Company: RFMZ
Filing Date: 2025-03-07
Form Type: N-CSRS
Source: 0001398344-25-005064
Chunk: 10

Company: RiverNorth Flexible Municipal Income Fund II, Inc.
Filing Date: 2025-03-07
Form: N-CSRS
Chunk 10
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to maintain a stable level of distributions, the Fund may pay out less than all of its net investment income or pay out accumulated undistributed
income, or return of capital, in addition to current net investment income. Any distribution that is treated as a return of capital generally
will reduce a common shareholder’s basis in his or her shares, which may increase the capital gain or reduce the capital loss realized
upon the sale of such shares.

Tender Option Bonds: The Fund may leverage
its assets through the use of proceeds received from tender option bond (“TOB”) transactions. In a TOB transaction, a tender
option bond trust (a “TOB Issuer”) is typically established, which forms a special purpose trust into which the Fund, or an
agent on behalf of the Fund, transfers municipal bonds or other municipal securities (“Underlying Securities”). A TOB Issuer
typically issues two classes of beneficial interests: short-term floating rate notes (“TOB Floaters”) with a fixed principal
amount representing a senior interest in the Underlying Securities, and which are generally sold to third party investors, and residual
interest municipal tender option bonds (“TOB Residuals”) representing a subordinate interest in the Underlying Securities,
and which are generally issued to the Fund. The interest rate on the TOB Floaters resets periodically, usually weekly, to a prevailing
market rate, and holders of the TOB Floaters are granted the option to tender their TOB Floaters back to the TOB Issuer for repurchase
at their principal amount plus accrued interest thereon periodically, usually daily or weekly. The Fund may invest in both TOB Floaters
and TOB Residuals, including TOB Floaters and TOB Residuals issued by the same TOB Issuer. The Fund may not invest more than 5% of its
“Managed Assets” in any single TOB Issuer. Managed Assets is defined as total assets of the Fund, including assets attributable
to leverage, minus liabilities (other than debt representing leverage and any preferred stock that may be outstanding).

As a result of Section 619 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act and the rules thereunder (collectively, the “Volcker Rule”), banking entities are
generally prohibited from sponsoring the TOB Issuer, and instead the Fund may serve as the sponsor of a TOB issuer (“Fund-sponsored
TOB”) and establish, structure and “sponsor” a TOB Issuer in which it