EXHIBIT 10.25
Amendment to Trust Agreement
THIS AMENDMENT TO TRUST AGREEMENT is made and entered into as of February 28
1995, between Municipal Bond Investors Assurance Corporation ("MBIA Corp."),
MBIA Insurance Corp. of Illinois ("MBIA Illinois"), Chase Manhattan Bank, N.A.
("Chase") and ▇▇▇▇▇▇ Guaranty Trust Company ("▇▇▇▇▇▇").
Section 1. Trust Agreement, dated as of December 31, 1989, by and among MBIA
Corp., Chase, MBIA Illinois and ▇▇▇▇▇▇ (the "Agreement"), is hereby amended to
replace ▇▇▇▇▇▇, the existing Trustee thereunder, with Chase Manhattan Bank,
N.A., such change to become effective on March 1, 1995.
Section 2. Section 2 of the Agreement is hereby amended in its entirety to
read as follows:
"2. Place of Deposit.
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The assets shall be held by the Trustee at Chase Manhattan Bank, N.A., or,
if appropriate, in book entry form at the Federal Reserve Bank of New York
or in depositories such as the Depository Trust Company."
Section 3. Section 20 of the Agreement is hereby amended to change the
notice address of the Trustee to:
Chase Manhattan Bank, N.A.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
IN WITNESS WHEREOF, the parties have hereunto executed this agreement this
28 day of February, 1995.
▇▇▇▇▇▇ Guaranty Trust Company Municipal Bond Investors Assurance Corp.
By: ___________________________ By:______________________________
Associate Title: Treasurer
Chase Manhattan Bank, N.A. MBIA Illinois Insurance Corp.
By: ___________________________ By:______________________________
Second Vice President Title: Treasurer
EXHIBIT 10.47
FIRST AMENDMENT TO TRUST AGREEMENT
BETWEEN FIDELITY MANAGEMENT TRUST COMPANY AND
MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION
THIS FIRST AMENDMENT, dated as of the twenty-first day of January, 1992, by
and between Fidelity Management Trust Company (the "Trustee") and Municipal Bond
Investors Assurance Corporation (the "Sponsor");
WITNESSETH:
WHEREAS, the Trustee and the Sponsor heretofore entered into trust
agreements dated December 31, 1991, with regard to the MBIA Inc. Master Plan
(the "Plan"); and
WHEREAS, the Trustee and the Sponsor now desire to amend said trust
agreements as provided for in Section 13 thereof;
NOW THEREFORE, in consideration of the above premises the Trustee and the
Sponsor hereby amend the trust agreement by adding Section 4(e)(iii)(C) as
follows:
(C) Purchases and Sales from or to Sponsor. The Trustee may purchase or
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sell Sponsor Stock from or to the Sponsor if the purchase or sale is for
adequate consideration (within the meaning of section 3(18) of ERISA) and no
commission is charged. If Plan participant or Sponsor contributions under
the Plan are to be invested in Sponsor Stock, the Sponsor may transfer
Sponsor Stock in lieu of cash to the Trust. In this case the number of
shares transferred shall be determined by dividing the amount of the
contribution by the closing price of the Sponsor Stock on any national
securities exchange on the trading day immediately preceding the date as of
which the contribution is made.
IN WITNESS WHEREOF, the Trustee and the Sponsor have caused this First
Amendment to be executed by their duly authorized officers effective as of the
day and year first above written.
MBIA INC. FIDELITY MANAGEMENT TRUST COMPANY
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ Jan 22, 1992 By /s/ 2/11/92
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Senior Vice President Date Senior Vice President Date
SECOND AMENDMENT TO TRUST AGREEMENT
BETWEEN FIDELITY MANAGEMENT TRUST COMPANY AND
MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION
THIS SECOND AMENDMENT, dated as of the fifth day of March, 1992, by and
between Fidelity Management Trust Company (the "Trustee") and Municipal Bond
Investors Assurance Corporation (the "Sponsor");
WITNESSETH:
WHEREAS, the Trustee and the Sponsor heretofore entered into trust
agreements dated December 31, 1991, with regard to the MBIA Inc. Master Plan
(the "Plan"); and
WHEREAS, the Trustee and the Sponsor now desire to amend said trust
agreements as provided for in Section 13 thereof;
NOW THEREFORE, in consideration of the above premises the Trustee and the
Sponsor hereby amend the trust agreement by:
. Revising Schedule "G" (Telephone Exchange Guidelines) as attached.
. Adding a sentence to the end of Section 4(c) (Participant Direction) to
read as follows:
The Administrator may, in its discretion and via facsimile, override
a Plan participant direction involving Sponsor Stock.
IN WITNESS WHEREOF, the Trustee and the Sponsor have caused this Second
Amendment to be executed by their duly authorized officers effective as of the
day and year first above written.
MBIA INC. FIDELITY MANAGEMENT TRUST COMPANY
By By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ April 6, 1992
-------------------------------- ------------------------------------
Date Senior Vice President Date
SCHEDULE "G"
TELEPHONE EXCHANGE PROCEDURES
-----------------------------
The following telephone exchange procedures are currently employed by Fidelity
Investments Retirement Services Company (FIRSCO).
Telephone exchange hours are 8:30 a.m. (EST) to 8:00 P.M. (EST) on each business
day. A "business day" is any day on which the New York Stock Exchange is open.
FIRSCO reserves the right to change these telephone exchange procedures at its
discretion.
MUTUAL FUNDS
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EXCHANGES BETWEEN MUTUAL FUNDS
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Participants may call on any business day to exchange between the mutual
funds. If the request is received before 4:00 p.m. (EST), it will receive
that day's trade date. Calls received after 4:00 P.M. (EST) will be
processed on a next day basis.
COMPANY STOCK
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I. EXCHANGES FROM MUTUAL FUNDS TO COMPANY STOCK
--------------------------------------------
Company Stock exchanges are processed on a monthly cycle. Participants who
wish to exchange out of a mutual fund into Company Stock may call between
the 1st and the 13th of the month. No calls will be accepted after 4:00
p.m. (ET) on the 13th (or previous business day if the 13th is not a
business day).
Mutual fund shares are sold on the 15th of the month (or the previous
business day if the 15th is not a business day) and the Company Stock is
purchased within two (2) business days after the date on which the mutual
fund shares are sold.
II. EXCHANGES FROM COMPANY STOCK TO MUTUAL FUNDS
--------------------------------------------
Participants who wish to exchange out of Company Stock into mutual funds may
call between the 1st and the 13th of the month. No calls will be accepted
after 4:00 P.M. (ET) on the 13th (or previous business day if the 13th is
not a business day).
The Company Stock is sold on the 16th (or the next business day if the 16th
is not a business day) and the subsequent purchase into mutual funds will
take place five (5) business days later. This allows for settlement of the
stock trade at the custodian and the corresponding transfer to Fidelity.
Orders for sales of Company Stock must be share specific.
GIC OPEN-END PORTFOLIO
----------------------
I. EXCHANGES BETWEEN MUTUAL FUNDS AND GIC OPEN-END PORTFOLIO
---------------------------------------------------------
Participants who wish to exchange out of a mutual fund into the GIC Open-End
Portfolio of the Fidelity Group Trust for Employee Benefit Plans (the "Group
Trust") may call on any business day. If the request is received before
4:00 p.m. (EST), it will receive that day's trade date. Calls received
after 4:00 p.m. (EST) will be processed on a next day basis.
II. EXCHANGES FROM GIC OPEN-END PORTFOLIO TO COMPANY STOCK
------------------------------------------------------
Participants who wish to exchange out of the GIC Open-End Portfolio into
Company Stock may call between the 1st and the 13th of the month. No calls
will be accepted after 4:00 p.m. (ET) on the 13th (or previous business day
if the 13th is not a business day).
GIC Open-End Portfolio shares are sold on the 15th of the month (or the
previous business day if the 15th is not a business day) and the Company
Stock is purchased within two (2) business days after the date on which the
Open-End Portfolio shares are sold.
III. EXCHANGES FROM COMPANY STOCK TO GIC OPEN-END PORTFOLIO
------------------------------------------------------
Participants who wish to exchange out of Company Stock into the GIC Open-End
Portfolio may call between the 1st and the 13th of the month. No calls will
be accepted after 4:00 p.m. (ET) on the 13th (or previous business day if
the 13th is not a business day).
The Company Stock is sold on the 16th (or the next business day if the 16th
is not a business day) and the subsequent purchase into the Open-End
Portfolio will take place five (5) business days later. This allows for
settlement of the stock trade at the custodian and the corresponding
transfer to Fidelity. Orders for sales of Company Stock must be share
specific.
MBIA INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ April 6, 1992
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Date
THIRD AMENDMENT TO TRUST AGREEMENT
BETWEEN FIDELITY MANAGEMENT TRUST COMPANY AND
MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION
THIS THIRD AMENDMENT, dated as of April 1, 1993, by and between Fidelity
Management Trust Company (the "Trustee") and Municipal Bond Investors Assurance
Corporation (the "Sponsor"); and
WITNESSETH:
WHEREAS, the Trustee and the Sponsor heretofore entered into a trust
agreement dated December 31, 1991, with regard to the MBIA, Inc. Master Plan
(the "Plan"); and
WHEREAS, the Trustee and the Sponsor now desire to amend said trust
agreement as provided for in Section 13 thereof;
NOW THEREFORE, in consideration of the above premises the Trustee and the
Sponsor hereby amend the trust agreement by:
. Amending Section 4 by replacing Section 4(f) with the following:
Notes. The Administrator shall act as the Trustee's agent for the
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purpose of holding all trust investments in participant loan notes and
related documentation and as such shall (i) hold physical custody of
and keep safe the notes and other loan documents, (ii) collect and
remit all principal and interest payments to the Trustee, (iii) keep
the proceeds of such loans separate from the other assets of the
Administrator and clearly identify such assets as Plan assets and (iv)
cancel and surrender the notes and other loan documentation when a
loan has been paid in full. To originate a participant loan, the Plan
participant shall notify the Trustee of the request by use of the
Telephone Exchange System. The Trustee shall determine, based on the
current value of the Plan participant's account, the amount available
for the loan. The Plan participant shall then direct the Trustee
regarding the amount to be borrowed and the term or period for
repayment. Based on the most recent interest rate supplied by the
Sponsor in accordance with the terms of the Plan, the Trustee shall
advise the Plan participant of such interest rate, as well as the
installment payment amounts. The Trustee shall forward the loan
document to the Plan participant for execution and submission for
approval to the Administrator. The Administrator shall have the
responsibility for approving the loan, via remote access, and
instructing the Trustee of such approval. The Trustee shall send the
loan proceeds to the Administrator or to the Plan participant in
accordance with the directions from the Administrator. In all cases,
such approval by the Administrator shall be made within 30 days of the
Plan participant's initial request (the origination date).
. Amending Schedule "B" to reflect the Loan Fee as follows:
Loan Fees Establishment fee $35.00 per loan account;
annual fee of $15.00 per loan account.
IN WITNESS WHEREOF, the Trustee and the Sponsor have caused this Third Amendment
to be executed by their duly authorized officers effective as of the day and
year first above written.
MUNICIPAL BOND INVESTORS FIDELITY MANAGEMENT TRUST COMPANY
ASSURANCE CORPORATION
By By
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Date Senior Vice President Date
FOURTH AMENDMENT TO TRUST AGREEMENT BETWEEN
FIDELITY MANAGEMENT TRUST COMPANY AND
MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION
THIS FOURTH AMENDMENT, dated as of the first day of July, 1995 by and
between Fidelity Management Trust Company (the "Trustee") and Municipal Bond
Investors Assurance Corporation (the "Sponsor");
WITNESSETH:
WHEREAS, the Trustee and the Sponsor heretofore entered into a trust
agreement dated December 31, 1991, with regard to the MBIA Inc. Employees
Pension Plan and the MBIA Inc. Employees Profit Sharing and 401(k) Salary
Deferral Plan (collectively and individually, the "Plan"); and
WHEREAS, the Trustee and the Sponsor now desire to amend said trust
agreement as provided for in Section 13 thereof;
NOW THEREFORE, in consideration of the above premises the Trustee and the
Sponsor hereby amend the trust agreement by:
(1) Amending and adding the following mutual funds to the "investment
options" portions of Schedules "A" and "C", as follows:
Fidelity Overseas Fund
Fidelity Puritan Fund
(2) Amending and adding the following money classification to Schedule
"A", as follows:
Employer Profit Sharing
IN WITNESS WHEREOF, the Trustee and the Sponsor have caused this Fourth
Amendment to be executed by their duly authorized officers effective as of the
day and year first above written.
MBIA INC. FIDELITY MANAGEMENT TRUST COMPANY
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ 6-12-95 By
-------------------------------- ------------------------------------
Date Senior Vice President Date
EXHIBIT 10.61
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as of
the 31st day of October, 1995, among MBIA INSURANCE CORPORATION and MBIA Inc.
(collectively, the "Borrowers"), WACHOVIA BANK OF GEORGIA, N.A. as Agent and a
Bank, BANCO SANTANDER, THE SUMITOMO BANK, LTD., NEW YORK BRANCH, THE CHASE
MANHATTAN BANK, N.A., COMMERZBANK AKTIENGESELLSCHAFT, THE INDUSTRIAL BANK OF
JAPAN, LIMITED, NEW YORK BRANCH and NBD BANK (formerly known as NBD BANK, N.A.)
(together with their respective successors and assigns the "Existing Banks")
and BANCA MONTE DEI PASCHI DI SIENA S.P.A.
Background:
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The Borrowers, the Existing Banks and the Agent have entered into a certain
Credit Agreement, dated as of August 31, 1994 (the "Credit Agreement"), as
amended by that certain First Amendment to Credit Agreement dated October 14,
1994.
The Borrowers, the Existing Banks and the Agent wish to amend the Credit
Agreement in certain respects, as hereinafter provided, and to add Banca Monte
dei Paschi di Siena S.p.A. as a Bank party to the Credit Agreement (as defined
in the Credit Agreement).
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions. Capitalized terms used herein which are not
-----------
otherwise defined herein shall have the respective meanings assigned to them in
the Credit Agreement.
SECTION 2. Amendments. The Credit Agreement is hereby amended as set forth
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in this Section 2.
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2.1 Amendments to Section 1.01. The definition of Termination Date
--------------------------
contained in Section 1.01 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"Termination Date" means August 30, 1998, and any extensions thereof
made pursuant to Section 2.05(b) hereof.
2.2 Amendment Increasing Aggregate Commitments. The Credit
------------------------------------------
Agreement shall be amended by increasing the total amount of the Commitments to
$250,000,000. The Commitments of the respective Existing Banks shall not be
modified by this Second Amendment to Credit Agreement. The cover page of the
Credit Agreement shall be amended by deleting the amount $225,000,000 and
inserting in place thereof the amount $250,000,000. The Agent shall deliver
replacement Money Market Notes, executed by the Borrower, to the Existing Banks
in the amount of the total Commitments (as increased hereby) in exchange for
the Money Market Notes currently outstanding. The Money Market Notes
currently outstanding will be returned to the Borrowers for cancellation.
2.3 Addition of Banca Monte del Paschi di Siena S.p.A. as a Bank.
------------------------------------------------------------
The Credit Agreement shall be amended by adding Banca Monte del Paschi di Siena
S.p.A. as a Bank (as defined
in the Credit Agreement) party thereto. Banca Monte del Paschi di Siena S.p.A.
shall have all of the rights and obligations of a Bank under the Credit
Agreement. The lending office and the Commitment of Banca Monte dei Paschi di
Siena S.p.A. shall be as set forth on the signature pages hereof. The Agent
shall deliver to Banca Monte del Paschi di Siena S.p.A. a Syndicated Note,
executed by the Borrowers, in the amount of its Commitment, and a Money Market
Note, executed by the Borrowers in the amount of the total Commitments (as
increased by this Second Amendment to Credit Agreement).
SECTION 3. No Other Amendment. Except for the amendments set forth
------------------
above, the text of the Credit Agreement shall remain unchanged and in full force
and effect. This Amendment is not intended to effect, nor shall it be construed
as, a novation. The Credit Agreement and this Amendment shall be construed
together as a single instrument.
SECTION 4. Representations and Warranties. The Borrowers hereby
------------------------------
represent and warrant in favor of the Agent and the Banks (including, without
limitation, Banca Monte del Paschi di Siena S.p.A.) as follows:
(a) No Default or Event of Default under the Credit Agreement has
occurred and is continuing on the date hereof,
(b) The Borrowers have the corporate power and authority to enter into
this Amendment and to do all acts and things as are required or contemplated
hereunder to be done, observed and performed by them;
(c) This Amendment has been duly authorized, validly executed and
delivered by one or more authorized officers of each of the Borrowers and this
Amendment constitutes the legal, valid and binding obligation of the Borrowers
enforceable against each of them in accordance with its terms; provided, that
the enforceability of this Amendment is subject to general principles of equity
and to bankruptcy, insolvency and similar laws affecting the enforcement of
creditor's rights generally; and
(d) The execution and delivery of this Amendment and the Borrowers'
performance hereunder do not and will not require the consent or approval of any
regulatory authority or governmental authority or agency having jurisdiction
over the Borrowers other than those which have already been obtained or given,
nor be in contravention of or in conflict with the respective Articles of 91
Incorporation or Bylaws of the Borrowers, or the provision of any statute, or
any judgment, order or indenture, instrument, agreement or undertaking, to which
the Borrowers are a party or by which the Borrowers' assets or properties are or
may become bound.
SECTION 5. Counterparts. This Amendment may be executed in multiple
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counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same agreement.
SECTION 6. Governing Law. This Amendment shall be deemed to be made
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pursuant to the laws of the State of Georgia with respect to agreements made and
to be performed wholly in the State of Georgia and shall be construed,
interpreted, performed and enforced in accordance therewith.
SECTION 7. Effective Date. This Amendment shall become effective as of
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October 31, 1995.
2
IN WITNESS WHEREOF. the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.
MBIA INC.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (SEAL)
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Title: Treasurer
MBIA INSURANCE CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (SEAL)
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Title: SVP
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3
WACHOVIA BANK OF GEORGIA, N.A.,
as Agent and as a Bank
By: /s/ FC Childer
------------------------------
Title: SVP
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4
BANCO SANTANDER
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (SEAL)
-------------------------------
Title: VICE PRESIDENT
MANAGER-CORPORATE BANKING
BANCO SANTANDER
/s/ Dom ▇. ▇▇▇▇▇▇▇▇▇
DOM ▇. ▇▇▇▇▇▇▇▇▇
VICE PRESIDENT
BANCO SANTANDER
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THE SUMITOMO BANK, LTD.,
NEW YORK BRANCH
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (SEAL)
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Joint General Manager
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6
THE CHASE MANHATTAN BANK, N.A.
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇, Jr. (SEAL)
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J. ▇▇▇▇▇ ▇▇▇▇▇▇, Jr.
Title: Vice President
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COMMERZBANK AKTIENGESELLSCHAFT
By: /s/ ??????????????? (SEAL)
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Title:
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▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ BRANCH
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. (SEAL)
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▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Title: SENIOR VICE PRESIDENT
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9
NBD BANK (formerly known as NBD BANK,
N.A.)
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: VICE PRESIDENT
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10
$25,000,000 BANCA MONTE DEI PASCHI DI SIENA S.P.A.
By: /s/ ????????????? (SEAL)
-------------------------------
Title:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ (SEAL)
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Lending Office
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Banca Monte dei Paschi di Siena S.p.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone number: (▇▇▇) ▇▇▇-▇▇▇▇
11
MBIA INC. SECRETARY'S CERTIFICATE
----------------------------------
Wachovia Bank of Georgia, N.A.,
as Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Second Amendment to Credit Agreement, dated as
of October 31, 1995 (the "Second Amendment") to the Credit Agreement, dated as
of August 31, 1994, as heretofore amended (collectively, the "Credit
Agreement") by and among MBIA Inc. ("MBIA"), MBIA Insurance Corporation,
Wachovia Bank of Georgia, N.A., as Agent and as Bank, and the other Banks
signatory thereto. All capitalized terms used herein and not otherwise defined
shall have the meanings assigned to them in the Credit Agreement
The undersigned, ▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary of MBIA, hereby certifies that he
has been duly elected, qualified and is acting in such capacity and that, as
such, he is familiar with the facts herein certified and is duly authorized to
certify the same, and hereby further certifies, in connection with the Credit
Agreement that:
1. From August 31, 1994 to and including the date hereof, there has been no
amendment, modification or revocation of the Amended and Restated Certificate of
Incorporation or By-Laws and both are in full force and effect on the date
hereof.
2. Attached hereto as Exhibit C is a complete and correct copy of the
resolution duly adopted by the Board of Directors of MBIA on July 14, 1994
approving, and authorizing the execution and delivery of, the Credit Agreement
and the Notes. Such resolution has not been repealed or amended and is in full
force and effect, and no other resolutions or consents have been adopted by the
Board of Directors of MBIA in connection therewith.
3. ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, who as Treasurer of MBIA signed the Second
Amendment and the Notes, was duly elected, qualified and acting as such at the
time he signed the Second Amendment and the Notes, and his signature appearing
on the Second Amendment and the Notes is his genuine signature.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the 31st
day of October, 1995.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary
-2-
EXHIBIT A
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RESOLVED, that the Company is authorized to enter into lines of credit with
various financial institutions, for an aggregate amount up to $275 million for
the purpose of drawings by the Company for all general corporate purposes and
the Chairman, President and Chief Executive Officer or any Executive Vice
President or the Senior Vice President and Chief Financial Officer or the Senior
Vice President and Controller or the Treasurer or the Secretary or any Assistant
Secretary of the Company be and each hereby is authorized, directed and
empowered to execute and deliver the credit agreements for and on behalf of the
Company, including necessary counterparts, on the material terms described
herein, but with such changes, modifications, additions or deletions as shall to
the signatory deem necessary, desirable or appropriate, such execution thereof
to constitute conclusive evidence of approval of any and all changes,
modifications or additions, and that from and after the execution of such credit
agreements, the Chairman, President and Chief Executive Officer or any Executive
Vice President or any Senior Vice President or the Secretary or any Assistant
Secretary are hereby authorized, empowered and directed to enter into and
execute any amendments to the credit agreements and do all such acts and things
and to execute all such documents, including but not limited to any notes, as
may be necessary to carry out and comply with the provisions of such credit
agreements as executed, as well as the intent and purposes of this resolution.
MBIA INSURANCE CORPORATION
--------------------------
SECRETARY'S CERTIFICATE
-----------------------
Wachovia Bank of Georgia, N.A.,
as Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Second Amendment to Credit Agreement, dated as of
October 31, 1995 (the "Second Amendment") to the Credit Agreement, dated as of
August 31, 1994, as heretofore amended (collectively, the "Credit Agreement") by
and among MBIA Inc., MBIA Insurance Corporation ("MBIA Corp."), Wachovia Bank of
Georgia, N.A., as Agent and as Bank, and the other Banks signatory thereto. All
capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Credit Agreement.
The undersigned, ▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary of MBIA Corp., hereby certifies
that he has been duly elected, qualified and is acting in such capacity and
that, as such, he is familiar with the facts herein certified and is duly
authorized to certify the same, and hereby further certifies, in connection with
the Credit Agreement that:
1. From August 31, 1994 to and including the date hereof, there has been no
amendment, modification or revocation of the Restated Charter or By-Laws of MBIA
Corp. except to reflect MBIA Corp.'s name change. Both the Restated Charter and
the By-Laws are in full force and effect on the date hereof.
2. Attached hereto as Exhibit A is a complete and correct copy of the
resolution duly adopted by the Board of Directors of MBIA Corp. on August 12,
1994 approving, and authorizing the execution and delivery of, the Credit
Agreement and the Notes. Such resolution has not been repealed or amended and
is in full force and effect, and no other resolutions or consents have been
adopted by the Board of Directors of MBIA Corp. in connection therewith.
3. ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, who as Treasurer of MBIA Corp. signed the Second
Amendment and the Notes, was duly elected, qualified and acting as such at the
time he signed the
Second Amendment and the Notes, and his signature appearing on the Second
Amendment and the Notes is his genuine signature.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
31st day of October, 1995.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary
-2-
EXHIBIT A
---------
RESOLVED, that the Corporation is authorized to enter into lines of credit
with various financial institutions, for an aggregate amount up to $275 million
for the purpose of drawings by the Corporation for all general corporate
purposes and the Chairman, President and Chief Executive Officer or any
Executive Vice President or the Senior Vice President and Chief Financial
Officer or the Senior Vice President and Controller or the Treasurer or the
Secretary or any Assistant Secretary of the Corporation be and each hereby is
authorized, directed and empowered to execute and deliver the credit agreements
for and on behalf of the Corporation, including necessary counterparts, on the
material terms described herein, but with such changes, modifications, additions
or deletions as shall to the signatory deem necessary, desirable or appropriate,
such execution thereof to constitute conclusive evidence of approval of any and
all changes, modifications or additions, and that from and after the execution
of such credit agreements, the Chairman, President and Chief Executive Officer
or any Executive Vice President or any Senior Vice President or the Secretary or
any Assistant Secretary are hereby authorized, empowered and directed to enter
into and execute any amendments to the credit agreements and do all such acts
and things and to execute all such documents, including but not limited to any
notes, as may be necessary to carry out and comply with the provisions of such
credit agreements as executed, as well as the intent and purposes of this
resolution.
[LETTERHEAD OF MBIA INSURANCE CORPORATION]
October 31, 1995
To the Banks and the Agent
Referred to Below
c/o Wachovia Bank of Georgia, N.A.,
As Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Credit Agreement, dated as of August 31, 1994, among MBIA Insurance
Corporation, MBIA Inc., Wachovia Bank of Georgia, N.A., as Agent and the
other Banks signatory thereto, as amended
Ladies and Gentlemen:
I am General Counsel of MBIA Inc., a Connecticut corporation ("MBIA") and NMIA
Insurance Corporation (formerly known as Municipal Bond Investors Assurance
Corporation), a New York stock insurance corporation ("MBIA Corp."). This
opinion is being given in connection with the Credit Agreement, dated as of
August 31, 1994, among MBIA Corp., MBIA, Wachovia Bank of Georgia, N.A., as
Agent (the "Agent") and the other Banks signatory thereto, as amended by the
First Amendment to Credit Agreement, dated as of October 14, 1994 and the Second
Amendment to Credit Agreement, dated as of October 31, 1995 (collectively, the
"Credit Agreement"). All capitalized terms used herein and not otherwise
defined shall have the respective meanings assigned thereto in the Credit
Agreement,
In this connection, I have examined the Credit Agreement, the Notes and such
certificates of public officials, such certificates of officers of MBIA and MBIA
Corp., and copies certified to my satisfaction of such corporate documents and
records of MBIA and MBIA Corp. and of such other papers as I have deemed
relevant and necessary or appropriate for the opinions set forth below. I have
relied upon certificates of public officials and of officers of MBIA and MBIA
Corp. with respect to the accuracy of factual matters contained therein which
were not independently established.
I have also assumed (i) the due execution and delivery, pursuant to due
authorization, of the Credit Agreement by the Agent and the Banks, (ii) the
authenticity of all such documents
Page 2
submitted to me as originals, (iii) the genuineness of all signatures, and (iv)
the conformity of all such documents submitted to me as copies.
Based upon the foregoing, it is my opinion that:
(1) MBIA is a corporation duly organized and validly existing and in good
standing under the laws of the State of Connecticut, MBIA Corp. is a stock
insurance corporation duly incorporated and validly existing in good standing
under the laws of the State of New York and each has the corporate power
required to carry on their businesses as now being conducted.
(2) The execution, delivery and performance by MBIA and MBIA Corp. of the
Credit Agreement and the Notes (i) are within the corporate powers of MBIA and
MBIA Corp., (ii) have been duly authorized by all necessary corporate action,
(iii) require no action by or in respect of, or filing with, any governmental
body, agency or official, (iv) do not (A) contravene, or constitute a default
under, any provision of applicable law or regulation or of any agreement,
judgment, injunction, order, decree or other instrument which to my knowledge is
binding upon MBIA and MBIA Corp., or (B) in the case of MBIA, violate any
provision of its Amended and Restated Certificate of Incorporation or By-Laws,
and in the case of MBIA Corp., violate any provision of its Restated Charter or
By-Laws, and (v) to the best of my knowledge, except as provided in the Credit
Agreement, do not result in the creation or imposition of any Lien on any asset
of MBIA, MBIA Corp. or any of their Subsidiaries.
(3) The Credit Agreement and the Notes are valid and binding obligations of
MBIA and MBIA Corp., enforceable in accordance with their respective terms,
except that such enforceability may be limited by laws relating to bankruptcy,
insolvency, reorganization, moratorium, receivership and other similar laws
affecting creditors rights generally and by general principals of equity, and
the enforceability as to rights to indemnity thereunder may be subject to
limitations of public policy.
(4) To the best of my knowledge, there is no action, suit or proceeding
before or by any court, arbitrator or any governmental body, agency or official
pending or threatened against MBIA or MBIA Corp. or their Consolidated
Subsidiaries wherein an adverse decision, ruling or finding would (i) materially
and adversely affect the business, consolidated financial position or
consolidated results of operations of MBIA, MBIA Corp. and their Consolidated
Subsidiaries, considered as a whole, or (ii) affect the validity or
enforceability of the Credit Agreement or any Note.
(5) Each Subsidiary of MBIA and MBIA Corp. is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
Page 3
(6) Neither MBIA nor MBIA Corp. is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(7) Neither MBIA, MBIA Corp. nor any of their Subsidiaries is a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
(8) The choice of law provisions in the Credit Agreement and Notes
designating the law of the State of Georgia as the governing law are enforceable
under the laws of the State of New York. In the event that the choice of law
provisions in the Credit Agreement and Notes designating the law of the State of
Georgia as the governing law are not enforceable, however, and the laws of the
State of New York are applied, the Credit Agreement and Notes constitute valid
and legally binding obligations of MBIA and MBIA Corp. enforceable against MBIA
and MBIA Corp. in accordance with their respective terms under the laws of the
State of New York.
This opinion is delivered to you in connection with the transaction
referenced above and may only be relied upon by you or any Assignee or
Participant under the Credit Agreement, and may not be circulated, quoted or
otherwise referred to without my prior written consent.
Very truly yours,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
General Counsel
PMK:lp
EXHIBIT 10.65
AMENDMENT NO. 1
TO
INVESTMENT SERVICES AGREEMENT
WHEREAS, MBIA Insurance Corporation and MBIA Securities Corp. have
entered into an Investment Services Agreement (the "Agreement"); and
WHEREAS, the parties have agreed to amend said Agreement.
NOW, THEREFORE, the Agreement is hereby amended as follows effective
January 2, 1996:
1. Exhibits B and C of the Agreement are replaced in their entirety by
the substitute Exhibits B and C attached hereto.
2. All other provisions of the Agreement shall remain unchanged.
IN WITNESS WHEREOF, the parties have caused the signatures of their
duly authorized officers to be hereto affixed this 29th day of December, 1995.
MBIA INSURANCE CORPORATION MBIA SECURITIES CORP.
By: /s/ By: /s/
--------------------------- --------------------------
Title: Chief Financial Officer Title: President
Section II. GUIDELINES
----------
The following shall constitute the Investment Guidelines for MBIA Corp., acting
through its duly authorized officers and/or through its outside investment
advisors:
A. Investments shall be made and maintained in compliance with all
applicable provisions of Article 14 of the New York Insurance Laws, as
amended.
B. Fixed Income Policy
(1) Quality: For fixed-income securities (over 1 year when purchased)
--------
average quality will be AA to AA-, with minimum purchase quality,
BBB. For short-term investments (less than 1 year), only
investments rated Al/P1 (or equivalent rating) or better may be
purchased.
(2) Maturity: The average duration target is a maximum of 7.5 years;
---------
minimum duration is 6.0 years.
(3) Maturity Distribution: Diversification in maturity to minimize
----------------------
reinvestment risk is an objective. Although this objective is not
quantified, a reasonably well-laddered portfolio over a wide range
of maturities is to be achieved.
(4) Insured Obligations: MBIA Corp. may purchase or hold obligations
--------------------
insured by MBIA Corp. or its competitors, subject to an aggregate
limit of 20% of the total investment portfolio.
(5) Other: Securities may be purchased in both public and private
-----
markets, subject to the maintenance of an appropriate level of
overall portfolio liquidity and to all other objectives/guidelines.
C. Equity Policy
MBIA Corp. holds interests in certain equity-oriented investments in
limited amounts. It is MBIA Corp.'s current policy not to purchase
equity oriented securities.
D. Further Restrictions
(1) At the time of purchase, no investment may be in default as to
principal or interest payments and all shall be rated "investment
grade" by at least one nationally-recognized domestic rating
agency.
(2) Only U.S. dollar denominated securities may be purchased, except
those required for MBIA Corp.'s foreign operations.
(3) No investment shall be made in futures or options on futures.
(4) All investments shall be held by a third-party custodian (or via
book entry at the Depository Trust Company or a similarly qualified
clearing corporation), as prescribed in approved custody
agreements, or in other customary forms of safekeeping.
2
E. Fixed income investments are further limited to the following types and
amounts (with the term "assets" defined by the New York statutes):
Type of Obligation Limitation Basis
------------------ ---------- -----
(i) Backed by full faith and credit Unlimited In Aggregate
of the United States, including Unlimited Per Issuer or
Government National Mortgage Association Mortgage Pool
direct obligations and guaranteed
mortgage-backed securities.
(ii) Federal National Mortgage Association 10% of Assets In Aggregate
direct obligations and guaranteed 2% of Assets Per Mortgage Pool
mortgage-backed securities.
(iii) Federal Home Loan Mortgage 10% of Assets In Aggregate
Corporation direct obligations and 2% of Assets Per Mortgage Pool
guaranteed mortgage-backed
securities.
(iv) Bonds which have been fully 2% of Assets Per Issuer
collateralized by direct U.S. government
obligations (i.e., prerefunded or
escrowed-to-maturity) and upgraded to
triple-A by at least one nationally-
recognized domestic rating agency.
(v) Obligations not included in Section (iv)
above and backed by full faith and credit of:
(a) Any state government. 5% of Assets Per State
(b) Any political subdivision of a State 2% of Assets Per Issuer
or any municipality within the
United States.
(vi) Obligations not included in Section (iv) 2% of Assets Per Issuer
above and backed by revenue or
other income sources of a single
facility or system.
(vii) Pools of assets rated AAA by at least 5% of Assets In Aggregate
one nationally recognized domestic 0.5% of Assets Per Single Issue
rating agency (excluding assets otherwise
permitted under this agreement).
3
Type of Obligation Limitation Basis
------------------ ---------- -----
(viii) Securities backed by pools of assets 3% of Assets In Aggregate
rated double-A by at least one 0.5% of Assets Per Single Issue
nationally recognized domestic rating
agency (examples may include, but
are not limited to, commercial or
residential mortgages, automobile
loans).
(ix) Investments in any entity, obligations 1% of Assets Per Issuer
of which are insured by MBIA Corp.,
(and which are identified on a list
furnished BY MBIA Corp. to its
advisors from time-to-time) with the
exception of United States
municipalities rated AA or better by at
least on nationally-recognized
domestic rating agency.
(x) Backed by full faith and credit of a 2% of Assets Per Issuer
non-public corporate entity, whether
foreign or domestic.
(xi) Backed by full faith and credit of 10% of Assets In Aggregate
Canada, its Provinces and other 10% of Assets For Federal Govt.
political subdivisions. 2% of Assets Per all Other
Issuers
(xii) Backed by full faith and credit of 10% of Assets In Aggregate
OECD foreign governments other than 1% of Assets Per Country
in Canada.
(xiii) Repurchase agreements with a bank 2% of Assets In Aggregate
or registered broker-deal, provided 1% of Assets Per Bank or
that all securities underlying such Broker-Dealer
agreements:
(a) Would be eligible
investments under
these Guidelines; and.
(b) Have maturities of one
year or less (unless the
agreement is fully
collateralized and
marked to market daily.
4
Type of Obligation Limitation Basis
------------------ ---------- -----
(xiv) investments of one year or 10% of Assets In Aggregate
less in term which are either 1% of Assets Per Bank
direct obligations of or
supported by letters of credit
from banks rated in the
highest short-term category by
at least one nationally-
recognized domestic rating
agency (or judged to be of
equivalent quality).
(xv) Mutual funds or other such 2% of Assets In Aggregate
investment conduits registered
with the SEC under the
Investment Company Act of
1940, as amended (provided
that all investments within
each fund would be eligible
under the Guidelines).
(xvi) Equity-linked debt instruments $100 million In Aggregate
rated A or better by at least $ 10 million Per Issue
one nationally recognized
domestic rating agency with a
maturity no greater than 10
years. Equity index must be
nationally recognized, such as
the S&P 500.
*************************
This Statement of investment Objective & Guidelines shall remain in effect until
revised or amended by action of the MBIA Corp. Board of Directors, in accordance
with its by-laws.
5
January 1996
------------
Section III. SPECIFIC INSTRUCTIONS FOR TAXABLE FIXED-INCOME INVESTMENTS
----------------------------------------------------------
In the context of Sections I. and II. above as applicable, the following shall
constitute the specific instructions for taxable fixed-term investments made by
MBIA Corp., acting through MBIA Securities Corp., its investment advisor, it
being understood that these instructions set forth in this Section III. are to
be adhered to notwithstanding any less restrictive provisions in Sections I. and
II.
A. Maturity
--------
The maximum allowable average duration is 7.5 years; minimum
duration is 5.0 years.
B. Quality
--------
Minimum average quality of total portfolio, "A."
Minimum purchase quality, "BBB+."
Maximum of investments held rated less than "A-," 4 percent.
Minimum holding quality, "BBB-."
6
January 1996
------------
SECTION IV. SPECIFIC INSTRUCTIONS FOR TAX-EXEMPT FIXED-INCOME INVESTMENTS
-------------------------------------------------------------
In the context of Sections I. and II. above as applicable, the following shall
constitute the specific instructions for tax-exempt fixed-term investments made
by MBIA Corp., acting through MBIA Securities Corp., its investment advisor, it
being understood that the instructions set forth in this Section IV. are to be
adhered to notwithstanding any less restrictive provisions in Sections I. and
II.
A. Maturity
--------
The maximum allowable average duration is 7.5 years; minimum
duration is 6.25 years.
B. Quality
-------
Minimum average quality for the tax-exempt portfolio is "AA."
Minimum purchase quality for the tax-exempt portfolio is "BBB."
Minimum holding quality for the taxable portfolio is investment
grade, unless specific waiver of this limit is obtained from MBIA Corp.
Maximum of investments held rated less than A-, 4 percent, unless
specific waiver of this limit is obtained from MBIA Corp.
7
EXHIBIT C
SCHEDULE OF FEES
MANAGEMENT FEES PER ANNUM
ASSETS UNDER MANAGEMENT IN BASIS POINTS TIMES ASSETS
AT MARKET VALUE ($ MILLIONS) UNDER MANAGEMENT
---------------------------- ----------------------------
All Assets 7.0 bp
Management fees shall be paid quarterly, in arrears, 30 days following the end
of each quarter, based upon the average market value of the assets under
management during such quarter.
"Market Value" shall be determined in accordance with Section 9 of this
Agreement.
11
INVESTMENT SERVICES AGREEMENT
-----------------------------
This INVESTMENT SERVICES AGREEMENT (the "Agreement") is made as of the 28th
day of April 1995, by and between MBIA Insurance Corporation, a New York
insurance corporation (the "Client"), and MBIA Securities Corp., a Delaware
Corporation (the "Advisor").
RECITALS
--------
WHEREAS, Client seeks investment advisory services in connection with
certain assets owned by it; and
WHEREAS, Advisor is an affiliate of Client and in the business of
providing investment advisory services; and
WHEREAS, Client desires to retain Advisor to render advice and services
to Client pursuant to the terms and conditions of this Agreement and Advisor is
willing to furnish such advice and services.
NOW THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto mutually agree as follows:
1. Authority of the Advisor. (a) Advisor shall have full power to
------------------------
manage and direct the investments of and for Client's account (the "Account"),
without prior consultation with Client, subject, however, to the limitations
referred to in clause (b) of this paragraph 1 and paragraph 5 hereof. This
discretionary authority makes the Advisor agent and attorney-in-fact with full
power and authority on behalf of the Account (i) to buy, sell, exchange, convert
and otherwise trade in any and all stocks, bonds and other securities as the
Advisor may select; and (ii) to establish and deal through accounts with one or
more securities brokerage firms, dealers or banks as Advisor may select;
provided, however, that none of such firms, dealers or banks shall be a person
or entity that controls, or is controlled by, or is under common control with,
Advisor. This discretionary authority shall remain in full force and effect for
the duration of this Agreement or until the Advisor receives written notice from
Client of its termination in accordance with the terms of this Agreement.
(b) Notwithstanding any other provision of this Agreement, it is
understood and acknowledged by the parties hereto that Client shall at all times
have ultimate control of and responsibility with respect to the functions which
Client is delegating to Advisor Pursuant to the terms of this Agreement. In
furtherance of the foregoing, Advisor shall follow the instructions of Client's
Chief Financial Officer in connection with the management and investment of
Account.
2. Custody of Assets. Client has appointed The Chase Manhattan Bank,
-----------------
N.A., as its custodian (the "Custodian") to act under the Custody Agreement,
dated March 1, 1995. The Custodian will take and have possession of the assets
of the Account. Advisor shall not act as
custodian for Client's Account or take or have possession of any of the assets
thereof, but may issue instructions to the Custodian of such assets as required
in connection with the settlement of transactions effected by Advisor hereunder.
Accounts and records maintained by Advisor in connection with this Agreement
shall be the property of the Client. Notwithstanding the foregoing, or any
other provisions of this Agreement to the contrary, Client and Advisor
acknowledge and agree that Advisor shall at all times own and have custody of
its own general corporate accounts and records.
3. Brokerage. To the extent permitted in paragraph I of this Agreement,
---------
Advisor may place orders for the execution of transactions for the Account with
or through such brokers, dealers, or banks as Advisor may select and, complying
with Section 28(e) of the Securities Exchange Act of 1934, may select brokers-
dealers charging a commission in excess of the commission another broker-dealer
would have charged. The Advisor and other clients advised by the Advisor may
benefit from any information received from broker-dealers selected in connection
with Client's Account.
4. Administrative Services. The Client hereby engages the Advisor to provide
-----------------------
those administrative and securities management services described in Exhibit A
attached hereto.
5. Sub-Advisors and Consultants. Advisor may, at its own expense, employ
----------------------------
other persons to furnish to Advisor statistical and other factual information,
advice regarding economic factors and trends, information with respect to
technical and scientific developments, and such other information, advice and
assistance as Advisor may desire; provided, however, that such subadvisors and
consultants shall not have authority to make investment decisions for Client's
Account.
6. Investment Objectives and Guidelines. Client has provided Advisor
------------------------------------
with a written Statement of Investment Objectives & Guidelines (the
"Guidelines") in the form attached hereto as Exhibit B and incorporated herein
by reference. Advisor agrees to follow the Guidelines when making investments
for Client's Account. Client shall give Advisor prompt written notice of any
investments made for Client's Account which Client believes to have been made
outside the Guidelines. Likewise, Advisor shall give Client prompt written
notice of any investments made for Client's Account which Advisor believes to
have been made outside the Guidelines. Client may change or modify the
Guidelines from time to time by providing the Advisor written notice of such
change or modification. Neither Advisor's acceptance of the Guidelines, nor any
other provision of this Agreement shall be considered a guaranty that any
specific result will be achieved.
7. Allocation of Charges and Expenses. (a) Advisor shall furnish at its
----------------------------------
own expense executive, supervisory and other personnel services, office space,
equipment, utilities and telephone services in connection with supplying the
investment management, advisory, statistical, analytical and research services
contemplated by this Agreement.
(b) Custodian fees, transfer agent fees and brokerage costs, fees and
commissions will be charged to Client's Account.
2
(c) For all expenses not otherwise covered in subsections (a) and (b) above,
it is understood that Client will pay or reimburse Advisor for such expenses,
including, without limitation, governmental fees, interest charges, taxes, fees
and expenses of independent auditors, legal fees and other expenses connected
with the execution of security transactions or the performance by Advisor of any
other duties under this Agreement or any actions taken by Advisor at the request
of Client. Except for taxes, governmental fees and any other expenses outside
of Advisor's control, Advisor will notify Client not less than five (5) business
days prior to incurring any individual expense under this subsection (c) and
Client shall have five (5) business days from receipt of such notice within
which to notify Advisor of its disapproval of any such expense. Failure of
Client to so notify Advisor of its disapproval within five (5) business days
shall be deemed Client's approval of such expense.
(d) Advisor shall provide Client, no later than thirty (30) days following
the end of each calendar month, with a summary of the investment transactions
for that month, together with a statement of any fees and expenses chargeable to
Client pursuant to subsections (b) and (c) above. Any undisputed amounts shall
be paid by Client within fifteen (15) days of receipt of said statement.
8. Compensation of Advisor. The compensation of Advisor for its services
-----------------------
under the Agreement shall be calculated and paid in accordance with the Schedule
of Fees attached hereto as Exhibit C and incorporated herein by reference. It
is intended by the parties hereto that the compensation rate set forth in that
Schedule of Fees, or any sub sequent amendment thereto, shall reflect Advisor's
costs in providing services to Client, pursuant to this Agreement. The Schedule
of Fees will be reviewed annually and adjusted to reflect any changes in the
Advisor's costs.
9. Valuation. In computing the market value of any security held in the
---------
custody account:
(a) Each security listed on any national securities exchange, for which
recent market quotations are readily available, shall be valued at the last
reported sale price on the principal exchange on which such security is traded,
or, if there has been no recently reported sale, at the last reported bid price;
(b) Unlisted securities shall be valued at the then current bid price, if
market quotations are readily available;
(c) Futures contracts will be valued based on closing settlement prices as
reported on regulated futures exchanges, in accordance with accepted practices
and applicable law and regulations; and
(d) Any other security or asset shall be valued in a manner determined in
good faith by Advisor to reflect its fair market value and such valuation shall
be determinative.
3
10. Records. Advisor shall maintain accurate and detailed records of all
-------
transactions in connection with the Account, which shall be subject to
inspection by Client upon reasonable notice during Advisor's regular business
hours. It is understood and acknowledged that such records are the property of
the Company and shall be returned to the Company upon termination of this
Agreement. On request, representatives of Advisor shall meet With the Client's
officers and directors and the officers and directors of the Client's parent
company to discuss investment performance and other matters relating to
Advisor's obligations under this Agreement.
11. Duration and Termination. (a) Subject to the provisions of paragraph 13
------------------------
hereof, this Agreement shall commence as of the date set forth above and shall
continue until terminated (i) by mutual consent of Advisor and Client or (ii) as
hereinafter provided. Fees will be prorated to the date of termination and any
unearned portion of repaid fees will be refunded to Client.
(b) Either party may terminate this Agreement without cause upon at least
thirty (30) days prior written notice.
(c) At its discretion, Client may immediately terminate this Agreement by
written notice to Advisor upon the occurrence of any one of the following
events:
(i) The insolvency of Advisor, the inability of Advisor to pay debts as they
mature, the making of an assignment by Advisor for the benefit of creditors, the
dissolution of Advisor, the appointment of a receiver or liquidator for Advisor
or for a substantial part of Advisor's property, or the institution of
bankruptcy, reorganization, arrangement, insolvency or similar proceedings by or
against Advisor under the laws of any jurisdiction; or
(ii) The default under or any violation of the terms of this Agreement by
Advisor which is not cured by Advisor within fifteen (15) days after receipt by
Advisor of notice of such default from Client of the failure of Advisor to
perform satisfactorily its duties as set forth in this Agreement.
(d) At its discretion, Advisor may immediately terminate this Agreement by
written notice to Client upon the occurrence of any one of the following events:
(i) The insolvency of Client, the inability of Client to pay debts as they
mature, the making of an assignment by Client for the benefit of creditors or
the dissolution of Client.
(ii) The default under or any violation of the terms of this Agreement by
Client which is not cured by Client within fifteen (15) days after receipt by
Client of notice of such default from Advisor of the failure of Client to
perform satisfactorily its duties as set forth in this Agreement; or
(iii)The commencement of a delinquency proceeding against Client pursuant to
Article 74 of the New York Insurance Law.
4
(e) Upon termination of this Agreement, if Client so elects and for a
period not exceeding the earlier of two (2) months or the date on which Client
appoints a successor to Advisor, Advisor shall be obligated to perform those
investment services which are necessary to ensure the proper management of
Client's Account. Termination of this Agreement shall not relieve either party
of liability for the performance of obligations imposed upon such party during
the effective period of this Agreement which have not been performed at the time
of termination thereof. It is specifically agreed to and acknowledged that
Advisor shall be entitled to fees referred to in paragraph 8 for services
rendered pursuant to this subparagraph (e).
12. Non-Exclusive Contract. The services of the Advisor to Client are not to
----------------------
be deemed to be exclusive. Advisor is free to render service to others. Client
agrees that Advisor may give advice and take action with respect to any of its
other clients which may differ from advice given or the timing or nature of
action taken with respect to Client's Account. Nothing in this Agreement shall
be deemed to impose upon the Advisor any obligation to purchase or sell or to
recommend for purchase or sale by or for Client any security or other property
which Advisor, its officers, employees or affiliates may purchase or sell for
their own accounts or which the Advisor may purchase or sell for the account of
any other client. Client recognizes that transactions in a specific security
may not be accomplished for all or any other clients at the same time or at the
same price.
13. Representations. (a) The Advisor represents and warrants that it is
---------------
registered as an investment advisor with the Securities and Exchange Commission
pursuant to the Investment Advisers Act of 1940 as amended.
(b) Advisor represents and warrants that this Agreement has been duly
authorized in accordance with Advisor's governing documents and when executed
and delivered will be binding upon Advisor in accordance with its terms.
(c) Advisor represents and warrants that it will maintain records in
connection with the Account in accordance with the applicable requirements of
Section 325 of the New York Insurance Law or any successor statute thereto.
(d) Client represents and warrants that this Agreement has been duly
authorized by Client's Board of Directors in accordance with Client's governing
documents and when executed and delivered will be binding upon Client in
accordance with its terms.
14. Department of Insurance Approval. This Agreement is executed by the
--------------------------------
parties with the understanding that it is contingent upon final approval by the
New York Department of Insurance. In the event such approval is not obtained,
the Client shall have the unqualified right to terminate this Agreement without
penalty, provided, however, that any investment action taken by Advisor on
behalf of Client prior to the effective date of such termination shall be at
Client's risk.
15. Applicable Laws. Advisor shall comply with all securities laws and other
---------------
laws applicable to investment managers, including, without limitation, the
Investment Advisers Act of
5
1940, as amended. Advisor shall comply with the Guidelines in providing its
services hereunder, and, except for monitoring compliance with the provisions of
law referred to in the Guidelines, shall have no independent duty or
responsibility to assure that investments permitted by Client's Guidelines
qualify as permitted investments under applicable insurance laws.
16. Voting Rights. Decisions on voting of proxies will be made by Client.
-------------
17. Liability of Advisor. In providing Client with investment advice and other
--------------------
services as herein provided, neither Advisor nor any officer, director, employee
or agent thereof shall be held liable to Client, its creditors or its
stockholder(s) for errors of judgment or for anything except willful
malfeasance, bad faith or negligence in the performance of its duties or
reckless disregard of its obligations and duties under the terms of this
Agreement. It is further understood and agreed that Advisor may rely upon
information furnished to it reasonably believed to be accurate and reliable.
Nothing herein shall constitute a waiver or limitation of any rights which the
Client may have under any federal securities laws.
18. Confidential Relationship. The terms and conditions of this Agreement, all
-------------------------
information and advice furnished by either party under this Agreement and any
records generated by this Agreement are confidential and shall not be disclosed
to third parties, except as required by law.
19. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be delivered by hand, telecopier, or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses and shall be deemed given on the date on which such notice is
received:
To Client at:
Attention: General Counsel
Or by telecopier at:
With a copy to:
Attention: Chief Financial Officer
Or by telecopier at:
To Advisor at:
Attention: President
6
Or by telecopier at:
Either party may change its address or telecopier number for purposes of this
paragraph by giving the other party written notice of the new address or
telecopier number in the manner set forth below.
20. Waiver. Waiver by either party of any obligation of the other party does
------
not constitute a waiver of any further or other obligation of the other party.
21. Amendment. This Agreement may be modified or amended only by an instrument
---------
in writing signed by duly authorized representatives of both Advisor and Client.
22. Agreement not Assignable. This Agreement is not assignable by either Client
------------------------
or Advisor.
23. Cumulative. All rights, powers and privileges conferred hereunder upon the
----------
parties shall be cumulative and shall not restrict those given by law.
24. Counterparts. This Agreement may be executed in counterparts, each of which
------------
so executed shall be deemed to be an original and such counterparts together
shall constitute but one and the same contract, which shall be sufficiently
evidenced by any such original counterpart.
25. Construction. The captions used in this Agreement are for convenience only,
------------
and shall not affect the construction or interpretation of any of its
provisions. Each of the provisions of this Agreement is severable, and
invalidity or inapplicability of one or more provisions, in whole or in part,
shall not affect any other provision. This Agreement shall be construed in
accordance with the laws of the State of New York, and is subject to the
provisions of the Investment Advisers Act of 1940, as amended, and the rules and
regulations of the Securities and Exchange Commission.
26. Disclosure Statement. Client acknowledges receipt of Advisor's disclosure
--------------------
statement, as required by Rule 204-3 under the Investment Advisers Act of 1940,
not less than 48 hours prior to the date of execution of this Agreement.
27. Dispute Resolution. Any disputes arising under this Agreement shall be
------------------
settled by arbitration in New York City in accordance with the American
Arbitration Association rules then in effect, any award rendered thereon shall
be enforceable in any court of competent jurisdiction.
28. Entirety of Agreement. This Agreement contains the entire agreement between
---------------------
the parties with respect to the subject matter hereof and supersedes and cancels
any prior understandings and agreements between the parties.
7
IN WITNESS WHEREOF, the parties have caused the signatures of their duly
authorized offices to be hereto affixed.
By: By:
------------------------- -----------------------------
Title: Senior Vice President Title: President, MBIA Securities Corp.
----------------------- --------------------------------
"Client" "Advisor"
8
EXHIBIT A
ADMINISTRATIVE SERVICES
Advisor will provide the following securities support functions:
- Settlement/Custody Control
--------------------------
Daily coordination of any securities purchased or sold with investment
manager, brokers and clearance bank. Confirmation of funds movement upon
receipt/delivery of securities. Reconciliation of asset position between
custody bank and investment operations.
- Transaction Processing
----------------------
Daily recording of individual security transactions on trade date.
- Income Collection
-----------------
Daily collection and recording principal (maturity/redemption) and interest
payments. Follow up on overdue payments.
- Bank Reconciliation
-------------------
Monthly reconciliation of all cash transactions in demand deposit accounts.
- Market Valuation of Assets
--------------------------
Assets priced monthly by an outside service.
- Investment Accounting Staff Support
-----------------------------------
Staff support will be provided to assist the Client in responding to audit,
tax or other regulatory interrogatories related to investment transactions as
reported.
Independent administrative services which are not provided by Advisor under
this Agreement include:
-- Custody services provided by The Chase Manhattan Bank, N.A. of New
York.
-- Outside audit services.
9
The following reports will be provided to the Client and will include
transaction reports and investment management reports prepared monthly or
quarterly, as the case may be:
(a) Transaction Reporting:
---------------------
(i) Quarterly detail reports on new commitments.
(ii) Quarterly detail reports on all transactions including purchases,
sales, investment income and return of principal.
(iii) Transactional information on investments, as needed, to support tax
return preparation.
(b) Portfolio Review:
----------------
Quarterly summary and detail on the Client's holdings will be provided.
This report will include market values, overall quality ratings, portfolio
yield and a summary review of market conditions and portfolio strategy.
(c) Performance Reporting:
---------------------
Included as part of the portfolio review will be performance results on
both yields on new commitments and total return for the portfolio.
Performance will be measured against agreed upon indices.
10
EXHIBIT B
April 1995
----------
MBIA INSURANCE CORPORATION
STATEMENT OF INVESTMENT OBJECTIVES & GUIDELINES
-----------------------------------------------
SECTION I. OBJECTIVES:
----------
A. Preservation of Capital in the context of maintaining triple-A
-----------------------
ratings for MBIA Insurance Corporation ("MBIA Corp.") and supporting
recognition of MBIA Corp.'s financial stability and strength by
insured bond investors, municipal market intermediaries, and other
municipal bond market constituencies.
B. Subject to A. above, optimization of after-tax investment income
----------------------------------------------------------------
to support the predictability and consistency of company earnings
and cash flow.
C. Subject to A. and B. above, optimization of long-term total returns.
-------------------------------------------------------------------
D. Maintenance of reasonable liquidity after taking into account the
-----------------------------------
company's other sources of liquidity (including bank credit
facilities and cash flow) for potential claims-paying and other
corporate needs.
Overall, these objectives call for maintenance of high quality investments,
avoidance of undue volatility in both income and returns and generally minimal
amounts of short-term investments and/or U.S. Treasury obligations for immediate
liquidity. MBIA Corp.'s investment selections will be made with a bias to hold
for the long-term, and to avoid sales or swaps in the absence of compelling
circumstances of tax credit, structural or other economic reasons, and not to
rely on short-term trading or market timing to achieve performance. The mix of
taxable and tax-exempt investments will vary from time to time with both market
conditions and company tax circumstances.
In seeking to achieve these objectives, MBIA Corp. will monitor, evaluate and
report on the performance of its investment managers and the portfolio, using
appropriate market-related benchmarks. In addition, MBIA Corp. will maintain an
awareness of and periodically report on the investment practices and results of
key competitors and comply with the constraints or limitations related to
internal guidelines and regulatory or rating agency considerations.
SECTION II. GUIDELINES:
----------
The following shall constitute the Investment Guidelines for MBIA Corp., acting
through its duly authorized officers and/or through its outside investment
advisors:
A. Investments shall be made and maintained in compliance with all
applicable provisions of Article 14 of the New York Insurance Laws, as
amended.
B. Fixed Income Policy
(1) Quality: For fixed-income securities (over 1 year when purchased)
-------
average quality will be AA to AA-, with minimum purchase quality,
BBB. For short-term investments (less than 1 year), only investments
rated A1/P1 (or equivalent rating) or better may be purchased.
(2) Maturity: The average duration target is a maximum of 7.5 years;
--------
minimum duration is 6.0 years.
(3) Maturity Distribution: Diversification in maturity to minimize
---------------------
reinvestment risk is an objective. Although this objective is not
quantified, a reasonably well-laddered portfolio over a wide range
of maturities is to be achieved.
(4) Insured Obligations: MBIA Corp. may purchase or hold obligations
-------------------
insured BY MBIA Corp. or its competitors, subject to an aggregate
limit of 20% of the total investment portfolio.
(5) Other: Securities may be purchased in both public and private
------
markets, subject to the maintenance of an appropriate level of
overall portfolio liquidity and to all other objectives/guidelines.
C. Equity Policy
MBIA Corp. holds interests in certain equity-oriented investments in
limited amounts. It is MBIA Corp.'s current policy not to purchase
equity oriented securities.
D. Further Restrictions
(1) At the time of purchase, no investment may be in default as to
principal or interest payments and all shall be rated "investment
grade" by at least one nationally-recognized domestic rating
agency.
(2) Only U.S. dollar denominated securities may be purchased, except
those required for MBIA Corp.'s foreign operations.
(3) No investment shall be made in futures or options on futures.
(4) All investments shall be held by a third-party custodian (or via
book entry at the Depository Trust Company or a similarly qualified
clearing corporation), as prescribed in approved custody
agreements, or in other customary forms of safekeeping.
2
E. Fixed income investments are further limited to the following types and
amounts (with the term "assets" defined by the New York statutes):
Type of Obligation Limitation Basis
------------------ ---------- -----
(i) Backed by full faith and credit Unlimited In Aggregate
of the United States, including Unlimited Per Issuer or
Government National Mortgage Association Mortgage Pool
direct obligations and guaranteed
mortgage-backed securities.
(ii) Federal National Mortgage Association 10% of Assets In Aggregate
direct obligations and guaranteed 2% of Assets Per Mortgage
mortgage-backed securities. Pool
(iii) Federal Home Loan Mortgage 10% of Assets In Aggregate
Corporation direct obligations and 2% of Assets Per Mortgage
guaranteed mortgage-backed Pool
securities.
(iv) Bonds which have been fully 2% of Assets Per Issuer
collateralized by direct U.S. government
obligations (i.e. pre-refunded or
escrowed-to-maturity) and upgraded to
triple-A by at least one nationally-
recognized domestic rating agency.
(v) Obligations not included in Section (iv)
above and backed by full faith and credit of:
(a) Any state government. 5% of Assets Per State
(b) Any political subdivision of a State 2% of Assets Per Issuer
or any municipality within the
United States.
(vi) Obligations not included in Section (iv) 2% of Assets Per Issuer
above and backed by revenue or
other income sources of a single
facility or system.
(vii) Pools of assets rated AAA by at least 5% of Assets In Aggregate
one nationally recognized domestic 0.5% of Assets Per Single Issue
rating agency (excluding assets otherwise
permitted under this agreement).
3
Type of Obligation Limitation Basis
------------------ ---------- -----
(viii) Securities backed by pools of assets 3% of Assets In Aggregate
rated double-A by at least one 0.5% of Assets Per Single Issue
nationally recognized domestic rating
agency (examples may include, but
are not limited to, commercial or
residential mortgages, automobile
loans).
(ix) Investments in any entity, obligations 1% of Assets Per Issuer
of which are insured by MBIA Corp.,
(and which are identified on a list
furnished by MBIA Corp. to its
advisors from time-to-time) with the
exception of United States
municipalities rated AA or better by at
least on nationally-recognized
domestic rating agency.
(x) Backed by full faith and credit of a 2% of Assets Per Issuer
non-public corporate entity, whether
foreign or domestic.
(xi) Backed by full faith and credit of 10% of Assets In Aggregate
Canada, its Provinces and other 10% of Assets For Federal Govt.
political subdivisions. 2% of Assets Per All Other
Issuers
(xii) Backed by full faith and credit of 10% of Assets In Aggregate
OECD foreign governments other than 1% of Assets Per Country
in Canada.
(xiii) Repurchase agreements with a bank 2% of Assets In Aggregate
or registered broker-dealer, provided 1% of Assets Per Bank or
that all securities underlying such Broker-Dealer
agreements:
(a) would be eligible
investments under
these Guidelines; and
(b) have maturities of one
year or less (unless the
agreement is fully
collateralized and
marked to market daily).
4
Type of Obligation Limitation Basis
------------------ ---------- -----
(xiv) Investments of one year or 10% of Assets In Aggregate
less in term which are either 1% of Assets Per Bank
direct obligations of or
supported by letters of credit
from banks rated in the
highest short-term category by
at least one nationally-
recognized domestic rating
agency (or judged to be of
equivalent quality).
(xv) Mutual funds or other such 2% of Assets In Aggregate
investment conduits registered
with the SEC under the
Investment Company Act of
1940, as amended (provided
that all investments within
each fund would be eligible
under the Guidelines).
(xvi) Equity-linked debt instruments $100 million In Aggregate
rated A or better by at least $ 10 million Per Issue
one nationally recognized
domestic rating agency with a
maturity no greater than 10
years. Equity index must be
nationally recognized, such as
the S&P 500.
* * * * * * * * * * *
THIS STATEMENT OF INVESTMENT OBJECTIVES & GUIDELINES SHALL REMAIN IN EFFECT
UNTIL REVISED OR AMENDED BY ACTION OF THE MBIA CORP. BOARD OF DIRECTORS, IN
ACCORDANCE WITH ITS BY-LAWS.
5
May 1995
--------
SECTION III. SPECIFIC INSTRUCTIONS FOR FIXED-INCOME INVESTMENTS MANAGED BY
-------------------------------------------------------------
MBIA SECURITIES CORP.
---------------------
In the context of Sections I. and II. above as applicable, the following shall
constitute the specific instructions for fixed-term investments made by MBIA
Corp., acting through MBIA Securities Corp. ("MBIA SECO"), its investment
advisor; it being understood that these instructions set forth in this Section
III. are to be adhered to notwithstanding any less restrictive provisions in
Sections I. and II.
A. Permitted Investments
---------------------
MBIA SECO may invest only in the following categories of fixed income
investments as set forth in Section II of the Guidelines:
Section Type
------- ----
(i) Full faith and credit of the United States
(x) Non-public corporates
(xi) Canadian obligations
(xii) OECD governments
(xiii) Repurchase agreements
(xiv) Short-term investments
B. Maturity
--------
The maximum allowable average duration is 7.5 years; minimum duration is
5.0 years.
C. Quality
-------
Minimum average quality of total portfolio, "A."
Minimum purchase quality, "BBB+."
Maximum of investments held rated less than "A-," 4 percent.
Minimum holding quality, "BBB-."
6
EXHIBIT C
MANAGEMENT FEES PER ANNUM
ASSETS UNDER MANAGEMENT IN BASIS POINTS TIMES ASSETS
AT MARKET VALUE ($ MILLIONS) UNDER MANAGEMENT
---------------------------- ----------------------------
First $1,000 7.0 bp
Next $1,000 6.0 bp
In excess of $2,000 5.0 bp
Management fees shall be paid quarterly, in arrears, 30 days following the end
of each quarter, based upon the average market value of the assets under
management during such quarter.
"Market Value" shall be determined in accordance with Section 9 of this
Agreement.
11
[LOGO] MBIA INSURANCE CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇
May 31, 1995
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Associate Insurance Examiner
Property/Casualty Bureau
State of New York Insurance Department
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: MBIA Insurance Corporation
Proposed Investment Services Agreement (the "Agreement")
with MBIA Securities Corp.
Dear ▇▇. ▇▇▇▇▇▇▇▇:
Enclosed please find an executed copy of the Agreement. At your request,
Section 8 on Compensation of Advisor has been revised to state that the Schedule
of Fees (Exhibit C) will be reviewed annually and adjusted to reflect any
changes in MBIA Securities Corp. ("SECO") costs. In addition, as required by
your letter dated May 17, 1995, MBIA Insurance Corporation ("MBIA") commits to
notify the Department when its assets under management by SECO exceeds 20% of
the total admitted assets of MBIA.
If I can be of any further assistance, please call me at (▇▇▇) ▇▇▇-▇▇▇▇.
Very truly yours,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant General Counsel
cc: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
EXHIBIT B
---------
January 1996
------------
MBIA INSURANCE CORPORATION
STATEMENT OF INVESTMENT OBJECTIVES & GUIDELINES
-----------------------------------------------
SECTION I. OBJECTIVES
----------
A. Preservation of Capital in the context of maintaining triple-A ratings
-----------------------
for MBIA Insurance Corporation ("MBIA Corp.") and supporting recognition
of MBIA Corp.'s financial stability and strength by insured bond
investors, municipal market intermediaries, and other municipal bond
market constituencies.
B. Subject to A. above, optimization of after-tax investment income to
----------------------------------------------------------------
support the predictability and consistency of company earnings and cash
flow.
C. Subject to A. and B. above, optimization of long-term total returns.
-------------------------------------------------------------------
D. Maintenance of reasonable liquidity after taking into account the
-----------------------------------
company's other sources of liquidity (including bank credit facilities
and cash flow) for potential claims paying and other corporate needs.
Overall, these objectives call for maintenance of high quality investments,
avoidance of undue volatility in both income and returns and generally minimal
amounts of short-term investments and/or U.S. Treasury obligations for immediate
liquidity. MBIA Corp.'s investment selections will be made with a bias to hold
for the long-term, and to avoid sales or swaps in the absence of compelling
circumstances of tax credit, structural or other economic reasons, and not to
rely on short-term trading or market timing to achieve performance. The mix of
taxable and tax-exempt investments will vary from time to time with both market
conditions and company tax circumstances.
In seeking to achieve these objectives, MBIA Corp. will monitor, evaluate and
report on the performance of its investment managers and the portfolio, using
appropriate market-related benchmarks. In addition, MBIA Corp. will maintain an
awareness of and periodically report on the investment practices and results of
key competitors and comply with the constraints or limitations related to
guidelines and regulatory or rating agency considerations.
EXHIBIT 10.65
AMENDMENT NO. 1
TO
INVESTMENT SERVICES AGREEMENT
WHEREAS, MBIA Insurance Corporation and MBIA Securities Corp. have
entered into an Investment Services Agreement (the "Agreement"); and
WHEREAS, the parties have agreed to amend said Agreement.
NOW, THEREFORE, the Agreement is hereby amended as follows effective
January 2, 1996:
1. Exhibits B and C of the Agreement are replaced in their entirety by
the substitute Exhibits B and C attached hereto.
2. All other provisions of the Agreement shall remain unchanged.
IN WITNESS WHEREOF, the parties have caused the signatures of their
duly authorized officers to be hereto affixed this 29th day of December, 1995.
MBIA INSURANCE CORPORATION MBIA SECURITIES CORP.
By: /s/ By: /s/
--------------------------- --------------------------
Title: Chief Financial Officer Title: President
Section II. GUIDELINES
----------
The following shall constitute the Investment Guidelines for MBIA Corp., acting
through its duly authorized officers and/or through its outside investment
advisors:
A. Investments shall be made and maintained in compliance with all
applicable provisions of Article 14 of the New York Insurance Laws, as
amended.
B. Fixed Income Policy
(1) Quality: For fixed-income securities (over 1 year when purchased)
--------
average quality will be AA to AA-, with minimum purchase quality,
BBB. For short-term investments (less than 1 year), only
investments rated Al/P1 (or equivalent rating) or better may be
purchased.
(2) Maturity: The average duration target is a maximum of 7.5 years;
---------
minimum duration is 6.0 years.
(3) Maturity Distribution: Diversification in maturity to minimize
----------------------
reinvestment risk is an objective. Although this objective is not
quantified, a reasonably well-laddered portfolio over a wide range
of maturities is to be achieved.
(4) Insured Obligations: MBIA Corp. may purchase or hold obligations
--------------------
insured by MBIA Corp. or its competitors, subject to an aggregate
limit of 20% of the total investment portfolio.
(5) Other: Securities may be purchased in both public and private
-----
markets, subject to the maintenance of an appropriate level of
overall portfolio liquidity and to all other objectives/guidelines.
C. Equity Policy
MBIA Corp. holds interests in certain equity-oriented investments in
limited amounts. It is MBIA Corp.'s current policy not to purchase
equity oriented securities.
D. Further Restrictions
(1) At the time of purchase, no investment may be in default as to
principal or interest payments and all shall be rated "investment
grade" by at least one nationally-recognized domestic rating
agency.
(2) Only U.S. dollar denominated securities may be purchased, except
those required for MBIA Corp.'s foreign operations.
(3) No investment shall be made in futures or options on futures.
(4) All investments shall be held by a third-party custodian (or via
book entry at the Depository Trust Company or a similarly qualified
clearing corporation), as prescribed in approved custody
agreements, or in other customary forms of safekeeping.
2
E. Fixed income investments are further limited to the following types and
amounts (with the term "assets" defined by the New York statutes):
Type of Obligation Limitation Basis
------------------ ---------- -----
(i) Backed by full faith and credit Unlimited In Aggregate
of the United States, including Unlimited Per Issuer or
Government National Mortgage Association Mortgage Pool
direct obligations and guaranteed
mortgage-backed securities.
(ii) Federal National Mortgage Association 10% of Assets In Aggregate
direct obligations and guaranteed 2% of Assets Per Mortgage Pool
mortgage-backed securities.
(iii) Federal Home Loan Mortgage 10% of Assets In Aggregate
Corporation direct obligations and 2% of Assets Per Mortgage Pool
guaranteed mortgage-backed
securities.
(iv) Bonds which have been fully 2% of Assets Per Issuer
collateralized by direct U.S. government
obligations (i.e., prerefunded or
escrowed-to-maturity) and upgraded to
triple-A by at least one nationally-
recognized domestic rating agency.
(v) Obligations not included in Section (iv)
above and backed by full faith and credit of:
(a) Any state government. 5% of Assets Per State
(b) Any political subdivision of a State 2% of Assets Per Issuer
or any municipality within the
United States.
(vi) Obligations not included in Section (iv) 2% of Assets Per Issuer
above and backed by revenue or
other income sources of a single
facility or system.
(vii) Pools of assets rated AAA by at least 5% of Assets In Aggregate
one nationally recognized domestic 0.5% of Assets Per Single Issue
rating agency (excluding assets otherwise
permitted under this agreement).
3
Type of Obligation Limitation Basis
------------------ ---------- -----
(viii) Securities backed by pools of assets 3% of Assets In Aggregate
rated double-A by at least one 0.5% of Assets Per Single Issue
nationally recognized domestic rating
agency (examples may include, but
are not limited to, commercial or
residential mortgages, automobile
loans).
(ix) Investments in any entity, obligations 1% of Assets Per Issuer
of which are insured by MBIA Corp.,
(and which are identified on a list
furnished BY MBIA Corp. to its
advisors from time-to-time) with the
exception of United States
municipalities rated AA or better by at
least on nationally-recognized
domestic rating agency.
(x) Backed by full faith and credit of a 2% of Assets Per Issuer
non-public corporate entity, whether
foreign or domestic.
(xi) Backed by full faith and credit of 10% of Assets In Aggregate
Canada, its Provinces and other 10% of Assets For Federal Govt.
political subdivisions. 2% of Assets Per all Other
Issuers
(xii) Backed by full faith and credit of 10% of Assets In Aggregate
OECD foreign governments other than 1% of Assets Per Country
in Canada.
(xiii) Repurchase agreements with a bank 2% of Assets In Aggregate
or registered broker-deal, provided 1% of Assets Per Bank or
that all securities underlying such Broker-Dealer
agreements:
(a) Would be eligible
investments under
these Guidelines; and.
(b) Have maturities of one
year or less (unless the
agreement is fully
collateralized and
marked to market daily.
4
Type of Obligation Limitation Basis
------------------ ---------- -----
(xiv) investments of one year or 10% of Assets In Aggregate
less in term which are either 1% of Assets Per Bank
direct obligations of or
supported by letters of credit
from banks rated in the
highest short-term category by
at least one nationally-
recognized domestic rating
agency (or judged to be of
equivalent quality).
(xv) Mutual funds or other such 2% of Assets In Aggregate
investment conduits registered
with the SEC under the
Investment Company Act of
1940, as amended (provided
that all investments within
each fund would be eligible
under the Guidelines).
(xvi) Equity-linked debt instruments $100 million In Aggregate
rated A or better by at least $ 10 million Per Issue
one nationally recognized
domestic rating agency with a
maturity no greater than 10
years. Equity index must be
nationally recognized, such as
the S&P 500.
*************************
This Statement of investment Objective & Guidelines shall remain in effect until
revised or amended by action of the MBIA Corp. Board of Directors, in accordance
with its by-laws.
5
January 1996
------------
Section III. SPECIFIC INSTRUCTIONS FOR TAXABLE FIXED-INCOME INVESTMENTS
----------------------------------------------------------
In the context of Sections I. and II. above as applicable, the following shall
constitute the specific instructions for taxable fixed-term investments made by
MBIA Corp., acting through MBIA Securities Corp., its investment advisor, it
being understood that these instructions set forth in this Section III. are to
be adhered to notwithstanding any less restrictive provisions in Sections I. and
II.
A. Maturity
--------
The maximum allowable average duration is 7.5 years; minimum
duration is 5.0 years.
B. Quality
--------
Minimum average quality of total portfolio, "A."
Minimum purchase quality, "BBB+."
Maximum of investments held rated less than "A-," 4 percent.
Minimum holding quality, "BBB-."
6
January 1996
------------
SECTION IV. SPECIFIC INSTRUCTIONS FOR TAX-EXEMPT FIXED-INCOME INVESTMENTS
-------------------------------------------------------------
In the context of Sections I. and II. above as applicable, the following shall
constitute the specific instructions for tax-exempt fixed-term investments made
by MBIA Corp., acting through MBIA Securities Corp., its investment advisor, it
being understood that the instructions set forth in this Section IV. are to be
adhered to notwithstanding any less restrictive provisions in Sections I. and
II.
A. Maturity
--------
The maximum allowable average duration is 7.5 years; minimum
duration is 6.25 years.
B. Quality
-------
Minimum average quality for the tax-exempt portfolio is "AA."
Minimum purchase quality for the tax-exempt portfolio is "BBB."
Minimum holding quality for the taxable portfolio is investment
grade, unless specific waiver of this limit is obtained from MBIA Corp.
Maximum of investments held rated less than A-, 4 percent, unless
specific waiver of this limit is obtained from MBIA Corp.
7
EXHIBIT C
SCHEDULE OF FEES
MANAGEMENT FEES PER ANNUM
ASSETS UNDER MANAGEMENT IN BASIS POINTS TIMES ASSETS
AT MARKET VALUE ($ MILLIONS) UNDER MANAGEMENT
---------------------------- ----------------------------
All Assets 7.0 bp
Management fees shall be paid quarterly, in arrears, 30 days following the end
of each quarter, based upon the average market value of the assets under
management during such quarter.
"Market Value" shall be determined in accordance with Section 9 of this
Agreement.
11
INVESTMENT SERVICES AGREEMENT
-----------------------------
This INVESTMENT SERVICES AGREEMENT (the "Agreement") is made as of the 28th
day of April 1995, by and between MBIA Insurance Corporation, a New York
insurance corporation (the "Client"), and MBIA Securities Corp., a Delaware
Corporation (the "Advisor").
RECITALS
--------
WHEREAS, Client seeks investment advisory services in connection with
certain assets owned by it; and
WHEREAS, Advisor is an affiliate of Client and in the business of
providing investment advisory services; and
WHEREAS, Client desires to retain Advisor to render advice and services
to Client pursuant to the terms and conditions of this Agreement and Advisor is
willing to furnish such advice and services.
NOW THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto mutually agree as follows:
1. Authority of the Advisor. (a) Advisor shall have full power to
------------------------
manage and direct the investments of and for Client's account (the "Account"),
without prior consultation with Client, subject, however, to the limitations
referred to in clause (b) of this paragraph 1 and paragraph 5 hereof. This
discretionary authority makes the Advisor agent and attorney-in-fact with full
power and authority on behalf of the Account (i) to buy, sell, exchange, convert
and otherwise trade in any and all stocks, bonds and other securities as the
Advisor may select; and (ii) to establish and deal through accounts with one or
more securities brokerage firms, dealers or banks as Advisor may select;
provided, however, that none of such firms, dealers or banks shall be a person
or entity that controls, or is controlled by, or is under common control with,
Advisor. This discretionary authority shall remain in full force and effect for
the duration of this Agreement or until the Advisor receives written notice from
Client of its termination in accordance with the terms of this Agreement.
(b) Notwithstanding any other provision of this Agreement, it is
understood and acknowledged by the parties hereto that Client shall at all times
have ultimate control of and responsibility with respect to the functions which
Client is delegating to Advisor Pursuant to the terms of this Agreement. In
furtherance of the foregoing, Advisor shall follow the instructions of Client's
Chief Financial Officer in connection with the management and investment of
Account.
2. Custody of Assets. Client has appointed The Chase Manhattan Bank,
-----------------
N.A., as its custodian (the "Custodian") to act under the Custody Agreement,
dated March 1, 1995. The Custodian will take and have possession of the assets
of the Account. Advisor shall not act as
custodian for Client's Account or take or have possession of any of the assets
thereof, but may issue instructions to the Custodian of such assets as required
in connection with the settlement of transactions effected by Advisor hereunder.
Accounts and records maintained by Advisor in connection with this Agreement
shall be the property of the Client. Notwithstanding the foregoing, or any
other provisions of this Agreement to the contrary, Client and Advisor
acknowledge and agree that Advisor shall at all times own and have custody of
its own general corporate accounts and records.
3. Brokerage. To the extent permitted in paragraph I of this Agreement,
---------
Advisor may place orders for the execution of transactions for the Account with
or through such brokers, dealers, or banks as Advisor may select and, complying
with Section 28(e) of the Securities Exchange Act of 1934, may select brokers-
dealers charging a commission in excess of the commission another broker-dealer
would have charged. The Advisor and other clients advised by the Advisor may
benefit from any information received from broker-dealers selected in connection
with Client's Account.
4. Administrative Services. The Client hereby engages the Advisor to provide
-----------------------
those administrative and securities management services described in Exhibit A
attached hereto.
5. Sub-Advisors and Consultants. Advisor may, at its own expense, employ
----------------------------
other persons to furnish to Advisor statistical and other factual information,
advice regarding economic factors and trends, information with respect to
technical and scientific developments, and such other information, advice and
assistance as Advisor may desire; provided, however, that such subadvisors and
consultants shall not have authority to make investment decisions for Client's
Account.
6. Investment Objectives and Guidelines. Client has provided Advisor
------------------------------------
with a written Statement of Investment Objectives & Guidelines (the
"Guidelines") in the form attached hereto as Exhibit B and incorporated herein
by reference. Advisor agrees to follow the Guidelines when making investments
for Client's Account. Client shall give Advisor prompt written notice of any
investments made for Client's Account which Client believes to have been made
outside the Guidelines. Likewise, Advisor shall give Client prompt written
notice of any investments made for Client's Account which Advisor believes to
have been made outside the Guidelines. Client may change or modify the
Guidelines from time to time by providing the Advisor written notice of such
change or modification. Neither Advisor's acceptance of the Guidelines, nor any
other provision of this Agreement shall be considered a guaranty that any
specific result will be achieved.
7. Allocation of Charges and Expenses. (a) Advisor shall furnish at its
----------------------------------
own expense executive, supervisory and other personnel services, office space,
equipment, utilities and telephone services in connection with supplying the
investment management, advisory, statistical, analytical and research services
contemplated by this Agreement.
(b) Custodian fees, transfer agent fees and brokerage costs, fees and
commissions will be charged to Client's Account.
2
(c) For all expenses not otherwise covered in subsections (a) and (b) above,
it is understood that Client will pay or reimburse Advisor for such expenses,
including, without limitation, governmental fees, interest charges, taxes, fees
and expenses of independent auditors, legal fees and other expenses connected
with the execution of security transactions or the performance by Advisor of any
other duties under this Agreement or any actions taken by Advisor at the request
of Client. Except for taxes, governmental fees and any other expenses outside
of Advisor's control, Advisor will notify Client not less than five (5) business
days prior to incurring any individual expense under this subsection (c) and
Client shall have five (5) business days from receipt of such notice within
which to notify Advisor of its disapproval of any such expense. Failure of
Client to so notify Advisor of its disapproval within five (5) business days
shall be deemed Client's approval of such expense.
(d) Advisor shall provide Client, no later than thirty (30) days following
the end of each calendar month, with a summary of the investment transactions
for that month, together with a statement of any fees and expenses chargeable to
Client pursuant to subsections (b) and (c) above. Any undisputed amounts shall
be paid by Client within fifteen (15) days of receipt of said statement.
8. Compensation of Advisor. The compensation of Advisor for its services
-----------------------
under the Agreement shall be calculated and paid in accordance with the Schedule
of Fees attached hereto as Exhibit C and incorporated herein by reference. It
is intended by the parties hereto that the compensation rate set forth in that
Schedule of Fees, or any sub sequent amendment thereto, shall reflect Advisor's
costs in providing services to Client, pursuant to this Agreement. The Schedule
of Fees will be reviewed annually and adjusted to reflect any changes in the
Advisor's costs.
9. Valuation. In computing the market value of any security held in the
---------
custody account:
(a) Each security listed on any national securities exchange, for which
recent market quotations are readily available, shall be valued at the last
reported sale price on the principal exchange on which such security is traded,
or, if there has been no recently reported sale, at the last reported bid price;
(b) Unlisted securities shall be valued at the then current bid price, if
market quotations are readily available;
(c) Futures contracts will be valued based on closing settlement prices as
reported on regulated futures exchanges, in accordance with accepted practices
and applicable law and regulations; and
(d) Any other security or asset shall be valued in a manner determined in
good faith by Advisor to reflect its fair market value and such valuation shall
be determinative.
3
10. Records. Advisor shall maintain accurate and detailed records of all
-------
transactions in connection with the Account, which shall be subject to
inspection by Client upon reasonable notice during Advisor's regular business
hours. It is understood and acknowledged that such records are the property of
the Company and shall be returned to the Company upon termination of this
Agreement. On request, representatives of Advisor shall meet With the Client's
officers and directors and the officers and directors of the Client's parent
company to discuss investment performance and other matters relating to
Advisor's obligations under this Agreement.
11. Duration and Termination. (a) Subject to the provisions of paragraph 13
------------------------
hereof, this Agreement shall commence as of the date set forth above and shall
continue until terminated (i) by mutual consent of Advisor and Client or (ii) as
hereinafter provided. Fees will be prorated to the date of termination and any
unearned portion of repaid fees will be refunded to Client.
(b) Either party may terminate this Agreement without cause upon at least
thirty (30) days prior written notice.
(c) At its discretion, Client may immediately terminate this Agreement by
written notice to Advisor upon the occurrence of any one of the following
events:
(i) The insolvency of Advisor, the inability of Advisor to pay debts as they
mature, the making of an assignment by Advisor for the benefit of creditors, the
dissolution of Advisor, the appointment of a receiver or liquidator for Advisor
or for a substantial part of Advisor's property, or the institution of
bankruptcy, reorganization, arrangement, insolvency or similar proceedings by or
against Advisor under the laws of any jurisdiction; or
(ii) The default under or any violation of the terms of this Agreement by
Advisor which is not cured by Advisor within fifteen (15) days after receipt by
Advisor of notice of such default from Client of the failure of Advisor to
perform satisfactorily its duties as set forth in this Agreement.
(d) At its discretion, Advisor may immediately terminate this Agreement by
written notice to Client upon the occurrence of any one of the following events:
(i) The insolvency of Client, the inability of Client to pay debts as they
mature, the making of an assignment by Client for the benefit of creditors or
the dissolution of Client.
(ii) The default under or any violation of the terms of this Agreement by
Client which is not cured by Client within fifteen (15) days after receipt by
Client of notice of such default from Advisor of the failure of Client to
perform satisfactorily its duties as set forth in this Agreement; or
(iii)The commencement of a delinquency proceeding against Client pursuant to
Article 74 of the New York Insurance Law.
4
(e) Upon termination of this Agreement, if Client so elects and for a
period not exceeding the earlier of two (2) months or the date on which Client
appoints a successor to Advisor, Advisor shall be obligated to perform those
investment services which are necessary to ensure the proper management of
Client's Account. Termination of this Agreement shall not relieve either party
of liability for the performance of obligations imposed upon such party during
the effective period of this Agreement which have not been performed at the time
of termination thereof. It is specifically agreed to and acknowledged that
Advisor shall be entitled to fees referred to in paragraph 8 for services
rendered pursuant to this subparagraph (e).
12. Non-Exclusive Contract. The services of the Advisor to Client are not to
----------------------
be deemed to be exclusive. Advisor is free to render service to others. Client
agrees that Advisor may give advice and take action with respect to any of its
other clients which may differ from advice given or the timing or nature of
action taken with respect to Client's Account. Nothing in this Agreement shall
be deemed to impose upon the Advisor any obligation to purchase or sell or to
recommend for purchase or sale by or for Client any security or other property
which Advisor, its officers, employees or affiliates may purchase or sell for
their own accounts or which the Advisor may purchase or sell for the account of
any other client. Client recognizes that transactions in a specific security
may not be accomplished for all or any other clients at the same time or at the
same price.
13. Representations. (a) The Advisor represents and warrants that it is
---------------
registered as an investment advisor with the Securities and Exchange Commission
pursuant to the Investment Advisers Act of 1940 as amended.
(b) Advisor represents and warrants that this Agreement has been duly
authorized in accordance with Advisor's governing documents and when executed
and delivered will be binding upon Advisor in accordance with its terms.
(c) Advisor represents and warrants that it will maintain records in
connection with the Account in accordance with the applicable requirements of
Section 325 of the New York Insurance Law or any successor statute thereto.
(d) Client represents and warrants that this Agreement has been duly
authorized by Client's Board of Directors in accordance with Client's governing
documents and when executed and delivered will be binding upon Client in
accordance with its terms.
14. Department of Insurance Approval. This Agreement is executed by the
--------------------------------
parties with the understanding that it is contingent upon final approval by the
New York Department of Insurance. In the event such approval is not obtained,
the Client shall have the unqualified right to terminate this Agreement without
penalty, provided, however, that any investment action taken by Advisor on
behalf of Client prior to the effective date of such termination shall be at
Client's risk.
15. Applicable Laws. Advisor shall comply with all securities laws and other
---------------
laws applicable to investment managers, including, without limitation, the
Investment Advisers Act of
5
1940, as amended. Advisor shall comply with the Guidelines in providing its
services hereunder, and, except for monitoring compliance with the provisions of
law referred to in the Guidelines, shall have no independent duty or
responsibility to assure that investments permitted by Client's Guidelines
qualify as permitted investments under applicable insurance laws.
16. Voting Rights. Decisions on voting of proxies will be made by Client.
-------------
17. Liability of Advisor. In providing Client with investment advice and other
--------------------
services as herein provided, neither Advisor nor any officer, director, employee
or agent thereof shall be held liable to Client, its creditors or its
stockholder(s) for errors of judgment or for anything except willful
malfeasance, bad faith or negligence in the performance of its duties or
reckless disregard of its obligations and duties under the terms of this
Agreement. It is further understood and agreed that Advisor may rely upon
information furnished to it reasonably believed to be accurate and reliable.
Nothing herein shall constitute a waiver or limitation of any rights which the
Client may have under any federal securities laws.
18. Confidential Relationship. The terms and conditions of this Agreement, all
-------------------------
information and advice furnished by either party under this Agreement and any
records generated by this Agreement are confidential and shall not be disclosed
to third parties, except as required by law.
19. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be delivered by hand, telecopier, or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses and shall be deemed given on the date on which such notice is
received:
To Client at:
Attention: General Counsel
Or by telecopier at:
With a copy to:
Attention: Chief Financial Officer
Or by telecopier at:
To Advisor at:
Attention: President
6
Or by telecopier at:
Either party may change its address or telecopier number for purposes of this
paragraph by giving the other party written notice of the new address or
telecopier number in the manner set forth below.
20. Waiver. Waiver by either party of any obligation of the other party does
------
not constitute a waiver of any further or other obligation of the other party.
21. Amendment. This Agreement may be modified or amended only by an instrument
---------
in writing signed by duly authorized representatives of both Advisor and Client.
22. Agreement not Assignable. This Agreement is not assignable by either Client
------------------------
or Advisor.
23. Cumulative. All rights, powers and privileges conferred hereunder upon the
----------
parties shall be cumulative and shall not restrict those given by law.
24. Counterparts. This Agreement may be executed in counterparts, each of which
------------
so executed shall be deemed to be an original and such counterparts together
shall constitute but one and the same contract, which shall be sufficiently
evidenced by any such original counterpart.
25. Construction. The captions used in this Agreement are for convenience only,
------------
and shall not affect the construction or interpretation of any of its
provisions. Each of the provisions of this Agreement is severable, and
invalidity or inapplicability of one or more provisions, in whole or in part,
shall not affect any other provision. This Agreement shall be construed in
accordance with the laws of the State of New York, and is subject to the
provisions of the Investment Advisers Act of 1940, as amended, and the rules and
regulations of the Securities and Exchange Commission.
26. Disclosure Statement. Client acknowledges receipt of Advisor's disclosure
--------------------
statement, as required by Rule 204-3 under the Investment Advisers Act of 1940,
not less than 48 hours prior to the date of execution of this Agreement.
27. Dispute Resolution. Any disputes arising under this Agreement shall be
------------------
settled by arbitration in New York City in accordance with the American
Arbitration Association rules then in effect, any award rendered thereon shall
be enforceable in any court of competent jurisdiction.
28. Entirety of Agreement. This Agreement contains the entire agreement between
---------------------
the parties with respect to the subject matter hereof and supersedes and cancels
any prior understandings and agreements between the parties.
7
IN WITNESS WHEREOF, the parties have caused the signatures of their duly
authorized offices to be hereto affixed.
By: By:
------------------------- -----------------------------
Title: Senior Vice President Title: President, MBIA Securities Corp.
----------------------- --------------------------------
"Client" "Advisor"
8
EXHIBIT A
ADMINISTRATIVE SERVICES
Advisor will provide the following securities support functions:
- Settlement/Custody Control
--------------------------
Daily coordination of any securities purchased or sold with investment
manager, brokers and clearance bank. Confirmation of funds movement upon
receipt/delivery of securities. Reconciliation of asset position between
custody bank and investment operations.
- Transaction Processing
----------------------
Daily recording of individual security transactions on trade date.
- Income Collection
-----------------
Daily collection and recording principal (maturity/redemption) and interest
payments. Follow up on overdue payments.
- Bank Reconciliation
-------------------
Monthly reconciliation of all cash transactions in demand deposit accounts.
- Market Valuation of Assets
--------------------------
Assets priced monthly by an outside service.
- Investment Accounting Staff Support
-----------------------------------
Staff support will be provided to assist the Client in responding to audit,
tax or other regulatory interrogatories related to investment transactions as
reported.
Independent administrative services which are not provided by Advisor under
this Agreement include:
-- Custody services provided by The Chase Manhattan Bank, N.A. of New
York.
-- Outside audit services.
9
The following reports will be provided to the Client and will include
transaction reports and investment management reports prepared monthly or
quarterly, as the case may be:
(a) Transaction Reporting:
---------------------
(i) Quarterly detail reports on new commitments.
(ii) Quarterly detail reports on all transactions including purchases,
sales, investment income and return of principal.
(iii) Transactional information on investments, as needed, to support tax
return preparation.
(b) Portfolio Review:
----------------
Quarterly summary and detail on the Client's holdings will be provided.
This report will include market values, overall quality ratings, portfolio
yield and a summary review of market conditions and portfolio strategy.
(c) Performance Reporting:
---------------------
Included as part of the portfolio review will be performance results on
both yields on new commitments and total return for the portfolio.
Performance will be measured against agreed upon indices.
10
EXHIBIT B
April 1995
----------
MBIA INSURANCE CORPORATION
STATEMENT OF INVESTMENT OBJECTIVES & GUIDELINES
-----------------------------------------------
SECTION I. OBJECTIVES:
----------
A. Preservation of Capital in the context of maintaining triple-A
-----------------------
ratings for MBIA Insurance Corporation ("MBIA Corp.") and supporting
recognition of MBIA Corp.'s financial stability and strength by
insured bond investors, municipal market intermediaries, and other
municipal bond market constituencies.
B. Subject to A. above, optimization of after-tax investment income
----------------------------------------------------------------
to support the predictability and consistency of company earnings
and cash flow.
C. Subject to A. and B. above, optimization of long-term total returns.
-------------------------------------------------------------------
D. Maintenance of reasonable liquidity after taking into account the
-----------------------------------
company's other sources of liquidity (including bank credit
facilities and cash flow) for potential claims-paying and other
corporate needs.
Overall, these objectives call for maintenance of high quality investments,
avoidance of undue volatility in both income and returns and generally minimal
amounts of short-term investments and/or U.S. Treasury obligations for immediate
liquidity. MBIA Corp.'s investment selections will be made with a bias to hold
for the long-term, and to avoid sales or swaps in the absence of compelling
circumstances of tax credit, structural or other economic reasons, and not to
rely on short-term trading or market timing to achieve performance. The mix of
taxable and tax-exempt investments will vary from time to time with both market
conditions and company tax circumstances.
In seeking to achieve these objectives, MBIA Corp. will monitor, evaluate and
report on the performance of its investment managers and the portfolio, using
appropriate market-related benchmarks. In addition, MBIA Corp. will maintain an
awareness of and periodically report on the investment practices and results of
key competitors and comply with the constraints or limitations related to
internal guidelines and regulatory or rating agency considerations.
SECTION II. GUIDELINES:
----------
The following shall constitute the Investment Guidelines for MBIA Corp., acting
through its duly authorized officers and/or through its outside investment
advisors:
A. Investments shall be made and maintained in compliance with all
applicable provisions of Article 14 of the New York Insurance Laws, as
amended.
B. Fixed Income Policy
(1) Quality: For fixed-income securities (over 1 year when purchased)
-------
average quality will be AA to AA-, with minimum purchase quality,
BBB. For short-term investments (less than 1 year), only investments
rated A1/P1 (or equivalent rating) or better may be purchased.
(2) Maturity: The average duration target is a maximum of 7.5 years;
--------
minimum duration is 6.0 years.
(3) Maturity Distribution: Diversification in maturity to minimize
---------------------
reinvestment risk is an objective. Although this objective is not
quantified, a reasonably well-laddered portfolio over a wide range
of maturities is to be achieved.
(4) Insured Obligations: MBIA Corp. may purchase or hold obligations
-------------------
insured BY MBIA Corp. or its competitors, subject to an aggregate
limit of 20% of the total investment portfolio.
(5) Other: Securities may be purchased in both public and private
------
markets, subject to the maintenance of an appropriate level of
overall portfolio liquidity and to all other objectives/guidelines.
C. Equity Policy
MBIA Corp. holds interests in certain equity-oriented investments in
limited amounts. It is MBIA Corp.'s current policy not to purchase
equity oriented securities.
D. Further Restrictions
(1) At the time of purchase, no investment may be in default as to
principal or interest payments and all shall be rated "investment
grade" by at least one nationally-recognized domestic rating
agency.
(2) Only U.S. dollar denominated securities may be purchased, except
those required for MBIA Corp.'s foreign operations.
(3) No investment shall be made in futures or options on futures.
(4) All investments shall be held by a third-party custodian (or via
book entry at the Depository Trust Company or a similarly qualified
clearing corporation), as prescribed in approved custody
agreements, or in other customary forms of safekeeping.
2
E. Fixed income investments are further limited to the following types and
amounts (with the term "assets" defined by the New York statutes):
Type of Obligation Limitation Basis
------------------ ---------- -----
(i) Backed by full faith and credit Unlimited In Aggregate
of the United States, including Unlimited Per Issuer or
Government National Mortgage Association Mortgage Pool
direct obligations and guaranteed
mortgage-backed securities.
(ii) Federal National Mortgage Association 10% of Assets In Aggregate
direct obligations and guaranteed 2% of Assets Per Mortgage
mortgage-backed securities. Pool
(iii) Federal Home Loan Mortgage 10% of Assets In Aggregate
Corporation direct obligations and 2% of Assets Per Mortgage
guaranteed mortgage-backed Pool
securities.
(iv) Bonds which have been fully 2% of Assets Per Issuer
collateralized by direct U.S. government
obligations (i.e. pre-refunded or
escrowed-to-maturity) and upgraded to
triple-A by at least one nationally-
recognized domestic rating agency.
(v) Obligations not included in Section (iv)
above and backed by full faith and credit of:
(a) Any state government. 5% of Assets Per State
(b) Any political subdivision of a State 2% of Assets Per Issuer
or any municipality within the
United States.
(vi) Obligations not included in Section (iv) 2% of Assets Per Issuer
above and backed by revenue or
other income sources of a single
facility or system.
(vii) Pools of assets rated AAA by at least 5% of Assets In Aggregate
one nationally recognized domestic 0.5% of Assets Per Single Issue
rating agency (excluding assets otherwise
permitted under this agreement).
3
Type of Obligation Limitation Basis
------------------ ---------- -----
(viii) Securities backed by pools of assets 3% of Assets In Aggregate
rated double-A by at least one 0.5% of Assets Per Single Issue
nationally recognized domestic rating
agency (examples may include, but
are not limited to, commercial or
residential mortgages, automobile
loans).
(ix) Investments in any entity, obligations 1% of Assets Per Issuer
of which are insured by MBIA Corp.,
(and which are identified on a list
furnished by MBIA Corp. to its
advisors from time-to-time) with the
exception of United States
municipalities rated AA or better by at
least on nationally-recognized
domestic rating agency.
(x) Backed by full faith and credit of a 2% of Assets Per Issuer
non-public corporate entity, whether
foreign or domestic.
(xi) Backed by full faith and credit of 10% of Assets In Aggregate
Canada, its Provinces and other 10% of Assets For Federal Govt.
political subdivisions. 2% of Assets Per All Other
Issuers
(xii) Backed by full faith and credit of 10% of Assets In Aggregate
OECD foreign governments other than 1% of Assets Per Country
in Canada.
(xiii) Repurchase agreements with a bank 2% of Assets In Aggregate
or registered broker-dealer, provided 1% of Assets Per Bank or
that all securities underlying such Broker-Dealer
agreements:
(a) would be eligible
investments under
these Guidelines; and
(b) have maturities of one
year or less (unless the
agreement is fully
collateralized and
marked to market daily).
4
Type of Obligation Limitation Basis
------------------ ---------- -----
(xiv) Investments of one year or 10% of Assets In Aggregate
less in term which are either 1% of Assets Per Bank
direct obligations of or
supported by letters of credit
from banks rated in the
highest short-term category by
at least one nationally-
recognized domestic rating
agency (or judged to be of
equivalent quality).
(xv) Mutual funds or other such 2% of Assets In Aggregate
investment conduits registered
with the SEC under the
Investment Company Act of
1940, as amended (provided
that all investments within
each fund would be eligible
under the Guidelines).
(xvi) Equity-linked debt instruments $100 million In Aggregate
rated A or better by at least $ 10 million Per Issue
one nationally recognized
domestic rating agency with a
maturity no greater than 10
years. Equity index must be
nationally recognized, such as
the S&P 500.
* * * * * * * * * * *
THIS STATEMENT OF INVESTMENT OBJECTIVES & GUIDELINES SHALL REMAIN IN EFFECT
UNTIL REVISED OR AMENDED BY ACTION OF THE MBIA CORP. BOARD OF DIRECTORS, IN
ACCORDANCE WITH ITS BY-LAWS.
5
May 1995
--------
SECTION III. SPECIFIC INSTRUCTIONS FOR FIXED-INCOME INVESTMENTS MANAGED BY
-------------------------------------------------------------
MBIA SECURITIES CORP.
---------------------
In the context of Sections I. and II. above as applicable, the following shall
constitute the specific instructions for fixed-term investments made by MBIA
Corp., acting through MBIA Securities Corp. ("MBIA SECO"), its investment
advisor; it being understood that these instructions set forth in this Section
III. are to be adhered to notwithstanding any less restrictive provisions in
Sections I. and II.
A. Permitted Investments
---------------------
MBIA SECO may invest only in the following categories of fixed income
investments as set forth in Section II of the Guidelines:
Section Type
------- ----
(i) Full faith and credit of the United States
(x) Non-public corporates
(xi) Canadian obligations
(xii) OECD governments
(xiii) Repurchase agreements
(xiv) Short-term investments
B. Maturity
--------
The maximum allowable average duration is 7.5 years; minimum duration is
5.0 years.
C. Quality
-------
Minimum average quality of total portfolio, "A."
Minimum purchase quality, "BBB+."
Maximum of investments held rated less than "A-," 4 percent.
Minimum holding quality, "BBB-."
6
EXHIBIT C
MANAGEMENT FEES PER ANNUM
ASSETS UNDER MANAGEMENT IN BASIS POINTS TIMES ASSETS
AT MARKET VALUE ($ MILLIONS) UNDER MANAGEMENT
---------------------------- ----------------------------
First $1,000 7.0 bp
Next $1,000 6.0 bp
In excess of $2,000 5.0 bp
Management fees shall be paid quarterly, in arrears, 30 days following the end
of each quarter, based upon the average market value of the assets under
management during such quarter.
"Market Value" shall be determined in accordance with Section 9 of this
Agreement.
11
[LOGO] MBIA INSURANCE CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇
May 31, 1995
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Associate Insurance Examiner
Property/Casualty Bureau
State of New York Insurance Department
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: MBIA Insurance Corporation
Proposed Investment Services Agreement (the "Agreement")
with MBIA Securities Corp.
Dear ▇▇. ▇▇▇▇▇▇▇▇:
Enclosed please find an executed copy of the Agreement. At your request,
Section 8 on Compensation of Advisor has been revised to state that the Schedule
of Fees (Exhibit C) will be reviewed annually and adjusted to reflect any
changes in MBIA Securities Corp. ("SECO") costs. In addition, as required by
your letter dated May 17, 1995, MBIA Insurance Corporation ("MBIA") commits to
notify the Department when its assets under management by SECO exceeds 20% of
the total admitted assets of MBIA.
If I can be of any further assistance, please call me at (▇▇▇) ▇▇▇-▇▇▇▇.
Very truly yours,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant General Counsel
cc: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
EXHIBIT B
---------
January 1996
------------
MBIA INSURANCE CORPORATION
STATEMENT OF INVESTMENT OBJECTIVES & GUIDELINES
-----------------------------------------------
SECTION I. OBJECTIVES
----------
A. Preservation of Capital in the context of maintaining triple-A ratings
-----------------------
for MBIA Insurance Corporation ("MBIA Corp.") and supporting recognition
of MBIA Corp.'s financial stability and strength by insured bond
investors, municipal market intermediaries, and other municipal bond
market constituencies.
B. Subject to A. above, optimization of after-tax investment income to
----------------------------------------------------------------
support the predictability and consistency of company earnings and cash
flow.
C. Subject to A. and B. above, optimization of long-term total returns.
-------------------------------------------------------------------
D. Maintenance of reasonable liquidity after taking into account the
-----------------------------------
company's other sources of liquidity (including bank credit facilities
and cash flow) for potential claims paying and other corporate needs.
Overall, these objectives call for maintenance of high quality investments,
avoidance of undue volatility in both income and returns and generally minimal
amounts of short-term investments and/or U.S. Treasury obligations for immediate
liquidity. MBIA Corp.'s investment selections will be made with a bias to hold
for the long-term, and to avoid sales or swaps in the absence of compelling
circumstances of tax credit, structural or other economic reasons, and not to
rely on short-term trading or market timing to achieve performance. The mix of
taxable and tax-exempt investments will vary from time to time with both market
conditions and company tax circumstances.
In seeking to achieve these objectives, MBIA Corp. will monitor, evaluate and
report on the performance of its investment managers and the portfolio, using
appropriate market-related benchmarks. In addition, MBIA Corp. will maintain an
awareness of and periodically report on the investment practices and results of
key competitors and comply with the constraints or limitations related to
guidelines and regulatory or rating agency considerations.
EXHIBIT 10.67
CUSTODY AGREEMENT
To: THE CHASE MANHATTAN BANK, N.A.
Worldwide Insurance Securities Services
3 Chase MetroTech Center, 6th Floor
Brooklyn, New York 11245
Gentlemen:
We hereby request you to open and to maintain a Custody Account in our
name and to hold therein as our custodian, upon the following terms and
conditions, all such securities and similar property as shall be received by and
acceptable to you for the Custody Account. As used herein, the term Custody
Account shall include all such Custody Accounts opened pursuant to this Custody
Agreement.
TRANSACTIONS. Unless you receive contrary written instructions from us,
and subject to the provisions of this Agreement, you are authorized:
(a) To receive all interest and dividends payable on such
property and to credit such interest and dividends to the account or
accounts of ours with you as are designated by us (hereinafter referred
to as the "Cash Account");
(b) To credit all proceeds received from sales and redemptions
of property to the Cash Account;
(c) To debit the Cash Account for the cost of acquiring property
for the Custody Account;
(d) To present obligations (including coupons) for payment upon
maturity, when called for redemption and when income payments are due;
(e) To exchange securities for other securities where the
exchange is purely ministerial as, for example, the exchange of
securities in temporary form for securities in definitive form or the
mandatory exchange of certificates;
(f) To sell fractional interests resulting from a stock split or
a stock dividend and to credit the Cash Account with the proceeds
thereof;
(g) To convert moneys received with respect to securities of
foreign issue into United States dollars whenever it is practical to do
so through customary banking channels. In effecting such conversion you
may use any method or agency available to you, including the facilities
of your own divisions, subsidiaries or affiliates. You shall incur no
liability on account of any loss suffered or expense incurred as a
result of such conversion, including, without limitation, losses arising
from fluctuations in exchange rates affecting any such conversion; and
(h) To execute in our name, whenever you deem it appropriate,
such ownership and other certificates as may be required to obtain
payments with respect to, or to effect the sale, transfer or other
disposition of, property in our Custody Account and to guarantee as our
signature the signature so affixed.
INSTRUCTIONS. You are authorized to rely and act upon all further
written instructions given or purported to be given by one or more officers,
employees or agents of ours (i) authorized by or in accordance with a corporate
resolution of ours delivered to you or (ii) described as authorized in a
certificate delivered to you by our Secretary or an Assistant Secretary or
similar officer of ours (each such officer, employee or agent or combination of
officers, employees and agents authorized pursuant to clause (i) or described
pursuant to clause (ii) of this paragraph is hereinafter referred to as an
"Authorized Officer"). (The term "instructions" includes, without limitation,
instructions to sell, assign, transfer, deliver, purchase or receive for the
Custody Account, any and all stocks, bonds and other securities or to transfer
funds in the Custody Account or Cash Account.) You may also rely and act upon
instructions when bearing or purporting to bear the facsimile signature of any
of the individuals designated by an Authorized Officer regardless of by whom or
by what means the actual or purported facsimile signature or signatures thereon
may have been affixed thereto if such facsimile signature or signatures resemble
the facsimile specimen or specimens from time to time furnished to you by any of
such Officers, our Secretary or an Assistant Secretary or similar officer of
ours. In addition, you may rely and act upon instructions received by telephone,
telex, TWX, facsimile transmission, bank wire or other teleprocess acceptable to
you which you believe in good faith to have been given by an Authorized Officer
or which are transmitted with proper testing or authentication pursuant to terms
and conditions which you may specify. You may also rely and act upon
instructions transmitted electronically through your TITAN Data Entry System or
any similar electronic instruction system acceptable to you. You shall incur no
liability to us or otherwise as a result of any act or omission by you in
accordance with instructions on which you are authorized to rely pursuant to the
provisions of this paragraph. Any instructions delivered to you by telephone
shall promptly thereafter be confirmed in writing by an Authorized Officer, but
you shall incur no liability for our failure to send such confirmation in
writing, the failure of any such written confirmation to conform to the
telephone instructions which you received, the failure of any such written
confirmation to be signed or properly signed, or your failure to produce such
confirmation at any subsequent time. You shall incur no liability for refraining
from acting upon any instructions which for any reason you, in good faith, are
unable to verify to your own satisfaction. With respect to instructions received
hereunder to transfer funds from the Cash Account to any other account or party,
we agree to implement any callback or other authentication method or procedure
or security device required by you at any time or from time to time. Unless
otherwise expressly provided, all authorizations and instructions shall continue
in full force and effect until canceled or superseded by subsequent
authorizations or instructions received by your safekeeping account
administrator with reasonable opportunity to act thereon. Your
- 2 -
authorization to rely and act upon instructions pursuant to this paragraph shall
be in addition to, and shall not limit, any other authorization which we may
give you regarding our accounts with you.
We agree that, if you require test arrangements, authentication methods
or procedures or other security devices to be used with respect to instructions
which we may give hereunder, thereafter instructions given by us shall be given
and processed in accordance with terms and conditions for the use of such
arrangements, methods or procedures or devices as you may put into effect and
modify from time to time. We shall safeguard any testkeys, identification codes
or other security devices which you make available to us and agree that we shall
be responsible for any loss, liability or damage incurred by you or by us as a
result of your acting in accordance with instructions from any unauthorized
person using the proper security device. You may electronically record any
instructions given by telephone, and any other telephone discussions with
respect to the Custody Account or transactions pursuant to this Agreement.
Except as may be provided otherwise herein, you are authorized to
execute our instructions and take other actions pursuant to this Agreement in
accordance with your customary processing practices for customers similar to us
and, in accordance with such practices, you may retain agents, including
subsidiaries or affiliates of yours, to perform certain of such functions.
In acting upon instructions to deliver securities against payment, you
are authorized, in accordance with customary securities processing practices, to
deliver such securities to the purchaser thereof or dealer therefor (including
to an agent for any such purchaser or dealer) against a receipt, with the
expectation of collecting payment from the purchaser, dealer or agent to whom
the securities were so delivered before the close of business on the same day.
REGISTRATION. Unless you receive contrary instructions from us, you are
authorized to keep securities in your own vaults registered in the name of your
nominee or nominees or, where securities are eligible for deposit in a central
depository, such as The Depository Trust Company, the Federal Reserve Bank of
New York or the Participants Trust Company, you may use any such depository and
permit the registration of registered securities in the name of its nominee or
nominees, and we agree to hold you and the nominees harmless from any liability
as holders of record. We shall accept the return or delivery of securities of
the same class and denomination as those deposited with you by us or otherwise
received by you for the Custody Account, and you need not retain the particular
certificates so deposited or received.
If any securities registered in the name of your nominee or held in a
central depository and registered in the name of the depository's nominee are
called for partial redemption by the issuer of such securities, you are
authorized to allot the called
- 3 -
portion to the respective beneficial holders of the securities in any manner
deemed to be fair and equitable by you in your sole discretion.
STATEMENTS. You shall notify us of each securities transaction effected
for our Custody Account and of income on and redemptions of the property in the
Custody Account, as well as furnish us a listing of such property, at such times
upon which you and we mutually agree.
CORPORATE ACTIONS. You shall send us such proxies (signed in blank, if
issued in the name of your nominee or a nominee of a central depository) and
communications with respect to securities in our Custody Account as call for
voting or relate to legal proceedings within a reasonable time after sufficient
copies are received by you for forwarding to customers. In addition, you shall
follow coupon payments, redemptions, exchanges or similar matters with respect
to securities in our Custody Account and advise us of rights issued, tender
offers or any other discretionary rights with respect to such securities, in
each case, of which you receive notice from the issuer of the securities or as
to which notice is published in publications routinely used by you for this
purpose.
CUSTODIAN RESPONSIBILITY. You shall be obligated to indemnify us for
any loss of securities and other property in the Custody Account resulting from
(i) your negligence or willful misconduct, (ii) the negligence or willful
misconduct of your officers or employees, or (iii) the negligence or willful
misconduct of any central depository or other agent retained by you to hold such
securities or property. Except as otherwise provided herein, in no event shall
you be liable or responsible other than for your own negligence or willful
misconduct. In the event of a loss of securities in the Custody Account for
which you are required to indemnify us pursuant to this Agreement, you shall
promptly replace, at your option, such securities or the value thereof
(determined as of the date of the discovery of such loss) and the value of any
loss of rights or privileges resulting from the loss of such securities. Subject
to your obligations set forth above, you shall be liable to us only to the
extent of our general damages (determined based upon the market value of the
property which is the subject of the loss at the date of discovery of such loss)
suffered or incurred as a result of any act or omission of yours which is a
breach of your duties pursuant to this Agreement and for which liability is
legally imposed upon you, and in no event shall you be liable for special,
consequential or punitive damages. General damages shall mean only those damages
as directly and necessarily result from such act or omission without reference
to any special conditions or circumstances of ours or of any transaction,
whether or not you have been advised of any such special conditions or
circumstances.
All collection and receipt of funds or securities and all payment and
delivery of funds or securities under this Agreement shall be made by you as our
agent, at our risk with respect to our actions or omissions and those of persons
other than you, including, without limitation, the risk associated with the
securities processing
- 4 -
practice of delivering securities against a receipt and the risk that the
counterparty in any transaction into which we enter will not transfer funds or
securities or otherwise perform in accordance with our expectation of its
obligations thereunder (including, without limitation, where, as a result of
such nonperformance, a central depository reverses, or requires repayment of,
any credit given in connection with the transfer of securities).
In no event shall you be responsible or liable for any loss due to
forces beyond your control, including, but not limited to, acts of God, flood,
fire, nuclear fusion, fission or radiation, war (declared or undeclared),
terrorism, insurrection, revolution, riot, strikes or work stoppages for any
reason, embargo, government action, including any laws, ordinances, regulations
or the like which restrict or prohibit the providing of the services
contemplated by this Agreement, inability to obtain equipment or communications
facilities, or the failure of equipment or interruption of communications
facilities, and other causes whether or not of the same class or kind as
specifically named above. In the event that you are unable substantially to
perform for any of the reasons described in the immediately preceding sentence,
you shall so notify us as soon as reasonably practicable.
You shall be responsible for only those duties expressly stated in this
Agreement or expressly contained in instructions to perform the services
described herein given to you pursuant to the provisions of this Agreement and
accepted by you (unless you and we otherwise agree in writing) and, without
limiting the foregoing, you shall have no duty or responsibility:
(a) to supervise the investment of, or make recommendations with
respect to the purchase, retention or sale of, securities or other
property relating to the Custody Account, or to maintain any insurance
on property in the Custody Account for our benefit;
(b) with regard to any security in the Custody Account as to
which a default in the payment of principal or interest has occurred, to
give notice of default, make demand for payment or take any other action
with respect to such default;
(c) except as otherwise specifically provided herein, for any
act or omission, or for the solvency or insolvency, or notice to us of
the solvency or insolvency, of any broker or agent (including any
central depository) which is selected by you (in the absence of gross
negligence or willful misconduct by you in such selection) or by us or
any other person to effect any transaction for the Custody Account or to
perform any service under this Agreement;
(d) to evaluate, or report to us regarding, the financial
condition of any person to which you deliver securities or funds
pursuant to this Agreement; or
- 5 -
(e) for any loss occasioned by delay in the actual receipt of
notice by you of any payment, redemption or other transaction in respect
to which you are authorized to take some action pursuant to this
Agreement.
OVERDRAFTS. The amount by which payments made by you on our behalf with
respect to property in, or to be received for, the Custody Account, or with
respect to other transactions pursuant to this Agreement, exceed the available
funds in the Cash Account shall be deemed a loan from you to us, payable on
demand, bearing interest at the rate of interest customarily charged by you on
similar loans, provided, however, that you shall have no duty to make any
payment if such payment shall exceed the available funds in the Cash Account.
REIMBURSEMENT. If you choose to credit the Cash Account or the Custody
Account on the payable date, or at any time prior to actual collection or
receipt, for interest, dividends or redemptions, we shall promptly return to you
such amount or property credited, and you may debit the Cash Account or the
Custody Account for such amount or property credited, upon your oral or written
notification to us that you have been unable to collect such amount or property
in the ordinary course of transactions for our account or that such amount or
property was incorrectly credited. You shall have no duty to institute legal
proceedings, file a claim or proof of claim in any insolvency proceeding or take
any action beyond your ordinary collection procedures to collect such amounts or
property, but this Agreement shall not limit or waive any rights which we may
have against any other person obligated to us.
RESPONSIBLE AS PRINCIPAL. We agree that we shall be responsible to you
as a principal for all of our obligations to you arising under or in connection
with this Agreement, notwithstanding that we may be acting on behalf of other
persons, and we warrant our authority to deposit in the Custody Account and Cash
Account any securities and funds which you or your agents receive therefor and
to give instructions relative thereto. We further agree that you shall not be
subject to, nor shall your rights and obligations with respect to this Agreement
and the Custody Account be affected by, any agreement between us and any such
person.
CREDITING AND DEBITING PROCEDURES. With respect to all transactions for
the Custody Account, including, without limitation, dividend and interest
payments and sales and redemptions of securities, availability of funds credited
to the Cash Account shall be based on the type of funds used in the trade
settlement or payment, including, but not limited to, same day availability for
federal or same day funds and next business day availability for clearing house
or next day funds. Subject to the above, with respect to the purchase and sale
of property for the Custody Account, the proceeds from the sale of securities
shall be credited to the Cash Account on the date such proceeds are received by
you and the cost of securities purchased shall be debited to the Cash Account on
the date securities are received by you
- 6 -
TRANSFER TAXES. You are authorized and directed, unless otherwise
instructed in particular transactions, to claim exemption from transfer taxes on
all transfers and deliveries of securities held for our Custody Account.
OTHER ACCOUNTS. From time to time we may instruct you to open and
maintain more than one Custody Account for us. Unless we and you otherwise
expressly agree, such accounts will be governed by the provisions of this
Agreement.
FEES, INDEMNIFICATION. We agree to pay you compensation for your ser
vices pursuant to this Agreement at the fees of which you shall notify us from
time to time. We also agree to hold you and your agents harmless from, and to
indemnify and reimburse you and them for, all claims, liability, loss and
expense (including out-of-pocket and incidental expenses and legal fees)
incurred by you or them in connection with our Custody Account or your acting
under this Agreement, provided that you or they, as the case may be, have not
acted with negligence or willful misconduct with respect to the events resulting
in such claims, liability, loss and expense.
TERMINATION. Either party may terminate this Agreement at any time upon
thirty days written notice. Our obligations pursuant to the paragraphs under the
headings "Registration", "Overdrafts", "Reimbursement" and "Fees,
Indemnification" shall survive the termination of this Agreement.
NOTICES. Notices with respect to termination, specification of
Authorized Officers and terms and conditions for instructions required hereunder
shall be in writing, and shall be deemed to have been duly given if delivered
personally, by courier service or by mail, postage prepaid, to the following
addresses (or to such other address as either party hereto may from time to time
designate by notice duly given in accordance with this paragraph):
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ Account Name: MBIA Corp. Custody
To us at: MBIA Corp. (Aeltus)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To you, to the attention of the individual designated by you as the
safekeeping account administrator for our account, at:
The Chase Manhattan Bank, N.A.
Worldwide Insurance Securities
Services
3 Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
GOVERNING LAW, SUCCESSORS AND ASSIGNS, HEADINGS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
- 7 -
EXHIBIT 10.68
CUSTODY AGREEMENT
To: THE CHASE MANHATTAN BANK, N.A.
Worldwide Insurance Securities Services
3 Chase MetroTech Center, 6th Floor
Brooklyn, New York 11245
Gentlemen:
We hereby request you to open and to maintain a Custody Account in our
name and to hold therein as our custodian, upon the following terms and
conditions, all such securities and similar property as shall be received by and
acceptable to you for the Custody Account. As used herein, the term Custody
Account shall include all such Custody Accounts opened pursuant to this Custody
Agreement.
TRANSACTIONS. Unless you receive contrary written instructions from us,
and subject to the provisions of this Agreement. you are authorized:
(a) To receive all interest and dividends payable on such
property and to credit such interest and dividends to the account or
accounts of ours with you as are designated by us (hereinafter referred
to as the "Cash Account");
(b) To credit all proceeds received from sales and redemptions
of property to the Cash Account;
(c) To debit the Cash Account for the cost of acquiring property
for the Custody Account;
(d) To present obligations (including coupons) for payment upon
maturity, when called for redemption and when income payments are due;
(e) To exchange securities for other securities where the
exchange is purely ministerial as, for example, the exchange of
securities in temporary form for securities in definitive form or the
mandatory exchange of certificates;
(f) To sell fractional interests resulting from a stock split or
a stock dividend and to credit the Cash Account with the proceeds
thereof;
(g) To convert moneys received with respect to securities of
foreign issue into United States dollars whenever it is practical to do
so through customary banking channels. In effecting such conversion you
may use any method or agency available to you, including the facilities
of your own divisions, subsidiaries or affiliates. You shall incur no
liability on account of any loss suffered or expense incurred as a
result of such conversion, including, without limitation, losses arising
from fluctuations in exchange rates affecting any such conversion; and
(h) To execute in our name, whenever you deem it appropriate,
such ownership and other certificates as may be required to obtain
payments with respect to, or to effect the sale, transfer or other
disposition of, property in our Custody Account and to guarantee as our
signature the signature so affixed.
INSTRUCTIONS. You are authorized to rely and act upon all further
written instructions given or purported to be given by one or more officers,
employees or agents of ours (i) authorized by or in accordance with a corporate
resolution of ours delivered to you or (ii) described as authorized in a
certificate delivered to you by our Secretary or an Assistant Secretary or
similar officer of ours ▇▇▇▇▇ such officer, employee or agent or combination of
officers, employees and agents authorized pursuant to clause (i) or described
pursuant to clause (ii) of this paragraph is hereinafter referred to as an
"Authorized Officer"). (The term "instructions" includes, without limitation,
instructions to sell, assign, transfer, deliver, purchase or receive for the
Custody Account, any and all stocks, bonds and other securities or to transfer
funds in the Custody Account or Cash Account.) You may also rely and act upon
instructions when bearing or purporting to bear the facsimile signature of any
of the individuals designated by an Authorized Officer regardless of by whom or
by what means the actual or purported facsimile signature or signatures thereon
may have been affixed thereto if such facsimile signature or signatures resemble
the facsimile specimen or specimens from time to time furnished to you by any of
such Officers, our Secretary or an Assistant Secretary or similar officer of
ours. In addition, you may rely and act upon instructions received by telephone,
telex, TWX, facsimile transmission, bank wire or other teleprocess acceptable to
you which you believe in good faith to have been given by an Authorized Officer
or which are transmitted with proper testing or authentication pursuant to terms
and conditions which you may specify. You may also rely and act upon
instructions transmitted electronically through your TITAN Data Entry System or
any similar electronic instruction system acceptable to you. You shall incur no
liability to us or otherwise as a result of any act or omission by you in
accordance with instructions on which you are authorized to rely pursuant to the
provisions of this paragraph. Any instructions delivered to you by telephone
shall promptly thereafter be confirmed in writing by an Authorized Officer, but
you shall incur no liability for our failure to send such confirmation in
writing, the failure of any such written confirmation to conform to the
telephone instructions which you received, the failure of any such written
confirmation to be signed or properly signed, or your failure to produce such
confirmation at any subsequent time. You shall incur no liability for refraining
from acting upon any instructions which for any reason you, in good faith, are
unable to verify to your own satisfaction. With respect to instructions received
hereunder to transfer funds from the Cash Account to any other account or party,
we agree to implement any callback or other authentication method or procedure
or security device required by you at any time or from time to time. Unless
otherwise expressly provided, all authorizations and instructions shall continue
in full force and effect until canceled or superseded by subsequent
authorizations or instructions received by your safekeeping account
administrator with reasonable opportunity to act thereon. Your
- 2 -
authorization to rely and act upon instructions pursuant to this paragraph shall
be in addition to, and shall not limit, any other authorization which we may
give you regarding our accounts with you.
We agree that, if you require test arrangements, authentication methods
or procedures or other security devices to be used with respect to instructions
which we may give hereunder, thereafter instructions given by us shall be given
and processed in accordance with terms and conditions for the use of such
arrangements, methods or procedures or devices as you may put into effect and
modify from time to time. We shall safeguard any testkeys, identification codes
or other security devices which you make available to us and agree that we shall
be responsible for any loss, liability or damage incurred by you or by us as a
result of your acting in accordance with instructions from any unauthorized
person using the proper security device. You may electronically record any
instructions given by telephone, and any other telephone discussions with
respect to the Custody Account or transactions pursuant to this Agreement.
Except as may be provided otherwise herein, you are authorized to
execute our instructions and take other actions pursuant to this Agreement in
accordance with your customary processing practices for customers similar to us
and, in accordance with such practices, you may retain agents, including
subsidiaries or affiliates of yours, to perform certain of such functions.
In acting upon instructions to deliver securities against payment, you
are authorized, in accordance with customary securities processing practices, to
deliver such securities to the purchaser thereof or dealer therefor (including
to an agent for any such purchaser or dealer) against a receipt, with the
expectation of collecting payment from the purchaser, dealer or agent to whom
the securities were so delivered before the close of business on the same day.
REGISTRATION. Unless you receive contrary instructions from us, you are
authorized to keep securities in your own vaults registered in the name of your
nominee or nominees or, where securities are eligible for deposit in a central
depository, such as The Depository Trust Company, the Federal Reserve Bank of
New York or the Participants Trust Company, you may use any such depository and
permit the registration of registered securities in the name of its nominee or
nominees, and we agree to hold you and the nominees harmless from any liability
as holders of record. We shall accept the return or delivery of securities of
the same class and denomination as those deposited with you by us or otherwise
received by you for the Custody Account, and you need not retain the particular
certificates so deposited or received.
If any securities registered in the name of your nominee or held in a
central depository and registered in the name of the depository's nominee are
called for partial redemption by the issuer of such securities, you are
authorized to allot the called
- 3 -
portion to the respective beneficial holders of the securities in any manner
deemed to be fair and equitable by you in your sole discretion.
STATEMENTS. You shall notify us of each securities transaction effected
for our Custody Account and of income on and redemptions of the property in the
Custody Account, as well as furnish us a listing of such property, at such times
upon which you and we mutually agree.
CORPORATE ACTIONS. You shall send us such proxies (signed in blank, if
issued in the name of your nominee or a nominee of a central depository) and
communications with respect to securities in our Custody Account as call for
voting or relate to legal proceedings within a reasonable time after sufficient
copies are received by you for forwarding to customers. In addition, you shall
follow coupon payments, redemptions, exchanges or similar matters with respect
to securities in our Custody Account and advise us of rights issued, tender
offers or any other discretionary rights with respect to such securities, in
each case, of which you receive notice from the issuer of the securities or as
to which notice is published in publications routinely used by you for this
purpose.
CUSTODIAN RESPONSIBILITY. You shall be obligated to indemnify us for any
loss of securities and other property in the Custody Account resulting from (i)
your negligence or willful misconduct, (ii) the negligence or willful misconduct
of your officers or employees, or (iii) the negligence or willful misconduct of
any central depository or other agent retained by you to hold such securities or
property. Except as otherwise provided herein, in no event shall you be liable
or responsible other than for your own negligence or willful misconduct. In the
event of a loss of securities in the Custody Account for which you are required
to indemnify us pursuant to this Agreement, you shall promptly replace, at your
option, such securities or the value thereof (determined as of the date of the
discovery of such loss) and the value of any loss of rights or privileges
resulting from the loss of such securities. Subject to your obligations set
forth above, you shall be liable to us only to the extent of our general damages
(determined based upon the market value of the property which is the subject of
the loss at the date of discovery of such loss) suffered or incurred as a result
of any act or omission of yours which is a breach of your duties pursuant to
this Agreement and for which liability is legally imposed upon you, and in no
event shall you be liable for special, consequential or punitive damages.
General damages shall mean only those damages as directly and necessarily result
from such act or omission without reference to any special conditions or
circumstances of ours or of any transaction, whether or not you have been
advised of any such special conditions or circumstances.
All collection and receipt of funds or securities and all payment and
delivery of funds or securities under this Agreement shall be made by you as our
agent, at our risk with respect to our actions or omissions and those of persons
other than you, including, without limitation, the risk associated with the
securities processing
- 4 -
practice of delivering securities against a receipt and the risk that the
counterparty In any transaction into which we enter will not transfer funds or
securities or otherwise perform in accordance with our expectation of its
obligations thereunder (including, without limitation, where, as a result of
such nonperformance, a central depository reverses, or requires repayment of,
any credit given in connection with the transfer of securities).
In no event shall you be responsible or liable for any loss due to
forces beyond your control, including, but not limited to, acts of God, flood,
fire, nuclear fusion, fission or radiation, war (declared or undeclared),
terrorism, insurrection, revolution, riot, strikes or work stoppages for any
reason, embargo, government action, including any laws, ordinances, regulations
or the like which restrict or prohibit the providing of the services
contemplated by this Agreement, inability to obtain equipment or communications
facilities, or the failure of equipment or interruption of communications
facilities, and other causes whether or not of the same class or kind as
specifically named above. In the event that you are unable substantially to
perform for any of the reasons described in the immediately preceding sentence,
you shall so notify us as soon as reasonably practicable.
You shall be responsible for only those duties expressly stated in this
Agreement or expressly contained in instructions to perform the services
described herein given to you pursuant to the provisions of this Agreement and
accepted by you (unless you and we otherwise agree in writing) and, without
limiting the foregoing, you shall have no duty or responsibility:
(a) to supervise the investment of, or make recommendations with
respect to the purchase, retention or sale of, securities or other
property relating to the Custody Account, or to maintain any insurance
on property in the Custody Account for our benefit;
(b) with regard to any security in the Custody Account as to
which a default in the payment of principal or interest has occurred, to
give notice of default, make demand for payment or take any other action
with respect to such default;
(c) except as otherwise specifically provided herein, for any
act or omission, or for the solvency or insolvency, or notice to us of
the solvency or insolvency, of any broker or agent (including any
central depository) which is selected by you (in the absence of gross
negligence or willful misconduct by you in such selection) or by us or
any other person to effect any transaction for the Custody Account or to
perform any service under this Agreement;
(d) to evaluate, or report to us regarding, the financial
condition of any person to which you deliver securities or funds
pursuant to this Agreement; or
- 5 -
(e) for any loss occasioned by delay in the actual receipt of
notice by you of any payment, redemption or other transaction in respect
to which you are authorized to take some action pursuant to this
Agreement.
OVERDRAFTS. The amount by which payments made by you on our behalf with
respect to property in, or to be received for, the Custody Account, or with
respect to other transactions pursuant to this Agreement, exceed the available
funds in the Cash Account shall be deemed a loan from you to us, payable on
demand, bearing interest at the rate of interest customarily charged by you on
similar loans, provided, however, that you shall have no duty to make any
payment if such payment shall exceed the available funds in the Cash Account.
REIMBURSEMENT. If you choose to credit the Cash Account or the Custody
Account on the payable date, or at any time prior to actual collection or
receipt, for interest, dividends or redemptions, we shall promptly return to you
such amount or property credited, and you may debit the Cash Account or the
Custody Account for such amount or property credited, upon your oral or written
notification to us that you have been unable to collect such amount or property
in the ordinary course of transactions for our account or that such amount or
property was incorrectly credited. You shall have no duty to institute legal
proceedings, file a claim or proof of claim in any insolvency proceeding or take
any action beyond your ordinary collection procedures to collect such amounts or
property, but this Agreement shall not limit or waive any rights which we may
have against any other person obligated to us.
RESPONSIBLE AS PRINCIPAL. We agree that we shall be responsible to you
as a principal for all of our obligations to you arising under or in connection
with this Agreement, notwithstanding that we may be acting on behalf of other
persons, and we warrant our authority to deposit in the Custody Account and Cash
Account any securities and funds which you or your agents receive therefor and
to give instructions relative thereto. We further agree that you shall not be
subject to, nor shall your rights and obligations with respect to this Agreement
and the Custody Account be affected by, any agreement between us and any such
person.
CREDITING AND DEBITING PROCEDURES. With respect to all transactions for
the Custody Account, including, without limitation, dividend and interest
payments and sales and redemptions of securities, availability of funds credited
to the Cash Account shall be based on the type of funds used in the trade
settlement or payment, including, but not limited to, same day availability for
federal or same day funds and next business day availability for clearing house
or next day funds. Subject to the above, with respect to the purchase and sale
of property for the Custody Account, the proceeds from the sale of securities
shall be credited to the Cash Account on the date such proceeds are received by
you and the cost of securities purchased shall be debited to the Cash Account on
the date securities are received by you.
- 6 -
TRANSFER TAXES. You are authorized and directed, unless otherwise
instructed in particular transactions, to claim exemption from transfer taxes on
all transfers and deliveries of securities held for our Custody Account.
OTHER ACCOUNTS. From time to time we may instruct you to open and
maintain more than one Custody Account for us. Unless we and you otherwise
expressly agree, such accounts will be governed by the provisions of this
Agreement.
FEES, INDEMNIFICATION. We agree to pay you compensation for your
services pursuant to this Agreement at the fees of which you shall notify us
from time to time. We also agree to hold you and your agents harmless from, and
to indemnify and reimburse you and them for, all claims, liability, loss and
expense (including out-of-pocket and incidental expenses and legal fees)
incurred by you or them in connection with our Custody Account or your acting
under this Agreement, provided that you or they, as the case may be, have not
acted with negligence or willful misconduct with respect to the events resulting
in such claims, liability, loss and expense.
TERMINATION. Either party may terminate this Agreement at any time upon
thirty days written notice. Our obligations pursuant to the paragraphs under the
headings "Registration", "Overdrafts", "Reimbursement" and "Fees,
Indemnification" shall survive the termination of this Agreement.
NOTICES. Notices with respect to termination, specification of
Authorized Officers and terms and conditions for instructions required hereunder
shall be in writing, and shall be deemed to have been duly given if delivered
personally, by courier service or by mail, postage prepaid, to the following
addresses (or to such other address as either party hereto may from time to time
designate by notice duly given in accordance with this paragraph):
MBIA Corp.
To us at: Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Name: MBIA Corp. Custody
To you, to the attention of the individual designated by you as the
safekeeping account administrator for our account, at:
The Chase Manhattan Bank, N.A.
Worldwide Insurance Securities
Services
3 Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
GOVERNING LAW, SUCCESSORS AND ASSIGNS, HEADINGS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
- 7 -
without regard to laws as to conflicts of laws, and shall be binding on our and
your respective successors and assigns. The headings of the paragraphs hereof
are included for convenience of reference only and do not form a part of this
Agreement.
PRIOR PROPOSALS. This Agreement contains the complete agreement of the
parties hereto with respect to the Custody Account (except as may be expressly
provided to the contrary herein) and supersedes and replaces any previously made
proposals, representations, warranties or agreements with respect thereto by
either or both of the parties hereto. This Agreement shall become effective upon
execution hereof by us and acceptance by you.
SEPARABILITY. Any provisions of this Agreement which may be determined
by competent authority to be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SPECIAL TERMS. The following additional terms and provisions, if any,
are included in and constitute a part of this Agreement:
Municipal Bond Investors
Assurance Corporation
------------------------
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Title: Treasurer
------------------------
Accepted by: Date: March 1, 1995
-------------------------
THE CHASE MANHATTAN BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Title: Second Vice President
-------------------------
Date: 2/21/95
-------------------------
- 8 -
EXHIBIT 10.69
CUSTODY AGREEMENT
To: THE CHASE MANHATTAN BANK, N.A.
Worldwide Insurance Securities Services
3 Chase MetroTech Center, 6th Floor
Brooklyn, New York 11245
Gentlemen:
We hereby request you to open and to maintain a Custody Account in our
name and to hold therein as our custodian, upon the following terms and
conditions, all such securities and similar property as shall be received by and
acceptable to you for the Custody Account. As used herein, the term Custody
Account shall include all such Custody Accounts opened pursuant to this Custody
Agreement.
TRANSACTIONS. Unless you receive contrary written instructions from us,
and subject to the provisions of this Agreement, you are authorized:
(a) To receive all interest and dividends payable on such
property and to credit such interest and dividends to the account or
accounts of ours with you as are designated by us (hereinafter referred
to as the "Cash Account");
(b) To credit all proceeds received from sales and redemptions
of property to the Cash Account;
(c) To debit the Cash Account for the cost of acquiring property
for the Custody Account;
(d) To present obligations (including coupons) for payment upon
maturity, when called for redemption and when income payments are due;
(e) To exchange securities for other securities where the
exchange is purely ministerial as, for example, the exchange of
securities in temporary form for securities in definitive form or the
mandatory exchange of certificates;
(f) To sell fractional interests resulting from a stock split or
a stock dividend and to credit the Cash Account with the proceeds
thereof;
(g) To convert moneys received with respect to securities of
foreign issue into United States dollars whenever it is practical to do
so through customary banking channels. In effecting such conversion you
may use any method or agency available to you, including the facilities
of your own divisions, subsidiaries or affiliates. You shall incur no
liability on account of any loss suffered or expense incurred as a
result of such conversion, including, without limitation, losses arising
from fluctuations in exchange rates affecting any such conversion; and
(h) To execute in our name, whenever you deem it appropriate,
such ownership and other certificates as may be required to obtain
payments with respect to, or to effect the sale, transfer or other
disposition of, property in our Custody Account and to guarantee as our
signature the signature so affixed.
INSTRUCTIONS. You are authorized to rely and act upon all further
written instructions given or purported to be given by one or more officers,
employees or agents of ours {i) authorized by or in accordance with a corporate
resolution of ours delivered to you or (ii) described as authorized in a
certificate delivered to you by our Secretary or an Assistant Secretary or
similar officer of ours (each such officer, employee or agent or combination of
officers, employees and agents authorized pursuant to clause (i) or described
pursuant to clause (ii) of this paragraph is hereinafter referred to as an
"Authorized Officer"). (The term "instructions" includes, without limitation,
instructions to sell, assign, transfer, deliver, purchase or receive for the
Custody Account, any and all stocks, bonds and other securities or to transfer
funds in the Custody Account or Cash Account.) You may also rely and act upon
instructions when bearing or purporting to bear the facsimile signature of any
of the individuals designated by an Authorized Officer regardless of by whom or
by what means the actual or purported facsimile signature or signatures thereon
may have been affixed thereto if such facsimile signature or signatures resemble
the facsimile specimen or specimens from time to time furnished to you by any of
such Officers, our Secretary or an Assistant Secretary or similar officer of
ours. In addition, you may rely and act upon instructions received by telephone,
telex, TWX, facsimile transmission, bank wire or other teleprocess acceptable to
you which you believe in good faith to have been given by an Authorized Officer
or which are transmitted with proper testing or authentication pursuant to terms
and conditions which you may specify. You may also rely and act upon
instructions transmitted electronically through your TITAN Data Entry System or
any similar electronic instruction system acceptable to you. You shall incur no
liability to us or otherwise as a result of any act or omission by you in
accordance with instructions on which you are authorized to rely pursuant to the
provisions of this paragraph. Any instructions delivered to you by telephone
shall promptly thereafter be confirmed in writing by an Authorized Officer, but
you shall incur no liability for our failure to send such confirmation in
writing, the failure of any such written confirmation to conform to the
telephone instructions which you received, the failure of any such written
confirmation to be signed or properly signed, or your failure to produce such
confirmation at any subsequent time. You shall incur no liability for refraining
from acting upon any instructions which for any reason you, in good faith, are
unable to verify to your own satisfaction. With respect to instructions received
hereunder to transfer funds from the Cash Account to any other account or party,
we agree to implement any callback or other authentication method or procedure
or security device required by you at any time or from time to time. Unless
otherwise expressly provided, all authorizations and instructions shall continue
in full force and effect until canceled or superseded by subsequent
authorizations or instructions received by your safekeeping account
administrator with reasonable opportunity to act thereon. Your
- 2 -
authorization to rely and act upon instructions pursuant to this paragraph shall
be in addition to, and shall not limit, any other authorization which we may
give you regarding our accounts with you.
We agree that, if you require test arrangements, authentication methods
or procedures or other security devices to be used with respect to instructions
which we may give hereunder, thereafter instructions given by us shall be given
and processed in accordance with terms and conditions for the use of such
arrangements, methods or procedures or devices as you may put into effect and
modify from time to time. We shall safeguard any testkeys, identification codes
or other security devices which you make available to us and agree that we shall
be responsible for any loss, liability or damage incurred by you or by us as a
result of your acting in accordance with instructions from any unauthorized
person using the proper security device. You may electronically record any
instructions given by telephone, and any other telephone discussions with
respect to the Custody Account or transactions pursuant to this Agreement.
Except as may be provided otherwise herein, you are authorized to
execute our instructions and take other actions pursuant to this Agreement in
accordance with your customary processing practices for customers similar to us
and, in accordance with such practices, you may retain agents, including
subsidiaries or affiliates of yours, to perform certain of such functions.
In acting upon instructions to deliver securities against payment, you
are authorized, in accordance with customary securities processing practices, to
deliver such securities to the purchaser thereof or dealer therefor (including
to an agent for any such purchaser or dealer) against a receipt, with the
expectation of collecting payment from the purchaser, dealer or agent to whom
the securities were so delivered before the close of business on the same day.
REGISTRATION. Unless you receive contrary instructions from us, you are
authorized to keep securities in your own vaults registered in the name of your
nominee or nominees or, where securities are eligible for deposit in a central
depository, such as The Depository Trust Company, the Federal Reserve Bank of
New York or the Participants Trust Company, you may use any such depository and
permit the registration of registered securities in the name of its nominee or
nominees, and we agree to hold you and the nominees harmless from any liability
as holders of record. We shall accept the return or delivery of securities of
the same class and denomination as those deposited with you by us or otherwise
received by you for the Custody Account, and you need not retain the particular
certificates so deposited or received.
If any securities registered in the name of your nominee or held in a
central depository and registered in the name of the depository's nominee are
called for partial redemption by the issuer of such securities, you are
authorized to allot the called
- 3 -
portion to the respective beneficial holders of the securities in any manner
deemed to be fair and equitable by you in your sole discretion.
STATEMENTS. You shall notify us of each securities transaction effected
for our Custody Account and of income on and redemptions of the property in the
Custody Account, as well as furnish us a listing of such property, at such times
upon which you and we mutually agree.
CORPORATE ACTIONS. You shall send us such proxies (signed in blank, if
issued in the name of your nominee or a nominee of a central depository) and
communications with respect to securities in our Custody Account as call for
voting or relate to legal proceedings within a reasonable time after sufficient
copies are received by you for forwarding to customers. In addition, you shall
follow coupon payments, redemptions, exchanges or similar matters with respect
to securities in our Custody Account and advise us of rights issued, tender
offers or any other discretionary rights with respect to such securities, in
each case, of which you receive notice from the issuer of the securities or as
to which notice is published in publications routinely used by you for this
purpose.
CUSTODIAN RESPONSIBILITY. You shall be obligated to indemnify us for any
loss of securities and other property in the Custody Account resulting from (i)
your negligence or willful misconduct, (ii) the negligence or willful misconduct
of your officers or employees, or (iii) the negligence or willful misconduct of
any central depository or other agent retained by you to hold such securities or
property. Except as otherwise provided herein, in no event shall you be liable
or responsible other than for your own negligence or willful misconduct. In the
event of a loss of securities in the Custody Account for which you are required
to indemnify us pursuant to this Agreement, you shall promptly replace, at your
option, such securities or the value thereof (determined as of the date of the
discovery of such loss) and the value of any loss of rights or privileges
resulting from the loss of such securities. Subject to your obligations set
forth above, you shall be liable to us only to the extent of our general damages
(determined based upon the market value of the property which is the subject of
the loss at the date of discovery of such loss) suffered or incurred as a result
of any act or omission of yours which is a breach of your duties pursuant to
this Agreement and for which liability is legally imposed upon you, and in no
event shall you be liable for special, consequential or punitive damages.
General damages shall mean only those damages as directly and necessarily result
from such act or omission without reference to any special conditions or
circumstances of ours or of any transaction, whether or not you have been
advised of any such special conditions or circumstances.
All collection and receipt of funds or securities and all payment and
delivery of funds or securities under this Agreement shall be made by you as our
agent, at our risk with respect to our actions or omissions and those of persons
other than you, including, without limitation, the risk associated with the
securities processing
- 4 -
practice of delivering securities against a receipt and the risk that the
counterparty in any transaction into which we enter will not transfer funds or
securities or otherwise perform in accordance with our expectation of its
obligations thereunder (including, without limitation, where, as a result of
such nonperformance, a central depository reverses, or requires repayment of,
any credit given in connection with the transfer of securities).
In no event shall you be responsible or liable for any loss due to
forces beyond your control, including, but not limited to, acts of God, flood,
fire, nuclear fusion, fission or radiation, war (declared or undeclared),
terrorism, insurrection, revolution, riot, strikes or work stoppages for any
reason, embargo, government action, including any laws, ordinances, regulations
or the like which restrict or prohibit the providing of the services
contemplated by this Agreement, inability to obtain equipment or communications
facilities, or the failure of equipment or interruption of communications
facilities, and other causes whether or not of the same class or kind as
specifically named above. In the event that you are unable substantially to
perform for any of the reasons described in the immediately preceding sentence,
you shall so notify us as soon as reasonably practicable.
You shall be responsible for only those duties expressly stated in this
Agreement or expressly contained in instructions to perform the services
described herein given to you pursuant to the provisions of this Agreement and
accepted by you (unless you and we otherwise agree in writing) and, without
limiting the foregoing, you shall have no duty or responsibility:
(a) to supervise the investment of, or make recommendations with
respect to the purchase, retention or sale of, securities or other
property relating to the Custody Account, or to maintain any insurance
on property in the Custody Account for our benefit;
(b) with regard to any security in the Custody Account as to
which a default in the payment of principal or interest has occurred, to
give notice of default, make demand for payment or take any other action
with respect to such default:
(c) except as otherwise specifically provided herein, for any
act or omission, or for the solvency or insolvency, or notice to us of
the solvency or insolvency, of any broker or agent (including any
central depository) which is selected by you (in the absence of gross
negligence or willful misconduct by you in such selection) or by us or
any other person to effect any transaction for the Custody Account or to
perform any service under this Agreement:
(d) to evaluate, or report to us regarding, the financial
condition of any person to which you deliver securities or funds
pursuant to this Agreement; or
- 5 -
(e) for any loss occasioned by delay in the actual receipt of
notice by you of any payment, redemption or other transaction in respect
to which you are authorized to take some action pursuant to this
Agreement.
OVERDRAFTS. The amount by which payments made by you on our behalf with
respect to property in, or to be received for, the Custody Account, or with
respect to other transactions pursuant to this Agreement, exceed the available
funds in the Cash Account shall be deemed a loan from you to us, payable on
demand, bearing interest at the rate of interest customarily charged by you on
similar loans, provided, however, that you shall have no duty to make any
payment if such payment shall exceed the available funds in the Cash Account.
REIMBURSEMENT. If you choose to credit the Cash Account or the Custody
Account on the payable date, or at any time prior to actual collection or
receipt, for interest, dividends or redemptions, we shall promptly return to you
such amount or property credited, and you may debit the Cash Account or the
Custody Account for such amount or property credited, upon your oral or written
notification to us that you have been unable to collect such amount or property
in the ordinary course of transactions for our account or that such amount or
property was incorrectly credited. You shall have no duty to institute legal
proceedings, file a claim or proof of claim in any insolvency proceeding or take
any action beyond your ordinary collection procedures to collect such amounts or
property, but this Agreement shall not limit or waive any rights which we may
have against any other person obligated to us.
RESPONSIBLE AS PRINCIPAL. We agree that we shall be responsible to you
as a principal for all of our obligations to you arising under or in connection
with this Agreement, notwithstanding that we may be acting on behalf of other
persons, and we warrant our authority to deposit in the Custody Account and Cash
Account any securities and funds which you or your agents receive therefor and
to give instructions relative thereto. We further agree that you shall not be
subject to, nor shall your rights and obligations with respect to this Agreement
and the Custody Account be affected by, any agreement between us and any such
person.
CREDITING AND DEBITING PROCEDURES. With respect to all transactions for
the Custody Account, including, without limitation, dividend and interest
payments and sales and redemptions of securities, availability of funds credited
to the Cash Account shall be based on the type of funds used in the trade
settlement or payment, including, but not limited to, same day availability for
federal or same day funds and next business day availability for clearing house
or next day funds. Subject to the above, with respect to the purchase and sale
of property for the Custody Account, the proceeds from the sale of securities
shall be credited to the Cash Account on the date such proceeds are received by
you and the cost of securities purchased shall be debited to the Cash Account on
the date securities are received by you.
- 6 -
TRANSFER TAXES. You are authorized and directed, unless otherwise
instructed in particular transactions, to claim exemption from transfer taxes on
all transfers and deliveries of securities held for our Custody Account.
OTHER ACCOUNTS. From time to time we may instruct you to open and
maintain more than one Custody Account for us. Unless we and you otherwise
expressly agree, such accounts will be governed by the provisions of this
Agreement.
FEES, INDEMNIFICATION. We agree to pay you compensation for your
services pursuant to this Agreement at the fees of which you shall notify us
from time to time. We also agree to hold you and your agents harmless from, and
to indemnify and reimburse you and them for, all claims, liability, loss and
expense (including out-of-pocket and incidental expenses and legal fees)
incurred by you or them in connection with our Custody Account or your acting
under this Agreement, provided that you or they, as the case may be, have not
acted with negligence or willful misconduct with respect to the events resulting
in such claims, liability, loss and expense.
TERMINATION. Either party may terminate this Agreement at any time upon
thirty days written notice. Our obligations pursuant to the paragraphs under the
headings "Registration", "Overdrafts", "Reimbursement" and "Fees,
Indemnification" shall survive the termination of this Agreement.
NOTICES. Notices with respect to termination, specification of
Authorized Officers and terms and conditions for instructions required hereunder
shall be in writing, and shall be deemed to have been duly given if delivered
personally, by courier service or by mail, postage prepaid, to the following
addresses (or to such other address as either party hereto may from time to time
designate by notice duly given in accordance with this paragraph):
To us at: MBIA Inc. Account Name: MBIA Inc. Custody
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To you, to the attention of the individual designated by you as the
safekeeping account administrator for our account, at:
The Chase Manhattan Bank, N.A.
Worldwide Insurance Securities
Services
3 Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
GOVERNING LAW, SUCCESSORS AND ASSIGNS, HEADINGS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
- 7 -
without regard to laws as to conflicts of laws, and shall be binding on our and
your respective successors and assigns. The headings of the paragraphs hereof
are included for convenience of reference only and do not form a part of this
Agreement.
PRIOR PROPOSALS. This Agreement contains the complete agreement of the
parties hereto with respect to the Custody Account (except as may be expressly
provided to the contrary herein) and supersedes and replaces any previously made
proposals, representations, warranties or agreements with respect thereto by
either or both of the parties hereto. This Agreement shall become effective upon
execution hereof by us and acceptance by you.
SEPARABILITY. Any provisions of this Agreement which may be determined
by competent authority to be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SPECIAL TERMS. The following additional terms and provisions, if any,
are included in and constitute a part of this Agreement:
MBIA Inc.
-----------------------------
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Title: Treasurer
--------------------------
Accepted by: Date: March 1, 1995
--------------------------
THE CHASE MANHATTAN BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Title: Second Vice President
--------------------------
Date: 2/21/95
--------------------------
- 8 -
EXHIBIT 10.70
EXHIBIT A
MBIA INC.
1996 INCENTIVE PLAN
(EFFECTIVE AS OF JANUARY 1, 1996)
1. PURPOSE.
The purposes of the Plan are to enable the Company and its
Subsidiaries to attract, retain, motivate and reward the best qualified
executive officers and key employees by providing them with the opportunity to
earn competitive compensation directly linked to the Company's performance.
2. DEFINITIONS.
Unless the context requires otherwise, the following words as used in
the Plan shall have the meanings ascribed to each below, it being understood
that masculine, feminine and neuter pronouns are used interchangeably and that
each comprehends the others.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the Compensation and Organization Committee
of the Board (or such other committee of the Board that the Board shall
designate from time to time) or any subcommittee thereof consisting of two or
more directors each of whom is an "outside director" within the meaning of
Section 162(m).
(c) "Company" shall mean MBIA Inc.
(d) "Covered Employee" shall have the meaning set forth in
Section 162(m).
(e) "Participant" shall mean (i) each executive officer of the Company
and (ii) each other key employee of the Company or a Subsidiary whom the
Committee designates as a participant under the Plan.
(f) "Performance Period" shall mean each calendar year or multi-year
cycle as determined by the Committee.
(g) "Plan" shall mean the MBIA Inc. 1996 Incentive Plan, as set forth
herein and as may be amended from time to time.
(h) "Section 162(m)" shall mean Section 162(m) of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated thereunder (including
any proposed regulations).
(i) "Subsidiary" shall mean any corporation in which the Company owns,
directly or indirectly, stock representing more than 50% of the voting power of
all classes of stock entitled to vote.
3. ADMINISTRATION.
The Committee shall administer and interpret the Plan, provided that, in
no event, shall the Plan be interpreted in a manner which would cause any award
intended to be qualified as performance-based compensation under Section 162(m)
to fail to so qualify. The Committee shall establish the performance objectives
for any calendar year in accordance with Section 4 and certify whether such
performance objectives have been obtained. Any determination made by the
Committee under the Plan shall be final and conclusive. The Committee may employ
such legal counsel, consultants and agents (including counsel or agents who are
employees of the Company or a Subsidiary) as it may deem desirable for the
administration of the Plan and may rely upon any opinion received from any
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such counsel or consultant or agent and any computation received from such
consultant or agent. All expenses incurred in the administration of the Plan,
including, without limitation, for the engagement of any counsel, consultant or
agent, shall be paid by the Company. No member or former member of the Board or
the Committee shall be liable for any act, omission, interpretation,
construction or determination made in connection with the Plan other than as a
result of such individual's willful misconduct.
4. BONUSES.
(a) Performance Criteria. Within 90 days after each Performance
Period begins (or such other date as may be required or permitted under Section
162(m)), the Committee shall establish the performance objective or objectives
that must be satisfied in order for a Participant to receive a bonus for such
Performance Period. Unless the Committee determines at the time of grant not to
qualify the award as performance-based compensation under Section 162(m), any
such performance objectives will be based upon the relative or comparative
achievement of one or more of the following criteria, as determined by the
Committee: (i) consolidated earnings before income taxes; (ii) earnings per
share; (iii) book value per share; (iv) return on shareholders equity; (v) the
relative performance of peer group companies; (vi) expense management; (vii)
return on investment; (viii) improvements in capital structure; (ix)
profitability of an identifiable business unit or product; (x) maintenance or
improvement of product margins; and (xi) ratio of claims to revenues.
(b) Maximum Amount Payable. If the Committee certifies in writing that
any of the performance objectives established for the relevant Performance
Period under Section 4(a) has been satisfied, each Participant who is employed
by the Company or one of its Subsidiaries on the last day of the Performance
Period for which the bonus is payable shall be entitled to receive (i) an annual
bonus in an amount not to exceed $1,000,000 and/or (ii) a long-term award in an
amount not to exceed $3,000,000. If a Participant's employment terminates for
any reason (including, without limitation, his death, disability or retirement
under the terms of any retirement plan maintained by the Company or a
Subsidiary) prior to the last day of the Performance Period for which the bonus
is payable, such Participant shall receive a bonus equal to the maximum bonus
payable to such Participant under the preceding sentence multiplied by a
fraction, the numerator of which is the number of days that have elapsed during
the Performance Period in which the termination occurs prior to and including
the date of the Participant's termination of employment and the denominator of
which is the total number of days in the Performance Period.
(c) Negative Discretion. Notwithstanding anything else contained in
Section 4(b) to the contrary, the Committee shall have the right, in its
absolute discretion, (i) to reduce or eliminate the amount otherwise payable to
any Participant under Section 4(b) based on individual performance or any other
factors that the Committee, in its discretion, shall deem appropriate and (ii)
to establish rules or procedures that have the effect of limiting the amount
payable to each Participant to an amount that is less than the maximum amount
otherwise authorized under Section 4(b).
(d) Affirmative Discretion. Notwithstanding any other provision in
the Plan to the contrary, (i) the Committee shall have the right, in its
discretion, to pay to any Participant who is not a Covered Employee a bonus for
the year in which the amount paid would ordinarily be deductible by the Company
for federal income tax purposes in an amount up to the maximum bonus payable
under Section 4(b), based on individual performance or any other criteria that
the Committee deems appropriate and (ii) in connection with the hiring any
person who is or becomes Covered Employee, the Committee may provide for a
minimum bonus amount in any Performance Period, regardless of whether
performance objectives are attained.
5. PAYMENT.
Except as otherwise provided hereunder, payment of any bonus amount
determined under Section 4 shall be made to each Participant as soon as
practicable after the Committee certifies that
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one or more of the applicable performance objectives have been attained (or, in
the case of any bonus payable under the provisions of Section 4(d), after the
Committee determines the amount of any such bonus).
6. FORM OF PAYMENT.
The Committee shall determine whether any bonus payable under the 1996
Plan is payable in cash, in shares of Common Stock or in any combination
thereof. The Committee shall have the right to impose whatever conditions it
deems appropriate with respect to the award of shares of Common Stock, including
conditioning the vesting of such shares on the performance of additional
service. The maximum number of shares available for issuance under the Plan
shall be 1,500,000.
7. GENERAL PROVISIONS.
(a) Effectiveness of the Plan. The Plan shall be effective with respect
to calendar years beginning on or after January 1, 1996 and ending on or before
December 31, 2000, unless the term hereof is extended by action of the Board.
(b) Amendment and Termination. Notwithstanding Section 6(a), the Board
or the Committee may at any time amend, suspend, discontinue or terminate the
Plan; provided, however, that no such action shall be effective without approval
by the shareholders of the Company to the extent necessary to continue to
qualify the amounts payable hereunder to Covered Employees as performance-based
compensation under Section 162(m).
(c) Designation of Beneficiary. Each Participant may designate a
beneficiary or beneficiaries (which beneficiary may be an entity other than a
natural person) to receive any payments which may be made following the
Participant's death. Such designation may be changed or canceled at any time
without the consent of any such beneficiary. Any such designation, change or
cancellation must be made in a form approved by the Committee and shall not be
effective until received by the Committee. If no beneficiary has been named, or
the designated beneficiary or beneficiaries shall have predeceased the
Participant, the beneficiary shall be the Participant's spouse or, if no spouse
survives the Participant, the Participant's estate. If a Participant designates
more than one beneficiary, the rights of such beneficiaries shall be payable in
equal shares, unless the Participant has designated otherwise.
(d) No Right of Continued Employment. Nothing in this Plan shall be
construed as conferring upon any Participant any right to continue in the
employment of the Company or any of its Subsidiaries.
(e) No Limitation on Corporate Actions. Nothing contained in the Plan
shall be construed to prevent the Company or any Subsidiary from taking any
corporate action which is deemed by it to be appropriate or in its best
interest, whether or not such action would have an adverse effect on any awards
made under the Plan. No employee, beneficiary or other person shall have any
claim against the Company or any Subsidiary as a result of any such action.
(f) Nonalienation of Benefits. Except as expressly provided herein, no
Participant or beneficiary shall have the power or right to transfer,
anticipate, or otherwise encumber the Participant's interest under the Plan. The
Company's obligations under this Plan are not assignable or transferable except
to (i) a corporation which acquires all or substantially all of the Company's
assets or (ii) any corporation into which the Company may be merged or
consolidated. The provisions of the Plan shall inure to the benefit of each
Participant and the Participant's beneficiaries, heirs, executors,
administrators or successors in interest.
(g) Withholding. Any amount payable to a Participant or a beneficiary
under this Plan shall be subject to any applicable Federal, state and local
income and employment taxes and any other
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amounts that the Company or a Subsidiary is required at law to deduct and
withhold from such payment.
(h) Severability. If any provision of this Plan is held unenforceable,
the remainder of the Plan shall continue in full force and effect without regard
to such unenforceable provision and shall be applied as though the unenforceable
provision were not contained in the Plan.
(i) Governing Law. The Plan shall be construed in accordance with and
governed by the laws of the State of New York, without reference to the
principles of conflict of laws.
(j) Headings. Headings are inserted in this Plan for convenience of
reference only and are to be ignored in a construction of the provisions of the
Plan.
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