Exhibit 7(a)
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MuniYield California Insured Fund II, Inc.
(a Maryland corporation)
Common Stock
(Par Value $0.10 Per Share)
PURCHASE AGREEMENT
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Dear Sirs:
MuniYield California Insured Fund II, Inc,. a Maryland corporation (the
"Fund"), and _________________ (the "Adviser"), each confirms its agreement with
___________________________________ (the "Underwriter"), with respect to the
sale by the Fund and the purchase by the Underwriter of _________ shares of
common stock, par value $.10 per share, of the Fund (the "Common Stock") and,
with respect to the grant by the Fund to the Underwriter of the option described
in Section 2 hereof to purchase all or any part of _____________ additional
shares of Common Stock to cover over-allotments. The aforesaid ________ shares
(the "Initial Shares"), together with all or any part of the ___________
additional shares of common Stock subject to the option described in Section 2
hereof (the "Option Shares"), are collectively hereunafter called the "Shares".
Prior to the purchase and public offering of the Shares by the Underwriter,
the Fund and the Underwriter shall enter into an agreement substantially in the
form of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may
take the form of an exchange of any standard form of written telecommunication
between the Fund and the Underwriter and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Shares will
be governed by this Agreement, as supplemented by the Pricing Agreement. From
and after the date of the execution and delivery of the Pricing Agreement, this
Agreement shall be deemed to incorporate the Pricing Agreement:
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 33-48416) and a related
preliminary prospectus for the registration of the Shares under the Securities
Act of 1933, as amended (the "1933 Act"), and a notification on Form N-8A of
registration of the Fund as an investment company under the Investment Company
Act of 1940, as amended (the "1940 Act"), and the rules and regulations of the
Commission under the 1940 Act (together with the rules and regulations under the
1933 Act, the "Rules and Regulations") and has filed such amendments to such
registration statement on Form N-2, if any, and such amended preliminary
prospectuses as may have been required to the date hereof. The Fund will prepare
and file such additional amendments thereto and such amended prospectuses as may
hereafter be required. Such registration statement (as amended, if applicable)
and the prospectus constituting a part thereof (including in each case the
information, if any, deemed to be part thereof pursuant to Rule 430A(b) of the
Rules and Regulations), as from time to time amended or supplemented pursuant to
the 1933 Act, are hereinafter referred to as the "Registration Statement" and
the "Prospectus", respectively, except that if any revised prospectus shall be
provided to the Underwriter by the Fund for use in connection with the offering
of the Shares which differs from the Prospectus on file at the Commission at the
time the Registration Statement becomes effective (whether such revised
prospectus is required to be filed by the Fund pursuant to Rule 497(b) or Rule
497(h) of the Rules and Regulations), the term "Prospectus" shall refer to each
such revised prospectus from and after the time it is first provided to the
Underwriter for such use.
The Fund understands that the Underwriter proposes to make a public
offering of the Shares as soon as the Underwriter deems advisable after the
Registration Statement becomes effective and the Pricing Agreement has been
executed and delivered.
SECTION 1. Representations and Warranties. (a) The Fund and the Adviser
each severally represents and warrants to the Underwriter as of the date hereof
and as of the date of the Pricing Agreement (such later date being hereinafter
referred to as the "Representation Date") as follows:
(i) At the time the Registration Statement becomes effective and at
the Representation Date, the Registration Statement will comply in all
material respects with the requirements of the 1933 Act, the 1940 Act and
the Rules and
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Regulations and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. At the time the Registration Statement
becomes effective, at the Representation Date and at Closing Time referred to in
Section 2, the Prospectus (unless the term "Prospectus" refers to a prospectus
which has been provided to the Underwriter by the Fund for use in connection
with the offering of the Shares which differs from the Prospectus on file with
the Commission at the time the Registration Statement becomes effective, in
which case at the time such prospectus is first provided to the Underwriter for
such use) will not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall not
apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information furnished to
the Fund in writing by the Underwriter expressly for use in the Registration
Statement or Prospectus.
(ii) The accountants who certified the statement of assets and
liabilities included in the Registration Statement are independent public
accountants as required by the 1933 Act and the Rules and Regulations.
(iii) The statement of assets and liabilities included in the Registration
Statement presents fairly the financial position of the Fund as at the date
indicated and said statement has been prepared in conformity with generally
accepted accounted principles.
(iv) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated therein,
(A) there has been no material adverse change in the condition, financial or
otherwise, of the Fund, or in the earnings, business affairs or business
prospects of the Fund, whether or not arising in the ordinary course of
business, (B) there have been no transactions entered into by the Fund which are
material to the Fund other than those in the ordinary course of business, and
(C) there has been no dividend or distribution of any kind declared, paid or
made by the Fund on any class of its capital stock.
(v) The Fund has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland with
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement; the Fund is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required; and the
Fund has no subsidiaries.
(vi) The Fund is registered with the Commission under the 1940 Act as a
closed-end non-diversified management investment company, and no order of
suspension or revocation of such registration has been issued or proceedings
therefor initiated or threatened by the Commission.
(vii) The authorized, issued and outstanding capital stock of the Fund is
as set forth in the Prospectus under the caption "Description of Capital Stock";
the Shares have been duly authorized for issuance and sale to the Underwriter
pursuant to this Agreement and, when issued and delivered by the Fund pursuant
to this Agreement against payment of the consideration set forth in the Pricing
Agreement, will be validly issued and fully paid and nonassessable; the Shares
conform in all material respects to all statements relating thereto contained in
the Registration Statement; and the issuance of the Shares is not subject to
preemptive rights.
(viii) The Fund is not in violation of its articles of incorporation, as
amended (the "Charter") or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any material
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which it is a party or by which it or its properties may be bound; and the
execution and delivery of this Agreement, the Pricing Agreement and the
Investment Advisory Agreement and the Custodial Agreement referred to in the
Registration Statement (as used herein, the "Advisory Agreement" and the
"Custody Agreement", respectively) and the consummation of the transactions
contemplated herein and therein have been duly authorized by all necessary
corporate action and will not conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Fund pursuant to any material
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which the Fund is a party or by which it may be bound or to which any of the
property or assets of the Fund is subject, nor will such action result in any
violation of the provisions of the Charter or by-laws, as amended, of the Fund
(the "ByLaws") or, to the best knowledge of the Fund and the Adviser, any law,
administrative regulation or administrative or court decree; and no consent,
approval, authorization or order of any court or governmental authority or
agency is required for
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the consummation by the Fund of the transactions contemplated by this Agreement,
the Pricing Agreement, the Advisory Agreement and the Custody Agreement, except
such as has been obtained under the 1940 Act or as may be required under the
1933 Act, state securities or Blue Sky laws or foreign securities laws in
connection with the purchase and distribution of the Shares by the Underwriter.
(ix) The Fund owns or possesses or has obtained all material governmental
licenses, permits, consents, orders, approvals and other authorizations
necessary to lease or own, as the case may be, and to operate its properties and
to carry on its businesses as contemplated in the Prospectus.
(x) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Fund, threatened against or affecting, the Fund, which might
result in any material adverse change in the condition, financial or otherwise,
business affairs or business prospects of the Fund, or might materially and
adversely affect the properties or assets of the Fund; and there are no material
contracts or documents of the Fund which are required to be filed as exhibits to
the Registration Statement by the 1933 Act, the 1940 Act or by the Rules and
Regulations which have not been so filed.
(xi) The Fund owns or possesses, or can acquire on reasonable terms,
adequate trademarks, service marks and trade names necessary to conduct its
business as described in the Registration Statement, and the Fund has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any trademarks, service marks or trade names which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially adversely affect the conduct of the business,
operations, financial condition or income of the Fund.
(b) The Adviser represents and warrants to the Underwriter as of the date
hereof and as of the Representation Date as follows:
(i) The Adviser has been duly incorporated as a corporation under the
laws of the State of Delaware with corporate power and authority to conduct its
business as described in the Prospectus.
(ii) The Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and is not
prohibited by the Advisers Act or the 1940 Act, or the rules and regulations
under such acts, from acting under the Advisory Agreement for the Fund as
contemplated by the Prospectus.
(iii) This Agreement has been duly authorized, executed and delivered
by the Adviser; the Advisory Agreement has been duly authorized, executed and
delivered by the Adviser and constitutes a valid and binding obligation of the
Adviser, enforceable in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization or other laws relating to or affecting
creditors' rights and to general equity principles; and neither the execution
and delivery of this Agreement, or the Advisory Agreement nor the performance by
the Adviser of its obligations hereunder or thereunder will conflict with, or
result in a breach of any of the terms and provisions of, or constitute, with or
without the giving of notice or lapse of time or both, a default under, any
agreement or instrument to which the Adviser is a party or by which it is bound,
or any law, order, rule or regulation applicable to it of any jurisdiction,
court, federal or state-regulatory body, administrative agency or other
governmental body, stock exchange or securities association having jurisdiction
over the Adviser or its respective properties or operations.
(iv) The Adviser has the financial resources available to it necessary
for the performance of its services and obligations as contemplated in the
Prospectus.
(v) Any advertisement approved by the Adviser for use in the public
offering of the Shares pursuant to Rule 482 under the Rules and Regulations (an
"Omitting Prospectus") complies with the requirements of such Rule 482.
(c) Any certificate signed by any officer of the Fund or the Adviser and
delivered to the Underwriter shall be deemed a representation and warranty by
the Fund or the Adviser, as the case may be, to the Underwriter, as to the
matters covered thereby.
SECTION 2. Sale and Delivery to the Underwriter; Closing. On the basis of
the representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Fund agrees to sell the Initial Shares to the
Underwriter, and the Underwriter agrees to purchase the Initial Shares from the
Fund, at the price per share set forth in the Pricing Agreement.
(a) If the Fund has elected not to rely upon Rule 430A under the Rules and
Regulations, the initial public offering prices and the purchase price per share
to be paid by the Underwriter for the Shares has been determined and set forth
in the Pricing Agreement, dated the date hereof, and an amendment to the
Registration
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Statement and the Prospectus will be filed before the Registration
Statement becomes effective.
(b) If the Fund has elected to rely upon Rule 430A under the Rules and
Regulations, the purchase price per share to be paid by the Underwriter for the
Shares shall be an amount equal to the applicable initial public offering price,
less an amount per share to be determined by agreement between the Underwriter
and the Fund. The applicable initial public offering price per share shall be a
fixed price based upon the number of Shares purchased in a single transaction to
be determined by agreement between the Underwriter and the Fund. The initial
public offering prices and the purchase price, when so determined, shall be set
forth in the Pricing Agreement. In the event that such prices have not been
agreed upon and the Pricing Agreement has not been executed and delivered by all
parties thereto by the close of business on the fourth business day following
the date of this Agreement, this Agreement shall terminate forthwith, without
liability of any party to any other party, except as provided in Section 4,
unless otherwise agreed to by the Fund, the Adviser and the Underwriter.
In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Fund
hereby grants an option to the Underwriter to purchase all or any part of the
Option Shares at the price per share set forth above, less an amount equal to
any dividend paid by the Fund and payable on any Initial Shares and not payable
on such Option Shares. The option hereby granted will expire 45 days after the
date hereof (or, if the Fund has elected to rely upon Rule 430A under the Rules
and Regulations, 45 days after the execution of the Pricing Agreement) and may
be exercised only for the purpose of covering over-allotments which may be made
in connection with the offering and distribution of the Initial Shares upon
notice by the Underwriter to the Fund setting forth the number of Option Shares
as to which the Underwriter is then exercising the option and the time, date and
place of payment and delivery for such Option Shares. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Underwriter but shall
not be later than seven full business days after the exercise of said option,
nor in any event prior to Closing Time, as hereinafter defined, unless otherwise
agreed upon by the Underwriter and the Fund.
Payment of the purchase price for, and delivery of certificates for, the
Initial Shares shall be made at the office of Xxxxx & Xxxx, Xxx Xxxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, or at such other place as shall be
agreed upon by the Underwriter and the Fund, at 10:00 A.M. on the fifth business
day (unless postponed in accordance with the provisions of Section 10) following
the date the Registration Statement becomes effective (or, if the Fund has
elected to rely upon Rule 430A under the Rules and Regulations, the fifth
business day after execution of the Pricing Agreement), or such other time not
later than ten business days after such date as shall be agreed upon by the
Underwriter and the Fund (such time and date of payment and delivery being
herein called "Closing Time"). In addition, in the event that any or all of
the Option Shares are purchased by the Underwriter, payment of the purchase
price for, and delivery of certificates for, such Option Shares shall be made at
the above-mentioned office of Xxxxx & Wood, or at such other place as shall be
mutually agreed upon by the Fund and the Underwriter, on each Date of Delivery
as specified in the notice from the Underwriter to the Fund. Payment shall be
made to the Fund by check or checks drawn in New York Clearing House or similar
next day funds and payable to the order of the Fund, against delivery to the
Underwriter of certificates for the Shares to be purchased by it. Certificates
for the Initial Shares and Option Shares shall be in such denominations and
registered in such names as the Underwriter may request in writing at least two
business days before Closing Time or the Date of Delivery, as the case may be.
The certificates for the Initial Shares and the Option Shares will be made
available by the Fund for examination and packaging by the Underwriter not later
than 10:00 A.M. on the last business day prior to Closing Time or the Date of
Delivery, as the case may be.
SECTION 3. Covenants of the Fund. The Fund covenants with the Underwriter
as follows:
(a) The Fund will use its best efforts to cause the Registration
Statement to become effective under the 1933 Act, and will advise the
Underwriter promptly as to the time at which the Registration Statement and any
amendments thereto (including any post-effective amendment) becomes so effective
and, if required, to cause the issuance of any orders exempting the Fund from
any provisions of the 1940 Act and will advise the Underwriter promptly as to
the time at which any such orders are granted.
(b) The Fund will notify the Underwriter immediately, and confirm the
notice in writing, (i) of the effectiveness of the Registration Statement and
any amendment thereto (including any post-effective amendment), (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose,
and (v) of the issuance by the Commission of an order of suspension or
revocation of the notification on Form N-8A of registration of the Fund as an
Investment Company under the
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1940 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) 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.
(c) The Fund will give the Underwriter notice of its intention to file any
amendment to the Registration Statement (including any post-effective
amendment) or any amendment or supplement to the Prospectus (including any
revised prospectus which the Fund proposes for use by the Underwriter in
connection with the offering of the Shares, which differs from the prospectus on
file at the Commission at the time the Registration Statement becomes effective,
whether such revised prospectus is required to be filed pursuant to Rule 497(b)
or Rule 497(h) of the Rules and Regulations), whether pursuant to the 1940 Act,
the 1933 Act, or otherwise, and will furnish the Underwriter with copies of any
such amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement to which the Underwriter shall reasonably object.
(d) The Fund will deliver to the Underwriter, as soon as practicable, two
signed copies of the notification of registration and registration statement as
originally filed and of each amendment thereto, in each case with two sets of
the exhibits filed therewith, and will also deliver to the Underwriter a
conformed copy of the registration statement as originally filed and of each
amendment thereto (but without exhibits to the registration statement or any
such amendment) for the Underwriter.
(e) The Fund will furnish to the Underwriter, from time to time during the
period when the Prospectus is required to be delivered under the 1933 Act, such
number of copies of the Prospectus (as amended or supplemented) as the
Underwriter may reasonably request for the purposes contemplated by the 1933 Act
or the Rules and Regulations.
(f) If any event shall occur as a result of which it is necessary, in the
opinion of counsel for the Underwriter, to amend or supplement the Prospectus in
order to make the Prospectus not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, the Fund will forthwith
amend or supplement the Prospectus by preparing and furnishing to the
Underwriter a reasonable number of copies of an amendment or amendments of or a
supplement or supplements to, the Prospectus (in form and substance satisfactory
to counsel for the Underwriter, so that, as so amended or supplemented, the
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading.
(g) The Fund will endeavor, in cooperation with the Underwriter, to qualify
the Shares for offering and sale under the applicable securities laws of such
states and other jurisdictions of the United States as the Underwriter may
designate, and will maintain such qualifications in effect for a period of not
less than one year after the date hereof. The Fund will file such statements and
reports as may be required by the laws of each jurisdiction in which the Shares
have been qualified as above provided.
(h) The Fund will make generally available to its security holders as soon
as practicable, but no later than 60 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 of the Rules and Regulations) covering a twelve-month period beginning not
later than the first day of the Fund's fiscal quarter next following the
"effective" date (as defined in said Rule 158) of the Registration Statement.
(i) Between the date of this Agreement and the termination of any trading
restrictions or Closing Time, whichever is later, the Fund will not, without
your prior consent, offer or sell, or enter into any agreement to sell, any
equity or equity related securities of the Fund other than the Shares and shares
of Common Stock issued in reinvestment of dividends or distributions.
(j) If, at the time that the Registration Statement becomes effective, any
information shall have been omitted therefrom in reliance upon Rule 430A of the
Rules and Regulations, then immediately following the execution of the Pricing
Agreement, the Fund will prepare, and file or transmit for filing with the
Commission in accordance with such Rule 430A and Rule 497(h) of the Rules and
Regulations, copies of amended Prospectus, or, if required by such Rule 430A, a
post-effective amendment to the Registration Statement (including an amended
Prospectus), containing all information so omitted.
(k) The Fund will use its best efforts to effect the listing of the Shares
on the New York Stock Exchange so that trading on such Exchange will begin no
later than three weeks from the date of the Prospectus.
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SECTION 4. Payment of Expenses. The Fund will pay all expenses incident to
the performance of its obligations under this Agreement, including, but not
limited to, expenses relating to (i) the printing and filing of the registration
statement as originally filed and of each amendment thereto, (ii) the printing
of this Agreement and the Pricing Agreement, (iii) the preparation, issuance and
delivery of the certificates for the Shares to the Underwriter, (iv) the fees
and disbursements of the Fund's counsel and accountants, (v) the qualification
of the Shares under securities laws in accordance with the provisions of Section
3(g) of this Agreement, including filing fees and any reasonable fees or
disbursements of counsel for the Underwriter in connection therewith and in
connection with the preparation of the Blue Sky Survey, (vi) the printing and
delivery to the Underwriter of copies of the registration statement as
originally filed and of each amendment thereto, of the preliminary prospectus,
and of the Prospectus and any amendments or supplements thereto, (vii) the
printing and delivery to the Underwriter of copies of the Blue Sky Survey,
(viii) the fees and expenses incurred with respect to the filing with the
National Association of Securities Dealers, Inc. and (ix) the fees and expenses
incurred with respect to the listing of the Shares on the New York Stock
Exchange.
If this Agreement is terminated by the Underwriter in accordance with the
provisions of Section 5 or Section 9(a) (i), the Fund or the Adviser shall
reimburse the Underwriter for all of their reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the Underwriter.
In the event the transactions contemplated hereunder are not consummated, the
Adviser agrees to pay all of the costs and expenses set forth in the first
paragraph of this Section 4 which the Fund would have paid if such transactions
were consummated.
SECTION 5. Conditions of Underwriter's Obligations. The obligations of the
Underwriter hereunder are subject to the accuracy of the representations and
warranties of the Fund and the Adviser herein contained, to the performance by
the Fund and the Adviser of their respective obligations hereunder, and to the
following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., New York City time, on the date of this Agreement, or at a later
time and date not later, however, than 5:30 P.M. on the first business day
following the date hereof, or at such later time and date as may be approved by
the Underwriter, and at Closing Time no stop order suspending the effectiveness
of the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission. If the Fund has
elected to rely upon Rule 430A of the Rules and Regulations, the prices of the
Shares and any price-related information previously omitted from the effective
Registration Statement pursuant to such Rule 430A shall have been transmitted to
the Commission for filing pursuant to Rule 497(h) of the Rules and Regulations
within the prescribed time period, and prior to Closing Time the Fund shall have
provided evidence satisfactory to the Underwriter of such timely filing, or a
post-effective amendment providing such information shall have been promptly
filed and declared effective in accordance with the requirements of Rule 430A of
the Rules and Regulations.
(b) At Closing Time, the Underwriter shall have received:
(1) The favorable opinion, dated as of Closing Time, of Xxxxx &
Xxxx, counsel for the Fund and the Underwriter, to the effect that:
(i) The Fund has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Maryland.
(ii) The Fund has corporate power and authority to own, lease
and operate its properties and conduct its business as described in the
Registration Statement and the Prospectus.
(iii) The Fund is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required.
(iv) The Shares have been duly authorized for issuance and
sale to the Underwriter pursuant to this Agreement and, when issued and
delivered by the Fund pursuant to this Agreement against payment of the
consideration set forth in the Pricing Agreement, will be validly issued and
fully paid and nonassessable; the issuance of the Shares is not subject to
preemptive rights; and the authorized capital stock conforms as to legal matters
in all material respects to the description thereof in the Registration
Statement under the caption "Description of Capital Stock".
(v) This Agreement and the Pricing Agreement have each been
duly authorized, executed and delivered by the Fund and each complies with all
applicable provisions of the 1940 Act.
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(vi) The Registration Statement is effective under the 1933
Act and, to the best of their knowledge and information, no stop order
suspending the effectiveness of the Registration Statement has been issued under
the 1933 Act or proceedings therefor initiated or threatened by the Commission.
(vii) At the time the Registration Statement became effective
and at the Representation Date, the Registration Statement (other than the
financial statements included therein, as to which no opinion need be rendered)
complied as to form in all material respects with the requirements of the 1933
Act and the 1940 Act and the Rules and Regulations.
(viii) To the best of their knowledge and information, there are
no legal or governmental proceedings pending or threatened against the Fund
which are required to be disclosed in the Registration Statement, other than
those disclosed therein.
(ix) To the best of their knowledge and information, there are
no contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments of the Fund required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other than those
described or referred to therein or filed as exhibits thereto, the descriptions
thereof are correct in all material respects, references thereto are correct,
and no default exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, loan agreement, note or lease so described, referred to or filed.
(x) No consent, approval, authorization or order of any court
or governmental authority or agency is required in connection with the sale of
the Shares to the Underwriter, except such as has been obtained under the 1933
Act, the 1940 Act or the Rules and Regulations or such as may be required under
state or foreign securities laws; and to the best of their knowledge and
information, the execution and delivery of this Agreement, the Pricing
Agreement, the Advisory Agreement and the Custody Agreement and the consummation
of the transactions contemplated herein and therein will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Fund pursuant to, any contract, indenture, mortgage, loan agreement, note, lease
or other instrument to which the Fund is a party or by which it may be bound or
to which any of the property or assets of the Fund is subject, nor will such
action result in any violation of the provisions of the Charter or ByLaws of the
Fund, or any law or administrative regulation, or, to the best of their
knowledge and information, administrative or court decree.
(xi) 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 1940 Act, and both have
been duly executed by the Fund.
(xii) The Fund is registered with the Commission under the 1940
Act as a closed-end non-diversified management investment company, and all
required action has been taken by the Fund under the 1933 Act, the 1940 Act and
the Rules and Regulations to make the public offering and consummate the sale of
the Shares pursuant to this Agreement; the provisions of the Charter and ByLaws
of the Fund comply as to form in all material respects with the requirements of
the 1940 Act; and, to the best of their knowledge and information, no order of
suspension or revocation of such registration under the 1940 Act, pursuant to
Section 8(e) of the 1940 Act, has been issued or proceedings therefor initiated
or threatened by the Commission.
(xiii) The information in the Prospectus under the caption
"Taxes", to the extent that it constitutes matters of law or legal conclusions,
has been reviewed by them and is correct in all material respects.
(2) The favorable opinion, dated as of Closing Time, of Xxxxxx X. Xxxxxxxx,
Esq., General Counsel to the Adviser, in form and substance satisfactory to
counsel for the Underwriter, to the effect that:
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(i) The Adviser has been duly organized as a corporation under the laws
of the State of Delaware with corporate power and authority to conduct its
business as described in the Registration Statement and the Prospectus.
(ii) The Adviser is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the 1940 Act, or the
rules and regulations under such Acts, from acting under the Advisory Agreement
for the Fund as contemplated by the Prospectus.
(iii) This Agreement and the Advisory Agreement have been duly authorized,
executed and delivered by the Adviser, and the Advisory Agreement constitutes a
valid and binding obligation of the Adviser, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization or
other laws relating to or affecting creditors' rights and to general equity
principles; and, to the best of his knowledge and information, neither the
execution and delivery of this Agreement or the Advisory Agreement nor the
performance by the Adviser of its obligations hereunder or thereunder will
conflict with, or result in a breach of, any of the terms and provisions of, or
constitute, with or without giving notice or lapse of time or both, a default
under, any agreement or instrument to which the Adviser is a party or by which
the Adviser is bound, or any law, order, rule or regulation applicable to the
Adviser of any jurisdiction, court, federal or state regulatory body,
administrative agency or other governmental body, stock exchange or securities
association having jurisdiction over the Adviser or its properties or
operations.
(iv) To the best of his knowledge and information, the description of the
Adviser in the Registration Statement and the Prospectus does not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading.
(3) In giving their opinion required by sub-section (b) (1) of this
Section, Xxxxx & Wood shall additionally state that nothing has come to their
attention that would lead them to believe that the Registration Statement (other
than the financial statements included therein, as to which no opinion need be
rendered), at the time it became effective or at the Representation Date,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus (other than the financial statement
included therein, as to which no opinion need be rendered), at the
Representation Date (unless the term "Prospectus" refers to a prospectus which
has been provided to the Underwriter by the Fund for use in connection with the
offering of the Shares which differs from the Prospectus on file at the
Commission at the time the Registration Statement becomes effective, in which
case at the time they are first provided to the Underwriter for such use) or at
Closing Time, included an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. In giving
their opinion, Xxxxx & Xxxx may rely as to matters involving the laws of the
State of Maryland upon the opinion of Xxxxxxx, Baetjer & Xxxxxx. Xxxxxxx,
Xxxxxxx & Xxxxxx and Xxxxx & Xxxx may rely, as to matters of fact, upon
certificates and written statements of officers and employees of and accountants
for the Fund and the Adviser and of public officials.
(C) At Closing Time, (i) the Registration Statement and the Prospectus
shall contain all statements which are required to be stated therein in
accordance with the 1933 Act, the 1940 Act and the Rules and Regulations and in
all material respects shall conform to the requirements of the 1933 Act, the
1940 Act and the Rules and Regulations and neither the Registration Statement
nor the Prospectus shall 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, and no action, suit or proceeding at law
or in equity shall be pending or, to the knowledge of the Fund or the Adviser,
threatened against the Fund or the Adviser which would be required to be set
forth in the Prospectus other than as set forth therein, (ii) there shall not
have been, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in the
condition, financial or otherwise, of the Fund or in its earnings, business
affairs or business prospects, whether or not arising in the ordinary course of
business, from that set forth in the Registration Statement and Prospectus,
(iii) the Adviser shall
8
have the financial resources available to it necessary for the performance of
its services and obligations as contemplated in the Registration Statement and
the Prospectus and (iv) no proceedings shall be pending or, to the knowledge of
the Fund or the Adviser, threatened against the Fund or the Adviser before or by
any Federal, state or other commission, board or administrative agency wherein
an unfavorable decision, ruling or finding would materially and adversely affect
the business, property, financial condition or income of either the Fund or the
Adviser other than as set forth in the Registration Statement and the
Prospectus; and the Underwriter shall have received, at Closing Time, a
certificate of the President or Treasurer of the Fund and of the President or a
Vice President of the Adviser dated as of Closing Time, evidencing compliance
with the appropriate provisions of this subsection (c).
(d) At Closing Time, the Underwriter shall have received certificates,
dated as of Closing Time, (i) of the President or Treasurer of the Fund to the
effect that the representations and warranties of the Fund contained in Section
1(a) are true and correct with the same force and effect as though expressly
made at and as of Closing Time and, (ii) of the President or a Vice President of
the Adviser to the effect that the representations and warranties of the Adviser
contained in Sections 1(a) and (b) are true and correct with the same force and
effect as though expressly made at and as of Closing Time.
(e) At the time of execution of this Agreement, the Underwriter shall have
received from Deloitte & Touche a letter, dated such date in form and substance
satisfactory to the Underwriter, to the effect that:
(i) they are independent accountants with respect to the Fund within
the meaning of the 1933 Act and the Rules and Regulations;
(ii) in their opinion, the statement of assets and liabilities
examined by them and included in the Registration Statement complies as to
form in all material respects with the applicable accounting requirements
of the 1933 Act and the 1940 Act and the Rules and Regulations; and
(iii) they have performed specified procedures, not constituting an
audit, including a reading of the latest available interim financial
statements of the Fund, a reading of the minute books of the Fund,
inquiries of officials of the Fund responsible for financial accounting
matters and such other inquiries and procedures as may be specified in such
letter, and on the basis of such inquiries and procedures nothing came to
their attention that caused them to believe that at the date of the latest
available statement of assets and liabilities read by such accountants, or
at a subsequent specified date not more than five days prior to the date of
this Agreement, there was any change in the capital stock or net assets of
the Fund as compared with amounts shown on the statement of net assets
included in the Prospectus.
(f) At Closing Time, the Underwriter shall have received from Deloitte &
Touche a letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (e) of this
Section, except that the "specified date" referred to shall be a date not more
than five days prior to Closing Time.
(g) At Closing Time, all proceedings taken by the Fund and the Adviser in
connection with the organization and registration of the Fund under the 1940 Act
and the issuance and sale of the Shares as herein and therein contemplated shall
be satisfactory in form and substance to the Underwriter.
(h) In the event the Underwriter exercises its option provided in Section 2
hereof to purchase all or any portion of the Option Shares, the representations
and warranties of the Fund and the Adviser contained herein and the statements
in any certificate furnished by the Fund and the Adviser hereunder shall be true
and correct as of each Date of Delivery, and the Underwriter shall have
received:
(1) Certificates, dated the Date of Delivery, of the President or
Treasurer of the Fund and of the President or a Vice President of the
Adviser confirming that the information contained in the certificate
delivered by each of them at Closing Time pursuant to Sections 5(c) and
(d), as the case may be, remains true as of such Date of Delivery.
(2) The favorable opinion of Xxxxx & Wood, counsel for the Fund and
Xxxxxx X. Xxxxxxxx, Esq., General Counsel to the Adviser, each in form and
substance satisfactory to the Underwriter, dated such Date of Delivery,
relating to the Option Shares and otherwise to the same effect as the
opinions required by Sections 5(b)(1) and (2), respectively.
9
(3) A letter from Deloitte & Touche, in form and substance satisfactory
to the Underwriter and dated such Date of Delivery, substantially the same
in scope and substance as the letter furnished to the Underwriter pursuant
to Section 5(e), except that the "specified date" in the letter furnished
pursuant to this Section 5(h)(3) shall be a date not more than five days
prior to such Date of Delivery.
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 4.
SECTION 6. Indemnification. (a) The Fund and the Adviser, jointly and
severally, agree to indemnify and hold harmless the Underwriter and each person,
if any, who controls the Underwriter within the meaning of Section 15 of the
1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the information deemed to be part of
the Registration Statement pursuant to Rule 430A of the Rules and
Regulations, if applicable, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever as incurred to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the indemnifying party; and
(iii) against any and all expense whatsoever (including the fees and
disbursements of counsel chosen by the Underwriter) reasonably incurred in
investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund by the
Underwriter expressly for use in the Registration Statement (or any amendment
thereto) or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(b) The Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Fund and the Adviser, their respective directors, each of the
Fund's officers who signed the Registration Statement, and each person, if any,
who controls the Fund or the Adviser within the meaning of Section 15 of the
1933 Act, against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Fund by the Underwriter expressly for use in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(c) In addition to the foregoing indemnification, the Adviser also agrees
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,
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, with respect to any
Omitting Prospectus or any advertising materials approved by the Adviser for use
in connection with the public offering of the Shares.
(d) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. An indemnifying party may
participate at its own expense in the defense of any such action.
10
In no event shall the indemnifying parties be liable for the fees and expenses
of more than one counsel (in addition to any local counsel) separate from their
own counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Fund, the Adviser and the
Underwriter shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement as
incurred by the Fund, the Adviser and the Underwriter, as incurred, in such
proportion that the Underwriter is responsible for that portion represented by
the percentage that the aggregate underwriting compensation payable pursuant to
Section 2 hereof bears to the aggregate initial public offering price of the
Shares sold under this Agreement and the Fund and the Adviser are responsible
for the balance; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls the Underwriter within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as the Underwriter, and each director of
the Fund and the Adviser, respectively, each officer of the Fund who signed the
Registration Statement, and each person, if any, who controls the Fund or the
Adviser within the meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as the Fund and the Adviser, respectively.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or
the Pricing Agreement, or contained in certificates of officers of the Fund or
the Adviser submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the
Underwriter or controlling person, or by or on behalf of the Fund or the Adviser
and shall survive delivery of the Shares to the Underwriter.
SECTION 9. Termination of Agreement. (a) The Underwriter, by notice to the
Fund, may terminate this Agreement at any time at or prior to Closing Time (i)
if there has been, since the date of this Agreement or since the respective
dates as of which information is given in the Registration Statement, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or the Adviser,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or elsewhere or any outbreak of hostilities or other calamity or crisis
or any escalation of existing hostilities the effect of which is such as to make
it, in the Underwriter's judgment, impracticable to market the Shares or enforce
contracts for the sale of the Shares, or (iii) if trading in the Common Stock
has been suspended by the Commission or if trading generally on either the
American Stock Exchange or the New York Stock Exchange has been suspended, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of said exchanges or by
order of the Commission or any other governmental authority, or if a banking
moratorium has been declared by Federal or New York authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4.
SECTION 10. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of written telecommunication. Notices to the Underwriter shall
be directed to _________________, Attention: ; notices to the Fund or the
Adviser shall be directed to each of them at 000 Xxxxxxxx Xxxx Xxxx, Xxxxxxxxxx,
Xxx Xxxxxx 00000, Attention: Xxxxxx Xxxxxx, President.
SECTION 11. Parties. This Agreement and the Pricing Agreement shall
inure to the benefit of and be binding upon the Underwriter, the Fund, the
Adviser and their respective successors. Nothing expressed or mentioned in this
Agreement or the Pricing Agreement is intended or shall be construed to give any
person, firm or corporation, other than the parties hereto and their respective
successors and the controlling persons and officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and the Pricing Agreement and all
conditions and provisions hereof are intended to be for the sole and exclusive
benefit of the parties hereto and thereto and their respective successors, and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Shares from the Underwriter shall be deemed to be a successor by
reason merely of such purchase.
SECTION 12. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by the laws of the State of New York applicable to
agreements made and to be performed in said State. Specified times of day refer
to New York City time.
11
If the foregoing is in accordance with your understanding of our Agreement,
please sign and return to us a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement among the
Underwriter, the Fund and the Adviser in accordance with its terms.
Very truly yours,
MUNIYIELD CALIFORNIA INSURED FUND II, INC.
By:
--------------------------------------
Authorized Officer
[Investment Adviser]
By:
-------------------------------------
Authorized Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
By:
By:
-------------------------------
12
Exhibit A
Shares
MuniYield California Insured Fund II, Inc.
(a Maryland corporation)
Common Stock
(Par Value $.10 Per Share)
PRICING AGREEMENT
-----------------
Dear Sirs:
Reference is made to the Purchase Agreement, dated (the "Purchase
Agreement"), relating to the purchase by ,(the "Underwriter"), of
the above shares of Common Stock, par value $.10 per share (the "Initial
Shares"), of MuniYield California Insured Fund II, Inc. (the "Fund") and
relating to the option granted to the Underwriter to purchase up to an
additional shares of Common Stock, par value $.10 per share, of the Fund to
cover over-allotments in connection with the sale of the Initial Shares (the
"Option Shares"). The Initial Shares and all or any part of the Option Shares
are collectively herein referred to as the "Shares".
Pursuant to Section 2 of the Purchase Agreement, the Fund agrees with
the Underwriter as follows:
1. The applicable initial public offering price per share for the
Shares, determined as provided in said Section 2, shall be as follows:
(a) $_____ for purchases in single transactions of less than
3,500 Shares;
(b) $_____ for purchases in single transactions of 3,500 or
more Shares but less than 7,000 Shares; and
(c) $_____ for purchases in single transactions of 7,000 or
more Shares.
2. The purchase price per share for the Shares to be paid by the
Underwriter shall be $_____ being an amount equal to the applicable
initial public offering price set forth above less (i) $_____ per share
for purchases in single transactions of less than 3,500 Shares; (ii)
$_____ per share for purchases in single transactions of 3,500 or more
Shares but less than 7,000 Shares and (iii) $_____ per share for
purchases in single transactions of 7,000 or more Shares.
13
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Fund a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriter and the Fund in accordance with its terms.
Very truly yours,
MUNIYIELD CALIFORNIA
INSURED FUND II, INC.
By:
-----------------------
(Authorized Officer)
Confirmed and Accepted, as of the
date first above written:
By:
-------------------------------
14
