<PAGE> PAGE 1
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001 B000000 811-5652
001 C000000 2129226765
002 A000000 144 GLENN CURTISS BOULEVARD
002 B000000 UNIONDALE
002 C000000 NY
002 D010000 11556
003 000000 N
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006 000000 N
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018 000000 Y
019 A000000 Y
019 B000000 162
019 C000000 DREYFUSFAM
022 A000001 SALOMON SMITH BARNEY INC.
022 B000001 13-1912900
022 C000001 58246
022 D000001 33584
022 A000002 J.P. MORGAN SECURITIES, INC.
022 B000002 13-3224016
022 C000002 43400
022 D000002 40200
022 A000003 LEHMAN BROTHERS INC.
022 B000003 13-2518466
022 C000003 28879
022 D000003 22638
022 A000004 PAINEWEBBER INCORPORATED
022 B000004 13-2638166
022 C000004 23584
022 D000004 19800
022 A000005 MORGAN STANLEY DEAN WITTER & CO.
022 B000005 13-2655998
022 C000005 20296
022 D000005 10018
022 A000006 GOLDMAN, SACHS & CO.
022 B000006 13-5108880
022 C000006 29079
022 D000006 400
022 A000007 BEAR, STEARNS & CO. INC.
<PAGE> PAGE 2
022 B000007 13-3299429
022 C000007 25486
022 D000007 2500
022 A000008 FIRST ALBANY CORPORATION
022 B000008 14-1391446
022 C000008 15257
022 D000008 2124
022 A000009 PIPER JAFFRAY INC.
022 B000009 41-0953246
022 C000009 12220
022 D000009 3785
022 A000010 PRUDENTIAL SECURITIES INCORPORATED
022 B000010 22-2347336
022 C000010 12000
022 D000010 1500
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023 D000000 143520
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<PAGE> PAGE 3
080 A000000 VIGILANT INSURANCE COMPANY
080 B000000 NATIONAL UNION FIRE INSURANCE
080 C000000 125
081 A000000 Y
081 B000000 180
082 A000000 N
082 B000000 0
083 A000000 N
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084 A000000 N
084 B000000 0
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086 C020000 100000
086 D010000 0
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086 E010000 0
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086 F010000 0
086 F020000 0
087 A010000 SERIES A AUCTION PREFERRED STOCK
087 A020000 26201R20-1
087 B010000 SERIES B AUCTION PREFERRED STOCK
087 B020000 26201R30-0
088 A000000 N
088 B000000 N
088 C000000 N
088 D000000 N
SIGNATURE STEPHANIE D. PIERCE
TITLE ASSISTANT TREASURER
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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EXHIBIT 77I
on September 10, 1999, the fund's Board of Directors reclassified 4,000
shares of
unissued capital stock as Auction Preferred Stock ("APS"). The fund issued
2,000 shares of Series A and 2,000 shares of Series B APS, with a
liquidation
preference of $25,000 per share (plus an amount equal to accumulated but
unpaid dividends upon liquidation). The initial dividend rate on the APS
was 3.40% per annum, payable on October 13 for series A and October 15 for
series B. Subsequent dividend rates will be determined at auction every 28
days.
Banker's Trust Company, as Auction Agent, receives a fee from the fund for
its
services in connection with such auctions. The fund also compensates broker-
dealers generally at an annual at rate of .25% of the purchase price of the
shares
of APS placed by the broker-dealer in an auction.
The fund is subject to certain restrictions relating to the APS.
Failure
to comply with these restrictions could preclude the fund from declaring any
distributions to common shareholders or repurchasing common shares and/or
could
trigger the mandatory redemption of APS at liquidation value.
The holders of the APS, voting as a separate class, have the right to
elect
at least two directors. The holders of the APS will vote as a separate
class on
certain other matters, as required by law. The fund has designated Martin
D. Fife
and Whitney I. Gerard to represent holders of APS on the fund's Board of
Directors.
For Additional Information on the fund's APS, please refer to the
Prospectus
filed via EDGAR on Form N-2 on September 16, 1999.
Articles Supplementary and Amended by-laws filed in connection with the
fund's
APS are part of Exhibit 77Q1.
EXHIBIT 77Q1
DREYFUS MUNICIPAL INCOME, INC.
ARTICLES SUPPLEMENTARY CREATING TWO SERIES OF
AUCTION PREFERRED STOCK
Dreyfus Municipal Income, Inc., a Maryland corporation having its
principal
Maryland office in the City of Baltimore in the State of Maryland (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 FIFTH of its Articles of Incorporation, the Board
of
Directors has classified from the Corporation's capital stock and authorized
the
issuance of two series of _____ shares each of authorized preferred stock,
par
value $.001 per share, liquidation preference $25,000 per share, designated
respectively: Auction Preferred Stock, Series A and Auction Preferred Stock,
Series B.
SECOND: Pursuant to Section 2-411 of the Maryland General Corporation
Law
and authority granted by Article II of the Corporation's By-laws, the Board
of
Directors of the Corporation has appointed a pricing committee (the "Pricing
Committee") and has authorized such Pricing Committee to fix, consistent
with,
and subject to, the authorization referred to in Article FIRST of these
Articles
Supplementary, the terms of the shares of Auction Preferred Stock, Series A
and
Auction Preferred Stock, Series B.
THIRD: The preferences, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption, of the
shares
of such series of preferred stock are as follows:
DESIGNATION
Series A: A series of _____ shares of preferred stock, par value $.001
per
share, liquidation preference $25,000 per share, hereby is designated
"Auction
Preferred Stock Series A." Each share of Auction Preferred Stock, Series A
shall
be issued on the Date of Original Issue (as herein defined); and have such
other
preferences, limitations and relative voting rights, in addition to those
required by applicable law or set forth in the Corporation's Articles of
Incorporation applicable to preferred stock of the Corporation, as are set
forth
in these Articles Supplementary. The Auction Preferred Stock, Series A shall
constitute a separate series of preferred stock of the Corporation, and each
share of Auction Preferred Stock, Series A shall be identical.
Series B: A series of _____ shares of preferred stock, par value $.001
per
share, liquidation preference $25,000 per share, hereby is designated
"Auction
Preferred Stock Series B." Each share of Auction Preferred Stock, Series B
shall
be issued on the Date of Original Issue (as herein defined); and have such
other
preferences, limitations and relative voting rights, in addition to those
required by applicable law or set forth in the Corporation's Articles of
Incorporation applicable to preferred stock of the Corporation, as are set
forth
in these Articles Supplementary. The Auction Preferred Stock, Series B shall
constitute a separate series of preferred stock of the Corporation, and each
share of Auction Preferred Stock, Series B shall be identical.
1. DEFINITIONS.
(a) Capitalized terms not defined in this paragraph 1 shall have
the
respective meanings specified in paragraph 10 hereof. Unless the context or
use
indicates another or different meaning, the following terms shall have the
following meanings, whether used in the singular or plural:
"'AA' Composite Commercial Paper Rate," on any Valuation Date,
means
(i) the Interest Equivalent of the rate on commercial paper placed on behalf
of
issuers whose corporate bonds are rated "AA" by S&P or "Aa" by Moody's or
the
equivalent of such rating by another nationally recognized statistical
rating
organization, as such rate is made available on a discount basis or
otherwise by
the Federal Reserve Bank of New York for the Business Day immediately
preceding
such date, or (ii) in the event that the Federal Reserve Bank of New York
does
not make available such a rate, then the arithmetic average of the Interest
Equivalent of the rate on commercial paper placed on behalf of such issuers,
as
quoted on a discount basis or otherwise by PaineWebber Incorporated or its
successors that are Commercial Paper Dealers, to the Auction Agent for the
close
of business on the Business Day immediately preceding such date. If one of
the
Commercial Paper Dealers does not quote a rate required to determine the
"AA"
Composite Commercial Paper Rate, the "AA" Composite Commercial Paper Rate
will
be determined on the basis of the quotation or quotations furnished by any
Substitute Commercial Paper Dealer or Substitute Commercial Paper Dealers
selected by the Fund to provide such rate or rates not being supplied by the
Commercial Paper Dealer. If the number of Dividend Period days shall be (i)
7 or
more but fewer than 49 days, such rate shall be the Interest Equivalent of
the
30-day rate on such commercial paper; (ii) 49 or more but fewer than 70
days,
such rate shall be the Interest Equivalent of the 60-day rate on such
commercial
paper; (iii) 70 or more days but fewer than 85 days, such rate shall be the
arithmetic average of the Interest Equivalent of the 60-day and 90-day rates
on
such commercial paper; (iv) 85 or more days but fewer than 99 days, such
rate
shall be the Interest Equivalent of the 90-day rate on such commercial
paper;
(v) 99 or more days but fewer than 120 days, such rate shall be the
arithmetic
average of the Interest Equivalent of the 90-day and 120-day rates on such
commercial paper; (vi) 120 or more days but fewer than 141 days, such rate
shall
be the Interest Equivalent of the 120-day rate on such commercial paper;
(vii)
141 or more days but fewer than 162 days, such rate shall be the arithmetic
average of the Interest Equivalent of the 120-day and 180-day rates on such
commercial paper; and (viii) 162 or more days but fewer than 183 days, such
rate
shall be the Interest Equivalent of the 180-day rate on such commercial
paper.
"Accountant's Confirmation" has the meaning set forth in paragraph
7(c) of these Articles Supplementary.
"Additional Dividend" has the meaning set forth in paragraph 2(e)
of
these Articles Supplementary.
"Adviser" means the Corporation's investment adviser which shall
be
The Dreyfus Corporation or any other entity that may serve as the
Corporation's
investment adviser.
"Affiliate" means any Person known to the Auction Agent to be
controlled by, in control of, or under common control with, the Corporation.
"Agent Member" means a member of the Securities Depository that
will
act on behalf of a Beneficial Owner of one or more shares of APS or a
Potential
Beneficial Owner.
"Anticipation Notes" shall mean the following Municipal
Obligations:
revenue anticipation notes, tax anticipation notes, tax and revenue
anticipation
notes, grant anticipation notes and bond anticipation notes.
"Applicable Percentage" has the meaning set forth in paragraph
10(a)(vii) of these Articles Supplementary.
"Applicable Rate" means the rate per annum at which cash dividends
are
payable on the APS or Other APS, as the case may be, for any Dividend
Period.
"APS" means, as the case may be, the Auction Preferred Stock.
"APS Basic Maintenance Amount," as of any Valuation Date, means
the
dollar amount equal to (i) the sum of (A) the product of the number of
shares of
APS and Other APS Outstanding on such Valuation Date multiplied by the sum
of
(a) $25,000 and (b) any applicable redemption premium attributable to the
designation of a Premium Call Period; (B) the aggregate amount of cash
dividends
(whether or not earned or declared) that will have accumulated for each
share of
APS and Other APS Outstanding, in each case, to (but not including) the end
of
the current Dividend Period for each series of APS that follows such
Valuation
Date in the event the then current Dividend Period will end within 49
calendar
days of such Valuation Date or through the 49th day after such Valuation
Date in
the event the then current Dividend Period for each series of APS will not
end
within 49 calendar days of such Valuation Date; (C) in the event the then
current Dividend Period will end within 49 calendar days of such Valuation
Date,
the aggregate amount of cash dividends that would accumulate at the Maximum
Applicable Rate applicable to a Dividend Period of 28 or fewer days on any
shares of APS and Other APS Outstanding from the end of such Dividend Period
through the 49th day after such Valuation Date, multiplied by the S&P
Volatility
Factor, determined from time to time by S&P (except that if such Valuation
Date
occurs during a Non-Payment Period, the cash dividend for purposes of
calculation would accumulate at the then current Non-Payment Period Rate);
(D)
the amount of anticipated expenses of the Corporation for the 90 days
subsequent
to such Valuation Date (including any premiums payable with respect to a
Policy); (E) the amount of the Corporation's Maximum Potential Additional
Dividend Liability as of such Valuation Date; and (F) any current
liabilities as
of such Valuation Date to the extent not reflected in any of (i)(A) through
(i)(E) (including, without limitation, and immediately upon determination,
any
amounts due and payable by the Corporation pursuant to repurchase agreements
and
any amounts payable for Municipal Obligations purchased as of such Valuation
Date) less (ii) either (A) the Discounted Value of any of the Corporation's
assets, or (B) the face value of any of the Corporation's assets if such
assets
mature prior to or on the date of redemption of APS or payment of a
liability
and are either securities issued or guaranteed by the United States
Government
or Deposit Securities, in both cases irrevocably deposited by the
Corporation
for the payment of the amount needed to redeem shares of APS subject to
redemption or to satisfy any of (i)(B) through (i)(F).
"APS Basic Maintenance Cure Date," with respect to the failure by
the
Corporation to satisfy the APS Basic Maintenance Amount (as required by
paragraph 7(a) of these Articles Supplementary) as of a given Valuation
Date,
means the second Business Day following such Valuation Date.
"APS Basic Maintenance Report" means a report signed by any of the
President, Treasurer, any Vice President or any Assistant Treasurer of the
Corporation which sets forth, as of the related Valuation Date, the assets
of
the Corporation, the Market Value and the Discounted Value thereof (seriatim
and
in aggregate), and the APS Basic Maintenance Amount.
"Articles of Incorporation" means the Articles of Incorporation of
the
Corporation, as amended, supplemented and restated from time to time,
including
as supplemented by these Articles Supplementary.
"Auction" means a periodic operation of the Auction Procedures.
"Auction Agent" means Bankers Trust Company unless and until
another
commercial bank, trust company or other financial institution appointed by a
resolution of the Board of Directors of the Corporation or a duly authorized
committee thereof enters into an agreement with the Corporation to follow
the
Auction Procedures for the purpose of determining the Applicable Rate and to
act
as transfer agent, registrar, dividend disbursing agent and redemption agent
for
the APS and Other APS.
"Auction Procedures" means the procedures for conducting Auctions
set
forth in paragraph 10 of these Articles Supplementary.
"Beneficial Owner" means a customer of a Broker-Dealer who is
listed
on the records of that Broker-Dealer (or, if applicable, the Auction Agent)
as a
holder of shares of APS or a Broker-Dealer that holds APS for its own
account.
"Board of Directors" or "Board" means the Corporation's Board of
Directors and, to the extent permitted by law, any committee thereof.
"Broker-Dealer" means any broker-dealer, or other entity permitted
by
law to perform the functions required of a Broker-Dealer in paragraph 10 of
these Articles Supplementary, that has been selected by the Corporation and
has
entered into a Broker-Dealer Agreement with the Auction Agent that remains
effective.
"Broker-Dealer Agreement" means an agreement between the Auction
Agent
and a Broker-Dealer pursuant to which such Broker-Dealer agrees to follow
the
procedures specified in paragraph 10 of these Articles Supplementary.
"Business Day" means a day on which the New York Stock Exchange is
open for trading and which is not a Saturday, Sunday or other day on which
banks
in The City of New York are authorized or obligated by law to close.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commercial Paper Dealers" means PaineWebber Incorporated and such
other commercial paper dealer or dealers as the Corporation may from time to
time appoint, or, in lieu of any thereof, their respective affiliates or
successors.
"Common Stock" means the shares of common stock designated as
common
stock, par value $.001 per share, of the Corporation.
"Corporation" means Dreyfus Municipal Income, Inc., a Maryland
corporation.
"Date of Original Issue" means, with respect to any share of APS
or
Other APS, the date on which the Corporation originally issues such share.
"Deposit Securities" means cash and Municipal Obligations rated at
least A2 (having a remaining maturity of 12 months or less), P-1, VMIG-1 or
MIG-1 by Moody's or A (having a remaining maturity of 12 months or less), A-
1+
or SP-1+ by S&P.
"Discounted Value" means the quotient of the Market Value thereof
divided by the applicable S&P Discount Factor.
"Dividend Payment Date," with respect to APS, has the meaning set
forth in paragraph 2(b)(i) of these Articles Supplementary and, with respect
to
Other APS, has the equivalent meaning.
"Dividend Period" means any of the Initial Dividend Period, 28-Day
Dividend Period or the Special Dividend Period. The Board of Directors may
change the 28-Day Dividend Period to seven days upon prior notice to
Holders, in
which case, 7-Day Dividend Period shall be substituted for 28-Day Dividend
Period.
"Escrow Bonds" mean Municipal Obligations that (i) have been
determined to be legally defeased in accordance with S&P's legal defeasance
criteria, (ii) have been determined to be economically defeased in
accordance
with S&P's economic defeasance criteria and assigned a rating of AAA by S&P,
(iii) are not rated by S&P but have been determined to be legally defeased
by
Moody's, or (iv) have been determined to be economically defeased by Moody's
and
assigned a rating no lower than the rating that is Moody's equivalent of
S&P's
AAA rating.
"Existing Holder" means a Broker-Dealer or any such other Person
as
may be permitted by the Corporation that is listed as the holder of record
of
shares of APS in the Share Books.
"Forward Commitment" has the meaning set forth in paragraph 8(c)
of
these Articles Supplementary.
"Holder" means a Person identified as a holder of record of shares
of
APS in the Stock Register.
"Independent Accountant" means a nationally recognized accountant,
or
firm of accountants, that is, with respect to the Corporation, an
independent
public accountant or firm of independent public accountants under the
Securities
Act of 1933, as amended.
"Initial Dividend Payment Date" means the Initial Dividend Payment
Date as determined by the Board of Directors of the Corporation with respect
to
each series of APS or Other APS, as the case may be.
"Initial Dividend Period" has the meaning set forth in paragraph
2(c)(i) of these Articles Supplementary and, with respect to Other APS, has
the
equivalent meaning.
"Initial Dividend Rate" means the rate per annum applicable to the
Initial Dividend Period for such series of APS and, with respect to Other
APS,
has the equivalent meaning. The Initial Dividend Rate shall be ___% for
Series A
APS and ___% for Series B APS.
"Initial Margin" means the amount of cash or securities deposited
with
a broker as a margin payment at the time of purchase or sale of a futures
contract.
"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.
"Inverse Floaters" mean trust certificates or other instruments
evidencing interests in one or more Municipal Obligations that qualify as
S&P
Eligible Assets (and are not part of a private placement of Municipal
Obligations and satisfy the issuer and original issue size requirements of
clause (vii) of the definition of S&P Eligible Assets) the interest rates on
which are adjusted at short term intervals on a basis that is inverse to the
simultaneous readjustment of the interest rates on corresponding floating
rate
trust certificates or other instruments issued by the same issuer, provided
that
the ratio of the aggregate dollar amount of floating rate instruments to
inverse
floating rate instruments issued by the same issuer does not exceed one to
one
at their time of original issuance unless the floating rate instruments have
only one reset remaining until maturity.
"Long Term Dividend Period" means a Special Dividend Period
consisting
of a specified period of one whole year or more but not greater than five
years.
"Mandatory Redemption Price" means $25,000 per share of APS plus
an
amount equal to accumulated but unpaid dividends (whether or not earned or
declared) to the date fixed for redemption and excluding Additional
Dividends.
"Marginal Tax Rate" means the maximum marginal regular Federal
individual income tax rate applicable to ordinary income or the maximum
marginal
regular Federal corporate income tax rate, whichever is greater.
"Market Value" of any asset of the Corporation shall be the market
value thereof determined by the Pricing Service. Market Value of any asset
shall
include any interest accrued thereon. The Pricing Service shall value
portfolio
securities at the quoted bid prices or the mean between the quoted bid and
asked
price or the yield equivalent when quotations are not readily available.
Securities for which quotations are not readily available shall be valued at
fair value as determined by the Pricing Service using methods which include
consideration of: yields or prices of municipal obligations of comparable
quality, type of issue, coupon, maturity and rating; indications as to value
from dealers; and general market conditions. The Pricing Service may employ
electronic data processing techniques and/or a matrix system to determine
valuations. If the Pricing Service is unable to value a security, the
security
shall be valued at the lower of two dealer bids obtained by the Corporation
from
dealers who are members of the National Association of Securities Dealers,
Inc.
and who make a market in the security, at least one of which shall be in
writing. Futures contracts and options are valued at closing prices for such
instruments established by the exchange or board of trade on which they are
traded, or if market quotations are not readily available, are valued at
fair
value on a consistent basis using methods determined in good faith by the
Board
of Directors.
"Maximum Applicable Rate," with respect to APS, has the meaning
set
forth in paragraph 10(a)(vii) of these Articles Supplementary and, with
respect
to Other APS, has the equivalent meaning.
"Maximum Potential Additional Dividend Liability," as of any
Valuation
Date, means the aggregate amount of Additional Dividends that would be due
if
the Corporation were to make Retroactive Taxable Allocations, with respect
to
any fiscal year, estimated based upon dividends paid and the amount of
undistributed realized net capital gains and other taxable income earned by
the
Corporation, as of the end of the calendar month immediately preceding such
Valuation Date and assuming such Additional Dividends are fully taxable.
"Moody's" means Moody's Investors Service, Inc. or its successors.
"Municipal Obligations" means "Municipal Obligations" as defined
in
the Corporation's Registration Statement on Form N-2 (File Nos. 333-84131
and
No. 811-05652) relating to the APS on file with the Securities and Exchange
Commission, as such Registration Statement may be amended from time to time,
as
well as short term municipal obligations and Inverse Floaters.
"Municipal Index" has the meaning set forth in paragraph 8(a) of
these
Articles Supplementary.
"1940 Act" means the Investment Company Act of 1940, as amended
from
time to time.
"1940 Act APS Asset Coverage" means asset coverage, as defined in
section 18(h) of the 1940 Act, of at least 200% with respect to all
outstanding
senior securities of the Corporation which are shares of capital stock,
including all outstanding shares of APS and Other APS (or such other asset
coverage as may in the future be specified in or under the 1940 Act as the
minimum asset coverage for senior securities which are shares of capital
stock
of a closed-end investment company as a condition of paying dividends on its
Common Stock).
"1940 Act Cure Date," with respect to the failure by the
Corporation
to maintain the 1940 Act APS Asset Coverage (as required by paragraph 6 of
these
Articles Supplementary) as of the last Business Day of each month, means the
last Business Day of the following month.
"Non-Call Period" has the meaning set forth under the definition
of
"Specific Redemption Provisions."
"Non-Payment Period" means any period commencing on and including
the
day on which the Corporation shall fail to (i) declare, prior to the close
of
business on the second Business Day preceding any Dividend Payment Date, for
payment on or (to the extent permitted by paragraph 2(c)(i) of these
Articles
Supplementary) within three Business Days after such Dividend Payment Date
to
the Holders as of 12:00 noon, New York City time, on the Business Day
preceding
such Dividend Payment Date, the full amount of any dividend on shares of APS
payable on such Dividend Payment Date or (ii) deposit, irrevocably in trust,
in
same-day funds, with the Auction Agent by 12:00 noon, New York City time,
(A) on
such Dividend Payment Date the full amount of any cash dividend on such
shares
payable (if declared) on such Dividend Payment Date or (B) on any redemption
date for any shares of APS called for redemption, the Mandatory Redemption
Price
per share of such APS or, in the case of an optional redemption, the
Optional
Redemption Price per share, and ending on and including the Business Day on
which, by 12:00 noon, New York City time, all unpaid cash dividends and
unpaid
redemption prices shall have been so deposited or shall have otherwise been
made
available to Holders in same-day funds; provided that, a Non-Payment Period
shall not end unless the Corporation shall have given at least five days'
but no
more than 30 days' written notice of such deposit or availability to the
Auction
Agent, all Existing Holders (at their addresses appearing in the Share
Books)
and the Securities Depository. Notwithstanding the foregoing, the failure by
the
Corporation to deposit funds as provided for by clauses (ii)(A) or (ii)(B)
above
within three Business Days after any Dividend Payment Date or redemption
date,
as the case may be, in each case to the extent contemplated by paragraph
2(c)(i)
of these Articles Supplementary, shall not constitute a "Non-Payment
Period."
"Non-Payment Period Rate" means, initially, 200% of the applicable
Reference Rate (or 275% of such rate if the Corporation has provided
notification to the Auction Agent prior to the Auction establishing the
Applicable Rate for any dividend pursuant to paragraph 2(f) hereof that net
capital gains or other taxable income will be included in such dividend on
shares of APS), provided that the Board of Directors of the Corporation
shall
have the authority to adjust, modify, alter or change from time to time the
initial Non-Payment Period Rate if the Board of Directors of the Corporation
determines and S&P (and any Substitute Rating Agency in lieu of S&P in the
event
such party shall not rate the APS) advise the Corporation in writing that
such
adjustment, modification, alteration or change will not adversely affect its
then-current ratings on the APS.
"Normal Dividend Payment Date" has the meaning set forth in
paragraph
2(b)(i) of these Articles Supplementary.
"Notice of Redemption" means any notice with respect to the
redemption
of shares of APS pursuant to paragraph 4 of these Articles Supplementary.
"Notice of Revocation" has the meaning set forth in paragraph
2(c)(iii) of these Articles Supplementary.
"Notice of Special Dividend Period" has the meaning set forth in
paragraph 2(c)(iii) of these Articles Supplementary.
"Optional Redemption Price" means $25,000 per share plus an amount
equal to accumulated but unpaid dividends (whether or not earned or
declared) to
the date fixed for redemption and excluding Additional Dividends plus any
applicable redemption premium attributable to the designation of a Premium
Call
Period.
"Other APS" means the Auction Rate Preferred Stock of the
Corporation,
other than the APS.
"Outstanding" means, as of any date (i) with respect to APS,
shares of
APS therefor issued by the Corporation except, without duplication, (A) any
shares of APS theretofore canceled or delivered to the Auction Agent for
cancellation, or redeemed by the Corporation, or as to which a Notice of
Redemption shall have been given and Deposit Securities shall have been
deposited in trust or segregated by the Corporation pursuant to paragraph
4(c)
and (B) any shares of APS as to which the Corporation or any Affiliate
thereof
shall be a Beneficial Owner, provided that shares of APS held by an
Affiliate
shall be deemed outstanding for purposes of calculating the APS Basic
Maintenance Amount and (ii) with respect to shares of other Preferred Stock,
has
the equivalent meaning.
"Parity Shares" means the APS and each other outstanding series of
Preferred Stock the holders of which, together with the holders of the APS,
shall be entitled to the receipt of dividends or of amounts distributable
upon
liquidation, dissolution or winding up, as the case may be, in proportion to
the
full respective preferential amounts to which they are entitled, without
preference or priority one over the other.
"Person" means and includes an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or
other
entity or a government or any agency or political subdivision thereof.
"Policy" means an insurance policy purchased by the Corporation
which
guarantees the payment of principal and interest on specified Municipal
Obligations during the period in which such Municipal Obligations are owned
by
the Corporation; provided, however, that, as long as the APS are rated by
S&P,
the Corporation will not obtain any Policy unless S&P advises the
Corporation in
writing that the purchase of such Policy will not adversely affect its
then-current rating on the APS.
"Potential Beneficial Owner" means a customer of a Broker-Dealer
or a
Broker-Dealer that is not a Beneficial Owner of shares of APS but that
wishes to
purchase such shares, or that is a Beneficial Owner that wishes to purchase
additional shares of APS.
"Potential Holder" means any Broker-Dealer or any such other
Person as
may be permitted by the Corporation, including any Existing Holder, who may
be
interested in acquiring shares of APS (or, in the case of an Existing
Holder,
additional shares of APS).
"Preferred Stock" means the preferred shares of capital stock, par
value $.001 per share, of the Corporation, and includes APS and Other APS.
"Premium Call Period" has the meaning set forth under the
definition
of "Specific Redemption Provisions."
"Pricing Service" means S&P J.J. Kenny Evaluation Services or any
pricing service designated by the Board of Directors of the Corporation
provided
the Corporation obtains written assurance from S&P that such designation
will
not impair the rating then assigned by S&P to the APS.
"Quarterly Valuation Date" means the last Business Day of the last
month of each fiscal quarter of the Corporation in each fiscal year of the
Corporation, commencing December 31, 1999.
"Receivables for Municipal Obligations Sold" has the meaning set
forth
under the definition of S&P Discount Factor.
"Reference Rate" means: (i) with respect to a Dividend Period or a
Short Term Dividend Period having 28 or fewer days, the higher of the
applicable
"AA" Composite Commercial Paper Rate and the Taxable Equivalent of the
Short-Term Municipal Bond Rate, (ii) with respect to any Short Term Dividend
Period having more than 28 but fewer than 183 days, the applicable "AA"
Composite Commercial Paper Rate, (iii) with respect to any Short Term
Dividend
Period having 183 or more but fewer than 364 days, the applicable U.S.
Treasury
Bill Rate and (iv) with respect to any Long Term Dividend Period, the
applicable
U.S. Treasury Note Rate.
"Request for Special Dividend Period" has the meaning set forth in
paragraph 2(c)(iii) of these Articles Supplementary.
"Response" has the meaning set forth in paragraph 2(c)(iii) of
these
Articles Supplementary.
"Retroactive Taxable Allocation" has the meaning set forth in
paragraph 2(e) of these Articles Supplementary.
"Right", with respect to the APS, has the meaning set forth in
paragraph 2(e) of these Articles Supplementary and, with respect to Other
APS,
has the equivalent meaning.
"S&P" means Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., or its successors.
"S&P Discount Factor" means, for purposes of determining the
Discounted Value of any Municipal Obligation which constitutes an S&P
Eligible
Asset, the percentage determined by reference to (a) the rating by S&P or
Moody's on such Municipal Obligation and (b) the S&P Exposure Period, in
accordance with the table set forth below:
<TABLE>
<CAPTION>
S&P
Discount Factors Rating Category
EXPOSURE PERIOD AAA
AA A BBB UNRATED*
<S> <C>
<C> <C> <C> <C>
45 Business Days.................................................... 190%
195% 210% 250% 220%
25 Business Days.................................................... 170
175 190 230 220
10 Business Days.................................................... 155
160 175 215 220
7 Business Days..................................................... 150
155 170 210 220
3 Business Days..................................................... 130
135 150 190 220
- -----------------
* Eligible Assets not rated by S&P or rated less than BBB by S&P and not
rated
at least the equivalent of an "A" rating by another Rating Agency.
</TABLE>
Notwithstanding the foregoing, (i) the S&P Discount Factor for
short-
term Municipal Obligations will be 115%, so long as such Municipal
Obligations
are rated A-1+ or SP-1+ by S&P and mature or have a demand feature
exercisable
in 30 days or less, 120% if such Municipal Obligations are rated A-1 or SP-1-
by
S&P and mature or have a demand feature exercisable within 30 days or less,
or
125% if such Municipal Obligations are not rated by S&P but are rated VMIG-
1,
P-1 or MIG-1 by Moody's; provided, however, such short-term Municipal
Obligations rated by Moody's but not rated by S&P having a demand feature
exercisable in 30 days or less must be backed by a letter of credit,
liquidity
facility or guarantee from a bank or other financial institution having a
short-term rating of at least A-1+ from S&P; and further provided that such
short-term Municipal Obligations rated by Moody's but not rated by S&P may
comprise no more than 50% of short-term Municipal Obligations that qualify
as
S&P Eligible Assets; (ii) no S&P Discount Factor will be applied to cash,
options or to Receivables for Municipal Obligations Sold; and (iii) except
as
set forth in clause (i) above, in the case of any Municipal Obligation that
is
not rated by S&P but qualifies as a S&P Eligible Asset pursuant to clause
(1)(c)
of the following paragraph, such Municipal Obligation will be deemed to have
a
S&P rating one full rating category lower than the S&P rating category that
is
the equivalent of the rating category in which such Municipal Obligation is
placed by another Rating Agency. "Receivables for Municipal Obligations
Sold,"
for purposes of calculating S&P Eligible Assets as of any Valuation Date,
means
the book value of Receivables for Municipal Obligations Sold as of or prior
to
such Valuation Date if such receivables are due within five Business Days of
the
Valuation Date. For purposes of the foregoing, Anticipation Notes rated SP-
1+
or, if not rated by S&P, rated VMIG-1 by Moody's, which do not mature or
have a
demand feature exercisable in 30 days and which do not have a long-term
rating,
shall be considered to be short-term Municipal Obligations. In calculating
the
Discounted Value of the Corporation's portfolio (1) the S&P Discount Factors
will be applied to futures and Inverse Floaters and (2) a Discount Factor of
388% will be applied to Municipal Obligations rated AAA by S&P which are not
interest bearing or do not pay interest at least semi-annually.
"S&P Eligible Asset" means cash, Receivables for Municipal
Obligations
Sold or a Municipal Obligation that (i) is issued by any of the 50 states,
the
territories and their subdivisions, counties, cities, towns, villages, and
school districts, agencies, such as authorities and special districts
created by
the states, and certain federally sponsored agencies such as local housing
authorities (payments made on these bonds are exempt from regular federal
income
taxes and are generally exempt from state and local taxes in the state of
issuance), (ii) is interest bearing and pays interest at least semi-
annually;
(iii) is payable with respect to principal and interest in United States
Dollars; (iv) is publicly rated BBB or higher by S&P or, except in the case
of
Anticipation Notes that are grant anticipation notes or bond anticipation
notes,
which must be rated by S&P to be included in S&P Eligible Assets, if not
rated
by S&P but rated by another Rating Agency, is rated at least A by such
agency;
(v) is not part of a private placement (except in the case of Inverse
Floaters);
(vi) is not subject to a covered call or covered put option written by the
Corporation; and (vii) is part of an issue of Municipal Obligations with an
original issue size of at least $20 million or, if of an issue with an
original
issue size below $20 million (but in no event below $10 million), is issued
by
an issuer with a total of at least $50 million of securities outstanding.
Notwithstanding the foregoing:
(1) Municipal Obligations (excluding Escrow Bonds) of any one
issuer
or guarantor (excluding bond insurers) will be considered S&P Eligible
Assets only to the extent the fair market value of such obligations
does
not exceed 10% of the aggregate fair market value of the S&P Eligible
Assets, provided that 2% is added to the applicable S&P Discount Factor
for
every 1% by which the fair market value of such Municipal Obligations
exceeds 5% of the aggregate fair market value of the S&P Eligible
Assets,
and provided that Municipal Obligations (excluding Escrow Bonds) not
rated
or rated less than BBB by S&P or not rated at least A by another Rating
Agency with respect to any one issuer or guarantor (excluding bond
insurers) will be considered S&P Eligible Assets only to the extent the
fair market value of such Municipal Obligations does not exceed 5% of
the
aggregate fair market value of S&P Eligible Assets;
(2) Municipal Obligations not rated at least BBB by S&P or not
rated
by S&P, or not rated at least A by another Rating Agency, will be
considered S&P Eligible Assets only to the extent the fair market value
of
such Municipal Obligations does not exceed 20% of the aggregate fair
market
value of S&P Eligible Assets; provided however, that if the fair market
value of such Municipal Obligations exceeds 20% of the aggregate fair
market value of S&P Eligible Assets, a portion of such Municipal
Obligations (selected by the Fund) will not be considered S&P Eligible
Assets, so that the fair market value of such Municipal Obligations
(excluding such portion) does not exceed 20% of the aggregate fair
market
value of S&P Eligible Assets;
(3) Municipal Obligations not rated at least BBB by S&P or not
rated
by S&P, but rated at least A by another Rating Agency, will be
considered
S&P Eligible Assets only to the extent the fair market value of such
Municipal Obligations does not exceed 50% of the aggregate fair market
value of S&P Eligible Assets; provided however, that if the fair market
value of such Municipal Obligations exceeds 50% of the aggregate fair
market value of S&P Eligible Assets, a portion of such Municipal
Obligations (selected by the Fund) will not be considered S&P Eligible
Assets, so that the fair market value of such Municipal Obligations
(excluding such portion) does not exceed 50% of the aggregate fair
market
value of S&P Eligible Assets;
(4) Long-term Municipal Obligations (excluding Escrow Bonds)
issued by
issuers in any one state or territory will be considered S&P Eligible
Assets only to the extent the fair market value of such Municipal
Obligations does not exceed 25% of the aggregate fair market value of
S&P
Eligible Assets; and
(5) Municipal Obligations which are not interest bearing or do not
pay
interest at least semi-annually will be considered S&P Eligible Assets
if
rated AAA by S&P.
"S&P Exposure Period" means the maximum period of time following a
Valuation Date, including the Valuation Date and the APS Basic Maintenance
Cure
Date, that the Corporation has under these Articles Supplementary to cure
any
failure to maintain, as of such Valuation Date, the Discounted Value for its
portfolio at least equal to the APS Basic Maintenance Amount (as described
in
paragraph 7(a) of these Articles Supplementary).
"S&P Hedging Transactions" has the meaning set forth in paragraph
8(a)
of these Articles Supplementary.
"S&P Volatility Factor" means 277% or such other potential
dividend
rate increase factor as S&P advises the Corporation in writing is
applicable.
"Securities Depository" means The Depository Trust Company or any
successor company or other entity elected by the Corporation as securities
depository for the shares of APS that agrees to follow the procedures
required
to be followed by such securities depository in connection with the shares
of
APS.
"Service" means the United States Internal Revenue Service.
"Series A APS" means the Auction Preferred Stock, Series A.
"Series B APS" means the Auction Preferred Stock, Series B.
"Short Term Dividend Period" means a Special Dividend Period
consisting of a specified number of days (other than seven), evenly
divisible by
seven and not fewer than seven nor more than 364.
"Special Dividend Period" means a Dividend Period consisting of
(i) a
specified number of days (other than 28), evenly divisible by seven and not
fewer than seven nor more than 364 or (ii) a specified period of one whole
year
or more but not greater than five years (in each case subject to adjustment
as
provided in paragraph 2(b)(i)).
"Specific Redemption Provisions" means, 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-Dealers, during which the
shares of APS subject to such Dividend Period shall not be subject to
redemption
at the option of the Corporation and (ii) a period (a "Premium Call
Period"),
consisting of a number of whole years and determined by the Board of
Directors
of the Corporation, after consultation with the Auction Agent and the
Broker-Dealers, during each year of which the shares of APS subject to such
Dividend Period shall be redeemable at the Corporation's option at a price
per
share equal to $25,000 plus accumulated but unpaid dividends plus a premium
expressed as a percentage of $25,000, as determined by the Board of
Directors of
the Corporation after consultation with the Auction Agent and the
Broker-Dealers.
"Stock Books" means the books maintained by the Auction Agent
setting
forth at all times a current list, as determined by the Auction Agent, of
Existing Holders of the APS.
"Stock Register" means the register of Holders maintained on
behalf of
the Corporation by the Auction Agent in its capacity as transfer agent and
registrar for the APS.
"Subsequent Dividend Period," with respect to APS, has the meaning
set
forth in paragraph 2(c)(i) of these Articles Supplementary and, with respect
to
Other APS, has the equivalent meaning.
"Substitute Commercial Paper Dealers" means such Substitute
Commercial
Paper Dealer or Dealers as the Corporation may from time to time appoint or,
in
lieu of any thereof, their respective affiliates or successors.
"Substitute Rating Agency" and "Substitute Rating Agencies" mean a
nationally recognized statistical rating organization or two nationally
recognized statistical rating organizations, respectively, selected by
PaineWebber Incorporated or its affiliates and successors, after
consultation
with the Corporation, to act as the substitute rating agency or substitute
rating agencies, as the case may be, to determine the credit ratings of the
shares of APS.
"Taxable Equivalent of the Short-Term Municipal Bond Rate" on any
date
means 90% of the quotient of (A) the per annum rate expressed on an interest
equivalent basis equal to the Kenny S&P 30 Day High Grade Index (the "Kenny
Index") or any successor index, made available for the Business Day
immediately
preceding such date but in any event not later than 8:30 A.M., New York City
time, on such date by Kenny Information Systems Inc. or any successor
thereto,
based upon 30-day yield evaluations at par of bonds the interest on which is
excludable for regular Federal income tax purposes under the Code of "high
grade" component issuers selected by Kenny Information Systems Inc. or any
such
successor from time to time in its discretion, which component issuers shall
include, without limitation, issuers of general obligation bonds but shall
exclude any bonds the interest on which constitutes an item of tax
preference
under Section 57(a)(5) of the Code, or successor provisions, for purposes of
the
"alternative minimum tax," divided by (B) 1.00 minus the Marginal Tax Rate
(expressed as a decimal); provided, however, that if the Kenny Index is not
made
so available by 8:30 A.M., New York City time, on such date by Kenny
Information
Systems Inc. or any successor, the Taxable Equivalent of the Short-Term
Municipal Bond Rate shall mean the quotient of (A) the per annum rate
expressed
on an interest equivalent basis equal to the most recent Kenny Index so made
available for any preceding Business Day, divided by (B) 1.00 minus the
Marginal
Tax Rate (expressed as a decimal). The Corporation may not utilize a
successor
index to the Kenny Index unless S&P provides the Corporation with written
confirmation that the use of such successor index will not adversely affect
the
then-current S&P rating of the APS.
"Treasury Bonds" has the meaning set forth in paragraph 8(a) of
these
Articles Supplementary.
"28-Day Dividend Period" means a Dividend Period consisting of 28
days. If the Corporation changes the 28-Day Dividend Period to seven days,
then
7-Day Dividend Periods will be substituted for 28-Day Dividend Periods.
"U.S. Treasury Bill Rate" on any date means (i) the Interest
Equivalent of the rate on the actively traded Treasury Bill with a maturity
most
nearly comparable to the length of the related Dividend Period, as such rate
is
made available on a discount basis or otherwise by the Federal Reserve Bank
of
New York in its Composite 3:30 P.M. Quotations for U.S. Government
Securities
report for such Business Day, or (ii) if such yield as so calculated is not
available, the Alternate Treasury Bill Rate on such date. "Alternate
Treasury
Bill Rate" on any date means the Interest Equivalent of the yield as
calculated
by reference to the arithmetic average of the bid price quotations of the
actively traded Treasury Bill with a maturity most nearly comparable to the
length of the related Dividend Period, as determined by bid price quotations
as
of any time on the Business Day immediately preceding such date, obtained
from
at least three recognized primary U.S. Government securities dealers
selected by
the Auction Agent. "U.S. Treasury Note Rate" on any date means (i) the yield
as
calculated by reference to the bid price quotation of the actively traded,
current coupon Treasury Note with a maturity most nearly comparable to the
length of the related Dividend Period, as such bid price quotation is
published
on the Business Day immediately preceding such date by the Federal Reserve
Bank
of New York in its Composite 3:30 P.M. Quotations for U.S. Government
Securities
report for such Business Day, or (ii) if such yield as so calculated is not
available, the Alternate Treasury Note Rate on such date. "Alternate
Treasury
Note Rate" on any date means the yield as calculated by reference to the
arithmetic average of the bid price quotations of the actively traded,
current
coupon Treasury Note with a maturity most nearly comparable to the length of
the
related Dividend Period, as determined by the bid price quotations as of any
time on the Business Day immediately preceding such date, obtained from at
least
three recognized primary U.S. Government securities dealers selected by the
Auction Agent.
"Valuation Date" means, for purposes of determining whether the
Corporation is maintaining the APS Basic Maintenance Amount, each Business
Day
commencing with the Date of Original Issue.
"Variation Margin" means, in connection with an outstanding
futures
contract owned or sold by the Corporation, the amount of cash or securities
paid
to or received from a broker (subsequent to the Initial Margin payment) from
time to time as the price of such futures contract fluctuates.
(b) The foregoing definitions of Accountant's Confirmation, APS
Basic
Maintenance Amount, APS Basic Maintenance Cure Date, APS Basic Maintenance
Report, Inverse Floaters, Deposit Securities, Discounted Value, Independent
Accountant, Initial Margin, Market Value, Maximum Potential Additional
Dividend
Liability, S&P Discount Factor, S&P Eligible Asset, S&P Exposure Period, S&P
Hedging Transactions, S&P Volatility Factor, Valuation Date and Variation
Margin
have been determined by the Board of Directors of the Corporation in order
to
obtain a AAA rating from S&P on the APS on their Date of Original Issue; and
the
Board of Directors of the Corporation shall have the authority, without
shareholder approval, to amend, alter or repeal from time to time the
foregoing
definitions and the restrictions and guidelines set forth thereunder if S&P
or
any Substitute Rating Agency advises the Corporation in writing that such
amendment, alteration or repeal will not adversely affect its then current
rating on the APS.
2. DIVIDENDS. (a) The Holders of a particular series of APS shall
be
entitled to receive, when, as and if declared by the Board of Directors of
the
Corporation, out of funds legally available therefor, cumulative dividends
each
consisting of (i) cash at the Applicable Rate, (ii) a Right to receive cash
as
set forth in paragraph 2(e) below, and (iii) any additional amounts as set
forth
in paragraph 2(f) below, and no more, payable on the respective dates set
forth
below. Dividends on the shares of each series of APS so declared and payable
shall be paid (i) in preference to and in priority over any dividends
declared
and payable on the Common Stock, and (ii) to the extent permitted under the
Code
and to the extent available, out of net tax-exempt income earned on the
Corporation's investments. To the extent permitted under the Code, dividends
on
shares of APS will be designated as exempt-interest dividends. For the
purposes
of this section, the term "net tax-exempt income" shall exclude capital
gains of
the Corporation.
(b) (i) Cash dividends on shares of each series of APS shall
accumulate from the Date of Original Issue and shall be payable, when, as
and if
declared by the Board of Directors, out of funds legally available therefor,
commencing on the Initial Dividend Payment Date. Following the Initial
Dividend
Payment Date for a series of APS, dividends on that series of APS will be
payable, at the option of the Corporation, either (i) with respect to any 28-
Day
Dividend Period and any Short Term Dividend Period of 35 or fewer days, on
the
day next succeeding the last day thereof, or (ii) with respect to any Short
Term
Dividend Period of more than 35 days and with respect to any Long Term
Dividend
Period, monthly on the first Business Day of each calendar month during such
Short Term Dividend Period or Long Term Dividend Period and on the day next
succeeding the last day thereof (each such date referred to in clause (i) or
(ii) being herein referred to as a "Normal Dividend Payment Date"), except
that
if such Normal Dividend Payment Date is not a Business Day, then the
Dividend
Payment Date shall be the first Business Day next succeeding such Normal
Dividend Payment Date. Although any particular Dividend Payment Date may not
occur on the originally scheduled date because of the exception discussed
above,
the next succeeding Dividend Payment Date, subject to such exception, will
occur
on the next following originally scheduled date. If for any reason a
Dividend
Payment Date cannot be fixed as described above, then the Board of Directors
shall fix the Dividend Payment Date. The Board of Directors by resolution
prior
to authorization of a dividend by the Board of Directors may change a
Dividend
Payment Date if such change does not adversely affect the contract rights of
the
Holders of shares of APS set forth in the Articles of Incorporation. The
Initial
Dividend Period, 28-Day Dividend Periods and Special Dividend Periods with
respect to a series of APS are hereinafter sometimes referred to as Dividend
Periods. Each dividend payment date determined as provided above is
hereinafter
referred to as a "Dividend Payment Date."
(ii) Each dividend shall be paid to the Holders as they appear in
the
Stock Register as of 12:00 noon, New York City time, on the Business Day
preceding the Dividend Payment Date. Dividends in arrears for any past
Dividend
Period may be declared and paid at any time, without reference to any
regular
Dividend Payment Date, to the Holders as they appear on 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 of the Corporation.
(c) (i) During the period from and including the Date of Original
Issue to but excluding the Initial Dividend Payment Date for each series of
APS
(the "Initial Dividend Period"), the Applicable Rate shall be the Initial
Dividend Rate. Commencing on the Initial Dividend Payment Date for each
series
of APS, the Applicable Rate for each subsequent dividend period (hereinafter
referred to as a "Subsequent Dividend Period"), which Subsequent Dividend
Period
shall commence on and include a Dividend Payment Date and shall end on and
include the calendar day prior to the next Dividend Payment Date (or last
Dividend Payment Date in a Dividend Period if there is more than one
Dividend
Payment Date), shall be equal to the rate per annum that results from
implementation of the Auction Procedures. The Applicable Rate for each
Dividend
Period commencing during a Non-Payment Period shall be equal to the Non-
Payment
Period Rate; and each Dividend Period, commencing after the first day of,
and
during, a Non-Payment Period shall be a 28-Day Dividend Period in the case
of
each series of APS. Except in the case of the willful failure of the
Corporation
to pay a dividend on a Dividend Payment Date or to redeem any shares of APS
on
the date set for such redemption, any amount of any dividend due on any
Dividend
Payment Date (if, prior to the close of business on the second Business Day
preceding such Dividend Payment Date, the Corporation has declared such
dividend
payable on such Dividend Payment Date to the Holders of such shares of APS
as of
12:00 noon, New York City time, on the Business Day preceding such Dividend
Payment Date) or redemption price with respect to any shares of APS not paid
to
such Holders when due may be paid to such Holders in the same form of funds
by
12:00 noon, New York City time, on any of the first three Business Days
after
such Dividend Payment Date or due date, as the case may be, provided that,
such
amount is accompanied by a late charge calculated for such period of non-
payment
at the Non-Payment Period Rate applied to the amount of such non-payment
based
on the actual number of days comprising such period divided by 365. In the
case
of a willful failure of the Corporation to pay a dividend on a Dividend
Payment
Date or to redeem any shares of APS on the date set for such redemption, the
preceding sentence shall not apply and the Applicable Rate for the Dividend
Period commencing during the Non-Payment Period resulting from such failure
shall be the Non-Payment Period Rate. For the purposes of the foregoing,
payment
to a person in same-day funds on any Business Day at any time shall be
considered equivalent to payment to such person in New York Clearing House
(next-day) funds at the same time on the preceding Business Day, and any
payment
made after 12:00 noon, New York City time, on any Business Day shall be
considered to have been made instead in the same form of funds and to the
same
person before 12:00 noon, New York City time, on the next Business Day.
(ii) The amount of cash dividends per share of any series of APS
payable (if declared) on the Initial Dividend Payment Date, each 28-Day
Dividend
Period and each Dividend Payment Date of each Short Term Dividend Period
shall
be computed by multiplying the Applicable Rate for such Dividend Period by a
fraction, the numerator of which will be the number of days in such Dividend
Period or part thereof that such share was outstanding and the denominator
of
which will be 365, multiplying the amount so obtained by $25,000, and
rounding
the amount so obtained to the nearest cent. During any Long Term Dividend
Period, the amount of cash dividends per share of a series of APS payable
(if
declared) on any Dividend Payment Date shall be computed by multiplying the
Applicable Rate for such Dividend Period by a fraction, the numerator of
which
will be such number of days in such part of such Dividend Period that such
share
was outstanding and for which dividends are payable on such Dividend Payment
Date and the denominator of which will be 360, multiplying the amount so
obtained by $25,000, and rounding the amount so obtained to the nearest
cent.
(iii) With respect to each Dividend Period that is a Special
Dividend
Period, the Corporation may, at its sole option and to the extent permitted
by
law, by telephonic and written notice (a "Request for Special Dividend
Period")
to the Auction Agent and to each Broker-Dealer, request that the next
succeeding
Dividend Period for a series of APS be a number of days (other than 28),
evenly
divisible by seven and not fewer than seven nor more than 364 in the case of
a
Short Term Dividend Period or one whole year or more but not greater than
five
years in the case of a Long Term Dividend Period, specified in such notice,
provided that the Corporation may not give a Request for Special Dividend
Period
of greater than 28 days (and any such request shall be null and void)
unless,
for any Auction occurring after the initial Auction, Sufficient Clearing
Bids
were made in the last occurring Auction and unless full cumulative
dividends,
any amounts due with respect to 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 Short Term Dividend Period, shall be given
on
or prior to the second Business Day but not more than seven Business Days
prior
to an Auction Date for a series of APS and, in the case of a Long Term
Dividend
Period, shall be given on or prior to the second Business Day but not more
than
28 days prior to an Auction Date for a series of APS. Upon receiving such
Request for Special Dividend Period, the Broker-Dealer(s) 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 series of APS
as
contemplated by such Request for Special Dividend Period and the Optional
Redemption Price of the APS during such Special Dividend Period and 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
second
Business Day prior to such Auction Date. In making such determination the
Broker-Dealer(s) will consider (1) existing short-term and long-term market
rates and indices of such short-term and long-term rates, (2) existing
market
supply and demand for short-term and long-term securities, (3) existing
yield
curves for short-term and long-term securities comparable to the APS, (4)
industry and financial conditions which may affect the APS, (5) the
investment
objective of the Corporation, and (6) the Dividend Periods and dividend
rates at
which current and potential beneficial holders of the APS would remain or
become
beneficial holders. If the Broker-Dealer(s) shall not give the Corporation
and
the Auction Agent a Response by such second Business Day or if the 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 series of APS,
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 indicates
that it
is advisable that the Corporation give a Notice of Special Dividend Period
for
the series of APS, the Corporation may by no later than the second Business
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 (i) the duration of the Special Dividend Period, (ii)
the
Optional Redemption Price as specified in the related Response and (iii) the
Specific Redemption Provisions, if any, as specified in the related
Response.
The Corporation also shall provide a copy of such Notice of Special Dividend
Period to Moody's and S&P. The Corporation shall not give a Notice of
Special
Dividend Period and, if the Corporation has given a Notice of Special
Dividend
Period, the Corporation is required to give telephonic and written notice of
its
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 (x) either the 1940 Act APS Asset Coverage is not
satisfied or the Corporation shall fail to maintain S&P Eligible Assets with
an
aggregate Discounted Value at least equal to the APS Basic Maintenance
Amount,
on each of the two Valuation Dates immediately preceding the Business Day
prior
to the relevant Auction Date on an actual basis and on a pro forma basis
giving
effect to the proposed Special Dividend Period (using as a pro forma
dividend
rate with respect to such Special Dividend Period the dividend rate which
the
Broker-Dealers shall advise the Corporation is an approximately equal rate
for
securities similar to the APS with an equal dividend period), (y) sufficient
funds for the payment of dividends payable on the immediately succeeding
Dividend Payment Date have not been irrevocably deposited with the Auction
Agent
by the close of business on the third Business Day preceding the related
Auction
Date or (z) the Broker-Dealer(s) 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. The Corporation also shall provide
a
copy of such Notice of Revocation to S&P. If the Corporation is prohibited
from
giving a Notice of Special Dividend Period as a result of any of the factors
enumerated in clause (x), (y) or (z) above or if the Corporation gives a
Notice
of Revocation with respect to a Notice of Special Dividend Period for any
series
of APS, the next succeeding Dividend Period will be a 28-Day Dividend
Period. In
addition, in the event Sufficient Clearing Bids are not made in the
applicable
Auction or such Auction is not held for any reason, such next succeeding
Dividend Period will be a 28-Day Dividend Period and the Corporation may not
again give a Notice of Special Dividend Period for the APS (and any such
attempted notice shall be null and void) until Sufficient Clearing Bids have
been made in an Auction with respect to a 28-Day Dividend Period.
(d) (i) Holders shall not be entitled to any dividends, whether
payable in cash, property or stock, in excess of full cumulative dividends
and
applicable late charges, as herein provided, on the shares of APS (except
for
Additional Dividends as provided in paragraph 2(e) hereof and additional
payments as provided in paragraph 2(f) hereof). Except for the late charge
payable pursuant to paragraph 2(c)(i) hereof, no interest, or sum of money
in
lieu of interest, shall be payable in respect of any dividend payment on the
shares of APS that may be in arrears.
(ii) For so long as any share of APS is Outstanding, the
Corporation
shall not declare, pay or set apart for payment any dividend or other
distribution (other than a dividend or distribution paid in shares of, or
options, warrants or rights to subscribe for or purchase, Common Stock or
other
shares of capital stock, if any, ranking junior to the shares of APS as to
dividends or upon liquidation) in respect of the Common Stock or any other
shares of capital stock of the Corporation ranking junior to or on a parity
with
the shares of APS as to dividends or upon liquidation, or call for
redemption,
redeem, purchase or otherwise acquire for consideration any shares of the
Common
Stock or any other such junior shares (except by conversion into or exchange
for
shares of the Corporation ranking junior to the shares of APS as to
dividends
and upon liquidation) or any other such Parity Shares (except by conversion
into
or exchange for stock of the Corporation ranking junior to or on a parity
with
the shares of APS as to dividends and upon liquidation), unless (A)
immediately
after such transaction, the Corporation shall have S&P Eligible Assets with
an
aggregate Discounted Value equal to or greater than the APS Basic
Maintenance
Amount and the Corporation shall maintain the 1940 Act APS Asset Coverage,
(B)
full cumulative dividends on shares of APS and shares of Other APS due on or
prior to the date of the transaction have been declared and paid or shall
have
been declared and sufficient funds for the payment thereof deposited with
the
Auction Agent, (C) any Additional Dividend required to be paid under
paragraph
2(e) below on or before the date of such declaration or payment has been
paid
and (D) the Corporation has redeemed the full number of shares of APS
required
to be redeemed by any provision for mandatory redemption contained herein.
(e) Each dividend shall consist of (i) cash at the Applicable
Rate,
(ii) an uncertificated right (a "Right") to receive an Additional Dividend
(as
defined below), and (iii) any additional amounts as set forth in paragraph
2(f)
below. Each Right shall thereafter be independent of the share or shares of
APS
on which the dividend was paid. The Corporation shall cause to be maintained
a
record of each Right received by the respective Holders. A Right may not be
transferred other than by operation of law. If the Corporation retroactively
allocates any net capital gains or other income subject to regular Federal
income taxes to shares of APS without having given advance notice thereof to
the
Auction Agent as described in paragraph 2(f) hereof solely by reason of the
fact
that such allocation is made as a result of the redemption of all or a
portion
of the outstanding shares of APS or the liquidation of the Corporation (the
amount of such allocation referred to herein as a "Retroactive Taxable
Allocation"), the Corporation will, within 90 days (and generally within 60
days) after the end of the Corporation's fiscal year for which a Retroactive
Taxable Allocation is made, provide notice thereof to the Auction Agent and
to
each holder of a Right applicable to such shares of APS (initially as
nominee of
The Depository Trust Company) during such fiscal year at such holder's
address
as the same appears or last appeared on the Stock Books of the Corporation.
The
Corporation will, within 30 days after such notice is given to the Auction
Agent, pay to the Auction Agent (who will then distribute to such holders of
Rights), out of funds legally available therefor, an amount equal to the
aggregate Additional Dividend with respect to all Retroactive Taxable
Allocations made to such holders during the fiscal year in question.
An "Additional Dividend" means payment to a present or former
holder
of shares of APS of an amount which, when taken together with the aggregate
amount of Retroactive Taxable Allocations made to such holder with respect
to
the fiscal year in question, would cause such holder's dividends in dollars
(after Federal income tax consequences) from the aggregate of both the
Retroactive Taxable Allocations and the Additional Dividend to be equal to
the
dollar amount of the dividends which would have been received by such holder
if
the amount of the aggregate Retroactive Taxable Allocations would have been
excludable from the gross income of such holder. Such Additional Dividend
shall
be calculated (i) without consideration being given to the time value of
money;
(ii) assuming that no holder of shares of APS is subject to the Federal
alternative minimum tax with respect to dividends received from the
Corporation;
and (iii) assuming that each Retroactive Taxable Allocation would be taxable
in
the hands of each holder of shares of APS at the greater of: (x) the maximum
marginal regular Federal individual income tax rate applicable to ordinary
income or capital gains depending on the taxable character of the
distribution
(including any surtax); or (y) the maximum marginal regular Federal
corporate
income tax rate applicable to ordinary income or capital gains depending on
the
taxable character of the distribution (disregarding in both (x) and (y) the
effect of any state or local taxes and the phase out of, or provision
limiting,
personal exemptions, itemized deductions, or the benefit of lower tax
brackets).
(f) Except as provided below, whenever the Corporation intends to
include any net capital gains or other income subject to regular Federal
income
taxes in any dividend on shares of APS, the Corporation will notify the
Auction
Agent of the amount to be so included at least five Business Days prior to
the
Auction Date on which the Applicable Rate for such dividend is to be
established. The Corporation may also include such income in a dividend on
shares of a series of APS without giving advance notice thereof if it
increases
the dividend by an additional amount calculated as if such income was a
Retroactive Taxable Allocation and the additional amount was an Additional
Dividend, provided that the Corporation will notify the Auction Agent of the
additional amounts to be included in such dividend at least five Business
Days
prior to the applicable Dividend Payment Date.
(g) No fractional shares of APS shall be issued.
3. LIQUIDATION RIGHTS. Upon any liquidation, dissolution or
winding up
of the Corporation, whether voluntary or involuntary, the Holders shall be
entitled to receive, out of the assets of the Corporation available for
distribution to shareholders, before any distribution or payment is made
upon
any Common Stock or any other shares of ranking junior in right of payment
upon
liquidation to the APS, the sum of $25,000 per share plus accumulated but
unpaid
dividends (whether or not earned or declared) thereon to the date of
distribution, and after such payment the Holders will be entitled to no
other
payments other than Additional Dividends as provided in paragraph 2(e)
hereof.
If upon any liquidation, dissolution or winding up of the Corporation, the
amounts payable with respect to the APS and any other Outstanding class or
series of Preferred Stock of the Corporation ranking on a parity with the
APS as
to payment upon liquidation are not paid in full, the Holders and the
holders of
such other class or series will share ratably in any such distribution of
assets
in proportion to the respective preferential amounts to which they are
entitled.
After payment of the full amount of the liquidating distribution to which
they
are entitled, the Holders will not be entitled to any further participation
in
any distribution of assets by the Corporation except for any Additional
Dividends. A consolidation, merger or statutory share exchange of the
Corporation with or into any other corporation or entity 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.
4. REDEMPTION. (a) Shares of APS shall be redeemable by the
Corporation as provided below:
(i) To the extent permitted under the 1940 Act and Maryland law,
upon
giving a Notice of Redemption, the Corporation at its option may redeem
shares
of any series of APS, in whole or in part, out of funds legally available
therefor, at the Optional Redemption Price per share, on any Dividend
Payment
Date; provided that no share of APS may be redeemed at the option of the
Corporation during (A) the Initial Dividend Period with respect to a series
of
shares or (B) a Non-Call Period to which such share is subject. In addition,
holders of APS which are redeemed shall be entitled to receive Additional
Dividends to the extent provided herein. The Corporation may not give a
Notice
of Redemption relating to an optional redemption as described in this
paragraph
4(a)(i) unless, at the time of giving such Notice of Redemption, the
Corporation
has available Deposit Securities with maturity or tender dates not later
than
the day preceding the applicable redemption date and having a value not less
than the amount due to Holders by reason of the redemption of their shares
of
APS on such redemption date.
(ii) The Corporation shall redeem, out of funds legally available
therefor, at the Mandatory Redemption Price per share, shares of APS to the
extent permitted under the 1940 Act and Maryland law, on a date fixed by the
Board of Directors, if the Corporation fails to maintain S&P Eligible Assets
with an aggregate Discounted Value equal to or greater than the APS Basic
Maintenance Amount as provided in paragraph 7(a) or to satisfy the 1940 Act
APS
Asset Coverage as provided in paragraph 6 and such failure is not cured on
or
before the APS Basic Maintenance Cure Date or the 1940 Act Cure Date (herein
collectively referred to as a "Cure Date"), as the case may be. In addition,
holders of APS so redeemed shall be entitled to receive Additional Dividends
to
the extent provided herein. The number of shares of APS to be redeemed shall
be
equal to the lesser of (i) the minimum number of shares of APS the
redemption of
which, if deemed to have occurred immediately prior to the opening of
business
on the Cure Date, together with all shares of other Preferred Stock subject
to
redemption or retirement, would result in the Corporation having S&P
Eligible
Assets with an aggregate Discounted Value equal to or greater than the APS
Basic
Maintenance Amount or satisfaction of the 1940 Act APS Asset Coverage, as
the
case may be, on such Cure Date (provided that, if there is no such minimum
number of shares of APS and shares of other Preferred Stock the redemption
of
which would have such result, all shares of APS and shares of other
Preferred
Stock then Outstanding shall be redeemed), and (ii) the maximum number of
shares
of APS, together with all shares of other Preferred Stock subject to
redemption
or retirement, that can be redeemed out of funds expected to be legally
available therefor on such redemption date. In determining the number of
shares
of APS required to be redeemed in accordance with the foregoing, the
Corporation
shall allocate the number required to be redeemed which would result in the
Corporation having S&P Eligible Assets with an aggregate Discounted Value
equal
to or greater than the APS Basic Maintenance Amount or satisfaction of the
1940
Act APS Asset Coverage, as the case may be, pro rata among shares of APS of
all
series, Other APS and other Preferred Stock subject to redemption pursuant
to
provisions similar to those contained in this paragraph 4(a)(ii); provided
that,
shares of APS which may not be redeemed at the option of the Corporation due
to
the designation of a Non-Call Period applicable to such shares (A) will be
subject to mandatory redemption only to the extent that other shares are not
available to satisfy the number of shares required to be redeemed and (B)
will
be selected for redemption in an ascending order of outstanding number of
days
in the Non-Call Period (with shares with the lowest number of days to be
redeemed first) and by lot in the event of shares having an equal number of
days
in such Non-Call Period. The Corporation shall effect such redemption on a
Business Day which is not later than 35 days after such Cure Date, except
that
if the Corporation does not have funds legally available for the redemption
of
all of the required number of shares of APS and shares of other Preferred
Stock
which are subject to mandatory redemption or the Corporation otherwise is
unable
to effect such redemption on or prior to 35 days after such Cure Date, the
Corporation shall redeem those shares of APS which it is unable to redeem on
the
earliest practicable date on which it is able to effect such redemption out
of
funds legally available therefor.
(b) Notwithstanding any other provision of this paragraph 4, no
shares
of APS may be redeemed pursuant to paragraph 4(a)(i) of these Articles
Supplementary (i) unless all dividends in arrears on all remaining
outstanding
shares of Parity Shares shall have been or are being contemporaneously paid
or
declared and set apart for payment and (ii) if redemption thereof would
result
in the Corporation's failure to maintain S&P Eligible Assets with an
aggregate
Discounted Value equal to or greater than the APS Basic Maintenance Amount.
In
the event that less than all the outstanding shares of a series of APS are
to be
redeemed and there is more than one Holder, the shares of that series of APS
to
be redeemed shall be selected by lot or such other method as the Corporation
shall deem fair and equitable.
(c) Whenever shares of APS are to be redeemed, the Corporation,
not
less than 17 nor more than 30 days prior to the date fixed for redemption,
shall
mail a notice ("Notice of Redemption") by first-class mail, postage prepaid,
to
each Holder of shares of APS to be redeemed and to the Auction Agent. The
Corporation shall cause the Notice of Redemption to also be published in the
eastern and national editions of The Wall Street Journal. The Notice of
Redemption shall set forth (i) the redemption date, (ii) the amount of the
redemption price, (iii) the aggregate number of shares of APS of such series
to
be redeemed, (iv) the place or places where shares of APS of such series are
to
be surrendered for payment of the redemption price, (v) a statement that
dividends on the shares to be redeemed shall cease to accumulate on such
redemption date (except that holders may be entitled to Additional
Dividends)
and (vi) the provision of these Articles Supplementary pursuant to which
such
shares are being redeemed. No defect in the Notice of Redemption or in the
mailing or publication thereof shall affect the validity of the redemption
proceedings, except as required by applicable law.
If the Notice of Redemption shall have been given as aforesaid
and,
concurrently or thereafter, the Corporation shall have deposited in trust
with
the Auction Agent, or segregated in an account at the Corporation's
custodian
bank for the benefit of the Auction Agent, Deposit Securities (with a right
of
substitution) having an aggregate Discounted Value (utilizing in the case of
S&P
an S&P Exposure Period of 3 Business Days) equal to the redemption payment
for
the shares of APS as to which such Notice of Redemption has been given with
irrevocable instructions and authority to pay the redemption price to the
Holders of such shares, then upon the date of such deposit or, if no such
deposit is made, then upon such date fixed for redemption (unless the
Corporation shall default in making the redemption payment), all rights of
the
Holders of such shares as shareholders of the Corporation by reason of the
ownership of such shares will cease and terminate (except their right to
receive
the redemption price in respect thereof and any Additional Dividends, but
without interest), and such shares shall no longer be deemed outstanding.
The
Corporation shall be entitled to receive, from time to time, from the
Auction
Agent the interest, if any, on such Deposit Securities 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 one year after the date of
redemption,
the Auction Agent shall, upon demand, pay over to the Corporation such
amount
remaining on deposit and the Auction 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.
5. VOTING RIGHTS. (a) General. Except as otherwise provided in the
Articles of Incorporation, each Holder of shares of APS shall 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,
including APS, and of shares of Common Stock shall vote together as a single
class; provided that, at any meeting of the stockholders of the Corporation
held
for the election of directors, the holders of outstanding shares of
Preferred
Stock, including APS, shall be entitled, as a class, to the exclusion of the
holders of all other securities and classes of capital stock of the
Corporation,
to elect two directors of the Corporation. Subject to paragraph 5(b) hereof,
the
holders of outstanding shares of capital stock of the Corporation, including
the
holders of outstanding shares of Preferred Stock, including APS, voting as a
single class, shall elect the balance of the directors.
(b) Right to Elect Majority of Board of Directors. During any
period
in which any one or more of the conditions described below shall exist (such
period being referred to herein as a "Voting Period"), the number of
directors
constituting the Board of Directors shall be automatically increased by the
smallest number that, when added to the two directors elected exclusively by
the
holders of shares of Preferred Stock, would constitute a majority of the
Board
of Directors as so increased by such smallest number; and the holders of
shares
of Preferred Stock shall be entitled, voting separately as one class (to the
exclusion of the holders of all other securities and classes of shares of
capital stock of the Corporation), to elect such smallest number of
additional
directors, together with the two directors that such holders are in any
event
entitled to elect. A Voting Period shall commence:
(i) if at any time accumulated dividends (whether or not earned or
declared, and whether or not funds are then legally available in an amount
sufficient therefor) on the outstanding shares of APS equal to at least two
full
years' dividends shall be due and unpaid and sufficient cash or specified
securities shall not have been deposited with the Auction Agent for the
payment
of such accumulated dividends; or
(ii) if at any time holders of any other shares of Preferred Stock
are
entitled to elect a majority of the directors of the Corporation under the
1940
Act. Upon the termination of a Voting Period, the voting rights described in
this paragraph 5(b) shall cease, subject always, however, to the reverting
of
such voting rights in the Holders upon the further occurrence of any of the
events described in this paragraph 5(b).
(c) Right to Vote with Respect to Certain Other Matters. So long
as
any shares of APS are outstanding, the Corporation shall not, without the
affirmative vote of the holders of a majority of the shares of Preferred
Stock
Outstanding at the time, voting separately as one class: (i) authorize,
create
or issue any class or series of shares of capital stock ranking prior to the
APS
or any other series of Preferred Stock with respect to payment of dividends
or
the distribution of assets on liquidation, or (ii) amend, alter or repeal
the
provisions of the Articles of Incorporation, whether by merger,
consolidation or
otherwise, so as to adversely affect any of the contract rights expressly
set
forth in the Articles of Incorporation of holders of shares of APS or any
other
Preferred Stock. So long as any shares of APS are outstanding, the
Corporation
may not, without the affirmative vote of the holders of at least 66-2/3% of
the
shares of APS outstanding at the time, voting as a separate class, file a
voluntary application for relief under federal bankruptcy law or any similar
application under state law for so long as the Corporation is solvent and
does
not foresee becoming insolvent. To the extent permitted under the 1940 Act,
in
the event shares of more than one series of APS are outstanding, the
Corporation
shall not approve any of the actions set forth in clause (i) or (ii) which
adversely affects the contract rights expressly set forth in the Articles of
Incorporation of a Holder of shares of a series of APS differently than
those of
a Holder of shares of any other series of APS without the affirmative vote
of
the holders of at least a majority of the shares of APS of each series
adversely
affected and outstanding at such time (each such adversely affected series
voting separately as a class). The Corporation shall notify S&P ten Business
Days prior to any such vote described in clause (i) or (ii). Unless a higher
percentage is provided for under the Articles of Incorporation, the
affirmative
vote of the holders of a majority of the outstanding shares of Preferred
Stock,
including APS, voting together as a single class, will be required to
approve
any plan of reorganization (including bankruptcy proceedings) adversely
affecting such shares or any action requiring a vote of security holders
under
Section 13(a) of the 1940 Act. The class vote of holders of shares of
Preferred
Stock, including APS, described above will in each case be in addition to a
separate vote of the requisite percentage of shares of Common Stock and
shares
of Preferred Stock, including APS, voting together as a single class
necessary
to authorize the action in question.
(d) Voting Procedures.
(i) As soon as practicable after the accrual of any right of the
holders of shares of Preferred Stock to elect additional directors as
described
in paragraph 5(b) above, the Corporation shall call a special meeting of
such
holders and instruct the Auction Agent to mail a notice of such special
meeting
to such holders, such meeting to be held not less than 10 nor more than 20
days
after the date of mailing of such notice. If the Corporation fails to send
such
notice to the Auction Agent or if the Corporation does not call such a
special
meeting, it may be called by any such holder on like notice. The record date
for
determining the holders entitled to notice of and to vote at such special
meeting shall be the close of business on the fifth Business Day preceding
the
day on which such notice is mailed. At any such special meeting and at each
meeting held during a Voting Period, such Holders, voting together as a
class
(to the exclusion of the holders of all other securities and classes of
shares
of capital stock of the Corporation), shall be entitled to elect the number
of
directors prescribed in paragraph 5(b) above. At any such meeting or
adjournment
thereof in the absence of a quorum, a majority of such holders present in
person
or by proxy shall have the power to adjourn the meeting without notice,
other
than by an announcement at the meeting, to a date not more than 120 days
after
the original record date.
(ii) For purposes of determining any rights of the Holders to vote
on
any matter or the number of shares required to constitute a quorum, whether
such
right is created by these Articles Supplementary, by the other provisions of
the
Articles of Incorporation, by statute or otherwise, a share of APS which is
not
Outstanding shall not be counted.
(iii) Subject to the provisions of paragraph 5(b) hereof, the
terms of
office of all persons who are directors of the Corporation at the time of a
special meeting of Holders and holders of other Preferred Stock to elect
directors shall continue, notwithstanding the election at such meeting by
the
Holders and such other holders of the number of directors that they are
entitled
to elect, and the persons so elected by the Holders and such other holders,
together with the two incumbent directors elected by the Holders and such
other
holders of Preferred Stock and the remaining incumbent directors elected by
the
holders of the Common Stock and Preferred Stock, shall constitute the duly
elected directors of the Corporation.
(iv) Simultaneously with the expiration of a Voting Period, the
terms
of office of the additional directors elected by the Holders and holders of
other Preferred Stock pursuant to paragraph 5(b) above shall terminate, the
remaining directors shall constitute the directors of the Corporation and
the
voting rights of the Holders and such other holders to elect additional
directors pursuant to paragraph 5(b) above shall cease, subject to the
provisions of the last sentence of paragraph 5(b).
(v) Solely for purposes of the provisions of paragraphs 5 (b) and
(d)
hereof, and subject to the terms thereof in accordance with the 1940 Act and
Section 3-803(f) of the Maryland General Corporation Law (the "MGCL"), by
resolution of its Board of Directors on August 12, 1999, the Corporation
elected
to be subject to Section 3-804(b) of the MGCL, which vests in the Board the
power to fix the number of directors of the Corporation, to be effective
upon
the occurrence of the conditions giving rise to a Voting Period,
notwithstanding
any contrary provisions in the Corporation's Charter or Bylaws. Except as
set
forth above, the Corporation has not elected to be subject to the provisions
of
Title 3 Subtitle 8 of the MGCL.
(e) Exclusive Remedy. Unless otherwise required by law, the
Holders of
shares of APS shall not have any rights or preferences other than those
specifically set forth herein. The Holders of shares of APS shall have no
preemptive rights or rights to cumulative voting. In the event that the
Corporation fails to pay any dividends on the shares of APS, the exclusive
remedy of the Holders shall be the right to vote for directors pursuant to
the
provisions of this paragraph 5.
(f) Notification to S&P and Moody's. In the event a vote of
Holders of
APS is required pursuant to the provisions of Section 13(a) of the 1940 Act,
the
Corporation shall, not later than ten Business Days prior to the date on
which
such vote is to be taken, notify S&P that such vote is to be taken and the
nature of the action with respect to which such vote is to be taken and, not
later than ten Business Days after the date on which such vote is taken,
notify
S&P of the result of such vote.
6. 1940 ACT APS ASSET COVERAGE. The Corporation shall maintain, as
of
the last Business Day of each month in which any share of APS is
outstanding,
the 1940 Act APS Asset Coverage.
7. APS BASIC MAINTENANCE AMOUNT. (a) The Corporation shall
maintain,
on each Valuation Date, and shall verify to its satisfaction that it is
maintaining on such Valuation Date S&P Eligible Assets having an aggregate
Discounted Value equal to or greater than the APS Basic Maintenance Amount.
Upon
any failure to maintain the required Discounted Value, the Corporation will
use
its best efforts to alter the composition of its portfolio to retain a
Discounted Value at least equal to the APS Basic Maintenance Amount on or
prior
to the APS Basic Maintenance Cure Date.
(b) On or before 5:00 p.m., New York City time, on the third
Business
Day after a Valuation Date on which the Corporation fails to satisfy the APS
Basic Maintenance Amount, the Corporation shall complete and deliver to the
Auction Agent, and S&P, a complete APS Basic Maintenance Report as of the
date
of such failure, which will be deemed to have been delivered to the Auction
Agent if the Auction Agent receives a copy or telecopy, telex or other
electronic transcription thereof and on the same day the Corporation mails
to
the Auction Agent for delivery on the next Business Day the complete APS
Basic
Maintenance Report. The Corporation will deliver an APS Basic Maintenance
Report
to the Auction Agent and S&P, on or before 5:00 p.m., New York City time, on
the
third Business Day after a Valuation Date on which the Corporation cures its
failure to maintain S&P Eligible Assets, with an aggregate Discounted Value
equal to or greater than the APS Basic Maintenance Amount or on which the
Corporation fails to maintain S&P Eligible Assets, with an aggregate
Discounted
Value which exceeds the APS Basic Maintenance Amount by 5% or more. The
Corporation will also deliver an APS Basic Maintenance Report to the Auction
Agent and S&P as of each Quarterly Valuation Date on or before the third
Business Day after such date. Additionally, on or before 5:00 p.m., New York
City time, on the third Business Day after the first day of a Special
Dividend
Period, the Corporation will deliver an APS Basic Maintenance Report to S&P
and
the Auction Agent. The Corporation shall also provide S&P with an APS Basic
Maintenance Report when specifically requested by S&P. A failure by the
Corporation to deliver an APS Basic Maintenance Report under this paragraph
7(b)
shall be deemed to be delivery of an APS Basic Maintenance Report indicating
the
Discounted Value for S&P Eligible Assets of the Corporation is less than the
APS
Basic Maintenance Amount, as of the relevant Valuation Date.
(c) Within ten Business Days after the date of delivery of an APS
Basic Maintenance Report in accordance with paragraph 7(b) above relating to
a
Quarterly Valuation Date, the Independent Accountant will confirm in writing
to
the Auction Agent and S&P (i) the mathematical accuracy of the calculations
reflected in such Report (and in any other APS Basic Maintenance Report,
randomly selected by the Independent Accountant, that was delivered by the
Corporation during the quarter ending on such Quarterly Valuation Date),
(ii)
that, in such Report (and in such randomly selected Report), the Corporation
correctly determined the assets of the Corporation which constitute S&P
Eligible
Assets at such Quarterly Valuation Date in accordance with these Articles
Supplementary, (iii) that, in such Report (and in such randomly selected
Report), the Corporation determined whether the Corporation had, at such
Quarterly Valuation Date (and at the Valuation Date addressed in such
randomly
selected Report) in accordance with these Articles Supplementary, S&P
Eligible
Assets of an aggregate Discounted Value at least equal to the APS Basic
Maintenance Amount, (iv) with respect to the S&P ratings on Municipal
Obligations, the issuer name, issue size and coupon rate listed in such
Report,
that the Independent Accountant has requested that S&P verify such
information
and the Independent Accountant shall provide a listing in its letter of any
differences, (v) with respect to the Moody's ratings on Municipal
Obligations,
the issuer name, issue size and coupon rate listed in such Report, that such
information has been verified by Moody's (in the event such information is
not
verified by Moody's, the Independent Accountant will inquire of Moody's what
such information is, and provide a listing in its letter of any
differences),
(vi) with respect to the bid or mean price (or such alternative permissible
factor used in calculating the Market Value) provided by the custodian of
the
Corporation's assets to the Corporation for purposes of valuing securities
in
the Corporation's portfolio, the Independent Accountant has traced the price
used in such Report to the bid or mean price listed in such Report as
provided
to the Corporation and verified that such information agrees (in the event
such
information does not agree, the Independent Accountant will provide a
listing in
its letter of such differences) and (vii) with respect to such confirmation
to
Moody's, that the Corporation has satisfied the requirements of paragraph
8(b)
of these Articles Supplementary (such confirmation is herein called the
"Accountant's Confirmation").
(d) Within ten Business Days after the date of delivery to the
Auction
Agent and S&P of an APS Basic Maintenance Report in accordance with
paragraph
7(b) above relating to any Valuation Date on which the Corporation failed to
maintain S&P Eligible Assets with an aggregate Discounted Value equal to or
greater than the APS Basic Maintenance Amount, and relating to the APS Basic
Maintenance Cure Date with respect to such failure, the Independent
Accountant
will provide to the Auction Agent and S&P an Accountant's Confirmation as to
such APS Basic Maintenance Report.
(e) If any Accountant's Confirmation delivered pursuant to
subparagraph (c) or (d) of this paragraph 7 shows that an error was made in
the
APS Basic Maintenance Report for a particular Valuation Date for which such
Accountant's Confirmation as required to be delivered, or shows that a lower
aggregate Discounted Value for the aggregate of all S&P Eligible Assets of
the
Corporation was determined by the Independent Accountant, the calculation or
determination made by such Independent Accountant shall be final and
conclusive
and shall be binding on the Corporation, and the Corporation shall
accordingly
amend and deliver the APS Basic Maintenance Report to the Auction Agent and
S&P
promptly following receipt by the Corporation of such Accountant's
Confirmation.
(f) On or before 5:00 p.m., New York City time, on the first
Business
Day after the Date of Original Issue of the shares of APS, the Corporation
will
complete and deliver to S&P an APS Basic Maintenance Report as of the close
of
business on such Date of Original Issue. Within five Business Days of such
Date
of Original Issue, the Independent Accountant will confirm in writing to S&P
(i)
the mathematical accuracy of the calculations reflected in such Report and
(ii)
that the aggregate Discounted Value of S&P Eligible Assets reflected thereon
equals or exceeds the APS Basic Maintenance Amount reflected thereon. Also,
on
or before 5:00 p.m., New York City time, on the first Business Day after
shares
of Common Stock are repurchased by the Corporation, the Corporation will
complete and deliver to S&P an APS Basic Maintenance Report as of the close
of
business on such date that Common Stock is repurchased.
8. CERTAIN OTHER RESTRICTIONS AND REQUIREMENTS.
(a) For so long as any shares of APS are rated by S&P, the
Corporation
will not purchase or sell futures contracts, write, purchase or sell options
on
futures contracts or write put options (except covered put options) or call
options (except covered call options) on portfolio securities unless it
receives
written confirmation from S&P that engaging in such transactions will not
impair
the ratings then assigned to the shares of APS by S&P, except that the
Corporation may purchase or sell futures contracts based on the Bond Buyer
Municipal Bond Index (the "Municipal Index") or United States Treasury Bonds
or
Notes ("Treasury Bonds") and write, purchase or sell put and call options on
such contracts (collectively, "S&P Hedging Transactions"), subject to the
following limitations:
(i) the Corporation will not engage in any S&P Hedging Transaction
based on the Municipal Index (other than transactions which terminate a
futures
contract or option held by the Corporation by the Corporation's taking an
opposite position thereto ("Closing Transactions")), which would cause the
Corporation at the time of such transaction to own or have sold the least of
(A)
more than 1,000 outstanding futures contracts based on the Municipal Index,
(B)
outstanding futures contracts based on the Municipal Index exceeding in
number
25% of the quotient of the Market Value of the Corporation's total assets
divided by $1,000 or (C) outstanding futures contracts based on the
Municipal
Index exceeding in number 10% of the average number of daily traded futures
contracts based on the Municipal Index in the 30 days preceding the time of
effecting such transaction as reported by The Wall Street Journal;
(ii) the Corporation will not engage in any S&P Hedging
Transaction
based on Treasury Bonds (other than Closing Transactions) which would cause
the
Corporation at the time of such transaction to own or have sold the lesser
of
(A) outstanding futures contracts based on Treasury Bonds and on the
Municipal
Index exceeding in number 25% of the quotient of the Market Value of the
Corporation's total assets divided by $100,000 ($200,000 in the case of the
two-year United States Treasury Note) or (B) outstanding futures contracts
based
on Treasury Bonds exceeding in number 10% of the average number of daily
traded
futures contracts based on Treasury Bonds in the 30 days preceding the time
of
effecting such transaction as reported by The Wall Street Journal;
(iii) the Corporation will engage in Closing Transactions to close
out
any outstanding futures contract which the Corporation owns or has sold or
any
outstanding option thereon owned by the Corporation in the event (A) the
Corporation does not have S&P Eligible Assets with an aggregate Discounted
Value
equal to or greater than the APS Basic Maintenance Amount on two consecutive
Valuation Dates and (B) the Corporation is required to pay Variation Margin
on
the second such Valuation Date;
(iv) the Corporation will engage in a Closing Transaction to close
out
any outstanding futures contract or option thereon in the month prior to the
delivery month under the terms of such futures contract or option thereon
unless
the Corporation holds the securities deliverable under such terms; and
(v) when the Corporation writes a futures contract or option
thereon,
it will either maintain an amount of cash, cash equivalents or high grade
(rated
A or better by S&P), fixed-income securities in a segregated account with
the
Corporation's custodian, so that the amount so segregated plus the amount of
Initial Margin and Variation Margin held in the account of or on behalf of
the
Corporation's broker with respect to such futures contract or option equals
the
Market Value of the futures contract or option, or, in the event the
Corporation
writes a futures contract or option thereon which requires delivery of an
underlying security, it shall hold such underlying security in its
portfolio.
For purposes of determining whether the Corporation has S&P
Eligible
Assets with a Discounted Value that equals or exceeds the APS Basic
Maintenance
Amount, the Discounted Value of cash or securities held for the payment of
Initial Margin or Variation Margin shall be zero and the aggregate
Discounted
Value of S&P Eligible Assets shall be reduced by an amount equal to (i) 30%
of
the aggregate settlement value, as marked to market, of any outstanding
futures
contracts based on the Municipal Index which are owned by the Corporation
plus
(ii) 25% of the aggregate settlement value, as marked to market, of any
outstanding futures contracts based on Treasury Bonds which contracts are
owned
by the Corporation.
(b) For so long as shares of APS are rated by S&P, the Corporation
will not, unless it has received written confirmation from S&P that such
action
would not impair the rating then assigned to shares of APS by S&P (i) borrow
money except for the purpose of clearing transactions in portfolio
securities
(which borrowings shall under any circumstances be limited to the lesser of
$10
million and an amount equal to 5% of the Market Value of the Corporation's
assets at the time of such borrowings and which borrowings shall be repaid
within 60 days and not be extended or renewed and shall not cause the
aggregate
Discounted Value of S&P Eligible Assets to be less than the APS Basic
Maintenance Amount), (ii) engage in short sales of securities, (iii) lend
any
securities, (iv) issue any class or series of stock ranking prior to or on a
parity with the APS with respect to the payment of dividends or the
distribution
of assets upon dissolution, liquidation or winding up of the Corporation,
(v)
reissue any APS previously purchased or redeemed by the Corporation, (vi)
merge
or consolidate into or with any other Corporation or entity, (vii) change
the
Pricing Service or (viii) engage in reverse repurchase agreements.
9. NOTICE. All notices or communications, unless otherwise
specified
in these Articles Supplementary, shall be sufficiently given if in writing
and
delivered in person or mailed by first-class mail, postage prepaid. Notice
shall
be deemed given on the earlier of the date received or the date seven days
after
which such notice is mailed.
10. AUCTION PROCEDURES.
(a) Certain definitions. As used in this paragraph 10, the
following
terms shall have the following meanings, unless the context otherwise
requires:
(i) "APS" means the shares of auction preferred stock being
auctioned
pursuant to this paragraph 10.
(ii) "Auction Date" means the first Business Day preceding the
first
day of a Dividend Period.
(iii) "Available APS" has the meaning specified in paragraph
10(d)(i)
below.
(iv) "Bid" has the meaning specified in paragraph 10(b)(i) below.
(v) "Bidder" has the meaning specified in paragraph 10(b)(i)
below.
(vi) "Hold Order" has the meaning specified in paragraph 10(b)(i)
below.
(vii) "Maximum Applicable Rate" for any Dividend Period will be
the
Applicable Percentage of the Reference Rate. The Applicable Percentage will
be
determined based on (i) the credit rating assigned on such date to such
shares
by S&P (or if S&P shall not make such rating available, the equivalent of
such
rating by a Substitute Rating Agency) and (ii) whether the Corporation has
provided notification to the Auction Agent prior to the Auction establishing
the
Applicable Rate for any dividend pursuant to paragraph 2(f) hereof that net
capital gains or other taxable income will be included in such dividend on
shares of APS as follows:
APPLICABLE APPLICABLE
PERCENTAGE OF Percentage
Of
Reference Rate -- Reference
Rate --
S&P Credit Ratings No Notification Notification
AA- or higher 110% 150%
A- to A+............ 125 160
BBB- to BBB+ 150 250
Below BBB-.......... 200 275
The Corporation shall take all reasonable action necessary to
enable
S&P to provide a rating for each series of APS. If S&P shall not make such a
rating available, the underwriter or its affiliates and successors, after
consultation with the Corporation, shall select a nationally recognized
statistical rating organization to act as a Substitute Rating Agency.
(viii) "Order" has the meaning specified in paragraph 10(b)(i)
below.
(ix) "Sell Order" has the meaning specified in paragraph 10(b)(i)
below.
(x) "Submission Deadline" means 1:00 P.M., New York City time, on
any
Auction Date or such other time on any Auction Date as may be specified by
the
Auction Agent from time to time as the time by which each Broker-Dealer must
submit to the Auction Agent in writing all Orders obtained by it for the
Auction
to be conducted on such Auction Date.
(xi) "Submitted Bid" has the meaning specified in paragraph
10(d)(i)
below.
(xii) "Submitted Hold Order" has the meaning specified in
paragraph
10(d)(i) below.
(xiii) "Submitted Order" has the meaning specified in paragraph
10(d)(i) below.
(xiv) "Submitted Sell Order" has the meaning specified in
paragraph
10(d)(i) below.
(xv) "Sufficient Clearing Bids" has the meaning specified in
paragraph
10(d)(i) below.
(xvi) "Winning Bid Rate" has the meaning specified in paragraph
10(d)(i) below.
(b) Orders by Beneficial Owners, Potential Beneficial Owners,
Existing
Holders and Potential Holders.
(i) Unless otherwise permitted by the Corporation, Beneficial
Owners
and Potential Beneficial Owners may only participate in Auctions through
their
Broker-Dealers. Broker-Dealers will submit the Orders of their respective
customers who are Beneficial Owners and Potential Beneficial Owners to the
Auction Agent, designating themselves as Existing Holders in respect of
shares
subject to Orders submitted or deemed submitted to them by Beneficial Owners
and
as Potential Holders in respect of shares subject to Orders submitted to
them by
Potential Beneficial Owners. A Broker-Dealer may also hold shares of APS in
its
own account as a Beneficial Owner. A Broker-Dealer may thus submit Orders to
the
Auction Agent as a Beneficial Owner or a Potential Beneficial Owner and
therefore participate in an Auction as an Existing Holder or Potential
Holder on
behalf of both itself and its customers. On or prior to the Submission
Deadline
on each Auction Date:
(A) each Beneficial Owner may submit to its Broker-Dealer
information as to:
(1) the number of Outstanding shares, if any, of APS held by
such
Beneficial Owner which such Beneficial Owner desires to continue to
hold
without regard to the Applicable Rate for the next succeeding Dividend
Period;
(2) the number of Outstanding shares, if any, of APS held by
such
Beneficial Owner which such Beneficial Owner desires to continue to
hold,
provided that the Applicable Rate for the next succeeding Dividend
Period
shall not be less than the rate per annum specified by such Beneficial
Owner; and/or
(3) the number of Outstanding shares, if any, of APS held by
such
Beneficial Owner which such Beneficial Owner offers to sell without
regard
to the Applicable Rate for the next succeeding Dividend Period; and
(B) each Broker-Dealer, using a list of Potential Beneficial
Owners
that shall be maintained in good faith for the purpose of conducting a
competitive Auction, shall contact Potential Beneficial Owners, including
Persons that are not Beneficial Owners, on such list to determine the number
of
Outstanding shares, if any, of APS which each such Potential Beneficial
Owner
offers to purchase, provided that the Applicable Rate for the next
succeeding
Dividend Period shall not be less than the rate per annum specified by such
Potential Beneficial Owner.
For the purposes hereof, the communication by a Beneficial Owner
or
Potential Beneficial Owner to a Broker-Dealer, or the communication by a
Broker-
Dealer acting for its own account to the Auction Agent, of information
referred
to in clause (A) or (B) of this paragraph 10(b)(i) is hereinafter referred
to as
an "Order" and each Beneficial Owner and each Potential Beneficial Owner
placing
an Order, including a Broker-Dealer acting in such capacity for its own
account,
is hereinafter referred to as a "Bidder"; an Order containing the
information
referred to in clause (A)(1) of this paragraph 10(b)(i) is hereinafter
referred
to as a "Hold Order"; an Order containing the information referred to in
clause
(A)(2) or (B) of this paragraph 10(b)(i) is hereinafter referred to as a
"Bid";
and an Order containing the information referred to in clause (A)(3) of this
paragraph 10(b)(i) is hereinafter referred to as a "Sell Order." Inasmuch as
a
Broker-Dealer participates in an Auction as an Existing Holder or a
Potential
Holder only to represent the interests of a Beneficial Owner or Potential
Beneficial Owner, whether it be its customers or itself, all discussion
herein
relating to the consequences of an Auction for Existing Holders and
Potential
Holders also applies to the underlying beneficial ownership interests
represented.
(ii) (A) A Bid by an Existing Holder shall constitute an
irrevocable
offer to sell:
(1) the number of Outstanding shares of APS specified in such
Bid
if the Applicable Rate determined on such Auction Date shall be less
than
the rate per annum specified in such Bid; or (1) such number or a
lesser
number of Outstanding shares of APS to be determined as set forth in
paragraph 10(e)(i)(D) if the Applicable Rate determined on such Auction
Date shall be equal to the rate per annum specified therein; or
(2) a lesser number of Outstanding shares of APS to be
determined
as set forth in paragraph 10(e)(ii)(C) if such specified rate per annum
shall be higher than the Maximum Applicable Rate and Sufficient
Clearing
Bids do not exist.
(B) A Sell Order by an Existing Holder shall constitute an
irrevocable
offer to sell:
(1) the number of Outstanding shares of APS specified in such
Sell Order; or
(2) such number or a lesser number of Outstanding shares of
APS
to be determined as set forth in paragraph 10(e)(ii)(C) if Sufficient
Clearing Bids do not exist.
(C) A Bid by a Potential Holder shall constitute an irrevocable
offer
to purchase:
(1) the number of Outstanding shares of APS specified in such
Bid
if the Applicable Rate determined on such Auction Date shall be higher
than
the rate per annum specified in such Bid; or
(2) such number or a lesser number of Outstanding shares of
APS
to be determined as set forth in paragraph 10(e)(i)(E) if the
Applicable
Rate determined on such Auction Date shall be equal to the rate per
annum
specified therein.
(c) Submission of Orders by Broker-Dealers to Auction Agent.
(i) Each Broker-Dealer shall submit in writing or through the
Auction
Agent's Auction Processing System to the Auction Agent prior to the
Submission
Deadline on each Auction Date all Orders obtained by such Broker-Dealer,
designating itself (unless otherwise permitted by the Corporation) as an
Existing Holder in respect of shares subject to Orders submitted or deemed
submitted to it by Beneficial Owners and as a Potential Holder in respect of
shares subject to Orders submitted to it by Potential Beneficial Owners, and
specifying with respect to each Order:
(A) the name of the Bidder placing such Order (which shall be the
Broker-Dealer unless otherwise permitted by the Corporation);
(B) the aggregate number of Outstanding shares of APS that are the
subject of such Order;
(C) to the extent that such Bidder is an Existing Holder:
(1) the number of Outstanding shares, if any, of APS subject to
any
Hold Order placed by such Existing Holder;
(2) the number of Outstanding shares, if any, of APS subject to
any
Bid placed by such Existing Holder and the rate per annum specified in such
Bid;
and
(3) the number of Outstanding shares, if any, of APS subject to
any
Sell Order placed by such Existing Holder; and
(D) to the extent such Bidder is a Potential Holder, the rate per
annum specified in such Potential Holder's Bid.
(ii) If any rate per annum specified in any Bid contains more than
three figures to the right of the decimal point, the Auction Agent shall
round
such rate up to the next highest one-thousandth (.001) of 1%.
(iii) If an Order or Orders covering all of the Outstanding shares
of
APS held by an Existing Holder are not submitted to the Auction Agent prior
to
the Submission Deadline, the Auction Agent shall deem a Hold Order (in the
case
of an Auction relating to a Dividend Period which is not a Special Dividend
Period) and a Sell Order (in the case of an Auction relating to a Special
Dividend Period) to have been submitted on behalf of such Existing Holder
covering the number of Outstanding shares of APS held by such Existing
Holder
and not subject to Orders submitted to the Auction Agent.
(iv) If one or more Orders on behalf of an Existing Holder
covering in
the aggregate more than the number of Outstanding shares of APS held by such
Existing Holder are submitted to the Auction Agent, such Order shall be
considered valid as follows and in the following order of priority:
(A) any Hold Order submitted on behalf of such Existing Holder
shall
be considered valid up to and including the number of Outstanding shares of
APS
held by such Existing Holder; provided that if more than one Hold Order is
submitted on behalf of such Existing Holder and the number of shares of APS
subject to such Hold Orders exceeds the number of Outstanding shares of APS
held
by such Existing Holder, the number of shares of APS subject to each of such
Hold Orders shall be reduced pro rata so that such Hold Orders, in the
aggregate, will cover exactly the number of Outstanding shares of APS held
by
such Existing Holder;
(B) any Bids submitted on behalf of such Existing Holder shall be
considered valid, in the ascending order of their respective rates per annum
if
more than one Bid is submitted on behalf of such Existing Holder, up to and
including the excess of the number of Outstanding shares of APS held by such
Existing Holder over the number of shares of APS subject to any Hold Order
referred to in paragraph 10(c)(iv)(A) above (and if more than one Bid
submitted
on behalf of such Existing Holder specifies the same rate per annum and
together
they cover more than the remaining number of shares that can be the subject
of
valid Bids after application of paragraph 10(c)(iv)(A) above and of the
foregoing portion of this paragraph 10(c)(iv)(B) to any Bid or Bids
specifying a
lower rate or rates per annum, the number of shares subject to each of such
Bids
shall be reduced pro rata so that such Bids, in the aggregate, cover exactly
such remaining number of shares); and the number of shares, if any, subject
to
Bids not valid under this paragraph 10(c)(iv)(B) shall be treated as the
subject
of a Bid by a Potential Holder; and
(C) any Sell Order shall be considered valid up to and including
the
excess of the number of Outstanding shares of APS held by such Existing
Holder
over the number of shares of APS subject to Hold Orders referred to in
paragraph
10(c)(iv)(A) and Bids referred to in paragraph 10(c)(iv)(B); provided that
if
more than one Sell Order is submitted on behalf of any Existing Holder and
the
number of shares of APS subject to such Sell Orders is greater than such
excess,
the number of shares of APS subject to each of such Sell Orders shall be
reduced
pro rata so that such Sell Orders, in the aggregate, cover exactly the
number of
shares of APS equal to such excess.
(v) If more than one Bid is submitted on behalf of any Potential
Holder, each Bid submitted shall be a separate Bid with the rate per annum
and
number of shares of APS therein specified.
(vi) Any Order submitted by a Beneficial Owner as a Potential
Beneficial Owner to its Broker-Dealer, or by a Broker-Dealer to the Auction
Agent, prior to the Submission Deadline on any Auction Date shall be
irrevocable.
(d) Determination of Sufficient Clearing Bids, Winning Bid Rate
and
Applicable Rate.
(i) Not earlier than the Submission Deadline on each Auction Date,
the
Auction Agent shall assemble all Orders submitted or deemed submitted to it
by
the Broker-Dealers (each such Order as submitted or deemed submitted by a
Broker-Dealer being hereinafter referred to individually as a "Submitted
Hold
Order", a "Submitted Bid" or a "Submitted Sell Order", as the case may be,
or as
a "Submitted Order") and shall determine:
(A) the excess of the total number of Outstanding shares of APS
over
the number of Outstanding shares of APS that are the subject of Submitted
Hold
Orders (such excess being hereinafter referred to as the "Available APS");
(B) from the Submitted Orders whether the number of Outstanding
shares
of APS that are the subject of Submitted Bids by Potential Holders
specifying
one or more rates per annum equal to or lower than the Maximum Applicable
Rate
exceeds or is equal to the sum of:
(1) the number of Outstanding shares of APS that are the
subject
of Submitted Bids by Existing Holders specifying one or more rates per
annum higher than the Maximum Applicable Rate, and
(2) the number of Outstanding shares of APS that are subject
to
Submitted Sell Orders (if such excess or such equality exists (other
than
because the number of Outstanding shares of APS in clause (1) above and
this clause (2) are each zero because all of the Outstanding shares of
APS
are the subject of Submitted Hold Orders), such Submitted Bids by
Potential
Holders being hereinafter referred to collectively as "Sufficient
Clearing
Bids"); and
(C) if Sufficient Clearing Bids exist, the lowest rate per annum
specified in the Submitted Bids (the "Winning Bid Rate") that if:
(1) each Submitted Bid from Existing Holders specifying the
Winning Bid Rate and all other Submitted Bids from Existing Holders
specifying lower rates per annum were rejected, thus entitling such
Existing Holders to continue to hold the shares of APS that are the
subject
of such Submitted Bids, and
(2) each Submitted Bid from Potential Holders specifying the
Winning Bid Rate and all other Submitted Bids from Potential Holders
specifying lower rates per annum were accepted, thus entitling the
Potential Holders to purchase the shares of APS that are the subject of
such Submitted Bids, would result in the number of shares subject to
all
Submitted Bids specifying the Winning Bid Rate or a lower rate per
annum
being at least equal to the Available APS.
(ii) Promptly after the Auction Agent has made the determinations
pursuant to paragraph 10(d)(i), the Auction Agent shall advise the
Corporation
of the Maximum Applicable Rate and, based on such determinations, the
Applicable
Rate for the next succeeding Dividend Period as follows:
(A) if Sufficient Clearing Bids exist, that the Applicable Rate
for
the next succeeding Dividend Period shall be equal to the Winning Bid Rate;
(B) if Sufficient Clearing Bids do not exist (other than because
all
of the Outstanding shares of APS are the subject of Submitted Hold Orders),
that
the Applicable Rate for the next succeeding Dividend Period shall be equal
to
the Maximum Applicable Rate; or
(C) if all of the Outstanding shares of APS are the subject of
Submitted Hold Orders, that the Dividend Period next succeeding the Auction
shall automatically be the same length as the immediately preceding Dividend
Period and the Applicable Rate for the next succeeding Dividend Period shall
be
equal to 40% of the Reference Rate (or 60% of such rate if the Corporation
has
provided notification to the Auction Agent prior to the Auction establishing
the
Applicable Rate for any dividend pursuant to paragraph 2(f) hereof that net
capital gains or other taxable income will be included in such dividend on
shares of APS) on the date of the Auction.
(e) Acceptance and Rejection of Submitted Bids and Submitted Sell
Orders and Allocation of Shares. Based on the determinations made pursuant
to
paragraph 10(d)(i), the Submitted Bids and Submitted Sell Orders shall be
accepted or rejected and the Auction Agent shall take such other action as
set
forth below:
(i) If Sufficient Clearing Bids have been made, subject to the
provisions of paragraph 10(e)(iii) and paragraph 10(e)(iv), Submitted Bids
and
Submitted Sell Orders shall be accepted or rejected in the following order
of
priority and all other Submitted Bids shall be rejected:
(A) the Submitted Sell Orders of Existing Holders shall be
accepted
and the Submitted Bid of each of the Existing Holders specifying any rate
per
annum that is higher than the Winning Bid Rate shall be accepted, thus
requiring
each such Existing Holder to sell the Outstanding shares of APS that are the
subject of such Submitted Sell Order or Submitted Bid;
(B) the Submitted Bid of each of the Existing Holders specifying
any
rate per annum that is lower than the Winning Bid Rate shall be rejected,
thus
entitling each such Existing Holder to continue to hold the Outstanding
shares
of APS that are the subject of such Submitted Bid;
(C) the Submitted Bid of each of the Potential Holders specifying
any
rate per annum that is lower than the Winning Bid Rate shall be accepted;
(D) the Submitted Bid of each of the Existing Holders specifying a
rate per annum that is equal to the Winning Bid Rate shall be rejected, thus
entitling each such Existing Holder to continue to hold the Outstanding
shares
of APS that are the subject of such Submitted Bid, unless the number of
Outstanding shares of APS subject to all such Submitted Bids shall be
greater
than the number of Outstanding shares of APS ("Remaining Shares") equal to
the
excess of the Available APS over the number of Outstanding shares of APS
subject
to Submitted Bids described in paragraph 10(e)(i)(B) and paragraph
10(e)(i)(C),
in which event the Submitted Bids of each such Existing Holder shall be
accepted, and each such Existing Holder shall be required to sell
Outstanding
shares of APS, but only in an amount equal to the difference between (1) the
number of Outstanding shares of APS then held by such Existing Holder
subject to
such Submitted Bid and (2) the number of shares of APS obtained by
multiplying
(x) the number of Remaining Shares by (y) a fraction the numerator of which
shall be the number of Outstanding shares of APS held by such Existing
Holder
subject to such Submitted Bid and the denominator of which shall be the sum
of
the number of Outstanding shares of APS subject to such Submitted Bids made
by
all such Existing Holders that specified a rate per annum equal to the
Winning
Bid Rate; and
(E) the Submitted Bid of each of the Potential Holders specifying
a
rate per annum that is equal to the Winning Bid Rate shall be accepted but
only
in an amount equal to the number of Outstanding shares of APS obtained by
multiplying (x) the difference between the Available APS and the number of
Outstanding shares of APS subject to Submitted Bids described in paragraph
10(e)(i)(B), paragraph 10(e)(i)(C) and paragraph 10(e)(i)(D) by (y) a
fraction
the numerator of which shall be the number of Outstanding shares of APS
subject
to such Submitted Bid and the denominator of which shall be the sum of the
number of Outstanding shares of APS subject to such Submitted Bids made by
all
such Potential Holders that specified rates per annum equal to the Winning
Bid
Rate.
(ii) If Sufficient Clearing Bids have not been made (other than
because all of the Outstanding shares of APS are subject to Submitted Hold
Orders), subject to the provisions of paragraph 10(e)(iii), Submitted Orders
shall be accepted or rejected as follows in the following order of priority
and
all other Submitted Bids shall be rejected:
(A) the Submitted Bid of each Existing Holder specifying any rate
per
annum that is equal to or lower than the Maximum Applicable Rate shall be
rejected, thus entitling such Existing Holder to continue to hold the
Outstanding shares of APS that are the subject of such Submitted Bid;
(B) the Submitted Bid of each Potential Holder specifying any rate
per
annum that is equal to or lower than the Maximum Applicable Rate shall be
accepted, thus requiring such Potential Holder to purchase the Outstanding
shares of APS that are the subject of such Submitted Bid; and
(C) the Submitted Bids of each Existing Holder specifying any rate
per
annum that is higher than the Maximum Applicable Rate shall be accepted and
the
Submitted Sell Orders of each Existing Holder shall be accepted, in both
cases
only in an amount equal to the difference between (1) the number of
Outstanding
shares of APS then held by such Existing Holder subject to such Submitted
Bid or
Submitted Sell Order and (2) the number of shares of APS obtained by
multiplying
(x) the difference between the Available APS and the aggregate number of
Outstanding shares of APS subject to Submitted Bids described in paragraph
10(e)(ii)(A) and paragraph 10(e)(ii)(B) by (y) a fraction the numerator of
which
shall be the number of Outstanding shares of APS held by such Existing
Holder
subject to such Submitted Bid or Submitted Sell Order and the denominator of
which shall be the number of Outstanding shares of APS subject to all such
Submitted Bids and Submitted Sell Orders.
(iii) If, as a result of the procedures described in paragraph
10(e)(i) or paragraph 10(e)(ii), 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 APS 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 APS to be purchased or sold by any Existing
Holder
or Potential Holder on such Auction Date so that each Outstanding share of
APS
purchased or sold by each Existing Holder or Potential Holder on such
Auction
Date shall be a whole share of APS.
(iv) If, as a result of the procedures described in paragraph
10(e)(i), any Potential Holder would be entitled or required to purchase
less
than a whole share of APS on any Auction Date, the Auction Agent shall, in
such
manner as in its sole discretion it shall determine, allocate shares of APS
for
purchase among Potential Holders so that only whole shares of APS are
purchased
on such Auction Date by any Potential Holder, even if such allocation
results in
one or more of such Potential Holders not purchasing any shares of APS on
such
Auction Date.
(v) Based on the results of each Auction, the Auction Agent shall
determine, with respect to each Broker-Dealer that submitted Bids or Sell
Orders
on behalf of Existing Holders or Potential Holders, the aggregate number of
Outstanding shares of APS to be purchased and the aggregate number of the
Outstanding shares of APS to be sold by such Potential Holders and Existing
Holders and, to the extent that such aggregate number of Outstanding shares
to
be purchased and such aggregate number of Outstanding shares to be sold
differ,
the Auction Agent shall determine to which other Broker-Dealer or Broker-
Dealers
acting for one or more purchasers such Broker-Dealer shall deliver, or from
which other Broker-Dealer or Broker-Dealers acting for one or more sellers
such
Broker-Dealer shall receive, as the case may be, Outstanding shares of APS
(f) Miscellaneous. The Corporation may interpret the provisions of
this paragraph 10 to resolve any inconsistency or ambiguity, remedy any
formal
defect or make any other change or modification that does not substantially
adversely affect the rights of Beneficial Owners of APS. A Beneficial Owner
or
an Existing Holder (A) may sell, transfer or otherwise dispose of shares of
APS
only pursuant to a Bid or Sell Order in accordance with the procedures
described
in this paragraph 10 or to or through a Broker-Dealer, provided that in the
case
of all transfers other than pursuant to Auctions such Beneficial Owner or
Existing Holder, its Broker-Dealer, if applicable, or its Agent Member
advises
the Auction Agent of such transfer and (B) except as otherwise required by
law,
shall have the ownership of the shares of APS held by it maintained in book
entry form by the Securities Depository in the account of its Agent Member,
which in turn will maintain records of such Beneficial Owner's beneficial
ownership. Neither the Corporation nor any Affiliate shall submit an Order
in
any Auction. Any Beneficial Owner that is an Affiliate shall not sell,
transfer
or otherwise dispose of shares of APS to any Person other than the
Corporation.
All of the Outstanding shares of APS of a series shall be represented by a
single certificate registered in the name of the nominee of the Securities
Depository unless otherwise required by law or unless there is no Securities
Depository. If there is no Securities Depository, at the Corporation's
option
and upon its receipt of such documents as it deems appropriate, any shares
of
APS may be registered in the Stock Register in the name of the Beneficial
Owner
thereof and such Beneficial Owner thereupon will be entitled to receive
certificates therefor and required to deliver certificates therefor upon
transfer or exchange thereof.
11. SECURITIES DEPOSITORY; STOCK CERTIFICATES. (a) If there is a
Securities Depository, one certificate for all of the shares of APS of each
series shall be issued to the Securities Depository and registered in the
name
of the Securities Depository or its nominee. Additional certificates may be
issued as necessary to represent shares of APS. All such certificates shall
bear
a legend to the effect that such certificates are issued subject to the
provisions restricting the transfer of shares of APS contained in these
Article
Supplementary. Unless the Corporation shall have elected, during a Non-
Payment
Period, to waive this requirement, the Corporation will also issue stop-
transfer
instructions to the Auction Agent for the shares of APS. Except as provided
in
paragraph (b) below, the Securities Depository or its nominee will be the
Holder, and no Beneficial Owner shall receive certificates representing its
ownership interest in such shares.
(b) If the Applicable Rate applicable to all shares of APS of a
series
shall be the Non-Payment Period Rate or there is no Securities Depository,
the
Corporation may at its option issue one or more new certificates with
respect to
such shares (without the legend referred to in paragraph 11(a)) registered
in
the names of the Beneficial Owners or their nominees and rescind the
stop-transfer instructions referred to in paragraph 11(a) with respect to
such
shares.
<PAGE>
IN WITNESS WHEREOF, DREYFUS MUNICIPAL INCOME, INC., has caused
these
presents to be signed in its name and on its behalf by its VicePresident and
witnessed by its Assistant Secretary as of the __ day of September, 1999,
and
its President acknowledges that these Articles Supplementary are the act and
deed of Dreyfus Municipal Income, Inc., and, under the penalties of perjury,
that the matters and facts set forth herein with respect to authorization
and
approval are true in all material respects to the best of her knowledge,
information and belief.
DREYFUS MUNICIPAL INCOME, INC.
By:/s/ STEPHANIE D. PIERCE
------------------------------------
- -
Stephanie D. Pierce
Vice President, Assistant Secretary
and Assistant Treasurer
WITNESS:
/s/ CHRISTOPHER J. KELLEY
- ---------------------------
Christopher J. Kelley
Assistant Secretary
EXHIBIT (B)
BY-LAWS
OF
DREYFUS MUNICIPAL INCOME, INC.
(A Maryland Corporation)
-----------
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing
shares
of stock shall set forth thereon the statements prescribed by Section 2-211
of
the Maryland General Corporation Law ("General Corporation Law") and by any
other applicable provision of law and shall be signed by the Chairman of the
Board or the President or a Vice President and countersigned by the
Secretary or
an Assistant Secretary or the Treasurer or an Assistant Treasurer and may be
sealed with the corporate seal. The signatures of any such officers may be
either manual or facsimile signatures and the corporate seal may be either
facsimile or any other form of seal. In case any such officer who has signed
manually or by facsimile any such certificate ceases to be such officer
before
the certificate is issued, it nevertheless may be issued by the corporation
with
the same effect as if the officer had not ceased to be such officer as of
the
date of its issue.
No certificate representing shares of stock shall be issued for
any
share of stock until such share is fully paid, except as otherwise
authorized in
Section 2-206 of the General Corporation Law.
The corporation may issue a new certificate of stock in place of
any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the Board of Directors may require, in its discretion, the
owner
of any such certificate or the owner's legal representative to give bond,
with
sufficient surety, to the corporation to indemnify it against any loss or
claim
that may arise by reason of the issuance of a new certificate.
2. SHARE TRANSFERS. Upon compliance with provisions restricting
the
transferability of shares of stock, if any, transfers of shares of stock of
the
corporation shall be made only on the stock transfer books of the
corporation by
the record holder thereof or by his attorney thereunto authorized by power
of
attorney duly executed and filed with the Secretary of the corporation or
with a
transfer agent or a registrar, if any, and on surrender of the certificate
or
certificates for such shares of stock properly endorsed and the payment of
all
taxes due thereon.
3. RECORD DATE FOR STOCKHOLDERS. The Board of Directors may fix,
in
advance, a date as the record date for the purpose of determining
stockholders
entitled to notice of, or to vote at, any meeting of stockholders, or
stockholders entitled to receive payment of any dividend or the allotment of
any
rights or in order to make a determination of stockholders for any other
proper
purpose. Such date, in any case, shall be not more than 90 days, and in case
of
a meeting of stockholders not less than 10 days, prior to the date on which
the
meeting or particular action requiring such determination of stockholders is
to
be held or taken. In lieu of fixing a record date, the Board of Directors
may
provide that the stock transfer books shall be closed for a stated period
but
not to exceed 20 days. If the stock transfer books are closed for the
purpose of
determining stockholders entitled to notice of, or to vote at, a meeting of
stockholders, such books shall be closed for at least 10 days immediately
preceding such meeting. If no record date is fixed and the stock transfer
books
are not closed for the determination of stockholders: (1) The record date
for
the determination of stockholders entitled to notice of, or to vote at, a
meeting of stockholders shall be at the close of business on the day on
which
the notice of meeting is mailed or the day 30 days before the meeting,
whichever
is the closer date to the meeting; and (2) The record date for the
determination
of stockholders entitled to receive payment of a dividend or an allotment of
any
rights shall be at the close of business on the day on which the resolution
of
the Board of Directors declaring the dividend or allotment of rights is
adopted,
provided that the payment or allotment date shall not be more than 60 days
after
the date on which the resolution is adopted.
4. MEANING OF CERTAIN TERMS. As used herein in respect of the
right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as
the
case may be, the term "share of stock" or "shares of stock" or "stockholder"
or
"stockholders" refers to an outstanding share or shares of stock and to a
holder
or holders of record of outstanding shares of stock when the corporation is
authorized to issue only one class of shares of stock and said reference
also is
intended to include any outstanding share or shares of stock and any holder
or
holders of record of outstanding shares of stock of any class or series upon
which or upon whom the Charter confers such rights where there are two or
more
classes or series of shares or upon which or upon whom the General
Corporation
Law confers such rights notwithstanding that the Charter may provide for
more
than one class or series of shares of stock, one or more of which are
limited or
denied such rights thereunder.
5. STOCKHOLDER MEETINGS.
TIME. The annual meeting of stockholders shall be held on the
date
fixed, from time to time, by the directors, within the thirty-one day period
commencing with the first day of June (or if said day be a legal holiday,
then
on the next succeeding day not a legal holiday), for the election of
directors
and the transaction of any business within the powers of the corporation.
Special meetings shall be held on the date or dates fixed by the directors.
PLACE. Annual meetings and special meetings shall be held at
such
place, either within the State of Maryland or at such other place within the
United States, as the directors from time to time may fix.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. Written or
printed notice of all meetings shall be given by the Secretary and shall
state
the time and place of the meeting. The notice of a special meeting shall
state
in all instances the purpose or purposes for which the meeting is called.
Written or printed notice of any meeting shall be given to each stockholder
either by mail or by presenting it to the stockholder personally or by
leaving
it at his or her residence or usual place of business not less than ten days
and
not more than 90 days before the date of the meeting, unless any provisions
of
the General Corporation Law shall prescribe a different elapsed period of
time,
to each stockholder at his or her address appearing on the books of the
corporation or the address supplied by the stockholder for the purpose of
notice. If mailed, notice shall be deemed to be given when deposited in the
United States mail addressed to the stockholder at his or her post office
address as it appears on the records of the corporation with postage thereon
prepaid. Whenever any notice of the time, place or purpose of any meeting of
stockholders is required to be given under the provisions of these by-laws
or of
the General Corporation Law, a waiver thereof in writing, signed by the
stockholder and filed with the records of the meeting, whether before or
after
the holding thereof, or actual attendance or representation at the meeting
shall
be deemed equivalent to the giving of such notice to such stockholder. The
foregoing requirements of notice also shall apply, whenever the corporation
shall have any class of stock which is not entitled to vote, to holders of
stock
who are not entitled to vote at the meeting, but who are entitled to notice
thereof and to dissent from any action taken thereat.
STATEMENT OF AFFAIRS. The President of the corporation or, if
the
Board of Directors shall determine otherwise, some other executive officer
thereof, shall prepare or cause to be prepared annually a full and correct
statement of the affairs of the corporation, including a balance sheet and a
financial statement of operations for the preceding fiscal year, which shall
be
submitted at the annual meeting and filed within 20 days thereafter at the
principal office of the corporation in the State of Maryland.
QUORUM. At any meeting of stockholders, the presence in person
or
by proxy of stockholders entitled to cast a majority of the votes thereat
shall
constitute a quorum. In the absence of a quorum, the stockholders present in
person or by proxy, by majority vote and without notice other than by
announcement, may adjourn the meeting from time to time, but not for a
period
exceeding 120 days after the original record date until a quorum shall
attend.
ADJOURNED MEETINGS. A meeting of stockholders convened on the
date
for which it was called (including one adjourned to achieve a quorum as
provided
in the paragraph above) may be adjourned from time to time without further
notice to a date not more than 120 days after the original record date, and
any
business may be transacted at any adjourned meeting which could have been
transacted at the meeting as originally called.
CONDUCT OF MEETING. Meetings of the stockholders shall be
presided
over by one of the following officers in the order of seniority and if
present
and acting: the President, the Chairman of the Board, a Vice President or,
if
none of the foregoing is in office and present and acting, by a chairman to
be
chosen by the stockholders. The Secretary of the corporation or, in his or
her
absence, an Assistant Secretary, shall act as secretary of every meeting,
but if
neither the Secretary nor an Assistant Secretary is present the chairman of
the
meeting shall appoint a secretary of the meeting.
PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a
stockholder
is entitled to participate, whether for the purposes of determining the
stockholder's presence at a meeting, or whether by waiving notice of any
meeting, voting or participating at a meeting, expressing consent or dissent
without a meeting or otherwise. Every proxy shall be executed in writing by
the
stockholder or by his or her duly authorized attorney-in-fact or be in such
other form as may be permitted by the Maryland General Corporation Law,
including documents conveyed by electronic transmission, and filed with the
Secretary of the corporation. A copy, facsimile transmission or other
reproduction of the writing or transmission may be substituted for the
original
writing or transmission for any purpose for which the original transmission
could be used. No unrevoked proxy shall be valid after 11 months from the
date
of its execution, unless a longer time is expressly provided therein. The
placing of a stockholder's name on a proxy pursuant to telephonic or
electronically transmitted instructions obtained pursuant to procedures
reasonably designed to verify that such instructions have been authorized by
such stockholder shall constitute execution of such proxy by or on behalf of
such stockholder.
INSPECTORS OF ELECTION. The directors, in advance of any
meeting,
may, but need not, appoint one or more inspectors to act at the meeting or
any
adjournment thereof. If an inspector or inspectors are not appointed, the
person
presiding at the meeting may, but need not, appoint one or more inspectors.
In
case any person who may be appointed as an inspector fails to appear or act,
the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector,
if
any, 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, if
any,
shall determine the number of shares outstanding and the voting power of
each,
the shares represented at the meeting, the existence of a quorum and 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 person presiding at the
meeting
or any stockholder, the inspector or inspectors, if any, shall make a report
in
writing of any challenge, question or matter determined by him or them and
execute a certificate of any fact found by him or them.
VOTING. Each share of stock shall entitle the holder thereof to
one
vote, except in the election of directors, at which each said vote may be
cast
for as many persons as there are directors to be elected. Except for
election of
directors, a majority of the votes cast at a meeting of stockholders, duly
called and at which a quorum is present, shall be sufficient to take or
authorize action upon any matter which may come before a meeting, unless
more
than a majority of votes cast is required by the corporation's Articles of
Incorporation. A plurality of all the votes cast at a meeting at which a
quorum
is present shall be sufficient to elect a director.
6. INFORMAL ACTION. Any action required or permitted to be taken
at a
meeting of stockholders may be taken without a meeting if a consent in
writing,
setting forth such action, is signed by all the stockholders entitled to
vote on
the subject matter thereof and any other stockholders entitled to notice of
a
meeting of stockholders (but not to vote thereat) have waived in writing any
rights which they may have to dissent from such action and such consent and
waiver are filed with the records of the corporation.
ARTICLE II
BOARD OF DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed under the direction of a Board of Directors.
The
use of the phrase "entire board" herein refers to the total number of
directors
which the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. Each director shall be a natural
person
of full age. A director need not be a stockholder, a citizen of the United
States or a resident of the State of Maryland. The initial Board of
Directors
shall consist of one person. Thereafter, the number of directors
constituting
the entire board shall never be less than three or the number of
stockholders,
whichever is less. At any regular meeting or at any special meeting called
for
that purpose, a majority of the entire Board of Directors may increase or
decrease the number of directors, provided that the number thereof shall
never
be less than three or the number of stockholders, whichever is less, nor
more
than twelve and further provided that the tenure of office of a director
shall
not be affected by any decrease in the number of directors.
3. ELECTION AND TERM. The first Board of Directors shall consist
of
the director named in the Articles of Incorporation and shall hold office
until
the first annual meeting of stockholders or until his successor has been
elected
and qualified. Beginning with the first annual meeting of stockholders held
after the initial public offering of the shares of the corporation (the
"initial
annual meeting"), the Board of Directors shall be divided into three
classes, as
nearly equal in number as the then total number of directors constituting
the
entire Board permits, with the term of office of one class expiring each
year.
At the initial annual meeting, directors of the first class shall be deemed
to
have been elected to hold office for a term expiring at the next succeeding
annual meeting, directors of the second class shall be deemed to have been
elected to hold office for a term expiring at the second succeeding annual
meeting and directors of the third class shall be deemed to have been
elected to
hold office for a term expiring at the third succeeding annual meeting. In
the
interim between annual meetings of stockholders or special meetings of
stockholders called for the election of directors, newly created
directorships
and any vacancies in the Board of Directors, other than vacancies resulting
from
the removal of directors by the stockholders, may be filled by the Board of
Directors. Newly created directorships filled by the Board of Directors
shall be
by action of a majority of the entire Board of Directors. All other
vacancies to
be filled by the Board of Directors may be filled by a majority of the
remaining
members of the Board of Directors, although such majority is less than a
quorum
thereof. Any director elected by the stockholders of the corporation to fill
a
vacancy shall be in the same class and have the same remaining term as that
of
the predecessor. Any director elected by the Board of Directors to fill a
vacancy shall serve until the next annual meeting of stockholders and until
his
successor is elected and qualifies. No decrease in the number of directors
shall
shorten the term of any incumbent director.
4. MEETINGS.
TIME. Meetings shall be held at such time as the Board shall
fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors conveniently may assemble.
PLACE. Meetings shall be held at such place within or without
the
State of Maryland as shall be fixed by the Board.
CALL. No call shall be required for regular meetings for which
the
time and place have been fixed. Special meetings may be called by or at the
direction of the President or of a majority of the directors in office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. Whenever any notice of
the
time, place or purpose of any meeting of directors or any committee thereof
is
required to be given under the provisions of the General Corporation Law or
of
these by-laws, a waiver thereof in writing, signed by the director or
committee
member entitled to such notice and filed with the records of the meeting,
whether before or after the holding thereof, or actual attendance at the
meeting
shall be deemed equivalent to the giving of such notice to such director or
such
committee member.
QUORUM AND ACTION. A majority of the entire Board of Directors
shall constitute a quorum except when a vacancy or vacancies prevents such
majority, whereupon a majority of the directors in office shall constitute a
quorum, provided such majority shall constitute at least one-third of the
entire
Board and, in no event, less than two directors. A majority of the directors
present, whether or not a quorum is present, may adjourn a meeting to
another
time and place. Except as otherwise specifically provided by the Articles of
Incorporation, the General Corporation Law or these by-laws, the action of a
majority of the directors present at a meeting at which a quorum is present
shall be the action of the Board of Directors.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and
if
present and acting, or the President or any other director chosen by the
Board,
shall preside at all meetings.
5. REMOVAL OF DIRECTORS. Any or all of the directors may be
removed
for cause or without cause by the stockholders, who may elect a successor or
successors to fill any resulting vacancy or vacancies for the unexpired term
of
the removed director or directors.
6. COMMITTEES. The Board of Directors may appoint from among its
members an Executive Committee and other committees composed of one or more
directors and may delegate to such committee or committees, in the intervals
between meetings of the Board of Directors, any or all of the powers of the
Board of Directors in the management of the business and affairs of the
corporation to the extent permitted by law. In the absence of any member of
any
such committee, the members thereof present at any meeting, whether or not
they
constitute a quorum, may appoint a member of the Board of Directors to act
in
the place of such absent member.
7. INFORMAL ACTION. 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 a written consent to such action is signed by all
members
of the Board of Directors or any such committee, as the case may be, and
such
written consent is filed with the minutes of the proceedings of the Board or
any
such committee.
Members of the Board of Directors or any committee designated
thereby
may participate in a meeting of such Board or committee by means of a
conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time.
Participation
by such means shall constitute presence in person at a meeting.
ARTICLE III
OFFICERS
The corporation may have a Chairman of the Board and shall have a
President, a Secretary and a Treasurer, who shall be elected by the Board of
Directors, and may have such other officers, assistant officers and agents
as
the Board of Directors shall authorize from time to time. Any two or more
offices, except those of President and Vice President, may be held by the
same
person, but no person shall execute, acknowledge or verify any instrument in
more than one capacity, if such instrument is required by law to be
executed,
acknowledged or verified by two or more officers.
Any officer or agent may be removed by the Board of Directors
whenever, in its judgment, the best interests of the corporation will be
served
thereby.
ARTICLE IV
PRINCIPAL OFFICE - RESIDENT AGENT - STOCK LEDGER
The address of the principal office of the corporation in the
State of
Maryland prescribed by the General Corporation Law is 300 East Lombard
Street,
c/o The Corporation Trust Incorporated, Baltimore, Maryland 21202. The name
and
address of the resident agent in the State of Maryland prescribed by the
General
Corporation Law are: The Corporation Trust Incorporated, 300 East Lombard
Street, Baltimore, Maryland 21202.
The corporation shall maintain, at its principal office in the
State
of Maryland prescribed by the General Corporation Law or at the business
office
or an agency of the corporation, an original or duplicate stock ledger
containing the names and addresses of all stockholders and the number of
shares
of each class held by each stockholder. Such stock ledger may be in written
form
or any other form capable of being converted into written form within a
reasonable time for visual inspection.
The corporation shall keep at said principal office in the State
of
Maryland the original or a certified copy of the by-laws, including all
amendments thereto, and shall duly file thereat the annual statement of
affairs
of the corporation prescribed by Section 2-313 of the General Corporation
Law.
ARTICLE V
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of the
corporation and shall be in such form and contain such other words and/or
figures as the Board of Directors shall determine or the law require.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be
subject to change, by the Board of Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
The power to make, alter, amend and repeal the by-laws is vested
exclusively in the Board of Directors of the corporation.
ARTICLE VIII
INDEMNIFICATION
1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The corporation
shall
indemnify its directors to the fullest extent that indemnification of
directors
is permitted by the law. The corporation shall indemnify its officers to the
same extent as its directors and to such further extent as is consistent
with
law. The corporation shall indemnify its directors and officers who while
serving as directors or officers also serve at the request of the
corporation as
a director, officer, partner, trustee, employee, agent or fiduciary of
another
corporation, partnership, joint venture, trust, other enterprise or employee
benefit plan to the same extent as its directors and, in the case of
officers,
to such further extent as is consistent with law. The indemnification and
other
rights provided by this Article shall continue as to a person who has ceased
to
be a director or officer and shall inure to the benefit of the heirs,
executors
and administrators of such a person. This Article shall not protect any such
person against any liability to the corporation or any stockholder thereof
to
which such person 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 ("disabling conduct").
2. ADVANCES. Any current or former director or officer of the
corporation seeking indemnification within the scope of this Article shall
be
entitled to advances from the corporation for payment of the reasonable
expenses
incurred by him in connection with the matter as to which he is seeking
indemnification in the manner and to the fullest extent permissible under
the
General Corporation Law. The person seeking indemnification shall provide to
the
corporation a written affirmation of his good faith belief that the standard
of
conduct necessary for indemnification by the corporation has been met and a
written undertaking to repay any such advance if it should ultimately be
determined that the standard of conduct has not been met. In addition, at
least
one of the following additional conditions shall be met: (a) the person
seeking
indemnification shall provide a security in form and amount acceptable to
the
corporation for his or her undertaking; (b) the corporation is insured
against
losses arising by reason of the advance; or (c) a majority of a quorum of
directors of the corporation who are neither "interested persons" as defined
in
Section 2(a)(19) of the Investment Company Act of 1940, as amended, nor
parties
to the proceeding ("disinterested non-party directors"), or independent
legal
counsel, in a written opinion, shall have determined, based on a review of
facts
readily available to the corporation at the time the advance is proposed to
be
made, that there is reason to believe that the person seeking
indemnification
will ultimately be found to be entitled to indemnification.
3. PROCEDURE. At the request of any person claiming
indemnification
under this Article, the Board of Directors shall determine, or cause to be
determined, in a manner consistent with the General Corporation Law, whether
the
standards required by this Article have been met. Indemnification shall be
made
only following: (a) a final decision on the merits by a court or other body
before whom the proceeding was brought that the person to be indemnified was
not
liable by reason of disabling conduct or (b) in the absence of such a
decision,
a reasonable determination, based upon a review of the facts, that the
person to
be indemnified was not liable by reason of disabling conduct by (i) the vote
of
a majority of a quorum of disinterested non-party directors or (ii) an
independent legal counsel in a written opinion.
4. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Employees and agents
who
are not officers or directors of the corporation may be indemnified, and
reasonable expenses may be advanced to such employees or agents, as may be
provided by action of the Board of Directors or by contract, subject to any
limitations imposed by the Investment Company Act of 1940, as amended.
5. OTHER RIGHTS. The Board of Directors may make further provision
consistent with law for indemnification and advance of expenses to
directors,
officers, employees and agents by resolution, agreement or otherwise. The
indemnification provided by this Article shall not be deemed exclusive of
any
other right, with respect to indemnification or otherwise, to which those
seeking indemnification may be entitled under any insurance or other
agreement
or resolution of stockholders or disinterested non-party directors or
otherwise.
6. AMENDMENTS. References in this Article are to the General
Corporation Law and to the Investment Company Act of 1940 as from time to
time
amended. No amendment of the by-laws shall affect any right of any person
under
this Article based on any event, omission or proceeding prior to the
amendment.
Dated: September 2, 1988
Amended: August 12, 1999
