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EXHIBIT 77C
FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
(the "Fund")
On April 18, 2008, the Fund held its Annual Meeting of Shareholders (the "Annual Meeting") for the following purpose: election of Directors of the Fund ("Proposal 1"). The proposal was approved by the shareholders and the results of the voting are as follows:
Proposal 1: Election of Directors.
Name For Withheld
Common Stock
Morgan Gust 10,734,201 166,617
Preferred Stock
Karen H. Hogan 670 0
|
Donald F. Crumrine, David Gale and Robert F. Wulf continue to serve in their capacities as Directors of the Fund.
On May 21, 2008, the Fund held a Special Meeting of Shareholders (the "Special Meeting") for the following purpose: (i) approval of changes to certain fundamental investment policies ("Proposal 1-A, Proposal 1-B and Proposal 1-C") and (ii) approval of an amended and restated investment advisory agreement ("Proposal 2"). The proposals were approved by the shareholders and the results of the voting are as follows:
Proposal 1-A: Revision to the fundamental policy relating to borrowing money.
For Against Abstain
Common Stock 5,973,300 297,143 192,643
Preferred Stock 505 0 0
|
Proposal 1-B: Revision to the fundamental policy relating to issuing senior securities.
For Against Abstain
Common Stock 5,970,849 286,310 187,926
Preferred Stock 505 0 0
|
Proposal 1-C: Revision to the fundamental policy relating to purchasing securities on margin.
For Against Abstain
Common Stock 5,912,671 334,917 197,498
Preferred Stock 505 0 0
|
Proposal 2: Approval of Amended Investment Advisory Agreement.
For Against Abstain
Common Stock 5,906,578 318,431 220,077
Preferred Stock 505 0 0
|
EXHIBIT 77Q1(e)
FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
(the "Fund")
AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT
February 5, 1992
As amended and restated May 22, 2008
Flaherty & Crumrine Incorporated
301 E. Colorado Boulevard
Suite 720
Pasadena, California 91101
Ladies and Gentlemen:
Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated (the "Company"), a corporation organized under the laws of the State of Maryland, herewith confirms its agreement with Flaherty & Crumrine Incorporated (the "Adviser"), a corporation organized under the laws of the State of California, as follows:
1. Investment Description; Appointment
The Company desires to employ its capital by investing and reinvesting in investments of the kind and in accordance with the limitations specified in its Articles of Incorporation, as the same may from time to time be amended, and in its Registration Statement as from time to time in effect, and in such manner and to such extent as may from time to time be approved by the Board of Directors of the Company. Copies of the Company's Registration Statement and Articles of Incorporation, as amended, have been or will be submitted to the Adviser. The Company agrees to provide copies of all amendments to the Company's Registration Statement and Articles of Incorporation to the Adviser on an on-going basis. The Company desires to employ and hereby appoints the Adviser to act as investment adviser to the Company. The Adviser accepts the appointment and agrees to furnish the services described herein for the compensation set forth below.
2. Services as Investment Adviser
Subject to the supervision and direction of the Board of Directors of the Company, the Adviser will (a) act in accordance with the Company's Articles of Incorporation, the Investment Company Act of 1940, and the Investment Advisers Act of 1940, as the same may from time to time be amended, (b) manage the Company's portfolio on a discretionary basis in accordance with its investment objective and policies as stated in the Company's Registration Statement as from time to time in effect, (c) make investment decisions and exercise voting rights in respect of portfolio securities for the Company, (d) place purchase and sale orders on behalf of the Company and (e) employ professional portfolio managers and securities analysts to provide research services to the Company. The Adviser is authorized to retain the services of an economic consultant at the expense of the Fund to provide such services with respect to the Company as the parties to any agreement may agree upon. In providing these services, the Adviser will provide investment research and supervision of the Company's evaluation and, if appropriate, sale and reinvestment of the Company's assets. In addition, the Adviser will furnish the Company with whatever statistical information the Company may reasonably request with respect to the securities that the Company may hold or contemplate purchasing.
3. Brokerage
In executing transactions for the Company and selecting brokers or dealers, the Adviser will use its best efforts to seek the best overall terms available. In assessing the best overall terms available for any Company transaction, the Adviser will consider all factors it deems relevant including, but not limited to, breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer and the reasonableness of any commission for the specific transaction and on a continuing basis. In selecting brokers or dealers to execute any transaction and in evaluating the best overall terms available, the Adviser may consider the brokerage and research services (as those terms are defined in Section 28(e) of the Securities and Exchange Act of 1934) provided to the Company and/or other accounts over which the Adviser or an affiliate exercises investment discretion.
4. Information Provided to the Company
The Adviser will use its best efforts to keep the Company informed of developments materially affecting the Company, and will, on its own initiative, furnish the Company from time to time with whatever information the Adviser believes is appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in
rendering the services described in paragraphs 2, 3, and 4
above. The Adviser shall not be liable for any error of
judgment or mistake of law or for any act or omission or any
loss suffered by the Company in connection with the matters to
which this Agreement relates, provided that nothing herein shall
be deemed to protect or purport to protect the Adviser against
any liability to the Company or its shareholders to which the
Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement ("disabling
conduct"). The Company will indemnify the Adviser against, and
hold it harmless from, any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and
expenses), including any amounts paid in satisfaction of
judgments, in compromise or as fines or penalties, not resulting
from disabling conduct by the Adviser. Indemnification shall be
made only following: (i) a final decision on the merits by a
court or other body before whom the proceeding was brought that
the Adviser was not liable by reason of disabling conduct or
(ii) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the
Adviser was not liable by reason of disabling conduct by (a) the
vote of a majority of a quorum of directors of the Company who
are neither "interested persons" of the Company nor parties to
the proceeding ("disinterested non-party directors") or (b) an
independent legal counsel in a written opinion. The Adviser
shall be entitled to advances from the Company for payment of
the reasonable expenses incurred by it in connection with the
matter as to which it is seeking indemnification in the manner
and to the fullest extent permissible under the Maryland General
Corporation law. The Adviser shall provide to the Company a
written affirmation of its good faith belief that the standard
of conduct necessary for indemnification by the Company 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 Adviser shall
provide a security in form and amount acceptable to the Company
for its undertaking; (b) the Company is insured against losses
arising by reason of the advance; or (c) a majority of a quorum
of 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 Company at the time the
advance is proposed to be made, that there is reason to believe
that the Adviser will ultimately be found to be entitled to
indemnification.
6. Compensation
(a) In consideration of the services rendered pursuant to this Agreement, the Company will pay the Adviser after the end of each calendar month a fee for the previous month computed monthly at the annual rate of .625 of 1.00% on the Company's average monthly total managed assets up to $100 million and .50 of 1.00% on the Company's average monthly total managed assets of $100 million or more. For purposes of calculating such fee, the Company's total managed assets means the total assets of the Company (including any assets attributable to any Company auction rate preferred stock that may be outstanding or otherwise attributable to the use of leverage) minus the sum of accrued liabilities (other than debt, if any, representing financial leverage). For purposes of determining total managed assets, the liquidation preference of the Company preferred stock is not treated as a liability.
(b) Upon any termination of the Agreement before the end of a month, the fee for such part of that month shall be prorated according to the proportion that such period bears to the full monthly period and shall be payable upon the date of termination of this Agreement. For the purpose of determining fees payable to the Adviser, the value of the Company's average monthly net assets shall be computed at the times and in the manner specified in the Company's Registration Statement as from time to time in effect.
7. Expenses
The Adviser will bear all expenses in connection with the performance of its services under this Agreement, including compensation of an office space for its officers and employees connected with investment and economic research, trading and investment management and administration of the Company, as well as the fees of all directors of the Company who are affiliated with the Adviser or any of its affiliates; provided that the Company shall reimburse the Adviser for the travel and out-of- pocket expenses or an appropriate portion thereof of directors, officers and employees of the Adviser in connection with attendance at meetings of the Board of Directors of the Fund of any committee thereof. The Company will bear all other expenses to be incurred in its operation other than those that other parties have agreed to bear, including: organizational expenses; taxes, interest, brokerage costs and commissions and stock exchange fees; fees of directors of the Company who are not officers, directors or employees of the Adviser; Securities and Exchange Commission fees; state Blue Sky qualification fees; charges of the custodian, any subcustodians and transfer and dividend-paying agent; expenses in connection with the Company's Dividend Reinvestment and Cash Purchase Plan; insurance premiums; outside auditing and legal expenses; costs of maintenance of the Company's existence; costs attributable to investor services, including, without limitation, telephone and personnel expenses; costs of printing stock certificates; costs of shareholders' reports and meetings of the shareholders of the Company and of the officers or Board of Directors of the Company; membership fees in trade associations; stock exchange listing fees and expenses; expenses in connection with auctions of shares of auction rate preferred stock proposed to be issued by the Company; litigation and other extraordinary or non- recurring expenses.
8. Services to Other Companies or Accounts
The Company understands that the Adviser now acts, will continue to act or may in the future act, as investment adviser to fiduciary and other managed accounts or as investment adviser to one or more other investment companies, and the Company has no objection to the Adviser so acting, provided that whenever the Company and one or more other accounts or investment companies advised by the Adviser have available funds for investment, investments suitable and appropriate for each will be allocated in accordance with procedures believed by the Adviser to be equitable to each entity. Similarly, opportunities to sell securities will be allocated in an equitable manner. The Company recognizes that in some cases this procedure may adversely affect the size of the position obtained for or disposed of by the Company. In addition, the Company understands that the persons employed by the Adviser to assist in the performance of the Adviser's duties hereunder will not devote their full time to such service and nothing contained herein shall be deemed to limit or restrict the right of the Adviser or any affiliate of the Adviser to engage in and devote time and attention to other business or to render services or whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective as of the date
the Company's Registration Statement is declared effective by
the Securities and Exchange Commission and shall continue for an
initial two-year term and shall continue thereafter so long as
such continuance is specifically approved at least annually by
(i) the Board of Directors of the Company or (ii) a vote of a
"majority" (as defined in the Investment Company Act of 1940, as
amended) of the Company's outstanding voting securities,
provided that in either event the continuance is also approved
by a majority of the Board of Directors who are not "interested
persons" (as defined in said Act) of any party to this
Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is
terminable, without penalty, on 60 days' written notice, by the
Board of Directors of the Company or by vote of holders of a
majority of the Company's shares, or upon 60 days' written
notice, by the Adviser. This Agreement will also terminate
automatically in the event of its assignment (as defined in said
1940 Act).
10. Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto.
11. Governing Law
This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York without giving effect to the conflicts of laws principles thereof.
If the foregoing accurately sets forth our agreement, kindly indicate your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours.
FLAHERTY & CRUMRINE PREFERRED
INCOME OPPORTUNITY FUND
INCORPORATED
By: /s/ Robert M. Ettinger Robert M. Ettinger, President |
Accepted:
FLAHERTY & CRUMRINE INCORPORATED
By:/s/ Donald F. Crumrine Donald F. Crumrine, Chairman of the Board |
EXHIBIT 77Q1(a)(2)
FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
(the "Fund")
AMENDMENT TO AMENDED AND RESTATED BYLAWS
OF
FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
Articles 6.1, 6.2 and 6.3 of the Amended and Restated Bylaws are hereby deleted and the following is substituted in their place:
BYLAW-SIX: SHARES.
Article 6.1(a). Certificates of Stock. The interest, except fractional interests, of each Stockholder of the Company shall be evidenced by certificates for shares of stock in such form as the Board of Directors may from time to time prescribe. The certificates shall be numbered and entered in the books of the Company as they are issued. They shall exhibit the holder's name and the number of whole shares and no certificate shall be valid unless it has been signed by the Chairman of the Board, if any, or the President or a Vice President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary and bears the corporate seal. Such seal may be a facsimile, engraved or printed. Where any such certificate is signed by a Transfer Agent or by a Registrar, the signatures of any such officer may be facsimile, engraved or printed. In case any of the Officers of the Company whose manual or facsimile signature appears on any stock certificate delivered to a Transfer Agent of the Company shall cease to be such Officer prior to the issuance of such certificate, the Transfer Agent may nevertheless countersign and deliver such certificate as though the person signing the same or whose facsimile signature appears thereon had not ceased to be such Officer, unless written instructions of the Company to the contrary are delivered to the Transfer Agent.
Article 6.1(b). Uncertificated Shares. For any shares issued without certificates, the Company or a Transfer Agent of the Company may either issue receipts therefor or may keep accounts upon the books of the Company for the record holders of such shares, who shall in either case be deemed, for all purposes hereunder, to be the holders of such shares as if they had received certificates therefor.
Article 6.2. Lost, Stolen or Destroyed Certificates. The Board of Directors, or the President together with the Treasurer or Chief Financial Officer or Secretary, may direct a new certificate to be issued in place of any certificate for certificated shares theretofore issued by the Company, alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed, or by his legal representative. When authorizing such issue of a new certificate, the Board of Directors, or the President and Treasurer or Chief Financial Officer or Secretary, may, in its or their discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as it or they shall require and/or give the Company a bond in such sum and with such surety or sureties as it or they may direct as indemnity against any claim that may be made against the Company with respect to the certificate alleged to have been lost, stolen or destroyed for such newly issued certificate.
Article 6.3. Transfer of Stock. Transfer of shares of the Company shall be made on the books of the Company by the registered holder thereof or by his duly authorized attorney or legal representative and upon surrender and cancellation of a certificate or certificates, if issued, for the same number of shares of the same class, duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, with such proof of the authenticity of the transferor's signature as the Company or its agents may reasonably require. The shares of stock of the Company may be freely transferred, and the Board of Directors may, from time to time, adopt rules and regulations with reference to the method of transfer of the shares of stock of the Company.
December 10, 2007
EXHIBIT 77Q1(a)(1)
FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
(the "Fund")
ARTICLES OF AMENDMENT
OF
FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated, a Maryland corporation (hereinafter the "Corporation"), hereby certifies to the Maryland State Department of Assessments and Taxation ("SDAT") that:
FIRST: The Articles Supplementary Creating and Fixing the Rights of Money Market Cumulative Preferred(tm) Stock ("MMP(R)") of the Corporation, filed with the SDAT on April 6, 1992, as amended to date (the "Articles Supplementary") are hereby further amended to reflect a change in the name of the Preferred Stock of the Corporation designated as Money Market Cumulative Preferred(tm) Stock ("MMP(R)") to Auction Preferred Stock ("APS") and, the Articles Supplementary hereinafter shall be entitled "Articles Supplementary Creating and Fixing the Rights of Auction Preferred Stock ("APS")" of the Corporation, and all references in such Articles Supplementary to MMP(R) or MMP are changed to APS.
SECOND: That Part I of the Articles Supplementary is further amended by deleting in its entirety Section 11(uu) of Part I (which defines the name of the Preferred Stocks as "MMP(R)" meaning "Money Market Cumulative Preferred Stocks, par value $.01 per share") and substituting therefore the following new Section 11(uu):
"(uu) APS shall mean Auction Preferred Stock par value $.01 per share."
THIRD: The amendments to the Articles Supplementary of the Corporation set forth in FIRST and SECOND above are limited to a change expressly permitted by Section 2- 605(a)(2) of the General Corporation Law of Maryland to be made without action by stockholders of the Corporation and were duly approved by a majority of the Corporation's entire Board of Directors.
IN WITNESS WHEREOF, the undersigned officers of the Corporation have executed these Articles of Amendment and do hereby acknowledge that these Articles of Amendment are the act and deed of the Corporation and state that, to the best of their knowledge, information and belief, the matters and facts contained herein with respect to authorization and approval are true in all material respects, under the penalties of perjury.
DATE: February 11, 2008
FLAHERTY & CRUMRINE PREFERRED
INCOME FUND INCORPORATED
By: /s/ Robert M. Ettinger Robert M. Ettinger President |
WITNESS:
/s/ Chad C. Conwell Chad C. Conwell Secretary |