Certain Other Restrictions. ( ) (a) For so long as any shares of RP are outstanding, the Trust will not, unless it has received written confirmation from Moodys and S&P that any such action would not impair the ratings then assigned by Moodys and S&P to any shares of RP, engage in any one or more of the following transactions: (i) borrow any money except as may be necessary for the clearance of purchases and sales of portfolio securities and which borrowings shall be repaid within 60 days and not be extended or renewed (provided that no such borrowing will be permitted unless the Trust, after giving effect to such borrowing, maintains Moodys Eligible Assets and S&P Eligible Assets at least equal to the RP Basic Maintenance Amount); (ii) lend portfolio securities; (iii) designate a new Pricing Service; (iv) engage in short sales; (v) merge or consolidate with any other entity; (vi) engage in reverse repurchase agreements; or (vii) issue a class or series of shares of beneficial interest ranking prior to or on a parity with the RP with respect to payment of dividends or the distribution of assets on liquidation. (b) For so long as any shares of RP are rated by Moodys or S&P, the Trust shall give to Moodys or S&P, as the case may be, prompt written notice of the following circumstances: (i) any change to the Declaration of Trust or Article 12 of the Bylaws; (ii) any failure to declare or pay any dividend on the shares of RP; (iii) any mandatory or optional redemption of the shares of RP; (iv) any assumption of control of the Trustees by the Holders of shares of RP pursuant to Section 6(b) of this Part I of Section 12.1; (v) in the event the Trust shall not be a party to a pricing services agreement and dealer quotes on assets are not available; (vi) in the event that the Applicable Dividend Rate equals or exceeds 95% of the applicable Reference Rate; (vii) any person owning of record more than 5% of the Trusts Common Shares; (viii) a change in Internal Revenue Service rules on Additional Dividends relating to the operation of the Trust; and (ix) Xxxxxx Investment Management, Inc. is no longer the Trusts investment manager. 13. 14.
Appears in 1 contract
Samples: Putnam Municipal Opportunities Trust
Certain Other Restrictions. ( ) (a) For so long as any shares of RP APS are outstandingrated by Xxxxx'x, the Trust will notnot buy or sell financial futures contracts, write, purchase or sell call options on financial futures contracts or purchase put options on financial futures contracts or write call options (except covered call options) on portfolio securities unless it receives written confirmation from Moody's that engaging in such transactions would not impair the ratings then assigned to the APS by Moody's, except that the Trust may purchase or sell exchange-traded financial futures contracts based on the Municipal Index or Treasury Bonds, and purchase, write or sell exchange-traded put options on such financial futures contracts, the Municipal Index or Treasury Bonds, and purchase, write or sell exchange-traded call options on such financial futures contracts, the Municipal Index or Treasury Bonds (collectively "Moody's Hedging Transactions"), subject to the following limitations: (i) the Trust will not engage in any Moody's Hedging Transaction based on the Municipal Index (other than transactions that terminate a futures contract or option held by the Trust by the Trust's taking the opposite position thereto ("Closing Transactions")) that would cause the Trust at the time of such transaction to own or have sold: (A) outstanding financial futures contracts based on the Municipal Index exceeding in number 10% (or such higher percentage as Moody's may approve) of the average number of daily traded financial 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; or (B) outstanding financial futures contracts based on the Municipal Index having a Market Value exceeding 50% (or such higher percentage as Moody's may approve) of the Market Value of all Municipal Obligations constituting Moody's Eligible Assets owned by the Trust (other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction); -40- (ii) the Trust will not engage in any Moody's Hedging Transaction based on Treasury Bonds (other than Closing Transactions) that would cause the Trust at the time of such transaction to own or have sold: (A) outstanding financial futures contracts based on Treasury Bonds with such contracts having an aggregate Market Value exceeding 20% (or such higher percentage as Moody's may approve) of the aggregate Market Value of Moody's Eligible Assets owned by the Trust and rated Aa or higher by Moody's (or, if not rated by Moody's but rated by S&P, rated AAA by S&P); or (B) outstanding financial futures contracts based on Treasury Bonds with such contracts having an aggregate Market Value exceeding 80% of the aggregate Market Value of all Municipal Obligations constituting Moody's Eligible Assets owned by the Trust (other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction) and rated Baa or A by Moody's (or, if not rated by Moody's but rated by S&P, rated A or AA by S&P) (for purposes of the foregoing clauses (i) and (ii), the Trust shall be deemed to own the number of financial futures contracts that underlie any outstanding options written by the Trust); (iii) the Trust will engage in Closing Transactions to close out any outstanding financial futures contract based on the Municipal Index if the amount of open interest in the Municipal Index as reported by The Wall Street Journal is less than 5,000 (or such lower number as Moody's may approve); (iv) the Trust will engage in a Closing Transaction to close out any outstanding financial futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a financial futures contract by no later than the first Business Day of the month in which such option expires; (v) the Trust will engage in Moody's Hedging Transactions only with respect to financial futures contracts or options thereon having the next settlement date or the settlement date immediately thereafter; (vi) the Trust (A) will not engage in options and futures transactions for leveraging or speculative purposes, except that an option or futures transaction shall not for these purposes be considered a leveraged position or speculative so long as the combination of the Fund's non-derivative positions, together with the relevant option or futures transaction, produces a synthetic investment position, or the same economic result, that could be achieved by an investment, consistent with the Fund's investment objective and policies, in a security that is not an option or futures transaction, and (B) will not write any call options or sell any financial futures contracts for the purpose of hedging the anticipated purchase of an asset prior to completion of such purchase; and (vii) while the Trust may use options and futures transactions for hedging and risk management purposes, it will not enter into an option or futures transaction unless, after giving effect thereto, the Trust would continue to have Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the APS Basic Maintenance Amount. -41- (b) For purposes of determining whether the Trust has Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the APS Basic Maintenance Amount, the Discounted Value of Moody's Eligible Assets that the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows: (i) assets subject to call options written by the Trust that are either exchange-traded and "readily reversible" or that expire within 49 days after the date as of which such valuation is made shall be valued at the lesser of (A) Discounted Value and (B) the exercise price of the call option written by the Trust; (ii) assets subject to call options written by the Trust not meeting the requirements of clause (i) of this sentence shall have no value; (iii) assets subject to put options written by the Trust shall be valued at the lesser of (A) the exercise price and (B) the Discounted Value of the assets subject to the option; (iv) futures contracts shall be valued at the lesser of (A) settlement price and (B) the Discounted Value of the assets subject to the futures contract, provided that, if a contract matures within 49 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the assets subject to the futures contract; and (v) where delivery may be made to the Trust with any security of a class of securities, the Trust shall assume that it will take delivery of the security with the lowest Discounted Value. (c) For purposes of determining whether the Trust has Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the APS Basic Maintenance Amount, the following amounts shall be subtracted from the aggregate Discounted Value of the Moody's Eligible Assets held by the Trust to the extent the relevant asset is a Moody's Eligible Asset: (i) 10% of the exercise price of a written call option; (ii) the exercise price of any written put option; (iii) where the Trust is the seller under a financial futures contract, 10% of the settlement price of the financial futures contract; (iv) where the Trust is the purchaser under a financial futures contract, any amounts payable by the Trust under such financial futures contract; (v) the settlement price of the underlying financial futures contract if the Trust writes put options on a financial futures contract; and (vi) 105% of the Market Value of the underlying financial futures contract if the Trust writes call options on a financial futures contract and does not own the underlying contract. -42- (d) For so long as any APS are rated by Moody's, the Trust will not enter into any "Forward Commitment," herein defined as any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Moody's Hedging Transactions), except that the Trust may enter into Forward Commitments subject to the following limitations: (i) for each Forward Commitment, the Trust will maintain with its custodian (A) cash, cash equivalents or short-term, fixed-income securities rated X-0, XXX-0 xx XXXX-0 by Moody's or A-1 by S&P and maturing in one year or less with a fair market value that equals or exceeds the amount by which the Trust's obligations under any Forward Commitments to which it is from time to time a party exceed obligations to the Trust arising from securities sales by the Trust that are scheduled to settle at a future date, or (B) long-term, fixed-income securities with a then current market value that equals or exceeds the amount by which the Trust's obligations under any Forward Commitments to which it is from time to time a party exceed obligations to the Trust arising from securities sales by the Trust that are scheduled to settle on a future date, or (C) a combination of assets described in (A) and (B) above that in the aggregate equals or exceeds the amount by which the Trust's obligations under any Forward Commitments to which it is from time to time a party exceed obligations to the Trust arising from securities sales by the Trust that are scheduled to settle on a future date; and (ii) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the APS Basic Maintenance Amount. For purposes of determining whether the Trust has Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the APS Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero. (e) For so long as APS are Outstanding and rated by Moody's, the Trust, unless it has received written confirmation from Moodys and S&P Moody's that any such action would not impair the ratings then assigned to the APS by Moodys and S&P to any shares of RPMoody's, engage in any one or more of the following transactionswill not: (i) borrow any money except as may be necessary for the clearance purpose of purchases and sales of clearing transactions in portfolio securities (which borrowings under any circumstances shall be limited to an amount equal to 5% of the Market Value of the Trust's assets at the time of such borrowings and which borrowings shall be repaid within 60 days and not be extended or renewed (provided that no such borrowing will be permitted unless and shall not cause the Trust, after giving effect to such borrowing, maintains Moodys aggregate Discounted Value of Moody's Eligible Assets and S&P Eligible Assets at least equal to be less than the RP APS Basic Maintenance Amount); (ii) lend portfolio engage in short sales of securities; (iii) designate a new Pricing Servicelend any securities; -43- (iv) engage in short sales; (v) merge or consolidate with issue any other entity; (vi) engage in reverse repurchase agreements; or (vii) issue a class or series of shares of beneficial interest ranking prior to or on a parity with the RP APS with respect to the payment of dividends or the distribution of assets on liquidation. (b) For so long as any shares of RP are rated by Moodys upon dissolution, liquidation or S&P, the Trust shall give to Moodys or S&P, as the case may be, prompt written notice winding up of the following circumstances: (i) any change to the Declaration of Trust or Article 12 of the Bylaws; (ii) any failure to declare or pay any dividend on the shares of RP; (iii) any mandatory or optional redemption of the shares of RP; (iv) any assumption of control of the Trustees by the Holders of shares of RP pursuant to Section 6(b) of this Part I of Section 12.1Trust; (v) in the event the Trust shall not be a party to a pricing services agreement merge or consolidate into or with any other corporation or entity; and dealer quotes on assets are not available; (vi) in the event that the Applicable Dividend Rate equals or exceeds 95% of the applicable Reference Rate; (vii) any person owning of record more than 5% of the Trusts Common Shares; (viii) a change in Internal Revenue Service rules on Additional Dividends relating to the operation of the Trust; and (ix) Xxxxxx Investment Management, Inc. is no longer the Trusts investment manager's Pricing Service. 13. 14.11.9
Appears in 1 contract
Certain Other Restrictions. ( ) (a) For so long as any shares of RP APS are outstandingrated by Xxxxx'x, the Trust will notnot buy or sell financial futures contracts, write, purchase or sell call options on financial futures contracts or purchase put options on financial futures contracts or write call options (except covered call options) on portfolio securities unless it receives written confirmation from Moody's that engaging in such transactions would not impair the ratings then assigned to the APS by Moody's, except that the Trust may purchase or sell exchange-traded financial futures contracts based on the Municipal Index or Treasury Bonds, and purchase, write or sell exchange-traded put options on such financial futures contracts, the Municipal Index or Treasury Bonds, and purchase, write or sell exchange-traded call options on such financial futures contracts, the Municipal Index or Treasury Bonds (collectively "Moody's Hedging Transactions"), subject to the following limitations: (i) the Trust will not engage in any Moody's Hedging Transaction based on the Municipal Index (other than transactions that terminate a futures contract or option held by the Trust by the Trust's taking the opposite position thereto ("Closing Transactions")) that would cause the Trust at the time of such transaction to own or have sold: (A) outstanding financial futures contracts based on the Municipal Index exceeding in number 10% (or such higher percentage as Moody's may approve) of the average number of daily traded financial 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; or (B) outstanding financial futures contracts based on the Municipal Index having a Market Value exceeding 50% (or such higher percentage as Moody's may approve) of the Market Value of all Municipal Obligations constituting Moody's Eligible Assets owned by the Trust (other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction); -42- (ii) the Trust will not engage in any Moody's Hedging Transaction based on Treasury Bonds (other than Closing Transactions) that would cause the Trust at the time of such transaction to own or have sold: (A) outstanding financial futures contracts based on Treasury Bonds with such contracts having an aggregate Market Value exceeding 20% (or such higher percentage as Moody's may approve) of the aggregate Market Value of Moody's Eligible Assets owned by the Trust and rated Aa or higher by Moody's (or, if not rated by Moody's but rated by S&P, rated AAA by S&P); or (B) outstanding financial futures contracts based on Treasury Bonds with such contracts having an aggregate Market Value exceeding 80% of the aggregate Market Value of all Municipal Obligations constituting Moody's Eligible Assets owned by the Trust (other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction) and rated Baa or A by Moody's (or, if not rated by Moody's but rated by S&P, rated A or AA by S&P) (for purposes of the foregoing clauses (i) and (ii), the Trust shall be deemed to own the number of financial futures contracts that underlie any outstanding options written by the Trust); (iii) the Trust will engage in Closing Transactions to close out any outstanding financial futures contract based on the Municipal Index if the amount of open interest in the Municipal Index as reported by The Wall Street Journal is less than 5,000 (or such lower number as Moody's may approve); (iv) the Trust will engage in a Closing Transaction to close out any outstanding financial futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a financial futures contract by no later than the first Business Day of the month in which such option expires; (v) the Trust will engage in Moody's Hedging Transactions only with respect to financial futures contracts or options thereon having the next settlement date or the settlement date immediately thereafter; (vi) the Trust (A) will not engage in options and futures transactions for leveraging or speculative purposes, except that an option or futures transaction shall not for these purposes be considered a leveraged position or speculative so long as the combination of the Fund's non-derivative positions, together with the relevant option or futures transaction, produces a synthetic investment position, or the same economic result, that could be achieved by an investment, consistent with the Fund's investment objective and policies, in a security that is not an option or futures transaction, and (B) will not write any call options or sell any financial futures contracts for the purpose of hedging the anticipated purchase of an asset prior to completion of such purchase; and -43- (vii) while the Trust may use options and futures transactions for hedging and risk management purposes, it will not enter into an option or futures transaction unless, after giving effect thereto, the Trust would continue to have Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the APS Basic Maintenance Amount. (b) For purposes of determining whether the Trust has Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the APS Basic Maintenance Amount, the Discounted Value of Moody's Eligible Assets that the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows: (i) assets subject to call options written by the Trust that are either exchange-traded and "readily reversible" or that expire within 49 days after the date as of which such valuation is made shall be valued at the lesser of (A) Discounted Value and (B) the exercise price of the call option written by the Trust; (ii) assets subject to call options written by the Trust not meeting the requirements of clause (i) of this sentence shall have no value; (iii) assets subject to put options written by the Trust shall be valued at the lesser of (A) the exercise price and (B) the Discounted Value of the assets subject to the option; (iv) futures contracts shall be valued at the lesser of (A) settlement price and (B) the Discounted Value of the assets subject to the futures contract, provided that, if a contract matures within 49 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the assets subject to the futures contract; and (v) where delivery may be made to the Trust with any security of a class of securities, the Trust shall assume that it will take delivery of the security with the lowest Discounted Value. (c) For purposes of determining whether the Trust has Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the APS Basic Maintenance Amount, the following amounts shall be subtracted from the aggregate Discounted Value of the Moody's Eligible Assets held by the Trust to the extent the relevant asset is a Moody's Eligible Asset: (i) 10% of the exercise price of a written call option; (ii) the exercise price of any written put option; (iii) where the Trust is the seller under a financial futures contract, 10% of the settlement price of the financial futures contract; -44- (iv) where the Trust is the purchaser under a financial futures contract, any amounts payable by the Trust under such financial futures contract; (v) the settlement price of the underlying financial futures contract if the Trust writes put options on a financial futures contract; and (vi) 105% of the Market Value of the underlying financial futures contract if the Trust writes call options on a financial futures contract and does not own the underlying contract. (d) For so long as any APS are rated by Moody's, the Trust will not enter into any "Forward Commitment," herein defined as any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Moody's Hedging Transactions), except that the Trust may enter into Forward Commitments subject to the following limitations: (i) for each Forward Commitment, the Trust will maintain with its custodian (A) cash, cash equivalents or short-term, fixed-income securities rated X-0, XXX-0 xx XXXX-0 by Moody's or A-1 by S&P and maturing in one year or less with a fair market value that equals or exceeds the amount by which the Trust's obligations under any Forward Commitments to which it is from time to time a party exceed obligations to the Trust arising from securities sales by the Trust that are scheduled to settle at a future date, or (B) long-term, fixed-income securities with a then current market value that equals or exceeds the amount by which the Trust's obligations under any Forward Commitments to which it is from time to time a party exceed obligations to the Trust arising from securities sales by the Trust that are scheduled to settle on a future date, or (C) a combination of assets described in (A) and (B) above that in the aggregate equals or exceeds the amount by which the Trust's obligations under any Forward Commitments to which it is from time to time a party exceed obligations to the Trust arising from securities sales by the Trust that are scheduled to settle on a future date; and (ii) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the APS Basic Maintenance Amount. For purposes of determining whether the Trust has Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the APS Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero. -45- (e) For so long as APS are Outstanding and rated by Moody's, the Trust, unless it has received written confirmation from Moodys and S&P Moody's that any such action would not impair the ratings then assigned to the APS by Moodys and S&P to any shares of RPMoody's, engage in any one or more of the following transactionswill not: (i) borrow any money except as may be necessary for the clearance purpose of purchases and sales of clearing transactions in portfolio securities (which borrowings under any circumstances shall be limited to an amount equal to 5% of the Market Value of the Trust's assets at the time of such borrowings and which borrowings shall be repaid within 60 days and not be extended or renewed (provided that no such borrowing will be permitted unless and shall not cause the Trust, after giving effect to such borrowing, maintains Moodys aggregate Discounted Value of Moody's Eligible Assets and S&P Eligible Assets at least equal to be less than the RP APS Basic Maintenance Amount); (ii) lend portfolio engage in short sales of securities; (iii) designate a new Pricing Servicelend any securities; (iv) engage in short sales; (v) merge or consolidate with issue any other entity; (vi) engage in reverse repurchase agreements; or (vii) issue a class or series of shares of beneficial interest ranking prior to or on a parity with the RP APS with respect to the payment of dividends or the distribution of assets on liquidation. (b) For so long as any shares of RP are rated by Moodys upon dissolution, liquidation or S&P, the Trust shall give to Moodys or S&P, as the case may be, prompt written notice winding up of the following circumstances: (i) any change to the Declaration of Trust or Article 12 of the Bylaws; (ii) any failure to declare or pay any dividend on the shares of RP; (iii) any mandatory or optional redemption of the shares of RP; (iv) any assumption of control of the Trustees by the Holders of shares of RP pursuant to Section 6(b) of this Part I of Section 12.1Trust; (v) in the event the Trust shall not be a party to a pricing services agreement merge or consolidate into or with any other corporation or entity; and dealer quotes on assets are not available; (vi) in the event that the Applicable Dividend Rate equals or exceeds 95% of the applicable Reference Rate; (vii) any person owning of record more than 5% of the Trusts Common Shares; (viii) a change in Internal Revenue Service rules on Additional Dividends relating to the operation of the Trust; and (ix) Xxxxxx Investment Management, Inc. is no longer the Trusts investment manager's Pricing Service. 13. 14.11.9
Appears in 1 contract
Samples: Pimco Municipal Income Fund Iii
Certain Other Restrictions. ( ) (a) For so long as any shares of RP APS are outstandingrated by Xxxxx'x, the Trust will notnot buy or sell financial futures contracts, write, purchase or sell call options on financial futures contracts or purchase put options on financial futures contracts or write call options (except covered call options) on portfolio securities unless it receives written confirmation from Xxxxx'x that engaging in such transactions would not impair the ratings then assigned to the APS by Xxxxx'x, except that the Trust may purchase or sell exchange-traded financial futures contracts based on the Municipal Index or Treasury Bonds, and purchase, write or sell exchange-traded put options on such financial futures contracts, the Municipal Index or Treasury Bonds, and purchase, write or sell exchange-traded call options on such financial futures contracts, the Municipal Index or Treasury Bonds (collectively "Xxxxx'x Hedging Transactions"), subject to the following limitations: (i) the Trust will not engage in any Xxxxx'x Hedging Transaction based on the Municipal Index (other than transactions that terminate a futures contract or option held by the Trust by the Trust's taking the opposite position thereto ("Closing Transactions")) that would cause the Trust at the time of such transaction to own or have sold: (A) outstanding financial futures contracts based on the Municipal Index exceeding in number 10% (or such higher percentage as Xxxxx'x may approve) of the average number of daily traded financial 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; or (B) outstanding financial futures contracts based on the Municipal Index having a Market Value exceeding 50% (or such higher percentage as Xxxxx'x may approve) of the Market Value of all Municipal Obligations constituting Xxxxx'x Eligible Assets owned by the Trust (other than Xxxxx'x Eligible Assets already subject to a Xxxxx'x Hedging Transaction); -40- (ii) the Trust will not engage in any Xxxxx'x Hedging Transaction based on Treasury Bonds (other than Closing Transactions) that would cause the Trust at the time of such transaction to own or have sold: (A) outstanding financial futures contracts based on Treasury Bonds with such contracts having an aggregate Market Value exceeding 20% (or such higher percentage as Xxxxx'x may approve) of the aggregate Market Value of Xxxxx'x Eligible Assets owned by the Trust and rated Aa or higher by Xxxxx'x (or, if not rated by Xxxxx'x but rated by S&P, rated AAA by S&P); or (B) outstanding financial futures contracts based on Treasury Bonds with such contracts having an aggregate Market Value exceeding 80% of the aggregate Market Value of all Municipal Obligations constituting Xxxxx'x Eligible Assets owned by the Trust (other than Xxxxx'x Eligible Assets already subject to a Xxxxx'x Hedging Transaction) and rated Baa or A by Xxxxx'x (or, if not rated by Xxxxx'x but rated by S&P, rated A or AA by S&P) (for purposes of the foregoing clauses (i) and (ii), the Trust shall be deemed to own the number of financial futures contracts that underlie any outstanding options written by the Trust); (iii) the Trust will engage in Closing Transactions to close out any outstanding financial futures contract based on the Municipal Index if the amount of open interest in the Municipal Index as reported by The Wall Street Journal is less than 5,000 (or such lower number as Xxxxx'x may approve); (iv) the Trust will engage in a Closing Transaction to close out any outstanding financial futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a financial futures contract by no later than the first Business Day of the month in which such option expires; (v) the Trust will engage in Xxxxx'x Hedging Transactions only with respect to financial futures contracts or options thereon having the next settlement date or the settlement date immediately thereafter; (vi) the Trust (A) will not engage in options and futures transactions for leveraging or speculative purposes, except that an option or futures transaction shall not for these purposes be considered a leveraged position or speculative so long as the combination of the Fund's non-derivative positions, together with the relevant option or futures transaction, produces a synthetic investment position, or the same economic result, that could be achieved by an investment, consistent with the Fund's investment objective and policies, in a security that is not an option or futures transaction, and (B) will not write any call options or sell any financial futures contracts for the purpose of hedging the anticipated purchase of an asset prior to completion of such purchase; and (vii) while the Trust may use options and futures transactions for hedging and risk management purposes, it will not enter into an option or futures transaction unless, after giving effect thereto, the Trust would continue to have Xxxxx'x Eligible Assets with an aggregate Discounted Value equal to or greater than the APS Basic Maintenance Amount. -41- (b) For purposes of determining whether the Trust has Xxxxx'x Eligible Assets with an aggregate Discounted Value that equals or exceeds the APS Basic Maintenance Amount, the Discounted Value of Xxxxx'x Eligible Assets that the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows: (i) assets subject to call options written by the Trust that are either exchange-traded and "readily reversible" or that expire within 49 days after the date as of which such valuation is made shall be valued at the lesser of (A) Discounted Value and (B) the exercise price of the call option written by the Trust; (ii) assets subject to call options written by the Trust not meeting the requirements of clause (i) of this sentence shall have no value; (iii) assets subject to put options written by the Trust shall be valued at the lesser of (A) the exercise price and (B) the Discounted Value of the assets subject to the option; (iv) futures contracts shall be valued at the lesser of (A) settlement price and (B) the Discounted Value of the assets subject to the futures contract, provided that, if a contract matures within 49 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the assets subject to the futures contract; and (v) where delivery may be made to the Trust with any security of a class of securities, the Trust shall assume that it will take delivery of the security with the lowest Discounted Value. (c) For purposes of determining whether the Trust has Xxxxx'x Eligible Assets with an aggregate Discounted Value that equals or exceeds the APS Basic Maintenance Amount, the following amounts shall be subtracted from the aggregate Discounted Value of the Xxxxx'x Eligible Assets held by the Trust to the extent the relevant asset is a Xxxxx'x Eligible Asset: (i) 10% of the exercise price of a written call option; (ii) the exercise price of any written put option; (iii) where the Trust is the seller under a financial futures contract, 10% of the settlement price of the financial futures contract; (iv) where the Trust is the purchaser under a financial futures contract, any amounts payable by the Trust under such financial futures contract; -42- (v) the settlement price of the underlying financial futures contract if the Trust writes put options on a financial futures contract; and (vi) 105% of the Market Value of the underlying financial futures contract if the Trust writes call options on a financial futures contract and does not own the underlying contract. (d) For so long as any APS are rated by Xxxxx'x, the Trust will not enter into any "Forward Commitment," herein defined as any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Xxxxx'x Hedging Transactions), except that the Trust may enter into Forward Commitments subject to the following limitations: (i) for each Forward Commitment, the Trust will maintain with its custodian (A) cash, cash equivalents or short-term, fixed-income securities rated X-0, XXX-0 xx XXXX-0 by Xxxxx'x or A-1 by S&P and maturing in one year or less with a fair market value that equals or exceeds the amount by which the Trust's obligations under any Forward Commitments to which it is from time to time a party exceed obligations to the Trust arising from securities sales by the Trust that are scheduled to settle at a future date, or (B) long-term, fixed-income securities with a then current market value that equals or exceeds the amount by which the Trust's obligations under any Forward Commitments to which it is from time to time a party exceed obligations to the Trust arising from securities sales by the Trust that are scheduled to settle on a future date, or (C) a combination of assets described in (A) and (B) above that in the aggregate equals or exceeds the amount by which the Trust's obligations under any Forward Commitments to which it is from time to time a party exceed obligations to the Trust arising from securities sales by the Trust that are scheduled to settle on a future date; and (ii) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Xxxxx'x Eligible Assets with an aggregate Discounted Value equal to or greater than the APS Basic Maintenance Amount. For purposes of determining whether the Trust has Xxxxx'x Eligible Assets with an aggregate Discounted Value that equals or exceeds the APS Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero. (e) For so long as APS are Outstanding and rated by Xxxxx'x, the Trust, unless it has received written confirmation from Moodys and S&P Xxxxx'x that any such action would not impair the ratings then assigned to the APS by Moodys and S&P to any shares of RPXxxxx'x, engage in any one or more of the following transactionswill not: (i) borrow any money except as may be necessary for the clearance purpose of purchases and sales of clearing transactions in portfolio securities (which borrowings under any circumstances shall be limited to an amount equal to 5% of the Market Value of the Trust's assets at the time of such borrowings and which borrowings shall be repaid within 60 days and not be extended or renewed (provided that no such borrowing will be permitted unless and shall not cause the Trust, after giving effect to such borrowing, maintains Moodys aggregate Discounted Value of Xxxxx'x Eligible Assets and S&P Eligible Assets at least equal to be less than the RP APS Basic Maintenance Amount); -43- (ii) lend portfolio engage in short sales of securities; (iii) designate a new Pricing Servicelend any securities; (iv) engage in short sales; (v) merge or consolidate with issue any other entity; (vi) engage in reverse repurchase agreements; or (vii) issue a class or series of shares of beneficial interest ranking prior to or on a parity with the RP APS with respect to the payment of dividends or the distribution of assets on liquidation. (b) For so long as any shares of RP are rated by Moodys upon dissolution, liquidation or S&P, the Trust shall give to Moodys or S&P, as the case may be, prompt written notice winding up of the following circumstances: (i) any change to the Declaration of Trust or Article 12 of the Bylaws; (ii) any failure to declare or pay any dividend on the shares of RP; (iii) any mandatory or optional redemption of the shares of RP; (iv) any assumption of control of the Trustees by the Holders of shares of RP pursuant to Section 6(b) of this Part I of Section 12.1Trust; (v) in the event the Trust shall not be a party to a pricing services agreement merge or consolidate into or with any other corporation or entity; and dealer quotes on assets are not available; (vi) in the event that the Applicable Dividend Rate equals or exceeds 95% of the applicable Reference Rate; (vii) any person owning of record more than 5% of the Trusts Common Shares; (viii) a change in Internal Revenue Service rules on Additional Dividends relating to the operation of the Trust; and (ix) Xxxxxx Investment Management, Inc. is no longer the Trusts investment manager's Pricing Service. 13. 14.11.9
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