Notice of Special Dividend Period" shall have the
meaning set forth in paragraph 3.1(g) of these Articles
Supplementary.
"Opinion of Counsel" shall mean an opinion in
writing signed by Skadden, Arps, Slate, Meagher & Flom or
such other attorney or firm of attorneys who may be counsel
for the Corporation or other counsel unless the context
specifies otherwise.
"Order" shall have the meaning set forth in
Section 3.8(a)(i) of these Articles Supplementary.
"Outstanding," when used with respect to AMPS,
shall mean, as of a particular date, all AMPS theretofore
issued and delivered by the Corporation, except:
(1) any such share of AMPS theretofore cancelled
by the Corporation or delivered to the Corporation
for cancellation;
(2) any such share of AMPS as to which a
Redemption Notice shall have been given and for
whose payment at the redemption thereof Deposit
Assets in the necessary amount are held by the
Auction Agent or the Corporation in trust for or
was paid by the Auction Agent or the Corporation
to the Holder of such share pursuant to these
Articles Supplementary; and
(3) any such share in exchange for or in lieu of
which other shares have been issued and delivered
pursuant to these Articles Supplementary.
"Paying Agent" shall mean one or more banks or
trust companies authorized under the laws of the United
States of America or the State of New York to engage in the
bank or trust business within the State of New York and
designated as paying agent for the AMPS and which initially
shall be IBJ Schroder Bank & Trust Company.
"Person" shall include an individual, association,
unincorporated organization, corporation, partnership, joint
venture, business trust, limited liability company or a
government or any agency or a political subdivision thereof,
or any other entity.
"Potential Holder" shall mean any person,
including any Existing Holder, who shall have executed a
Purchaser's Letter and who may be interested in acquiring
AMPS (or, in the case of an Existing Holder thereof, an
additional number of shares of AMPS).
"Preferred Stock" shall mean the preferred stock,
par value $.01 per share, of the Corporation, including the
AMPS.
"Pricing Service" shall mean Interactive Data
Corporation or any other pricing service approved by the
Board of Directors.
"Purchaser's Letter" shall mean a letter
substantially in the form of Exhibit E to the Broker-Dealer
Agreement as the same may be changed from time to time by
the Broker-Dealer.
"Premium Call Period" has the meaning set forth
under "Specific Redemption Provisions" below.
"Qualified Dividends" shall have the meaning set
forth in Section 3.5(c)(i) of these Articles Supplementary.
"Qualifying Purchaser" shall mean (a) initially,
an institutional investor that qualifies as an accredited
investor as defined in Section 501(a)(1)-(3) of Regulation D
under the Securities Act or a qualified institutional buyer
as defined in Rule 144A under the Securities Act and (b)
after delivery by the Corporation of a notice to the Auction
Agent specifying that each purchaser of AMPS must have a
minimum amount of total assets or net worth, an
institutional investor described in clause (a) above that
has such minimum amount of total assets or net worth.
"Rating Agencies" shall mean (i) each of Moody's
and S&P if both such rating agencies are then rating the
AMPS at the request of the Corporation, or (ii) if only one
of such rating agencies is then rating the AMPS at the
request of the Corporation, such rating agency, or (iii) if
neither of such rating agencies is then rating the AMPS at
the request of the Corporation, any nationally recognized
statistical rating organization designated by the
Corporation.
"Redemption Date" shall mean the date fixed for
any optional or mandatory redemption of AMPS in accordance
with the applicable provisions of Article IV of these
Articles Supplementary.
"Redemption Notice" shall have the meaning set
forth in Section 4.5 of these Articles Supplementary.
"Redemption Premium" shall have the meaning set
forth in Section 4.4 of these Articles Supplementary.
"Registration Statement" shall mean the
Corporation's Registration Statement on Form N-2 filed with
the Commission, as the same may be amended or supplemented
from time to time.
"Regular Record Date," with respect to any
Dividend Distribution Date, shall mean the Business Day next
preceding such Dividend Distribution Date.
"Request for Special Dividend Period" has the
meaning set forth in paragraph 3.1(g) of these Articles
Supplementary.
"Response" has the meaning set forth in paragraph
3.1(g) of these Articles Supplementary.
"Rule 144A" shall mean Rule 144A promulgated under
the Securities Act.
"S&P" shall mean Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., a
corporation organized and existing under the laws of the
State of Delaware, its successors and their assigns, and if
such corporation shall be dissolved or liquidated or shall
no longer perform the functions of a securities rating
agency, "S&P" shall be deemed to refer to any other
nationally recognized securities rating agency designated by
the Corporation.
"S&P Eligible Assets" shall mean the sum of S&P
Seasoned Eligible Assets and S&P Unseasoned Eligible Assets.
"S&P Excess Dividend Coverage Amount," for a
particular Series of AMPS, as of any date of determination
of S&P Required Asset Coverage, shall mean (a) zero, if the
next Dividend Distribution Date applicable to such Series
succeeding such date of determination is equal to or greater
than sixteen (16) days after such date of determination and
(b) if the number of days referred to in the preceding
clause (a) is less than sixteen (16), an amount equal to the
aggregate liquidation preference of such Series of AMPS
multiplied by (i) 186% multiplied by (ii) the Maximum Rate
as of such date of determination multiplied by (iii) a
fraction, the numerator of which is sixteen (16) minus the
number of days referred to in the preceding clause (a) and
the denominator of which is 365.
"S&P Required Asset Coverage" as of any date of
determination shall mean the sum of, without duplication,
(a) the aggregate liquidation preference of all shares of
AMPS Outstanding on such date, (b) the aggregate amount of
all accrued and unpaid dividends on such AMPS to and
including such date whether or not earned or declared, (c)
to the extent not already included in clause (a) or (b)
above, (i) if the Dividend Distribution Date with respect to
a particular Series of AMPS next succeeding such date of
determination is sixteen (16) days or more after such date,
the amount of dividends which will accrue on such Series of
AMPS for the next sixteen (16) days, or (ii) in all other
cases, the amount of dividends which will accrue on such
Series of AMPS to the next Dividend Distribution Date
applicable thereto, (d) an amount (but not less than zero)
equal to the Current Additional Dividend Amount, (e) the S&P
Excess Dividend Coverage Amount, if any, for the AMPS, (f)
300% of the aggregate principal amount of all Indebtedness
of the Corporation outstanding on such date, (g) the
aggregate amount of all accrued and unpaid interest, to and
including such date, on all Indebtedness of the Corporation
outstanding on such date, (h) the Excess Interest Coverage
Amount, if any, with respect to all Indebtedness of the
Corporation outstanding on such date, (i) the amount of
anticipated expenses of the Corporation for the number of
days subsequent to such date of determination and prior to
the next Dividend Distribution Date, but not less than 90
days, and any current liabilities of the Corporation as of
such date of determination to the extent not included above,
(j) the S&P Required Asset Coverage (as defined in the
applicable articles supplementary relating to any other
Preferred Stock issued by the Corporation and rated by S&P),
if any, applicable to any other Preferred Stock of the
Corporation outstanding on such date (without counting the
S&P Required Asset Coverage, or any component thereof, for
any such Preferred Stock more than once) and (k) from and
after the date of call for redemption, the premium, if any,
on any Optional Redemption of the AMPS.
"S&P Seasoned Eligible Assets" shall mean any of
the following held by the Corporation: (a) Deposit Assets
and (b) common stocks that satisfy all of the following
conditions: (i) such common stock (including the common
stock of any predecessor or constituent issuer) has been
traded on a recognized national securities exchange or
quoted on the National Market System (or any equivalent or
successor thereto) of Nasdaq for at least 450 days, (ii) the
Market Capitalization of such issuer of common stock exceeds
$100 million, (iii) the issuer of such common stock is not
an entity that elects to be taxed under Section 856 of the
Code or that is treated as a partnership for federal income
taxes, (iv) if such issuer is organized under the laws of
any jurisdiction other than the United States, any state
thereof, any possession or territory thereof or the District
of Columbia, the common stock of such issuer held by the
Corporation is traded on a recognized national securities
exchange or quoted on the National Market System of Nasdaq
either directly or in the form of depository receipts and
(v) if such issuer is registered as an investment company
under the 1940 Act, such issuer does not invest more than
25% of the value of its gross assets in securities that are
not S&P Eligible Assets by reason of clause (iv) above;
provided, however, that the Corporation's holdings of the
common stock of any single issuer that satisfies the
conditions set forth in clauses (i) through (v) above shall
be included in S&P Seasoned Eligible Assets only to the
extent that (1) such holdings may be sold publicly by the
Corporation at any time without registration, (2) to the
extent remaining eligible after the operation of item (1)
above, the aggregate Fair Market Value of such holdings does
not exceed 5% of the Market Capitalization of such issuer of
common stock, (3) to the extent remaining eligible after the
operation of items (1) and (2) above, such holdings do not
exceed a number of shares representing 5% of (x) the Market
Capitalization of such issuer of common stock, less (y) the
number of outstanding shares of such common stock held by
directors and executive officers of the issuer of such
common stock (such number to be computed solely by reference
to information on file with the Commission on the last day
of the preceding calendar month), (4) to the extent
remaining eligible after the operation of items (1) through
(3) above, such holdings do not exceed a number of shares
representing the average weekly trading volume of such
common stock during the preceding 30 day period, (5) to the
extent remaining eligible after the operation of items (1)
through (4) above, the aggregate Fair Market Value of such
holdings, when added to the aggregate Fair Market Value of
the Corporation's holdings of all other similarly eligible
shares of common stock of issuers in the same Industry
Classification, does not exceed 25% of the aggregate Fair
Market Value of the Corporation's S&P Eligible Assets and
(6) to the extent remaining eligible after the operation of
items (1) through (5) above, the aggregate Fair Market Value
of such holdings in excess of 5% of the aggregate Fair
Market Value of the Corporation's S&P Eligible Assets, when
added to the aggregate Fair Market Value of the
Corporation's holdings of all other similarly eligible
shares of each other issuer in excess of 5% of the aggregate
Fair Market Value of the Corporation's S&P Eligible Assets,
does not exceed 30% of the aggregate Fair Market Value of
the Corporation's S&P Eligible Assets. Notwithstanding the
foregoing, an asset will not be considered an S&P Seasoned
Eligible Asset if it (A) is held in a margin account, (B) is
subject to any material lien, mortgage, pledge, security
interest or security agreement of any kind or (C) has been
deposited irrevocably for the payment of dividends,
redemption payments or any other payment or obligation
hereunder.
"S&P Unseasoned Eligible Assets" shall mean any
common stock that would be an S&P Seasoned Eligible Asset
but for the fact that the 450 trading day requirement of
clause (i) of the definition thereof is not satisfied.
"Securities" shall mean the portfolio of
securities owned by the Corporation from time to time.
"Securities Act" shall mean the Securities Act of
1933, as amended from time to time.
"Securities Depository" shall mean The Depository
Trust Company, New York, New York or another recognized
securities depository selected by the Custodian, which
maintains a book-entry system in respect of the AMPS.
"Securities Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended from time to
time.
"Sell Order" shall have the meaning set forth in
Section 3.8(a)(i)(B) of these Articles Supplementary.
"Series A AMPS" shall have the meaning specified
in the preamble to these Articles Supplementary under the
heading "Designation."
"Series B AMPS" shall have the meaning specified
in the preamble to these Articles Supplementary under the
heading "Designation."
"Series C AMPS" shall have the meaning specified
in the preamble to these Articles Supplementary under the
heading "Designation."
"Series D AMPS" shall have the meaning specified
in the preamble to these Articles Supplementary under the
heading "Designation."
"Series of AMPS" shall mean the Series A AMPS, the
Series B AMPS, the Series C AMPS or the Series D AMPS,
respectively.
"Share" or "Shares" shall mean a share or shares
of AMPS.
"60-Day 'AA' Composite Commercial Paper Rate," on
any date of determination, shall mean: (i) the interest
equivalent of the 60-day rate on commercial paper placed on
behalf of issuers whose corporate bonds are rated "AA" by
S&P or "Aa" by Moody's, or the equivalent of such rating by
another nationally recognized securities rating agency, as
such 60-day rate is made available on a discount basis or
otherwise by the Federal Reserve Bank of New York for the
Business Day immediately preceding such date of
determination; or (ii) if the Federal Reserve Bank of New
York does not make available any such rate, then the
arithmetic average of the interest equivalent of the 60-day
rate on commercial paper placed on behalf of such issuers,
as quoted to the Auction Agent on a discount basis or
otherwise, by the Commercial Paper Dealers, for the close of
business on the Business Day immediately preceding such date
of determination. If any Commercial Paper Dealer does not
quote a commercial paper rate required to determine the "AA"
Composite Commercial Paper Rate, the "AA" Composite
Commercial Paper Rate shall be determined on the basis of
the quotation or quotations furnished by the remaining
Commercial Paper Dealer or Commercial Paper Dealers and any
Substitute Commercial Paper Dealer or Substitute Commercial
Paper Dealers selected by the Auction Agent to provide such
quotation or quotations not being supplied by any Commercial
Paper Dealer or Commercial Paper Dealers, as the case may
be, or if the Auction Agent does not select any such
Substitute Commercial Paper Dealer or Substitute Commercial
Paper Dealers, by the remaining Commercial Paper Dealer or
Commercial Paper Dealers. For purposes of this definition,
the "interest equivalent" of a rate stated on a discount
basis (a "discount rate" for commercial paper of a given
day's maturity) shall be equal to the product of (A) 100
times (B) the quotient (rounded upwards to the next higher
one-thousandth (.001) of 1%) of (x) the discount rate
(expressed in decimals) divided by (y) the difference
between (1) 1.00 and (2) a fraction, the numerator of which
shall be the product of the discount rate (expressed in
decimals) times the number of days in which such commercial
paper matures and the denominator of which shall be 360.
"Special Dividend Period" shall mean a Dividend
Period consisting of a specified number of days greater than
49 days.
"Special Dividend Period Reference Rate" shall
mean, in the case of a Special Dividend Period of 182 days
or less, the "AA" Composite Commercial Paper Rate which
most closely matches the length of the Special Dividend
Period, provided that in no case shall the Special Dividend
Reference Rate be a "AA" Composite Commercial Paper Rate
which is shorter in time than the 60-day "AA" Composite
Commercial Paper Rate, and, in the case of a Special
Dividend Period longer than 182 days, the Treasury Rate
which most closely matches the length of the Special
Dividend Period.
"Specific Redemption Provisions" shall mean, with
respect to a Special Dividend Period either, or any
combination of, (i) a period (a "Non-Call Period")
determined by the Board of Directors of the Corporation,
after consultation with the Auction Agent and the Broker-
Dealer, during which a particular Series of the AMPS shall
not be subject to redemption at the option of the
Corporation except for redemption pursuant to Section 4.2 in
connection with a Mandatory Redemption Event or redemption
in connection with voluntary liquidation of the Corporation
after shareholder approval thereof or involuntary
liquidation and (ii) a period (a "Premium Call Period")
determined by the Board of Directors of the Corporation,
after consultation with the Auction Agent and the Broker-
Dealers, during which a particular Series of the AMPS shall
be redeemable at a price per share equal to $100,000 plus
(a) all accrued and unpaid dividends thereon whether or not
earned or declared to but excluding the Redemption Date in
the case of (i) a redemption occurring on a Dividend
Distribution Date or (ii) a redemption occurring as a result
of a Mandatory Redemption Event or (b) the Redemption
Premium in all other cases plus a premium, which may vary
during such Premium Call Period, expressed as one or more
percentages of $100,000 as determined by the Board of
Directors of the Corporation after consultation with the
Auction Agent and the Broker-Dealer; provided, however, that
the Corporation shall not adopt Specific Redemption
Provisions unless each Rating Agency advises the Corporation
in writing that such adoption shall not adversely affect its
then-current ratings on the AMPS.
"Stock Register" shall mean the register of
Holders maintained on behalf of the Corporation by the
Auction Agent in its capacity as transfer agent and
registrar for the Shares.
"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 the Broker-Dealer is required to
submit Orders to the Auction Agent as specified by the
Auction Agent from time to time.
"Submitted Bid" shall have the meaning set forth
in Section 3.8(c)(i) of these Articles Supplementary.
"Submitted Hold Order" shall have the meaning set
forth in Section 3.8(c)(i) of these Articles Supplementary.
"Submitted Order" shall have the meaning set forth
in Section 3.8(c)(i) of these Articles Supplementary.
"Submitted Sell Order" shall have the meaning set
forth in Section 3.8(c)(i) of these Articles Supplementary.
"Subsequent Dividend Period" shall have the
meaning set forth in Section 3.3 of these Articles
Supplementary.
"Substitute Commercial Paper Dealers" shall mean
The First Boston Corporation or Morgan Stanley & Co.
Incorporated, or such other commercial paper dealer or
dealers as the Auction Agent may from time to time select in
consultation with the Corporation or, in lieu of any
thereof, their respective affiliates or successors, if such
Person is a commercial paper dealer, provided that neither
such Person nor any of its affiliates or successors shall be
a Commercial Paper Dealer.
"Sufficient Clearing Bids" shall have the meaning
set forth in Section 3.8(c)(i)(B) of these Articles
Supplementary.
"Treasury Rate" on any date for any Special
Dividend Period exceeding 182 days, means:
(i) the yield on the most recently
auctioned non-callable direct obligations of the U.S.
Government (excluding "flower" bonds) with a remaining
maturity closest to the duration of such Special
Dividend Period, as quoted in The Wall Street Journal
on such date for the Business Day next preceding such
date; or
(ii) in the event that any such rate is
not published by The Wall Street Journal, then the
arithmetic average of the yields on the most recently
auctioned non-callable direct obligations of the U.S.
Government (excluding "flower" bonds) with a remaining
maturity closest to the duration of such Special
Dividend Period as quoted on a discount basis or
otherwise by the U.S. Government Securities Dealers to
the Auction Agent for the close of business on the
Business Day immediately preceding such date.
If any U.S. Government Securities Dealer does
not quote a rate required to determine the Treasury Rate,
the Treasury Rate shall be determined on the basis of the
quotation or quotations furnished by the remaining U.S.
Government Securities Dealer or U.S. Government Securities
Dealers and any Substitute U.S. Government Dealers selected
by the Corporation to provide such rate or rates not being
supplied by any U.S. Government Securities Dealer or U.S.
Government Securities Dealers, as the case may be, or, if
the Trust does not select any such Substitute U.S.
Government Securities Dealer or Substitute U.S. Government
Securities Dealers, by the remaining U.S. Government
Securities Dealer or U.S. Government Securities Dealers.
"U.S. Government Securities Dealer" means Merrill
Lynch, Pierce, Fenner & Smith Incorporated or its respective
affiliates or successors, if such entity is a U.S.
Government securities dealer. As used herein, "Substitute
U.S. Government Securities Dealer" shall mean, another
leading U.S. Government securities dealer; or the respective
affiliates or successors, if such entity is a U.S.
Government securities dealer, provided that none of such
entities shall be a U.S. Government Securities Dealer.
"Utility Industry" shall mean the following:
1. Electric
2. Water
3. Hydro Power
4. Gas
5. Diversified
"Winning Bid Rate" shall have the meaning set
forth in Section 3.8(c)(i)(C) of these Articles
Supplementary.
ARTICLE II
THE SHARES
2.1. Limitation on Issuance of Shares. No Shares
may be issued under the provisions of these Articles
Supplementary except in accordance with the provisions of
this Article II.
2.2. Book-Entry Only For Shares. (a) Except as
otherwise provided herein, one fully registered certificate
for 1,000 shares of Series A AMPS, one fully registered
certificate for 1,000 shares of Series B AMPS, one fully
registered certificate for 1,000 shares of Series C AMPS and
one fully registered certificate for 1,000 shares of Series
D AMPS shall be registered in the name of the Securities
Depository or its nominee, and ownership thereof shall be
maintained in book-entry form by the Securities Depository
for the account of the Agent Members thereof. Initially,
such Shares shall be registered in the name of Cede & Co.,
as the nominee of The Depository Trust Company. Transfers
of beneficial ownership interests in such Shares which are
registered in the name of Cede & Co. will be accomplished by
book entries made by the Securities Depository and in turn
by the Agent Members who act on behalf of the beneficial
owners of such Shares.
Neither the Corporation, the Paying Agent, the
Auction Agent nor any of their respective affiliates shall
have any responsibility or obligation with respect to:
(i) the accuracy of the records of the
Securities Depository or any Agent Member or the
Auction Agent with respect to any beneficial ownership
interest in the Shares;
(ii) the delivery to any Agent Member, any
beneficial owner of the Shares or any other Person,
other than the Securities Depository, of any notice or
proxy with respect to the Shares;
(iii) the payment to any Agent Member, any
beneficial owner of the Shares or any other Person,
other than the Securities Depository, of any amount
distributable with respect to the Shares; or
(iv) the failure of the Securities
Depository to effect any transfer or to provide the
Auction Agent with current information regarding
registration of transfer.
(b) The Corporation may treat the Securities
Depository as, and deem the Securities Depository to be, the
absolute owner of the Shares for all purposes whatsoever,
except as otherwise required by applicable law.
2.3. Limitations on Transfer. (a) An Existing
Holder may not offer to sell, transfer, pledge, hypothecate
or otherwise dispose of (each, a "transfer") any AMPS or any
interest therein unless such transfer is to a Qualifying
Purchaser and an applicable exemption from the registration
requirements of the Securities Act and any state securities
laws is available. An Existing Holder may transfer or
otherwise dispose of its beneficial interest in AMPS only
pursuant to a Bid or Sell Order placed in any Auction or,
with the prior consent of the Auction Agent upon
consultation by the Auction Agent with and at the direction
of the Corporation, to or through the Broker-Dealer or to
another Person that is a Qualifying Purchaser, provided that
in no case shall any AMPS be so transferable to any Person
that has not signed and delivered to the Auction Agent or
Broker-Dealer, as the case may be, a duly executed
Purchaser's Letter and that, in the case of all proposed
transfers other than pursuant to an Auction, the transferor,
the Broker-Dealer or the Broker-Dealer's Agent Member shall
have advised the Auction Agent or Broker-Dealer, as the case
may be, of such proposed transfer prior to the proposed date
of transfer and no such transfer shall be permitted or
effective unless the Auction Agent or Broker-Dealer, as the
case may be, shall have confirmed in writing to the
Corporation, or the Corporation shall have confirmed in
writing to the Auction Agent, that such transfer will not
conflict with the requirements of the first sentence of this
Section 2.3.
Notwithstanding anything contained in these
Articles Supplementary to the contrary, no AMPS or any
interest therein may be transferred unless the entire
beneficial interest of the transferor therein is so
transferred. Any attempted transfer of any AMPS or any
interest therein, except as aforesaid, shall be null and
void and of no force or effect.
(b) In connection with any transfer, the
Corporation may require an unqualified Opinion of Counsel to
the effect that such transfer may be effected without
registration under the Securities Act.
(c) The certificates representing the Shares and
any other evidence of an interest in such Shares shall bear
legends stating that the Shares have not been registered
under the Securities Act and are subject to the restrictions
on transfer described in this Section 2.3. By purchasing a
Share, each purchaser shall be deemed to have agreed to such
restrictions on transfer.
(d) Without the vote or consent of any Holder of
AMPS, to the extent permitted by Maryland law, the
certificates representing Shares and the provisions of this
Section 2.3 may be amended or supplemented from time to time
by the Corporation to modify the restrictions on and
procedures for resale and other transfers of the Shares and
interests therein to reflect (i) any registration of the
Shares under applicable law or (ii) any change in applicable
law or regulation (or the interpretation thereof) or in
practices relating to the resale or other transfer of
restricted securities generally if the Corporation shall
have received an Opinion of Counsel to the effect that such
amendment or supplement is necessary or appropriate to
conform to such change in law, regulations or practices.
(e) In order to preserve the exemption for
resales and transfers provided by Rule 144A under the
Securities Act, the Corporation shall provide to any Holder
of a Share and any prospective purchaser designated by such
Holder, upon request of such Holder or such prospective
purchaser, such information required by Rule 144A as will
enable the resale of such Share to be made pursuant to Rule
144A. However, the Corporation shall not be required to
provide with respect to any Share more information than is
required by Rule 144A as of the date such Share is issued
but may elect to do so if necessary under subsequent
revisions of Rule 144A. In addition, the Corporation may
from time to time modify the foregoing restrictions on
resale and other transfers (including the form of
Purchaser's Letter), without the consent or vote of any
Holder of Shares, but upon notice to all Holders of Shares,
in order to reflect any amendment to Rule 144A or change in
the interpretation thereof or practices thereunder if the
Corporation shall have received an Opinion of Counsel to the
effect that such amendment or supplement is necessary or
appropriate.
2.4. Other Restrictions. For so long as any AMPS
are Outstanding, the Corporation will not reissue any
Preferred Stock previously purchased or redeemed by the
Corporation unless (i) prior to such reissuance the
Corporation receives written confirmation from the Rating
Agencies that such reissuance would not result in a
reduction or withdrawal of the rating then assigned to the
AMPS by the Rating Agencies and (ii) after giving pro forma
effect to such reissuance the Adjusted Value of all Moody's
Eligible Assets and S&P Eligible Assets would equal or
exceed the Moody's Required Asset Coverage and the S&P
Required Asset Coverage, respectively.
ARTICLE III
DIVIDENDS
3.1. General. (a) The holders of Shares of each
Series of AMPS will be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally
available therefor, cumulative cash dividends, at the rate
determined in accordance with Section 3.3.
(b) Dividends on the Shares of AMPS of a
particular Series will accumulate from the Date of Original
Issue applicable thereto and will be payable, if declared,
on each date determined pursuant to this sentence, which
date shall be either (i) with respect to the Initial
Dividend Period, on the day after the last day of such
Initial Dividend Period, (ii) with respect to any Dividend
Period of 49 days or more and fewer than 180 days other than
the Initial Dividend Period, on the day next succeeding each
period of 49 days to occur during such Dividend Period
unless and until the number of days remaining in such
Dividend Period would be less than 49, in which case in lieu
thereof such Dividend Distribution Date shall be on the day
next succeeding the last day of such Dividend Period, or
(iii) with respect to any Dividend Period of 180 days or
more other than the Initial Dividend Period, quarterly on
the last day of each calendar quarter during such Dividend
Period and, if the last day of such Dividend Period is not
the last day of a calendar quarter, on the day next
succeeding the last day thereof (each such date referred to
in clauses (i), (ii) and (iii) being hereinafter referred to
as a "Normal Dividend Distribution Date"), except that (A)
if such Normal Dividend Distribution Date is not a Business
Day, then the Dividend Distribution Date shall be the next
succeeding date if both such date and the next succeeding
date are Business Days, (B) if either of such dates are not
Business Days, then the Dividend Distribution Date will be
the date next preceding such Normal Dividend Distribution
Date and (C) if such Shares have been called for redemption,
or the date of distribution thereon in the event of any
liquidation, dissolution or winding up of the Corporation
has been scheduled to occur, on the date that would
otherwise be the Dividend Distribution Date and if such date
is the last Business Day of the year, then the Dividend
Distribution Date will be the next to the last Business Day
of such year; provided, however, that if the Securities
Depository shall make available to its participants and
members in funds immediately available in New York on such
Dividend Distribution Dates, the amount due as dividends on
such Dividend Distribution Dates (and the Securities
Depository shall have so advised the Corporation), and if
the day that otherwise would be the Dividend Distribution
Date is not a Business Day, then the Dividend Distribution
Date shall be the next succeeding Business Day (unless the
Normal Dividend Distribution Date is December 31 in which
case the Dividend Distribution Date shall be the preceding
Business Day or, in the case of the exception in clause (C)
above, the second preceding Business Day). Although any
particular Dividend Distribution Date may not occur on a
Normal Dividend Distribution Date because of the exceptions
set forth above, the next succeeding Dividend Distribution
Date shall be, subject to such provisos, the next Normal
Dividend Distribution Date. If for any reason a Dividend
Distribution Date cannot be fixed as described above, then
the Board of Directors shall fix the Dividend Distribution
Date. Each dividend payment date determined as provided
above and each dividend payment date for an Additional
Dividend is hereinafter referred to as a "Dividend
Distribution Date." Each dividend shall be paid to the
Holders as they appear in the Stock Register as of 12:00
noon, New York time, on the Business Day immediately
preceding the Dividend Distribution Date. Dividends in
arrears for any past Dividend Distribution Date may be
declared and paid at any time, without reference to any
regular Dividend Distribution Date, to the Holders as they
appear in the Stock Register on a date, not exceeding 15
days prior to the payment date therefor, as may be fixed by
the Board of Directors.
(c) On or prior to each Dividend Distribution
Date, the Corporation shall deposit with the Paying Agent
sufficient funds for the payment of declared dividends.
(d) Holders of Shares of AMPS will not be
entitled to any dividends, whether payable in cash, property
or stock, in excess of full cumulative dividends (including
any applicable Additional Dividends). No interest will be
payable in respect of any dividend payment or payments on
the Shares of AMPS which may be in arrears.
(e) No dividends shall be declared or paid or set
apart for payment on the AMPS of a particular Series for any
Dividend Period or part thereof unless full cumulative
dividends (including Additional Dividends) have been or
contemporaneously are declared and paid on each of the
Shares of AMPS of such Series through the most recent
Dividend Distribution Date applicable thereto. Any dividend
payment made on the AMPS of a particular Series will be
first credited against the dividends accumulated thereon
with respect to the earliest Dividend Period for which
dividends have not been paid. No Holder shall be entitled
to any dividends or Additional Dividends, whether payable in
cash, property or shares, in excess of full cumulative
dividends and Additional Dividends, as provided in this
Section 3.1. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend
payment on the AMPS that may be in arrears. In case the
stated dividends on the AMPS, or shares of any other class
or series of stock of the Corporation ranking on a parity
with the AMPS as to dividends, are not paid in full, the
AMPS and such other shares of stock of the Corporation
ranking on a parity with the AMPS as to dividends shall
share ratably in the payment of dividends, including
accumulations, if any, in accordance with the sums which
would be payable on such shares if all dividends were
declared and paid in full.
(f) So long as the Shares are registered in the
name of the Securities Depository or a nominee thereof,
payment of dividends distributable with respect to the
Shares shall be made to the Securities Depository by wire
transfer provided proper wire instructions are received by
the Corporation prior to the applicable Regular Record Date
therefor.
(g) With respect to each Dividend Period for a
particular Series of AMPS (other than the Initial Dividend
Period) that the Corporation desires to be a Special
Dividend Period, the Corporation may, at its sole option and
to the extent permitted by law request, by telephonic and
written notice (a "Request for Special Dividend Period") to
the Auction Agent and to each Broker-Dealer, that the next
succeeding Dividend Period be a number of days (greater than
49) specified in the notice (a "Special Dividend Period"),
provided that for any Auction occurring after the initial
Auction, the Corporation may not give a Request for Special
Dividend Period (and any such request shall be null and
void) unless Sufficient Clearing Bids were made in the last
occurring Auction for such particular Series of AMPS and
unless full cumulative dividends, any amounts due with
respect to mandatory redemptions, and any Additional
Dividends payable prior to such date have been paid in full.
Such Request for Special Dividend Period, in the case of a
Dividend Period of 180 days or less, shall be given on or
prior to the 4th day but not more than 7 days prior to an
Auction Date for such particular Series of AMPS and, in the
case of a Dividend Period of more than 180 days, shall be
given on or prior to the 5th day but not more than 28 days
prior to an Auction Date for such particular Series of AMPS.
The Request for Special Dividend Period shall also state any
Specific Redemption Provisions that will apply during such
Special Dividend Period.
Upon receiving such Request for Special Dividend
Period, the Broker-Dealers shall jointly determine whether,
given the factors set forth below, it is advisable that the
Corporation issue a Notice of Special Dividend Period for
the particular Series of AMPS as contemplated by such
Request for Special Dividend Period and, if advisable, the
Specific Redemption Provisions, and shall give the
Corporation and the Auction Agent written notice (a
"Response") of such determination by no later than the day
prior to such Auction Date. In making such determination
the Broker-Dealers will consider (1) existing short-term and
long-term market rates and indices of such short-term and
long-term rates, (2) existing market supply and demand for
short-term and long-term securities, (3) existing yield
curves for short-term and long-term securities comparable to
such AMPS, (4) industry and financial conditions which may
affect such AMPS, (5) the investment objective of the
Corporation, and (6) the Dividend Periods and dividend rates
at which current and potential beneficial holders of such
particular Series of AMPS would remain or become beneficial
holders.
If the Response of all of the Broker-Dealers who
give a Response states that given the factors set forth
above it is not advisable that the Corporation give a Notice
of Special Dividend Period for the particular Series of
AMPS, the Corporation may not give a Notice of Special
Dividend Period in respect of such Request for Special
Dividend Period. In the event the Response of any Broker-
Dealer does not indicate that it is not advisable that the
Corporation give a Notice of Special Dividend Period for
such particular Series of AMPS, the Corporation may by no
later than the second day prior to such Auction Date give a
notice (a "Notice of Special Dividend Period") to the
Auction Agent, the Securities Depository and each Broker-
Dealer which notice will specify the duration of the Special
Dividend Period and the Maximum Rate therefor and Specific
Redemption Provisions (if any).
The Corporation shall not give a Notice of Special
Dividend Period or convert to a Special Dividend Period and,
if the Corporation has given a Notice of Special Dividend,
the Corporation is required to give telephonic and written
notice of revocation (a "Notice of Revocation") to the
Auction Agent, each Broker-Dealer, and the Securities
Depository on or prior to the Business Day prior to the
relevant Auction Date if it has not obtained the advice of
the Rating Agencies that the proposed Special Dividend
Period will not adversely affect their then-current rating
on such particular Series of AMPS or if (w) either the 1940
Act AMPS Asset Coverage Requirement is not satisfied or
there shall not be maintained S&P Eligible Assets and
Moody's Eligible Assets (if Moody's and S&P are rating the
AMPS at the request of the Corporation) or S&P Eligible
Assets (if S&P and not Moody's is rating the AMPS at the
request of the Corporation) or Moody's Eligible Assets (if
Moody's and not S&P is rating the AMPS at the request of the
Corporation) with an aggregate Adjusted Value which equals
or exceeds the Moody's Required Asset Coverage and/or the
S&P Required Asset Coverage, as the case may be, (x)
sufficient funds for the payment of dividends payable on the
immediately succeeding Dividend Distribution Date have not
been irrevocably deposited with the Auction Agent by the
close of business on third Business Day preceding the
related Auction Date, (y) all of the Broker-Dealers jointly
advise the Corporation that after consideration of the
factors listed above they have concluded that it is
advisable to give a Notice of Revocation or (z) the
Corporation has determined to terminate the Special Dividend
Period for any reason.
If the Corporation is prohibited from giving a
Notice of Special Dividend Period as a result of clause (w),
(x), (y) or (z) of the prior sentence or if the Corporation
for any reason gives a Notice of Revocation with respect to
a Notice of Special Dividend Period for any particular
Series of AMPS, the next succeeding Dividend Period for such
particular Series of AMPS will be a 49-day Dividend Period.
In addition, in the event Sufficient Clearing Bids are not
made in the Auction or such Auction is not held for any
reason, such next succeeding Dividend Period will be a 49-
day Dividend Period and the Corporation may not again give a
Notice of Special Dividend Period for any particular Series
of AMPS (and any such attempted notice shall be null and
void) until Sufficient Clearing Bids have been made in an
Auction with respect to a 49-day Dividend Period for such
particular Series of AMPS.
3.2. Restrictions on Dividends and Other
Payments. So long as any Shares of AMPS are outstanding,
the Corporation will not declare, pay or set apart for
payment any dividend or other distribution (other than a
dividend or distribution paid in shares of, or options,
warrants or rights to subscribe for or purchase, Common
Stock or other stock, if any, ranking junior to the Shares
of AMPS as to dividends or upon liquidation) in respect of
Common Stock or any other stock of the Corporation ranking
junior to or on a parity with the Shares of AMPS as to
dividends or upon liquidation, or call for redemption,
redeem, purchase or otherwise acquire for consideration any
shares of Common Stock or any other such junior stock
(except by conversion into or exchange for stock of the
Corporation ranking junior to the AMPS as to dividends and
upon liquidation) or any such parity stock (except by
conversion into or exchange for stock of the Corporation
ranking junior to or on a parity with the AMPS as to
dividends and upon liquidation), unless (A) immediately
after such transaction, (i) the Adjusted Value of Moody's
Eligible Assets and S&P Eligible Assets (if Moody's and S&P
are rating the AMPS at the request of the Corporation) or
S&P Eligible Assets (if S&P and not Moody's is rating the
AMPS at the request of the Corporation) or Moody's Eligible
Assets (if Moody's and not S&P is rating the AMPS at the
request of the Corporation) would equal or exceed the
Moody's Required Asset Coverage and/or the S&P Required
Asset Coverage, as the case may be, and (ii) the 1940 Act
AMPS Asset Coverage Requirement would be satisfied, (B) full
cumulative dividends (including the then current Additional
Dividends which shall be due and payable but be unpaid) on
the Shares of AMPS due on or prior to the date of the
transaction have been declared and paid or Deposit Assets
have been deposited for such payment and (C) the Corporation
has redeemed the Shares of AMPS required to be redeemed by
any provision for mandatory redemption contained in these
Articles Supplementary.
3.3. Calculation of AMPS Dividend Rate. Except
as provided in Section 3.4(b), the rate (the "AMPS Rate")
per annum at which dividends shall be payable (if declared)
with respect to a particular Series of AMPS shall be equal
to (a) the rate or rates per annum established by the Board
of Directors for each of the periods ending on but excluding
a Dividend Distribution Date during the period commencing on
and including the Date of Original Issue for such Series of
AMPS and ending on but excluding the last Dividend
Distribution Date with respect to such Series with respect
to the Initial Dividend Period established by the Board of
Directors (the "Initial Dividend Period") and (b) the rate
per annum that results from implementation of the Auction
Procedures pursuant to Section 3.8 (the "Auction Rate") for
each subsequent period which either is a Special Dividend
Period or is the 49-day period commencing on the last Normal
Dividend Distribution Date for the preceding Dividend Period
with respect to such Series of AMPS (each a "Subsequent
Dividend Period" and together with the Initial Dividend
Period a "Dividend Period"); provided that if, on any
Auction Date, an Auction is not held for any reason with
respect to a particular Series of AMPS the dividend rate for
the next succeeding Dividend Period for such Series of AMPS
shall equal the Maximum Rate on such Auction Date for a
Dividend Period that is not a Special Dividend Period; and
provided further that in no event shall the Auction Rate
exceed the Maximum Rate.
3.4. Calculation of Cash Dividends Distributable
on AMPS. (a) The aggregate amount of dividends
distributable to each Holder of Shares of AMPS of a
particular Series for any Dividend Period or part thereof
(the "AMPS Dividend Amount") shall be calculated by (i)
multiplying the AMPS Rate for such Series of AMPS for such
Dividend Period or part thereof by $100,000, (ii) (A) in the
case of a Dividend Period of less than 365 days, multiplying
such product by the actual number of days in such Dividend
Period or part thereof concerned, or (B) in the case of a
Dividend Period of 365 days or more, multiplying such
product by 30 multiplied by the sum of the number of 30-day
months (calculated on the basis of a 360-day year consisting
of twelve months of 30 days each), plus, in the case of
incomplete months, the number of days actually elapsed
divided by 30 days, in the Dividend Period or part thereof
concerned, (iii) dividing such product by 360 and (iv)
rounding the remainder to the nearest cent (one-half a cent
being rounded upwards).
(b) If the Corporation fails to deposit, in
same-day funds, with the Paying Agent by 12:00 noon, New
York City time, (A) on any Dividend Distribution Date an
amount sufficient to pay the dividends (whether or not
earned or declared) with respect to a particular Series of
AMPS payable on such Dividend Distribution Date or (B) on
any Redemption Date an amount sufficient to redeem on such
date fixed for redemption the Shares of AMPS of a particular
Series to be redeemed (including an amount equal to
dividends thereon, whether or not earned or declared,
accumulated but unpaid to such Redemption Date), then, in
either case, beginning with the Dividend Distribution Date
or Redemption Date, as the case may be, on which such
failure occurs and continuing until the Dividend
Distribution Date with respect to such Series of AMPS that
is or immediately follows the date the Corporation remedies
such failure as provided in the third sentence of this
paragraph, the dividend rate for such Series of AMPS for
each Dividend Period or Redemption Date applicable thereto
shall be equal to 200% of the Maximum Rate in effect on the
second Business Day preceding the first day of such Dividend
Period. Notwithstanding the foregoing and provided such
failure is not due to the willful negligence of the
Corporation, if the Corporation remedies such failure by
depositing, in same-day funds, with the Paying Agent by
12:00 noon, New York City time, on the first, second or
third Business Day following such Dividend Distribution Date
or date fixed for redemption, as the case may be, an amount
equal to (x) the unpaid dividends or unpaid redemption
payments plus (y) a late charge computed at an annual rate
of 200% of the Maximum Rate in effect on the second Business
Day preceding the date of such failure applied to the amount
of such unpaid dividends or unpaid redemption payments based
on the number of days elapsed from the applicable Dividend
Distribution Date or date fixed for redemption to the date
on which funds for such dividends or redemption payments are
deposited with the Paying Agent divided by 360, then the
dividend rate for such Series of AMPS for the then-current
Dividend Period applicable thereto will be the AMPS Rate
established on the immediately preceding Auction Date
applicable thereto. If, subsequent to the three-Business
Day grace period referred to in the preceding sentence, the
Corporation remedies such failure to pay dividends or the
redemption payments by depositing with the Paying Agent all
amounts required by the first sentence of this paragraph
plus all dividends (computed at the rate specified in the
first sentence of this paragraph) accumulated (whether or
not earned or declared) but unpaid to the Dividend
Distribution Date with respect to such Series that is or
immediately precedes the date of such remedy, then the
dividend rate for such Series of AMPS in respect of each
Dividend Period applicable thereto commencing after such
remedy will be determined in accordance with the Auction
Procedures until such time as there is another failure to
pay either dividends or the redemption payments with respect
to such Series of AMPS. In the event of any such remedy
described in the preceding sentence, the Corporation will,
not more than 30 nor less than five Business Days prior to
the next Auction Date with respect to such Series, notify
the Auction Agent, all Holders of the Shares of such Series
of AMPS and the Securities Depository in writing of the date
of the next Auction.
(c) After payment in full of the AMPS
Dividend Amounts for all Outstanding Shares of a particular
Series of AMPS in respect of any Dividend Period applicable
thereto, the Holders of the AMPS of such Series will not be
entitled to any further distributions in respect of such
Dividend Period other than distributions of Additional
Dividends as provided in Section 3.5.
3.5. Additional Dividends. (a) If any of the
dividends paid by the Corporation pursuant to Sections 3.1,
3.2 and 3.3 to Holders of any Series of AMPS in any taxable
year cannot be designated by the Corporation as fully
eligible for the Dividends Received Deduction, then, without
further action by the Board of Directors, to the extent of
funds legally available therefor, additional dividends
("Additional Dividends") for that year shall accumulate and
shall become payable with respect to such Series of AMPS as
set forth below such that the Net After-Tax Return to a
Holder (calculated in a manner which assumes that such
Holder entitled to receive such prior dividends by reason of
being a Holder on the date immediately preceding payment has
been a Holder for the entire relevant taxable year) of
Shares of such Series of AMPS which is a domestic
corporation from any such prior dividend and the Additional
Dividend relating to such prior dividend will be the same as
the Net After-Tax Return that would have been derived from
such prior dividend if all of the dividends (other than
Additional Dividends) paid on such Series of AMPS by the
Corporation had been designated by the Corporation as fully
eligible for the Dividends Received Deduction, calculated by
assuming any Additional Dividends to be eligible for the
Dividends Received Deduction, and by assuming any dividend
designated as a capital gain dividend pursuant to clause (c)
hereof as eligible for any preferential tax treatment
provided under applicable law for net long-term capital gain
recognized by corporations.
(b) Shortly after the end of each fiscal year of
the Corporation in which one or more dividends at one or
more AMPS Rates for a particular Series of AMPS have been
declared, the Corporation shall make a calculation pursuant
to paragraphs (c) and (e) below of the Additional Dividends,
if any, with respect to such Series for such year. The
calculation of the amount of such Additional Dividends, if
any, shall be based on the income and expenses of the
Corporation to the end of such immediately preceding fiscal
year. Each such Additional Dividend shall be payable to
Holders of record as of the record date established by the
Board for determining Holders entitled to receive
distribution of the dividend to which such income not
eligible for the Dividends Received Deduction is allocated
pursuant to the provisions hereof and shall be payable on a
date fixed by the Board as promptly as practicable after the
calculation of the amount thereof, but in any event must be
paid within the time limit and in such a manner as will
permit the Corporation to treat each such Additional
Dividend as having been paid during such immediately
preceding fiscal year for Federal tax purposes. The
Corporation shall (1) deposit with the Paying Agent or (2)
irrevocably instruct its bank to segregate in a separate
trust account sufficient funds for the payment of such
Additional Dividends not later than noon on the date on
which such Additional Dividends become payable and shall
give the Paying Agent, or its bank, irrevocable instructions
to apply such funds and, if applicable, the income and
proceeds therefrom, to the payment of such Additional
Dividends. If the Company instructs its bank to segregate
funds pursuant to clause (2) in the preceding sentence, the
Paying Agent shall have no obligation to take any action
until such time as sufficient funds are deposited by the
Company with the Paying Agent. The Corporation may direct
the Paying Agent, or its bank, to invest any such available
funds in Deposit Assets. All such funds (to the extent
necessary to pay the full amount of such Additional
Dividends) shall be held in trust for the benefit of the
Holders of the Shares of AMPS entitled thereto. If, for any
taxable year, all dividends paid on the AMPS of such Series
are eligible in full for the Dividends Received Deduction,
then the amount of each Additional Dividend with respect to
such Series with respect to such taxable year shall be zero.
(c) If for any taxable year the Corporation
realizes net capital gain, then the Corporation shall:
(i) allocate to the distributions made on
each series of AMPS and any other Preferred Stock
of the Corporation for a taxable year, to the
extent permitted under applicable law, dividends
received by the Corporation for such taxable year
that would have qualified for the Dividends
Received Deduction if the Corporation were not a
regulated investment company ("Qualified
Dividends"), and allocate the remainder of such
dividends to the distributions made on the Common
Stock for such taxable year;
(ii) allocate to the distributions made on
the Common Stock for such taxable year, to the
extent permitted under applicable law, the net
capital gain of the Corporation for such taxable
year, and allocate the remainder of such net
capital gain to the distributions (including
Additional Dividends) made for such taxable year
on each series of AMPS and any other Preferred
Stock of the Corporation outstanding on the last
day of such taxable year, in each case in the same
proportion as the amount of such distributions on
such series bears to the sum of such distributions
on all such series of AMPS and Preferred Stock;
(iii) designate one or more of the
distributions made on the Common Stock for such
taxable year, to the extent permitted under
applicable law, as derived (in whole or in part,
as the case may be) from the portion of the net
capital gain of the Corporation for such taxable
year that is allocated to the distributions on
the Common Stock for such taxable year;
(iv) designate as derived (in whole or in
part, as the case may be) from net capital gain
allocated to the distributions made on each Series
of AMPS outstanding on the last day of such
taxable year, first, all or a portion of the
distribution paid as dividends on the last
Dividend Distribution Date for such year on which
a distribution is made with respect to such Series
of AMPS, and thereafter, if the net capital gain
allocated to the distributions made on such Series
of AMPS for such taxable year exceeds the amount
of the dividend paid on such last Dividend
Distribution Date, all or a portion of each
distribution paid as dividends on each next
preceding Dividend Distribution Date for such
taxable year on which a distribution is made with
respect to such Series of AMPS, in reverse order
of their occurrence, until an amount equal to the
amount of the net capital gain allocated to the
distributions made with respect to such Series of
AMPS for such year has been so designated; and
(v) designate as derived (in whole or in
part) from Qualified Dividends allocated to the
distributions made on each Series of AMPS
outstanding on any day during such taxable year,
first, all or a portion of the distribution paid
as dividends on the first Dividend Distribution
Date for such year on which a distribution is made
with respect to such Series of AMPS, and
thereafter, all or a portion of each distribution
paid as dividends on each next successive Dividend
Distribution Date for such taxable year on which a
distribution is made with respect to such Series
of AMPS, in the order of their occurrence, until
an amount equal to the amount of the Qualified
Dividends allocated to the distributions made with
respect to such Series of AMPS for such year has
been so designated.
(d) Notwithstanding the provisions of paragraph
(c) above, if in the Opinion of Counsel an allocation and
designation by the Corporation of its distributions as
consisting of net capital gain or of Qualifying Dividends,
respectively, other than as set forth in paragraph (c)
above, would be treated for federal income tax purposes as
proportionate within the meaning of applicable law, the
Corporation may utilize such other method of allocation and
designation.
(e) Notwithstanding the provisions of paragraph
(c) above, if (x) the difference of (1) the sum of the
distributions paid as dividends and Additional Dividends on
any Series of AMPS and any other Preferred Stock of the
Corporation and (2) the Qualified Dividends allocable to any
Series of AMPS and any other Preferred Stock of the
Corporation exceeds the amounts payable as dividends and
Additional Dividends on the last Dividend Distribution Date
for the taxable year, or (y) the Corporation is prohibited
by applicable law, rule, regulation or interpretation from
designating dividends and Additional Dividends as derived
from net capital gain or as qualified for the Dividends
Received Deduction as provided in paragraph (c) above, the
Corporation shall designate distributions made as dividends
and Additional Dividends on any Series of AMPS as derived
from net capital gain or as Qualified Dividends in a manner
determined by the Board of Directors to be just and
equitable to the Holders.
(f) If the Corporation's designations of
dividends qualifying for the Dividends Received Deduction
and as derived from net capital gain are not given effect
for federal income tax purposes, the Corporation will not be
required to pay Additional Dividends on any Series of AMPS
to compensate for the resulting reduction in the Net
After-Tax Return to the holders of any Series of AMPS.
Moreover, no Additional Dividends shall become payable as a
result of any change in the law concerning the eligibility
for the Dividends Received Deduction of amounts paid with
respect to any Series of AMPS.
(g) For purposes of this Section 3.5, except as
otherwise provided by applicable law, any dividend declared
by the Corporation in October, November or December of any
calendar year and payable to shareholders of record on a
specified date in such month, and actually paid by the
Corporation during January of the following calendar year
shall be deemed to have been paid by the Corporation on
December 31 of the year during which it was declared, unless
otherwise stipulated by the Board.
3.6. Calculation of Maximum Rate and AMPS Rates.
The Corporation shall cause the Auction Agent to calculate
the Maximum Rate on each Auction Date. The Corporation
shall cause the Auction Agent to calculate the AMPS Rate for
each Dividend Period. The Auction Agent's determination of
the AMPS Rate shall (in the absence of manifest error) be
final and binding upon all parties.
3.7. Position Listings; Notices. (a) By 10:00
A.M., New York City time, on the Business Day immediately
preceding the first day of each Dividend Period for a
particular Series of AMPS, the Corporation shall request
that the Securities Depository deliver to the Corporation a
position listing showing at the close of business on the
immediately preceding Regular Record Date with respect to
such Series the aggregate liquidation preference of
Outstanding Shares of such Series and by 2:00 P.M., New York
City time, on each such Business Day, the Corporation shall
have obtained such a position listing from the Securities
Depository. On the basis of such position listing, the
Corporation shall determine the aggregate amounts of
dividends distributable on the next succeeding Dividend
Distribution Date with respect to such Series to the Holders
of Shares of such Series. The Corporation shall advise the
Securities Depository of each Regular Record Date for the
Shares of such Series at least two Business Days prior
thereto.
(b) As promptly as practicable after the Date of
Original Issue for each Series of AMPS and each Dividend
Distribution Date with respect thereto, and in any event at
least 10 days prior to the next Dividend Distribution Date
with respect thereto following such Date of Original Issue
or such Dividend Distribution Date, as the case may be, the
Corporation shall advise:
(i) the Auction Agent of such next Dividend
Distribution Date; and
(ii) the Securities Depository of the AMPS
Rate and the AMPS Dividend Amount applicable to such
Series.
In the event that any day that is scheduled to be a Dividend
Distribution Date with respect to the AMPS of a particular
Series shall be changed after the Corporation shall have
given the notice referred to in clause (i) of the preceding
sentence, not later than 9:15 A.M., New York City time, on
the Business Day next preceding the earlier of the new
Dividend Distribution Date or the old Dividend Distribution
Date, the Corporation shall, by such means as the
Corporation deems practicable, give notice of such change to
the Auction Agent and to the Holders of Shares of such
Series.
3.8. Auction Procedures. An Auction shall be
conducted on each Auction Date on which there is an Auction
Agent, in the following manner (it being understood that a
separate Auction will be conducted on a different Auction
Date for each separate Series of AMPS and, accordingly, as
used in this Section 3.8, "AMPS" means the Series of AMPS
subject to the related Auction and "Existing Holders" and
"Potential Holders" mean Existing Holders and Potential
Holders of such Series of AMPS; as used in this Section 3.8,
"stated value" of any AMPS refers to the liquidation
preference thereof of $100,000 per share):
(a) (i) Prior to the Submission Deadline on each
Auction Date:
(A) Each Existing Holder of AMPS may submit to
the Broker-Dealer information as to:
(I) the stated value of Outstanding
AMPS, if any, held by such Existing Holder
which such Existing Holder desires to
continue to hold without regard to the
Auction Rate for the next succeeding Dividend
Period;
(II) the stated value of Outstanding
AMPS, if any, held by such Existing Holder
which such Existing Holder offers to sell if
the Auction Rate for the next succeeding
Dividend Period shall be less than the rate
per annum specified by such Existing Holder;
and/or
(III) the stated value of Outstanding
AMPS, if any, held by such Existing Holder
which such Existing Holder offers to sell
without regard to the Auction Rate for the
next succeeding Dividend Period.
(B) The Broker-Dealer may contact Potential
Holders to determine the stated value of AMPS
which each such Potential Holder offers to
purchase if the Auction Rate for the next
succeeding Dividend Period shall be not less
than the rate per annum specified by such
Potential Holder.
For the purposes hereof, the communication to the
Broker-Dealer of information referred to in clause (A)(I),
(A)(II), (A)(III) or (B) of this paragraph (i) is
hereinafter referred to as an "Order" and collectively as
"Orders" and each Existing Holder and each Potential Holder
placing an Order is hereinafter referred to as a "Bidder"
and collectively as "Bidders"; an Order containing the
information referred to in (x) clause (A)(I) of this
paragraph (i) is hereinafter referred to as a "Hold Order"
and collectively as "Hold Orders," (y) clause (A)(II) or (B)
of this paragraph (i) is hereinafter referred to as a "Bid"
and collectively as "Bids" and (z) clause (A)(III) of this
paragraph (i) is hereinafter referred to as a "Sell Order"
and collectively as "Sell Orders."
(ii) (A) A Bid by an Existing Holder shall
constitute an irrevocable offer to sell:
(I) the stated value of Outstanding
AMPS specified in such Bid if the Auction
Rate determined as provided in this Section
3.8 shall be less than the rate specified in
such Bid; or
(II) such stated value or a lesser
stated value of Outstanding AMPS to be
determined as set forth in paragraph
(d)(i)(D) hereof if the Auction Rate
determined as provided in this Section 3.8
shall be equal to the rate specified in such
Bid; or
(III) such stated value or a lesser
stated value of Outstanding AMPS to be
determined as set forth in paragraph
(d)(ii)(C) hereof if the rate specified shall
be higher than the applicable Maximum Rate
and Sufficient Clearing Bids have not been
made.
(B) A Sell Order by an Existing Holder shall
constitute an irrevocable offer to sell:
(I) the stated value of Outstanding
AMPS specified in such Sell Order; or
(II) such stated value or a lesser
stated value of Outstanding AMPS as set forth
in paragraph (d)(ii)(C) hereof if Sufficient
Clearing Bids have not been made.
(C) A Bid by a Potential Holder shall constitute
an irrevocable offer to purchase:
(I) the stated value of Outstanding
AMPS specified in such Bid if the Auction
Rate determined as provided in this Section
3.8 shall be higher than the rate specified
in such Bid; or
(II) such stated value or a lesser
stated value of Outstanding AMPS as set forth
in paragraph (d)(i)(E) hereof if the Auction
Rate determined as provided in this Section
3.8 shall be equal to the rate specified in
such Bid.
(D) A Bid by a Potential Holder specifying a rate
per annum higher than the applicable Maximum
Rate will not be considered.
(b) (i) The Corporation shall instruct the
Broker-Dealer to submit in writing to the Auction Agent
prior to the Submission Deadline on each Auction Date
all Orders obtained by the Broker-Dealer and shall
specify with respect to each such Order:
(A) the name of the Bidder placing such Order;
(B) the aggregate stated value of AMPS that are
the subject of such Order;
(C) the number of Persons for which Submitted
Bids are being made and the stated value of
AMPS for which each such Bid is being made;
(D) to the extent that such Bidder is an Existing
Holder:
(I) the stated value of AMPS, if any,
subject to any Hold Order placed by such
Existing Holder;
(II) the stated value of AMPS, if any,
subject to any Bid placed by such Existing
Holder and the rate specified in such Bid;
and
(III) the stated value of AMPS, if any,
subject to any Sell Order placed by such
Existing Holder;
and
(E) to the extent such Bidder is a Potential
Holder, the rate specified in such Potential
Holder's Bid.
(ii) If any rate specified in any Bid
contains more than three figures to the right of the
decimal point, the Corporation shall instruct the
Auction Agent to round such rate up to the next highest
one one-thousandth (.001) of 1%.
(iii) If an Order or Orders covering all
Outstanding AMPS held by any Existing Holder is not
submitted to the Auction Agent prior to the Submission
Deadline, the Corporation shall instruct the Auction
Agent to deem a Hold Order to have been submitted on
behalf of such Existing Holder covering the stated
value of Outstanding AMPS held by such Existing Holder
and not subject to an Order submitted to the Auction
Agent; provided, however, that with respect to an
Auction to establish a Special Dividend Period, the
Auction Agent shall deem a Sell Order to have been
submitted on behalf of such Existing Holder covering
such number of Outstanding AMPS.
(iv) Neither the Corporation nor the Auction
Agent shall be responsible for any failure or delay of
the Broker-Dealer to submit an Order to the Auction
Agent on behalf of any Existing Holder or Potential
Holder.
(v) If any Existing Holder submits through
the Broker-Dealer to the Auction Agent one or more
Orders covering in the aggregate more than the stated
value of Outstanding AMPS held by such Existing Holder,
such Orders shall be considered valid as follows and in
the following order of priority:
(A) All Hold Orders of such Existing Holder shall
be considered valid, but only up to and
including in the aggregate the stated value
of AMPS held by such Existing Holder, and if
the aggregate stated value of AMPS subject to
such Hold Orders exceeds the aggregate stated
value of AMPS held by such Existing Holder,
the aggregate stated value of AMPS subject to
each such Hold Order shall be reduced pro
rata to cover the aggregate stated value of
Outstanding AMPS held by such Existing
Holder;
(B) (I) any Bid of such Existing Holder
shall be considered valid up to and including
the excess of the stated value of Outstanding
AMPS held by such Existing Holder over the
aggregate stated value of AMPS subject to any
Hold Orders referred to in clause (A) of this
paragraph (v);
(II) subject to subclause (I) of this
clause (B), if more than one Bid with the
same rate is submitted on behalf of such
Existing Holder and the aggregate stated
value of Outstanding AMPS subject to such
Bids is greater than such excess, such Bids
shall be considered valid up to and including
the stated value of such excess and the
stated value of AMPS subject to each Bid with
the same rate shall be reduced pro rata to
cover the stated value of AMPS equal to such
excess;
(III) subject to subclause (I) and (II)
of this clause (B), if more than one Bid with
different rates is submitted on behalf of
such Existing Holder, such bids shall be
considered valid first in the ascending order
of their respective rates until the highest
rate is reached at which such excess exists
and then at such rate up to and including the
stated value of such excess; and
(IV) in any such event, the aggregate
stated value of Outstanding AMPS, if any,
subject to Bids not valid under this clause
(B) shall be treated as the subject of a Bid
by a Potential Holder at the rate therein
specified; and
(C) All Sell Orders shall be considered valid up
to and including the excess of the stated
value of Outstanding AMPS held by such
Existing Holder over the aggregate stated
value of AMPS subject to Hold Orders referred
to in clause (A) of this paragraph (v) and
valid Bids referred to in clause (B) of this
paragraph (v).
(vi) If more than one Bid for AMPS is
submitted on behalf of any Potential Holder, each Bid
submitted shall be a separate Bid with the rate and
stated value therein specified.
(vii) Any Bid or Sell Order submitted by an
Existing Holder not equal to an integral multiple of
the stated value of AMPS shall be rejected and shall be
deemed a Hold Order. Any Bid submitted by a Potential
Holder not covering an integral multiple of the stated
value of AMPS shall be rejected.
(viii) Any Order submitted in an Auction by
the Broker-Dealer to the Auction Agent prior to the
Submission Deadline on any Auction Date shall be
irrevocable.
(c) (i) The Corporation shall instruct the
Auction Agent to assemble, not earlier than the
Submission Deadline on each Auction Date, all valid
Orders submitted or deemed submitted to it by the
Broker-Dealer (each such Order as submitted or deemed
submitted by the 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 instruct the Auction
Agent to determine:
(A) the excess of the aggregate stated value of
Outstanding AMPS on such Auction Date over
the sum of the aggregate stated value of
Outstanding AMPS subject to Submitted Hold
Orders on such Auction Date (such excess
being hereinafter referred to as the
"Available AMPS"); and
(B) from such Submitted Orders whether:
(I) the aggregate stated value of
Outstanding AMPS subject to Submitted Bids by
Potential Holders specifying one or more
rates equal to or lower than the applicable
Maximum Rate;
exceeds or is equal to the sum of:
(II) the aggregate stated value of
Outstanding AMPS subject to Submitted Bids by
Existing Holders specifying one or more rates
higher than the applicable Maximum Rate; and
(III) the aggregate stated value of
Outstanding AMPS subject to Submitted Sell
Orders
(in the event such excess or such equality exists,
other than because the sum of the stated value of AMPS
in subclauses (II) and (III) above is zero because all
of the Outstanding AMPS are subject to Submitted Hold
Orders, there shall exist "Sufficient Clearing Bids"
and such Submitted Bids in subclause (I) above shall be
hereinafter referred to collectively as "Sufficient
Clearing Bids"); and
(C) if Sufficient Clearing Bids have been made,
the lowest rate specified in such Submitted
Bids (which shall be the "Winning Bid Rate")
such that if:
(I) (aa) each such Submitted Bid from
Existing Holders specifying such lowest rate
and (bb) all other Submitted Bids from
Existing Holders specifying lower rates were
rejected, thus entitling such Existing
Holders to continue to hold the stated value
of AMPS subject to such Submitted Bids; and
(II) (aa) each such Submitted Bid from
Potential Holders specifying such lowest rate
and (bb) all other Submitted Bids from
Potential Holders specifying lower rates were
accepted, thus entitling such Potential
Holders to purchase the stated value of AMPS
subject to such Submitted Bids,
the result would be that such Existing Holders
described in subclause (I) above would continue to
hold an aggregate stated value of Outstanding AMPS
which, when added to the aggregate stated value of
Outstanding AMPS to be purchased by such Potential
Holders described in subclause (II) above, would
equal not less than the stated value of Available
AMPS.
(ii) The Corporation shall instruct the
Auction Agent to advise the Corporation and the
Broker-Dealer, promptly after the Auction Agent has
made the determinations pursuant to paragraph (i) of
this subsection (c), of the applicable Maximum Rate and
the components thereof on the Auction Date and, based
on such determinations, the rate (the "Auction Rate")
for the next succeeding Dividend Period as follows:
(A) if Sufficient Clearing Bids have been made,
that the Auction Rate for the next succeeding
Dividend Period shall be equal to the Winning
Bid Rate so determined;
(B) if Sufficient Clearing Bids have not been
made (other than because all of the
Outstanding AMPS are subject to Submitted
Hold Orders) that the Auction Rate for the
next succeeding Dividend Period shall be
equal to the applicable Maximum Rate for a
Dividend Period that is not a Special
Dividend Period;
(C) if all Outstanding AMPS are subject to
Submitted Hold Orders, that the Auction Rate
for the next succeeding Dividend Period shall
be equal to 59% of the 60-day "AA" Composite
Commercial Paper Rate on the Auction Date; or
(D) if the Auction is being conducted with
respect to a Special Dividend Period and
Sufficient Clearing Bids do not exist, then
the Dividend Period next succeeding the
Auction shall automatically be 49 days and
the Auction Rate for the next succeeding
Dividend Period will be as set forth in
paragraph 3.8 (c)(ii)(B) above.
(d) Based on the determinations made pursuant to
paragraph (c)(i) hereof, Submitted Bids and Submitted Sell
Orders shall be accepted or rejected and the Corporation
shall instruct the Auction Agent to take such other action
as set forth below:
(i) If Sufficient Clearing Bids have been
made, all Submitted Sell Orders shall be accepted and,
subject to the provisions of paragraphs (d)(iii) and
(iv) hereof, Submitted Bids shall be accepted or
rejected as follows in the following order of priority
and all other Submitted Bids shall be rejected:
(A) Existing Holders' Submitted Bids specifying
any rate that is higher than the Winning Bid
Rate shall be accepted, thus requiring each
such Existing Holder to sell the aggregate
stated value of AMPS subject to such
Submitted Bids;
(B) Existing Holders' Submitted Bids specifying
any rate that is lower than the Winning Bid
Rate shall be rejected, thus entitling each
such Existing Holder to continue to hold the
aggregate stated value of AMPS subject to
such Submitted Bids;
(C) Potential Holders' Submitted Bids specifying
any rate that is lower than the Winning Bid
Rate shall be accepted;
(D) each Existing Holder's Submitted Bid
specifying a rate that is equal to the
Winning Bid Rate shall be rejected, thus
entitling such Existing Holder to continue to
hold the aggregate stated value of AMPS
subject to such Submitted Bid, unless the
aggregate stated value of Outstanding AMPS
subject to all such Submitted Bids shall be
greater than the stated value of AMPS (the
"remaining value") equal to the excess of the
Available AMPS over the aggregate stated
value of AMPS subject to Submitted Bids
described in clauses (B) and (C) of this
Section 3.8(d)(i), 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 the
stated value of AMPS subject to such
Submitted Bid, but only in a stated value
equal to the aggregate stated value of AMPS
obtained by multiplying the remaining value
by a fraction, the numerator of which shall
be the stated value of Outstanding AMPS held
by such Existing Holder subject to such
Submitted Bid and the denominator of which
shall be the sum of the stated value of
Outstanding AMPS subject to such submitted
Bids made by all such Existing Holders that
specified a rate equal to the Winning Bid
Rate; and
(E) each Potential Holder's Submitted Bid
specifying a rate that is equal to the
Winning Bid Rate shall be accepted but only
in a stated value equal to the stated value
of AMPS obtained by multiplying the excess of
the aggregate stated value of Available AMPS
over the aggregate stated value of AMPS
subject to Submitted Bids described in
clauses (B), (C) and (D) of this Section
3.8(d)(i) by a fraction, the numerator of
which shall be the aggregate stated value of
Outstanding AMPS subject to such Submitted
Bid and the denominator of which shall be the
sum of the stated value of Outstanding AMPS
subject to Submitted Bids made by all such
Potential Holders that specified a rate equal
to the Winning Bid Rate.
(ii) If Sufficient Clearing Bids have not
been made (other than because all of the Outstanding
AMPS are subject to Submitted Hold Orders), subject to
the provisions of paragraph (d)(iii) hereof, Submitted
Orders shall be accepted or rejected as follows in the
following order of priority and all other Submitted
Bids shall be rejected:
(A) Existing Holders' Submitted Bids specifying
any rate that is equal to or lower than the
applicable Maximum Rate shall be rejected,
thus entitling each such Existing Holder to
continue to hold the aggregate stated value
of AMPS subject to such Submitted Bids;
(B) Potential Holders' Submitted Bids specifying
any rate that is equal to or lower than the
applicable Maximum Rate shall be accepted,
thus requiring such Potential Holders to
purchase the aggregate stated value of AMPS
subject to such Submitted Bids; and
(C) each Existing Holder's Submitted Bids
specifying any rate that is higher than the
applicable Maximum Rate and the Submitted
Sell Order of each Existing Holder shall be
accepted, thus entitling each Existing Holder
that submitted any such Submitted Bid or
Submitted Sell Order to sell the AMPS subject
to such Submitted Bid or Submitted Sell
Order, but in both cases only in a stated
value equal to the aggregate stated value of
AMPS obtained by multiplying the aggregate
stated value of AMPS subject to Submitted
Bids described in clause (B) of this Section
3.8(d)(ii) by a fraction, the numerator of
which shall be the aggregate stated value of
Outstanding AMPS held by such Existing Holder
subject to such Submitted Bid or Submitted
Sell Order and the denominator of which shall
be the aggregate stated value of Outstanding
AMPS subject to all such Submitted Bids and
Submitted Sell Orders.
(iii) The Corporation shall instruct the
Auction Agent that if, as a result of the procedures
described in paragraphs (d)(i) or (ii) hereof, 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 AMPS on any
Auction Date, the Auction Agent shall, in such manner
as in its sole discretion it shall determine, round up
or down the number of Shares of AMPS to be purchased or
sold by an Existing Holder or Potential Holder, as the
case may be, on such Auction Date so that only whole
Shares of AMPS will be entitled or required to be sold
or purchased.
(iv) The Corporation shall instruct the
Auction Agent that if, as a result of the procedures
described in paragraph (d)(i) hereof, any Potential
Holder would be entitled or required to purchase less
than a whole Share of AMPS on any Auction Date, the
Auction Agent shall, in such manner in its sole
discretion it shall determine, allocate Shares of AMPS
for purchase among Potential Holders so that only whole
Shares of AMPS are purchased on such Auction Date by
any Potential Holder, even if such allocation results
in one or more of the Potential Holders not purchasing
any Shares of AMPS on such Auction Date.
(v) If all Outstanding AMPS are subject to
Submitted Hold Orders, all Submitted Bids shall be
rejected.
(e) The Corporation shall instruct the Auction
Agent that based on the results of each Auction, the Auction
Agent shall determine the aggregate stated value of AMPS to
be purchased and the aggregate stated value of AMPS to be
sold by Potential Holders and Existing Holders on whose
behalf the Broker-Dealer submitted Bids or Sell Orders.
3.9. Interpretations, Changes or Modifications.
The Board of Directors may interpret the provisions of this
Article III to resolve any inconsistency or ambiguity,
remedy any formal defect or make any other change or
modification that does not adversely affect the rights of
Holders of AMPS.
ARTICLE IV
REDEMPTION
4.1. Optional Redemption. To the extent
permitted under the 1940 Act and Maryland Law, upon giving a
Redemption Notice, the Corporation at its option may redeem
the Shares of one or more Series of AMPS at any time or from
time to time, at a redemption price equal to the AMPS
Redemption Amount; provided, however, that (a) no Shares of
a particular Series of AMPS shall be redeemed pursuant to
this Section 4.1 unless all of the Outstanding Shares of
such Series are simultaneously redeemed, (b) no Shares of
any Series of AMPS may be redeemed pursuant to this Section
4.1 unless all dividends in arrears on the Outstanding
Shares of AMPS and on all other series of Preferred Stock
ranking on a parity with the AMPS with respect to the
payment of dividends or upon liquidation, have been or are
being contemporaneously paid or Deposit Assets irrevocably
set aside for such payment, (c) no Shares of any Series of
AMPS may be redeemed pursuant to this Section 4.1 unless the
aggregate Adjusted Value of all Moody's Eligible Assets and
S&P Eligible Assets (if Moody's and S&P are rating the AMPS
at the request of the Corporation) or S&P Eligible Assets
(if S&P and not Moody's is rating the AMPS at the request of
the Corporation) or Moody's Eligible Assets (if Moody's and
not S&P is rating the AMPS at the request of the
Corporation) held by the Corporation at the time of the
redemption equals or exceeds the Moody's Required Asset
Coverage and/or the S&P Required Asset Coverage, as the case
may be; provided, however, that if such time of redemption
is prior to 1:00 p.m. on an applicable Cure Date arising
under Section 4.2(a) and if giving effect to such redemption
the deficiency referred to in Section 4.2(a) would not exist
at 1:00 p.m. on the applicable Cure Date, then such Adjusted
Value need not exceed the Moody's Required Asset Coverage
and/or the S&P Required Asset Coverage, as the case may be,
at the time of such redemption and (d) except for redemption
in connection with voluntary liquidation of the Corporation
after shareholder approval thereof or involuntary
liquidation, no Shares of AMPS of a particular Series may be
redeemed pursuant to this Section 4.1 in the event that a
Non-Call Period is in effect with respect to such Series
pursuant to a Specific Redemption Provision.
4.2. Mandatory Redemption. To the extent
permitted under the 1940 Act and Maryland Law and
notwithstanding that a No-Call Period may be in effect
pursuant to a Specific Redemption Provision, the Shares of
each Series of AMPS are subject to mandatory redemption in
whole or in part in the event of a Mandatory Redemption
Event.
The occurrence of any of the following will be a
"Mandatory Redemption Event":
(a) (i) if both Moody's and S&P are rating the
AMPS at the request of the Corporation, either (A) the
aggregate Adjusted Value of all Moody's Eligible Assets held
by the Corporation as of the close of business on any
Business Day is less than the Moody's Required Asset
Coverage as of such Business Day and such deficiency
continues to exist as of 1:00 p.m. (New York time) on the
applicable Cure Date or (B) the aggregate Adjusted Value of
all S&P Eligible Assets held by the Corporation as of the
close of business on any Business Day is less than the S&P
Required Asset Coverage as of such Business Day and such
deficiency continues to exist as of 1:00 p.m. (New York
time) on the applicable Cure Date or (ii) if Moody's and not
S&P is rating the AMPS at the request of the Corporation,
clause (A) above shall be operative and the state of affairs
described therein shall exist and clause (B) above shall not
be operative or (iii) if S&P and not Moody's is rating the
AMPS at the request of the Corporation, clause (B) above
shall be operative and the state of affairs described
therein shall exist and clause (A) above shall not be
operative;
(b) (i) the aggregate Fair Market Value of the
Securities and other assets of the Corporation is less than
130% of the sum of the aggregate AMPS Redemption Amount for
all Shares of AMPS then Outstanding and the aggregate AMPS
Redemption Amount (as defined in the applicable articles
supplementary relating to any other Preferred Stock issued
by the Corporation and rated by the Rating Agencies)
applicable to any other Preferred Stock of the Corporation
then outstanding, and such aggregate Fair Market Value
remains less than 130% of such aggregate AMPS Redemption
Amount through the close of business on the applicable Cure
Date;
(c) the Corporation ceases to qualify as a
"regulated investment company" within the meaning of the
Code; or
(d) Merrill Lynch, Pierce, Fenner & Smith
Incorporated ceases to be the Broker-Dealer.
4.3. Timing of Mandatory Redemption. Upon the
occurrence of a Mandatory Redemption Event, the Corporation
will notify each Holder, the Custodian, the Paying Agent and
the Broker-Dealer of the occurrence of such Mandatory
Redemption Event as soon as practicable after it obtains
knowledge thereof and will cause (i) in the case of a
Mandatory Redemption Event described in Section 4.2(a), (b)
or (c), all of the Shares of AMPS to be called for
redemption separately for each Series of AMPS as soon as
practicable after such Mandatory Redemption Event (but in no
event later than the next Business Day) and effect the
redemption of such AMPS not later than 10 days after the
applicable Cure Date and (ii) in the case of the Mandatory
Redemption Event described in Section 4.2(d), all of the
Shares of AMPS to be redeemed separately for each Series of
AMPS on the next succeeding Dividend Distribution Date.
4.4. Distributions Upon Redemption. Upon any
redemption, each Holder of Shares of AMPS to be redeemed
will be entitled to receive out of funds legally available
therefor, an amount (the "AMPS Redemption Amount") equal to
the liquidation preference of such AMPS plus (a) all accrued
and unpaid dividends whether or not earned or declared
thereon to but excluding the Redemption Date in the case of
(i) a redemption occurring on a Dividend Distribution Date
(or if the exception in clause (C) of Section 3.1(b) is
satisfied, the next day after a Dividend Distribution Date)
with respect to such Series or (ii) a redemption occurring
as a result of a Mandatory Redemption Event or (b) the
Redemption Premium in all other cases plus the premium, if
any, if a Premium Call Period is in effect pursuant to
Specific Redemption Provisions. The "Redemption Premium"
with respect to a Share of AMPS shall equal the product of
(i) accrued but unpaid dividends thereon up to but excluding
the Redemption Date and (ii) a fraction the numerator of
which is one minus the product of (A) 100% minus the
percentage specified in Section 243(a)(1) of the Code to be
used in calculating the Dividends Received Deduction
multiplied by (B) the highest Federal tax rate applicable to
ordinary income recognized by corporations and the
denominator of which is one minus the highest Federal
regular tax rate applicable to net short-term capital gain
recognized by corporations. The references in the preceding
sentence and in Section 6.1 hereof to the highest Federal
tax rate applicable to corporations shall be applied by
treating the calendar year in which the Redemption Premium
(or Liquidation Premium in the case of Section 6.1 hereof)
is paid as the relevant taxable year, and, in the event of a
change in such rate with an effective date other than the
first day of the calendar year, giving effect to the
provisions of Section 15 of the Code.
In connection with a Mandatory Redemption Event,
if the net assets of the Corporation are insufficient to pay
in full the aggregate AMPS Redemption Amount and the
aggregate redemption price of all other Preferred Stock
required to be redeemed, such net assets will be
distributed, out of funds legally available therefor, among
the holders of Shares of AMPS and the holders of shares of
such other Preferred Stock ratably in accordance with the
respective preferential amounts which would be payable on
all of such stock if all such amounts payable upon such
redemption were paid in full.
4.5. Notice of Redemption. Not more than 60 days
before any Redemption Date (and on the same date as the
notice to the Securities Depository), the Corporation will
cause a notice (a "Redemption Notice") of any redemption to
be mailed to the Holders of AMPS to be redeemed provided,
however in the case of a redemption pursuant to Section
4.2(a), (b) or (c) the Corporation will cause a Redemption
Notice to be mailed to the Holders of AMPS to be redeemed as
soon as practicable after the occurrence of such events.
Failure to mail a Redemption Notice to a Holder or a defect
in any notice so mailed will not affect the validity of the
proceedings for the redemption of the AMPS. Each Redemption
Notice will set forth the certificate numbers or other
identifying information of the AMPS to be redeemed, the date
of issuance of such AMPS, the Redemption Date, the AMPS
Redemption Amount to be paid, the address and phone number
of the Paying Agent, the date of the Redemption Notice, the
date on which funds will be available for payment of the
AMPS Redemption Amount at the principal corporate trust
office of the Paying Agent, and that from and after the
close of business on the Business Day immediately preceding
the Redemption Date dividends on the AMPS to be redeemed
will cease to accrue and be payable.
The Corporation will cause to be delivered to the
Securities Depository a notice of redemption of AMPS on or
prior to the Redemption Date. Such notice will give the
Securities Depository notice of the record date selected by
the Corporation for the purpose of a redemption (each a
"Redemption Record Date"). The notice to the Securities
Depository of the Redemption Record Date shall specify,
among other things, the Redemption Record Date and the
Redemption Date. Failure to deliver a notice of redemption
to the Securities Depository or a defect in any notice so
delivered will not affect the validity of the proceedings
for the redemption of the AMPS to be redeemed.
If the Corporation gives notice of redemption, and
concurrently or thereafter deposits in trust with the Paying
Agent Deposit Assets in an amount sufficient to redeem the
Shares of AMPS to be redeemed, with irrevocable instructions
and authority to pay the redemption price to the Holders
thereof, then upon the date of such deposit or, if no such
deposit is made, upon such date fixed for redemption (unless
the Corporation shall default in making payment of the
redemption price), all rights of the Holders of such Shares
will cease and terminate, except the right to receive the
redemption price thereof, but without interest, and such
Shares will no longer be deemed to be Outstanding. The
Corporation shall be entitled to receive, from time to time,
from the Paying Agent the interest, if any, on such moneys
deposited with it and the Holders of any Shares so redeemed
shall have no claim to any of such interest. In case the
Holder of any Shares so called for redemption shall not
claim the redemption payment for his Shares within twenty-
four months after the date of redemption, the Corporation
shall cause the Paying Agent to pay over to the Corporation
such amount remaining on deposit and the Paying Agent shall
thereupon be relieved of all responsibility to the Holder of
such Shares called for redemption and such Holder thereafter
shall look only to the Corporation for the redemption
payment.
4.6. Cancellation. Shares so redeemed, presented
and surrendered shall be cancelled upon the surrender for
payment thereof. Until such surrender for payment, amounts
payable upon redemption of Shares shall be held by the
Corporation or the Paying Agent uninvested.
ARTICLE V
REQUIRED ASSET COVERAGE
5.1. Certificate of Moody's Required Asset
Coverage. So long as Moody's is rating the AMPS at the
request of the Corporation and except to the extent waived
by Moody's, as of each Business Day and each Cure Date, the
Corporation shall cause the Administrator to determine the
aggregate Adjusted Value of all Moody's Eligible Assets on
that day and whether such aggregate Adjusted Value on such
date equals or exceeds the Moody's Required Asset Coverage
on such date. The calculations of the Adjusted Value of all
Moody's Eligible Assets and Moody's Required Asset Coverage,
and whether the aggregate Adjusted Value of Moody's Eligible
Assets equals or exceeds the Moody's Required Asset Coverage
shall be set forth in a certificate substantially in the
form of Schedule II to the Administration Agreement (a
"Certificate of Moody's Required Asset Coverage"), dated as
of each such Business Day and Cure Date and signed by an
Authorized Officer. The Corporation shall cause the
Administrator to deliver (by facsimile or otherwise) a
Certificate of Moody's Required Asset Coverage to the
Corporation by 11:00 a.m. New York time on the Business Day
to which such certificate relates. With respect to the
Certificate of Moody's Required Asset Coverage relating to
(1) each Business Day which is the first Business Day in the
months of January, April, July and October of each year, and
(2) another day during each calendar quarter, which day
shall be selected at random by the independent accountants
signing the Accountant's Certificate referred to below, the
Corporation shall cause the Administrator to deliver to the
Corporation, within three Business Days of each such date,
an Accountant's Certificate (in substantially such form as
may be agreed upon by the Company and the Administrator with
the consent of Moody's) certifying as to (i) the
mathematical accuracy of the calculations reflected in the
related Certificate of Moody's Required Asset Coverage,
including the calculation of the Adjusted Value of the
Moody's Eligible Assets referred to therein and confirming
that the Moody's Eligible Assets referred to therein conform
to the definition of Moody's Eligible Assets herein, (ii)
that the methodology used by the Administrator in
determining whether the Adjusted Value of Moody's Eligible
Assets equals or exceeds the Moody's Required Asset Coverage
is in accordance with the applicable requirements of these
Articles Supplementary, and (iii) that the written or
published price quotations used in such determination
conform to such written or published quotations and that the
Moody's Eligible Assets listed in such Certificate of
Moody's Required Asset Coverage constitute Moody's Eligible
Assets as defined herein. In the event that a Certificate
of Moody's Required Asset Coverage is not delivered to the
Corporation when required, the Moody's Required Asset
Coverage will be deemed not to have been met as of the
applicable date. If such Accountant's Certificate shall
differ from the Administrator's calculations, then the
Accountant's Certificate shall control unless any such
difference results from an error in calculation by the
preparers of the Accountant's Certificate.
5.2. Notice of Moody's Required Asset Coverage.
The Corporation shall cause to be delivered to Moody's,
promptly after receipt thereof by the Corporation (but in no
event later than the close of business on the second
Business Day next succeeding the following dates) the
Certificate of Moody's Required Asset Coverage with respect
to each of the following dates: (a) the Date of Original
Issue for the AMPS, (b) each date as of which the Adjusted
Value of all Moody's Eligible Assets is less than the
Moody's Required Asset Coverage, (c) each Cure Date, (d)
each date as of which the Adjusted Value of all Moody's
Eligible Assets is less than or equal to 105% of the Moody's
Required Asset Coverage, (e) each Business Day which is the
first Business Day in the months of January, April, July and
October and (f) the date on which any Common Stock is
redeemed by the Corporation.
5.3. Certificate of S&P Required Asset Coverage.
So long as S&P is rating the AMPS at the request of the
Corporation and except to the extent waived by S&P, as of
each Business Day and each Cure Date, the Corporation shall
cause the Administrator to determine the aggregate Adjusted
Value of all S&P Eligible Assets on that day and whether
such aggregate Adjusted Value on such date equals or exceeds
the S&P Required Asset Coverage on such date. The
calculations of the Adjusted Value of all S&P Eligible
Assets and S&P Required Asset Coverage, and whether the
aggregate Adjusted Value of S&P Eligible Assets equals or
exceeds the S&P Required Asset Coverage shall be set forth
in a certificate substantially in the form of Schedule II to
the Administration Agreement (a "Certificate of S&P Required
Asset Coverage"), dated as of each such Business Day and
Cure Date and signed by an Authorized Officer. The
Corporation shall cause the Administrator to deliver (by
facsimile or otherwise) a Certificate of S&P Required Asset
Coverage to the Corporation by 11:00 a.m. New York time on
the Business Day to which such certificate relates. With
respect to the Certificate of S&P Required Asset Coverage
relating to (1) each Business Day which is the first
Business Day in the months of January, April, July and
October of each year, and (2) another day during each
calendar quarter, which day shall be selected at random by
the independent accountants signing the Accountant's
Certificate referred to below, the Corporation shall cause
the Administrator to deliver to the Corporation, within
three Business Days of each such date, an Accountant's
Certificate (in substantially such form as may be agreed
upon by the Company and the Administrator with the consent
of S&P) certifying as to (i) the mathematical accuracy of
the calculations reflected in the related Certificate of S&P
Required Asset Coverage, including the calculation of the
Adjusted Value of the S&P Eligible Assets referred to
therein and confirming that the S&P Eligible Assets referred
to therein conform to the definition of S&P Eligible Assets
herein, (ii) that the methodology used by the Administrator
in determining whether the Adjusted Value of S&P Eligible
Assets equals or exceeds the S&P Required Asset Coverage is
in accordance with the applicable requirements of these
Articles Supplementary, and (iii) that the written or
published price quotations used in such determination
conform to such written or published quotations and that the
S&P Eligible Assets listed in such Certificate of S&P
Required Asset Coverage constitute S&P Eligible Assets as
defined herein. In the event that a Certificate of S&P
Required Asset Coverage is not delivered to the Corporation
when required, the S&P Required Asset Coverage will be
deemed not to have been met as of the applicable date. If
such Accountant's Certificate shall differ from the
Administrator's calculations, then the Accountant's
Certificate shall control unless any such difference results
from an error in calculation by the preparers of the
Accountant's Certificate.
5.4. Notice of S&P Required Asset Coverage. The
Corporation shall cause to be delivered to S&P, promptly
after receipt thereof by the Corporation (but in no event
later than the close of business on the second Business Day
next succeeding the following dates) the Certificate of S&P
Required Asset Coverage with respect to each of the
following dates: (a) the Date of Original Issue for the
AMPS, (b) each date as of which the Adjusted Value of all
S&P Eligible Assets is less than the S&P Required Asset
Coverage, (c) each Cure Date, (d) each date as of which the
Adjusted Value of all S&P Eligible Assets is less than or
equal to 105% of the S&P Required Asset Coverage, (e) each
Business Day which is the first Business Day in the months
of January, April, July and October, (f) the date on which
any Common Stock is redeemed by the Corporation and (g)
whenever requested by S&P.
5.5. Delivery of Accountant's Certificate to S&P.
The Corporation shall cause to be delivered to S&P as soon
as practicable after receipt thereof (but in no event later
than 5 business days after the Corporation's receipt
thereof) the Accountant's Certificate relating to the
Certificate of S&P Required Asset Coverage with respect to
each of the following dates: (a) the Date of Original Issue
for the AMPS; (b) each Cure Date; (c)(1) each Business Day
which is the first Business Day in the months of January,
April, July and October and (2) another day during each
calendar quarter, which day shall be selected at random by
the independent accountants signing the Accountant's
Certificate.
5.6. Alteration of Portfolio Composition. During
any period in which the Adjusted Value of all Moody's
Eligible Assets or S&P Eligible Assets is equal to or less
than 105%, but greater than 100%, of the Moody's Required
Asset Coverage or S&P Required Asset Coverage, respectively,
the Corporation will not alter the composition of its
investment portfolio without first determining that after
giving pro forma effect to such alteration the Adjusted
Value of Moody's Eligible Assets and S&P Eligible Assets (if
Moody's and S&P are rating the AMPS at the request of the
Corporation) or S&P Eligible Assets (if S&P and not Moody's
is rating the AMPS at the request of the Corporation) or
Moody's Eligible Assets (if Moody's and not S&P is rating
the AMPS at the request of the Corporation) would equal or
exceed the Moody's Required Asset Coverage or S&P Required
Asset Coverage, as the case may be.
5.7. 1940 Act AMPS Asset Coverage Requirement.
The Corporation shall maintain, as of the last business day
of each month in which any Share of AMPS is Outstanding, the
1940 Act AMPS Asset Coverage Requirement.
5.8. Rating of the AMPS by Moody's or S&P. If at
any time Moody's is not rating the AMPS at the request of
the Corporation or S&P is not rating the AMPS at the request
of the Corporation, then none of the provisions in Sections
2.4, 3.1(g), 3.2, 4.1, 4.2, 5.1 through 5.7 and 7.3(d)
herein (including the definitions relating to Moody's or
S&P, as the case may be, in Section 1.1 herein) relating to
whichever of Moody's and S&P is not rating the AMPS at the
request of the Corporation shall apply during the period
that such Person is not rating the AMPS at the request of
the Corporation.
ARTICLE VI
LIQUIDATION
6.1. Liquidation Rights. Upon any liquidation,
dissolution or winding up of the Corporation, whether
voluntary or involuntary, the holders of Shares of each
Series of AMPS will be entitled to receive, out of the
assets of the Corporation available for distribution to its
stockholders, before any distribution or payment is made
upon any shares of Common Stock or any other capital stock
of the Corporation ranking junior in right of payment upon
liquidation to the AMPS, $100,000 per share plus (a) the
amount of any dividends accumulated but unpaid (whether or
not earned or declared) thereon to the date of distribution
in the case where the date of distribution occurs on a
Dividend Distribution Date (or if the exception in clause
(C) of Section 3.1(b) is satisfied, the next day after a
Dividend Distribution Date) with respect to such Series or
(b) the Liquidation Premium in all other cases, and after
such payment the holders of AMPS will be entitled to no
other payments. The "Liquidation Premium" with respect to
the Shares of a particular Series of AMPS shall equal the
product of (i) accrued but unpaid dividends on such Shares
up to but excluding the date of distribution and (ii) a
fraction the numerator of which is one minus the product of
(A) 100% minus the percentage specified in Section 243(a)(1)
of the Code to be used in calculating the Dividends Received
Deduction multiplied by (B) the highest Federal tax rate
applicable to ordinary income recognized by corporations and
the denominator of which is one minus the highest Federal
regular tax rate applicable to net short-term capital gain
recognized by corporations. If such assets of the
Corporation are insufficient to make the full liquidating
payment on each outstanding Share of AMPS and liquidating
payments on any other series of Preferred Stock, then such
assets will be distributed among the holders of Shares of
AMPS and the holders of shares of such other series of
Preferred Stock ratably in accordance with the respective
preferential amounts which would be payable on all of such
stock if all such liquidating amounts payable were paid in
full. A consolidation or merger of the Corporation with or
into any other corporation or corporations or a sale,
whether for cash, shares of stock, securities or properties,
of all or substantially all or any part of the assets of the
Corporation shall not be deemed or construed to be a
liquidation, dissolution or winding up of the Corporation
within the meaning of this Article VI.
ARTICLE VII
VOTING
7.1. Voting Rights. Except as otherwise provided
in the Charter and except as otherwise provided by
applicable law, each Holder of AMPS will be entitled to one
vote for each share held on each matter submitted to a vote
of stockholders of the Corporation, and the holders of
outstanding shares of Preferred Stock entitled to vote
thereon, including AMPS, and of shares of Common Stock shall
vote together as a single class.
7.2. Election of Directors. (a) Holders of AMPS
and any other Preferred Stock, voting together as a separate
class, shall be entitled and have the exclusive right at all
times to elect two of the Corporation's directors.
(b) If at any time (i) accumulated dividends
(whether or not earned or declared, and whether or not funds
are then legally available in an amount sufficient therefor)
on the Outstanding Shares of AMPS equal to at least two full
years' dividends shall be due and unpaid and sufficient Cash
or Deposit Assets shall not have been deposited with the
Paying Agent for the payment of such accumulated dividends
or (ii) Holders of AMPS and any other Preferred Stock are
entitled to elect a majority of the directors of the
Corporation under the 1940 Act (any such time during which
such events specified in clause (i) or (ii) above occur and
shall be continuing is referred to herein as a "Voting
Period"), then the number of directors constituting the
Board of Directors shall automatically be increased by the
smallest number that, when added to the two directors
elected exclusively by the Holders of AMPS and any other
Preferred Stock as provided in Section 7.2(a), would
constitute a majority of the Board of Directors as so
increased by such smallest number; and the Holders of AMPS
and any other Preferred Stock, voting together as a separate
class, will be entitled to elect the smallest number of
additional directors that, together with the two directors
which such holders will be in any event entitled to elect,
constitutes a majority of the total number of directors of
the Corporation as so increased. If the Corporation
thereafter shall pay, or declare and set apart for payment
in full, all dividends payable on all Outstanding AMPS and
any other Preferred Stock for all past Dividend Periods (in
the case of a Voting Period caused by the event described in
clause (i) above) or if the events giving rise to a Voting
Period are cured or otherwise cease to exist (in the case of
a Voting Period by an event described in clause (ii) above),
such special voting rights shall cease, and the terms of
office of all of the additional directors elected by the
Holders of AMPS and any other Preferred Stock (but not of
the directors with respect to whose election the holders of
Common Stock were entitled to vote or the two directors the
Holders of AMPS and any other Preferred Stock have the right
to elect in any event) will terminate automatically
thereafter on the earliest date permitted by the Maryland
General Corporation Law.
7.3. Right of Vote with Respect to Certain Other
Matters. (a) Without the affirmative vote of the Holders
(excluding the Corporation and any of its subsidiaries) of a
majority of the outstanding AMPS and any other Preferred
Stock having voting rights on such matter, voting together
as a separate class without regard to series and separately
by any series if such series is affected differently than
the other series then outstanding, voting in person or by
proxy at a special meeting called for the purpose, or the
unanimous written consent of the holders of AMPS and any
other Preferred Stock having voting rights on such matter
acting without such a meeting, the Corporation shall not:
(i) authorize, create or issue (or
reclassify any authorized capital stock of the
Corporation into), or increase the authorized or issued
amount of, any class or series of stock ranking prior
to the AMPS with respect to payment of dividends or the
distribution of assets on liquidation; or
(ii) amend, alter or repeal the provisions
of the Charter, whether by merger, consolidation or
otherwise, so as to adversely affect any of the
contract rights expressly set forth in the Charter of
holders of AMPS, except (A) as otherwise contemplated
by Sections 2.3 and 3.9 hereof or (B) amendments,
alterations or repeals of any or all of the various
provisions of Sections 5.1 and 5.3, including any
defined terms used therein and including the
definitions of Adjusted Value, Discount Factor, Moody's
Eligible Assets, S&P Eligible Assets and Fair Market
Value, to the extent provided in the definition of
"Adjusted Value".
(b) Without the affirmative vote of the holders
of a majority (or such higher percentage provided for under
the Charter) of the outstanding AMPS and any other Preferred
Stock having voting rights on such matter, voting together
as a separate class without regard to series and separately
by any series if such series is affected differently than
other series then outstanding, the Corporation shall not
approve any plan of reorganization (as such term is defined
in the 1940 Act) adversely affecting such shares or any
action requiring a vote of security holders under Section
13(a) of the 1940 Act.
(c) The class vote of holders of AMPS and any
other Preferred Stock having voting rights described above
shall in each case be in addition to a separate vote of the
requisite percentage of shares of Common Stock and AMPS and
any other Preferred Stock having voting rights, voting
together as a single class, necessary to authorize the
action in question to the extent that such separate vote
shall be required specifically by the terms of the Charter
or the Maryland General Corporation Law. Voluntary
liquidation of the Company after shareholder approval
thereof or involuntary liquidation of the Corporation or a
merger or consolidation of the Corporation with or into, or
a sale or conveyance of all or substantially all of the
assets of the Corporation to, another corporation under the
circumstances described in the proviso to clause (v) of
Section 7.3(d) hereof shall not be deemed to adversely
affect any of the contract rights expressly set forth in the
Charter of the holders of AMPS or any other Preferred Stock
within the meaning of Section 7.3(a)(ii).
(d) Without the affirmative vote of the Holders
(excluding the Corporation and any of its subsidiaries) of
at least 66 2/3% of the Shares of the AMPS and other
Preferred Stock then Outstanding and separately by any
series if such series is affected differently than the other
series then outstanding, voting in person or by proxy at a
special meeting called for the purpose, or the unanimous
written consent of the holders of Shares of AMPS and other
Preferred Stock then Outstanding without such a meeting,
unless the Corporation receives confirmation from the Rating
Agencies that such action will not adversely affect their
then current ratings of the Shares of AMPS (in which case,
the vote provided for in this sentence shall not be
required), the Corporation shall not:
(i) institute proceedings to be adjudicated
a bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against it, or
file a petition or an answer or consent to a petition
seeking reorganization or relief under any applicable
federal or state law relating to bankruptcy, or consent
to the appointment of a receiver, liquidator, assignee,
trustee sequestrator (or other similar official) of the
Corporation or a substantial part of its property, or
make any assignment for the benefit of creditors, or,
except as may be required by any fiduciary obligation
of the Board of Directors or as may be required by
applicable law, admit in writing its inability to pay
its debts generally as they become due, or take any
corporate action in furtherance of any such action;
(ii) (A) create, authorize or issue (or
reclassify any authorized capital shares of the
Corporation into) shares of any class or series of
capital stock ranking prior to the shares of any series
of Preferred Stock with respect to the payment of
dividends or the distribution of assets, or any
securities convertible into, or warrants, options or
similar rights to purchase, acquire or receive shares
of any class or series of capital stock ranking prior
to the shares of any series of Preferred Stock or (B)
issue any shares of capital stock ranking on a parity
with any series of Preferred Stock with respect to the
payment of dividends and the distribution of assets
unless, with respect to this clause (B), such parity
stock is rated "aaa" (or a comparable successor rating
by Moody's (if Moody's is then rating the AMPS at the
request of the Corporation) and AAA (or a comparable
successor rating) by S&P (if S&P is then rating the
AMPS at the request of the Corporation) at the time of
issuance of such parity stock;
(iii) except in connection with the
redemption of one or more series of Preferred Stock,
create, authorize, issue, assume, incur or suffer to
exist any indebtedness for borrowed money or any direct
or indirect guarantee of such indebtedness by the
Corporation; provided, however, that the Corporation
may (without any requirement to obtain the affirmative
vote or any consent of any holder of Shares of the
AMPS) create, authorize, issue, assume, incur or suffer
to exist any indebtedness for borrowed money or any
direct or indirect guarantee of such indebtedness if
the Adjusted Value of Moody's Eligible Assets and S&P
Eligible Assets, respectively, would equal or exceed
the Moody's Required Asset Coverage and/or S&P Required
Asset Coverage, respectively, as the case may be, on
the date of such transaction after giving effect
thereto and not later than the date of such
transaction, the Custodian provides to the Corporation
a Certificate of Moody's Required Asset Coverage and/or
a Certificate of S&P Required Asset Coverage showing
compliance with this proviso;
(iv) create, incur or suffer to exist, or
agree to create, incur or suffer to exist, or consent
to cause or permit in the future (upon the happening of
a contingency or otherwise) the creation, incurrence or
existence of any material lien, mortgage, pledge,
charge, security interest, security agreement,
conditional sale or trust receipt or other material
encumbrance of any kind upon any of its Moody's
Eligible Assets or S&P Eligible Assets, except (A)
liens the validity of which are being contested in good
faith by appropriate proceedings, (B) liens for taxes
that are not then due and payable or that can be paid
thereafter without penalty, (C) liens, pledges,
charges, security interests, security agreements or
other encumbrances arising in connection with any
indebtedness permitted under clause (iii) above, (D)
liens to secure payment for services rendered by the
Broker-Dealer, Auction Agent, the Custodian, or the
Paying Agent or others providing services to the
Corporation and (E) liens arising by operation of law
(provided that, in the event the Corporation has
received actual notice of any such liens, the
Corporation is contesting in good faith the validity of
such liens by appropriate proceedings);
(v) voluntarily liquidate the Corporation or
consolidate or merge with or into any other
corporation, or, except in connection with the
redemption of the AMPS and other Preferred Stock, sell,
lease or convey all or substantially all of the assets
of the Corporation to a single purchaser; provided,
however, that this clause (v) shall not apply to any
consolidation or merger of the Corporation with or
into, or a sale or conveyance of all or substantially
all of the assets of the Corporation to, any other
closed-end diversified management investment company
registered under Section 8 of the 1940 Act, if (A) the
surviving or transferee corporation (the "Surviving
Corporation") has investment objectives and policies
substantially similar to the investment objectives and
policies of the Corporation and owns a portfolio of
securities consisting primarily of common stocks that
conform to the definitions of "Moody's Eligible Assets"
and "S&P Eligible Assets" herein, as applicable, and
(B) in connection with such transaction, either (1)
each Share of AMPS is converted into or exchanged for a
share of auction market preferred stock of the
Surviving Corporation having terms substantially
similar to the AMPS and having a rating assigned by the
Rating Agencies not lower than the rating assigned by
the Rating Agencies to the AMPS immediately prior to
such transaction or (2) each Share of AMPS shall remain
outstanding and the Surviving Corporation shall have
received confirmation from the Rating Agencies that
such transaction will not affect the then current
rating assigned by the Rating Agencies to the AMPS.
(vi) except as otherwise permitted by
Section 2.3, 3.9 or Section 7.3(a)(ii)(B), amend the
Charter or any provision of the by-laws of the
Corporation in any manner that materially and adversely
affects the rights of holders of shares of any series
of Preferred Stock (an amendment of the Charter in
connection with a transaction described in the proviso
to clause (v) of this Section 7.3(d) shall not be
deemed to materially and adversely affect the rights of
holders of shares of any series of Preferred Stock
within the meaning of this clause (vi)); or
(vii) amend the Charter to increase or
decrease the number of authorized shares of any series
of Preferred Stock.
Notwithstanding anything contained herein which may be
inconsistent or to the contrary, the Corporation shall not
take any of the actions described in the foregoing clause
(ii) or clause (iii) of this Section 7.3(d) or change the
Pricing Service without prior confirmation from the Rating
Agencies, or lend any of its securities or enter into any
reverse repurchase agreement without prior confirmation from
S&P, that such action will not adversely affect its then
current rating of the Shares of AMPS.
7.4. Voting Procedures. (a) As soon as
practicable after the accrual of any right of the Holders
and holders of other Preferred Stock to elect additional
directors as described in Section 7.2(b), the Corporation
shall notify the Secretary of the Corporation and instruct
the Secretary to call or cause to be called a special
meeting of the Holders and holders of other Preferred Stock
by mailing or causing to be mailed a notice of such special
meeting to the Holders and holders of other Preferred Stock,
such meeting to be held not less than 10 nor more than 20
days after the date of mailing of such notice. If the
Secretary of the Corporation does not call or cause to be
called such a special meeting, it may be called by Holders
and holders of other Preferred Stock of at least 25% of the
vote entitled to be cast at such meeting on like notice.
The record date for determining the Holders and holders of
other Preferred Stock entitled to notice of and to vote at
such special meeting shall be the close of business on the
fifth Business Day preceding the date on which such notice
is mailed. At any such special meeting and at each meeting
of stockholders held during a Voting Period at which
directors are to be elected, the Holders and holders of
other Preferred Stock, by majority vote, voting together as
a class (to the exclusion of the holders of all other
securities and classes of capital stock of the Corporation),
shall be entitled to elect the number of directors
prescribed in Section 7.2(b) above on a one-vote-per-share
basis. The Holders of one-third of the Shares of the AMPS
and such other Preferred Stock then outstanding, present in
person or by proxy, will constitute a quorum for the
election of directors. At any such meeting or adjournment
thereof in the absence of a quorum, a majority of the
Holders and holders of other Preferred Stock present in
person or by proxy shall have the power to adjourn the
meeting for the election of directors without notice, other
than by an announcement at the meeting, to a date not more
than 120 days after the original record date.
(b) For purposes of determining any right of the
Holders and holders of other Preferred Stock to vote on any
matter, whether such right is created by these Articles
Supplementary, by statute or otherwise, no Holder and
holders of any other Preferred Stock shall be entitled to
vote and no share of AMPS or any other Preferred Stock shall
be deemed to be "Outstanding" for the purpose of voting or
determining the number of shares required to constitute a
quorum, if prior to or concurrently with the time of
determination of shares entitled to vote or shares deemed
outstanding for quorum purposes, as the case may be,
sufficient funds for the redemption of such shares have been
deposited in trust with the Paying Agent for that purpose
and the requisite Redemption Notice with respect to such
shares shall have been given as provided in Section 4.5.
(c) The term of office of all persons who are
directors of the Corporation at the time of a special
meeting of Holders and holders of any other Preferred Stock
to elect directors shall continue, notwithstanding the
election at such meeting by the Holders and holders of other
Preferred Stock of the number of directors that they are
entitled to elect, and the persons so elected by the Holders
and holders of any other Preferred Stock, together with the
incumbent directors, shall constitute the duly elected
directors of the Corporation.
(d) The terms of office of the additional
directors elected by the Holders and holders of other
Preferred Stock pursuant to Section 7.2(b) shall terminate
on the earliest date permitted by the Maryland General
Corporation Law following the termination of a Voting
Period, the remaining directors shall constitute the
directors of the Corporation and the voting rights of the
Holders and holders of other Preferred Stock to elect
directors shall cease.
(e) So long as a Voting Period continues, the
directors elected by the Holders and holders of other
Preferred Stock shall (subject to the provisions of any
applicable law) be subject to removal only by the vote of
the Holders of a majority of shares of the AMPS and other
Preferred Stock outstanding. Any vacancy on the Board of
Directors of a directorship elected by the Holders and
holders of other Preferred Stock occurring by reason of such
removal or otherwise may be filled only by vote of the
Holders and holders of other Preferred Stock in accordance
with the provision of paragraph 7.2(b) above, and if not so
filled such vacancy shall (subject to the provisions of any
applicable law) be filled by a majority of the remaining
directors (or the remaining director) who were elected by
the Holders and holders of other Preferred Stock.
(f) Parity Stock; Exclusive Remedy. 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 and
each Share of AMPS shall rank on a parity with all other
Preferred Stock now existing in respect of the payment of
dividends and distribution of assets upon liquidation. The
Holders of AMPS shall have no preemptive rights or rights to
cumulative voting. In the event that the Corporation 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 Article VII and the
Holders of AMPS shall have no cause of action against the
Company for money damages or other relief with respect to
the failure to pay such dividends.
(g) Notification to the Rating Agencies. In the
event a vote of Holders of AMPS is required pursuant to the
provisions of Section 13(a) of the 1940 Act, the Corporation
shall, not later than ten 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. Upon completion
of any such vote, the Corporation shall notify the Rating
Agencies as to the result of such vote.
IN WITNESS WHEREOF, HURON INVESTMENT FUND, INC.
has caused these presents to be signed in its name and on
its behalf by its President, and its corporate seal to be
hereunto affixed and attested by its Secretary, and the said
officer of the Corporation acknowledge said instrument to be
the corporate act of the Corporation, and state under the
penalties of perjury that to the best of their knowledge,
information and belief the matters and facts therein set
forth with respect to approval are true in all material
respects, all on March 1, 1996.
HURON INVESTMENT FUND, INC.
by /s/ James A. McIntosh
Name: James A. McIntosh
Title: President
Attest:
/s/ Robert H. Bockrath
Robert H. Bockrath II
Secretary
BY-LAWS
OF
SELECT ASSET FUND, SERIES 3, INC.
ARTICLE I
Offices
Section 1. Principal Office. The principal
office of the Corporation shall be in the City of
Baltimore, State of Maryland.
Section 2. Principal Executive Office. The
principal executive offices of the Corporation shall be
at c/o Merrill Lynch & Co., 250 Vesey Street, North
Tower, World Financial Center, New York, New York, 10281-
1613.
Section 3. Other Offices. The Corporation may
have such other offices in such places as the Board of
Directors may from time to time determine.
ARTICLE II
Meetings of Stockholders
Section 1. Annual Meeting. The Corporation
shall not hold annual meetings of its stockholders in any
year in which the election of directors is not required
under applicable law.
Section 2. Special Meetings. Special meetings
of the stockholders, unless otherwise provided by law or
by the Charter, may be called for any purpose or purposes
by a majority of the Board of Directors, the President,
or on the written request of the holders of at least 25%
of the outstanding capital stock of the Corporation
entitled to vote at such meeting.
Section 3. Place of Meetings. Annual and
special meetings of the stockholders shall be held at
such place within the United States as the Board of
Directors may from time to time determine.
Section 4. Notice of Meetings; Waiver of
Notice. Notice of the place, date and time of the holding
of each annual and special meeting of the stockholders
and the purpose or purposes of each special meeting shall
be given personally or by mail, not less than ten nor
more than ninety days before the date of such meeting, to
each stockholder entitled to vote at such meeting and to
each other stockholder entitled to notice of the meeting.
Notice by mail shall be deemed to be duly given when
deposited in the United States mail addressed to the
stockholder at his address as it appears on the records
of the Corporation, with postage thereon prepaid.
Notice of any meeting of stockholders shall be
deemed waived by any stockholder who shall attend such
meeting in person or by proxy, or who shall, either
before or after the meeting, submit a signed waiver of
notice which is filed with the records of the meeting.
When a meeting is adjourned to another time and place,
unless the Board of Directors, after the adjournment,
shall fix a new record date for an adjourned meeting, or
the adjournment is for more than one hundred and twenty
days after the original record date, notice of such
adjourned meeting need not be given if the time and place
to which the meeting shall be adjourned were announced at
the meeting at which the adjournment is taken.
Section 5. Quorum. At all meetings of the
stockholders, the holders of a majority of the shares of
stock of the Corporation entitled to vote at the meeting,
present in person or by proxy, shall constitute a quorum
for the transaction of any business, except as otherwise
provided by statute or by the Charter. In the absence of
a quorum no business may be transacted, except that the
holders of a majority of the shares of stock present in
person or by proxy and entitled to vote may adjourn the
meeting from time to time, without notice other than
announcement thereat except as otherwise required by
these By-Laws, until the holders of the requisite amount
of shares of stock shall be so present. At any such
adjourned meeting at which a quorum may be present any
business may be transacted which might have been
transacted at the meeting as originally called. The
absence from any meeting, in person or by proxy, of
holders of the number of shares of stock of the
Corporation in excess of a majority thereof which may be
required by applicable statute, the Charter or these
By-Laws, for action upon any given matter shall not
prevent action at such meeting upon any other matter or
matters which may properly come before the meeting, if
there shall be present thereat, in person or by proxy,
holders of the number of shares of stock of the
Corporation required for action in respect of such other
matter or matters.
Section 6. Organization. At each meeting of
the stockholders, the Chairman of the Board (if one has
been designated by the Board), or in the Chairman of the
Board's absence or inability to act, the President, or in
the absence or inability to act of the Chairman of the
Board and the President, a Vice President or Treasurer,
shall act as chairman of the meeting. The Secretary, or
in the Secretary's absence or inability to act, any
person appointed by the chairman of the meeting, shall
act as secretary of the meeting and keep the minutes
thereof.
Section 7. Order of Business. The order of
business at all meetings of the stockholders shall be as
determined by the chairman of the meeting.
Section 8. Voting. Except as otherwise pro-
vided by statute or the Charter, each holder of record of
shares of stock of the Corporation having voting power
shall be entitled at each meeting of the stockholders to
one vote for every share of such stock standing in such
stockholder's name on the record of stockholders of the
Corporation as of the record date determined pursuant to
Section 9 of this Article or if such record date shall
not have been so fixed, then at the later of (i) the
close of business on the day on which notice of the meet-
ing is mailed or (ii) the thirtieth day before the meeting.
Each stockholder entitled to vote at any meet-
ing of stockholders may authorize another person or per-
sons to act for him by a proxy signed by such stockholder
or his attorney-in-fact. No proxy shall be valid after
the expiration of eleven months from the date thereof,
unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the stockholder
executing it, except in those cases where such proxy
states that it is irrevocable and where an irrevocable
proxy is permitted by law. Except as otherwise provided
by statute, the Charter or these By-Laws, any corporate
action to be taken by vote of the stockholders shall be
authorized by a majority of the total votes cast at a
meeting of stockholders by the holders of shares present
in person or represented by proxy and entitled to vote on
such action.
If a vote shall be taken on any question other
than the election of directors, which shall be by written
ballot, then unless required by statute or these By-Laws,
or determined by the chairman of the meeting to be advis-
able, any such vote need not be by ballot. On a vote by
ballot, each ballot shall be signed by the stockholder
voting, or by his proxy, if there be such proxy, and
shall state the number of shares voted.
Section 9. Fixing of Record Date. The Board
of Directors may set a record date for the purpose of
determining stockholders entitled to vote at any meeting
of the stockholders. The record date, which may not be
prior to the close of business on the day the record date
is fixed, shall be not more than ninety nor less than ten
days before the date of the meeting of the stockholders.
All persons who were holders of record of shares at such
time, and not others, shall be entitled to vote at such
meeting and any adjournment thereof.
Section 10. Inspectors. The Board may, in
advance of any meeting of stockholders, appoint one or
more inspectors to act at such meeting or any adjournment
thereof. If the inspector shall not be so appointed or
if any of them shall fail to appear or act, the chairman
of the meeting may, and on the request of any stockholder
entitled to vote thereat shall, appoint inspectors. Each
inspector, before entering upon the discharge of his
duties, shall take and sign an oath to execute faithfully
the duties of inspector at such meeting with strict
impartiality and according to the best of his ability.
The inspectors shall determine the number of shares
outstanding and the voting powers of each, the number of
shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine
all challenges and questions arising in connection with
the right to vote, count and tabulate all votes, ballots
or consents, determine the result, and do such acts as
are proper to conduct the election or vote with fairness
to all stockholders. On request of the chairman of the
meeting or any stockholder entitled to vote thereat, the
inspectors shall make a report in writing of any
challenge, request or matter determined by them and shall
execute a certificate of any fact found by them. No
director or candidate for the office of director shall
act as inspector of an election of directors. Inspectors
need not be stockholders.
Section 11. Consent of Stockholders in Lieu
of Meeting. Except as otherwise provided by statute or
the Charter, any action required to be taken at any
annual or special meeting of stockholders, or any action
which may be taken at any annual or special meeting of
such stockholders, may be taken without a meeting,
without prior notice and without a vote, if the following
are filed with the records of stockholders meetings: (i)
a unanimous written consent which sets forth the action
and is signed by each stockholder entitled to vote on the
matter and (ii) a written waiver of any right to dissent
signed by each stockholder entitled to notice of the
meeting but not entitled to vote thereat.
ARTICLE III
Board of Directors
Section 1. General Powers. Except as other-
wise provided in the Charter, the business and affairs of
the Corporation shall be managed under the direction of
the Board of Directors. All powers of the Corporation
may be exercised by or under authority of the Board of
Directors except as conferred on or reserved to the
stockholders by law or by the Charter or these By-Laws.
Section 2. Number of Directors. The number of
directors shall be fixed from time to time by resolution
of the Board of Directors adopted by a majority of the
directors then in office; provided, however, that the
number of directors shall in no event be less than two
nor more than nine. Any vacancy created by an increase
in directors may be filled in accordance with Section 6
of this Article III. No reduction in the number of
directors shall have the effect of removing any director
from office prior to the expiration of his term.
Directors need not be stockholders.
Section 3. Election and Term of Directors.
Each Director shall be elected by written ballot at a
meeting of stockholders unless otherwise provided by
statute or the Charter. The term of office of each
director shall be from the time of his election and
qualification until the expiration of his term or until
the election of directors next succeeding his election
and until his successor shall have been elected and shall
have qualified, or until his death, or until he shall
have resigned, or have been removed as hereinafter
provided in these By-Laws, or as otherwise provided by
statute or the Charter.
Section 4. Resignation. A director of the
Corporation may resign at any time by giving written
notice of his resignation to the Board or the Chairman of
the Board or the President or the Secretary. Any such
resignation shall take effect at the time specified
therein or, if the time when it shall become effective
shall not be specified therein, immediately upon its
receipt; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to
make it effective.
Section 5. Removal of Directors. Any director
of the Corporation may be removed for cause (but not
without cause) by the stockholders by a vote of seventy-
five percent (75%) of the votes entitled to be cast for
the election of directors.
Section 6. Vacancies. Subject to applicable
law, any vacancies in the Board, whether arising from
death, resignation, removal, an increase in the number of
directors or any other cause, shall be filled by a vote
of the Board of Directors in accordance with the Charter.
Section 7. Place of Meetings. Meetings of the
Board may be held at such place as the Board may from
time to time determine or as shall be specified in the
notice of such meeting.
Section 8. Regular Meeting. Regular meetings
of the Board may be held without notice at such time and
place as may be determined by the Board of Directors.
Section 9. Special Meetings. Special meetings
of the Board may be called by two or more directors of
the Corporation or by the Chairman of the Board or the
President.
Section 10. Notice of Special Meetings. No-
tice of each special meeting of the Board shall be given
by the Secretary as hereinafter provided, in which notice
shall be stated the time and place of the meeting. No-
tice of each such meeting shall be delivered to each
director, either personally or by telephone or any stan-
dard form of telecommunication, at least twenty-four
hours before the time at which such meeting is to be
held, or mailed by first-class mail, postage prepaid,
addressed to him at his residence or usual place of
business, at least three days before the day on which
such meeting is to be held.
Section 11. Waiver of Notice of Meetings.
Notice of any special meeting need not be given to any
director who shall, either before or after the meeting,
sign a written waiver of notice which is filed with the
records of the meeting or who shall attend such meeting.
Except as otherwise specifically required by these By-
Laws, a notice or waiver of notice of any meeting need
not state the purpose of such meeting.
Section 12. Quorum and Voting. One-third,
but not less than two, of the members of the entire Board
shall be present in person at any meeting of the Board in
order to constitute a quorum for the transaction of bus-
nebs at such meeting, and except as otherwise expressly
required by statute, the Charter or these By-Laws, the
act of a majority of the directors present at any meeting
at which a quorum is present shall be the act of the
Board; provided, however, that the approval of any
contract with an investment adviser or principal
underwriter which the Corporation enters into or any
renewal or amendment thereof, the approval of any
fidelity bond and the selection of the Corporation's
independent public accountants shall each require the
affirmative vote of a majority of the directors who are
not interested persons of the Corporation. Whether or
not a quorum is present at any meeting of the Board, a
majority of the directors present thereat may adjourn
such meeting to another time and place until a quorum
shall be present thereat. Notice of the time and place
of any such adjourned meeting shall be given to the
directors who were not present at the time of the
adjournment and, unless such time and place were
announced at the meeting at which the adjournment was
taken, to the other directors. At any adjourned meeting
at which a quorum is present, any business may be
transacted which might have been transacted at the
meeting as originally called.
Section 13. Organization. The Board may, by
resolution adopted by a majority of the entire Board,
designate a Chairman of the Board, who shall preside at
each meeting of the Board. In the absence or inability
of the Chairman of the Board to preside at a meeting, the
President or, in his absence or inability to act, another
director chosen by a majority of the directors present,
shall act as chairman of the meeting and preside thereat.
The Secretary (or, in his absence or inability to act,
any person appointed by the Chairman) shall act as
secretary of the meeting and keep the minutes thereof.
Section 14. Written Consent of Directors in
Lieu of a Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if
all members of the Board or committee, as the case may
be, consent thereto in writing, and the writings or
writing are filed with the minutes of the proceedings of
the Board or committee.
Section 15. Compensation. Directors may re-
ceive compensation for services to the Corporation in
their capacities as directors or otherwise in such manner
and in such amounts as may be fixed from time to time by
the Board.
Section 16. Investment Policies. It shall be
the duty of the Board of Directors to ensure that the
purchase, sale, retention and disposal of portfolio secu-
rities and the other investment practices of the Corpora-
tion are at all times consistent with the investment
policies and restrictions with respect to securities
investments and otherwise of the Corporation, as recited
in any registration statement of the Corporation filed
with the Securities and Exchange Commission (or as such
investment policies and restrictions may be modified by
the Board of Directors or, if required, by majority vote
of the stockholders of the Corporation). The Board, how-
ever, may delegate the duty of management of the assets
and the administration of its day to day operations to
one or more officers, individuals or management companies
and/or investment advisers.
Section 17. Asset Value. The Board of
Directors shall determine the times and method of
calculation of the net asset value per share of the Fund
subject to compliance with the requirements of the
Investment Company Act of 1940.
ARTICLE IV
Committee
Section 1. Committees of the Board. The Board
of Directors may from time to time, by resolution adopted
by a majority of the whole Board, designate one or more
committees of the Board, each such committee to consist
of two or more directors and to have such powers and
duties as the Board of Directors may, by resolution,
prescribe.
Section 2. General. One-third, but not less
than two, of the members of any committee shall be pre-
sent in person at any meeting of such committee in order
to constitute a quorum for the transaction of business at
such meeting, and the act of a majority present shall be
the act of such committee. The Board may designate a
chairman of any committee and such chairman or any two
members of any committee may fix the time and place of
its meetings unless the Board shall otherwise provide. In
the absence or disqualification of any member of any
committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified
member. The Board shall have the power at any time to
change the membership of any committee, to fill all
vacancies, to designate alternate members to replace any
absent or disqualified member, or to dissolve any such
committee. Nothing herein shall be deemed to prevent the
Board from appointing one or more committees consisting
in whole or in part of persons who are not directors of
the Corporation; provided, however, that no such
committee shall have or may exercise any authority or
power of the Board in the management of the business or
affairs of the corporation.
ARTICLE V
Officers, Agents and Employees
Section 1. Number of Qualifications. The
officers of the Corporation shall be a President, a Sec-
retary and a Treasurer, each of whom shall be elected by
the Board of Directors. The Board of Directors may elect
or appoint one or more Vice Presidents and may also ap-
point such other officers, agents and employees as it may
deem necessary or proper. Any two or more offices may be
held by the same person, except the offices of President
and Vice President, but no officer shall execute, ac-
knowledge or verify any instrument as an officer in more
than one capacity. Such officers shall be elected by the
Board of Directors each year at its first meeting held
after the annual meeting of stockholders, each to hold
office until the meeting of the stockholders and until
his successor shall have been duly elected and shall have
qualified, or until his death, or until he shall have
resigned, or have been removed, as hereinafter provided
in these By-Laws. The Board may from time to time elect,
or delegate to the President the power to appoint, such
officers (including one or more Assistant Vice Presi-
dents, one or more Assistant Treasurers and one or more
Assistant Secretaries) and such agents, as may be neces-
sary or desirable for the business of the Corporation.
Such officers and agents shall have such duties and shall
hold their offices for such terms as may be prescribed by
the Board or by the appointing authority.
Section 2. Resignations. Any officer of the
Corporation may resign at any time by giving written
notice of resignation to the Board, the Chairman of the
Board, President or the Secretary. Any such resignation
shall take effect at the time specified therein or, if
the time when it shall become effective shall not be
specified therein, immediately upon its receipt; and,
unless otherwise specified therein, the acceptance of
such resignation shall be necessary to make it effective.
Section 3. Removal of Officer, Agent or
Employee. Any officer, agent or employee of the Corpora-
tion may be removed by the Board of Directors with or
without cause at any time, and the Board may delegate
such power of removal as to agents and employees not
elected or appointed by the Board of Directors. Such
removal shall be without prejudice to such person's con-
tract rights, if any, but the appointment of any person
as an officer, agent or employee of the Corporation shall
not of itself create contract rights.
Section 4. Vacancies. A vacancy in any of-
fice, either arising from death, resignation, removal or
any other cause, may be filled for the unexpired portion
of the term of the office which shall be vacant, in the
manner prescribed in these By-Laws for the regular elec-
tion or appointment to such office.
Section 5. Compensation. The compensation of
the officers of the Corporation shall be fixed by the
Board of Directors, but this power may be delegated to
any officer in respect of other officers under his con-
trol.
Section 6. Bonds or Other Security. If re-
quired by the Board, any officer, agent or employee of
the Corporation shall give a bond or other security for
the faithful performance of his duties, in such amount
and with such surety or sureties as the Board may require.
Section 7. President. The President shall be
the chief executive officer of the Corporation. In the
absence of the Chairman of the Board (or if there be
none), he shall preside at all meetings of the stockhold-
ers and of the Board of Directors. He shall have, sub-
ject to the control of the Board of Directors, general
charge of the business and affairs of the Corporation.
He may employ and discharge employees and agents of the
Corporation, except such as shall be appointed by the
Board, and he may delegate these powers.
Section 8. Vice President. Each Vice Presi-
dent shall have such powers and perform such duties as
the Board of Directors or the President may from time to
time prescribe.
Section 9. Treasurer. The Treasurer shall
(a) have charge and custody of, and be
responsible for, all the funds and securities of the
Corporation, except those which the Corporation has
placed in the custody of a bank or trust company pursuant
to a written agreement designating such bank or trust
company or member of a national securities exchange as a
custodian or sub-custodian of the property of the Corporation;
(b) keep full and accurate accounts of
receipts and disbursements in books belonging to the
Corporation;
(c) cause all moneys and other valuables
to be deposited to the credit of the Corporation;
(d) receive, and give receipts for,
moneys due and payable, to the Corporation from any
source whatsoever;
(e) disburse the funds of the Corpora-
tion and supervise the investment of its funds as ordered
or authorized by the Board, taking proper vouchers there-
for; and
(f) in general, perform all the duties
incident to the office of Treasurer and such other duties
as from time to time may be assigned to him by the Board
or the President.
Section 10. Secretary. The Secretary shall
(a) keep or cause to be kept in one or
more books provided for the purpose, the minutes of all
meetings of the Board, the committees of the Board and
the stockholders;
(b) see that all notices are duly given
in accordance with the provisions of these By-Laws and as
required by law;
(c) be custodian of the records and the
seal of the Corporation and affix and attest the seal to
all stock certificates of the Corporation (unless the
seal of the Corporation on such certificates shall be a
facsimile, as hereinafter provided) and affix and attest
the seal to all other documents to be executed on behalf
of the Corporation under its seal;
(d) see that the books, reports, state-
ments, certificates and other documents and records re-
quired by law to be kept and filed are properly kept and
filed; and
(e) in general, perform all the duties
incident to the office of Secretary and such other duties
as from time to time may be assigned to him by the Board
or the President.
Section 11. Delegation of Duties. In case of
the absence of any officer of the Corporation, or for any
other reason that the Board may deem sufficient, the
Board may confer for the time being the powers or duties,
or any of them, of such officer upon any other officer or
upon any director.
ARTICLE VI
Indemnification
Each person who at any time is or was a
director or officer of the Corporation shall be
indemnified by the Corporation to the fullest extent
permitted by the Maryland General Corporation Law as it
may be amended or interpreted from time to time,
including the advancing of expenses, subject to any
limitations imposed by applicable law. Furthermore, to
the fullest extent permitted by Maryland law, as it may
be amended or interpreted from time to time, but subject
to the limitations imposed by any other applicable law,
no director or officer of the Corporation shall be
personally liable to the Corporation or its stockholders
for money damages. No amendment of the Charter of the
Corporation or repeal of any of its provisions shall
limit or eliminate any of the benefits provided to any
person who at any time is or was a director or officer of
the Corporation in respect of any act or omission that
occurred prior to such amendment or repeal.
The Corporation may purchase insurance on be-
half of an officer or director protecting such person to
the full extent permitted under the General Laws of the
State of Maryland, from liability arising from his activ-
ivies as officer or director of the Corporation. The
Corporation, however, may not purchase insurance on be-
half of any officer or director of the Corporation that
protects or purports to protect such person from liabil-
ity to the Corporation or to its stockholders to which
such officer or director would otherwise be subject by
reason of willful misfeasance, bad faith, gross negli-
gence, or reckless disregard of the duties involved in
the conduct of his office.
The Corporation may indemnify or purchase in-
surance to the extent provided in this Article VI on
behalf of an employee or agent who is not an officer or
director of the Corporation.
ARTICLE VII
Capital Stock
Section 1. Stock Certificates. Each holder of
stock of the Corporation shall be entitled upon request
to have a certificate or certificates, in such form as
shall be approved by the Board, representing the number
of shares of the Corporation owned by him, provided,
however, that certificates for fractional shares will not
be delivered in any case. The certificates representing
shares of stock shall be signed by or in the name of the
Corporation by the President or a Vice President and by
the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer and sealed with the seal of the
Corporation. Any or all of the signatures or the seal on
the certificate may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose facs-
imile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or regis-
trar before such certificate shall be issued, it may be
issued by the Corporation with the same effect as if such
officer, transfer agent or registrar were still in office
at the date of issue.
Section 2. Books of Accounts and Record of
Stockholders. There shall be kept at the principal exec-
utive office of the Corporation correct and complete
books and records of account of all the business and
transactions of the Corporation. There shall be made
available upon request of any stockholder, in accordance
with Maryland law, a record containing the number of
shares of stock issued during a specified period not to
exceed twelve months and the consideration received by
the Corporation for each such share.
Section 3. Transfers of Shares. Transfers of
shares of stock of the Corporation shall be made on the
stock records of the Corporation only by the registered
holder thereof, or by his attorney thereunto authorized
by power of attorney duly executed and filed with the
Secretary or with a transfer agent or transfer clerk, and
on surrender of the certificate or certificates, if is-
sued, for such shares properly endorsed or accompanied by
a duly executed stock transfer power and the payment of
all taxes thereon. Except as otherwise provided by law,
the Corporation shall be entitled to recognize the exclu-
sive rights of a person in whose name any share or shares
stand on the record of stockholders as the owner of such
share or shares for all purposes, including, without
limitation, the rights to receive dividends or other
distributions, and to vote as such owner, and the Corpo-
ration shall not be bound to recognize any equitable or
legal claim to or interest in any such share or shares on
the part of any other person.
Section 4. Regulations. The Board may make
such additional rules and regulations, not inconsistent
with these By-Laws, as it may deem expedient concerning
the issue, transfer and registration of certificates for
shares of stock of the Corporation. It may appoint or
authorize any officer or officers to appoint, one or more
transfer agents or one or more transfer clerks and one or
more registrars and may require all certificates for
shares of stock to bear the signature or signatures of
any of them.
Section 5. Lost, Destroyed or Mutilated Cer-
tificates. The holder of any certificates representing
shares of stock of the Corporation shall immediately
notify the Corporation of any loss, destruction or muti-
lation of such certificate, and the Corporation may issue
a new certificate of stock in the place of any
certificate theretofore issued by it which the owner
thereof shall allege to have been lost or destroyed or
which shall have been mutilated, and the Board may, in
its discretion, require such owner or his legal
representatives to give to the Corporation a bond in
such sum, limited or unlimited, and in such form and with
such surety or sureties, as the Board in its absolute
discretion shall determine, to indemnify the
Corporation against any claim that may be made against it
on account of the alleged loss or destruction of any such
certificate, or issuance of a new certificate.
Anything herein to the contrary notwithstanding, the
Board, in its absolute discretion, may refuse to issue
any such new certificate, except pursuant to legal
proceedings under the laws of the State of Maryland.
Section 6. Fixing of a Record Date for Divi-
dends and Distributions. The Board may fix, in advance,
a date not more than ninety days preceding the date fixed
for the payment of any dividend or the making of any
distribution. Once the Board of Directors fixes a record
date as the record date for the determination of the
stockholders entitled to receive any such dividend or
distribution, in such case only the stockholders of re-
cord at the time so fixed shall be entitled to receive
such dividend or distribution.
Section 7. Information to Stockholders and
Others. Any stockholder of the Corporation or his agent
may inspect and copy during usual business hours the
Corporation's By-Laws, minutes of the proceedings of its
stockholders, annual statements of its affairs, and vot-
ing trust agreements on file at its principal office.
ARTICLE VIII
Seal
The seal of the Corporation shall be circular
in form and shall bear, in addition to any other emblem
or device approved by the Board of Directors, the name of
the Corporation, the year of its incorporation and the
words "Corporate Seal" and "Maryland". Said seal may be
used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
ARTICLE IX
Fiscal Year
Unless otherwise determined by the Board, the
fiscal year of the Corporation shall end on the 31st day
of December.
ARTICLE X
Depositories and Custodians
Section 1. Depositories. The funds of the
Corporation shall be deposited with such banks or other
depositories as the Board of Directors of the Corporation
may from time to time determine.
Section 2. Custodians. All securities and
other investments shall be deposited in the safe keeping
of such banks or other companies as the Board of Direc-
tors of the Corporation may from time to time determine.
ARTICLE XI
Execution of Instruments
Section 1. Checks, Notes, Drafts, etc. Checks,
notes, drafts, acceptances, bills of exchange and other
orders or obligations for the payment of money shall be
signed by such officer or officers or person or persons
as the Board of Directors by resolution shall from time
to time designate.
Section 2. Sale or Transfer of Securities.
Stock certificates, bonds or other securities at any time
owned by the Corporation may be held on behalf of the
Corporation or sold, transferred or otherwise disposed of
subject to any limits imposed by these By-Laws and pursu-
ant to authorization by the Board and, when so authorized
to be held on behalf of the Corporation or sold, trans-
ferred or otherwise disposed of, may be transferred from
the name of the Corporation by the signature of the Pres-
ident or a Vice President or the Treasurer or pursuant to
any procedure approved by the Board of Directors, subject
to applicable law.
ARTICLE XII
Annual Statement
The books of account of the Corporation shall
be examined by an independent firm of public accountants
at the close of each annual period of the Corporation and
at such other times as may be directed by the Board. A
report to the stockholders based upon each such examina-
tion shall be mailed to each stockholder of the Corpora-
tion of record on such date with respect to each report
as may be determined by the Board, at his address as the
same appears on the books of the Corporation. Such annu-
al statement shall also be available at the annual meet-
ing of stockholders and be placed on file at the Corpora-
tion's principal office in the State of Maryland. Each
such report shall show the assets and liabilities of the
Corporation as of the close of the annual or quarterly
period covered by the report and the Securities in which
the funds of the Corporation were then invested. Such
report shall also show the Corporation`s income and ex-
penses for the period from the end of the Corporation's
preceding fiscal year to the close of the annual or quar-
terly period covered by the report and any other informa-
tion required by applicable law and shall set forth such
other matters as the Board or such firm of independent
public accountants shall determine.
ARTICLE XIII
Amendments
The Board of Directors, by affirmative vote of
a majority thereof, shall have the exclusive right to
amend, alter or repeal these By-Laws at any regular or
special meeting of the Board of Directors, except any
particular By-Law which is specified as not subject to
alteration or repeal by the Board of Directors, subject
to the requirements of applicable law.
FORM OF FLOATING RATE NOTE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER STATE SECURITIES LAWS. THE
TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN A
PURCHASER'S LETTER ACCEPTED AS OF MARCH 4, 1996 AND
ARTICLE 4 HEREOF. A COPY OF SUCH CONDITIONS WILL BE
FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST AND WITHOUT CHARGE. THESE SECURITIES MAY
NOT BE RESOLD OR TRANSFERRED UNLESS SUCH CONDITIONS ARE
COMPLIED WITH AND UNLESS REGISTERED OR EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS.
HURON INVESTMENT FUND, INC.
Floating Rate Note due 2021
No. __ $________
New York, New York
March 4, 1996
HURON INVESTMENT FUND, INC., a corporation duly
organized and existing under the laws of the State of
Maryland (the "Company," which term includes any
successor corporation), for value received promises to
pay to ______ or registered assigns, the principal sum of
________ DOLLARS ($______), on March 4, 2021, in
accordance with the provisions set forth below.
See Article 9 for certain definitions.
1. Payment of Interest. The Company promises
to pay interest on the unpaid principal amount hereof
(computed on the basis of a 360-day year consisting of
twelve months of 30 days each, and in the case of
incomplete months, on the number of days actually elapsed
divided by 360 days) from the date of issuance to and
including March 14, 1997 at the rate of 8.50% per annum
and thereafter pay interest on the unpaid principal
amount hereof (computed on the basis of a 360-day year
consisting of twelve months of 30 days each, and in the
case of incomplete months, on the number of days actually
elapsed divided by 360 days), for each Interest Period,
until maturity, at the interest rate per annum equal to
the sum of (a) the Treasury Bill Rate as of the first day
of such Interest Period and (b) 3.50% per annum;
provided, however, such rate per annum shall not exceed
the maximum rate permitted by applicable law. Such per
annum rate shall be calculated by the Company and all
such calculations shall, in the absence of manifest
error, be conclusive for all purposes and binding on the
holders of the Securities.
The Company shall pay interest on March 15 and
September 15 of each year (or, if such day is not a
Business Day, on the next succeeding Business Day),
commencing on September 15, 1996, and at maturity (each
an "Interest Payment Date"). Interest payable on any
Interest Payment Date shall accrue from and including the
immediately preceding Interest Payment Date (or the date
of original issue in the case of the first Interest
Payment Date) to and excluding such Interest Payment
Date.
2. Method of Payment. The Company shall pay
interest on this Security to the Person who is the
registered Holder of this Security at the close of
business on the Record Date next preceding the Interest
Payment Date notwithstanding any registration of transfer
or exchange subsequent to the Record Date and prior to
the next succeeding Interest Payment Date. Unless the
Company agrees in writing with a particular Holder to a
different method of payment, (a) the Holder must
surrender this Security to the Company to collect
payments of principal and (b) payments of principal and
interest shall be made by check mailed to the
Securityholder. The Company shall pay principal and
interest in money of the United States that at the time
of payment is legal tender for payment of public and
private debts. If a payment date is not a Business Day,
payment shall be made on the next succeeding day
thereafter that is a Business Day, provided that interest
shall not accrue after such payment date.
3. Register of Holders. The Company shall
keep at its principal office a register (the "Register")
in which shall be entered the names and addresses of the
registered holders of the Securities and particulars of
the respective Securities held by them and of all
transfers and exchanges of such Securities. References
herein to the "Holder" of a Security or a
"Securityholder" shall mean the Person listed in the
Register as the payee of such Security unless the payee
shall have presented such Security to the Company for
transfer and the transferee shall have been entered in
the Register as a subsequent holder, in which case the
term shall mean such subsequent holder. The ownership of
the Securities shall be proven by the Register. For the
purpose of paying principal and interest on the
Securities, the Company shall be entitled to rely on the
names and addresses in the Register and, notwithstanding
anything to the contrary contained in this Security, no
Event of Default shall occur under Article 7 hereof if
payment of principal and interest is made to, and in
accordance with, the names and addresses and other
particulars contained in the Register.
4. Transfers or Exchange; Restrictions on
Transfer; Cancellation.
4.1 Transfer or Exchange. The Holder of this
Security, or of any Security or Securities issued upon
transfer or exchange of this Security or in substitution
for this Security pursuant to the provisions of this
Article 4 or of Section 10.8 hereof, may, at its option,
in person or by duly authorized attorney, surrender the
same for transfer or exchange at an office or agency
maintained by the Company for such purpose and, within a
reasonable time thereafter and without expense (other
than transfer taxes and other governmental charges, if
any, the payment of which by the Holder shall have been
established to the satisfaction of the Company), receive
in exchange therefor one or more duly executed printed or
typewritten Securities, each in the principal amount of
$500.00 or an integral multiple thereof (or in the case
of any Security so surrendered that is in a principal
amount less than $500.00, in an equal principal amount)
dated as of the date to which interest has most recently
been paid, and payable to such Person or Persons, all as
may be designated by such Holder, for the same aggregate
principal amount as the then unpaid principal amount of
the Security or Securities so surrendered. The Company
covenants and agrees to take and cause to be taken all
action reasonably necessary to effect such transfers and
exchanges. The Company hereby designates as its office
where the Register will be maintained and the Securities
may be presented for transfer, redemption or exchange,
its principal office, which shall be initially at the
address set forth in Section 10.1 hereof.
No service charge shall be made before any
registration of transfer or exchange of Securities, but
the Company may require payment of a sum sufficient to
cover any stamp or transfer tax or other similar
governmental charge that may be imposed in connection
with any registration of transfer or exchange of
Securities.
The Company shall not be required to exchange
or register a transfer of (a) any Securities for a period
of fifteen days next preceding any selection of
Securities to be redeemed, or (b) any Securities
selected, called or being called for redemption except,
in the case of any Securities to be redeemed in part, the
portion thereof not to be so redeemed.
4.2 Restrictions on Transfer. Each Holder by
his acceptance of this Security covenants and agrees to
take and cause to be taken all action necessary to ensure
compliance with the restrictions on transfer of the
Securities of such Holder set forth herein and in the
Purchaser's Letters. Notwithstanding Section 4.1 hereof,
the Company shall not be obligated to register the
transfer of any Security or reissue any Security unless
such restrictions on transfer shall have been complied
with to the satisfaction of the Company.
4.3 Cancellation of Securities Paid, etc. All
Securities surrendered for the purpose of payment,
redemption, exchange or registration of transfer shall,
if surrendered to the Company or any Paying Agent be
promptly cancelled by the Company, and no Securities
shall be issued in lieu thereof except as expressly
permitted by any of the provisions contained herein.
5. Redemption.
5.1 Mandatory Redemption. Upon the occurrence
of a Mandatory Redemption Event the Company shall notify
each Securityholder of the occurrence of such event
within 60 days after it obtains knowledge thereof and
will cause all of the Securities to be redeemed on the
Interest Payment Date next succeeding the date of such
notice at a price equal to the Redemption Price, plus
interest accrued to but excluding the date fixed for
redemption.
5.2 Redemption at the Company's Option. The
Securities will be redeemable on any Interest Payment
Date at the option of the Company, as a whole or from
time to time in part, upon not less than 30 nor more than
60 days notice by mail prior to the date fixed for
redemption. The Securities are so redeemable at the
Redemption Price, plus interest accrued to but excluding
the date fixed for redemption.
5.3 Notice of Redemption; Selection of
Securities. (a) Prior to any mandatory or optional
redemption, the Company shall mail, within the respective
time period referred to in Section 5.1 and 5.2, a notice
to the Holders of Securities to be redeemed at their last
addresses as the same appear on the Register. The notice
if delivered in the manner herein provided shall be
conclusively presumed to have been duly given, whether or
not the Holder receives such notice. In any case,
failure to give such notice or any defect in the notice
to the Holder of any Security designated for redemption
as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Security.
(b) Each such notice of redemption shall
specify (i) whether such redemption is pursuant to
Section 5.1 or Section 5.2 hereof, (ii) the Redemption
Date, (iii) the Redemption Price, (iv) the place of
payment, (v) that payment will be made upon presentation
and surrender of such Securities, (vi) that interest
accrued to but excluding the Redemption Date will be paid
as specified in said notice, and (vii) that on and after
said Redemption Date interest thereon or on the portions
thereof to be redeemed will cease to accrue. If less
than all the Securities are to be redeemed the notice of
redemption shall specify by number the Securities to be
redeemed. In case any Security is to be redeemed in part
only, the notice of redemption shall state the portion of
the principal amount of Securities to be redeemed and
shall state that on and after the Redemption Date, upon
surrender of such Security, a new Security or Securities
in principal amount equal to the unredeemed portion
thereof will be issued.
(c) In every case of redemption pursuant
to Section 5.2 of less than all Securities, the
Securities or portions thereof to be redeemed shall be
selected by lot, on a pro rata basis, or in such other
manner as will not discriminate unfairly against any
Securityholder.
(d) Unless the context otherwise
requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Security
redeemed or to be redeemed only in part, to the portion
of the principal of such Security which has been or is to
be redeemed.
5.4 Payment of Securities Called for
Redemption. If notice of redemption has been given as
provided in Section 5.3, the Securities or portions of
Securities with respect to which such notice has been
given shall become due and payable on the Redemption Date
and at the place stated in such notice at the Redemption
Price, together with interest accrued to but excluding
the date fixed for redemption, and on and after said date
(unless the Company shall default in the payment of such
Securities at the Redemption Price, together with
interest accrued to said date) interest on the Securities
or portions of Securities so called for redemption shall
cease to accrue. On presentation and surrender of such
Securities at the place of payment in said notice
specified, the said Securities or the specified portions
thereof shall be paid and redeemed by the Company at the
Redemption Price, together with interest accrued thereon
to the Redemption Date.
Upon presentation of any Security redeemed in
part only, the Company shall execute and deliver to the
Holder thereof, at the expense of the Company, a new
Security or Securities, of authorized denominations, in
principal amount equal to the unredeemed portion of the
Security so presented.
5.5 Redemption at the Option of the Holders.
(a) The Securities held by each Holder shall be subject
to redemption by the Company, in whole or in part, at the
option of such Holder on March 15 of each year (or if
such day is not a Business Day, the next succeeding
Business Day) upon not less than 60 nor more than 90
days' notice to the Company. The Securities are so
redeemable at the Redemption Price, plus interest accrued
to but excluding the date fixed for redemption. In order
to exercise such right to require the Company to redeem
Securities held by a Holder, such Holder must surrender
such Security to the Company during the notice period
referred to in the first sentence of this Section 5.5,
accompanied by a notice from such Holder directed to the
Company, c/o Comerica Bank, 411 W. Lafayette Avenue,
Detroit, Michigan 48226, Attention: Mr. Robert H.
Bockrath II, setting forth (a) the name of the Holder of
such Security, (b) the number of such Security and the
principal amount of such Security, (c) the principal
amount, in integral multiples of $500.00, of the Security
to be redeemed and (d) a statement that such Holder is
thereby electing to have such Security, or portion
thereof, redeemed by the Company on the applicable
redemption date.
(b) If any Securities are duly
surrendered to the Company and accompanied by a notice
given as provided in Section 5.5(a), the Securities or
portions of Securities required to be redeemed in
accordance with such notice shall become due and payable
on the date fixed for redemption in accordance with
Section 5.5(a) at the Redemption Price, together with
interest accrued to but excluding the date fixed for
redemption, and on and after said date (unless the
Company shall default in the payment of such Securities
at the Redemption Price together with interest accrued to
said date) interest on the Securities or portions thereof
to be redeemed shall cease to accrue. Upon surrender of
any Security to be redeemed in part only, the Company
shall execute and deliver to the Holder thereof, at the
expense of the Company, a new Security or Securities, of
authorized denominations, in principal amount equal to
the unredeemed portion of the Security so surrendered.
6. Consolidation, Merger, Conveyance, Transfer
or Lease; Other Covenants
6.1 Company May Consolidate, etc., Only on
Certain Terms. The Company shall not consolidate with or
merge into any other corporation or sell or transfer all
or substantially all of its properties and assets to
another corporation, unless:
(1) the corporation formed by such
consolidation or into which the Company is
merged or the corporation which acquires such
properties and assets shall be a corporation
organized and existing under the laws of the
United States of America or any state thereof
or the District of Columbia and shall expressly
assume, by an assumption agreement, the due and
punctual payment of the principal of and
interest on all the Securities and the
performance of every covenant contained herein
on the part of the Company to be performed or
observed; and
(2) immediately after giving effect to
such transaction, no Event of Default, and no
event which, after notice or lapse of time, or
both, would become an Event of Default, shall
have happened and be continuing.
6.2 Successor Corporation Substituted. Upon
any consolidation or merger, or any sale or transfer of
all or substantially all of the Company's properties and
assets in accordance with Section 6.1, the successor
corporation formed by such consolidation or into which
the Company is merged or to which such sale or transfer
is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under
terms of the Securities with the same effect as if such
successor corporation had been named as the Company
herein and thereafter the predecessor corporation shall
be relieved from all obligations under the Securities.
6.3 Limitation on Incurrence of Additional
Indebtedness. The Company shall not create, authorize,
issue, assume, incur or suffer to exist any indebtedness
for borrowed money or any direct or indirect guarantee of
such indebtedness except (a) the indebtedness evidenced
by the Securities, (b) in connection with the redemption
of one or more series of Preferred Stock or (c) other
indebtedness in an aggregate principal amount not to
exceed at any one time outstanding an amount equal to 10%
of the Company's net asset value.
6.4 Limitation on Dividends and Other
Payments. The Company shall not declare any dividend
(except a dividend in capital stock of the Company), or
declare any other distribution, upon any class of capital
stock of the Company, or purchase any such capital stock,
unless, in every such case, the Securities have at the
time of the declaration of any such dividend or
distribution or at the time of any such purchase an asset
coverage (as defined in the 1940 Act) of at least 300
percent (or such other percentage as may in the future be
required by law or, if lower, such other percentage as
may in the future be permitted by order of the SEC) after
deducting the amount of such dividend, distribution or
purchase price, as the case may be, except that dividends
may be declared upon any preferred stock (within the
meaning of the 1940 Act) if the Securities have an asset
coverage (as defined in the 1940 Act) of at least 200
percent (or such other percentage as may in the future be
required by law or, if lower, such other percentage as
may in the future be permitted by order of the SEC) at
the time of declaration thereof after deducting the
amount of such dividend.
6.5 Payment of Securities. The Company shall
pay the principal of and interest on the Securities on
the dates and in the manner provided in the Securities.
An installment of principal or interest shall be
considered paid on the date due if the Paying Agent holds
on that date money designated for and sufficient to pay
the installment.
6.6 Corporate Existence. Except as otherwise
permitted by Section 6.1 hereof, the Company will do or
cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and
the rights (charter and statutory), licenses and
franchises of the Company; provided that the Company
shall not be required to preserve any such right, license
or franchise, if the preservation thereof is no longer
desirable in the conduct of the business of the Company
and the loss thereof is not adverse in any material
respect to the Holders.
6.7 Payment of Taxes and Other Claims. The
Company will pay or discharge or cause to be paid or
discharged, before any penalty accrues thereon, (i) all
material taxes, assessments and governmental charges
levied or imposed upon the Company or upon the income,
profits or property of the Company, and (ii) all material
lawful claims for labor, materials and supplies which, if
unpaid, might by law become a lien upon the property of
the Company; provided that the Company shall not be
required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claims the
amount, applicability or validity of which is being
contested in good faith by appropriate proceedings and
for which adequate provision has been made.
7. Events of Default and Remedies.
7.1 Events of Default. "Event of Default",
wherever used herein means any one of the following
events (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be
effected by operation of law pursuant to any judgment,
decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) default in the payment of any
interest upon any Security when it becomes due
and payable, and continuance of such default
for a period of 30 days; or
(2) default in the payment of the
principal of any Security at its maturity; or
(3) default in the performance, or
breach, of any covenant or warranty of the
Company contained in this Security (other than
a covenant or warranty a default in whose
performance or whose breach is elsewhere in
this Section specifically dealt with), and
continuance of such default or breach for a
period of 60 days after there has been given,
by registered or certified mail, to the Company
by the Holders of at least 25% in aggregate
principal amount of the Securities then
Outstanding, a written notice specifying such
default or breach and requiring it to be
remedied and stating that such notice is a
"Notice of Default" hereunder; or
(4) on the last Business Day of each
month in any period of twenty-four consecutive
calendar months the Securities shall have an
asset coverage (as defined in the 1940 Act) of
less than 100 percent; or
(5) the entry of a decree or order by a
court having jurisdiction in the premises
adjudging the Company bankrupt or insolvent, or
the entry of an order for relief in any case or
proceeding for reorganization, arrangement,
adjustment or composition of or in respect of
the Company under the Federal Bankruptcy Code
or any other applicable Federal or State law,
or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar
official) of the Company or of any substantial
part of its property, or ordering the winding
up or liquidation of its affairs, and the
continuance of any such decree or order
unstayed and in effect for a period of 90
consecutive days; or
(6) the institution by the Company of
proceedings to be adjudicated a bankrupt or
insolvent, or the consent by it to the
institution of bankruptcy or insolvency
proceedings against it, or the filing by it of
a petition or answer or consent seeking
reorganization or relief under the Federal
Bankruptcy Code or any other applicable Federal
or State law, or the consent by it to the
filing of any such petition or to the
appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other
similar official) of the Company or of any
substantial part of its property.
7.2 Acceleration of Maturity; Rescission and
Annulment. If an Event of Default (other than an Event
of Default described in clause (5) or clause (6) of
Section 7.1) occurs and is continuing, then and in every
such case the Holders of no less than 25% in aggregate
principal amount of the Securities then Outstanding may
declare the principal of all the Securities to be due and
payable immediately, by a notice in writing to the
Company, and upon any such declaration such principal
shall become immediately due and payable. In the case of
an Event of Default described in clause (5) or clause (6)
of Section 7.1, the Securities then Outstanding shall
become due and payable immediately without any
declaration or act on the part of the Holders.
At any time after such a declaration of
acceleration has been made and before a judgment or
decree for payment of the money due has been obtained
against the Company as hereinafter in this Article
provided, the Holders of a majority in aggregate
principal amount of the Securities then Outstanding, by
written notice to the Company, may rescind and annul such
declaration and its consequences if
(1) the Company has paid or deposited
with any Paying Agent a sum sufficient to pay
(A) all overdue installments of
interest on all Securities,
(B) the principal of and premium, if
any, on any Securities which have become due
otherwise than by such declaration of
acceleration and interest thereon at the rate
borne by the Securities,
(C) to the extent that payment of
such interest is lawful, interest upon overdue
interest at the rate borne by the Securities,
(D) the reasonable compensation,
expenses, disbursements and advances of the
Holders and any of their agents and counsel;
and
(2) all Events of Default, other than the
non-payment of the principal of Securities
which have become due solely by such
acceleration, have been cured or waived as
provided in Section 7.7.
No such rescission shall affect any subsequent default or
impair any right consequent thereon.
7.3 Restoration of Rights and Remedies. If
any Securityholder has instituted any proceeding to
enforce any right or remedy under this Security and such
proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to such
Securityholder, then and in every such case the Company
and the Securityholders shall, subject to any
determination in such proceeding, be restored severally
and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Securityholders
shall continue as though no such proceeding had been
instituted.
7.4 Rights and Remedies Cumulative. No right
or remedy herein conferred upon or reserved to any
Securityholder is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder,
or otherwise, shall not prevent the concurrent assertion
or employment of any other appropriate right or remedy.
7.5 Delay or Omission Not Waiver. No delay or
omission of any Securityholder to exercise any right or
remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every
right and remedy given by this Article 7 or by law to any
Securityholder may be exercised from time to time, and as
often as may be deemed expedient, by any such
Securityholder, as the case may be.
7.6 Control by Securityholders. The Holders
of a majority in aggregate principal amount of the
Outstanding Securities shall have the right to direct the
time, method and place of conducting any proceeding for
any remedy available to any Holders, provided that such
direction shall not be in conflict with any rule of law
or with this Security.
7.7 Waiver of Past Defaults. The Holders of
not less than a majority in aggregate principal amount of
the Securities then Outstanding may on behalf of the
Holders of all the Securities waive any past default
hereunder and its consequences, except a default
(1) in the payment of the principal of or
interest on any Security, or
(2) in respect of a covenant or provision
hereof which under Article 8 cannot be modified
or amended without the consent of the Holder of
each Outstanding Security affected.
Upon any such waiver, such default shall cease
to exist, and any Event of Default arising therefrom
shall be deemed to have been cured, for every purpose of
this Security; but no such waiver shall extend to any
subsequent or other default or impair any right
consequent thereon.
7.8 Waiver of Stay or Extension Laws. The
Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect
the covenants or the performance of this Security; and
the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to any
Securityholder, but will suffer and permit the execution
of every such power as though no such law had been
enacted.
8. Amendments, Supplements And Waivers.
8.1 Without Consent of Securityholders. The
Company, when authorized by a Board Resolution, at any
time and from time to time, may amend or supplement the
Securities without notice to or consent of any
Securityholder for any of the following purposes:
(1) to evidence the succession of another
corporation to the Company, and the assumption
by any such successor of the covenants of the
Company herein contained; or
(2) to add to the covenants of the
Company or to add Events of Default, for the
benefit of the Holders of the Securities, or to
surrender any right or power herein conferred
upon the Company; or
(3) to cure any ambiguity, to correct or
supplement any provision herein which may be
inconsistent with any other provision herein,
or to make any other provisions with respect to
matters or questions arising under this
Security which shall not be inconsistent with
the provisions of this Security, provided such
action shall not adversely affect the interest
of the Holders of the Securities in any
material respect.
8.2 With Consent of Securityholders. With the
consent of the Holders of not less than a majority in
aggregate principal amount of the Securities Outstanding
and when authorized by a Board Resolution, the Company
may amend or supplement the Securities for the purpose of
adding any provisions to or changing in any manner or
eliminating any of the provisions of the Securities or of
modifying in any manner the rights of the Holders of the
Securities; provided, however, that no such supplement or
amendment shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) change the stated maturity date of
the principal of, or any installment of
interest on, any Security, or reduce the
principal amount thereof or the interest
thereon, or the coin or currency in which, any
Security or the interest thereon is payable, or
impair the right to institute suit for the
enforcement of any such payment after the due
date thereof (or, in the case of redemption, on
or after the Redemption Date), or
(2) reduce the percentage in principal
amount of the Outstanding Securities, the
consent of whose Holders is required for any
such supplement or amendment, or the consent of
whose Holders is required for any waiver (of
compliance with certain provisions of the
Securities or certain defaults hereunder and
their consequences) provided for in the
Securities, or
(3) modify any of the provisions of this
Section or Section 7.7, except to increase any
such percentage or to provide that certain
other provisions of the Securities cannot be
modified or waived without the consent of the
Holder of each Security affected thereby.
Before an amendment, supplement or waiver under
this Section becomes effective, the Company shall mail to
the Holders affected thereby a notice briefly describing
the amendment, supplement or waiver.
8.3 Effect of Supplement or Amendment. Upon
the execution of any supplement or amendment properly
adopted under this Article, the Securities (including
this Security) shall be modified in accordance therewith,
and such supplement or amendment shall form a part of
this Security for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
9. Certain Definitions.
For all purposes of this Security, except as
otherwise expressly provided or unless the context
otherwise requires:
(1) the terms defined in this Article
have the meanings assigned to them in this
Article, and include the plural as well as the
singular; and
(2) all accounting terms not otherwise
defined herein have the meanings assigned to
them in accordance with generally accepted
accounting principles.
"Affiliate" of any specified Person means any
other Person directly or indirectly controlling or
controlled by or under direct or indirect common control
with such specified Person. For the purposes of this
definition, "control" when used with respect to any
specified Person means the power to direct the management
and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board of Directors" means either the board of
directors of the Company or any duly authorized committee
of that board.
"Board Resolutions" means a copy of a
resolution certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the
Board of Directors and to be in full force and effect on
the date of such certification.
"Business Day" shall mean a day on which the
New York Stock Exchange is open for trading and which is
not a Saturday, Sunday or other day on which banks in The
City of New York, New York are authorized or obligated by
law or executive order to close.
"Company" means the Person named as the
"Company" in the first paragraph of this instrument until
a successor corporation shall have become such pursuant
to the applicable provisions of this Security, and
thereafter "Company" shall mean such successor
corporation.
"Event of Default" has the meaning specified in
Article 7.
"Interest Period" shall mean the period
beginning on and including March 15 of each year and
ending on and including March 14 of the following year.
"Mandatory Redemption Event" shall be deemed to
occur if the aggregate net asset value of the Company as
determined for purposes of the 1940 Act does not exceed
the aggregate principal amount of the Company's
liabilities for money borrowed, including the Notes, by a
ratio of at least 200 to 1.
"maturity" when used with respect to any
Security means the date on which the principal of such
Security becomes due and payable as therein or herein
provided, whether at the stated maturity or by
declaration of acceleration, call for redemption or
otherwise.
"1940 Act" means the Investment Company Act of
1940.
"Outstanding" when used with respect to
Securities means, as of the date of determination, all
Securities theretofore executed and delivered, except:
(i) Securities which have been
cancelled pursuant to Section 4.3; and
(ii) Securities in exchange for
or in lieu of which other Securities have been
executed and delivered;
provided, however, that in determining whether the
Holders of the requisite principal amount of Securities
Outstanding have given any request, demand,
authorization, direction, notice, consent or waiver under
the Securities, Securities owned by the Company or any
other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and
deemed not to be Outstanding. Securities so owned which
have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the
satisfaction of the Holders of a majority of the
Securities then Outstanding the pledgee's right so to act
with respect to such Securities and that the pledgee is
not the Company or any other obligor upon the Securities
or any Affiliate of the Company or such other obligor.
"Paying Agent" means any Person authorized by
the Company to pay the principal of or interest on any
Securities on behalf of the Company, which may include
the Company or any subsidiary of the Company.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock
company, trust, limited liability company, unincorporated
organization or government or any agency or political
subdivision thereof.
"Preferred Stock" means any capital stock of
the Company which ranks prior to the common stock of the
Company with respect to the payment of dividends or the
distribution of assets upon liquidation.
"Purchaser's Letter" means the Purchaser's
Letter between the Company and the original purchaser of
this Security.
"Redemption Date" when used with respect to any
Security to be redeemed means the date fixed for such
redemption by or pursuant to such Security.
"Redemption Price" when used with respect to
any Security or portion thereof to be redeemed means 100%
of the principal amount thereof.
"Register" has the meaning specified in Article 3.
"SEC" means the United States Securities and
Exchange Commission.
"Securities" means the Company's Floating Rate
Notes due on March 4, 2021.
"Treasury Bill Rate", on any date of
determination, shall mean the arithmetic average (rounded
to the nearest basis point) of the per annum yield to
maturity values, adjusted to constant maturities of one
year, for the five consecutive Business Days immediately
preceding such date of determination as read from the
yield curves of the most actively traded marketable
United States Treasury fixed interest rate securities (x)
constructed daily by the United States Treasury
Department (i) as published by the Federal Reserve Board
in its Statistical Release H.15 (519), "Selected Interest
Rates" (the "FRB Release"), which average yield to
maturity values currently are set forth in such
statistical release under the caption "U.S. Government
Securities--Treasury Constant Maturities," or (ii) if the
FRB Release is not then published, as published by the
Federal Reserve Board in any release comparable to its
FRB Release or (iii) if the Federal Reserve Board shall
not be publishing a comparable release, as published in
any official publication or release of any other United
States government department or agency, or (y) if the
United States Treasury Department shall not then be
constructing such yield curves, as constructed by the
Federal Reserve Board or any other United States
government department or agency and published as set
forth in (x) above. However, if the Treasury Bill Rate
cannot be determined as provided above, then the Treasury
Bill Rate shall mean the arithmetic average (rounded to
the nearest basis point) of the per annum yields to
maturity for each of five Business Days preceding such
date of determination of all of the issues of actively
traded marketable United States Treasury fixed interest
rate securities with a maturity which is not less than
nine months less nor more than fifteen months (excluding
all such securities which can be surrendered at the
option of the holder at face value in payment of any
Federal estate tax, which provide tax benefits to the
holder or which were issued at a substantial discount)
(1) as published in all editions of The Wall Street
Journal printed for distribution in the United States or
(2) if The Wall Street Journal shall cease such
publication, based on average asked prices (or yields) as
quoted by each of three United States government
securities dealers of recognized national standing
selected by the Board of Directors of the Company for
such purpose.
10. Miscellaneous.
10.1 Notices. Except as otherwise expressly
provided for herein, all notices, requests and other
communications to any party hereunder shall be in writing
(including facsimile or similar writing) and shall be
given to such party at its address or facsimile number
set forth below, or such other address or facsimile
number as such party may hereinafter specify for the
purpose (in the case of the Company, by notice in
accordance herewith to each Holder or, in the case of
each Holder, by notice in accordance herewith to the
Company). Each such notice, request or other
communication shall be effective (i) if given by
facsimile, when such facsimile is transmitted to the
facsimile number specified in this Section or, (ii) if
given by mail, 36 hours after such communication is
deposited in the mails with first class postage prepaid,
addressed as aforesaid or, (iii) if given by any other
means, when delivered at the address specified in this
Section 10.1. Notices shall be addressed as follows:
if to the Company:
Huron Investment Fund, Inc.
c/o Comerica Bank
411 W. Lafayette Avenue
Detroit, Michigan 48226
Attn: Mr. Robert H. Bockrath II
Facsimile No.: (313) 222-6301
All notices to Securityholders shall be at the
address set forth in the Register.
Failure to deliver a notice or communication to
a Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders. If a
notice or communication is delivered in the manner
provided above, it is duly given, whether or not the
addressee receives it.
10.2 Communications by Holders With Other
Holders. Securityholders may communicate with other
Securityholders with respect to their rights under the
Securities. Each Securityholder shall have the right to
examine the Register and receive a list of
Securityholders and their addresses upon request.
10.3 Successors. All agreements of the
Company in the Securities shall bind its respective
successors.
10.4 New York Law. THE SECURITIES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF.
10.5 Separability. In case any provision in
the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability
of the remaining provisions thereof shall not in any way
be affected or impaired thereby.
10.6 Denominations; Transfer; Exchange. The
Securities are in registered form without coupons, and
are issuable in denominations of $500.00 and in integral
multiples of $500.00.
10.7 No Recourse Against Others. No past,
present or future stockholder, director, officer, agent,
employee or incorporator of the Company, as such, or of
any successor corporation shall have any liability for
any obligations of the Company under the Securities or
for any claim based on, in respect of, or by reason of,
such obligations or their creation. By accepting a
Security, each Holder waives and releases all such
liability.
10.8 Loss, Theft, Destruction or Mutilation of
the Security. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Security, and of
indemnity or security reasonably satisfactory to the
Company, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon
surrender and cancellation of this Security, if
mutilated, the Company will make and deliver a new
Security of like tenor, in lieu of this Security. Any
Security made and delivered in accordance with the
provisions of this Section 10.8 shall be dated as of the
date to which interest has been paid on this Security, or
if no interest has therefore been paid on this Security,
then dated the date hereof.
IN WITNESS WHEREOF, the Company has caused this
Security to be duly executed as of the date first above
written.
HURON INVESTMENT FUND, INC.
Dated: March 4, 1996 By: __________________________
James A. McIntosh
President
Attest:
By: ______________________________
Robert H. Bockrath II
Secretary
INVESTMENT MANAGEMENT AGREEMENT
Date:
Account No.
Investment advisory agreement by and between Huron Investment Fund, Inc.
(the Client), and World Asset Management.
The Client, being duly authorized, hereby employs World Asset Management
to provide investment advisory services for an Investment Management
Account (Account), to be established on behalf of the Client in
accordance with the following terms and conditions described herein:
1. Authority. World Asset Management will have the following power
and authority with respect to the Account. World Asset Management
shall have discretion to supervise, manage and direct the assets in
the Account and, as agent and attorney-in-fact with full power and
authority on behalf of the Client, in accordance with the
objectives, policies and restrictions set forth in Client's
registration statement on Form N-2 as amended from time to time or
as set forth in written instructions furnished by the Client. It
shall be Client's responsibility to advise World Asset Management
of any modification of objectives as they occur. World Asset
Management may, without prior consultation with the Client and at
such times when World Asset Management deems appropriate, (a)
purchase, sell, invest, reinvest, exchange, convert, trade in and
otherwise deal with such assets in accordance with the cash
management requirements of the Client communicated by the officers
of the Client to World Asset Management; and (b) place all orders
for the purchase or sale of portfolio securities for the account
with or through brokers, dealers or issuers selected by it or
designated by the Client. World Asset Management shall not vote the
proxies solicited by or with respect to the issuers of securities
in which assets of the Account may be invested from time to time.
2. Brokerage. World Asset Management shall use its best efforts to
effect securities transactions through brokers who offer the best
execution for the least commissions in the overall best interest of
the Client unless otherwise directed by the Client.
3. Fees. Compensation to World Asset Management for its services
shall be calculated in accordance with the attached Schedule of
Fees (Appendix A). The fee shall be paid quarterly in arrears.
4. Reports to Client. World Asset Management will send Client an
Account statement containing an inventory of the investments in the
Account as soon as reasonably possible after the end of each
calendar quarter. Copies of confirmations of transactions executed
will be sent promptly to the Custodian. World Asset Management does
not assume responsibility for the accuracy of information furnished
by Client or any other person.
5. Limit of Liability. It is understood that World Asset Management
shall act in good faith and shall not be liable for any loss
incurred in connection with recommendations or investments made or
other action taken on behalf of the Account due to errors of
judgment or by reason of its advice, including action taken or
omitted prior to a written notice of termination. World Asset
Management shall not be excluded from liability for losses
occasioned by reason of its willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties hereunder. Subject
to the foregoing, World Asset Management shall not be responsible
for any loss incurred solely by reason of any act or omission of
the Client, a custodian or any broker or dealer.
6. Recourse Against World Asset Management. World Asset Management's
authority hereunder shall not be impaired because of the fact that
World Asset Management may effect transactions with respect to
securities for its own account or for the accounts of others that
it manages. These transactions may involve identical or similar
securities and may be executed at the same or different times.
Except for negligence or malfeasance, or violation of applicable
law, neither World Asset Management nor any of its partners,
employees or agents shall be liable hereunder for any action
performed or omitted to be performed or for any errors of judgment
in managing the Account; provided, however, as the federal
securities laws impose liabilities under certain circumstances on
persons who act in good faith, nothing herein shall in any way
constitute a waiver or limitation of any rights that Client may
have under any federal securities laws.
Subject to the foregoing, if any loss is suffered due solely to the
acts or omissions of a custodian, broker, dealer or underwriter to
which World Asset Management has given investment instructions
pursuant to the authority granted World Asset Management herein,
Client will look to the custodian, broker, dealer or underwriter,
and not to World Asset Management, for restitution and recovery.
7. Representations of World Asset Management and Client. World Asset
Management represents that it is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended and
that such registration is currently effective.
Client represents that employment of World Asset Management is
authorized by, has been accomplished in accordance with, and does
not violate, the documents governing the Account. Client will
furnish World Asset Management with true copies of all governing
documents.
8. Communications. Instructions from Client to World Asset Management
may be given orally and, where deemed necessary, may be confirmed
in writing as soon as practicable. World Asset Management shall be
fully protected in acting upon any such communications which it
considers to be authentic.
9. Non-Exclusive Agreement. World Asset Management acts as adviser to
other clients and may give advice, and take action, with respect to
any of those clients that may differ from the advice given, or the
timing or nature of action taken, with respect to the Account.
World Asset Management shall have no obligation to purchase or sell
for the Account, or to recommend for purchase or sale by the
Account, any security that World Asset Management, its partners,
employees, or affiliates may purchase or sell for themselves or for
any other client.
10. Entire Agreement; Amendments. This Agreement constitutes the
entire agreement of the parties with respect to management of the
Account and can be amended only by a written amendment signed by
World Asset Management and the Client; provided that such amendment
shall be directed or approved as required by the Investment Company
Act of 1940.
11. Assignment. This Agreement shall terminate automatically in the
event of its assignment (as "assignment" is defined in the
Investment Company Act of 1940 and regulations promulgated
thereunder). World Asset Management is a partnership and will
notify the Client promptly after any change in the membership of
such partnership.
12. Termination. This Agreement may be terminated at any time by World
Asset Management or the Client by thirty (30) days notice to the
other; provided that such termination by the Client shall be
directed or approved in accordance with the Investment Company Act
of 1940.
13. Notices. Unless otherwise specified herein, all notices,
instructions and advices with respect to security transactions or
any other matters contemplated by this Agreement shall be deemed
duly given when deposited by first class mail addressed to World
Asset Management at 480 Pierce Street, Birmingham, Michigan 48009,
USA and when deposited by first class mail addressed to the Client
to the address appearing below and to any custodian designated by
the Client, at such address as it may specify to World Asset
Management in writing, or at such other address or addresses as
shall be specified, in each case, in a notice similarly given.
14. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Michigan.
HURON INVESTMENT FUND, INC.
By: /s/ James A. McIntosh
___________________________
James A. McIntosh
Its: President
411 West Lafayette
Detroit, Michigan 48226
Accepted and Agreed to in
Detroit, Michigan
By: /s/ Steve Albrecht
World Asset Management
Date: February 29, 1996
APPENDIX A
MANAGEMENT FEES
The fee for services as investment adviser will be one hundredth of one
percent per annum (0.01%) of the aggregate fair market value of the
equity securities (other than equity securities of open or closed-end
investment companies), in the account. The fee shall be payable
quarterly, in arrears, on the basis of the average of the month end fair
market values of assets in the account during the calendar quarter. In
the event that services commence or terminate other than at the
beginning of a quarter, the fee will be prorated accordingly. Statements
for the fees will be sent directly to the company to the attention of
James A. McIntosh.
AUTHORIZATION
World Asset Management
480 Pierce Street
Birmingham, Michigan 48009
Re: Huron Investment Fund, Inc.
Gentlemen:
This is to confirm the appointment of World Asset Management ("World
Asset Management") as investment adviser to supervise, manage and direct
the investments of and for the above captioned account (the "Account"),
with authority as agent and attorney-in-fact on behalf of the Account,
when World Asset Management shall deem the same appropriate (a) to
purchase, sell, invest, reinvest, exchange, convert, trade in and
otherwise deal with the assets of the Account, and (b) to place orders
for the purchase or sale of portfolio securities for the Account with or
through brokers, dealers or issuers selected by World Asset Management
or designated by the Client.
It is further understood that World Asset Management may deliver to any
securities brokerage firm executing transactions on behalf of the
Account, or to the custodian for the Account, a copy of this document as
evidence of its authority to act for and on behalf of the Account.
Very truly yours,
Date: Client:
CUSTODIAN CONTRACT
Between
HURON INVESTMENT FUND, INC.
and
COMERICA BANK
CUSTODIAN CONTRACT
This Contract between Huron Investment Fund,
Inc., a corporation organized and existing under the laws
of Maryland, having its principal place of business at
411 W. Lafayette Avenue, Detroit, Michigan 48226,
hereinafter called the "Fund", and Comerica Bank, a
Michigan banking corporation, having its principal place
of business at 411 W. Lafayette Avenue, Detroit, Michigan
48226, hereinafter called the "Custodian",
WITNESSETH: That in consideration of the
mutual covenants and agreements hereinafter contained,
the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the
custodian of its assets pursuant to the provisions of the
Articles of Incorporation. The Fund agrees to deliver to
the Custodian all securities and cash owned by it, and
all payments of income, payments of principal or capital
distributions received by it with respect to all
securities owned by the Fund from time to time, and the
cash consideration received by it for such new or
treasury shares of capital stock ("Shares") of the Fund
as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of
the Fund held or received by the Fund and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (within
the meaning of Section 2.15), the Custodian shall from
time to time employ one or more sub-custodians, but only
in accordance with an applicable vote by the Board of
Directors of the Fund, and provided that the Custodian
shall have no more or less responsibility or liability to
the Fund on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has
to the Custodian.
2. Duties of the Custodian with Respect to Property of
the Fund Held By the Custodian
2.1 Holding Securities. The Custodian shall
hold and physically segregate for the
account of the Fund all non-cash property,
including all securities owned by the Fund,
other than (a) securities which are
maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities
depository or in a book-entry system
authorized by the U.S. Department of the
Treasury, collectively referred to herein as
"Securities System" and (b) commercial paper
of an issuer for which Comerica Incorporated
acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained
in the Direct Paper System of the Custodian
pursuant to Section 2.10A.
2.2 Delivery of Securities. The Custodian shall
release and deliver securities owned by the
Fund held by the Custodian or in a
Securities System account of the Custodian
or in the Custodian's Direct Paper book
entry system account ("Direct Paper System
Account") only upon receipt of Proper
Instructions, which may be continuing
instructions when deemed appropriate by the
parties, and only in the following cases:
(1) Upon sale of such securities for the
account of the Fund and receipt of
payment therefor;
(2) Upon the receipt of payment in
connection with any repurchase
agreement related to such securities
entered into by the Fund;
(3) In the case of a sale effected
through a Securities System, in
accordance with the provisions of
Section 2.10 hereof;
(4) To the depository agent in connection
with tender or other similar offers
for portfolio securities of the Fund;
(5) To the issuer thereof or its agent
when such securities are called,
redeemed, retired or otherwise become
payable; provided that, in any such
case, the cash or other consideration
is to be delivered to the Custodian;
(6) To the issuer thereof, or its agent,
for transfer into the name of the
Fund or into the name of any nominee
or nominees of the Custodian or into
the name or nominee name of any agent
appointed pursuant to Section 2.9 or
into the name or nominee name of any
sub-custodian appointed pursuant to
Article 1; or for exchange for a
different number of bonds,
certificates or other evidence
representing the same aggregate face
amount or number of units; provided
that, in any such case, the new
securities are to be delivered to the
Custodian;
(7) Upon the sale of such securities for
the account of the Fund, to the
broker or its clearing agent, against
a receipt, for examination in
accordance with "street delivery"
custom; provided that in any such
case, the Custodian shall have no
responsibility or liability for any
loss arising from the delivery of
such securities prior to receiving
payment for such securities except as
may arise from the Custodian's own
negligence or willful misconduct;
(8) For exchange or conversion pursuant
to any plan of merger, consolidation,
recapitalization, reorganization or
readjustment of the securities of the
issuer of such securities, or
pursuant to provisions for conversion
contained in such securities, or
pursuant to any deposit agreement;
provided that, in any such case, the
new securities and cash, if any, are
to be delivered to the Custodian;
(9) In the case of warrants, rights or
similar securities, the surrender
thereof in the exercise of such
warrants, rights or similar
securities or the surrender of
interim receipts or temporary
securities for definitive securities;
provided that, in any such case, the
new securities and cash, if any, are
to be delivered to the Custodian;
(10) For delivery in connection with any
loans of securities made by the Fund,
but only against receipt of adequate
collateral as agreed upon from time
to time by the Custodian and the
Fund, which may be in the form of
cash or obligations issued by the
United States government, its
agencies or instrumentalities, except
that in connection with any loans for
which collateral is to be credited to
the Custodian's account in the book-
entry system authorized by the U.S.
Department of the Treasury, the
Custodian will not be held liable or
responsible for the delivery of
securities owned by the Fund prior to
the receipt of such collateral;
(11) For delivery as security in
connection with any borrowings by the
Fund requiring a pledge of assets by
the Fund, but only against receipt of
amounts borrowed;
(12) For delivery in accordance with the
provisions of any agreement among the
Fund, the Custodian and a broker-
dealer registered under the
Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The
National Association of Securities
Dealers, Inc. ("NASD"), relating to
compliance with the rules of The
Options Clearing Corporation and of
any registered national securities
exchange, or of any similar
organization or organizations,
regarding escrow or other
arrangements in connection with
transactions by the Fund;
(13) For delivery in accordance with the
provisions of any agreement among the
Fund, the Custodian, and a Futures
Commission Merchant registered under
the Commodity Exchange Act, relating
to compliance with the rules of the
Commodity Futures Trading Commission
and/or any Contract Market, or any
similar organization or
organizations, regarding account
deposits in connection with
transactions by the Fund; and
(14) For any other proper corporate
purpose, but only upon receipt of, in
addition to Proper Instructions, a
certified copy of a resolution of the
Board of Directors or of the
Executive Committee signed by an
officer of the Fund and certified by
the Secretary or an Assistant
Secretary, specifying the securities
to be delivered, setting forth the
purpose for which such delivery is to
be made, declaring such purpose to be
a proper corporate purpose, and
naming the person or persons to whom
delivery of such securities shall be
made.
2.3 Registration of Securities. Securities held
by the Custodian (other than bearer
securities) shall be registered in the name
of the Fund or in the name of any nominee of
the Fund or of any nominee of the Custodian
which nominee shall be assigned exclusively
to the Fund, unless the Fund has authorized
in writing the appointment of a nominee to
be used in common with other registered
investment companies having the same
investment adviser as the Fund, or in the
name or nominee name of any agent appointed
pursuant to Section 2.9 or in the name or
nominee name of any sub-custodian appointed
pursuant to Article 1. All securities
accepted by the Custodian on behalf of the
Fund under the terms of this Contract shall
be in "street name" or other good delivery
form. If, however, the Fund directs the
Custodian to maintain securities in "street
name", the Custodian shall utilize its best
efforts only to timely collect income due
the Fund on such securities and to notify
the Fund on a best efforts basis only of
relevant corporate actions including,
without limitation, pendency of calls,
maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and
maintain a separate bank account or accounts
in the name of the Fund, subject only to
draft or order by the Custodian acting
pursuant to the terms of this Contract, and
shall hold in such account or accounts,
subject to the provisions hereof, all cash
received by it from or for the account of
the Fund, other than cash maintained by the
Fund in a bank account established and used
in accordance with Rule 17f-3 under the
Investment Company Act of 1940 ("Investment
Company Act"). Funds held by the Custodian
for the Fund may be deposited by it to its
credit as Custodian in the Banking
Department of the Custodian or in such other
banks or trust companies as it may in its
discretion deem necessary or desirable;
provided, however, that every such bank or
trust company shall be qualified to act as a
custodian under the Investment Company Act
and that each such bank or trust company and
the funds to be deposited with each such
bank or trust company shall be approved by
vote of a majority of the Board of Directors
of the Fund. Such funds shall be deposited
by the Custodian in its capacity as
Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual
agreement between the Fund and the
Custodian, the Custodian shall, upon the
receipt of Proper Instructions, make federal
funds available to the Fund as of specified
times agreed upon from time to time by the
Fund and the Custodian in the amount of
checks received in payment for Shares of the
Fund which are deposited into the Fund's
account.
2.6 Collection of Income. Subject to the
provisions of Section 2.3, the Custodian
shall collect on a timely basis all income
and other payments with respect to
registered securities held hereunder to
which the Fund shall be entitled either by
law or pursuant to custom in the securities
business, and shall collect on a timely
basis all income and other payments with
respect to bearer securities if, on the date
of payment by the issuer, such securities
are held by the Custodian or its agent
thereof and shall credit such income, as
collected, to the Fund's custodian account.
Without limiting the generality of the
foregoing, the Custodian shall detach and
present for payment all coupons and other
income items requiring presentation as and
when they become due and shall collect
interest when due on securities held
hereunder. Income due the Fund on
securities loaned pursuant to the provisions
of Section 2.2(10) shall be the
responsibility of the Fund. The Custodian
will have no duty or responsibility in
connection therewith, other than to provide
the Fund with such information or data as
may be necessary to assist the Fund in
arranging for the timely delivery to the
Custodian of the income to which the Fund is
properly entitled.
2.7 Payment of Fund Monies. Upon receipt of
Proper Instructions, which may be continuing
instructions when deemed appropriate by the
parties, the Custodian shall pay out monies
of the Fund in the following cases only:
(1) Upon the purchase of securities,
options, futures contracts or options
on futures contracts for the account
of the Fund but only (a) against the
delivery of such securities or
evidence of title to such options,
futures contracts or options on
futures contracts to the Custodian
(or any bank, banking firm or trust
company doing business in the United
States or abroad which is qualified
under the Investment Company Act, as
amended, to act as a custodian and
has been designated by the Custodian
as its agent for this purpose)
registered in the name of the Fund or
in the name of a nominee of the
Custodian referred to in Section 2.3
hereof or in proper form for
transfer; (b) in the case of a
purchase effected through a
Securities System, in accordance with
the conditions set forth in Section
2.10 hereof; (c) in the case of a
purchase involving the Direct Paper
System, in accordance with the
conditions set forth in Section
2.10A; (d) in the case of repurchase
agreements entered into between the
Fund and the Custodian, or another
bank, or a broker-dealer which is a
member of NASD, (i) against delivery
of the securities either in
certificate form or through an entry
crediting the Custodian's account at
the Federal Reserve Bank with such
securities or (ii) against delivery
of the receipt evidencing purchase by
the Fund of securities owned by the
Custodian along with written evidence
of the agreement by the Custodian to
repurchase such securities from the
Fund; or (e) for transfer to a time
deposit account of the Fund in any
bank, whether domestic or foreign;
such transfer may be effected prior
to receipt of a confirmation from a
broker and/or the applicable bank
pursuant to Proper Instructions from
the Fund as defined in Section 2.15;
(2) In connection with conversion,
exchange or surrender of securities
owned by the Fund as set forth in
Section 2.2 hereof;
(3) For the payment of any expense or
liability incurred by the Fund,
including but not limited to the
following payments for the account of
the Fund: interest, taxes,
management, accounting, transfer
agent and legal fees, and operating
expenses of the Fund whether or not
such expenses are to be in whole or
part capitalized or treated as
deferred expenses;
(4) For the payment of any dividends
declared pursuant to the governing
documents of the Fund;
(5) For payment of the amount of
dividends received in respect of
securities sold short; or
(6) For any other proper purpose, but
only upon receipt of, in addition to
Proper Instructions, a certified copy
of a resolution of the Board of
Directors or of the Executive
Committee of the Fund signed by an
officer of the Fund and certified by
the Secretary or an Assistant
Secretary, specifying the amount of
such payment, setting forth the
purpose for which such payment is to
be made, declaring such purpose to be
a proper purpose, and naming the
person or persons to whom such
payment is to be made.
2.8 Liability for Payment in Advance of Receipt
of Securities Purchased. Except as
specifically stated otherwise in this
Contract, in any and every case where
payment for purchase of securities for the
account of the Fund is made by the Custodian
in advance of receipt of the securities
purchased in the absence of specific written
instructions from the Fund to so pay in
advance, the Custodian shall be absolutely
liable to the Fund for such securities to
the same extent as if the securities had
been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at
any time or times in its discretion appoint
(and may at any time remove) any other bank
or trust company which is itself qualified
under the Investment Company Act, as
amended, to act as a custodian, as its agent
to carry out such of the provisions of this
Article 2 as the Custodian may from time to
time direct; provided, however, that the
appointment of any agent shall not relieve
the Custodian of its responsibilities or
liabilities hereunder.
2.10 Deposit of Fund Assets in Securities
Systems. The Custodian may deposit and/or
maintain securities owned by the Fund in a
clearing agency registered with the
Securities and Exchange Commission under
Section 17A of the Exchange Act, which acts
as a securities depository, or in the book-
entry system authorized by the U.S.
Department of the Treasury and certain
federal agencies, collectively referred to
herein as "Securities System" in accordance
with applicable Federal Reserve Board and
Securities and Exchange Commission rules and
regulations, if any, and subject to the
following provisions:
(1) The Custodian may keep securities of
the Fund in a Securities System
provided that such securities are
represented in an account ("Account")
of the Custodian in the Securities
System which shall not include any
assets of the Custodian other than
assets held as a fiduciary, custodian
or otherwise for customers;
(2) The records of the Custodian with
respect to securities of the Fund
which are maintained in a Securities
System shall identify by book-entry
those securities belonging to the
Fund;
(3) The Custodian shall pay for
securities purchased for the account
of the Fund upon (i) receipt of
advice from the Securities System
that such securities have been
transferred to the Account, and (ii)
the making of an entry on the records
of the Custodian to reflect such
payment and transfer for the account
of the Fund. The Custodian shall
transfer securities sold for the
account of the Fund upon (i) receipt
of advice from the Securities System
that payment for such securities has
been transferred to the Account, and
(ii) the making of an entry on the
records of the Custodian to reflect
such transfer and payment for the
account of the Fund. Copies of all
advices from the Securities System of
transfers of securities for the
account of the Fund shall identify
the Fund, be maintained for the Fund
by the Custodian and be provided to
the Fund at its request. Upon
request, the Custodian shall furnish
the Fund confirmation of each
transfer to or from the account of
the Fund in the form of a written
advice or notice and shall furnish to
the Fund copies of daily transaction
sheets reflecting each day's
transactions in the Securities System
for the account of the Fund;
(4) The Custodian shall provide the Fund
with any report obtained by the
Custodian on the Securities System's
accounting system, internal
accounting control and procedures for
safeguarding securities deposited in
the Securities System;
(5) The Custodian shall have received the
initial or annual certificate, as the
case may be, required by Article 9
hereof; and
(6) Anything to the contrary in this
Contract notwithstanding, the
Custodian shall be liable to the Fund
for any loss or damage to the Fund
resulting from use of the Securities
System by reason of any negligence,
misfeasance or misconduct of the
Custodian or any of its agents or of
any of its or their employees or from
failure of the Custodian or any such
agent to enforce effectively such
rights as it may have against the
Securities System; at the election of
the Fund, it shall be entitled to be
subrogated to the rights of the
Custodian with respect to any claim
against the Securities System or any
other person which the Custodian may
have as a consequence of any such
loss or damage if and to the extent
that the Fund has not been made whole
for any such loss or damage.
2.10A Fund Assets Held in the Custodian's Direct
Paper System. The Custodian may deposit
and/or maintain securities owned by the Fund
in the Direct Paper System of the Custodian
subject to the following provisions:
(1) No transaction relating to securities
in the Direct Paper System will be
effected in the absence of Proper
Instructions;
(2) The Custodian may keep securities of
the Fund in the Direct Paper System
only if such securities are
represented in an account ("Account")
of the Custodian in the Direct Paper
System which shall not include any
assets of the Custodian other than
assets held as a fiduciary, custodian
or otherwise for customers;
(3) The records of the Custodian with
respect to securities of the Fund
which are maintained in the Direct
Paper System shall identify by book-
entry those securities belonging to
the Fund;
(4) The Custodian shall pay for
securities purchased for the account
of the Fund upon the making of an
entry on the records of the Custodian
to reflect such payment and transfer
of securities to the account of the
Fund. The Custodian shall transfer
securities sold for the account of
the Fund upon the making of an entry
on the records of the Custodian to
reflect such transfer and receipt of
payment for the account of the Fund;
(5) The Custodian shall furnish the Fund
confirmation of each transfer to or
from the account of the Fund, in the
form of a written advice or notice,
of Direct Paper on the next business
day following such transfer and shall
furnish to the Fund copies of daily
transaction sheets reflecting each
day's transaction in the Securities
System for the account of the Fund;
and
(6) The Custodian shall provide the Fund
with any report on its system of
internal accounting control as the
Fund may reasonably request from time
to time.
2.11 Segregated Account. The Custodian shall
upon receipt of Proper Instructions
establish and maintain a segregated account
or accounts for and on behalf of the Fund,
into which account or accounts may be
transferred cash and/or securities,
including securities maintained in an
account by the Custodian pursuant to Section
2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund,
the Custodian and a broker-dealer registered
under the Exchange Act and a member of the
NASD (or any Futures Commission Merchant
registered under the Commodity Exchange
Act), relating to compliance with the rules
of The Options Clearing Corporation and of
any registered national securities exchange
(or the Commodity Futures Trading Commission
or any registered Contract Market), or of
any similar organization or organizations,
regarding escrow or other arrangements in
connection with transactions by the Fund,
(ii) for purposes of segregating cash or
government securities in connection with
options purchased, sold or written by the
Fund or commodity futures contracts or
options thereon purchased or sold by the
Fund, (iii) for the purposes of compliance
by the Fund with the procedures required by
Investment Company Act Release No. 10666, or
any subsequent release or releases of the
Securities and Exchange Commission relating
to the maintenance of segregated accounts by
registered investment companies and (iv) for
other proper corporate purposes, but only,
in the case of clause (iv), upon receipt of,
in addition to Proper Instructions, a
certified copy of a resolution of the Board
of Directors or of the Executive Committee
signed by an officer of the Fund and
certified by the Secretary or an Assistant
Secretary, setting forth the purpose or
purposes of such segregated account and
declaring such purposes to be proper
corporate purposes.
2.12 Ownership Certificates for Tax Purposes.
The Custodian shall execute ownership and
other certificates and affidavits for all
federal and state tax purposes in connection
with receipt of income or other payments
with respect to securities of the Fund held
by it and in connection with transfers of
securities.
2.13 Proxies. The Custodian shall, with respect
to the securities held hereunder, cause to
be promptly executed by the registered
holder of such securities, if the securities
are registered otherwise than in the name of
the Fund or a nominee of the Fund, all
proxies, without indication of the manner in
which such proxies are to be voted, and
shall promptly deliver to the Fund such
proxies, all proxy soliciting materials and
all notices relating to such securities.
2.14 Communications Relating to Fund Portfolio
Securities. Subject to the provisions of
Section 2.3, the Custodian shall transmit
promptly to the Fund all written information
(including, without limitation, pendency of
calls and maturities of securities and
expirations of rights in connection
therewith and notices of exercise of call
and put options written by the Fund and the
maturity of futures contracts purchased or
sold by the Fund) received by the Custodian
from issuers of the securities being held
for the Fund. With respect to tender or
exchange offers, the Custodian shall
transmit promptly to the Fund all written
information received by the Custodian from
issuers of the securities whose tender or
exchange is sought and from the party (or
his agents) making the tender or exchange
offer. If the Fund desires to take action
with respect to any tender offer, exchange
offer or any other similar transaction, the
Fund shall notify the Custodian at least
three business days prior to the date on
which the Custodian is to take such action.
2.15 Proper Instructions. Proper Instructions as
used throughout this Article 2 means a
writing signed or initialled by one or more
person or persons as the Board of Directors
shall have from time to time authorized.
Each such writing shall set forth the
specific transaction or type of transaction
involved, including a specific statement of
the purpose for which such action is
requested. Oral instructions will be
considered Proper Instructions if the
Custodian reasonably believes them to have
been given by a person authorized to give
such instructions with respect to the
transaction involved. The Fund shall cause
all oral instructions to be confirmed in
writing. Upon receipt of a certificate of
the Secretary or an Assistant Secretary as
to the authorization by the Board of
Directors of the Fund accompanied by a
detailed description of procedures approved
by the Board of Directors, Proper
Instructions may include communications
effected directly between electro-mechanical
or electronic devices provided that the
Board of Directors and the Custodian are
satisfied that such procedures afford
adequate safeguards for the Fund's assets.
For purposes of this Section, Proper
Instructions shall include instructions
received by the Custodian pursuant to any
three-party agreement which requires a
segregated asset account in accordance with
Section 2.11.
2.16 Actions Permitted without Express Authority.
The Custodian may in its discretion, without
express authority from the Fund:
(1) make payments to itself or others for
minor expenses of handling securities
or other similar items relating to
its duties under this Contract,
provided that all such payments shall
be accounted for to the Fund;
(2) surrender securities in temporary
form for securities in definitive
form;
(3) endorse for collection, in the name
of the Fund, checks, drafts and other
negotiable instruments; and
(4) in general, attend to all non-
discretionary details in connection
with the sale, exchange,
substitution, purchase, transfer and
other dealings with the securities
and property of the Fund except as
otherwise directed by the Board of
Directors of the Fund.
2.17 Evidence of Authority. The Custodian shall
be protected in acting upon any
instructions, notice, request, consent,
certificate or other instrument or paper
believed by it to be genuine and to have
been properly executed by or on behalf of
the Fund. The Custodian may receive and
accept a certified copy of a vote of the
Board of Directors of the Fund as conclusive
evidence (a) of the authority of any person
to act in accordance with such vote or (b)
of any determination or of any action by the
Board of Directors pursuant to the Articles
of Incorporation as described in such vote,
and such vote may be considered as in full
force and effect until receipt by the
Custodian of written notice to the contrary.
3. Duties of Custodian with Respect to the Books of
Account and Calculation of Net Asset Value and Net
Income
The Custodian shall cooperate with and
supply necessary information to the entity or entities
appointed by the Board of Directors of the Fund to keep
the books of account of the Fund and/or compute the net
asset value per share of the outstanding shares of the
Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute
such net asset value per share. If so directed, the
Custodian shall also calculate weekly the net income of
the Fund as described in the Fund's currently effective
private placement memorandum and shall advise the Fund
and the Transfer Agent weekly of the total amounts of
such net income and, if instructed in writing by an
officer of the Fund to do so, shall advise the Transfer
Agent periodically of the division of such net income
among its various components. The calculations of the
net asset value per share and the weekly income of the
Fund shall be made at the time or times described from
time to time in the Fund's currently effective private
placement memorandum.
4. Records
The Custodian shall create and maintain all
records relating to its activities and obligations under
this Contract in such manner as will meet the obligations
of the Fund under the Investment Company Act, with
particular attention to Section 31 thereof and Rules 31a-
1 and 31a-2 thereunder. All such records shall be the
property of the Fund and shall at all times during the
regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the
Securities and Exchange Commission. The Custodian shall,
at the Fund's request, supply the Fund with a tabulation
of securities owned by the Fund and held by the Custodian
and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in
such tabulations.
5. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable
action, as the Fund may from time to time request, to
furnish such information with respect to its activities
hereunder as the Fund's independent accountant may
request in connection with the accountant's verification
of the Fund's securities and similar investments as
required by Rule 17f-2 under the Investment Company Act,
to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its
activities hereunder in connection with the preparation
of the Fund's periodic financial reports required to be
filed with the Securities and Exchange Commission, or
other filings, and with respect to any other requirements
of such Commission.
6. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at
such times as the Fund may reasonably require, with
reports by independent public accountants on the
accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts
and options on futures contracts, including securities
deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian under
this Contract; such reports shall be of sufficient scope
and in sufficient detail as may reasonably be required by
the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the
reports shall so state.
7. Compensation of Custodian
The Custodian shall be entitled to
reasonable compensation for its services and expenses as
Custodian in an amount as detailed in Schedule A,
attached hereto, which may be amended from time to time
with the written consent of the parties hereto. The
Custodian may charge such compensation and any expenses
incurred by the Custodian in the performance of its
duties pursuant to such agreement against any money held
on behalf of the Fund.
8. Responsibility of Custodian
So long as and to the extent that it is in
the exercise of reasonable care, the Custodian shall not
be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it
or delivered by it pursuant to this Contract and shall be
held harmless in acting upon any notice, request,
consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the
proper party or parties, including any Futures Commission
Merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be
held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept
indemnified by and shall be without liability to the Fund
for any action taken or omitted by it in good faith
without negligence. It shall be entitled to rely on and
may act upon advice of counsel (who may be counsel for
the Fund) on all matters, and shall be without liability
for any action reasonably taken or omitted pursuant to
such advice.
If the Fund requires the Custodian to take
any action with respect to securities, which action
involves the payment of money or which action may, in the
opinion of the Custodian, result in the Custodian or its
nominee assigned to the Fund being liable for the payment
of money or incurring liability of some other form, the
Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the
Custodian in an amount and form satisfactory to it.
If the Fund requires the Custodian, its
affiliates, subsidiaries or agents, to advance cash or
securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and
assumed settlements) or in the event that the Custodian
or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Fund
shall be security therefor and should the Fund fail to
repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of the
Fund assets to the extent necessary to obtain
reimbursement. The Fund will use reasonable efforts to
avoid cash overdrafts in its account and will provide
offsetting balances with respect to any cash overdrafts
that may occur from time to time.
9. Effective Period, Termination and Amendment
This Contract shall become effective as of
its execution, shall continue in full force and effect
until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and
may be terminated by either party by an instrument in
writing delivered or mailed, postage prepaid to the other
party, such termination to take effect not sooner than
thirty (30) days after the date of such delivery or
mailing; provided, however that the Custodian shall not
act under Section 2.10 hereof in the absence of receipt
of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Directors of the
Fund has approved the initial use of a particular
Securities System and the receipt of an annual
certificate of the Secretary or an Assistant Secretary
that the Board of Directors has reviewed the use by the
Fund of such Securities System, as required in each case
by Rule 17f-4 under the Investment Company Act, as
amended, and that the Custodian shall not act under
Section 2.10A hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant
Secretary that the Board of Directors has approved the
initial use of the Direct Paper System and the receipt of
an annual certificate of the Secretary or an Assistant
Secretary that the Board of Directors has reviewed the
use by the Fund of the Direct Paper System; provided
further, however, that the Fund shall not amend or
terminate this Contract in contravention of any
applicable federal or state regulations, or any provision
of the Articles of Incorporation and further provided,
that the Fund may at any time by action of its Board of
Directors (i) substitute another bank or trust company
for the Custodian by giving notice as described above to
the Custodian, or (ii) immediately terminate this
Contract in the event of the appointment of a conservator
or receiver for the Custodian by the Comptroller of the
Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of
competent jurisdiction.
Upon termination of the Contract, the Fund
shall pay to the Custodian such compensation as may be
due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and
disbursements.
10. Successor Custodian
If a successor custodian shall be appointed
by the Board of Directors of the Fund, the Custodian
shall, upon termination, deliver to such successor
custodian at the office of such successor custodian, duly
endorsed and in the form for transfer, all securities
then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's
securities held in a Securities System.
If no such successor custodian shall be
appointed, the Custodian shall, in like manner, upon
receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the
Custodian and transfer such securities, funds and other
properties in accordance with such vote.
In the event that no written order
designating a successor custodian or certified copy of a
vote of the Board of Directors shall have been delivered
to the Custodian on or before the date when such
termination shall become effective, then the Custodian
shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment
Company Act, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its
last published report, of not less than $25,000,000, all
securities, funds and other properties held by the
Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under
this Contract and to transfer to an account of such
successor custodian all of the Fund's securities held in
any Securities System. Thereafter, such bank or trust
company shall be the successor of the Custodian under
this Contract.
In the event that securities, funds and
other properties remain in the possession of the
Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the
vote referred to or of the Board of Directors to appoint
a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as
the Custodian retains possession of such securities,
funds and other properties and the provisions of this
Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
11. Interpretive and Additional Provisions
In connection with the operation of this
Contract, the Custodian and the Fund may from time to
time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in
their joint opinion be consistent with the general tenor
of this Contract. Any such interpretive or additional
provisions shall be in a writing signed by both parties
and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene
any applicable federal or state regulations or any
provision of the Articles of Incorporation of the Fund.
No interpretive or additional provisions made as provided
in the preceding sentence shall be deemed to be an
amendment of this Contract.
12. New York Law to Apply
This Contract shall be governed by and
construed in accordance with laws of the State of New
York without reference to choice of law principles
thereof and in accordance with the Investment Company
Act. In the case of any conflict the Investment Company
Act shall control.
13. Prior Contract
This Contract supersedes and terminates, as
of the date hereof, all prior contracts between the Fund
and the Custodian relating to the custody of the Fund's
assets.
14. Counterparts
This Agreement may be executed by the
parties hereto in counterparts, and if executed in more
than one counterpart, the separate instruments shall
constitute one agreement.
15. Shareholder Communications
Securities and Exchange Commission Rule 14b-2
requires banks which hold securities for the account of
customers to respond to requests by issuers of securities
for the names, addresses and holdings of beneficial
owners of securities of that issuer held by the bank
unless the beneficial owner has expressly objected to
disclosure of this information. The Fund hereby
instructs the Custodian to not disclose any such
information to issuers who so request.
IN WITNESS WHEREOF, each of the parties has
caused this instrument to be executed in its name and
behalf by its duly authorized representative as of the
4th day of March, 1996.
HURON INVESTMENT FUND, INC.
By: /s/ Robert H. Bockrath II
Name: Robert H. Bockrath II
Title: Secretary
COMERICA BANK
By: /s/ James A. McIntosh
Name: James A. McIntosh
Title: First Vice President
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be
Held by It . . . . . . . . . . . . . . . . . . . . . . 1
2. Duties of the Custodian with Respect to
Property of the Fund Held By the Custodian . . . . . . 2
2.1 Holding Securities . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . 3
2.3 Registration of Securities. . . . . . . . . . 9
2.4 Bank Accounts . . . . . . . . . . . . . . . 10
2.5 Availability of Federal Funds. . . . . . . . . 11
2.6 Collection of Income . . . . . . . . . . . . . 12
2.7 Payment of Fund Monies . . . . . . . . . . . . 13
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased. . . . . . . . . . . . . 16
2.9 Appointment of Agents . . . . . . . . . . . . 17
2.10 Deposit of Fund Assets in Securities Systems . 18
2.10A Fund Assets Held in the Custodian's Direct
Paper System . . . . . . . . . . . . . . . . . 22
2.11 Segregated Account . . . . . . . . . . . . . . 24
2.12 Ownership Certificates for Tax Purposes . . . 26
2.13 Proxies . . . . . . . . . . . . . . . . . . . 26
2.14 Communications Relating to Fund Portfolio
Securities . . . . . . . . . . . . . . . . . . 26
2.15 Proper Instructions . . . . . . . . . . . . . 27
2.16 Actions Permitted without Express Authority . 29
2.17 Evidence of Authority . . . . . . . . . . . . 30
3. Duties of Custodian with Respect to the Books of Account
and Calculation of Net Asset Value and Net Income . . 31
4. Records . . . . . . . . . . . . . . . . . . . . . . . 32
5. Opinion of Fund's Independent Accountant . . . . . . . 32
6. Reports to Fund by Independent Public Accountants . . 33
7. Compensation of Custodian . . . . . . . . . . . . . . 34
8. Responsibility of Custodian . . . . . . . . . . . . . 34
9. Effective Period, Termination and Amendment . . . . . 36
10. Successor Custodian . . . . . . . . . . . . . . . . . 38
11. Interpretive and Additional Provisions . . . . . . . . 40
12. New York Law to Apply . . . . . . . . . . . . . . . . 40
13. Prior Contract . . . . . . . . . . . . . . . . . . . . 41
14. Counterparts . . . . . . . . . . . . . . . . . . . . . 41
15. Shareholder Communications . . . . . . . . . . . . . . 41
Schedule A . . . . . . . . . . . . . . . . . . . . . . . . A-1
Schedule A
The Fund will pay (A) the direct expenses of the
Custodian and (B) quarterly in arrears the annual aggregate
amount of (i) $22,000 ($5,500 per quarter); plus (ii) .01% of
the Fund's market value of assets at the end of each quarter
for the first $500 million of assets and .005% for Fund assets
in excess of $500 million; less (iii) any direct expenses paid
pursuant to (A) above. For any periods less than a quarter,
such fees shall be prorated according to the proportion that
such period bears to a full quarter.
HURON INVESTMENT FUND, INC.
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, made as of the 4th
day of March, 1996 between Huron Investment Fund, Inc., a
Maryland corporation (the "Company"), and Comerica Bank,
a Michigan corporation (the "Administrator").
WITNESSETH:
WHEREAS, the Company desires to retain the
Administrator as its agent for certain administrative
services, and the Administrator is willing to furnish
such administrative services on the terms and conditions
hereinafter set forth,
NOW, THEREFORE, the parties agree as follows:
I. The Company hereby appoints the
Administrator as its agent to provide the services set
forth below, subject to the overall supervision and
approval of the Board of Directors of the Company for the
period and on the terms set forth in this Agreement. The
Administrator hereby accepts such appointment and agrees
during such period to render the services herein
described and to assume the obligations herein set forth,
for the compensation herein provided.
II. Subject to the supervision, direction and
control of the Board of Directors and officers of the
Company, the Administrator shall provide facilities for
meetings of the Board of Directors and shareholders of
the Company and office facilities and personnel to assist
the officers of the Company in the performance of the
following services:
A. Oversee the determination, pursuant
to Schedule I hereto, and publication of, the Company's
net asset value in accordance with the Company's policy
as adopted from time to time by the Board of Directors;
B. Oversee the maintenance of certain
books and records of the Company as required under Rule
31a-1(b)(1)-(4) of the Investment Company Act;
C. Arrange for preparation by the
Company's independent accountants, for review, approval
and execution by officers of the Company, the Company's
federal, state and local income tax returns, reporting
forms, and any other required tax returns, as may be
determined by the Company and the Board of Directors;
D. Arrange for payment of the Company's
expenses;
E. Prepare for review and approval by
officers of the Company financial information for the
Company's reports required to be filed with the
Securities and Exchange Commission and its semi-annual
and annual reports, proxy statements and other
communications with shareholders required or otherwise to
be sent to Company shareholders, and arrange for the
printing and dissemination of such reports and
communications to shareholders;
F. Prepare for review by an officer of
the Company the Company's periodic financial reports
required to be filed with the Securities and Exchange
Commission (the "SEC") on such forms, or other filings,
as may be determined by the Company and the Board of
Directors;
G. Prepare reports relating to the
business and affairs of the Company as may be mutually
agreed upon and not otherwise appropriately prepared by
the Company or by the Company's custodian, counsel or
auditors;
H. Implement the accounting policies of
the Company established by the Company;
I. Provide such assistance to the
Company's custodian and the Company's counsel and
auditors as generally may be reasonably requested in
carrying on the business and operations of the Company;
J. Respond to, or refer to the Company's
officers or transfer agent, shareholder inquiries
relating to the Company;
K. Provide to Standard & Poor's Ratings
Services ("S&P") such copies of information (including
notices and certificates in connection with Required
Asset Coverage as detailed in Schedule II) in the
Administrator's possession as may reasonably be requested
by S&P to assist in the rating of the Company's preferred
shares; provided, however, that such providing of
information shall be limited to information in the form
maintained by the Administrator at the time of such
request;
L. Perform required asset coverage tests
and calculations for S&P as detailed in Schedule II; and
M. Perform the function of notes paying
agent for the Floating Rate Notes due 2021 issued by the
Company.
All services are to be furnished through the
medium of any directors, officers or employees of the
Administrator as the Administrator deems appropriate in
order to fulfill its obligations hereunder.
Each party shall bear all its own expenses
incurred in connection with this Agreement. Printing and
dissemination expenses, such as those for reports to
shareholders and proxy statements, shall be expenses of
the Company, as shall fees of the Company's independent
accountants but only in connection with (i) the
preparation of the tax returns and reporting forms
referred to in Section 2(c) hereof, (ii) the preparation
of any accountant's certificates required in connection
with calculations of the required asset coverage of any
outstanding preferred stock of the Company and (iii) the
annual audit of the Company's financial statements, it
being understood that the Administrator shall bear all
other accounting fees and expenses.
III. The Company will pay the Administrator a
fee, payable quarterly on the last day (each, a "Payment
Date") of each calendar quarter, in an amount equal to
that amount as detailed in Schedule III, attached hereto,
which may be amended from time to time with the written
consent of the parties hereto.
IV. The Administrator assumes no
responsibility under this Agreement other than to render
the services called for hereunder, and specifically
assumes no responsibilities for investment advice or the
investment or reinvestment of the Company's assets.
V. A. In the absence of bad faith or
negligence on its part, the Administrator shall not be
liable for any action taken, suffered or omitted or for
any error of judgment made by it in the performance of
its duties under this Agreement. In no event shall the
Administrator be liable to the Company or any third party
for special, indirect, or consequential damages, or lost
profits or loss of business arising under or in
connection with this Agreement, even if informed of the
possibility of such damages and regardless of the form of
action. The Administrator shall not be liable for any
error of judgment made in good faith unless the
Administrator shall have been negligent in ascertaining
or failing to ascertain the pertinent facts.
B. As used in this Paragraph 5, the term
"Administrator" shall include any affiliates of the
Administrator performing services for the Company
contemplated hereby, and directors, officers, agents and
employees of the Administrator and such affiliates.
C. The Administrator may, with respect
to questions of law, apply for and obtain the advice and
opinion of legal counsel satisfactory to the
Administrator, which may include counsel to the Company
(which shall be at the expense of the Company within a
reasonable budget established by the Company after
consultation with the Administrator) or counsel to the
Administrator (which shall be at the expense of the
Administrator), and with respect to the application of
generally accepted accounting principles, apply for and
obtain the advice and opinion of the Company's accounting
experts, which shall be at the expense of the Company if
in connection with the matters referred to in clauses
(i), (ii) or (iii) of the last paragraph of Section 2
hereof. The Administrator shall be fully protected with
respect to any action taken or omitted by it in good
faith in conformity with such advice or opinion.
D. The Company shall indemnify and hold
harmless the Administrator from and against any and all
costs, expenses, damages, liabilities and claims, and
reasonable attorneys' and accountants' fees relating
thereto, which are sustained or incurred or which may be
asserted against the Administrator, by reason of or as a
result of any action taken or omitted to be taken by the
Administrator in good faith hereunder or in reliance upon
(i) any law, act, regulation or interpretation of the
same even though the same may thereafter have been
altered, changed, amended or repealed after such action
was taken or omitted, (ii) any offering materials of the
Company, in connection with the sale of securities of the
Company, (iii) any instructions of an officer of the
Company, or (iv) any opinion of legal counsel for the
Company, or the Administrator (if a copy of such opinion
is provided to the Company before such action was taken
or omitted), or arising out of transactions or other
activities of the Company which occurred prior to the
commencement of this Agreement; provided, that the
Company shall not indemnify the Administrator for costs,
expenses, damages, liabilities or claims arising out of
the Administrator's own negligence, bad faith or willful
misconduct. This indemnity shall be a continuing
obligation of the Company, its successors and assigns,
notwithstanding the termination of this Agreement.
E. Actions taken or omitted in reliance
on oral or written instructions, or upon any information,
order, indenture, stock certificate, power of attorney,
assignment, affidavit or other instrument believed by the
Administrator to be genuine or bearing the signature of a
person or persons believed to be authorized to sign,
countersign or execute the same, or upon the opinion of
legal counsel for the Company or its own counsel, shall
be conclusively presumed to have been taken or omitted in
good faith.
VI. At any time the Administrator may apply to
an officer of the Company for written instructions with
respect to any matter arising in connection with the
Administrator's duties and obligations under this
Agreement, and the Administrator shall not be liable for
any action taken or omitted to be taken by the
Administrator in good faith in accordance with such
instructions. Such application by the Administrator for
instructions from an officer of the Company may, at the
option of the Administrator, set forth in writing any
action proposed to be taken or omitted to be taken by the
Administrator with respect to its duties or obligations
under this Agreement and the date on and/or after which
such action shall be taken, and the Administrator shall
not be liable for any action taken or omitted to be taken
in accordance with a proposal included in any such
application on or after the date specified therein
unless, prior to taking or omitting to take any such
action, the Administrator has received written
instructions in response to such application specifying
the action to be taken or omitted. The Administrator may
consult counsel to the Company at the expense of the
Company (within a reasonable budget established by the
Company after consultation with the Administrator), or
its own counsel at its own expense, and shall be fully
protected with respect to anything done or omitted by it
in good faith in accordance with the advice or opinion of
such counsel.
VII. This Agreement shall become effective
immediately and shall continue in effect unless
terminated as herein provided. This Agreement may be
terminated by either party hereto (without penalty) at
any time upon not less than 30 days' prior written notice
to the other party hereto.
VIII. The services of the Administrator to
the Company hereunder are not exclusive and nothing in
this Agreement shall limit or restrict the right of the
Administrator to engage in any other business or to
render services of any kind to any other corporation,
firm, individual or association. The Administrator shall
be deemed to be an independent contractor, unless
otherwise expressly provided or authorized by this
Agreement.
IX. During the term of this Agreement, the
Company agrees to furnish the Administrator at the
principal office of the Administrator prior to use
thereof drafts and final copies of all placement
memoranda, prospectuses, proxy statements, reports to
shareholders, sales literature, or other material
prepared for distribution to shareholders of the Company
or the public that refer in any way to the Administrator.
If the Administrator reasonably objects to such
references within five business days (or such other time
as may be mutually agreed) after receipt thereof, the
Company will modify such references in a manner
reasonably satisfactory to the Administrator. In the
event of termination of this Agreement, the Company will
continue to furnish to the Administrator copies of any of
the above-mentioned materials that refer in any way to
the Administrator. The Company shall timely furnish or
otherwise make available to the Administrator such other
information relating to the business affairs of the
Company, its directors, officers, and service providers,
as the Administrator at any time, or from time to time,
reasonably requests in order to discharge its obligations
hereunder.
X. This Agreement may be amended only by
mutual written consent.
XI. Any notice of other communication required
to be given in writing pursuant to this Agreement shall
be deemed duly given if delivered or mailed by registered
mail, postage prepaid, (l) to the Administrator at
Comerica Bank, 411 W. Lafayette Avenue, Detroit, Michigan
48226, Attention: Robert H. Bockrath II; (2) to the
Company at c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated, World Financial Center, New York, New York
10281-1323, Attention: Auction Desk.
XII. This Agreement sets forth the agreement
and understanding of the parties hereto solely with
respect to the matters covered hereby and the
relationship between the Company and Comerica Bank as
Administrator. Nothing in this Agreement shall govern,
restrict or limit in any respect any other business
dealings between the parties hereto unless otherwise
expressly provided herein.
XIII. This Agreement shall be governed by
and construed in accordance with the laws of the State of
New York without reference to choice of law principles
thereof and in accordance with the Investment Company Act
of 1940 (the "Investment Company Act"). In the case of
any conflict, the Investment Company Act shall control.
XIV. This Agreement may be executed by the
parties hereto in counterparts, and if executed in more
than one counterpart, the separate instruments shall
constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the day and year first
above written.
HURON INVESTMENT FUND, INC.
By /s/ Robert H. Bockrath II
Name: Robert H. Bockrath II
Title: Secretary
COMERICA BANK, as Administrator
By /s/ James A. McIntosh
Name: James A. McIntosh
Title: First Vice President
Schedule I
The net asset value of a share of the Common
Stock as at the time of a particular determination shall
be calculated by subtracting the Company's liabilities
(including accrued expenses and dividends payable) and
the liquidation value of any preferred stock outstanding
from the Company's total assets (the value of the
securities the Company holds plus cash or other assets,
including interest and dividends accrued but not yet
received) and dividing the result by the total number of
shares of Common Stock-outstanding. The value of the
securities the Company holds shall be based on the
closing prices quoted by Muller Data Corporation or any
other pricing service approved by Standard & Poor's
Corporation. Expenses are to be accrued as directed by
the Board of Directors of the Company.
Schedule II
Certificate of S&P Required Asset Coverage.
For each series of the Company's preferred
shares which is rated by S&P the Administrator shall
determine, as of each Business Day and each Cure Date,
the aggregate Adjusted Value of all S&P Eligible Assets
on that day and whether such aggregate Adjusted Value on
such date equals or exceeds the S&P Required Asset
Coverage on such date. The calculations of the Adjusted
Value of all S&P Eligible Assets and S&P Required Asset
Coverage, and whether the aggregate Adjusted Value of S&P
Eligible Assets equals or exceeds the S&P Required Asset
Coverage shall be set forth in a certificate
substantially in the form of Exhibit C attached hereto (a
"Certificate of S&P Required Asset Coverage"), dated as
of each such Business Day and Cure Date and signed by an
Authorized Custodian Officer. The Administrator shall
deliver (by facsimile or otherwise) a Certificate of S&P
Required Asset Coverage to the Company by 11:00 a.m. New
York time on the Business Day to which such certificate
relates. With respect to the Certificate of S&P Required
Asset Coverage relating to (1) each Business Day which is
the first Business Day in the months of January, April,
July and October of each year, and (2) another day during
each calendar quarter, which day shall be selected at
random by the independent accountants signing the
Accountant's Certificate referred to below, the
Administrator shall deliver to the Company, within three
Business Days of each such date, an Accountant's
Certificate (in substantially the form of Exhibit D
attached hereto) certifying as to (i) the mathematical
accuracy of the calculations reflected in the related
Certificate of S&P Required Asset Coverage, including the
calculation of the Adjusted Value of the S&P Eligible
Assets referred to therein and confirming that the S&P
Eligible Assets referred to therein conform to the
definition of S&P Eligible Assets set forth in the
Articles Supplementary, (ii) that the methodology used by
the Administrator in determining whether the Adjusted
Value of S&P Eligible Assets equals or exceeds the S&P
Required Asset Coverage is in accordance with the
applicable requirements of the Articles Supplementary,
and (iii) that the written or published price quotations
used in such determination conform to such written or
published quotations and that the S&P Eligible Assets
listed in such Certificate of S&P Required Asset Coverage
constitute S&P Eligible Assets as defined in the Articles
Supplementary.
Notices to S&P.
For each series of the Company's preferred
shares which is rated by S&P the Administrator shall:
(a) deliver to S&P, as soon as
practicable (but in no event later than the close of
business on the second Business Day next succeeding the
following dates) the Certificate of S&P Required Asset
Coverage with respect to each of the following dates:
(i) the Date of Original Issue, (ii) each date as of
which the Adjusted Value of all S&P Eligible Assets is
less than the S&P Required Asset Coverage, (iii) each
Cure Date, (iv) each date as of which the Adjusted Value
of all S&P Eligible Assets is less than or equal to 105%
of the S&P Required Asset Coverage, (v) each Business Day
which is the first Business Day in the months of January,
April, July and October, and (vi) the date on which any
Common Stock is redeemed by the Company.
(b) deliver to S&P, promptly after same
become available, the following: (i) a copy of each
Accountant's Certificate which differs from the
Administrator's calculations of S&P Required Asset
Coverage; (ii) a copy of each Accountant's Certificate
relating to the Certificates of S&P Required Asset
Coverage with respect to (1) the Date of Original Issue
for each Series of preferred shares; (2) each Cure Date;
(3)(A) each business day which is the first business day
in the months of January, April, July and October and (B)
another day during each calendar quarter, which day shall
be selected at random by the independent accountant's
signing the Accountant's Certificate; (iii) a copy of
each amendment to the Articles Supplementary; (iv) notice
of the failure to distribute the full Dividend Amount
payable on any Dividend Distribution Date; (v) notice of
the inability of the Pricing Service to price, or the
unavailability of price quotes with respect to, any issue
of common stock included in the S&P Eligible Assets; and
(vi) a copy of each written notice from the Broker-Dealer
changing any previously scheduled Dividend Distribution
Date.
Notices to Company and Broker-dealer.
The Administrator will direct the independent
auditors to distribute such certifications as follows: In
addition to providing the required asset coverage
certifications to S&P.
Company: Robert H. Bockrath II, Treasurer
c/o Comerica Bank
P.O. Box 75000
Detroit, MI 48275-3465
Telephone: (313) 222-3263
Fax: (313) 222-6301
Broker/dealer: Ben Katz, Vice President
c/o Merrill Lynch & Co.
250 Vesey Street
North Tower - 16th Floor
New York, NY 10281
Telephone: (212) 449-3932
Fax: (212) 449-8617
Carter Keegal, Managing Director
c/o Merrill Lynch & Co.
250 Vesey Street
North Tower - 7th Floor
New York, NY 10281
Telephone: (212) 449-4940
Fax (212) 449-2761
The Administrator will promptly notify the
Company and the Broker-dealer as enumerated above in case
of any failure to meet the required asset coverage.
Schedule III
The Company will pay the Administrator an
annual fee of $38,000 which shall be paid quarterly
($9,500 per quarter) in arrears on the last day of each
calendar quarter. For any periods less than a quarter,
such fee shall be prorated according to the proportion
that such period bears to a full quarter.
