Company: RFMZ
Filing Date: 2025-09-05
Form Type: N-CSR
Source: 0001398344-25-017693
Chunk: 18

Company: RiverNorth Flexible Municipal Income Fund II, Inc.
Filing Date: 2025-09-05
Form: N-CSR
Chunk 18
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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 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 TO