-----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, GApMA+wPZrEEy5AsKpPKGN/ZVu0+x72KC1RR78YxtGGwTdZWNAW//1vq8F+llYjw JLo4WY2JM3RFbg3celOIqA== 0000950130-96-000234.txt : 19960125 0000950130-96-000234.hdr.sgml : 19960125 ACCESSION NUMBER: 0000950130-96-000234 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19960124 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/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-00217 FILM NUMBER: 96506534 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/A 1 AMENDMENT #1 TO FORM S-3 AS FILED WITH THE SECURITIES EXCHANGE COMMISSION ON JANUARY 24, 1996 REGISTRATION NO. 333-00217 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- MBIA INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) CONNECTICUT 06-1185706 (STATE OR OTHER JURISDICTION OF (IRS EMPLOYER INCORPORATION OR ORGANIZATION) 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 LEE MEYERSON, ESQ. SIMPSON THACHER & BARTLETT 875 THIRD AVENUE 425 LEXINGTON AVENUE NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10017 --------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. 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. [_] 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. [_] 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. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +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. THESE 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 BE 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. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED JANUARY 24, 1996 PROSPECTUS , 1996 LOGO 3,530,000 SHARES MBIA INC. COMMON STOCK Of the 3,530,000 Shares of Common Stock being offered hereby, 2,830,000 Shares are being offered initially in the United States and Canada by the U.S. Underwriters and 700,000 Shares are being offered initially outside the United States and Canada by the International Managers. See "Underwriting." Of the 3,530,000 Shares of Common Stock being offered hereby, 670,000 Shares are being sold by the Company and 2,860,000 Shares are being sold by the Selling Shareholder. See "Selling Shareholder." The price to the public and the aggregate underwriting discounts and commissions per Share will be identical for both offerings. See "Underwriting." The Company will not receive any part of the proceeds from the sale of Shares by the Selling Shareholder. On January 23, 1996, the last reported sale price of the Common Stock on the New York Stock Exchange was $71 3/4. 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. - --------------------------------------------------------------------------------
PRICE UNDERWRITING PROCEEDS PROCEEDS TO TO THE DISCOUNTS AND TO THE THE SELLING PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDER(3) - ---------------------------------------------------------------------------------- Per Share........................ $ $ $ $ Total(4)......................... $ $ $ $
- -------------------------------------------------------------------------------- (1) The Company and the Selling Shareholder have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. See "Underwriting." (2) Before deducting the Company's share of expenses, estimated at $ . (3) Before deducting the Selling Shareholder's share of expenses, estimated at $ . (4) The Company and the Selling Shareholder have granted to the U.S. Underwriters an option, exercisable within 30 days hereof, to purchase up to 100,000 and 260,000 additional shares of Common Stock, respectively, at the price to the public less underwriting discounts and commissions, solely to cover over-allotments, if any. If such options are exercised in full, the total Price to the Public, Underwriting Discounts and Commissions, Proceeds to the Company and Proceeds to the Selling Shareholder will be $ , $ , $ and $ , respectively. See "Underwriting." The Shares offered by this Prospectus are offered by the U.S. Underwriters, subject to prior sale, when, as and if delivered to and accepted by them and subject to various prior conditions, including their right to reject orders in whole or in part. It is expected that delivery of the Shares will be made against payment in New York, New York on or about , 1996. DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION GOLDMAN, SACHS & CO. LEHMAN BROTHERS SMITH BARNEY INC. No action has been or will be taken in any jurisdiction by the Company, the Selling Shareholder or any Underwriter that would permit a public offering of the Common Stock or possession or distribution of this Prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons who come into possession of this Prospectus are required by the Company, the Selling Shareholder and the Underwriters to inform themselves about and to observe any restrictions as to the offering of the Common Stock and the distribution of this Prospectus. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 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. 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; Seven World Trade Center, Suite 1300, New York, New York 10048, and at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. 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. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents are incorporated herein by reference: (1) The Company's Annual Report on Form 10-K for the year ended December 31, 1994. (2) The Company's Quarterly Report on Form 10-Q for each of the first three calendar quarters of 1995 and a Form 10-Q/A dated November 30, 1995 relating to the quarter ended June 30, 1995. (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. 2 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 Shares 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). 3 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. is the market leader with over 40% market share of the insured new issue municipal business. 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 nine months ended September 30, 1995, MBIA Corp. insured $23.4 billion par value of new issue and secondary market municipal bonds and $6.8 billion par value of domestic structured finance business. As of September 30, 1995, the total net par amount of outstanding bonds insured by MBIA Corp. was $181.5 billion and the aggregate net insurance in force was $332.7 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 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 September 30, 1995, the Company's deferred premium revenues were $1,599 million, its shareholders' equity was $2,090 million, and its total investments were $5,946 million and $6,138 million at book value and market value, respectively. As of September 30, 1995, MBIA Corp.'s investment portfolio was $3,520 million and $3,668 million at book value and market value, respectively, and was primarily comprised of high quality fixed income securities with intermediate maturities. In 1990, the Company formed a French company, MBIA Assurance S.A. ("MBIA Assurance"), to assist in writing 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. As of September 30, 1995, MBIA Corp. and MBIA Assurance had collectively insured 50 international transactions. In September 1995, MBIA Corp. entered into a joint venture agreement with AMBAC Indemnity Corporation for the purpose of jointly marketing financial guarantee insurance within the European Community. Over the last three 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 nine months ended September 30, 1995, in the aggregate, these investment management ventures contributed $10 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. 4 RECENT DEVELOPMENTS The Company's 1995 fourth quarter net income increased 6% to $68.3 million from $64.5 million in the same 1994 period. Fourth quarter earnings per share rose 5% to $1.61 compared with $1.53. Operating earnings for the fourth quarter were $1.60 per share, up 5% from $1.53. In 1995 net income and earnings per share increased 4% over 1994 to $271.4 million from $260.2 million and to $6.43 per share from $6.18. Operating earnings, which excludes capital gains and non-recurring items, rose 6% to $6.35 per share from $6.01. Year-end book value per share was $53.19, a 30% gain over 1994. The Company's fourth quarter core earnings increased 12% over the same period a year ago to $1.50 per share. For 1995, core earnings also rose 12% to $5.87 per share from $5.26. Core earnings exclude the net income effects of capital gains, premiums earned from refunded issues and non-recurring items. New issue municipal financings declined 9% in 1995 to $141.4 billion from $154.7 billion issued in 1994. However, the insured portion of new issue volume rose to a record 47% from 40% in 1994. This resulted in a 6% increase in insured municipal volume in 1995 to $66.0 billion from $62.1 billion in 1994. MBIA Corp. led the municipal bond insurance industry in 1995, insuring $28.0 billion of par value, representing 42% of the insured market and a record 20% of all new municipal issues. In 1994, MBIA Corp. insured $25.1 billion of par value, representing 40% of the insured market and 16% of all new issue municipal bonds. MBIA Corp. reported substantial gains in its domestic structured finance business, insuring $9.0 billion of par value in 1995, a 57% gain over 1994. The Company's international operations also recorded strong results by insuring $2.2 billion of par value in 1995. For 1995's fourth quarter, MBIA Corp.'s gross premiums written declined 8% to $79.3 million compared with $86.5 million a year earlier. For the year, gross premiums written totaled $348.5 million, down 3% from $360.8 million in 1994. Gross premiums written reflects upfront premiums received for business originated in the current period and installment premiums received for current and prior-period business. Because part of the Company's business writings is collected on an installment basis, gross premiums written do not fully reflect the premium associated with new insurance business writings. Adjusted gross premiums originated, which captures both upfront premiums and the present value of estimated installment premiums from new business writings, increased 3% in the fourth quarter to $89.9 million from $87.4 million in the same 1994 period. For 1995, adjusted gross premiums originated rose 2% to $369.2 million from $362.0 million in 1994. Premiums earned during the fourth quarter were $54.5 million, a 2% decline from 1994's fourth quarter. This included $7.2 million from refundings of previously insured issues compared with $13.1 million in the same period in 1994. For 1995, premiums earned decreased 1% to $215.1 million from $218.3 million in 1994, including $34.0 million from refundings in 1995 versus $53.0 million in 1994. The net income effect of refunding activity was $.10 per share for the fourth quarter of 1995 compared with $.19 per share in 1994's fourth quarter, and was $.47 per share for the full year 1995 compared with $.74 per share in 1994. Net investment income excluding net realized gains and revenues from the Company's municipal investment agreement business, increased 15% for the quarter to $57.0 million from $49.6 million in 1994's fourth quarter. For the year, net investment income rose 13% to $219.9 million from $193.9 million in 1994. At December 31, 1995, the Company's aggregate investment portfolio, including fixed-income securities related to its municipal investment agreement business, was $6.6 billion compared to $4.9 billion at the end of 1994. The investment agreement portion increased to $2.7 billion as of December 1995, from $1.7 billion in December 1994. The average quality of fixed-income investments is Double-A. 5 The effect of carrying fixed income investments at market value rather than at amortized cost, as required by Statement of Financial Accounting Standards 115, resulted in a $4.96 increase in book value per share at December 31, 1995 and a $2.10 decrease at year-end 1994. Total fourth quarter revenues were $118.8 million compared with $109.8 million in the fourth quarter of 1994. For 1995, total revenues increased 5% to $462.2 million from $439.5 million in 1994. Total expenses for the fourth quarter were $32.0 million compared with $28.8 million in the fourth quarter of 1994. For the year, expenses were $117.2 million compared with $110.1 million in 1994. Computed on a statutory basis, MBIA Corp.'s unearned premium reserve was $1.7 billion as of December 31, 1995, and its capital base, consisting of capital, surplus and contingency reserve, was $2.0 billion. Aggregate policyholders' reserves rose 11% to $3.8 billion in 1995 from $3.4 billion in the prior year. 6 MBIA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED YEARS ENDED DECEMBER 31, DECEMBER 31, ------------------------ ------------------------ 1995 1994 1995 1994 ----------- ----------- ----------- ----------- (UNAUDITED) (UNAUDITED) (AUDITED) REVENUES Insurance: Gross premiums written... $ 79,288 $ 86,451 $ 348,487 $ 360,836 Ceded premiums........... (12,844) (10,595) (45,050) (49,281) ----------- ----------- ----------- ----------- Net premiums written.... 66,444 75,856 303,437 311,555 Increase in deferred pre- (11,943) (20,397) (88,365) (93,226) mium revenue............ ----------- ----------- ----------- ----------- Premiums earned......... 54,501 55,459 215,072 218,329 Net investment income.... 56,973 49,612 219,858 193,853 Net realized gains....... 3,225 676 11,312 10,335 Investment management services: Income................... 6,179 4,159 19,884 16,178 Net realized losses...... (2,732) (123) (6,092) (726) Other..................... 633 40 2,188 1,567 ----------- ----------- ----------- ----------- Total revenues......... 118,779 109,823 462,222 439,536 ----------- ----------- ----------- ----------- EXPENSES Insurance: Losses and loss adjust- ment.................... 2,685 2,428 10,639 8,093 Policy acquisition costs, net..................... 5,502 5,553 21,283 21,845 Operating................ 12,259 10,573 41,805 41,026 Investment management services................. 3,518 3,019 12,857 10,611 Interest.................. 7,168 6,945 28,439 27,159 Other..................... 913 327 2,169 1,380 ----------- ----------- ----------- ----------- Total expenses......... 32,045 28,845 117,192 110,114 ----------- ----------- ----------- ----------- Income before income tax- es....................... 86,734 80,978 345,030 329,422 Provision for income tax- 18,462 16,508 73,611 69,213 es....................... ----------- ----------- ----------- ----------- Net income................ $ 68,272 $ 64,470 $ 271,419 $ 260,209 =========== =========== =========== =========== Net income per common $ 1.61 $ 1.53 $ 6.43 $ 6.18 share.................... =========== =========== =========== =========== Weighted average number of common shares 42,418,654 42,005,970 42,240,011 42,085,943 outstanding.............. =========== =========== =========== ===========
7 MBIA INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
DECEMBER 31, DECEMBER 31, 1995 1994 ------------ ------------ (UNAUDITED) (AUDITED) ASSETS Investments: Fixed maturity securities held as available-for- sale at market (amortized cost $3,428,986 and $3,123,838)....................................... $3,652,621 $3,051,906 Short-term investments............................. 198,035 121,384 Other investments.................................. 14,064 17,550 ---------- ---------- 3,864,720 3,190,840 Municipal investment agreement portfolio held as available-for-sale at market (amortized cost $2,645,828 and $1,738,375)........................ 2,742,626 1,675,935 ---------- ---------- Total investments................................ 6,607,346 4,866,775 Cash and cash equivalents............................ 23,258 7,940 Accrued investment income............................ 87,016 68,486 Deferred acquisition costs........................... 140,348 133,048 Prepaid reinsurance premiums......................... 200,887 186,492 Goodwill--net........................................ 106,569 111,252 Property and equipment--net.......................... 46,030 45,069 Receivable for investments sold...................... 6,100 945 Other assets......................................... 49,896 36,432 ---------- ---------- Total assets....................................... $7,267,450 $5,456,439 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deferred premium revenue........................... $1,616,315 $1,512,211 Loss and loss adjustment expense reserves(/1/)..... 42,505 40,148 Municipal investment agreements.................... 2,026,709 1,334,177 Municipal repurchase agreements.................... 615,776 191,956 Long-term debt..................................... 373,900 298,790 Short-term debt.................................... 18,000 17,000 Deferred income taxes.............................. 246,736 76,843 Payable for investments purchased.................. 10,695 209,966 Other liabilities.................................. 82,548 70,632 ---------- ---------- Total liabilities................................ 5,033,184 3,751,723 ---------- ---------- Shareholders' Equity: Common stock....................................... 42,077 42,077 Additional paid-in capital......................... 725,153 719,750 Retained earnings.................................. 1,261,051 1,057,092 Cumulative translation adjustment.................. 2,849 503 Unrealized appreciation (depreciation)--net........ 207,648 (86,560) Unearned compensation--restricted stock............ (426) -- Treasury stock..................................... (4,086) (28,146) ---------- ---------- Total shareholders' equity....................... 2,234,266 1,704,716 ---------- ---------- Total liabilities and shareholders' equity....... $7,267,450 $5,456,439 ========== ========== Book value per share............................. $ 53.19 $ 40.96 ========== ==========
(1) Includes net case reserves of $14,481 at December 31, 1995 and $21,967 at December 31, 1994. 8 MBIA INC. AND SUBSIDIARIES COMPONENTS OF CORE EARNINGS PER SHARE
THREE MONTHS ENDED YEARS ENDED DECEMBER 31, DECEMBER 31, ------------------- --------------------- 1995 1994 1995 1994 --------- --------- ----------- --------- (UNAUDITED) (UNAUDITED) (AUDITED) Reported earnings per share........... $ 1.61 $ 1.53 $6.43 $6.18 Adjustments: Realized gains.................... 0.01 0.01 0.08 0.15 Net effect of sold operation...... -- -- -- 0.03 --------- --------- ----- ----- Operating earnings per share(/1/)..... 1.60 1.53 6.35 6.01 --------- --------- ----- ----- Earnings from refunded issues....... 0.10 0.19 0.47 0.74 --------- --------- ----- ----- Core earnings per share(/1/).......... $1.50 $ 1.34 $5.87 $5.26 ========= ========= ===== =====
- -------- (1) Amounts may not add due to rounding. COMPONENTS OF ADJUSTED BOOK VALUE PER SHARE
DECEMBER 31, DECEMBER 31, 1995 1994 ------------ ------------ (UNAUDITED) (AUDITED) Book value............................................ $53.19 $40.96 After-tax value of: Net deferred premium revenue, net of DAC............ 19.73 18.63 Present value of future installment premiums........ 3.64 2.76 ------ ------ Adjusted book value................................... $76.56 $62.35 ====== ======
9 CAPITALIZATION The following table sets forth the total capitalization of the Company at September 30, 1995 and such capitalization as adjusted to give effect to (i) the issuance and sale of the 670,000 newly-issued shares of Common Stock offered by the Company and (ii) the issuance and sale on December 22, 1995 of $75,000,000 aggregate principal amount of 7.00% Debentures due December 15, 2025. The capitalization of the Company will not be affected by the sale of Common Stock offered by the Selling Shareholder.
SEPTEMBER 30, 1995 ------------------------------- ACTUAL AS ADJUSTED (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Long-term debt................................. $ 298,872 $ 373,872 ============== ============== Shareholders' equity: Preferred Stock, par value $1.00 per share; authorized shares--10,000,000; issued and outstanding shares--none.................... -- -- Common Stock, par value $1.00 per share; authorized shares--200,000,000; issued shares--42,077,387; as adjusted--42,747,387. 42,077 42,747 Additional paid-in capital................... 722,478 Retained earnings............................ 1,212,628 1,212,628 Cumulative translation adjustment............ 2,609 2,609 Unrealized appreciation of investments, net of taxes of $67,879......................... 125,075 125,075 Treasury shares at cost (248,331 shares)..... (14,583) (14,583) -------------- -------------- Total shareholders' equity................. 2,090,284 -------------- -------------- Total capitalization..................... $ 2,389,156 $ ============== ==============
10 SELECTED CONSOLIDATED FINANCIAL AND STATISTICAL DATA The selected consolidated financial data in the table below for each of the five years in the period ended December 31, 1994 have been derived from audited consolidated financial statements of the Company previously filed with the Commission. The selected consolidated financial data at September 30, 1994 and 1995 and for the nine months ended September 30, 1994 and 1995 are unaudited but in the opinion of management include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation. The following information should be read in conjunction with the consolidated financial statements and related notes of the Company included, or incorporated by reference, in the Company's periodic reports filed under the Exchange Act that are incorporated by reference herein. See "Incorporation of Certain Documents by Reference."
NINE MONTHS YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30, ----------------------------------------------------------- ---------------------- 1990 1991 1992 1993 1994 1994 1995 (UNAUDITED) (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) INCOME STATEMENT DATA: Insurance: Gross premiums writ- ten................... $ 211.4 $ 269.2 $ 368.7 $ 479.3 $ 360.8 $ 274.4 $ 269.2 Net premiums written... 181.5 223.0 336.1 431.8 311.6 235.7 237.0 Premiums earned........ 106.7 132.2 162.9 231.3 218.3 162.9 160.6 Net investment income.. 115.3 131.6 150.5 178.9 193.9 144.2 162.9 Net realized gains (losses).............. (0.2) 2.9 9.8 9.7 10.3 9.7 8.1 Investment management services: Income................. -- 0.6 2.3 4.7 16.2 12.0 13.7 Net realized gains (losses).............. -- -- -- 0.1 (0.7) (0.6) (3.4) Income before income taxes................. 165.3 189.7 244.3 324.0 329.4 248.4 258.3 Net income............. 126.6 144.7 188.7 259.0 260.2 195.7 203.1 PER SHARE DATA: Earnings............... $ 3.33 $ 3.74 $ 4.62 $ 6.10 $ 6.18 $ 4.65 $ 4.82 Dividends: Declared............... 0.48 0.62 0.76 0.94 1.14 0.83 0.965 Paid................... 0.44 0.59 0.72 0.89 1.09 0.78 0.930 Book value............. 24.35 27.58 33.00 38.18 40.96 41.09 49.97 BALANCE SHEET DATA: Investments............ $ 1,724.5 $ 1,961.4 $ 2,528.7 $ 3,544.3 $ 4,866.8 $ 4,683.1 $ 6,138.4 Total assets........... 2,158.8 2,438.5 3,049.2 4,106.3 5,456.4 5,264.0 6,758.1 Deferred premium reve- nue................... 902.1 1,018.6 1,196.2 1,402.8 1,512.2 1,488.5 1,598.6 Loss and loss adjust- ment expense reserves.............. 5.0 21.2 25.5 33.7 40.1 38.8 45.2 Long-term debt......... 200.0 198.7 298.6 298.7 298.8 298.8 298.9 Shareholders' equity... 931.7 1,063.3 1,382.1 1,596.4 1,704.7 1,714.2 2,090.3 SELECTED FINANCIAL RA- TIOS: GAAP Basis(1)(3): Loss ratio............. 4.7% 13.0% 3.4% 3.4% 3.7% 3.5% 5.0% Expense ratio.......... 33.7% 30.1% 32.0% 27.4% 28.8% 28.7% 28.2% Combined ratio......... 38.4% 43.1% 35.4% 30.8% 32.5% 32.2% 33.2% SAP Basis(2)(3): Loss ratio............. -- 12.7% 2.4% (3.5%) 9.8% 13.1% (0.4%) Expense ratio.......... 23.4% 20.4% 18.3% 17.6% 22.9% 22.0% 18.8% Combined ratio......... 23.4% 33.1% 20.7% 14.1% 32.7% 35.1% 18.4% OTHER FINANCIAL DATA: Net par amount out- standing.............. $ 75,979.2 $ 90,042.9 $112,483.0 $141,386.8 $164,317.9 $159,558.7 $181,481.0 Net debt service out- standing.............. 157,706.5 184,604.3 223,056.1 266,784.3 304,501.6 295,227.2 332,741.1
- --------------------- (1) The GAAP loss ratio is the provision for losses and loss adjustment expenses divided by net premiums earned, and the GAAP expense ratio is underwriting expenses (adjusted for deferred policy acquisition costs) and operating expenses (excluding interest expense) divided by net premiums earned, in each case calculated in accordance with generally accepted accounting principles. The combined ratio is the total of the loss and expense ratios (see Note 2 to the Consolidated Financial Statements of MBIA Inc. and Subsidiaries). (2) The SAP loss ratio is the provision for losses and loss adjustment expenses divided by net premiums earned, and the SAP expense ratio is underwriting expenses divided by net premiums written, in each case calculated in accordance with statutory accounting practices. The combined ratio is the total of the loss and expense ratios. (3) For a discussion of the principal differences between GAAP and SAP accounting, see Note 3 to the Consolidated Financial Statements of MBIA Inc. and Subsidiaries. 11 USE OF PROCEEDS The proceeds to the Company from the sale of the Shares, net of underwriting discounts and expenses, are estimated to be approximately $ million. Proceeds from the sale of the Shares being offered by the Company will be used to provide additional capital for the future needs of the Company and MBIA Corp. and for general corporate purposes. The Company will not receive any proceeds from the sale of the Shares being offered by the Selling Shareholder. PRICE RANGE OF COMMON STOCK AND DIVIDENDS The Company's Common Stock is traded on the New York Stock Exchange ("NYSE") under the symbol "MBI." The table below sets forth the dividends paid per share and the high and low closing sales prices for the Company's Common Stock on the NYSE (as reported on the composite tape) during the periods indicated. The last reported sale price of the Common Stock on the NYSE on January 23, 1996 was $71 3/4.
DIVIDENDS PAID PER HIGH LOW SHARE 1994 1st Quarter........................................ $63 7/8 $54 5/8 $.26 2nd Quarter........................................ 60 1/4 53 1/2 .26 3rd Quarter........................................ 62 56 7/8 .26 4th Quarter........................................ 59 3/8 49 1/8 .31 1995 1st Quarter........................................ $64 1/8 $55 3/4 $.31 2nd Quarter........................................ 68 7/8 60 1/4 .31 3rd Quarter........................................ 71 3/4 65 1/4 .31 4th Quarter........................................ 77 3/8 69 5/8 .34 1/2
In May 1987, following the Company's commencement of operations, the Board of Directors of the Company established the policy of declaring quarterly dividends on the Common Stock and the Company has paid consecutive quarterly dividends since then. The amount of dividends payable on Common Stock is reviewed periodically by the Board of Directors in light of the Company's earnings, financial condition and capital requirements. It is the policy of the Board of Directors that the Company retain a portion of its earnings to support the reasonable growth of the business. The Company's ability to pay dividends depends on the ability of MBIA Corp. to declare and distribute dividends to the Company. MBIA Corp.'s ability to declare dividends is subject to restrictions contained in the New York Insurance Law. See "Business--Regulation" in the Company's Annual Report on Form 10-K for the year ended December 31, 1994 (the "1994 Form 10-K"). The Company expects that such restrictions will not affect the ability of MBIA Corp. to declare dividends sufficient to support the Company's dividend policy. 12 SELLING SHAREHOLDER Of the 3,530,000 shares of Common Stock being offered hereby, 2,860,000 Shares are being sold by the Selling Shareholder. The Selling Shareholder will receive all of the net proceeds from the sale of these Shares. The following table sets forth, as of the date of this Prospectus, certain information with respect to the ownership of shares of Common Stock by the Selling Shareholder. Daniel P. Kearney, the executive vice president, investments/financial services of the Selling Shareholder, currently serves on the Company's Board of Directors. In addition, the Selling Shareholder or its affiliates have engaged in a variety of material transactions with the Company, including (i) entering into reinsurance transactions, (ii) providing investment advisory services to the Company and (iii) providing insurance coverage for the Company's directors, officers and employees. For further information, see "Certain Relationships and Related Transactions" in the Company's 1994 Form 10-K. Beginning in January 1996, the Selling Shareholder and its affiliates no longer provide investment advisory services to the Company.
SHARES BENEFICIALLY SHARES SHARES TO BE OWNED OWNED PRIOR TO BEING BENEFICIALLY AFTER THE OFFERING OFFERED THE OFFERING (1) NAME AND ADDRESS OF ----------------------- --------- -------------------- SELLING SHAREHOLDER NUMBER PERCENT NUMBER NUMBER PERCENT The Aetna Casualty and 3,813,009 9.12% 2,860,000 953,009 2.24% Surety Company.......... 151 Farmington Avenue Hartford, CT 06156
- --------------------- (1) If the U.S. Underwriters' over-allotment options are exercised in full, the Selling Shareholder will sell an additional 260,000 shares of Common Stock. As a result, the number of shares of Common Stock beneficially owned by the Selling Shareholder after the offering would be 693,009, or 1.63%. 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. 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. 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. See "Price Range of Common Stock and Dividends." 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 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 1994 Form 10-K. These provisions and regulations may discourage attempts to obtain control of the Company. 13 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. The Board of Directors has the power, without further vote of shareholders, to authorize the issue of up to 10,000,000 shares of Preferred Stock and to fix and determine the terms, limitations and relative rights and preferences of any shares of Preferred Stock that it causes to be issued. This power includes the authority to establish voting, dividend, redemption, conversion, liquidation and other rights of any such shares. No shares of Preferred Stock have been issued, and the Company has no current plan to issue any such shares, except as contemplated by the shareholder rights plan described below. 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. 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 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 14 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. The Company furnishes its shareholders with annual reports containing financial statements certified by independent public accounants and quarterly reports containing unaudited quarterly financial statements. CERTAIN UNITED STATES TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS OF COMMON STOCK GENERAL The following is a general discussion of certain United States Federal income and estate tax consequences of the ownership and disposition of Common Stock by a person other than (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in the United States or under the laws of the United States or of any State or (iii) an estate or trust whose income is includable in gross income for United States Federal income tax purposes regardless of its source (referred to hereafter as a "non-U.S. holder"). The discussion is based on provisions of the Internal Revenue Code of 1986, as amended (the "Code") and administrative and judicial interpretations as of the date hereof, all of which are subject to change, possibly with retroactive effect. Furthermore, this discussion does not consider specific facts and circumstances that may be relevant to a particular holder's tax position. Prospective purchasers are urged to consult a tax adviser with respect to the United States Federal income and estate tax consequences of owning and disposing of Common Stock, as well as any tax consequences under the laws of any other taxing jurisdiction. INCOME TAX DIVIDENDS. Generally, dividends paid to a non-U.S. holder of Common Stock will be subject to U.S. Federal income tax. Except in the case of dividends that are effectively connected with the holder's conduct of a trade or business within the United States, this tax is imposed and withheld at the rate of 30% of the amount of the dividend, unless reduced by an applicable income tax treaty. Currently, dividends paid to an address in a foreign country are presumed to be paid to a resident of such country in determining the applicability of a treaty for such purposes. However, the Internal Revenue Service has issued proposed regulations which, if adopted, would require a non-U.S. holder to provide certain certifications under penalties of perjury in order to obtain treaty benefits. Except as may be otherwise provided in an applicable income tax treaty, dividends which are effectively connected with the non-U.S. holder's conduct of a trade or business within the United States are subject to tax at ordinary Federal income tax rates, which tax is not collected by withholding (except as described below under "Backup Withholding and Information Reporting"). All or part of any effectively connected dividends received by a foreign corporation may also, under certain circumstances, be subject to an additional "branch profits" tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. Non-U.S. holders of Common Stock must comply with certain certification and disclosure requirements to claim an exception from withholding under the rules described in this paragraph. A non-U.S. holder that is eligible for a reduced rate of U.S. withholding tax pursuant to a tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the United States Internal Revenue Service. 15 DISPOSITION OF COMMON STOCK. Generally, non-U.S. holders will not be subject to United States Federal income tax (or withholding thereof) in respect of gain recognized on a disposition of Common Stock unless (i) the gain is effectively connected with the non-U.S. holder's conduct of a trade or business within the United States (in which case the "branch profits" tax described above may also apply if the holder is a foreign corporation), (ii) in the case of a non-U.S. holder who is a non-resident alien individual and holds the Common Stock as a capital asset, such holder is present in the United States for 183 or more days in the taxable year of the sale and certain other conditions are met; or (iii) the Company is or has been a "United States real property holding corporation" for Federal income tax purposes (which the Company does not believe it has been or is currently) and the non-U.S. holder has held directly or constructively more than 5% of the outstanding Common Stock within the five-year period ending on the date of the disposition. The Company currently is not and does not anticipate becoming a "U.S. real property holding corporation." ESTATE TAX If an individual non-U.S. holder owns, or is treated as owning, Common Stock at the time of his or her death, such stock would be subject to U.S. Federal estate tax imposed on the estates of nonresident aliens, in the absence of a contrary provision contained in any applicable tax treaty. INFORMATION REPORTING AND BACKUP WITHHOLDING DIVIDENDS. The Company must report annually to the Internal Revenue Service and to each non-U.S. holder the amount of dividends and other payments distributed to such non-U.S. holder and any tax withheld with respect to such holder, regardless of whether withholding is required. Generally, dividends paid on Common Stock to a non-U.S. holder at an address outside the United States will be exempt from backup withholding tax and information reporting requirements related thereto. BROKER SALES. Payments of proceeds from the sale of Common Stock by a non- U.S. holder made to or through a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, sales through certain foreign offices, including the foreign offices of a U.S. broker, are subject to information reporting unless the holder certifies its non-U.S. status under penalties of perjury or otherwise establishes its entitlement to an exemption. Payments of proceeds from the sale of Common Stock by a non-U.S. holder to or through a U.S. office of a broker are currently subject to both information reporting and backup withholding at a rate of 31% unless the holder certifies its status as a non-U.S. holder under penalties of perjury or otherwise establishes an exemption. A non-U.S. holder may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS. UNDERWRITING Subject to the terms and conditions contained in the Underwriting Agreement (the "Underwriting Agreement"), the U.S. Underwriters named below (the "U.S. Underwriters"), for whom Donaldson, Lufkin & Jenrette Securities Corporation, Goldman, Sachs & Co., Lehman Brothers Inc. and Smith Barney Inc. are acting as representatives (the "U.S. Representatives"), and the international managers (the "International Managers") named below, for whom Donaldson, Lufkin & Jenrette Securities Corporation, Goldman Sachs International, Lehman Brothers International (Europe) and Smith Barney Inc. are acting as representatives (the "International Representatives") have severally agreed to purchase 670,000 shares of Common Stock from the Company and 2,860,000 shares of Common Stock from the Selling Shareholder, of which 2,830,000 shares of Common Stock are to be purchased by the U.S. Underwriters (the "U.S. Shares") and 700,000 shares of Common Stock are to be purchased by the International Managers (the "International Shares"). The U.S. Underwriters and the International Managers are hereinafter collectively referred to as the "Underwriters." The U.S. Representatives 16 and the International Representatives are sometimes hereinafter referred to as the "Representatives." The number of shares of Common Stock that each Underwriter has agreed to purchase is set forth opposite its name below:
NUMBER OF U.S. UNDERWRITERS SHARES Donaldson, Lufkin & Jenrette Securities Corporation............. Goldman, Sachs & Co............................................. Lehman Brothers Inc............................................. Smith Barney Inc................................................ --------- U.S. Offering Subtotal........................................ 2,830,000 ========= NUMBER OF INTERNATIONAL MANAGERS SHARES Donaldson, Lufkin & Jenrette Securities Corporation............. Goldman Sachs International..................................... Lehman Brothers International (Europe).......................... Smith Barney Inc................................................ --------- International Offering Subtotal............................... 700,000 --------- Total....................................................... 3,530,000 =========
The Underwriting Agreement provides that the obligations of the several Underwriters to purchase and accept delivery of the shares of Common Stock offered hereby are subject to approval of certain legal matters by counsel and to certain other conditions. If any shares of Common Stock are purchased by the Underwriters pursuant to the Underwriting Agreement, all such shares (other than shares covered by the over-allotment option described below) must be purchased. The Underwriters have advised the Company and the Selling Shareholder that they propose to offer the shares of Common Stock directly to the public at the public offering price set forth on the cover page hereof and to certain dealers (who may include the Underwriters) at a price which represents a concession not in excess of $ a share under the public offering price. The Underwriters may allow, and such dealers may reallow, a concession not in excess of $ a share to other Underwriters or to certain other dealers. The Company and the Selling Shareholder have granted the U.S. Underwriters an option exercisable for 30 days after the date of this Prospectus to purchase, at the price to the public less the underwriting discounts, as set forth on the cover page of this Prospectus, up to 100,000 and 260,000 additional shares of Common Stock, respectively, to cover over-allotments, if any. If the U.S. Underwriters exercise these over-allotment options, the U.S. Underwriters have severally agreed, subject to certain conditions, to purchase approximately the same percentage thereof that the number of shares to be purchased by each of them, as shown in the foregoing table, bears to the 2,830,000 shares of Common Stock offered by the U.S. Underwriters hereby. The U.S. Underwriters may exercise such options only to cover over-allotments in connection with this offering. The Company, the Selling Shareholder and the Underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. Subject to certain exceptions, each of the Company and the Selling Shareholder have agreed with the Underwriters not to offer, sell, contract to sell, grant any option to purchase, or otherwise dispose of any Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock (other than the Shares offered hereby) for 90 days from the date of this Prospectus, without the prior written consent of the U.S. Representatives of the Underwriters. Under an Amended and Restated Shareholders' Agreement among the Company, the Selling Shareholder and certain other founding shareholders and Credit Local de France, the Selling Shareholder is responsible for 17 all expenses in connection with the registration and sale of its Shares. See "Certain Relationships and Related Transactions--Shareholders' Agreement" in the Company's 1994 Form 10-K. Pursuant to the Agreement Between U.S. Underwriters and International Managers, each U.S. Underwriter has represented and agreed that, with certain exceptions set forth below, (a) it is not purchasing any shares of Common Stock for the account of anyone other than a United States or Canadian Person (as defined below), and (b) it has not offered or sold, and will not offer or sell, directly or indirectly, any shares of Common Stock or distribute this Prospectus outside the United States or Canada or to anyone other than a United States or Canadian Person. Pursuant to the Agreement Between U.S. Underwriters and International Managers, each International Manager has represented and agreed that, with certain exceptions set forth below, (a) it is not purchasing any shares of Common Stock for the account of any United States or Canadian Person, and (b) it has not offered or sold, and will not offer or sell, directly or indirectly, any shares of Common Stock or distribute this Prospectus within the United States or Canada or to any United States or Canadian Person. The foregoing limitations do not apply to stabilization transactions and to certain other transactions among the International Managers and the U.S. Underwriters. As used herein, "United States or Canadian Person" means any national or resident of the United States or Canada or any corporation, pension, profit-sharing or other trust or other entity organized under the laws of the United States or Canada or of any political subdivision thereof (other than a branch located outside the United States and Canada of any United States or Canadian Person) and includes any United States or Canadian branch of a person who is not otherwise a United States or Canadian Person, and "United States" means the United States of America, its territories, its possessions and all areas subject to its jurisdiction. Pursuant to the Agreement Between U.S. Underwriters and International Managers, sales may be made between the U.S. Underwriters and the International Managers of any number of shares of Common Stock to be purchased pursuant to the Underwriting Agreement as may be mutually agreed. The per share price and currency of settlement of any shares so sold shall be the public offering price set forth on the cover page hereof, in United States dollars, less an amount not greater than the per share amount of the concession to dealers set forth below. Pursuant to the Agreement Between U.S. Underwriters and International Managers, each U.S. Underwriter has represented that it has not offered or sold, and has agreed not to offer or sell, any shares of Common Stock, directly or indirectly, in Canada in contravention of the securities laws of Canada or any province or territory thereof and has represented that any offer of Common Stock in Canada will be made only pursuant to an exemption from the requirement to file a prospectus in the province or territory of Canada in which such offer is made. Each U.S. Underwriter has further agreed to send to any dealer who purchases from it any shares of Common Stock a notice stating in substance that, by purchasing such Common Stock, such dealer represents and agrees that it has not offered or sold, and will not offer or sell, directly or indirectly, any of such Common Stock in Canada in contravention of the securities laws of Canada or any province or territory thereof and that any offer of Common Stock in Canada will be made only pursuant to an exemption from the requirement to file a prospectus in the province or territory of Canada in which such offer is made, and that such dealer will deliver to any other dealer to whom it sells any of such Common Stock a notice to the foregoing effect. Pursuant to the Agreement Among U.S. Underwriters and International Managers, each International Manager has represented that (i) it is not carrying on investment business in the United Kingdom in contravention of Section 3 of the Financial Services Act 1986 (the "1986 Act"), (ii) it has not offered or sold and prior to the date six months after the date of issue of the shares of Common Stock will not offer or sell any Common Stock to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995, (iii) it has complied and will comply with all applicable provisions of the 1986 Act with respect to anything done by it in relation to the Common Stock in, from or otherwise involving the United Kingdom, and (iv) it has not issued or caused to be issued and will not issue or cause to be issued in the United Kingdom any investment advertisement (within the meaning of the 1986 Act) relating to the Common Stock or (subject to and upon Part V of the 1986 Act coming into operation) any advertisement offering the Common Stock, which advertisement is a primary or secondary offer within the 18 meaning of the 1986 Act, except in any such case in compliance with provisions applicable under the 1986 Act or pursuant to any exemption thereunder and, in particular, it has not given and will not give copies of this Prospectus to any person in the United Kingdom who does not fall within Article 11(3) of the 1986 Act (Investment Advertisements) (Exemptions) Order 1995. All of the Underwriters have provided from time to time, and expect to provide in the future, investment banking services to the Company and its affiliates and the Selling Shareholders and its affiliates, for which such Underwriters have received and will receive customary fees and commissions. On November 28, 1995, The Travelers Insurance Group Inc. and Aetna Life and Casualty Company signed a definitive agreement for the sale of the Selling Shareholder and certain of its affiliates to The Travelers Insurance Group Inc. Smith Barney Inc. is a wholly-owned subsidiary of The Travelers Insurance Group Inc. David C. Clapp, a limited partner of Goldman, Sachs & Co., is a member of the Board of Directors of the Company. William H. Donaldson, the Co-Founder and Senior Advisor of Donaldson, Lufkin & Jenrette Securities Corporation, is a member of the Board of Directors of the Selling Shareholder and certain of its affiliates. LEGAL OPINIONS The validity of the Shares offered hereby will be passed upon for the Company by Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022, and for the Underwriters by Simpson Thacher & Bartlett (a partnership which includes professional corporations), 425 Lexington Avenue, New York, New York 10017. Such counsel will 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, 1994, have been audited by Coopers & Lybrand L.L.P., independent accountants, as set forth in their reports thereon dated February 1, 1995 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 upon the authority of such firm as experts in accounting and auditing. 19 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDER OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR 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. ------------ TABLE OF CONTENTS
PAGE Available Information..................................................... 2 Incorporation of Certain Documents by Reference........................... 2 The Company............................................................... 4 Recent Developments....................................................... 5 Capitalization............................................................ 10 Selected Consolidated Financial and Statistical Data...................... 11 Use of Proceeds........................................................... 12 Price Range of Common Stock and Dividends................................. 12 Selling Shareholder....................................................... 13 Description of Capital Stock.............................................. 13 Certain United States Tax Consequences to Non-United States Holders of Common Stock............................................................. 15 Underwriting.............................................................. 16 Legal Opinions............................................................ 19 Experts................................................................... 19
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 3,530,000 SHARES LOGO COMMON STOCK ---------------- PROSPECTUS ---------------- DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION GOLDMAN, SACHS & CO. LEHMAN BROTHERS SMITH BARNEY INC. , 1996 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +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. THESE 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 BE 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. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED JANUARY 24, 1996 PROSPECTUS , 1996 LOGO 3,530,000 SHARES MBIA INC. COMMON STOCK Of the 3,530,000 Shares of Common Stock being offered hereby, 700,000 shares are being offered initially outside the United States and Canada by the International Managers and 2,830,000 shares are being offered initially in the United States and Canada by the U.S. Underwriters. See "'Underwriting." Of the 3,530,000 Shares of Common Stock being offered, 670,000 Shares are being sold by the Company and 2,860,000 Shares are being sold by the Selling Shareholder. See "Selling Shareholder." The price to the public and the aggregate underwriting discounts and commissions per Share will be identical for both offerings. See "Underwriting." The Company will not receive any part of the proceeds from the sale of Shares by the Selling Shareholder. On January 23, 1996, the last reported sale price of the Common Stock on the New York Stock Exchange was $71 3/4. 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. - --------------------------------------------------------------------------------
PRICE UNDERWRITING PROCEEDS PROCEEDS TO TO THE DISCOUNTS AND TO THE THE SELLING PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDER(3) - ---------------------------------------------------------------------------------- Per Share........................ $ $ $ $ Total(4)......................... $ $ $ $
- -------------------------------------------------------------------------------- (1) The Company and the Selling Shareholder have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. See "Underwriting." (2) Before deducting the Company's share of expenses, estimated at $ . (3) Before deducting the Selling Shareholder's share of expenses, estimated at $ . (4) The Company and the Selling Shareholder have granted to the U.S. Underwriters an option, exercisable within 30 days hereof, to purchase up to 100,000 and 260,000 additional shares of Common Stock, respectively, at the price to the public less the underwriting discounts and commissions, solely to cover over-allotments, if any. If such options are exercised in full, the total Price to the Public, Underwriting Discounts and Commissions, Proceeds to the Company and Proceeds to the Selling Shareholder will be $ , $ , $ and $ , respectively. See "Underwriting." The Shares offered by this Prospectus are offered by the International Managers, subject to prior sale, when, as and if delivered to and accepted by them and subject to various prior conditions, including their right to reject orders in whole or in part. It is expected that delivery of the Shares will be made against payment in New York, New York on or about , 1996. DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION GOLDMAN SACHS INTERNATIONAL LEHMAN BROTHERS SMITH BARNEY INC. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDER OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR 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. THERE ARE RESTRICTIONS ON THE OFFER AND SALE OF THE COMMON STOCK OFFERED HEREBY IN THE UNITED KINGDOM. ALL APPLICABLE PROVISIONS OF THE PUBLIC OFFERS OF SECURITIES REGULATIONS 1995, THE FINANCIAL SERVICES ACT 1986 AND THE COMPANIES ACT 1985 WITH RESPECT TO ANYTHING DONE BY ANY PERSON IN RELATION TO THE COMMON STOCK IN, FROM OR OTHERWISE INVOLVING THE UNITED KINGDOM MUST BE COMPLIED WITH. SEE "UNDERWRITING." ------------ TABLE OF CONTENTS
PAGE Available Information..................................................... 2 Incorporation of Certain Documents by Reference........................... 2 The Company............................................................... 4 Recent Developments....................................................... 5 Capitalization............................................................ 10 Selected Consolidated Financial and Statistical Data...................... 11 Use of Proceeds........................................................... 12 Price Range of Common Stock and Dividends................................. 12 Selling Shareholder....................................................... 13 Description of Capital Stock.............................................. 13 Certain United States Tax Consequences To Non-United States Holders of Common Stock............................................................. 15 Underwriting.............................................................. 16 Legal Opinions............................................................ 19 Experts................................................................... 19
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 3,530,000 SHARES LOGO COMMON STOCK ---------------- PROSPECTUS ---------------- DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION GOLDMAN SACHS INTERNATIONAL LEHMAN BROTHERS SMITH BARNEY INC. , 1996 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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 Shares being registered, other than underwriting discounts and commissions: Registration Fee................................................. $ 96,244 New York Stock Exchange Listing Application Fee.................. 5,000 Registrar and Transfer Agent Fees................................ 15,000 Printing Fees.................................................... 125,000 Accounting Fees.................................................. 20,000 Legal Fees....................................................... 125,000 Blue Sky Fees and Expenses....................................... 20,000 Miscellaneous.................................................... 3,756 -------- Total.......................................................... $410,000 ========
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 Underwriting Agreement filed as Exhibit 1.01 hereto provides for indemnification of the Company's officers and directors by the Underwriters under certain circumstances. 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 Commissionon 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. 5. Opinions as to Validity. 5.01. Opinion of Debevoise & Plimpton. 5.02. Opinion of Day, Berry & Howard. 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.++
- --------------------- ++ Previously filed. 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. (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. II-2 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 JANUARY 24, 1996. MBIA Inc. (Registrant) /s/ David H. Elliott By __________________________________ 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 Officer January 24, DAVID H. ELLIOTT and Director 1996 (principal executive officer) /s/ Richard L. Weill President and - ------------------------------------- Director January 24, RICHARD L. WEILL 1996 /s/ Julliette S. Tehrani Senior Vice - ------------------------------------- President and Chief January 24, JULLIETTE S. TEHRANI Financial Officer 1996 (principal financial officer) /s/ Elizabeth B. Sullivan Vice President and - ------------------------------------- Controller January 24, ELIZABETH B. SULLIVAN (principal 1996 accounting officer) /s/ William O. Bailey* Director - ------------------------------------- January 24, WILLIAM O. BAILEY 1996 Director - ------------------------------------- JOSEPH W. BROWN, JR. /s/ David C. Clapp* Director - ------------------------------------- January 24, DAVID C. CLAPP 1996 II-3 SIGNATURE TITLE DATE /s/ Claire L. Gaudiani* Director - ------------------------------------- January 24, CLAIRE L. GAUDIANI 1996 /s/ William H, Gray, III* Director - ------------------------------------- January 24, WILLIAM H. GRAY, III 1996 Director - ------------------------------------- FREDA S. JOHNSON /s/ Daniel P. Kearney* Director - ------------------------------------- January 24, DANIEL P. KEARNEY 1996 /s/ James A. Lebenthal* Director - ------------------------------------- January 24, JAMES A. LEBENTHAL 1996 /s/ Robert B. Nicholas* Director - ------------------------------------- January 24, ROBERT B. NICHOLAS 1996 /s/ Pierre-Henri Richard* Director - ------------------------------------- January 24, PIERRE-HENRI RICHARD 1996 /s/ John A. Rolls* Director - ------------------------------------- January 24, JOHN A. ROLLS 1996 /s/ Louis G. Lenzi *By:_________________________________ LOUIS G. LENZI ATTORNEY-IN-FACT II-4 EX-1.01 2 FORM OF UNDERWRITING AGREEMENT EXHIBIT 1.01 3,530,000 Shares MBIA INC. Common Stock UNDERWRITING AGREEMENT ---------------------- __________, 1996 DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION GOLDMAN, SACHS & CO. LEHMAN BROTHERS INC. SMITH BARNEY INC. As representatives of the several U.S. underwriters named in Schedule I hereto c/o Donaldson, Lufkin & Jenrette Securities Corporation 140 Broadway New York, New York 10005 DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION GOLDMAN SACHS INTERNATIONAL LEHMAN BROTHERS INTERNATIONAL (EUROPE) SMITH BARNEY INC. As representatives of the several international managers named in Schedule II hereto c/o Donaldson, Lufkin & Jenrette Securities Corporation Jupiter House Trinton Court 14 Finsbury Square London EC2A 1BR, England Dear Sirs: MBIA Inc., a Connecticut corporation (the "Company"), proposes to issue and sell to the several Underwriters (as defined below) an aggregate of 670,000 shares of its common stock (par value $1.00 per share) ("Common Stock"), and The Aetna Casualty and Surety Company, a Connecticut corporation (the "Selling Stockholder"), proposes to sell to the several Underwriters an aggregate of 2,860,000 shares of Common Stock of the Company. The 670,000 shares of Common Stock to be issued and 2 sold by the Company are hereinafter called the Company Shares. The shares of Common Stock to be sold by the Selling Stockholder are hereinafter called the Stockholder Shares. The Company Shares and the Stockholder Shares are hereinafter called the Firm Shares. It is understood that, subject to the conditions hereinafter stated, 2,290,000 Stockholder Shares (the "U.S. Stockholder Shares") and 540,000 Company Shares (the "U.S. Company Shares" and together with the U.S. Stockholder Shares, the "U.S. Firm Shares") will be sold to the several U.S. Underwriters named in Schedule I hereto (the "U.S. Underwriters") in connection with the offering and sale of such U.S. Firm Shares in the United States and Canada to United States and Canadian Persons (as such terms are defined in the Agreement Between U.S. Underwriters and International Managers of even date herewith), and 570,000 Stockholder Shares (the "International Stockholder Shares") and 130,000 Company Shares (the "International Company Shares" and together with the International Stockholder Shares, the "International Shares") will be sold to the several International Managers named in Schedule II hereto (the "International Managers") in connection with the offering and sale of such International Shares outside the United States and Canada to persons other than United States and Canadian Persons. Donaldson, Lufkin & Jenrette Securities Corporation, Goldman, Sachs & Co., Lehman Brothers Inc. and Smith Barney Inc. shall act as representatives (the "U.S. Representatives") of the several U.S. Underwriters, and Donaldson Lufkin & Jenrette Securities Corporation, Goldman Sachs International, Lehman Brothers International (Europe) and Smith Barney Inc. shall act as representatives (the "International Representatives") of the several International Managers. The U.S. Underwriters and the International Managers are hereinafter collectively referred to as the Underwriters. The Company also proposes to issue and sell to the several U.S. Underwriters not more than an additional 100,000 shares of its Common Stock (the "Additional Company Shares"), and the Selling Stockholder also proposes to sell to the several U.S. Underwriters not more than an additional 260,000 shares of Common Stock of the Company (the "Additional Stockholder Shares" and together with the Additional Company Shares, the "Additional Shares"), if requested by the U.S. Underwriters as provided in Section 2 hereof. The Firm Shares and the Additional Shares are herein collectively called the Shares. The Company and the Selling Stockholder are hereinafter collectively referred to as the Sellers. 1. Registration Statement and Prospectus. The Company has prepared and ------------------------------------- filed with the Securities and Exchange Commission (the "Commission") in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively called the "Act"), a registration statement on Form S-3 including a 3 prospectus relating to the Shares, which may be amended. The registration statement contains two prospectuses to be used in connection with the offering and sale of the Shares: the U.S. prospectus, to be used in connection with the offering and sale of Shares in the United States and Canada to United States and Canadian Persons, and the international prospectus, to be used in connection with the offering and sale of Shares outside the United States and Canada to persons other than United States and Canadian Persons. The international prospectus is identical to the U.S. prospectus except for the outside front and back cover pages. The registration statement as amended at the time when it becomes effective, including information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Act, is hereinafter referred to as the Registration Statement; and the U.S. prospectus and the international prospectus in the respective forms first used to confirm sales of Shares are hereinafter referred to as the Prospectus. 2. Agreements to Sell and Purchase. The Company hereby agrees to issue ------------------------------- and sell the U.S. Company Shares to the several U.S. Underwriters, and the Selling Stockholder hereby agrees to sell to the several U.S. Underwriters the U.S. Stockholder Shares, and each of the U.S. Underwriters, upon the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, agrees, severally and not jointly, to purchase from the Company and the Selling Stockholder at a price per share of $___ (the "Purchase Price"), the respective number of U.S. Company Shares and U.S. Stockholder Shares (subject to such adjustments to eliminate fractional shares as the U.S. Representatives may determine) that bears the same proportion to the number of U.S. Company Shares and U.S. Stockholder Shares to be sold by the Company or by the Selling Stockholder, as the case may be, as the number of Firm Shares set forth in Schedule I hereto opposite the name of such U.S. Underwriter bears to the total number of Firm Shares set forth opposite the names of all U.S. Underwriters in Schedule I hereto. The Company hereby agrees to issue and sell the International Company Shares to the International Managers named in Schedule II hereto, and the Selling Stockholder hereby agrees to sell the International Stockholder Shares to the International Managers named in Schedule II hereto, and each of the International Managers, upon the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, agrees, severally and not jointly, to purchase from the Company and the Selling Stockholder at the Purchase Price the respective number of Firm Shares set forth opposite the name of such International Manager in Schedule II hereto. On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to issue and sell to the U.S. 4 Underwriters the Additional Company Shares, and the Selling Stockholder agrees to sell to the U.S. Underwriters the Additional Stockholder Shares, and the U.S. Underwriters shall have the right to purchase, severally and not jointly, up to 100,000 Additional Company Shares from the Company and up to 260,000 Additional Stockholder Shares from the Selling Stockholder at the Purchase Price. Additional Shares may be purchased solely for the purpose of covering over- allotments made in connection with the offering of the Firm Shares. The U.S. Underwriters may exercise their right to purchase Additional Shares in whole or in part from time to time by giving written notice thereof to the Company and the Selling Stockholder within 30 days after the date of this Agreement. The U.S. Representatives shall give any such notice on behalf of the U.S. Underwriters and such notice shall specify the aggregate number of Additional Shares to be purchased pursuant to such exercise and the date for payment and delivery thereof. The date specified in any such notice shall be a business day (i) no earlier than the Closing Date (as hereinafter defined), (ii) no later than ten business days after such notice has been given and (iii) no earlier than two business days after such notice has been given. If any Additional Shares are to be purchased, each U.S. Underwriter, severally and not jointly, agrees to purchase from the Company and the Selling Stockholder the number of Additional Shares (subject to such adjustments to eliminate fractional shares as the U.S. Representatives may determine) which bears the same proportion to the total number of Additional Shares to be purchased from the Company and the Selling Stockholder as the number of Firm Shares set forth opposite the name of such Underwriter in Schedule I bears to the total number of U.S. Firm Shares. The Sellers hereby agree, severally and not jointly, and the Company shall, concurrently with the execution of this Agreement, deliver an agreement executed by (i) each of the directors and officers of the Company and (ii) [each stockholder listed on Annex I hereto], pursuant to which each such person agrees, not to offer, sell, contract to sell, grant any option to purchase, or otherwise dispose of any Common Stock of the Company or any securities convertible into or exercisable or exchangeable for such Common Stock or in any other manner transfer all or a portion of the economic consequences associated with the ownership of any such Common Stock, except to the Underwriters pursuant to this Agreement, for a period of 90 days after the date of the Prospectus without the prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation. Notwithstanding the foregoing, during such period (i) the Company may grant stock options pursuant to the Company's existing stock option plan and (ii) the Company may issue shares of its Common Stock upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof. 3. Terms of Public Offering. The Sellers are advised by you that the ------------------------ Underwriters propose (i) to make a public 5 offering of their respective portions of the Shares as soon after the effective date of the Registration Statement as in your judgment is advisable and (ii) initially to offer the Shares upon the terms set forth in the Prospectus. Each U.S. Underwriter hereby makes to and with the Company the representations and agreements of such U.S. Underwriter contained in the fifth paragraph of Section 3 of the Agreement Between U.S. Underwriters and International Managers of even date herewith. Each International Manager hereby makes to and with the Company the representations and agreements of such International Underwriter contained in the seventh, eighth, ninth and tenth paragraphs of Section 3 of such Agreement. 4. Delivery and Payment. Delivery to the Underwriters of and payment for -------------------- the Firm Shares shall be made at 10:00 A.M., New York City time, on the third business day (the "Closing Date") following the date of the initial public offering, at such place outside the State of New York as you shall designate. The Closing Date and the location of delivery of and the form of payment for the Firm Shares may be varied by agreement between you and the Sellers. Delivery to the Underwriters of and payment for any Additional Shares to be purchased by the Underwriters shall be made at such place as the U.S. Representatives shall designate at 10:00 A.M., New York City time, on the date specified in the applicable exercise notice given by you pursuant to Section 2 (an "Option Closing Date"). Any such Option Closing Date and the location of delivery of and the form of payment for such Additional Shares may be varied by agreement between the U.S. Representatives, the Company and the Selling Stockholder. Certificates for the Shares shall be registered in such names and issued in such denominations as you shall request in writing not later than two full business days prior to the Closing Date or an Option Closing Date, as the case may be. Such certificates shall be made available to you for inspection not later than 9:30 A.M., New York City time, on the business day next preceding the Closing Date or an Option Closing Date, as the case may be. Certificates in definitive form evidencing the Shares shall be delivered to you on the Closing Date or an Option Closing Date, as the case may be, with any transfer taxes thereon duly paid by the respective Sellers, for the respective accounts of the several Underwriters, against payment of the Purchase Price therefor by certified or official bank checks payable in New York Clearing House funds to the order of the applicable Sellers. 5. Agreements of the Company. The Company agrees with you: ------------------------- (a) To use its best efforts to cause the Registration Statement to become effective at the earliest possible time. 6 (b) To advise you promptly and, if requested by you, to confirm such advice in writing, (i) when the Registration Statement has become effective and when any post-effective amendment to it becomes effective, (ii) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the suspension of qualification of the Shares for offering or sale in any jurisdiction, or the initiation of any proceeding for such purposes, and (iv) of the happening of any event during the period referred to in paragraph (e) below which makes any statement of a material fact made in the Registration Statement or the Prospectus untrue or which requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, the Company will make every reasonable effort to obtain the withdrawal or lifting of such order at the earliest possible time. (c) To furnish to you, without charge, five signed copies of the Registration Statement as first filed with the Commission and of each amendment to it, including all exhibits, and to furnish to you and each Underwriter designated by you such number of conformed copies of the Registration Statement as so filed and of each amendment to it, without exhibits, as you may reasonably request. (d) Not to file any amendment or supplement to the Registration Statement, whether before or after the time when it becomes effective, or to make any amendment or supplement to the Prospectus of which you shall not previously have been advised or to which you shall reasonably object; and to prepare and file with the Commission, promptly upon your reasonable request, any amendment to the Registration Statement or supplement to the Prospectus which may be necessary or advisable in connection with the distribution of the Shares by you, and to use its best efforts to cause the same to become promptly effective. (e) Prior to 10:00 A.M. New York City time on the first business day next succeeding the date of this Agreement, and from time to time thereafter for such period as in the opinion of counsel for the Underwriters a prospectus is required by law to be delivered in connection with sales by an Underwriter or a dealer, to furnish in New York City to each Underwriter and dealer as many copies of the Prospectus (and of any amendment or supplement to the Prospectus) as such Underwriter or dealer may reasonably request. 7 (f) If during the period specified in paragraph (e) any event shall occur as a result of which, in the opinion of counsel for the Underwriters it becomes necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if it is necessary to amend or supplement the Prospectus to comply with any law, forthwith to prepare and file with the Commission an appropriate amendment or supplement to the Prospectus so that the statements in the Prospectus, as so amended or supplemented, will not in the light of the circumstances when it is so delivered, be misleading, or so that the Prospectus will comply with law, and to furnish to each Underwriter and to such dealers as you shall specify, such number of copies thereof as such Underwriter or dealers may reasonably request. (g) Prior to any public offering of the Shares, to cooperate with you and counsel for the Underwriters in connection with the registration or qualification of the Shares for offer and sale by the several Underwriters and by dealers under the state securities or Blue Sky laws of such jurisdictions as you may request, to continue such qualification in effect so long as required for distribution of the Shares and to file such consents to service of process or other documents as may be necessary in order to effect such registration or qualification. (h) To mail and make generally available to its stockholders as soon as reasonably practicable an earnings statement covering a period of at least twelve months after the effective date of the Registration Statement (but in no event commencing later than 90 days after such date) which shall satisfy the provisions of Section 11(a) of the Act, and to advise you in writing when such statement has been so made available. (i) During the period of five years after the date of this Agreement, to furnish to you as soon as available a copy of each report or other publicly available information of the Company mailed to the holders of Common Stock or filed with the Commission and such other publicly available information concerning the Company and its subsidiaries as you may reasonably request. (j) To pay all costs, expenses, fees and taxes incident to (i) the preparation, printing, filing and distribution under the Act of the Registration Statement (including financial statements and exhibits), each preliminary prospectus and all amendments and supplements to any of them prior to or during the period specified in paragraph (e), (ii) the printing and delivery of the Prospectus and all amendments or supplements to it during the period specified in paragraph (e), (iii) the printing 8 and delivery of this Agreement, the Preliminary Blue Sky Memoranda and all other agreements, memoranda, correspondence and other documents printed and delivered in connection with the offering of the Shares (including in each case any disbursements of counsel for the Underwriters relating to such printing and delivery), (iv) the registration or qualification of the Shares for offer and sale under the securities or Blue Sky laws of the several states (including in each case the fees and disbursements of counsel for the Underwriters relating to such registration or qualification and memoranda relating thereto), (v) filings and clearance with the National Association of Securities Dealers, Inc. in connection with the offering, (vi) the listing of the Shares on the New York Stock Exchange, (vii) furnishing such copies of the Registration Statement, the Prospectus and all amendments and supplements thereto as may be requested for use in connection with the offering or sale of the Shares by the Underwriters or by dealers to whom Shares may be sold and (viii) the performance by the Sellers of their other obligations under this Agreement. (k) To use its best efforts to do and perform all things required or necessary to be done and performed under this Agreement by the Company prior to the Closing Date or any Option Closing Date, as the case may be, and to satisfy all conditions precedent to the delivery of the Shares. 6. Representations and Warranties of the Company. The Company --------------------------------------------- represents and warrants to each Underwriter that: (a) The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or threatened by the Commission. (b) (i) Each part of the Registration Statement, when such part became effective, did not contain and each such part, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Act and (iii) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph (b) do not apply to statements or omissions in the Registration Statement or the Prospectus based upon 9 information relating to any Underwriter furnished to the Company in writing by such Underwriter through you expressly for use therein. (c) Each preliminary prospectus filed as part of the registration statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Act, complied when so filed in all material respects with the Act; and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (d) The Company and each of its subsidiaries has been duly incorporated, is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation and has the corporate power and authority to carry on its business as it is currently being conducted and to own, lease and operate its properties, and each is duly qualified and is in good standing as a foreign corporation authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified would not have a material adverse effect on the Company and its subsidiaries, taken as a whole. (e) All of the outstanding shares of capital stock of, or other ownership interests in, each of the Company's subsidiaries have been duly authorized and validly issued and are fully paid and non-assessable, and are owned by the Company, free and clear of any security interest, claim, lien, encumbrance or adverse interest of any nature. (f) All the outstanding shares of capital stock of the Company (including the Shares to be sold by the Selling Stockholder) have been duly authorized and validly issued and are fully paid, non-assessable and not subject to any preemptive or similar rights; and the Shares to be issued and sold by the Company hereunder have been duly authorized and, when issued and delivered to the Underwriters against payment therefor as provided by this Agreement, will be validly issued, fully paid and non- assessable, and the issuance of such Shares will not be subject to any preemptive or similar rights. (g) The authorized capital stock of the Company, including the Common Stock, conforms as to legal matters to the description thereof contained in the Prospectus. (h) Neither the Company nor any of its subsidiaries is in violation of its respective charter or by-laws or in default in the performance of any obligation, agreement or 10 condition contained in any bond, debenture, note or any other evidence of indebtedness or in any other agreement, indenture or instrument material to the conduct of the business of the Company and its subsidiaries, taken as a whole, to which the Company or any of its subsidiaries is a party or by which it or any of its subsidiaries or their respective property is bound. (i) The execution, delivery and performance of this Agreement, compliance by the Company with all the provisions hereof and the consummation of the transactions contemplated hereby will not require any consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body (except as such may be required under the securities or Blue Sky laws of the various states) and will not conflict with or constitute a breach of any of the terms or provisions of, or a default under, the charter or by-laws of the Company or any of its subsidiaries or any agreement, indenture or other instrument to which it or any of its subsidiaries is a party or by which it or any of its subsidiaries or their respective property is bound, or violate or conflict with any laws, administrative regulations or rulings or court decrees applicable to the Company, any of its subsidiaries or their respective property. (j) Except as otherwise set forth in the Prospectus, there are no material legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any of their respective property is the subject, and, to the best of the Company's knowledge, no such proceedings are threatened or contemplated. No contract or document of a character required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement is not so described or filed as required. (k) Coopers & Lybrand L.L.P. are independent public accountants with respect to the Company as required by the Act. (l) The financial statements, together with related schedules and notes forming part of the Registration Statement and the Prospectus (and any amendment or supplement thereto), present fairly the consolidated financial position, results of operations and changes in financial position of the Company and its subsidiaries on the basis stated in the Registration Statement at the respective dates or for the respective periods to which they apply; such statements and related schedules and notes have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except as disclosed therein; and the other financial and statistical information and data set forth in 11 the Registration Statement and the Prospectus (and any amendment or supplement thereto) is, in all material respects, accurately presented and prepared on a basis consistent with such financial statements and the books and records of the Company. (m) The Company is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (n) Other than pursuant to the Amended and Restated Shareholders' Agreement dated as of May 21, 1987, as amended, among the Company and the shareholders named therein (the "Shareholders' Agreement"), no holder of any security of the Company has any right to require registration of shares of Common Stock or any other security of the Company. (o) The Company has complied with all provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida). 7. Representations and Warranties of the Selling Stockholder. The --------------------------------------------------------- Selling Stockholder represents and warrants to each Underwriter that: (a) The Selling Stockholder is the lawful owner of the Shares to be sold by it pursuant to this Agreement and has, and on the Closing Date (and Option Closing Date, if applicable) will have, good and clear title to such Shares, free of all restrictions on transfer, liens, encumbrances, security interests and claims whatsoever. (b) Upon delivery of and payment for such Shares pursuant to this Agreement, good and clear title to such Shares will pass to the Underwriters, free of all restrictions on transfer, liens, encumbrances, security interests and claims whatsoever. (c) The Selling Stockholder has, and on the Closing Date will have, full legal right, power and authority to enter into this Agreement and the Custody Agreement between the Selling Stockholder and ______________________________, as Custodian (the "Custody Agreement") and to sell, assign, transfer and deliver such Shares in the manner provided herein and therein, and this Agreement and the Custody Agreement have been duly authorized, executed and delivered by the Selling Stockholder and each of this Agreement and the Custody Agreement is a valid and binding agreement of the Selling Stockholder enforceable in accordance with its terms, except as rights to indemnity and contribution hereunder may be limited by applicable law. 12 (d) The power of attorney signed by the Selling Stockholder appointing _________________ and ________________, or either one of them, as its attorney-in-fact to the extent set forth therein with regard to the transactions contemplated hereby and by the Registration Statement and the Custody Agreement has been duly authorized, executed and delivered by or on behalf of the Selling Stockholder and is a valid and binding instrument of the Selling Stockholder enforceable in accordance with its terms, and, pursuant to such power of attorney, the Selling Stockholder has authorized _________________ and ________________, or either one of them, to execute and deliver on its behalf this Agreement and any other document necessary or desirable in connection with transactions contemplated hereby and to deliver the Shares to be sold by the Selling Stockholder pursuant to this Agreement. (e) The Selling Stockholder has not taken, and will not take, directly or indirectly, any action designed to, or which might reasonably be expected to, cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares pursuant to the distribution contemplated by this Agreement, and other than as permitted by the Act, the Selling Stockholder has not distributed and will not distribute any prospectus or other offering material in connection with the offering and sale of the Shares. (f) The execution, delivery and performance of this Agreement by the Selling Stockholder, compliance by the Selling Stockholder with all the provisions hereof and the consummation of the transactions contemplated hereby will not require any consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body (except as such may be required under the Act, state securities laws or Blue Sky laws) and will not conflict with or constitute a breach of any of the terms or provisions of, or a default under, organizational documents of the Selling Stockholder, or any agreement, indenture or other instrument to which the Selling Stockholder is a party or by which the Selling Stockholder or property of the Selling Stockholder is bound, or violate or conflict with any laws, administrative regulation or ruling or court decree applicable to the Selling Stockholder or property of the Selling Stockholder. (g) Such parts of the Registration Statement under the caption "Selling Shareholder" which specifically relate to the Selling Stockholder do not, and will not on the Closing Date (and any Option Closing Date, if applicable), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to 13 make the statements therein, in light of circumstances under which they were made, not misleading. (h) At any time during the period described in paragraph 5(e) hereof, if there is any change in the information referred to in paragraph 7(g) above, the Selling Stockholder will immediately notify you of such change. 8. Indemnification. (a) The Company agrees to indemnify and hold --------------- harmless each Underwriter and the Selling Stockholder and each person, if any, who controls any Underwriter or the Selling Stockholder within the meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and against any and all losses, claims, damages, liabilities and judgments caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriters furnished in writing to the Company by or on behalf of any Underwriter through you, or based upon information relating to the Selling Stockholder furnished to the Company in writing by or on behalf of the Selling Stockholder, expressly for use therein. (b) The Selling Stockholder agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act and the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either such Section, from and against any and all losses, claims, damages and liabilities and judgments caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only with reference to information relating to the Selling Stockholder furnished in writing by or on behalf of the Selling Stockholder expressly for use in the Registration Statement or the Prospectus or in any preliminary prospectus. (c) In case any action shall be brought against any Underwriter or any person controlling such Underwriter, based upon any preliminary prospectus, the Registration Statement or the Prospectus or any amendment or supplement thereto and with 14 respect to which indemnity may be sought against the Company and the Selling Stockholder, such Underwriter shall promptly notify the Company and the Selling Stockholder in writing and the Company and the Selling Stockholder shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such indemnified party and payment of all fees and expenses. Any Underwriter or any such controlling person shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Underwriter or such controlling person unless (i) the employment of such counsel shall have been specifically authorized in writing by the Company, (ii) the Company and the Selling Stockholder shall have failed to assume the defense and employ counsel or (iii) the named parties to any such action (including any impleaded parties) include both such Underwriter or such controlling person and the Company or the Selling Stockholder, as the case may be, and such Underwriter or such controlling person shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Company or the Selling Stockholder, as the case may be, (in which case the Company and the Selling Stockholder shall not have the right to assume the defense of such action on behalf of such Underwriter or such controlling person, it being understood, however, that the Company and the Selling Stockholder shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all such Underwriters and controlling persons, which firm shall be designated in writing by Donaldson, Lufkin & Jenrette Securities Corporation and that all such fees and expenses shall be reimbursed as they are incurred). A Seller shall not be liable for any settlement of any such action effected without the written consent of such Seller but if settled with the written consent of such Seller, such Seller agrees to indemnify and hold harmless any Underwriter and any such controlling person from and against any loss or liability by reason of such settlement. Notwithstanding the immediately preceding sentence, if in any case where the fees and expenses of counsel are at the expense of the indemnifying party and an indemnified party shall have requested the indemnifying party to reimburse the indemnified party for such fees and expenses of counsel as incurred, such indemnifying party agrees that it shall be liable for any settlement of any action effected without its written consent if (i) such settlement is entered into more than ten business days after the receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall have failed to reimburse the indemnified party in accordance with such request for reimbursement prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party 15 is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement, any person controlling the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, the Selling Stockholder and each person, if any, controlling the Selling Stockholder within the meaning of Section 15 of the Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company and the Selling Stockholder to each Underwriter but only with reference to information relating to such Underwriter furnished in writing by or on behalf of such Underwriter through you expressly for use in the Registration Statement, the Prospectus or any preliminary prospectus. In case any action shall be brought against the Company, any of its directors, any such officer or any person controlling the Company or the Selling Stockholder or any person controlling the Selling Stockholder based on the Registration Statement, the Prospectus or any preliminary prospectus and in respect of which indemnity may be sought against any Underwriter, the Underwriter shall have the rights and duties given to the Sellers (except that if any Seller shall have assumed the defense thereof) such Underwriter shall not be required to do so, but may employ separate counsel therein and participate in the defense thereof but the fees and expenses of such counsel shall be at the expense of such Underwriter), and the Company, its directors, any such officers and any person controlling the Company and the Selling Stockholder and any person controlling the Selling Stockholder shall have the rights and duties given to the Underwriter, by Section 8(c) hereof. (e) If the indemnification provided for in this Section 8 is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities and judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Stockholder on the one hand and the Underwriters on the other hand from the offering of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, the Selling Stockholder and the Underwriters in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative benefits received by the Company, the Selling Stockholder and the Underwriters shall be 16 deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company and the Selling Stockholder, and the total underwriting discounts and commissions received by the Underwriters, bear to the total price to the public of the Shares, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company, the Selling Stockholder and the Underwriters shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Company, the Selling Stockholder or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Selling Stockholder and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 8(e) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section 8(e) are several in proportion to the respective number of Shares purchased by each of the Underwriters hereunder and not joint. [(f) Each Seller hereby designates [______________], [ADDRESS], (a [ ] corporation) as its authorized agent, upon which process may be served in any action, suit or proceeding which may be instituted in any state or federal court in the State of New York by any Underwriter or person controlling an Underwriter asserting a claim for indemnification or contribution under or pursuant to this Section 8, and each Seller will accept the jurisdiction of such court in such action, and waives, to the fullest extent permitted by applicable law, any defense based upon lack of personal jurisdiction or venue. A copy of any such 17 process shall be sent or given to such Seller, at the address for notices specified in Section 13 hereof.] 9. Conditions of Underwriters' Obligations. The several obligations --------------------------------------- of the Underwriters to purchase the Firm Shares under this Agreement are subject to the satisfaction of each of the following conditions: (a) All the representations and warranties of the Company contained in this Agreement shall be true and correct on the Closing Date with the same force and effect as if made on and as of the Closing Date. (b) The Registration Statement shall have become effective not later than 5:00 P.M., New York City time, on the date of this Agreement or at such later date and time as you may approve in writing, and at the Closing Date no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been commenced or shall be pending before or contemplated by the Commission. (c) (i) Since the date of the latest balance sheet included in the Registration Statement and the Prospectus, there shall not have been any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, affairs or business prospects, whether or not arising in the ordinary course of business, of the Company, (ii) since the date of the latest balance sheet included in the Registration Statement and the Prospectus there shall not have been any change, or any development involving a prospective material adverse change, in the capital stock or in the long-term debt of the Company from that set forth in the Registration Statement and Prospectus, (iii) the Company and its subsidiaries shall have no liability or obligation, direct or contingent, which is material to the Company and its subsidiaries, taken as a whole, other than those reflected in the Registration Statement and the Prospectus and (iv) on the Closing Date you shall have received a certificate dated the Closing Date, signed by _______________ and _______________, in their capacities as the _______________ and _________________ of the Company, confirming the matters set forth in paragraphs (a), (b), and (c) of this Section 9. (d) All the representations and warranties of the Selling Stockholder contained in this Agreement shall be true and correct on the Closing Date with the same force and effect as if made on and as of the Closing Date and you shall have received a certificate to such effect, dated the Closing Date, from the Selling Stockholder. 18 (e) You shall have received on the Closing Date an opinion (satisfactory to you and counsel for the Underwriters), dated the Closing Date, of Louis G. Lenzi, Esq., General Counsel of the Company, to the effect that: (i) the Company and each of its subsidiaries (other than MBIA Insurance Corporation ("MBIA Corp.") which is discussed below) has been duly incorporated, is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation and has the corporate power and authority required to carry on its business as it is currently being conducted and to own, lease and operate its properties; (ii) the Company and each of its subsidiaries (other than MBIA Corp. which is discussed below) is duly qualified and is in good standing as a foreign corporation authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; (iii) (A) MBIA Corp. has been duly incorporated, is validly existing as an insurance company in good standing under the laws of the State of New York and (B) is duly licensed and in good standing to conduct its municipal bond insurance business in each state in the United States and the District of Columbia; (iv) all of the outstanding shares of capital stock of, or other ownership interests in, each of the Company's subsidiaries have been duly and validly authorized and issued and are fully paid and non-assessable, and are owned by the Company, free and clear of any security interest, claim, lien, encumbrance or adverse interest of any nature; (v) all the outstanding shares of Common Stock (including the Shares to be sold by the Selling Stockholder) have been duly authorized and validly issued and are fully paid, non-assessable and not subject to any preemptive or similar rights; (vi) the Shares to be issued and sold by the Company hereunder have been duly authorized, and when issued and delivered to the Underwriters against payment therefor as provided by this Agreement, will have been validly issued and will be fully paid and non-assessable, and the issuance of such Shares is not subject to any preemptive or similar rights; 19 (vii) this Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company enforceable in accordance with its terms (except as rights to indemnity and contribution hereunder may be limited by applicable law); (viii) the authorized capital stock of the Company, including the Common Stock, conforms as to legal matters to the description thereof contained in the Prospectus; (ix) the Registration Statement has become effective under the Act, no stop order suspending its effectiveness has been issued and no proceedings for that purpose are, to the knowledge of such counsel, pending before or contemplated by the Commission; (x) the statements under the captions "Selling Shareholder", "Description of Capital Stock" and "Underwriting" in the Prospectus and Item 15 of Part II of the Registration Statement insofar as such statements constitute a summary of legal matters, documents or proceedings referred to therein, fairly present the information called for with respect to such legal matters, documents and proceedings; (xi) neither the Company nor any of its subsidiaries is in violation of its respective charter or by-laws and, to the best of such counsel's knowledge after due inquiry, neither the Company nor any of its subsidiaries is in default in the performance of any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness or in any other agreement, indenture or instrument material to the conduct of the business of the Company and its subsidiaries, taken as a whole, to which the Company or any of its subsidiaries is a party or by which it or any of its subsidiaries or their respective property is bound; (xii) the execution, delivery and performance of this Agreement by the Company, compliance by the Company with all the provisions hereof and the consummation of the transactions contemplated hereby will not require any consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body (except as such may be required under the Act or other securities or Blue Sky laws) and will not conflict with or constitute a breach of any of the terms or provisions of, or a default under, the charter or by-laws of the Company or any of its subsidiaries or any agreement, indenture or other instrument to which 20 the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or its respective properties are bound, or violate or conflict with any laws, administrative regulations or rulings or court decrees applicable to the Company or any of its subsidiaries or its respective properties; (xiii) after due inquiry, such counsel does not know of any legal or governmental proceeding pending or threatened to which the Company or any of its subsidiaries is a party or to which any of their respective property is subject which is required to be described in the Registration Statement or the Prospectus and is not so described, or of any contract or other document which is required to be described in the Registration Statement or the Prospectus or is required to be filed as an exhibit to the Registration Statement which is not described or filed as required; (xiv) the Company is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (xv) to the best of such counsel's knowledge, after due inquiry, other than pursuant to the Shareholders' Agreement, no holder of any security of the Company has any right to require registration of shares of Common Stock or any other security of the Company; and (xvi) (1) the Registration Statement and the Prospectus and any supplement or amendment thereto (except for financial statements as to which no opinion need be expressed) comply as to form in all material respects with the Act, and (2) such counsel believes that (except for financial statements, as aforesaid) the Registration Statement at the time it became effective did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and that the Prospectus as of its date and as of the Closing Date, as amended or supplemented, if applicable (except for financial statements, as aforesaid) does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. In giving such opinion with respect to the matters covered by clause (xvi) such counsel may state that his opinion and belief are based upon his participation in the preparation of the Registration Statement and Prospectus and 21 any amendments or supplements thereto and review and discussion of the contents thereof, but are without independent check or verification except as specified. Each of the opinions delivered pursuant to this paragraph (e) may rely as to matters of Connecticut law on the opinion of Day, Berry & Howard or of such other local counsel as shall be reasonably satisfactory to you. (f) You shall have received on the Closing Date an opinion (satisfactory to you and counsel for the Underwriters), dated the Closing Date, of Debevoise & Plimpton, counsel for the Company, as to the matters referred to in clauses (i), (iii)(A), (v), (vi), (vii), (viii), (ix), (x) (but only as to the statements in the Prospectus under "Description of Capital Stock" and "Underwriting") and (xvi) of paragraph (e) above. In giving such opinion with respect to the matters covered by clause (xvi) such counsel may state that their opinion and belief are based upon their participation in the preparation of the Registration Statement and Prospectus and any amendments or supplements thereto and review and discussion of the contents thereof, but are without independent check or verification except as specified. Each of the opinions delivered pursuant to this paragraph (f) may rely as to matters of Connecticut law on the opinion of Day, Berry & Howard or of such other local counsel as shall be reasonably satisfactory to you. The opinion of Debevoise & Plimpton described in paragraph (f) above shall be rendered to you at the request of the Company and shall so state therein. (g) You shall have received on the Closing Date an opinion (satisfactory to you and counsel for the Underwriters), dated the Closing Date, of [counsel in the Law Department of the Selling Stockholder], to the effect that: (i) this Agreement has been duly authorized, executed and delivered by the Selling Stockholder and is a valid and binding agreement of the Selling Stockholder enforceable in accordance with its terms (except as rights to indemnity and contribution hereunder may be limited by applicable law); (ii) the execution, delivery and performance of this Agreement by the Selling Stockholder, compliance by the Selling Stockholder with all the provisions hereof and the consummation of the transactions contemplated hereby will not require any consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body (except as such may be required under 22 the Act or other securities or Blue Sky laws) and will not conflict with or constitute a breach of any of the terms or provisions of, or a default under, the charter or by-laws of the Selling Stockholder or any agreement, indenture or other instrument to which the Selling Stockholder is a party or by which the Selling Stockholder or its respective properties are bound, or violate or conflict with any laws, administrative regulations or rulings or court decrees applicable to the Selling Stockholder or its respective properties; (iii) the Custody Agreement has been duly authorized, executed and delivered by the Selling Stockholder and is a valid and binding agreement of the Selling Stockholder enforceable in accordance with its terms; (iv) the Selling Stockholder has full legal right, power and authority, and any approval required by law (other than any approval imposed by the applicable state securities and Blue Sky laws) to sell, assign, transfer and deliver the Shares to be sold by it in the manner provided in this Agreement and the Custody Agreement; (v) the Selling Stockholder has good and clear title to the certificates for the Shares to be sold by it and upon delivery thereof, pursuant hereto and payment therefor, good and clear title will pass to the Underwriters, severally, free of all restrictions on transfer, liens, encumbrances, security interests and claims whatsoever; and (vi) the power of attorney signed by the Selling Stockholder appointing _________________ and ___________, or either of them, as its attorney-in-fact to the extent set forth therein with regard to the transactions contemplated hereby and by the Registration Statement has been duly authorized, executed and delivered by or on behalf of the Selling Stockholder and are valid and binding instruments of the Selling Stockholder enforceable in accordance with its terms, and pursuant to such power of attorney, the Selling Stockholder has authorized _________________ and ________________, or either of them, to execute and deliver on its behalf this Agreement and any other document necessary or desirable in connection with transactions contemplated hereby and to deliver the Shares to be sold by it pursuant to this Agreement. (h) You shall have received on the Closing Date an opinion, dated the Closing Date, of Simpson Thacher & Bartlett, counsel for the Underwriters, as to the matters referred to in clauses (vi), (vii), (ix), (x) (but only with 23 respect to the statements under the captions "Description of Capital Stock" and "Underwriting") and (xvi) of paragraph (e). In giving such opinion with respect to the matters covered by clause (xvi) such counsel may state that their opinion and belief are based upon their participation in the preparation of the Registration Statement and Prospectus and any amendments or supplements thereto and review and discussion of the contents thereof, but are without independent check or verification except as specified. Each of the opinions delivered pursuant to this paragraph (h) may rely as to matters of Connecticut law on the opinion of Day, Berry & Howard or of such other local counsel as shall be reasonably satisfactory to you. (i) You shall have received a letter on and as of the Closing Date, in form and substance satisfactory to you, from Coopers & Lybrand L.L.P., independent public accountants, with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus and substantially in the form and substance of the letter delivered to you by Coopers & Lybrand L.L.P., on the date of this Agreement. (j) The Company shall have delivered to you the agreements specified in Section 2 hereof. (k) The Company and the Selling Stockholder shall not have failed at or prior to the Closing Date to perform or comply with any of the agreements herein contained and required to be performed or complied with by the Company at or prior to the Closing Date. [(l) You shall have received on the Closing Date, a certificate of the Selling Stockholder who is not a U.S. Person to the effect that the Selling Stockholder is not a U.S. Person (as defined under applicable U.S. federal tax legislation), which certificate may be in the form of a properly completed and executed United States Treasury Department Form W-8 (or other applicable form or statement specified by Treasury Department regulations in lieu thereof).] The several obligations of the U.S. Underwriters to purchase any Additional Shares hereunder are subject to the delivery to the U.S. Representatives on the applicable Option Closing Date of such documents as you may reasonably request with respect to the good standing of the Company, the due authorization and issuance of such Additional Shares and other matters related to the issuance of such Additional Shares. 10. Effective Date of Agreement and Termination. This Agreement ------------------------------------------- shall become effective upon the later of (i) execution of this Agreement and (ii) when notification of the effectiveness 24 of the Registration Statement has been released by the Commission. This Agreement may be terminated at any time prior to the Closing Date by you by written notice to the Sellers if any of the following has occurred: (i) since the respective dates as of which information is given in the Registration Statement and the Prospectus, any adverse change or development involving a prospective adverse change in the condition, financial or otherwise, of the Company or any of its subsidiaries or the earnings, affairs, or business prospects of the Company or any of its subsidiaries, whether or not arising in the ordinary course of business, which would, in your judgment, make it impracticable to market the Shares on the terms and in the manner contemplated in the Prospectus, (ii) any outbreak or escalation of hostilities or other national or international calamity or crisis or change in economic conditions or in the financial markets of the United States or elsewhere that, in your judgment, is material and adverse and would, in your judgment, make it impracticable to market the Shares on the terms and in the manner contemplated in the Prospectus, (iii) the suspension or material limitation of trading in securities on the New York Stock Exchange, the American Stock Exchange or the NASDAQ National Market System or limitation on prices for securities on any such exchange or National Market System, (iv) the enactment, publication, decree or other promulgation of any federal or state statute, regulation, rule or order of any court or other governmental authority which in your opinion materially and adversely affects, or will materially and adversely affect, the business or operations of the Company or any Subsidiary, (v) the declaration of a banking moratorium by either federal or New York State authorities or (vi) the taking of any action by any federal, state or local government or agency in respect of its monetary or fiscal affairs which in your opinion has a material adverse effect on the financial markets in the United States. If on the Closing Date or on an Option Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase the Firm Shares or Additional Shares, as the case may be, which it or they have agreed to purchase hereunder on such date and the aggregate number of Firm Shares or Additional Shares, as the case may be, which such defaulting Underwriter or Underwriters, as the case may be, agreed but failed or refused to purchase is not more than one-tenth of the total number of Shares to be purchased on such date by all Underwriters, each non-defaulting Underwriter shall be obligated severally, in the proportion which the number of Firm Shares set forth opposite its name in Schedule I bears to the total number of Firm Shares which all the non-defaulting Underwriters, as the case may be, have agreed to purchase, or in such other proportion as you may specify, to purchase the Firm Shares or Additional Shares, as the case may be, which such defaulting Underwriter or Underwriters, as the case may be, agreed but failed or refused to purchase on such date; provided that in no event shall the number -------- 25 of Firm Shares or Additional Shares, as the case may be, which any Underwriter has agreed to purchase pursuant to Section 2 hereof be increased pursuant to this Section 10 by an amount in excess of one-ninth of such number of Firm Shares or Additional Shares, as the case may be, without the written consent of such Underwriter. If on the Closing Date or on an Option Closing Date, as the case may be, any Underwriter or Underwriters shall fail or refuse to purchase Firm Shares, or Additional Shares, as the case may be, and the aggregate number of Firm Shares or Additional Shares, as the case may be, with respect to which such default occurs is more than one-tenth of the aggregate number of Shares to be purchased on such date by all Underwriters and arrangements satisfactory to you and the applicable Sellers for purchase of such Shares are not made within 48 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter and the applicable Sellers. In any such case which does not result in termination of this Agreement, either you or the Sellers shall have the right to postpone the Closing Date or the applicable Option Closing Date, as the case may be, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and the Prospectus or any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of any such Underwriter under this Agreement. 11. Agreements of the Selling Stockholder. The Selling Stockholder ------------------------------------- severally agrees with you and the Company: (a) To pay or to cause to be paid all transfer taxes with respect to the Shares to be sold by the Selling Stockholder; and (b) To take all reasonable actions in cooperation with the Company and the Underwriters to cause the Registration Statement to become effective at the earliest possible time, to do and perform all things to be done and performed under this Agreement prior to the Closing Date and to satisfy all conditions precedent to the delivery of the Shares pursuant to this Agreement. 12. Miscellaneous. Notices given pursuant to any provision of this ------------- Agreement shall be addressed as follows: (a) if to the Company, to MBIA Inc., 113 King Street, Armonk, New York 10504, (b) if to the Selling Stockholder, to Aetna Life Insurance and Annuity Company, 151 Farmington Avenue, Hartford, Connecticut 06156-3124, Attention: Vice President Corporate Finance YF37 and (c) if to any Underwriter or to you, to you c/o Donaldson, Lufkin & Jenrette Securities Corporation, 140 Broadway, New York, New York 10005, Attention: Syndicate Department, or in any case to such other address as the person to be notified may have requested in writing. 26 The respective indemnities, contribution agreements, representations, warranties and other statements of the Selling Stockholder, the Company, its officers and directors and of the several Underwriters set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, and will survive delivery of and payment for the Shares, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter or by or on behalf of the Sellers, the officers or directors of the Company or any controlling person of the Sellers, (ii) acceptance of the Shares and payment for them hereunder and (iii) termination of this Agreement. If this Agreement shall be terminated by the Underwriters because of any failure or refusal on the part of the Sellers to comply with the terms or to fulfill any of the conditions of this Agreement, the Sellers agree to reimburse the several Underwriters for all out-of-pocket expenses (including the fees and disbursements of counsel) reasonably incurred by them. Except as otherwise provided, this Agreement has been and is made solely for the benefit of and shall be binding upon the Sellers, the Underwriters, any controlling persons referred to herein and their respective successors and assigns, all as and to the extent provided in this Agreement, and no other person shall acquire or have any right under or by virtue of this Agreement. The term "successors and assigns" shall not include a purchaser of any of the Shares from any of the several Underwriters merely because of such purchase. This Agreement shall be governed and construed in accordance with the laws of the State of New York. This Agreement may be signed in various counterparts which together shall constitute one and the same instrument. 27 Please confirm that the foregoing correctly sets forth the agreement between the Company, the Selling Stockholder and the several Underwriters. Very truly yours, MBIA INC. By____________________________ Title: THE AETNA CASUALTY AND SURETY COMPANY By____________________________ Attorney-in-fact DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION GOLDMAN, SACHS & CO. LEHMAN BROTHERS INC. SMITH BARNEY INC. Acting severally on behalf of themselves and the several U.S. Underwriters named in Schedule I hereto By DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION By__________________________ DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION GOLDMAN SACHS INTERNATIONAL LEHMAN BROTHERS INTERNATIONAL (EUROPE) SMITH BARNEY INC. Acting severally on behalf of themselves and the several International Managers named in Schedule II hereto By DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION By__________________________ SCHEDULE I ---------- Number of Firm Shares U.S. Underwriters to be Purchased - ------------------------------ --------------------- Donaldson, Lufkin & Jenrette Securities Corporation Goldman, Sachs & Co. Lehman Brothers Inc. Smith Barney Inc. __________________ Total 2,830,000 SCHEDULE II ----------- Number of Firm Shares International Underwriters to be Purchased - ------------------------------- --------------------- Donaldson, Lufkin & Jenrette Securities Corporation Goldman Sachs International Lehman Brothers International (Europe) Smith Barney Inc. __________________ Total 700,000 ANNEX I ------- Required Stockholder Lock-ups ----------------------------- EX-5.01 3 OPINION OF DEBEVOISE & PLIMPTON EXHIBIT 5.01 [Letterhead of Debevoise & Plimpton] January 24, 1996 MBIA, Inc. 113 King Street Armonk, New York 10504 Registration Statement on Form S-3 Registration No. 333-00217 ---------------------------------- Dear Sirs: We have acted as counsel to MBIA Inc., a Connecticut corporation (the "Company"), in connection with the preparation and filing with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Act"), of Registration Statement No. 333-00217 on Form S-3 (the "Registration Statement"), relating to the public offering of up to 3,890,000 shares of common stock, par value $1.00 per share (the "Shares"), of the Company. In so acting, we have examined and relied upon the originals, or copies certified or otherwise identified to our satisfaction, of such corporate records, documents, certificates and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion set forth below. We are of the opinion that the Shares have been duly authorized, the Shares being sold by the Selling Shareholder (as defined in the Registration Statement) are legally issued, fully paid and nonassessable, and the Shares MBIA Inc. -2- January 24, 1996 being sold by the Company, when issued against payment therefor as contemplated by the Underwriting Agreement (as defined in the Registration Statement), will be legally issued, fully paid and nonassessable. In rendering the opinion expressed above, we have relied as to all matters involving the law of the State of Connecticut upon the opinion of Day, Berry & Howard, Connecticut counsel for the Company, dated January 23, 1996 and addressed to you. We 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 Opinions" in the prospectus forming a part of the Registration Statement. In giving such consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Act or the Rules and Regulations of the Securities and Exchange Commission thereunder. Very truly yours, /s/ Debevoise & Plimpton EX-5.02 4 OPINION OF DAY, BERRY & HOWARD EXHIBIT 5.02 [Letterhead of - DAY, BERRY & HOWARD] January 23, 1996 MBIA Inc. 113 King Street Armonk, New York 10504 Re: MBIA Inc. Registration Statement on Form S-3 Registration No. 333-00217 ---------------------------------- Gentlemen: We have acted as special Connecticut counsel to MBIA Inc., a Connecticut corporation (the "Company"), as to certain matters of Connecticut law relating to the sale by the Company and a certain Selling Shareholder of up to 3,890,000 shares of Common Stock, par value $1.00 per share (the "Shares"). Reference is made to the filing of the above-referenced Registration Statement (the "Registration Statement") for the Company on Form S-3 with the Securities and Exchange Commission pursuant to the provisions of the Securities Act of 1933, as amended, covering the registration of the Shares. Capitalized terms not otherwise defined herein have the meanings assigned to them in the Registration Statement. We have examined the Company's Certificate of Incorporation and Bylaws, both as amended and restated to date, records of the corporate proceedings of the Board of Directors of the Company with respect to 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. Based on the foregoing, we are of the opinion that the 3,120,000 Shares that are being registered for sale by the Selling Shareholder have been duly authorized and are validly issued, fully paid and non-assessable. The 770,000 Shares that are being registered for sale by the Company have been duly authorized and, when issued against DAY, BERRY & HOWARD MBIA Inc. January 23, 1996 Page 2 payment therefor as contemplated by the Underwriting Agreement, will be validly issued, fully paid and non-assessable. Messrs. Debevoise & Plimpton may rely upon this opinion as though it were addressed to them on the date hereof. We hereby consent to the inclusion of this opinion as an exhibit to the Registration Statement and to the reference to our firm in the prospectus included in the Registration Statement under the caption "Legal Opinions." 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 EX-23.01 5 CONSENT OF COOPERS & LYBRAND L.L.P. CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this registration statement of MBIA Inc. on Form S-3 of: 1. Our report dated February 1, 1995, on our audits of the consolidated financial statements of MBIA Inc. and Subsidiaries (the "Company") as of December 31, 1994 and 1993 and for each of the three years in the period ended December 31, 1994, which report is incorporated by reference in MBIA Inc.'s 1994 Annual Report on Form 10-K. 2. Our Report dated February 1, 1995 on our audits of the financial statement schedules of the Company, which report is MBIA Inc's 1994 Annual Report on Form 10-K. We also consent to the reference to our firm under the caption "Experts" in this registration statement. /s/ Coopers & Lybrand L.L.P. Coopers & Lybrand L.L.P. New York, New York January 23, 1995 -----END PRIVACY-ENHANCED MESSAGE-----