Exhibit 1.4A
CAPMAC
Capital Markets Assurance Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
UNIT INVESTMENT TRUST INSURANCE POLICY
FOR XXX XXXXXX AMERICAN CAPITAL
INSURED INCOME TRUST
SERIES 71
Capital Markets Assurance Corporation
Policy No. SB13050
Capital Markets Assurance Corporation (the "Insurer"), in consideration
of the payment of the premium and subject to the terms of this policy and the
letter agreement dated March 20, 1998 among the Insurer, the Depositor and the
Trustee, each as hereinafter defined, hereby unconditionally and irrevocably
guarantees to the Trust, as hereinafter defined, the full and complete payment
required to be made by or on behalf of the issuer(s) of the Obligations, as
hereinafter defined, to the applicable paying agent(s) for the underlying
Obligations or its/their successor(s) (the "Paying Agent") of an amount equal to
(i) the principal of (either at the stated maturity or by any advancement of
maturity pursuant to a mandatory sinking fund payment) and interest on the
obligations described in Exhibit A attached hereto (referred to herein as the
"Obligations"), as such payments shall become due but shall not be so paid in
accordance with the original terms of the Obligations when issued and without
regard to any amendment or modification which affects in any manner the amount,
terms or conditions of payment of such Obligations thereafter, unless the
Insurer has previously consented in writing to any such amendment or
modification, except that in the event of any acceleration of the due date of
such principal by reason of mandatory or optional redemption or acceleration
resulting from a default (an "Acceleration Default"), a failure to make any
required principal and/or interest payment as and when due (after giving effect
to any applicable grace or cure period) (a "Payment Default") or an event of
bankruptcy, receivership, insolvency or similar action (a "Bankruptcy Default"),
other than any advancement of maturity pursuant to a mandatory sinking fund
payment, the payments guaranteed hereby may be made by the Insurer at its option
upon the earlier to occur of an Acceleration Default, a Payment Default or a
Bankruptcy Default within thirty (30) days of notice of such Acceleration
Default, Payment Default or Bankruptcy Default (x) in such amounts and at such
times as such payments would have been due had there not been any such
acceleration or (y) on such accelerated basis by payment (an "Accelerated
Payment") of an amount equal to the par value of such Obligation plus accrued
interest to the date of any such Accelerated Payment, and (ii) the payment of
any Insured Amount subsequently avoided in whole or in part as a preference
payment under applicable law. The amounts referred to in the preceding sentence,
including the Accelerated Payment, shall be referred to herein collectively as
the "Insured Amounts."
Upon receipt of telegraphic or telecopied notice, such notice promptly
confirmed in writing by registered or certified mail, in the form of Exhibit B
hereto duly completed (such form to be sent and notice to be given for each
Obligation for which a claim is made under this policy), or upon receipt of
written notice by registered or certified mail in the form of Exhibit B hereto
duly completed (such form to be sent and notice to be given for each Obligation
for which a claim is made under this policy), or upon receipt of written notice
by registered or certified mail in the form of Exhibit B hereto duly completed
(such form to be sent and notice to be given for each Obligation for which a
claim is made under this policy) by the Insurer or its designee from the
Trustee, that a Payment Default has occurred, the Insurer shall, on the business
day next succeeding the later of (x) the date which is thirty (30) days after
the date of any Payment Default or (y) receipt of the first notice of such
Payment Default with respect to such Obligation and, in the event the Insurer
does not make an Accelerated Payment, thereafter, within one (1) business day
after the later of (x) receipt of notice of a subsequent Payment Default or (y)
the due date of the Insured Amounts to which such notice relates, disburse to
the Trustee payment of the Insured Amounts due on such Obligation, less any
amount held by the Paying Agent or the Trustee for the payment of the Insured
Amounts and legally available therefor. Notwithstanding the foregoing, in the
event a Bankruptcy Default or Acceleration Default occurs prior to any Payment
Default, the Insurer may, at its option, make an Accelerated Payment upon the
earlier to occur of such Bankruptcy Default or Acceleration Default within
thirty (30) days of such Bankruptcy Default or Acceleration Default. In such
event, the Insurer shall have no further obligation to make any payments in
respect of the Obligation for which such Accelerated Payment was made. The
Trustee will be paid, as to principal or as to principal and interest, upon
presentment and surrender to the Insurer of each Obligation, or in the case of
any Obligation held by a depository (the "Depository") on behalf of the Trustee,
presentment and surrender of such Obligation through the Depository, or
presentment of such other proof of ownership of the Obligation registered,
together with evidence satisfactory to the Insurer that, in all cases, such
Obligation is the Obligation described in this policy or any replacement or
successor hereto, and that such Obligation is free and clear of all claims and
encumbrances created by or on behalf of the Trustee and is uncancelled, and any
appropriate instruments of assignment to evidence the assignment of the Insured
Amounts due on the Obligation as are paid by the Insurer, such instruments being
in a form satisfactory to the Insurer. This policy does not insure against loss
of any prepayment premium which may at any time be payable with respect to any
Obligation.
If payment of any principal of or interest on the Obligations that is
avoided as a preference under applicable bankruptcy, insolvency, receivership or
similar law in the event of a bankruptcy, insolvency, receivership or similar
action of the issuer of the Obligation is required to be made under this policy,
the Insurer will pay such amount as is avoided as a preference pursuant to the
Order or notice referred to below when due to be paid on a scheduled basis in
accordance with the original terms of the Obligations (without reference to any
redemption thereof) and in any event no earlier than the first to occur of the
fourth business day following receipt by the Insurer from the Trustee of (i)(x)
a certified copy of the order of the court, or such regulatory authority which
exercised jurisdiction, to the effect that the Trustee or the Depository is
required to return principal or interest paid on any Obligation during the term
of this policy because such payments were avoidable preferences under applicable
bankruptcy, insolvency, receivership or similar laws (the "Order") and (y) a
certificate of the Trustee that the Order has been entered and is not subject to
any stay or (ii) notice from the Trustee that such payment has been avoided and
the Depository holding the affected Obligation on behalf of the Trust has repaid
such avoided payment and/or charged or reduced the account of the Trustee by the
amount of such avoided payment (provided that if such certified copy and
certificate or notice referred to in clauses (i) and (ii) above are received
after 1:00 p.m., New York City time, on such business day, the Insurer shall
make such payment on the fifth business day following such date). Such payment
shall be disbursed to the receiver, conservator, debtor-in-possession or trustee
in bankruptcy named in the Order and not to the Trustee directly in the event of
receipt of the certified copy and certificate referred to in clause (i) above
and to the Trustee in the event of receipt of the notice referred to in clause
(ii) above.
Notwithstanding the foregoing or any other provisions of this policy,
if the Trustee receives notice that payment of any principal of or interest on
any of the Obligations is avoided as a preference under applicable bankruptcy,
insolvency, receivership or similar law and the Depository holding the affected
Obligation has not repaid such amount or charged or reduced the Trustee's
account for such amount, then the Trustee shall forward such notice to the
Insurer within four business days of the Trustee's receipt thereof. The Insurer
shall have the option to commence any appropriate adversary proceeding, in which
case it shall be responsible for all costs and expenses in connection therewith
and shall indemnify and hold the Trustee harmless against any loss or liability
in connection therewith or the failure of the Trustee to make such preference
payment, or to pay the amount of such avoided payment to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in such notice
in accordance with the preceding paragraph.
After the Insurer has made payment with respect to an Obligation, it
shall be subrogated to all of the rights of the Trust thereon or in relation
thereto to the extent of such payment, including but not limited to the rights
to commence or participate in an adversary proceeding. When the Insurer has made
any Accelerated Payment, and until the full amount of such payment has been
recovered, the Insurer shall be vested with all of the Trust's options, rights,
votes, powers and the like under all the legal proceedings by which each
Obligation has been authorized, issued or secured, including, the governing
statutes, resolutions and ordinances of the issuer of the Obligation, and any
trust indenture, mortgage, lease agreement or other contract relating to the
Obligation or its security. The Insurer shall not be liable to the Trust for any
loss or damage resulting from the exercise or failure to exercise, in its sole
discretion, any of such options, votes, rights, powers and the like it may have
as holder or registered owner of an Obligation with respect to which it has made
any payment. The Trustee shall execute and deliver instruments and do whatever
else may be required to secure the foregoing rights of the Insurer, and will do
nothing to prejudice them.
The obligations of the Insurer hereunder cannot be accelerated except
at the sole option of the Insurer.
The term "Depositor" shall mean Xxx Xxxxxx American Capital Distributors,
Inc. and its successors or any successor Depositor.
The term "Trust" shall mean the Xxx Xxxxxx American Capital Insured
Income Trust, Series 71, created pursuant to a trust agreement which
incorporates by reference the Standard Terms and Conditions of Trust, effective
April 3, 1990, among the Depositor, the Trustee and American Portfolio
Evaluation Services, as evaluator.
The term "Trustee" shall mean The Bank of New York, or any successor
trustee or co-trustee.
Any service of process on the Insurer may be made to the Insurer,
Attention: General Counsel, at its office located at 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, and such service or process shall be valid and binding.
This policy shall only apply to Obligations held in and owned by the
Trust and held or owned by the Depository on behalf of the Trust and shall not
apply to any Obligations not deposited therein by the Depositor. This policy
shall continue in force only with respect to Obligations held in and owned by
the Trust, and, subject to the provisions of this paragraph, the Insurer shall
not have any liability under this policy with respect to any Obligations which
do not constitute part of the Trust. This policy is non-cancellable during the
term hereof for any reason, but shall terminate as to any Obligation which is
not longer held by the Trust and has been redeemed from or sold by the Trustee
or the Trust on the date of such redemption or on the settlement date of such
sale, and the Insurer shall not have any liability under this policy as to any
such Obligation thereafter. Notwithstanding the foregoing provisions of this
paragraph, the termination of this policy as to any Obligation shall not affect
the obligations of the Insurer regarding any other Obligation in the Trust. This
policy shall terminate as to all Obligations on the date on which the last of
the Obligations mature, are redeemed or are sold by the Trust.
The premium on this policy is not refundable for any reason, including
the payment prior to maturity of the Obligations.
This policy is issued only to the Trust and is nontransferable.
This policy shall be governed by and construed under the laws of the
State of New York. Any provision of this policy which is in conflict with the
laws of the State of New York is hereby amended to conform with the minimum
requirements of such laws. THIS POLICY AND THE OBLIGATIONS OF THE INSURER
HEREUNDER ARE NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE FUND SPECIFIED IN
ARTICLE SEVENTY-SIX OF THE NEW YORK INSURANCE LAW.
No provision affecting this policy shall exist, or waiver of any
condition be valid, unless expressed in writing, signed by the Insurer and the
Trustee, and added hereto. Each of the conditions of this policy is hereby made
severable, and waiver of one condition is not a waiver of any other condition.
No suit or action on this policy for the recovery of any amount shall
be sustained in any court of law or equity unless all of the conditions of this
policy shall have been complied with (unless specifically waived by the Insurer
in writing) and unless commenced within two years after an event giving rise to
the Insurer's obligation to pay the Insured Amounts.
IN WITNESS WHEREOF, the Insurer has caused this policy to be executed
on its behalf this 20th day of March, 1998.
CAPITAL MARKETS ASSURANCE CORPORATION
By
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
A-1
EXHIBIT A
To Unit Investment Trust
Insurance Policy No. SB13050
SCHEDULE OF BONDS FOR
XXX XXXXXX AMERICAN CAPITAL INSURED
INCOME TRUST, SERIES 71
CUSIP PAR ISSUER COUPON MATURITY DATE OF ANNUAL INITIAL
NO. VALUE DATE ISSUANCE PREMIUM PREMIUM
OF BONDS RATE DUE
000000XX0 $1,000,000 Allegheny Generating 6.875% 09/01/2023 09/01/93 0.160% $184.11
Company
000000XX0 $1,000,000 U.S. West 6.875% 09/15/2033 09/15/93 0.150% $172.60
Communication Inc.
TOTAL $356.71
EXHIBIT B
To Unit Investment Trust
Insurance Policy No. SB13050
Capital Markets Assurance Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ____________________
NOTICE FOR PAYMENT UNDER
UNIT INVESTMENT TRUST
INSURANCE POLICY NO. SB13050
The undersigned individual, a duly authorized officer of The Bank of
New York (the "Trustee") hereby certifies to Capital Markets Assurance
Corporation ("CapMAC"), with reference to insurance policy No. SB13050 issued
by CapMAC, as follows:
(1) The Trustee has not received by _____ (insert due date of
scheduled payment) an amount of the [principal] or [interest] payment
due on (insert description of bond) (the "Obligation") on such date and
has been notified by the bond trustee for the Obligation (or such other
party that would have knowledge or nonpayment) that it will not receive
such payment or such bond trustee will not confirm to the Trustee that
the full payment has been or is that day being made, and the amount
necessary for the Trustee to have to equal the full amount of such
[principal] or [interest] that is due on the Obligation is $__________
(the "Shortfall");
(2) The Trustee is making a claim for the Shortfall to be
applied to the payment in full of such [principal] or [interest]
payments that are due;
(3) The Trustee hereby directs CapMAC to make payment of
the Shortfall to the following account: ______;
(4) The Trustee or a depository (the "Depository") on behalf
of the Trustee is the registered owner of the Obligation or coupons and
holds evidence of its right to receive payment of the Shortfall, and
the Trustee hereby represents and surrenders or will cause the
Depository to surrender to CapMAC such Obligation relating to the
Shortfall, or presents other proof of ownership of the Obligation to
CapMAC, which shall be acceptable to CapMAC in its sole judgment; and
(5) The Trustee hereby certifies that the Obligation or
coupon for which the Shortfall is being claimed are the same as
described in Exhibit A to the above-referenced policy, are free and
clear of any claims or encumbrances created by or on behalf of the
Trustee, and are uncancelled.
IN WITNESS WHEREOF, this Notice for Payment has been executed this
______ day of __________, 19__.
By
Name:_________________________________________________
Title:________________________________________________
