EXHIBIT 10.54
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PUT OPTION AGREEMENT
between
MBIA INSURANCE CORPORATION
and
NORTH CASTLE CUSTODIAL TRUST II
Dated December 23, 2002
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Preamble
This Put Option Agreement, dated as of December 23, 2002 (this
"Agreement"), is by and between MBIA Insurance Corporation, a New York domestic
stock insurance corporation ("MBIA Insurance"), and North Castle Custodial Trust
II (the "Custodial Trust"), a Delaware statutory trust.
Recitals
WHEREAS, MBIA Insurance is authorized to issue 500.01 shares of
non-cumulative, redeemable, perpetual preferred stock, par value $1,000 per
share, designated as "Series B Perpetual Preferred Shares," which shares have
not been and will not be registered with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Preferred Stock"); and
WHEREAS, MBIA Insurance and the Custodial Trust desire to enter into a
binding agreement pursuant to which MBIA Insurance will have the right to sell,
at its option, the Preferred Stock to the Custodial Trust, and the Custodial
Trust will have an obligation to purchase the Preferred Stock upon MBIA
Insurance's exercise of its option and upon the other terms and conditions
agreed upon by the parties.
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions; Interpretation
1.1 The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
section, clause or other subdivision, and references to "Sections"
refer to Sections of this Agreement except as otherwise expressly
provided.
1.2 In this Agreement:
"Agreement" has the meaning set forth above in the Preamble.
"Auction Date" has the meaning set forth in the General Terms of the
CPS Securities attached to the Declaration as Appendix A.
"Auction Rate" has the meaning set forth in the General Terms of the
CPS Securities attached to the Declaration as Appendix A.
"Broker-Dealer" has the meaning set forth in the Declaration.
"Business Day" has the meaning set forth in the Declaration.
"CPS Securities" has the meaning set forth in the Declaration.
"Custodial Trust" has the meaning set forth above in the Preamble.
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"Declaration" means the Amended and Restated Declaration of Trust
governing the Custodial Trust, dated as of the date hereof, as the same
may be amended or restated from time to time.
"Delayed Auction" has the meaning set forth in the General Terms of the
CPS Securities attached to the Declaration as Appendix A.
"Delayed Auction Date" has the meaning set forth in the General Terms
of the CPS Securities attached to the Declaration as Appendix A.
"Delayed Auction Period" has the meaning set forth in the General Terms
of the CPS Securities attached to the Declaration as Appendix A.
"Delayed Auction Rate" has the meaning set forth in the General Terms
of the CPS Securities attached to the Declaration as Appendix A.
"Delayed Put Option Premium" has the meaning set forth in Section 5.1.
"Delayed Put Option Premium Certificate" has the meaning set forth in
Section 5.2.
"Distribution Payment Date" has the meaning set forth in the General
Terms of the CPS Securities attached to the Declaration as Appendix A.
"Distribution Period" has the meaning set forth in the General Terms of
the CPS Securities attached to the Declaration as Appendix A.
"Dividend" has the meaning set forth in the Restated Charter.
"Eligible Assets" has the meaning set forth in the Declaration.
"Expense Reimbursement Agreement" has the meaning set forth in Section
3.1.
"Federal Funds Effective Rate" has the meaning set forth in the
Declaration.
"Fixed Rate Distribution Event" has the meaning set forth in the
Restated Charter.
"Fixed Rate Election" means an election by MBIA Insurance to pay
Dividends on the Preferred Stock at the rate described in clause (iii)
of the definition of "Dividend Rate" set forth in the Restated Charter.
"Holder" has the meaning set forth in the Declaration.
"Liquidation Preference" has the meaning set forth in the Restated
Charter.
"Maximum Rate" has the meaning set forth in the Restated Charter.
"MBIA Insurance" has the meaning set forth above in the Preamble.
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"Overnight Rate of Return" means the rate earned on the interest and on
the principal of the Eligible Assets during the period from each
Auction Date until the related Distribution Payment Date and during any
Delayed Auction Period, which shall be equal to the Federal Funds
Effective Rate then in effect.
"Preferred Stock" has the meaning set forth above in the Recitals.
"Preferred Stock Payment Date" has the meaning set forth in Section
3.2(a).
"Preferred Stock Purchase Price" has the meaning set forth in Section
4.1.
"Put Notice" means a written notice substantially in the form attached
hereto as Annex A.
"Put Option Premium" has the meaning set forth in Section 5.1.
"Put Option Premium Certificate" has the meaning set forth in Section
5.2.
"Redemption Price" has the meaning set forth in the Restated Charter.
"Redemption Proceeds" has the meaning set forth in Section 3.3(d).
"Restated Charter" means the Restated Charter of MBIA Insurance, a copy
of which is attached hereto as Annex C.
"Stated Yield" means all amounts of interest (including accreted
interest) and other payments due and payable (upon maturity or
otherwise) on the principal amount of the Eligible Assets (excluding
any repayment of principal) held by the Custodial Trust during a
Distribution Period, plus the amount of interest to be earned based on
the Overnight Rate of Return, as calculated on or prior to 11:00 a.m.
on the Auction Date for each respective Distribution Period.
"Tax Matters Partner" has the meaning set forth in the Declaration.
"Trustee" has the meaning set forth in the Declaration.
In this Agreement, any reference to a "company" shall be construed so
as to include any corporation, trust, partnership, limited liability
company or other legal entity, wheresoever incorporated or established.
1.3 In this Agreement, save where the contrary is indicated, any reference
to:
(a) this Agreement or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may
be, such other agreement or document as the same may have been,
or may from time to time be, amended, varied, novated or
supplemented in accordance with its terms; and
(b) a statute shall be construed as a reference to such statute as
the same may have been, or may from time to time be, amended or
re-enacted.
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1.4 In this Agreement, any definition shall be equally applicable to both
the singular and plural forms of the defined terms.
2. Put Option; Term
2.1 In consideration of the payment of the Put Option Premium, the
Custodial Trust hereby grants to MBIA Insurance the right to cause the
Custodial Trust to purchase the Preferred Stock on the terms set forth
in this Agreement.
2.2 The put option created hereby shall remain in effect and be exercisable
at any time except:
(a) during any period when the Preferred Stock that has been put to
the Custodial Trust pursuant to this Agreement is held by the
Custodial Trust; or
(b) after this Agreement has been terminated pursuant to Section 2.3.
2.3 This Agreement shall terminate upon the earliest to occur of:
(a) MBIA Insurance delivers a written notice to the Custodial Trust
while the Custodial Trust is holding Eligible Assets, stating
that MBIA Insurance is electing not to pay the Put Option Premium
for the next succeeding Distribution Period that follows the
notice by at least three (3) Business Days and indicating the
Distribution Payment Date on which the termination shall become
effective (delivery of such a termination notice by MBIA
Insurance shall be irrevocable);
(b) MBIA Insurance fails to pay the Put Option Premium or the Delayed
Put Option Premium, if any, for a Distribution Period on the
related Distribution Payment Date, and such failure has not been
cured within five (5) Business Days;
(c) MBIA Insurance makes a Fixed Rate Election;
(d) MBIA Insurance fails to pay Dividends on the Preferred Stock, or
the fees and expenses of the Custodial Trust pursuant to the
Expense Reimbursement Agreement, for a Distribution Period on the
related Distribution Payment Date;
(e) MBIA Insurance fails to pay the Redemption Price and such failure
has not been cured within five (5) Business Days; and
(f) the face amount of a Custodial Trust's CPS Securities is less
than $20,000,000;
3. Exercise of Put Option; Redemption.
3.1 The Custodial Trust agrees that it shall, upon exercise of the put
option as provided in Section 3.2, purchase the Preferred Stock from
MBIA Insurance for a purchase price equal to the Preferred Stock
Purchase Price, which Preferred Stock Purchase Price shall be payable
on the Preferred Stock Payment Date in accordance with Section 4.
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3.2 (a) MBIA Insurance may exercise the put option at any time by
delivering (i) a Put Notice to the Trustee, specifying a
payment date (the "Preferred Stock Payment Date"), which
shall be the next succeeding Distribution Payment Date after
the date on which the Put Notice is delivered to the Trustee
and (ii) the Expense Reimbursement Agreement to the
Custodial Trust in the form attached hereto as Annex D (the
"Expense Reimbursement Agreement"), in either case not more
than fifteen (15) days but not less than ten (10)days prior to
the next succeeding Distribution Payment Date.
(b) On the Preferred Stock Payment Date, after payment of the Put
Option Premium by MBIA Insurance to the Custodial Trust and
payment of the distribution amount by the Custodial Trust to
the Holders of the CPS Securities, in each case for the
immediately preceding Distribution Period, MBIA Insurance
shall issue and deliver to the Custodial Trust, or its
designee, Preferred Stock with an aggregate Liquidation
Preference equal to the proceeds attributable to principal
received upon the maturity or sale of the Custodial Trust's
Eligible Assets, net of fees and expenses of the Custodial
Trust and after any principal is returned to Holders of the
CPS Securities pursuant to Section 6.01(g) of the Declaration
and Section 6(b) of the General Terms of the CPS Securities
attached thereto. The Preferred Stock shall be delivered
free and clear of any defect in title, together with all
transfer and registration documents (or all notices,
instructions or other communications) as are necessary to
convey title to the Preferred Stock to the Custodial Trust
(or its nominee).
(c) For avoidance of doubt, (1) any cash received by the Custodial
Trust as interest or other payments earned on the principal
amount of the Eligible Assets (net of fees and expenses and
excluding any repayment of principal) and not previously
distributed to the Holders of CPS Securities shall be
distributed to the Holders of CPS Securities prior to payment
by the Custodial Trust of the Preferred Stock Purchase Price,
and shall not be used to purchase shares of Preferred Stock;
and (2) the aggregate Liquidation Preference of Preferred
Stock purchased from MBIA Insurance shall be reduced by the
amount, if any, by which the aggregate face amount of CPS
Securities is reduced as a result of losses of principal of
or interest on Eligible Assets as required by Section 6.01(g)
of the Declaration and Section 6(b) of the General Terms of
the CPS Securities attached thereto.
(d) MBIA Insurance shall have the right to redeem all or a portion
of the Preferred Stock on any Distribution Payment Date upon
payment of the Redemption Price for the shares to be redeemed
(the "Redemption Proceeds"). Notwithstanding the foregoing,
MBIA Insurance shall redeem all of the Preferred Stock if
after giving effect to a partial redemption, the aggregate
Liquidation Preference of the Preferred Stock outstanding
immediately after such partial redemption would be less than
$20,000,000. Payment of the Redemption Price will be made on
the first Distribution Payment Date after MBIA Insurance
properly elects to redeem the Preferred Stock.
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(e) Notice of any redemption of Preferred Stock shall be mailed to
the holders of the Preferred Stock not less than ten (10) days
nor more than fifteen (15) days prior to the date fixed for
such redemption. At any time before or after a notice of
redemption has been given, MBIA Insurance shall deposit the
aggregate Redemption Price of the Preferred Stock to be
redeemed with any bank or trust company in New York, New York,
with directions to pay the holders of the Preferred Stock
being redeemed the Redemption Proceeds in exchange for the
Preferred Stock.
(f) Upon a partial redemption of Preferred Stock held by the
Custodial Trust, the Redemption Proceeds shall be allocated
pro rata among the Holders of CPS Securities.
(g) Upon a complete redemption of all Preferred Stock held by the
Custodial Trust prior to a Fixed Rate Distribution Event, the
Custodial Trust shall apply the Redemption Proceeds to the
purchase of a portfolio of Eligible Assets.
(h) For the avoidance of doubt, there is no limitation on the
number of times MBIA Insurance may put the Preferred Stock to
the Custodial Trust pursuant to and in accordance with the
terms of this Agreement.
(i) MBIA Insurance may not redeem the Preferred Stock from the
holders thereof for a period of two years following a Fixed
Rate Distribution Event.
4. Payments
4.1 On the Preferred Stock Payment Date, after payment of the Put Option
Premium by MBIA Insurance to the Custodial Trust and payment of the
distribution amount by the Custodial Trust to the Holders of the CPS
Securities, in each case for the immediately preceding Distribution
Period, the Custodial Trust will deliver to MBIA Insurance the proceeds
attributable to principal received upon the maturity or sale of the
Custodial Trust's Eligible Assets, net of fees and expenses of the
Custodial Trust and after any principal is returned to Holders of CPS
Securities pursuant to Section 6.01(g) of the Declaration and Section
6(b) of the General Terms of the CPS Securities attached thereto (the
"Preferred Stock Purchase Price").
4.2 Payment by the Custodial Trust of the Preferred Stock Purchase Price
shall be made on or prior to 3:00 p.m. on the Preferred Stock Payment
Date and to the account of MBIA Insurance specified in the Put Notice.
4.3 Payment of the Preferred Stock Purchase Price by the Custodial Trust
shall be made as provided in Section 4.1 and Section 4.2 without
setoff, claim, recoupment, deduction or counterclaim; provided,
however, that if MBIA Insurance exercises its put option under Section
3 hereof at any time that it has failed to pay all or a portion of the
Put Option Premium, and such failure has not been cured on or before
the Preferred Stock Payment Date, the Custodial Trust shall be entitled
to setoff against the Preferred Stock Purchase Price of such unpaid
portion of the Put Option Premium.
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5. Put Option Premium
5.1 In consideration for the Custodial Trust's agreement to purchase the
Preferred Stock in accordance with the terms of this Agreement, MBIA
Insurance will pay to the Custodial Trust, in US dollars, on each
Distribution Payment Date during which the put option remains in effect
and is exercisable as set forth in Section 2.2 hereof, the "Put Option
Premium," in an amount equal to the product of (A) the Auction Rate on
the CPS Securities for the respective Distribution Period less the
excess of (i) the Stated Yield for such Distribution Period over (ii)
the expenses of the Custodial Trust for such Distribution Period,
provided that such amount shall be annualized and expressed as an
annual rate with respect to the face amount of the CPS Securities
outstanding on the date the Put Option Premium is determined, (B) the
aggregate face amount of the CPS Securities outstanding at the time the
Put Option Premium is calculated and (C) a fraction, the numerator of
which will be the actual number of calendar days in the respective
Distribution Period, and the denominator of which will be 360 days.
The Put Option Premium for each Distribution Period will be calculated
on the Auction Date.
If as a result of losses of principal of or interest on Eligible Assets
there is a Delayed Auction, MBIA Insurance will pay to the Custodial
Trust, in US dollars, on each Distribution Payment Date during which
the put option remains in effect and is exercisable as set forth in
Section 2.2 hereof, the "Delayed Put Option Premium," in an amount
equal to the product of (A) the Delayed Auction Rate on the CPS
Securities for the Delayed Auction Period less the excess of (i) the
Stated Yield for such Delayed Auction Period over (ii) the expenses of
the Custodial Trust for such Delayed Auction Period, provided that such
amount shall be annualized and expressed as an annual rate with respect
to the face amount of the CPS Securities outstanding on the date the
Put Option Premium is determined, (B) the aggregate face amount of the
CPS Securities outstanding at the time the Delayed Put Option Premium
is calculated and (C) a fraction, the numerator of which will be the
actual number of calendar days in the respective Delayed Auction
Period, and the denominator of which will be 360 days.
The Delayed Put Option Premium for each Delayed Auction Period will be
calculated on the Delayed Auction Date.
5.2 The amount of the Put Option Premium shall be calculated by the Trustee
and delivered in writing (the "Put Option Premium Certificate") to MBIA
Insurance prior to 5:00 p.m. on each Auction Date. The amount of the
Delayed Put Option Premium shall be calculated by the Trustee and
delivered in writing (the "Delayed Put Option Premium Certificate") to
MBIA Insurance prior to 5:00 p.m. on the Delayed Auction Date. The Put
Option Premium Certificate, and any Delayed Put Option Premium
Certificate, also shall set forth the Eligible Assets held by the
Custodial Trust, the Stated Yield on each Eligible Asset, any fees to
be incurred or accrued by the Trustee on behalf of the Custodial Trust
and the computation of the Put Option Premium, or the Delayed Put
Option Premium, as the case may be, in each case for the respective
Distribution
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Period and the Delayed Auction Period, respectively, and shall be in
the form attached hereto as Annex B.
5.3 MBIA Insurance has five (5) days to cure any failure to pay when due
the Put Option Premium or Delayed Put Option Premium, if any; provided
that the Put Option Premium during such cure period will be set at the
Maximum Rate then in effect.
5.4 MBIA Insurance has five (5) days to cure any failure to pay when due
the Redemption Price; provided that the Put Option Premium during such
cure period will be set at the Maximum Rate then in effect.
6. Obligations Absolute
6.1 The Custodial Trust acknowledges that, provided MBIA Insurance has
complied with the terms of this Agreement, the obligations of the
Custodial Trust undertaken under this Agreement are absolute,
irrevocable and unconditional irrespective of any circumstances
whatsoever, including any defense otherwise available to the Custodial
Trust, in equity or at law, including, without limitation, the defense
of fraud, any defense based on the failure of MBIA Insurance to
disclose any matter, whether or not material, to the Custodial Trust or
any other person, and any defense of breach of warranty or
misrepresentation, and irrespective of any other circumstance which
might otherwise constitute a legal or equitable discharge or defense of
an insurer, surety or guarantor under any and all circumstances. The
enforceability and effectiveness of this Agreement and the liability of
the Custodial Trust, and the rights, remedies, powers and privileges of
MBIA Insurance under this Agreement shall not be affected, limited,
reduced, discharged or terminated, and the Custodial Trust hereby
expressly waives, to the fullest extent permitted by applicable law,
any defense now or in the future arising by reason of:
(a) the illegality, invalidity or unenforceability of all or any part
of the Declaration;
(b) any action taken by MBIA Insurance;
(c) any change in the direct or indirect ownership or control of MBIA
Insurance or of any shares or ownership interests thereof; and
(d) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of or for the Custodial
Trust;
provided, however, that, notwithstanding the provisions of this Section
6.1, the Custodial Trust shall have no further obligations under this
Agreement after the termination of this Agreement. In addition, the
breach of any covenant made in this Agreement by the Custodial Trust
shall not terminate this Agreement or limit the rights of MBIA
Insurance hereunder.
6.2 For the avoidance of doubt, no failure or delay by MBIA Insurance in
exercising its rights hereunder shall operate as a waiver of its rights
hereunder (except as specifically provided in this Agreement,
including, without limitation, in respect of the notice periods and
payment dates set forth in Section 3.2(a)) and, subject to the
termination of this
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Agreement not having occurred, MBIA Insurance may continue to exercise
its rights hereunder at any time.
7. Covenants
7.1 MBIA Insurance hereby covenants and agrees that, at all times prior to
the earlier of the termination of this Agreement or completion of the
sale of the Preferred Stock to the Custodial Trust pursuant to this
Agreement it shall not amend, restate, revise or otherwise alter the
rights, terms and preferences of the Preferred Stock, whether by
operation of merger, reorganization or otherwise, without the prior
consent of the Custodial Trust, and it will not register the Preferred
Stock with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, on or before the Put Option Payment Date.
7.2 The Custodial Trust hereby covenants and agrees that, at all times
prior to the earlier of the termination of this Agreement or completion
of the sale of the Preferred Stock to the Custodial Trust pursuant to
this Agreement it shall not amend, restate, revise or otherwise alter
the rights, terms and preferences of the CPS Securities, whether by
operation of merger, reorganization or otherwise, and it will not
register the CPS Securities with the Securities and Exchange Commission
under the Securities Act of 1933, as amended.
7.3 MBIA Insurance hereby covenants and agrees that any Preferred Stock
delivered to the Custodial Trust shall rank, at the time of delivery,
(a) senior to the common stock of MBIA Insurance and (b) senior to or
pari passu with the most senior preferred shares of MBIA Insurance then
authorized by its Restated Charter or then issued and outstanding;
provided that this covenant may be amended with the consent of MBIA
Insurance and at least a majority of the face amount of the CPS
Securities.
7.4 MBIA Insurance hereby covenants and agrees that if MBIA Insurance's
financial strength rating is lowered while this Agreement remains
effective, MBIA Insurance shall provide written notice to the Trustee,
on behalf of the Custodial Trust, of such lowered rating.
8. This Agreement to Govern
If there is any inconsistency between any provision of this Agreement
and any other agreement, the provisions of this Agreement shall prevail
to the extent of such inconsistency but not otherwise.
9. Representations and Warranties
9.1 The Custodial Trust represents and warrants to MBIA Insurance that, as
of the date hereof:
(a) the Custodial Trust is duly organized and validly existing under
the Delaware Statutory Trust Act and has the power and authority
to own its assets and to conduct the activities which it
conducts;
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(b) its entry into, exercise of its rights and/or performance of
or compliance with its obligations under this Agreement do not
and will not violate (1) any law to which it is subject, (2)
any of its constitutional documents or (3) any agreement to
which it is a party or which is binding on it or its assets;
(c) it has the power to enter into, exercise its rights and
perform and comply with its obligations under this Agreement
and has taken all necessary action to authorize the execution,
delivery and performance of this Agreement;
(d) it will obtain and maintain in effect and comply with the
terms of all necessary consents, registrations and the like of
or with any government or other regulatory body or authority
applicable to this Agreement;
(e) its obligations under this Agreement are valid, binding and
enforceable at law;
(f) it is not in default under any agreement to which it is a
party or by which it or its assets is or are bound and no
litigation, arbitration or administrative proceedings are
current or pending, which default, litigation, arbitration or
administrative proceedings are material in the context of this
Agreement;
(g) it is not necessary or advisable in order to ensure the
validity, effectiveness, performance or enforceability of this
Agreement that any document be filed, registered or recorded
in any public office or elsewhere;
(h) each of the above representations and warranties will be
correct and complied with in all respects during the term of
this Agreement;
(i) no consent, approval, authorization or order of any court or
governmental authority, agency, commission or commissioner or
other regulatory authority is required for the consummation by
the Custodial Trust of the transactions contemplated by this
Agreement; and
(j) assuming compliance with the transfer restrictions with
respect to the CPS Securities set forth in the Declaration,
the Custodial Trust is not required to register with the
Securities and Exchange Commission as an investment company
under the Investment Company Act of 1940, as amended.
9.2 MBIA Insurance represents and warrants to the Custodial Trust that, as
of the date hereof:
(a) it is duly organized and validly existing as a domestic stock
insurance corporation under the laws of the State of New York and
has the power and authority to own its assets and to conduct its
activities;
(b) its entry into, exercise of its rights and/or performance of
or compliance with its obligations under this Agreement do not
and will not violate (1) any law to which it is subject, (2)
any of its constitutional documents or (3) any agreement to
which it is a party or which is binding on it or its assets;
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(c) it has the power to enter into, exercise its rights and perform
and comply with its obligations under this Agreement and has
taken all necessary action to authorize the execution, delivery
and performance of this Agreement;
(d) it will obtain and maintain in effect and comply with the terms
of all necessary consents, registrations and the like of or with
any government or other regulatory body or authority applicable
to this Agreement;
(e) its obligations under this Agreement are valid, binding and
enforceable at law;
(f) it is not in default under any agreement to which it is a party
or by which it or its assets is or are bound and no litigation,
arbitration or administrative proceedings are current or pending,
which default, litigation, arbitration or administrative
proceedings are material in the context of this Agreement;
(g) it is not necessary or advisable in order to ensure the validity,
effectiveness, performance or enforceability of this Agreement
that any document be filed, registered or recorded in any public
office or elsewhere;
(h) each of the above representations and warranties will be correct
and complied with in all respects during the term of this
Agreement;
(i) no consent, approval, authorization or order of any court or
governmental authority, agency, commission or commissioner or
other regulatory authority is required for the consummation by
MBIA Insurance of the transactions contemplated by this Agreement
and the sale of the Preferred Stock to the Custodial Trust,
pursuant to the terms hereof, need not be registered with the
Securities and Exchange Commission under the Securities Act of
1933, as amended; and
(j) as of the Put Option Payment Date, the Preferred Stock will be
duly authorized for issuance and sale to the Custodial Trust,
pursuant to this Agreement, and, when issued and delivered by
MBIA Insurance, pursuant to this Agreement, against payment of
the Preferred Stock Purchase Price, will be validly issued,
fully paid and nonassessable; the Preferred Stock will conform
in all respects to the terms of the Preferred Stock set forth
in the Restated Charter of MBIA Insurance attached hereto as
Annex C; and the Preferred Stock will not be subject to
preemptive or other similar rights.
10. Severability
10.1 Any provision of this Agreement which is or becomes illegal, invalid or
unenforceable in any jurisdiction may be severed from the other
provisions of this Agreement without invalidating the remaining
provisions hereof, and any such illegality, invalidity or
unenforceability shall not invalidate or render illegal or
unenforceable such provision in any other jurisdiction.
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11. Notices
11.1 Each communication to be made hereunder shall be deemed to have been
given (i) five (5) days after deposit of such communication with a
reputable national courier service addressed to such party at its
address specified below (or at such other address as such party shall
specify to the other party hereto in writing) or (ii) when transmitted
by facsimile to such party at its facsimile number specified below (or
at such other facsimile number as such party shall specify to the other
party hereto in writing):
If to MBIA Insurance at:
MBIA Insurance Corporation
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: Ram Wertheim, General Counsel
If to the Custodial Trust at:
The Bank of New York (Delaware)
P.O. Box 6973
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Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Copies to:
The Bank of New York
Corporate Trust Division
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Attention: Dealing and Trading Group
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In the case of any event under Sections 2.3, 7.3 or 14 of the
Agreement, MBIA Insurance shall give notice to:
Standard & Poor's Ratings Services at:
Standard & Poor's Ratings Services
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Moody's Investors Services, Inc. at:
▇▇▇▇▇'▇ Investors Services, Inc.
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12. Counterparts
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts each of which when
executed and delivered shall constitute an original, but all the
counterparts shall together constitute but one and the same instrument.
13. Benefit of Agreement and Disclaimer
13.1 This Agreement shall enure to the benefit of each party hereto and its
successors and assigns and transferees; provided that neither party
hereto may transfer its rights and obligations hereunder, by operation
of law or otherwise, without the prior written consent of the other
party.
14. Amendment and Assignment
14.1 This Agreement may not be amended or modified in any respect, nor may
any provision be waived, without the written agreement of both parties.
No waiver by one party of any obligation of the other hereunder shall
be considered a waiver of any other obligation of such party.
14.2 Neither the Custodial Trust nor MBIA Insurance may assign its rights or
obligations under this Agreement to any other person, except that MBIA
Insurance may assign its rights and obligations under this Agreement to
another person as a result of a merger of MBIA Insurance with another
person or as a result of a sale of all or substantially all of the
assets of MBIA Insurance to another person if the other person
expressly assumes all of the rights and obligations of MBIA Insurance
under this Agreement; and immediately following the merger or sale of
substantially all of its assets, the rating of the substitute preferred
stock or the unsecured debt obligations of the other person is at least
as high as the credit rating of the Preferred Stock or the general
unsecured debt obligations of MBIA Insurance, as the case may be (or if
no such ratings exist, the financial strength rating of MBIA Insurance)
immediately prior to the merger or sale.
15. Governing Law
15.1 THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.
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16. Jurisdiction
16.1 Each of the parties hereto irrevocably submits to the non-exclusive
jurisdiction of the courts of the State of New York in respect of any
action or proceeding arising out of or in connection with this
Agreement ("Proceedings"). Each of the parties hereto irrevocably
waives, to the fullest extent permitted by applicable law, any
objection that it may now or hereafter have to the laying of the venue
of any such Proceedings in the courts of the State of New York and any
claim that any Proceeding brought in any such court has been brought in
an inconvenient forum. Each of the Custodial Trust and MBIA Insurance
agrees that it shall at all times have an authorized agent in the State
of New York upon whom process may be served in connection with any
Proceedings, and each of the Custodial Trust and MBIA Insurance hereby
authorizes and appoints the Trustee to accept service of all legal
process arising out of or connected with this Agreement in the State of
New York and service on such person (or substitute) shall be deemed to
be service on the Custodial Trust or MBIA Insurance, as the case may
be. Except upon such a substitution, the Custodial Trust and MBIA
Insurance shall not revoke any such authority or appointment and shall
at all times maintain an agent for service of process in the State of
New York. If for any reason such person shall cease to act as agent for
the service of process, the Custodial Trust and MBIA Insurance shall
promptly appoint another such agent, and shall forthwith notify each
other of such appointment. The submission to jurisdiction reflected in
this paragraph shall not (and shall not be construed so as to) limit
the right of any person to take Proceedings in any court of competent
jurisdiction, nor shall the taking of Proceedings in any one or more
jurisdictions preclude the taking of Proceedings in any other
jurisdiction (whether concurrently or not) if and to the extent
permitted by law.
17. Limitation of Liability
17.1 It is expressly understood that (a) this Agreement is executed and
delivered by The Bank of New York (Delaware), not individually or
personally but solely as Trustee, in the exercise of the powers and
authority conferred and vested in it under the Declaration, (b) each of
the representations, undertakings and agreements herein made on the
part of the Custodial Trust, is made and intended not as personal
representations, undertakings and agreements by The Bank of New York
(Delaware), but is made and intended for the purpose of binding only
the Custodial Trust, and (c) under no circumstances shall The Bank of
New York (Delaware) be personally liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken
by the Custodial Trust, under this Agreement or the other related
documents.
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IN WITNESS WHEREOF the parties hereto have caused this Put Option
Agreement to be duly executed as of the day and year first above written.
NORTH CASTLE CUSTODIAL TRUST II,
By: The Bank of New York (Delaware), not in its
individual capacity but solely as Trustee
By:
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Name:
Title:
MBIA INSURANCE CORPORATION
By:
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Name:
Title:
ANNEX A
Form of Put Notice
To: North Castle Custodial Trust [I]
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502 ▇▇▇▇▇ ▇▇▇▇ Center ▇▇▇▇▇
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with a copy to:
The Bank of New York
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Attention: Dealing and Trading Group
Date:
Ladies and Gentlemen:
We refer to the put option agreement dated December 23, 2002 (as heretofore
amended, the "Put Option Agreement") entered into between us and you. Terms
defined therein shall have the same respective meanings herein.
This notice is the notice for the purposes of Section 3.2(a) of the Put Option
Agreement. We hereby require you to pay the Preferred Stock Purchase Price on
the Preferred Stock Payment Date which shall be [ ], to the
following account:
[ ]
Yours faithfully,
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for and on behalf of
MBIA INSURANCE CORPORATION
ANNEX B
Put Option Premium Certificate/
Delayed Put Option Premium Certificate
MBIA Insurance Corporation
Put Option Premium/Delayed Put Option Premium for the
Non-Cumulative Redeemable Perpetual
Preferred Stock of MBIA Insurance Corporation
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1. Distribution Period: [first day of Period]-[last day of Period]: [number of days in period - generally 28]
2. Auction Rate determined for the Distribution Period on [insert Auction Date]. 0.000000% $ (0)
3. Eligible Assets:
Issuer Ratings Purchase Price Yield to Maturity Interest
------------- ------------- -------------------- ----------------------- -------------
-------------------- ------------------------ -------------
4. Applicable Federal Funds Effective Rate: 0.00% 0.0% $ 0.0
5. Broker-Dealer Fee 0.0% $ 0.0
6. Trustee and Custodian Fees 0.0% $ 0.0
7. Investment Manager Fee 0.0% $ 0.0
8. Tax Matters Partner Fee 0.0% $ 0.0
9. Servicing Agent Fee 0.0% $ 0.0
10. Rating Agency Fees 0.0% $ 0.0
11. Tax Fees. Including preparation of returns
12. Other Fees and Expenses for the Distribution Period, if any 0.0% $ 0.0
13. Computation of Put Premium Due on
[insert Distribution Payment Date] by 11:00 a.m.
New York Time: 0.0% $ 0.0
14. The Investment manager is in compliance with the Investment
Management Agreement.
ANNEX C
Restated Charter of
MBIA Insurance Corporation
ANNEX D
Expense Reimbursement Agreement