Company: RFMZ
Filing Date: 2025-09-05
Form Type: N-CSR
Source: 0001398344-25-017693
Chunk: 55

Company: RiverNorth Flexible Municipal Income Fund II, Inc.
Filing Date: 2025-09-05
Form: N-CSR
Chunk 55
---
 Inc.

The TOB Issuer receives Municipal Bonds or other
municipal securities and then issues TOB Floaters to third party investors and a TOB Residual to the Fund. The Fund is paid the cash (less
transaction expenses, which are borne by the Fund and therefore the holders of the Common Shares indirectly) received by the TOB Issuer
from the sale of the TOB Floaters and typically will invest the cash in additional Municipal Bonds or other investments permitted by its
investment policies. TOB Floaters may have first priority on the cash flow from the securities held by the TOB Issuer and are enhanced
with a liquidity support arrangement from a third-party bank or other financial institution (the “liquidity provider”), which
allows holders to tender their position at par (plus accrued interest). The Fund, in addition to receiving cash from the sale of the TOB
Floaters, also receives the TOB Residual. The TOB Residual provides the Fund with the right to (1) cause the holders of the TOB Floaters
to tender their notes to the TOB Issuer at par (plus accrued interest), and (2) acquire the underlying Municipal Bonds or other municipal
securities from the TOB Issuer. In addition, all voting rights and decisions to be made with respect to any other rights relating to the
underlying securities deposited in the TOB Issuer are passed through to the Fund, as the holder of the TOB Residual. Such a transaction,
in effect, creates exposure for the Fund to the entire return of the securities deposited in the TOB Issuer, with a net cash investment
by the Fund that is less than the value of the underlying securities deposited in the TOB Issuer. This multiplies the positive or negative
impact of the underlying securities’ return within the Fund (thereby creating leverage).

The TOB Issuer may be terminated without the consent
of the Fund upon the occurrence of certain events, such as the bankruptcy or default of the issuer of the underlying securities deposited
in the TOB Issuer, a substantial downgrade in the credit quality of the issuer of the securities deposited in the TOB Issuer, the inability
of the TOB Issuer to obtain liquidity support for the TOB Floaters, a substantial decline in the market value of the underlying securities
deposited in the TOB Issuer, or the inability of the sponsor or remarketing agent to remarket any TOB Floaters tendered by holders of