-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BrUTb0mfbczl9n4dp1mBwsaxw2ehCsS9RqNzjZHp1HpfaavPZgS8J20pWps3B+P8 JRo0sPMh+XF6x9icvUJzOw== 0000814585-96-000011.txt : 19961030 0000814585-96-000011.hdr.sgml : 19961030 ACCESSION NUMBER: 0000814585-96-000011 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19961029 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MBIA INC CENTRAL INDEX KEY: 0000814585 STANDARD INDUSTRIAL CLASSIFICATION: SURETY INSURANCE [6351] IRS NUMBER: 061185706 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-15003 FILM NUMBER: 96649273 BUSINESS ADDRESS: STREET 1: 113 KING ST CITY: ARMONK STATE: NY ZIP: 10504 BUSINESS PHONE: 9142734545 MAIL ADDRESS: STREET 1: 113 KING ST CITY: ARMONK STATE: NY ZIP: 10504 S-3 1 S-3 As filed with the Securities Exchange Commission on October 29, 1996 Registration No. 333-______ - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------ MBIA INC. (Exact name of registrant as specified in its charter) Connecticut (State or other jurisdiction of incorporation or organization) 06-1185706 (IRS Employer Identification No.) 113 King Street Armonk, New York 10504 (914) 273-4545 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------ LOUIS G. LENZI, ESQ. General Counsel and Corporate Secretary MBIA Inc. 113 King Street Armonk, New York 10504 (914) 273-4545 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------ Copies to: ANDREW L. SOMMER, ESQ. Debevoise & Plimpton 875 Third Avenue New York, New York 10022 ------------ Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement as determined by market conditions and other factors. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM CLASS OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE OFFERING AMOUNT OF TO BE REGISTERED BE REGISTERED(1)(2) PER UNIT(3) PRICE(3) REGISTRATION FEE - -------------------------------------------------------------------------------------------------------------------- Debt Securities N/A Preferred Stock N/A Common Stock N/A TOTAL $250,000,000 100% $250,000,000 $75,757.58 ============ =============== ================ ===============
(1) Includes such indeterminate principal amount of Debt Securities, such indeterminate number of shares of Preferred Stock and such indeterminate number of shares of Common Stock as may from time to time be issued at indeterminate prices. There are also being registered hereunder an indeterminate number of shares of Common Stock and Preferred Stock which may be issued from time to time upon conversion of or in exchange for Preferred Stock or Debt Securities issued hereby. No separate consideration will be received for the Common Stock or Preferred Stock issuable upon conversion of or in exchange for any such securities registered hereunder. (2) In United States dollars or the equivalent thereof in one or more foreign denominated currencies or currency units if Debt Securities are issued with principal amounts denominated in one or more foreign or composite currencies as shall be designated by the Company. (3) Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933 and exclusive of accrued interest and dividends, if any. --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SUBJECT TO COMPLETION, DATED October 29, 1996 PROSPECTUS US $250,000,000 MBIA Inc. DEBT SECURITIES PREFERRED STOCK COMMON STOCK ----------------------- MBIA Inc. (the "Company") may offer from time to time its (a) unsecured debt securities, in one or more series, which may be either senior debt securities (the "Senior Debt Securities") or subordinated debt securities (the "Subordinated Debt Securities" and, together with the Senior Debt Securities, the "Debt Securities"); (b) shares of its preferred stock, par value $1.00 per share (the "Preferred Stock"); and (c) shares of its common stock, par value $1.00 per share (the "Common Stock"). The Debt Securities, Preferred Stock and Common Stock (collectively, the "Securities") may be offered either together or separately and will be offered in amounts, at prices and on terms to be determined at the time any such Securities are to be offered. The Securities will have an aggregate initial offering price of up to $250,000,000 or the equivalent thereof in U.S. dollars if any Securities are denominated in a foreign currency or in currency units. Specific terms of the particular Securities in respect of which this Prospectus is being delivered will be set forth in an accompanying Prospectus Supplement (the "Prospectus Supplement"), which will describe, without limitation and where applicable the following: (a) in the case of Debt Securities, the specific designation, aggregate principal amount, denominations, maturity, premium, if any, interest rate (which may be fixed or variable) or method of calculation of interest and premium, if any, place or places where principal, premium, if any, and interest will be payable, any terms of redemption, any sinking fund provisions, terms for any conversion or exchange into other Securities, initial public offering or purchase price, methods of distribution and other special terms, (b) in the case of Preferred Stock, the specific designation, stated value and liquidation preference per share and the number of shares offered, dividend rate (which may be fixed or variable) or method of calculating dividends, place or places where dividends will be payable, any terms of redemption, any sinking fund provisions, terms for any conversion or exchange into other Securities, initial public offering or purchase price, methods of distribution and other special terms, and (c) in the case of Common Stock, the number of shares offered, initial public offering or purchase price, methods of distribution and other special terms. The Prospectus Supplement will also contain information, as applicable, about certain United States Federal income tax considerations relating to the Offered Securities. The Securities may be sold to or through underwriters, through dealers or agents or directly to purchasers. See "Plan of Distribution". The names of any underwriters, dealers or agents involved in the sale of Securities in respect of which this Prospectus is being delivered and any applicable fee, commission or discount arrangements with them will be set forth in the Prospectus Supplement. This Prospectus may not be used to consummate sales of Securities unless accompanied by a Prospectus Supplement. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------ (1) Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. The securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there by any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. ----------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER RULED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. No dealer, salesperson or other person has been authorized to give any information or to make any representations other than those contained or incorporated by reference in this Prospectus and the applicable Prospectus Supplement, and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or any agent, underwriter or dealer. This Prospectus and the Prospectus Supplement do not constitute an offer to sell or a solicitation of an offer to buy any securities to which they relate in any jurisdiction in which it is unlawful to make such an offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that the information contained herein is correct as of any time subsequent to the date hereof. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports and proxy and information statements and other information concerning the Company may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the following regional offices of the Commission: Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661, 14th Floor, and Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such material can be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, at prescribed rates, or may be viewed by visiting the Commission's web site at http://www.sec.gov. Reports, proxy statements and other information concerning the Company may also be inspected at the offices of the New York Stock Exchange, Inc. at 20 Broad Street, New York, New York 10005. The Company has filed with the Commission a Registration Statement on Form S-3 (together with all amendments and exhibits thereto, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act") with respect to the securities offered hereby. This Prospectus does not contain all the information set forth in the Registration Statement, certain portions of which have been omitted as permitted by the rules and regulations of the Commission. In addition, certain documents filed by the Company with the Commission have been incorporated by reference in this Prospectus. See "Incorporation of Certain Documents by Reference." Statements contained herein concerning the provisions of any document do not purport to be complete, and in each instance are qualified in all respects by reference to the copy of such document filed as an exhibit to the Registration Statement or otherwise filed with the Commission. (2) INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the Commission are incorporated herein by reference: (1) The Company's Annual Report on Form 10-K for the year ended December 31, 1995. (2) The Company's Quarterly Report on Form 10-Q for each of the first two calendar quarters of 1996. (3) The description of the Common Stock of the Company contained in the Company's Registration Statement on Form 8-A filed with the Commission on June 15, 1987, as amended by the Form 8-A filed with the Commission on December 31, 1991 and by the Form 8-A filed with the Commission on October 27, 1994. (4) The Company's Current Report on Form 8-K filed with the Commission on January 24, 1996. Any documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the Securities offered hereby shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof. Any statement contained in a document incorporated or deemed to be incorporated by reference herein, or contained in this Prospectus, shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom this Prospectus is delivered, upon the written or oral request of such person, a copy of any or all of the foregoing documents incorporated herein by reference (other than exhibits to such documents unless such exhibits are specifically incorporated by reference into the foregoing documents). Any such request should be directed to: Louis G. Lenzi, Esq., MBIA Inc., 113 King Street, Armonk, New York 10504 (telephone: (914) 273-4545). THE COMPANY MBIA Inc. (the "Company") insures municipal bonds, asset-backed securities and other non-municipal bonds through its wholly owned subsidiary, MBIA Insurance Corporation ("MBIA Corp."). MBIA Corp.'s primary business is enhancing the efficiency of public finance by guaranteeing the timely payment of principal and interest on municipal bonds sold in the new issue market, traded in the secondary market and held in unit investment trusts and mutual funds. MBIA Corp. also provides financial guarantees for structured finance transactions (principally mortgage-backed and asset-backed securities), investor-owned utility debt and obligations of high-quality financial institutions. For the six months ended June 30, 1996, MBIA Corp. insured $20.4 billion par value of domestic new issue and secondary market municipal bonds and $8.4 billion par value of domestic structured finance business. As of June 30, 1996, the total net par amount of outstanding bonds insured by MBIA Corp. was $210.6 billion and the aggregate net insurance in force was $377.6 billion. Financial guarantee insurance provides an unconditional and irrevocable guarantee of the payment of the principal of and interest on insured obligations when due. MBIA Corp. primarily insures obligations sold in the new issue and secondary markets, including those held in unit investment trusts and by mutual funds. It also provides surety bonds for debt service reserve funds. The principal economic value of financial guarantee insurance to the entity offering the obligations is the saving in interest costs resulting from the difference in (3) the market yield between an insured obligation and the same obligation on an uninsured basis. In addition, for complex financings and for obligations of issuers that are not well known by investors, insured obligations receive greater market acceptance than uninsured obligations. All obligations insured by MBIA Corp. are rated AAA by both Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, Inc. and Fitch Investors Service, L.P. and Aaa by Moody's Investors Service, Inc., the highest ratings assigned by these rating agencies. The Company's insurance subsidiaries derive their income from insurance premiums earned over the life of the insured obligations and from investment income earned on assets representing capital, retained earnings, and deferred premium revenues. As of June 30, 1996, the Company's deferred premium revenues were $1,729 million, its shareholders' equity was $2,269 million, and its total investments were $7,096 million and $7,177 million at book value and market value, respectively. As of June 30, 1996, MBIA Corp.'s investment portfolio was $3,969 million and $4,047 million at book value and market value, respectively, and was primarily comprised of high-quality fixed-income securities with intermediate maturities. Since 1990, a French company, MBIA Assurance S.A. ("MBIA Assurance"), has written financial guarantee insurance in the countries of the European Community. MBIA Assurance, which is a subsidiary of MBIA Corp., writes policies insuring public infrastructure financings, asset-backed transactions and certain obligations of financial institutions. Over the last six years, the Company has undertaken the development of investment management services which capitalize on its capabilities, reputation and marketplace relationships. The Company is delivering these services through a group of subsidiary companies. For the six months ended June 30, 1996, in the aggregate, these investment management ventures contributed $14 million to revenues. The financial guarantee industry is subject to the direct and indirect effects of governmental regulation, including changes in tax laws affecting the municipal and asset-backed debt markets. No assurance can be given that future legislative or regulatory changes might not adversely affect the results of operations and financial condition of the Company. The principal executive offices of the Company are located at 113 King Street, Armonk, New York 10504. The telephone number is (914) 273-4545. USE OF PROCEEDS Unless otherwise stated in the applicable Prospectus Supplement, the net proceeds to the Company from the sale of the Securities will be used to provide additional capital for the future needs of the Company and MBIA Corp. and for general corporate purposes. RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of earnings to fixed charges for the Company for the periods indicated. Earnings represent consolidated earnings before income taxes and fixed charges. Fixed charges consist of interest and that portion of rental expense deemed representative of the interest factor for such rental expense. The Company had no capitalized interest for the periods presented. (4)
Six Months Ended Years Ended December 31, June 30, ----------------------------- ----------- 1991 1992 1993 1994 1995 1995 1996 ----- ----- ----- ----- ----- ----- ----- Ratio of earnings to fixed charges(1).. 11.2 12.9 13.0 13.1 13.1 13.0 13.2
- ------ (1) Fixed charges do not include the amount of fixed charges associated with obligations insured by MBIA Corp. DESCRIPTION OF DEBT SECURITIES The Senior Debt Securities offered hereby are to be issued in one or more series under the Senior Indenture, dated as of August 1, 1990, as supplemented from time to time (as so supplemented, the "Senior Indenture"), between the Company and The First National Bank of Chicago, as trustee (the "Senior Indenture Trustee"). The Subordinated Debt Securities offered hereby are to be issued in one or more series under a Subordinated Indenture, as supplemented from time to time (as so supplemented, the "Subordinated Indenture" and, together with the Senior Indenture, the "Indentures"), between the Company and a trustee to be named in the applicable Prospectus Supplement (the "Subordinated Indenture Trustee" and, together with the Senior Indenture Trustee, the "Trustees"). Copies of the Senior Indenture and the form of the Subordinated Indenture have been filed as exhibits to the Registration Statement of which this Prospectus forms a part. The statements herein relating to the Debt Securities and the following summaries of certain provisions of the Indentures do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the Indentures (as they may be amended or supplemented from time to time) and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). Whenever particular sections or defined terms of the Indentures (as they may be amended or supplemented from time to time) are referred to herein or in a Prospectus Supplement, such sections or defined terms are incorporated herein or therein by reference. General The Debt Securities will be direct and unsecured obligations of the Company. The Senior Debt Securities will rank equally and ratably with all other unsecured and unsubordinated obligations of the Company. The Subordinated Debt Securities will be subordinate and junior in right of payment to the extent and in the manner set forth in the Subordinated Indenture to all Senior Debt (as defined below) of the Company. See "-Subordination under the Subordinated Indenture". As a non-operating holding company, most of the assets of the Company are owned by the Company's subsidiaries, and the Company relies primarily on dividends from such subsidiaries to meet its obligations for payment of principal and interest on its outstanding debt obligations. Accordingly, the Debt Securities will be effectively subordinated to all existing and future liabilities of the Company's subsidiaries. In addition, the payment of dividends by the Company's insurance company subsidiary, MBIA Insurance Corporation, is limited under the applicable insurance laws and regulations of the State of New York. The Indentures do not limit the aggregate amount of Debt Securities that may be issued thereunder. Except as otherwise provided in the applicable Prospectus Supplement, the Indentures, as they apply to any series of Debt Securities, do not limit the incurrence or issuance of other secured or unsecured debt of the Company, whether under either of the Indentures or any other indenture that the Company may enter into in the future or otherwise. (5) The Debt Securities will be issuable in one or more series pursuant to an indenture supplemental to the Senior Indenture or the Subordinated Indenture, as the case may be, or a resolution of the Company's Board of Directors or a committee thereof. The applicable Prospectus Supplement or Prospectus Supplements will describe the following terms of the Debt Securities (to the extent such terms are applicable to such Debt Securities): (1) the title of the Debt Securities; (2) any limit upon the aggregate principal amount of the Debt Securities; (3) the date or dates on which the principal of the Debt Securities is payable; (4) the rate or rates, if any, at which the Debt Securities shall bear interest, the interest payment dates on which any such interest shall be payable, the right, if any, of the Company to defer or extend an interest payment date, or the method by which any of the foregoing shall be determined; (5) the place or places where, subject to the terms of the Indenture, the principal of and premium, if any, and interest on the Debt Securities will be payable; (6) any period or periods within or date or dates on which, the price or prices at which and the terms and conditions upon which Debt Securities may be redeemed, in whole or in part, at the option of the Company pursuant to any sinking fund or otherwise; (7) the obligation, if any, of the Company to redeem, purchase or repay the Debt Securities pursuant to any sinking fund, amortization or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which, the currency or currencies (including currency unit or units) in which and the other terms and conditions upon which the Debt Securities shall be redeemed, repaid or purchased, in whole or in part, pursuant to such obligation; (8) the denominations in which any Debt Securities shall be issuable if other than denominations of $1,000 and any integral multiple thereof; (9) if other than in U.S. Dollars, the currency or currencies (including currency unit or units) in which the principal of (and premium, if any) and interest, if any, on the Debt Securities shall be payable, or in which the Debt Securities shall be denominated; (10) any additions, modifications or deletions, in the Events of Default or covenants of the Company specified in the Indenture with respect to the Debt Securities; (11) if other than the principal amount thereof, the portion of the principal amount of Debt Securities that shall be payable upon declaration of acceleration of the maturity thereof; (12) any index or indices used to determine the amount of payments of principal of and premium, if any, on the Debt Securities and the manner in which such amounts will be determined; (13) the issuance of a temporary Global Security representing all of the Debt Securities of such series and exchange of such temporary Global Security for definitive Debt Securities of such series; (14) whether the Debt Securities of the series shall be issued in whole or in part in the form of one or more Global Securities and, in such case, the Depositary for such Global Securities, and the circumstances under which any such Registered Global Security may be registered for transfer or exchange, or authenticated and delivered, in the name of a Person other than such Depositary or its nominee, if other than as set forth in the Indentures; (15) the appointment of any paying agent, transfer agent or registrars; (16) the terms and conditions of any obligation or right of the Company to convert or exchange the Subordinated Debt Securities into other Securities or at the option of a Holder thereof; (17) the relative degree, if any, to which the Debt Securities of any series shall be senior to or subordinated to other series of Debt Securities in right of payment, whether such other series of Debt Securities are outstanding or not; and (18) any other terms of the Debt Securities not inconsistent with the provisions of the Indentures. (Section 2.3). (6) Debt Securities may be sold at a substantial discount below their stated principal amount, bearing no interest or interest at a rate which at the time of issuance is below market rates. Certain federal income tax consequences and special considerations applicable to any such Debt Securities will be described in the applicable Prospectus Supplement. If the purchase price of any of the Debt Securities is payable in one or more foreign currencies or currency units or if any Debt Securities are denominated in one or more foreign currencies or currency units or if the principal of, premium, if any, or interest, if any, on any Debt Securities is payable in one or more foreign currencies or currency units, the restrictions, elections, certain federal income tax considerations, specific terms and other information with respect to such issue of Debt Securities and such foreign currency or currency units will be set forth in the applicable Prospectus Supplement. If any index is used to determine the amount of payments of principal of, premium, if any, or interest on any series of Debt Securities, special federal income tax, accounting and other considerations applicable thereto will be described in the applicable Prospectus Supplement. Denominations, Registration, Payment and Transfer Unless otherwise specified in the applicable Prospectus Supplement, the Debt Securities will be issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. Debt Securities of any series will be exchangeable for other Debt Securities of the same issue and series, of any authorized denominations, of a like aggregate principal amount. Debt Securities may be presented for exchange as provided above, and may be presented for registration of transfer (with the form of transfer endorsed thereon, or a satisfactory written instrument of transfer, duly executed), at the office of the registrar or at the office of any transfer agent designated by the Company for such purpose with respect to any series of Debt Securities and referred to in an applicable Prospectus Supplement, without service charge and upon payment of any taxes and other governmental charges as described in the Indenture. The Company will appoint the Trustees as registrars under the Indentures. If the applicable Prospectus Supplement refers to any transfer agents or paying agents (in addition to the registrar) initially designated by the Company with respect to any series of Debt Securities, the Company may at any time rescind the designation of any such transfer agent or paying agent or approve a change in the location through which any such transfer agent or paying agent acts. The Company may at any time designate additional transfer agents or paying agents with respect to any series of Debt Securities. Neither the Company nor the Trustees shall be required to exchange or register a transfer of (a) any Debt Securities of any series for a period of 15 days preceding the first mailing of notice of redemption for such series to be redeemed, or (b) any Debt Securities selected, called or being called for redemption except, in the case of any Debt Security to be redeemed in part, the portion thereof not so to be redeemed. Unless otherwise indicated in an applicable Prospectus Supplement, payment of principal of (and premium, if any) and any interest on Debt Securities will be made at the office of the Trustee for such Debt Securities in the City of New York or at the office of such paying agent or paying agents as the Company may designate from time to time in an applicable Prospectus Supplement, except that at the option of the Company payment of any interest may be made by check mailed to the address of the person entitled thereto as such address shall appear in the register. Unless otherwise indicated in an applicable Prospectus Supplement, payment of any interest on Debt Securities will be made to the person in whose name such Debt Security is registered at the close of business on any record date for such interest, except in the case of defaulted interest. (7) Global Debt Securities The Debt Securities of a series may be issued in whole or in part in the form of one or more Global Debt Securities that will be deposited with, or on behalf of, a depositary (the "Depositary") identified in the Prospectus Supplement relating to such series. Global Debt Securities may be issued only in fully registered form and in either temporary or permanent form. Unless and until it is exchanged in whole or in part for the individual Debt Securities represented thereby, a Global Debt Security may not be transferred except as a whole by the Depositary for such Global Debt Security to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by the Depositary or any nominee to a successor Depositary or any nominee of such successor. The specific terms of the depositary arrangement with respect to a series of Debt Securities will be described in the Prospectus Supplement relating to such series. The Company anticipates that the following provisions will generally apply to depositary arrangements. Upon the issuance of a Global Debt Security, and the deposit of such Global Debt Security with or on behalf of the Depositary, the Depositary for such Global Debt Security or its nominee will credit on its book-entry registration and transfer system, the respective principal amounts of the individual Debt Securities represented by such Global Debt Security to the accounts of persons that have accounts with such Depositary ("Participants"). Such accounts shall be designated by the dealers, underwriters or agents with respect to such Debt Securities or by the Company if such Debt Securities are offered and sold directly by the Company. Ownership of beneficial interests in a Global Debt Security will be limited to Participants or persons that may hold interests through Participants. Ownership of beneficial interests in such Global Debt Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the applicable Depositary or its nominee (with respect to interests of Participants) and the records of Participants (with respect to interests of persons who hold through Participants). The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a Global Debt Security. So long as the Depositary for a Global Debt Security, or its nominee, is the registered owner of such Global Debt Security, such Depositary or such nominee, as the case may be, will be considered the sole owner or holder of the Debt Securities represented by such Global Debt Security for all purposes under the Indenture governing such Debt Securities. Except as provided below, owners of beneficial interests in a Global Debt Security will not be entitled to have any of the individual Debt Securities of the series represented by such Global Debt Security registered in their names, will not receive or be entitled to receive physical delivery of any such Debt Securities of such series in definitive form and will not be considered the owners or holders thereof under the Indenture governing such Debt Securities. (8) Payments of principal of (and premium, if any) and interest on individual Debt Securities represented by a Global Debt Security registered in the name of a Depositary or its nominee will be made to the Depositary or its nominee, as the case may be, as the registered owner of the Global Debt Security representing such Debt Securities. None of the Company, the Trustee for such Debt Securities, any paying agent, or the Securities registrar for such Debt Securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interest of the Global Debt Security for such Debt Securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Company expects that the Depositary for a series of Debt Securities or its nominee, upon receipt of any payment of principal, premium or interest in respect of a permanent Global Debt Security representing any of such Debt Securities, immediately will credit Participants' accounts with payments in amounts proportionate to their respective beneficial interest in the principal amount of such Global Debt Security for such Debt Securities as shown on the records of such Depositary or its nominee. The Company also expects that payments by participants to owners of beneficial interests in such Global Debt Security held through such Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in 'street name'. Such payments will be the responsibility of such Participants. Unless otherwise specified in the applicable Prospectus Supplement, if a Depositary for a series of Debt Securities is at any time unwilling, unable or ineligible to continue as depositary and a successor depositary is not appointed by the Company within 90 days, the Company will issue individual Debt Securities of such series in exchange for the Global Debt Security representing such series of Debt Securities. In addition, the Company may at any time and in its sole discretion, subject to any limitations described in the Prospectus Supplement relating to such Debt Securities, determine not to have any Debt Securities of such series represented by one or more Global Debt Securities and, in such event, will issue individual Debt Securities of such series in exchange for the Global Debt Security or Securities representing such series of Debt Securities. Further, if the Company so specifies with respect to the Debt Securities of a series, an owner of a beneficial interest in a Global Debt Security representing Debt Securities of such series may, on terms acceptable to the Company, the Trustee and the Depositary for such Global Debt Security, receive individual Debt Securities of such series in exchange for such beneficial interests, subject to any limitations described in the Prospectus Supplement relating to such Debt Securities. In any such instance, an owner of a beneficial interest in a Global Debt Security will be entitled to physical delivery of individual Debt Securities of the series represented by such Global Debt Security equal in principal amount to such beneficial interest and to have such Debt Securities registered in its name. Individual Debt Securities of such series so issued will be issued in denominations, unless otherwise specified by the Company, of $1,000 and integral multiples thereof. (9) Certain Covenants of the Company Limitations on Liens. Under the Senior Indenture, so long as Senior Debt Securities are outstanding, the Company will not, and will not permit any Subsidiary to, directly or indirectly, create, issue, assume, incur or guarantee any indebtedness for borrowed money which is secured by a Mortgage of any nature on any of the present or future capital stock of any Restricted Subsidiary unless the Senior Debt Securities then outstanding shall be secured equally and ratably with, or prior to, such other secured debt so long as it is outstanding. (Section 3.6) Limitations on Disposition of Stock of Restricted Subsidiaries. Under the Senior and Subordinated Indentures, so long as Debt Securities are outstanding, the Company will not, and will not permit any Subsidiary to, sell, transfer or otherwise dispose of any shares of capital stock of any Restricted Subsidiary except for (i) a sale, transfer or other disposition of any capital stock of any Restricted Subsidiary to a wholly owned Subsidiary of the Company or such Subsidiary; (ii) a sale, transfer or other disposition of the entire capital stock of any Restricted Subsidiary for at least fair value (as determined by the Board of Directors of the Company acting in good faith); or (iii) a sale, transfer or other disposition of the capital stock of any Restricted Subsidiary for at least fair value (as determined by the Board of Directors of the Company acting in good faith) if, after giving effect thereto, the Company and its Subsidiaries would own more than 80% of the issued and outstanding Voting Stock of such Restricted Subsidiary. (Section 3.7 of the Senior Indenture; Section 3.6 of the Subordinated Indenture) Consolidation, Merger, Sale or Conveyance Under the Senior and Subordinated Indentures, so long as Debt Securities are outstanding, the Company will not consolidate with or merge with or into any other corporation or convey, transfer or lease its properties or assets as an entirety or substantially as an entirety to any person, unless (i) the successor or purchaser is a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia; (ii) such successor or purchaser shall expressly assume, by supplemental indenture satisfactory in form to the related Trustee, the due and punctual payment of the principal of, premium, if any, and interest on all the Debt Securities and the performance and observance of every covenant and condition of the Company under the related Indenture; and (iii) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing under the related Indenture. (Section 9.1) Certain Definitions The covenants and other provisions relating to the Debt Securities are to be read in conjunction with the definitions contained in the Senior and Subordinated Indentures, certain of which are substantially to the following effect: "Debt Securities" means all unsecured debt securities, notes or other evidences of indebtedness issued in one or more series that the Company may issue from time to time in accordance with the terms of the related Indentures. "Mortgage" means any mortgage, pledge, lien, security interest or other encumbrance. (10) "Restricted Subsidiary" means MBIA Corp. and any successor to all or substantially all of its business, provided that such successor is a Subsidiary. "Subsidiary" means a corporation more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. "Voting Stock" means, with respect to any Subsidiary, stock of any class or classes (or equivalent interests), if the holders of the stock of such class or classes (or equivalent interests) are ordinarily, in the absence of contingencies, entitled to vote for the election of the directors (or persons performing similar functions) of such corporation, even though the right so to vote has been suspended by the happening of such a contingency. Events of Default Any one of the following events will constitute an Event of Default with regard to any series of Debt Securities under each of the Indentures: (i) default continued for 30 days in payment of any installment of interest on any of the Debt Securities when due; (ii) default in payment of all or any part of the principal of the Debt Securities when due and payable either at maturity, upon any redemption, by declaration or otherwise; (iii) default continued for 60 days after notice of such default in performance of any covenant or warranty of the Indenture by the Company in respect of the Debt Securities; (iv) certain events of default with respect to indebtedness of the Company (other than the Debt Securities or non-recourse obligations of the Company) in an aggregate principal amount in excess of $10,000,000 which default shall consist of the failure to make any payment at maturity or shall have resulted in the acceleration of the maturity of such indebtedness; (v) certain events of bankruptcy, insolvency, or reorganization of the Company or any Restricted Subsidiary; or (vi) any other Event of Default provided in the supplemental indenture or resolution of the Board of Directors under which such series of Debt Securities is issued or in the form of Debt Security for such series. (Section 5.1) The Company is required to file with the Trustee annually a written statement as to the fulfillment of certain of its obligations under the Indenture. (Section 3.5) Each Indenture provides that the Trustee may withhold notice to the holders of Debt Securities of any default (except in payment of principal of or premium, if any, or interest on the Debt Securities) if the Trustee considers it in the interest of the holders of the Debt Securities to do so. (Section 5.11) Each Indenture provides that (a) if an Event of Default described in clause (i) or (ii) above shall have occurred and be continuing with regard to the Debt Securities of any series, either the Trustee or the holders of 25% in aggregate principal amount of the Debt Securities of that series then outstanding (each such series acting as a separate class) may declare the principal (or, if Debt Securities of such series are original issue discount Debt Securities, such portion of the principal amount as may be specified in the terms of that series) of all Debt Securities of such series and interest accrued thereon, if any, to be due and payable immediately and (b) if an Event of Default described in clause (iii), (iv) or (v) above shall have occurred and be continuing, either the Trustee or the holders of 25% in aggregate principal amount of all Debt Securities (or in the case of an Event of Default described in clause (iii) above, all series affected by such Event of Default) then outstanding (voting as a single class) may declare the principal (or, if Debt Securities of such series are original issue discount Debt Securities, such portion of the principal amount as may be specified in the terms of that series) of all Debt Securities (in the case of clause (iii) above, limited to all series affected) then outstanding and interest accrued thereon, if any, to be due and payable immediately. Upon certain conditions, such declaration by the holders of Debt Securities of any series may be annulled and past defaults which have been cured may be waived by (a) with respect to clauses (i) or (ii) the holders of a majority in aggregate principal amount of Debt Securities of such series (each such series voting as a separate class) then outstanding and (b) with respect to clauses (iii), (iv) or (v) above, the (11) holders of a majority in aggregate principal amount of the Debt Securities of all series (in the case of clause (iii) above, limited to all series affected by such default) then outstanding (voting as a single class). (Section 5.1) Prior to a declaration of acceleration of maturity of the Debt Securities of any series, the holders of a majority in aggregate principal amount of the Debt Securities of each series voting separately or all series voting as a single class, depending on the nature of the Event of Default, may waive any Event of Default, and its consequences, except a default in the payment of the principal of or premium, if any, or interest on any of the Debt Securities of such series or in respect of a covenant or provision of the Indenture which cannot be modified or amended without the consent of the holder of each Debt Security of such series affected. (Section 5.10) Subject to the provisions of each Indenture relating to the duties of the Trustee, the Trustee shall be under no obligation to exercise any of its rights or powers under the relative Indenture at the request, order or direction of any of the holders of Debt Securities, unless such holders shall have offered the Trustee reasonable indemnity. (Section 6.2) Subject to such provision for indemnification, the holders of a majority in aggregate principal amount of the Debt Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee. (Section 5.9) Defeasance and Covenant Defeasance Except as may otherwise be provided in the applicable Prospectus Supplement with respect to the Debt Securities of any series, each Identure provides that, subject to certain conditions, the Company may elect either (i) to be discharged from any and all obligations with respect to the Debt Securities (except for the obligations to register the transfer or exchange of the Debt Securities, to replace temporary or mutilated, defaced, destroyed, lost or stolen Debt Securities, to maintain an office or agency for the payment of principal and interest in respect of the Debt Securities, to appoint a paying agent and, if the Company elects to act as the paying agent, to hold moneys for such payment in trust) ("Defeasance") or (ii) to be released from its obligations with respect to the Debt Securities under Sections 3.6 and 3.7 of the Indenture (being the sections of the Indenture captioned "Limitations on Liens" and "Limitations on Disposition of Stock of Restricted Subsidiaries" see "Certain Covenants of the Company") ("Covenant Defeasance"), upon the deposit with the Trustee (or another qualifying trustee) irrevocably in trust for such purpose, of money and/or United States government obligations in an amount which, in the opinion of a nationally recognized firm of independent public accountants delivered to such trustee, would be sufficient to pay the principal of and premium, if any, and interest on the Debt Securities on the scheduled due dates therefor. (Sections 13.1 through 13.4) Each Indenture provides that, to effect Defeasance or Covenant Defeasance, the Company must deliver to the Trustee an opinion of counsel to the effect that Defeasance or Covenant Defeasance, as the case may be, will not cause the holders of the Debt Securities to recognize income, gain or loss for federal income tax purposes. In addition, in the case of Defeasance, such opinion of counsel must state that a private letter ruling or a revenue ruling to the same effect has been issued by the United States Internal Revenue Service or state that since the date of the Indenture there has been a change in the applicable federal income tax law to the same effect. (Sections 13.3 and 13.4) With respect to the Subordinated Indenture, in order to be discharged as described above, no default in the payment of principal of (or premium, if any) or interest on any Senior Debt shall have occurred and be continuing or no Event of Default with respect to the Senior Debt shall have occurred and be continuing and shall have resulted in such Senior Debt becoming or being declared due and payable prior to the date it would have become due and payable. (12) Modification and Waiver Each Indenture provides that the Company may enter into a supplemental indenture or indentures for the purpose of adding to, changing or eliminating any of the provisions of such Indenture or of any supplemental indentures or of modifying the rights of the holders of Debt Securities issued thereunder if approved in writing signed by the holders of not less than a majority in aggregate principal amount of all outstanding Debt Securities affected thereby voting as one class; provided that the consent of each holder of Debt Securities affected thereby is required for any modification or alteration which (i) extends the final maturity of any Debt Securities, or reduces the principal amount thereof, or reduces the rate or extends the time of payment of interest thereon, or reduces any amount payable on redemption thereof or impairs or affects the right of any holder of Debt Securities to institute suit for the payment thereof, (ii) reduces the percentage in aggregate principal amount, the consent of the holders of which is required for any such supplemental indenture or (iii) modifies any provision with respect to the subordination of Debt Securities of any series in a manner adverse to the holders thereof. (Section 8.2) The holders of at least a majority in aggregate principal amount of the outstanding Debt Securities of all series (including the Debt Securities) voting as one class may waive compliance by the Company with certain covenants contained in each Indenture. (Section 3.9) Subordination under the Subordinated Indenture In the Subordinated Indenture, the Company has covenanted and agreed that any Subordinated Debt Securities issued thereunder will be subordinate and junior in right of payment to all Senior Debt to the extent provided in the Subordinated Indenture. Upon any payment or distribution of assets to creditors upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors, marshaling of assets or any bankruptcy, insolvency, debt restructuring or similar proceedings in connection with any insolvency or bankruptcy proceeding of the Company, the holders of the Senior Debt will first be entitled to receive payment in full of principal of (and premium, if any) and interest, if any, on such Senior Debt before the holders of Subordinated Debt Securities will be entitled to receive or retain any payment in respect of the principal of (and premium, if any) or interest, if any, on the Subordinated Debt Securities. In the event of the acceleration of the maturity of any Subordinated Debt Securities, the holders of all Senior Debt outstanding at the time of such acceleration will first be entitled to receive payment in full of all amounts due thereon (including any amounts due upon acceleration) before the holders of Subordinated Debt Securities will be entitled to receive any payment upon the principal of (or premium, if any) or interest, if any, or the Subordinated Debt Securities. No payments on account of principal (or premium, if any) or interest, if any, in respect of the Subordinated Debt Securities may be made if there shall have occurred and be continuing a default in any payment with respect to Senior Debt, or an event of default with respect to any Senior Debt resulting in the acceleration of the maturity thereof, or if any judicial proceeding shall be pending with respect to any such default. The Subordinated Indenture defines "Senior Debt" as the principal of (and premium, if any) and interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not such claim for post-petition interest is allowed in such proceeding), on Debt, whether incurred on or prior to the date of the Subordinated Indenture or thereafter incurred, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are not superior in right of payment to the (13) Subordinated Debt Securities or to other Debt which is pari passu with, or subordinated to, the Subordinated Debt Securities; provided, however, that Senior Debt shall not be deemed to include (i) any Debt of the Company which when incurred and without respect to any election under Section 1111(b) of the Bankruptcy code was without recourse to the Company, (ii) any Debt of the Company to any of its subsidiaries, (iii) Debt to any employee of the Company, (iv) any liability for taxes, (v) indebtedness or monetary obligations to trade taxes and (v) indebtedness or monetary obligations to trade creditors or assumed by the Company or any of its subsidiaries in the ordinary course of business in connection with the obtaining of materials or services. As used in the proceeding sentence the term "Debt" means with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; and (vi) every obligation of the type referred to in clauses (i) through (v) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable, directly or indirectly, as obligor or otherwise. The Subordinated Indenture places no limitation on the amount of additional Senior Debt that may be incurred by the Company. The Company may from time to time incur additional indebtedness constituting Senior Debt. The Subordinated Indenture provides that the foregoing subordination provisions, insofar as they relate to any particular issue of Subordinated Debt Securities, may be changed prior to such issuance. Any such change would be described in the Prospectus Supplement relating to such Subordinated Debt Securities. Conversion or Exchange The Subordinated Debt Securities of any series may be convertible or exchangeable into Common Stock or other Securities. The specific terms and conditions on which Subordinated Debt Securities of any series may be so converted or exchanged will be set forth in the applicable Prospectus Supplement. Such terms may include the conversion or exchange price, provisions for conversion or exchange, either mandatory, at the option of the holder, or at the option of the Company, and provisions under which the number of shares of Common Stock or other Securities to be received by the holders of Subordinated Debt Securities would be calculated as of a time and in the manner stated in the applicable Prospectus Supplement. Concerning the Trustee The Senior Indenture Trustee, The First National Bank of Chicago, performs services for the Company in the ordinary course of business. (14) DESCRIPTION OF CAPITAL STOCK The following is a summary of the terms of the Company's Amended and Restated Certificate of Incorporation. The Company's authorized capital stock consists of 200,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock, par value $1.00 per share. At the date of this Prospectus no shares of Preferred Stock are presently outstanding. The Company does not presently have outstanding, and the Amended and Restated Certificate of Incorporation does not authorize, any other classes of capital stock. The issued and outstanding shares of Common Stock are duly authorized, validly issued, fully paid and nonassessable. Common Stock Holders of shares of Common Stock have no preemptive, redemption or conversion rights. The holders of Common Stock are entitled to receive dividends when and as declared by the Board of Directors out of funds legally available therefor. Upon liquidation, dissolution or winding up of the Company, the holders of Common Stock may share ratably in the net assets of the Company after payment in full to all creditors of the Company and liquidating distributions to holders of Preferred Stock, if any. Each holder of Common Stock is entitled to one vote per share on all matters submitted to a vote of shareholders. The Common Stock is traded on the New York Stock Exchange under the symbol 'MBI'. The transfer agent for the Common Stock is ChaseMellon Shareholder Services, L.L.C. The applicable Prospectus Supplement relating to an offering of Common Stock will describe terms relevant thereto, including the number of shares offered, the initial offering price, market price and dividend information. Preferred Stock The particular terms of any series of Preferred Stock offered hereby will be set forth in the Prospectus Supplement relating thereto. The rights, preferences, privileges and restrictions, including dividend rights, voting rights, terms of redemption, retirement and sinking fund provisions and liquidation preferences, if any, of the Preferred Stock of each series will be fixed or designated pursuant to a certificate of designation adopted by the Board of Directors or a duly authorized committee thereof. The terms, if any, on which shares of any series of Preferred Stock are convertible or exchangeable into Common Stock will also be set forth in the Prospectus Supplement relating thereto. Such terms may include provisions for conversion or exchange, either mandatory, at the option of the holder, or at the option of the Company, in which case the number of shares of Common Stock to be received by the holders of Preferred Stock would be calculated as of a time and in the manner stated in the applicable Prospectus Supplement. The description of the terms of a particular series of Preferred Stock that will be set forth in the applicable Prospectus Supplement does not purport to be complete and is qualified in its entirety by reference to the certificate of designation relating to such series. (15) Certain Provisions of Restated Certificate of Incorporation and By-laws The Company's Amended and Restated Certificate of Incorporation requires the approval of at least 80% of the outstanding shares of Common Stock for the amendment of certain provisions which describe the factors the Board may consider in evaluating proposed mergers, sales and other corporate transactions. Further, as an insurance holding company, the Company is subject to certain state insurance regulations that require prior approval of a change of control. See "Business-Regulation" in the Company's 1995 Form 10-K. These provisions and regulations may discourage attempts to obtain control of the Company. In the Amended and Restated Certificate of Incorporation the Company elects not to be subject to the provisions of Sections 33-374a through 33-374c of the Connecticut Stock Corporation Act. If the Company had not made such elections these provisions would require the approval of the holders of at least 80% of the voting power of the outstanding voting stock of the Company, and at least 66 2/3% of the voting power of the outstanding voting stock of the Company other than voting stock held by certain holders of 10% or more of such voting power or by certain affiliates of the Company, as a condition for mergers, liquidations and other business transactions involving the Company and the holders of 10% or more of such voting power or certain affiliates of the Company unless certain minimum price and procedural requirements are met. Rights Agreement On December 12, 1991, the Company's Board of Directors declared a dividend distribution of one Preferred Share Purchase Right (a "Right") for each share of Common Stock. Each Right entitles the registered holder to purchase from the Company one one-hundredth of a Junior Participating Cumulative Preferred Share (the "Junior Preferred Stock") of the Company at a price of $160, subject to certain adjustments to prevent dilution through stock dividends, splits and combinations and distributions of warrants or other securities or assets. The Junior Preferred Stock will rank senior to Common Stock, but could rank junior to other classes of Preferred Stock that might be issued, as to dividends and liquidating distributions, and will have 100 votes per share, voting together with Common Stock. Initially, the Rights are attached to shares of Common Stock and are not represented by separate certificates or exercisable until the earlier to occur of (a) ten business days following the public announcement by the Company (the "Shares Acquisition Date") that a person or group of persons acquired (or obtained the right to acquire) beneficial ownership of 10% or more of the outstanding Common Stock and (b) ten business days (or, if determined by the Board of Directors, a later date) following the announcement or commencement of a tender offer or exchange offer which, if successful, would result in the bidder owning 10% or more of the outstanding Common Stock. However, no person shall be deemed to have acquired or obtained the right to acquire the beneficial ownership of 10% or more of the outstanding shares of the Company's Common Stock, if the Board of Directors determines that such acquisition is inadvertent, and such person promptly divests itself of a sufficient number of shares to be below the 10% ownership threshold. On such earlier date, Rights certificates would be issued and mailed to holders of Common Stock. The Rights will expire on December 12, 2001, unless earlier redeemed or exchanged. shares to be below the 10% ownership threshold. On such earlier date, Rights certificates would be issued and mailed to holders of Common Stock. The Rights will expire on December 12, 2001, unless earlier redeemed or exchanged. If an acquiring person or group acquires beneficial ownership of 10% or more of the Common Stock (except pursuant to a tender or exchange offer for all of the outstanding Common Stock determined by a majority of the Company's (16) independent directors to be fair and in the best interests of the Company and its shareholders), then each Right (other than those held by the acquiror, which will become void) will entitle its holder to purchase for $160 (or the purchase price as then adjusted) that number of shares of Common Stock (or, in certain circumstances, cash, a reduction in the purchase price, Common Stock, other securities of the Company, other property or a combination thereof) having a market value of $320 (or 200% of the adjusted purchase price). If, after an acquiring person or group so acquires 10% or more of the Common Stock in a merger or other business combination and (a) the Company shall not be the surviving or continuing corporation, (b) the Company shall be the surviving or continuing corporation and all or part of the Shares of Common Stock shall be changed or exchanged, or (c) 50% or more of the Company's assets, cash flow or earning power is sold, then proper provision shall be made so that each Right (other than those held by the acquiror) will entitle its holder to purchase that number of shares of common stock of the acquiring company which at the time of such transaction would have a market value of 200% of the then-effective purchase price. The Company's Board of Directors may redeem all but not less than all of the Rights at $0.01 per Right at any time prior to ten business days following the Shares Acquisition Date. Additionally, at any time after a person or group acquires 10% or more but less than 50% of the outstanding Common Stock, the Company's Board of Directors may exchange the Rights (other than those held by the acquiror, which will become void), in whole or in part, at an exchange ratio of one share of Common Stock per Right (subject to adjustment). The Board of Directors may also amend the Rights at any time prior to the Shares Acquisition Date. The Company's Rights Plan is designed to make it more likely that all of the Company's shareholders receive fair and equal treatment in the event of any unsolicited attempt to acquire the Company and to guard against the use of coercive tactics to gain control of the Company. However, the existence of the Company's Rights Plan might discourage unsolicited merger proposals and unfriendly tender offers and may therefore deprive shareholders of an opportunity to sell their shares at a premium over prevailing market prices. PLAN OF DISTRIBUTION The Company may sell the Securities to one or more underwriters for public offering and sale by them or may sell Securities to investors directly or through agents or dealers. Any such underwriter, agent or dealer involved in the offer and sale of the Securities will be named in an applicable Prospectus Supplement. Offers and sales of Securities hereunder may be effected at a fixed price or prices, which may be changed, or from time to time at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Company also may, from time to time, authorize underwriters acting as its agents to offer and sell the Securities upon the terms and conditions set forth in any Prospectus Supplement. If Securities are sold by means of an underwritten offering, the Company will execute an underwriting agreement with an underwriter or underwriters at the time an agreement for such sale is reached, and the names of the specific managing underwriter or underwriters, as well as any other underwriters, the respective amounts underwritten and the terms of the transaction, including commissions, discounts and any other compensation of the underwriters and dealers, if any, will be set forth in the applicable Prospectus Supplement which will be used by the underwriters to make resales of the Securities in respect of which this Prospectus is being delivered to the public. If any underwriter or underwriters are utilized in the sale of the Securities, unless otherwise set forth in the applicable Prospectus Supplement, the underwriting agreement will provide that the obligations of the underwriters are subject to certain conditions precedent and that the underwriters with respect to a sale of Securities will be obligated to purchase all such Securities if any are purchased. (17) In connection with the sale of Securities, underwriters may be deemed to have received compensation from the Company in the form of underwriting discounts or commissions and may also receive commissions from purchasers of Securities for whom they may act as agent. Underwriters may sell Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions (which may be changed from time to time) from the purchasers for whom they may act as agent. Any underwriting compensation paid by the Company to underwriters or agents in connection with the offering of Securities, and any discounts, concessions or commissions allowed by underwriters to participating dealers, will be set forth in an applicable Prospectus Supplement. Underwriters, dealers and agents participating in the distribution of the Securities may be deemed to be underwriters under the Securities Act, and any discounts and commissions received by them and any profit realized by them on resale of the Securities may be deemed to be underwriting discounts and commissions under the Securities Act. Underwriters, dealers and agents may be entitled, under agreements with the Company to indemnification against and contribution toward certain civil liabilities, including liabilities, under the Securities Act, and to reimbursement by the Company for certain expenses. If a dealer is utilized in the sale of the Securities in respect of which this Prospectus is delivered, the Company will sell such Securities to such dealer, as principal. The dealer may then resell such Securities to the public at varying prices to be determined by such dealer at the time of resale. The name of the dealer and the terms of the transaction will be set forth in the Prospectus Supplement relating thereto. Offers to purchase Securities may be solicited directly by the Company and the sale thereof may be made by the Company directly to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act with respect to any resale thereof. The terms of any such transaction will be set forth in the Prospectus Supplement relating thereto. The Securities may or may not be listed on a national securities exchange or a foreign securities exchange. Certain series of the Securities will be a new issue and will not have an established trading market. No assurances can be given that there will be a market for any of the Securities. Agents, underwriters and dealers may be customers of, engage in transactions with or perform services for, the Company and its subsidiaries in the ordinary course of business. LEGAL MATTERS Certain legal matters with respect to the legality of the Securities being offered hereby will be passed upon for the Company by Debevoise & Plimpton, New York, New York, and for any underwriters of agents by counsel to be named in the Prospectus Supplement. Such counsel may rely, as to matters of Connecticut law, upon the opinion of Day, Berry & Howard, City Place, Hartford, Connecticut 06103, Connecticut counsel for the Company. EXPERTS The consolidated financial statements and the related consolidated financial statement schedules of the Company appearing or incorporated by reference in the Company's Annual Report on Form 10-K for the year ended December 31, 1995, have been audited by Coopers & Lybrand L.L.P., independent accountants, as set forth in their reports thereon dated January 22, 1996 incorporated by reference or included therein and incorporated herein by reference. Such consolidated financial statements and financial statement schedules are incorporated herein by reference in reliance upon such reports given the authority of such firm as experts in accounting and auditing. (18) PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the estimated expenses in connection with the issuance and distribution of the Securities being registered, other than underwriting discounts and commissions: Registration Fee............................. $ 75,757.58 Trustee Fees................................. 7,500.00 Printing..................................... 50,000.00 Accounting Fees.............................. 30,000.00 Legal Fees................................... 60,000.00 Rating Agency Fees........................... 60,000.00 Blue Sky Fees and Expense.................... 20,000.00 Miscellaneous................................ 1,742.42 ----------- $305,000.00 =========== Item 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Section 33-320a of the Stock Corporation Act of the State of Connecticut provides that a corporation shall indemnify a director or officer against judgments, fines, penalties, amounts paid in settlement and reasonable expenses actually incurred by him, including attorneys' fees, for actions brought or threatened to be brought against him in his capacity as a director or officer, other than actions brought by or in the right of the corporation, when it is determined by certain disinterested parties that he acted in a manner reasonably believed to be in the corporation's best interest. In any criminal action or proceeding, it also must be determined that the director or officer had no reason to believe that his conduct was unlawful. The director or officer must also be indemnified when he is successful on the merits in the defense of a proceeding or in circumstances where a court determines that he is fairly and reasonably entitled to be indemnified, and the court approves the amount. In connection with shareholder derivative suits, the director or officer may not be indemnified unless he is finally adjudged not to have breached his duty to the corporation or a court has determined that he is fairly and reasonably entitled to be indemnified, and then for such amount as the court shall determine. The statute provides that the indemnification provided thereby is exclusive and cannot be reduced or expanded by charter, by-law or agreement, although a corporation may procure insurance providing greater indemnification. The Company has purchased insurance providing officers and directors of the Company (and their heirs and other legal representatives) coverage against certain liabilities arising from any negligent act, error, omission or breach of duty claimed against them solely by reason of their being such officers and directors, and providing coverage for the Company against its obligation to provide indemnification as required by the above-described statute. The insurance policy has a $50 million aggregate policy limit for any loss or losses during the policy year. The Amended and Restated Shareholders' Agreement among the Company and its Founding Shareholders provides for indemnification of the shareholders that are parties thereto under certain circumstances (filed as Exhibit 10.30 to the Company's Registration Statement on Form S-1 (Registration No. 33-14474)). II-1 Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits 1. Underwriting Agreement. 1.01.Form of Underwriting Agreement.* 4. Instruments Defining the Rights of Security Holders. 4.01.Specimen stock certificates representing shares of Common Stock, incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1, filed with the Commission on May 21, 1987 (Registration No. 33-14474). 4.02.Rights Agreement, dated as of December 12, 1991, between the Company and Mellon Bank, N.A., as Rights Agent, incorporated by reference to Exhibit 1 to the Form 8-A and the Current Report on Form 8-K, filed with the Commission December 31, 1991, as amended by Amendment No. 1 to the Rights Agreement, incorporated by reference to Exhibit 1 to the Form 8-A and the Current Report on Form 8-K, filed with the Commission on October 27, 1994. 4.03.Senior Indenture, dated as of August 1, 1990, between the Company and The First National Bank of Chicago, as Trustee, incorporated by reference to Exhibit 4.01 to the Company's Registration Statement on Form S-3 (Registration No. 33-33937). 4.04.Form of Subordinated Indenture 5. Opinions as to Validity. 5.01.Opinion of Debevoise & Plimpton. 5.02.Opinion of Day, Berry & Howard. 12. Computation Re Computation of Ratios. 12.01.Computation of Ratios of Earnings to Fixed Charges. 23. Consents of Experts and Counsel. 23.01.Consent of Coopers & Lybrand L.L.P. 23.02.Consent of Debevoise & Plimpton (contained in Exhibit 5.01). 23.03.Consent of Day, Berry & Howard (contained in Exhibit 5.02). 24. Powers of Attorney. 24.01.Powers of Attorney. 25. Statement of Eligibility of Trustee. 25.01.Statement of Eligibility and Qualification on Form T-1 under the Trust Indenture Act of 1939, as amended, of the First National Bank of Chicago, as Senior Trustee under the Senior Indenture, incorporated by reference to Exhibit 25.01 to the Registration Statement on Form S-3, filed with the Commission on December 8, 1995 (Registration No. 33-64681). 25.02.Statement of Eligibility and Qualification on Form T-1 of the Subordinated Trustee, as Trustee for the Subordinated Indenture.* - ------------------------------------------------------------------------------- *To be filed by a report on Form 8-K pursuant to Item 601 of Regulation S-K. Item 17. UNDERTAKINGS. (A) The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. II-2 (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (B) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (C) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in said Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (D) Rule 415 Offering Each undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10 (a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no II-3 more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii)To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; PROVIDED, however, that paragraphs (a) (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by such registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3 To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (E) The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee under subsection (a) of Section 310 of the Trust Indenture Act (the "Act") in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Armonk, New York, on October 29, 1996. MBIA Inc. (Registrant) By /s/ David H. Elliott ----------------------------------- David H. Elliott, Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated: Signature Title Date --------- ----- ---- /s/ David H. Elliott Chairman, Chief Executive October 29, 1996 - --------------------------- Officer and Director David H. Elliott (principal executive officer) /s/ Richard L. Weill President and Director October 29, 1996 - --------------------------- Richard L. Weill /s/ Julliette S. Tehrani Senior Vice President and October 29, 1996 - --------------------------- Chief Financial Officer Julliette S. Tehrani (principal financial officer) /s/ Elizabeth B. Sullivan Vice President and October 29, 1996 - --------------------------- Controller (principal Elizabeth B. Sullivan accounting officer) /s/ * Director October 29, 1996 - --------------------------- Joseph W. Brown, Jr. /s/ * Director October 29, 1996 - --------------------------- David C. Clapp /s/ * Director October 29, 1996 - --------------------------- Claire L. Gaudiani /s/ * Director October 29, 1996 - --------------------------- William H. Gray, III II-5 /s/ * Director October 29, 1996 - --------------------------- Freda S. Johnson /s/ * Director October 29, 1996 - --------------------------- Daniel P. Kearney /s/ * Director October 29, 1996 - --------------------------- James A. Lebenthal /s/ * Director October 29, 1996 - --------------------------- Robert B. Nicholas /s/ * Director October 29, 1996 - --------------------------- Pierre-Henri Richard /s/ * Director October 29, 1996 - --------------------------- John A. Rolls *By: /s/ Louis G. Lenzi ----------------------- Louis G. Lenzi Attorney-in-Fact EX-4.04 2 FORM OF SUBORDINATED INDENTURE MBIA INC. AND _____________, Trustee Subordinated Indenture Dated as of _____________, _____________ CROSS REFERENCE SHEET* Between Provisions of Trust Indenture Act of 1939 and Indenture to be dated as of __________, between MBIA Inc. and ______________________________, as Trustee: Section of the Act Section of Indenture - ------------------ ------------------------------ 310(a)(1) and (2)................................ 6.9 310(a)(3) and (4)................................ Inapplicable 310(b)........................................... 6.8 and 6.10(a), (b) and (d) 310(c)........................................... Inapplicable 311(a)........................................... 6.13(a) and (c)(1) and (2) 311(b)........................................... 6.13(b) 311(c)........................................... Inapplicable 312(a)........................................... 4.1 and 4.2(a) 312(b)........................................... 4.2(a) and (b)(i) and (ii) 312(c)........................................... 4.2(c) 313(a)........................................... 4.4(a)(i), (ii), (iii), (iv), (v) and (vi) 313(b)(1)........................................ Inapplicable 313(b)(2)........................................ 4.4 313(c)........................................... 4.4 313(d)........................................... 4.4 314(a)........................................... 4.3 314(b)........................................... Inapplicable 314(c)(1) and (2)................................ 11.5 314(c)(3)........................................ Inapplicable 314(d)........................................... Inapplicable 314(e)........................................... 11.5 314(f)........................................... Inapplicable 315(a), (c) and (d).............................. 6.1 315(b)........................................... 5.11 315(e)........................................... 5.12 316(a)(1)........................................ 5.9 316(a)(2)........................................ Not required 316(a) (last sentence)........................... 7.4 316(b)........................................... 5.7 317(a)........................................... 5.2 317(b)........................................... 3.4(a) and (b) 318(a)........................................... 11.7 * This Cross Reference Sheet is not part of the Indenture. TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS SECTION 1.1 Certain Terms Defined.......................................1 ARTICLE II SECURITIES SECTION 2.1 Forms Generally.............................................6 SECTION 2.2 Form of Trustee's Certificate of Authentication.............7 SECTION 2.3 Amount Unlimited; Issuable in Series........................7 SECTION 2.4 Authentication and Delivery of Debt Securities.............10 SECTION 2.5 Execution of Debt Securities...............................11 SECTION 2.6 Certificate of Authentication..............................11 SECTION 2.7 Denomination and Date of Debt Securities; Payments of Interest..............................12 SECTION 2.8 Registration, Transfer and Exchange........................12 SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Debt Securities...................................14 SECTION 2.10 Cancellation of Debt Securities; Destruction Thereof.......15 SECTION 2.11 Temporary Debt Securities..................................15 SECTION 2.12 Debt Securities Issuable in the Form of a Registered Globa Security................................16 ARTICLE III COVENANTS OF THE ISSUER SECTION 3.1 Payment of Principal and Interest..........................17 SECTION 3.2 Offices for Payments, etc..................................18 SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee.........18 SECTION 3.4 Paying Agents..............................................18 SECTION 3.5 Written Statement to Trustee...............................19 SECTION 3.6 Limitations on Disposition of Stock of Restricted Subsidiaries......................................19 SECTION 3.7 Corporate Existence........................................20 SECTION 3.8 Waiver of Certain Covenants................................20 ARTICLE IV DEBT SECURITYHOLDERS' LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE SECTION 4.1 Issuer to Furnish Trustee Information as to Names and Addresses of Debt Securityholders....................21 SECTION 4.2 Preservation and Disclosure of Debt Securityholders'Lists....................21 SECTION 4.3 Reports by the Issuer......................................22 SECTION 4.4 Reports by the Trustee.....................................23 ARTICLE V REMEDIES OF THE TRUSTEE AND DEBT SECURITYHOLDERS ON EVENT OF DEFAULT SECTION 5.1 Event of Default Defined; Acceleration of Maturity; Waiver of Default........................................25 SECTION 5.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt.............................................29 SECTION 5.3 Application of Proceeds....................................32 SECTION 5.4 Suits for Enforcement......................................33 SECTION 5.5 Restoration of Rights on Abandonment of Proceedings........33 SECTION 5.6 Limitations on Suits by Debt Securityholders...............33 SECTION 5.7 Unconditional Right of Debt Securityholders to Institute Certain Suits..................................34 SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default........................34 SECTION 5.9 Control by Debt Securityholders............................35 SECTION 5.10 Waiver of Past Defaults....................................35 SECTION 5.11 Trustee to Give Notice of Default, But May Withhold in Certain Circumstances.................................36 SECTION 5.12 Right of Court to Require Filing of Undertaking to Pay Costs................................................36 ARTICLE VI CONCERNING THE TRUSTEE SECTION 6.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default.........................37 SECTION 6.2 Certain Rights of the Trustee..............................38 SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of Debt Securities or Application of Proceeds Thereof............39 SECTION 6.4 Trustee and Agents May Hold Debt Securities; Collections, etc.........................................40 SECTION 6.5 Moneys Held by Trustee.....................................40 SECTION 6.6 Compensation and Indemnification of Trustee and Its Prior Claim...........................40 SECTION 6.7 Right of Trustee to Rely on Officers' Certificate, etc.....41 SECTION 6.8 Qualification of Trustee; Conflicting Interests............41 SECTION 6.9 Persons Eligible for Appointment as Trustee................47 SECTION 6.10 Resignation and Removal; Appointment of Successor Trustee..................................................47 SECTION 6.11 Acceptance of Appointment by Successor Trustee.............49 SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business of Trustee......................................50 SECTION 6.13 Preferential Collection of Claims Against the Issuer.......51 ARTICLE VII CONCERNING THE DEBT SECURITYHOLDERS SECTION 7.1 Evidence of Action Taken by Debt Securityholders...........55 SECTION 7.2 Proof of Execution of Instruments and of Holding of Debt Securities.......................................56 SECTION 7.3 Holders to Be Treated as Owners............................56 SECTION 7.4 Debt Securities Owned by Issuer Deemed Not Outstanding..............................................56 SECTION 7.5 Right of Revocation of Action Taken........................57 ARTICLE VIII SUPPLEMENTAL INDENTURES SECTION 8.1 Supplemental Indentures Without Consent of Debt Securityholders.....................................57 SECTION 8.2 Supplemental Indentures With Consent of Debt Securityholders..........................................59 SECTION 8.3 Effect of Supplemental Indenture...........................60 SECTION 8.4 Documents to Be Given to Trustee...........................60 SECTION 8.5 Notation on Debt Securities in Respect of Supplemental Indentures...............................61 ARTICLE IX CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 9.1 Covenant Not to Merge, Consolidate, Sell or Convey Property Except Under Certain Conditions.................61 SECTION 9.2 Successor Corporation Substituted..........................62 SECTION 9.3 Opinion of Counsel to Trustee..............................62 ARTICLE X SATISFACTION AND DISCHARGE OF INDENTURE;UNCLAIMED MONEYS SECTION 10.1 Satisfaction and Discharge of Indenture....................63 SECTION 10.2 Application by Trustee of Funds Deposited for Payment of Debt Securities...............................64 SECTION 10.3 Repayment of Moneys Held by Paying Agent...................64 SECTION 10.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed for Three Years..........................64 ARTICLE XI MISCELLANEOUS PROVISIONS SECTION 11.1 Incorporators, Stockholders, Officers and Directors of Issuer Exempt from Individual Liability.....65 SECTION 11.2 Provisions of Indenture for the Sole Benefit of Parties and Debt Securityholders.................................65 SECTION 11.3 Successors and Assigns of Issuer Bound by Indenture........65 SECTION 11.4 Notices and Demands on Issuer, Trustee and Debt Securityholders.....................................65 SECTION 11.5 Officers' Certificate and Opinions of Counsel; Statements to Be Contained Therein.......................66 SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays............67 SECTION 11.7 Conflict of Any Provision of Indenture with Trust Indenture Act of 1939....................................67 SECTION 11.8 New York Law to Govern.....................................68 SECTION 11.9 Counterparts...............................................68 SECTION 11.10 Effect of Headings.........................................68 ARTICLE XII REDEMPTION OF DEBT SECURITIES AND SINKING FUNDS SECTION 12.1 Applicability of Article...................................68 SECTION 12.2 Notice of Redemption; Partial Redemptions..................68 SECTION 12.3 Payment of Debt Securities Called for Redemption...........69 SECTION 12.4 Exclusion of Certain Debt Securities from Eligibility for Selection for Redemption.............................70 SECTION 12.5 Mandatory and Optional Sinking Funds.......................70 ARTICLE XIII DEFEASANCE AND COVENANT DEFEASANCE SECTION 13.1 Applicability of Article; Issuer's Option to Effect Defeasance or Covenant Defeasance........................74 SECTION 13.2 Defeasance and Discharge...................................74 SECTION 13.3 Covenant Defeasance........................................74 SECTION 13.4 Conditions to Defeasance or Covenant Defeasance............75 SECTION 13.5 Deposited Money and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions......77 SECTION 13.6 Reinstatement..............................................78 ARTICLE XIV SUBORDINATION OF DEBT SECURITIES Section 14.1 Securities Subordinate to Senior Debt......................78 Section 14.2 Payment Over of Proceeds Upon Dissolution, Etc.............78 Section 14.3 Prior Payment to Senior Debt Upon Acceleration of Debt Securities..........................................80 Section 14.4 No Payment When Senior Debt in Default.....................81 Section 14.5 Payment Permitted If No Default............................81 Section 14.6 Subrogation to Rights of Holders of Senior Debt............82 Section 14.7 Provisions Solely to Define Relative Rights................82 Section 14.8 Trustee to Effectuate Subordination........................82 Section 14.9 No Waiver of Subordination Provisions......................83 Section 14.10 Notice to Trustee..........................................83 Section 14.11 Reliance on Judicial Order or Certificate of Liquidating Agent........................................83 Section 14.12 Trustee Not Fiduciary For Holders of Senior Debt...........84 Section 14.13 Rights of Trustee as Holder of Senior Debt; Preservation of Trustee's Rights.........................84 Section 14.14 Article Applicable to Paying Agents........................84 Section 14.15 Defeasance of This Article XIV.............................84 Section 14.16 Certain Conversions or Exchanges Deemed Payment............84 THIS INDENTURE, dated as of ___________ between MBIA Inc., a Connecticut corporation (the "Issuer"), and , a (the "Trustee"), W I T N E S S E T H : WHEREAS, the Issuer has duly authorized the issue from time to time of its unsecured debt securities, notes or other evidences of indebtedness to be issued in one or more series (the "Debt Securities") up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture, and to provide, among other things, for the authentication, delivery and administration thereof, the Issuer has duly authorized the execution and delivery of this Indenture; and WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms have been done; NOW, THEREFORE: In consideration of the premises and the purchases of the Debt Securities by the holders thereof, the Issuer and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Debt Securities as follows: ARTICLE I DEFINITIONS SECTION 1.1 CERTAIN TERMS DEFINED The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section. All other terms used in this Indenture that are defined in the Trust Indenture Act of 1939 or the definitions of which in the Securities Act of 1933 are referred to in the Trust Indenture Act of 1939, including terms defined therein by reference to the Securities Act of 1933 (except as herein otherwise expressly provided or unless the context otherwise clearly requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of this Indenture. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" means such accounting principles as are generally accepted at the time of any computation. The words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular. "BOARD OF DIRECTORS" means either the Board of Directors of the Issuer or any committee of such Board duly authorized to act hereunder. "BUSINESS DAY" means, with respect to any Debt Security, a day that in the city (or in any of the cities, if more than one) in which amounts are payable, as specified in the form of such Debt Security, is not a day on which banking institutions are authorized by law or regulation to close. "COMMISSION" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "CORPORATE TRUST OFFICE" means the office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be principally administered, which office is, at the date as of which this Indenture is dated, located at _________________________________. "DEBT" means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; and (vi) every obligation of the type referred to in clauses (i) through (v) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable, directly or indirectly, as obligor or otherwise. 2 "DEBT SECURITY" or "DEBT SECURITIES" (except as otherwise provided in Section 6.8) has the meaning stated in the first recital of this Indenture, or, as the case may be, Debt Securities that have been authenticated and delivered under this Indenture. "DEPOSITARY" means, with respect to any Debt Securities issued in the form of one or more Registered Global Securities, such Person as the Board of Directors may designate and its successors. "EVENT OF DEFAULT" means any event or condition specified as such in Section 5.1. "HOLDER", "HOLDER OF DEBT SECURITIES", "DEBT SECURITYHOLDER" or other similar terms mean the registered holder of any Debt Security. "INDENTURE" means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented or both, and shall include the forms and terms of particular series of Debt Securities established as contemplated hereunder. "INTEREST" means, when used with respect to noninterest bearing Debt Securities, interest payable after maturity. "ISSUER" means (except as otherwise provided in Article Six) MBIA Inc., a Connecticut corporation, and, subject to Article Nine, its successors and assigns. "JUNIOR SUBORDINATED PAYMENT" has the meaning specified in Section 14.2. "MORTGAGE" means any mortgage, pledge, lien, security interest or other encumbrance. "OFFICERS' CERTIFICATE" means a certificate signed by the chairman of the Board of Directors or the president or any vice president and by the treasurer or the secretary or any assistant secretary of the Issuer and delivered to the Trustee. Each such certificate shall include the statements provided for in Section 11.5. 3 "OPINION OF COUNSEL" means an opinion in writing signed by legal counsel who may be an employee of or counsel to the Issuer or who may be other counsel satisfactory to the Trustee. Each such opinion shall include the statements provided for in Section 11.5, if and to the extent required hereby. "ORIGINAL ISSUE DATE" of any Debt Security (or portion thereof) means the earlier of (a) the date of such Debt Security or (b) the date of any Debt Security (or portion thereof) for which such Debt Security was issued (directly or indirectly) on registration of transfer, exchange or substitution. "ORIGINAL ISSUE DISCOUNT DEBT SECURITY" means any Debt Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. "OUTSTANDING" (except as otherwise provided in Section 6 8), when used with reference to Debt Securities, shall, subject to the provisions of Section 7.4, mean, as of any particular time, all Debt Securities authenticated and delivered by the Trustee under this Indenture, except (a) Debt Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (b) Debt Securities, or portions thereof, for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Issuer) or shall have been set aside, segregated and held in trust by the Issuer for the holders of such Debt Securities (if the Issuer shall act as its own paying agent), provided that if such Debt Securities, or portions thereof, are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as herein provided, or provision satisfactory to the Trustee shall have been made for giving such notice; and (c) Debt Securities in substitution for which other Debt Securities shall have been authenticated and delivered, or which shall have been paid, pursuant to the terms of Section 2.9 or Section 2.12 (except with respect to any such Debt Security as to which proof satisfactory to the Trustee is presented that such Debt Security is held by a person in whose hands such Debt Security is a legal, valid and binding obligation of the Issuer). In determining whether the holders of the requisite principal amount of Outstanding Debt Securities of any or all series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of an Original Issue Discount Debt Security that shall be deemed to be outstanding for such purposes shall be the amount of the principal thereof that 4 would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. "PERSON" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "PRINCIPAL" whenever used with reference to the Debt Securities or any Debt Security or any portion thereof, shall be deemed to include "and premium, if any". "REGISTERED GLOBAL SECURITY" means a Debt Security issued to the Depositary in accordance with Article Two and bearing the legend prescribed in Section 2.12. "RESPONSIBLE OFFICER" when used with respect to the Trustee means the chairman of the board of directors, any vice chairman of the board of directors, the chairman of the trust committee, the chairman of the executive committee, any vice chairman of the executive committee, the president, any vice president, the cashier, the secretary, the treasurer, any trust officer, any assistant trust officer, any assistant vice president, any assistant cashier, any assistant secretary, any assistant treasurer, or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject. "RESTRICTED SUBSIDIARY" means Municipal Bond Investors Assurance Corporation, a New York corporation, and any successor to all or substantially all of its business; provided that such successor is a Subsidiary. "SENIOR DEBT" means the principal of (and premium, if any) and interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Issuer whether or not such claim for post-petition interest is allowed in such proceeding), on Debt, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are not superior in right of payment to the Debt Securities or to other Debt which is pari passu with, or subordinated to, the Debt Securities; provided, however, that Senior Debt shall not be deemed to include (a) any Debt of the Issuer which when incurred and without respect to Section 1111 (b) of the Bankruptcy Code was without recourse to the Issuer, (b) any Debt of the Issuer to any of its 5 Subsidiaries, (c) Debt to any employee of the Issuer, (d) any liability for taxes, (e) Debt or other monetary obligations to trade creditors created or assumed by the Issuer by or any of its Subsidiaries in the ordinary course of business in connection with the obtaining of goods, materials or services and (f) the Debt Securities. "SUBSIDIARY" means a corporation more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by the Issuer or by one or more other Subsidiaries, or by the Issuer and one or more other Subsidiaries. "TRUSTEE" means the Person identified as "Trustee" in the first paragraph hereof and, subject to the provisions of Article Six, shall also include any successor trustee. "TRUST INDENTURE ACT OF 1939" (except as otherwise provided in Sections 8.1 and 8.2) means the Trust Indenture Act of 1939 as in force at the date as of which this Indenture was originally executed. "VICE PRESIDENT" when used with respect to the Issuer or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title of "vice president". "VOTING STOCK" means, with respect to any Subsidiary, stock of any class or classes (or equivalent interests), if the holders of the stock of such class or classes (or equivalent interests) are ordinarily, in the absence of contingencies, entitled to vote for the election of the directors (or Persons performing similar functions) of such Subsidiary, even though the right so to vote has been suspended by the happening of such a contingency. "YIELD TO MATURITY" means the yield to maturity on a series of Debt Securities, calculated at the time of issuance of such series, or, if applicable, at the most recent redetermination of interest on such series, and calculated in accordance with accepted financial practice. 6 ARTICLE II SECURITIES SECTION 2.1 FORMS GENERALLY. The Debt Securities of each series shall be substantially in such form (not inconsistent with this Indenture) as shall be established by or pursuant to a resolution of the Board of Directors or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Debt Securities, as evidenced by their execution of the Debt Securities. The definitive Debt Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Debt Securities, as evidenced by their execution of such Debt Securities. SECTION 2.2 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The Trustee's certificate of authentication on all Debt securities shall be in substantially the following form: This is one of the Debt Securities of the series designated herein and referred to in the within-mentioned Indenture. TRUSTEE as Trustee By_________________________ Authorized Officer SECTION 2.3 AMOUNT UNLIMITED; ISSUABLE IN SERIES. The aggregate principal amount of Debt Securities which may be authenticated and delivered under this Indenture is unlimited. The Debt Securities may be issued in one or more series. There shall be established in or pursuant to a resolution of the Board of Directors and set 7 forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Debt Securities of any series, (1) the title of the Debt Securities of the series (which shall distinguish the Debt Securities of the series from the Debt Securities of any other series and from any other securities issued by the Issuer); (2) any limit upon the aggregate principal amount of the Debt Securities of the series that may be authenticated and delivered under this Indenture (except for Debt Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Debt Securities of the series pursuant to Section 2.8, 2.9, 2.11 or 12.3); (3) the date or dates on which the principal of the Debt Securities of the series is payable; (4) the rate or rates at which the Debt Securities of the series shall bear interest, if any, or the method by which such rate shall be determined, the date or dates from which such interest shall accrue, the interest payment dates on which such interest shall be payable, the right, if any, of the Issuer to defer or extend an interest payment date, and the record dates for the determination of Holders to whom interest is payable; (5) the place or places where the principal and any interest on Debt Securities of the series shall be payable (if other than as provided in Section 3.2); (6) the price or prices at which, the period or periods within which and the terms and conditions upon which Debt Securities of the series may be redeemed, in whole or in part, at the option of the Issuer, pursuant to any sinking fund or otherwise; (7) the obligation, if any, of the Issuer to redeem, purchase or repay Debt Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which and the period or periods within which, the currency or currencies (including currency unit or units) in which, and the terms and conditions upon which Debt Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation; 8 (8) if other than denominations of $1,000 and any multiple thereof, the denominations in which Debt Securities of the series shall be issuable; (9) If other than Dollars, the currency or currencies (including currency unit or units) in which the principal of (and premium, if any) and interest, if any, on the Debt Securities of the series shall be payable, or in which the Debt Securities of the series shall be denominated. (10) whether the Securities of the series shall be issued in whole or in part in the form of one or more Registered Global Securities and, in such case, the Depositary with respect to such Registered Global Security or Securities and the circumstances under which any such Registered Global Security may be registered for transfer or exchange, or authenticated and delivered, in the name of a Person other than such Depositary or its nominee, if other than as set forth in Section 2.12; (11) the additions, modifications or deletions, if any, in the Events of Default or covenants of the Issuer set forth herein with respect to the Debt Securities of such series. (12) if other than the principal amount thereof, the portion of the principal amount of Debt Securities of the series which shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 5.1 or provable in bankruptcy pursuant to Section 5.2; (13) the application, if any, of Section 13.2 or Section 13.3 to the Securities of any series; (14) the relative degree, if any, to which the Debt Securities of the series shall be senior to or be subordinated to other series of Debt Securities in right of payment, whether such other series of Debt Securities are Outstanding or not; (15) the terms of any right to convert or exchange Debt Securities of the series into or for other securities or property, including (i) the conversion of or exchange price, (ii) the conversion or exchange period, (iii) provisions as to whether conversion or exchange will be at the option of the Holder or the Issuer and (iv) the events requiring an adjustment to the conversion or exchange price; (16) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture); and 9 (17) any trustees, authenticating or paying agents, transfer agents or registrars or any other agents with respect to the Debt Securities of such series. All Debt Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to such resolution of the Board of Directors or in any such indenture supplemental hereto. SECTION 2.4 AUTHENTICATION AND DELIVERY OF DEBT SECURITIES. At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Debt Securities of any series executed by the Issuer to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver such Debt Securities to or upon the written order of the Issuer, signed by both (a) the Chairman of its Board of Directors, or any vice chairman of its Board of Directors, or its president or any vice president and (b) by its treasurer or any assistant treasurer or its secretary or any assistant secretary, without any further action by the Issuer. In authenticating such Debt Securities and accepting the additional responsibilities under this Indenture in relation to such Debt Securities the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon: (1) a certified copy of any resolution or resolutions of the Board of Directors authorizing the action taken pursuant to the resolution or resolutions delivered under clause (2) below; (2) a copy of any resolution or resolutions of the Board of Directors relating to such series, in each case certified by the Secretary or an Assistant Secretary of the Issuer; (3) an executed supplemental indenture, if any; (4) an Officers' Certificate setting forth the form and terms of the Debt Securities as required pursuant to Section 2.1 and 2.3, respectively and prepared in accordance with Section 11.5; (5) an Opinion of Counsel, prepared in accordance with Section 11.5, which shall state (a) that the form or forms and terms of such Debt Securities have been established by or pursuant to a resolution of the Board of 10 Directors or by a supplemental indenture as permitted by Section 2.1 and 2.3 in conformity with the provisions of this Indenture; (b) that such Debt Securities, when authenticated and delivered by the Trustee and issued by the Issuer in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Issuer; (c) that all laws and requirements in respect of the execution and delivery by the Issuer of the Debt Securities have been complied with; and (d) such other matters as the Trustee may reasonably request. The Trustee shall have the right to decline to authenticate and deliver any Debt Securities under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Issuer or if the Trustee in good faith by its board of directors or board of trustees, executive committee, or a trust committee of directors or trustees or Responsible officers shall determine that such action would expose the Trustee to personal liability to existing Holders. SECTION 2.5 EXECUTION OF DEBT SECURITIES. The Debt Securities shall be signed on behalf of the Issuer by both (a) the chairman of its Board of Directors or any vice chairman of its Board of Directors or its president or any vice president and (b) its treasurer or any assistant treasurer or its secretary or any assistant secretary, under its corporate seal which may, but need not, be attested. Such signatures may be the manual or facsimile signatures of any such officers. The seal of the Issuer may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Debt Securities. Typographical and other minor errors or defects in any such reproduction of the seal or any such signature shall not affect the validity or enforceability of any Debt Security that has been duly authenticated and delivered by the Trustee. In case any officer of the Issuer who shall have signed any of the Debt Securities shall cease to be such officer before the Debt Security so signed shall be authenticated and delivered by the Trustee or disposed of by the Issuer, such Debt Security nevertheless may be authenticated and delivered or disposed of as though the person who signed such Debt Security had not ceased to be such officer of the Issuer; and any Debt Security may be signed on behalf of the Issuer by such persons as, at the actual date of the execution of such Debt Security, shall be the proper officers of the Issuer, although at the date of 11 the execution and delivery of this Indenture any such person was not such an officer. SECTION 2.6 CERTIFICATE OF AUTHENTICATION as shall bear thereon a certificate of authentication substantially in the form hereinbefore recited, executed by the Trustee by the manual signature of one of its authorized officers, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee upon any Debt Security executed by the Issuer shall be conclusive evidence that the Debt Security so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture. SECTION 2.7 DENOMINATION AND DATE OF DEBT SECURITIES; PAYMENTS OF INTEREST. The Debt Securities shall be issuable as registered debt securities without coupons and in denominations as shall be specified as contemplated by Section 2.3. In the absence of any such specification with respect to the Debt Securities of any series, the Debt Securities of such series shall be issuable in denominations of $1,000 and any multiple thereof. The Debt Securities shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plan as the officers of the Issuer executing the same may determine with the approval of the Trustee as evidenced by the execution and authentication thereof. Each Debt Security shall be dated the date of its authentication, shall bear interest, if any, from the date and shall be payable on the dates, in each case, which shall be specified as contemplated by Section 2.3. The person in whose name any Debt Security of any series is registered at the close of business on any record date applicable to a particular series with respect to any interest payment date for such series shall be entitled to receive the interest, if any, payable on such interest payment date notwithstanding any transfer or exchange of such Debt Security subsequent to the record date and prior to such interest payment date, except if and to the extent the Issuer shall default in the payment of the interest due on such interest payment date for such series, in which case such defaulted interest shall be paid to the persons in whose names outstanding Debt Securities for such series are registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest) established by notice given by mail by or on behalf of the Issuer to the holders of Debt Securities not less than 15 days preceding such subsequent record date. The term "record date" as used with respect to any interest payment date (except a date for payment of defaulted interest) shall mean the date specified as such in the terms of the Debt Securities of any particular series, or, if no such date is so specified, if such interest payment 12 date is the first day of a calendar month, the fifteenth day of the next preceding calendar month or, if such interest payment date is the fifteenth day of a calendar month, the first day of such calendar month, whether or not such record date is a Business Day. SECTION 2.8 REGISTRATION, TRANSFER AND EXCHANGE. The Issuer will keep at each office or agency to be maintained for the purpose as provided in Section 3.2 a register or registers in which, subject to such reasonable regulations as it may prescribe, it will register, and will register the transfer of, Debt Securities as in this Article provided. Such register shall be in written form in the English language or in any other form capable of being converted into such form within a reasonable time. At all reasonable times such register or registers shall be open for inspection by the Trustee. Subject to Section 2.12, upon due presentation for registration of transfer of any Debt Security of any series at any such office or agency to be maintained for the purpose as provided in Section 3.2, the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Debt Security or Debt Securities of the same series in authorized denominations for a like aggregate principal amount. Subject to Section 2.12, any Debt Security or Debt Securities of any series may be exchanged for a Debt Security or Debt Securities of the same series in other authorized denominations, in an equal aggregate principal amount. Debt securities of any series to be exchanged shall be surrendered at an office or agency to be maintained by the Issuer for the purpose as provided in Section 3.2, and the Issuer shall execute and the Trustee shall authenticate and deliver in exchange therefor the Debt Security or Debt Securities of the same series which the Debt Securityholder making the exchange shall be entitled to receive, bearing numbers not contemporaneously outstanding. All Debt Securities presented for registration of transfer, exchange, redemption or payment shall (if so required by the Issuer or the Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Issuer and the Trustee duly executed by, the Holder or his attorney duly authorized in writing. The Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Debt Securities. No service charge shall be made for any such transaction. 13 The Issuer shall not be required to exchange or register a transfer of (a) any Debt Securities of any series for a period of 15 days next preceding the first mailing of notice of redemption of Debt Securities of such series to be redeemed, or (b) any Debt Securities selected, called or being called for redemption except, in the case of any Debt Security where public notice has been given that such Debt Security is to be redeemed in part, the portion thereof not so to be redeemed. All Debt Securities issued upon any transfer or exchange of Debt Securities shall be valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Debt Securities surrendered upon such transfer or exchange. SECTION 2.9 MUTILATED, DEFACED, DESTROYED, LOST AND STOLEN DEBT SECURITIES. In case any temporary or definitive Debt Security of any series shall become mutilated, defaced or be destroyed, lost or stolen, the Issuer in its discretion may execute, and upon the written request of any officer of the Issuer, the Trustee shall authenticate and deliver, a new Debt Security of the same series, bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Debt Security, or in lieu of and substitution for the Debt Security so destroyed, lost or stolen. In every case the applicant for a substitute Debt Security shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless and, in every case of destruction, loss or theft, evidence to their satisfaction of the destruction, loss or theft of such Debt Security and of the ownership thereof. Upon the issuance of any substitute Debt Security, the Issuer may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. In case any Debt Security which has matured or is about to mature or has been called for redemption in full shall become mutilated or defaced or be destroyed, lost or stolen, the Issuer may instead of issuing a substitute Debt Security, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated or defaced Debt Security), if the applicant for such payment shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as any of them may require to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Issuer and the Trustee and any agent of the Issuer or the Trustee evidence to their satisfaction of the destruction, loss or theft of such Debt Security and of the ownership thereof. 14 Every substitute Debt Security of any series issued pursuant to the provisions of this Section by virtue of the fact that any such Debt Security is destroyed, lost or stolen shall constitute an additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen Debt Security shall be at any time enforceable by anyone and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Debt Securities of such series duly authenticated and delivered hereunder. All Debt Securities shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced or destroyed, lost or stolen Debt Securities and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.10 CANCELLATION OF DEBT SECURITIES; DESTRUCTION THEREOF. All Debt Securities surrendered for payment, redemption, registration of transfer, for conversion or exchange, or for credit against any payment in respect of a sinking or analogous fund, if surrendered to the Issuer or any agent of the Issuer or the Trustee, shall be delivered to the Trustee for cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no Debt Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee shall destroy cancelled Debt Securities held by it and deliver a certificate of destruction to the Issuer. If the Issuer shall acquire any of the Debt Securities, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Debt Securities unless and until the same are delivered to the Trustee for cancellation. SECTION 2.11 TEMPORARY DEBT SECURITIES. Pending the preparation of definitive Debt Securities for any series, the Issuer may execute and the Trustee shall authenticate and deliver temporary Debt Securities for such series (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee). Temporary Debt Securities of any series shall be issuable as registered Debt Securities without coupons, of any authorized denomination, and substantially in the form of the definitive Debt Securities of such series but with such omissions, insertions and variations as may be appropriate for temporary Debt Securities, all as may be determined by the Issuer with the concurrence of the Trustee. Temporary Debt Securities may contain such reference to any provisions of this Indenture as may be appropriate. Every temporary Debt Security shall be executed by the Issuer and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Debt Securities. Without unreasonable delay the Issuer shall execute and shall furnish definitive 15 Debt Securities of such series and thereupon temporary Debt Securities of such series may be surrendered in exchange therefor without charge at each office or agency to be maintained by the Issuer for that purpose pursuant to Section 3.2, and the Trustee shall authenticate and deliver in exchange for such temporary Debt Securities of such series a like aggregate principal amount of definitive Debt Securities of the same series of authorized denominations. Until so exchanged, the temporary Debt Securities of any series shall be entitled to the same benefits under this Indenture as definitive Debt Securities of such series. SECTION 2.12 DEBT SECURITIES ISSUABLE IN THE FORM OF A REGISTERED GLOBAL SECURITY. (a) If the Issuer shall establish pursuant to Section 2.3 that the Debt Securities of a series are to be issued in the form of one or more Registered Global Securities, then the Issuer shall execute and the Trustee shall, in accordance with this Article Two, authenticate and deliver, one or more Registered Global Securities which (i) shall represent, and shall be denominated in an amount equal to, the aggregate principal amount of all of the Debt Securities of such series, (ii) shall be registered in the name of the Depositary or its nominee, (iii) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary's instruction, and (iv) shall bear a legend substantially to the following effect: "Except as otherwise provided in Section 2.12 of the Indenture, this Registered Global Security may be transferred, in whole but not in part, by the Depositary to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary or to a nominee of such successor Depositary. Unless this Registered Global Security is presented by an authorized representative of the Depositary to the Issuer or its agent for registration of transfer, exchange or payment, and, in the case of any transfer or exchange, any Registered Global Security issued in exchange therefor is registered in the name of the Depositary or such other name as requested by an authorized representative of the Depositary and, in the case of any payment, such payment is made to the Depositary or the Depositary's nominee, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof has an interest herein." (b) Notwithstanding any other provision of this Section 2.12 or of Section 2.8, the Registered Global Securities may be transferred, in whole but not in part and in the manner provided in Section 2.8, by the Depositary to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary selected or approved by the Issuer or to a nominee of such successor Depositary. 16 (c) The Depositary shall be a clearing agency registered under the Securities Exchange Act of 1934, as amended, and any other applicable statute or regulation. (d) If at any time the Depositary notifies the Issuer that it is unwilling or unable to continue as Depositary for such series or if at any time the Depositary for such series shall no longer be eligible under paragraph (c) of this Section 2.12, and a successor Depositary is not appointed by the Issuer within 90 days after the Issuer receives such notice or becomes aware of such condition, as the case may be, this Section 2.12 shall no longer be applicable to the Debt Securities of such series and the Issuer will execute, and the Trustee will authenticate and deliver, Debt Securities of such series in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Registered Global Securities of such series then outstanding in exchange for such Registered Global Securities. In addition, the Issuer may at any time and in its sole discretion determine that the Debt Securities of any series shall no longer be represented by Registered Global Securities and that the provisions of this Section 2.12 shall no longer apply to the Debt Securities of such series. In such event the Issuer will execute, and the Trustee, upon receipt of anOfficers' Certificate evidencing such determination by the Issuer, will authenticate and deliver, Debt Securities of such series in definitive registered form without coupons, in authorized denominations and in an aggregate principal amount equal to the principal amount of the Registered Global Securities of such series then outstanding in exchange for such Registered Global Securities. Upon the exchange of the Registered Global Securities for such Debt Securities in definitive registered form without coupons, in authorized denominations, such Registered Global Securities shall be cancelled by the Trustee. Such Debt Securities in definitive registered form issued in exchange for the Registered Global Securities pursuant to this Section 2.12(d) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Debt Securities to the Persons in whose names such Debt Securities, are so registered. (e) As long as the Outstanding Debt Securities of any series are represented by one or more Registered Global Securities, the Issuer shall pay or cause to be paid the principal of, and interest on, such Registered Global Securities to the registered holders thereof, or to such Persons as the registered holders thereof may designate, by wire transfer of immediately available funds on the date such payments are due. 17 ARTICLE III COVENANTS OF THE ISSUER SECTION 3.1 PAYMENT OF PRINCIPAL AND INTEREST. The Issuer will duly and punctually pay or cause to be paid the principal of, and interest on, the Debt Securities of each series at the place or places, at the respective times and in the manner provided in such Debt Securities. Subject to Section 2.12(e), each instalment of interest on the Debt Securities of any series may be paid by mailing checks for such interest payable to or upon the written order of the holders of Debt Securities entitled thereto as they shall appear on the registry books of the Issuer. SECTION 3.2 OFFICES FOR PAYMENTS, ETC. So long as any of the Debt Securities remain outstanding, the Issuer will maintain in the Borough of Manhattan, the City of New York, the following for each series: an office or agency (a) where the Debt Securities may be presented for payment, (b) where the Debt Securities may be presented for registration of transfer and for exchange as in this Indenture provided and (c) where notices and demands to or upon the Issuer in respect of the Debt Securities or of this Indenture may be served. The Issuer will give to the Trustee written notice of the location of any such office or agency and of any change of location thereof. Unless otherwise specified in accordance with Section 2.3, the Issuer hereby initially designates the Trustee's office at 14 Wall Street, Eighth Floor, New York, New York 10005, as the office to be maintained by it for each such purpose. In case the Issuer shall fail to so designate or maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notices may be served at the Corporate Trust Office. SECTION 3.3 APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE. The Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so that there shall at all times be a Trustee with respect to each series of Debt Securities hereunder. SECTION 3.4 PAYING AGENTS. Whenever the Issuer shall appoint a paying agent other than the Trustee with respect to the Debt Securities of any series, it will cause such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section, (a) that it will hold all sums received by it as such agent for the payment of the principal of or interest on the Debt Securities of such 18 series (whether such sums have been paid to it by the Issuer or by any other obligor on the Debt Securities of such series) in trust for the benefit of the holders of the Debt Securities of such series or of the Trustee, and (b) that it will give the Trustee notice of any failure by the Issuer (or by any other obligor on the Debt Securities of such series) to make any payment of the principal of or interest on the Debt Securities of such series when the same shall be due and payable. The Issuer will, on or prior to each due date of the principal of or interest on the Debt Securities of such series, deposit with the paying agent a sum sufficient to pay such principal or interest so becoming due, and (unless such paying agent is the Trustee) the Issuer will promptly notify the Trustee of any failure to take such action. If the Issuer shall act as its own paying agent with respect to the Debt Securities of any series, it will, on or before each due date of the principal of or interest on the Debt Securities of such series, set aside, segregate and hold in trust for the benefit of the holders of the Debt Securities of such series a sum sufficient to pay such principal or interest so becoming due. The Issuer will promptly notify the Trustee of any failure to take such action. Anything in this Section to the contrary notwithstanding, the Issuer may at any time, for the purpose of obtaining a satisfaction and discharge with respect to one or more or all series of Debt Securities hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust for any such series by the Issuer or any paying agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein contained; and, upon such payment by any paying agent to the Trustee, such paying agent shall be released from all further liability with respect to such money. Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Sections 10.3 and 10.4. SECTION 3.5 WRITTEN STATEMENT TO TRUSTEE. The Issuer will deliver to the Trustee on or before ________ in each year (beginning with _______) a written statement, signed by two of its officers (which need not comply with Section 11.5), stating that in the course of the performance of their duties as officers of the Issuer they would normally have knowledge of any default by the Issuer in the performance or fulfillment of any covenant, agreement or condition contained in this Indenture, stating whether or not they have knowledge of any such 19 default and, if so, specifying each such default of which the signers have knowledge and the nature thereof. SECTION 3.6 LIMITATIONS ON DISPOSITION OF STOCK OF RESTRICTED SUBSIDIARIES. So long as Debt Securities are outstanding, the Issuer will not, and will not permit any Subsidiary to, sell, transfer or otherwise dispose of any shares of capital stock of any Restricted Subsidiary except for: (a) a sale, transfer or other disposition of any capital stock of any Restricted Subsidiary to a wholly owned Subsidiary of the Issuer or such Subsidiary; (b) a sale, transfer or other disposition of the entire capital stock of any Restricted Subsidiary for at least fair value (as determined by the Board of Directors of the Issuer acting in good faith); or (c) a sale, transfer or other disposition of the capital stock of any Restricted Subsidiary for at least fair value (as determined by the Board of Directors of the Issuer acting in good faith) if, after giving effect thereto, the Issuer and its Subsidiaries would own more than 80% of the issued and outstanding Voting Stock of such Restricted Subsidiary. SECTION 3.7 CORPORATE EXISTENCE. The Issuer will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence. SECTION 3.8 WAIVER OF CERTAIN COVENANTS. The Issuer may omit in respect of the Debt Securities, in any particular instance, to comply with any covenants or conditions set forth in Sections 3.6 and 3.7, if before or after the time for such compliance the Holders of at least a majority of the Outstanding Debt Securities of all series (voting as a class) either waive such compliance in such instance or generally waive compliance with such covenant or conditions, but no such waiver shall extend to or affect such covenant or condition except to the extent expressly waived, and, until such waiver shall become effective, the obligations of the Issuer and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect. 20 ARTICLE IV DEBT SECURITYHOLDERS' LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE ---------------------------------------------- SECTION 4.1 ISSUER TO FURNISH TRUSTEE INFORMATION AS TO NAMES AND ADDRESSES OF DEBT SECURITYHOLDERS. The Issuer covenants and agrees that it will furnish or cause to be furnished to the Trustee a list in such form as the Trustee may reasonably require of the names and addresses of the holders of the Debt Securities of each series: (a) semiannually and not more than 15 days after each record date for the payment of interest on such Debt Securities, as hereinabove specified, as of such record date and on dates to be determined pursuant to Section 2.3 for non-interest bearing securities in each year, and (b) at such other times as the Trustee may request in writing, within 30 days after receipt by the Issuer of any such request as of a date not more than 15 days prior to the time such information is furnished, PROVIDED that if and so long as the Trustee shall be the Debt Security registrar for such series, such list shall not be required to be furnished. SECTION 4.2 PRESERVATION AND DISCLOSURE OF DEBT SECURITYHOLDERS' LISTS. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of each series of Debt Securities contained in the most recent list furnished to it as provided in Section 4.1 or maintained by the Trustee in its capacity as Debt Security registrar for such series, if so acting. The Trustee may destroy any list furnished to it as provided in Section 4.1 upon receipt of a new list so furnished. (b) In case three or more holders of Debt Securities (hereinafter referred to as "applicants") apply in writing to the Trustee and furnish to the Trustee reasonable proof that each such applicant has owned a Debt Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other holders of Debt Securities of a particular series (in which case the applicants must all hold Debt Securities of such series) or with Holders of all Debt Securities with respect to their rights under this Indenture or under such Debt Securities and such application is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five business days after the receipt of such application, at its election, either 21 (i) afford to such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section, or (ii) inform such applicants as to the approximate number of holders of Debt Securities of such series or all Debt Securities, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee, in accordance with the provisions of subsection (a) of this Section, and as to the approximate cost of mailing to such Debt Securityholders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford to such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Debt Securityholder of such series or all Debt Securities, as the case may be, whose name and address appears in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Commission together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the holders of Debt Securities of such series or all Debt Securities, as the case may be, or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met, and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Debt Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Each and every holder of Debt Securities, by receiving and holding the same, agrees with the Issuer and the Trustee that neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the holders of Debt Securities in accordance with the provisions of subsection (b) of this Section, regardless of the source from which such 22 information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under such subsection (b). SECTION 4.3 REPORTS BY THE ISSUER. The Issuer covenants: (a) to file with the Trustee, within 15 days after the Issuer is required to file the same with the Commission, copies of the annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Issuer may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, but if the Issuer is not required to file information, documents, or reports pursuant to either of such Sections, then to file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents, and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934, or in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (b) to file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents, and reports with respect to compliance by the Issuer with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations; and (c) to transmit by mail to the holders of Debt Securities, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Issuer pursuant to subsections (a) and (b) of this Section as may be required to be transmitted to such Holders by rules and regulations prescribed from time to time by the commission. SECTION 3.4 REPORTS BY THE TRUSTEE. (a) On or before December 1 in each year following the date hereof, so long as any Debt Securities are outstanding hereunder, the Trustee shall transmit by mail as provided below to the Debt Securityholders of each series, as hereinafter in this Section provided, a brief report dated as of a date convenient to the Trustee no more than 60 nor less than 45 days prior thereto with respect to: 23 (i) its eligibility under Section 6.9 and its qualification under Section 6.8, or in lieu thereof, if to the best of its knowledge it has continued to be eligible and qualified under such Sections, a written statement to such effect; (ii) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Debt Securities of any series, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than 1/2 of 1% of the principal amount of the Debt securities of any series Outstanding on the date of such report; (iii)the amount, interest rate, and maturity date of all other indebtedness owing by the Issuer (or by any other obligor on the Debt Securities) to the Trustee in its individual capacity on the date of such report, with a brief description of any property held as collateral security therefor, except any indebtedness based upon a creditor relationship arising in any manner described in Section 6.13 (b) (2), (3), (4) or (6) ; (iv) the property and funds, if any, physically in the possession of the Trustee (as such) on the date of such report; (v) any additional issue of securities which the Trustee has not previously reported; and (vi) any action taken by the Trustee in the performance of its duties under this Indenture which it has not previously reported and which in its opinion materially affects the Debt Securities, except action in respect of a default, notice of which has been or is to be withheld by it in accordance with the provisions of Section 5.11. (b) The Trustee shall transmit to the Debt Securityholders of each series, as provided in subsection (c) of this Section, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee, as such, since the date of the last report transmitted pursuant to the provisions of subsection (a) of this Section (or if no such report has yet been so transmitted, since the date of this Indenture) for the reimbursement of which it claims or may claim a lien or charge prior to that of the Debt Securities of 24 such series on property or funds held or collected by it as Trustee and which it has not previously reported pursuant to this subsection (b), except that the Trustee shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate 10% or less of the principal amount of Debt Securities of such series outstanding at such time, such report to be transmitted within 90 days after such time. (c) Reports pursuant to this Section shall be transmitted by mail to all registered holders of Debt Securities, as the names and addresses of such holders appear upon the registry books of the Issuer. (d) A copy of each such report shall, at the time of such transmission to Debt Securityholders, be furnished to the Issuer and be filed by the Trustee with each stock exchange upon which the Debt Securities of any applicable series are listed and also with the Commission. The Issuer agrees to notify the Trustee with respect to any series when and as the Debt Securities of such series become admitted to trading on any national securities exchange. ARTICLE V REMEDIES OF THE TRUSTEE AND DEBT SECURITYHOLDERS ON EVENT OF DEFAULT ------------------------------------------------- SECTION 5.1 EVENT OF DEFAULT DEFINED; ACCELERATION OF MATURITY; WAIVER OF DEFAULT. "Event of Default" with respect to Debt Securities of any series wherever used herein, means any one of the following events which shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) default in the payment of any instalment of interest upon any of the Debt Securities of such series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; or (b) default in the payment of all or any part of the principal on any of the Debt Securities of such series as and when the same shall become due and payable either at maturity, upon any redemption, by declaration or otherwise; or 25 (c) default in the payment of any sinking fund instalment as and when the same shall become due and payable by the terms of the Debt Securities of such series; or (d) default in the performance, or breach, of any covenant or warranty of the Issuer in respect of the Debt Securities of such series (other than a covenant or warranty in respect of the Debt Securities of such series a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Debt Securities of such series, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (e) failure by the Issuer to make any payment at maturity, including any applicable grace period, in respect of indebtedness, which term as used herein means obligations (other than the Debt Securities of such series or non-recourse obligations) of, or guaranteed or assumed by, the Issuer for borrowed money or evidenced by bonds, debentures, notes or other similar instruments ("Indebtedness"), in an amount in excess of $10,000,000 or the equivalent thereof in any other currency or composite currency and such failure shall have continued for a period of 10 days after written notice thereof shall have been given by registered or certified mail, return receipt requested, to the Issuer by the Trustee, or to the Issuer and the Trustee by the holders of not less than 25% in aggregate principal amount of the Outstanding Debt Securities (treated as one class) and stating that such notice is a "Notice of Default" hereunder; or (f) default with respect to any Indebtedness, which default results in the acceleration of Indebtedness in an amount in excess of $10,000,000 or the equivalent thereof in any other currency or composite currency without such Indebtedness having been discharged or such acceleration having been cured, waived, rescinded or annulled for a period of 10 days after written notice thereof shall have been given by registered or certified mail, return receipt requested, to the Issuer by the Trustee, or to the Issuer and the Trustee by the holders of not less than 25% in aggregate principal amount of the outstanding Debentures (treated as one class) and stating that such notice is a "Notice of Default" hereunder; or 26 (g) entry by a court having jurisdiction in the premises of a decree or order for relief in respect of the Issuer or any Restricted Subsidiary in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law if not dismissed within 30 days; or (h) commencement by the Issuer or any Restricted Subsidiary of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law; or (i) any other Event of Default provided in the supplemental indenture or resolution of the Board of Directors under which such series of Debt Securities is issued or in the form of Debt Security for such series. If an Event of Default described in clauses (a), (b) or (c) above occurs and is continuing, then, and in each and every such case, unless the principal of all of the Debt Securities of such series shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Debt Securities of such series then Outstanding hereunder (each such series voting as a separate class) by notice in writing to the Issuer (and to the Trustee if given by Debt Securityholders), may declare the entire principal (or, if the Debt Securities of such series are original Issue Discount Debt Securities, such portion of the principal amount as may be specified in the terms of such series) of all Debt Securities of such series and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, provided that the payment of principal and interest on such Debt Securities shall remain subordinated to the extent provided in Article Fourteen. If an Event of Default described in clause (d) above (if such Event of Default is with respect to less than all series of Debt Securities then Outstanding) occurs and is continuing, then, and in each and every such case, unless the principal of all of the Debt Securities of such series shall have already become due and payable, either the Trustee or the holders of not less than 25% of the aggregate principal amount of the Debt Securities of all such affected series then outstanding hereunder (voting as a single class) by notice in writing to the Issuer (and to the Trustee if given by Debt Securityholders), may declare the entire principal (or, if the Debt Securities of any such series are Original Issue Discount Debt Securities, such portion of the principal amount as may be specified in the terms of such series) of all Debt Securities of all such affected series and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, provided that the payment of principal and interest on such Debt Securities shall remain subordinated to the extent provided in Article Fourteen. If an Event of Default described in clause (d) (if the Event of Default under 27 clause (d) is with respect to all series of Debt Securities then outstanding), (e), (f), (g) or (h) occurs and is continuing, then and in each and every such case, unless the principal of all the Debt Securities shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of all the Debt Securities then Outstanding hereunder (treated as one class), by notice in writing to the Issuer (and to the Trustee if given by Debt Securityholders), may declare the entire principal (or, if any Debt Securities are Original Issue Discount Debt Securities, such portion of the principal as may be specified in the terms thereof) of all the Debt Securities then outstanding and interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, provided that the payment of principal and interest on such Debt Securities shall remain subordinated to the extent provided in Article Fourteen. The foregoing provisions, however, are subject to the condition that if, at any time after the principal (or, if the Debt Securities are Original Issue Discount Debt Securities, such portion of the principal as may be specified in the terms thereof) of the Debt Securities of any series (or of all the Debt Securities, as the case may be) shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay all matured instalments of interest upon all the Debt Securities of such series (or of all the Debt Securities, as the case may be) and the principal of any and all Debt Securities of such series (or of all the Debt Securities, as the case may be) which shall have become due otherwise than by acceleration (with interest upon such principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue instalments of interest, at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Debt Securities) specified in the Debt Securities of such series, (or at the respective rates of interest or Yields to Maturity of all the Debt Securities, as the case may be) to the date of such payment or deposit) and such amount as shall be sufficient to cover reasonable compensation to the Trustee, its agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee except as a result of negligence or bad faith, and if any and all Events of Default under the Indenture, other than the non-payment of the principal of Debt Securities which shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein -- then and in every such case (i) with respect to an Event of Default described in clauses (a), (b) and (c) above, the holders of a majority in aggregate principal amount of the Debt Securities of such series, voting as a separate class, then outstanding, by written notice to the Issuer and to the Trustee, may waive all defaults with respect to such series and rescind and annul such declaration and 28 its consequences, (ii) with respect to an Event of Default described in clause (d) above (if such Event of Default is with respect to less than all series of Debt Securities then Outstanding), the holders of a majority in aggregate principal amount of the Debt Securities of all such affected series (voting as a single class) then Outstanding, by written notice to the Issuer and to the Trustee, may waive all such defaults with respect to all such affected series and rescind and annul such declaration and its consequences and (iii) with respect to an Event of Default described in clauses (d) (if such Event of Default is with respect to all Series of Debt Securities then Outstanding), (e), (f) and (g), the holders of a majority in aggregate principal amount of the Debt Securities of all series (voting as a single class) then Outstanding by written notice to the Issuer and to the Trustee, may waive all such defaults with respect to all the Debt Securities then Outstanding and rescind and annul such declaration and its consequences. No such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon. For all purposes under this Indenture, if a portion of the principal of any Original Issue Discount Debt Securities shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Original Issue Discount Debt Securities shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such original Issue Discount Debt securities. SECTION 5.2 COLLECTION OF INDEBTEDNESS BY TRUSTEE; TRUSTEE MAY PROVE DEBT. The Issuer covenants that (a) in case default shall be made in the payment of any instalment of interest on any of the Debt Securities of any series when such interest shall have become due and payable, and such default shall have continued for a period of 30 days or (b) in case default shall be made in the payment of all or any part of the principal of any of the Debt Securities of any series when the same shall have become due and payable, whether upon maturity of the Debt Securities of such series or upon any redemption or by declaration or otherwise -- then upon demand of the Trustee, the Issuer will pay to the Trustee for the benefit of the Holders of the Debt Securities of such series the whole amount that then shall have become due and payable on all Debt Securities of such series for principal or interest, as the case may be (with interest to the date of such payment upon the overdue principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue instalments of 29 interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Debt Securities) specified in the Debt Securities of such series); and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and any expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of its negligence or bad faith. Until such demand is made by the Trustee, the Issuer may pay the principal of and interest on the Debt Securities of any series to the registered holders, whether or not the principal of and interest on the Debt Securities of such series be overdue. In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Issuer or other obligor upon such Debt Securities and collect in the manner provided by law out of the property of the Issuer or other obligor upon such Debt Securities, wherever situated, the moneys adjudged or decreed to be payable. In case there shall be pending proceedings relative to the Issuer or any other obligor upon the Debt Securities under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor, or in case of any other comparable judicial proceedings relative to the Issuer or other obligor upon the Debt Securities of any series, or to the creditors or property of the Issuer or such other obligor, the Trustee, irrespective of whether the principal of any Debt Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of principal and interest (or, if the Debt Securities of any series are Original Issue Discount Debt Securities, such portion of the principal amount as may be specified in the terms of such series) owing and unpaid in respect of the Debt Securities of any series, and to file such other papers 30 or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of negligence or bad faith) and of the Debt Securityholders allowed in any judicial proceedings relative to the Issuer or other obligor upon the Debt Securities of any series, or to the creditors or property of the Issuer or such other obligor, (b) unless prohibited by applicable law and regulations, to vote on behalf of the holders of the Debt Securities of any series in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person performing similar functions in comparable proceedings, and (c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Debt Securityholders and of the Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Debt Securityholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to the Debt Securityholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith and all other amounts due to the Trustee or any predecessor Trustee pursuant to Section 6.6. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Debt Securityholder any plan or reorganization, arrangement, adjustment or composition affecting the Debt Securities of any series or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Debt Securityholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar person. All rights of action and of asserting claims under this Indenture, or under any of the Debt Securities, may be enforced by the Trustee without the possession of any of the Debt Securities or the production thereof on any trial or other proceedings relative thereto, and any such action or proceedings 31 instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the holders of the Debt Securities in respect of which such action was taken. In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the holders of the Debt Securities in respect to which such action was taken, and it shall not be necessary to make any holders of such Debt Securities parties to any such proceedings. SECTION 5.3 APPLICATION OF PROCEEDS. Any moneys collected by the Trustee pursuant to this Article in respect of any series shall be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal or interest, upon presentation of the several Debt Securities in respect of which monies have been collected and stamping (or otherwise noting) thereon the payment, or issuing Debt Securities of such series in reduced principal amounts in exchange for the presented Debt Securities of like series if only partially paid, or upon surrender thereof if fully paid: FIRST: To the payment of costs and expenses applicable to such series in respect of which monies have been collected, including reasonable compensation to the Trustee and each predecessor Trustee and their respective agents and attorneys and of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith, and all other amounts due to the Trustee or any predecessor Trustee pursuant to Section 6.6; SECOND: In case the principal of the Debt Securities of such series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest on the Debt Securities of such series in default in the order of the maturity of the instalments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue instalments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Debt Securities) specified in such Debt Securities, such payments to be made ratably to the persons entitled thereto, without discrimination or preference; THIRD: In case the principal of the Debt Securities of such series in respect of which moneys have been collected shall have become and shall be 32 then due and payable, to the payment of the whole amount then owing and unpaid upon all the Debt Securities of such series for principal and interest, with interest upon the overdue principal, and (to the extent that such interest has been collected by the Trustee) upon overdue instalments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of original Issue Discount Debt securities) specified in the Debt Securities of such series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Debt Securities of such series, then to the payment of such principal and interest or yield to maturity, without preference or priority of principal over interest or yield to maturity, or of interest or yield to maturity over principal, or of any instalment of interest over any other instalment of interest, or of any Debt Security of such series over any other Debt Security of such series, ratably to the aggregate of such principal and accrued and unpaid interest or yield to maturity; and FOURTH: To the payment of the remainder, if any, to the Issuer or any other person lawfully entitled thereto. SECTION 5.4 SUITS FOR ENFORCEMENT. In case an Event of Default has occurred, has not been waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. SECTION 5.5 RESTORATION OF RIGHTS ON ABANDONMENT OF PROCEEDINGS. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the Issuer and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Issuer, the Trustee and the Debt Securityholders shall continue as though no such proceedings had been taken. SECTION 5.6 LIMITATIONS ON SUITS BY DEBT SECURITYHOLDERS. No holder of any Debt Security of any series shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this 33 Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless such holder previously shall have given to the Trustee written notice of default and of the continuance thereof, as hereinbefore provided, and unless also the holders of not less than 25% in aggregate principal amount of the Debt Securities of such series then outstanding shall have made written request upon the Trustee to institute such action or proceedings in its own name as trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 5.9; it being understood and intended, and being expressly covenanted by the taker and Holder of every Debt Security with every other taker and Holder and the Trustee, that no one or more Holders of Debt Securities of any series shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other such Holder of Debt Securities, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Debt Securities of the applicable series. For the protection and enforcement of the provisions of this Section, each and every Debt Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 5.7 UNCONDITIONAL RIGHT OF DEBT SECURITYHOLDERS TO INSTITUTE CERTAIN SUITS. Notwithstanding any other provision in this Indenture and any provision of any Debt Security, the right of any Holder of any Debt Security to receive payment of the principal of and interest on such Debt Security on or after the respective due dates expressed in such Debt Security, or to institute suit for the enforcement of any such payment on or after such respective dates shall not be impaired or affected without the consent of such Holder. SECTION 5.8 POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER OF DEFAULT. Except as provided in Section 5.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Debt Securityholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. 34 No delay or omission of the Trustee or of any Debt Securityholder to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and, subject to Section 5.6, every power and remedy given by this Indenture or by law to the Trustee or to the Debt Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Debt Securityholders. SECTION 5.9 CONTROL BY DEBT SECURITYHOLDERS. The Holders of a majority in aggregate principal amount of the Debt Securities of each series affected (with each series voting as a separate class) at the time outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Debt Securities of such series by this Indenture; provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and provided further that (subject to the provisions of Section 6.1) the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or responsible officers of the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability or if the Trustee in good faith shall so determine that the actions or forebearances specified in or pursuant to such direction would be unduly prejudicial to the interests of Holders of the Debt Securities of all series so affected not joining in the giving of said direction, it being understood that (subject to Section 6.1) the Trustee shall have no duty to ascertain whether or not such actions or forebearances are unduly prejudicial to such Holders. Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee and which is not inconsistent with such direction or directions by Debt Securityholders. SECTION 5.10 WAIVER OF PAST DEFAULTS. Prior to the declaration of the acceleration of the maturity of the Debt Securities of any series as provided in Section 5.1, the Holders of a majority in aggregate principal amount of the Debt Securities of such series at the time Outstanding may on behalf of the Holders of all the Debt Securities of such series waive any past default or Event of Default described in clause (c) of Section 5.1 (or, in the case of an event specified in clause (d) of Section 5.1 which relates to less than all series of Debt Securities then Outstanding, the Holders of a majority in aggregate principal amount of the Debt Securities then Outstanding affected thereby (voting as single class)) may waive any such default or Event of Default, or, in 35 the case of an event specified in clause (d) (if the Event of Default under clause (d) relates to all series of Debt Securities then outstanding), (e), (f), (g) or (h) of Section 5.1 the Holders of Debt Securities of a majority in principal amount of all the Debt Securities then Outstanding (voting as one class) may waive any such default or Event of Default, and its consequences, except a default in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Debt Security affected. In the case of any such waiver, the Issuer, the Trustee and the Holders of the Debt Securities of such series shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured, and not to have occurred for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. SECTION 5.11 TRUSTEE TO GIVE NOTICE OF DEFAULT, BUT MAY WITHHOLD IN CERTAIN CIRCUMSTANCES. The Trustee shall transmit to the Debt Securityholders of any series, as the names and addresses of such Holders appear on the registry books, notice by mail of all defaults which have occurred with respect to such series, such notice to be transmitted within 90 days after the occurrence thereof, unless such defaults shall have been cured before the giving of such notice (the term "default" or "defaults" for the purposes of this Section being hereby defined to mean any event or condition which is, or with notice or lapse of time or both would become, an Event of Default); provided that, except in the case of default in the payment of the principal of or interest on any of the Debt Securities of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or trustees and/or responsible officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Debt Securityholders of such series. SECTION 5.12 RIGHT OF COURT TO REQUIRE FILING OF UNDERTAKING TO PAY COSTS. All parties to this Indenture agree, and each Holder of any Debt Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and 36 good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Debt Securityholder or group of Debt Securityholders of any series holding in the aggregate more than 10% in aggregate principal amount of the Debt Securities of such series, or, in the case of any suit relating to or arising under clause (d) of Section 5.1 (if the suit relates to Debt Securities of more than one but less than all series), 10% in aggregate principal amount of Debt Securities outstanding affected thereby, or in the case of any suit relating to or arising under clause (d) (if the suit under clause (d) relates to all the Debt Securities then outstanding), (e), (f), (g) or (h) of Section 5.1, 10% in aggregate principal amount of all Debt Securities Outstanding, or to any suit instituted by any Debt Securityholder for the enforcement of the payment of the principal of or interest on any Debt Security on or after the due date expressed in such Debt Security. ARTICLE VI CONCERNING THE TRUSTEE SECTION 6.1 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE; DURING DEFAULT; PRIOR TO DEFAULT. With respect to the Holders of any series of Debt Securities issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Debt Securities of a particular series and after the curing or waiving of all Events of Default which may have occurred with respect to such series, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default with respect to the Debt Securities of a series has occurred (which has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that (a) prior to the occurrence of an Event of Default with respect to the Debt Securities of any series and after the curing or waiving of all such Events of Default with respect to such series which may have occurred: (i) the duties and obligations of the Trustee with respect to the Debt Securities of any Series shall be determined solely by the 37 express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders pursuant to Section 5.9 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. SECTION 6.2 CERTAIN RIGHTS OF THE TRUSTEE. Subject to Section 6.1: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officers' Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; 38 (b) any request, direction, order or demand of the Issuer mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of the Issuer; (c) the Trustee may consult with counsel and any advice or opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith in reliance on such advice or opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Debt Securityholders pursuant to the provisions of this Indenture, unless such Debt Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture; (f) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the holders of not less than a majority in aggregate principal amount of the Debt Securities of all series affected then Outstanding; provided that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such investigation shall be paid by the Issuer or, if paid by the Trustee or any predecessor trustee, shall be repaid by the Issuer upon demand; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or 39 attorneys not regularly in its employ and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder. SECTION 6.3 TRUSTEE NOT RESPONSIBLE FOR RECITALS, DISPOSITION OF DEBT SECURITIES OR APPLICATION OF PROCEEDS THEREOF. The recitals contained herein and in the Debt securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Debt Securities. The Trustee shall not be accountable for the use or application by the Issuer of any of the Debt Securities or of the proceeds thereof. SECTION 6.4 TRUSTEE AND AGENTS MAY HOLD DEBT SECURITIES; COLLECTIONS, ETC. The Trustee or any agent of the Issuer or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Debt Securities with the same rights it would have if it were not the Trustee or such agent and, subject to Sections 6.8 and 6.13, if operative, may otherwise deal with the Issuer and receive, collect, hold and retain collections from the Issuer with the same rights it would have if it were not the Trustee or such agent. SECTION 6.5 MONEYS HELD BY TRUSTEE. Subject to the provisions of Section 10.4 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Issuer or the Trustee shall be under any liability for interest on any moneys received by it hereunder. SECTION 6.6 COMPENSATION AND INDEMNIFICATION OF TRUSTEE AND ITS PRIOR CLAIM. The Issuer covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Issuer covenants and agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Issuer also covenants to indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection 40 with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in the premises. The obligations of the Issuer under this Section to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Such additional indebtedness shall be a senior claim to that of the Debt Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Debt Securities, and the Debt Securities are hereby subordinated to such senior claim. SECTION 6.7 RIGHT OF TRUSTEE TO RELY ON OFFICERS' CERTIFICATE, ETC. Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof. SECTION 6.8 QUALIFICATION OF TRUSTEE; CONFLICTING INTERESTS. (a) If the Trustee has or shall acquire any conflicting interest, as defined in this Section, it shall, within 90 days after ascertaining that it has such conflicting interest, either eliminate such conflicting interest or resign in the manner and with the effect specified in this Indenture. (b) In the event that the Trustee shall fail to comply with the provisions of subsection (a) of this Section, the Trustee shall, within 10 days after the expiration of such 90 day period, transmit by mail notice of such failure to the Debt Securityholders at their last addresses as they appear on the Debt Security register. (c) For the purposes of this Section, the Trustee shall be deemed to have a conflicting interest with respect to Debt Securities of any series if (i) the Trustee is trustee under this Indenture with respect to the outstanding Debt Securities of any other series or is a trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of 41 the Issuer are outstanding, unless such other indenture is a collateral trust indenture under which the only collateral consists of Debt Securities issued under this Indenture and this Indenture with respect to the Debt Securities of any other series and there shall also be so excluded any other indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Issuer are outstanding if (i) this Indenture is and, if applicable, this Indenture and any series issued pursuant to this Indenture and such other indenture or indentures are wholly unsecured, and such other indenture or indentures are hereafter qualified under the Trust Indenture Act of 1939, unless the Commission shall have found and declared by order pursuant to Section 305(b) or Section 307(c) of such Trust Indenture Act of 1939 that differences exist between the provisions of this Indenture with respect to Debt Securities of such series and one or more other series, or the provisions of this Indenture and the provisions of such other indenture or indentures which are so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to Debt Securities of such series and such other series, or under this Indenture or such other indenture or indentures, or (ii) the Issuer shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that trusteeship under this Indenture with respect to Debt Securities of such series and such other series, or under this Indenture and such other indenture or indentures is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to Debt Securities of such series and such other series, or under this Indenture and such other indentures; (ii) the Trustee or any of its directors or executive officers is an obligor upon the Debt Securities of any series issued under this Indenture or an underwriter for the Issuer; (iii) the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with the Issuer or an underwriter for the Issuer; (iv) the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee, or representative of the Issuer, or of an underwriter (other than the Trustee itself) for the Issuer who is currently engaged in the business of underwriting, except that (x) one individual may be a director or an executive officer, or both, of the Trustee and a director or an 42 executive officer, or both, of the Issuer, but may not be at the same time an executive officer of both the Trustee and the Issuer; (y) if and so long as the number of directors of the Trustee in office is more than nine, one additional individual may be a director or an executive officer, or both, of the Trustee and a director of the Issuer; and (z) the Trustee may be designated by the Issuer or by any underwriter for the Issuer to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent, or depositary, or in any other similar capacity, or, subject to the provisions of subsection (c)(i) of this Section, to act as trustee, whether under an indenture or otherwise; (v) 10% or more of the voting securities of the Trustee is beneficially owned either by the Issuer or by any director, partner or executive officer thereof, or 20% or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or 10% or more of the voting securities of the Trustee is beneficially owned either by an underwriter for the Issuer or by any director, partner, or executive officer thereof, or is beneficially owned, collectively, by any two or more such persons; (vi) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default, (x) 5% or more of the voting securities or 10% or more of any other class of security of the Issuer, not including the Debt Securities issued under this Indenture and securities issued under any other indenture under which the Trustee is also trustee, or (y) 10% or more of any class of security of an underwriter for .the Issuer; (vii) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default, 5% or more of the voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, the Issuer; (viii) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default, 10% or more of any class of security of any person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of the Issuer; or (ix) the Trustee owns on May 15 in any calendar year, in the capacity of executor, administrator, testamentary or INTER VIVOS trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of 25% or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a 43 specified percentage of which would have constituted a conflicting interest under Section 6.8(c)(vi), (vii) or (viii). As to any such securities of which the Trustee acquired ownership through becoming executor, administrator, or testamentary trustee of an estate which included them, the provisions of the preceding sentence shall not apply, for a period of two years from the date of such acquisition, to the extent that such securities included in such estate do not exceed 25% of such voting securities or 25% of any such class of security. Promptly after May 15 in each calendar year, the Trustee shall make a check of its holdings of such securities in any of the above-mentioned capacities as of such May 15. If the Issuer fails to make payment in full of principal of or interest on any of the Debt Securities when and as the same becomes due and payable, and such failure continues for 30 days thereafter, the Trustee shall make a prompt check of its holdings of such securities in any of the above-mentioned capacities as of the date of the expiration of such 30-day period, and after such date, notwithstanding the foregoing provisions of this paragraph, all such securities so held by the Trustee, with sole or joint control over such securities vested in it, shall, but only so long as such failure shall continue, be considered as though beneficially owned by the Trustee for the purposes of subsections (c)(vi), (vii) and (viii) of this Section. The specification of percentages in subsections (c)(v) to (ix) inclusive of this Section shall not be construed as indicating that the ownership of such percentages of the securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purposes of subsections (c)(iii) or (vii) of this Section. For the purposes of subsections (c)(vi), (vii), (viii) and (ix), of this Section, only, (i) the terms "security" and "securities" shall include only such securities as are generally known as corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay moneys lent to a person by one or more banks, trust companies, or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; (ii) an obligation shall be deemed to be in default when a default in payment of principal shall have continued for 30 days or more and shall not have been cured; and 44 (iii) the Trustee shall not be deemed to be the owner or holder of (x) any security which it holds as collateral security, as trustee or otherwise, for an obligation which is not in default as defined in clause (ii) above, or (y) any security which it holds as collateral security under this Indenture, irrespective of any default hereunder, or (z) any security which it holds as agent for collection, or as custodian, escrow agent, or depositary, or in any similar representative capacity. Except as provided above, the word "security" or "securities" as used in this Section shall mean any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profitsharing agreement, collateral trust certificate, reorganization certificate or subscription, transferable share, investment contract, voting trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas or other mineral rights, or, in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. (d) For purposes of this Section: (i) the term "underwriter" when used with reference to the Issuer shall mean every person who, within three years prior to the time as of which the determination is made, has purchased from the Issuer with a view to, or has offered or sold for the Issuer in connection with, the distribution of any security of the Issuer outstanding at such time, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had a participation in the direct or indirect underwriting of any such undertaking, but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission; (ii) the term "director" shall mean any director of a corporation or any individual performing similar functions with respect to any organization whether incorporated or unincorporated; (iii) the term "person" shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof; as used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security; 45 (iv) the term "voting security" shall mean any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction or management of the affairs of a person; (v) the term "Issuer" shall mean any obligor upon the Debt Securities; and (vi) the term "executive officer" shall mean the president, every vice president, every trust officer, the cashier, the secretary, and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization whether incorporated or unincorporated, but shall not include the chairman of the board of directors. (e) The percentages of voting securities and other securities specified in this Section shall be calculated in accordance with the following provisions: (i) a specified percentage of the voting securities of the Trustee, the Issuer or any other person referred to in this Section (each of whom is referred to as a "person" in this paragraph) means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person; (ii) a specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding; (iii) the term "amount", when used in regard to securities, means the principal amount if relating to evidence of indebtedness, the number of shares if relating to capital shares, and the number of units if relating to any other kind of security; (iv) the term "outstanding" means issued and not held by or for the account of the issuer; the following securities shall not be deemed outstanding within the meaning of this definition: (A) securities of an issuer held in a sinking fund relating to securities of the issuer of the same class; 46 (B) securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise; (C) securities pledged by the issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; and (D) securities held in escrow if placed in escrow by the issuer thereof; PROVIDED, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof; and (v) a security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges; provided that, in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes and provided further, that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture. SECTION 6.9 PERSONS ELIGIBLE FOR APPOINTMENT AS TRUSTEE. The Trustee for each series of Debt Securities hereunder shall at all times be a corporation organized and doing business under the laws of the United States of America or of any State or the District of Columbia having a combined capital and surplus of at least $50,000,000, and which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by Federal, State or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.10. So long as any Debt Securities are outstanding, there shall at all times be a Trustee hereunder. 47 SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR TRUSTEE. (a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to one or more or all series of Debt Securities by giving written notice of resignation to the Issuer and by mailing notice thereof by first-class mail to Holders of the applicable series of Debt Securities at their last addresses as they shall appear on the Debt Security register. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor trustee or trustees with respect to the applicable series by written instrument in duplicate, executed by authority of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee or trustees. If no successor trustee shall have been so appointed with respect to any series and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Debt Securityholder who has been a bona fide Holder of a Debt Security or Debt Securities of the applicable series for at least six months may, subject to the provisions of Section 5.12, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (b) In case at any time any of the following (d) shall occur: (i) the Trustee shall fail to comply with the provisions of Section 6.8 with respect to any series of Debt Securities after written request therefor by the Issuer or by any Debt Securityholder who has been a bona fide Holder of a Debt Security or Debt Securities of such series for at least six months; or (ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.9 and shall fail to resign after written request therefor by the Issuer or by any Debt Securityholder; or (iii) the Trustee shall become incapable of acting with respect to any series of Debt Securities, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, the Issuer may remove the Trustee with respect to the applicable series of Debt Securities and appoint a successor trustee for such series by written instrument, in duplicate, executed by order of the Board of Directors of the Issuer, one copy of which instrument shall be delivered to the 48 Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 5.12, any Debt Securityholder who has been a bona fide Holder of a Debt Security or Debt Securities of such series for at least six months may on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee with respect to such series. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (c) The Holders of a majority in aggregate principal amount of the Debt Securities of each series at the time outstanding may at any time remove the Trustee with respect to Debt Securities of such series and appoint a successor trustee with respect to the Debt Securities of such series by delivering to the Trustee so removed, to the successor trustee so appointed and to the Issuer the evidence provided for in Section 7.1 of the action in that regard taken by the Debt Securityholders. (d) Any resignation or removal of the Trustee with respect to any series of Debt Securities and any appointment of a successor trustee with respect to such series pursuant to any of the provisions of this Section 6.10 shall become effective upon acceptance of appointment by the successor trustee as provided in section 6.11. SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE. Any successor trustee appointed as provided in Section 6.10 shall execute and deliver to the Issuer and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee with respect to all or any applicable series shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to such series of its predecessor hereunder, with like effect as if originally named as trustee for such series hereunder; but, nevertheless, on the written request of the Issuer or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 10.4, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Issuer shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 6.6. 49 If a successor trustee is appointed with respect to the Debt Securities of one or more (but not all) series, the Issuer, the predecessor Trustee and each successor trustee with respect to the Debt Securities of any applicable series shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Debt Securities of any series as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such trustees co-trustees of the same trust and that each such trustee shall be trustee of a trust or trusts under separate indentures. No successor trustee with respect to any series of Debt Securities shall accept appointment as provided in this Section 6.11 unless at the time of such acceptance such successor trustee shall be qualified under the provisions of Section 6.8 and eligible under the provisions of Section 6.9. Upon acceptance of appointment by any successor trustee as provided in this Section 6.11, the Issuer shall mail notice thereof by first-class mail to the Holders of Debt Securities of any series for which such successor trustee is acting as trustee at their last addresses as they shall appear in the Debt Security register. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 6.10. If the Issuer fails to mail such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Issuer. SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS OF TRUSTEE. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, PROVIDED that such corporation shall be qualified under the provisions of Section 6.8 and eligible under the provisions of Section 6.9, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Debt Securities of any series shall 50 have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver such Debt Securities so authenticated; and, in case at that time any of the Debt Securities of any series shall not have been authenticated, any successor to the Trustee may authenticate such Debt Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Debt Securities of such series or in this Indenture provided that the certificate of the Trustee shall have; PROVIDED that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Debt Securities of any series in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE ISSUER. (a) Subject to the provisions of this Section, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Issuer within four months prior to a default, as defined in subsection (c) of this Section, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the Debt Securities and the holders of other indenture securities (as defined in this Section): (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such four months' period and valid as against the Issuer and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in subsection (a)(2) of this Section, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Issuer upon the date of such default; and (2) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such four months' period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Issuer and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: 51 (A) to retain for its own account (i) payments made on account of any such claim by any person (other than the Issuer) who is liable thereon, (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third person, and (iii) distributions made in cash, securities or other property in respect of claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code or applicable state law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such four months' period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such four months' period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default as defined in subsection (c) of this Section would occur within four months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in such paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such four months' period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned between the Trustee, the Debt Securityholders and the holders of other indenture securities in such manner that the Trustee, such Debt Securityholders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code or applicable State law, the same percentage 52 of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Issuer of the funds and property in such special account and before crediting to the respective claims of the Trustee, such Debt Securityholders and the holders of other indenture securities dividends on claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code or applicable State law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code or applicable State law, whether such distribution is made in cash, securities or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceeding for reorganization is pending shall have jurisdiction (i) to apportion between the Trustee, such Debt Securityholders and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and the proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee, such Debt Securityholders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee who has resigned or been removed after the beginning of such four months' period shall be subject to the provisions of this subsection (a) as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such four months' period, it shall be subject to the provisions of this subsection (a) if and only if the following conditions exist: (i) the receipt of property or reduction of claim which would have given rise to the obligation to account, if such Trustee had continued as trustee, occurred after the beginning of such four months' period; and 53 (ii) such receipt of property or reduction of claim occurred within four months after such resignation or removal. (b) There shall be excluded from the operation of this Section a creditor relationship arising from (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction or by this Indenture for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advance and of the circumstances surrounding the making thereof is given to the Debt Securityholders at the time and in the manner provided in this Indenture; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity; (4) an indebtedness created as a result of services rendered or premises rented or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in subsection (c)(3) below; (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Issuer; or (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper as defined in subsection (c)(4) of this Section. (c) As used in this Section: (1) the term "default" shall mean any failure to make payment in full of the principal of or interest upon any of the Debt Securities or upon the other indenture securities when and as such principal or interest becomes due and payable; (2) the term "other indenture securities" shall mean securities upon which the Issuer is an obligor (as defined in the Trust Indenture Act of 54 1939) outstanding under any other indenture (i) under which the Trustee is also trustee, (ii) which contains provisions substantially similar to the provisions of subsection (a) of this Section, and (iii) under which a default exists at the time of the apportionment of the funds and property held in said special account; (3) the term "cash transaction" shall mean any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; (4) the term "self-liquidating paper" shall mean any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Issuer for the purpose of financing the purchase, processing, manufacture, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Issuer arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation; and (5) the term "Issuer" shall mean any obligor upon the Debt Securities. ARTICLE VII CONCERNING THE DEBT SECURITYHOLDERS SECTION 7.1 EVIDENCE OF ACTION TAKEN BY DEBT SECURITYHOLDERS. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage in principal amount of the Debt Securityholders of any or all series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Debt Securityholders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Article. 55 SECTION 7.2 PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF DEBT SECURITIES. Subject to Sections 6.1 and 6.2, the execution of any instrument by a Debt Securityholder or his agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding of Debt Securities shall be proved by the Debt Security register or by a certificate of the registrar thereof. SECTION 7.3 HOLDERS TO BE TREATED AS OWNERS. The Issuer, the Trustee and any agent of the Issuer or the Trustee may deem and treat the person in whose name any Debt Security shall be registered upon the Debt Security register for such series as the absolute owner of such Debt Security (whether or not such Debt Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of this Indenture, interest on such Debt Security and for all other purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. All such payments so made to any such person, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Debt Security. SECTION 7.4 DEBT SECURITIES OWNED BY ISSUER DEEMED NOT OUTSTANDING. In determining whether the Holders of the requisite aggregate principal amount of Outstanding Debt Securities of any or all series have concurred in any direction, consent or waiver under this Indenture, Debt Securities which are owned by the Issuer or any other obligor on the Debt Securities with respect to which such determination is being made or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Debt Securities with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver only Debt Securities which the Trustee knows are so owned shall be so disregarded. Debt Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Debt Securities and that the pledgee is not the Issuer or any other obligor upon the Debt Securities or any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Debt Securities. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Issuer shall furnish to the Trustee promptly an Officers' Certificate listing 56 and identifying all Debt Securities, if any, known by the Issuer to be owned or held by or for the account of any of the above-described persons; and, subject to Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Debt Securities not listed therein are Outstanding for the purpose of any such determination. SECTION 7.5 RIGHT OF REVOCATION OF ACTION TAKEN. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 7.1, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Debt Securities of any or all series, as the case may be, specified in this Indenture in connection with such action, any Holder of a Debt Security the serial number of which is shown by the evidence to be included among the serial numbers of the Debt Securities the Holders of which have consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Debt Security. Except as aforesaid any such action taken by the Holder of any Debt Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Debt Security and of any Debt Securities issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Debt Security. Any action taken by the Holders of the percentage in aggregate principal amount of the Debt Securities of any or all series, as the case may be, specified in this Indenture in connection with such action shall be conclusively binding upon the Issuer, the Trustee and the Holders of all the Debt Securities affected by such action. ARTICLE VIII SUPPLEMENTAL INDENTURES SECTION 8.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF DEBT SECURITYHOLDERS. The Issuer, when authorized by a resolution of its Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act of 1939 as in force at the date of the execution thereof) for one or more of the following purposes: (a) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Debt Securities of one or more series any property or assets; 57 (b) to evidence the succession of another corporation to the Issuer, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Issuer pursuant to Article Nine; (c) to add to the covenants of the Issuer such further covenants, restrictions, conditions or provisions as its Board of Directors and the Trustee shall consider to be for the protection of the Holders of Debt Securities, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Debt Securities of such series to waive such an Event of Default; (d) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture; or to make such other provisions in regard to matters or questions arising under this Indenture or under any supplemental indenture as the Board of Directors may deem necessary or desirable and which shall not adversely affect the interests of the Holders of the Debt Securities; (e) to establish the form or terms of Debt Securities of any series as permitted by Sections 2.1 and 2.3, and to provide for the issuance under this Indenture of Debt Securities in coupon form (including Debt Securities registrable as to principal only) and to provide for exchangeability of such Debt Securities with Debt Securities issued hereunder in fully registered form, and to make all appropriate changes for such purpose; (f) to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Debt Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Section 6.11.; and 58 (g) to modify the provisions in Article Fourteen of this Indenture with respect to the subordination of Outstanding Debt Securities of any series in a manner not adverse to the Holders thereof. The Trustee is hereby authorized to join with the Issuer in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section may be executed without the consent of the Holders of any of the Debt Securities at the time outstanding, notwithstanding any of the provisions of Section 8.2. SECTION 8.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF DEBT SECURITYHOLDERS. With the consent (evidenced as provided in Article Seven) of the Holders of not less than a majority in aggregate principal amount of the Debt Securities at the time Outstanding of all series affected by such supplemental indenture (voting as one class), the Issuer, when authorized by a resolution of its Board of Directors, and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act of 1939 as in force at the date of execution thereof) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Debt Securities of such series; provided, that no such supplemental indenture shall (a) extend the final maturity of any Debt Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or reduce the amount of the principal of an Original Issue Discount Debt Security that would be due and payable upon an acceleration of the maturity thereof pursuant to Section 5.1 or the amount thereof provable in bankruptcy pursuant to Section 5.2, or impair or affect the right of any Debt Securityholder to institute suit for the payment thereof or, if the Debt Securities provide therefor, any right of repayment at the option of the Debt Securityholder without the consent of the Holder of each Debt Security so affected, (b) reduce the aforesaid percentage of Debt Securities of any series, the consent of the Holders of which is required for any such supplemental indenture, without the consent of the Holders of each Debt Security so affected; or (c) modify the provisions in Article Fourteen of this Indenture with respect 59 to the subordination of Outstanding Debt Securities of any series in a manner adverse to the Holders thereof. Upon the request of the Issuer, accompanied by a copy of a resolution of the Board of Directors certified by the secretary or an assistant secretary of the Issuer authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Debt Securityholders as aforesaid and other documents, if any, required by Section 7.1, the Trustee shall join with the Issuer in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Debt Securityholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Issuer and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Issuer shall mail a notice thereof by first class mail to the Holders of Debt Securities of each series affected thereby at their addresses as they shall appear on the Debt Security registry books of the Issuer, setting forth in general terms the substance of such supplemental indenture. Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 8.3 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Issuer and the Holders of Debt Securities of each series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 8.4 DOCUMENTS TO BE GIVEN TO TRUSTEE. The Trustee, subject to the provisions of Sections 6.1 and 6.2, may receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article 8 complies with the applicable provisions of this Indenture. 60 SECTION 8.5 NOTATION ON DEBT SECURITIES IN RESPECT OF SUPPLEMENTAL INDENTURES. Notation on Debt Securities in Respect of Supplemental Indentures. Debt Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Trustee for such series as to any matter provided for by such supplemental indenture or as to any action taken at any such meeting. If the Issuer or the Trustee shall so determine, new Debt Securities of any series so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Issuer, authenticated by the Trustee and delivered in exchange for the Debt Securities of such series then outstanding. ARTICLE IX CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 9.1 COVENANT NOT TO MERGE, CONSOLIDATE, SELL OR CONVEY PROPERTY EXCEPT UNDER CERTAIN CONDITIONS. So long as Debt Securities are outstanding, the Issuer shall not consolidate with or merge with or into any other corporation or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to any Person, unless: (a) the corporation formed by such consolidation or with or into which the Issuer is merged or which purchases or acquires by conveyance or transfer, or which leases, the properties and assets of the Issuer as an entirety or substantially as an entirety, shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia; (b) upon any such consolidation, merger, sale, lease or conveyance, the due and punctual payment of the principal of, premium, if any, and interest on all the Debt Securities, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or observed by the Issuer, shall be expressly assumed, by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, by the corporation formed by such consolidation, or into which the Issuer shall have been merged, or which shall have acquired such property; and 61 (c) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default shall have occurred and be continuing. SECTION 9.2 SUCCESSOR CORPORATION SUBSTITUTED. In case of any such consolidation, merger, sale or conveyance, and following such an assumption by the successor corporation, such successor corporation shall succeed to and be substituted for the Issuer, with the same effect as if it had been named herein. Such successor corporation may cause to be signed, and may issue either in its own name or in the name of the Issuer prior to such succession any or all of the Debt Securities issuable hereunder which theretofore shall not have been signed by the Issuer and delivered to the Trustee; and, upon the order of such successor corporation, instead of the Issuer, and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Debt Securities which previously shall have been signed and delivered by the officers of the Issuer to the Trustee for authentication, and any Debt Securities which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All of the Debt Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Debt Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Debt Securities had been issued at the date of the execution hereof. In case of any such consolidation, merger, sale, lease or conveyance such changes in phraseology and form (but not in substance) may be made in the Debt Securities thereafter to be issued as may be appropriate. In the event of any such sale or conveyance (other than a conveyance by way of lease) the Issuer or any successor corporation which shall theretofore have become such in the manner described in this Article shall be discharged from all obligations and covenants under this Indenture and the Debt Securities and may be liquidated and dissolved. SECTION 9.3 OPINION OF COUNSEL TO TRUSTEE. The Trustee, subject to the provisions of Sections 6.1 and 6.2, may receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, lease or conveyance, and any such assumption, and any such liquidation or dissolution, complies with the applicable provisions of this Indenture. 62 ARTICLE X SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS ---------------------------------------- SECTION 10.1 SATISFACTION AND DISCHARGE OF INDENTURE. If at any time (a) the Issuer shall have paid or caused to be paid the principal of and interest on all the Debt Securities of any series outstanding hereunder (other than Debt Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.9) as and when the same shall have become due and payable, or (b) the Issuer shall have delivered to the Trustee for cancellation all Debt Securities of any series theretofore authenticated (other than any Debt Securities of such series which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.9) or (c) (i) all the Debt Securities of such series not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (ii) the Issuer shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds the entire amount in cash (other than moneys repaid by the Trustee or any paying agent to the Issuer in accordance with Section 10.4) or direct obligations of the United States of America, backed by its full faith and credit, maturing as to principal and interest in such amounts and at such times as will insure the availability of cash sufficient to pay at maturity or upon redemption all Debt Securities of such series (other than any Debt Securities of such series which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.9) not theretofore delivered to the Trustee for cancellation, including principal and interest due or to become due to such date of maturity as the case may be, and if, in any such case, the Issuer shall also pay or cause to be paid all other sums payable hereunder by the Issuer with respect to Debt Securities of such series, then this Indenture shall cease to be of further effect with respect to Debt Securities of such series (except as to (i) rights of registration of transfer and exchange, and the Issuer's right of optional redemption, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Debt Securities, (iii) rights of holders to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the holders to receive mandatory sinking fund payments, if any, (iv) the rights, if any, of holders of Debt Securities to convert or exchange Debt Securities, (v) the rights, obligations and immunities of the Trustee hereunder and (vi) the rights of the Debt Securityholders of such series as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them), and the Trustee, on demand of the Issuer accompanied by an Officers' Certificate and an 63 Opinion of Counsel and at the cost and expense of the Issuer, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture with respect to such series; provided that the rights of Holders of the Debt Securities to receive amounts in respect of principal of and interest on the Debt Securities held by them shall not be delayed longer than required by then-applicable mandatory rules or policies of any securities exchange upon which the Debt Securities are listed. The Issuer agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Debt Securities of such series. SECTION 10.2 APPLICATION BY TRUSTEE OF FUNDS DEPOSITED FOR PAYMENT OF DEBT SECURITIES. Subject to Section 10.4, all moneys deposited with the Trustee pursuant to Section 10.1 shall be held in trust and applied by it to the payment, either directly or through any paying agent (including the Issuer acting as its own paying agent), to the Holders of the particular Debt Securities of such series for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest; but such money need not be segregated from other funds except to the extent required by law. SECTION 10.3 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection with the satisfaction and discharge of this Indenture with respect to Debt Securities of any series, all moneys then held by any paying agent under the provisions of this Indenture with respect to such series of Debt Securities shall, upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such moneys. SECTION 10.4 RETURN OF MONEYS HELD BY TRUSTEE AND PAYING AGENT UNCLAIMED FOR THREE YEARS. Any moneys deposited with or paid to the Trustee or any paying agent for the payment of the principal of or interest on any Debt Security of any series and not applied but remaining unclaimed for three years after the date upon which such principal or interest shall have become due and payable, shall, upon the written request of the Issuer and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Issuer by the Trustee for such series or such paying agent, and the Holder of the Debt Security of such series shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Issuer for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any paying agent with respect to such moneys shall thereupon cease. 64 ARTICLE XI MISCELLANEOUS PROVISIONS SECTION 11.1 INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS OF ISSUER EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in any Debt Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such or against any past, present or future stockholder, officer or director, as such, of the Issuer or of any successor, either directly or through the Issuer or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Debt Securities by the holders thereof and as part of the consideration for the issue of the Debt Securities. SECTION 11.2 PROVISIONS OF INDENTURE FOR THE SOLE BENEFIT OF PARTIES AND DEBT SECURITYHOLDERS. Nothing in this Indenture or in the Debt Securities, expressed or implied, shall give or be construed to give to any person, firm or corporation, other than the parties hereto and their successors and the Holders of the Debt Securities, any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and of the Holders of the Debt Securities. SECTION 11.3 SUCCESSORS AND ASSIGNS OF ISSUER BOUND BY INDENTURE. All the covenants, stipulations, promises and agreements in this Indenture contained by or in behalf of the Issuer shall bind its successors and assigns, whether so expressed or not. SECTION 11.4 NOTICES AND DEMANDS ON ISSUER, TRUSTEE AND DEBT SECURITYHOLDERS. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Debt Securities to or on the Issuer may be given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Issuer is filed by the Issuer with the Trustee) to MBIA Inc., 113 King Street, Armonk, New York 10504. Any notice, direction, request or demand by the Issuer or any Debt Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made at the Corporate Trust Office. 65 Where this Indenture provides for notice to Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Debt Security register. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Issuer and Debt Securityholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. SECTION 11.5 OFFICERS' CERTIFICATE AND OPINIONS OF COUNSEL; STATEMENTS TO BE CONTAINED THEREIN. Upon any application or demand by the Issuer to the Trustee to take any action under any of the provisions of this Indenture, the Issuer shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the person making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. 66 Any certificate, statement or opinion of an officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters, information with respect to which is in the possession of the Issuer, upon the certificate, statement or opinion of or representations by an officer or officers of the Issuer, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Issuer or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Issuer, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent. SECTION 11.6 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. If the date of maturity of interest on or principal of the Debt Securities of any series or the date fixed for redemption or repayment of any such Debt Security shall not be a Business Day, then payment of interest or principal need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after such date. SECTION 11.7 CONFLICT OF ANY PROVISION OF INDENTURE WITH TRUST INDENTURE ACT OF 1939. Conflict of Any Provision of Indenture with Trust Indenture Act of 1939. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with another provision included in this Indenture which is required to be included herein by any of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, such required provision shall control. 67 SECTION 11.8 NEW YORK LAW TO GOVERN. This Indenture and each Debt Security shall be deemed to be a contract under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of such State, except as may otherwise be required by mandatory provisions of law. SECTION 11.9 Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. SECTION 11.10 Effect of Headings. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. ARTICLE XII REDEMPTION OF DEBT SECURITIES AND SINKING FUNDS SECTION 12.1 APPLICABILITY OF ARTICLE. The provisions of this Article shall be applicable to the Debt Securities of any series which are redeemable before their maturity or to any sinking fund for the retirement of Debt Securities of a series except as otherwise specified as contemplated by Section 2.3 for Debt Securities of such series. SECTION 12.2 NOTICE OF REDEMPTION; PARTIAL REDEMPTIONS. Notice of redemption to the Holders of Debt Securities of any series to be redeemed as a whole or in part at the option of the Issuer shall be given by mailing notice of such redemption by first class mail, postage prepaid, at least 30 days and not more than 45 days prior to the date fixed for redemption to such Holders of Debt Securities of such series at their last addresses as they shall appear upon the registry books. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. Failure to give notice by mail, or any defect in the notice to the Holder of any Debt Security of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Debt Security of such series. The notice of redemption to each such Holder shall specify the principal amount of each Debt Security of such series held by such Holder to be redeemed, the date fixed for redemption, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of such Debt Securities, that such redemption is pursuant to the mandatory or optional 68 sinking fund, or both, or any other redemption provision as the case may be, that interest accrued to the date fixed for redemption will be paid as specified in such notice and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. In case any Debt Security of a series is to be redeemed in part only the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Debt Security, a new Debt Security or Debt Securities of such series in principal amount equal to the unredeemed portion thereof will be issued. The notice of redemption of Debt Securities of any series to be redeemed at the option of the Issuer shall be given by the Issuer or, at the Issuer's request, by the Trustee in the name and at the expense of the Issuer. At least one Business Day prior to the redemption date specified in the notice of redemption given as provided in this Section, the Issuer will deposit with the Trustee or with one or more paying agents (or, if the Issuer is acting as its own paying agent, set aside, segregate and hold in trust as provided in Section 3.4) an amount of money sufficient to redeem on the redemption date all the Debt Securities of such series so called for redemption at the appropriate redemption price, together with accrued interest to the date fixed for redemption. If less than all the outstanding Debt Securities of a series are to be redeemed, the Issuer will deliver to the Trustee at least 55 days prior to the date fixed for redemption an Officers' Certificate stating the aggregate principal amount of Debt Securities to be redeemed. If less than all the Debt Securities of a series are to be redeemed, the Trustee shall select, in such manner as it shall deem appropriate and fair, Debt Securities of such series to be redeemed in whole or in part. Debt Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Debt Securities of such series or any multiple thereof. The Trustee shall promptly notify the Issuer in writing of the Debt Securities of such series selected for redemption and, in the case of any Debt Securities of such series selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Debt Securities of any series shall relate, in the case of any Debt Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Debt Security which has been or is to be redeemed. SECTION 12.3 PAYMENT OF DEBT SECURITIES CALLED FOR REDEMPTION. If notice of redemption has been given as above provided, the Debt Securities or portions of Debt Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, 69 together with interest accrued to the date fixed for redemption, and on and after said date (unless the Issuer shall default in the payment of such Debt Securities at the redemption price, together with interest accrued to said date) interest on the Debt Securities or portions of Debt Securities so called for redemption shall cease to accrue and, except as provided in Sections 6.5 and 10.4, such Debt Securities shall cease from and after the date fixed for redemption to be entitled to any benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Debt Securities except the right to receive the redemption price thereof and unpaid interest to the date fixed for redemption. On presentation and surrender of such Debt Securities at a place of payment specified in said notice, said Debt Securities or the specified portions thereof shall be paid and redeemed by the Issuer at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; provided that any semiannual payment of interest becoming due on the date fixed for redemption shall be payable to the Holders of such Debt Securities registered as such on the relevant record date subject to the terms and provisions of Section 2.4 hereof. If any Debt Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest or Yield to Maturity (in the case of an Original Issue Discount Debt Security) borne by the Debt Security. Upon presentation of any Debt Security redeemed in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Issuer, a new Debt Security or Debt Securities of such series, of authorized denominations, in principal amount equal to the unredeemed portion of the Debt Security so presented. SECTION 12.4 EXCLUSION OF CERTAIN DEBT SECURITIES FROM ELIGIBILITY FOR SELECTION FOR REDEMPTION. Debt Securities shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in a written statement signed by an authorized officer of the Issuer and delivered to the Trustee at least 40 days prior to the last date on which notice of redemption may be given as being owned of record and beneficially by, and not pledged or hypothecated by, either (a) the Issuer or (b) an entity specifically identified in such written statement directly or indirectly controlling or under direct or indirect common control with the Issuer. SECTION 12.5 MANDATORY AND OPTIONAL SINKING FUNDS. The minimum amount of any sinking fund payment provided for by the terms of Debt Securities of any 70 series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Debt Securities of any series is herein referred to as an "optional sinking fund payment". The date on which a sinking fund payment is to be made is herein referred to as the "sinking fund payment date". In lieu of making all or any part of any mandatory sinking fund payment with respect to any series of Debt Securities in cash, the Issuer may at its option (a) deliver to the Trustee Debt Securities of such series theretofore purchased or otherwise acquired (except upon redemption pursuant to the mandatory sinking fund) by the Issuer or receive credit for Debt Securities of such series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Issuer and delivered to the Trustee for cancellation pursuant to Section 2.10, (b) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section, (c) receive credit for Debt Securities of such series (not previously so credited) redeemed by the Issuer through any optional redemption provision contained in the terms of such series, or (d) receive credit for Debt Securities which have been converted or exchanged. Debt Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund redemption price specified in such Debt Securities. On or before the forty-fifth day next preceding each sinking fund payment date for any series, the Issuer will deliver to the Trustee a written statement (which need not contain the statements required by Section 11.5) signed by an authorized officer of the Issuer (a) specifying the portion of the mandatory sinking fund payment to be satisfied by payment of cash and the portion to be satisfied by credit of Debt Securities of such series, (b) stating that none of the Debt Securities of such series has theretofore been so credited, (c) stating that no defaults in the payment of interest or Events of Default with respect to such series have occurred (which have not been waived or cured) and are continuing and (d) stating whether or not the Issuer intends to exercise its right to make an optional sinking fund payment with respect to such series and, if so, specifying the amount of such optional sinking fund payment which the Issuer intends to pay on or before the next succeeding sinking fund payment date. With respect to any sinking fund payment date, any Debt Securities of such series to be credited and required to be delivered to the Trustee in order for the Issuer to be entitled to credit therefor as aforesaid which have not theretofore been delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.10 to the Trustee on or prior to the thirty-fifth day 71 preceding such sinking fund payment date (or reasonably promptly thereafter if acceptable to the Trustee). Failure of the Issuer, on or before any such thirty-fifth day, to deliver any such Debt Securities shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Issuer, and the Issuer shall become unconditionally obligated, to pay in cash on the next succeeding sinking fund payment date that portion of the mandatory sinking fund payment due on such date that would have been satisfied by the delivery of such Debt Securities. Such written statement shall, except as provided in the next preceding paragraph, be irrevocable and upon its receipt by the Trustee the Issuer shall become unconditionally obligated to make all the cash payments therein referred to, if any, on the next succeeding sinking fund payment date. Failure of the Issuer, on or before any such forty-fifth day, to deliver such written statement shall not constitute a default but shall constitute, in and as of such date, the irrevocable election of the Issuer (i) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit Debt Securities of such series in respect thereof and (ii) that the Issuer will make no optional sinking fund payment with respect to such series as provided in this Section. If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in cash shall exceed $50,000 (or a lesser sum if the Issuer shall so request) with respect to the Debt Securities of any particular series, such cash shall be applied on the next succeeding sinking fund payment date to the redemption of Debt Securities of such series at the sinking fund redemption price together with accrued interest to the date fixed for redemption. If such amount shall be $50,000 or less and the Issuer makes no such request then it shall be carried over until a sum in excess of $50,000 is available. The Trustee shall select, in the manner provided in Section 12.2, for redemption on such sinking fund payment date a sufficient principal amount of Debt Securities of such series to absorb said cash, as nearly as may be, and shall (if requested in writing by the Issuer) inform the Issuer of the serial numbers of the Debt Securities of such series (or portions thereof) so selected. Debt Securities of any series which are (a) owned by the Issuer or an entity known by the Trustee to be directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer, as shown by the Debt Security register, and not known to the Trustee to have been pledged or hypothecated by the Issuer or any such entity or (b) identified in an Officers' Certificate at least 30 days prior to the sinking fund payment date as being beneficially owned by, and not pledged or hypothecated by, the Issuer or an entity directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer shall be excluded from Debt Securities of such series eligible for selection for 72 redemption. The Trustee, in the name and at the expense of the Issuer (or the Issuer, if it shall so request the Trustee in writing) shall cause notice of redemption of the Debt Securities of such series to be given in substantially the manner provided in Section 12.2 (and with the effect provided in Section 12.3) for the redemption of Debt Securities of such series in part at the option of the Issuer. The amount of any sinking fund payments not so applied or allocated to the redemption of Debt Securities of such series shall be added to the next cash sinking fund payment for such series and, together with such payment, shall be applied in accordance with the provisions of this Section. Any and all sinking fund moneys held on the stated maturity date of the Debt Securities of any particular series (or earlier, if such maturity is accelerated), which are not held for the payment or redemption of particular Debt Securities of such series shall be applied, together with other moneys, if necessary, sufficient for the purpose, to the payment of the principal of, and interest on, the Debt Securities of such series at maturity. On each sinking fund payment date, the Issuer shall pay to the Trustee in cash or shall otherwise provide for the payment of all interest accrued to such sinking fund payment date on Debt Securities to be redeemed on such sinking fund payment date. The Trustee shall not redeem or cause to be redeemed any Debt Securities of a series with sinking fund moneys or mail any notice of redemption of Debt Securities for such series by operation of the sinking fund during the continuance of a default in payment of interest on such Debt Securities or of any Event of Default except that, where the mailing of notice of redemption of any Debt Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Debt Securities, provided that it shall have received from the Issuer a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such default or Event of Default, be deemed to have been collected under Article Five and held for the payment of all such Debt Securities. In case such Event of Default shall have been waived as provided in Section 5.10 or the default cured on or before the forty-fifth day preceding the sinking fund payment date in any year, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section to the redemption of such Debt Securities. 73 ARTICLE XIII DEFEASANCE AND COVENANT DEFEASANCE SECTION 13.1 APPLICABILITY OF ARTICLE; ISSUER'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE. If pursuant to Section 2.3 provision is made for either or both of (a) defeasance of the Securities of a series under Section 13.2 or (b) covenant defeasance of the Securities of a series under Section 13.3, then the provisions of such Section or Sections, as the case may be, together with the other provisions of this Article Thirteen, shall be applicable to the Securities of such series, and the Issuer may at its option by resolution of the Board of Directors, elect at any time, with respect to the Debt Securities of such series, to have either Section 13.2 (if applicable) or Section 13.3 (if applicable) be applied to the outstanding Debt Securities of such series upon compliance with the conditions set forth below in this Article Thirteen. SECTION 13.2 DEFEASANCE AND DISCHARGE. Upon the Issuer's exercise of the above option applicable to this Section, the Issuer shall be deemed to have been discharged from its obligations with respect to the Outstanding Debt Securities of such series on and after the date the conditions precedent set forth below are satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means that the Issuer shall be deemed to have paid and discharged the entire indebtedness represented by the Outstanding Debt Securities of such series and to have satisfied all its other obligations under such Debt Securities and this Indenture insofar as such Debt Securities are concerned (and the Trustee, at the expense of the Issuer, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of Outstanding Debt Securities of such series to receive, solely from the trust fund described in Section 13.4 as more fully set forth in such section, payments of the principal of (and premium, if any) and interest on such Debt Securities when such payments are due, (b) the Issuer's obligations with respect to such Debt Securities under Sections 2.8, 2.9, 2.11, 3.2, 3.4 and 6.5 and such obligations as shall be ancillary thereto, (c) the rights, powers, trusts, duties, immunities and other provisions in respect of the Trustee hereunder, (d) the Issuer's obligations with respect to a conversion or exchange of Debt Securities and (e) this Article Thirteen. Subject to compliance with this Article Thirteen, the Issuer may exercise its option under this Section 13.2 notwithstanding the prior exercise of its option under Section 13.3 with respect to the Debt Securities of such series. SECTION 13.3 COVENANT DEFEASANCE. Upon the Issuer's exercise of the above option applicable to this Section, the Issuer shall be released from its 74 obligations under Section 3.6 (hereinafter, "covenant defeasance"). For this purpose, such covenant defeasance means that, with respect to the Outstanding Debt Securities of such series, the Issuer may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such Section whether directly or indirectly by reason of any reference elsewhere herein to any such Section or by reason of any reference in any such Section to any other provision herein or in any other document, but the remainder of this Indenture and such Debt Securities shall be unaffected thereby. SECTION 13.4 CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The following shall be the conditions precedent to the application of either Section 13.2 or Section 13.3 to the Outstanding Debt Securities of such series: (a) the Issuer shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 6.9 who shall agree to comply with the provisions of this Article Thirteen applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the holders of such Debt Securities, (i) money in an amount, or (ii) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (iii) a combination thereof, sufficient, without reinvestment, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, the principal of and interest on the outstanding Debt Securities of such series on the maturity of such principal or interest. Before such a deposit the Issuer may make arrangements satisfactory to the Trustee for the redemption of Debt Securities at a future date or dates in accordance with Article Twelve, which shall be given effect in applying the foregoing. For this purpose, "U.S. Government Obligations" means securities that are (A) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (B) obligations of any Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or 75 interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal of or interest on the U.S. Government Obligation evidenced by such depository receipt. (b) No Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to the Debt Securities of such series shall have occurred and be continuing (i) on the date of such deposit or (ii) insofar as Subsections 5.1(g) and 5.1(h) are concerned, at any time during the period ending on the 121st day after the date of such deposit or, if longer, ending on the day following the expiration of the longest preference period applicable to the Issuer in respect of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period). (c) At the time of such deposit: (A) no default in the payment of principal of (or premium, if any) or interest on any Senior Debt shall have occurred and be continuing or (B) no other Event of Default with respect to any Senior Debt shall have occurred and be continuing and shall have resulted in such Senior Debt becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, or, in the case of either clause (A) or clause (B) above, each such default or Event of Default shall have been cured or waived or shall have ceased to exist. (d) Such defeasance or covenant defeasance shall not (i) cause the Trustee for the Debt Securities to have a conflicting interest as defined in Section 6.8 or for purposes of the Trust Indenture Act with respect to any securities of the Issuer or (ii) result in the trust arising from such deposit to constitute, unless it is qualified as, a regulated investment company under the Investment Company Act of 1940, as amended. (e) Such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Issuer is a party or by which it is bound. (f) In the case of an election under Section 13.2, the Issuer shall have delivered to the Trustee an opinion of Counsel stating that (i) the Issuer has received from the United States Internal Revenue Service (the 76 "IRS") a private letter ruling, (ii) there has been published by the IRS a general revenue ruling, or (iii) since the date of this Indenture there has been a change in the applicable Federal income tax law, in each case to the effect that, and based thereon such opinion shall confirm that, the holders of the Outstanding Debt Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same time as would have been the case if such defeasance had not occurred. (g) In the case of an election under Section 13.3, the Issuer shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the Outstanding Debt Securities will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred. (h) Such defeasance or covenant defeasance shall be effected in compliance with any additional terms, conditions or limitations which may be imposed by the Issuer in connection therewith pursuant to Section 2.1. (i) The Issuer shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to either the defeasance under Section 13.2 or the covenant defeasance under Section 13.3 (as the case may be) have been complied with. SECTION 13.5 DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to the provisions of Section 10.4, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee - collectively, for purposes of this Section 13.5, the "Trustee") pursuant to Section 13.4 in respect of the Outstanding Debt Securities of such series shall be held in trust and applied by the Trustee, in accordance with the provisions of such Debt Securities and this Indenture, to the payment, either directly or through any paying agent (but not including the Issuer acting as its own paying agent) as the Trustee may determine, to the Holders of such Debt Securities, of all sums due and to become due thereon in respect of principal and interest, but such money need not be segregated from other funds except to the extent required by law. 77 The Issuer shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the money or U.S. Government Obligations deposited pursuant to Section 13.4 or the principal and interest received in respect thereof. Anything herein to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuer from time to time upon the written request of the Issuer any money or U.S. Government Obligations held by it as provided in Section 13.4 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent defeasance or covenant defeasance. SECTION 13.6 REINSTATEMENT. If the Trustee or the paying agent is unable to apply any money in accordance with Section 13.5 by reason of any order or judgment or any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuer's obligations under the Debt Securities of such series shall be revived and reinstated as though no deposit had occurred pursuant to this Article Thirteen until such time as the Trustee or paying agent is permitted to apply all such money in accordance with Section 13.5; provided that, if the Issuer makes any payment of principal of any such Debt Security following the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Debt Securities to receive such payment from the money held by the Trustee or the paying agent. ARTICLE XIV SUBORDINATION OF DEBT SECURITIES SECTION 14.1 SECURITIES SUBORDINATE TO SENIOR DEBT. The Issuer covenants and agrees, and each Holder of Debt Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article, the payment of the principal of (and premium, if any) and interest on each and all of the Debt Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all amounts then due and payable in respect of all Senior Debt. SECTION 14.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. In the event of (a) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, arrangement, reorganization, debt restructuring or other similar case or proceeding in connection with any insolvency or bankruptcy proceeding, 78 relative to the Issuer or to its assets, or (b) any liquidation, dissolution or other winding up of the Issuer, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of the Issuer, then and in any such event specified in (a), (b) or (c) above (each such event, if any, herein sometimes referred to as a "Proceeding") the holders of Senior Debt shall be entitled to receive payment in full of principal of (and premium, if any) and interest, if any, on such Senior Debt, or provision shall be made for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, before the Holders of the Debt Securities are entitled to receive or retain any payment or distribution of any kind or character, whether in cash, property or securities (including any payment or distribution which may be payable or deliverable by reason of the payment of any other Debt of the Issuer (including any series of the Debt Securities) subordinated to the payment of the Debt Securities, such payment or distribution being hereinafter referred to as a "Junior Subordinated Payment"), on account of principal of (or premium, if any) or interest on the Debt Securities or on account of the purchase or other acquisition of Debt Securities by the Issuer or any Subsidiary and to that end the holders of Senior Debt shall be entitled to receive, for application to the payment thereof, any payment or distribution of any kind of character, whether in cash, property or securities, including any Junior Subordinated Payment, which may be payable or deliverable in respect of the Debt Securities in any such Proceeding. In the event that, notwithstanding the foregoing provisions of this Section, the Trustee or the Holder of any Debt Security shall have received any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, including any Junior Subordinated Payment, before all Senior Debt is paid in full or payment thereof is provided for in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, and if such fact shall, at or prior to the time of such payment or distribution, have been made known to the Trustee or, as the case may be, such Holder, then and in such event such payment or distribution shall be paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment or distribution of assets of the Issuer for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all Senior Debt in full, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt. For purposes of this Article only, the words "any payment or distribution of any kind or character, whether in cash, property or securities" shall not be deemed to include shares of stock of the Issuer as reorganized or readjusted, or securities of the Issuer or any other corporation provided for by a plan of 79 reorganization or readjustment which securities are subordinated in right of payment to all then outstanding Senior Debt to substantially the same extent as the Debt Securities are so subordinated as provided in this Article. The consolidation of the Issuer with, or the merger of the Issuer into, another Person or the liquidation or dissolution of the Issuer following the sale of all or substantially all of its properties and assets as any entirety to another Person or the liquidation or dissolution of the Issuer following the sale of all or substantially all of its properties and assets as an entirety to another Person upon the terms and conditions set forth in Article Nine shall not be deemed a Proceeding for the purposes of this Section if the Person formed by such consolidation or into which the Issuer is merged or the Person which acquires by sale such properties and assets as an entirety, as the case may be, shall, as a part of such consolidation, merger, or sale comply with the conditions set forth in Article Nine. SECTION 14.3 PRIOR PAYMENT TO SENIOR DEBT UPON ACCELERATION OF DEBT SECURITIES. In the event that any Debt Securities are declared due and payable before their stated maturity, then and in such event the holders of the Senior Debt outstanding at the time such Debt Securities so become due and payable shall be entitled to receive payment in full of all amounts due on or in respect of such Senior Debt (including any amounts due upon acceleration), or provision shall be made for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, before the Holders of the Debt Securities are entitled to receive any payment or distribution of any kind or character, whether in cash, properties or securities (including any Junior Subordinated Payment) by the Issuer on account of the principal of (or premium, if any) or interest on the Debt Securities or on account of the purchase or other acquisition of Debt Securities by the Issuer or any Subsidiary; provided, however, that nothing in this Section shall prevent the satisfaction of any sinking fund payment in accordance with Article Twelve by delivering and crediting pursuant to Section 12.5 Debt Securities which have been acquired (upon redemption or otherwise) prior to such declaration of acceleration. In the event that, notwithstanding the foregoing, the Issuer shall make any payment to the Trustee or the Holder of any Debt Security prohibited by the foregoing provisions of this Section, and if such fact shall, at or prior to the time of such payment, have been made known to the Trustee or, as the case may be, such Holder, then and in such event such payment shall be paid over and delivered forthwith to the Issuer. The provisions of this Section shall not apply to any payment with respect to which Section 14.2 would be applicable. 80 SECTION 14.4 NO PAYMENT WHEN SENIOR DEBT IN DEFAULT. (a) In the event and during the continuation of any default in the payment of principal of (or premium, if any) or interest on any Senior Debt, or in the event that any event of default with respect to any Senior Debt shall have occurred and be continuing and shall have resulted in such Senior Debt becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, unless and until such event of default shall have been cured or waived or shall have ceased to exist and such acceleration shall have been rescinded or annulled, or (b) in the event any judicial proceeding shall be pending with respect to any such default in payment or such event or default, then no payment or distribution of any kind or character, whether in cash, properties or securities (including any Junior Subordinated Payment) shall be made by the Issuer on account of principal of (or premium, if any) or interest, if any, on the Debt Securities or on account of the purchase or other acquisition of Debt Securities by the Issuer or any Subsidiary; provided, however, that nothing in this Section shall prevent the satisfaction of any sinking fund payment in accordance with Article Twelve by delivering and crediting pursuant to Section 12.2 Debt Securities which have been acquired (upon redemption or otherwise) prior to such default in payment or event of default. In the event that, notwithstanding the foregoing, the Issuer shall make any payment to the Trustee or the Holder of any Debt Security prohibited by the foregoing provisions of this Section, and if such fact shall, at or prior to the time of such payment, have been made known to the Trustee or, as the case may be, such Holder, then and in such event such payment shall be paid over and delivered forthwith to the Issuer. The provisions of this Section shall not apply to any payment with respect to which Section 14.2 would be applicable. SECTION 14.5 PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in this Article or elsewhere in this Indenture or in any of the Debt Securities shall prevent (a) the Issuer, at any time except during the pendency of any Proceeding referred to in Section 14.2 or under the conditions described in Sections 14.3 and 14.4, from making payments at any time of principal of (and premium, if any) or interest on the Debt Securities, or (b) the application by the Trustee of any money deposited with it hereunder to the payment of or on account of the principal of (and premium, if any) or interest on the Debt Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge that such payment would have been prohibited by the provisions of this Article. 81 SECTION 14.6 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT. Subject to the payment in full of all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of the Debt Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions of this Article (equally and ratably with the holders of all indebtedness of the Issuer which by its express terms is subordinated to Senior Debt of the Issuer to substantially the same extent as the Debt Securities are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of (and premium, if any) and interest on the Debt Securities shall be paid in full. For purposes of such subrogation or assignment, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Holders of the Debt Securities or the Trustee would be entitled except for the provisions of this Article, and no payments over pursuant to the provisions of this Article to the holders of Senior Debt by Holders of the Debt Securities or the Trustee, shall, as among the Issuer, its creditors other than holders of Senior Debt, and the Holders of the Debt Securities, be deemed to be a payment or distribution by the Issuer to or on account of the Senior Debt. SECTION 14.7 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of the Debt Securities on the one hand and the holders of Senior Debt on the other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Debt Securities is intended to or shall (a) impair, as between the Issuer and the Holders of the Debt Securities, the obligations of the Issuer, which are absolute and unconditional, to pay to the Holders of the Debt Securities the principal of (and premium, if any) and interest on the Debt Securities as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Issuer of the Holders of the Debt Securities and creditors of the Issuer other than their rights in relation to the holders of Senior Debt; or (c) prevent the Trustee or the Holder of any Debt Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture including, without limitation, filing and voting claims in any Proceeding, subject to the rights, if any, under this Article of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder. SECTION 14.8 TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of a Debt Security by his or her acceptance thereof authorizes and directs the Trustee on 82 his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article and appoints the Trustee his or her attorney-in-fact for any and all such purposes. SECTION 14.9 NO WAIVER OF SUBORDINATION PROVISIONS. No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Issuer or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Issuer with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with. SECTION 14.10 NOTICE TO TRUSTEE. The Issuer shall give prompt written notice to the Trustee of any fact known to the Issuer which would prohibit the making of any payment to or by the Trustee in respect of the Debt Securities. Notwithstanding the provisions of this Article or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Debt Securities, unless and until the Trustee shall have received written notice thereof from the Issuer or a holder of Senior Debt or from any trustee, agent or representative therefor (whether or not the facts contained in such notice are true); provided, however, that if the Trustee shall not have received the notice provided for in this Section at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, without limitation, the payment of the principal of (and premium, if any) or interest on any Debt Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary which may be received by it within two Business Days prior to such date. SECTION 14.11 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT. Upon any payment or distribution of assets of the Issuer referred to in this Article, the Trustee, subject to the provisions of Article Six, and the Holders of the Debt Securities shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Debt Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Issuer, the amount thereof or payable thereon, the 83 amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. SECTION 14.12 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBTTRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT. The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Debt Securities or to the Issuer or to any other Person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this Article or otherwise. SECTION 14.13 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT; PRESERVATION OF TRUSTEE'S RIGHTS. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Debt which may at any time be held by it, to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. SECTION 14.14 ARTICLE APPLICABLE TO PAYING AGENTS. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Issuer and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee. SECTION 14.15 DEFEASANCE OF THIS ARTICLE XIV. The subordination of the Debt Securities provided by this Article Fourteen is expressly made subject to the provisions for defeasance or covenant defeasance in Article Thirteen and, anything herein to the contrary notwithstanding, upon the effectiveness of any such defeasance or covenant defeasance, the Debt Securities then outstanding shall thereupon cease to be subordinated pursuant to this Article. SECTION 14.16 CERTAIN CONVERSIONS OR EXCHANGES DEEMED PAYMENT. For the purposes of this Article only, (a) the issuance and delivery of junior securities upon conversion or exchange of Debt Securities shall not be deemed to constitute a payment or distribution on account of the principal of (or premium, if any) or interest on securities or on account of the purchase or other acquisition of Debt Securities, and (b) the payment, issuance or delivery of cash, property or securities (other than junior securities) upon conversion or exchange of a Debt Security shall be deemed to constitute payment on account of the principal of such security. For the purposes of this Section, the term "junior securities" means (i) shares of any stock of any class of the Issuer and 84 (ii) securities of the Issuer which are subordinated in right of payment to all Senior Debt which may be outstanding at the time of issuance or delivery of such securities to substantially the same extent as, or to a greater extent than, the Debt Securities are so subordinated as provided in this Article. ------------------------------------------------- 85 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of __________. MBIA INC. By __________________________________ President [CORPORATE SEAL] Attest: By ________________________________ Secretary By _________________________________ [CORPORATE SEAL] Attest: By _______________________________ 86 STATE OF [New York] ) ) ss.: COUNTY OF [New York] ) On this ___ day of August, before me personally came [ ], to me personally known, who, being by me duly sworn, did depose and say that he resides at [ ]; that he is a [ ] of MBIA Inc., one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. [NOTARIAL SEAL] __________________________________ Notary Public 87 Exhibit (Form 1) [FORM OF FACE OF NOTE] No. $ MBIA INC. % NOTE DUE MBIA Inc., a Connecticut corporation (the "Issuer"), for value received, hereby promises to pay to ____________ or registered assigns, at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, the principal sum of ________ Dollars on ________________,_______________ , in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest, semiannually on _________________ and __________________ of each year, commencing _________________, _________________, on said principal sum at said office or agency, in like coin or currency, at the rate per annum specified in the title of this Note, from the _______________ or the _______________ , as the case may be, next preceding the date of this Note to which interest has been paid, unless the date hereof is a date to which interest has been paid, in which case from the date of this Note, or unless no interest has been paid on these Notes, in which case from ________________________, _________________ , until payment of said principal sum has been made or duly provided for; PROVIDED, that payment of interest may be made at the option of the Issuer by check mailed to the address of the person entitled thereto as such address shall appear on the security register. Notwithstanding the foregoing, if the date hereof is after the ___ day of ____________________ or ________________, as the case may be, and before the following _______________or ______________ this Note shall bear interest from such _____________ or _______________; PROVIDED, that if the Issuer shall default in the payment of interest due on such _____________ or _____________, then this Note shall bear interest from the next preceding __________or __________ , to which interest has been paid or, if no interest has been paid on these Notes, from _______________. The interest so payable on any or , will, subject to certain exceptions provided in the Indenture referred to on the reverse hereof, be paid to the person in whose name this Note is registered at the close of business on the _________________ or ___________, as the case may be, next preceding ____________________ such or ____________. Reference is made to the further provisions of this Note set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to on the reverse hereof. IN WITNESS WHEREOF, MBIA Inc. has caused this instrument to be signed by facsimile by its duly authorized officers and has caused a facsimile of its corporate seal to be affixed hereunto or imprinted hereon. Dated: _________________, MBIA INC. By___________________________ By___________________________ [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Debentures of the series designated herein referred to in the within-mentioned Indenture. , as Trustee By___________________________ Authorized Officer 2 [FORM OF REVERSE OF NOTE] MBIA INC. % NOTE DUE This Note is one of a duly authorized issue of debentures, notes, bonds or other evidences of indebtedness of the Issuer (hereinafter called the "Debentures") of the series hereinafter specified, all issued or to be issued under and pursuant to an indenture dated as of _____________ (herein called the "Indenture"), duly executed and delivered by the Issuer to _____________, Trustee (herein called the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Issuer and the holders of the Debentures. The Debentures may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any) and may otherwise vary as in the Indenture provided. This Note is one of a series designated as the ____________% Notes Due __________ of the Issuer, limited in aggregate principal amount to $_______________. In case an Event of Default with respect to the ___% Notes Due ____________, as defined in the Indenture, shall have occurred and be continuing, the principal hereof may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The indebtedness evidenced by this Note is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of Senior Debt as defined in the Indenture and this Note is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Note, by accepting the same, agrees to and shall be bound by such provisions and authorizes the Trustee in his behalf to effectuate the subordination so provided and appoints the Trustee his attorney-in-fact solely for such purpose. The Indenture contains provisions permitting the Issuer and the Trustee, with the consent of the Holders of more than 50% in aggregate principal amount of the Debentures at the time Outstanding (as defined in the Indenture) of all series to be affected (voting as one class), evidenced as in the Indenture 3 provided, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the Holders of the Debentures of each such series; PROVIDED, HOWEVER, that no such supplemental indenture shall (i) extend the final maturity of any Debenture, or reduce the principal amount thereof or any premium thereon, or reduce the rate or extend the time of payment of any interest thereon, or impair or affect the rights of any Holder to institute suit for the payment thereof, without the consent of the Holder of each Debenture so affected, (ii) reduce the aforesaid percentage of Debentures, the Holders of which are required to consent to any such supplemental indenture or (iii) modify any provision relating to the subordination of Outstanding Debt Securities of any series in a manner adverse to the Holders thereof, without the consent of the Holder of each Debenture affected. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Debentures of any series, prior to any declaration accelerating the maturity of such Debentures, the Holders of a majority in aggregate principal amount Outstanding of the Debentures of such series (or, in the case of certain defaults or Events of Default, all or certain series of the Debentures) may on behalf of the Holders of all the Debentures of such series (or all or certain series of the Debentures, as the case may be) waive any such past default or Event of Default and its consequences. The preceding sentence shall not, however, apply to a default in the payment of the principal of or premium, if any, or interest on any of the Debentures. Any such consent or waiver by the Holder of this Note (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Note and any Notes which may be issued in exchange or substitution herefor, irrespective of whether or not any notation thereof is made upon this Note or such other Notes. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and any premium and interest on this Note in the manner, at the respective times, at the rate and in the coin or currency herein prescribed. The Notes are issuable in registered form without coupons in ____________ denominations of $__________ and any multiple of $_______________ at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, and in the manner and subject to the limitations provided in the Indenture, but without the payment of any service charge, notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations. 4 The Notes may be redeemed at the option of the Issuer as a whole, or from time to time in part, on any date after __________________ and prior to maturity, upon mailing a notice of such redemption not less than 30 nor more than 45 days prior to the date fixed for redemption to the Holders of Notes at their last registered addresses, all as further provided in the Indenture, at the following redemption prices (expressed in percentages of the principal amount) together in each case with accrued interest to the date fixed for redemption: If redeemed during the twelve-month period beginning - ----------- ------------------------ ------------ -------------------------- Year Percentage Year Percentage - ----------- ------------------------ ------------ ------------------------- - ----------- ------------------------ ------------ ------------------------- Upon due presentment for registration of transfer of this Note at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, a new Note or Notes of authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange therefor, subject to the limitations provided in the Indenture, without charge except for any tax or other governmental charge imposed in connection therewith. The Issuer, the Trustee and any authorized agent of the Issuer or the Trustee may deem and treat the registered Holder hereof as the absolute owner of this Note (whether or not this Note shall be overdue and notwithstanding any notation of ownership or other writing hereon), for the purpose of receiving payment of, or on account of, the principal hereof and premium, if any, and subject to the provisions on the face hereof, interest hereon, and for all other purposes, and neither the Issuer nor the Trustee nor any authorized agent of the Issuer or the Trustee shall be affected by any notice to the contrary. No recourse under or upon any obligation, covenant or agreement of the Issuer in the Indenture or any indenture supplemental thereto or in any Note, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, of the Issuer or of any successor corporation, either directly or through the Issuer or any successor corporation, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable 5 proceeding or otherwise, all such liability being expressly waived and released by the acceptance hereof and as part of the consideration for the issue hereof. Terms used herein which are defined in the Indenture shall have the respective meanings assigned thereto in the Indenture. 6 Exhibit (Form 2) [FORM OF FACE OF DEBENTURE] No. $ MBIA INC. % DEBENTURE DUE MBIA Inc., a Connecticut corporation (the "Issuer"), for value received, hereby promises to pay to __________________ or registered assigns, at the office or agency of the Issuer in the Borough of Manhattan, the City of New York, the principal sum of ___________________ Dollars on ________________, _________________, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest, semiannually on ________________ and _______________ of each year, commencing ______________, __________________, on said principal sum at said office or agency, in like coin or currency, at the rate per annum specified in the title of this Debenture, from the ____________ or the _________ , as the case may be, next preceding the date of this Debenture to which interest has been paid, unless the date hereof is a date to which interest has been paid, in which case from the date of this Debenture, or unless no interest has been paid on these Debentures, in which case from ______________, until payment of said principal sum has been made or duly provided for; PROVIDED, that payment of interest may be made at the option of the Issuer by check mailed to the address of the person entitled thereto as such address shall appear on the security register. Notwithstanding the foregoing, if the date hereof is after the ___ day of _______________ or _____________, as the case may be, and before the following _____________ or _______________, this Debenture shall bear interest from such _______________ or _______________; PROVIDED, that if the Issuer shall default in the payment of interest due on such _________________ or _________________, then this Debenture shall bear interest from the next preceding _________________ or ______________, to which interest has been paid or, if no interest has been paid on these Debentures, from _________________. The interest so payable on any ___________or _________________ will, subject to certain exceptions provided in the Indenture referred to on the reverse hereof, be paid to the person in whose name this Debenture is registered at the close of business on the _________________ or______________, as the case may be, next preceding such ____________ or ___________. Reference is made to the further provisions of this Debenture set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Debenture shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to on the reverse hereof. IN WITNESS WHEREOF, MBIA Inc. has caused this instrument to be signed by facsimile by its duly authorized officers and has caused a facsimile of its corporate seal to be affixed hereunto or imprinted hereon. Dated: _________________, MBIA Inc. By___________________________ By___________________________ [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This one of the Debentures of the series designated therein referred to in the within-mentioned Indenture. ______________________, as Trustee By___________________________ Authorized Officer 2 [FORM OF REVERSE OF DEBENTURE] MBIA Inc. % DEBENTURE DUE This Debenture is one of a duly authorized issue of debentures, notes, bonds or other evidences of indebtedness of the issuer (hereinafter called the "Debentures") of the series hereinafter specified, all issued or to be issued under and pursuant to a indenture dated _________ (herein called the "Indenture"), duly executed and delivered by the Issuer to ___________, Trustee (herein called the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Issuer and the Holders of the Debentures. The Debentures may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any) may be subject to different sinking, purchase or analogous funds (if any) and may otherwise vary as in the Indenture provided. This Debenture is one of a series designated as the % Debentures Due of the Issuer, limited in aggregate principal amount to $_________. In case an Event of Default with respect to the _____% Debentures Due, as defined in the Indenture, shall have occurred and be continuing, the principal hereof may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The indebtedness evidenced by this Debenture is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of Senior Debt as defined in the Indenture and this Note is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Debenture, by accepting the same, agrees to and shall be bound by such provisions and authorizes the Trustee in his behalf to effectuate the subordination so provided and appoints the Trustee his attorney-in-fact solely for such purpose. The Indenture contains provisions permitting the Issuer and the Trustee, with the consent of the Holders of more than 50% in aggregate principal amount of the Debentures at the time Outstanding (as defined in the Indenture) of all series to be affected (voting as one class), evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to or 3 changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the Holders of the Debentures of each such series; PROVIDED, HOWEVER, that no such supplemental indenture shall (i) extend the final maturity of any Debenture, or reduce the principal amount thereof or any premium thereon, or reduce the rate or extend the time of payment of any interest thereon, or impair or affect the rights of any Holder to institute suit for the payment thereof, without the consent of the Holder of each Debenture so affected, (ii) reduce the aforesaid percentage of Debentures, the Holders of which are required to consent to any such supplemental indenture or (iii) modify any provision relating to the subordination of Outstanding Debt Securities of any series in a manner adverse to the Holders thereof , without the consent of the Holder of each Debenture affected. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Debentures of any series, prior to any declaration accelerating the maturity of such Debentures, the Holders of a majority in aggregate principal amount Outstanding of the Debentures of such series (or, in the case of certain defaults or Events of Default, all or certain series of the Debentures) may on behalf of the Holders of all the Debentures of such series (or all or certain series of the Debentures, as the case may be) waive any such past default or Event of Default and its consequences. The preceding sentence shall not, however, apply to a default in the payment of the principal of or premium, if any, or interest on any of the Debentures. Any such consent or waiver by the Holder of this Debenture (unless revoked as provided-in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Debenture and any Debentures which may be issued in exchange or substitution herefor, irrespective of whether or not any notation thereof is made upon this Debenture or such other Debentures. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and any premium and interest on this Debenture in the manner, at the respective times, at the rate and in the coin or currency herein prescribed. The Debentures are issuable in registered form without coupons in denominations of $______ and any multiple of $_________ at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, and in the manner and subject to the limitations provided in the Indenture, but without the payment of any service charge, Debentures may be exchanged for a like aggregate principal amount of Debentures of other authorized denominations. The Debentures may be redeemed at the option of the Issuer, as a whole, or from time to time in part, on any date after ___________ and prior to maturity, upon mailing a notice of such redemption not less than 30 nor more than 45 days 4 prior to the date fixed for redemption to the Holders of Debentures at their last registered addresses, all as further provided in the Indenture, at the following optional redemption prices (expressed in percentages of the principal amount) together in each case with accrued interest to the date fixed for redemption: If redeemed during the twelve-month period beginning , - ----------- ------------------------ ------------ -------------------------- Year Percentage Year Percentage - ----------- ------------------------ ------------ ------------------------- - ----------- ------------------------ ------------ ------------------------- [PROVIDED, HOWEVER, that no such optional redemption may be effected prior to _________________ directly or indirectly from or in anticipation of moneys borrowed by or for the account of the Issuer at an interest cost (calculated in accordance with generally accepted financial practice) of less than ____% per annum.] [The Debentures are also subject to redemption, through the operations of the sinking fund as herein provided on ________ and on each ________ thereafter to and including _________ on notice as set forth above and at 100% of the principal amount thereof (the sinking fund redemption price), together with accrued interest to the date fixed for redemption. As and for a sinking fund for the retirement of the Debentures and so long as any of the Debentures remain outstanding and unpaid, the Issuer will pay to the Trustee in cash (subject to the right to deliver certain Debentures in credit therefor as in the Indenture provided), on or before __________________ and on or before __________________ in each year thereafter to and including an amount sufficient to redeem $______________ principal amount of the Debentures (or such lesser amount equal to the principal amount then Outstanding) at the sinking fund redemption price. At its option the Issuer may pay into the sinking fund for the retirement of Debentures, in cash except as provided in the Indenture, on or before ________ and on or before __________ in each year thereafter to and including _______________, an amount sufficient to redeem an additional principal amount of Debentures up to but not to exceed $________________ at the sinking fund redemption price. To the extent that the right to such optional sinking fund payment is not exercised in any year, it shall not be cumulative or carried forward to any subsequent year.] 5 Upon due presentment for registration of transfer of this Debenture at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, a new Debenture or Debentures of authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange therefor, subject to the limitations provided in the Indenture, without charge except for any tax or other governmental charge imposed in connection therewith. The Issuer, the Trustee and any authorized agent of the Issuer or the Trustee may deem and treat the registered Holder hereof as the absolute owner of this Debenture (whether or not this Debenture shall be overdue and notwithstanding any notation of ownership or other writing hereon, for the purpose of receiving payment of, or on account of, the principal hereof and premium, if any, and, subject to the provisions on the face hereof, interest hereon, and for all other purposes, and neither the Issuer nor the Trustee nor any authorized agent of the Issuer or the Trustee shall be affected by any notice to the contrary. No recourse under or upon any obligation, covenant or agreement of the Issuer in the Indenture or any indenture supplemental thereto or in any Note, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, of the Issuer or of any successor corporation, either directly or through the Issuer or any successor corporation, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance hereof and as part of the consideration for the issue hereof. Terms used herein which are defined in the Indenture shall have the respective meanings assigned thereto in the Indenture. 6 Exhibit (Form 3) [FORM OF FACE OF ] No. $ MBIA INC. % [ ] DUE MBIA Inc., a Connecticut corporation (the "Issuer"), for value received, hereby promises to pay to ___________ or registered assigns, at the office or agency of the Issuer in the Borough of Manhattan, the City of New York, the principal sum of ____________ Dollars on _________________, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest, semiannually on ___________ and ___________ in each year, commencing _________________,________________, on said principal sum at said office or agency, in like coin or currency, at the rate per annum specified in the title of this [____________], from the __________ or the __________, as the case may be, next preceding the date of this [___________] to which interest has been paid, unless the date hereof is a date to which interest has been paid, in which case from the date of this [___________], or unless no interest has been paid on these [___________]s, in which case from ___________, until payment of said principal sum has been made or duly provided for; PROVIDED, that payment of interest may be made at the option of the Issuer by check mailed to the address of the person entitled thereto as such address shall appear on the security register. Notwithstanding the foregoing, if the date hereof is after the ___________ day of ___________ or ___________, as the case may be, and before the following ___________ or ___________, this [___________] shall bear interest from such or ; PROVIDED, that if the Issuer shall default in the payment of interest due on such ___________ or ___________, then this [___________] shall bear interest from the next preceding ___________ or ___________, to which interest has been paid ___________or ___________, if no interest has been paid on these [___________]s, from ___________. The interest so payable on any ___________ or ___________ will, subject to certain exceptions provided in the Indenture referred to on the reverse hereof, be paid to the person in whose name this [___________] is registered at the close of business on ___________ or ___________, as the case may be, next preceding such ___________ or ___________. Reference is made to the further provisions of this [___________] set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. This [___________] shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to on the reverse hereof. IN WITNESS WHEREOF, MBIA Inc. has caused this instrument to be signed by facsimile by its duly authorized officers and has caused a facsimile of its corporate seal to be affixed hereunto or imprinted hereon. Dated: ____________________, MBIA INC. By___________________________ By___________________________ [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Debentures of the series designated therein referred to in the within-mentioned Indenture. __________________, as Trustee By___________________________ Authorized Officer 2 [FORM OF REVERSE OF ___________] FOR PURPOSES OF SECTION 1232 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE ISSUE PRICE OF THIS [___________] IS ____% OF ITS PRINCIPAL AMOUNT AND THE ISSUE DATE IS ____________, _____. MBIA INC. % [ ] DUE This [___________] is one of a duly authorized issue of debentures, notes, bonds or other evidences of indebtedness of the Issuer (hereinafter called the "Debentures") of the series hereinafter specified, all issued or to be issued under and pursuant to an indenture dated as of ___________ (herein called the "Indenture"), duly executed and delivered by the Issuer to ______________________, Trustee (herein called the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Issuer and the Holders of the Debentures. The Debentures may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any) and may otherwise vary as in the Indenture provided. This [___________] is one of a series designated as the ___________% [___________] Due ___________ of the Issuer, limited in aggregate principal amount to $___________. In case an Event of Default with respect to [___________], as defined in the Indenture, shall have occurred and be continuing, (i) that portion of the principal equal to the initial public offering price of this [___________] plus accrued amortization of the original issue discount calculated using the "interest" method (computed in accordance with generally accepted accounting principles in effect on the date of the Indenture) from ___________, ___________ to the date of acceleration and (ii) any accrued interest to the date of acceleration may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. 3 The indebtedness evidenced by this ___________ is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of Senior Debt as defined in the Indenture and this ___________ is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this ___________, by accepting the same, agrees to and shall be bound by such provisions and authorizes the Trustee in his behalf to effectuate the subordination so provided and appoints the Trustee his attorney-in-fact solely for such purpose. The Indenture contains provisions permitting the Issuer and the Trustee, with the consent of the Holders of more than 50% in aggregate principal amount of the Debentures at the time Outstanding (as defined in the Indenture) of all series to be affected (voting as one class), evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the Holders of the Debentures of each such series to be affected; provided, however, that no such supplemental indenture shall (i) extend the final maturity of any Debenture, or reduce the rate or extend the time of payment of any interest thereon, or reduce the principal amount thereof, or reduce the amount of the principal of an Original Issue Discount Debenture that would be due and payable upon acceleration of the maturity thereof or the amount provable in bankruptcy or impair or affect the rights of any Holder to institute suit for the payment thereof, without the consent of the Holder of each Debenture so affected, (ii) reduce the aforesaid percentage of Debentures, the Holders of which are required to consent to any such supplemental indenture or (iii) modify any provision relating to the subordination of Outstanding Debt Securities of any series in a manner adverse to the Holders thereof, without the consent of the Holder of each Debenture affected. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Debentures of any series, prior to any declaration accelerating the maturity of such Debentures, the Holders of a majority in aggregate principal amount Outstanding of the Debentures of such series (or, in the case of certain defaults or Events of Default, all or certain series of the Debentures) may on behalf of the Holders of all the Debentures of such series (or all or certain series of the Debentures, as the case may be) waive any such past default or Event of Default. The preceding sentence shall not, however, apply to a default in the payment of the principal of, or interest, if any, on any of the Debentures. Any such consent or waiver by the Holder of this [___________] (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this [ ] and any [___________]s which may be issued in exchange or substitution herefor, irrespective of whether or not any notation thereof is made upon this [___________] or such other [___________]s. 4 No reference herein to the Indenture and no provision of this [___________] or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this [___________] in the manner, at the respective times, at the rate and in the coin or currency herein prescribed. The [___________]s are issuable in registered form without coupons in denominations of $___________ and any multiple of $___________ at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, and in the manner and subject to the limitations provided in the Indenture, but without the payment of any service charge, [___________]s may be exchanged for a like aggregate principal amount of [___________]s of other authorized denominations. The [___________] may be redeemed at the option of the Issuer, as a whole, or from time to time in part, on any date prior to maturity, upon mailing of notice of such redemption not less than 30 nor more than 45 days prior to the date fixed for redemption to the Holders of [___________]s at their last registered addresses, all as further provided in the Indenture, at the redemption price of 100% of the principal amount thereof together with accrued interest to the date fixed for redemption. Upon due presentment for registration of transfer of this [___________] at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, a new [___________] or [___________]s of authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange therefor, subject to the limitations provided in the Indenture, without charge except for any tax or other governmental charge imposed in connection therewith. The Issuer, the Trustee and any authorized agent of the Issuer or the Trustee may deem and treat the registered Holder hereof as the absolute owner of this [___________](whether or not this [___________] shall be overdue and notwithstanding any notation of ownership or other writing hereon, for the purpose of receiving payment of, or on account of, the principal hereof, and subject to the provisions on the face hereof, interest hereon, and for all other purposes, and neither the Issuer nor the Trustee nor any authorized agent of the Issuer or the Trustee shall be affected by any notice to the contrary. No recourse under or upon any obligation, covenant or agreement of the Issuer in the Indenture or any indenture supplemental thereto or in any [___________], or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or 5 director, as such, of the Issuer or of any successor corporation, either directly or through the Issuer or any successor corporation, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance hereof and as part of the consideration for the issue hereof. Terms used herein which are defined in the Indenture shall have the respective meanings assigned thereto in the Indenture. 6 Exhibit (Form 4) [FORM OF FACE OF ZERO COUPON SECURITY] No. $ MBIA INC. ZERO COUPON [ ] MBIA Inc., a Connecticut corporation (the "Issuer"), for value received, hereby promises to pay to ___________ or registered assigns, at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, the principal sum of ___________ Dollars on ___________, ___________, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. The principal of this [___________] shall not bear interest, except in the case of default in payment of principal upon acceleration, redemption or maturity, and in such case the amount in default shall bear interest at the rate of ____% per annum (to the extent enforceable under applicable law) from the date of default in payment to the date such payment has been made or duly provided for, at said office or agency and in like coin or currency. Reference is made to the further provisions of this [___________] set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. This [___________] shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to on the reverse hereof. IN WITNESS WHEREOF, MBIA Inc. has caused this instrument to be signed by facsimile by its duly authorized officers and has caused a facsimile of its corporate seal to be affixed hereunto or imprinted hereon. Dated: ___________________, MBIA INC. By___________________________ By___________________________ [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Debentures of the series designated therein referred to in the within-mentioned Indenture. ___________, as Trustee By___________________________ Authorized Officer [FORM OF REVERSE OF ___________] FOR THE PURPOSES OF SECTION 1232 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE ISSUE PRICE OF THIS [___________] IS ___________% OF ITS PRINCIPAL AMOUNT AND THE ISSUE DATE IS ___________, ___________. 2 MBIA INC. ZERO COUPON [ ] DUE This [___________] is one of a duly authorized issue of debentures, notes, bonds or other evidences of indebtedness of the Issuer (hereinafter called the "Debentures") of the series hereinafter specified, all issued or to be issued under and pursuant to an indenture dated as of ___________ (herein called the "Indenture"), duly executed and delivered by the Issuer to ___________, Trustee (herein called the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Issuer and the holders of the Debentures. The Debentures may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any) and may otherwise vary as in the Indenture provided. This [___________] is one of a series designated as the Zero Coupon [___________] Due ___________ of the Issuer, limited in aggregate principal amount to $___________. In case an Event of Default with respect to the Zero Coupon [___________], as defined in the Indenture, shall have occurred and be continuing, (i) that portion of the principal equal to the initial public offering price of this [___________] plus accrued amortization of the original issue discount calculated using the "interest" method (computed in accordance with generally accepted accounting principles in effect on the date of the Indenture) from ___________, ___________ to the date of acceleration may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The indebtedness evidenced by this Zero Coupon ___________ is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of Senior Debt as defined in the Indenture and this Zero Coupon ___________ is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Zero Coupon ___________, by accepting the same, agrees to and shall be bound by such provisions and authorizes the Trustee in his behalf to effectuate the subordination so provided and appoints the Trustee his attorney-in-fact solely for such purpose. The Indenture contains provisions permitting the Issuer and the Trustee, with the consent of the Holders of more than 50% in aggregate principal amount 3 of the Debentures at the time Outstanding (as defined in the Indenture) of all series to be affected (voting as one class), evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the Holders of the Debentures of each such series; PROVIDED, HOWEVER, that no such supplemental indenture shall (i) extend the final maturity of any Debenture, or reduce the rate or extend the time of payment of interest thereon, or reduce the principal amount thereof, or reduce the amount of the principal of an Original Issue Discount Debenture that would be due and payable upon acceleration or provable in bankruptcy or impair or affect the rights of any Holder to institute suit for the payment thereof, without the consent of the Holder of each Debenture so affected, (ii) reduce the aforesaid percentage of Debentures, the Holders of which are required to consent to any such supplemental indenture or (iii) modify any provision relating to the subordination of Outstanding Debt Securities of any series in a manner adverse to the Holders thereof, without the consent of the Holder of each Debenture affected. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Debentures of any series, prior to any declaration accelerating the maturity of the Debentures of any series, the Holders of a majority in aggregate principal amount Outstanding of the Debentures of such series (or, in the case of certain defaults or Events of Default, all or certain series of the Debentures) may on behalf of the Holders of all the Debentures of such series (or all or certain series of the Debentures, as the case may be) waive any such past default or Event of Default and its consequences. The preceding sentence shall not, however, apply to a default in the payment of the principal of, or interest, if any, on any of the Debentures. Any such consent or waiver by the Holder of this [___________] (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this [___________] and any [___________] which may be issued in exchange or substitution herefor, irrespective of whether or not any notation thereof is made upon this [___________] or such other [___________]. No reference herein to the Indenture and no provision of this [___________] or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest, if any, on this [___________] in the manner, at the respective times, at the rate and in the coin or currency herein prescribed. The [___________] are issuable in registered form without coupons in denominations of $___________ or any multiple of $___________ at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, and in the manner and subject to the limitations provided in the Indenture, but without 4 the payment of any service charge, [___________] may be exchanged for a like aggregate principal amount of [___________] of other authorized denominations. The [___________] may be redeemed at the option of the Issuer, as a whole, or from time to time in part, on any date prior to maturity, upon mailing a notice of such redemption to the holders of [___________] at their last registered addresses, all as further provided in the Indenture, at the redemption price of 100% of the principal amount thereof. Upon due presentment for registration of transfer of this [___________] at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, a new [___________] or [___________] of authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange therefor, subject to the limitations provided in the Indenture, without charge except for any tax or other governmental charge imposed in connection therewith. The Issuer, the Trustee and any authorized agent of the Issuer or the Trustee may deem and treat the registered Holder hereof as the absolute owner of this [___________](whether or not this [___________] shall be overdue and notwithstanding any notation of ownership or other writing hereon, for the purpose of receiving payment hereof, or on account hereof, and for all other purposes, and neither the Issuer nor the Trustee nor any authorized agent of the Issuer or the Trustee shall be affected by any notice to the contrary. No recourse under or upon any obligation, covenant or agreement of the Issuer in the Indenture or any indenture supplemental thereto or in any [___________], or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, of the Issuer or of any successor corporation, either directly or through the Issuer or any successor corporation, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance hereof and as part of the consideration for the issue hereof. Terms used herein which are defined in the Indenture shall have the respective meanings assigned thereto in the Indenture. 5 Exhibit (Form 5) [FORM OF FACE OF EXTENDIBLE NOTE] No. $ MBIA INC. - YEAR EXTENDIBLE NOTE MBIA Inc., a Connecticut corporation (the "Issuer"), for value received, hereby promises to pay to ___________ or registered assigns, at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, the principal sum of ___________ Dollars on ___________, ___________, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest, (at the rate per annum from time to time in effect as described below) semiannually on ___________ and ___________ of each year, commencing ___________, ___________ on said principal sum at said office or agency, in like coin or currency, from the ___________ or the ___________, as the case may be, next preceding the date of this Note to which interest has been paid, unless the date hereof is a date to which interest has been paid, in which case from the date of this Note, or unless no interest has been paid on these Notes, in which case from ___________, ___________, until payment of said principal sum has been made or duly provided; provided, however, that payment of interest may be made at the option of the Issuer by check mailed to the address of the person entitled thereto as such address shall appear on the security register. Notwithstanding the foregoing, if the date hereof is after the day of ___________ or ___________, as the case may be, and before the following ___________ or ___________, this Note bear interest from such ___________ or ___________; provided, however, that if the Issuer shall default in the payment of interest due on such ___________ or ___________, then this Note shall bear interest from the next preceding ___________ or ___________, to which interest has been paid or, if no interest has been paid on these Notes, from ___________. The interest so payable on any ___________ or ___________, will, subject to certain exceptions provided in the Indenture referred to on the reverse hereof, be paid to the person in whose name this Note is registered at the close of business on such ___________ or ___________, as the case may be, next preceding such ___________ or ___________. Interest on these Notes is payable at the rate of ___________% per annum from ___________ through ___________, and for each -month period beginning ___________, ___________ and ___________, at a rate per annum established by the Issuer on the ___________ preceding each such ___________, or at a rate per annum determined by a method established by the Issuer on the ___________ preceding each such ___________. The Issuer shall establish the interest rate or method to be used to determine such interest rate by delivery to the Trustee of an Officers' Certificate on such ___________. On or before the ___________ prior to the commencement of the ___________-month period to which it applies, the Trustee shall cause notice of such interest rate or the method to be used in ascertaining the interest rate on the following ___________ and the interest rate that would have been applicable to such ___________-month period had such determination been made as of such ___________, all as specified in the aforesaid Officers' Certificate, to be mailed to each holder of these Notes. The Issuer shall cause notice of the interest rate established as of the ___________ preceding the commencement of the ___________-month period to be enclosed with the interest payment checks mailed to the Holders of the Notes for the period ending on the ___________ following such ___________. The Notes of this series are subject to repayment on ___________, ___________, and ___________, at the option of the Holders thereof exercisable on or before the ___________, but not prior to the ___________ preceding such ___________, at a repayment price equal to the principal amount thereof to be repaid, together with interest payable thereon to the repayment date, as described on the reverse side hereof. Reference is made to the further provisions of this Note set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. 2 This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to on the reverse hereof. IN WITNESS WHEREOF, MBIA Inc. has caused this instrument to be signed by facsimile by its duly authorized officers and has caused a facsimile of its corporate seal to be affixed hereunto or imprinted hereon. Dated: ___________________, MBIA INC. By___________________________ By___________________________ [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Debentures of the series designated therein referred to in the within-mentioned Indenture. ___________, as Trustee By___________________________ Authorized Officer [FORM OF REVERSE OF ___________-YEAR EXTENDIBLE NOTE] MBIA INC. ___________-Year Extendible Note This Note is one of a duly authorized issue of debentures, notes, bonds or other evidences of indebtedness of the Issuer (the "Debentures") of the series hereinafter specified, all issued or to be issued under an indenture dated as of (herein called the "Indenture"), duly executed and delivered by the Issuer to ___________, Trustee (herein called the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of 3 the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Issuer and the holders of the Debentures. The Debentures may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any) and may otherwise vary as in the Indenture provided. This Note is one of a series designated as the ___________-Year Extendible Notes of the Issuer, limited in aggregate principal amount to $___________. [The ___________-Year Extendible Notes may be redeemed at the option of the Issuer as a whole or in part, or from time to time in part, on any date (i) on or after ___________, and prior to ___________, ___________, (ii) on or after ___________, ___________, and prior to ___________, (iii) on or after ___________, ___________, and prior to ___________, and (iv) on or after ___________, and prior to maturity upon mailing a notice of such redemption not less than 30 nor more than 45 days prior to the date fixed for redemption to the Holders of Notes at their last registered addresses, all as further provided in the Indenture at 100% of the principal amount thereof, together with accrued interest to the date fixed for redemption. If this Note is redeemed in part, the principal amount that remains Outstanding shall not be less than $___________.] The indebtedness evidenced by this ___________-Year Extendible Note is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of Senior Debt as defined in the Indenture and this ___________-Year Extendible Note is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this ___________-Year Extendible Note, by accepting the same, agrees to and shall be bound by such provisions and authorizes the Trustee in his behalf to effectuate the subordination so provided and appoints the Trustee his attorney-in-fact solely for such purpose. In case an Event of Default with respect to the ___________-Year Extendible Notes, as defined in the Indenture, shall have occurred and be continuing, the principal hereof may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture contains provisions permitting the Issuer and the Trustee, with the consent of the Holders of more than 50% in aggregate principal amount of the Debentures at the time Outstanding (as defined in the Indenture) of all series to be affected (voting as one class), evidenced as in the Indenture 4 provided, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the Holders of the Debentures of each such series; provided, however, that no such supplemental indenture shall (i) extend the final maturity of any Debenture, or reduce the rate or extend the time of payment of any interest thereon or impair or affect the rights of any Holder to institute suit for the payment thereof or reduce the principal amount thereof or any premium thereon, or, in the case of the ___________-Year Extendible Notes, adversely affect the right to repayment at the option of the Holder of said Notes, without the consent of the Holder of each Debenture so affected, (ii) reduce the aforesaid percentage of Debentures, the Holders of which are required to consent to any such supplemental indenture or (iii) modify any provision relating to the subrodination of Outstanding Debt Securities of any series in a manner adverse to the Holders thereof, without the consent of the Holder of each Debenture affected. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Debentures of any series, prior to any declaration accelerating the maturity of such Debentures, the Holders of a majority in aggregate principal amount Outstanding of the Debentures of such series (or, in the case of certain defaults or Events of Default, all or certain series of the Debentures) may on behalf of the Holders of all the Debentures of such series (or all or certain series of the Debentures, as the case may be) waive any such past default or Event of Default. The preceding sentence shall not, however, apply to a default in the payment of the principal of or premium, if any, or interest, on any of the Debentures. Any such consent or waiver by the Holder of this Note (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Note and any ___________-Year Extendible Notes which may be issued in exchange or substitution herefor, irrespective of whether or not any notation thereof is made upon this Note or such other ___________-Year Extendible Notes. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Note in the manner, at the respective times, at the rate and in the coin or currency herein prescribed. The ___________-Year Extendible Notes are subject to repayment in whole, or in part, on ___________, ___________, ___________ and ___________, in increments of $___________ or multiples of $___________ in excess of $ provided that the portion of the principal amount of any ___________-Year Extendible Note not being repaid shall be at least $_____________, at the option of the Holders thereof at a repayment price equal to the principal amount thereof to be repaid, together with interest payable thereon to the repayment date. For this Note to 5 be repaid at the option of the Holder, the Issuer must receive at its office or agency in the Borough of Manhattan, The City of New York, on or before the ___________, or, if such is not a Business Day, the next succeeding Business Day, but not earlier than the ___________ prior to the ___________ on which the repayment price will be paid (i) this Note, with the form entitled "Option to Elect Repayment" below duly completed, or (ii) a telegram, telex, facsimile transmission or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States of America setting forth the name of the Holder of the Note, the principal amount of the Note, the amount of such Note to be repaid, a statement that the option to elect repayment is being made thereby and a guarantee that the Note to be repaid with the form entitled "Option to Elect Repayment" on the reverse thereof duly completed will be received by the Issuer no later than five Business Days after the date of such telegram, telex, facsimile transmission or letter, and such Note and form duly completed are received by the Issuer by such fifth Business Day. Either form of notice duly received on or before the ___________ preceding any such shall be irrevocable. All questions as to the validity, eligibility (including time of receipt) and acceptance of any Notes for repayment will be determined by the Issuer, whose determination shall be final and binding. The ___________-Year Extendible Notes are issuable in registered form without coupons in denominations of $___________ and any multiple of $___________ at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, and in the manner and subject to the limitations provided in the Indenture, but without the payment of any service charge, ___________-Year Extendible Notes may be exchanged for a like aggregate principal amount of ___________-Year Extendible Notes of other authorized denominations. The Issuer, the Trustee and any authorized agent of the Issuer or the Trustee may deem and treat the registered Holder hereof as the absolute owner of this Note (whether or not this Note shall be overdue and notwithstanding any notation of ownership or other writing hereon, for the purpose of receiving payment of, or on account of, the principal hereof and premium, if any, and subject to the provisions on the face hereof, interest hereon and for all other purposes, and neither the Issuer nor the Trustee nor any authorized agent of the Issuer or the Trustee shall be affected by any notice to the contrary. No recourse under or upon any obligation, covenant or agreement of the Issuer in the Indenture or any indenture supplemental thereto or in any ___________-Year Extendible Note, or because of the creation of any indebtedness 6 represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, of the Issuer or of any successor corporation, either directly or through the Issuer or any successor corporation, under any rule of law, statute or ___________constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance hereof and as part of the consideration for the issue hereof. Terms used herein which are defined in the Indenture shall have the respective meanings assigned thereto in the Indenture. 7 [FORM OF OPTION TO ELECT REPAYMENT] Option To Elect Repayment ------------------------- The undersigned hereby irrevocably requests and instructs the Issuer to repay the within Note (or portion thereof specified below) pursuant to its terms at a price equal to the principal amount thereof, together with interest to the repayment date, to the undersigned, at ________________________________________________________________________________ ________________________________________________________________________________ (Please Print or Typewrite Name and Address of the Undersigned) FOR THIS NOTE TO BE REPAID THE ISSUER MUST RECEIVE AT ITS OFFICE OR AGENCY IN THE BOROUGH OF MANHATTAN, THE CITY AND STATE OF NEW YORK, OR AT SUCH ADDITIONAL PLACE OR PLACES OF WHICH THE ISSUER SHALL FROM TIME TO TIME NOTIFY THE HOLDER OF THE WITHIN NOTE, ON OR BEFORE THE _____________ OR, IF SUCH _________ IS NOT A BUSINESS DAY, THE NEXT SUCCEEDING BUSINESS DAY, BUT NOT EARLIER THAN THE ________ PRIOR TO _____________, _____________, _____________ AND _____________, (I) THIS NOTE WITH THIS "OPTION TO ELECT REPAYMENT" FORM DULY COMPLETED OR (II) A TELEGRAM, TELEX. FACSIMILE TRANSMISSION OR LETTER FROM A MEMBER OF A NATIONAL SECURITIES EXCHANGE OR THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. OR A COMMERCIAL BANK OR A TRUST COMPANY IN THE UNITED STATES OF AMERICA SETTING FORTH THE NAME OF THE HOLDER OF THE NOTE, THE PRINCIPAL AMOUNT OF THE NOTE, THE AMOUNT OF THE NOTE TO REPAID, A STATEMENT THAT THE OPTION TO ELECT REPAYMENT IS BEING MADE THEREBY AND A GUARANTEE THAT THE NOTE TO BE REPAID WITH THE FORM ENTITLED "OPTION TO ELECT REPAYMENT" ON THE REVERSE OF THE NOTE DULY COMPLETED WILL BE RECEIVED BY THE ISSUER NOT LATER THAN FIVE BUSINESS DAYS AFTER THE DATE OF SUCH TELEGRAM, TELEX, FACSIMILE TRANSMISSION OR LETTER, AND SUCH NOTE AND FORM DULY COMPLETED ARE RECEIVED BY THE ISSUER BY SUCH FIFTH BUSINESS DAY. If less than the entire principal amount of the within Note is to be repaid, specify the portion thereof (which shall be $_____________ or an integral multiple of $_____________ in excess of $_____________) which the Holder elects to have repaid: $_____________; and specify the denomination or denominations (which shall be $_____________ or multiple of $_____________ in excess of $_____________) of the _____________-Year. 8 Extendible Note or Notes to be issued to the Holder for the portion of the within Note not being repaid (in the absence of such specification, one such Note will be issued for the portion not being repaid); $ . Dated: ___________________, ____________________________________________ Note: The signature to this Option to Elect Repayment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any other change whatsoever. 9 EX-5.01 3 OPINION OF DEBEVOISE & PLIMPTON [Letterhead of Debevoise & Plimpton] October 29, 1996 MBIA Inc. 113 King Street Armonk, New York 10504 MBIA Inc. Registration Statement on Form S-3 ---------------------------------- Ladies and Gentlemen: We have acted as special counsel to MBIA Inc., a Connecticut corporation (the "Company"), in connection with the preparation and filing with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "1933 Act"), of a Registration Statement on Form S-3 (the "Registration Statement"), and the prospectus included therein (the "Prospectus"), relating to the registration by the Company of $250,000,000 in the aggregate of (i) debt securities representing unsecured obligations of the Company (the "Senior Debt Securities") to be issued pursuant to the Senior Indenture, dated as of August 1, 1990, (the "Senior Indenture"), between the Company and The First National Bank of Chicago, as trustee (the "Senior Trustee") and subordinated debt securities ("Subordinated Debt Securities" and, together with the Senior Debt Securities, the "Debt Securities") to be issued MBIA Inc. -2- October 29, 1996 pursuant to a Subordinated Indenture, (the "Subordinated Indenture") between the Company and a trustee to be named in a prospectus supplement relating to the Subordinated Debt Securities (the "Subordinated Trustee"), (ii) shares of preferred stock of the Company, par value $1.00 per share ("Preferred Stock"), (iii) shares of common stock of the Company, par value $1.00 per share ("Common Stock"), and the rights to purchase Junior Participating Cumulative Preferred Stock of the Company, par value $1.00 per share, or in certain circumstances either Common Stock or the common stock of any acquiring company, related to the Common Stock (the "Rights") to be issued pursuant to the Rights Agreement, dated December 12, 1991 (the "Rights Agreement"), between the Company and Mellon Bank, N.A., as Rights Agent, (iv) such indeterminate number of shares of Common Stock as may be issuable in exchange for or upon conversion of any Subordinated Debt Securities or Preferred Stock that provide for conversion or exchange into Common Stock, and the Rights relating thereto, and (v) such indeterminate number of shares of Preferred Stock as may be issuable in exchange for or upon conversion of any Subordinated Debt Securities that provide for conversion or exchange into Preferred Stock. In so acting, we have examined and relied upon the originals, or copies certified or otherwise identified to our satisfaction, of such records, documents, certificates and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion expressed below. Our opinion assumes that the definitive Subordinated Indenture will be in substantially the form filed as an Exhibit to the Registration Statement. Based upon the foregoing, we are of the following opinion: 1. The Senior Indenture has been duly authorized, executed and delivered by the Company. Assuming the Senior Indenture has been duly executed and delivered by the Senior Trustee, when the Senior Debt Securities have been duly executed, authenticated, issued, delivered and paid for as contemplated by the Registration Statement and any prospectus supplement relating to the Senior Debt Securities and in accordance with the Senior Indenture, assuming the terms of such Debt Securities have been duly established so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or MBIA Inc. -3- October 29, 1996 restriction imposed by any court or governmental body having jurisdiction over the Company, the Senior Debt Securities will be validly issued and will constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability relating to or affecting the rights of creditors and by general principles of equity. 2. When the Subordinated Indenture has been duly authorized, executed and delivered by the Subordinated Trustee, and the Subordinated Debt Securities have been duly executed, authenticated, issued, delivered and paid for as contemplated by the Registration Statement and any prospectus supplement relating to the Subordinated Debt Securities and in accordance with the Subordinated Indenture, assuming the terms of such Subordinated Debt Securities have been duly established so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company, (i) the Subordinated Debt Securities will be validly issued and will constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability relating to or affecting the rights of creditors and by general principles of equity; and (ii) if the Subordinated Debt Securities are exchangeable for or convertible into Common Stock or Preferred Stock, as the case may be, (a) when such Common Stock has been duly issued in exchange for or upon conversion of such Subordinated Debt Securities in accordance with the terms of the Subordinated Indenture and the supplemental indenture thereto fixing the terms for such exchange or conversion, such Common Stock will be duly authorized, validly issued, fully paid and nonassessable, assuming MBIA Inc. -4- October 29, 1996 issuance of such Common Stock in accordance with duly adopted resolutions of the Board of Directors of the Company or a duly authorized committee thereof fixing the terms of such exchange or conversion, and (b) when (1) the terms of such Preferred Stock and of their issuance and sale have been duly established in conformity with the Company's Restated Certificate of Incorporation, as amended, so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company, (2) a certificate of amendment to the Company's Restated Certificate of Incorporation (a "Certificate of Designation") fixing and determining the terms of the Preferred Stock has been filed with the Secretary of State of the State of Connecticut and (3) the Preferred Stock has been duly issued in exchange for or upon conversion of such Subordinated Debt Securities in accordance with the terms of the Subordinated Indenture and the supplemental indenture thereto fixing the terms for such exchange or conversion, such Preferred Stock will be duly authorized, validly issued, fully paid and nonassessable. 3. When (i) the terms of the Preferred Stock and of its issuance and sale have been duly established in conformity with the Company's Restated Certificate of Incorporation, as amended, so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company, (ii) a Certificate of Designation fixing and determining the terms of the Preferred Stock has been filed with the Secretary of State of the State of Connecticut and (iii) the Preferred Stock has been duly issued and sold as contemplated by the Registration Statement and any prospectus supplement relating thereto, against payment of the consideration fixed therefor by the Board of Directors or a duly authorized committee thereof, (a) the Preferred Stock will be duly authorized, validly issued, fully paid and nonassessable; and MBIA Inc. -5- October 29, 1996 (b) if the Preferred Stock is exchangeable for or convertible into Common Stock, when such Common Stock has been duly issued in exchange for or upon conversion of such Preferred Stock in accordance with the terms of the Certificate of Designation for such Preferred Stock, such Common Stock will be duly authorized, validly issued, fully paid and nonassessable, assuming issuance of such Common Stock in accordance with duly adopted resolutions of the Board of Directors of the Company or a duly authorized committee thereof fixing the terms of such exchange or conversion. 4. When the Common Stock has been duly issued and sold as contemplated by the Registration Statement and any prospectus supplement relating to the Common Stock, against payment of the consideration fixed therefor by the Board of Directors of the Company or a duly authorized committee thereof, the Common Stock will be duly authorized, validly issued, fully paid and nonassessable. 5. Assuming the Rights Agreement has been duly authorized, executed and delivered by the Rights Agent and the Common Stock has been validly issued (i) against payment of the consideration fixed therefor by the Board of Directors of the Company or a duly authorized committee thereof or (ii) in exchange for or upon conversion of any Preferred Stock or Debt Securities in accordance with the terms of exchange or conversion fixed for such Preferred Stock or Debt Securities, the Rights attributable to such Common Stock will be validly issued. In connection with our opinion set forth in paragraph (5) above, we note that the question whether the Board of Directors of the Company might be required to redeem the Rights at some future time will depend upon the facts and circumstances existing at the time and, accordingly, is beyond the scope of such opinion. To the extent the foregoing opinions involve matters of Connecticut law, we have relied on the opinion of Day, Berry & Howard, Connecticut counsel for the Company, dated today and addressed to you, and this opinion incorporates all of the assumptions and qualifications set forth in that opinion. MBIA Inc. -6- October 29, 1996 Our opinion expressed above is limited to the laws of the State of New York, the Delaware General Corporation Law and the Act and the federal laws of the United States of America. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name under the caption "Legal Matters" in the Prospectus. In giving such consent, we do not thereby concede that we are within the category of persons whose consent is required under Section 7 of the 1933 Act or the Rules and Regulations of the Commission thereunder. Very truly yours, /s/ Debevoise & Plimpton EX-5.02 4 OPINION OF DAY, BERRY & HOWARD [Letterhead of Day, Berry & Howard] October 29, 1996 MBIA Inc. 113 King Street Armonk, New York 10504 Re: MBIA Inc. Registration Statement on Form S-3 Dear Ladies and Gentlemen: We have acted as special Connecticut counsel to MBIA Inc., a Connecticut corporation (the "Company"), as to certain matters of Connecticut law in connection with the preparation and filing with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), of a Registration Statement on Form S-3 (the "Registration Statement"), and the prospectus included therein (the "Prospectus"), relating to the registration by the Company of $250,000,000 in the aggregate of (i) debt securities representing unsecured obligations of the Company (the "Senior Debt Securities") to be issued pursuant to the Senior Indenture, dated as of August 1, 1990 (the "Senior Indenture"), between the Company and The First National Bank of Chicago, as trustee (the "Senior Trustee") and subordinated debt securities ("Subordinated Debt Securities" and, together with the Senior Debt Securities, the "Debt Securities") to be issued pursuant to a Subordinated Indenture, (the "Subordinated Indenture") between the Company and a trustee to be named in a prospectus supplement relating to the Subordinated Debt Securities (the "Subordinated Trustee"), (ii) shares of preferred stock of the Company, par value $1.00 per share ("Preferred Stock"), (iii) shares of common stock of the Company, par value $1.00 per share ("Common Stock"), and the rights to purchase Junior Participating Cumulative Preferred Stock of the Company, par value $1.00 per share, or in certain circumstances either Common Stock or the common stock of any acquiring company (the "Rights") to be issued pursuant to the Rights Agreement, dated December 12, 1991 (the "Rights Agreement"), between the Company and Mellon Bank, N.A., as Rights Agent, (iv) such indeterminate number of shares of Common Stock as may be issuable in exchange for or upon conversion of any Subordinated Debt Securities or Preferred Stock that provides for conversion or exchange into Common Stock, and the Rights relating thereto, and (v) such indeterminate number of shares of Preferred Stock as may be issuable in exchange for or upon conversion of any Subordinated Debt Securities that provide for conversion or exchange into Preferred Stock. We have examined the Company's Certificate of Incorporation, as amended and restated to date, and the Company's By-Laws, as amended to date; records of the corporate proceedings of the Board of Directors of the Company with respect to the Debt Securities, the Preferred Stock, the Common Stock, the Rights, the Senior Indenture, the Subordinated Indenture, the Registration Statement and the offering contemplated thereby and such other documents, and have made such examination of law, as we have deemed relevant and necessary in order to render our opinion expressed below. MBIA Inc. -2- October 29, 1996 We have also examined and relied upon the form of the Subordinated Indenture filed as an Exhibit to the Registration Statement, the governing law of which is expressly stated to be that of the State of New York. The Senior Indenture also expressly states that its governing law is that of the State of New York. For purposes of the opinion set forth below, we have assumed that the Senior Indenture, the Subordinated Indenture and the Debt Securities, when duly issued, constitute legal, valid and binding obligations of the Company under the laws of the State of New York (as to which we express no opinion). Our opinion assumes that the definitive Subordinated Indenture will be in substantially the form filed as an Exhibit to the Registration Statement. In rendering the opinion set forth in paragraph 1 below, we have assumed the corporate authority to enter into and perform the Senior Indenture of the Senior Trustee. In rendering the opinion set forth in paragraph 2 below, we have assumed the corporate authority of the Subordinated Trustee to enter into and perform the Subordinated Indenture. We have also noted that other large publicly held corporations chartered in Connecticut have adopted rights agreements and issued rights similar to the Rights Agreement and the Rights. In addition, we have noted that the Rights would operate in a way similar to rights issued by numerous other corporations incorporated in Connecticut and in other states. For purposes of this opinion we have assumed that the Board of Directors of the Company, after fully informing itself with respect to the Rights Agreement and the Rights and after giving due consideration to all relevant matters, determined that the execution and delivery of the Rights Agreement and the issuance of the Rights thereunder would be in the best interests of the Company and its shareholders, that such action by the Board of Directors was not contrary to its fiduciary obligations and that the Rights Agreement has been duly authorized, executed and delivered by the Rights Agent. The Connecticut Stock Corporation Act (the "Act") provides a board of directors with broad authority and empowers a Connecticut corporation to issue or grant rights or options entitling the holders thereof to purchase from the corporation authorized shares of any class or classes on such terms and at such times as the board of directors may determine. Section 33-340(b) of the Act provides that shares are not of the same class unless they are identical except as to specified variations among different series in the class. A number of courts construing similar provisions of the corporation laws of states other than Connecticut have upheld the issuance of rights substantially similar to the Rights. On the other hand, a number of courts construing similar provisions of the corporation laws of other states have invalidated rights similar to the Rights on the basis that the provisions pursuant to which rights held by certain persons could become void violated the requirements that shares of the same class and series be identical. Courts sustaining the issuance of rights have distinguished between discrimination among shares and discrimination among shareholders, and determined that the relevant statutory authority does not prohibit the latter form of discrimination. The Act requires in effect that all shares of the same class be identical, with specified exceptions. However, the Act does not say whether this requirement applies to provisions of rights that have been issued in respect of shares of a particular class or to shareholders or holders of rights who take specified actions resulting in those rights become void. There is no published judicial decision interpreting Section 33-340 or other provisions of the Act in the context of the issuance of rights similar to the Rights. MBIA Inc. -3- October 29, 1996 We also note that the Connecticut legislature has added provisions to the Act which evidence concern for fair treatment of shareholders and other constituencies in light of the prevalence of abusive takeover tactics. These enactments indicate public policy support for the objectives which the Rights are designed to further, which we think would be persuasive to a court faced with a case questioning the validity of the Rights. The opinion set forth below with respect to the Rights is limited to the authorization of the Rights Agreement by the Board and the issue of Rights pursuant to the Rights Agreement, and does not extend to any subsequent action or inaction by the Board with respect to the Rights Agreement, including any decision relating to redemption of the Rights or amendment of the Rights Agreement, which would need to be evaluated in light of all relevant facts, circumstances and legal precedents applicable at that time. Based on the foregoing, we are of the following opinion: 1. The Senior Indenture has been duly authorized, executed and delivered by the Company. Assuming the Senior Indenture has been duly authorized, executed and delivered by the Senior Trustee, when the Senior Debt Securities have been duly authorized by all necessary corporate action of the Company and duly executed, authenticated, issued, delivered and paid for as contemplated by the Registration Statement and any prospectus supplement relating to the Senior Debt Securities and in accordance with the Senior Indenture, assuming the terms of such Debt Securities have been duly established so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company, the Senior Debt Securities will be validly issued and will constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability relating to or affecting the rights of creditors and by general principles or equity. 2. When the Subordinated Indenture has been duly authorized, executed and delivered by the Company and the Subordinated Trustee, and the Subordinated Debt Securities have been duly authorized by all necessary corporate action of the Company and duly executed, authenticated, issued, delivered and paid for as contemplated by the Registration Statement and any prospectus supplement relating to the Subordinated Debt Securities and in accordance with the Subordinated Indenture, assuming the terms of such Subordinated Debt Securities have been duly established so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company, (i) the Subordinated Debt Securities will be validly issued and will constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability relating to or affecting the rights of creditors and by general principles of equity; and (ii) if the Subordinated Debt Securities are exchangeable for or convertible into Common Stock or Preferred Stock, as the case may be, (a) when such Common Stock has been duly issued in exchange for or upon MBIA Inc. -4- October 29, 1996 conversion of such Subordinated Debt Securities in accordance with the terms of the Subordinated Indenture and the supplemental indenture thereto fixing the terms for such exchange or conversion, such Common Stock will be duly authorized, validly issued, fully paid and nonassessable, assuming issuance of such Common Stock in accordance with duly adopted resolutions of the Board of Directors of the Company or a duly authorized committee thereof fixing the terms of such exchange or conversion, and (b) when (1) the terms of such Preferred Stock and of its issuance and sale have been duly established in conformity with the Company's Restated Certificate of Incorporation, as amended, so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company, (2) a certificate of amendment to the Company's Restated Certificate of Incorporation (a "Certificate of Designation") fixing and determining the terms of the Preferred Stock has been filed with the Secretary of the State of the State of Connecticut and (3) the Preferred Stock has been duly issued in exchange for or upon conversion of such Subordinated Debt Securities in accordance with the terms of the Subordinated Indenture and the supplemental indenture thereto fixing the terms for such exchange or conversion, such Preferred Stock will be duly authorized, validly issued, fully paid and nonassessable. 3. When (i) the terms of the Preferred Stock and of its issuance and sale have been duly established in conformity with the Company's Restated Certificate of Incorporation, as amended, so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company, (ii) a Certificate of Designation fixing and determining the terms of the Preferred Stock has been filed with the Secretary of the State of the State of Connecticut and (iii) the Preferred Stock has been duly issued and sold as contemplated by the Registration Statement and any prospectus supplement relating thereto, against payment of the consideration fixed therefor by the Board of Directors or a duly authorized committee thereof, (a) the Preferred Stock will be duly authorized, validly issued, fully paid and nonassessable; and (b) if the Preferred Stock is exchangeable for or convertible into Common Stock, when such Common Stock has been duly issued in exchange for or upon conversion of such Preferred Stock in accordance with the terms of the Certificate of Designation for such Preferred Stock, such Common Stock will be duly authorized, validly issued, fully paid and nonassessable, assuming issuance of such Common Stock in accordance with duly adopted resolutions of the Board of Directors of the Company or a duly authorized committee thereof fixing the terms of such exchange or conversion. 4. When the Common Stock has been duly issued and sold as contemplated by the Registration Statement and any prospectus supplement relating to the Common Stock, against payment of the consideration fixed therefor by the Board of Directors of the Company or a duly authorized committee thereof, the Common Stock will be duly authorized, validly issued, fully paid and nonassessable. 5. Assuming the Rights Agreement has been duly authorized, executed and delivered by the Rights Agent and the Common Stock has been validly issued (i) against payment of the consideration fixed therefor by the Board of Directors of MBIA Inc. -5- October 29, 1996 the Company or a duly authorized committee thereof or (ii) in exchange for or upon conversion of any Preferred Stock or Debt Securities in accordance with the terms of exchange or conversion fixed for such Preferred Stock or Debt Securities, although there is no Connecticut case law or express statutory provision dispositive of the issue and the matter thus is not entirely free from doubt, the Rights attributable to such Common Stock will be validly issued. In connection with our opinion set forth in paragraph (5) above, we note that the question whether the Board of Directors of the Company might be required to redeem the Rights at some future time will depend upon the facts and circumstances existing at the time and, accordingly, is beyond the scope of such opinion. Our opinion expressed above is limited to the laws of the State of Connecticut. Messrs. Debevoise & Plimpton may rely upon this opinion as though it were addressed to them on the date hereof. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm in the Prospectus under the caption "Legal Matters". In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act, or the rules and regulations of the Commission thereunder. Very truly yours, /s/ Day, Berry & Howard Day, Berry & Howard WHC/jab EX-12.01 5 COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES MBIA Inc and Subsidiaries Computation of the Ratio of Earnings to Fixed Charges (in thousands except for ratios) The information appearing below presents historical consolidated financial results for the Company.
Six Months Ended June 30, -------- -------- -------- -------- -------- ------------------- 1991 1992 1993 1994 1995 1995 1996 -------- -------- -------- -------- -------- ------------------- EARNINGS Operating income before taxes ........ $189,732 $244,261 $324,035 $329,422 $345,030 $169,288 $199,404 Interest Expense ..... 18,565 20,523 26,900 27,159 28,439 14,159 16,378 Portion of rentals deemed to be interest -- -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- -------- EARNINGS ............. $208,297 $264,784 $350,935 $356,581 $373,469 $183,447 $215,782 ======== ======== ======== ======== ======== ======== ======== FIXED CHARGES Interest Expense ..... $ 18,565 $ 20,523 $ 26,900 $ 27,159 $ 28,439 $ 14,159 $ 16,378 Portion of Rentals deemed to be interest -- -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- -------- FIXED CHARGES ........ $ 18,565 $ 20,523 $ 26,900 $ 27,159 $ 28,439 $ 14,159 $ 16,378 ======== ======== ======== ======== ======== ======== ======== RATIO OF EARNINGS TO FIXED CHARGES .... 11.2 12.9 13.0 13.1 13.1 13.0 13.2 ======== ======== ======== ======== ======== ======== ========
EX-23.01 6 CONSENT OF COOPERS & LYBRAND L.L.P. CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statement on Form S-3 of our reports dated January 22, 1996, on our audits of the consolidated financial statements and the related financial statement schedules of MBIA Inc. and Subsidiaries as of December 31, 1995 and 1994 and for the three years ended December 31, 1995. We also consent to the reference to our firm under the caption "Experts". /s/ COOPERS & LYBRAND L.L.P. October 28, 1996 New York, New York EX-24.01 7 POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints each of Louis G. Lenzi, Richard L. Weill and Pauline M. Cullen as his/her lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for his/her and in his/her name, place and stead, in any and all capacities, to sign Registration Statements on Form S-3 or other appropriate forms for MBIA Inc. and any or all amendments or post-effective amendments thereto for offering of up to $250,000,000 of securities of MBIA Inc., and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute, may lawfully do or cause to be done by virtue hereof. /s/ Joseph W. Brown, Jr. September 5, 1996 - --------------------------- Joseph W. Brown, Jr. /s/ David C. Clapp September 5, 1996 - --------------------------- David C. Clapp /s/ Claire L. Gaudiani September 5, 1996 - --------------------------- Claire L. Gaudiani /s/ William H. Gray, III September 5, 1996 - --------------------------- William H. Gray, III /s/ Freda S. Johnson September 5, 1996 - --------------------------- Freda S. Johnson /s/ Daniel P. Kearney September 5, 1996 - --------------------------- Daniel P. Kearney /s/ James A. Lebenthal September 5, 1996 - --------------------------- James A. Lebenthal /s/ Robert B. Nicholas September 5, 1996 - --------------------------- Robert B. Nicholas /s/ Pierre-Henri Richard September 5, 1996 - --------------------------- Pierre-Henri Richard /s/ John A. Rolls September 5, 1996 - --------------------------- John A. Rolls -----END PRIVACY-ENHANCED MESSAGE-----