Exhibit 7(b)
$40,000,000
MUNIYIELD PENNSYLVANIA FUND
(a Massachusetts business trust)
AUCTION MARKET PREFERRED SHARES(R) ["AMPS"(R)]
800 Shares
Liquidation Preference $50,000 Per Share
PURCHASE AGREEMENT
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November 20, 1992
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 Pennsylvania Fund, a Massachusetts business trust (the "Trust"),
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 800 shares of auction market preferred shares
(collectively, the "Shares"), par value $.10 per share, liquidation preference
$50,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared).
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 "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.
______________________
(R) Registered trademark of Merrill Lynch & Co., Inc.
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. 33-53616) 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
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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 statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
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however, that the representations and warranties in this subsection shall
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not apply to statements in or omissions from the Registration Statement or
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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, liabilities
and capital 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 Shares" 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 beneficial interest, 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 on any class of its shares of beneficial
interest.
(v) The Fund has been duly organized and is validly existing as a
voluntary association (commonly referred to as a business trust) in good
standing under the laws of The Commonwealth of Massachusetts with 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 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 shares of beneficial
interest of the Fund are as set forth in the Prospectus under the caption
"Description of Shares"; the outstanding Common Shares have been duly
authorized and validly issued and are fully paid and nonassessable; 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 Declaration of Trust 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 Declaration of Trust 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.
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(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 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
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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.
(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.
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(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 pet 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
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to the Fund by Federal fund check or checks or similar same-day funds and
payable to the order of the Fund, against delivery to the Underwriter of
the certificate for the Shares to be purchased by it. The Shares shall be
represented by a certificate registered in the name of Cede & Co., as
nominee for The Depository Trust Company. The certificate 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.
SECTION 3. Covenants of the Fund. The Fund covenants with the Underwriter as
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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
7
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.
(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 in 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.
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(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
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agrees with the Fund as follows:
(a) It will sell Shares only to a person who has agreed to execute and
deliver, whose Broker-Dealer (as defined in the Prospectus) 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.
(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
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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
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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:
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(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
LLP, counsel for the Fund and the Underwriter, to the effect that:
(1) The Fund has been duly organized and is validly existing as an
unincorporated association commonly referred to as a business trust under
the laws of The Commonwealth of Massachusetts.
(2) The Fund has 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 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 shares of beneficial interest
conform 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.
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(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 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 Declaration of Trust 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.
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(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
Declaration of Trust 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"
(other than information related to Pennsylvania law, as to which no opinion
need be rendered), 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 Stradley,
Ronon, Stevens & Young Special Counsel for the Fund, to the effect that:
(1) The information in the Prospectus under the caption "Taxes",
to the extent that it constitutes matters of Pennsylvania law or legal
conclusions or legal opinions involving matters of law, has been reviewed
by them and is correct in all material respects.
(2) Nothing has come to their attention that would lead them to
believe that the information in the Registration Statement under the
caption "Investment Objective and Policies -- Special Considerations
Relating to Pennsylvania Municipal Bonds" and in Appendix A entitled
"Economic Conditions in Pennsylvania", 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
information under such caption and in such appendix in the Prospectus, 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 they are 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.
12
(iii) 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:
(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 fully 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 of 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 regulations applicable to the Adviser 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.
(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.
(iv) 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
13
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
Commonwealth of Massachusetts, upon the opinion of Bingham, Dana & Gould, and
Brown & Wood may rely, as to matters of fact, upon certificates and written
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 to the effect that the representations and
warranties 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.
14
(e) At the time of execution of this Agreement, the Underwriter 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 respect to the Fund
within the meaning of the 1933 Act and the Rules and Regulations;
(ii) in their opinion, the statement of assets, liabilities and
capital 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;
(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 minutes 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
November 2, 1992 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 financial statements included in the
Registration Statement, and (B) during the period from November 2, 1992 to a
specified date not more than five days prior to the date of this Agreement,
there was any change in the shares of beneficial interest or net assets of the
Fund or any increase in the long-term debt of the Fund, as compared with amounts
shown on the unaudited financial statements included in the Registration
Statement, except for changes which the Registration Statement discloses have
occurred or may occur; 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
15
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.
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 expenses 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, or any 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
16
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(b) The Underwriter agrees to indemnify and hold harmless the Fund and its
trustees and the Adviser, and its 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).
(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 unenforceable 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 the provisions of
this Section 8, the Underwriter shall not 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
tights to contribution as the Underwriter, and each trustee of the Fund, each
officer of the Fund who signed the Registration Statement, and each person, if
any, who controls the Fund
17
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 a 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 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: Richard N. Doyle, Vice
President; 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
18
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 or trustees 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. Liability of Shareholders, Trustees and Officers. A copy of the
------------------------------------------------
Agreement and Declaration of Trust of the Fund is on file with the Secretary of
State of The Commonwealth of Massachusetts and notice is hereby given that this
Agreement has been executed on behalf of the Fund by an officer of the Fund as
an officer and not individually and the obligations of the Fund arising out of
this Agreement are not binding upon any of the trustees, officers or
shareholders of the Fund individually but are binding only upon the assets and
property of the Fund.
SECTION 14. 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.
19
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 PENNSYLVANIA FUND
By:
------------------------------------
Authorized Officer
FUND ASSET MANAGEMENT, INC.
By:
------------------------------------
Authorized Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By:
-------------------------------------------
Vice President
Investment Banking
20
EXHIBIT A
$40,000,000
MUNIYIELD PENNSYLVANIA FUND
(a Massachusetts business trust)
AUCTION MARKET PREFERRED SHARES(R) [AMPS(R)]
800 Shares
Liquidation Preference, $50,000 Per Share
PRICING AGREEMENT
-----------------
November 23, 1992
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 November 20, 1992
(the "Purchase Agreement"), relating to the purchase by Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriter") of 800
shares of auction market preferred shares of the Fund, par value $.10 per share,
liquidation preference $50,000 per share plus an amount equal to accumulated but
unpaid dividends (whether or not earned or declared) (collectively, the
"Shares") of MuniYield Pennsylvania Fund (the "Fund").
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.
- -------------------
(R) Registered trademark of Merrill Lynch & Co., Inc.
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 AMPS for the Initial Dividend Period
ending January 11, 1993 will be 3.15%.
2
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Fund a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriter and the Fund in accordance with its terms.
Very truly yours,
MUNIYIELD PENNSYLVANIA FUND
By:
----------------------------------
Authorized Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: Merrill Lynch, Pierce, Fenner and Smith
Incorporated
By:
----------------------------------
Vice President
Investment Banking
3