Exhibit (h)(1)
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ INSURED FUND
(a Massachusetts business trust)
$14,000,000
Auction Market Preferred Shares
560 Shares, Series C
(Liquidation Preference $25,000 Per Share)
PURCHASE AGREEMENT
Dated: , 2004
==============================================================================
TABLE OF CONTENTS
Page
SECTION 1. Representations and Warranties.................................3
(a) Representations and Warranties by the Fund and the Investment
Adviser.................................................................3
(b) Additional Representations of the Investment Adviser................9
(c) Officers' Certificates.............................................10
SECTION 2. Sale and Delivery to the Underwriter; Closing.................11
(a) Purchase Price.....................................................11
(b) Payment............................................................11
(c) Denominations; Registration........................................11
SECTION 3. Covenants of the Fund.........................................11
(a) Compliance with Securities Regulations and Commission Requests.....11
(b) Filing of Amendments...............................................12
(c) Delivery of Registration Statements................................12
(d) Delivery of Prospectus.............................................12
(e) Continued Compliance with Securities Laws..........................12
(f) Blue Sky Qualifications............................................13
(g) Rule 158...........................................................13
(h) Use of Proceeds....................................................13
(i) Subchapter M.......................................................13
(j) Restrictions on Sale of Shares.....................................13
(k) Reporting Requirements.............................................14
(l) Rule 462(b) Registration Statement.................................14
(m) No Manipulation of Market for the Shares...........................14
SECTION 4. Covenants of the Underwriter..................................14
SECTION 5. Payment of Expenses...........................................14
(a) Expenses...........................................................14
(b) Termination of Agreement...........................................15
SECTION 6. Conditions of Underwriter's Obligations.......................15
(a) Effectiveness of Registration Statement............................15
(b) Opinion of Counsel for the Fund and the Underwriter................15
(c) Opinion of Senior Attorney of the Investment Adviser...............15
(d) Opinion of Special Pennsylvania Counsel for the Fund...............15
i
Table of Contents
-----------------
(continued)
Page
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(e) Officers' Certificates.............................................16
(f) Accountant's Comfort Letter........................................16
(g) Bring-down Comfort Letter..........................................16
(h) Ratings Letters....................................................16
(i) Asset Coverage.....................................................17
(j) Additional Documents...............................................17
(k) Termination of Agreement...........................................17
SECTION 7. Indemnification...............................................17
(a) Indemnification of the Underwriter.................................17
(b) Indemnification of Fund, Investment Adviser, General Partner, and
Trustees and Officers..................................................18
(c) Actions against Parties, Notification..............................18
(d) Settlement without Consent if Failure to Reimburse.................19
SECTION 8. Contribution..................................................19
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery.................................................................20
SECTION 10. Termination of Agreement.....................................20
(a) Termination; General...............................................20
(b) Liabilities........................................................21
SECTION 11. Notices......................................................22
SECTION 12. Parties......................................................22
SECTION 13. GOVERNING LAW AND TIME.......................................22
SECTION 14. Effect of Headings...........................................22
ii
EXHIBITS
Exhibit A - Form of Opinion of Fund's Counsel
Exhibit B - Form of Opinion of Senior Attorney of the Investment Adviser
Exhibit C - Form of Opinion of Special Pennsylvania Counsel to the Fund
Exhibit D - Form of Accountant's Comfort Letter
iii
MUNIYIELD PENNSYLVANIA INSURED FUND
(a Massachusetts business trust)
$14,000,000
Auction Market Preferred Shares
560 Shares, Series C
(Liquidation Preference $25,000 Per Share)
PURCHASE AGREEMENT
, 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
MuniYield Pennsylvania Insured Fund, a Massachusetts business trust (the
"Fund"), and Fund Asset Management, L.P., a Delaware limited partnership (the
"Investment Adviser"), each confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated (the "Underwriter" or
"▇▇▇▇▇▇▇ ▇▇▇▇▇"), with respect to the issue and sale by the Fund and the
purchase by the Underwriter of 560 shares of Auction Market Preferred Shares,
Series C, par value $.05 per share and a liquidation of preference $25,000
per share plus an amount equal to accumulated but unpaid dividends thereon
(whether or not earned or declared), of the Fund (the "Shares").
The Fund understands that the Underwriter proposes to make a public
offering of the Shares as soon as the Underwriter deems advisable after this
Agreement has been executed and delivered.
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
"Investment Company Act"), and a registration statement on Form N-2 (Nos.
333-__________, 811-07136), including the related preliminary prospectus and
preliminary statement of additional information, for the registration of the
Shares under the Securities Act of 1933, as amended (the "1933 Act"), the
Investment Company Act, and the rules and regulations of the Commission under
the 1933 Act and the Investment Company Act (together, the "Rules and
Regulations"), and has filed such amendments to such registration statement on
Form N-2, if any, and such amended preliminary prospectuses and preliminary
statements of additional information as may have been required to the date
hereof. Promptly after execution and delivery of this Agreement, the Fund will
either (i) prepare and file a prospectus and statement of additional
information in accordance with the
provisions of paragraph (c) of Rule 497 ("Rule 497(c)") of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")
or a certificate in accordance with the provisions of paragraph (j) of Rule
497 ("Rule 497(j)") of the 1933 Act Regulations, (ii) prepare and file a
prospectus and statement of additional information in accordance with the
provisions of Rule 430A ("Rule 430A") of the 1933 Act Regulations and
paragraph (h) of Rule 497 ("Rule 497(h)") of the 1933 Act Regulations, or
(iii) if the Fund has elected to rely upon Rule 434 ("Rule 434") of the 1933
Act Regulations, prepare and file a term sheet (a "Term Sheet") in accordance
with the provisions of Rule 434 and Rule 497(h). The information included in
any such prospectus and statement of additional information or in any such
Term Sheet, as the case may be, that was omitted from such registration
statement at the time it became effective but that is deemed to be part of
such registration statement at the time it became effective (a) pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (b)
pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434
Information." Each prospectus and statement of additional information used
before such registration statement became effective, and any prospectus and
statement of additional information that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such
effectiveness and prior to the execution and delivery of this Agreement, is
herein called a "preliminary prospectus/statement." Such registration
statement, including the exhibits thereto and schedules thereto, if any, at
the time it became effective and including the Rule 430A Information and the
Rule 434 Information, as applicable, is herein called the "Registration
Statement." Any registration statement filed pursuant to Rule 462(b) of the
1933 Act Regulations is herein referred to as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The final prospectus and final
statement of additional information in the form first furnished to the
Underwriter for use in connection with the offering of the Shares is herein
called the "Prospectus." If Rule 434 is relied on, the term "Prospectus" shall
refer to the preliminary prospectus/statement dated , 2004, together with the
applicable Term Sheet and all references in this Agreement to the date of such
Prospectus shall mean the date of the applicable Term Sheet. For purposes of
this Agreement, all references to the Registration Statement, any preliminary
prospectus/statement, the Prospectus, or any Term Sheet or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus/statement, or the
Prospectus (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information
which is incorporated by reference in the Registration Statement, any
preliminary prospectus or the Prospectus as the case may be; and all
references in this Agreement to amendments or supplements to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to
mean and include the filing of any document under the Securities Exchange Act
of 1934, as amended (the "1934 Act"), which is incorporated by reference in
the Registration Statement, such preliminary prospectus/statement, or the
Prospectus, as the case may be.
2
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Fund and the Investment
Adviser. The Fund and the Investment Adviser each severally represents and
warrants to the Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof and as of the Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with the Underwriter, as
follows:
(i) Compliance with Registration Requirements. The Fund meets
the requirements for use of Form N-2 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Fund or the Investment Adviser, are contemplated by
the Commission, and any request on the part of the Commission for
additional information has been complied with. If required, the Fund has
received any orders exempting the Fund from any provisions of the
Investment Company Act.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time the Registration Statement, the
Rule 462(b) Registration Statement and any amendments or supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act, the Investment Company Act and the Rules
and Regulations and did not 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.
Neither the Prospectus, nor any amendments or supplements thereto, at
the time the Prospectus or any amendments or supplements thereto were
issued and at the Closing Time included or will include an untrue
statement of a material fact or omitted or will 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. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
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 in the Prospectus. If Rule 434 is used,
the Fund will comply with the requirements of Rule 434 and the
Prospectus shall not be "materially different," as such term is used in
Rule 434, from the prospectus included in the Registration Statement at
the time it became effective.
Each preliminary prospectus/statement and the prospectus and
statement of additional information filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 497(c) or Rule 497(h) under the 1933 Act,
complied when so filed in all material respects with the Rules and
Regulations and each preliminary prospectus/statement and the Prospectus
delivered to the Underwriter for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
3
If a Rule 462(b) Registration Statement is required in connection
with the offering and sale of the Shares, the Fund has complied or will
comply with the requirements of Rule 111, under the 1933 Act Regulations
relating to the payment of filing fees thereof.
(ii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules, if any, included or
incorporated by reference in the Registration Statement are independent
public accountants as required by the 1933 Act and the Rules and
Regulations.
(iii) Financial Statements. The financial statements, included or
incorporated by reference in the Registration Statement and Prospectus,
together with the related schedules and notes, present fairly the
financial position of the Fund at the date indicated and said statements
have been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the period
involved. The supporting schedules, if any, included or incorporated by
reference in the Registration Statement present fairly, in accordance
with GAAP, the information required to be stated therein. The
information in the Prospectus under the headings "Financial Highlights,"
"Capitalization," "Portfolio Composition" and "Description of Capital
Shares" has been fairly presented.
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
in the Prospectus, except as otherwise stated therein, (A) there has
been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
the Fund, whether or not arising in the ordinary course of business (a
"Material Adverse Effect"), (B) there have been no transactions entered
into by the Fund, other than those in the ordinary course of business,
which are material with respect to the Fund and (C) except for regular
monthly dividends on the outstanding common shares, par value $.10 per
share (the "Common Shares"), of the Fund and periodic distributions on
the outstanding Auction Market Preferred Shares, with a liquidation
preference of $25,000 per share (the "Outstanding AMPS"), of the
Fund pursuant to the terms of the Outstanding AMPS, and special year
end distributions on the Common Shares and Outstanding AMPS related to
the Fund's qualification as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended
("Subchapter M of the Code"), there has been no dividend or distribution
of any kind declared, paid or made by the Fund on any class of its
capital shares of beneficial interest.
(v) Good Standing of the Fund. 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 and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement; and the Fund is duly qualified to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to be
in good standing would not result in a Material Adverse Effect.
4
(vi) Subsidiaries. The Fund has no subsidiaries.
(vii) Officers and Trustees. No person is serving or acting as an
officer, trustee or investment adviser of the Fund except in accordance
with the provisions of the Investment Company Act and the Rules and
Regulations and the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and the rules and regulations of the Commission
promulgated under the Advisers Act (the "Advisers Act Rules and
Regulations"). Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no
director of the Fund is an "interested person" (as defined in the
Investment Company Act) of the Fund or an "affiliated person" (as
defined in the Investment Company Act) of the Underwriter.
(viii) Capitalization. The authorized, issued and outstanding
capital shares of the Fund is as set forth in the Prospectus under the
caption "Description of Capital Shares." All issued and outstanding
Common Shares and Outstanding AMPS have been duly authorized
and validly issued and are fully paid and non-assessable, except as
provided for in the Fund's declaration trust, and have been offered and
sold or exchanged by the Fund in compliance with all applicable laws
(including without limitation, federal and state securities laws); none
of the outstanding Common Shares or Outstanding AMPS of the Fund was
issued in violation of the preemptive or other similar rights of any
securityholder of the Fund.
(ix) Investment Company Act. The Fund is registered with the
Commission under the Investment Company 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, to the knowledge of the Fund and the
Investment Adviser, or threatened by the Commission.
(x) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Fund.
(xi) Authorization and Description of Shares. The Shares to be
purchased by the Underwriter from the Fund 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 this Agreement will be validly
issued, fully paid and non-assessable (except for certain possible
liability of shareholders described in the Prospectus under "Description
of Capital Shares"); the Shares conform to all statements relating
thereto contained in the Prospectus and such description conforms to the
rights set forth in the instruments defining the same; no holder of the
Shares will be subject to personal liability by reason of being such a
holder (except for certain possible liability of shareholders described
in the Prospectus under "Description of Capital Shares"); and the
issuance of the Shares is not subject to the preemptive or other similar
rights of any securityholder of the Fund.
(xii) Absence of Defaults and Conflicts. The Fund is not in
violation of its declaration of trust or by-laws or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any material contract,
5
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Fund is a party or
by which it or its properties may be bound, or to which any of the
property or assets of the Fund is subject (collectively, "Agreements and
Instruments"), except for such defaults that would not result in a
Material Adverse Effect; and the execution, delivery and performance of
this Agreement, the Investment Advisory Agreement, the Custody
Agreement, the Auction Agent Agreement and the Letter of Representations
referred to in the Registration Statement (as used herein, the "Advisory
Agreement", the "Custody Agreement," the "Auction Agreement" and the
"Letter of Representations," respectively) and the consummation of the
transactions contemplated in this Agreement and in the Registration
Statement (including the issuance and sale of the Shares and the use of
the proceeds from the sale of the Shares as described in the Prospectus
under the caption "Use of Proceeds") and compliance by the Fund with its
obligations under this Agreement have been duly authorized by all
necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or a default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Fund pursuant
to the Agreements and Instruments (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation
of the provisions of the declaration of trust or the by-laws of the
Fund, or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Fund or any of its
assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Fund.
(xiii) Authorization of Agreements. Each of this Agreement, the
Advisory Agreement and the Custody Agreement has been duly authorized,
executed and delivered by the Fund, and each complies with all
applicable provisions of the Investment Company Act. Each of the Auction
Agreement and the Letter of Representations has 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 equitable principles.
(xiv) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Fund or the Investment Adviser, threatened against
or affecting the Fund, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
properties or assets of the Fund or the consummation of the transactions
contemplated in this Agreement or the performance by the Fund of its
obligations hereunder; the aggregate of all pending legal or
governmental proceedings to
6
which the Fund is a party or of which any of its respective property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material
Adverse Effect.
(xv) Subchapter M Compliance. 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 Code, and intends to qualify as a
regulated investment company under Subchapter M of the Code.
(xvi) Distribution of Offering Materials. The Fund has not
distributed and, prior to the later to occur of (A) the Closing Time and
(B) completion of the distribution of the Shares, will not distribute
any offering material in connection with the offering and sale of the
Shares other than the Registration Statement, a preliminary prospectus,
the Prospectus or other materials, if any, permitted by the 1933 Act or
the Investment Company Act or the Rules and Regulations.
(xvii) Accounting Controls. The Fund maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with management's
general or specific authorization and with the applicable requirements
of the Investment Company Act, the Rules and Regulations and the Code;
(B) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets and to maintain
compliance with the books and records requirements under the Investment
Company Act and the Rules and Regulations; (C) access to assets is
permitted only in accordance with the management's general or specific
authorization; and (D) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xviii) Absence of Undisclosed Payments. To the Fund's knowledge,
neither the Fund nor any employee or agent of the Fund has made any
payment of funds of the Fund or received or retained any funds, which
payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus.
(xix) Material Agreements. This Agreement, the Advisory Agreement,
the Custody Agreement and the Auction Agent Agreement have each been
duly authorized by all requisite action on the part of the Fund and
executed and delivered by the Fund, as of the dates noted therein, and
each complies with all applicable provisions of the Investment Company
Act in all material respects. Assuming due authorization, execution and
delivery by the other parties thereto with respect to the Advisory
Agreement, the Custody Agreement and the Auction Agent Agreement, each
of the Advisory Agreement, the Custody Agreement and the Auction Agent
Agreement constitutes a valid and binding agreement of the Fund,
enforceable in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied
7
covenant of good faith and fair dealing and except as rights to
indemnification or contribution thereunder may be limited by federal or
state laws.
(xx) Registration Rights. There are no persons with registration
rights or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the
Fund under the 1933 Act.
(xxi) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto by the 1933 Act, the
Investment Company Act or the Rules and Regulations which have not been
so described and filed as required.
(xxii) Possession of Intellectual Property. The Fund owns or
possesses, has the right to use or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by the Fund, and the Fund has not
received any notice or is not otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of
the Fund therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xxiii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Fund of its
obligations hereunder, in connection with the offering, issuance or sale
of the Shares under this Agreement or the consummation of the
transactions contemplated by this Agreement, except such as have been
already obtained or as may be required under the 1933 Act, the 1934 Act
or the Investment Company Act or the Rules and Regulations and foreign
or state securities laws or under the rules of the NASD (formerly, the
National Association of Securities Dealers, Inc.).
(xxiv) Possession of Licenses and Permits. The Fund possesses such
permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies necessary
to conduct the business now operated by it; the Fund is in compliance
with the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, singly or in the aggregate,
have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be
in full force and effect would not have a Material Adverse Effect; and
the Fund has not received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the
8
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xxv) NYSE Listing. The Fund's Common Shares are duly listed on
the New York Stock Exchange ("NYSE").
(xxvi) Ratings. The Shares have been, or prior to the Closing Date
will be, assigned a rating of Aaa by ▇▇▇▇▇'▇ Investors Service, Inc.
("Moody's") and AAA by Standard & Poor's ("S&P").
(xxvii) Leverage. The Fund has no liability for borrowed money,
including under any reverse repurchase agreement.
(b) Additional Representations of the Investment Adviser. The
Investment Adviser represents and warrants to the Underwriter as of the date
hereof and as of the Representation Date as follows:
(i) Organization and Authority of Investment Adviser. The
Investment Adviser has been duly organized as a limited partnership
under the laws of the State of Delaware, with power and authority to
conduct its business as described in the Registration Statement and the
Prospectus.
(ii) Investment Advisers Act. The Investment Adviser is duly
registered as an investment adviser under the Investment Advisers Act of
1940, as amended (the "Investment Advisers Act"), and is not prohibited
by the Investment Advisers Act or the Investment Company Act, or the
rules and regulations under such acts, from acting under the Advisory
Agreement for the Fund as contemplated by the Registration Statement and
the Prospectus.
(iii) Description of Investment Adviser. The description of the
Investment Adviser in the Registration Statement and the Prospectus (and
any amendment or supplement to either of them) complied and complies in
all material respects with the provisions of the 1933 Act, the
Investment Company Act, the Advisers Act, the Rules and Regulations and
the Advisers Act Rules and Regulations and is true and correct and does
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
(iv) Capitalization. The Investment Adviser has the financial
resources available to it necessary for the performance of its services
and obligations as contemplated in the Registration Statement, the
Prospectus, this Agreement and under the Advisory Agreement.
(v) Authorization of Agreements. This Agreement has been duly
authorized, executed and delivered by the Investment Adviser; the
Advisory Agreement has been duly authorized, executed and delivered by
the Investment Adviser, and constitutes a valid and binding obligation
of the Investment Adviser, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization or
other
9
laws relating to or affecting creditors' rights and to general equitable
principles; and neither the execution and delivery of this Agreement or
the Advisory Agreement, nor the performance by the Investment 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 the giving of notice or the lapse of time or both, a default
under, any agreement or instrument to which the Investment Adviser is a
party or by which it is bound, the certificate of formation, the
operating agreement, or other organizational documents of the Investment
Adviser, or the Investment Adviser's knowledge by any law, order,
decree, 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 Investment Adviser or its respective properties or
operations; and no consent, approval, authorization or order of any
court or governmental authority or agency is required for the
consummation by the Investment Adviser of the transactions contemplated
by this Agreement and the Advisory Agreement, except as have been
obtained or may be required under the 1933 Act, the Investment Company
Act, the 1934 Act or state securities laws.
(vi) No Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred
any event which should reasonably be expected to have a material adverse
effect on the ability of the Investment Adviser to perform its
respective obligations under this Agreement and the Advisory Agreement.
(vii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Investment Adviser, threatened against or affecting
the Investment Adviser or any "affiliated person" of the Investment
Adviser (as such term is defined in the Investment Company Act) or any
partners, trustees, officers or employees of the foregoing, whether or
not arising in the ordinary course of business, which might reasonably
be expected to result in any material adverse change in the condition,
financial or otherwise, or earnings, business affairs or business
prospects of the Investment Adviser, materially and adversely affect the
properties or assets of the Investment Adviser or materially impair or
adversely affect the ability of the Investment Adviser to function as an
investment adviser or perform its obligations under the Advisory
Agreement, or which is required to be disclosed in the Registration
Statement and the Prospectus.
(viii) Absence of Violation or Default. The Investment Adviser is
not in violation of its certificate of formation, its operating
agreement or other organizational documents or in default under any
agreement, indenture or instrument, where such violation or default
would reasonably be expected to have a Material Adverse Effect on the
Investment Adviser's ability to function as an investment adviser or
perform its obligations under the Advisory Agreement.
(c) Officers' Certificates. Any certificate signed by any officer of
the Fund or any officer of the Investment Adviser delivered to the
Underwriter or to counsel for the Fund and the
10
Underwriter shall be deemed a representation and warranty by the Fund or the
Investment 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) Purchase Price. 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 to the Underwriter and the Underwriter agrees to
purchase from the Fund the Shares at the price per share set forth in Schedule
A.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Shares shall be made at the offices of Sidley ▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such
other place as shall be agreed upon by the Underwriter and the Fund, at 9:00
A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30
P.M. (Eastern time) on any given day) business day following the date hereof,
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 herein being referred to as "Closing Time").
Payment shall be made to the Fund by wire transfer of immediately
available funds to a bank account designated by the Fund, against delivery to
the Underwriter of certificates for the Shares to be purchased by it.
(c) Denominations; Registration. The Shares shall be represented by
certificates 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.
SECTION 3. Covenants of the Fund. The Fund covenants with the
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Fund, subject to Section 3(b), will comply with the requirements of Rule
430A or Rule 434, as applicable, and will notify the Underwriter immediately,
and confirm the notice in writing, (i) if any post-effective amendment to the
Registration Statement shall have become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (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 of any order preventing or suspending the use of
any preliminary prospectus/statement, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes, 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 Investment Company Act or the 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)
11
hereunder and, if any such stop order or order of suspension or revocation is
issued, to obtain the lifting thereof at the earliest possible moment. The
Fund will promptly effect the filings necessary pursuant to Rule 497(c), Rule
497(j) or Rule 497(h) and will take such steps as it deems necessary to
ascertain promptly whether the certificate transmitted for filing under Rule
497(j) or the form of prospectus and statement of additional information
transmitted for filing under Rule 497(c) or Rule 497(h) was received for
filing by the Commission and, in the event that it was not, it will promptly
file such certificate or prospectus and statement of additional information.
(b) Filing of Amendments. The Fund will give the Underwriter notice of
its intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment or filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus or
statement of additional information included in the Registration Statement at
the time it became effective or to the Prospectus, whether pursuant to the
Investment Company Act, the 1933 Act, or otherwise, and will furnish the
Underwriter with copies of any such documents a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not file or
use any such document to which the Underwriter or counsel to the Underwriter
and the Fund shall object.
(c) Delivery of Registration Statements. The Fund has furnished or
will deliver to the Underwriter and counsel to the Underwriter and the Fund,
without charge, signed copies of the notification of registration on Form N-8A
and Registration Statement as originally filed and of each amendment thereto,
(including exhibits filed therewith, or incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will also
deliver to the Underwriter a conformed copy, without charge, of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for the Underwriter. The copies of the Registration
Statement and each amendment thereto furnished to the Underwriter will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(d) Delivery of Prospectus. The Fund has delivered to the Underwriter,
without charge, as many copies of each preliminary prospectus/statement as the
Underwriter reasonably requested, and the Fund hereby consents to the use of
such copies for purposes permitted by the 1933 Act. The Fund will furnish to
the Underwriter, without charge, 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. The Prospectus and any amendments or supplements thereto furnished to
the Underwriter will be identical to the electronically transmitted copies
thereof field with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Fund will comply
with the 1933 Act, the Investment Company Act and the Rules and Regulations so
as to permit the completion of the distribution of the Shares as contemplated
in this Agreement and in the Prospectus. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Shares, any event shall occur or condition shall exist as a result of which it
is necessary, in the opinion of counsel to the Underwriter and the Fund, to
amend the Registration Statement or amend or supplement any Prospectus in
order that the Prospectus will
12
not include any untrue statements of material fact or omit to state a material
fact necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend or supplement any
Prospectus in order to comply with the requirements of the 1933 Act or the
1933 Act Regulations, the Fund will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Fund will
furnish to the Underwriter such number of copies of such amendment or
supplement as the Underwriter may reasonably request.
(f) Blue Sky Qualifications. The Fund will use its best efforts, in
cooperation with the Underwriter, to qualify the Shares for offering and sale
under the applicable securities laws of such states and other jurisdictions as
the Underwriter may designate and to maintain such qualifications in effect
for a period of not less than one year from the later of the effective date of
the Registration Statement and any Rule 462(b) Registration Statement;
provided, however, that the Fund shall not be obligated to file any general
consent to service of process or to qualify as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation
in respect of doing business in any jurisdiction in which it is not otherwise
so subject. In each jurisdiction in which the Shares have been so qualified,
the Fund will file such statements and reports as may be required by the laws
of such jurisdiction to continue such qualification in effect for a period of
not less than one year from the effective date of the Registration Statement
and any Rule 462(b) Registration Statement.
(g) Rule 158. The Fund will timely file such reports pursuant to the
1933 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Fund will use the net proceeds received by it
from the sale of the Shares in the manner specified in the Prospectus under
"Use of Proceeds."
(i) Subchapter M. The Fund will use its best efforts to maintain its
qualification as a regulated investment company under Subchapter M of the
Code.
(j) Restrictions on Sale of Shares. During a period of 180 days from
the date of the Prospectus, the Fund will not, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) directly or indirectly offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any senior security of the Fund, as defined
in Section 18 of the Investment Company Act, or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii)
enter into any swap or any other agreement or any transaction that transfers,
in whole or in part, directly or indirectly, the economic consequence of
ownership of senior securities, whether any such swap or transaction described
in clause (i) or (ii) above is to be settled by delivery of senior securities,
in cash or otherwise. The foregoing sentence shall not apply to (A) the Shares
to be sold hereunder or (B) transactions as contemplated in the Registration
Statement where the
13
Fund has segregated cash, cash equivalents or liquid securities having a market
value at all times at least equal to the amount of such senior securities.
(k) Reporting Requirements. The Fund, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to
the Investment Company Act and the 1934 Act within the time periods required
by the Investment Company Act and the Rules and Regulations and the 1934 Act
and the rules and regulations of the Commission thereunder, respectively.
(l) Rule 462(b) Registration Statement. If the Fund elects to rely
upon Rule 462(b), the Fund shall file a Rule 462(b) Registration Statement
with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Fund shall at the time of
filing either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the payment of
such fee pursuant to Rule 111(b) under the 1933 Act.
(m) No Manipulation of Market for the Shares. The Fund will not (a)
take, directly or indirectly, any action designed to cause or to result in, or
that might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Fund to facilitate the sale
or resale of the Shares, and (b) until the Closing Date (i) sell, bid for or
purchase the Shares or pay any person (other than the Underwriter) any
compensation for soliciting purchases of the Shares or (ii) pay or agree to
pay to any person any compensation for soliciting another to purchase any
other securities of the Fund (other than payments to broker-dealers in
connection with the auctions of the Outstanding AMPS).
SECTION 4. Covenants of the Underwriter. The Underwriter covenants and
agrees with the Fund that 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 listing of Existing Holders (as defined in the
Prospectus) of Shares, the number of shares held by each such Existing Holder
and the number of Shares it is holding as Underwriter as of the date of such
notice.
SECTION 5. Payment of Expenses.
(a) Expenses. The Fund will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriter of
this Agreement and such other documents as may be required in connection with
the offering, purchase, sale, issuance or delivery of the Shares, (iii) the
preparation, issuance and delivery of the certificates for the Shares to the
Underwriter, including any stock or other transfer taxes and any stamp or
other duties payable upon the sale, issuance or delivery of the Shares to the
Underwriter, (iv) the fees and disbursements of the Fund's counsel,
accountants and other advisers, (v) the qualification of the Shares under the
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel to
the Underwriter and the Fund in connection therewith, (vi) the printing and
delivery to the Underwriter of copies of each preliminary
prospectus/statement, any Term Sheets and of the Prospectus and any amendments
or supplements thereto, (vii) the fees and expenses of any
14
transfer agent or registrar for the Shares, and (viii) the fees charged by
rating agencies rating the Shares.
(b) Termination of Agreement. If this Agreement is terminated by the
Underwriter in accordance with the provisions of Section 6 or Section 10(a)(i)
hereof, the Fund or the Investment Adviser shall reimburse, or arrange for an
affiliate to reimburse, the Underwriter for all of its out-of-pocket expenses,
including the reasonable fees and disbursements of counsel to the Fund and the
Underwriter.
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 Investment Adviser contained in Section 1
hereof, or in the certificates of any officer of the Fund and the Investment
Adviser delivered pursuant to the provisions hereof, to the performance by the
Fund and the Investment Adviser of their respective covenants and obligations
hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement including any Rule 462(b) Registration Statement has become
effective 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 and any request
on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of counsel to the Underwriter and
the Fund. Either (i) a certificate has been filed with the Commission in
accordance with Rule 497(j) or a prospectus and statement of additional
information have been filed with the Commission in accordance with Rule
497(c), or (ii) a prospectus and statement of additional information
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 497(h) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with
the requirements of Rule 430A) or, if the Fund has elected to rely upon Rule
434, a Term Sheet shall have been filed with the Commission in accordance with
Rule 497(h).
(b) Opinion of Counsel for the Fund and the Underwriter. At Closing
Time, the Underwriter shall have received the favorable opinion, dated as of
Closing Time, of Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to the Fund and the
Underwriter, to the effect set forth in Exhibit A hereto. In giving their
opinion, Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP may rely as to matters involving the
laws of the Commonwealth of Massachusetts upon the opinion of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLP.
(c) Opinion of Senior Attorney of the Investment Adviser. At Closing
Time, the Underwriter shall have received the favorable opinion, dated as of
Closing Time, of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., General Counsel of the Investment
Adviser, or another senior attorney of the Investment Adviser, in form and
substance satisfactory to counsel to the Underwriter, to the effect set forth
in Exhibit B hereto and to such further effect as counsel to the Underwriter
may reasonably request.
(d) Opinion of Special Pennsylvania Counsel for the Fund. At Closing
Time, the Underwriter shall have received the favorable opinion, dated as of
Closing Time, of ▇▇▇▇▇▇▇▇
15
Ronon ▇▇▇▇▇▇▇ & Young, LLP, special Pennsylvania counsel to the Fund to the
effect set forth in Exhibit C hereto.
(e) Officers' Certificates. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Fund, whether or not arising in the ordinary course
of business, and the Underwriter shall have received (A) a certificate of the
President or a Vice President of the Fund, dated as of Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct
with the same force and effect as though expressly made at and as of Closing
Time, (iii) the Fund has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to Closing
Time, and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or, to the officer's knowledge, are contemplated by
the Commission and (B) a certificate of the President or a Vice President of
the Investment Adviser, dated as of Closing Time, to the effect that (i) there
has been no such material change, (ii) the representations and warranties in
Sections 1(a) and 1(b) hereof are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) the
Investment Adviser has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to Closing
Time and (iv) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Investment Adviser, whether or not arising in the ordinary
course of business.
(f) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Underwriter shall have received from ________________ a letter,
dated such date, in form and substance satisfactory to the Underwriter
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus, to the effect set forth in Exhibit D hereto and
to such further effect as counsel to the Underwriter may reasonably request.
(g) Bring-down Comfort Letter. At Closing Time, the Underwriter shall
have received from ________________ 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 three business days prior to Closing
Time.
(h) Ratings Letters. Subsequent to the execution and delivery of this
Agreement and prior to Closing Time, there shall not have occurred any
downgrading, nor shall any notice have been given of (i) any intended or
potential downgrading or (ii) any review or possible change that indicates
anything other than a stable outlook, in the rating accorded any securities of
or guaranteed by the Fund by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2) under
the 1933 Act; and prior to Closing Time, S&P and Moody's shall have confirmed by
letter that the Shares have been rated AAA and Aaa, respectively, by such
agencies.
16
(i) Asset Coverage. As of the Closing Date and assuming the receipt of
the net proceeds from the sale of the Shares, the 1940 Act AMPS Asset Coverage
and the AMPS Basic Maintenance Amount (each as defined in the Fund's
certificate of designation creating the Shares) each will be met.
(j) Additional Documents. At Closing Time, counsel to the Fund and the
Underwriter shall have been furnished with such documents and opinions as it
may reasonably require for the purpose of enabling it to pass upon the
issuance and sale of the Shares as herein contemplated, 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 in connection with the issuance and sale of the Shares as
herein contemplated shall be reasonably satisfactory in form and substance to
the Underwriter and counsel to the Fund and the Underwriter.
(k) Termination of Agreement. 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 and
except that Sections 1, 7, 8 and 9 shall survive any such termination and
remain in full force and effect.
SECTION 7. Indemnification.
(a) Indemnification of the Underwriter. The Fund and the Investment
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 or Section 25 of the 1934 Act and any
director, officer, employee or affiliate thereof 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 Rule
430A Information and the Rule 434 Information, 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 included in any preliminary
prospectus/statement 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 any 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,
provided that (subject to Section 7(d) below) any such settlement is
effected with the written consent of the indemnifying party; and
17
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Underwriter) reasonably incurred in investigating, preparing or
defending against any litigation, or any 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 shall 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), including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus/statement or the Prospectus (or any
amendment or supplement thereto).
(b) Indemnification of Fund, Adviser, General Partner, and Trustees
and Officers. The Underwriter agrees to indemnify and hold harmless the Fund,
the Investment Adviser, the trustees of the Fund, the general partner of the
Investment Adviser, each of the Fund's officers who signed the Registration
Statement, and each person, if any, who controls the Fund or the Investment
Adviser within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 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 thereto) including the Rule 430A Information and the Rule 434
Information, if applicable, or in any preliminary prospectus/statement 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/statement or the Prospectus (or any amendment or
supplement thereto).
(c) Actions against Parties, Notification. 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 such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 7(a) above, counsel to the indemnified parties shall be selected by
the Underwriter, and, in the case of parties indemnified pursuant to Section
7(b) above, counsel to the indemnified parties shall be selected by the Fund
and the Investment Adviser. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. 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. No indemnifying party shall, without the
prior written
18
consent of the indemnified parties, settle or compromise or consent to the
entry of any judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribution could be
sought under this Section 7 or Section 8 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of
any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 7(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 30 days
prior to such settlement being entered into and (iii) such indemnifying party
shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
SECTION 8. Contribution. If the indemnification provided for in Section
7 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Fund and the
Investment Adviser on the one hand and the Underwriter on the other hand from
the offering of the Shares pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Fund and
the Investment Adviser on the one hand and of the Underwriter on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Fund and the Investment Adviser on
the one hand and the Underwriter on the other hand in connection with the
offering of the Shares pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Shares pursuant to this Agreement (before deducting expenses) received by the
Fund, and the total underwriting commission received by the Underwriter, in
each case as set forth on the cover of the Prospectus, or, if Rule 434 is
used, the corresponding location on the Term Sheet, bear to the aggregate
initial public offering price of the Shares as set forth on such cover.
The relative fault of the Fund and the Investment Adviser on the one
hand and the Underwriter on the other hand shall be determined by reference
to, among other things, whether any such untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Fund and the Investment Adviser or by
19
the Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Fund, the Investment Adviser and the Underwriter agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in
this Section 8. The aggregate amount of losses, liabilities, claims, damages
and expenses incurred by an indemnified party and referred to above in this
Section 7 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon
any such untrue or alleged untrue statement or omission or alleged omission.
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 the
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Underwriter,
and each director of the Fund and the Investment Adviser, respectively, each
officer of the Fund who signed the Registration Statement and each person, if
any, who controls the Fund and the Investment Adviser within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, shall have the same
rights to contribution as the Fund and the Investment Adviser.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Fund or of the Investment
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
Investment Adviser and shall survive delivery of the Shares to the
Underwriter.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Underwriter may terminate this Agreement
by notice to the Fund, at any time at or prior to Closing Time (i) if there
has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or the Investment
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 the international financial markets, any
20
outbreak of hostilities or escalation thereof or other calamity or crisis or
any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Underwriter,
impracticable or inadvisable to market the Shares or to enforce contracts for
the sale of the Shares, or (iii) if trading in any securities of the Fund has
been suspended or materially limited by the Commission or the NYSE or such
other national securities exchange upon which the Fund's securities trade, or
if trading generally on the NYSE or the American Stock Exchange or in the
Nasdaq National Market System has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by any of said exchanges or by such
system or by order of the Commission, the NASD or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States or (iv) if a
banking moratorium has been declared by either Federal or New York
authorities.
(b) Liabilities. 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 hereof, and provided further that
Sections 1, 7, 8 and 9 shall survive such termination and remain in full force
and effect.
21
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 telecommunication. Notices to the
Underwriter shall be directed to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. Inc., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Equity Capital Markets; notices to the Fund and
the Adviser shall be directed to ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriter, the Fund, the Investment Adviser and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriter, the Fund, the Investment Adviser and their respective
successors and the controlling persons and officers, directors, trustees and
general partner 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 all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriter, the Fund and the Investment Adviser and
their respective successors, and said controlling persons and officers and
directors and 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 merely by reason of such
purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Liability of Shareholders, Trustees and Officers. This
Agreement is executed by or on behalf of the trustees of the Fund solely in
their capacity as such trustees, and shall not constitute their personal
obligation either jointly or severally in their individual capacities. No
trustee, officer or shareholder of the Fund shall be liable for any
obligations of the Fund under this instrument and the Fund shall be solely
liable therefor; all parties hereto shall look solely to the Fund property for
the payment of any claim, or the performance of any obligation, hereunder.
SECTION 15. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
22
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 and the Investment Adviser in accordance
with its terms.
Very truly yours,
MUNIYIELD PENNSYLVANIA INSURED
FUND
By:
------------------------------
Authorized Officer
FUND ASSET MANAGEMENT, L.P.
By: PRINCETON SERVICES, INC.,
General Partner
By:
------------------------------
Authorized Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By:
-------------------------------
Authorized Signatory
23
SCHEDULE A
----------
MUNIYIELD PENNSYLVANIA INSURED FUND
(a Massachusetts business trust)
$14,000,000
Auction Market Preferred Shares
560 Shares, Series C
(Liquidation Preference $25,000 per share)
1. The initial public offering price per share for the Shares,
determined as provided in Section 2 hereof shall be $25,000 plus accumulated
dividends, if any, from the date of original issue.
2. The purchase price per share for the Shares to be paid by the
Underwriter shall be $24,750 plus accumulated dividends, if any, from the date
of original issue, being an amount equal to the initial public offering price
set forth above less $250 per share.
3. The dividend rate for the Shares for the initial dividend
period ending _________________, 2004 shall be ____%.
24
Exhibit A
FORM OF OPINION OF FUND'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 6(b)
1. The Fund has been duly organized and is validly existing as an
association (commonly referred to as a business trust) in good standing under
the laws of the Commonwealth of Massachusetts.
2. The Fund has power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and to
enter into and perform its obligations under the Purchase Agreement.
3. The Fund is duly qualified to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Fund,
whether or not arising in the ordinary course of business (a "Material Adverse
Effect").
4. The authorized, issued and outstanding capital shares of the Fund is as
set forth in the Prospectus under the caption "Description of Capital Shares."
The outstanding shares of Common Shares of the Fund and the Outstanding AMPS
have been duly authorized and validly issued and are fully paid and
nonassessable.
5. The Shares to be purchased by the Underwriter from the Fund have been
duly authorized for issuance and sale to the Underwriter pursuant to the
Purchase Agreement and, when issued and delivered by the Fund pursuant to the
Purchase Agreement against payment of the consideration set forth in the
Purchase Agreement, will be validly issued and fully paid and non-assessable
(except for certain possible liability of shareholders described in the
Prospectus under "Description of Capital Shares") and no holder of the Shares
is or will be subject to personal liability by reason of being such a holder
(except for certain possible liability of shareholders described in the
Prospectus under "Description of Capital Shares").
6. The issuance of the Shares is not subject to the preemptive or other
similar rights of any securityholder of the Fund.
7. To the best of our knowledge, the Fund does not have any subsidiaries.
8. The Purchase Agreement has been duly authorized, executed and delivered
by the Fund and complies with all applicable provisions of the Investment
Company Act.
A-1
9. The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required filing
of the certificate pursuant to Rule 497(j) or the Prospectus pursuant to Rule
497(c) or Rule 497(h), as the case may be, has been made in the manner and
within the time period required by Rule 497(j), Rule 497(c) or Rule 497(h), as
the case may be; and, to the best of our knowledge, no stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no proceedings
for that purpose have been instituted or are pending or threatened by the
Commission.
10. The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectus, and each amendment or supplement to the
Registration Statement and the Prospectus, as of their respective effective or
issue dates (other than the financial statements and supporting schedules
included or incorporated by reference therein or omitted therefrom, as to
which we need express no opinion) complied as to form in all material respects
with the requirements of the 1933 Act, the Investment Company Act and the
Rules and Regulations.
11. The form of certificate(s) used to evidence each of the Shares complies
in all material respects with all applicable statutory requirements and with
any applicable requirements of the declaration of trust and by-laws of the
Fund. To the best of our knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the Fund is a
party, or to which the property of the Fund is subject, before or brought by
any court or governmental agency or body, domestic or foreign, which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties or
assets thereof or the consummation of the transactions contemplated in the
Purchase Agreement or the performance by the Fund of its obligations
thereunder, other than those disclosed in the Prospectus.
12. The information in the Prospectus under "Description of AMPS,"
"Description of Capital Shares," and "Taxes" (other than the information
related to Pennsylvania law or legal conclusions involving matters of
Pennsylvania law as to which we express no opinion) and in the Registration
Statement under Item 29, to the extent that it constitutes matters of law,
summaries of legal matters, the Fund's declaration of trust and bylaws or
legal proceedings, or legal conclusions, has been reviewed by us and is
correct in all material respects.
13. To the best of our knowledge, there are no statutes or regulations that
are required to be described in the Prospectus that are not described as
required.
14. All descriptions in the Prospectus of contracts and other documents to
which the Fund is a party are accurate in all material respects; to the best
of our knowledge, there are no franchises, 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 or
incorporated by reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
A-2
15. To the best of our knowledge, the Fund is not in violation of its
declaration of trust or by-laws and no default by the Fund exists in the due
performance or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument that is described or referred to
in the Registration Statement or the Prospectus or filed or incorporated by
reference as an exhibit to the Registration Statement.
16. No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority
or agency, domestic or foreign (other than under the 1933 Act, the 1934 Act,
the Investment Company Act, the Rules and Regulations, which have been
obtained, or as may be required under the securities or blue sky laws of the
various states, as to which we need express no opinion) is necessary or
required in connection with the due authorization, execution and delivery of
the Purchase Agreement, the Advisory Agreement, the Custody Agreement, the
Auction Agreement and the Letter of Representations or for the offering,
issuance, sale or delivery of the Shares.
17. The Advisory Agreement and the Custody Agreement have each been duly
authorized and approved by the Fund and comply as to form in all material
respects with all applicable provisions of the Investment Company Act, and
each has been duly executed by the Fund.
18. Each of the Auction Agent Agreement and the Letter of Representations
has 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 equitable principles.
19. The Fund is registered with the Commission under the Investment Company
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 Investment
Company Act and the Rules and Regulations to make the public offering and
consummate the sale of the Shares pursuant to the Purchase Agreement; the
provisions of the declaration of trust and the by-laws of the Fund comply as
to form in all material respects with the requirements of the Investment
Company Act; and, to the best of our knowledge and information, no order of
suspension or revocation of such registration under the Investment Company
Act, pursuant to Section 8(e) of the Investment Company Act, has been issued
or proceedings therefor initiated or threatened by the Commission.
20. The execution, delivery and performance of the Purchase Agreement and
the consummation of the transactions contemplated in the Purchase Agreement
and in the Registration Statement (including the issuance and sale of the
Shares, and the use of the proceeds from the sale of the Shares as described
in the Prospectus under the caption "Use of Proceeds") and compliance by the
Fund with its obligations under the Purchase Agreement do not and will not,
whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(xi) of the Purchase Agreement) 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,
A-3
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument, known to us, 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 (except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a Material Adverse Effect), nor will such
action result in any violation of the provisions of the declaration of trust
or by-laws of the Fund, or any applicable law, statute, rule, regulation,
judgment, order, writ or decree, known to us, of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Fund or any of its properties, assets or operations.
Nothing has come to our attention that has caused us to believe that the
Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable), (except for financial
statements and schedules and other financial data included or incorporated by
reference therein or omitted therefrom and information contained therein under
the captions "Risk Factors and Special Considerations," "Investment Objective
and Policies--Risk Factors and Special Considerations Relating to Pennsylvania
Municipal Bonds" and in Appendix A entitled "Economic and Other Conditions in
Pennsylvania," as to which we need make no statement), at the time such
Registration Statement or any such amendment became effective, 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 or any amendment or supplement thereto
(except for financial statements and schedules and other financial data
included or incorporated by reference therein or omitted therefrom and
information contained therein under the captions "Risk Factors and Special
Considerations," "Investment Objective and Policies--Risk Factors and Special
Considerations Relating to Pennsylvania Municipal Bonds" and in Appendix A
entitled "Economic and Other Conditions in Pennsylvania," as to which we need
make no statement), at the time the Prospectus was issued, at the time any
such amended or supplemented prospectus was issued or at the Closing Time,
included or includes an untrue statement of a material fact or omitted or
omits 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 rendering such opinion, such counsel may rely as to matters involving the
laws of the Commonwealth of Massachusetts upon the opinion of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLP, and Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP may rely, as to matters of
fact (but not as to legal conclusions), to the extent they deem proper, on
certificates and written statements of responsible officers of and accountants
for the Fund and the Investment Adviser and public officials. Such opinion
shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating
to legal opinions, including, without limitation, the Legal Opinion Accord of
the ABA Section of Business Law (1991).
A-4
Exhibit B
FORM OF OPINION OF THE GENERAL COUNSEL OR SENIOR ATTORNEY
OF THE INVESTMENT ADVISER TO BE DELIVERED
PURSUANT TO SECTION 6(c)
(1) The Investment Adviser has been duly organized as a limited
partnership under the laws of the State of Delaware, with power and authority
to conduct its business as described in the Registration Statement and in the
Prospectus.
(2) The Investment Adviser is duly registered as an investment adviser
under the Investment Advisers Act and is not prohibited by the Investment
Advisers Act or the Investment Company 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 and the Advisory Agreement have been duly
authorized, executed and delivered by the Investment Adviser, and the Advisory
Agreement constitutes a valid and binding obligation of the Investment
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 Investment
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 the giving of notice or the lapse of time or both, a default under,
any agreement or instrument to which the Investment Adviser is a party or by
which the Investment Adviser is bound, or any law, order, rule or regulation
applicable to the Investment 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 Investment
Adviser or its properties or operations.
(4) To the best of his knowledge and information, the description of
the Investment Adviser in the Registration Statement and in 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.
B-1
Exhibit C
FORM OF OPINION OF SPECIAL PENNSYLVANIA COUNSEL
TO THE FUND TO BE DELIVERED
PURSUANT TO SECTION 6(d)
(1) The information in the Prospectus under the caption "Taxes," to
the extent that it constitutes matters of Pennsylvania law or legal
conclusions involving matters of Pennsylvania law, has been reviewed by us and
is correct in all material respects.
(2) Nothing has come to our attention that has caused us to believe
that the information in the Registration Statement under the captions "Risk
Factors and Special Considerations," "Investment Objective and Policies --
Risk Factors and Special Considerations Relating to Pennsylvania Municipal
Bonds" and in Appendix A entitled "Economic and Other Conditions in
Pennsylvania," at the time such Registration Statement or any amendment became
effective, contained an untrue statement or 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 captions
and in such appendix in the Prospectus or any amendment or supplement thereto,
at the time the Prospectus was issued, at the time of any such amended or
supplemented prospectus was issued or at Closing Time, included or includes an
untrue statement of a material fact or omitted or omits 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.
C-1
Exhibit D
FORM OF ACCOUNTANTS'
COMFORT LETTER PURSUANT TO SECTION 6(f)
(1) We are independent public accountants with respect to the Fund
within the meaning of the 1933 Act, Investment Company Act and the applicable
rules and regulations thereunder adopted by the Commission;
(2) In our opinion the financial statements audited by us and included
or incorporated by reference in the Registration Statement and the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act, the Investment Company Act and the related rules
and regulations adopted by the Commission;
Such accountants shall also state that 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, made 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 included or incorporated by reference in the
Registration Statement do not comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act, the Investment Company
Act and of the Rules and Regulations applicable to unaudited interim financial
statements included or incorporated by reference 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 or incorporated by reference in the Registration Statement, and (B)
during the period from the date of the unaudited financial statements included
or incorporated by reference in the Registration Statement to a specified date
not more than three days prior to the date of the Purchase Agreement, there
was any change in the capital shares (other than by reason of the issuance of
shares of common shares in connection with the Fund's dividend reinvestment
plan, as specified in such letter) or decrease in 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 or incorporated by reference in
the Registration Statement, except for changes which the Registration
Statement discloses have occurred or may occur; and in addition, 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 previously
have been specified by such accountants 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.
D-1