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Retirement And Consulting Agreement

This is an actual contract by Mbia.

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Sectors: Insurance
Governing Law: New York, View New York State Laws
Effective Date: January 07, 1999
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RETIREMENT AND CONSULTING AGREEMENT, dated as of January 7, 1999, by and between MBIA INC., a Connecticut corporation (the "Company"), and David H. Elliott ("Executive").

WHEREAS, Executive is currently serving as the Chairman of the Board of Directors ("Chairman") and Chief Executive Officer of the Company;

WHEREAS, Executive has expressed his intention to retire from employment with the Company;

WHEREAS, Executive has provided loyal and valuable service to the Company and the Company recognizes Executive's significant contribution to the Company and its shareholders;

WHEREAS, the Company believes that it is in its best interest to retain access to the services of Executive; and

WHEREAS, Executive is willing to continue to provide services to the Company on the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of their mutual promises, the Company and Executive agree as follows:

1. Resignation; Continuing Board Membership. Effective as of the date hereof, Executive hereby resigns as Chief Executive Officer of the Company. Executive shall remain as Chairman of the Board of Directors and an employee of the Company ("Chairman") until the annual meeting of shareholders in 1999 (the "Chairman Service Period"), and, effective at such time, he hereby resigns (i) as Chairman, (ii) from employment with the Company and each of its subsidiaries and affiliates and (iii) from each other officer or executive position held with the Company and each directorship or officer or executive position held with each of the Company's subsidiaries or affiliates. Subject to his continued election by shareholders, Executive shall serve in the capacity as Chairman of the Executive Committee, and as a member of the Board until the end of the Consulting Period (as defined in Section 2 below) without compensation in addition to that set forth herein.

2. Consulting Services. During the period beginning on the first day following the Chairman Service Period and continuing until the second anniversary thereof (the "Consulting Period"), Executive shall provide to the Company consulting services commensurate with his status and experience with respect to such matters as shall be reasonably requested from time to time including, without limitation, such assistance as the Board shall request in writing with respect to the transition of authority to his successor as Chief Executive Officer. Executive shall not, solely by virtue of the consulting services provided hereunder, be considered to be an officer or employee of the Company during the Consulting Period, and shall not have the power or authority to contract in the name of or bind the Company, except as may be expressly stated in a written delegation of such authority from the Board.

3. Compensation. Except to the extent expressly otherwise provided herein, during the Chairman Service Period, Executive shall continue to be compensated on the same terms and conditions as in effect immediately prior to the date hereof. During the Consulting Period, the Company shall pay Executive an annual fee equal to the annual rate of base salary payable to Executive as of January 1, 1999. Such fees shall be paid to Executive at the same time or times and in the same number of installments as base salary is payable to the Company's senior officers. In addition to the fees described in the immediately preceding sentence, Executive shall be entitled to receive a bonus payment in respect of each of calendar years 1999 and 2000, in an amount to be determined by the Compensation and Organization Committee of the Board, but which shall in no event be less with respect to either year than the total bonus earned by Executive in respect of calendar year 1998 (as determined prior to any stock discount factor). Any such bonus amount shall be paid to Executive at the same time and subject to the same conditions upon which annual bonuses are payable to the senior officers of the Company, except the entire bonus amount shall be paid to Executive in cash with no portion payable or issuable in stock. The Company shall also reimburse Executive for such reasonable travel, lodging and other appropriate expenses incurred by Executive in the course or on account of rendering any services during either the Chairman Service Period or the Consulting Period upon submission of itemized reports consistent with good business practices. Nothing in this Agreement shall be construed to preclude Executive from receiving, in addition to the amounts payable hereunder, any other fees or compensation to which he may be entitled as a non-employee member of the Board.

4. Employee Programs. (a) Benefits Generally. Effective as of the end of the Chairman Service Period, Executive's employment with the Company shall voluntarily terminate. Except as otherwise expressly provided below, Executive's continued participation in, or rights to receive compensation or other benefits under, any of the Company's employee benefit plans, programs or arrangements (including those


plans, programs or arrangements available solely for the benefit of senior executive officers) shall be governed by the terms and conditions of the applicable plan, program or arrangement. Notwithstanding the immediately preceding sentence, during the Consulting Period, Executive shall be eligible to participate in the Company's medical and dental plans on the same terms and conditions as though Executive had continued to be an employee of the Company throughout such period. In the event that the Company cannot provide such medical and dental coverage under the terms and conditions of any such plan, the Company shall provide substantially the same coverage from another source, including by providing such benefits on a self-insured basis. Following the end of the Consulting Period, Executive shall receive the same medical and dental coverage as is available under the Company's generally applicable retiree medical and dental benefit programs.

(b) Stock Options. Notwithstanding anything else to the contrary contained in this Agreement or any agreement issued under the 1987 Stock Option Plan (the "1987 Plan"), to the extent that Executive holds any options granted pursuant to the terms of the 1987 Plan that are not exercisable as of the date hereof, each such option shall become exercisable at the same time and subject to the same conditions as though Executive had continued in the employ of the Company during the period over which any such option otherwise would have become exercisable; provided that, all of Executive's options shall become fully exercisable without any further action on the part of Executive or the Company on the last day of a period of ten consecutive days on which a Share has traded at at least $90 at any point during each such day (an "Acceleration Event"). Any options currently held by Executive may, to the extent currently exercisable or to the extent they become exercisable hereafter in accordance with the immediately preceding sentence, be exercised until the earlier of December 31, 2005 (or, if a Change of Control (as defined in the 1987 Plan) occurs during the Consulting Period, until the fifth anniversary of the end of the Consulting Period) or the expiration of the option; provided that, if an Acceleration Event occurs (and regardless of whether it has the effect of accelerating the exercisab
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