As filed with the Securities and Exchange Commission on June 13, 2016

Securities Act File No. 333-194973

Investment Company Act File No. 811-22021

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-2

 

 

(Check Appropriate Box or Boxes)

 

 

Registration Statement

under

the Securities Act of 1933

   x
  Pre-Effective Amendment No.         ¨
  Post-Effective Amendment No. 5    x
  and/or   
 

Registration Statement

under

the Investment Company Act of 1940

   x
  Amendment No. 17    x

 

 

THE GABELLI HEALTHCARE & WELLNESS Rx TRUST

(Exact Name of Registrant as Specified in the Certificate of Trust)

 

 

One Corporate Center, Rye, New York 10580-1422

(Address of Principal Executive Offices)

Registrant’s Telephone Number, Including Area Code: (800) 422-3554

Agnes Mullady

The Gabelli Healthcare & Wellness Rx Trust

One Corporate Center

Rye, New York 10580-1422

(914) 921-5100

(Name and Address of Agent for Service)

 

 

Copies to:

 

Andrea R. Mango, Esq.

The Gabelli Healthcare & Wellness Rx Trust

One Corporate Center

Rye, New York 10580-1422

(914) 921-5100

 

Rose F. DiMartino, Esq.

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019-6099

(212) 728-8000

 

 

Approximate date of proposed public offering: From time to time after the effective date of this Registration Statement.

If any securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, as amended, other than securities offered in connection with a dividend reinvestment plan, check the following box.   x

 

 

 


EXPLANATORY NOTE

This Post-Effective Amendment No. 5 to the Registration Statement on Form N-2 (File Nos. 333-194973 and 811-22021) of The Gabelli Healthcare & Wellness Rx Trust (the “Registration Statement”) is being filed pursuant to Rule 462(d) under the Securities Act of 1933, as amended (the “Securities Act”), solely for the purpose of filing exhibits to the Registration Statement. Accordingly, this Post-Effective Amendment No. 5 consists only of a facing page, this explanatory note and Part C of the Registration Statement on Form N-2 setting forth the exhibits to the Registration Statement. This Post-Effective Amendment No. 5 does not modify any other part of the Registration Statement. Pursuant to Rule 462(d) under the Securities Act, this Post-Effective Amendment No. 5 shall become effective immediately upon filing with the Securities and Exchange Commission. The contents of the Registration Statement are hereby incorporated by reference.


PART C — OTHER INFORMATION

 

Item 25. Financial Statements and Exhibits

 

1.   Financial Statements
  (a)    None
  (b)    Part A
     None
     Part B
     The following statements of the Registrant are incorporated by reference in Part B of the Registration Statement:
     Schedule of Investments at December 31, 2015
     Statement of Assets and Liabilities as of December 31, 2015
     Statement of Operations for the Year Ended December 31, 2015
     Statement of Changes in Net Assets for the Year Ended December 31, 2015
     Notes to Financial Statements for the Year Ended December 31, 2015
     Report of Independent Registered Public Accounting Firm for the Year Ended December 31, 2015
2. Exhibits   
(a)(i)      Third Amended and Restated Agreement and Declaration of Trust of Registrant (6)
(a)(ii)      Fourth Amended and Restated Statement of Preferences with respect to the 5.76% Series A Cumulative Preferred Shares (12)
(a)(iii)      Second Amended and Restated Statement of Preferences with respect to the 5.875% Series B Cumulative Preferred Shares (12)
(b)      Second Amended and Restated By-Laws of Registrant (4)
(c)      Not applicable
(d)(i)      Form of Registrant’s Common Share Certificate (1)
(d)(ii)      Form of Registrant’s Specimen Preferred Share Certificate (3)
(e)      Automatic Dividend Reinvestment and Voluntary Cash Purchase Plan of Registrant (1)
(f)      Not applicable

 

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(g)      Form of Investment Advisory Agreement between Registrant and Gabelli Funds, LLC (1)
(h)(i)      Form of Sales Agreement for 5.875% Series B Cumulative Preferred Shares (12)
(i)      Not applicable
(j)(i)      Form of Custodian Contract between Registrant and Mellon Trust of New England, N.A. (1)
(j)(ii)      Form of Custodian Fee Schedule between Registrant and Mellon Trust of New England, N.A. (1)
(k)(i)      Form of Transfer Agency and Service Agreement among Registrant, Computershare Trust Company, N.A. and Computershare Inc. (5)
(k)(ii)      Form of Amendment No. 1 to Transfer Agency and Service Agreement among Registrant, Computershare Trust Company, N.A. and Computershare Inc. (5)
(k)(iii)      Form of Amendment No. 2 to Transfer Agency and Service Agreement among Registrant, Computershare Trust Company, N.A. and Computershare Inc. (5)
(k)(iv)      Form of Amendment No. 3 to Transfer Agency and Service Agreement among Registrant, Computershare Trust Company, N.A. and Computershare Inc. (11)
(k)(v)      Form of Amendment No. 4 to Transfer Agency and Service Agreement among Registrant, Computershare Trust Company, N.A. and Computershare Inc. (11)
(k)(vi)      Form of Amendment No. 5 to Transfer Agency and Service Agreement among Registrant, Computershare Trust Company, N.A. and Computershare Inc. (10)
(k)(vii)      Form of Amendment No. 6 to Transfer Agency and Service Agreement among Registrant, Computershare Trust Company, N.A. and Computershare Inc. (11)
(k)(viii)      Form of Amendment No. 7 to Transfer Agency and Service Agreement among Registrant, Computershare Trust Company, N.A. and Computershare Inc. (12)
(k)(ix)      Form of Amendment No. 8 to Transfer Agency and Service Agreement among Registrant, Computershare Trust Company, N.A. and Computershare Inc. (12)
(l)(i)      Opinion and Consent of Richards, Layton & Finger, P.A. with respect to the legality of the Common and Preferred Shares (8)
(l)(ii)      Opinion and Consent of Richards, Layton & Finger, P.A. with respect to the legality of the Common Shares and the Rights (9)
(l)(iii)      Opinion and Consent of Richards, Layton & Finger, P.A. with respect to the legality of the 5.875% Series B Cumulative Preferred Shares (10)
(l)(iv)      Opinion and Consent of Richards, Layton & Finger, P.A. with respect to the legality of the Additional Shares of 5.875% Series B Cumulative Preferred Shares (12)
(m)      Not applicable

 

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(n)(i)      Consent of Independent Registered Public Accounting Firm (11)
(n)(ii)      Powers of Attorney (7)
(n)(iii)      Powers of Attorney (11)
(o)      Not applicable
(p)(i)      Purchase Agreement dated April 12, 2007 between Registrant and The Gabelli Equity Trust Inc. (1)
(q)      Not applicable
(r)(i)      Codes of Ethics of the Investment Adviser and of the Fund (7)
(r)(ii)      Joint Code of Ethics of the Investment Adviser and of the Fund for Chief Executive and Senior Financial Officers of the Gabelli Funds (2)

 

(1) Incorporated by reference to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-14, as filed with the Commission on April 16, 2007.
(2) Incorporated by reference to the Registrant’s Registration Statement on Form N-2, file Nos. 333-166168 and 811-22021, as filed with the Commission on April 19, 2010.
(3) Incorporated by reference to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2, file Nos. 333-166168 and 811-22021, as filed with the Commission on August 18, 2010.
(4) Incorporated by reference to Post-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form N-2, file Nos. 333-166168 and 811-22021, as filed with the Commission on March 7, 2011.
(5) Incorporated by reference to the Registrant’s Registration Statement on Form N-2, file Nos. 333-187842 and 811-22021, as filed with the Commission on April 10, 2013.
(6) Incorporated by reference to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2, file Nos. 333-187842 and 811-22021, as filed with the Commission on June 13, 2013.
(7) Incorporated by reference to the Registrant’s Registration Statement on Form N-2, file Nos. 333-194973 and 811-22021, as filed with the Commission on April 1, 2014.
(8) Incorporated by reference to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2, file Nos. 333-194973 and 811-22021, as filed with the Commission on May 13, 2014.
(9) Incorporated by reference to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2, file Nos. 333-194973 and 811-22021, as filed with the Commission on June 3, 2014.
(10) Incorporated by reference to Post-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2, file Nos. 333-194973 and 811-22021, as filed with the Commission on September 18, 2014.
(11) Incorporated by reference to Post-Effective Amendment No. 4 to the Registrant’s Registration Statement on Form N-2, file Nos. 333-194973 and 811-22021, as filed with the Commission on April 29, 2016.
(12) Filed herewith.

 

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Item 26. Marketing Arrangements

The information contained under the heading “Plan of Distribution” beginning on page 68 of the Prospectus and under the heading “Plan of Distribution” beginning on page P-20 of the accompanying Prospectus Supplement is incorporated by reference.

 

Item 27. Other Expenses of Issuance and Distribution

The following table sets forth the estimated expenses to be incurred in connection with the at-the-market offering of 5.875% Series B Cumulative Preferred Shares described in this Registration Statement:

 

Printing expenses

   $  10,000   

Legal fees

   $ 19,500   

Miscellaneous

   $ 2,500   
  

 

 

 

Total

   $ 32,000   

 

Item 28. Persons Controlled by or Under Common Control

None.

 

Item 29. Number of Holders of Securities as of April 30, 2016:

 

Title of Class

   Number of
Record Holders
 

Common Shares of Beneficial Interest

     7,273   

5.76% Series A Cumulative Preferred Shares

     1   

5.875% Series B Cumulative Preferred Shares

     1   

 

Item 30. Indemnification

Article IV of the Registrant’s Third Amended and Restated Agreement and Declaration of Trust provides as follows:

4.1 No Personal Liability of Shareholders, Trustees, etc. No Shareholder of the Trust shall be subject in such capacity to any personal liability whatsoever to any Person in connection with Trust Property or the acts, obligations or affairs of the Trust. Shareholders shall have the same limitation of personal liability as is extended to shareholders of a private corporation for profit incorporated under the general corporation law of the State of Delaware. No Trustee or officer of the Trust shall be subject in such capacity to any personal liability whatsoever to any Person, other than the Trust or its Shareholders, in connection with Trust Property or the affairs of the Trust, save only liability to the Trust or its Shareholders arising from bad faith, willful misfeasance, gross negligence or reckless disregard for his duty to such Person; and, subject to the foregoing exception, all such Persons shall look solely to the Trust Property for satisfaction of claims of any nature arising in connection with the affairs of the Trust. If any Shareholder, Trustee or officer, as such, of the Trust, is made a party to any suit or proceeding to enforce any such liability, subject to the foregoing exception, he shall not, on account thereof, be held to any personal liability.

4.2 Mandatory Indemnification. (a) The Trust shall indemnify the Trustees and officers of the Trust (each such person being an “indemnitee”) against any liabilities and expenses, including amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and reasonable counsel fees reasonably incurred by such

 

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indemnitee in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or investigative body in which he may be or may have been involved as a party or otherwise (other than, except as authorized by the Trustees, as the plaintiff or complainant) or with which he may be or may have been threatened, while acting in any capacity set forth above in this Section 4.2 by reason of his having acted in any such capacity, except with respect to any matter as to which he shall not have acted in good faith in the reasonable belief that his action was in the best interest of the Trust or, in the case of any criminal proceeding, as to which he shall have had reasonable cause to believe that the conduct was unlawful, provided, however, that no indemnitee shall be indemnified hereunder against any liability to any person or any expense of such indemnitee arising by reason of (i) willful misfeasance, (ii) bad faith, (iii) gross negligence (negligence in the case of Affiliated Indemnitees), or (iv) reckless disregard of the duties involved in the conduct of his position (the conduct referred to in such clauses (i) through (iv) being sometimes referred to herein as “disabling conduct”). Notwithstanding the foregoing, with respect to any action, suit or other proceeding voluntarily prosecuted by any indemnitee as plaintiff, indemnification shall be mandatory only if the prosecution of such action, suit or other proceeding by such indemnitee was authorized by a majority of the Trustees.

(b) Notwithstanding the foregoing, no indemnification shall be made hereunder unless there has been a determination (1) by a final decision on the merits by a court or other body of competent jurisdiction before whom the issue of entitlement to indemnification hereunder was brought that such indemnitee is entitled to indemnification hereunder or, (2) in the absence of such a decision, by (i) a majority vote of a quorum of those Trustees who are neither Interested Persons of the Trust nor parties to the proceeding (“Disinterested Non-Party Trustees”), that the indemnitee is entitled to indemnification hereunder, or (ii) if such quorum is not obtainable or even if obtainable, if such majority so directs, independent legal counsel in a written opinion conclude that the indemnitee should be entitled to indemnification hereunder. All determinations to make advance payments in connection with the expense of defending any proceeding shall be authorized and made in accordance with the immediately succeeding paragraph (c) below.

(c) The Trust shall make advance payments in connection with the expenses of defending any action with respect to which indemnification might be sought hereunder if the Trust receives a written affirmation by the indemnitee of the indemnitee’s good faith belief that the standards of conduct necessary for indemnification have been met and a written undertaking to reimburse the Trust unless it is subsequently determined that he is entitled to such indemnification and if a majority of the Trustees determine that the applicable standards of conduct necessary for indemnification appear to have been met. In addition, at least one of the following conditions must be met: (1) the indemnitee shall provide adequate security for his undertaking, (2) the Trust shall be insured against losses arising by reason of any lawful advances, or (3) a majority of a quorum of the Disinterested Non-Party Trustees, or if a majority vote of such quorum so direct, independent legal counsel in a written opinion, shall conclude, based on a review of readily available facts (as opposed to a full trial-type inquiry), that there is substantial reason to believe that the indemnitee ultimately will be found entitled to indemnification.

(d) The rights accruing to any indemnitee under these provisions shall not exclude any other right to which he may be lawfully entitled.

(e) Notwithstanding the foregoing, subject to any limitations provided by the 1940 Act and this Declaration, the Trust shall have the power and authority to indemnify Persons providing services to the Trust to the full extent provided by law as if the Trust were a corporation organized under the Delaware General Corporation Law provided that such indemnification has been approved by a majority of the Trustees.

4.3 No Duty of Investigation; Notice in Trust Instruments, etc. No purchaser, lender, transfer agent or other person dealing with the Trustees or with any officer, employee or agent of the Trust shall be bound to make any inquiry concerning the validity of any transaction purporting to be made by the Trustees or by said officer, employee or agent or be liable for the application of money or property paid, loaned, or delivered to or on the order of the Trustees or of said officer, employee or agent. Every obligation, contract, undertaking, instrument, certificate, Share, other security of the Trust, and every other act or thing whatsoever executed in connection with the Trust shall be

 

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conclusively taken to have been executed or done by the executors thereof only in their capacity as Trustees under this Declaration or in their capacity as officers, employees or agents of the Trust. The Trustees may maintain insurance for the protection of the Trust Property, its Shareholders, Trustees, officers, employees and agents in such amount as the Trustees shall deem adequate to cover possible liability, and such other insurance as the Trustees in their sole judgment shall deem advisable or is required by the 1940 Act.

4.4 Reliance on Experts, etc. Each Trustee and officer or employee of the Trust shall, in the performance of its duties, be fully and completely justified and protected with regard to any act or any failure to act resulting from reliance in good faith upon the books of account or other records of the Trust, upon an opinion of counsel, or upon reports made to the Trust by any of the Trust’s officers or employees or by any advisor, administrator, manager, distributor, selected dealer, accountant, appraiser or other expert or consultant selected with reasonable care by the Trustees, officers or employees of the Trust, regardless of whether such counsel or other person may also be a Trustee.

Section 9 of the Registrant’s Investment Advisory Agreement provides as follows:

9. Indemnity

(a) The Fund hereby agrees to indemnify the Adviser and each of the Adviser’s trustees, officers, employees, and agents (including any individual who serves at the Adviser’s request as director, officer, partner, trustee or the like of another corporation) and controlling persons (each such person being an “indemnitee”) against any liabilities and expenses, including amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees (all as provided in accordance with applicable corporate law) reasonably incurred by such indemnitee in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or investigative body in which he may be or may have been involved as a party or otherwise or with which he may be or may have been threatened, while acting in any capacity set forth above in this paragraph or thereafter by reason of his having acted in any such capacity, except with respect to any matter as to which he shall have been adjudicated not to have acted in good faith in the reasonable belief that his action was in the best interest of the Fund and furthermore, in the case of any criminal proceeding, so long as he had no reasonable cause to believe that the conduct was unlawful, provided, however, that (1) no indemnitee shall be indemnified hereunder against any liability to the Fund or its shareholders or any expense of such indemnitee arising by reason of (i) willful misfeasance, (ii) bad faith, (iii) gross negligence, (iv) reckless disregard of the duties involved in the conduct of his position (the conduct referred to in such clauses (i) through (iv) being sometimes referred to herein as “disabling conduct”), (2) as to any matter disposed of by settlement or a compromise payment by such indemnitee, pursuant to a consent decree or otherwise, no indemnification either for said payment or for any other expenses shall be provided unless there has been a determination that such settlement or compromise is in the best interests of the Fund and that such indemnitee appears to have acted in good faith in the reasonable belief that his action was in the best interest of the Fund and did not involve disabling conduct by such indemnitee and (3) with respect to any action, suit or other proceeding voluntarily prosecuted by any indemnitee as plaintiff, indemnification shall be mandatory only if the prosecution of such action, suit or other proceeding by such indemnitee was authorized by a majority of the full Board of the Fund. Notwithstanding the foregoing the Fund shall not be obligated to provide any such indemnification to the extent such provision would waive any right which the Fund cannot lawfully waive.

(b) The Fund shall make advance payments in connection with the expenses of defending any action with respect to which indemnification might be sought hereunder if the Fund receives a written affirmation of the indemnitee’s good faith belief that the standard of conduct necessary for indemnification has been met and a written undertaking to reimburse the Fund unless it is subsequently determined that he is entitled to such indemnification and if the trustees of the Fund determine that the facts then known to them would not preclude indemnification. In addition, at least one of the following conditions must be met: (A) the indemnitee shall provide a security for his undertaking, (B) the Fund shall be insured against losses arising by reason of any lawful advances, or (C) a majority of a quorum of trustees of the Fund who are neither “interested persons” of the Fund (as defined in Section 2(a)(19)

 

C-6


of the Act) nor parties to the proceeding (“Disinterested Non-Party Trustees”) or an independent legal counsel in a written opinion, shall determine, based on a review of readily available facts (as opposed to a full trial-type inquiry), that there is reason to believe that the indemnitee ultimately will be found entitled to indemnification.

(c) All determinations with respect to indemnification hereunder shall be made (1) by a final decision on the merits by a court or other body before whom the proceeding was brought that such indemnitee is not liable by reason of disabling conduct or, (2) in the absence of such a decision, by (i) a majority vote of a quorum of the Disinterested Non-party Trustees of the Fund, or (ii) if such a quorum is not obtainable or even, if obtainable, if a majority vote of such quorum so directs, independent legal counsel in a written opinion.

The rights accruing to any indemnitee under these provisions shall not exclude any other right to which he may be lawfully entitled.

 

Item 31. Business and Other Connections of Investment Adviser

The Investment Adviser, a limited liability company organized under the laws of the State of New York, acts as investment adviser to the Registrant. The Registrant is fulfilling the requirement of this Item 31 to provide a list of the officers and trustees of the Investment Adviser, together with information as to any other business, profession, vocation or employment of a substantial nature engaged in by the Investment Adviser or those officers and directors during the past two years, by incorporating by reference the information contained in the Form ADV of the Investment Adviser filed with the commission pursuant to the Investment Advisers Act of 1940 (Commission File No. 801-37706).

 

Item 32. Location of Accounts and Records

The accounts and records of the Registrant are maintained in part at the office of the Investment Adviser at One Corporate Center, Rye, New York 10580-1422, in part at the offices of the Fund’s custodian, The Bank of New York Mellon Corporation, at 135 Santilli Highway, Everett, Massachusetts 02149, in part at the offices of the Fund’s sub-administrator, BNY Mellon Investment Servicing (US) Inc., at One Boston Place, 201 Washington Street, Boston, MA 02108, and in part at the offices of the Fund’s transfer agent, Computershare Trust Company, N.A., 250 Royall Street, Canton, Massachusetts 02021.

 

Item 33. Management Services

Not applicable.

 

Item 34. Undertakings

1. Registrant undertakes to suspend the offering of shares until it amends its prospectus if (a) subsequent to the effective date of its Registration Statement, the net asset value declines more than ten percent from the later of its net asset value as of the effective date of the Registration Statement or the filing of a prospectus supplement pursuant to Rule 497, under the Securities Act, setting forth the terms of the offering or (b) the net asset value increases to an amount greater than its net proceeds as stated in the prospectus.

2. Not applicable.

3. If the securities being registered are to be offered to existing shareholders pursuant to warrants or rights, and any securities not taken by shareholders are to be reoffered to the public, the Registrant undertakes to supplement the prospectus, after the expiration of the subscription period, to set forth the results of the subscription offer, the transactions by underwriters during the subscription period, the amount of unsubscribed securities to be purchased by underwriters, and the terms of any subsequent reoffering thereof. If any public offering by the underwriters of the securities being registered is to be made on terms differing from those set forth on the cover page of the prospectus, the Registrant further undertakes to file a post-effective amendment to set forth the terms of such offering.

 

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4. Registrant hereby undertakes:

(a) to file, during a period in which offers or sales are being made, a post-effective amendment to this Registration Statement:

 

  (1) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “1933 Act”);

 

  (2) to reflect in the Prospectus any facts or events after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement;

 

  (3) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; and

 

  (4) if (i) it determines to conduct one or more offerings of the Fund’s common shares (including rights to purchase its common shares) at a price below its net asset value per common share at the date the offering is commenced, and (ii) such offering or offerings will result in greater than a 15% dilution to the Fund’s net asset value per common share.

(b) that for the purpose of determining any liability under the 1933 Act, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

(c) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; and

(d) that, for the purpose of determining liability under the 1933 Act to any purchaser, if the Registrant is subject to Rule 430C: Each prospectus filed pursuant to Rule 497(b), (c), (d) or (e) under the 1933 Act as part of a registration statement relating to an offering, other than prospectuses filed in reliance on Rule 430A under the 1933 Act shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(e) that for the purpose of determining liability of the Registrant under the 1933 Act to any purchaser in the initial distribution of securities:

The undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to the purchaser:

 

  (1) any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 497 under the 1933 Act.

 

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  (2) the portion of any advertisement pursuant to Rule 482 under the 1933 Act relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and

 

  (3) any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

5. Registrant undertakes that, for the purpose of determining any liability under the 1933 Act, the information omitted from the form of Prospectus filed as part of the Registration Statement in reliance upon Rule 430A and contained in the form of Prospectus filed by the Registrant pursuant to Rule 497(h) will be deemed to be a part of the Registration Statement as of the time it was declared effective.

Registrant undertakes that, for the purpose of determining any liability under the 1933 Act, each post-effective amendment that contains a form of Prospectus will be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof.

6. Registrant undertakes to send by first class mail or other means designed to ensure equally prompt delivery, within two business days of receipt of a written or oral request, any Statement of Additional Information constituting Part B of this Registration Statement.

 

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SIGNATURES

As required by the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant has duly caused this Registration Statement on Form N-2 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Rye, State of New York, on the 13 th day of June, 2016.

 

THE GABELLI HEALTHCARE & WELLNESS Rx TRUST

By:

 

/s/ Agnes Mullady

 

Agnes Mullady

President

As required by the Securities Act of 1933, as amended, this Form N-2 has been signed below by the following persons in the capacities set forth below on the 13 th day of June, 2016.

 

   

NAME

     

TITLE

 

*

Jeffrey J. Jonas

    Trustee
 

*

Anthony J. Colavita

    Trustee
 

*

James P. Conn

    Trustee
 

*

Vincent D. Enright

    Trustee
 

*

Robert C. Kolodny

    Trustee
 

*

Kuni Nakamura

    Trustee
 

*

Anthonie C. Van Ekris

    Trustee
 

*

Salvatore J. Zizza

    Trustee
 

/s/ AGNES MULLADY

Agnes Mullady

    President (Principal Executive Officer)
 

/s/ JOSEPH H. EGAN

Joseph H. Egan

    Treasurer (Principal Financial and Accounting Officer)
 

/s/ AGNES MULLADY

Agnes Mullady

    Attorney-in-Fact

 

* Pursuant to a Power of Attorney


EXHIBIT INDEX

 

Exhibit
Number
  Description
(a)(ii)   Fourth Amended and Restated Statement of Preferences of 5.76% Series A Cumulative Preferred Shares
(a)(iii)   Second Amended and Restated Statement of Preferences of 5.875% Series B Cumulative Preferred Shares
(h)(i)   Form of Sales Agreement for 5.875% Series B Cumulative Preferred Shares
(k)(viii)   Form of Amendment No. 7 to Transfer Agency and Service Agreement among Registrant, Computershare Trust Company, N.A. and Computershare Inc.
(k)(ix)   Form of Amendment No. 8 to Transfer Agency and Service Agreement among Registrant, Computershare Trust Company, N.A. and Computershare Inc.
(l)(iv)   Opinion and Consent of Richards, Layton & Finger, P.A. with respect to the legality of the Additional Shares of 5.875% Series B Cumulative Preferred Shares

Execution Version

THE GABELLI HEALTHCARE & WELLNESS Rx TRUST

FOURTH AMENDED AND RESTATED STATEMENT OF PREFERENCES

OF

5.76% SERIES A CUMULATIVE PREFERRED SHARES

The Gabelli Healthcare & Wellness Rx Trust, a Delaware statutory trust (the “ Fund ”), hereby certifies that:

FIRST: The Board of Trustees of the Fund (the “ Board of Trustees ”), at a meeting duly convened and held on February 24, 2010, pursuant to authority expressly vested in it by Article V of the Amended Agreement and Declaration of Trust, adopted resolutions classifying an unlimited amount of shares as authorized but unissued preferred shares of the Fund, par value $0.001 per share, and delegated the designation and issuance of such shares to a pricing committee (the “ Pricing Committee ”) at such times and in such amounts and on such terms and conditions as the Pricing Committee should determine.

SECOND: The Pricing Committee, at a meeting duly convened and held on August 17, 2010, pursuant to the authority granted it by the Board of Trustees, approved the designation and issuance by the Fund of up to 1,200,000 shares of 5.76% Series A Cumulative Preferred Shares.

THIRD: As a result of a notification from S&P that it no longer requires the delivery of an Accountant’s Confirmation, the Board of Trustees determined that it should amend this Statement of Preferences to reflect the S&P notification.

FOURTH: The Board of Trustees, at a meeting duly convened and held on November 15, 2012, pursuant to authority expressly vested in it by Part III of this Statement of Preferences, authorized the officers of the Trust to amend and restate this Statement of Preferences that was initially executed on August 17, 2010.

FIFTH: The Board of Trustees of the Trust, at a meeting duly convened on November 20, 2013, approved the change in the Rating Agency rating the 5.76% Series A Cumulative Preferred Shares at the request of the Trust from S&P to Moody’s.

SIXTH: The Board of Trustees of the Trust, at a meeting duly convened and held on November 20, 2013, pursuant to authority expressly vested in it by Part III of this Statement of Preferences, authorized the officers of the Trust to amend and restate this Statement of Preferences that was initially executed on August 17, 2010 and amended and restated on November 15, 2012.

SEVENTH: The Board of Trustees at a meeting duly convened and held on May 17, 2016 (i) pursuant to authority expressly vested in it by Article V of the Third Amended and Restated Agreement and Declaration of Trust of the Fund, dated as of February 16, 2011, adopted resolutions approving the designation of 2,500,000 additional shares of 5.76% Series A Cumulative Preferred Shares and (ii) pursuant to authority expressly vested in it by Part III of the Second Amended and Restated Statement of Preferences, approved the Third Amended and Restated Statement of Preferences and authorized the officers of the Fund to take all necessary action in connection therewith.


EIGHTH: The Board of Trustees, by written consent dated as of June 10, 2016, pursuant to authority expressly vested in it by Part III of the Third Amended and Restated Statement of Preferences, approved this Fourth Amended and Restated Statement of Preferences (which was initially executed on August 17, 2010 and amended and restated on November 15, 2012, January 23, 2014 and May 17, 2016) and authorized the officers of the Fund to take all necessary action in connection therewith.

NINTH: The preferences, rights, voting powers, restrictions, limitations as to dividends and distributions, qualifications, and terms and conditions of redemption of the 5.76% Series A Cumulative Preferred Shares, par value $0.001 per share, as set by the Pricing Committee and the Board of Trustees, are as follows:

DESIGNATION

Series A Preferred Shares: A series of 3,700,000 preferred shares, par value $0.001 per share, liquidation preference $25.00 per share, is hereby designated “5.76% Series A Cumulative Preferred Shares” (the “ Series A Preferred Shares ”). Each share of Series A Preferred Shares may be issued on a date to be determined by the Board of Trustees; and have such other preferences, rights, voting powers, restrictions, limitations as to dividends and distributions, qualifications and terms and conditions of redemption, in addition to those required by applicable law or set forth in the Governing Documents applicable to Preferred Shares of the Fund, as are set forth in this Statement of Preferences. The Series A Preferred Shares shall constitute a separate series of Preferred Shares.

TENTH: This Statement of Preferences sets forth the rights, powers, preferences and privileges of the holders of the Series A Preferred Shares and the provisions set forth herein shall operate either as additions to or modifications of the rights, powers, preferences and privileges of the Holders of the Series A Preferred Shares under the Declaration of Trust, as the context may require. To the extent the provisions set forth herein conflict with the provisions of the Declaration of Trust with respect to any such rights, powers, preferences and privileges, this Statement of Preferences shall control. Except as contemplated by the immediately preceding sentence, the Declaration of Trust shall control as to the Fund generally and the rights, powers, preferences and privileges of the other shareholders of the Fund.

PART I

DEFINITIONS

Unless the context or use indicates another or different meaning or intent, each of the following terms when used in this Statement of Preferences shall have the meaning ascribed to it below, whether such term is used in the singular or plural and regardless of tense:

Adjusted Value ” of each Eligible Asset shall be computed as follows:

 

  (a) cash shall be valued at 100% of the face value thereof;

 

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  (b) all other Eligible Assets shall be valued at the applicable Discounted Value thereof, provided, however, that the Adjusted Value of any unit of a security held by the Fund that is subject to a call option written by the Fund shall be the lesser of (i) the Discounted Value of such unit or (ii) the strike price per unit of such option; and

 

  (c) each asset that is not an Eligible Asset shall be valued at zero.

Administrator ” means Gabelli Funds, LLC, a New York limited liability company, or such other entity as shall be providing administrative services to the Fund and will include, as appropriate, any sub-administrator appointed by the Administrator.

Adviser ” means Gabelli Funds, LLC, a New York limited liability company, or such other entity as shall be serving as the investment adviser of the Fund.

Agency Mortgage Collateral ” means certificates guaranteed by U.S. Government Agencies (e.g., Federal National Mortgage Association (“FNMA”), Government National Mortgage Association (“GNMA”) and Federal Home Loan Mortgage Corporation (“FHLMC”)) for timely payment of interest and full and ultimate payment of principal. Agency Mortgage Collateral also evidences undivided interests in pools of level-payment, fixed, variable, or adjustable rate, fully amortizing loans that are secured by first liens on one- to four-family residences residential properties (or in the case of Plan B FHLMC certificates, five or more units primarily designed for residential use).

Annual Valuation Date ” means the Valuation Date each calendar year so designated by the Fund, commencing in the calendar year 2010.

Asset Coverage ” means asset coverage, as determined in accordance with Section 18(h) of the 1940 Act, of at least 200% with respect to all outstanding senior securities of the Fund which are stock, including all Outstanding Series A Preferred Shares (or such other asset coverage as may in the future be specified in or under the 1940 Act as the minimum asset coverage for senior securities which are stock of a closed-end investment company as a condition of declaring dividends on its common stock), determined on the basis of values calculated as of a time within 48 hours (not including Saturdays, Sundays or holidays) next preceding the time of such determination.

Bank Loans ” means direct purchases of, assignments of, participations in and other interests in (a) any bank loan or (b) any loan made by an investment bank, investment fund or other financial institution, provided that such loan under this clause (b) is similar to those typically made, syndicated, purchased or participated by a commercial bank or institutional loan investor in the ordinary course of business.

Basic Maintenance Amount ” means, with respect to the Series A Preferred Shares, the meaning set forth in the Moody’s Guidelines or, if any Other Rating Agency is rating the Series A Preferred Shares at the Fund’s request, the meaning set forth in the guidelines of the Other Rating Agency.

 

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Basic Maintenance Amount Cure Date ” means, with respect to the Series A Preferred Shares, 10 Business Days following a Valuation Date, such date being the last day upon which the Fund’s failure to comply with paragraph 6(a)(ii)(A) of Part II hereof could be cured, and for the purposes of this Statement of Preferences shall have a correlative meaning with respect to any other class or series of Preferred Shares.

Basic Maintenance Report ” or “ Report ” means, with respect to the Series A Preferred Shares, a report prepared by the Administrator (if requested by any Rating Agency) which sets forth, as of the related Valuation Date, (i) Eligible Assets sufficient to meet or exceed the Basic Maintenance Amount, (ii) the Market Value and Discounted Value thereof (seriatim and in the aggregate), (iii) the Basic Maintenance Amount, and (iv) the net asset value of the Fund. For the purposes of this Statement of Preferences, “Basic Maintenance Report” or “Report” shall have a correlative meaning with respect to any other class or series of Preferred Shares.

Basic Maintenance Test ” means a test which is met if the Eligible Assets meets or exceeds the Basic Maintenance Amount.

Board of Trustees ” means the Board of Trustees of the Fund or any duly authorized committee thereof as permitted by applicable law.

Business Day ” means a day on which the New York Stock Exchange is open for trading and that is neither a Saturday or Sunday.

Business Development Company ” (BDCs) means a type of closed-end fund regulated under the 1940 Act whose shares are typically listed for trading on a U.S. securities exchange. BDCs are publicly-traded funds that typically invest in and lend to small and medium-sized private and certain public companies that may not have access to public equity markets for capital raising. BDCs invest in such diverse industries as healthcare, chemical and manufacturing, technology and service companies.

By-Laws ” means the By-Laws of the Fund as amended from time to time.

Collateralized Mortgage Obligations ” means publicly issued instruments rated ‘AAA’ by S&P. No more than 25% of the total market value of collateral may be from one private sector issuer.

Common Shares ” means the common shares of beneficial interest, par value $0.001 per share, of the Fund.

Commission ” means the Securities and Exchange Commission.

Conventional Mortgage ” means a mortgage in which the interest rate does not change during the entire term of the loan.

Convertible Corporate Indebtedness ” means evidences of indebtedness other than Deposit Assets, U.S. Government Securities and Municipal Obligations that are convertible into or exchangeable or exercisable for stock of a corporation and that satisfy the following conditions: (i) such evidence of indebtedness is rated at least CCC by S&P; and (ii) if such evidence of indebtedness is rated BBB or lower by S&P, the market capitalization of the issuer of such evidence of indebtedness is at least $100 million.

 

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Cure Date ” shall have the meaning set forth in paragraph 4(a) of Part II hereof.

Date of Original Issue ” means August 20, 2010 with respect to the Series A Preferred Shares, and for the purposes of this Statement of Preferences shall have a correlative meaning with respect to any other class or series of Preferred Shares.

Declaration of Trust ” means the Third Amended and Restated Agreement and Declaration of Trust of the Fund, dated as of February 16, 2011, as amended, supplemented or restated from time to time (including by this Statement of Preferences or by way of any other supplement or Statement of Preferences authorizing or creating a class of Shares (as defined in the Governing Documents) in the Fund).

Deposit Assets ” means cash, Short-Term Money Market Instruments and U.S. Government Obligations. Except for determining whether the Fund has Eligible Assets with an Adjusted Value equal to or greater than the Basic Maintenance Amount, each Deposit Asset shall be deemed to have a value equal to its principal or face amount payable at maturity plus any interest payable thereon after delivery of such Deposit Asset but only if payable on or prior to the applicable payment date in advance of which the relevant deposit is made.

Discount Factor ” means (a) so long as Moody’s is rating the Series A Preferred Shares at the Fund’s request, the Moody’s Discount Factor, or (b) any applicable discount factor established by any Other Rating Agency, whichever is applicable.

Discounted Value ” means, as applicable, (a) the quotient of the Market Value of an Eligible Asset divided by the applicable Discount Factor or (b) such other formula for determining the discounted value of an Eligible Asset as may be established by an applicable Rating Agency, provided, in either case that with respect to an Eligible Asset that is currently callable, Discounted Value will be equal to the applicable quotient or product as calculated above or the call price, whichever is lower, and that with respect to an Eligible Asset that is prepayable, Discounted Value will be equal to the applicable quotient or product as calculated above or the liquidation preference or other contractual amount, whichever is lower.

Dividend-Disbursing Agent ” means, with respect to the Series A Preferred Shares, Computershare Trust Company, N.A. and its successors or any other dividend-disbursing agent appointed by the Fund and, with respect to any other class or series of Preferred Shares, the entity appointed by the Fund as dividend-disbursing or paying agent with respect to such class or series.

Dividend Payment Date ” means with respect to the Series A Preferred Shares, any date on which dividends and distributions declared by the Board of Trustees thereon are payable pursuant to the provisions of paragraph 2(a) of Part II of this Statement of Preferences and shall for the purposes of this Statement of Preferences have a correlative meaning with respect to any other class or series of Preferred Shares.

 

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Dividend Period ” shall have the meaning set forth in paragraph 2(a) of Part II hereof, and for the purposes of this Statement of Preferences shall have a correlative meaning with respect to any other class or series of Preferred Shares.

Eligible Assets ” means Moody’s Eligible Assets (if Moody’s is then rating the Series A Preferred Shares at the request of the Fund) and/or Other Rating Agency Eligible Assets if any Other Rating Agency is then rating the Series A Preferred Shares, or any other outstanding series of Preferred Shares, at the request of the Fund, whichever is applicable.

FHA Mortgage ” means a mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA).

Foreign Currency Transactions ” means any technique used by the Fund to hedge its exposure to foreign currencies, including forward foreign currency exchange contracts.

Foreign Sovereign Debt ” means debt issued by a national government other than the United States.

Fund ” means The Gabelli Healthcare & WellnessRx Trust, a Delaware statutory trust.

Governing Documents ” means the Declaration of Trust and the By-Laws.

Foreign Sovereign Debt ” means debt issued by a national government other than the United States.

High Yield Securities ” means Municipal Obligations not rated by S&P but rated equivalent to BBB or lower by another NRSRO, rated BB+ or lower by S&P or not rated.

Independent Accountant ” means a nationally recognized accountant, or firm of accountants, that is with respect to the Fund an independent public accountant or firm of independent public accountants under the Securities Act of 1933, as amended.

Liquidation Preference ” shall, with respect to the Series A Preferred Shares, have the meaning set forth in paragraph 3 (a) of Part II hereof, and for the purposes of this Statement of Preferences shall have a correlative meaning with respect to any other class or series of Preferred Shares.

Market Value ” means the amount determined by the Fund with respect to specific Eligible Assets in accordance with valuation policies adopted from time to time by the Board of Trustees as being in compliance with the requirements of the 1940 Act.

Notwithstanding the foregoing, “Market Value” may, at the option of the Fund with respect to any of its assets, mean the market value of an asset of the Fund as computed as follows:

 

  (a)

Equity securities listed or traded on a nationally recognized securities exchange or traded in the U.S. over-the-counter market where trades are reported contemporaneously and for which market quotations are readily available, are

 

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  valued at the last quoted sale or a market’s official closing price at the close of the exchange’s or other market’s regular trading hours, as of or prior to the time and day as of which such value is being determined. Portfolio securities traded on more than one national securities exchange or market are valued according to the broadest and most representative market as determined by the Adviser. If there has been no sale on the day the valuation is made, the securities are valued at the closing bid price on the principal market for such security on such day. If no asked prices are quoted on such day, then the security is valued at the closing bid price on the principal market for such security on such day. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price.;

 

  (b) Debt instruments are valued based upon (i) the basis of prices provided by a pricing service or (ii) the lower of the value set forth in bids from two independent dealers in securities, one of which bids will be in writing;

 

  (c) as to cash, demand deposits, federal funds, bankers’ acceptances and next Business Day repurchase agreements included in Short-Term Money Market Instruments, the face value thereof;

Master Limited Partnership Securities ” means the following securities, restricted or unrestricted, issued by a Master Limited Partnership (MLP) or an affiliate of an MLP: (1) common units, (2) convertible subordinated units, (3) I-Shares, (4) I-units and (5) debt securities.

Monthly Valuation Date ” means the last Valuation Date of each calendar month.

Moody’s ” means Moody’s Investors Service, Inc. and its successors at law.

Moody’s Discount Factor ” means the discount factors set forth in the Moody’s Guidelines as eligible for inclusion in calculating the Discounted Value of the Fund’s assets in connection with Moody’s ratings of Preferred Shares.

Moody’s Eligible Assets ” means the assets of the Fund set forth in the Moody’s Guidelines as eligible for inclusion in calculating the Discounted Value of the Fund’s assets in connection with Moody’s ratings of Series A Preferred Shares.

Moody’s Guidelines ” means the guidelines provided by Moody’s, as may be amended from time to time, in connection with Moody’s ratings of Series A Preferred Shares at the rating then assigned.

Mortgage Pass-Through Certificates ” means publicly-issued instruments maintaining at least AA- ratings by S&P. Certificates evidence proportional, undivided interests in pools of whole residential mortgage loans. Pass-through certificates backed by pools of convertible adjustable rate mortgages (ARMs) are acceptable as eligible collateral at 5 points above the levels established for pass-through certificates backed by fixed or non-convertible ARM pools.

1933 Act ” means the Securities Act of 1933, as amended, or any successor statute.

 

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1940 Act ” means the Investment Company Act of 1940, as amended, or any successor statute.

Notice of Redemption ” shall have the meaning set forth in paragraph 4(c)(i) of Part II hereof.

Other Rating Agency ” means any rating agency other than Moody’s then providing a rating for the Series A Preferred Shares at the request of the Fund.

Other Rating Agency Eligible Assets ” means assets of the Fund designated by any Other Rating Agency as eligible for inclusion in calculating the discounted value of the Fund assets in connection with such Other Rating Agency’s rating of the Series A Preferred Shares.

Outstanding ” means, as of any date, Preferred Shares theretofore issued by the Fund except:

 

  (a) any such Preferred Share theretofore cancelled by the Fund or delivered to the Fund for cancellation;

 

  (b) any such Preferred Share as to which a notice of redemption shall have been given and for whose payment at the redemption thereof Deposit Assets in the necessary amount are held by the Fund in trust for, or have been irrevocably deposited with the relevant disbursing agent for payment to, the holder of such share pursuant to the Statement of Preferences with respect thereto; and

 

  (c) any such Preferred Share in exchange for or in lieu of which other shares have been issued and delivered.

Notwithstanding the foregoing, for purposes of voting rights (including the determination of the number of shares required to constitute a quorum), any Preferred Shares as to which any subsidiary of the Fund is the holder will be disregarded and deemed not Outstanding.

Person ” means and includes an individual, a partnership, the Fund, a trust, a corporation, a limited liability company, an unincorporated association, a joint venture or other entity or a government or any agency or political subdivision thereof.

Preferred Shares ” means the preferred shares, par value $0.001 per share, of the Fund, and includes the Series A Preferred Shares.

Pricing Service ” means any pricing service retained by the Fund to price its investments, including any of the following: Bloomberg Financial Service, IDC, ITG, Markit Loans Group (LOANX), Pricing Direct, Reuters (ThomsonReuters), S&P/J.J. Kenny, Telekurs, or their successors, and independent broker quotes.

Private Investment Companies ” means investment companies that are structured to be exempt under the 1940 Act.

 

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Rating Agency ” means Moody’s as long as Moody’s is then rating the Series A Preferred Shares at the Fund’s request or any other rating agency then rating the Series A Preferred Shares at the Fund’s request.

Record Date ” shall have the meaning set forth in paragraph 2(a) of Part II hereof, and for the purposes of this Statement of Preferences shall have a correlative meaning with respect to any other class or series of Preferred Shares.

Redemption Price ” has the meaning set forth in paragraph 4(a) of Part II hereof, and for the purposes of this Statement of Preferences shall have a correlative meaning with respect to any other class or series of Preferred Shares.

Registered Investment Company ” means an investment company, such as an open-end or closed-end mutual fund, which files a registration statement with the Commission and meets all requirements of the 1940 Act.

Senior Loan ” means any secured Bank Loan that is not subordinated by its terms to any other indebtedness of the borrower.

Senior Loan Participation ” means participations by the Fund in a lender’s portion of a Bank Loan where the Fund has a contractual relationship with such lender and not the borrower.

Series A Preferred Shares ” means the 5.76% Series A Cumulative Preferred Shares, par value $0.001 per share, of the Fund.

Series A Asset Coverage Cure Date ” means, with respect to the failure by the Fund to maintain Asset Coverage (as required by paragraph 6(a)(i) of Part II hereof) as of the last Business Day of each March, June, September and December of each year, 60 days following such Business Day.

Short-Term Money Market Instruments ” means the following types of instruments if, on the date of purchase or other acquisition thereof by the Fund, the remaining term to maturity thereof is not in excess of 360 days:

 

  (i) commercial paper rated either F-1 by Fitch or A-1 by S&P if such commercial paper matures in 30 days or P-1 by Moody’s and either F-1+ by Fitch or A-1+ by S&P if such commercial paper matures in over 30 days;

 

  (ii) demand or time deposits in, and banker’s acceptances and certificates of deposit of (A) a depository institution or trust company incorporated under the laws of the United States of America or any state thereof or the District of Columbia or (B) a United States branch office or agency of a foreign depository institution (provided that such branch office or agency is subject to banking regulation under the laws of the United States, any state thereof or the District of Columbia);

 

  (iii) overnight funds; and

 

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  (iv) U.S. Government Obligations and Government Securities.

 

  (v) Eurodollar demand or time deposits in, or certificates of deposit of, the head office or the London branch office of a depository institution or trust company if the certificates of deposit, if any, and the long-term unsecured debt obligations (other than such obligations the ratings of which are based on the credit of a person or entity other than such depository institution or trust company) of such depository institution or trust company that have (1) credit ratings on each Valuation Date of at least P-1 from Moody’s and either F-1+ from Fitch or A-1+ from S&P, in the case of commercial paper or certificates of deposit, and (2) credit ratings on each Valuation Date of at least Aa3 from Moody’s and either AA from Fitch or AA- from S&P, in the case of long-term unsecured debt obligations; provided, however, that in the case of any such investment that matures in no more than one Business Day from the date of purchase or other acquisition by the Corporation, all of the foregoing requirements shall be applicable except that the required long-term unsecured debt credit rating of such depository institution or trust company from Moody’s, Fitch and S&P shall be at least A2, A-2 and A, respectively; and provided further, however, that the foregoing credit rating requirements shall be deemed to be met with respect to a depository institution or trust company if (1) such depository institution or trust company is the principal depository institution in a holding company system, (2) the certificates of deposit, if any, of such depository institution or trust company are not rated on any Valuation Date below P-1 by Moody’s, F-1+ by Fitch or A-1+ by S&P and there is no long-term rating, and (3) the holding company shall meet all of the foregoing credit rating requirements (including the preceding proviso in the case of investments that mature in no more than one Business Day from the date of purchase or other acquisition by the Corporation); and provided further, that the interest receivable by the Corporation shall not be subject to any withholding or similar taxes.

SIC codes ” means standard industry classification codes.

U.S. Government Obligations ” means direct obligations of the United States or by its agencies or instrumentalities that are entitled to the full faith and credit of the United States and that, other than United States Treasury Bills, provide for the periodic payment of interest and the full payment of principal at maturity or call for redemption.

U.S. Government Securities ” mean securities that are direct obligations of, and obligations the timely payment of principal and interest on which is fully guaranteed by, the United States or any agency or instrumentality of the United States, the obligations of which are backed by the full faith and credit of the United States and in the form of conventional bills, bonds and notes.

 

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VA Mortgage ” means a mortgage qualifying under the mortgage loan program established by the United States Department of Veterans Affairs to help veterans and their families obtain home financing.

Valuation Date ” means the last Business Day of each month, or for purposes of determining whether the Fund is maintaining the Basic Maintenance Amount, each Business Day commencing with the Date of Original Issue.

Voting Period ” shall have the meaning set forth in paragraph 5(b) of Part II hereof.

Whole Loan ” means an investment representing an original mortgage loan from a loan representing a participation with one or more lenders.

PART II

Series A Preferred Shares

1. Number of Shares; Ranking.

(a) The number of authorized Shares constituting the Series A Preferred Shares to be issued is 3,700,000. No fractional Series A Preferred Shares shall be issued.

(b) Series A Preferred Shares which at any time have been redeemed or purchased by the Fund shall, after such redemption or purchase, have the status of authorized but unissued Preferred Shares.

(c) The Series A Preferred Shares shall rank on a parity with any other series of Preferred Shares as to the payment of dividends and liquidation preference to which such Shares are entitled.

(d) No Holder of Series A Preferred Shares shall have, solely by reason of being such a holder, any preemptive or other right to acquire, purchase or subscribe for any Preferred Shares or Common Shares or other securities of the Fund which it may hereafter issue or sell.

2. Dividends and Distributions.

(a) The holders of Series A Preferred Shares shall be entitled to receive, when, as and if declared by, or under authority granted by, the Board of Trustees, out of funds legally available therefor, cumulative cash dividends and distributions, calculated separately for each Dividend Period at the rate of 5.76% per annum (computed on the basis of a 360-day year consisting of twelve 30-day months) of the Liquidation Preference on the Series A Preferred Shares and no more, and payable quarterly on March 26, June 26, September 26, and December 26 in each year (each, a “ Dividend Payment Date ”) commencing on September 26, 2010 (or, if any such day is not a Business Day, then on the next succeeding Business Day) to holders of record of Series A Preferred Shares as they appear on the stock register of the Fund at the close of business on the fifth preceding Business Day (each, a “ Record Date ”) in preference to dividends and distributions on Common Shares and any other capital shares of the Fund ranking junior to the Series A Preferred Shares in payment of dividends and distributions. Dividends and distributions

 

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on Series A Preferred Shares that were originally issued on the Date of Original Issue shall accumulate from the Date of Original Issue. Dividends and distributions on all other Series B Preferred Shares shall accumulate from (i) the date on which such shares are originally issued if such date is a Dividend Payment Date, (ii) the immediately preceding Dividend Payment Date if the date on which such shares are originally issued is other than a Dividend Payment Date and is on or before a Record Date or (iii) the immediately following Dividend Payment Date if the date on which such shares are originally issued is during the period between a Record Date and a Dividend Payment Date. Each period beginning on and including a Dividend Payment Date (or the Date of Original Issue, in the case of the first dividend period after issuance of such shares) and ending on but excluding the next succeeding Dividend Payment Date is referred to herein as a “ Dividend Period .” Dividends and distributions on account of arrears for any past Dividend Period or in connection with the redemption of Series A Preferred Shares may be declared and paid at any time, without reference to any Dividend Payment Date, to holders of record on such date not exceeding 30 days preceding the payment date thereof as shall be fixed by the Board of Trustees.

(b) (i) No full dividends and distributions shall be declared or paid on Series A Preferred Shares for any Dividend Period or part thereof unless full cumulative dividends and distributions due through the most recent Dividend Payment Dates therefor for all series of Preferred Shares of the Fund ranking on a parity with the Series A Preferred Shares as to the payment of dividends and distributions have been or contemporaneously are declared and paid through the most recent Dividend Payment Dates therefor. If full cumulative dividends and distributions due have not been paid on all such Outstanding Preferred Shares, any dividends and distributions being paid on such Preferred Shares (including the Series A Preferred Shares) will be paid as nearly pro rata as possible in proportion to the respective amounts of dividends and distributions accumulated but unpaid on each such series of Preferred Shares on the relevant Dividend Payment Date. No holders of Series A Preferred Shares shall be entitled to any dividends and distributions, whether payable in cash, property or shares, in excess of full cumulative dividends and distributions as provided in this paragraph 2(b)(i) on Series A Preferred Shares. No interest or sum of money in lieu of interest shall be payable in respect of any dividend payments on any Series A Preferred Shares that may be in arrears.

(ii) For so long as Series A Preferred Shares are Outstanding, the Fund shall not pay any dividend or other distribution (other than a dividend or distribution paid in Common Shares, or options, warrants or rights to subscribe for or purchase Common Shares or other shares, if any, ranking junior to the Series A Preferred Shares as to dividends and distributions and upon liquidation) in respect of the Common Shares or any other shares of the Fund ranking junior to the Series A Preferred Shares as to the payment of dividends and distributions and upon liquidation, or call for redemption, redeem, purchase or otherwise acquire for consideration any Common Shares or any other shares of the Fund ranking junior to the Series A Preferred Shares as to the payment of dividends and distributions and upon liquidation (except by conversion into or exchange for shares of the Fund ranking junior to the Series A Preferred Shares as to dividends and distributions and upon liquidation), unless, in each case, (A) immediately thereafter, the aggregate Adjusted Value of the Fund Eligible Assets shall equal or exceed the Basic Maintenance Amount and the Fund shall have Asset Coverage, (B) all cumulative dividends and distributions on all Series A Preferred Shares 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

 

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payment thereof deposited with the applicable Dividend-Disbursing Agent) and (C) the Fund has redeemed the full number of Series A Preferred Shares to be redeemed mandatorily pursuant to any provision contained herein for mandatory redemption.

(iii) Any dividend payment made on the Series A Preferred Shares shall first be credited against the dividends and distributions accumulated with respect to the earliest Dividend Period for which dividends and distributions have not been paid.

(c) Not later than the Business Day immediately preceding each Dividend Payment Date, the Fund shall deposit with the Dividend-Disbursing Agent Deposit Assets having an initial combined value sufficient to pay the dividends and distributions that are payable on such Dividend Payment Date, which Deposit Assets shall mature on or prior to such Dividend Payment Date. The Fund may direct the Dividend-Disbursing Agent with respect to the investment of any such Deposit Assets, provided that such investment consists exclusively of Deposit Assets and provided further that the proceeds of any such investment will be available at the opening of business on such Dividend Payment Date.

3. Liquidation Rights.

(a) In the event of any liquidation, dissolution or winding up of the affairs of the Fund, whether voluntary or involuntary, the holders of Series A Preferred Shares shall be entitled to receive out of the assets of the Fund available for distribution to shareholders, after satisfying claims of creditors but before any distribution or payment shall be made in respect of the Common Shares or any other shares of the Fund ranking junior to the Series A Preferred Shares as to liquidation payments, a liquidation distribution in the amount of $25.00 per share (the “ Liquidation Preference ”), plus an amount equal to all unpaid dividends and distributions accumulated to and including the date fixed for such distribution or payment (whether or not earned or declared by the Fund, but excluding interest thereon), and such holders shall be entitled to no further participation in any distribution or payment in connection with any such liquidation, dissolution or winding up.

(b) If, upon any liquidation, dissolution or winding up of the affairs of the Fund, whether voluntary or involuntary, the assets of the Fund available for distribution among the holders of all Outstanding Series A Preferred Shares, and any other Outstanding class or series of Preferred Shares of the Fund ranking on a parity with the Series A Preferred Shares as to payment upon liquidation, shall be insufficient to permit the payment in full to such holders of Series A Preferred Shares of the Liquidation Preference plus accumulated and unpaid dividends and distributions and the amounts due upon liquidation with respect to such other Preferred Shares, then such available assets shall be distributed among the holders of Series A Preferred Shares and such other Preferred Shares ratably in proportion to the respective preferential liquidation amounts to which they are entitled. Unless and until the Liquidation Preference plus accumulated and unpaid dividends and distributions has been paid in full to the holders of Series A Preferred Shares, no dividends or distributions will be made to holders of the Common Shares or any other shares of the Fund ranking junior to the Series A Preferred Shares as to liquidation.

 

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4. Redemption.

The Series A Preferred Shares shall be redeemed by the Fund as provided below:

(a) Mandatory Redemptions.

If the Fund is required to redeem any Preferred Shares (which may include Series A Preferred Shares) pursuant to paragraphs 6(b) or 6(c) of Part II hereof, then the Fund shall, to the extent permitted by the 1940 Act and Delaware law, by the close of business on such Series A Asset Coverage Cure Date or Basic Maintenance Amount Cure Date (herein collectively referred to as a “ Cure Date ”), as the case may be, fix a redemption date no later than 10 Business Days following such Cure Date and proceed to redeem shares as set forth in paragraph 4(c) hereof. On such redemption date, the Fund shall redeem, out of funds legally available therefor, the number of Preferred Shares, which, to the extent permitted by the 1940 Act and Delaware law, at the option of the Fund may include any proportion of Series A Preferred Shares or any other series of Preferred Shares, equal to the minimum number of shares the redemption of which, if such redemption had occurred immediately prior to the opening of business on such Cure Date, would have resulted in the Fund having Asset Coverage or an Adjusted Value of its Eligible Assets equal to or greater than the Basic Maintenance Amount, as the case may be, immediately prior to the opening of business on such Cure Date or, if Asset Coverage or an Adjusted Value of its Eligible Assets equal to or greater than the Basic Maintenance Amount, as the case may be, cannot be so restored, all of the Outstanding Series A Preferred Shares, at a price equal to $25.00 per share plus accumulated but unpaid dividends and distributions (whether or not earned or declared by the Fund) through the date of redemption (the “ Redemption Price ”). In the event that Preferred Shares are redeemed pursuant to paragraphs 6(b) or 6(c) of Part II hereof, the Fund may, but is not required to, redeem a sufficient number of Series A Preferred Shares pursuant to this paragraph 4(a) which, when aggregated with other Preferred Shares redeemed by the Fund, permits the Fund to have with respect to the Preferred Shares (including the Series A Preferred Shares) remaining Outstanding after such redemption (i) Asset Coverage of as much as 220% and (ii) Eligible Assets with Adjusted Value of as great as 105% of the Basic Maintenance Amount. In the event that all of the Series A Preferred Shares then Outstanding are required to be redeemed pursuant to paragraph 6 of Part II hereof, the Fund shall redeem such shares at the Redemption Price and proceed to do so as set forth in paragraph 4(c) hereof.

(b) Optional Redemptions.

Prior to August 20, 2015, the Series A Preferred Shares are not subject to optional redemption by the Fund unless such redemption is necessary, in the judgment of the Board of Trustees, to maintain the Fund status as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. Except as provided in the foregoing sentence, commencing August 20, 2015, and thereafter, to the extent permitted by the 1940 Act and Delaware law, the Fund may at any time upon Notice of Redemption (as defined below) redeem the Series A Preferred Shares in whole or in part at the Redemption Price per share, which notice shall specify a redemption date of not fewer than 15 days nor more than 60 days after the date of such notice.

 

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(c) Procedures for Redemption.

(i) If the Fund shall determine or be required to redeem Series A Preferred Shares pursuant to this paragraph 4, it shall mail a written notice of redemption (“ Notice of Redemption ”) with respect to such redemption by first class mail, postage prepaid, to each holder of the shares to be redeemed at such holder’s address as the same appears on the stock register of the Fund on the close of business on such date as the Board of Trustees or its delegatee may determine, which date shall not be earlier than the second Business Day prior to the date upon which such Notice of Redemption is mailed to the holders of Series A Preferred Shares. Each such Notice of Redemption shall state: (A) the redemption date as established by the Board of Trustees or its delegatee; (B) the number of Series A Preferred Shares to be redeemed; (C) the CUSIP number(s) of such shares; (D) the Redemption Price (specifying the amount of accumulated dividends to be included therein); (E) the place or places where the certificate(s) for such shares (properly endorsed or assigned for transfer, if the Board of Trustees or its delegatee shall so require and the Notice of Redemption shall so state) are to be surrendered for payment in respect of such redemption; (F) that dividends and distributions on the shares to be redeemed will cease to accrue on such redemption date; (G) the provisions of this paragraph 4 under which such redemption is made; and (H) in the case of a redemption pursuant to paragraph 4(b), any conditions precedent to such redemption. If fewer than all Series A Preferred Shares held by any holder are to be redeemed, the Notice of Redemption mailed to such holder also shall specify the number or percentage of shares to be redeemed from such holder. No defect in the Notice of Redemption or the mailing thereof shall affect the validity of the redemption proceedings, except as required by applicable law.

(ii) If the Fund shall give a Notice of Redemption, then by the close of business on the Business Day preceding the redemption date specified in the Notice of Redemption (so long as any conditions precedent to such redemption have been met) or, if the Dividend-Disbursing Agent so agrees, another date not later than the redemption date, the Fund shall (A) deposit with the Dividend-Disbursing Agent Deposit Assets that shall mature on or prior to such redemption date having an initial combined value sufficient to effect the redemption of the Series A Preferred Shares to be redeemed and (B) give the Dividend-Disbursing Agent irrevocable instructions and authority to pay the Redemption Price to the holders of the Series A Preferred Shares called for redemption on the redemption date. The Fund may direct the Dividend-Disbursing Agent with respect to the investment of any Deposit Assets so deposited provided that the proceeds of any such investment will be available at the opening of business on such redemption date. Upon the date of such deposit (unless the Fund shall default in making payment of the Redemption Price), all rights of the holders of the Series A Preferred Shares so called for redemption shall cease and terminate except the right of the holders thereof to receive the Redemption Price thereof and such shares shall no longer be deemed Outstanding for any purpose. The Fund shall be entitled to receive, promptly after the date fixed for redemption, any cash in excess of the aggregate Redemption Price of the Series A Preferred Shares called for redemption on such date and any remaining Deposit Assets. Any assets so deposited that are unclaimed at the end of two years from such redemption date shall, to the extent permitted by law, be repaid to the Fund, after which the holders of the Series A Preferred Shares so called for redemption shall look only to the Fund for payment of the Redemption Price thereof. The Fund shall be entitled to receive, from time to time after the date fixed for redemption, any interest on the Deposit Assets so deposited.

 

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(iii) On or after the redemption date, each holder of Series A Preferred Shares that are subject to redemption shall surrender the certificate evidencing such shares to the Fund at the place designated in the Notice of Redemption and shall then be entitled to receive the cash Redemption Price, without interest.

(iv) In the case of any redemption of less than all of the Series A Preferred Shares pursuant to this Statement of Preferences, such redemption shall be made pro rata from each holder of Series A Preferred Shares in accordance with the respective number of shares held by each such holder on the record date for such redemption.

(v) Notwithstanding the other provisions of this paragraph 4, the Fund shall not redeem Series A Preferred Shares unless all accumulated and unpaid dividends and distributions on all Outstanding Series A Preferred Shares and other Preferred Shares ranking on a parity with the Series A Preferred Shares with respect to dividends and distributions for all applicable past Dividend Periods (whether or not earned or declared by the Fund) shall have been or are contemporaneously paid or declared and Deposit Assets for the payment of such dividends and distributions shall have been deposited with the Dividend-Disbursing Agent as set forth in paragraph 2(c) of Part II hereof, provided, however, that the foregoing shall not prevent the purchase or acquisition of outstanding Preferred Shares pursuant to the successful completion of an otherwise lawful purchase or exchange offer made on the same terms to holders of all Outstanding Series A Preferred Shares.

If the Fund shall not have funds legally available for the redemption of, or is otherwise unable to redeem, all the Series A Preferred Shares or other Preferred Shares designated to be redeemed on any redemption date, the Fund shall redeem on such redemption date the number of Series A Preferred Shares and other Preferred Shares so designated as it shall have legally available funds, or is otherwise able, to redeem ratably on the basis of the Redemption Price from each holder whose shares are to be redeemed, and the remainder of the Series A Preferred Shares and other Preferred Shares designated to be redeemed shall be redeemed on the earliest practicable date on which the Fund shall have funds legally available for the redemption of, or is otherwise able to redeem, such shares upon Notice of Redemption.

5. Voting Rights.

(a) General.

Except as otherwise provided in the Governing Documents or a resolution of the Board of Trustees or its delegatee, or as required by applicable law, holders of Series A Preferred Shares shall have no power to vote on any matter except matters submitted to a vote of the Common Shares. In any matter submitted to a vote of the holders of the Common Shares, each holder of Series A Preferred Shares shall be entitled to one vote for each Series A Preferred Share held and the holders of the Outstanding Preferred Shares, including Series A Preferred Shares, and the Common Shares shall vote together as a single class; provided , however , that at any meeting of the shareholders of the Fund held for the election of Trustees, the holders of the Outstanding Preferred Shares, including Series A Preferred Shares, shall be entitled, as a class, to the exclusion of the holders of all other securities and classes of capital shares of the Fund, to elect a number of Fund trustees, such that following the election of trustees at the meeting of the

 

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shareholders, the Fund’s Board of Trustees shall contain two trustees elected by the holders of the Outstanding Preferred Shares, including the Series A Preferred Shares. Subject to paragraph 5(b) of Part II hereof, the holders of the outstanding Common Shares of the Fund together with the holders of Outstanding Preferred Shares, including the Series A Preferred Shares, voting as a single class, shall elect the balance of the trustees.

(b) Right to Elect Majority of Board of Trustees.

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 and/or composition of trustees constituting the Board of Trustees shall be adjusted as necessary to permit the holders of Outstanding Preferred Shares, including the Series A Preferred Shares, voting separately as one class (to the exclusion of the holders of all other securities and classes of capital shares of the Fund) to elect the number of trustees that, when added to the two trustees elected exclusively by the holders of Preferred Shares pursuant to paragraph 5(a) above, would constitute a simple majority of the Board of Trustees as so adjusted. To the fullest extent permitted by applicable law and the terms of the Declaration of Trust, the Fund and the Board of Trustees shall take all necessary actions, including effecting the removal of trustees or amendment of the Declaration of Trust, to effect an adjustment of the number and/or composition of trustees as described in the preceding sentence. A Voting Period shall commence:

(i) if at any time accumulated dividends and distributions (whether or not earned or declared, and whether or not funds are then legally available in an amount sufficient therefor) on the Outstanding Series A Preferred Shares equal to at least two full years’ dividends and distributions shall be due and unpaid and sufficient cash or specified securities shall not have been deposited with the Dividend-Disbursing Agent for the payment of such accumulated dividends and distributions; or

(ii) if at any time holders of any other Preferred Shares are entitled to elect a majority of the Trustees of the Fund under the 1940 Act or Statement of Preferences creating such shares.

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 of Preferred Shares 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.

Subject to paragraph 1 of Part III of this Statement of Preferences, so long as any Series A Preferred Shares are Outstanding, the Fund shall not amend, alter or repeal the provisions of this Statement of Preferences so as to in the aggregate adversely affect the rights and preferences set forth in any Statement of Preferences, including the Series A Preferred Shares, without the affirmative vote of the holders of a majority of the Outstanding Preferred Shares at the time and present and voting on such matter, voting separately as one class. To the extent permitted under the 1940 Act, in the event that more than one series of Preferred Shares are Outstanding, the Fund shall not effect any of the actions set forth in the preceding sentence which in the aggregate

 

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adversely affects the rights and preferences set forth in the Statement of Preferences for a series of Preferred Shares differently than such rights and preferences for any other series of Preferred Shares without the affirmative vote of the holders of at least a majority of the Outstanding Preferred Shares and present and voting on such matter of each series adversely affected (each such adversely affected series voting separately as a class to the extent its rights are affected differently). The holders of the Series A Preferred Shares shall not be entitled to vote on any matter that affects the rights or interests of only one or more other series of Preferred Shares. The Fund shall notify the relevant Rating Agency ten Business Days prior to any such vote described above. Unless a higher percentage is required under the Governing Documents or applicable provisions of the Delaware Statutory Trust Act or the 1940 Act, the affirmative vote of the holders of a majority of the Outstanding Preferred Shares, including Series A Preferred Shares, voting together as a single class, will be required to approve any plan of reorganization adversely affecting the Preferred Shares or any action requiring a vote of security holders under Section 13(a) of the 1940 Act. For purposes of this paragraph 5(c), the phrase “vote of the holders of a majority of the Outstanding Preferred Shares” or series or series thereof (or any like phrase) shall mean, in accordance with Section 2(a)(42) of the 1940 Act, the vote, at the annual or a special meeting of the shareholders of the Fund duly called (i) of 67 percent or more of the Preferred Shares or series or series thereof present at such meeting, if the holders of more than 50 percent of the Outstanding Preferred Shares or series or series thereof are present or represented by proxy; or (ii) of more than 50 percent of the Outstanding Preferred Shares or series or series thereof, whichever is less. The class vote of holders of Preferred Shares described above will in each case be in addition to a separate vote of the requisite percentage of Common Shares and Preferred Shares, including Series A Preferred Shares, voting together as a single class, necessary to authorize the action in question. An increase in the number of authorized Preferred Shares pursuant to the Governing Documents or the issuance of additional shares of any series of Preferred Shares (including Series A Preferred Shares) pursuant to the Governing Documents shall not be considered to adversely affect the rights and preferences of the Preferred Shares.

(d) Voting Procedures.

(i) As soon as practicable after the accrual of any right of the holders of Preferred Shares to elect additional trustees as described in paragraph 5(b) above, the Fund shall call a special meeting of such holders and instruct the Dividend-Disbursing Agent to mail a notice of such special meeting to such holders, such meeting to be held not less than 10 nor more than 30 days after the date of mailing of such notice. If the Fund fails to send such notice to the Dividend-Disbursing Agent or if the Fund 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 day on which such notice is mailed or such other date as the Board of Trustees shall determine. At any such special meeting and at each meeting held during a Voting Period, such holders of Preferred Shares, voting together as a class (to the exclusion of the holders of all other securities and classes of capital shares of the Fund), shall be entitled to elect the number of trustees prescribed in paragraph 5(b) above on a one-vote-per-share basis. 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.

 

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(ii) For purposes of determining any rights of the holders of Series A Preferred Shares to vote on any matter or the number of shares required to constitute a quorum, whether such right is created by this Statement of Preferences, by the other provisions of the Governing Documents, by statute or otherwise, any Series A Preferred Share which is not Outstanding shall not be counted.

(iii) The terms of office of all persons who are trustees of the Fund at the time of a special meeting of holders of Preferred Shares to elect trustees and who remain trustees following such meeting shall continue, notwithstanding the election at such meeting by such holders of the number of trustees that they are entitled to elect, and the persons so elected by such holders, together with the two incumbent trustees elected by the holders of Preferred Shares, and the remaining incumbent trustees elected by the holders of the Common Shares and Preferred Shares, shall constitute the duly elected trustees of the Fund.

(iv) Upon the expiration of a Voting Period, the terms of office of the additional trustees elected by the holders of Preferred Shares pursuant to paragraph 5(b) above shall expire at the earliest time permitted by law, and the remaining trustees shall constitute the trustees of the Fund and the voting rights of such holders of Preferred Shares, including Series A Preferred Shares, to elect additional trustees pursuant to paragraph 5(b) above shall cease, subject to the provisions of the last sentence of paragraph 5(b). Upon the expiration of the terms of the trustees elected by the holders of Preferred Shares pursuant to paragraph 5(b) above, the number of trustees shall be automatically reduced to the number of trustees on the Board immediately preceding such Voting Period.

(e) Exclusive Remedy.

Unless otherwise required by law, the holders of Series A Preferred Shares shall not have any rights or preferences other than those specifically set forth herein. The holders of Series A Preferred Shares shall have no preemptive rights or rights to cumulative voting. In the event that the Fund fails to pay any dividends and distributions on the Series A Preferred Shares or fails to complete any voluntary or mandatory redemption, the exclusive remedy of the holders shall be the right to vote for trustees pursuant to the provisions of this paragraph 5.

(f) Notification to Rating Agency.

In the event a vote of holders of Series A Preferred Shares is required pursuant to the provisions of Section 13(a) of the 1940 Act, as long as the Series A Preferred Shares are rated by a Rating Agency at the Fund’s request, the Fund shall, not later than ten Business Days prior to the date on which such vote is to be taken, notify the relevant Rating Agency 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 such Rating Agency of the result of such vote.

 

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6. Coverage Tests.

(a) Determination of Compliance.

For so long as any Series A Preferred Shares are Outstanding, the Fund shall make the following determinations:

(i) Asset Coverage. The Fund shall have Asset Coverage as of the last Business Day of each March, June, September and December of each year in which any Series A Preferred Shares are Outstanding.

(ii) Basic Maintenance Amount Requirement.

(A) For so long as any Series A Preferred Shares are Outstanding and are rated by a Rating Agency at the Fund’s request, the Fund shall maintain, on each Valuation Date, Eligible Assets having an Adjusted Value at least equal to the Basic Maintenance Amount, as of such Valuation Date. Upon any failure to maintain Eligible Assets having an Adjusted Value at least equal to the Basic Maintenance Amount, the Fund shall use all commercially reasonable efforts to re-attain Eligible Assets having an Adjusted Value at least equal to the Basic Maintenance Amount on or prior to the Basic Maintenance Amount Cure Date, by altering the composition of its portfolio or otherwise.

(B) The Adviser shall prepare a Basic Maintenance Report relating to each Valuation Date. On or before 5:00 P.M., New York City time, on the tenth Business Day after the first Valuation Date following the Date of Original Issue of the Series A Preferred Shares and after each (1) Annual Valuation Date, (2) Valuation Date on which the Fund fails to satisfy the requirements of paragraph 6(a)(ii)(A) above, (3) Basic Maintenance Amount Cure Date following a Valuation Date on which the Fund fails to satisfy the requirements of paragraph 6(a)(ii)(A) above, (4) any day the Common Shares and Series A Preferred Shares are redeemed and (5) upon reasonable request by such Rating Agency, the Fund shall complete and deliver to the relevant Rating Agency (if requested by such Rating Agency) a Basic Maintenance Report, which will be deemed to have been delivered to such Rating Agency if such Rating Agency receives a copy or facsimile or other electronic transcription or transmission of the Basic Maintenance Report and on the same day the Fund mails to the Rating Agency for delivery on the next Business Day the Basic Maintenance Report. So long as the Rating Agency requires delivery of a Basic Maintenance Report, a failure by the Fund to deliver a Basic Maintenance Report under this paragraph 6(a)(ii)(B) shall be deemed to be delivery of a Basic Maintenance Report indicating an Adjusted Value of the Fund Eligible Assets less than the Basic Maintenance Amount, as of the relevant Valuation Date.

(C) In the event the Adjusted Value of the Fund Eligible Assets shown in any Basic Maintenance Report prepared pursuant to paragraph 6(a)(ii)(B) above is less than the applicable Basic Maintenance Amount, the Fund shall have until the Basic Maintenance Amount Cure Date to achieve an Adjusted Value of the Fund Eligible Assets at least equal to the Basic Maintenance Amount, and upon such achievement (and not later than such Basic Maintenance Amount Cure Date) the Fund shall inform the relevant Rating Agency of such achievement in writing by delivery of a revised Basic Maintenance Report (if requested by such Rating Agency) showing an Adjusted Value of the Fund Eligible Assets at least equal to the Basic Maintenance Amount as of the date of such revised Basic Maintenance Report.

 

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(D) On or before 5:00 P.M., New York City time, on no later than the tenth Business Day after the next Valuation Date following each date on which the Fund has repurchased more than 1% of its Common Shares since the most recent date of delivery of a Basic Maintenance Report, the Fund shall complete and deliver to the relevant Rating Agency a Basic Maintenance Report (if requested by such Rating Agency). A Basic Maintenance Report delivered as provided in paragraph 6(a)(ii)(B) above also shall be deemed to have been delivered pursuant to this paragraph 6(a)(ii)(E).

(b) Failure to Meet Asset Coverage.

If the Fund fails to have Asset Coverage as provided in paragraph 6(a)(i) hereof and such failure is not cured as of the related Series A Asset Coverage Cure Date, (i) the Fund shall give a Notice of Redemption as described in paragraph 4 of Part II hereof with respect to the redemption of a sufficient number of Preferred Shares, which at the Fund’s determination (to the extent permitted by the 1940 Act and Delaware law) may include any proportion of Series A Preferred Shares, to enable it to meet the requirements of paragraph 6(a)(i) above, and, at the Fund’s discretion, such additional number of Series A Preferred Shares or other Preferred Shares in order that the Fund have Asset Coverage with respect to the Series A Preferred Shares and any other Preferred Shares remaining Outstanding after such redemption as great as 220%, and (ii) deposit with the Dividend-Disbursing Agent Deposit Assets having an initial combined value sufficient to effect the redemption of the Series A Preferred Shares or other Preferred Shares to be redeemed, as contemplated by paragraph 4 of Part II hereof.

(c) Failure to Maintain Eligible Assets having an Adjusted Value at Least Equal to the Basic Maintenance Amount.

If the Fund fails to have Eligible Assets having an Adjusted Value at least equal to the Basic Maintenance Amount as provided in paragraph 6(a)(ii)(A) above and such failure is not cured, the Fund shall, on or prior to the Basic Maintenance Amount Cure Date, (i) give a Notice of Redemption as described in paragraph 4 of Part II hereof with respect to the redemption of a sufficient number of Series A Preferred Shares or other Preferred Shares to enable it to meet the requirements of paragraph 6(a)(ii)(A) above, and, at the Fund’s discretion, such additional number of Series A Preferred Shares or other Preferred Shares in order that the Fund have Adjusted Assets with respect to the remaining Series A Preferred Shares and any other Preferred Shares remaining Outstanding after such redemption as great as 105% of the Basic Maintenance Amount, and (ii) deposit with the Dividend-Disbursing Agent Deposit Assets having an initial combined value sufficient to effect the redemption of the Series A Preferred Shares or other Preferred Shares to be redeemed, as contemplated by paragraph 4 of Part II hereof.

(d) Status of Shares Called for Redemption.

For purposes of determining whether the requirements of paragraphs 6(a)(i) and 5(a)(ii)(A) hereof are satisfied, (i) no Series A Preferred Share shall be deemed to be Outstanding for purposes of any computation if, prior to or concurrently with such determination, sufficient Deposit Assets to pay the full Redemption Price for such share shall have been deposited in trust with the Dividend-Disbursing Agent (or applicable paying agent) and the requisite Notice of Redemption shall have been given, and (ii) such Deposit Assets deposited with the Dividend-Disbursing Agent (or paying agent) shall not be included.

 

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7. Certain Other Restrictions.

(a) For so long as the Series A Preferred Shares are rated by a Rating Agency at the request of the Fund, the Fund will not, and will cause the Adviser not to, (i) knowingly and willfully purchase or sell any asset for the specific purpose of causing, and with the actual knowledge that the effect of such purchase or sale will be to cause, the Fund to have Eligible Assets having an Adjusted Value as of the date of such purchase or sale to be less than the Basic Maintenance Amount as of such date, (ii) in the event that, as of the immediately preceding Valuation Date, the Adjusted Value of the Fund Eligible Assets did not exceed the Basic Maintenance Amount, alter the composition of the Fund assets in a manner reasonably expected to reduce the Adjusted Value of the Fund Eligible Assets, unless the Fund shall have confirmed that, after giving effect to such alteration, the Adjusted Value of the Fund Eligible Assets exceeded the Basic Maintenance Amount or (iii) declare or pay any dividend or other distribution on any Common Shares or repurchase any Common Shares, unless the Fund shall have confirmed that, after giving effect to such declaration, other distribution or repurchase, the Fund continued to satisfy the requirements of paragraph 6(a)(ii)(A) of Part II hereof.

(b) For so long as the Series A Preferred Shares are rated by a Rating Agency at the request of the Fund, unless the Fund shall have received written confirmation from the relevant Rating Agency, the Fund may engage in the lending of its portfolio securities only in an amount of up to 20% of the Fund total assets, provided that the Fund receives cash collateral for such loaned securities which is maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities and, if invested, is invested only in Short-Term Money Market Instruments or in money market mutual funds meeting the requirements of Rule 2a-7 under the 1940 Act that maintain a constant $1.00 per share net asset value and treat the loaned securities rather than the collateral as the assets of the Fund for purposes of determining compliance with paragraph 6 of Part II hereof.

(c) For so long as the Series A Preferred Shares are rated by a Rating Agency at the request of the Fund, the Fund shall not consolidate the Fund with, merge the Fund into, sell or otherwise transfer all or substantially all of the Fund assets to another Person or adopt a plan of liquidation of the Fund, in each case without providing prior written notification to the relevant Rating Agency.

8. Limitation on Incurrence of Additional Indebtedness and Issuance of Additional Preferred Shares

(a) So long as any Series A Preferred Shares are Outstanding the Fund may issue and sell one or more series of a class of senior securities of the Fund representing indebtedness under Section 18 of the 1940 Act and/or otherwise create or incur indebtedness, provided that immediately after giving effect to the incurrence of such indebtedness and to its receipt and application of the proceeds thereof, the Fund shall have an “asset coverage” for all senior securities representing indebtedness, as defined in Section 18(h) of the 1940 Act, of at least 300% of the amount of all indebtedness of the Fund then outstanding and no such additional

 

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indebtedness shall have any preference or priority over any other indebtedness of the Fund upon the distribution of the assets of the Fund or in respect of the payment of interest. Any possible liability resulting from lending and/or borrowing portfolio securities, entering into reverse repurchase agreements, entering into futures contracts and writing options, to the extent such transactions are made in accordance with the investment restrictions of the Fund then in effect, shall not be considered to be indebtedness limited by this paragraph 8(a).

(b) So long as any Series A Preferred Shares are Outstanding, the Fund may issue and sell shares of one or more other series of Preferred Shares constituting a series of a class of senior securities of the Fund representing stock under Section 18 of the 1940 Act in addition to the Series A Preferred Shares and other Preferred Shares then Outstanding, provided that (i) the Fund shall, immediately after giving effect to the issuance of such additional Preferred Shares and to its receipt and application of the proceeds thereof (including, without limitation, to the redemption of Preferred Shares for which a Redemption Notice has been mailed prior to such issuance), have an “asset coverage” for all senior securities which are stock, as defined in Section 18(h) of the 1940 Act, of at least 200% of the sum of the liquidation preference of the Series A Preferred Shares and all other Preferred Shares of the Fund then Outstanding, and (ii) no such additional Preferred Shares shall have any preference or priority over any other Preferred Shares of the Fund upon the distribution of the assets of the Fund or in respect of the payment of dividends.

9. Status of Redeemed or Repurchased Series A Preferred

Series A Preferred Shares which at any time have been redeemed or purchased by the Fund shall, after such redemption or purchase, have the status of authorized but unissued Preferred Shares.

PART III

ABILITY OF THE BOARD OF TRUSTEES TO MODIFY THE STATEMENT OF PREFERENCES

1. Modification to Prevent Ratings Reduction or Withdrawal.

The Board of Trustees or its delegatee, without further action by the shareholders, may amend, alter, add to or repeal any provision of this Statement of Preferences including provisions that have been adopted by the Fund pursuant to the Rating Agency guidelines, if the Board of Trustees or its delegatee determines that such amendments or modifications are necessary to prevent a reduction in, or the withdrawal of, a rating of the Preferred Shares and are in the aggregate in the best interests of the holders of the Preferred Shares.

2. Other Modification.

The Board of Trustees or its delegatee, without further action by the shareholders, may amend, alter, add to or repeal any provision of this Statement of Preferences including provisions that have been adopted by the Fund pursuant to the Rating Agency guidelines, if the Board of Trustees or its delegatee determines that such amendments or modifications will not in the aggregate adversely affect the rights and preferences of the holders of any series of the Preferred

 

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Shares, provided, that the Fund has received advice from each applicable Rating Agency that such amendment or modification is not expected to adversely affect such Rating Agency’s then-current rating of such series of the Fund Preferred Shares.

Notwithstanding the provisions of the preceding paragraph, to the extent permitted by law, the Board of Trustees or its delegatee, without the vote of the holders of the Series A Preferred Shares or any other capital shares of the Fund, may amend the provisions of this Statement of Preferences to resolve any inconsistency or ambiguity or to remedy any formal defect so long as the amendment does not in the aggregate adversely affect the rights and preferences of the Series A Preferred Shares.

 

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IN WITNESS WHEREOF, The Gabelli Healthcare & Wellness Rx Trust has caused these presents to be signed in its name and on its behalf by a duly authorized officer, who acknowledges said instrument to be the statutory trust act of the Fund, and states that to the best of such officer’s knowledge, information and belief under penalty of perjury the matters and facts herein set forth with respect to approval are true in all material respects, all as of June      , 2016.

 

By:  

 

Name:   Agnes Mullady
Title:   President

 

Attest:

 

Name:   Andrea Mango
Title:   Secretary

 

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Execution Version

THE GABELLI HEALTHCARE & WELLNESS Rx TRUST

SECOND AMENDED AND RESTATED STATEMENT OF PREFERENCES

OF

5.875% SERIES B CUMULATIVE PREFERRED SHARES

The Gabelli Healthcare & Wellness Rx Trust, a Delaware statutory trust (the “ Fund ”), hereby certifies that:

FIRST: The Board of Trustees of the Fund (the “ Board of Trustees ”), at a meeting duly convened and held on August 20, 2014, pursuant to authority expressly vested in it by Article V of the Declaration of Trust, adopted resolutions classifying an unlimited amount of shares as authorized but unissued preferred shares of the Fund, par value $0.001 per share, and delegated the designation and issuance of such shares to a pricing committee (the “ Pricing Committee ”) at such times and in such amounts and on such terms and conditions as the Pricing Committee should determine.

SECOND: The Pricing Committee, at a meeting duly convened and held on September 17, 2014, pursuant to the authority granted it by the Board of Trustees, approved the designation and issuance by the Fund of up to 1,400,000 shares of 5.875% Series B Cumulative Preferred Shares.

THIRD: The Board of Trustees at a meeting duly convened and held on May 17, 2016 (i) pursuant to authority expressly vested in it by Article V of the Third Amended and Restated Agreement and Declaration of Trust of the Fund, dated as of February 16, 2011, adopted resolutions approving the designation of 2,500,000 additional shares of 5.875% Series B Cumulative Preferred Shares and (ii) pursuant to authority expressly vested in it by Part III of the Statement of Preferences, approved the Amended and Restated Statement of Preferences and authorized the officers of the Fund to take all necessary action in connection therewith.

FOURTH: The Board of Trustees, by written consent dated as of June 10, 2016, pursuant to authority expressly vested in it by Part III of the Amended and Restated Statement of Preferences, approved this Second Amended and Restated Statement of Preferences (which was initially executed on September 17, 2014 and amended and restated on May 17, 2016) and authorized the officers of the Fund to take all necessary action in connection therewith.


FIFTH: The preferences, rights, voting powers, restrictions, limitations as to dividends and distributions, qualifications, and terms and conditions of redemption of the 5.875% Series B Cumulative Preferred Shares, par value $0.001 per share, as set by the Pricing Committee and the Board of Trustees, are as follows:

DESIGNATION

Series B Preferred Shares: A series of 3,900,000 preferred shares, par value $0.001 per share, liquidation preference $25.00 per share, is hereby designated “5.875% Series B Cumulative Preferred Shares” (the “ Series B Preferred Shares ”). Each share of Series B Preferred Shares may be issued on a date to be determined by the Board of Trustees; and have such other preferences, rights, voting powers, restrictions, limitations as to dividends and distributions, qualifications and terms and conditions of redemption, in addition to those required by applicable law or set forth in the Governing Documents applicable to Preferred Shares of the Fund, as are set forth in this Statement of Preferences. The Series B Preferred Shares shall constitute a separate series of Preferred Shares.

SIXTH: This Statement of Preferences sets forth the rights, powers, preferences and privileges of the holders of the Series B Preferred Shares and the provisions set forth herein shall operate either as additions to or modifications of the rights, powers, preferences and privileges of the Holders of the Series B Preferred Shares under the Declaration of Trust, as the context may require. To the extent the provisions set forth herein conflict with the provisions of the Declaration of Trust with respect to any such rights, powers, preferences and privileges, this Statement of Preferences shall control. Except as contemplated by the immediately preceding sentence, the Declaration of Trust shall control as to the Fund generally and the rights, powers, preferences and privileges of the other shareholders of the Fund.

PART I

DEFINITIONS

Unless the context or use indicates another or different meaning or intent, each of the following terms when used in this Statement of Preferences shall have the meaning ascribed to it below, whether such term is used in the singular or plural and regardless of tense:

Adjusted Value ” of each Eligible Asset shall be computed as follows:

 

  (a) cash shall be valued at 100% of the face value thereof;

 

  (b) all other Eligible Assets shall be valued at the applicable Discounted Value thereof, provided, however, that the Adjusted Value of any unit of a security held by the Fund that is subject to a call option written by the Fund shall be the lesser of (i) the Discounted Value of such unit or (ii) the strike price per unit of such option; and

 

  (c) each asset that is not an Eligible Asset shall be valued at zero.

Administrator ” means Gabelli Funds, LLC, a New York limited liability company, or such other entity as shall be providing administrative services to the Fund and will include, as appropriate, any sub-administrator appointed by the Administrator.

Adviser ” means Gabelli Funds, LLC, a New York limited liability company, or such other entity as shall be serving as the investment adviser of the Fund.

 

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Annual Valuation Date ” means the Valuation Date each calendar year so designated by the Fund, commencing in the calendar year 2014.

Asset Coverage ” means asset coverage, as determined in accordance with Section 18(h) of the 1940 Act, of at least 200% with respect to all outstanding senior securities of the Fund which are stock, including all Outstanding Series B Preferred Shares (or such other asset coverage as may in the future be specified in or under the 1940 Act as the minimum asset coverage for senior securities which are stock of a closed-end investment company as a condition of declaring dividends on its common stock), determined on the basis of values calculated as of a time within 48 hours (not including Saturdays, Sundays or holidays) next preceding the time of such determination.

Basic Maintenance Amount ” means, with respect to the Series B Preferred Shares, the meaning set forth in the Moody’s Guidelines or, if any Other Rating Agency is rating the Series B Preferred Shares at the Fund’s request, the meaning set forth in the guidelines of the Other Rating Agency.

Basic Maintenance Amount Cure Date ” means, with respect to the Series B Preferred Shares, 10 Business Days following a Valuation Date, such date being the last day upon which the Fund’s failure to comply with paragraph 6(a)(ii)(A) of Part II hereof could be cured, and for the purposes of this Statement of Preferences shall have a correlative meaning with respect to any other class or series of Preferred Shares.

Basic Maintenance Report ” or “ Report ” means, with respect to the Series B Preferred Shares, a report prepared by the Administrator (if requested by any Rating Agency) which sets forth, as of the related Valuation Date, (i) Eligible Assets, (ii) the Market Value thereof (seriatim and in the aggregate), and (iii) the net asset value of the Fund. For the purposes of this Statement of Preferences, “Basic Maintenance Report” or “Report” shall have a correlative meaning with respect to any other class or series of Preferred Shares.

Board of Trustees ” means the Board of Trustees of the Fund or any duly authorized committee thereof as permitted by applicable law.

Business Day ” means a day on which the New York Stock Exchange is open for trading and that is neither a Saturday or Sunday.

By-Laws ” means the By-Laws of the Fund as amended from time to time.

Common Shares ” means the common shares of beneficial interest, par value $0.001 per share, of the Fund.

Commission ” means the Securities and Exchange Commission.

Cure Date ” shall have the meaning set forth in paragraph 4(a) of Part II hereof.

Date of Original Issue ” means September 24, 2014 with respect to the Series B Preferred Shares, and for the purposes of this Statement of Preferences shall have a correlative meaning with respect to any other class or series of Preferred Shares.

 

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Declaration of Trust ” means the Third Amended and Restated Agreement and Declaration of Trust of the Fund, dated as of February 16, 2011, as amended, supplemented or restated from time to time (including by this Statement of Preferences or by way of any other supplement or Statement of Preferences authorizing or creating a class of Shares (as defined in the Governing Documents) in the Fund).

Deposit Assets ” means cash, Short-Term Money Market Instruments and U.S. Government Obligations. Except for determining whether the Fund has Eligible Assets with an Adjusted Value equal to or greater than the Basic Maintenance Amount, each Deposit Asset shall be deemed to have a value equal to its principal or face amount payable at maturity plus any interest payable thereon after delivery of such Deposit Asset but only if payable on or prior to the applicable payment date in advance of which the relevant deposit is made.

Discount Factor ” means (a) so long as Moody’s is rating the Series B Preferred Shares at the Fund’s request, the Moody’s Discount Factor, or (b) any applicable discount factor established by any Other Rating Agency, whichever is applicable.

Discounted Value ” means, as applicable, (a) the quotient of the Market Value of an Eligible Asset divided by the applicable Discount Factor or (b) such other formula for determining the discounted value of an Eligible Asset as may be established by an applicable Rating Agency, provided, in either case that with respect to an Eligible Asset that is currently callable, Discounted Value will be equal to the applicable quotient or product as calculated above or the call price, whichever is lower, and that with respect to an Eligible Asset that is prepayable, Discounted Value will be equal to the applicable quotient or product as calculated above or the liquidation preference or other contractual amount, whichever is lower.

Dividend-Disbursing Agent ” means, with respect to the Series B Preferred Shares, Computershare Trust Company, N.A. and its successors or any other dividend-disbursing agent appointed by the Fund and, with respect to any other class or series of Preferred Shares, the entity appointed by the Fund as dividend-disbursing or paying agent with respect to such class or series.

Dividend Payment Date ” means with respect to the Series B Preferred Shares, any date on which dividends and distributions declared by the Board of Trustees thereon are payable pursuant to the provisions of paragraph 2(a) of Part II of this Statement of Preferences and shall for the purposes of this Statement of Preferences have a correlative meaning with respect to any other class or series of Preferred Shares.

Dividend Period ” shall have the meaning set forth in paragraph 2(a) of Part II hereof, and for the purposes of this Statement of Preferences shall have a correlative meaning with respect to any other class or series of Preferred Shares.

Eligible Assets ” means Moody’s Eligible Assets (if Moody’s is then rating the Series B Preferred Shares at the request of the Fund) and/or Other Rating Agency Eligible Assets if any Other Rating Agency is then rating the Series B Preferred Shares, or any other outstanding series of Preferred Shares, at the request of the Fund, whichever is applicable.

Fund ” means The Gabelli Healthcare & Wellness Rx Trust, a Delaware statutory trust.

 

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Governing Documents ” means the Declaration of Trust and the By-Laws.

Independent Accountant ” means a nationally recognized accountant, or firm of accountants, that is with respect to the Fund an independent public accountant or firm of independent public accountants under the 1933 Act.

Liquidation Preference ” shall, with respect to the Series B Preferred Shares, have the meaning set forth in paragraph 3 (a) of Part II hereof, and for the purposes of this Statement of Preferences shall have a correlative meaning with respect to any other class or series of Preferred Shares.

Market Value ” means the amount determined by the Fund with respect to specific Eligible Assets in accordance with valuation policies adopted from time to time by the Board of Trustees as being in compliance with the requirements of the 1940 Act.

Monthly Valuation Date ” means the last Valuation Date of each calendar month.

Moody’s ” means Moody’s Investors Service, Inc. and its successors at law.

Moody’s Discount Factor ” means the discount factors set forth in the Moody’s Guidelines as eligible for inclusion in calculating the Discounted Value of the Fund’s assets in connection with Moody’s ratings of Preferred Shares.

Moody’s Eligible Assets ” means the assets of the Fund set forth in the Moody’s Guidelines as eligible for inclusion in calculating the Discounted Value of the Fund’s assets in connection with Moody’s ratings of Series B Preferred Shares.

Moody’s Guidelines ” means the guidelines provided by Moody’s, as may be amended from time to time, in connection with Moody’s ratings of Series B Preferred Shares at the rating then assigned.

1933 Act ” means the Securities Act of 1933, as amended, or any successor statute.

1940 Act ” means the Investment Company Act of 1940, as amended, or any successor statute.

Notice of Redemption ” shall have the meaning set forth in paragraph 4(c)(i) of Part II hereof.

Other Rating Agency ” means any rating agency other than Moody’s then providing a rating for the Series B Preferred Shares at the request of the Fund.

Other Rating Agency Eligible Assets ” means assets of the Fund designated by any Other Rating Agency as eligible for inclusion in calculating the discounted value of the Fund assets in connection with such Other Rating Agency’s rating of the Series B Preferred Shares.

 

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Outstanding ” means, as of any date, Preferred Shares theretofore issued by the Fund except:

 

  (a) any such Preferred Share theretofore cancelled by the Fund or delivered to the Fund for cancellation;

 

  (b) any such Preferred Share as to which a notice of redemption shall have been given and for whose payment at the redemption thereof Deposit Assets in the necessary amount are held by the Fund in trust for, or have been irrevocably deposited with the relevant disbursing agent for payment to, the holder of such share pursuant to the Statement of Preferences with respect thereto; and

 

  (c) any such Preferred Share in exchange for or in lieu of which other Preferred Shares have been issued and delivered.

Notwithstanding the foregoing, for purposes of voting rights (including the determination of the number of shares required to constitute a quorum), any Preferred Shares as to which any subsidiary of the Fund is the holder will be disregarded and deemed not Outstanding.

Person ” means and includes an individual, a partnership, the Fund, a trust, a corporation, a limited liability company, an unincorporated association, a joint venture or other entity or a government or any agency or political subdivision thereof.

Preferred Shares ” means the preferred shares, par value $0.001 per share, of the Fund, and includes the Series B Preferred Shares.

Pricing Service ” means any pricing service retained by the Fund to price its investments, including, without limitation, any of the following: Interactive Dating Pricing and Reference Data, Inc., Thomson Reuters Markets, LLC, Standard & Poor’s, Bloomberg L.P., Pricing Direct Inc., SIX Financial Information USA Inc., or their successors, and independent broker quotes.

Rating Agency ” means Moody’s as long as Moody’s is then rating the Series B Preferred Shares at the Fund’s request or any other rating agency then rating the Series B Preferred Shares at the Fund’s request.

Record Date ” shall have the meaning set forth in paragraph 2(a) of Part II hereof, and for the purposes of this Statement of Preferences shall have a correlative meaning with respect to any other class or series of Preferred Shares.

Redemption Price ” has the meaning set forth in paragraph 4(a) of Part II hereof, and for the purposes of this Statement of Preferences shall have a correlative meaning with respect to any other class or series of Preferred Shares.

Series B Preferred Shares ” means the 5.875% Series B Cumulative Preferred Shares, par value $0.001 per share, of the Fund.

Series B Asset Coverage Cure Date ” means, with respect to the failure by the Fund to maintain Asset Coverage (as required by paragraph 6(a)(i) of Part II hereof) as of the last Business Day of each March, June, September and December of each year, 60 days following such Business Day.

 

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Short-Term Money Market Instruments ” means the following types of instruments if, on the date of purchase or other acquisition thereof by the Fund, the remaining term to maturity thereof is not in excess of 360 days:

 

  (i) commercial paper rated either F-1 by Fitch or A-1 by S&P if such commercial paper matures in 30 days or P-1 by Moody’s and either F-1+ by Fitch or A-1+ by S&P if such commercial paper matures in over 30 days;

 

  (ii) demand or time deposits in, and banker’s acceptances and certificates of deposit of (A) a depository institution or trust company incorporated under the laws of the United States of America or any state thereof or the District of Columbia or (B) a United States branch office or agency of a foreign depository institution (provided that such branch office or agency is subject to banking regulation under the laws of the United States, any state thereof or the District of Columbia);

 

  (iii) overnight funds;

 

  (iv) U.S. Government Obligations and U.S. Government Securities; and

 

  (v)

Eurodollar demand or time deposits in, or certificates of deposit of, the head office or the London branch office of a depository institution or trust company if the certificates of deposit, if any, and the long-term unsecured debt obligations (other than such obligations the ratings of which are based on the credit of a person or entity other than such depository institution or trust company) of such depository institution or trust company that have (1) credit ratings on each Valuation Date of at least P-1 from Moody’s and either F-1+ from Fitch or A-1+ from S&P, in the case of commercial paper or certificates of deposit, and (2) credit ratings on each Valuation Date of at least Aa3 from Moody’s and either AA from Fitch or AA- from S&P, in the case of long-term unsecured debt obligations; provided, however, that in the case of any such investment that matures in no more than one Business Day from the date of purchase or other acquisition by the Fund, all of the foregoing requirements shall be applicable except that the required long-term unsecured debt credit rating of such depository institution or trust company from Moody’s, Fitch and S&P shall be at least A2, A-2 and A, respectively; and provided further, however, that the foregoing credit rating requirements shall be deemed to be met with respect to a depository institution or trust company if (1) such depository institution or trust company is the principal depository institution in a holding company system, (2) the certificates of deposit, if any, of such depository institution or trust company are not rated on any Valuation Date below P-1 by Moody’s, F-1+ by Fitch or A-1+ by S&P and there is no long-term rating, and (3) the holding company shall meet all of the foregoing credit rating requirements (including the preceding proviso in the case of investments that mature in no more than one

 

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  Business Day from the date of purchase or other acquisition by the Fund); and provided further, that the interest receivable by the Fund shall not be subject to any withholding or similar taxes.

U.S. Government Obligations ” means direct obligations of the United States or by its agencies or instrumentalities that are entitled to the full faith and credit of the United States and that, other than United States Treasury Bills, provide for the periodic payment of interest and the full payment of principal at maturity or call for redemption.

U.S. Government Securities ” mean securities that are direct obligations of, and obligations the timely payment of principal and interest on which is fully guaranteed by, the United States or any agency or instrumentality of the United States, the obligations of which are backed by the full faith and credit of the United States and in the form of conventional bills, bonds and notes.

Valuation Date ” means the last Business Day of each month, or for purposes of determining whether the Fund is maintaining the Basic Maintenance Amount, each Business Day commencing with the Date of Original Issue.

Voting Period ” shall have the meaning set forth in paragraph 5(b) of Part II hereof.

PART II

Series B Preferred Shares

1. Number of Shares; Ranking.

(a) The number of authorized Shares constituting the Series B Preferred Shares to be issued is 3,900,000. No fractional Series B Preferred Shares shall be issued.

(b) Series B Preferred Shares which at any time have been redeemed or purchased by the Fund shall, after such redemption or purchase, have the status of authorized but unissued Preferred Shares.

(c) The Series B Preferred Shares shall rank on a parity with any other series of Preferred Shares as to the payment of dividends and liquidation preference to which such Shares are entitled.

(d) No Holder of Series B Preferred Shares shall have, solely by reason of being such a holder, any preemptive or other right to acquire, purchase or subscribe for any Preferred Shares or Common Shares or other securities of the Fund which it may hereafter issue or sell.

2. Dividends and Distributions.

(a) The holders of Series B Preferred Shares shall be entitled to receive, when, as and if declared by, or under authority granted by, the Board of Trustees, out of funds legally available therefor, cumulative cash dividends and distributions, calculated separately for each Dividend Period at the rate of 5.875% per annum (computed on the basis of a 360-day year consisting of

 

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twelve 30-day months) of the Liquidation Preference on the Series B Preferred Shares and no more, and payable quarterly on March 26, June 26, September 26, and December 26 in each year (each, a “ Dividend Payment Date ”) commencing on December 26, 2014 (or, if any such day is not a Business Day, then on the next succeeding Business Day) to holders of record of Series B Preferred Shares as they appear on the stock register of the Fund at the close of business on the fifth preceding Business Day (each, a “ Record Date ”) in preference to dividends and distributions on Common Shares and any other capital shares of the Fund ranking junior to the Series B Preferred Shares in payment of dividends and distributions. Dividends and distributions on Series B Preferred Shares that were originally issued on the Date of Original Issue shall accumulate from the Date of Original Issue. Dividends and distributions on all other Series B Preferred Shares shall accumulate from (i) the date on which such shares are originally issued if such date is a Dividend Payment Date, (ii) the immediately preceding Dividend Payment Date if the date on which such shares are originally issued is other than a Dividend Payment Date and is on or before a Record Date or (iii) the immediately following Dividend Payment Date if the date on which such shares are originally issued is during the period between a Record Date and a Dividend Payment Date. Each period beginning on and including a Dividend Payment Date (or the Date of Original Issue, in the case of the first dividend period after issuance of such shares) and ending on but excluding the next succeeding Dividend Payment Date is referred to herein as a “ Dividend Period .” Dividends and distributions on account of arrears for any past Dividend Period or in connection with the redemption of Series B Preferred Shares may be declared and paid at any time, without reference to any Dividend Payment Date, to holders of record on such date not exceeding 30 days preceding the payment date thereof as shall be fixed by the Board of Trustees.

(b) (i) No full dividends and distributions shall be declared or paid on Series B Preferred Shares for any Dividend Period or part thereof unless full cumulative dividends and distributions due through the most recent Dividend Payment Dates therefor for all series of Preferred Shares of the Fund ranking on a parity with the Series B Preferred Shares as to the payment of dividends and distributions have been or contemporaneously are declared and paid through the most recent Dividend Payment Dates therefor. If full cumulative dividends and distributions due have not been paid on all such Outstanding Preferred Shares, any dividends and distributions being paid on such Preferred Shares (including the Series B Preferred Shares) will be paid as nearly pro rata as possible in proportion to the respective amounts of dividends and distributions accumulated but unpaid on each such series of Preferred Shares on the relevant Dividend Payment Date. No holders of Series B Preferred Shares shall be entitled to any dividends and distributions, whether payable in cash, property or shares, in excess of full cumulative dividends and distributions as provided in this paragraph 2(b)(i) on Series B Preferred Shares. No interest or sum of money in lieu of interest shall be payable in respect of any dividend payments on any Series B Preferred Shares that may be in arrears.

(ii) For so long as Series B Preferred Shares are Outstanding, the Fund shall not pay any dividend or other distribution (other than a dividend or distribution paid in Common Shares, or, subject to compliance with the 1940 Act, options, warrants or rights to subscribe for or purchase Common Shares or other shares, if any, ranking junior to the Series B Preferred Shares as to dividends and distributions and upon liquidation) in respect of the Common Shares or any other shares of the Fund ranking junior to the Series B Preferred Shares as to the payment of dividends and distributions and upon liquidation, or call for redemption, redeem, purchase or

 

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otherwise acquire for consideration any Common Shares or any other shares of the Fund ranking junior to the Series B Preferred Shares as to the payment of dividends and distributions and upon liquidation (except, subject to compliance with the 1940 Act, by conversion into or exchange for shares of the Fund ranking junior to the Series B Preferred Shares as to dividends and distributions and upon liquidation), unless, in each case, (A) immediately thereafter, the aggregate Adjusted Value of the Fund Eligible Assets shall equal or exceed the Basic Maintenance Amount and the Fund shall have Asset Coverage, (B) all cumulative dividends and distributions on all Series B Preferred Shares 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 applicable Dividend-Disbursing Agent) and (C) the Fund has redeemed the full number of Series B Preferred Shares to be redeemed mandatorily pursuant to any provision contained herein for mandatory redemption.

(iii) Any dividend payment made on the Series B Preferred Shares shall first be credited against the dividends and distributions accumulated with respect to the earliest Dividend Period for which dividends and distributions have not been paid.

(c) Not later than the Business Day immediately preceding each Dividend Payment Date, the Fund shall deposit with the Dividend-Disbursing Agent Deposit Assets having an initial combined value sufficient to pay the dividends and distributions that are payable on such Dividend Payment Date, which Deposit Assets shall mature on or prior to such Dividend Payment Date. The Fund may direct the Dividend-Disbursing Agent with respect to the investment of any such Deposit Assets, provided that such investment consists exclusively of Deposit Assets and provided further that the proceeds of any such investment will be available at the opening of business on such Dividend Payment Date.

3. Liquidation Rights.

(a) In the event of any liquidation, dissolution or winding up of the affairs of the Fund, whether voluntary or involuntary, the holders of Series B Preferred Shares shall be entitled to receive out of the assets of the Fund available for distribution to shareholders, after satisfying claims and obligations of the Fund pursuant to Delaware law but before any distribution or payment shall be made in respect of the Common Shares or any other shares of the Fund ranking junior to the Series B Preferred Shares as to liquidation payments, a liquidation distribution in the amount of $25.00 per share (the “ Liquidation Preference ”), plus an amount equal to all unpaid dividends and distributions accumulated to and including the date fixed for such distribution or payment (whether or not earned or declared by the Fund, but excluding interest thereon), and such holders shall be entitled to no further participation in any distribution or payment in connection with any such liquidation, dissolution or winding up.

(b) If, upon any liquidation, dissolution or winding up of the affairs of the Fund, whether voluntary or involuntary, the assets of the Fund available for distribution among the holders of all Outstanding Series B Preferred Shares, and any other Outstanding class or series of Preferred Shares of the Fund ranking on a parity with the Series B Preferred Shares as to payment upon liquidation, shall be insufficient to permit the payment in full to such holders of Series B Preferred Shares of the Liquidation Preference plus accumulated and unpaid dividends and distributions and the amounts due upon liquidation with respect to such other Preferred Shares,

 

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then such available assets shall be distributed among the holders of Series B Preferred Shares and such other Preferred Shares ratably in proportion to the respective preferential liquidation amounts to which they are entitled. Unless and until the Liquidation Preference plus accumulated and unpaid dividends and distributions has been paid in full to the holders of Series B Preferred Shares, no dividends or distributions will be made to holders of the Common Shares or any other shares of the Fund ranking junior to the Series B Preferred Shares as to liquidation.

4. Redemption.

The Series B Preferred Shares shall be redeemed by the Fund as provided below:

(a) Mandatory Redemptions.

If the Fund is required to redeem any Preferred Shares (which may include Series B Preferred Shares) pursuant to paragraphs 6(b) or 6(c) of Part II hereof, then the Fund shall, to the extent permitted by the 1940 Act and Delaware law, by the close of business on such Series B Asset Coverage Cure Date or Basic Maintenance Amount Cure Date (herein collectively referred to as a “ Cure Date ”), as the case may be, fix a redemption date no later than 10 Business Days following such Cure Date and proceed to redeem shares as set forth in paragraph 4(c) hereof. On such redemption date, the Fund shall redeem, out of funds legally available therefor, the number of Preferred Shares, which, to the extent permitted by the 1940 Act and Delaware law, at the option of the Fund may include any proportion of Series B Preferred Shares or any other series of Preferred Shares, equal to the minimum number of shares the redemption of which, if such redemption had occurred immediately prior to the opening of business on such Cure Date, would have resulted in the Fund having Asset Coverage or an Adjusted Value of its Eligible Assets equal to or greater than the Basic Maintenance Amount, as the case may be, immediately prior to the opening of business on such Cure Date or, if Asset Coverage or an Adjusted Value of its Eligible Assets equal to or greater than the Basic Maintenance Amount, as the case may be, cannot be so restored, all of the Outstanding Series B Preferred Shares, at a price equal to $25.00 per share plus accumulated but unpaid dividends and distributions (whether or not earned or declared by the Fund) through the date of redemption (the “ Redemption Price ”). In the event that Preferred Shares are redeemed pursuant to paragraphs 6(b) or 6(c) of Part II hereof, the Fund may, but is not required to, redeem a sufficient number of Series B Preferred Shares pursuant to this paragraph 4(a) which, when aggregated with other Preferred Shares redeemed by the Fund, permits the Fund to have with respect to the Preferred Shares (including the Series B Preferred Shares) remaining Outstanding after such redemption (i) Asset Coverage of as much as 220% and (ii) Eligible Assets with Adjusted Value of as great as 105% of the Basic Maintenance Amount. In the event that all of the Series B Preferred Shares then Outstanding are required to be redeemed pursuant to paragraph 6 of Part II hereof, the Fund shall redeem such shares at the Redemption Price and proceed to do so as set forth in paragraph 4(c) hereof.

(b) Optional Redemptions.

Prior to September 24, 2019, the Series B Preferred Shares are not subject to optional redemption by the Fund unless such redemption is necessary, in the judgment of the Board of Trustees, to maintain the Fund’s status as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. Except as provided in the foregoing

 

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sentence, commencing September 24, 2019, and thereafter, to the extent permitted by the 1940 Act and Delaware law, the Fund may at any time upon Notice of Redemption (as defined below) redeem the Series B Preferred Shares in whole or in part at the Redemption Price per share, which notice shall specify a redemption date of not fewer than 15 days nor more than 60 days after the date of such notice.

(c) Procedures for Redemption.

(i) If the Fund shall determine or be required to redeem Series B Preferred Shares pursuant to this paragraph 4, it shall mail a written notice of redemption (“ Notice of Redemption ”) with respect to such redemption by first class mail, postage prepaid, to each holder of the shares to be redeemed at such holder’s address as the same appears on the stock register of the Fund on the close of business on such date as the Board of Trustees or its delegatee may determine, which date shall not be earlier than the second Business Day prior to the date upon which such Notice of Redemption is mailed to the holders of Series B Preferred Shares. Each such Notice of Redemption shall state: (A) the redemption date as established by the Board of Trustees or its delegatee; (B) the number of Series B Preferred Shares to be redeemed; (C) the CUSIP number(s) of such shares; (D) the Redemption Price (specifying the amount of accumulated dividends to be included therein); (E) the place or places where the certificate(s) for such shares (properly endorsed or assigned for transfer, if the Board of Trustees or its delegatee shall so require and the Notice of Redemption shall so state) are to be surrendered for payment in respect of such redemption; (F) that dividends and distributions on the shares to be redeemed will cease to accrue on such redemption date; (G) the provisions of this paragraph 4 under which such redemption is made; and (H) in the case of a redemption pursuant to paragraph 4(b), any conditions precedent to such redemption. If fewer than all Series B Preferred Shares held by any holder are to be redeemed, the Notice of Redemption mailed to such holder also shall specify the number or percentage of shares to be redeemed from such holder. No defect in the Notice of Redemption or the mailing thereof shall affect the validity of the redemption proceedings, except as required by applicable law.

(ii) If the Fund shall give a Notice of Redemption, then by the close of business on the Business Day preceding the redemption date specified in the Notice of Redemption (so long as any conditions precedent to such redemption have been met) or, if the Dividend-Disbursing Agent so agrees, another date not later than the redemption date, the Fund shall (A) deposit with the Dividend-Disbursing Agent Deposit Assets that shall mature on or prior to such redemption date having an initial combined value sufficient to effect the redemption of the Series B Preferred Shares to be redeemed and (B) give the Dividend-Disbursing Agent irrevocable instructions and authority to pay the Redemption Price to the holders of the Series B Preferred Shares called for redemption on the redemption date. The Fund may direct the Dividend-Disbursing Agent with respect to the investment of any Deposit Assets so deposited provided that the proceeds of any such investment will be available at the opening of business on such redemption date. Upon the date of such deposit (unless the Fund shall default in making payment of the Redemption Price), all rights of the holders of the Series B Preferred Shares so called for redemption shall cease and terminate except the right of the holders thereof to receive the Redemption Price thereof and such shares shall no longer be deemed Outstanding for any purpose. The Fund shall be entitled to receive, promptly after the date fixed for redemption, any cash in excess of the aggregate Redemption Price of the Series B Preferred Shares called for

 

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redemption on such date and any remaining Deposit Assets. Any assets so deposited that are unclaimed at the end of two years from such redemption date shall, to the extent permitted by law, be repaid to the Fund, after which the holders of the Series B Preferred Shares so called for redemption shall look only to the Fund for payment of the Redemption Price thereof. The Fund shall be entitled to receive, from time to time after the date fixed for redemption, any interest on the Deposit Assets so deposited.

(iii) On or after the redemption date, each holder of Series B Preferred Shares that are subject to redemption shall surrender the certificate evidencing such shares to the Fund at the place designated in the Notice of Redemption and shall then be entitled to receive the cash Redemption Price, without interest.

(iv) In the case of any redemption of less than all of the Series B Preferred Shares pursuant to this Statement of Preferences, such redemption shall be made pro rata from each holder of Series B Preferred Shares in accordance with the respective number of shares held by each such holder on the record date for such redemption.

(v) Notwithstanding the other provisions of this paragraph 4, the Fund shall not redeem Series B Preferred Shares unless all accumulated and unpaid dividends and distributions on all Outstanding Series B Preferred Shares and other Preferred Shares ranking on a parity with the Series B Preferred Shares with respect to dividends and distributions for all applicable past Dividend Periods (whether or not earned or declared by the Fund) shall have been or are contemporaneously paid or declared and Deposit Assets for the payment of such dividends and distributions shall have been deposited with the Dividend-Disbursing Agent as set forth in paragraph 2(c) of Part II hereof, provided, however, that the foregoing shall not prevent the purchase or acquisition of outstanding Preferred Shares pursuant to the successful completion of an otherwise lawful purchase or exchange offer made on the same terms to holders of all Outstanding Series B Preferred Shares.

If the Fund shall not have funds legally available for the redemption of, or is otherwise unable to redeem, all the Series B Preferred Shares or other Preferred Shares designated to be redeemed on any redemption date, the Fund shall redeem on such redemption date the number of Series B Preferred Shares and other Preferred Shares so designated as it shall have legally available funds, or is otherwise able, to redeem ratably on the basis of the Redemption Price from each holder whose shares are to be redeemed, and the remainder of the Series B Preferred Shares and other Preferred Shares designated to be redeemed shall be redeemed on the earliest practicable date on which the Fund shall have funds legally available for the redemption of, or is otherwise able to redeem, such shares upon Notice of Redemption.

5. Voting Rights.

(a) General.

Except as otherwise provided in the Governing Documents or a resolution of the Board of Trustees or its delegatee, or as required by applicable law, holders of Series B Preferred Shares shall have no power to vote on any matter except matters submitted to a vote of the Common Shares. In any matter submitted to a vote of the holders of the Common Shares, each holder of

 

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Series B Preferred Shares shall be entitled to one vote for each Series B Preferred Share held and the holders of the Outstanding Preferred Shares, including Series B Preferred Shares, and the Common Shares shall vote together as a single class; provided , however , that at any meeting of the shareholders of the Fund held for the election of Trustees, the holders of the Outstanding Preferred Shares, including Series B Preferred Shares, shall be entitled, as a class, to the exclusion of the holders of all other securities and classes of capital shares of the Fund, to elect a number of Fund trustees, such that following the election of trustees at the meeting of the shareholders, the Fund’s Board of Trustees shall contain two trustees elected by the holders of the Outstanding Preferred Shares, including the Series B Preferred Shares. Subject to paragraph 5(b) of Part II hereof, the holders of the outstanding Common Shares of the Fund together with the holders of Outstanding Preferred Shares, including the Series B Preferred Shares, voting as a single class, shall elect the balance of the trustees.

(b) Right to Elect Majority of Board of Trustees.

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 and/or composition of trustees constituting the Board of Trustees shall be adjusted as necessary to permit the holders of Outstanding Preferred Shares, including the Series B Preferred Shares, voting separately as one class (to the exclusion of the holders of all other securities and classes of capital shares of the Fund) to elect the number of trustees that, when added to the two trustees elected exclusively by the holders of Preferred Shares pursuant to paragraph 5(a) above, would constitute a simple majority of the Board of Trustees as so adjusted. To the fullest extent permitted by applicable law and the terms of the Declaration of Trust, the Fund and the Board of Trustees shall take all necessary actions, including effecting the removal of trustees or amendment of the Declaration of Trust, to effect an adjustment of the number and/or composition of trustees as described in the preceding sentence. A Voting Period shall commence:

(i) if at any time accumulated dividends and distributions (whether or not earned or declared, and whether or not funds are then legally available in an amount sufficient therefor) on the Outstanding Series B Preferred Shares equal to at least two full years’ dividends and distributions shall be due and unpaid and sufficient cash or specified securities shall not have been deposited with the Dividend-Disbursing Agent for the payment of such accumulated dividends and distributions; or

(ii) if at any time holders of any other Preferred Shares are entitled to elect a majority of the Trustees of the Fund under the 1940 Act or Statement of Preferences creating such shares.

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 of Preferred Shares upon the further occurrence of any of the events described in this paragraph 5(b).

 

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(c) Right to Vote with Respect to Certain Other Matters.

Subject to paragraph 1 of Part III of this Statement of Preferences, so long as any Series B Preferred Shares are Outstanding, the Fund shall not amend, alter or repeal the provisions of this Statement of Preferences so as to in the aggregate adversely affect the rights and preferences set forth in any Statement of Preferences, including the Series B Preferred Shares, without the affirmative vote of the holders of a majority of the Outstanding Preferred Shares at the time and present and voting on such matter, voting separately as one class. To the extent permitted under the 1940 Act, in the event that more than one series of Preferred Shares are Outstanding, the Fund shall not effect any of the actions set forth in the preceding sentence which in the aggregate adversely affects the rights and preferences set forth in the Statement of Preferences for a series of Preferred Shares differently than such rights and preferences for any other series of Preferred Shares without the affirmative vote of the holders of at least a majority of the Outstanding Preferred Shares and present and voting on such matter of each series adversely affected (each such adversely affected series voting separately as a class to the extent its rights are affected differently). The holders of the Series B Preferred Shares shall not be entitled to vote on any matter that affects the rights or interests of only one or more other series of Preferred Shares. The Fund shall notify the relevant Rating Agency ten Business Days prior to any such vote described above. Unless a higher percentage is required under the Governing Documents or applicable provisions of the Delaware Statutory Trust Act or the 1940 Act, the affirmative vote of the holders of a majority of the Outstanding Preferred Shares, including Series B Preferred Shares, voting together as a single class, will be required to approve any plan of reorganization adversely affecting the Preferred Shares or any action requiring a vote of security holders under Section 13(a) of the 1940 Act. For purposes of this paragraph 5(c), the phrase “vote of the holders of a majority of the Outstanding Preferred Shares” or series thereof (or any like phrase) shall mean, in accordance with Section 2(a)(42) of the 1940 Act, the vote, at the annual or a special meeting of the shareholders of the Fund duly called (i) of 67 percent or more of the Preferred Shares or series thereof present at such meeting, if the holders of more than 50 percent of the Outstanding Preferred Shares or series thereof are present or represented by proxy; or (ii) of more than 50 percent of the Outstanding Preferred Shares or series thereof, whichever is less. The class vote of holders of Preferred Shares described above will in each case be in addition to a separate vote of the requisite percentage of Common Shares and Preferred Shares, including Series B Preferred Shares, voting together as a single class, necessary to authorize the action in question. An increase in the number of authorized Preferred Shares pursuant to the Governing Documents or the issuance of additional shares of any series of Preferred Shares (including Series B Preferred Shares) pursuant to the Governing Documents shall not be considered to adversely affect the rights and preferences of the Preferred Shares.

(d) Voting Procedures.

(i) As soon as practicable after the accrual of any right of the holders of Preferred Shares to elect additional trustees as described in paragraph 5(b) above, the Fund shall call a special meeting of such holders and instruct the Dividend-Disbursing Agent to mail a notice of such special meeting to such holders, such meeting to be held not less than 10 nor more than 30 days after the date of mailing of such notice. If the Fund fails to send such notice to the Dividend-Disbursing Agent or if the Fund 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 day on which such notice is mailed or such other date as the Board of Trustees shall determine. At any such special

 

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meeting and at each meeting held during a Voting Period, such holders of Preferred Shares, voting together as a class (to the exclusion of the holders of all other securities and classes of capital shares of the Fund), shall be entitled to elect the number of trustees prescribed in paragraph 5(b) above on a one-vote-per-share basis. 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 of Series B Preferred Shares to vote on any matter or the number of shares required to constitute a quorum, whether such right is created by this Statement of Preferences, by the other provisions of the Governing Documents, by statute or otherwise, any Series B Preferred Share which is not Outstanding shall not be counted.

(iii) The terms of office of all persons who are trustees of the Fund at the time of a special meeting of holders of Preferred Shares to elect trustees and who remain trustees following such meeting shall continue, notwithstanding the election at such meeting by such holders of the number of trustees that they are entitled to elect, and the persons so elected by such holders, together with the two incumbent trustees elected by the holders of Preferred Shares, and the remaining incumbent trustees elected by the holders of the Common Shares and Preferred Shares, shall constitute the duly elected trustees of the Fund.

(iv) Upon the expiration of a Voting Period, the terms of office of the additional trustees elected by the holders of Preferred Shares pursuant to paragraph 5(b) above shall expire at the earliest time permitted by law, and the remaining trustees shall constitute the trustees of the Fund and the voting rights of such holders of Preferred Shares, including Series B Preferred Shares, to elect additional trustees pursuant to paragraph 5(b) above shall cease, subject to the provisions of the last sentence of paragraph 5(b). Upon the expiration of the terms of the trustees elected by the holders of Preferred Shares pursuant to paragraph 5(b) above, the number of trustees shall be automatically reduced to the number of trustees on the Board immediately preceding such Voting Period.

(e) Exclusive Remedy.

Unless otherwise required by law, the holders of Series B Preferred Shares shall not have any rights or preferences other than those specifically set forth herein. The holders of Series B Preferred Shares shall have no preemptive rights or rights to cumulative voting. In the event that the Fund fails to pay any dividends and distributions on the Series B Preferred Shares or fails to complete any voluntary or mandatory redemption, the exclusive remedy of the holders shall be the right to vote for trustees pursuant to the provisions of this paragraph 5.

(f) Notification to Rating Agency.

In the event a vote of holders of Series B Preferred Shares is required pursuant to the provisions of Section 13(a) of the 1940 Act, as long as the Series B Preferred Shares are rated by a Rating Agency at the Fund’s request, the Fund shall, not later than ten Business Days prior to the date on which such vote is to be taken, notify the relevant Rating Agency that such vote is to

 

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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 such Rating Agency of the result of such vote.

6. Coverage Tests.

(a) Determination of Compliance.

For so long as any Series B Preferred Shares are Outstanding, the Fund shall make the following determinations:

(i) Asset Coverage. The Fund shall have Asset Coverage as of the last Business Day of each March, June, September and December of each year in which any Series B Preferred Shares are Outstanding.

(ii) Basic Maintenance Amount Requirement.

(A) For so long as any Series B Preferred Shares are Outstanding and are rated by a Rating Agency at the Fund’s request, the Fund shall maintain, on each Valuation Date, Eligible Assets having an Adjusted Value at least equal to the Basic Maintenance Amount, as of such Valuation Date. Upon any failure to maintain Eligible Assets having an Adjusted Value at least equal to the Basic Maintenance Amount, the Fund shall use all commercially reasonable efforts to re-attain Eligible Assets having an Adjusted Value at least equal to the Basic Maintenance Amount on or prior to the Basic Maintenance Amount Cure Date, by altering the composition of its portfolio or otherwise.

(B) The Adviser shall prepare a Basic Maintenance Report relating to each Valuation Date. On or before 5:00 P.M., New York City time, on the tenth Business Day after the first Valuation Date following the Date of Original Issue of the Series B Preferred Shares and after each (1) Annual Valuation Date, (2) Valuation Date on which the Fund fails to satisfy the requirements of paragraph 6(a)(ii)(A) above, (3) Basic Maintenance Amount Cure Date following a Valuation Date on which the Fund fails to satisfy the requirements of paragraph 6(a)(ii)(A) above, (4) any day the Common Shares and Series B Preferred Shares are redeemed and (5) reasonable request by such Rating Agency, the Fund shall complete and deliver to the relevant Rating Agency (if requested by such Rating Agency) a Basic Maintenance Report, which will be deemed to have been delivered to such Rating Agency if such Rating Agency receives a copy or facsimile or other electronic transcription or transmission of the Basic Maintenance Report and on the same day the Fund mails to the Rating Agency for delivery on the next Business Day the Basic Maintenance Report. So long as the Rating Agency requires delivery of a Basic Maintenance Report, a failure by the Fund to deliver a Basic Maintenance Report under this paragraph 6(a)(ii)(B) shall be deemed to be delivery of a Basic Maintenance Report indicating an Adjusted Value of the Fund Eligible Assets less than the Basic Maintenance Amount, as of the relevant Valuation Date.

(C) In the event the Adjusted Value of the Fund Eligible Assets shown in any Basic Maintenance Report prepared pursuant to paragraph 6(a)(ii)(B) above is less than the applicable Basic Maintenance Amount, the Fund shall have until the Basic Maintenance Amount Cure Date to achieve an Adjusted Value of the Fund Eligible Assets at least equal to the Basic

 

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Maintenance Amount, and upon such achievement (and not later than such Basic Maintenance Amount Cure Date) the Fund shall inform the relevant Rating Agency of such achievement in writing by delivery of a revised Basic Maintenance Report (if requested by such Rating Agency) showing an Adjusted Value of the Fund Eligible Assets at least equal to the Basic Maintenance Amount as of the date of such revised Basic Maintenance Report.

(D) On or before 5:00 P.M., New York City time, on no later than the tenth Business Day after the next Valuation Date following each date on which the Fund has repurchased more than 1% of its Common Shares since the most recent date of delivery of a Basic Maintenance Report, the Fund shall complete and deliver to the relevant Rating Agency a Basic Maintenance Report (if requested by such Rating Agency). A Basic Maintenance Report delivered as provided in paragraph 6(a)(ii)(B) above also shall be deemed to have been delivered pursuant to this paragraph 6(a)(ii)(D).

(b) Failure to Meet Asset Coverage.

If the Fund fails to have Asset Coverage as provided in paragraph 6(a)(i) hereof and such failure is not cured as of the related Series B Asset Coverage Cure Date, (i) the Fund shall give a Notice of Redemption as described in paragraph 4 of Part II hereof with respect to the redemption of a sufficient number of Preferred Shares, which at the Fund’s determination (to the extent permitted by the 1940 Act and Delaware law) may include any proportion of Series B Preferred Shares, to enable it to meet the requirements of paragraph 6(a)(i) above, and, at the Fund’s discretion, such additional number of Series B Preferred Shares or other Preferred Shares in order that the Fund have Asset Coverage with respect to the Series B Preferred Shares and any other Preferred Shares remaining Outstanding after such redemption as great as 220%, and (ii) deposit with the Dividend-Disbursing Agent Deposit Assets having an initial combined value sufficient to effect the redemption of the Series B Preferred Shares or other Preferred Shares to be redeemed, as contemplated by paragraph 4 of Part II hereof.

(c) Failure to Maintain Eligible Assets having an Adjusted Value at Least Equal to the Basic Maintenance Amount.

If the Fund fails to have Eligible Assets having an Adjusted Value at least equal to the Basic Maintenance Amount as provided in paragraph 6(a)(ii)(A) above and such failure is not cured, the Fund shall, on or prior to the Basic Maintenance Amount Cure Date, (i) give a Notice of Redemption as described in paragraph 4 of Part II hereof with respect to the redemption of a sufficient number of Series B Preferred Shares or other Preferred Shares to enable it to meet the requirements of paragraph 6(a)(ii)(A) above, and, at the Fund’s discretion, such additional number of Series B Preferred Shares or other Preferred Shares in order that the Fund have Adjusted Assets with respect to the remaining Series B Preferred Shares and any other Preferred Shares remaining Outstanding after such redemption as great as 105% of the Basic Maintenance Amount, and (ii) deposit with the Dividend-Disbursing Agent Deposit Assets having an initial combined value sufficient to effect the redemption of the Series B Preferred Shares or other Preferred Shares to be redeemed, as contemplated by paragraph 4 of Part II hereof.

 

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(d) Status of Shares Called for Redemption.

For purposes of determining whether the requirements of paragraphs 6(a)(i) and 5(a)(ii)(A) hereof are satisfied, (i) no Series B Preferred Share shall be deemed to be Outstanding for purposes of any computation if, prior to or concurrently with such determination, sufficient Deposit Assets to pay the full Redemption Price for such share shall have been deposited in trust with the Dividend-Disbursing Agent (or applicable paying agent) and the requisite Notice of Redemption shall have been given, and (ii) such Deposit Assets deposited with the Dividend-Disbursing Agent (or paying agent) shall not be included.

7. Certain Other Restrictions.

(a) For so long as the Series B Preferred Shares are rated by a Rating Agency at the request of the Fund, the Fund will not, and will cause the Adviser not to, (i) knowingly and willfully purchase or sell any asset for the specific purpose of causing, and with the actual knowledge that the effect of such purchase or sale will be to cause, the Fund to have Eligible Assets having an Adjusted Value as of the date of such purchase or sale to be less than the Basic Maintenance Amount as of such date, (ii) in the event that, as of the immediately preceding Valuation Date, the Adjusted Value of the Fund Eligible Assets did not exceed the Basic Maintenance Amount, alter the composition of the Fund assets in a manner reasonably expected to reduce the Adjusted Value of the Fund Eligible Assets, unless the Fund shall have confirmed that, after giving effect to such alteration, the Adjusted Value of the Fund Eligible Assets exceeded the Basic Maintenance Amount or (iii) declare or pay any dividend or other distribution on any Common Shares or repurchase any Common Shares, unless the Fund shall have confirmed that, after giving effect to such declaration, other distribution or repurchase, the Fund continued to satisfy the requirements of paragraph 6(a)(ii)(A) of Part II hereof.

(b) For so long as the Series B Preferred Shares are rated by a Rating Agency at the request of the Fund, unless the Fund shall have received written confirmation from the relevant Rating Agency, the Fund may engage in the lending of its portfolio securities only in an amount of up to 20% of the Fund total assets, provided that the Fund receives cash collateral for such loaned securities which is maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities and, if invested, is invested only in Short-Term Money Market Instruments or in money market mutual funds meeting the requirements of Rule 2a-7 under the 1940 Act that maintain a constant $1.00 per share net asset value and treat the loaned securities rather than the collateral as the assets of the Fund for purposes of determining compliance with paragraph 6 of Part II hereof.

(c) For so long as the Series B Preferred Shares are rated by a Rating Agency at the request of the Fund, the Fund shall not consolidate the Fund with, merge the Fund into, sell or otherwise transfer all or substantially all of the Fund assets to another Person or adopt a plan of liquidation of the Fund, in each case without providing prior written notification to the relevant Rating Agency.

8. Limitation on Incurrence of Additional Indebtedness and Issuance of Additional Preferred Shares

(a) So long as any Series B Preferred Shares are Outstanding the Fund may issue and sell one or more series of a class of senior securities of the Fund representing indebtedness under

 

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Section 18 of the 1940 Act and/or otherwise create or incur indebtedness, provided that immediately after giving effect to the incurrence of such indebtedness and to its receipt and application of the proceeds thereof, the Fund shall have an “asset coverage” for all senior securities representing indebtedness, as defined in Section 18(h) of the 1940 Act, of at least 300% of the amount of all indebtedness of the Fund then outstanding and no such additional indebtedness shall have any preference or priority over any other indebtedness of the Fund upon the distribution of the assets of the Fund or in respect of the payment of interest. Any possible liability resulting from lending and/or borrowing portfolio securities, entering into reverse repurchase agreements, entering into futures contracts and writing options, to the extent such transactions are made in accordance with the investment restrictions of the Fund then in effect, shall not be considered to be indebtedness limited by this paragraph 8(a).

(b) So long as any Series B Preferred Shares are Outstanding, the Fund may issue and sell shares of one or more other series of Preferred Shares constituting a series of a class of senior securities of the Fund representing stock under Section 18 of the 1940 Act in addition to the Series B Preferred Shares and other Preferred Shares then Outstanding, provided that (i) the Fund shall, immediately after giving effect to the issuance of such additional Preferred Shares and to its receipt and application of the proceeds thereof (including, without limitation, to the redemption of Preferred Shares for which a Redemption Notice has been mailed prior to such issuance), have an “asset coverage” for all senior securities which are stock, as defined in Section 18(h) of the 1940 Act, of at least 200% of the sum of the liquidation preference of the Series B Preferred Shares and all other Preferred Shares of the Fund then Outstanding, and (ii) no such additional Preferred Shares shall have any preference or priority over any other Preferred Shares of the Fund upon the distribution of the assets of the Fund or in respect of the payment of dividends.

9. Status of Redeemed or Repurchased Series B Preferred

Series B Preferred Shares which at any time have been redeemed or purchased by the Fund shall, after such redemption or purchase, have the status of authorized but unissued Preferred Shares.

PART III

ABILITY OF THE BOARD OF TRUSTEES TO MODIFY THE STATEMENT OF PREFERENCES

1. Modification to Prevent Ratings Reduction or Withdrawal.

The Board of Trustees or its delegatee, without further action by the shareholders, may amend, alter, add to or repeal any provision of this Statement of Preferences including provisions that have been adopted by the Fund pursuant to the Rating Agency guidelines, if the Board of Trustees or its delegatee determines that such amendments or modifications are necessary to prevent a reduction in, or the withdrawal of, a rating of the Preferred Shares and are in the aggregate in the best interests of the holders of the Preferred Shares.

 

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2. Other Modification.

The Board of Trustees or its delegatee, without further action by the shareholders, may amend, alter, add to or repeal any provision of this Statement of Preferences including provisions that have been adopted by the Fund pursuant to the Rating Agency guidelines, if the Board of Trustees or its delegatee determines that such amendments or modifications will not in the aggregate adversely affect the rights and preferences of the holders of any series of the Preferred Shares, provided, that the Fund has received advice from each applicable Rating Agency that such amendment or modification is not expected to adversely affect such Rating Agency’s then-current rating of such series of the Fund Preferred Shares.

Notwithstanding the provisions of the preceding paragraph, to the extent permitted by law, the Board of Trustees or its delegatee, without the vote of the holders of the Series B Preferred Shares or any other shares of the Fund, may amend the provisions of this Statement of Preferences to resolve any inconsistency or ambiguity, to remedy any formal defect or to make any other change to this Statement of Preferences so long as the amendment does not in the aggregate adversely affect the rights and preferences of the Series B Preferred Shares.

 

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IN WITNESS WHEREOF, The Gabelli Healthcare & Wellness Rx Trust has caused these presents to be signed in its name and on its behalf by a duly authorized officer, who acknowledges said instrument to be the statutory trust act of the Fund, and states that to the best of such officer’s knowledge, information and belief under penalty of perjury the matters and facts herein set forth with respect to approval are true in all material respects, all as of June      , 2016.

 

By:  

 

Name:   Agnes Mullady
Title:   President

 

Attest:  

 

Name:   Andrea Mango
Title:   Secretary

 

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THE GABELLI HEALTHCARE & WELLNESS Rx TRUST

SALES AGREEMENT

$62,500,000 value of

5.875% Series B Cumulative Preferred Shares

Par value $0.001 per share

(Liquidation Preference $25.00)


SALES AGREEMENT

June      , 2016

G.research, LLC

One Corporate Center

Rye, New York 10580

Ladies and Gentlemen:

The Gabelli Healthcare & Wellness Rx Trust (the “ Fund ”), a statutory trust organized and existing under and by virtue of the laws of the State of Delaware, proposes to issue and sell through G.research, LLC (the “ Sales Manager ”), as agent, as much as $62,500,000 aggregate value (the “ Maximum Amount ”) of 5.875% Series B Cumulative Preferred Shares, par value $0.001 per share (the “ Preferred Shares ”), of the Fund. The Preferred Shares are classified and designated by the Fund’s Board of Trustees (the “ Board ”) pursuant to authority expressly vested in it by the Fund’s Declaration of Trust, as amended (the “Declaration of Trust”), and subject to the terms and conditions of the Statement of Preferences of the Fund’s 5.875% Series B Cumulative Preferred Shares, as amended (the “ Statement ”)

The Fund has filed with the Securities and Exchange Commission (the “ Commission ”) a shelf registration statement on Form N-2 (File Nos. 333-194973 and 811-22021) covering the registration of the Preferred Shares under the Securities Act of 1933, as amended (the “ Securities Act ”). Except where the context otherwise requires, “ Registration Statement ,” as used herein, means the registration statement referred to in the immediately preceding sentence, as amended, and any future registration statement of the Fund, as amended, at each time such registration statement or an amendment thereto becomes effective for purposes of Section 11 of the Securities Act, as such section applies to the Sales Manager (the “ Effective Time ”), including (i) all documents filed as a part thereof or incorporated by reference therein, and (ii) any information contained in a prospectus subsequently filed with the Commission pursuant to Rule 497 under the Securities Act and deemed to be part of the registration statement at the Effective Time. Post-effective amendment No. 4 to the Registration Statement, filed on April 29, 2016, is effective.

The Fund has also filed a notification on Form N-8A of registration (the “ Investment Company Act Notification ”) of the Fund as an investment company under the Investment Company Act of 1940, as amended (the “ Investment Company Act ”).

The Fund has prepared and filed, in accordance with Section 12 of Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (collectively, the “ Exchange Act ”), and the Commission has declared effective, a registration statement (as amended, the “ Exchange Act Registration Statement ”) on Form 8-A (File No. 001-33536) under the Exchange Act to register, under Section 12(b) of the Exchange Act, the class of securities consisting of the Preferred Shares.

Except where the context otherwise requires, “ Prospectus ,” as used herein, means the final base prospectus (including the statement of additional information incorporated therein by reference) and latest supplemental prospectus relating to the offering of the Preferred Shares

 

2


contemplated by this Sales Agreement, as filed by the Fund with the Commission, each as amended or supplemented from time to time (i) pursuant to Rule 497(h) under the Securities Act on or before the second business day after the date hereof (or such earlier time as may be required under the Securities Act) or (ii) pursuant to Rule 497(c) under the Securities Act on or before the fourth business day prior to the relevant Settlement Date (as defined below), in each case in the form furnished by the Fund to the Sales Manager for its use in connection with the offering of the Preferred Shares.

Sales Materials ” means those advertising materials, sales literature or other promotional materials or documents, if any, constituting an advertisement pursuant to Rule 482 under the Securities Act authorized or prepared by the Fund or authorized or prepared on behalf of the Fund by the Investment Adviser (as defined below) or any representative thereof for use in connection with the public offering or sale of the Preferred Shares; provided, however , that Sales Materials do not include any slides, tapes or other materials or documents that constitute a “written communication” (as defined in Rule 405 under the Securities Act) used in connection with a “road show” or a “bona fide electronic road show” (each as defined in Rule 433 under the Securities Act) related to the offering of Preferred Shares contemplated hereby (collectively, “ Road Show Materials ”).

Applicable Time ” means the time as of which this Sales Agreement was entered into, which shall be 9:00 A.M. (New York City time) on the date of this Sales Agreement (or such other time as is agreed to by the Fund and the Sales Manager).

Gabelli Funds, LLC, a New York limited liability company (the “ Investment Adviser ”), acts as the Fund’s investment adviser pursuant to an Investment Advisory Agreement by and between the Fund and the Investment Adviser, dated as of June 14, 2007 (the “ Investment Advisory Agreement ”). Bank of New York Mellon Corporation acts as the custodian (the “Custodian”) of the Fund’s cash and portfolio assets pursuant to the Mutual Fund Custody and Services Agreement, dated as of June 29, 2007 (the “ Custodian Agreement ”). Computershare Trust Company, N.A. serves as the Fund’s agent under the Fund’s automatic dividend reinvestment and voluntary cash purchase plan (the “ Dividend Reinvestment Plan ”). Computershare Trust Company, N.A. (the “ Transfer Agent ”) also serves as the transfer agent, registrar, dividend paying agent and redemption agent with respect to the Preferred Shares pursuant to the transfer agency and service agreement, dated as of January 1, 2011 (the “ Transfer Agency Agreement ”). BNY Mellon Investment Servicing (US) Inc. acts as the sub-administrator of the Fund pursuant to a Sub-Administration Agreement, dated as of [●] (the “ Sub-Administration Agreement ”).

As used in this Sales Agreement, “ business day ” shall mean a day on which the New York Stock Exchange (the “ NYSE ”) is open for trading. The terms “herein,” “hereof,” “hereto,” “hereinafter” and similar terms, as used in this Sales Agreement, shall in each case refer to this Sales Agreement as a whole and not to any particular section, paragraph, sentence or other subdivision of this Sales Agreement. The term “or,” as used herein, is not exclusive.

 

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The Fund, the Investment Adviser and the Sales Manager agree as follows:

 

1. Sale and Purchase . Upon the basis of the warranties and representations and subject to the terms and conditions herein set forth, the Fund agrees to issue and sell through the Sales Manager, as agent, and the Sales Manager agrees to sell, as agent for the Fund, on a best efforts basis, up to the Maximum Amount of the Preferred Shares during the term of this Sales Agreement on the terms set forth herein. The Preferred Shares will be sold from time to time as described in the Registration Statement and Prospectus in amounts and at prices as directed by the Fund and as agreed to by the Sales Manager.

 

  (a) The Sales Manager may, if it reasonably believes one of the conditions under Section 6(a) below exists, upon notice to the Fund by telephone (confirmed promptly by telecopy or hand delivery), at any time and from time to time suspend the offering of Preferred Shares; provided , however , that such suspension shall not affect or impair the parties’ respective obligations with respect to the Preferred Shares sold hereunder prior to the giving of such notice and that such suspension shall last no more than ten (10) business days, at which time the Sales Manager shall either cease such suspension or notify the Fund that this Sales Agreement is being terminated pursuant to Article 6 below, subject to the terms and conditions hereof. The Fund may, upon notice to the Sales Manager by telephone (confirmed promptly by telecopy or hand delivery), at any time and from time to time suspend the offering of Preferred Shares; provided , however , that such suspension shall not affect or impair the parties’ respective obligations with respect to the Preferred Shares sold hereunder prior to the giving of such notice.

 

  (b) The Fund shall pay compensation to the Sales Manager for sales of Preferred Shares at a commission rate as mutually agreed upon by the Fund and the Sales Manager, but in no event greater than 0.25% of the gross sales price per Preferred Share sold under this Sales Agreement, as determined by further agreement between the Sales Manager and the Fund from time to time with respect to particular sales. The remaining proceeds, after further deduction for any transaction fees imposed by any governmental or self-regulatory organization in respect to such sale shall constitute the net proceeds to the Fund for such Preferred Shares (the “ Net Proceeds ”).

 

  (c) The Fund shall open and maintain a trading account (the “ Trading Account ”) at a clearing agent designated by the Sales Manager to facilitate the transactions contemplated by this Sales Agreement. The Net Proceeds from the sale of the Preferred Shares shall be available in the Trading Account on the third business day (or such other day as is industry practice for regular-way trading) following each sale of the Preferred Shares (each, a “ Settlement Date ”). The Fund shall effect the delivery of the applicable number of Preferred Shares to an account designated by the Sales Manager at The Depository Trust Company on or before the Settlement Date of each sale hereunder. The Sales Manager’s compensation shall be withheld from the sales proceeds on each Settlement Date and shall be paid to the Sales Manager at that time.

 

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  (d) Subject to Section 5(d) below, at each Settlement Date, the Fund shall be deemed to have affirmed each representation, warranty, covenant and other agreement contained in this Sales Agreement. Any obligation of the Sales Manager under this Sales Agreement shall be subject to the continuing accuracy of the representations and warranties of the Fund herein, to the performance by the Fund of its obligations hereunder and to the continuing satisfaction of the additional conditions specified in Article 5 below.

 

  (e) If the Fund shall default on its obligation to deliver Preferred Shares on any Settlement Date, the Fund shall (i) hold the Sales Manager harmless against any loss, claim or damage arising from or as a result of such default by the Fund and (ii) pay the Sales Manager any commission to which it would otherwise be entitled absent such default.

 

2. Representations and Warranties of the Fund and the Investment Adviser . Each of the Fund and the Investment Adviser jointly and severally represents and warrants to the Sales Manager as of the date of this Sales Agreement and as of each Settlement Date, as follows:

 

(a)    (i)      (A) the Registration Statement has heretofore become effective under the Securities Act; (B) no stop order of the Commission preventing or suspending the use of any preliminary prospectus or Sales Materials or of the Prospectus or the effectiveness of the Registration Statement has been issued, and no proceedings for such purpose have been instituted or, to the Fund’s knowledge, are contemplated by the Commission; and (C) the Exchange Act Registration Statement has become effective as provided in Section 12 of the Exchange Act;
   (ii)      (A) the Registration Statement complied at the Effective Time, complies as of the date hereof and, as amended or supplemented, at each Settlement Date and at all times during which a prospectus is required by the Securities Act to be delivered in connection with any sale of Preferred Shares, will comply, in all material respects, with the requirements of the Securities Act and the Investment Company Act; (B) any preliminary prospectus and the Prospectus complied, at the time it was filed with the Commission, and the Prospectus complies as of the date hereof and, as amended or supplemented, at each Settlement Date and at all times during which a prospectus is required by the Securities Act to be delivered in connection with any sale of Preferred Shares, will comply, in all material respects with the requirements of the Securities Act (including, without limitation, Section 10(a) of the Securities Act) and the Investment Company Act; and (C) each of the Sales Materials complied, at the time it was first used in connection with the public offering of the Preferred Shares, and complies as of the date hereof, in all material respects with the requirements of the Securities Act (including, without limitation, Rule 482 thereunder), the Investment Company Act and the applicable rules and interpretations of the Financial Industry Regulatory Authority, Inc. (“ FINRA ”);

 

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  (iii) (A) (1) the Registration Statement as of the Effective Time did not, (2) the Registration Statement (including any post-effective amendment thereto declared or deemed to be effective by the Commission) as of the date hereof does not, and (3) the Registration Statement (including any post-effective amendment thereto declared or deemed to be effective by the Commission), as of each Settlement Date, will not, in each case, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (B) at no time during the period that begins as of the Applicable Time and ends at the final Settlement Date did or will the Prospectus and any Sales Material considered together (collectively, the “ Disclosure Package ”) in use at the applicable time include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (C) at no time during the period that begins at the time each of the Sales Materials was first used in connection with the public offering of the Preferred Shares and ends at the final Settlement Date did any of the Sales Materials in use at the applicable time include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (D) at no time during the period that begins on the earlier of the date of the Prospectus and the date the Prospectus is filed with the Commission and ends at the latest of the final Settlement Date and the end of the period during which a prospectus is required by the Securities Act to be delivered in connection with any sale of Preferred Shares did or will the Prospectus, as then amended or supplemented, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however , that each of the Fund and the Investment Adviser makes no representation or warranty with respect to any statement contained in the Registration Statement, the Disclosure Package or the Prospectus in reliance upon and in conformity with information concerning the Sales Manager and furnished in writing by or on behalf of the Sales Manager to the Fund expressly for use in the Registration Statement, the Disclosure Package or the Prospectus as described in Section 7(f) hereof;

 

  (b)

(i) The Fund has been duly formed, is validly existing as a statutory trust under the laws of the State of Delaware, with full power and authority to conduct all the activities conducted by it, to own or lease all assets owned or leased by it and to conduct its business as described in the Registration Statement and the Prospectus; (ii) the Fund is duly licensed and qualified to do business and in good standing in each jurisdiction in which its ownership or leasing of property or its

 

6


  conducting of business requires such qualification, except where the failure to be so qualified or be in good standing would not have a material adverse effect on the Fund; (iii) the Fund owns, possesses or has obtained and currently maintains all governmental licenses, permits, consents, orders, approvals and other authorizations, whether foreign or domestic, necessary to carry on its business as contemplated in the Prospectus; and (iv) the Fund has no subsidiaries.

 

  (c) The capitalization of the Fund is as set forth in the Registration Statement and the Prospectus. The Preferred Shares conform in all material respects to the description of them in the Prospectus. All the outstanding Preferred Shares have been duly authorized and are validly issued, fully paid and nonassessable. The Preferred Shares to be issued and sold in accordance with this Sales Agreement against payment therefor as provided by this Sales Agreement have been duly authorized and when issued and delivered will have been validly issued and will be fully paid and nonassessable. No person is entitled to any preemptive or other similar rights with respect to the Preferred Shares.

 

  (d) The Fund is duly registered with the Commission under the Investment Company Act as a diversified, closed-end management investment company, and, subject to the filing of any supplemental registration statements, amendments to the Registration Statement or such registration statements or the Prospectus, all action under the Securities Act and the Investment Company Act, as the case may be, necessary to make the public offering and consummate the sale of the Preferred Shares as provided in this Sales Agreement has or will have been taken by the Fund.

 

  (e) The Fund has full power and authority to enter into each of this Sales Agreement, the Investment Advisory Agreement, the Custodian Agreement, the Transfer Agency Agreement, the Sub-Administration Agreement and the Dividend Reinvestment Plan (collectively, the “ Fund Agreements ”) and to perform all of the terms and provisions hereof and thereof to be carried out by it and (i) each Fund Agreement has been duly and validly authorized, executed and delivered by or on behalf of the Fund, (ii) each Fund Agreement does not violate any of the applicable provisions of the Investment Company Act or the rules and regulations thereunder or the Investment Advisers Act of 1940, as amended, and the rules and regulations thereunder (collectively called the “ Advisers Act ”), as the case may be, and (iii) assuming due authorization, execution and delivery by the other parties thereto, each Fund Agreement constitutes the legal, valid and binding obligation of the Fund enforceable in accordance with its terms, (A) subject, as to enforcement, to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law) and (B) except as rights to indemnity thereunder may be limited by federal or state securities laws.

 

  (f)

None of (i) the execution and delivery by the Fund of the Fund Agreements, (ii) the issue and sale by the Fund of the Preferred Shares as contemplated by this

 

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  Sales Agreement and (iii) the performance by the Fund of its obligations under any of the Fund Agreements or consummation by the Fund of the other transactions contemplated by the Fund Agreements conflicts with or will conflict with, or results or will result in a breach of, (A) the Declaration of Trust or the By-laws of the Fund, (B) any agreement or instrument to which the Fund is a party or by which the Fund is bound, or (C) any law, rule or regulation, or order of any court, governmental instrumentality, securities exchange or association or arbitrator, whether foreign or domestic, applicable to the Fund, other than state securities or “blue sky” laws applicable in connection with the distribution of the Preferred Shares by the Sales Manager pursuant to this Sales Agreement.

 

  (g) The Fund is not currently in breach of, or in default under, any written agreement or instrument to which it is a party or by which it or its property is bound or affected.

 

  (h) No person has any right to the registration of any securities of the Fund because of the filing of the registration statement.

 

  (i) No consent, approval, authorization or order of any court or governmental agency or body or securities exchange or association, whether foreign or domestic, is required by the Fund for the consummation by the Fund of the transactions to be performed by the Fund or the performance by the Fund of all the terms and provisions to be performed by or on behalf of it in each case as contemplated in the Fund Agreements, except such as (i) have been obtained under the Securities Act, the Investment Company Act, or the Advisers Act, and (ii) may be required by the NYSE or under state securities or “blue sky” laws, in connection with the distribution of the Preferred Shares by the Sales Manager pursuant to this Sales Agreement.

 

  (j) The Preferred Shares are duly authorized for listing, subject to official notice of issuance, on the NYSE and the Notification has become effective.

 

  (k) PricewaterhouseCoopers LLP, whose report is incorporated by reference in the Prospectus, is an independent registered public accounting firm with respect to the Fund as required by the Securities Act and the Investment Company Act.

 

  (l) The statements of assets and liabilities, operations and changes in net assets attributable to common shareholders (including the notes thereto) included or incorporated by reference in the Registration Statement and the Prospectus presents fairly in all material respects, in accordance with generally accepted accounting principles in the United States applied on a consistent basis, the financial position of the Fund as of the date indicated.

 

  (m)

The Fund maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with

 

8


  generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets through an asset reconciliation procedure or otherwise at reasonable intervals and appropriate action is taken with respect to any differences.

 

  (n) Since the date as of which information is given in the Registration Statement and the Prospectus, except as otherwise stated therein, (i) there has been no material adverse change in the condition, financial or otherwise, business prospects, properties, net assets or results of operations of the Fund, whether or not arising in the ordinary course of business and (ii) there have been no transactions entered into by the Fund other than those in the ordinary course of its business.

 

  (o) There is no action, suit or proceeding before or by any court, commission, regulatory body, administrative agency or other governmental agency or body, foreign or domestic, now pending, or, to the knowledge of the Fund, threatened against or affecting the Fund, which (i) might result in any material adverse change in the condition, financial or otherwise, business affairs or business prospects of the Fund or might materially adversely affect the properties or assets of the Fund or (ii) is of a character required to be described in the Registration Statement or the Prospectus; and there are no contracts, franchises or other documents that are of a character required to be described in, or that are required to be filed as exhibits to, the Registration Statement that have not been described or filed as required.

 

  (p) The Fund has not taken and will not take, directly or indirectly, any action designed or which might be reasonably expected to cause or result in, or which will constitute, (i) manipulation of the price of the Preferred Shares in violation of applicable federal securities laws or (ii) except for stabilization transactions conducted by underwriters in connection with other offerings of the Preferred Shares and except for tender offers, Common Share repurchases and the issuance or purchase of Preferred Shares pursuant to the Fund’s Dividend Reinvestment Plan effected following the date on which the distribution of the Preferred Shares is completed in accordance with the policies of the Fund as set forth in the Prospectus, stabilization.

 

  (q) The Fund intends to direct the investment of the proceeds of the offering of the Preferred Shares in such a manner as to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

 

  (r) The Fund has not distributed and, prior to the final Settlement Date, will not distribute any offering material in connection with the public offering or sale of the Preferred Shares other than the Registration Statement, the Disclosure Package, the Sales Materials and the Prospectus.

 

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  (s) To the knowledge of the Fund after due inquiry, there are no Sales Materials; and no Road Show Materials authorized or prepared by the Fund or authorized or prepared on behalf of the Fund by the Investment Adviser or any representative thereof for use in connection with the public offering or sale of the Preferred Shares contained or contains any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

  (t) Except as disclosed in the Registration Statement and the Prospectus (or any amendment or supplement to any of them), to the Fund’s knowledge, after due inquiry, no trustee of the Fund is an “interested person” (as defined in the Investment Company Act) of the Fund or an “affiliated person” (as defined in the Investment Company Act) of the Sales Manager.

In addition, any certificate signed by any officer of the Fund and delivered to the Sales Manager or its counsel in connection with the offering of the Preferred Shares shall be deemed to be a representation and warranty by the Fund, as to matters covered thereby, to the Sales Manager.

 

3. Representations and Warranties of the Investment Adviser . The Investment Adviser represents to the Sales Manager as of the date of this Sales Agreement and as of each Settlement Date, as follows:

 

  (a) The Investment Adviser has been duly formed, is validly existing as a limited liability company under the laws of the State of New York, with full power and authority to conduct all of the activities conducted by it, to own or lease all of the assets owned or leased by it and to conduct its business as described in the Registration Statement and the Prospectus, and the Investment Adviser is duly licensed and qualified to do business and in good standing in each jurisdiction in which it is required to be so qualified, except to the extent that failure to be so qualified or be in good standing would not have a material adverse affect on the Investment Adviser’s ability to provide services to the Fund; and the Investment Adviser owns, possesses or has obtained and currently maintains all governmental licenses, permits, consents, orders, approvals and other authorizations, whether foreign or domestic, necessary to carry on its business as contemplated in the Registration Statement and the Prospectus.

 

  (b) The Investment Adviser is (i) duly registered as an investment adviser under the Advisers Act and (ii) not prohibited by the Advisers Act or the Investment Company Act from acting as the investment adviser for the Fund as contemplated by the Investment Advisory Agreement, the Registration Statement and the Prospectus.

 

  (c)

The Investment Adviser has full power and authority to enter into each of this Sales Agreement, the Investment Advisory Agreement and the Sub-Administration Agreement (collectively, the “ Adviser Agreements ”), and to carry

 

10


  out all the terms and provisions hereof and thereof to be carried out by it; and each Adviser Agreement has been duly and validly authorized, executed and delivered by the Investment Adviser; none of the Adviser Agreements violate any of the applicable provisions of the Investment Company Act or the Advisers Act; and assuming due authorization, execution and delivery by the other parties thereto, each Adviser Agreement constitutes a legal, valid and binding obligation of the Investment Adviser, enforceable in accordance with its terms, (i) subject, as to enforcement, to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law) and (ii) except as rights to indemnity thereunder may be limited by federal or state securities laws.

 

  (d) Neither (i) the execution and delivery by the Investment Adviser of any Adviser Agreement nor (ii) the consummation by the Investment Adviser of the transactions contemplated by, or the performance of its obligations under any Adviser Agreement conflicts or will conflict with, or results or will result in a breach of, (A) the Limited Liability Company Operating Agreement or Articles of Organization of the Investment Adviser, (B) any agreement or instrument to which the Investment Adviser is a party or by which the Investment Adviser is bound, or any law, rule or regulation, or (C) any order of any court, governmental instrumentality, securities exchange or association or arbitrator, whether foreign or domestic, applicable to the Investment Adviser.

 

  (e) No consent, approval, authorization or order of any court, governmental agency or body or securities exchange or association, whether foreign or domestic, is required for the consummation of the transactions contemplated in, or the performance by the Investment Adviser of its obligations under, any Adviser Agreement, as the case may be, except such as (i) have been obtained under the Securities Act, the Investment Company Act, or the Advisers Act, and (ii) may be required by the NYSE or under state securities or “blue sky” laws, in connection with the distribution of the Preferred Shares by the Sales Manager pursuant to this Sales Agreement.

 

  (f) The description the Investment Adviser and its business and the statements attributable to the Investment Adviser in the Registration Statement and the Prospectus comply with the requirements of the Securities Act and the Investment Company Act and do not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein (in the case of the Prospectus in light of the circumstances in which they were made) not misleading.

 

  (g)

Except as set forth in the Registration Statement and the Prospectus, there is no action, suit or proceeding before or by any court, commission, regulatory body, administrative agency or other governmental agency or body, foreign or domestic, now pending or, to the knowledge of the Investment Adviser, threatened against or affecting the Investment Adviser of a nature required to be disclosed in the

 

11


  Registration Statement or the Prospectus or that might result in any material adverse change in the condition, financial or otherwise, business affairs or business prospects of the Investment Adviser or the ability of the Investment Adviser to fulfill its respective obligations under any Adviser Agreement.

 

  (h) The Investment Adviser has not taken and will not take, directly or indirectly, any action designed, or which might reasonably be expected to cause or result in, or which will constitute, (i) manipulation of the price of the Preferred Shares in violation of applicable federal securities laws or (ii) except for stabilization activities conducted by underwriters in connection with other offerings of the Preferred Shares and except for tender offers and Preferred Share repurchases effected following the date on which the distribution of the Preferred Shares is completed in accordance with the policies of the Fund as set forth in the Prospectus, stabilization.

 

  (i) In the event that the Fund or the Investment Adviser has made available any Road Show Materials or promotional materials (other than the Sales Materials) by means of an Internet web site or similar electronic means such as to constitute a bona fide electronic road show, the Investment Adviser has installed and maintained pre-qualification and password-protection or similar procedures which are designed and reasonably expected to effectively prohibit access to such Road Show Materials or promotional materials by persons other than qualified broker-dealers and registered representatives thereof.

In addition, any certificate signed by any officer of the Investment Adviser and delivered to the Sales Manager or its counsel in connection with the offering of the Preferred Shares shall be deemed to be a representation and warranty by the Investment Adviser as to matters covered thereby, to the Sales Manager.

 

4. Agreements of the Parties .

 

  (a) If the registration statement relating to the Preferred Shares has not yet become effective, the Fund will promptly file a further amendment, if not previously filed, with the Commission, and will use its best efforts to cause such registration statement to become effective and, as soon as the Fund is advised, will advise the Sales Manager when the Registration Statement or any amendment thereto has become effective. If it is necessary for a post-effective amendment to the Registration Statement, or a new registration statement under Rule 462(b) under the Securities Act, to be filed with the Commission and become effective before the Preferred Shares may be sold, the Fund will use its best efforts to cause such post-effective amendment or such further registration statement to be filed and become effective as soon as possible, and the Fund will advise you promptly and, if requested by you, will confirm such advice in writing, (i) when such post-effective amendment or such further registration statement has become effective.

 

  (b)

During the period in which a prospectus relating to the Preferred Shares is required to be delivered under the Securities Act, the Fund will notify the Sales

 

12


  Manager promptly of the time when any subsequent amendment to the Registration Statement has become effective or any subsequent supplement to the Prospectus has been filed and of any request by the Commission for any amendment or supplement to the Registration Statement or the Prospectus or for additional information; the Fund will prepare and file with the Commission, promptly upon the Sales Manager’s reasonable request, any amendments or supplements to the Registration Statement or Prospectus that, in the Sales Manager’s reasonable opinion based upon advice of counsel, may be necessary in connection with the sale of the Preferred Shares pursuant to this Sales Agreement; the Fund will not file any amendment or supplement to the Registration Statement or Prospectus (other than a supplement to the Prospectus that (i) relates solely to the issuance of securities other than Preferred Shares of the Fund and (ii) does not materially change the information about the Fund or its business, operations, properties or financial condition disclosed in the Registration Statement or Prospectus previously thereto (an “ Excluded Supplement ”)) unless a copy thereof has been submitted to the Sales Manager a reasonable period of time before the filing and the Sales Manager has not reasonably objected thereto; and it will notify the Sales Manager at the time of filing of any document that upon filing is deemed to be incorporated by reference in the Registration Statement or Prospectus. The Fund will cause each amendment or supplement to the Prospectus to be filed with the Commission as required pursuant to the applicable paragraph of Rule 497 of the Securities Act Regulations or, in the case of any document to be incorporated therein by reference, to be filed with the Commission as required pursuant to the relevant securities laws, within the time period prescribed.

 

  (c) For the period of one year from the final Settlement Date, the Fund will advise the Sales Manager promptly (i) of the issuance by the Commission of any order in respect of the Fund or the Investment Adviser, which relates to the Fund, or which relates to any material arrangements or proposed material arrangements involving the Fund or the Investment Adviser, (ii) of the initiation or threatening of any proceedings for, or receipt by the Fund of any notice with respect to, any suspension of the qualification of the Preferred Shares for sale in any jurisdiction or the issuance of any order by the Commission suspending the effectiveness of the Registration Statement, (iii) of receipt by the Fund, or any representative or attorney of the Fund, of any other communication from the Commission relating in any material way to the Fund, the Registration Statement, the Investment Company Act Notification, the Sales Materials, the Prospectus or to the transactions contemplated by this Sales Agreement and (iv) the issuance by any court, regulatory body, administrative agency or other governmental agency or body, whether foreign or domestic, of any order, ruling or decree, or the threat to initiate any proceedings with respect thereto, regarding the Fund, which relates in any material way to the Fund or any material arrangements or proposed material arrangements involving the Fund. The Fund will make every reasonable effort to prevent the issuance of any order suspending the effectiveness of the Registration Statement and, if any such order is issued, to obtain its lifting as soon as possible.

 

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  (d) If not delivered prior to the date of this Sales Agreement, the Fund will deliver to the Sales Manager, without charge, a signed copy of the Registration Statement, the Exchange Act Registration Statement and the Investment Company Act Notification and of any amendments (except any post-effective amendment which is filed with the Commission after the later of (i) one year from the date of this Sales Agreement or (ii) the date on which the distribution of the Preferred Shares is completed) to either the Registration Statement, the Exchange Act Registration Statement or the Notification (including all exhibits filed with any such document) and as many conformed copies of the Registration Statement and any amendments thereto (except any post-effective amendment which is filed with the Commission after the later of (ii) one year from the date of this Sales Agreement or (iv) the date on which the distribution of the Preferred Shares is completed) (excluding exhibits) as the Sales Manager may reasonably request.

 

  (e) During such period as a prospectus is required by law to be delivered by an underwriter or a dealer, the Fund will deliver, without charge, to the Sales Manager and any dealers, at such office or offices as the Sales Manager may designate, as many copies of the Prospectus as the Sales Manager may reasonably request, and, if any event occurs during such period as a result of which it is necessary to amend or supplement the Prospectus, in order to make the statements therein, in light of the circumstances under which they were made, not misleading in any material respect, or if during such period it is necessary to amend or supplement the Prospectus to comply with the Securities Act or the Investment Company Act, the Fund promptly will prepare, submit to the Sales Manager, file with the Commission and deliver, without charge, to others if requested by the Sales Manager, amendments or supplements to the Prospectus so that the statements in such Prospectus, as so amended or supplemented, will not, in light of the circumstances under which they were made, be misleading in any material respect and will comply with the Securities Act and the Investment Company Act. Delivery by the Sales Manager of any such amendments or supplements to the Prospectus will not constitute a waiver of any of the conditions in Article 5 hereof. The Fund shall also deliver copies of each such Prospectus and any supplement thereto to the NYSE in accordance with applicable rules and regulations under the Securities Act.

 

  (f) The Fund will make generally available to holders of the Fund’s securities, as soon as practicable, an earnings statement, if applicable, satisfying the provisions of the last paragraph of Section 11(a) of the Securities Act and, at the option of the Fund, Rule 158 under the Securities Act.

 

  (g)

The Fund shall pay all costs and expenses incident to the performance of the obligations of the Fund under this Sales Agreement, including but not limited to costs and expenses of or relating to (i) the preparation, printing and filing of the Registration Statement and exhibits to it, each preliminary prospectus, the Prospectus and all amendments and supplements thereto, (ii) the issuance of the

 

14


  Preferred Shares and the preparation and delivery of certificates, if any, for the Preferred Shares, (iii) the registration or qualification of the Preferred Shares for offer and sale under the securities or “blue sky” laws of the jurisdictions referred to in the foregoing paragraph, including the fees and disbursements of counsel for the Sales Manager in that connection, and the preparation and printing of any preliminary and supplemental “blue sky” memoranda, (iv) the furnishing (including costs of design, production, shipping and mailing) to the Sales Manager and others of copies of the Preferred Shares, the Sales Materials, the Prospectus, and all amendments or supplements to the Prospectus, and of the other documents required by this Section to be so furnished, (v) the filing requirements of FINRA, in connection with its review of the financing, including filing fees and the fees, disbursements and other charges of counsel for the Sales Manager in that connection, (vi) all transfer taxes, if any, with respect to the sale and delivery of the Preferred Shares, (vii) the listing of the Preferred Shares on the NYSE and (viii) the Transfer Agent.

 

  (h) If the transactions contemplated by this Sales Agreement are not consummated, except as otherwise provided herein, no party will be under any liability to any other party, except that (i) if this Sales Agreement is terminated by the Sales Manager because of any inability, failure or refusal on the part of the Fund or the Investment Adviser to comply with any material terms of this Sales Agreement or because any of the Sales Manager conditions in Article 5 are not satisfied, the Fund will reimburse the Sales Manager for all out-of-pocket expenses (including the reasonable fees, disbursements and other charges of its counsel) reasonably incurred by it in connection with the proposed issuance and sale of the Preferred Shares, subject to Section 6(b)(iii) below and (ii) the Sales Manager shall not be relieved of liability to the Fund if it breaches its obligations pursuant to this Sales Agreement.

 

  (i) The Fund will not, directly or indirectly, offer or sell any Preferred Shares (other than the Preferred Shares to be sold pursuant to this Sales Agreement) or securities convertible into or exchangeable for, or any rights to purchase or acquire, Preferred Shares, during the period from the Applicable Time through the final Settlement Date for the sale of Preferred Shares hereunder without (i) giving the Sales Manager at least one business day prior written notice specifying the nature of the proposed sale and the date of such proposed sale and (ii) suspending activity under this program for such period of time, if any, as may reasonably be determined by agreement of the Fund and the Sales Manager.

 

  (j) The Fund will use its best efforts to supplementally list the additional Preferred Shares on the NYSE prior to the date the Preferred Shares are issued and comply with the rules and regulations of such exchange.

 

  (k) The Fund will direct the investment of the net proceeds of the offering of the Preferred Shares in such a manner as to comply with the investment objective and policies of the Fund as described in the Prospectus.

 

15


  (l) Each time that the Registration Statement or the Prospectus shall be amended or supplemented (other than an Excluded Supplement), the Fund shall (unless (i) otherwise agreed to by the Sales Manager or (ii) the Fund is not then selling Preferred Shares through the Sales Manager and has not requested the Sales Manager to sell Preferred Shares) furnish or cause to be furnished to the Sales Manager forthwith a certificate dated the date of filing with the Commission of such amendment, supplement or other document, the date of effectiveness of amendment, as the case may be, in form satisfactory to the Sales Manager to the effect that the statements contained in the certificates referred to in Section 5(d) below that were last furnished to the Sales Manager are true and correct at the time of such amendment, supplement, filing, as the case may be, as though made at and as of such time (except that such statements shall be deemed to relate to the Registration Statement or the Prospectus as amended and supplemented to such time) or, in lieu of such certificates, certificates of the same tenor as the certificates referred to in said Section 5(d) below, modified as necessary to relate to the Registration Statement or the Prospectus as amended and supplemented to the time of delivery of such certificate.

 

  (m) (i) Each time that the Registration Statement shall be amended by the filing of a post-effective amendment thereto; and (ii) at such other times, including the date hereof or the first Settlement Date, as may be reasonably requested by the Sales Manager, when the Prospectus is supplemented and/or any document or report is filed with the Commission or is incorporated by reference into the Registration Statement or the Prospectus, the Fund (unless (i) otherwise agreed to by the Sales Manager or (ii) the Fund is neither selling Preferred Shares through the Sales Manager nor has requested the Sales Manager to sell Preferred Shares) shall furnish or cause to be furnished forthwith to the Sales Manager and to the Sales Manager’s counsel a written opinion of counsel to the Fund (“ Fund Counsel ”), dated the date of filing with the Commission of such amendment, supplement or other document and the date of effectiveness of such amendment, as the case may be, in form and substance satisfactory to the Sales Manager, of the same tenor as the opinion referred to in Section 5(e) below, but modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such opinion.

 

  (n) Each time that the Registration Statement or the Prospectus shall be amended or supplemented (other than an Excluded Supplement) to include additional financial information, the Fund shall (unless (i) otherwise agreed to by the Sales Manager or (ii) the Fund is not then selling Preferred Shares through the Sales Manager and has not requested the Sales Manager to sell Preferred Shares) cause the independent registered public accounting firm then retained by the Fund, forthwith to furnish to the Sales Manager a letter, dated the date of effectiveness of such amendment, or the date of filing of such supplement or other document with the Commission, as the case may be, in form satisfactory to the Sales Manager, of the same tenor as the letter referred to in Section 5(g) below but modified to relate to the Registration Statement or the Prospectus, as amended and supplemented to the date of such letter.

 

16


5. Conditions of the Sales Manager’s Obligations . The obligations of the Sales Manager to sell Preferred Shares are subject to the accuracy on the date of this Sales Agreement, and as of each Settlement Date, of the representations of the Fund and the Investment Adviser in this Sales Agreement, to the accuracy and completeness of all material statements made by the Fund and the Investment Adviser or any of their respective officers in any certificate delivered to the Sales Manager or its counsel pursuant to this Sales Agreement, to performance by the Fund and the Investment Adviser of their respective obligations under this Sales Agreement and to each of the following additional conditions:

 

  (a) The Registration Statement must have become effective. The Prospectus must have been filed in accordance with Rule 497(c) or (h) or a certificate must have been filed in accordance with Rule 497(j), as the case may be, under the Securities Act.

 

  (b) No order suspending the effectiveness of the Registration Statement may be in effect and no proceedings for such purpose may be pending before or, to the knowledge of counsel to the Sales Manager, threatened by the Commission, and any requests for additional information on the part of the Commission (to be included in the Registration Statement or the Prospectus or otherwise) must be complied with or waived to the reasonable satisfaction of the Sales Manager.

 

  (c) Since the dates as of which information is given in the Registration Statement and the Prospectus, (i) there must not have been any material change in the Preferred Shares except as set forth in or contemplated by the Prospectus; (ii) there must not have been any material adverse change in the general affairs, prospects, management, business, financial condition or results of operations of the Fund or the Investment Adviser whether or not arising from transactions in the ordinary course of business as set forth in or contemplated by the Prospectus; (iii) the Fund must not have sustained any material loss or interference with its business from any court or from legislative or other governmental action, order or decree, whether foreign or domestic, or from any other occurrence not described in the Registration Statement and the Prospectus; and (iv) there must not have occurred any event that makes untrue or incorrect in any material respect any statement or information contained in the Registration Statement or the Prospectus or that is not reflected in the Registration Statement or the Prospectus but should be reflected therein in order to make the statements or information therein (in the case of the Prospectus, in light of the circumstances in which they were made) not misleading in any material respect; if, in the judgment of the Sales Manager, any such development referred to in clause (i), (ii), (iii), or (iv) of this paragraph (c) makes it impracticable or inadvisable to consummate the sale and delivery of the Preferred Shares pursuant to this Sales Agreement at the then current market price of the Preferred Shares.

 

  (d)

Unless otherwise agreed to by the Sales Manager, the Sales Manager must have received as of each Settlement Date a certificate, dated such date, of the President or a Vice-President and the chief financial or accounting officer of each of the

 

17


  Fund and the Investment Adviser certifying (in their capacity as such officers and, with respect to clauses (ii), (iii) and (vi) below, on behalf of the Fund and the Investment Adviser, as the case may be) that (i) the signers have carefully examined the Registration Statement, the Prospectus and this Sales Agreement, (ii) the representations of the Fund (with respect to the certificates from such Fund officers) and the representations of the Investment Adviser (with respect to the certificates from such officers of the Investment Adviser) in this Sales Agreement are accurate on and as of the date of the certificate, (iii) there has not been any material adverse change in the general affairs, prospects, management, business, financial condition or results of operations of the Fund (with respect to the certificates from such Fund officers) or the Investment Adviser (with respect to the certificates from such officers of the Investment Adviser), which change would materially and adversely affect the ability of the Fund or the Investment Adviser, as the case may be, to fulfill its obligations under this Sales Agreement or the Investment Advisory Agreement (with respect to the certificates from such officers of the Investment Adviser), whether or not arising from transactions in the ordinary course of business, (iv) with respect to the Fund only, no order suspending the effectiveness of the Registration Statement, prohibiting the sale of any of the Preferred Shares or otherwise having a material adverse effect on the Fund has been issued and no proceedings for any such purpose are pending before or, to the knowledge of such officers after reasonable investigation, threatened by the Commission or any other regulatory body, whether foreign or domestic, (v) no order having a material adverse effect on the ability of the Investment Adviser to fulfill its obligations under this Sales Agreement or the Investment Advisory Agreement, as the case may be, has been issued and no proceedings for any such purpose are pending before or, to the knowledge of the officers of the Investment Adviser after reasonable investigation, threatened by the Commission or any other regulatory body, whether foreign or domestic and (vi) each of the Fund (with respect to the certificates from such Fund officers) and the Investment Adviser (with respect to the certificates from such officers of the Investment Adviser) has performed all of its respective agreements that this Sales Agreement requires it to perform by such Settlement Date (to the extent not waived in writing by the Sales Manager).

 

  (e) Unless otherwise agreed to by the Sales Manager, the Sales Manager must have received as of the date of this Sales Agreement and each time referred to in Section 4(m) the opinions dated as of the date thereof substantially in the form of Schedules A and B to this Sales Agreement (modified in the case of times referred to in Section 4(m) as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented to that date) from the counsel identified in each such Schedule.

 

  (f)

Unless otherwise agreed to by the Sales Manager, the Sales Manager must have received as of the date of this Sales Agreement and each time referred to in Section 4(m) from its counsel an opinion dated as of the date thereof with respect to the Fund, the Preferred Shares, the Registration Statement and the Prospectus, this Sales Agreement and the form and sufficiency of all proceedings taken in

 

18


  connection with the sale and delivery of the Preferred Shares. Such opinion and proceedings shall fulfill the requirements of this Section 5(f) only if such opinion and proceedings are satisfactory in all respects to the Sales Manager. The Fund and the Investment Adviser must have furnished to such counsel such documents as counsel may reasonably request for the purpose of enabling them to render such opinion.

 

  (g) Unless otherwise agreed to by the Sales Manager, the Sales Manager must have received on the date of this Sales Agreement a signed letter, dated such date, substantially in the form of Schedule C to this Sales Agreement from the independent registered public accounting firm designated in such Schedule. The Sales Manager also must have received as of each time referred to in Section 4(n) a signed letter from such accountants, dated as of the date thereof, confirming on the basis of a review in accordance with the procedures set forth in their earlier letter that nothing has come to their attention during the period from a date not more than five business days before the date of this Sales Agreement, specified in the letter, to a date not more than five business days before such time, that would require any change in their letter referred to in the foregoing sentence.

All opinions, letters, evidence and certificates mentioned above or elsewhere in this Sales Agreement will comply only if they are in form and scope reasonably satisfactory to counsel for the Sales Manager, provided that any such documents, forms of which are annexed hereto, shall be deemed satisfactory to such counsel if substantially in such form.

 

6. Termination .

 

  (a) This Sales Agreement may be terminated by the Sales Manager by notifying the Fund at any time:

 

  (i) before any of the Preferred Shares are first generally offered pursuant to this Sales Agreement by the Sales Manager;

 

  (ii)

if, in the judgment of the Sales Manager, sale of any Preferred Shares is rendered impracticable or inadvisable because (A) trading in the equity securities of the Fund is suspended by the Commission or by the principal exchange that lists the Preferred Shares, (B) trading in securities generally on the NYSE or the Nasdaq Stock Market shall have been suspended or limited or minimum or maximum prices shall have been generally established on such exchange or over-the-counter market, (C) additional material governmental restrictions, not in force on the date of this Sales Agreement, have been imposed upon trading in securities or trading has been suspended on any U.S. securities exchange, (D) a general banking moratorium has been established by U.S. federal or New York authorities or (E) any material adverse change in the financial or securities markets in the United States or in political, financial or economic conditions in the United States or any outbreak or material escalation of hostilities or

 

19


  declaration by the United States of a national emergency or war or other calamity, terrorist activity or crisis shall have occurred the effect of any of which is such as to make it, in the sole judgment of the Sales Manager, impracticable or inadvisable to market the Preferred Shares on the terms and in the manner contemplated by the Prospectus;

 

  (iii) as of or before any Settlement Date, if any of the conditions specified in Article 5 have not been fulfilled when and as required by this Sales Agreement;

 

  (iv) in its sole discretion for any reason on or after the first anniversary of the date hereof; or

 

  (v) in its sole discretion for any reason by giving 30 days notice before the anniversary referred to in Section 6.1(a)(iv).

 

  (b) The Fund may terminate this Sales Agreement only as follows:

 

  (i) The Fund shall have the right by giving notice as hereinafter specified at any time to terminate this Sales Agreement if (A) the Sales Manager shall have failed, refused or been unable, to perform any agreement on its part to be performed hereunder, (B) any other condition of the Fund’s obligations hereunder is not fulfilled completely or (C) at any time in the judgment of the Fund the sale of any shares is rendered inadvisable or impracticable for any of the reasons set forth in Section 6.1(a)(ii)(A)-(E).

 

  (ii) The Fund shall have the right, by giving notice as hereinafter specified, to terminate this Sales Agreement in its sole discretion at any time and for any reason on or after the first anniversary of the date of this Sales Agreement.

 

  (iii) Notwithstanding anything contained in this Section 6.1(b) to the contrary, the Fund shall have the right, by giving notice as hereinafter specified, to terminate this Sales Agreement in its sole discretion at any time before the anniversary referred to in Section 6.1(b)(ii) provided that the Fund shall reimburse the Sales Manager for its reasonable costs and expenses (including, without limitation, legal fees and disbursements of counsel and ongoing due diligence costs and expenses) incurred in connection with the negotiation and consummation of this Sales Agreement and the transactions contemplated thereby (unless already reimbursed by the Fund to the Sales Manager pursuant to Section 4(h)(i) above). Such total expenses to be paid hereunder and pursuant to Section 4(h)(i) shall not together exceed $5,000.

 

  (c)

Any termination of this Sales Agreement shall be effective on the date specified in such notice of termination; provided that such termination shall not be effective earlier than the close of business on the date of receipt of such notice by the Sales Manager or the Fund, as the case may be. If such termination shall occur during a

 

20


  period when sales of Preferred Shares are being made pursuant to this Sales Agreement, any sales of Preferred Shares made prior to the termination of this Sales Agreement shall settle in accordance with the provisions of this Sales Agreement.

 

7. Indemnity and Contribution .

 

  (a) Each of the Fund and the Investment Adviser, jointly and severally, agrees to indemnify, defend and hold harmless the Sales Manager, its partners, directors and officers, and any person who controls the Sales Manager within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and their successors and assigns of all of the foregoing persons from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which, jointly or severally, the Sales Manager or any such person may incur under the Securities Act, the Exchange Act, the Investment Company Act, the Advisers Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim (i) arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof by the Fund) or arises out of or is based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) arises out of or is based any untrue statement or alleged untrue statement of a material fact included in any Road Show Material, the Disclosure Package or the Prospectus or arises out of or is based upon any omission or alleged omission to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; except with respect to either of the foregoing clause (i) and (ii) insofar as any such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in and in conformity with information concerning the Sales Manager furnished in writing by or on behalf of the Sales Manager to the Fund expressly for use with reference to the Sales Manager in such Registration Statement or in such Disclosure Package as set forth in Section 7(f) hereof or arises out of or is based upon any omission or alleged omission to state a material fact in connection with such information required to be stated in such Registration Statement or such Disclosure Package or necessary to make such information (with respect to such Disclosure Package, in light of the circumstances under which they were made) not misleading.

If any action, suit or proceeding (together, a “ Proceeding ”) is brought against the Sales Manager or any such person in respect of which indemnity may be sought against the Fund or the Investment Adviser pursuant to the foregoing paragraph, the Sales Manager or such person shall promptly notify the Fund or the Investment Adviser, as the case may be, in writing of the institution of such Proceeding and the Fund or the Investment Adviser shall assume the defense of such Proceeding, including the employment of counsel reasonably satisfactory to such indemnified party and payment of all fees and expenses; provided , however ,

 

21


that the omission to so notify the Fund or the Investment Adviser shall not relieve the Fund or the Investment Adviser from any liability which the Fund or the Investment Adviser may have to the Sales Manager or any such person to the extent Fund or the Investment Adviser are not materially prejudiced as a result thereof and in any event shall not relieve the Fund or the Investment Adviser from any liability which it may have otherwise than on account of this indemnity agreement. The Sales Manager or such person shall have the right to employ its or their own counsel in any such case, but the reasonable fees and expenses of such counsel shall be at the expense of the Sales Manager or of such person unless the employment of such counsel shall have been authorized in writing by the Fund or the Investment Adviser, as the case may be, in connection with the defense of such Proceeding or the Fund or the Investment Adviser shall not have, within a reasonable period of time in light of the circumstances, employed counsel to have charge of the defense of such Proceeding or such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them, which are different from, additional to or in conflict with those available, to the Fund or the Investment Adviser (in which case the Fund, the Investment Adviser shall not have the right to direct the defense of such Proceeding on behalf of the indemnified party or parties), in any of which events such reasonable fees and expenses shall be borne by the Fund or the Investment Adviser and paid as incurred (it being understood, however, that the Fund or the Investment Adviser shall not be liable for the expenses of more than one separate counsel (in addition to any local counsel) in any one Proceeding or series of related Proceedings in the same jurisdiction representing the indemnified parties who are parties to such Proceeding). Neither the Fund nor the Investment Adviser shall be liable for any settlement of any Proceeding effected without its written consent but if settled with the written consent of the Fund or the Investment Adviser, the Fund or the Investment Adviser, as the case may be, agrees to indemnify and hold harmless the Sales Manager and any such person from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for reasonable fees and expenses of counsel as contemplated by the second sentence of this paragraph, then the indemnifying party agrees that it shall be liable for any settlement of any Proceeding effected without its written consent if (i) such settlement is entered into more than 60 business days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement and (iii) such indemnified party shall have given the indemnifying party at least 30 days’ prior notice of its intention to settle. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened Proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such Proceeding and does not include an admission of fault, culpability or a failure to act, by or on behalf of such indemnified party.

 

22


  (b) The Sales Manager agrees to indemnify, defend and hold harmless the Fund and the Investment Adviser, and each of their respective shareholders, partners, managers, members, trustees, directors and officers, and any person who controls the Fund or the Investment Adviser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation), which, jointly or severally, the Fund, the Investment Adviser or any such person may incur under the Securities Act, the Exchange Act, the Investment Company Act, the Advisers Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in and in conformity with information concerning the Sales Manager furnished in writing by or on behalf of the Sales Manager to the Fund or the Investment Adviser expressly for use with reference to the Sales Manager in the Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof by the Fund) or in the Disclosure Package as set forth in Section 7(f) hereof, or arises out of or is based upon any omission or alleged omission to state a material fact in connection with such information required to be stated in such Registration Statement or the Disclosure Package or necessary to make such information not misleading (with respect to the Disclosure Package, in light of the circumstances under which they were made).

If any Proceeding is brought against the Fund, the Investment Adviser or any such person in respect of which indemnity may be sought against the Sales Manager pursuant to the foregoing paragraph, the Fund, the Investment Adviser or such person shall promptly notify the Sales Manager in writing of the institution of such Proceeding and the Sales Manager shall assume the defense of such Proceeding, including the employment of counsel reasonably satisfactory to such indemnified party and payment of all fees and expenses; provided , however , that the omission to so notify the Sales Manager shall not relieve the Sales Manager from any liability which the Sales Manager may have to the Fund, the Investment Adviser or any such person to the extent the Sales Manager is not materially prejudiced as a result thereof and in any event shall not relieve the Sales Manager from any liability which it may have otherwise than on account of this indemnity agreement. The Fund, the Investment Adviser or such person shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of the Fund, the Investment Adviser or such person, as the case may be, unless the employment of such counsel shall have been authorized in writing by the Sales Manager in connection with the defense of such Proceeding or the Sales Manager shall not have, within a reasonable period of time in light of the circumstances, employed counsel to have charge of the defense of such Proceeding or such indemnified party or parties

 

23


shall have reasonably concluded that there may be defenses available to it or them, which are different from or additional to or in conflict with those available to the Sales Manager (in which case the Sales Manager shall not have the right to direct the defense of such Proceeding on behalf of the indemnified party or parties, but the Sales Manager may employ counsel and participate in the defense thereof but the fees and expenses of such counsel shall be at the expense of the Sales Manager), in any of which events such fees and expenses shall be borne by the Sales Manager and paid as incurred (it being understood, however, that the Sales Manager shall not be liable for the expenses of more than one separate counsel (in addition to any local counsel) in any one Proceeding or series of related Proceedings in the same jurisdiction representing the indemnified parties who are parties to such Proceeding). The Sales Manager shall not be liable for any settlement of any such Proceeding effected without the written consent of the Sales Manager but if settled with the written consent of the Sales Manager agrees to indemnify and hold harmless the Fund, the Investment Adviser and any such person from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second sentence of this paragraph, then the indemnifying party agrees that it shall be liable for any settlement of any Proceeding effected without its written consent if (i) such settlement is entered into more than 60 business days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement and (iii) such indemnified party shall have given the indemnifying party at least 30 days’ prior notice of its intention to settle. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened Proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such Proceeding and does not include an admission of fault, culpability or a failure to act, by or on behalf of such indemnified party.

 

  (c)

If the indemnification provided for in this Section 7 is unavailable to an indemnified party under subsections (a) and (b) of this Section 7 in respect of any losses, damages, expenses, liabilities or claims referred to therein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, damages, expenses, liabilities or claims (i) in such proportion as is appropriate to reflect the relative benefits received by the Fund and the Investment Adviser on the one hand and the Sales Manager on the other hand from the offering of the Preferred Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above

 

24


  but also the relative fault of the Fund and the Investment Adviser on the one hand and of the Sales Manager on the other in connection with the statements or omissions, which resulted in such losses, damages, expenses, liabilities or claims, as well as any other relevant equitable considerations. The relative benefits received by the Fund and the Investment Adviser on the one hand and the Sales Manager on the other shall be deemed to be in the same respective proportions as the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by the Fund and the total commissions received by bear to the aggregate public offering price of the Preferred Shares. The relative fault of the Fund and the Investment Adviser one hand and of the Sales Manager on the other shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or omission or alleged omission relates to information supplied by the Fund or the Investment Adviser or by the Sales Manager and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, damages, expenses, liabilities and claims referred to in this subsection shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with investigating, preparing to defend or defending any Proceeding.

 

  (d) The Fund, the Investment Adviser and the Sales Manager agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in subsection (c) above. Notwithstanding the provisions of this Section 7, the Sales Manager shall not be required to contribute any amount in excess of the fees and commissions received by the Sales Manager. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

  (e)

The indemnity and contribution agreements contained in this Section 7 and the covenants, warranties and representations of the Fund contained in this Sales Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the Sales Manager, its partners, directors or officers or any person (including each partner, officer or director of such person) who controls the Sales Manager within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, or by or on behalf of the Fund, the Investment Adviser, its shareholders, partners, advisers, members, trustees, directors or officers or any person who controls the Fund, the Investment Adviser or the Sub-Adviser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and shall survive any termination of this Sales Agreement or the issuance and delivery of the Preferred Shares. The Fund, the Investment Adviser and the Sales Manager agree promptly to notify each other of the commencement of any Proceeding against it and, in the case of the Fund or the Investment Adviser, against any of the Fund’s or the Investment Adviser’s

 

25


  shareholders, partners, managers, members, trustees, directors or officers in connection with the issuance and sale of the Preferred Shares, or in connection with the Registration Statement or Prospectus.

 

  (f) The Fund and the Investment Adviser each acknowledge that no information has been furnished in writing by or on behalf of the Sales Manager to the Fund expressly for use with reference to the Sales Manager in the Registration Statement or in the Disclosure Package (as amended or supplemented).

 

  (g) Notwithstanding any other provisions in this Section 7, no party shall be entitled to indemnification or contribution under this Sales Agreement against any loss, claim, liability, expense or damage arising by reason of such person’s willful misfeasance, bad faith, gross negligence or reckless disregard of its duties in the performance of its duties hereunder. The parties hereto acknowledge that the foregoing provision shall be applicable solely as to matters arising under Section 17(i) of the Investment Company Act, and shall not be construed to impose any duties or obligations upon any such parties under this Sales Agreement other than as specifically set forth herein (it being understood that the Sales Manager have no duty hereunder to the Fund to perform any due diligence investigation).

 

8. Notices . Except as otherwise herein provided, all statements, requests, notices and agreements shall be in writing or by telegram and, if to the Sales Manager shall be sufficient in all respects if delivered or sent to G.research, LLC, One Corporate Center, Rye, New York 10580, Attention: Syndicate Department, and if to the Fund or the Investment Adviser, shall be sufficient in all respects if delivered or sent to the Fund or the Investment Adviser, as the case may be, at the offices of the Fund or the Investment Adviser at the same address.

 

9. Governing Law; Construction . This Sales Agreement and any claim, counterclaim or dispute of any kind or nature whatsoever arising out of or in any way relating to this Sales Agreement (“ Claim ”), directly or indirectly, shall be governed by, and construed in accordance with, the laws of the State of New York. The Section headings in this Sales Agreement have been inserted as a matter of convenience of reference and are not a part of this Sales Agreement.

 

10.

Submission to Jurisdiction . Except as set forth below, no Claim may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the County of Westchester or in the United States District Court for the Southern District of New York, which courts shall have jurisdiction over the adjudication of such matters, and the Fund and the Sales Manager each consent to the jurisdiction of such courts and personal service with respect thereto. Each of the Sales Manager, the Fund (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates) and the Investment Adviser (on its behalf and, to the extent permitted by applicable law, on behalf of its shareholders and affiliates) waives all right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) in any way arising out of or relating to this

 

26


  Sales Agreement. Each of the Sales Manager, the Fund and the Investment Adviser agrees that a final judgment in any such action, proceeding or counterclaim brought in any such court shall be conclusive and binding upon the Sales Manager, the Fund and the Investment Adviser, as the case may be, and may be enforced in any other courts in the jurisdiction of which the Sales Manager, the Fund or the Investment Adviser, as the case may be, is or may be subject, by suit upon such judgment.

 

11. Parties at Interest . The Agreement herein set forth has been and is made solely for the benefit of the Sales Manager, the Fund, the Investment Adviser and to the extent provided in Section 7 hereof the controlling persons, shareholders, partners, members, trustees, managers, directors and officers referred to in such section, and their respective successors, assigns, heirs, personal representatives and executors and administrators. No other person, partnership, association or corporation (including a purchaser, as such purchaser, through the Sales Manager) shall acquire or have any right under or by virtue of this Sales Agreement.

 

12. Counterparts . This Sales Agreement may be signed by the parties in one or more counterparts which together shall constitute one and the same agreement among the parties.

 

13. Successors and Assigns . This Sales Agreement shall be binding upon the Sales Manager, the Fund, the Investment Adviser and any successor or assign of any substantial portion of the Fund’s, the Investment Adviser’s or the Sales Manager’s respective businesses and/or assets.

 

27


If the foregoing correctly sets forth the understanding among the Fund, the Investment Adviser and the Sales Manager, please so indicate in the space provided below, whereupon this letter and your acceptance shall constitute a binding agreement among the Fund, the Investment Adviser and the Sales Manager.

 

Sincerely,
THE GABELLI HEALTHCARE & WELLNESS Rx TRUST

 

By:
Title:
GABELLI FUNDS, LLC

 

By:
Title:

 

28


Accepted and agreed to as of the date first above written, on behalf of itself
G.research, LLC

 

By:
Title:

 

29


SCHEDULE A

FORM OF OPINION LEGAL COUNSEL REGARDING THE FUND

None.

Schedule-A-1


SCHEDULE B

FORM OF OPINION OF LEGAL COUNSEL REGARDING THE INVESTMENT ADVISER

None.

Schedule-B-1


SCHEDULE C

FORM OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM LETTER

None.

Schedule-C-1

Seventh Amendment to Transfer Agency and Service Agreement

This Seventh Amendment (“Amendment’’), effective as of May 10, 2016 (‘‘Effective Date’’), is to the Transfer Agency and Service Agreement, as amended (the “Agreement’’) dated January 1, 2011, by and among Computershare Inc., and its fully owned subsidiary Computershare Trust Company, N.A. (collectively, “Transfer Agent’’) and each of the Gabelli Closed-End Investment Companies listed on Exhibit A attached to the Agreement (each, a “Company” and collectively the “Company’’).

WHEREAS, each Company and the Transfer Agent are parties to the Agreement; and

WHEREAS, each Company and the Transfer Agent desire to amend the Agreement upon the terms and conditions set forth herein;

NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows:

1. Designation of a New Company. The Series A Cumulative Preferred Shares (the “Series A Preferred”) of The Gabelli Global Small and Mid Cap Value Trust (the “Fund”’) is hereby designated by the Fund as a new class of Shares covered under the Agreement.

2. Amendment of the Agreement . In order that the Series A Preferred may be designated as a new class of Shares under the Agreement, including, without limitation, any and all schedules and exhibits thereto, the Fund agrees and binds itself to the terms and conditions thereof with respect to the Series A Preferred and acknowledges that by its execution and delivery of this Amendment it shall assume all of the obligations and shall be entitled to all of the rights, duties and obligations of a Company with respect to a class of Shares, as if the Series A Preferred were an original designated class of Shares under the Agreement.

3. Amendment of the Fee and Service Schedule for Stock Transfer Services (“Schedule’’) . The Schedule is hereby amended as follows:

 

  (a) Add “The Gabelli Global Small and Mid Cap Value Trust Inc., Series A Preferred” to the following subsection in the “FEES” section:

“$1000.00 Per Month for the following Funds:”

4. Exhibit. Exhibit A is hereby deleted in its entirety and replaced with the new Exhibit A attached hereto, which reflects the addition of the Series A Preferred to the Agreement.

5. Capitalized Terms. Capitalized terms not defined herein shall have the same meaning as set forth in the Agreement.

6. Limited Effect . Except as expressly modified herein, the Agreement shall continue to be and shall remain, in full force and effect and the valid and binding obligation of the parties thereto in accordance with its terms.

7. Counterparts . This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. A signature to this Amendment transmitted and/or executed electronically shall have the same authority, effect, and enforceability as an original signature.

8. Governing Law . This Amendment shall be governed by the laws of the Commonwealth of Massachusetts.


IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers, hereunto duly agreed and authorized, as of the Effective Date.

THE GABELLI CLOSED-END INVESTMENT COMPANIES LISTED ON EXHIBIT A ATTACHED TO THE AGREEMENT

 

By:  

 

Name:  

 

Title:  

 

COMPUTERSHARE INC. and

COMPUTERSHARE TRUST COMPANY, N.A.

On behalf of both entities

 

By:  

 

Name:  

 

Title:  

 

 

2


EXHIBIT A

Gabelli Convertible and Income Securities Fund Inc.

 

    Common

 

    6.00% Series B Cumulative Preferred

Gabelli Dividend & Income Trust

 

    Common

 

    5.875% Series A Cumulative Preferred

 

    6.00% Series D Cumulative Preferred

Gabelli Equity Trust Inc.

 

    Common

 

    5.875% Series D Cumulative Preferred

 

    5.00% Series G Cumulative Preferred

 

    5.00% Series H Cumulative Preferred

 

    5.45% Series J Cumulative Preferred

Gabelli Multimedia Trust Inc.

 

    Common

 

    6.00% Series B Cumulative Preferred

Gabelli Global Small and Mid Cap Value Trust

 

    Common

 

    Series A Cumulative Preferred

Gabelli Global Utility & Income Trust

 

    Common

 

    Series A Cumulative Puttable and Callable Preferred

Gabelli Healthcare & WellnessRx Trust

 

    Common

 

    5.76% Series A Cumulative Preferred

 

    5.875% Series B Cumulative Preferred

Gabelli Utility Trust

 

    Common

 

    5.625% Series A Cumulative Preferred

 

3

Eighth Amendment to Transfer Agency and Service Agreement

This Eighth Amendment (“Amendment’’), effective as of May 31, 2016 (‘‘Effective Date’’), is to the Transfer Agency and Service Agreement, as amended (the “Agreement’’) dated January 1, 2011, by and among Computershare Inc., and its fully owned subsidiary Computershare Trust Company, N.A. (collectively, “Transfer Agent’’) and each of the Gabelli Closed-End Investment Companies listed on Exhibit A attached to the Agreement (each, a “Company” and collectively the “Company’’).

WHEREAS, each Company and the Transfer Agent are parties to the Agreement; and

WHEREAS, each Company and the Transfer Agent desire to amend the Agreement upon the terms and conditions set forth herein;

NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows:

1. Designation of a New Company. The 5.375% Series C Cumulative Preferred Shares (the “Series C Preferred”) of The Gabelli Utility Trust (the “Fund”) is hereby designated by the Fund as a new class of Shares covered under the Agreement.

2. Amendment of the Agreement . In order that the Series C Preferred may be designated as a new class of Shares under the Agreement, including, without limitation, any and all schedules and exhibits thereto, the Fund agrees and binds itself to the terms and conditions thereof with respect to the Series C Preferred and acknowledges that by its execution and delivery of this Amendment it shall assume all of the obligations and shall be entitled to all of the rights, duties and obligations of a Company with respect to a class of Shares, as if the Series C Preferred were an original designated class of Shares under the Agreement.

3. Amendment of the Fee and Service Schedule for Stock Transfer Services (“Schedule’’) . The Schedule is hereby amended as follows:

 

  (a) Add “The Gabelli Utility Trust, Series C Preferred” to the following subsection in the “FEES” section:

“$1000.00 Per Month for the following Funds:”

4. Exhibit. Exhibit A is hereby deleted in its entirety and replaced with the new Exhibit A attached hereto, which reflects the addition of the Series C Preferred to the Agreement.

5. Capitalized Terms. Capitalized terms not defined herein shall have the same meaning as set forth in the Agreement.

6. Limited Effect . Except as expressly modified herein, the Agreement shall continue to be and shall remain, in full force and effect and the valid and binding obligation of the parties thereto in accordance with its terms.

7. Counterparts . This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. A signature to this Amendment transmitted and/or executed electronically shall have the same authority, effect, and enforceability as an original signature.

8. Governing Law . This Amendment shall be governed by the laws of the Commonwealth of Massachusetts.


IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers, hereunto duly agreed and authorized, as of the Effective Date.

THE GABELLI CLOSED-END INVESTMENT COMPANIES

LISTED ON EXHIBIT A ATTACHED TO THE AGREEMENT

 

By:  

 

Name:  

 

Title:  

 

COMPUTERSHARE INC. and

COMPUTERSHARE TRUST COMPANY, N.A.

On behalf of both entities

 

By:  

 

Name:  

 

Title:  

 

 

- 2 -


EXHIBIT A

Gabelli Convertible and Income Securities Fund Inc.

 

    Common

 

    6.00% Series B Cumulative Preferred

Gabelli Dividend & Income Trust

 

    Common

 

    5.875% Series A Cumulative Preferred

 

    6.00% Series D Cumulative Preferred

Gabelli Equity Trust Inc.

 

    Common

 

    5.875% Series D Cumulative Preferred

 

    5.00%Series G Cumulative Preferred

 

    5.00% Series H Cumulative Preferred

 

    5.45% Series J Cumulative Preferred

Gabelli Multimedia Trust Inc.

 

    Common

 

    6.00% Series B Cumulative Preferred

Gabelli Global Small and Mid Cap Value Trust

 

    Common

 

    Series A Cumulative Preferred

Gabelli Global Utility & Income Trust

 

    Common

 

    Series A Cumulative Puttable and Callable Preferred

Gabelli Healthcare & Wellness Rx Trust

 

    Common

 

    5.76% Series A Cumulative Preferred

 

    5.875% Series B Cumulative Preferred

Gabelli Utility Trust

 

    Common

 

    5.625% Series A Cumulative Preferred

 

    5.375% Series C Cumulative Preferred

 

- 3 -

[LETTERHEAD OF RICHARDS, LAYTON & FINGER, P.A.]

June 13, 2016

The Gabelli Healthcare & Wellness Rx Trust

One Corporate Center

Rye, New York 10580

 

  Re: The Gabelli Healthcare & Wellness Rx Trust

Ladies and Gentlemen:

We have acted as special Delaware counsel for The Gabelli Healthcare & Wellness Rx Trust, a Delaware statutory trust (the “Fund”), in connection with the matters set forth herein. At your request, this opinion is being furnished to you.

We have examined and relied upon such records, documents, certificates and other instruments as in our judgment are necessary or appropriate to enable us to render the opinions expressed below, including the following documents:

(a) The Certificate of Trust of the Fund, as filed in the office of the Secretary of State of the State of Delaware (the “Secretary of State”) on February 20, 2007, as amended by the Certificate of Amendment to the Certificate of Trust as filed in the office of the Secretary of State on April 5, 2007 (as amended, the “Certificate of Trust”);

(b) The Agreement and Declaration of Trust, dated as of February 20, 2007, among the trustees of the Fund named therein, as amended and restated by the Amended Agreement and Declaration of Trust, dated as of April 9, 2007 and as further amended and restated by the Second Amended Agreement and Declaration of Trust, dated as of February 26, 2009 and as further amended and restated by the Third Amended Agreement and Declaration of Trust, dated as of February 16, 2011 (as amended, the “Trust Agreement”);

(c) The Second Amended and Restated By-Laws of the Fund, dated as of February 16, 2011 (the “By-Laws”);

(d) The Second Amended and Restated Statement of Preferences of the Fund’s Series B Cumulative Preferred Shares (the “Preferred Shares”), dated as of June 13, 2016(the “Statement of Preferences”);

(e) The Fund’s Registration Statement on Form N-2, as amended (the “Registration Statement”), including a prospectus supplement (and the statement of additional


information incorporated by reference therein) dated June 13, 2016 (the “Prospectus”), with respect to the issuance of the Preferred Shares, filed by the Fund with the United States Securities and Exchange Commission on or about the date hereof;

(f) An Officer’s Certificate of the Fund, dated June 13, 2016, and the resolutions of the trustees (and certain committees thereof) attached thereto (the “Resolutions”); and

(g) A Certificate of Good Standing for the Fund, dated June 13, 2016, obtained from the Secretary of State.

As to various questions of fact material to our opinion, we have relied upon the representations made in the foregoing documents and upon certificates of officers of the Fund.

Initially capitalized terms used herein and not otherwise defined are used as defined in the Trust Agreement.

With respect to all documents examined by us, we have assumed (i) the authenticity of all documents submitted to us as authentic originals, (ii) the conformity with the originals of all documents submitted to us as copies or forms, and (iii) the genuineness of all signatures.

For purposes of this opinion, we have assumed (i) that the Trust Agreement, the Statement of Preferences, the By-Laws and the Resolutions collectively constitute the entire agreement with respect to the subject matter thereof, including with respect to the creation, operation and termination of the Fund, and that the Trust Agreement, the By-laws, the Statement of Preferences, the Resolutions and the Certificate of Trust are in full force and effect and will not be amended, (ii) except to the extent provided in paragraph 1 below, the due organization or due formation, as the case may be, and valid existence in good standing of each party to the documents examined by us under the laws of the jurisdiction governing its organization or formation, (iii) the legal capacity of natural persons who are parties to the documents examined by us, (iv) that each of the parties, other than the Fund, to the documents examined by us has the power and authority to execute and deliver, and to perform its obligations under, such documents, (v) the due authorization, execution and delivery by all parties thereto of all documents examined by us, (vi) that the Preferred Shares will be issued and sold to the Shareholders in accordance with the Trust Agreement and the Resolutions and as contemplated by the Registration Statement (including as to the aggregate number of Preferred Shares to be issued), (vii) that any amendment or restatement of any document reviewed by us has been accomplished in accordance with, and was permitted by, the relevant provisions of said document prior to its amendment or restatement from time to time, and (viii) that none of the Preferred Shares will be issued to a Principal Shareholder. We have not participated in the preparation of the Registration Statement (except for providing this opinion) and assume no responsibility for their contents, other than this opinion.


This opinion is limited to the laws of the State of Delaware (excluding the securities laws of the State of Delaware), and we have not considered and express no opinion on the laws of any other jurisdiction, including federal laws and rules and regulations relating thereto. Our opinions are rendered only with respect to Delaware laws and rules, regulations and orders thereunder which are currently in effect.

Based upon the foregoing, and upon our examination of such questions of law and statutes of the State of Delaware as we have considered necessary or appropriate, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that:

1. The Fund has been duly formed and is validly existing in good standing as a statutory trust under the Delaware Statutory Trust Act, 12 Del. C. § 3801, et. seq.

2. The Preferred Shares have been duly authorized and, upon issuance, delivery and payment therefor as contemplated by the Trust Agreement, the Statement of Preferences and the Registration Statement, will be validly issued, fully paid and nonassessable beneficial interests in the Fund.

We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. In giving the foregoing consents, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder.

 

Very truly yours,
/s/ Richards, Layton & Finger,P.A.

DKD/JWP