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EXHIBIT 4
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as
of the _____ day of ________________, 1999, by and between MuniYield Michigan
Insured Fund, Inc., a Maryland corporation ("MuniYield Michigan"), MuniVest
Michigan Insured Fund, Inc., a Maryland corporation ("MuniVest Michigan") and
MuniHoldings Michigan Insured Fund, Inc., a Maryland corporation ("MuniHoldings
Michigan") (MuniYield Michigan, MuniVest Michigan and MuniHoldings Michigan are
sometimes referred to herein collectively as the "Funds"; MuniVest Michigan and
MuniHoldings Michigan are sometimes referred to herein collectively as the
"Acquired Funds").
PLAN OF REORGANIZATION
The reorganization will comprise the following:
(a)(1) the acquisition by MuniYield Michigan of substantially all of
the assets, and the assumption by MuniYield Michigan of substantially all of the
liabilities of MuniVest Michigan in exchange solely for an equal aggregate value
of newly issued shares of (A) common stock, with a par value of $0.10 per share
of MuniYield Michigan ("MuniYield Michigan Common Stock") and (B) auction market
preferred stock of MuniYield Michigan, with a liquidation preference of $25,000
per share plus an amount equal to accumulated but unpaid dividends thereon
(whether or not earned or declared) to be designated Series B ("MuniYield
Michigan Series B AMPS"), and (2) the subsequent distribution by MuniVest
Michigan to MuniVest Michigan stockholders of (x) all of the MuniYield Michigan
Common Stock received by MuniVest Michigan in exchange for such stockholders'
shares of common stock, with a par value of $0.10 per share, of MuniVest
Michigan ("MuniVest Michigan Common Stock") and (y) all of the MuniYield
Michigan Series B AMPS received by MuniVest Michigan in exchange for such
stockholders' shares of auction market preferred stock of MuniVest Michigan,
with a liquidation preference of $25,000 per share plus an amount equal to
accumulated but unpaid dividends thereon (whether or not earned or declared)
("MuniVest Michigan AMPS").
(b)(1) the acquisition by MuniYield Michigan of substantially all of
the assets, and the assumption by MuniYield Michigan of substantially all of the
liabilities of MuniHoldings Michigan in exchange solely for an equal aggregate
value of newly issued shares of (A) MuniYield Michigan Common Stock and (B)
auction market preferred stock of MuniYield Michigan, with a liquidation
preference of $25,000 per share plus an amount equal to accumulated but unpaid
dividends thereon (whether or not earned or declared) to be designated Series C
("MuniYield Michigan Series C AMPS"), and (2) the subsequent distribution by
MuniHoldings Michigan to MuniHoldings Michigan stockholders of (x) all of the
MuniYield Michigan Common Stock received by MuniHoldings Michigan in exchange
for such stockholders' shares of common stock, with a par value of $0.10 per
share, of MuniHoldings Michigan ("MuniHoldings Michigan Common Stock") and (y)
all of the MuniYield Michigan Series C AMPS received by MuniHoldings Michigan in
exchange for such stockholders' shares of auction market preferred stock of
MuniHoldings Michigan, with a liquidation preference of
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$25,000 per share plus an amount equal to accumulated but unpaid dividends
thereon (whether or not earned or declared) designated Series A ("MuniHoldings
Michigan AMPS");
all upon and subject to the terms hereinafter set forth (collectively, the
"Reorganization").
In the course of the Reorganization, MuniYield Michigan Common Stock,
MuniYield Michigan Series B AMPS and MuniYield Michigan Series C AMPS will be
distributed to the stockholders of the Acquired Funds as follows:
(a) (1) each holder of MuniVest Michigan Common Stock will be entitled
to receive a number of shares of MuniYield Michigan Common Stock equal to the
aggregate net asset value of the MuniVest Michigan Common Stock owned by such
stockholder on the Exchange Date; and (2) each holder of MuniVest Michigan AMPS
will be entitled to receive a number of shares of MuniYield Michigan Series B
AMPS equal to the aggregate liquidation preference (and aggregate value) of the
MuniVest Michigan AMPS owned by such stockholder on the Exchange Date; and
(b) (1) each holder of MuniHoldings Michigan Common Stock will be
entitled to receive a number of shares of MuniYield Michigan Common Stock equal
to the aggregate net asset value of the MuniHoldings Michigan Common Stock owned
by such stockholder on the Exchange Date; and (2) each holder of MuniHoldings
Michigan AMPS will be entitled to receive a number of shares of MuniYield
Michigan Series C AMPS equal to the aggregate liquidation preference (and
aggregate value) of the MuniHoldings Michigan AMPS owned by such stockholder on
the Exchange Date.
It is intended that the Reorganization described in this Plan shall be
a reorganization within the meaning of Section 368(a)(1)(C) of the Internal
Revenue Code of 1986, as amended (the "Code"), and any successor provision.
Prior to the Exchange Date, each Acquired Fund shall declare a dividend
or dividends which, together with all such previous dividends, shall have the
effect of distributing to their respective stockholders all of their respective
net investment company taxable income to and including the Exchange Date, if any
(computed without regard to any deduction for dividends paid), and all of its
net capital gain, if any, realized to and including the Exchange Date. In this
regard and in connection with the Reorganization, the last dividend period for
the MuniVest Michigan AMPS and MuniHoldings Michigan AMPS prior to the Exchange
Date may be shorter than the dividend period for such AMPS determined as set
forth in the applicable Articles Supplementary.
Articles Supplementary to MuniYield Michigan's Articles of
Incorporation establishing the powers, rights and preferences of the MuniYield
Michigan Series B AMPS and the MuniYield Michigan Series C AMPS will have been
filed with the State Department of Assessments and Taxation of Maryland (the
"Maryland Department") prior to the Exchange Date.
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As promptly as practicable after the consummation of the
Reorganization, each Acquired Fund shall be dissolved in accordance with the
laws of the State of Maryland and will terminate its registration under the
Investment Company Act of 1940, as amended (the "1940 Act").
AGREEMENT
In order to consummate the Reorganization and in consideration of the
promises and the covenants and agreements hereinafter set forth, and intending
to be legally bound, each of the Funds hereby agrees as follows:
1. Representations and Warranties of MuniYield Michigan.
MuniYield Michigan represents and warrants to, and agrees with, the
Acquired Funds that:
(a) MuniYield Michigan is a corporation duly organized,
validly existing and in good standing in conformity with the laws of the State
of Maryland, and has the power to own all of its assets and to carry out this
Agreement. MuniYield Michigan has all necessary Federal, state and local
authorizations to carry on its business as it is now being conducted and to
carry out this Agreement.
(b) MuniYield Michigan is duly registered under the 1940 Act
as a non-diversified, closed-end management investment company (File No.
811-7080), and such registration has not been revoked or rescinded and is in
full force and effect. MuniYield Michigan has elected and qualified for the
special tax treatment afforded regulated investment companies ("RICs") under
Sections 851-855 of the Code at all times since its inception and intends to
continue to so qualify until consummation of the Reorganization and thereafter.
(c) Each of the Acquired Funds has been furnished with
MuniYield Michigan's Annual Report to Stockholders for the fiscal year ended
October 31, 1998, and the audited financial statements appearing therein, having
been examined by Ernst & Young LLP, independent public accountants, fairly
present the financial position of MuniYield Michigan as of the respective dates
indicated, in conformity with generally accepted accounting principles applied
on a consistent basis.
(d) Each of the Acquired Funds has been furnished with
MuniYield Semi-Annual Report to Stockholders for the six months ended April 30,
1999, and the unaudited financial statements appearing therein fairly present
the financial position of MuniYield Michigan as of the respective dates
indicated, in conformity with generally accepted accounting principles applied
on a consistent basis.
(e) An unaudited statement of assets, liabilities and capital
of MuniYield Michigan and an unaudited schedule of investments of MuniYield
Michigan, each as of the Valuation Time (as defined in Section 4(d) of this
Agreement), will be furnished to each of the Acquired Funds, at or prior to the
Exchange Date for the purpose of determining the number of
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shares of MuniYield Michigan Common Stock, MuniYield Michigan Series B AMPS and
MuniYield Michigan Series C AMPS to be issued pursuant to Section 5 of this
Agreement; each will fairly present the financial position of MuniYield Michigan
as of the Valuation Time in conformity with generally accepted accounting
principles applied on a consistent basis.
(f) MuniYield Michigan has full power and authority to enter
into and perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement has been duly authorized by all necessary
action of its Board of Directors, and this Agreement constitutes a valid and
binding contract enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, moratorium, fraudulent conveyance and similar
laws relating to or affecting creditors' rights generally and court decisions
with respect thereto.
(g) There are no material legal, administrative or other
proceedings pending or, to the knowledge of MuniYield Michigan, threatened
against it which assert liability on the part of MuniYield Michigan or which
materially affect its financial condition or its ability to consummate the
Reorganization. MuniYield Michigan is not charged with or, to the best of its
knowledge, threatened with any violation or investigation of any possible
violation of any provisions of any Federal, state or local law or regulation or
administrative ruling relating to any aspect of its business.
(h) MuniYield Michigan is not obligated under any provision of
its Articles of Incorporation, as amended, or its by-laws, as amended, or a
party to any contract or other commitment or obligation, and is not subject to
any order or decree which would be violated by its execution of or performance
under this Agreement, except insofar as the Funds have mutually agreed to amend
such contract or other commitment or obligation to cure any potential violation
as a condition precedent to the Reorganization.
(i) There are no material contracts outstanding to which
MuniYield Michigan is a party that have not been disclosed in the N-14
Registration Statement (as defined in subsection (l) below) or will not
otherwise be disclosed to the Acquired Funds prior to the Valuation Time.
(j) MuniYield Michigan has no known liabilities of a material
amount, contingent or otherwise, other than those shown on its statements of
assets, liabilities and capital referred to above, those incurred in the
ordinary course of its business as an investment company since October 31, 1998;
and those incurred in connection with the Reorganization. As of the Valuation
Time, MuniYield Michigan will advise each Acquired Fund in writing of all known
liabilities, contingent or otherwise, whether or not incurred in the ordinary
course of business, existing or accrued as of such time.
(k) No consent, approval, authorization or order of any court
or governmental authority is required for the consummation by MuniYield Michigan
of the Reorganization, except such as may be required under the Securities Act
of 1933, as amended (the "1933 Act"), the Securities Exchange Act of 1934, as
amended (the "1934 Act") and the 1940 Act or state
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securities laws (which term as used herein shall include the laws of the
District of Columbia and Puerto Rico).
(l) The registration statement filed by MuniYield Michigan on
Form N-14 which includes the joint proxy statement of the Funds with respect to
the transactions contemplated herein and the prospectus of MuniYield Michigan
relating to the MuniYield Michigan Common Stock, MuniYield Michigan Series B
AMPS and MuniYield Michigan Series C AMPS to be issued pursuant to this
Agreement, (the "Joint Proxy Statement and Prospectus"), and any supplement or
amendment thereto or to the documents therein (as amended or supplemented, the
"N-14 Registration Statement"), on its effective date, at the time of the
stockholders' meetings referred to in Section 7(a) of this Agreement and at the
Exchange Date, insofar as it relates to MuniYield Michigan (i) complied or will
comply in all material respects with the provisions of the 1933 Act, the 1934
Act and the 1940 Act and the rules and regulations thereunder and (ii) did not
or will 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; and the Joint Proxy Statement and Prospectus included
therein did not or will not contain any untrue statement of a material fact or
omit to state any material fact necessary 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 only shall
apply to statements in or omissions from the N-14 Registration Statement made in
reliance upon and in conformity with information furnished by MuniYield Michigan
for use in the N-14 Registration Statement as provided in Section 7(e) of this
Agreement.
(m) MuniYield Michigan is authorized to issue 200,000,000
shares of capital stock, of which 2,000 shares have been designated AMPS and
199,998,000 shares have been designated as common stock, par value $.10 per
share; each outstanding share of which is fully paid and nonassessable and has
full voting rights.
(n) The shares of MuniYield Michigan Common Stock, MuniYield
Michigan Series B AMPS and MuniYield Michigan Series C AMPS to be issued to the
Acquired Funds pursuant to this Agreement will have been duly authorized and,
when issued and delivered pursuant to this Agreement, will be legally and
validly issued and will be fully paid and nonassessable and will have full
voting rights, and no stockholder of MuniYield Michigan will have any preemptive
right of subscription or purchase in respect thereof.
(o) At or prior to the Exchange Date, the MuniYield Michigan
Common Stock to be transferred to the Acquired Funds for distribution to the
stockholders of the Acquired Funds on the Exchange Date will be duly qualified
for offering to the public in all states of the United States in which the sale
of shares of the Funds presently are qualified, and there will be a sufficient
number of such shares registered under the 1933 Act and, as may be necessary,
with each pertinent state securities commission to permit the transfers
contemplated by this Agreement to be consummated.
(p) At or prior to the Exchange Date, the shares of MuniYield
Michigan Series B AMPS to be transferred to MuniVest Michigan on the Exchange
Date and the shares of
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MuniYield Michigan Series C AMPS to be transferred to MuniHoldings Michigan on
the Exchange Date will be duly qualified for offering to the public in all
states of the United States in which the sale of AMPS of the Acquired Funds
presently are qualified, and there are a sufficient number of each series of
MuniYield Michigan AMPS registered under the 1933 Act and with each pertinent
state securities commission to permit the transfers contemplated by this
Agreement to be consummated.
(q) At or prior to the Exchange Date, MuniYield Michigan will
have obtained any and all regulatory, Director and stockholder approvals
necessary to issue the MuniYield Michigan Common Stock, MuniYield Michigan
Series B AMPS and MuniYield Michigan Series C AMPS to MuniVest Michigan and
MuniHoldings Michigan, as applicable.
2. Representations and Warranties of MuniVest Michigan.
MuniVest Michigan represents and warrants to, and agrees with,
MuniYield Michigan and MuniHoldings Michigan that:
(a) MuniVest Michigan is a corporation duly organized, validly
existing and in good standing in conformity with the laws of the State of
Maryland, and has the power to own all of its assets and to carry out this
Agreement. MuniVest Michigan has all necessary Federal, state and local
authorizations to carry on its business as it is now being conducted and to
carry out this Agreement.
(b) MuniVest Michigan is duly registered under the 1940 Act as
a non-diversified, closed-end management investment company (File No. 811-7578),
and such registration has not been revoked or rescinded and is in full force and
effect. MuniVest Michigan has elected and qualified for the special tax
treatment afforded RICs under Sections 851-855 of the Code at all times since
its inception, and intends to continue to so qualify through its taxable year
ending upon liquidation.
(c) As used in this Agreement, the term "MuniVest Michigan
Investments" shall mean (i) the investments of MuniVest Michigan shown on the
schedule of its investments as of the Valuation Time furnished to each of
MuniYield Michigan and MuniHoldings Michigan; and (ii) all other assets owned by
MuniVest Michigan or liabilities incurred as of the Valuation Time.
(d) MuniVest Michigan has full power and authority to enter
into and perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement has been duly authorized by all necessary
action of its Board of Directors and this Agreement constitutes a valid and
binding contract enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, moratorium, fraudulent conveyance and similar
laws relating to or affecting creditors' rights generally and court decisions
with respect thereto.
(e) Each of MuniYield Michigan and MuniHoldings Michigan has
been furnished with MuniVest Michigan's Annual Report to Stockholders for the
fiscal year ended
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October 31, 1998, and the audited financial statements appearing therein having
been examined by Deloitte & Touche LLP, independent public accountants, fairly
present the financial position of MuniVest Michigan as of the respective dates
indicated, in conformity with generally accepted accounting principles applied
on a consistent basis.
(f) Each of MuniYield Michigan and MuniHolding Michigan has
been furnished with MuniVest Michigan's Semi-Annual Report to Stockholders for
the period ended April 30, 1999, and the unaudited financial statements
appearing therein fairly present the financial position of MuniVest Michigan as
of the respective dates indicated, in conformity with generally accepted
accounting principles applied on a consistent basis.
(g) An unaudited statement of assets, liabilities and capital
of MuniVest Michigan and an unaudited schedule of investments of MuniVest
Michigan, each as of the Valuation Time, will be furnished to each of MuniYield
Michigan and MuniHoldings Michigan at or prior to the Exchange Date for the
purpose of determining the number of shares of MuniYield Michigan Common Stock
and MuniYield Michigan Series B AMPS to be issued to MuniVest Michigan pursuant
to Section 5 of this Agreement; each will fairly present the financial position
of MuniVest Michigan as of the Valuation Time in conformity with generally
accepted accounting principles applied on a consistent basis.
(h) There are no material legal, administrative or other
proceedings pending or, to the knowledge of MuniVest Michigan, threatened
against it which assert liability on the part of MuniVest Michigan or which
materially affect its financial condition or its ability to consummate the
Reorganization. MuniVest Michigan is not charged with or, to the best of its
knowledge, threatened with any violation or investigation of any possible
violation of any provisions of any Federal, state or local law or regulation or
administrative ruling relating to any aspect of its business.
(i) There are no material contracts outstanding to which
MuniVest Michigan is a party that have not been disclosed in the N-14
Registration Statement or will not otherwise be disclosed to MuniYield Michigan
and MuniHoldings Michigan prior to the Valuation Time.
(j) MuniVest Michigan is not obligated under any provision of
its Articles of Incorporation, as amended, or its by-laws, as amended, or a
party to any contract or other commitment or obligation, and is not subject to
any order or decree which would be violated by its execution of or performance
under this Agreement, except insofar as the Funds have mutually agreed to amend
such contract or other commitment or obligation to cure any potential violation
as a condition precedent to the Reorganization.
(k) MuniVest Michigan has no known liabilities of a material
amount, contingent or otherwise, other than those shown on its statements of
assets, liabilities and capital referred to above, those incurred in the
ordinary course of its business as an investment company since October 31, 1998
and those incurred in connection with the Reorganization. As of the Valuation
Time, MuniVest Michigan will advise MuniYield Michigan and MuniHoldings
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Michigan in writing of all known liabilities, contingent or otherwise, whether
or not incurred in the ordinary course of business, existing or accrued as of
such time.
(l) MuniVest Michigan has filed, or has obtained extensions to
file, all Federal, state and local tax returns which are required to be filed by
it, and has paid or has obtained extensions to pay, all Federal, state and local
taxes shown on said returns to be due and owing and all assessments received by
it, up to and including the taxable year in which the Exchange Date occurs. All
tax liabilities of MuniVest Michigan have been adequately provided for on its
books, and no tax deficiency or liability of MuniVest Michigan has been asserted
and no question with respect thereto has been raised by the Internal Revenue
Service or by any state or local tax authority for taxes in excess of those
already paid, up to and including the taxable year in which the Exchange Date
occurs.
(m) At both the Valuation Time and the Exchange Date, MuniVest
Michigan will have full right, power and authority to sell, assign, transfer and
deliver the MuniVest Michigan Investments. At the Exchange Date, subject only to
the obligation to deliver the MuniVest Michigan Investments as contemplated by
this Agreement, MuniVest Michigan will have good and marketable title to all of
the MuniVest Michigan Investments, and MuniYield Michigan will acquire all of
the MuniVest Michigan Investments free and clear of any encumbrances, liens or
security interests and without any restrictions upon the transfer thereof
(except those imposed by the Federal or state securities laws and those
imperfections of title or encumbrances as do not materially detract from the
value or use of the MuniVest Michigan Investments or materially affect title
thereto).
(n) No consent, approval, authorization or order of any court
or governmental authority is required for the consummation by MuniVest Michigan
of the Reorganization, except such as may be required under the 1933 Act, the
1934 Act, the 1940 Act or state securities laws.
(o) The N-14 Registration Statement, on its effective date, at
the time of the stockholders' meetings referred to in Section 7(a) of this
Agreement and on the Exchange Date, insofar as it relates to MuniVest Michigan
(i) complied or will comply in all material respects with the provisions of the
1933 Act, the 1934 Act and the 1940 Act and the rules and regulations
thereunder, and (ii) did not or will 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; and the Joint Proxy
Statement and Prospectus included therein did not or will not contain any untrue
statement of a material fact or omit to state any material fact necessary 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 apply only to statements in or omissions
from the N-14 Registration Statement made in reliance upon and in conformity
with information furnished by MuniVest Michigan for use in the N-14 Registration
Statement as provided in Section 7(e) of this Agreement.
(p) MuniVest Michigan is authorized to issue 200,000,000
shares of capital stock, of which 2,000 shares have been designated as AMPS and
199,998,000 shares have been
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designated as common stock, par value $.10 per share; each outstanding share of
which is fully paid and nonassessable and has full voting rights.
(q) All of the issued and outstanding shares of MuniVest
Michigan Common Stock and MuniVest Michigan AMPS were offered for sale and sold
in conformity with all applicable Federal and state securities laws.
(r) The books and records of MuniVest Michigan made available
to MuniYield Michigan and MuniHoldings Michigan and/or their counsel are
substantially true and correct and contain no material misstatements or
omissions with respect to the operations of MuniVest Michigan.
(s) MuniVest Michigan will not sell or otherwise dispose of
any of the shares of MuniYield Michigan Common Stock or MuniYield Michigan
Series B AMPS to be received in the Reorganization, except in distribution to
the stockholders of MuniVest Michigan, as provided in Section 4 of this
Agreement.
3. Representations and Warranties of MuniHoldings Michigan.
MuniHoldings Michigan represents and warrants to, and agrees with,
MuniYield Michigan and MuniVest Michigan that:
(a) MuniHoldings Michigan is a corporation duly organized,
validly existing and in good standing in conformity with the laws of the State
of Maryland, and has the power to own all of its assets and to carry out this
Agreement. MuniHoldings Michigan has all necessary Federal, state and local
authorizations to carry on its business as it is now being conducted and to
carry out this Agreement.
(b) MuniHoldings Michigan is duly registered under the 1940
Act as a non-diversified, closed-end management investment company (File No.
811-9125), and such registration has not been revoked or rescinded and is in
full force and effect. MuniHoldings Michigan has elected and qualified for the
special tax treatment afforded RICs under Sections 851-855 of the Code at all
times since its inception, and intends to continue to so qualify through its
taxable year ending upon liquidation.
(c) As used in this Agreement, the term "MuniHoldings Michigan
Investments" shall mean (i) the investments of MuniHoldings Michigan shown on
the schedule of its investments as of the Valuation Time furnished to each of
MuniYield Michigan and MuniVest Michigan; and (ii) all other assets owned by
MuniHoldings Michigan or liabilities incurred as of the Valuation Time. The
MuniHoldings Michigan Investments together with the MuniVest Michigan
Investments may sometimes be referred to herein collectively as the "Acquired
Fund Investments."
(d) MuniHoldings Michigan has full power and authority to
enter into and perform its obligations under this Agreement. The execution,
delivery and performance of this
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Agreement has been duly authorized by all necessary action of its Board of
Directors and this Agreement constitutes a valid and binding contract
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, moratorium, fraudulent conveyance and similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto.
(e) Each of MuniYield Michigan and MuniVest Michigan has been
furnished with MuniHoldings Michigan's Annual Report to Stockholders for the
period ended September 30, 1998, and the audited financial statements appearing
therein fairly present the financial position of MuniHoldings Michigan as of the
respective dates indicated, in conformity with generally accepted accounting
principles applied on a consistent basis.
(f) Each of MuniYield Michigan and MuniVest Michigan has been
furnished with MuniHoldings Michigan's Semi-Annual report to Stockholders for
the period ended March 31, 1999, and the unaudited financial statements
appearing therein fairly present the financial position of MuniHoldings Michigan
as of the respective dates indicated, in conformity with generally accepted
accounting principles applied on a consistent basis.
(g) An unaudited statement of assets, liabilities and capital
of MuniHoldings Michigan and an unaudited schedule of investments of
MuniHoldings Michigan, each as of the Valuation Time, will be furnished to each
of MuniYield Michigan and MuniVest Michigan at or prior to the Exchange Date for
the purpose of determining the number of shares of MuniYield Michigan Common
Stock and MuniYield Michigan Series C AMPS to be issued to MuniHoldings Michigan
pursuant to Section 5 of this Agreement; each will fairly present the financial
position of MuniHoldings Michigan as of the Valuation Time in conformity with
generally accepted accounting principles applied on a consistent basis.
(h) There are no material legal, administrative or other
proceedings pending or, to the knowledge of MuniHoldings Michigan, threatened
against it which assert liability on the part of MuniHoldings Michigan or which
materially affect its financial condition or its ability to consummate the
Reorganization. MuniHoldings Michigan is not charged with or, to the best of its
knowledge, threatened with any violation or investigation of any possible
violation of any provisions of any Federal, state or local law or regulation or
administrative ruling relating to any aspect of its business.
(i) There are no material contracts outstanding to which
MuniHoldings Michigan is a party that have not been disclosed in the N-14
Registration Statement or will not otherwise be disclosed to MuniYield Michigan
and MuniVest Michigan prior to the Valuation Time.
(j) MuniHoldings Michigan is not obligated under any provision
of its Articles of Incorporation, as amended, or its by-laws, as amended, or a
party to any contract or other commitment or obligation, and is not subject to
any order or decree which would be violated by its execution of or performance
under this Agreement, except insofar as the Funds have mutually agreed to amend
such contract or other commitment or obligation to cure any potential violation
as a condition precedent to the Reorganization.
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(k) MuniHoldings Michigan has no known liabilities of a
material amount, contingent or otherwise, other than those shown on its
statements of assets, liabilities and capital referred to above, those incurred
in the ordinary course of its business as an investment company since September
30, 1998 and those incurred in connection with the Reorganization. As of the
Valuation Time, MuniHoldings Michigan will advise MuniYield Michigan and
MuniVest Michigan in writing of all known liabilities, contingent or otherwise,
whether or not incurred in the ordinary course of business, existing or accrued
as of such time.
(l) MuniHoldings Michigan has filed, or has obtained
extensions to file, all Federal, state and local tax returns which are required
to be filed by it, and has paid or has obtained extensions to pay, all Federal,
state and local taxes shown on said returns to be due and owing and all
assessments received by it, up to and including the taxable year in which the
Exchange Date occurs. All tax liabilities of MuniHoldings Michigan have been
adequately provided for on its books, and no tax deficiency or liability of
MuniHoldings Michigan has been asserted and no question with respect thereto has
been raised by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid, up to and including the
taxable year in which the Exchange Date occurs.
(m) At both the Valuation Time and the Exchange Date,
MuniHoldings Michigan will have full right, power and authority to sell, assign,
transfer and deliver the MuniHoldings Michigan Investments. At the Exchange
Date, subject only to the obligation to deliver the MuniHoldings Michigan
Investments as contemplated by this Agreement, MuniHoldings Michigan will have
good and marketable title to all of the MuniHoldings Michigan Investments, and
MuniYield Michigan will acquire all of the MuniHoldings Michigan Investments
free and clear of any encumbrances, liens or security interests and without any
restrictions upon the transfer thereof (except those imposed by the Federal or
state securities laws and those imperfections of title or encumbrances as do not
materially detract from the value or use of the MuniHoldings Michigan
Investments or materially affect title thereto).
(n) No consent, approval, authorization or order of any court
or governmental authority is required for the consummation by MuniHoldings
Michigan of the Reorganization, except such as may be required under the 1933
Act, the 1934 Act, the 1940 Act or state securities laws.
(o) The N-14 Registration Statement, on its effective date, at
the time of the stockholders' meetings referred to in Section 7(a) of this
Agreement and on the Exchange Date, insofar as it relates to MuniHoldings
Michigan (i) complied or will comply in all material respects with the
provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder, and (ii) did not or will 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; and
the Joint Proxy Statement and Prospectus included therein did not or will not
contain any untrue statement of a material fact or omit to state any material
fact necessary 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
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subsection shall apply only to statements in or omissions from the N-14
Registration Statement made in reliance upon and in conformity with information
furnished by MuniHoldings Michigan for use in the N-14 Registration Statement as
provided in Section 7(e) of this Agreement.
(p) MuniHoldings Michigan is authorized to issue 200,000,000
shares of capital stock, of which 1,600 shares have been designated as Series A
AMPS, and 199,998,400 shares have been designated as common stock, par value
$.10 per share; each outstanding share of which is fully paid and nonassessable
and has full voting rights.
(q) All of the issued and outstanding shares of MuniHoldings
Michigan Common Stock and MuniHoldings Michigan AMPS were offered for sale and
sold in conformity with all applicable Federal and state securities laws.
(r) The books and records of MuniHoldings Michigan made
available to MuniYield Michigan and MuniVest Michigan and/or their counsel are
substantially true and correct and contain no material misstatements or
omissions with respect to the operations of MuniHoldings Michigan.
(s) MuniHoldings Michigan will not sell or otherwise dispose
of any of the shares of MuniYield Michigan Common Stock or MuniYield Michigan
Series C AMPS to be received in the Reorganization, except in distribution to
the stockholders of MuniHoldings Michigan, as provided in Section 4 of this
Agreement.
4. The Reorganization.
(a) Subject to receiving the requisite approvals of the
stockholders of each of the Funds, and to the other terms and conditions
contained herein, (i) MuniVest Michigan agrees to convey, transfer and deliver
to MuniYield Michigan and MuniYield Michigan agrees to acquire from MuniVest
Michigan on the Exchange Date, all of the MuniVest Michigan Investments
(including interest accrued as of the Valuation Time on debt instruments) and
assume substantially all of the liabilities of MuniVest Michigan in exchange
solely for that number of shares of MuniYield Michigan Common Stock and
MuniYield Michigan Series B AMPS provided in Section 5 of this Agreement; and
(ii) MuniHoldings Michigan agrees to convey, transfer and deliver to MuniYield
Michigan and MuniYield Michigan agrees to acquire from MuniHoldings Michigan on
the Exchange Date, all of the MuniHoldings Michigan Investments (including
interest accrued as of the Valuation Time on debt instruments) and assume
substantially all of the liabilities of MuniHoldings Michigan in exchange solely
for that number of shares of MuniYield Michigan Common Stock and MuniYield
Michigan Series C AMPS provided in Section 5 of this Agreement.
Pursuant to this Agreement, as soon as practicable after the
Exchange Date (i) MuniVest Michigan will distribute all shares of MuniYield
Michigan Common Stock and MuniYield Michigan Series B AMPS received by it to its
stockholders in exchange for their shares of MuniVest Michigan Common Stock and
MuniVest Michigan AMPS; and (ii) MuniHoldings Michigan will distribute all
shares of MuniYield Michigan Common Stock and
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MuniYield Michigan Series C AMPS received by it to its stockholders in exchange
for their shares of MuniHoldings Michigan Common Stock and MuniHoldings Michigan
AMPS. Such distributions shall be accomplished by the opening of stockholder
accounts on the stock ledger records of MuniYield Michigan in the amounts due
the stockholders of each Acquired Fund based on their respective holdings in
such Acquired Fund as of the Valuation Time.
(b) Prior to the Exchange Date, each Acquired Fund shall
declare a dividend or dividends which, together with all such previous
dividends, shall have the effect of distributing to their respective
stockholders all of their respective net investment company taxable income to
and including the Exchange Date, if any (computed without regard to any
deduction for dividends paid), and all of its net capital gain, if any, realized
to and including the Exchange Date. In this regard and in connection with the
Reorganization, the last dividend period for the MuniVest Michigan AMPS and the
MuniHoldings Michigan AMPS prior to the Exchange Date may be shorter than the
dividend period for such AMPS determined as set forth in the applicable Articles
Supplementary.
(c) Each of the Acquired Funds will pay or cause to be paid to
MuniYield Michigan any interest such Acquired Fund receives on or after the
Exchange Date with respect to any of the Acquired Fund Investments transferred
to MuniYield Michigan hereunder.
(d) The Valuation Time shall be 4:00 p.m., Eastern time, on
February __, 2000, or such earlier or later day and time as may be mutually
agreed upon in writing (the "Valuation Time").
(e) Recourse for liabilities assumed from each Acquired Fund
by MuniYield Michigan in the Reorganization will be limited to the net assets of
each such fund acquired by MuniYield Michigan. The known liabilities of the
Acquired Funds, as of the Valuation Time, shall be confirmed in writing to
MuniYield Michigan pursuant to Sections 2(k) and 3(k) of this Agreement.
(f) The Funds will jointly file Articles of Transfer with the
Maryland Department and any other such instrument as may be required by the
State of Maryland to effect the transfer of the Acquired Fund Investments.
(g) The Acquired Funds will each be dissolved following the
Exchange Date by filing separate Articles of Dissolution with the Maryland
Department.
(h) MuniYield Michigan will file with the Maryland Department
Articles Supplementary to its Articles of Incorporation establishing the powers,
rights and preferences of the MuniYield Michigan Series B AMPS and the MuniYield
Michigan Series C AMPS prior to the closing of the Reorganization.
(i) As promptly as practicable after the liquidation of each
of the Acquired Fund pursuant to the Reorganization, each Acquired Fund shall
terminate its respective registration under the 1940 Act.
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5. Issuance and Valuation of MuniYield Michigan Common Stock,
MuniYield Michigan Series B AMPS and MuniYield Michigan Series
C AMPS in the Reorganization.
Full shares of MuniYield Michigan Common Stock and MuniYield Michigan
Series B AMPS of an aggregate net asset value or liquidation preference, as the
case may be, equal (to the nearest one then thousandth of one cent) to the value
of the assets of MuniVest Michigan acquired in the Reorganization determined as
hereinafter provided, reduced by the amount of liabilities of MuniVest Michigan
assumed by MuniYield Michigan in the Reorganization, shall be issued by
MuniYield Michigan to MuniVest Michigan in exchange for such assets of MuniVest
Michigan, plus cash in lieu of fractional shares. MuniYield Michigan will issue
to MuniVest Michigan (a) a number of shares of MuniYield Michigan Common Stock,
the aggregate net asset value of which will equal the aggregate net asset value
of the shares of MuniVest Michigan Common Stock, determined as set forth below,
and (b) a number of shares of MuniYield Michigan Series B AMPS, the aggregate
liquidation preference and value of which will equal the aggregate liquidation
preference and value of the MuniVest Michigan AMPS, determined as set forth
below.
Full shares of MuniYield Michigan Common Stock and MuniYield Michigan
Series C AMPS of an aggregate net asset value or liquidation preference, as the
case may be, equal (to the nearest one ten thousandth of one cent) to the value
of the assets of MuniHoldings Michigan acquired in the Reorganization determined
as hereinafter provided, reduced by the amount of liabilities of MuniHoldings
Michigan assumed by MuniYield Michigan in the Reorganization, shall be issued by
MuniYield Michigan to MuniHoldings Michigan in exchange for such assets of
MuniHoldings Michigan, plus cash in lieu of fractional shares. MuniYield
Michigan will issue to MuniHoldings Michigan (a) a number of shares of MuniYield
Michigan Common Stock, the aggregate net asset value of which will equal the
aggregate net asset value of the shares of MuniHoldings Michigan Common Stock,
determined as set forth below, and (b) a number of shares of MuniYield Michigan
Series C AMPS, the aggregate liquidation preference and value of which will
equal the aggregate liquidation preference and value of the MuniHoldings
Michigan AMPS, determined as set forth below.
The net asset value of each of the Funds and the liquidation preference
and value of the AMPS of each of the Funds shall be determined as of the
Valuation Time in accordance with the procedures described in (i) the prospectus
of MuniYield Michigan, October 23, 1992, relating to the MuniYield Michigan
Common Stock and (ii) the final prospectus of MuniYield Michigan, dated November
16, 1992 relating to the MuniYield Michigan AMPS, and no formula will be used to
adjust the net asset value so determined of any Fund to take into account
differences in realized and unrealized gains and losses. Values in all cases
shall be determined as of the Valuation Time. The value of the Acquired Fund
Investments to be transferred to MuniYield Michigan shall be determined by
MuniYield Michigan pursuant to the procedures utilized by MuniYield Michigan in
valuing its own assets and determining its own liabilities for purposes of the
Reorganization. Such valuation and determination shall be made by MuniYield
Michigan in cooperation with the Acquired Funds and shall be confirmed in
writing by MuniYield Michigan
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to the Acquired Funds. The net asset value per share of the MuniYield Michigan
Common Stock and the liquidation preference and value per share of the MuniYield
Michigan Series B AMPS and the MuniYield Michigan Series C AMPS shall be
determined in accordance with such procedures and MuniYield Michigan shall
certify the computations involved. For purposes of determining the net asset
value of a share of Common Stock of each Fund, the value of the securities held
by the Fund plus any cash or other assets (including interest accrued but not
yet received) minus all liabilities (including accrued expenses) and the
aggregate liquidation value of the outstanding shares of AMPS of that Fund is
divided by the total number of shares of Common Stock of that Fund outstanding
at such time.
MuniYield Michigan shall issue to MuniVest Michigan separate
certificates or share deposit receipts for the MuniYield Michigan Common Stock
and the MuniYield Michigan Series B AMPS, each registered in the name of
MuniVest Michigan. MuniVest Michigan then shall distribute the MuniYield
Michigan Common Stock and the MuniYield Michigan Series B AMPS to the holders of
MuniVest Michigan Common Stock and MuniVest Michigan AMPS by redelivering the
certificates or share deposit receipts evidencing ownership of (i) the MuniYield
Michigan Common Stock to The Bank of New York, as the transfer agent and
registrar for the MuniYield Michigan Common Stock for distribution to the
holders of MuniVest Michigan Common Stock on the basis of such holder's
proportionate interest in the aggregate net asset value of the Common Stock of
MuniVest Michigan and (ii) the MuniYield Michigan Series B AMPS to The Bank of
New York as the transfer agent and registrar for the MuniYield Michigan Series B
AMPS for distribution to the holders of MuniVest Michigan AMPS on the basis of
such holder's proportionate interest in the aggregate liquidation preference and
value of the AMPS of MuniVest Michigan. With respect to any MuniVest Michigan
stockholder holding certificates evidencing ownership of either MuniVest
Michigan Common Stock or MuniVest Michigan AMPS as of the Exchange Date, and
subject to MuniYield Michigan being informed thereof in writing by MuniVest
Michigan, MuniYield Michigan will not permit such stockholder to receive new
certificates evidencing ownership of the MuniYield Michigan Common Stock or
MuniYield Michigan Series B AMPS, exchange MuniYield Michigan Common Stock or
MuniYield Michigan Series B AMPS credited to such stockholder's account for
shares of other investment companies managed by MLAM or any of its affiliates,
or pledge or redeem such MuniYield Michigan Common Stock or MuniYield Michigan
Series B AMPS, in any case, until notified by MuniVest Michigan or its agent
that such stockholder has surrendered his or her outstanding certificates
evidencing ownership of MuniVest Michigan Common Stock or MuniVest Michigan AMPS
or, in the event of lost certificates, posted adequate bond. MuniVest Michigan,
at its own expense, will request its stockholders to surrender their outstanding
certificates evidencing ownership of MuniVest Michigan Common Stock or MuniVest
Michigan AMPS, as the case may be, or post adequate bond therefor.
MuniYield Michigan shall issue to MuniHoldings Michigan separate
certificates or share deposit receipts for the MuniYield Michigan Common Stock
and the MuniYield Michigan Series C AMPS, each registered in the name of
MuniHoldings Michigan. MuniHoldings Michigan then shall distribute the MuniYield
Michigan Common Stock and the MuniYield Michigan Series C AMPS to the holders of
MuniHoldings Michigan Common Stock and
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MuniHoldings Michigan AMPS by redelivering the certificates or share deposit
receipts evidencing ownership of (i) the MuniYield Michigan Common Stock to The
Bank of New York, as the transfer agent and registrar for the MuniYield Michigan
Common Stock for distribution to the holders of MuniHoldings Michigan Common
Stock on the basis of such holder's proportionate interest in the aggregate net
asset value of the Common Stock of MuniHoldings Michigan and (ii) the MuniYield
Michigan Series C AMPS to The Bank of New York as the transfer agent and
registrar for the MuniYield Michigan Series C AMPS for distribution to the
holders of MuniHoldings Michigan AMPS on the basis of such holder's
proportionate interest in the aggregate liquidation preference and value of the
AMPS of MuniHoldings Michigan. With respect to any MuniHoldings Michigan
stockholder holding certificates evidencing ownership of either MuniHoldings
Michigan Common Stock or MuniHoldings Michigan AMPS as of the Exchange Date, and
subject to MuniYield Michigan being informed thereof in writing by MuniHoldings
Michigan, MuniYield Michigan will not permit such stockholder to receive new
certificates evidencing ownership of MuniYield Michigan Common Stock or
MuniYield Michigan Series C AMPS, exchange MuniYield Michigan Common Stock or
MuniYield Michigan Series C AMPS credited to such stockholder's account for
shares of other investment companies managed by MLAM or any of its affiliates,
or pledge or redeem such MuniYield Michigan Common Stock or MuniYield Michigan
Series C AMPS, in any case, until notified by MuniHoldings Michigan or its agent
that such stockholder has surrendered his or her outstanding certificates
evidencing ownership of MuniHoldings Michigan Common Stock or MuniHoldings
Michigan AMPS or, in the event of lost certificates, posted adequate bond.
MuniHoldings Michigan, at its own expense, will request its stockholders to
surrender their outstanding certificates evidencing ownership of MuniHoldings
Michigan Common Stock or MuniHoldings Michigan AMPS, as the case may be, or post
adequate bond therefor.
Dividends payable to holders of record of shares of MuniYield Michigan
Common Stock, MuniYield Michigan Series B AMPS or MuniYield Michigan Series C
AMPS, as the case may be, as of any date after the Exchange Date and prior to
the exchange of certificates by any stockholder of an Acquired Fund shall be
payable to such stockholder without interest; however, such dividends shall not
be paid unless and until such stockholder surrenders the stock certificates
representing shares of common stock or AMPS of the Acquired Funds, as the case
may be, for exchange.
No fractional shares of MuniYield Michigan Common Stock will be issued
to holders of MuniVest Michigan Common Stock or MuniHoldings Michigan Common
Stock. In lieu thereof, MuniYield Michigan's transfer agent, The Bank of New
York, will aggregate all fractional shares of MuniYield Michigan Common Stock
and sell the resulting full shares on the New York Stock Exchange at the current
market price for shares of MuniYield Michigan Common Stock for the account of
all holders of fractional interests, and each such holder will receive such
holder's pro rata share of the proceeds of such sale upon surrender of such
holder's certificates representing MuniVest Michigan Common Stock or
MuniHoldings Michigan Common Stock.
6. Payment of Expenses.
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(a) With respect to expenses incurred in connection with the
Reorganization, (i) each Fund shall pay all expenses incurred that are
attributable solely to such Fund and the conduct of its business, and (ii)
MuniYield Michigan shall pay, subsequent to the Exchange Date and pro rata
according to each Fund's net assets on the Exchange Date, all expenses incurred
in connection with the Reorganization, including, but not limited to, all costs
related to the preparation and distribution of the N-14 Registration Statement.
Such fees and expenses shall include the cost of preparing and filing a ruling
request with the Internal Revenue Service, legal and accounting fees, printing
costs, filing fees, stock exchange fees, rating agency fees, portfolio transfer
taxes (if any) and any similar expenses incurred in connection with the
Reorganization.
(b) If for any reason the Reorganization is not consummated,
no party shall be liable to any other party for any damages resulting therefrom,
including, without limitation, consequential damages.
7. Covenants of the Funds.
(a) Each Fund agrees to call an annual meeting of its
stockholders as soon as is practicable after the effective date of the N-14
Registration Statement for the purpose of considering the Reorganization as
described in this Agreement.
(b) Each Fund covenants to operate its business as presently
conducted between the date hereof and the Exchange Date.
(c) Each Acquired Fund agrees that following the consummation
of the Reorganization, it will dissolve in accordance with the laws of the State
of Maryland and any other applicable law, it will not make any distributions of
any shares of MuniYield Michigan Common Stock, MuniYield Michigan Series B AMPS
or MuniYield Michigan Series C AMPS, as applicable other than to its respective
stockholders and without first paying or adequately providing for the payment of
all of its respective liabilities not assumed by MuniYield Michigan, if any, and
on and after the Exchange Date it shall not conduct any business except in
connection with its dissolution.
(d) Each Acquired Fund undertakes that if the Reorganization
is consummated, it will file an application pursuant to Section 8(f) of the 1940
Act for an order declaring that such Acquired Fund has ceased to be a registered
investment company.
(e) MuniYield Michigan will file the N-14 Registration
Statement with the Securities and Exchange Commission (the "Commission") and
will use its best efforts to provide that the N-14 Registration Statement
becomes effective as promptly as practicable. Each Fund agrees to cooperate
fully with the others, and each will furnish to the others the information
relating to itself to be set forth in the N-14 Registration Statement as
required by the 1933 Act, the 1934 Act, the 1940 Act, and the rules and
regulations thereunder and the state securities laws.
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(f) MuniYield Michigan has no plan or intention to sell or
otherwise dispose of the Acquired Fund Investments, except for dispositions made
in the ordinary course of business.
(g) Each of the Funds agrees that by the Exchange Date all of
its Federal and other tax returns and reports required to be filed on or before
such date shall have been filed and all taxes shown as due on said returns
either have been paid or adequate liability reserves have been provided for the
payment of such taxes. In connection with this covenant, the Funds agree to
cooperate with each other in filing any tax return, amended return or claim for
refund, determining a liability for taxes or a right to a refund of taxes or
participating in or conducting any audit or other proceeding in respect of
taxes. MuniYield Michigan agrees to retain for a period of ten (10) years
following the Exchange Date all returns, schedules and work papers and all
material records or other documents relating to tax matters of the Acquired
Funds for each of such Fund's taxable period first ending after the Exchange
Date and for all prior taxable periods. Any information obtained under this
subsection shall be kept confidential except as otherwise may be necessary in
connection with the filing of returns or claims for refund or in conducting an
audit or other proceeding. After the Exchange Date, each of the Acquired Funds
shall prepare, or cause its agents to prepare, any Federal, state or local tax
returns, including any Forms 1099, required to be filed by such fund with
respect to its final taxable year ending with its complete liquidation and for
any prior periods or taxable years and further shall cause such tax returns and
Forms 1099 to be duly filed with the appropriate taxing authorities.
Notwithstanding the aforementioned provisions of this subsection, any expenses
incurred by the Acquired Funds (other than for payment of taxes) in connection
with the preparation and filing of said tax returns and Forms 1099 after the
Exchange Date shall be borne by each such Fund to the extent such expenses have
been accrued by such Fund in the ordinary course without regard to the
Reorganization; any excess expenses shall be borne by Fund Asset Management,
L.P. ("FAM") at the time such tax returns and Forms 1099 are prepared.
(h) The Funds each agree to mail to its respective
stockholders of record entitled to vote at the annual meeting of stockholders at
which action is to be considered regarding this Agreement, in sufficient time to
comply with requirements as to notice thereof, a combined proxy statement and
prospectus which complies in all material respects with the applicable
provisions of Section 14(a) of the 1934 Act and Section 20(a) of the 1940 Act,
and the rules and regulations, respectively, thereunder.
(i) Following the consummation of the Reorganization,
MuniYield Michigan will stay in existence and continue its business as a
non-diversified, closed-end management investment company registered under the
1940 Act.
8. Exchange Date.
(a) Delivery of the assets of the Acquired Funds to be
transferred, together with any other Acquired Fund Investments, and the shares
of MuniYield Michigan Common Stock, MuniYield Michigan Series B AMPS and
MuniYield Michigan Series C AMPS to be issued as provided in this Agreement,
shall be made at the offices of Xxxxx & Xxxx LLP, One
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Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m. on the next full
business day following the Valuation Time, or at such other place, time and date
agreed to by the Funds, the date and time upon which such delivery is to take
place being referred to herein as the "Exchange Date." To the extent that any
Acquired Fund Investments, for any reason, are not transferable on the Exchange
Date, the applicable Acquired Fund shall cause such Acquired Fund Investments to
be transferred to MuniYield Michigan's account with The Bank of New York at the
earliest practicable date thereafter.
(b) Each of the Acquired Funds will deliver to MuniYield
Michigan on the Exchange Date confirmations or other adequate evidence as to the
tax basis of each of their respective Acquired Fund Investments delivered to
MuniYield Michigan hereunder, certified by and Deloitte & Touche LLP (for
MuniVest Michigan and MuniHoldings Michigan).
(c) As soon as practicable after the close of business on the
Exchange Date, each of the Acquired Funds shall deliver to MuniYield Michigan a
list of the names and addresses of all of the stockholders of record of such
Acquired Fund on the Exchange Date and the number of shares of common stock and
AMPS of such Acquired Fund owned by each such stockholder, certified to the best
of their knowledge and belief by the applicable transfer agent for such Acquired
Fund or by its President.
9. Conditions of the Acquired Funds.
The obligations of each Acquired Fund hereunder shall be subject to the
following conditions:
(a) That this Agreement shall have been adopted, and the
Reorganization shall have been approved, by the affirmative vote of two-thirds
of the members of the Board of Directors of each of the Funds and by the
affirmative vote of (i) the holders of (a) a majority of the MuniYield Michigan
Common Stock and MuniYield Michigan AMPS, voting together as a single class, and
(b) a majority of the MuniYield Michigan AMPS, voting separately as a class, in
each case issued and outstanding and entitled to vote thereon; (ii) the holders
of (a) a majority of the MuniVest Michigan Common Stock and MuniVest Michigan
AMPS, voting together as a single class, and (b) a majority of the MuniVest
Michigan AMPS, voting separately as a class, in each case issued and outstanding
and entitled to vote thereon; (iii) the holders of (a) a majority of the
MuniHoldings Michigan Common Stock and MuniHoldings Michigan AMPS, voting
together as a single class, and (b) a majority of the MuniHoldings Michigan
AMPS, voting separately as a class, in each case issued and outstanding and
entitled to vote thereon; and further that each Fund shall have delivered to
each other Fund a copy of the resolution approving this Agreement adopted by
such Fund's Board of Directors, and a certificate setting forth the vote of such
Fund's stockholders obtained at its Annual Meeting, each certified by the
Secretary of the appropriate Fund.
(b) That each Acquired Fund shall have received from MuniYield
Michigan and from each other Acquired Fund a statement of assets, liabilities
and capital, with values determined as provided in Section 5 of this Agreement,
together with a schedule of such fund's
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investments, all as of the Valuation Time, certified on the Fund's behalf by its
President (or any Vice President) and its Treasurer, and a certificate signed by
the Fund's President (or any Vice President) and its Treasurer, dated as of the
Exchange Date, certifying that as of the Valuation Time and as of the Exchange
Date there has been no material adverse change in the financial position of the
Fund since the date of such Fund's most recent Annual or Semi-Annual Report as
applicable, other than changes in its portfolio securities since that date or
changes in the market value of its portfolio securities.
(c) That MuniYield Michigan shall have furnished to the
Acquired Funds a certificate signed by MuniYield Michigan's President (or any
Vice President) and its Treasurer, dated as of the Exchange Date, certifying
that, as of the Valuation Time and as of the Exchange Date all representations
and warranties of MuniYield Michigan made in this Agreement are true and correct
in all material respects with the same effect as if made at and as of such
dates, and that MuniYield Michigan has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied at or
prior to each of such dates.
(d) That there shall not be any material litigation pending
with respect to the matters contemplated by this Agreement.
(e) That the Acquired Funds shall have received an opinion or
opinions of Xxxxx & Xxxx LLP, as counsel to the Funds, in form and substance
satisfactory to the Acquired Funds and dated the Exchange Date, to the effect
that (i) each of the Funds is a corporation duly organized, validly existing and
in good standing in conformity with the laws of the State of Maryland; (ii) the
shares of MuniYield Michigan Common Stock, MuniYield Michigan Series B AMPS and
MuniYield Michigan Series C AMPS to be issued pursuant to this Agreement are
duly authorized and, upon delivery, will be validly issued and outstanding and
fully paid and nonassessable by MuniYield Michigan, and no stockholder of
MuniYield Michigan has any preemptive right to subscription or purchase in
respect thereof (pursuant to the Articles of Incorporation or the by-laws of
MuniYield Michigan or the state law of Maryland, or to the best of such
counsel's knowledge, otherwise); (iii) this Agreement has been duly authorized,
executed and delivered by each of the Funds, and represents a valid and binding
contract, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization or other similar laws
pertaining to the enforcement of creditors' rights generally and court decisions
with respect thereto; provided, such counsel shall express no opinion with
respect to the application of equitable principles in any proceeding, whether at
law or in equity; (iv) the execution and delivery of this Agreement does not,
and the consummation of the Reorganization will not, violate any material
provisions of Maryland law or the Articles of Incorporation, as amended, the
by-laws, as amended, or any agreement (known to such counsel) to which any Fund
is a party or by which any Fund is bound, except insofar as the parties have
agreed to amend such provision as a condition precedent to the Reorganization;
(v) each of the Acquired Funds has the power to sell, assign, transfer and
deliver the assets transferred by it hereunder and, upon consummation of the
Reorganization in accordance with the terms of this Agreement, each of the
Acquired Funds will have duly transferred such assets and liabilities in
accordance with this Agreement; (vi) to the best of such counsel's knowledge, no
consent,
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approval, authorization or order of any United States federal court, Maryland
state court or governmental authority is required for the consummation by the
Funds of the Reorganization, except such as have been obtained under the 1933
Act, the 1934 Act and the 1940 Act and the published rules and regulations of
the Commission thereunder and under Maryland law and such as may be required
under state securities laws; (vii) the N-14 Registration Statement has become
effective under the 1933 Act, no stop order suspending the effectiveness of the
N-14 Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the 1933 Act, and the
N-14 Registration Statement, and each amendment or supplement thereto, as of
their respective effective dates, appear on their face to be appropriately
responsive in all material respects to the requirements of the 1933 Act, the
1934 Act and the 1940 Act and the published rules and regulations of the
Commission thereunder; (viii) the descriptions in the N-14 Registration
Statement of statutes, legal and governmental proceedings and contracts and
other documents are accurate and fairly present the information required to be
shown; (ix) the information in the Joint Proxy Statement and Prospectus under
"Comparison of the Funds -- Tax Rules Applicable to the Funds and their
Stockholders" and "Agreement and Plan of Reorganization -- Tax Consequences of
the Reorganization," (other than information related to Michigan law or legal
conclusions involving matters of Michigan law as to which we express no opinion)
to the extent that it constitutes matters of law, summaries of legal matters or
legal conclusions, has been reviewed by such counsel and is correct in all
material respects as of the date of the Joint Proxy Statement and Prospectus;
(x) such counsel does not know of any statutes, legal or governmental
proceedings or contracts or other documents related to the Reorganization of a
character required to be described in the N-14 Registration Statement which are
not described therein or, if required to be filed, filed as required; (xi) no
Fund, to the knowledge of such counsel, is required to qualify to do business as
a foreign corporation in any jurisdiction except as may be required by state
securities laws, and except where each has so qualified or the failure so to
qualify would not have a material adverse effect on such Fund or its respective
stockholders; (xii) such counsel does not have actual knowledge of any material
suit, action or legal or administrative proceeding pending or threatened against
any of the Funds, the unfavorable outcome of which would materially and
adversely affect such Fund; (xiii) all corporate actions required to be taken by
the Funds to authorize this Agreement and to effect the Reorganization have been
duly authorized by all necessary corporate actions on the part of such Fund; and
(xiv) such opinion is solely for the benefit of the Funds and their Directors
and officers. Such opinion also shall state that (x) while such counsel cannot
make any representation as to the accuracy or completeness of statements of fact
in the N-14 Registration Statement or any amendment or supplement thereto,
nothing has come to their attention that would lead them to believe that, on the
respective effective dates of the N-14 Registration Statement and any amendment
or supplement thereto, (1) the N-14 Registration Statement or any amendment or
supplement thereto contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading; and (2) the prospectus included in the
N-14 Registration Statement contained any untrue statement of a material fact or
omitted to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
(y) such counsel does not express any opinion or belief as to the financial
statements or other financial or statistical data relating to any Fund contained
or incorporated by
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reference in the N-14 Registration Statement. In giving the opinion set forth
above, Xxxxx & Wood LLP may state that it is relying on certificates of officers
of a Fund with regard to matters of fact and certain certificates and written
statements of governmental officials with respect to the good standing of a
Fund.
(f) That each Acquired Fund shall have received either (a) a
private letter ruling from the Internal Revenue Service or (b) an opinion of
Xxxxx & Xxxx LLP, to the effect that for Federal income tax purposes (i) the
transfer by such Acquired Fund of substantially all of its assets to MuniYield
Michigan in exchange solely for shares of MuniYield Michigan Common Stock and
MuniYield Michigan Series B AMPS or MuniYield Michigan Series C AMPS as provided
in this Agreement will constitute a reorganization within the meaning of Section
368(a)(1)(C) of the Code, and the respective Funds will each be deemed to be a
"party" to a reorganization within the meaning of Section 368(b); (ii) in
accordance with Section 361(a) of the Code, no gain or loss will be recognized
to an Acquired Fund as a result of the asset transfer solely in exchange for
shares of MuniYield Michigan Common Stock and MuniYield Michigan Series B AMPS
or MuniYield Michigan Series B AMPS as the case may be, or on the distribution
of the MuniYield Michigan stock to stockholders of the respective Acquired Fund
under Section 361(c)(1); (iii) under Section 1032 of the Code, no gain or loss
will be recognized to MuniYield Michigan on the receipt of assets of an Acquired
Fund in exchange for its shares; (iv) in accordance with Section 354(a)(1) of
the Code, no gain or loss will be recognized to the stockholders of an Acquired
Fund on the receipt of shares of MuniYield Michigan in exchange for their shares
of the Acquired Fund (except to the extent that company stockholders receive
cash representing an interest in fractional shares of MuniYield Michigan in the
Reorganization); (v) in accordance with Section 362(b) of the Code, the tax
basis of an Acquired Fund's assets in the hands of MuniYield Michigan will be
the same as the tax basis of such assets in the hands of the Acquired Fund
immediately prior to the consummation of the Reorganization; (vi) in accordance
with Section 358 of the Code, immediately after the Reorganization, the tax
basis of the shares of MuniYield Michigan received by the stockholders of an
Acquired Fund in the Reorganization will be equal, in the aggregate, to the tax
basis of the shares of the Acquired Fund surrendered in exchange; (vii) in
accordance with Section 1223 of the Code, a stockholder's holding period for the
shares of MuniYield Michigan will be determined by including the period for
which such stockholder held the Acquired Fund shares exchanged therefor,
provided, that such shares were held as a capital asset; (viii) in accordance
with Section 1223 of the Code, MuniYield Michigan's holding period with respect
to an Acquired Fund's assets transferred will include the period for which such
assets were held by the Acquired Fund; (ix) the payment of cash to common
stockholders of an Acquired Fund in lieu of fractional shares of MuniYield
Michigan Common Stock will be treated as though the fractional shares were
distributed as part of the Reorganization and then redeemed, with the result
that such stockholders will have short- or long-term capital gain or loss to the
extent that the cash distribution differs from the stockholder's basis allocable
to the MuniYield Michigan fractional shares; and (x) the taxable year of each
Acquired Fund will end on the effective date of the Reorganization and pursuant
to Section 381(a) of the Code and regulations thereunder, MuniYield Michigan
will succeed to and take into account certain tax attributes of each Acquired
Fund, such as earnings and profits, capital loss carryovers and method of
accounting.
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(g) That all proceedings taken by each of the Funds and its
counsel in connection with the Reorganization and all documents incidental
thereto shall be satisfactory in form and substance to the others.
(h) That the N-14 Registration Statement shall have become
effective under the 1933 Act, and no stop order suspending such effectiveness
shall have been instituted or, to the knowledge of MuniYield Michigan, be
contemplated by the Commission.
(i) That Acquired Funds shall have received from Ernst & Young
LLP a letter dated as of the effective date of the N-14 Registration Statement
and a similar letter dated within five days prior to the Exchange Date, in form
and substance satisfactory to them, to the effect that (i) they are independent
public accountants with respect to MuniYield Michigan within the meaning of the
1933 Act and the applicable published rules and regulations thereunder; (ii) in
their opinion, the financial statements and supplementary information of
MuniYield Michigan included or incorporated by reference in the N-14
Registration Statement and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and the
published rules and regulations thereunder; and (iii) on the basis of limited
procedures agreed upon by the Funds and described in such letter (but not an
examination in accordance with generally accepted auditing standards) consisting
of a reading of any unaudited interim financial statements and unaudited
supplementary information of MuniYield Michigan included in the N-14
Registration Statement, and inquiries of certain officials of MuniYield Michigan
responsible for financial and accounting matters, nothing came to their
attention that caused them to believe that (a) such unaudited financial
statements and related unaudited supplementary information do not comply as to
form in all material respects with the applicable accounting requirements of the
1933 Act and the published rules and regulations thereunder, (b) such unaudited
financial statements are not fairly presented in conformity with generally
accepted accounting principles, applied on a basis substantially consistent with
that of the audited financial statements, or (c) such unaudited supplementary
information is not fairly stated in all material respects in relation to the
unaudited financial statements taken as a whole; and (iv) on the basis of
limited procedures agreed upon by the Funds and described in such letter (but
not an examination in accordance with generally accepted auditing standards),
the information relating to MuniYield Michigan appearing in the N-14
Registration Statement, which information is expressed in dollars (or
percentages derived from such dollars) (with the exception of performance
comparisons, if any), if any, has been obtained from the accounting records of
MuniYield Michigan or from schedules prepared by officials of MuniYield Michigan
having responsibility for financial and reporting matters and such information
is in agreement with such records, schedules or computations made therefrom.
(j) That the Commission shall not have issued an unfavorable
advisory report under Section 25(b) of the 1940 Act, nor instituted or
threatened to institute any proceeding seeking to enjoin consummation of the
Reorganization under Section 25(c) of the 1940 Act, and no other legal,
administrative or other proceeding shall be instituted or threatened which would
materially affect the financial condition of MuniYield Michigan or would
prohibit the Reorganization.
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(k) That the Acquired Funds shall have received from the
Commission such orders or interpretations as Xxxxx & Xxxx LLP, as their counsel,
deems reasonably necessary or desirable under the 1933 Act and the 1940 Act in
connection with the Reorganization, provided, that such counsel shall have
requested such orders as promptly as practicable, and all such orders shall be
in full force and effect.
10. MuniYield Michigan Conditions.
The obligations of MuniYield Michigan hereunder shall be subject to the
following conditions:
(a) That this Agreement shall have been adopted, and the
Reorganization shall have been approved, by the Board of Directors and the
stockholders of each of the Funds as set forth in Section 9(a); and that each of
the Acquired Funds shall have delivered to MuniYield Michigan a copy of the
resolution approving this Agreement adopted by such Acquired Fund's Board of
Directors, and a certificate setting forth the vote of the stockholders of such
Acquired Fund obtained, each certified by its Secretary.
(b) That each Acquired Fund shall have furnished to MuniYield
Michigan a statement of its assets, liabilities and capital, with values
determined as provided in Section 5 of this Agreement, together with a schedule
of investments with their respective dates of acquisition and tax costs, all as
of the Valuation Time, certified on such Fund's behalf by its President (or any
Vice President) and its Treasurer, and a certificate signed by such Fund's
President (or any Vice President) and its Treasurer, dated as of the Exchange
Date, certifying that as of the Valuation Time and as of the Exchange Date there
has been no material adverse change in the financial position of the Acquired
Fund since the date of such Fund's most recent Annual Report or Semi-Annual
Report, as applicable, other than changes in the Acquired Fund Investments since
that date or changes in the market value of the Acquired Fund Investments.
(c) That each Acquired Fund shall have furnished to MuniYield
Michigan a certificate signed by such Fund's President (or any Vice President)
and its Treasurer, dated the Exchange Date, certifying that as of the Valuation
Time and as of the Exchange Date all representations and warranties of the
Acquired Fund made in this Agreement are true and correct in all material
respects with the same effect as if made at and as of such dates and the
Acquired Fund has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied at or prior to such dates.
(d) That each Acquired Fund shall have delivered to MuniYield
Michigan a letter from Deloitte & Touche LLP dated the Exchange Date, stating
that such firm has performed a limited review of the Federal, state and local
income tax returns of the Acquired Fund for the period ended (which
returns originally were prepared and filed by the Acquired Fund), and that based
on such limited review, nothing came to their attention which caused them to
believe that such returns did not properly reflect, in all material respects,
the Federal, state and local income taxes of the Acquired Fund for the period
covered thereby; and that for the period from , to and including the
Exchange Date and for any taxable year of the
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Acquired Fund ending upon the liquidation of that Acquired Fund, such firm has
performed a limited review to ascertain the amount of applicable Federal, state
and local taxes, and has determined that either such amount has been paid or
reserves have been established for payment of such taxes, this review to be
based on unaudited financial data; and that based on such limited review,
nothing has come to their attention which caused them to believe that the taxes
paid or reserves set aside for payment of such taxes were not adequate in all
material respects for the satisfaction of Federal, state and local taxes for the
period from , to and including the Exchange Date and for any taxable
year of that Acquired Fund, ending upon the liquidation of such fund or that
such fund would not qualify as a regulated investment company for Federal income
tax purposes for the tax years in question.
(e) That there shall not be any material litigation pending
with respect to the matters contemplated by this Agreement.
(f) That MuniYield Michigan shall have received an opinion of
Xxxxx & Wood LLP, as counsel to the Funds, in form and substance satisfactory to
MuniYield Michigan and dated the Exchange Date, with respect to the matters
specified in Section 9(e) of this Agreement and such other matters as MuniYield
Michigan reasonably may deem necessary or desirable.
(g) That MuniYield Michigan shall have received a private
letter ruling from the Internal Revenue Service or an opinion of Xxxxx & Xxxx
LLP with respect to the matters specified in Section 9(f) of this Agreement.
(h) That MuniYield Michigan shall have received from Deloitte
& Touche LLP for each of MuniVest Michigan and MuniHoldings Michigan a letter
dated as of the effective date of the N-14 Registration Statement and a similar
letter dated within five days prior to the Exchange Date, in form and substance
satisfactory to MuniYield Michigan, to the effect that (i) they are independent
public accountants with respect to each fund within the meaning of the 1933 Act
and the applicable published rules and regulations thereunder; (ii) in their
opinion, the financial statements and supplementary information of each fund
included or incorporated by reference in the N-14 Registration Statement and
reported on by them comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the published rules and
regulations thereunder; (iii) on the basis of limited procedures agreed upon by
the Funds and described in such letters (but not an examination in accordance
with generally accepted auditing standards) consisting of a reading of any
unaudited interim financial statements and unaudited supplementary information
of each Acquired Fund included in that fund's N-14 Registration Statement, and
inquiries of certain officials of each Acquired Fund responsible for financial
and accounting matters, nothing came to their attention that caused them to
believe that (a) such unaudited financial statements and related unaudited
supplementary information do not comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act and the published rules
and regulations thereunder, (b) such unaudited financial statements are not
fairly presented in conformity with generally accepted accounting principles,
applied on a basis substantially consistent with that of the audited
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financial statements, or (c) such unaudited supplementary information is not
fairly stated in all material respects in relation to the unaudited financial
statements taken as a whole; and (iv) on the basis of limited procedures agreed
upon by the Funds and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the information relating
to the Acquired Fund appearing in that Fund's N-14 Registration Statement, which
information is expressed in dollars (or percentages derived from such dollars)
(with the exception of performance comparisons, if any), if any, has been
obtained from the accounting records of that Acquired Fund or from schedules
prepared by officials of that Acquired Fund having responsibility for financial
and reporting matters and such information is in agreement with such records,
schedules or computations made therefrom.
(i) That the Acquired Fund Investments to be transferred to
MuniYield Michigan shall not include any assets or liabilities which MuniYield
Michigan, by reason of charter limitations or otherwise, may not properly
acquire or assume.
(j) That the N-14 Registration Statement shall have become
effective under the 1933 Act and no stop order suspending such effectiveness
shall have been instituted or, to the knowledge of any Acquired Fund, be
contemplated by the Commission.
(k) That the Commission shall not have issued an unfavorable
advisory report under Section 25(b) of the 1940 Act, nor instituted or
threatened to institute any proceeding seeking to enjoin consummation of the
Reorganization under Section 25(c) of the 1940 Act, and no other legal,
administrative or other proceeding shall be instituted or threatened which would
materially affect the financial condition of any Acquired Fund or would prohibit
the Reorganization.
(l) That MuniYield Michigan shall have received from the
Commission such orders or interpretations as Xxxxx & Wood LLP, as counsel to
MuniYield Michigan, deems reasonably necessary or desirable under the 1933 Act
and the 1940 Act in connection with the Reorganization, provided, that such
counsel shall have requested such orders as promptly as practicable, and all
such orders shall be in full force and effect.
(m) That all proceedings taken by each Acquired Fund and its
respective counsel in connection with the Reorganization and all documents
incidental thereto shall be satisfactory in form and substance to MuniYield
Michigan.
(n) That prior to the Exchange Date, each of the Acquired
Funds shall have declared a dividend or dividends which, together with all such
previous dividends, shall have the effect of distributing to its stockholders
all of its net investment company taxable income for the period to and including
the Exchange Date, if any (computed without regard to any deduction for
dividends paid), and all of its net capital gain, if any, realized to and
including the Exchange Date. In this regard, the last dividend period for the
MuniVest Michigan AMPS and the MuniHoldings Michigan AMPS may be shorter than
the dividend period for such AMPS determined as set forth in the applicable
Articles Supplementary.
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11. Termination, Postponement and Waivers.
(a) Notwithstanding anything contained in this Agreement to
the contrary, this Agreement may be terminated and the Reorganization abandoned
at any time (whether before or after adoption thereof by the stockholders of the
Funds) prior to the Exchange Date, or the Exchange Date may be postponed, (i) by
mutual consent of the Boards of Directors of the Funds, (ii) by the Board of
Directors of any Acquired Fund if any condition of such Acquired Fund's
obligations set forth in Section 9 of this Agreement has not been fulfilled or
waived by such Board; or (iii) by the Board of Directors of MuniYield Michigan
if any condition of MuniYield Michigan's obligations set forth in Section 10 of
this Agreement have not been fulfilled or waived by such Board.
(b) If the transactions contemplated by this Agreement have
not been consummated by August __, 2000, this Agreement automatically shall
terminate on that date, unless a later date is mutually agreed to by the Boards
of Directors of the Funds.
(c) In the event of termination of this Agreement pursuant to
the provisions hereof, the same shall become void and have no further effect,
and there shall not be any liability on the part of any Fund or persons who are
their directors, trustees, officers, agents or stockholders in respect of this
Agreement.
(d) At any time prior to the Exchange Date, any of the terms
or conditions of this Agreement may be waived by the Board of Directors of any
Fund (whichever is entitled to the benefit thereof), if, in the judgment of such
Board after consultation with its counsel, such action or waiver will not have a
material adverse effect on the benefits intended under this Agreement to the
stockholders of their respective fund, on behalf of which such action is taken.
In addition, the Boards of Directors of the Funds have delegated to FAM the
ability to make non-material changes to the transaction if it deems it to be in
the best interests of the Funds to do so.
(e) The respective representations and warranties contained in
Sections 1, 2 and 3 of this Agreement shall expire with, and be terminated by,
the consummation of the Reorganization, and no Fund nor any of its officers,
directors, trustees, agents or stockholders shall have any liability with
respect to such representations or warranties after the Exchange Date. This
provision shall not protect any officer, director, trustee, agent or stockholder
of any Fund against any liability to the entity for which that officer,
director, trustee, agent or stockholder so acts or to its stockholders, to which
that officer, director, trustee, agent or stockholder otherwise would be subject
by reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties in the conduct of such office.
(f) If any order or orders of the Commission with respect to
this Agreement shall be issued prior to the Exchange Date and shall impose any
terms or conditions which are determined by action of the Boards of Directors of
the Funds to be acceptable, such terms and conditions shall be binding as if a
part of this Agreement without further vote or approval of the stockholders of
the Funds unless such terms and conditions shall result in a change in the
method
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of computing the number of shares of MuniYield Michigan Common Stock, MuniYield
Michigan Series B AMPS and MuniYield Michigan Series C AMPS to be issued to the
Acquired Funds, as applicable, in which event, unless such terms and conditions
shall have been included in the proxy solicitation materials furnished to the
stockholders of the Funds prior to the meetings at which the Reorganization
shall have been approved, this Agreement shall not be consummated and shall
terminate unless the Funds promptly shall call a special meeting of stockholders
at which such conditions so imposed shall be submitted for approval.
12. Indemnification.
(a) Each Acquired Fund hereby severally agrees to indemnify
and hold MuniYield Michigan harmless from all loss, liability and expenses
(including reasonable counsel fees and expenses in connection with the contest
of any claim) which MuniYield Michigan may incur or sustain by reason of the
fact that (i) MuniYield Michigan shall be required to pay any corporate
obligation of such Acquired Fund, whether consisting of tax deficiencies or
otherwise, based upon a claim or claims against such Acquired Fund which were
omitted or not fairly reflected in the financial statements to be delivered to
MuniYield Michigan in connection with the Reorganization; (ii) any
representations or warranties made by such Acquired Fund in this Agreement
should prove to be false or erroneous in any material respect; (iii) any
covenant of such Acquired Fund has been breached in any material respect; or
(iv) any claim is made alleging that (a) the N-14 Registration Statement
included any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein attributable to such Fund not misleading or (b) the Joint Proxy
Statement and Prospectus delivered to the stockholders of the Funds and forming
a part of the N-14 Registration Statement included any untrue statement of a
material fact or omitted to state any material fact necessary to make the
statements therein attributable to such Fund, in the light of the circumstances
under which they were made, not misleading, except with respect to (iv)(a) and
(b) herein insofar as such claim is based on written information furnished to
the Acquired Funds by MuniYield Michigan.
(b) MuniYield Michigan hereby agrees to indemnify and hold
each Acquired Fund harmless from all loss, liability and expenses (including
reasonable counsel fees and expenses in connection with the contest of any
claim) which such Acquired Fund may incur or sustain by reason of the fact that
(i) any representations or warranties made by MuniYield Michigan in this
Agreement should prove false or erroneous in any material respect, (ii) any
covenant of MuniYield Michigan has been breached in any material respect, or
(iii) any claim is made alleging that (a) the N-14 Registration Statement
included any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, not misleading or (b) the Joint Proxy Statement and Prospectus
delivered to stockholders of the Funds and forming a part of the N-14
Registration Statement included any untrue statement of a material fact or
omitted to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except with respect to (iii)(a) and (b) herein insofar as such claim is based on
written information furnished to MuniYield Michigan by the Acquired Fund seeking
indemnification.
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(c) In the event that any claim is made against MuniYield
Michigan in respect of which indemnity may be sought by MuniYield Michigan from
an Acquired Fund under Section 12(a) of this Agreement, or in the event that any
claim is made against an Acquired Fund in respect of which indemnity may be
sought by an Acquired Fund from MuniYield Michigan under Section 12(b) of this
Agreement, then the party seeking indemnification (the "Indemnified Party"),
with reasonable promptness and before payment of such claim, shall give written
notice of such claim to the other party (the "Indemnifying Party"). If no
objection as to the validity of the claim is made in writing to the Indemnified
Party by the Indemnifying Party within thirty (30) days after the giving of
notice hereunder, then the Indemnified Party may pay such claim and shall be
entitled to reimbursement therefor, pursuant to this Agreement. If, prior to the
termination of such thirty-day period, objection in writing as to the validity
of such claim is made to the Indemnified Party, the Indemnified Party shall
withhold payment thereof until the validity of such claim is established (i) to
the satisfaction of the Indemnifying Party, or (ii) by a final determination of
a court of competent jurisdiction, whereupon the Indemnified Party may pay such
claim and shall be entitled to reimbursement thereof, pursuant to this
Agreement, or (iii) with respect to any tax claims, within seven (7) calendar
days following the earlier of (A) an agreement between MuniYield Michigan and
the Acquired Fund seeking indemnification that an indemnity amount is payable,
(B) an assessment of a tax by a taxing authority, or (C) a "determination" as
defined in Section 1313(a) of the Code. For purposes of this Section 12, the
term "assessment" shall have the same meaning as used in Chapter 63 of the Code
and Treasury Regulations thereunder, or any comparable provision under the laws
of the appropriate taxing authority. In the event of any objection by the
Indemnifying Party, the Indemnifying Party promptly shall investigate the claim,
and if it is not satisfied with the validity thereof, the Indemnifying Party
shall conduct the defense against such claim. All costs and expenses incurred by
the Indemnifying Party in connection with such investigation and defense of such
claim shall be borne by it. These indemnification provisions are in addition to,
and not in limitation of, any other rights the parties may have under applicable
law.
13. Other Matters.
(a) Pursuant to Rule 145 under the 1933 Act, and in connection
with the issuance of any shares to any person who at the time of the
Reorganization is, to its knowledge, an affiliate of a party to the
Reorganization pursuant to Rule 145(c), MuniYield Michigan will cause to be
affixed upon the certificate(s) issued to such person (if any) a legend as
follows:
THESE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT TO MUNIYIELD MICHIGAN INSURED FUND, INC.
(OR ITS STATUTORY SUCCESSOR), OR ITS PRINCIPAL UNDERWRITER
UNLESS (I) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE SECURITIES ACT OF 1933 OR (II) IN THE
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE FUND, SUCH
REGISTRATION IS NOT REQUIRED.
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and, further, that stop transfer instructions will be issued to MuniYield
Michigan's transfer agent with respect to such shares. Each Acquired Fund will
provide MuniYield Michigan on the Exchange Date with the name of any stockholder
of an Acquired Fund who is to the knowledge of such Acquired Fund an affiliate
of that Acquired Fund on such date.
(b) All covenants, agreements, representations and warranties made under this
Agreement and any certificates delivered pursuant to this Agreement shall be
deemed to have been material and relied upon by each of the parties,
notwithstanding any investigation made by them or on their behalf.
(c) Any notice, report or demand required or permitted by any provision of this
Agreement shall be in writing and shall be made by hand delivery, prepaid
certified mail or overnight service, addressed to any Fund, at 000 Xxxxxxxx Xxxx
Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000, Attn: Xxxxx X. Xxxxx, President.
(d) This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the Reorganization, constitutes the
only understanding with respect to the Reorganization, may not be changed except
by a letter of agreement signed by each party and shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said state.
(e) Copies of the Articles of Incorporation, as amended, and Articles
Supplementary of each Fund are on file with the Maryland Department and notice
is hereby given that this instrument is executed on behalf of the Directors of
each Fund.
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This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original but all
such counterparts together shall constitute but one instrument.
MUNIYIELD MICHIGAN INSURED FUND, INC.
By:
-------------------------------------
Attest:
----------------------------
MUNIVEST MICHIGAN INSURED FUND, INC.
By:
-------------------------------------
Attest:
----------------------------
MUNIHOLDINGS MICHIGAN INSURED FUND, INC.
By:
-------------------------------------
Attest:
----------------------------
31
