AMBAC ASSURANCE CORPORATION, AMBAC INSURANCE UK LIMITED,
MBIA INSURANCE CORPORATION, AND MBIA ASSURANCE, S.A.
AGREEMENT REGARDING A GLOBAL JOINT VENTURE
This Agreement (the "Agreement") shall respecify the terms of the joint venture
(the "Venture") established by the Agreement Regarding the Formation of a
European Joint Venture dated as of September 11, 1995 and amended as of August
1, 1998 (the "September 11, 1995 Agreement"), shall supersede the September 11,
1995 Agreement, and shall become effective as of January 15, 1999.
The parties to the Venture shall be Ambac Assurance Corporation and AMBAC
Insurance UK Limited (collectively "Ambac") on the one hand and MBIA Insurance
Corporation and MBIA Assurance, S.A. (collectively "MBIA," and together with
Ambac, the "Parties") on the other. The Parties may handle through the Venture,
as further specified in Guidelines that the Parties may promulgate, types of
transactions (1) that generally require an assessment of a non-trivial and
bona-fide foreign risk exposure or in which the credit enhancement is sold to a
foreign purchaser, and (2) on which collaboration by the Parties conforms to all
applicable laws, rules, and regulations ("Global business").
The Parties intend to accomplish through the Venture the following purposes,
among others: (1) increase the quantity and quality of the output and
availability of financial guaranty insurance, other types of credit and guaranty
insurance, or other forms of credit enhancement, (2) reduce the cost, and
increase the availability, of capital financing, and (3) increase the demand for
credit enhancement and capital financing throughout the world. The Parties have
concluded that combining their resources through the Venture will achieve
efficiencies, expand their insurance offerings, and assist in overcoming
significant difficulties that each Party experienced in its separate activities
outside the United States.
The Venture permits the Parties to increase their capacities for covering risks
that would be difficult to cover individually because of their scale, rarity, or
novelty and provides a structure through which the Parties can harmonize their
incentives to integrate their resources and share their goodwill. The Venture
also allows the Parties to compete with banking, governmental funding, and
alternative forms of credit enhancement and structured financing. The Venture
thereby permits the Parties to offer consumers durable access to additional
forms and sources of financing.
The Parties expect that the Venture will enable them to develop expanded
geographic coverage outside the United States and to promote more effectively
established and innovative uses of various forms of credit enhancement in
foreign countries and territories. The improvements and progress that will be
accomplished through the Venture will allow the Parties to diversify and
increase their product offerings and will directly benefit issuers of financial
obligations, investors, others in the international financial community, and
consumers throughout the world.
The Parties anticipate acting mainly (though not exclusively) as primary insurer
and reinsurer, respectively, in jointly serving clients through the Venture. In
addition and without limitation, the Parties may act jointly through the Venture
as and when stated above with respect to, among others, the following activities
and activities related thereto:
CONFIDENTIAL
(a) conduct research regarding new business opportunities for the provision of
financial guaranty insurance and other forms of credit enhancement;
(b) market all forms of credit enhancement by, among other things, informing
clients of the increased capacity, expanded expertise, extended geographic
coverage, and improved service that the Parties will offer as a result of their
collaboration under this Agreement and by promoting and conducting seminars and
conferences on credit enhancement and the Parties' activities through the
Venture;
(c) analyze credit risks, select business opportunities that will be pursued as
part of the Venture, and, in some cases, seek to obtain reinsurance for those
opportunities;
(d) compile proposals for the offering of financial guaranty insurance, other
types of credit and guaranty insurance, or other forms of credit enhancement in
which the Parties will act mainly as primary insurer and reinsurer, respectively
(though the Parties may also act as co-insurers or co- reinsurers);
(e) present and execute such offerings and obtain reinsurance for such
offerings; and
(f) settle claims or risks insured by the Parties through the Venture.
While the Parties are reviewing or pursuing a business opportunity jointly
through the Venture, neither Party shall pursue that opportunity independently
or unilaterally in competition with the Venture, provided, however, that each
Party retains the discretion to terminate unilaterally its consideration of a
business opportunity through the Venture and to pursue that opportunity
independently.
Each Party's participation in any particular Venture activity shall be
determined independently by that Party. In addition, with respect to any
particular Venture activity, each Party shall act only in such capacity (that
is, as primary insurer, reinsurer, or in any other capacity) as is permitted by
applicable law. If any Party requires any authorization to undertake the
business contemplated by this Agreement, that Party shall obtain such
authorization and refrain from conducting such business in the absence of such
authorization. Each Party shall be responsible for its own compliance with the
applicable laws, rules, and regulations related to its participation in this
Agreement.
Each Party shall retain the discretion to act independently and unilaterally if
it so chooses or if a prospective client wishes to deal with either Party on
such a basis, even if the Parties have begun to review or pursue the opportunity
jointly through the Venture. Accordingly, neither Party shall be required to
bring all risks relating to Global business to the Venture. When either Party
acts independently and unilaterally with respect to any Global business matter,
the acting Party shall do so without coordination or cooperation with the other
Party after the acting Party decides to proceed independently and unilaterally.
Each Party shall advise each client in connection with any Global business
matter whether it is acting jointly or separately with respect to that matter.
The Parties shall not engage in joint conduct through the Venture in connection
with types of transactions that do not constitute Global business ("Non-Venture
business"). The Venture formed by this Agreement shall have no effect on Ambac's
or MBIA's respective Non-Venture business, and each Party shall continue to act
independently and unilaterally with respect to its Non-Venture business. In
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CONFIDENTIAL
addition, each Party shall not disclose competitively sensitive information
regarding its Non-Venture business or regarding other domestic activities to the
other Party.
The Parties shall use "MBIA-Ambac International" as the logo for the Venture.
Each Party shall permit the other Party to use, on a non-exclusive basis and in
conjunction only with Venture business, the trademarks and tradenames listed in
Appendix A to this Agreement in accordance with the terms of Appendix A.
Each Party represents to the other Party that it is authorized to enter into
this Agreement and to exercise all rights and meet all obligations set forth in
this Agreement. This Agreement shall continue in force for five years from the
effective date of this Agreement; provided, however, that this Agreement may be
terminated 30 days following the transmission (by facsimile and registered mail)
of written notification by one Party to the other Party that the notifying Party
wishes to withdraw from the Agreement.
This Agreement constitutes the entire agreement between the Parties regarding
the Venture and can be amended only in writing. This Agreement may be executed
in counterparts that, when taken together, shall constitute a fully executed
original of this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the dates set
forth below.
Ambac Assurance Corporation MBIA Insurance Corporation
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxx. Jr.
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Name: Xxxxxxx X. Xxxxxxxx Name: Xxxxxx X. Xxxxx. Jr.
Title: Chairman, President, Title: Chief Executive Officer
and Chief Executive Officer
Date: 1/29/99 Date:
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AMBAC Insurance UK Limited MBIA Assurance S.A.
By: /s/ Xxxx X. Xxxxxx III By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxx III Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director Title: President
Date: 1/29/99 Date:
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APPENDIX A
Each Party shall permit the other Party, on a non-exclusive basis and only
during the term of this Agreement, to use its trademarks and tradenames that are
listed on the following pages in conjunction with the other Party's trademarks
and tradenames that are listed on the following pages solely in connection with
business conducted through the Venture under this Agreement.
Each Party shall retain the right, to be exercised reasonably, to prohibit the
use of its trademark or tradename in connection with any specific instance of
Venture business if the use of such trademark or tradename would violate the
standards that such Party has set for the use of its trademark or tradename in
the ordinary course of its business.
Each Party represents to the other Party that it owns free of any adverse claim
the trademarks and tradenames attributed to it on the following pages.
MBIA INSURANCE CORPORATION
MBIA ASSURANCE, S.A.
[LOGO]
AMBAC ASSURANCE CORPORATION
AMBAC INSURANCE UK LIMITED
[LOGO]
Joint Venture Logo
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