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interest on the Series 1991 Bonds which shall become Due for <br />Payment but shall be unpaid by reason of Nonpayment by the Issuer <br />(as such terms are defined in the Municipal Bond Insurance <br />Policy). AMBAC Indemnity will make such payments to the Insurance <br />Trustee on the later of the date on which such principal and <br />interest becomes Due for Payment or within one business day <br />following the date on which AMBAC Indemnity shall have received <br />notice of Nonpayment from the Paying Agent. The insurance will <br />extend for the term of the Series 1991 Bonds and, once issued, <br />cannot be cancelled by AMBAC Indemnity. <br />The Municipal Bond Insurance Policy will insure payment only <br />on stated maturity dates and on mandatory sinking fund installment <br />dates, in the case of principal, and on stated dates for payment, <br />in the case of interest. If the Series 1991 Bonds become subject <br />to mandatory redemption and insufficient funds are available for <br />redemption of all outstanding Series 1991 Bonds, AMBAC Indemnity <br />will remain obligated to pay principal of and interest on <br />outstanding Series 1991 Bonds on the originally scheduled <br />interest and principal payment dates including mandatory sinking <br />fund redemption dates. In the event of any acceleration of the <br />principal of the Series 1991 Bonds, the insured payments will be <br />made at such times and in such amounts as would have been made <br />had there not been an acceleration. <br />In the event the Paying Agent has notice that any payment of <br />principal of or interest on a Series 1991 Bond which has become <br />Due for Payment and which is made to a Bondholder by or on behalf <br />of the Issuer has been deemed a preferential transfer and theretofore <br />recovered from its registered owner pursuant to the United States <br />Bankruptcy Code in accordance with a final, nonappealable order <br />of a court of competent jurisdiction, such registered owner will <br />be entitled to payment from AMBAC Indemnity to the extent of such <br />recovery if sufficient funds are not otherwise available. <br />The Municipal Bond Insurance Policy does not insure any risk <br />other than Nonpayment, as defined in the Policy. Specifically, the <br />Municipal Bond Insurance Policy does not cover: <br />1. payment on acceleration, as a result of a call for <br />redemption (other than mandatory sinking fund redemption) <br />or as a result of any other advancement of maturity. <br />2. payment of any redemption, prepayment or acceleration <br />premium. <br />3. nonpayment of principal or interest caused by the insolvency <br />or negligence of any Trustee or Paying Agent, if any. <br />If it becomes necessary to call upon the Municipal Bond Insurance <br />Policy, payment of principal requires surrender of the Series <br />1991 Bonds to the Insurance Trustee together with an appropriate <br />9 <br />