Exhibit 99.1.7(a)
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[MBIA LETTERHEAD]
[DATE]
[ADDRESSEE]
Re: [TITLE OF PORTFOLIO]
Ladies and Gentlemen:
This letter sets forth the agreement between MBIA Insurance Corporation
(formerly known as Municipal Bond Investors Assurance Corporation) (the
"Corporation") and [SPONSOR] (the "Sponsor"), commencing with the [TRUST NAME],
(the "Trusts") with [TRUSTEE], as trustee (the "Trustee") regarding the
Financial Guaranty Master Permanent Insurance Unit Investment Trust Insurance
Policy issued by the Corporation in connection with each Trust (the "Policy") on
the Deposit Date (as hereinafter defined) of such Trust. The Policy covers all
the bonds (including contracts for purchase) (collectively, the "Bonds")
described in the respective Exhibit A ("Exhibit A") attached to the Policy and
prepared by the Corporation with respect to each Trust. The Sponsor agrees to
have the Corporation insure all Bonds included in the Trusts.
1. Premium and Related Fees. On or prior to the date the Bonds are
deposited in a Trust (the "Deposit Date"), the Corporation shall furnish the
Sponsor and the Trustee with a list (the "List") describing the issuer and par
value of each Bond. The premium relating to each Bond and for any Substitute
Bond (as defined below) will be determined by an independent evaluator
acceptable to the Corporation and the Sponsor. The premium will be equal to the
value added by insurance, subject to certain minimum premiums for both uninsured
Bonds and for Bonds previously insured by insurers other than MBIA Insurance
Corporation ("MBIA"), MBIA Insurance Corp. of Illinois (formerly known as Bond
Investors Guaranty Insurance Company) ("BIG") or the Corporation. The
Corporation, at its sole discretion, will establish the minimum premiums to be
charged and the percentage of value added by insurance, to be paid to the
Corporation as premium. The Corporation's total premium will be equal to minimum
premiums, if any, plus the percentage of valued added as determined by the
Corporation. No premium shall be due on any Bond which is preinsured by the MBIA
Insurance Corporation ("MBIA"), MBIA Insurance Corp. of Illinois (formerly known
as Bond Investors Guaranty Insurance Company) ("BIG") or the Corporation.
[DATE]
Page 2
The Sponsor will pay Standard & Poor's rating fees up to [RATING FEE]
per trust Trust Fees, (Trust Fees include rating agency fees, CUSIP fees (if
applicable) and bond immobilization fees) and the cost of bond immobilization
(together the "Related Fees"). The Bond immobilization fees will be determined
pursuant to a separate agreement. The Premium and Related Fees due to the
Corporation for Bonds deposited in a Trust shall be payable in same day funds in
whole on the Deposit Date (the "Due Date"). The Corporation has agreed to pay
all CUSIP fees, all Xxxxx'x rating fees and Standard & Poor's rating fees in
excess of [FEE AMOUNT] per trust and the cost of the insured evaluation.
On the initial Deposit Due Date, the Sponsor will deliver the Premium
and Related Fees due to the Corporation. On each subsequent Due Date the Sponsor
will deliver any additional premium and Related Fees, if any, due to the
Corporation. In the case of a Substitute Bond (as defined below), no premium
will be due and owing to the Corporation unless the premium for such Substitute
Bond is higher than the Bond it replaces. If the premium for such Substitute
Bond is less than the Bond it replaces, the difference will be refunded to the
Sponsor.
2. Substitution of Failed Bonds. In the event of a Failed Bond, the
Sponsor may substitute therefor within 30 days notification to the Sponsor of a
Failed Bond any other bonds (the "Substitute Bonds") by notifying the Trustee
thereof and providing to the Corporation and to the Trustee such information
regarding the Substitute Bonds as specified in the respective Exhibit A. Any
Substitute Bonds shall include only bonds which the Corporation approves upon
request of the Sponsor. Within ten Business Days following written notification
to the Corporation and to the Trustee of such substitution, the Corporation will
issue such instruments or documents as the Trustee and the Corporation mutually
deem necessary to confirm that the Policy, as of the Deposit Date, covers
Exhibit A as then constituted.
3. Immobilization. The Sponsor agrees to immobilize all Bonds as
soon as practicable, but in no event later than 30 days following the Deposit
Date.
The Custodian agrees to accept Xxxxx received from the Trustee and to
immobilize them pursuant to its Amended and Restated Custody Agreement with the
Corporation, amended and restated as of [DATE] and the Fee Agreement as it may
be amended from time to time.
Upon completion of immobilization of all of the Bonds in a Trust, the
Corporation agrees to issue to the Custodian its Financial Guaranty Master
Custodian Policy (the "Custodian Policy") insuring all the Bonds and the Trustee
will return the Policy applicable to that Trust to the Corporation.
[DATE]
Page 3
4. Amendment. This letter may be amended anytime by a writing
signed by the Corporation, the Custodian and the Sponsor. The Sponsor shall
provide written notice to the Trustee of any amendment hereto.
5. Legal Opinion and Officer's Certificate. On the Deposit Date of
each Trust, the Corporation shall deliver to the Sponsor an opinion of counsel
substantially in the following form:
(a) The Corporation is a stock insurance corporation, duly
organized, validly existing under the laws of the State of New York and
is licensed and authorized to issue the Policy under the laws of the
State of New York; and
(b) The Policy has been duly executed, is in proper and approved
form and is a valid and binding obligation of the Corporation
enforceable in accordance with its terms except that the enforcement of
the Policy may be limited by laws relating to bankruptcy, insolvency,
reorganization, moratorium, receivership, other similar laws affecting
creditors' rights generally and by general principles of equity.
On the Deposit Date of each Trust, the Corporation shall also deliver to
the Sponsor a Certificate signed by an authorized officer of the Corporation
which certifies substantially as follows:
(a) The Policy has been duly executed, is a valid and binding
obligation of the Corporation enforceable in accordance with its terms
except that the enforcement of the Policy may be limited by laws
relating to bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws affecting creditors' rights
generally and by general principles of equity; and
(b) The information concerning the Corporation's Policy as set forth
in the prospectus of the Trust filed as part of a Registration Statement
dated the Deposit Date of such Trust under the caption entitled
"Insurance on the Portfolio" is accurate; and
(c) The financial information as of [DATE] for the Corporation
supplied to the Sponsor is true and correct financial information
provided to the New York Insurance Department in connection with the
licensing of the Corporation, and such financial information is the most
recent financial information available.(1)
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1 To be conformed to updated financial information as and when available.
[DATE]
Page 4
6. Payment of Insured Amounts. If a Trust is entitled to payment of
any Insured Amount as defined in and pursuant to the terms of the Policy and has
complied with all such terms, the Corporation acknowledges its obligation to
make such payment in the event the Trust fails to receive such payment. In the
event an Insured Amount relates to a Bond which is preinsured solely by MBIA,
BIG or the Corporation, the Trustee shall not be required to present evidence to
Paying Agent that demand for payment has been made.
7. Notices. All notices, services of process and other data or
documents required to be submitted to the Corporation shall be forwarded to the
MBIA Insurance Corporation located at 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000.
Any notice required to be given to the Sponsor shall be sent to the Sponsor at
the address set forth hereinabove. Any notice required to be given to the
Trustee shall be sent to the Trustee at [TRUSTEE ADDRESS]. The Sponsor shall
cause the Trustee on the Due Date to provide written notice to the Corporation
of the occurrence of any of the following events since the last Due Date: (1)
the maturity, redemption or sale of any Bonds by the respective Trust; (2) the
nondeposit of any Bonds in the Trust; (3) the failure of any contracts to
purchase Bonds (the "Failed Bonds") and (4) the substitution of any Bonds in the
Trust. Such notification to the Corporation must specify the Bonds affected, the
Policy number for the applicable Trust and identify each by the information
listed on the respective Exhibit A for each Trust including the applicable
premium rate of such Bond. The Sponsor shall also cause the Trustee to furnish
such information concerning interest coupons, redemption and sinking fund
provisions and maturity dates with respect to any Bonds and Substitute Bonds as
defined in Section 2, as the Corporation may reasonably request. The premium
paid to the Corporation on the Due Date will reflect any adjustment thereto due
to the nondeposit or substitution of any bond.
8. Counterparts. This letter may be signed in counterparts and each
of the individual signatures in counterpart will have the same validity and
effect as if such signatures had appeared on the same page.
[DATE]
Page 5
9. Duration of Letter. Unless the Corporation provides the parties
hereto with the written notice to the contrary, this letter is applicable to all
Bonds deposited in the Trusts from the date hereof. On or after [DATE], the
Corporation shall have the right upon thirty days notice to the Sponsor to
cancel this letter.
MBIA INSURANCE CORPORATION
By: _____________________________
ACKNOWLEDGED AND ACCEPTED:
NATIONAL FINANCIAL SERVICES
CORPORATION
By: _____________________________
ACKNOWLEDGED AND ACCEPTED:
THE CHASE MANHATTAN BANK
By: _____________________________
ACKNOWLEDGED AND ACCEPTED:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Custodian
By: _____________________________
