exhibit3.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

		Issue Date: January 30, 2008

1.		Definitions. Unless the context otherwise requires, when used herein the following terms shall
		have the meanings indicated.

		“Additional Shares” has the meaning given to it in Section 3.

		“Affiliate” means, with respect to any Person, any Person directly or indirectly controlling,
		controlled by or under common control with, such other person, provided, that with respect to the
		Company, also includes Channel Reinsurance Ltd. For purposes of this definition, “control”
		(including, with correlative meanings, the terms “controlled by” and “under common control
		with”) when used with respect to any Person, means the possession, directly or indirectly, of the
		power to cause the direction of management or policies of such person, whether through the
		ownership of voting securities by contract or otherwise.

		“Applicable Price” means the greater of (A) the greater of the Market Price per share of
		outstanding Common Stock on (i) the date on which the Company issues or sells any Common
		Stock other than Excluded Stock or (ii) the first date of the announcement of such issuance or sale
		or (B) the Buy-In Price.

		“Appraisal Procedure” means a procedure whereby two independent appraisers, one chosen by
		the Company and one by the Warrantholder (or if there is more than one Warrantholder, a
		majority in interest of Warrantholders), shall mutually agree upon the determinations then the
		subject of appraisal. Each party shall deliver a notice to the other appointing its appraiser within
		fifteen (15) days after the Appraisal Procedure is invoked. If within thirty (30) days after
		appointment of the two appraisers they are unable to agree upon the amount in question, a third
		independent appraiser shall be chosen within ten (10) days thereafter by the mutual consent of
		such first two appraisers or, if such first two appraisers fail to agree upon the appointment of a
		third appraiser, such appointment shall be made by the American Arbitration Association, or any

organization successor thereto, from a panel of arbitrators having experience in the appraisal of
the subject matter to be appraised. The decision of the third appraiser so appointed and chosen
shall be given within thirty (30) days after the selection of such third appraiser. If three
appraisers shall be appointed and the determination of one appraiser is disparate from the middle
determination by more than twice the amount by which the other determination is disparate from
the middle determination, then the determination of such appraiser shall be excluded, the
remaining two determinations shall be averaged and such average shall be binding and conclusive
on the Company and the Warrantholder; otherwise, the average of all three determinations shall
be binding and conclusive on the Company and the Warrantholder. The costs of conducting any
Appraisal Procedure shall be borne by the Warrantholder requesting such Appraisal Procedure,
except (A) the fees and expenses of the appraiser appointed by the Company and any other costs
incurred by the Company shall be borne by the Company and (B) if such Appraisal Procedure
shall result in a determination that is disparate by 5% or more from the Company’s initial
determination, all costs of conducting such Appraisal Procedure shall be borne by the Company.

“Beneficially Own,” “Beneficial Owner” and “Beneficial Ownership” are defined in Rules 13d-3
and 13d-5 of the Exchange Act.

“Board” means the Board of Directors of the Company.

“Board Representatives” means the two people nominated by the Investor to be elected or
appointed, subject to satisfaction of all legal and governance requirements regarding service as a
director of the Company, to the Board on the Closing Date (as defined in the Investment
Agreement).

“Business Combination” means a merger, consolidation, statutory share exchange or similar
transaction that requires adoption by the Company’s stockholders.

“Business Day” means any day except Saturday, Sunday and any day which shall be a legal
holiday or a day on which banking institutions in the State of New York generally are authorized
or required by law or other governmental actions to close.

“Buy-In Price” means the price per share at which the Investor acquires each share of Common
Stock pursuant to Section 1.2(a)(2) of the Investment Agreement.

“Capital Stock” means (A) with respect to any Person that is a corporation or company, any and
all shares, interests, participations or other equivalents (however designated) of capital or capital
stock of such Person and (B) with respect to any Person that is not a corporation or company, any
and all partnership or other equity interests of such Person.

“Change of Control” means, with respect to the Company, the occurrence of any one of the
following events:

(A)		the Incumbent Directors cease for any reason to constitute at least a majority of
		the Board; provided, that any person becoming a director subsequent to the date
		of the Investment Agreement whose election or nomination for election was
		approved by a vote of at least two-thirds of the Incumbent Directors then on the
		Board (either by a specific vote or by approval of the proxy statement of the
		relevant party in which such person is named as a nominee for director, without
		written objection to such nomination) shall be an Incumbent Director (except that
		no individuals who were not directors at the time any agreement or understanding

- 2 -

		with respect to any Business Combination or contested election is reached shall
		be treated as Incumbent Directors for the purposes of clause (C) below with
		respect to such Business Combination or this paragraph in the case of a contested
		election); provided, further, that the Board Representatives will be treated as an
		Incumbent Directors even if the Persons designated to be such Board
		Representatives should change;

(B)		any Person is or becomes a Beneficial Owner (other than the Investor and its
		Affiliates), directly or indirectly, of 50% of the aggregate voting power of the
		Voting Securities; provided, however, that the event described in this clause (B)
		will not be deemed a Change of Control by virtue of any holdings or acquisitions:
		(i) by the Company or any of its Subsidiaries, (ii) by any employee benefit plan
		(or related trust) sponsored or maintained by the Company or any of its
		subsidiaries; provided, that such holdings or acquisitions by any such plan (other
		than any plan maintained under Section 401(k) of the Internal Revenue Code of
		1986, as amended) do not exceed 50% of the then outstanding Voting Securities,
		(iii) by any underwriter temporarily holding securities pursuant to an offering of
		such securities or (iv) pursuant to a Non-Qualifying Transaction;

(C)		a Business Combination, to the extent it is not a Non-Qualifying Transaction; or

(D)		a plan of liquidation or dissolution of the Company or a sale of all or
		substantially all of the Company’s assets.

“Common Stock” means the Company’s common stock, par value $1.00 per share, and any
Capital Stock for or into which such Common Stock hereafter is exchanged, converted,
reclassified or recapitalized by the Company or pursuant to an agreement or Business
Combination to which the Company is a party.

“Company” means MBIA Inc., a Connecticut corporation.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.

“Excluded Stock” means (A) shares of Common Stock issued by the Company as a stock
dividend payable in shares of Common Stock, or upon any subdivision or split-up of the
outstanding shares of Capital Stock in each case which is subject to Section 13(B), or upon
conversion of shares of Capital Stock (but not the issuance of such Capital Stock which will be
subject to the provisions of Section 13(A)) and (B) shares of Common Stock to be issued to
employees, consultants and advisors of the Company pursuant to options granted prior to the date
of issuance of this Warrant and pursuant to options granted after the date of issuance of this
Warrant if the exercise price per share of Common Stock on the date of such grant equals or
exceeds the Market Price of a share of Common Stock on the date of such grant.

“Exercise Price” has the meaning given to it in Section 2.

“Expiration Time” has the meaning given to it in Section 3.

“Governmental Entities” has the meaning given to it in Section 2.2(d) of the Investment
Agreement.


- 3 -

“Group” means a group as contemplated by Section 13(d)(3) of the Exchange Act.

“Incumbent Directors” means individuals who on the date of the Investment Agreement

constitute the Board.

“Investment Agreement” means the Investment Agreement, dated as of December 10, 2007,

between the Company and the Investor, including all schedules and exhibits thereto.

“Investor” means Warburg Pincus Private Equity X, L.P.

“Market Price” means, with respect to a particular security, on any given day, the last reported

sale price regular way or, in case no such reported sale takes place on such day, the average of the

last closing bid and ask prices regular way, in either case on the principal national securities

exchange on which the applicable securities are listed or admitted to trading, or if not listed or

admitted to trading on any national securities exchange, (A) the closing sale price for such day

reported by the Nasdaq Stock Market if such security is traded over-the-counter and quoted in the

Nasdaq Stock Market, or (B) if such security is so traded, but not so quoted, the average of the

closing reported bid and ask prices of such security as reported by the Nasdaq Stock Market or

any comparable system, or (C) if such security is not listed on the Nasdaq Stock Market or any

comparable system, the average of the closing bid and ask prices as furnished by two members of

the National Association of Securities Dealers, Inc. selected from time to time by the Company

for that purpose. If such security is not listed and traded in a manner that the quotations referred

to above are available for the period required hereunder, the Market Price per share of Common

Stock shall be deemed to be the fair value per share of such security as determined in good faith

by the Board of Directors of the Company.

“Non-Qualifying Transaction” means any Business Combination that satisfies all of the following

criteria: (A) more than 50% of the total voting power of the surviving corporation resulting from

a Business Combination, or, if applicable, the ultimate parent corporation that directly or

indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of

the surviving corporation, is represented by Voting Securities that were outstanding immediately

before such Business Combination (or, if applicable, is represented by shares into which such

Voting Securities were converted pursuant to such Business Combination) and (B) at least a

majority of the members of the board of directors of the parent corporation (or, if there is no

parent corporation, the surviving corporation) following the consummation of the Business

Combination were Incumbent Directors at the time the Company’s Board approved the execution

of the initial agreement providing for such Business Combination.

“Ordinary Cash Dividends” means a regular quarterly cash dividend out of surplus or net profits

legally available therefor (determined in accordance with generally accepted accounting

principles, consistently applied) and consistent with past practice.

“Person” has the meaning given to it in Section 3(a)(9) of the Exchange Act and as used in

Sections 13(d)(3) and 14(d)(2) of the Exchange Act.

“Preliminary Control Event” means, with respect to the Company, (A) the execution of definitive

documentation for a transaction or (B) the recommendation that stockholders tender in response

to a tender or exchange offer, that could reasonably result in a Change of Control upon

consummation.

- 4 -

		“Pro Rata Repurchases” means any purchase of shares of Common Stock by the Company or any
		Affiliate thereof pursuant to any tender offer or exchange offer subject to Section 13(e) of the
		Exchange Act, or pursuant to any other offer available to substantially all holders of Common
		Stock, whether for cash, shares of Capital Stock of the Company, other securities of the
		Company, evidences of indebtedness of the Company or any other person or any other property
		(including, without limitation, shares of Capital Stock, other securities or evidences of
		indebtedness of a subsidiary of the Company), or any combination thereof, effected while this
		Warrant is outstanding; provided, however, that “Pro Rata Repurchase” shall not include any
		purchase of shares by the Company or any Affiliate thereof made in accordance with the
		requirements of Rule 10b-18 as in effect under the Exchange Act. The “Effective Date” of a Pro
		Rata Repurchase shall mean the date of acceptance of shares for purchase or exchange under any
		tender or exchange offer which is a Pro Rata Repurchase or the date of purchase with respect to
		any Pro Rata Repurchase that is not a tender or exchange offer.

		“Rights Offering” has the meaning given to it in Section 4.10(a) of the Investment Agreement.

		“Securities” has the meaning given to it in the recitals of the Investment Agreement.

		“Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and the
		rules and regulations promulgated thereunder.

		“Shares” is defined in Section 2.

		“Subsidiary” of a Person means those corporations, banks, savings banks, associations and other
		Persons of which such Person owns or controls 51% or more of the outstanding equity securities
		either directly or through an unbroken chain of entities, as to each of which 51% or more of the
		outstanding equity securities is owned directly or indirectly by its parent; provided, however, that
		there shall not be included any such entity to the extent that the equity securities of such entity
		were acquired in satisfaction of a debt previously contracted in good faith or are owned or
		controlled in a bona fide fiduciary capacity.

		“Voting Securities” means the Company’s then outstanding securities eligible to vote for the
		election of directors.

		“Warrantholder” has the meaning given to it in Section 2.

		“Warrants” means this Warrant, issued to the Investor pursuant to the Investment Agreement.

2.		Number of Shares; Exercise Price. This certifies that, for value received, Warburg Pincus Private
		Equity X, L.P., its affiliates or its registered assigns (the “Warrantholder”) is entitled, upon the
		terms and subject to the conditions hereinafter set forth, to acquire from the Company, in whole
		or in part, up to an aggregate of 8,698,920 fully paid and nonassessable shares of Common Stock,
		par value $1.00 per share (the “Shares”), of the Company, at a purchase price of $40.00 per Share
		(the “Exercise Price”). The number of Shares and the Exercise Price are subject to adjustment as
		provided herein, and all references to “Shares,” “Common Stock” and “Exercise Price” herein
		shall be deemed to include any such adjustment or series of adjustments.

3.		Exercise of Warrant; Term. To the extent permitted by applicable laws and regulations, including
		but not limited to the insurance laws of the States of New York and Illinois, the right to purchase
		the Shares represented by this Warrant are exercisable, in whole or in part by the Warrantholder,
		at any time or from time to time after 9:00 a.m., New York City time, on the date hereof, but in

- 5 -

	no event later than 11:59 p.m., New York City time, on the seventh anniversary of the date of
	issuance of the Warrant (the “Expiration Time”), by (A) the surrender of this Warrant and Notice
	of Exercise annexed hereto, duly completed and executed on behalf of the Warrantholder, at the
	office of the Company in Armonk, New York (or such other office or agency of the Company in
	the United States as it may designate by notice in writing to the Warrantholder at the address of
	the Warrantholder appearing on the books of the Company), and (B) payment of the Exercise
	Price for the Shares thereby purchased at the election of the Warrantholder in one of the
	following manners:

	(i)	by tendering in cash, by certified or cashier’s check or by wire transfer payable to the
		order of the Company; or

	(ii)	by having the Company withhold shares of Common Stock issuable upon exercise of the
		Warrant equal in value to the aggregate Exercise Price as to which this Warrant is so
		exercised based on the Market Price of the Common Stock on the trading day prior to the
		date on which this Warrant and the Notice of Exercise are delivered to the Company.

	If the Warrantholder does not exercise this Warrant in its entirety, the Warrantholder will be
	entitled to receive from the Company within a reasonable time, and in any event not exceeding
	three (3) Business Days, a new warrant in substantially identical form for the purchase of that
	number of Shares equal to the difference between the number of Shares subject to this Warrant
	and the number of Shares as to which this Warrant is so exercised. Notwithstanding anything in
	this Warrant to the contrary, in the event that the issuance of shares of Common Stock pursuant to
	an adjustment under Section 13 of this Warrant (the “Additional Shares”), or any other aspect of
	an adjustment to this Warrant made pursuant to Section 13 of this Warrant, cannot be made
	without a shareholder vote as a result of the application of Rule 312 of the New York Stock
	Exchange Listing Manual, the Warrantholder shall have the full benefit of the adjustment in
	Section 13, but the Warrantholder may only exercise this Warrant in the manner permitted by
	Section 3(B)(ii) with respect to the Additional Shares, and upon any such exercise receive, in lieu
	of the shares of Common Stock represented by the Additional Shares, cash in an amount equal to
	the product of (x) the number of shares of Common Stock represented by the Additional Shares
	that would have been otherwise issuable and (y) the Market Price of the Common Stock on the
	trading day prior to the date on which this Warrant and the Notice of Exercise are delivered to the
	Company, such amount being paid by certified or cashiers check or by wire transfer in same day
	funds no later than the third Business Day following such exercise; provided, that the restriction
	on the Warrantholder in this sentence shall no longer be in effect if it is no longer required by the
	rules of the New York Stock Exchange; provided, further, that at its option, the Company may
	pay such amount in four quarterly payments, the first payment of which shall be made no more
	than three (3) Business Days following such exercise by the Warrantholder; provided, further,
	that each such quarterly payment shall not be for an amount less than 25% of the total amount of
	such aggregate payment obligation (except for the final payment), and in each case, plus interest
	computed at the Company’s borrowing rate under its revolving credit facility.

4.	Issuance of Shares; Authorization; Listing. Certificates for Shares issued upon exercise of this
	Warrant will be issued in such name or names as the Warrantholder may designate and will be
	delivered to such named Person or Persons within a reasonable time, not to exceed three (3)
	Business Days after the date on which this Warrant has been duly exercised in accordance with
	the terms of this Warrant. The Company hereby represents and warrants that any Shares issued
	upon the exercise of this Warrant in accordance with the provisions of Section 3 will, upon such
	exercise, be duly and validly authorized and issued, fully paid and nonassessable and free from all
	taxes, liens and charges (other than liens or charges created by the Warrantholder or taxes in

- 6 -

	respect of any transfer occurring contemporaneously therewith). The Company agrees that the
	Shares so issued will be deemed to have been issued to the Warrantholder as of the close of
	business on the date on which this Warrant and payment of the Exercise Price are delivered to the
	Company in accordance with the terms of this Warrant, notwithstanding that the stock transfer
	books of the Company may then be closed or certificates representing such Shares may not be
	actually delivered on such date. The Company will at all times reserve and keep available, out of
	its authorized but unissued Common Stock, solely for the purpose of providing for the exercise of
	this Warrant, the aggregate number of shares of Common Stock issuable upon exercise of this
	Warrant. The Company will (i) procure, at its sole expense, the listing of the Shares and other
	securities issuable upon exercise of this Warrant, including but not limited to those Shares
	issuable pursuant to Section 13 of this Warrant, subject to issuance or notice of issuance on all
	stock exchanges on which the Common Stock are then listed or traded and (ii) maintain the listing
	of such Shares after issuance. The Company will use commercially reasonable efforts to ensure
	that the Shares may be issued without violation of any applicable law or regulation or of any
	requirement of any securities exchange on which the Shares are listed or traded.

5.	No Fractional Shares or Scrip. No fractional Shares or scrip representing fractional Shares shall
	be issued upon any exercise of this Warrant. In lieu of any fractional Share to which the
	Warrantholder would otherwise be entitled, the Warrantholder shall be entitled to receive a cash
	payment equal to the Market Price of the Common Stock less the Exercise Price for such
	fractional share.

6.	No Rights as Shareholders; Transfer Books. This Warrant does not entitle the Warrantholder to
	any voting rights or other rights as a shareholder of the Company prior to the date of exercise
	hereof. The Company will at no time close its transfer books against transfer of this Warrant in
	any manner which interferes with the timely exercise of this Warrant.

7.	Charges, Taxes and Expenses. Issuance of certificates for Shares to the Warrantholder upon the
	exercise of this Warrant shall be made without charge to the Warrantholder for any issue or
	transfer tax or other incidental expense in respect of the issuance of such certificates, all of which
	taxes and expenses shall be paid by the Company.

8.	Transfer/Assignment.

	(A)	Subject to compliance with clause (B) of this Section 8, without obtaining the consent of
		the Company to assign or transfer this Warrant, this Warrant and all rights hereunder are
		transferable, in whole or in part, upon the books of the Company by the registered holder
		hereof in person or by duly authorized attorney, and a new warrant shall be made and
		delivered by the Company, of the same tenor and date as this Warrant but registered in
		the name of the transferee, upon surrender of this Warrant, duly endorsed, to the office or
		agency of the Company described in Section 2. All expenses (other than stock transfer
		taxes) and other charges payable in connection with the preparation, execution and
		delivery of the new warrants pursuant to this Section 8 shall be paid by the Company.

- 7 -

	(B)	Notwithstanding the foregoing, this Warrant and any rights hereunder, and any Shares
		issued upon exercise of this Warrant, shall be subject to the applicable restrictions as set
		forth in Section 4.2 of the Investment Agreement.

	(C)	Notwithstanding anything herein to the contrary, nothing shall prevent any hedging
		transactions by the Warrantholder or its transferees.

9.	Exchange and Registry of Warrant. This Warrant is exchangeable, upon the surrender hereof by
	the Warrantholder to the Company, for a new warrant or warrants of like tenor and representing
	the right to purchase the same aggregate number of Shares. The Company shall maintain a
	registry showing the name and address of the Warrantholder as the registered holder of this
	Warrant. This Warrant may be surrendered for exchange or exercise, in accordance with its
	terms, at the office of the Company, and the Company shall be entitled to rely in all respects,
	prior to written notice to the contrary, upon such registry.

10.	Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence
	reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in the
	case of any such loss, theft or destruction, upon receipt of an indemnity or security reasonably
	satisfactory to the Company, or, in the case of any such mutilation, upon surrender and
	cancellation of this Warrant, the Company shall make and deliver, in lieu of such lost, stolen,
	destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to
	purchase the same aggregate number of Shares as provided for in such lost, stolen, destroyed or
	mutilated Warrant.

11.	Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the
	expiration of any right required or granted herein shall not be a Business Day, then such action
	may be taken or such right may be exercised on the next succeeding day that is a Business Day.

12.	Rule 144 Information. The Company covenants that it will use its reasonable best efforts to
	timely file all reports and other documents required to be filed by it under the Securities Act and
	the Exchange Act and the rules and regulations promulgated by the U.S. Securities and Exchange
	Commission thereunder (or, if the Company is not required to file such reports, it will, upon the
	request of any Warrantholder, make publicly available such information as necessary to permit
	sales pursuant to Rule 144), and it will use reasonable best efforts to take such further action as
	any Warrantholder may reasonably request, all to the extent required from time to time to enable
	such holder to sell the Warrants without registration under the Securities Act within the limitation
	of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may be
	amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the
	Securities and Exchange Commission. Upon the written request of any Warrantholder, the
	Company will deliver to such Warrantholder a written statement that it has complied with such
	requirements.

13.	Adjustments and Other Rights. The Exercise Price and the number of Shares issuable upon
	exercise of this Warrant shall be subject to adjustment from time to time as follows; provided,
	that no single event shall be subject to adjustment under more than one subsection of this Section
	13 so as to result in duplication:

	(A)	Common Stock Issued at Less than the Applicable Price. If the Company issues or sells
		any Common Stock other than Excluded Stock for consideration per share less than the
		Applicable Price, then the Exercise Price in effect immediately prior to each such
		issuance or sale will immediately (except as provided below) be reduced to the price

- 8 -

determined by multiplying the Exercise Price in effect immediately prior to such issuance
or sale by a fraction, (x) the numerator of which shall be (1) the number of shares of
Common Stock outstanding immediately prior to such issuance or sale plus (2) the
number of shares of Common Stock which the aggregate consideration received by the
Company for the total number of such additional shares of Common Stock so issued or
sold would purchase at the Applicable Price, and (y) the denominator of which shall be
the number of shares of Common Stock outstanding immediately after such issuance or
sale. In such event, the number of shares of Common Stock issuable upon the exercise of
this Warrant shall be increased to the number obtained by dividing (x) the product of (1)
the number of Shares issuable upon the exercise of this Warrant before such adjustment
and (2) the Exercise Price in effect immediately prior to the issuance or sale giving rise to
this adjustment, by (y) the new Exercise Price determined in accordance with the
immediately preceding sentence. For the purposes of any adjustment of the Exercise
Price and the number of Shares issuable upon exercise of this Warrant pursuant to this
Section 13(A), the following provisions shall be applicable, provided, however, no
increase in the Exercise Price or reduction in the number of Shares issuable upon exercise
of this Warrant shall be made pursuant to subclauses (i) or (ii) of this Section 13(A):

(i)	In the case of the issuance or sale of Common Stock for cash, the amount of the
	consideration received by the Company shall be deemed to be the amount of the
	gross cash proceeds received by the Company for such Common Stock before
	deducting therefrom any discounts or commissions allowed, paid or incurred by
	the Company for any underwriting or otherwise in connection with the issuance
	and sale thereof.

(ii)	In the case of the issuance or sale of Common Stock (otherwise than upon the
	conversion of shares of Capital Stock or other securities of the Company) for a
	consideration in whole or in part other than cash, including securities acquired in
	exchange therefor (other than securities by their terms so exchangeable), the
	consideration other than cash shall be deemed to be the fair value thereof as
	determined by the Board, before deducting therefrom any discounts or
	commissions allowed, paid or incurred by the Company for any underwriting or
	otherwise in connection with the issuance and sale thereof, provided, however,
	that such per share fair value as determined by the Board shall not exceed the
	Applicable Price.

(iii)	In the case of the issuance of (1) options, warrants or other rights to purchase or
	acquire Common Stock (whether or not at the time exercisable) or (2) securities
	by their terms convertible into or exchangeable for Common Stock (whether or
	not at the time so convertible or exchangeable) or options, warrants or rights to
	purchase such convertible or exchangeable securities (whether or not at the time
	exercisable):

	(1)	The aggregate maximum number of shares of Common Stock deliverable
		upon exercise of such options, warrants or other rights to purchase or
		acquire Common Stock shall be deemed to have been issued at the time
		such options, warrants or rights are issued and for a consideration equal
		to the consideration (determined in the manner provided in Section
		13(A)(i) and (ii)), if any, received by the Company upon the issuance or
		sale of such options, warrants or rights plus the minimum purchase price

- 9 -

		provided in such options, warrants or rights for the Common Stock
		covered thereby.

(2)		The aggregate maximum number of shares of Common Stock deliverable
		upon conversion of or in exchange for any such convertible or
		exchangeable securities, or upon the exercise of options, warrants or
		other rights to purchase or acquire such convertible or exchangeable
		securities and the subsequent conversion or exchange thereof, shall be
		deemed to have been issued at the time such securities were issued or
		such options, warrants or rights were issued and for a consideration equal
		to the consideration, if any, received by the Company for any such
		securities and related options, warrants or rights (excluding any cash
		received on account of accrued interest or accrued dividends), plus the
		additional consideration (in each case, determined in the manner
		provided in Section 13(A)(i) and (ii)), if any, to be received by the
		Company upon the conversion or exchange of such securities, or upon
		the exercise of any related options, warrants or rights to purchase or
		acquire such convertible or exchangeable securities and the subsequent
		conversion or exchange thereof.

(3)		On any change in the number of shares of Common Stock deliverable
		upon exercise of any such options, warrants or rights or conversion or
		exchange of such convertible or exchangeable securities or any change in
		the consideration to be received by the Company upon such exercise,
		conversion or exchange, but excluding changes resulting from the anti-
		dilution provisions thereof (to the extent comparable to the anti-dilution
		provisions contained herein), the Exercise Price and the number of
		Shares issuable upon exercise of this Warrant as then in effect shall
		forthwith be readjusted to such Exercise Price and number of Shares as
		would have been obtained had an adjustment been made upon the
		issuance or sale of such options, warrants or rights not exercised prior to
		such change, or of such convertible or exchangeable securities not
		converted or exchanged prior to such change, upon the basis of such
		change.

(4)		On the expiration or cancellation of any such options, warrants or rights
		(without exercise), or the termination of the right to convert or exchange
		such convertible or exchangeable securities (without exercise), if the
		Exercise Price and the number of Shares issuable upon exercise of this
		Warrant shall have been adjusted upon the issuance or sale thereof, the
		Exercise Price and the number of Shares issuable upon exercise of this
		Warrant shall forthwith be readjusted to such Exercise Price and number
		of Shares as would have been obtained had an adjustment been made
		upon the issuance or sale of such options, warrants, rights or such
		convertible or exchangeable securities on the basis of the issuance of
		only the number of shares of Common Stock actually issued upon the
		exercise of such options, warrants or rights, or upon the conversion or
		exchange of such convertible or exchangeable securities.

(5)		If the Exercise Price and the number of Shares issuable upon exercise of
		this warrant shall have been adjusted upon the issuance or sale of any

- 10 -

		such options, warrants, rights or convertible or exchangeable securities,
		no further adjustment of the Exercise Price and the number of Shares
		issuable upon exercise of this Warrant shall be made for the actual
		issuance of Common Stock upon the exercise, conversion or exchange
		thereof; provided, however, that no increase in the Exercise Price or
		reduction in the number of Shares issuable upon exercise of this Warrant
		shall be made pursuant to subclauses (1) or (2) of this Section 13(A)(iii).

	(iv)	For the avoidance of doubt, (i) the Company’s issuance or sale of shares of Com-
		mon Stock in the Rights Offering to the extent not purchased by the Investor pur-
		suant to Section 4.10 of the Investment Agreement shall be subject to the provi-
		sions of this Section 13(A) and (ii) the Company’s issuance or sale of shares of
		Common Stock in the Rights Offering to the extent purchased by the Investor
		pursuant to Section 4.10 of the Investment Agreement shall not be subject to the
		provisions of this Section 13(A).

(B)	Stock Splits, Subdivisions, Reclassifications or Combinations. If the Company shall (i)
	declare a dividend or make a distribution on its Common Stock in shares of Common
	Stock, (ii) subdivide or reclassify the outstanding shares of Common Stock into a greater
	number of shares, or (iii) combine or reclassify the outstanding Common Stock into a
	smaller number of shares, the number of Shares issuable upon exercise of this Warrant at
	the time of the record date for such dividend or distribution or the effective date of such
	subdivision, combination or reclassification shall be proportionately adjusted so that the
	Warrantholder after such date shall be entitled to purchase the number of shares of
	Common Stock which such holder would have owned or been entitled to receive after
	such date had this Warrant been exercised immediately prior to such date. In such event,
	the Exercise Price in effect at the time of the record date for such dividend or distribution
	or the effective date of such subdivision, combination or reclassification shall be adjusted
	to the number obtained by dividing (x) the product of (1) the number of Shares issuable
	upon the exercise of this Warrant before such adjustment and (2) the Exercise Price in
	effect immediately prior to the issuance giving rise to this adjustment by (y) the new
	number of shares issuable upon exercise of the Warrant determined pursuant to the
	immediately preceding sentence.

(C)	Other Distributions. In case the Company shall fix a record date for the making of a
	distribution to all holders of shares of its Common Stock (i) of shares of any class other
	than its Common Stock, (ii) of evidence of indebtedness of the Company or any
	Subsidiary, (iii) of assets (excluding Ordinary Cash Dividends, and dividends or
	distributions referred to in Section 13(B)), or (iv) of rights or warrants (excluding those
	referred to in Section 13(B)), in each such case, the Exercise Price in effect prior thereto
	shall be reduced immediately thereafter to the price determined by dividing (x) an
	amount equal to the difference resulting from (1) the number of shares of Common Stock
	outstanding on such record date multiplied by the Exercise Price per Share on such record
	date, less (2) the fair market value (as reasonably determined by the Board) of said shares
	or evidences of indebtedness or assets or rights or warrants to be so distributed, by (y) the
	number of shares of Common Stock outstanding on such record date; such adjustment
	shall be made successively whenever such a record date is fixed. In such event, the
	number of shares of Common Stock issuable upon the exercise of this Warrant shall be
	increased to the number obtained by dividing (x) the product of (1) the number of Shares
	issuable upon the exercise of this Warrant before such adjustment, and (2) the Exercise
	Price in effect immediately prior to the issuance giving rise to this adjustment by (y) the


- 11 -

		new Exercise Price determined in accordance with the immediately preceding sentence.
		In the event that such distribution is not so made, the Exercise Price and the number of
		Shares issuable upon exercise of this Warrant then in effect shall be readjusted, effective
		as of the date when the Board determines not to distribute such shares, evidences of
		indebtedness, assets, rights or warrants, as the case may be, to the Exercise Price that
		would then be in effect and the number of Shares that would then be issuable upon
		exercise of this Warrant if such record date had not been fixed.

(D)		Certain Repurchases of Common Stock. In case the Company effects a Pro Rata
		Repurchase of Common Stock, then the Exercise Price shall be reduced to the price
		determined by multiplying the Exercise Price in effect immediately prior to the effective
		date of such Pro Rata Repurchase by a fraction of which the numerator shall be (i) the
		product of (x) the number of shares of Common Stock outstanding immediately before
		such Pro Rata Repurchase and (y) the Market Price of a share of Common Stock on the
		trading day immediately preceding the first public announcement by the Company or any
		of its Affiliates of the intent to effect such Pro Rata Repurchase, minus (ii) the aggregate
		purchase price of the Pro Rata Repurchase, and of which the denominator shall be the
		product of (i) the number of shares of Common Stock outstanding immediately prior to
		such Pro Rata Repurchase minus the number of shares of Common Stock so repurchased
		and (ii) the Market Price per share of Common Stock on the trading day immediately
		preceding the first public announcement of such Pro Rata Repurchase. In such event, the
		number of shares of Common Stock issuable upon the exercise of this Warrant shall be
		increased to the number obtained by dividing (x) the product of (1) the number of Shares
		issuable upon the exercise of this Warrant before such adjustment, and (2) the Exercise
		Price in effect immediately prior to the Pro Rata Repurchase giving rise to this
		adjustment by (y) the new Exercise Price determined in accordance with the immediately
		preceding sentence.

(E)		Business Combinations. Subject to Section 14 of this Warrant, in case of any Business
		Combination or reclassification of Common Stock (other than a reclassification of
		Common Stock referred to in Section 13(B)), any Shares issued or issuable upon exercise
		of this Warrant after the date of such Business Combination or reclassification, shall be
		exchangeable for the number of shares of stock or other securities or property (including
		cash) to which the Common Stock issuable (at the time of such Business Combination or
		reclassification) upon exercise of this Warrant immediately prior to such Business
		Combination or reclassification would have been entitled upon such Business
		Combination or reclassification; and in any such case, if necessary, the provisions set
		forth herein with respect to the rights and interests thereafter of the Warrantholder shall
		be appropriately adjusted so as to be applicable, as nearly as may reasonably be, to any
		shares of stock or other securities or property thereafter deliverable on the exercise of this
		Warrant. In determining the kind and amount of stock, securities or the property
		receivable upon consummation of such Business Combination, if the holders of Common
		Stock have the right to elect the kind or amount of consideration receivable upon
		consummation of such Business Combination, then the Warrantholder shall have the right
		to make a similar election upon exercise of this Warrant with respect to the number of
		shares of stock or other securities or property which the Warrantholder will receive upon
		exercise of this Warrant.

(F)		Rounding of Calculations; Minimum Adjustments. All calculations under this Section 13
		shall be made to the nearest one-tenth (1/10th) of a cent or to the nearest one-hundredth
		(1/100th) of a share, as the case may be. Any provision of this Section 13 to the contrary

- 12 -

		notwithstanding, no adjustment in the Exercise Price or the number of Shares into which
		this Warrant is exercisable shall be made if the amount of such adjustment would be less
		than $0.01 or one-tenth (1/10th) of a share of Common Stock, respectively, but any such
		amount shall be carried forward and an adjustment with respect thereto shall be made at
		the time of and together with any subsequent adjustment which, together with such
		amount and any other amount or amounts so carried forward, shall aggregate $0.01 or
		1/10th of a share of Common Stock, respectively, or more.

(G)		Timing of Issuance of Additional Common Stock Upon Certain Adjustments. In any
		case in which the provisions of this Section 13 shall require that an adjustment shall
		become effective immediately after a record date for an event, the Company may defer
		until the occurrence of such event (i) issuing to the Warrantholder of this Warrant
		exercised after such record date and before the occurrence of such event the additional
		shares of Common Stock issuable upon such exercise by reason of the adjustment
		required by such event over and above the shares of Common Stock issuable upon such
		exercise before giving effect to such adjustment and (ii) paying to such Warrantholder
		any amount of cash in lieu of a fractional share of Common Stock; provided, however,
		that the Company upon request shall deliver to such Warrantholder a due bill or other
		appropriate instrument evidencing such Warrantholder’s right to receive such additional
		shares, and such cash, upon the occurrence of the event requiring such adjustment.

(H)		Adjustment for Unspecified Actions. If the Company takes any action affecting the
		Common Stock, other than actions described in this Section 13, which in the opinion of
		the Board would adversely affect the exercise rights of the Warrantholder, the Exercise
		Price for the Warrants and/or the number of Shares received upon exercise of the Warrant
		shall be adjusted for the Warrantholder’s benefit, to the extent permitted by law, in such
		manner, and at such time, as such Board after consultation with the Investor shall
		reasonably determine to be equitable in the circumstances. Failure of the Board to
		provide for any such adjustment will be evidence that the Board has determined that it is
		equitable to make no such adjustments in the circumstances.

(I)		Statement Regarding Adjustments. Whenever the Exercise Price or the number of Shares
		into which this Warrant is exercisable shall be adjusted as provided in Section 13, the
		Company shall forthwith file at the principal office of the Company a statement showing
		in reasonable detail the facts requiring such adjustment and the Exercise Price that shall
		be in effect and the number of Shares into which this Warrant shall be exercisable after
		such adjustment, and the Company shall also cause a copy of such statement to be sent by
		mail, first class postage prepaid, to each Warrantholder at the address appearing in the
		Company’s records.

(J)		Notice of Adjustment Event. In the event that the Company shall propose to take any
		action of the type described in this Section 13 (but only if the action of the type described
		in this Section 13 would result in an adjustment in the Exercise Price or the number of
		Shares into which this Warrant is exercisable or a change in the type of securities or
		property to be delivered upon exercise of this Warrant), the Company shall give notice to
		the Warrantholder, in the manner set forth in Section 13(I), which notice shall specify the
		record date, if any, with respect to any such action and the approximate date on which
		such action is to take place. Such notice shall also set forth the facts with respect thereto
		as shall be reasonably necessary to indicate the effect on the Exercise Price and the
		number, kind or class of shares or other securities or property which shall be deliverable
		upon exercise of this Warrant. In the case of any action which would require the fixing


- 13 -

		of a record date, such notice shall be given at least 10 days prior to the date so fixed, and
		in case of all other action, such notice shall be given at least 15 days prior to the taking of
		such proposed action. Failure to give such notice, or any defect therein, shall not affect
		the legality or validity of any such action.

	(K)	No Impairment. The Company will not, by amendment of its Articles or through any
		reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
		securities or any other voluntary action, avoid or seek to avoid the observance or
		performance of any of the terms to be observed or performed hereunder by the Company,
		but will at all times in good faith assist in the carrying out of all the provisions of this
		Warrant and in taking of all such action as may be necessary or appropriate in order to
		protect the rights of the Warrantholder.

	(L)	Proceedings Prior to Any Action Requiring Adjustment. As a condition precedent to the
		taking of any action which would require an adjustment pursuant to this Section 13, the
		Company shall take any action which may be necessary, including obtaining regulatory,
		New York Stock Exchange or stockholder approvals or exemptions, in order that the
		Company may thereafter validly and legally issue as fully paid and nonassessable all
		shares of Common Stock that the Warrantholder is entitled to receive upon exercise of
		this Warrant pursuant to this Section 13.

	(M)	Adjustment Rules. Any adjustments pursuant to this Section 13 shall be made
		successively whenever an event referred to herein shall occur. If an adjustment in
		Exercise Price made hereunder would reduce the Exercise Price to an amount below par
		value of the Common Stock, then such adjustment in Exercise Price made hereunder shall
		reduce the Exercise Price to the par value of the Common Stock.

14.	Change of Control. Upon the occurrence of a Preliminary Control Event, and by delivering
	written notice thereof to the Company, the Warrantholder may cause the Company to purchase
	any Warrant, in whole or in part, acquired hereunder that the Warrantholder then holds, at a
	valuation based on a computation of the option value of the Warrant using Black-Scholes
	calculation methods and making the assumptions described in the Black-Scholes methodology
	described in Exhibit A. Payment by the Company to the Warrantholder of such purchase price
	shall be due only upon the occurrence of the Change in Control and on the date of the occurrence
	of the Change of Control, subject to the mechanics described in the last paragraph of Exhibit A.
	At the election of the Company, all or any portion of such purchase price may be paid in Shares
	valued at the Market Price of a share of Common Stock as of (A) the last trading day prior to the
	date on which this payment occurs or (B) the first date of the announcement of such Preliminary
	Control Event (whichever is less), so long as such payment does not cause the Company to fail to
	comply with applicable New York Stock Exchange requirements or the requirements of any other
	Governmental Entities. To the extent that a payment in Common Shares would cause the
	Company to fail to comply with New York Stock Exchange rules, once the maximum number of
	Shares has been paid, the remainder of such purchase price may be paid in the form of cash. The
	Company agrees that it will not take any action resulting in a Preliminary Control Event in the
	absence of definitive documentation providing for such election right of the Warrantholder
	pursuant to this Section 14. Under no circumstances shall the Warrantholder be restricted from
	engaging in any hedging or derivative program reasonably necessary in the opinion of the
	Warrantholder to secure the option value of this Warrant so adjusted.

15.	Contest and Appraisal Rights. Upon each determination of Market Price or fair market value, as
	the case may be, hereunder, the Company shall promptly give notice thereof to the

- 14 -

		Warrantholder, setting forth in reasonable detail the calculation of such Market Price or fair
		market value, and the method and basis of determination thereof, as the case may be. If the
		Warrantholder (or if there is more than one Warrantholder, a majority in interest of
		Warrantholders) shall disagree with such determination and shall, by notice to the Company
		given within fifteen (15) days after the Company’s notice of such determination, elect to dispute
		such determination, such dispute shall be resolved in accordance with this Section 15. In the
		event that a determination of Market Price, or fair market value (if such determination solely
		involves Market Price), is disputed, such dispute shall be submitted, at the Company’s expense, to
		a New York Stock Exchange member firm selected by the Company and acceptable to the
		Warrantholder, whose determination of Market Price or fair market value, as the case may be,
		shall be binding on the Company and the Warrantholder. In the event that a determination of fair
		market value, other than a determination solely involving Market Price, is disputed, such dispute
		shall be resolved through the Appraisal Procedure.

16.		Governing Law. This Warrant shall be binding upon any successors or assigns of the Company.
		This Warrant shall constitute a contract under the laws of New York and for all purposes shall be
		construed in accordance with and governed by the laws of New York, without giving effect to the
		conflict of laws principles.

17.		Attorneys’ Fees. In any litigation, arbitration or court proceeding between the Company and the
		Warrantholder as the holder of this Warrant relating hereto, the prevailing party shall be entitled
		to reasonable attorneys’ fees and expenses incurred in enforcing this Warrant.

18.		Amendments. This Warrant may be amended and the observance of any term of this Warrant
		may be waived only with the written consent of the Company and the Warrantholder.

19.		Notices. All notices hereunder shall be in writing and shall be effective (A) on the day on which
		delivered if delivered personally or transmitted by telex or telegram or telecopier with evidence of
		receipt, (B) one Business Day after the date on which the same is delivered to a nationally
		recognized overnight courier service with evidence of receipt, or (C) five Business Days after the
		date on which the same is deposited, postage prepaid, in the U.S. mail, sent by certified or
		registered mail, return receipt requested, and addressed to the party to be notified at the address
		indicated below for the Company, or at the address for the Warrantholder set forth in the registry
		maintained by the Company pursuant to Section 9, or at such other address and/or telecopy or
		telex number and/or to the attention of such other person as the Company or the Warrantholder
		may designate by ten-day advance written notice.

20.		Prohibited Actions. The Company agrees that it will not take any action which would entitle the
		Warrantholder to an adjustment of the Exercise Price if the total number of shares of Common
		Stock issuable after such action upon exercise of this Warrant, together with all shares of
		Common Stock then outstanding and all shares of Common Stock then issuable upon the exercise
		of all outstanding options, warrants, conversion and other rights, would exceed the total number
		of shares of Common Stock then authorized by its Restated Articles of Incorporation.

21.		Entire Agreement. This Warrant and the forms attached hereto, and the Investment Agreement,
		contain the entire agreement between the parties with respect to the subject matter hereof and
		supersede all prior and contemporaneous arrangements or undertakings with respect thereto.


[Remainder of page intentionally left blank]

- 15 -

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a duly authorized officer.


Dated: January 30, 2008



MBIA INC.


By: /s/ C. Edward Chaplin
Name: C. Edward Chaplin
Title: Vice President and Chief Financial Officer


Attest:


By:		/s/ Ram D. Wertheim
		Name: Ram D. Wertheim
		Title: Vice President, Secretary and General Counsel


Acknowledged and Agreed:

WARBURG PINCUS
		PRIVATE EQUITY X, L.P.

By:		Warburg Pincus X L.P., its general
		partner
By:		Warburg Pincus X LLC, its general
		partner
By:		Warburg Pincus Partners LLC, its sole
		member
By:		Warburg Pincus & Co., its managing
		member


By:		/s/ David A. Coulter
		Name: David A. Coulter
		Title: Managing Director



[Signature Page to Warrant]

[Form Of Notice Of Exercise]

Date: ______________

TO: MBIA Inc.

RE: Election to Subscribe for and Purchase Common Stock

The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby

agrees to subscribe for and purchase the number of shares of the Common Stock set forth below covered

by such Warrant. The undersigned, in accordance with Section 3 of the Warrant, hereby agrees to pay the

aggregate Exercise Price for such shares of Common Stock in the manner set forth below. A new warrant

evidencing the remaining shares of Common Stock covered by such Warrant, but not yet subscribed for

and purchased, should be issued in the name set forth below. If the new warrant is being transferred, an

opinion of counsel is attached hereto with respect to the transfer of such warrant.

Number of Shares of Common Stock: _______________________

Method of Payment of Exercise Price: _______________________

Name and Address of Person to be

Issued New Warrant: __________________________________

__________________________________

Holder: _______________________

By: __________________________

Name: ________________________

Title: _____________________________

[Form of Notice of Exercise]

For the purpose of this Exhibit A:		“Acquiror” means (A) the third party that has entered into definitive
		document for a transaction, or (b) the offeror in the event of a
		tender or exchange offer, that could reasonably result in a
		Change of Control upon consummation.

Underlying Security Price:		In the event of a merger or acquisition, (A) in the event of an “all
		cash” deal, the cash per share offered to the Company’s share-
		holders by the Acquiror; (B) in the event of an “all stock” deal,
		(1) in the event of a fixed exchange ratio transaction, the product
		of (i) the average of the Market Price of the Acquiror’s common
		stock for the ten (10) trading day period ending on the day pre-
		ceding the date of the Preliminary Control Event and (ii) the
		number of Acquiror’s shares being offered for one share of
		Common Stock and (2) in the event of a fixed value transaction,
		the value offered by the Acquiror for one share of Common
		Stock; (C) in the event of a transaction contemplating various
		forms of consideration for each share of Common Stock, the cash
		portion, if any, shall be valued as clause (A) above and the stock
		portion shall be valued as clause (B) above and any other forms
		of consideration shall be valued by the Company in good faith,
		without applying any discounts to such consideration.
		In the event of all other Change of Control events, the average of
		the Market Price of the Common Stock for the five (5) trading
		day period beginning on the date of the Preliminary Control
		Event.
Exercise Price:		The Exercise Price as adjusted and then in effect for the Warrant
		at the time of the Preliminary Control Event.
Dividend Rate:		The Company’s annualized dividend yield as of the date of the
		Preliminary Control Event
Interest Rate:		The applicable U.S. 5-year treasury note risk free rate as of the
		date of the Preliminary Control Event
Model Type:		Black-Scholes
Exercise Type:		American
Put or Call:		Call
Trade Date:		The date of the Preliminary Control Event
Expiration Date:		Expiration Time
Settle Date:		The date of the Preliminary Control Event
Exercise Delay:		0
Volatility:		The average annual volatility over the last 3 years of the Common
		Stock as listed by Bloomberg L.P., as of the date of the Prelimi-
		nary Control Event

		Such valuation of the Warrant based on the Black-Scholes methodology shall not be discounted in any
		way. If the Warrantholder disputes such Black-Scholes valuation pursuant to this Exhibit A as calculated
		by the Company, the Company and the Warrantholder will choose a mutually-agreeable firm to compute
		the valuation of the Warrant using the guidelines above, and such valuation shall be final. The fees and
		expenses of such firm shall be borne equally by the Company and the Warrantholder.
		The Company covenants that it will not close the Change of Control transaction or otherwise facilitate the
		closing of a tender or exchange offer as referenced above until giving the Warrantholder at least five (5)
		Business Days to sell or distribute the Common Stock to be received in an exchange and will cooperate
		with the Warrantholder to ensure that there is an effective registration statement available to facilitate
		such a sale during such five (5) Business Day period or an effective opportunity is provided in the case of
		a tender or exchange offer as referenced above to tender such shares in to the offer.