Exhibit 7(b)
$250,000,000
MUNIYIELD FUND, INC.
(a Maryland corporation)
AUCTION MARKET PREFERRED STOCK ["AMPS"(R)]
900 Shares Series A 900 Shares Series C
900 Shares Series B 900 Shares Series D
1,400 Shares Series E
Liquidation Preference $50,000 Per Share
PURCHASE AGREEMENT
December 18, 1991
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281-1201
Dear Sirs:
MuniYield Fund, Inc., a Maryland corporation (the "Fund"), and Fund Asset
Management, Inc., a Delaware corporation (the "Adviser"), each confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriter") with respect to the sale by the Fund and the
purchase by the Underwriter of 900 shares of auction market preferred stock,
Series A, of the Fund (the "Series A AMPS"), 900 shares of auction market
preferred stock, Series B, of the Fund (the "Series B AMPS"), 900 shares of
auction market preferred stock, Series C, of the Fund (the "Series C AMPS"), 900
shares of auction market preferred stock, Series D, of the Fund (the "Series D
AMPS") and 1,400 shares of auction market preferred stock, Series E, of the Fund
(the "Series E AMPS") all with a par value of $.10 per share and a liquidation
preference of $50,000 per share plus an amount equal to accumulated but unpaid
dividends (whether or not earned or declared). The Series A AMPS, Series B AMPS,
Series C AMPS, Series D AMPS and Series E AMPS are herein collectively referred
to as the "Shares."
Prior to the purchase and public offering of the Shares by the
Underwriter, the Fund and the Underwriter, shall enter into an agreement
substantially in the form of Exhibit A hereto (the
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(R) Registered trademark of Merrill Lynch & Co., Inc.
"Pricing Agreement"). The Pricing Agreement may take the form of an exchange of
any standard form of written telecommunication between the Fund and the
Underwriter and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the Shares will be governed by this Agreement,
as supplemented by the Pricing Agreement. From and after the date of the
execution and delivery of the Pricing Agreement, this Agreement shall be deemed
to incorporate the Pricing Agreement.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a notification on Form N-8A of registration of the Fund as an
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act") and a registration statement on Form N-2 (No. 33-43264) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act, and the
rules and regulations of the Commission under the 1933 Act and the 1940 Act (the
"Rules and Regulations") and has filed such amendments to such registration
statement on Form N-2, if any, and such amended preliminary prospectuses as may
have been required to the date hereof. The Fund will prepare and file such
additional amendments thereto and such amended prospectuses as may hereafter be
required. Such registration statement (as amended at the time it becomes
effective, if applicable) and the prospectus constituting a part thereof
(including in each case the information, if any, deemed to be part thereof
pursuant to Rule 430A(b) of the Rules and Regulations), as from time to time
amended or supplemented pursuant to the 1933 Act, are hereinafter referred to as
the "Registration Statement" and the "Prospectus," respectively, except that if
any revised prospectus shall be provided to the Underwriter by the Fund for use
in connection with the offering of the Shares which differs from the Prospectus
on file at the Commission at the time the Registration Statement becomes
effective (whether such revised prospectus is required to be filed by the Fund
pursuant to Rule 497(b) or Rule 497(h) of the Rules and Regulations), the term
"Prospectus" shall refer to such revised prospectus from and after the time it
is first provided to the Underwriter for such use.
The Fund understands that the Underwriter proposes to make a public
offering of the Shares as soon as the Underwriter deems advisable after the
Registration Statement becomes effective and the Pricing Agreement has been
executed and delivered.
SECTION 1. Representations and Warranties. (a) The Fund and the Adviser
each severally represents and warrants to the Underwriter as of the date hereof
and as of the date of the Pricing Agreement (such later date being hereinafter
referred to as the "Representation Date") as follows:
(i) At the time the Registration Statement becomes effective and at
the Representation Date, the Registration Statement will comply in all
material respects with the requirements of the 1933 Act, the 1940 Act and
the Rules and Regulations and will not 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. At the
time the Registration Statement becomes effective, at the Representation
Date and at Closing Time as defined in Section 2, the Prospectus (unless
the term "Prospectus" refers to a prospectus which has been provided to
the Underwriter by the Fund for use in connection with the offering of the
Shares which differs from the Prospectus on file with the Commission at
the time the Registration Statement becomes effective, in which case at
the time it is first provided to the Underwriter for such use) will not
contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the
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statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Fund in writing
by the Underwriter expressly for use in the Registration Statement or
Prospectus.
(ii) The accountants who certified the statement of assets and
liabilities included in the Registration Statement are independent public
accountants as required by the 1933 Act and the Rules and Regulations.
(iii) The financial statements included in the Registration
Statement present fairly the financial position of the Fund as at the date
indicated and the results of its operations for the period specified; such
financial statements have been prepared in conformity with generally
accepted accounting principles; and the information in the Prospectus
under the headings "Description of Capital Stock" and "Portfolio
Composition" has been fairly presented.
(iv) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, of the Fund, or in the earnings, business affairs
or business prospects of the Fund, whether or not arising in the ordinary
course of business, (B) there have been no transactions entered into by
the Fund which are material to the Fund other than those in the ordinary
course of business and (C) except for regular monthly dividends on the
outstanding shares of common stock, par value $.10 per share ("Common
Shares") of the Fund, there has been no dividend or distribution of any
kind declared, paid or made by the Fund or any class of its capital stock.
(v) The Fund has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Maryland, with
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement; the Fund
is duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required; and the Fund has no subsidiaries.
(vi) The Fund is registered with the Commission under the 1940 Act
as a closed-end, non-diversified management investment company, and no
order of suspension or revocation of such registration has been issued or
proceedings therefor initiated or threatened by the Commission.
(vii) The authorized, issued and outstanding capital stock of the
Fund is as set forth in the Prospectus under the caption "Description of
Capital Stock"; the outstanding Common Shares have been duly authorized
and validly issued and are fully paid and non-assessable; the Shares have
been duly authorized for issuance and sale to the Underwriter pursuant to
this Agreement and, when issued and delivered by the Fund pursuant to this
Agreement against payment of the consideration set forth in the Pricing
Agreement, will be validly issued and fully paid and nonassessable; the
Common Shares and the Shares conform in all material respects to all
statements relating thereto contained
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in the Registration Statement; and the issuance of the Shares to be
purchased by the Underwriter is not subject to preemptive rights.
(viii) The Fund is not in violation of its charter, as amended (the
"Charter") or by-laws, as amended (the "By-Laws") or in default in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or by
which it or its properties may be bound; and the execution and delivery of
this Agreement, the Pricing Agreement and the Investment Advisory
Agreement, the Custodian Agreement, the Auction Agent Agreement and the
Depository Agreement referred to in the Registration Statement (the
"Advisory Agreement," "Auction Agreement," "Custodian Agreement" and
"Depository Agreement," respectively), and the consummation of the
transactions contemplated herein and therein, will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Fund pursuant to any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Fund is a party or by which
it may be bound or to which any of the property or assets of the Fund is
subject, nor will such action result in any violation of the provisions of
the Charter or By-laws of the Fund or, to the best knowledge of the Fund
and the Adviser, any law, administrative regulation or administrative or
court decree; and no consent, approval, authorization or order of any
court or governmental authority or agency is required for the consummation
by the Fund of the transactions contemplated by this Agreement, the
Pricing Agreement, the Advisory Agreement, the Custodian Agreement, the
Auction Agreement and the Depository Agreement, except such as has been
obtained under the 1940 Act or as may be required under the 1933 Act or
state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriter.
(ix) The Fund owns or possesses or has obtained all material
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease or own, as the case may be, and to
operate its properties and to carry on its businesses as contemplated in
the Prospectus and the Fund has not received any notice of proceedings
relating to the revocation or modification of any such licenses, permits,
covenants, orders, approvals or authorizations.
(x) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Fund or the Adviser, threatened against or affecting, the
Fund, which might result in any material adverse change in the condition,
financial or otherwise, business affairs or business prospects of the
Fund, or might materially and adversely affect the properties or assets of
the Fund; and there are no material contracts or documents of the Fund
which are required to be filed as exhibits to the Registration Statement
by the 1933 Act, the 1940 Act or by the Rules and Regulations which have
not been so filed.
(xi) The Fund owns or possesses, or can acquire on reasonable terms,
adequate trademarks, service marks and trade names necessary to conduct
the business now operated by it, and the Fund has not received any notice
of infringement of or conflict with asserted rights of others with respect
to any trademarks, service marks and trade names which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling
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or finding, would materially and adversely affect the conduct of the
business, operations, financial condition or income of the Fund.
(xii) The Fund intends to, and will, direct the investment of the
proceeds of the offering described in the Registration Statement in such a
manner as to comply with the requirements of Subchapter M of the Internal
Revenue Code of 1986, as amended ("Subchapter M of the Code"), and intends
to qualify as a regulated investment company under Subchapter M of the
Code.
(xiii) This Agreement, the Pricing Agreement, the Advisory Agreement
and the Custodian Agreement have each been duly authorized, executed and
delivered by the Fund and each complies with all applicable provisions of
the 1940 Act.
(xiv) The Auction Agreement and the Depository Agreement have each
been duly authorized for execution and delivery by the Fund and, when
executed and delivered by the Fund, will constitute a valid and binding
obligation of the Fund, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization or other laws
relating to or affecting creditors' rights and to general equity
principles.
(b) The Adviser represents and warrants to the Underwriter as of the date
hereof and as of the Representation Date as follows:
(i) The Adviser has been duly incorporated under the laws of the
State of Delaware with corporate power and authority to conduct its
business as described in the Prospectus.
(ii) The Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and
is not prohibited by the Advisers Act or the 1940 Act or the rules and
regulations under such acts from acting under the Advisory Agreement for
the Fund as contemplated by the Prospectus.
(iii) This Agreement has been duly authorized, executed and
delivered by the Adviser; the Advisory Agreement is in full force and
effect and constitutes a valid and binding obligation of the Adviser,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization or other laws relating to or
affecting creditors' rights and to general equity principles; and neither
the execution and delivery of this Agreement nor the performance by the
Adviser of its obligations hereunder or under the Advisory Agreement will
conflict with, or result in a breach of any of the terms and provisions
of, or constitute, with or without the giving of notice or lapse of time
or both, a default under, any agreement or instrument to which the Adviser
is a party or by which it is bound, or any law, order, rule or regulation
applicable to it of any jurisdiction, court, federal or state regulatory
body, administrative agency or other governmental body, stock exchange or
securities association having jurisdiction over the Adviser or its
respective properties or operations.
(iv) The Adviser has the financial resources available to it
necessary for the performance of its services and obligations as
contemplated in the Prospectus.
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(c) Any certificate signed by any officer of the Fund or the Adviser and
delivered to the Underwriter shall be deemed a representation and warranty by
the Fund or the Adviser, as the case may be, to the Underwriter as to the
matters covered thereby.
SECTION 2. Sale and Delivery to the Underwriter; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Fund agrees to
sell the Shares to the Underwriter and the Underwriter agrees to purchase the
Shares from the Fund, at the price per share set forth in the Pricing Agreement.
(i) If the Fund has elected not to rely upon rule 430A under the
Rules and Regulations, the initial public offering price and the purchase
price per share to be paid by the Underwriter for the Shares each has been
determined and set forth in the Pricing Agreement, dated the date hereof,
and an amendment to the Registration Statement and the Prospectus will be
filed before the Registration Statement becomes effective.
(ii) If the Fund has elected to rely upon rule 430A under the Rules
and Regulations, the purchase price per share to be paid by the
Underwriter for the Shares shall be an amount equal to the initial public
offering price, less an amount per share to be determined by agreement
between the Underwriter and the Fund. The initial public offering price
per share shall be a fixed price to be determined by agreement between the
Underwriter and the Fund. The initial public offering price and the
purchase price, when so determined, shall be set forth in the Pricing
Agreement. In the event that such prices have not been agreed upon and the
Pricing Agreement has not been executed and delivered by all parties
thereto by the close of business on the fourth business day following the
date of this Agreement, this Agreement shall terminate forthwith, without
liability of any party to any other party, except as provided in Section
5, unless otherwise agreed to by the Fund, the Adviser and the
Underwriter.
(b) Payment of the purchase price for, and delivery of certificates for,
the Shares shall be made at the office of Brown & Wood, One World Trade Center,
New York, New York 10048-0557 or at such other place as shall be agreed upon by
the Underwriter and the Fund, at 10:00 A.M. on the fifth business day following
the date the Registration Statement becomes effective (or, if the Fund has
elected to rely upon rule 430A under the Rules and Regulations, the fifth
business day after execution of the Pricing Agreement), or such other time not
later than ten business days after such date as shall be agreed upon by the
Underwriter and the Fund (such time and date of payment and delivery being
herein called "Closing Time"). Payment shall be made to the Fund by Federal
funds check or checks or similar same-day funds and payable to the order of the
Fund, against delivery to the Underwriter of the certificates for the Shares to
be purchased by it. The Series A Shares, Series B Shares, Series C Shares,
Series D Shares and Series E Shares shall each be represented by a certificate
registered in the name of Cede & Co., as nominee for The Depository Trust
Company. The certificates for the Shares will be made available for examination
by the Underwriter not later than 10:00 A.M. on the last business day prior to
Closing Time.
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SECTION 3. Covenants of the Fund. The Fund covenants with the Underwriter
as follows:
(a) The Fund will use its best efforts (i) to cause the Registration
Statement to become effective under the 1933 Act, and will advise the
Underwriter promptly as to the time at which the Registration Statement and any
amendments thereto (including any post-effective amendment) becomes so effective
and (ii) if required, to cause the issuance of any orders exempting the Fund
from any provisions of the 1940 Act and will advise the Underwriter promptly as
to the time at which any such orders are granted.
(b) The Fund will notify the Underwriter immediately, and confirm the
notice in writing, (i) of the effectiveness of the Registration Statement and
any amendments thereto (including any post-effective amendment), (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose and
(v) of the issuance by the Commission of an order of suspension or revocation of
the notification on Form N-8A of registration of the Fund as an investment
company under the 1940 Act or initiation of any proceeding for that purpose. The
Fund will make every reasonable effort to prevent the issuance of any stop order
described in subsection (iv) hereunder or any order of suspension or revocation
described in subsection (v) hereunder and, if any stop order or order of
suspension or revocation is issued, to obtain the lifting thereof at the
earliest possible moment.
(c) The Fund will give the Underwriter notice of its intention to file any
amendment to the Registration Statement (including any post-effective amendment)
or any amendment or supplement to the Prospectus (including any revised
prospectus which the Fund proposes for use by the Underwriter in connection with
the offering of the Shares which differs from the prospectus on file at the
Commission at the time the Registration Statement becomes effective, whether
such revised prospectus is required to be filed pursuant to Rule 497 (b) or rule
497 (h) of the Rules and Regulations) whether pursuant to the 1940 Act, the 1933
Act, or otherwise, and will furnish the Underwriter with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement to which the Underwriter or counsel for the Underwriter shall
reasonably object.
(d) The Fund will deliver to the Underwriter, as soon as practicable, two
signed copies of the registration statement as originally filed and of each
amendment thereto, in each case with two sets of the exhibits filed therewith,
and will also deliver to the Underwriter a conformed copy of the registration
statement as originally filed and of each amendment thereto (but without
exhibits to the registration statement or to any such amendment) for the
Underwriter.
(e) The Fund will furnish to the Underwriter, from time to time during the
period when the Prospectus is required to be delivered under the 1933 Act, such
number of copies of the Prospectus (as amended or supplemented) as the
Underwriter may reasonably request for the purposes contemplated by the 1933 Act
or the Rules and Regulations.
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(f) If any event shall occur as a result of which it is necessary, in the
opinion of counsel for the Underwriter, to amend or supplement the Prospectus in
order to make the Prospectus not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, the Fund will forthwith
amend or supplement the Prospectus by preparing and furnishing to the
Underwriter a reasonable number of copies of an amendment or amendments of, or a
supplement or supplements to, the Prospectus (in form and substance satisfactory
to counsel for the Underwriter), so that, as so amended or supplemented, the
Prospectus will not contain 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 existing at the time the Prospectus is delivered to a
purchaser, not misleading.
(g) The Fund will endeavor, in cooperation with the Underwriter, to
qualify the Shares for offering and sale under the applicable securities laws of
such states and other jurisdictions of the United States as the Underwriter may
designate, and will maintain such qualifications in effect for a period of not
less than one year after the date hereof. The Fund will file such statements and
reports as may be required by the laws of each jurisdiction in which the Shares
have been qualified as above provided.
(h) The Fund will make generally available to its security holders as soon
as practicable, but not later than 60 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 of the Rules and Regulations) covering a twelve-month period beginning not
later than the first day of the Fund's fiscal quarter next following the
"effective" date (as defined is said Rule 158) of the Registration Statement.
(i) Between the date of this Agreement and the termination of any trading
restrictions or Closing time, whichever is later, the Fund will not, without
your prior consent, offer or sell or enter into any agreement to sell any equity
or equity related securities of the Fund other than the Shares and Common Shares
issued in reinvestment of dividends or distributions.
(j) If, at the time that the Registration Statement becomes effective, any
information shall have been omitted therefrom in reliance upon Rule 430A of the
Rules and Regulations, then immediately following the execution of the Pricing
Agreement, the Fund will prepare and file or transmit for filing with the
Commission in accordance with such Rule 430A and Rule 497(h) of the Rules and
Regulations, copies of an amended Prospectus, or, if required by such Rule 430A,
a post-effective amendment to the Registration Statement (including an amended
Prospectus) containing all information so omitted.
(k) The Fund will use its best efforts to maintain its qualification as a
regulated investment company under Subchapter M of the Code.
SECTION 4. Covenants of the Underwriter. The Underwriter covenants and
agrees with the Fund as follows:
(a) It will sell Shares only to a person who has agreed to execute and
deliver or who has already executed and delivered a Master Purchaser's Letter
(as defined in the Prospectus) in accordance with the terms of the Prospectus.
(b) No later than Closing Time, it will execute and deliver a Master
Purchaser's Letter in accordance with the terms of the Prospectus.
8
(c) No later than the second business day succeeding Closing Time, it will
provide the Fund and the Auction Agent (as defined in the Prospectus) with a
list of the persons to whom it has sold Shares, the number of Shares sold to
each such person and the number of Shares it is holding as of the date of such
notice.
SECTION 5. Payment of Expenses. The Fund will pay all expenses incident to
the performance of its obligations under this Agreement, including, but not
limited to, expenses relating to (i) the printing and filing of the registration
statement as originally filed and of each amendment thereto, (ii) the
preparation, issuance and delivery of the certificates for the Shares to the
Underwriter, (iii) the fees and disbursements of the Fund's counsel and
accountants, (iv) the qualification of the Shares under securities laws in
accordance with the provisions of Section 3 (g) of this Agreement, including
filing fees and any fees or disbursements of counsel for the Underwriter in
connection therewith and in connection with the preparation of the Blue Sky
Survey, (v) the printing and delivery to the Underwriter of copies of the
registration statement as originally filed and of each amendment thereto, of the
preliminary prospectuses, and of the Prospectus and any amendments or
supplements thereto, (vi) the printing and delivery to the Underwriter of copies
of the Blue Sky Survey and (vii) the fees charged by rating agencies for the
rating of the Shares.
If this Agreement is terminated by the Underwriter in accordance with the
provisions of Section 6 or Section 10(a)(i); the Fund or the Adviser shall
reimburse the Underwriter for all of their out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriter. In the event
the transactions contemplated hereunder are not consummated, the Adviser agrees
to pay all of the costs and expenses set forth in the first paragraph of this
Section 5 which the Fund would have paid if such transactions had been
consummated.
SECTION 6. Conditions of Underwriter's Obligations. The obligations of the
Underwriter hereunder are subject to the accuracy of the representations and
warranties of the Fund and the Adviser herein contained, to the performance by
the Fund and the Adviser of their respective obligations hereunder, and to the
following further conditions:
(a) The Registration Statement shall have become effective not later than
5:30 P.M., New York City time, on the date hereof or at such later time and date
as may be approved by the Underwriter, and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by the
Commission. If the Fund has elected to rely upon Rule 430A of the Rules and
Regulations, the price of the Shares and any price-related information
previously omitted from the effective Registration Statement pursuant to such
Rule 430A shall have been transmitted to the Commission for filing pursuant to
Rule 497(h) of the Rules and Regulations within the prescribed time period, and
prior to Closing Time the Fund shall have provided evidence satisfactory to the
Underwriter of such timely filing, or a post-effective amendment providing such
information shall have been promptly filed and declared effective in accordance
with the requirements of Rule 430A of the Rules and Regulations.
(b) At Closing Time, the Underwriter shall have received:
(i) The favorable opinion, dated as of Closing Time, of Brown &
Wood, counsel for the Fund and the Underwriter, to the effect that:
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(1) The Fund has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Maryland.
(2) The Fund has corporate power and authority to own, lease
and operate its properties and conduct its business as described in
the Prospectus.
(3) The Fund is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, except where the failure to so
qualify would not have a material adverse effect on the condition,
financial or otherwise, business affairs or business prospects of
the Fund.
(4) The outstanding Common Shares have been duly authorized
and validly issued and are fully paid and non-assessable.
(5) The Shares have been duly authorized for issuance and sale
to the Underwriter pursuant to this Agreement and, when issued and
delivered by the Fund pursuant to this Agreement against payment of
the consideration set forth in the Pricing Agreement, will be
validly issued and fully paid and non-assessable; the issuance of
the Shares is not subject to preemptive or other similar rights; and
the authorized capital stock conforms in all material respects to
the description thereof in the Registration Statement.
(6) This Agreement and the Pricing Agreement each has been
duly authorized, executed and delivered by the Fund and each
complies with all applicable provisions of the 1940 Act.
(7) The Registration Statement is effective under the 1933 Act
and, to the best of their knowledge and information, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have
been instituted, are pending or are contemplated.
(8) At the time the Registration Statement became effective
and at the Representation Date, the Registration Statement (other
than the financial statements included therein, as to which no
opinion need be rendered) complied as to form in all material
respects with the requirements of the 1933 Act, the 1940 Act and the
Rules and Regulations.
(9) To the best of their knowledge and information, there are
no legal or governmental proceedings pending or threatened against
the Fund which are required to be disclosed in the Registration
Statement, other than those disclosed therein.
(10) To the best of their knowledge and information, there are
no contracts, indentures, mortgages, loan agreements, notes, leases
or other instruments of the Fund required to be described or
referred to in the Registration Statement or to be filed as exhibits
thereto other than those described or referred to therein or filed
as exhibits thereto, the descriptions thereof or references thereto
are correct, and no default exists in the due performance or
observance of any
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material obligation, agreement, covenant or condition contained in
any contract, indenture, loan agreement, note or lease so described,
referred to or filed.
(11) No consent, approval, authorization or order of any court
or governmental authority or agency is required in connection with
the sale of the Shares to the Underwriter, except such as has been
obtained under the 1933 Act, the 1940 Act or the Rules and
Regulations or such as may be required under state securities laws;
and to the best of their knowledge and information, the execution
and delivery of this Agreement, the Pricing Agreement, the Advisory
Agreement, the Custodian Agreement, the Auction Agreement and the
Depository Agreement and the consummation of the transactions
contemplated herein and therein will not conflict with or constitute
a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Fund pursuant to any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the Fund is
a party or by which it may be bound or to which any of the property
or assets of the Fund is subject, nor will such action result in any
violation of the provisions of the Charter or By-Laws of the Fund,
or any law, administrative regulation or administrative or court
decree.
(12) The Advisory Agreement and the Custodian Agreement have
each been duly authorized, executed and delivered by the Fund and
each complies with all applicable provisions of the 1940 Act.
(13) The Fund is registered with the Commission under the 1940
Act as a closed-end non-diversified management investment company,
and all required action has been taken by the Fund under the 1933
Act, the 1940 Act and the Rules and Regulations to make the public
offering and consummate the sale of the Shares pursuant to this
Agreement; the provisions of the Charter and By-Laws of the Fund
comply as to form in all material respects with the requirements of
the 1940 Act; and, to the best of their knowledge and information,
no order of suspension or revocation of such registration under the
1940 Act, pursuant to Section 8(e) thereof, has been issued or
proceedings therefor initiated or threatened by the Commission.
(14) The information in the Prospectus under the caption
"Taxes" to the extent that it constitutes matters of law or legal
conclusions, has been reviewed by them and is correct in all
material respects.
(15) The Auction Agreement and the Depository Agreement each
have been duly authorized, executed and delivered by the Fund and
each constitutes a valid and binding obligation of the Fund,
enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization or other laws
relating to or affecting creditors' rights and to general equity
principles.
(ii) The favorable opinion, dated as of Closing Time, of Philip L.
Kirstein, Esq., General Counsel to the Adviser, in form and substance
satisfactory to counsel for the Underwriter, to the effect that:
11
(1) The Adviser has been duly organized as a corporation under
the laws of the State of Delaware with corporate power and authority
to conduct its business as described in the Registration Statement
and the Prospectus.
(2) The Adviser is duly registered as an investment adviser
under the Advisers Act and is not prohibited by the Advisers Act or
the 1940 Act or the rules and regulations under such Acts from
acting under the Advisory Agreement for the Fund as contemplated by
the Prospectus.
(3) This Agreement has been duly authorized, executed and
delivered by the Adviser; the Advisory Agreement is in full force
and effect and constitutes a valid and binding obligation of the
Adviser, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization or other laws
relating to or affecting creditors' rights and to general equity
principles; and to the best of his knowledge and information,
neither the execution and delivery of this Agreement or the Advisory
Agreement nor the performance by the Adviser of its obligations
hereunder or thereunder will conflict with, or result in a breach
of, any of the terms and provisions of, or constitute, with or
without giving notice or lapse of time or both, a default under, any
agreement or instrument to which it is a party or by which the
Adviser is bound, or any law, order, rule or regulation applicable
to the Adviser of any jurisdiction, court, Federal or state
regulatory body, administrative agency or the governmental body,
stock exchange or securities association have jurisdiction over the
Adviser or its respective properties or operations.
(4) To the best of his knowledge and information, the
description of the Adviser in the Registration Statement and the
Prospectus does not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(iii) In giving their opinion required by subsection (b)(i) of this
Section, Brown & Wood shall additionally state that nothing has come to
their attention that would lead them to believe that the Registration
Statement (excluding the financial statements and financial schedules
included therein, as to which such counsel need express no belief), at the
time it became effective or at the Representation Date, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus (except for the financial statements
and financial schedules included therein as to which such counsel need
express no belief), at the Representation Date (unless the term
"Prospectus" refers to a prospectus which has been provided to the
Underwriter by the Fund for use in connection with the offering of the
Shares which differs from the Prospectus on file at the Commission at the
time the Registration Statement becomes effective, in which case at the
time it is first provided to the Underwriter for such use) or at Closing
Time, included an untrue statement of a material fact or omitted 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. In
giving their opinion, Brown & Wood may rely, as to all matters governed by
the law of the State of Maryland, upon the opinion of Venable, Baetjer and
Howard and Brown & Wood may rely, as to matters of fact upon certificates
and written
12
statements of officers and employees of and accountants of the Fund and
the Adviser and of public officials.
(c) At Closing Time (i) the Registration Statement and the Prospectus
shall contain all statements which are required to be stated therein in
accordance with the 1933 Act, the 1940 Act and the Rules and Regulations and in
all material respects shall conform to the requirements of the 1933 Act, the
1940 Act and the Rules and Regulations and the Prospectus shall not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein in the light of the circumstances under which
they were made, not misleading and no action, suit or proceeding at law or in
equity shall be pending or, to the knowledge of the Fund or the Adviser,
threatened against the Fund or the Adviser which would be required to be set
forth in the Prospectus other than as set forth therein, (ii) there shall not
have been, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in the
condition, financial or otherwise, of the Fund or in its earnings, business
affairs or business prospects, whether or not arising in the ordinary course of
business, from that set forth in the Registration Statement and Prospectus,
(iii) the Adviser shall have the financial resources available to it necessary
for the performance of its services and obligations as contemplated in the
Registration Statement and the Prospectus, (iv) no proceedings shall be pending
or, to the knowledge of the Fund or the Adviser, threatened against the Fund or
the Adviser before or by any Federal, state or other commission, board or
administrative agency wherein an unfavorable decision, ruling or finding would
materially and adversely affect the business, property, financial condition or
income of either the Fund or the Adviser other than as set forth in the
Registration Statement and the Prospectus and (v) Moody's Investors Service,
Inc. ("Moody's") and Standard & Poor's corporation ("S&P") shall have confirmed
that the Shares have been rated "aaa" and AAA respectively, by such agencies;
and the Underwriter shall have received, at Closing Time, a certificate of the
President or Treasurer of the Fund and of the President or a Vice President of
the Adviser dated as of Closing Time, evidencing compliance with the appropriate
provisions of this subsection (c), together with true and correct copies of
letters from Moody's and S&P confirming their rating.
(d) At Closing Time, the Underwriter shall have received certificates,
dated as of Closing Time, (i) of the President or Treasurer of the Fund to the
effect that the representations and warranties of the Fund contained in Section
1(a) are true and correct with the same force and effect as though expressly
made at and as of Closing Time and (ii) of the President or a Vice President of
the Adviser contained in Sections 1(a) and (b) are true and correct with the
same force and effect as though expressly made at and as of Closing Time.
(e) At the time of execution of this Agreement, the Underwriters shall
have received from Deloitte & Touche a letter, dated the date hereof, in form
and substance satisfactory to the Underwriter, to the effect that:
(i) they are independent accountants with respects to the Fund
within the meaning of the 1933 Act and the Rules and Regulations;
(ii) in their opinion, the statement of assets and liabilities
examined by them and included in the Registration Statement complies as to
form in all material respects with the applicable accounting requirements
of the 1933 Act and 1940 Act and the Rules and Regulations;
13
(iii) they have performed specified procedures, not constituting an
audit, including a reading of the latest available interim financial
statements of the Fund, a reading of the minute books of the Fund,
inquiries of officials of the Fund responsible for financial accounting
matters and such other inquiries and procedures as may be specified in
such letter, and on the basis of such inquiries and procedures nothing
came to their attention that caused them to believe that (A) the unaudited
financial statements as of December 3, 1991 and for the period from
November 29, 1991 to December 3, 1991 included in the Registration
Statement do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations applicable to unaudited interim financial statements included
in registration statements or are not in conformity with generally
accepted accounting principles applied on a basis substantially consistent
with that of the audited financed statements included in the Registration
Statement and (B) at the date of the latest available financial statements
read by such accountants, or at a subsequent specified date not more than
five days prior to the date of this Agreement, there was any change in the
capital stock or net assets of the Fund as compared with amounts shown on
the statement of net assets included in the Prospectus; and
(iv) in addition to the procedures referred to in clause (iii)
above, they have performed other specified procedures, not constituting an
audit, with respect to certain amounts, percentages, numerical data,
financial information and financial statements appearing in the
Registration Statement, which have previously been specified by you and
which shall be specified in such letter, and have compared certain of such
items with, and have found such items to be in agreement with, the
accounting and financial records of the Fund.
(f) At Closing Time, the Underwriter shall have received from Deloitte &
Touche a letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (e) of this
Section, except that the "specified date" referred to shall be a date not more
than five days prior to Closing Time.
(g) At Closing Time, counsel for the Underwriter shall have been furnished
with such documents and opinions as they may reasonably require for the purpose
of enabling them to pass upon the issuance and sale of the Shares as herein
contemplated and to pass upon related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Fund and
the Adviser in connection with the organization and registration of the Fund
under the 1940 Act and the issuance and sale of the Shares as herein
contemplated shall be satisfactory in form and substance to the Underwriter and
counsel for the Underwriter.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriter by notice to the Fund at any time at or prior to Closing Time, and
such termination shall be without liability of any party to any other party
except as provided in Section 5.
14
SECTION 7. Indemnification. (a) The Fund and the Adviser, jointly and
severally, agree to indemnify and hold harmless the Underwriter and each person,
if any, who controls the Underwriter within the meaning of Section 15 of the
1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the information deemed to
be part of the Registration Statement pursuant to Rule 430A of the Rules
and Regulations, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability claim, damage and expense
whatsoever as incurred to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Fund; and
(iii) against any and all expense whatsoever (including the fees and
disbursements of counsel chosen by the Underwriter) reasonably incurred in
investigating, preparing or defending against any litigation or
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue
statement or omission, to the extent such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund by the
Underwriter expressly for use in the Registration Statement (or any amendment
thereto) or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(b) The Underwriter severally agrees to indemnify and hold harmless the
Fund and the Adviser, their respective directors, each of the Fund's officers
who signed the Registration Statement, and each person, if any, who controls the
Fund or the Adviser within the meaning of Section 15 of the 1933 Act, against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment or supplement
thereto) or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Fund by the Underwriter expressly for use in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
15
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. An indemnifying party may
participate at its own expense in the defense of such action. In no event shall
the indemnifying parties be liable for the fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances.
SECTION 8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 7 is for any reason held to be enforceable by the indemnified parties
although applicable in accordance with its terms, the Fund and the Underwriter
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement as incurred by
the Fund and the Underwriter, as incurred, in such proportions that the
Underwriter is responsible for that portion represented by the percentage that
the underwriting compensation payable pursuant to Section 2 hereof bears to the
initial public offering price appearing on the cover page of the Prospectus and
the Fund is responsible for the balance; provided, however, that no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Notwithstanding provisions of this
Section 8, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay in respect
of such losses, liabilities, claims, damages and expenses. For purposes of this
Section, each person, if any, who controls the Underwriter within the meaning of
Section 15, of the 1933 Act shall have the same rights to contribution as the
Underwriter, and each director of the Fund, each officer of the Fund who signed
the Registration Statement, and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Underwriter, and each director of the Fund, each officer of
the Fund who signed the Registration Statement, and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act shall have
the same rights to contribution as the Fund.
SECTION 9. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement and
the Pricing Agreement, or contained in certificates of officers of the Fund or
the Adviser submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the
Underwriter or controlling person, or by or on behalf of the Fund or the Adviser
and shall survive delivery of the Shares to the Underwriter.
SECTION 10. Termination of Agreement. (a) The Underwriter, by notice to
the Fund, may terminate this Agreement at any time or prior to Closing Time (i)
if there has been, since the date of this Agreement or since the respective
dates as of which information is given in the Registration Statement, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or the Adviser,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or any outbreak of hostilities or escalation thereof or other calamity or
crisis the effect of which is such as to make it, in the Underwriter's
16
judgment, impracticable to market the Shares or enforce contracts for the sale
of the Shares, or (iii) if trading in the Common Shares has been suspended by
the Commission or if trading generally on either the American Stock Exchange or
the New York Stock Exchange has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been
required, by either of said exchanges or by order of the Commission or any other
governmental authority, or if a banking moratorium has been declared by Federal
or New York authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 5.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of written telecommunication. Notices to the
Underwriter shall be directed to Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated at Merrill Lynch World Headquarters, North Tower,
World Financial Center, New York, New York 10281-1201, Attention: Theresa Lang,
Director; notices to the Fund or the Adviser shall be directed to each of them
at 800 Scudders Mill Road, Plainsboro, New Jersey, 08536, Attention: Arthur
Zeikel.
SECTION 12. Parties. This Agreement and the Pricing Agreement shall inure
to the benefit of and be binding upon the Underwriter, the Fund, the Adviser and
their respective successors. Nothing expressed or mentioned in this Agreement or
the Pricing agreement is intended or shall be construed to give any person, firm
or corporation, other than the parties hereto and their respective successors
and the controlling persons and officers and directors referred to in Sections 7
and 8 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and the Pricing Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
parties hereto and thereto and their respective successors, and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
Shares from the Underwriter shall be deemed to be a successor by reason merely
of such purchase.
SECTION 13. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by the laws of the State of New York applicable to
agreements made and to be performed in said State. Specified times of day refer
to New York City time.
17
If the foregoing is in accordance with your understanding of our
Agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriter, the Fund and the Adviser in accordance with its terms.
Very truly yours,
MUNIYIELD FUND, INC.
By:________________________________________
Authorized Officer
FUND ASSET MANAGEMENT, INC.
By:________________________________________
Authorized Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: ______________________________________
Vice President
Investment Banking
18
EXHIBIT A
$250,000,000
MUNIYIELD FUND, INC.
(a Maryland corporation)
AUCTION MARKET PREFERRED STOCK [AMPS(R)]
900 Shares Series A 900 Shares Series C
900 Shares Series B 900 Shares Series D
1,400 Shares Series E
Liquidation Preference $50,000 Per Share
PURCHASE AGREEMENT
December 18, 1991
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281-1201
Dear Sirs:
Reference is made to the Purchase Agreement, dated December 18, 1991 (the
"Purchase Agreement"), relating to the purchase by Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriter") of 900 shares of
auction market preferred stock, Series A, of MuniYield Fund, Inc. (the "Fund")
(the "Series A AMPS"), 900 shares of auction market preferred stock, Series B,
of the Fund (the "Series B AMPS"), 900 shares of auction market preferred stock,
Series C, of the Fund (the "Series C AMPS"), 900 shares of auction market
preferred stock, Series D, of the Fund (the "Series D AMPS") and 1,400 shares of
auction market preferred stock, Series E (the "Series E AMPS") of the Fund, all
with a par value of $.10 per share and a liquidation preference of $50,000 per
share plus an amount equal to accumulated but unpaid dividends (whether or not
earned or declared). The Series A AMPS, Series B AMPS, Series C AMPS, Series D
AMPS and Series E AMPS are collectively referred to as the "Shares."
- ----------
(R) Registered trademark of Merrill Lynch & Co., Inc.
Pursuant to Section 2 of the Purchase Agreement, the Fund agrees with the
Underwriter as follows:
1. The initial public offering price per share for the Shares,
determined as provided in said Section 2, shall be $50,000.
2. The purchase price per share for the Shares to be paid by the
Underwriter shall be $49,125, being an amount equal to the initial public
offering price set forth above less $875 per share.
3. The dividend rate for the Series A AMPS for the Initial Dividend
Period ending January 7, 1992 will be 5.000%, the dividend rate for the
Series B AMPS for the Initial Dividend Period ending January 14, 1992 will
be 4.900%, the dividend rate for the Series C AMPS for the Initial
Dividend Period ending January 21, 1992 will be 4.900%, the dividend rate
for the Series D AMPS for the Initial Dividend Period ending January 28,
1992 will be 4.875% and the dividend rate for the Series E AMPS for the
Initial Dividend Period ending January 7, 1992 will be 5.000%.
A-2
If the foregoing is in accordance with your understanding of our
Agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriter, the Fund and the Adviser in accordance with its terms.
Very truly yours,
MUNIYIELD FUND, INC.
By:________________________________________
Authorized Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: ______________________________________
Vice President
Investment Banking
A-3