<PAGE>
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.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO THE DISCOUNTS AND TO THE THE SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDER(3)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share........................ $ $ $ $
Total(4)......................... $ $ $ $
</TABLE>
- --------------------------------------------------------------------------------
(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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
------------------------ ------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (AUDITED)
<S> <C> <C> <C> <C>
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.............. =========== =========== =========== ===========
</TABLE>
7
<PAGE>
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
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
========== ==========
</TABLE>
(1) Includes net case reserves of $14,481 at December 31, 1995 and $21,967 at
December 31, 1994.
8
<PAGE>
MBIA INC. AND SUBSIDIARIES
COMPONENTS OF CORE EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
------------------- ---------------------
1995 1994 1995 1994
--------- --------- ----------- ---------
(UNAUDITED) (UNAUDITED) (AUDITED)
<S> <C> <C> <C> <C>
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
========= ========= ===== =====
</TABLE>
- --------
(1) Amounts may not add due to rounding.
COMPONENTS OF ADJUSTED BOOK VALUE PER SHARE
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
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
====== ======
</TABLE>
9
<PAGE>
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.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995
-------------------------------
ACTUAL AS ADJUSTED
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
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 $
============== ==============
</TABLE>
10
<PAGE>
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."
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
----------------------------------------------------------- ----------------------
1990 1991 1992 1993 1994 1994 1995
(UNAUDITED)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
- ---------------------
(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
<PAGE>
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.
<TABLE>
<CAPTION>
DIVIDENDS
PAID PER
HIGH LOW SHARE
<S> <C> <C> <C>
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
</TABLE>
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
<PAGE>
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.
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C>
The Aetna Casualty and 3,813,009 9.12% 2,860,000 953,009 2.24%
Surety Company..........
151 Farmington Avenue
Hartford, CT 06156
</TABLE>
- ---------------------
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.............
Goldman, Sachs & Co.............................................
Lehman Brothers Inc.............................................
Smith Barney Inc................................................
---------
U.S. Offering Subtotal........................................ 2,830,000
=========
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.............
Goldman Sachs International.....................................
Lehman Brothers International (Europe)..........................
Smith Barney Inc................................................
---------
International Offering Subtotal............................... 700,000
---------
Total....................................................... 3,530,000
=========
</TABLE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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
<TABLE>
<CAPTION>
PAGE
<S> <C>
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
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
3,530,000 SHARES
LOGO
COMMON STOCK
----------------
PROSPECTUS
----------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
SMITH BARNEY INC.
, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO THE DISCOUNTS AND TO THE THE SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDER(3)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share........................ $ $ $ $
Total(4)......................... $ $ $ $
</TABLE>
- --------------------------------------------------------------------------------
(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.
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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
<TABLE>
<CAPTION>
PAGE
<S> <C>
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
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
3,530,000 SHARES
LOGO
COMMON STOCK
----------------
PROSPECTUS
----------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN SACHS INTERNATIONAL
LEHMAN BROTHERS
SMITH BARNEY INC.
, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
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:
<TABLE>
<S> <C>
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
========
</TABLE>
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
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
<TABLE>
<C> <S>
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.++
</TABLE>
- ---------------------
++ 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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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;
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
--------
<PAGE>
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.
<PAGE>
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.
<PAGE>
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__________________________
<PAGE>
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
<PAGE>
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
<PAGE>
ANNEX I
-------
Required Stockholder Lock-ups
-----------------------------
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
