Company: RFMZ
Filing Date: 2025-03-07
Form Type: N-CSRS
Source: 0001398344-25-005064
Chunk: 13

Company: RiverNorth Flexible Municipal Income Fund II, Inc.
Filing Date: 2025-03-07
Form: N-CSRS
Chunk 13
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 the sponsor to remarket any TOB Floaters tendered to it by holders of the TOB Floaters.
In such an event, the TOB Floaters would be redeemed by the TOB Issuer at par (plus accrued interest) out of the proceeds from a sale
of the Underlying Securities deposited in the TOB Issuer. If this happens, the Fund would be entitled to the assets of the TOB Issuer,
if any, that remain after the TOB Floaters have been redeemed at par (plus accrued interest). If there are insufficient proceeds from
the sale of these Underlying Securities to redeem all of the TOB Floaters at par (plus accrued interest), the liquidity provider or holders
of the TOB Floaters would bear the losses on those securities and there would be no recourse to the Fund’s assets (unless the Fund
held a recourse TOB Residual).

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RiverNorth Flexible Municipal Income Fund II, Inc.

Pursuant to the Volcker Rule, to the extent that
the remarketing agent is a banking entity, it would not be able to repurchase tendered TOB Floaters for its own account upon a failed
remarketing. In the event of a failed remarketing, a banking entity serving as liquidity provider may loan the necessary funds to the
TOB Issuer to purchase the tendered TOB Floaters. The TOB Issuer, not the Fund, would be the borrower and the loan from the liquidity
provider will be secured by the purchased TOB Floaters now held by the TOB Issuer. However, the Fund would bear the risk of loss with
respect to any liquidity shortfall to the extent it entered into a reimbursement agreement with the liquidity provider.

The Fund accounts for TOB transactions as secured
borrowings. For financial reporting purposes, Underlying Securities that are deposited into a TOB Issuer are treated as investments of
the Fund, and are presented in the Fund’s Schedule of Investments. Outstanding TOB Floaters issued by a TOB Issuer are presented
as a liability at their face value as “Payable for Floating Rate Note Obligations” in the Fund’s Statement of Assets
and Liabilities. The face value of the TOB Floaters approximates the fair value of the floating rate notes. Interest income from the Underlying
Securities is recorded by the Fund on an accrual basis. Interest expense incurred on the