-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MmqplbYcyo5l+HLhA09TTZu/SlskHp34vSeB0sgBqTlIjta3P+GtgIuy6IyGjtUr /kzaPyerapXQJqmgPM9X7A== 0001157523-04-004582.txt : 20040507 0001157523-04-004582.hdr.sgml : 20040507 20040507165100 ACCESSION NUMBER: 0001157523-04-004582 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20040507 ITEM INFORMATION: Other events ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MBIA INC CENTRAL INDEX KEY: 0000814585 STANDARD INDUSTRIAL CLASSIFICATION: SURETY INSURANCE [6351] IRS NUMBER: 061185706 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09583 FILM NUMBER: 04789772 BUSINESS ADDRESS: STREET 1: 113 KING ST CITY: ARMONK STATE: NY ZIP: 10504 BUSINESS PHONE: 914-273-4545 MAIL ADDRESS: STREET 1: 113 KING ST CITY: ARMONK STATE: NY ZIP: 10504 8-K 1 a4635848.txt MBIA INC. 8-K DOCUMENT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): May 7, 2004 MBIA INC. (Exact name of registrant as specified in its charter) Connecticut 1-9583 06-1185706 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 113 King Street, Armonk, New York 10504 (Addresses of principal executive offices) (Zip or Postal Codes) Registrant's telephone number in the United States, including area code: (914) 273-4545 Item 5. OTHER EVENTS AND REGULATION FD DISCLOSURE On May 6, 2004, MBIA Inc. (the "Registrant") entered into letter agreements and Restricted Stock agreements with Mr. Joseph W. Brown and Mr. Gary C. Dunton in connection with Mr. Brown's appointment as executive Chairman for a period of up to three years and Mr. Dunton's appointment as Chief Executive Officer and related grants of restricted stock of the Registrant. Attached as Exhibits are copies of the agreements. (a) Exhibits Exhibit 10.66 -Letter Agreement dated May 6, 2004 between MBIA Inc. and Joseph W. Brown Exhibit 10.67 - Letter Agreement dated May 6, 2004 between MBIA Inc. and Gary C. Dunton Exhibit 10.68 - Restricted Stock Agreement dated as of May 6, 2004 between MBIA Inc. and Joseph W. Brown Exhibit 10.69 - Restricted Stock Agreement dated as of May 6, 2004 between MBIA Inc. and Gary C. Dunton Item 9. REGULATION FD DISCLOSURE On May 6, 2004, the "Registrant" issued two press releases, one announcing the naming of Gary C. Dunton as Chief Executive Officer, Jay W. Brown continuing as executive Chairman and Neil Budnick's promotion to President of MBIA Insurance Corporation. The second press release announced the naming of Nicholas Ferreri as Chief Financial Officer of MBIA Inc. Attached are copies of the press releases. (a) Exhibits Exhibit 99.1 Press Release dated May 6, 2004 re Messrs. Brown and Dunton Exhibit 99.2 Press Release dated May 6, 2004 re Mr. Ferreri SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MBIA INC. By: /s/ Ram D. Wertheim ------------------------- Ram D. Wertheim General Counsel Date: May 7, 2004 EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K Dated May 7, 2004 Exhibit 10.66 - Letter agreement with Mr. Brown Exhibit 10.67 - Letter agreement with Mr. Dunton Exhibit 10.68 - Restricted Stock Agreement with Mr. Brown Exhibit 10.69 - Restricted Stock Agreement with Mr. Dunton Exhibit 99.1 - Press Release issued by MBIA Inc. dated May 6, 2004 re Messrs. Brown and Dunton. Exhibit 99.2 - Press Release issued by MBIA Inc. dated May 6, 2004 re Mr. Ferreri. EX-10.66 2 a4635848ex10p66.txt LETTER AGREEMENT - BROWN Exhibit 10.66 May 6, 2004 Joseph W. Brown 24 Penwood Road Bedford Corners, NY 10549 Dear Jay: On behalf of MBIA Inc. (the "Company") and the Board of Directors (the "Board"), we want to thank you for your leadership and outstanding efforts on behalf of the Company during the past five years. We are pleased that you have agreed to remain with the Company to effect a smooth transition of your duties and responsibilities over the next several years. We recognize that this deviates from your original intention as to your period of service for the Company, and the Company has designed a compensation plan and program to provide you recognition for the commitment that you are making and as an incentive for you to continue your excellent efforts on behalf of the Company. 1. Term of Employment. In order to facilitate a smooth transition in connection with Gary Dunton's promotion to Chief Executive Officer of the Company, the Company wishes to continue your employment with the Company until the earlier of May 31, 2007 and the date of the Company's May 2007 annual shareholders meeting (the "Termination Date"). The period from the date hereof through the Termination Date, or if earlier the date of the termination of your employment with the Company as contemplated hereby, shall be referred to as the "Employment Period". This letter agreement shall supercede the terms of your January 7, 1999 letter agreement with the Company. 2. Title, Reporting Relationship and Duties. Commencing on the date hereof, you will cease serving as Chief Executive Officer of the Company, but continue to serve as executive Chairman of the Company, reporting solely and directly to the Board. Your duties and responsibilities will be commensurate with your title as executive Chairman, and will include assisting Gary Dunton in assuming his new responsibilities and duties as Chief Executive Officer of the Company. 3. Compensation. Your compensation package with respect to the Employment Period will include a base salary, an annual performance bonus and the special one-time restricted stock grant described below. (a) Base Salary. Commencing on the date hereof and for the duration of your Employment Period, your annualized base salary will be $720,000. This reduced annual base salary reflects your change in title and duties from this date forward and will be paid in accordance with the Company's customary payroll practices. (b) Annual Performance Bonus. With respect to the Employment Period, you will be entitled to receive a performance-based annual cash bonus in accordance with the terms and conditions of the Company's Annual and Long-Term Incentive Plan (or any successor plan thereto) (the "Incentive Plan"), to the extent that the applicable performance criteria are satisfied. Your maximum annual bonus opportunity will be 300% of your base salary. Your bonus will be determined by the Board in accordance with the generally applicable provisions of the Incentive Plan, as in effect from time to time, including the manner in which the performance objectives will be obtained and the determination and certification of your annual cash bonus. (c) Long-Term Incentive Compensation. In light of the fact that your services for the Company are expected to terminate on the Termination Date, the Company and you have agreed that it would not be appropriate for you to receive new awards under the Company's stock option plan or standard long-term incentive compensation plans and programs, pursuant to which the Company currently makes annual awards. Accordingly, the one-time award of performance-based restricted stock referenced in Section 3(d) below is intended to replace your right or opportunity to participate in any further long-term incentive compensation awards or programs during the Employment Period. (d) Restricted Stock. The Company recognizes that you have recently been granted an award of restricted stock subject to the terms of the Restricted Stock Award Agreement, dated as of February 10, 2004, between you and the Company (the "Award Agreement"), in recognition of your contributions to the Company's success for the period through December, 2003, and as an inducement for you to continue your excellent performance on behalf of the Company. To induce you to commit yourself to employment with the Company through the Termination Date, you will be granted an additional award of 200,000 Company shares of restricted stock which may not vest prior to the end of the Employment Period and the full vesting of which is contingent upon the achievement of substantial increases in the Company's book value, as modified, in a manner consistent with past long-term compensation practices, to eliminate the positive or negative effect of certain items over a period that may extend well beyond the Termination Date. The terms and conditions of this additional award shall be set forth in our award agreement of even date herewith, which in all events shall govern such 2 restricted stock award notwithstanding anything to the contrary herein or elsewhere. You agree and acknowledge that, pursuant to such award agreement, your right to receive the benefit of the restricted stock award referenced herein shall be subject to your not voluntarily terminating your employment prior to the Termination Date, other than in connection with a Constructive Termination Without Cause or following a Change of Control. 4. Modifications to Outstanding Awards. (a) Stock Options. Reference is made to your stock option agreements with the Company dated as of January 7, 1999, December 9, 1999, January 11, 2001, February 7, 2002 and March 12, 2003 (with respect to the grant effective as of February 12, 2003) (the "Option Agreements"). Each of the Option Agreements is hereby amended to reflect the following terms with respect to your outstanding stock options: (i) Subject to your continued employment with the Company through the Termination Date, all of your then outstanding stock options under the Option Agreements shall become fully vested and exercisable (to the extent not vested and exercisable prior to the Termination Date) on the Termination Date. (ii) Subject to your continued employment with the Company through the Termination Date, each of your then outstanding stock options shall remain exercisable until the earliest of (a) May 31, 2012, (b) the second anniversary of the first date following the Termination Date on which the Company's common stock closes at a trading price that is (1) greater than or equal to $90 per share and (2) greater than or equal to 150% of the closing price on the Termination Date, and (c) the expiration of the original term with respect to each such stock option as provided under the applicable Option Agreement. For purposes of this clause (ii), the provisions of the Section of each Option Agreement titled "Adjustments for Changes in Structure and Special Transactions" shall be applicable and such Section of each Option Agreement shall remain in full force and effect for all other purposes. (iii) In the event that, prior to the Termination Date, your employment is terminated by the Company other than for Cause, by you in a Constructive Termination Without Cause or as a result of your Disability, the vesting and exercisability terms with respect to your stock options shall be determined as if you remained employed with the Company through the Termination Date (including, without limitation, for purposes of Paragraphs 4(a)(i) and 4(a)(ii) above). (iv) In the event that you voluntarily terminate employment prior to the Termination Date (other than due to Disability, in a Constructive Termination Without Cause or upon or following a Change of 3 Control), (x) all of your options that are unvested as of your termination date shall be cancelled and forfeited and, (y) notwithstanding the fact that you will have met the conditions to retire under such Option Agreements, each of your then vested options shall remain exercisable only until the earlier of (a) the second anniversary of your termination of employment date and (b) the expiration of the original term with respect to each such stock option as provided under the applicable Option Agreement. Except as expressly provided in this Paragraph 4(a), the terms of your Option Agreements shall continue in full force and effect. For purposes of this letter agreement, the terms "Cause", "Change of Control", "Constructive Termination Without Cause", and "Disability" shall each have the meanings assigned to such terms under the applicable Option Agreement. (b) February 2003 MBV and Restricted Stock Awards. Based on the fact that the Company's share price has appreciated by more than 50% since the date of your February 12, 2003 MBV award and restricted stock award (the "February 2003 Awards"), the Board has determined that such February 2003 Awards will automatically vest (to the extent not previously vested) on the Termination Date, subject to your continued employment through the Termination Date. (c) Long-Term Awards Generally. Reference is made to (i) your restricted stock award agreements dated as of January 11, 2001, February 7, 2002 and February 12, 2003, (ii) your MBV awards dated as of February 7, 2002 and February 12, 2003, and (iii) your January 11, 2001 MBV award that was converted into 28,739 shares of restricted stock as of February 10, 2004 (collectively, the "LTI Awards"). With respect to each of your outstanding LTI Awards, in the event that, prior to the Termination Date, your employment is terminated by the Company other than for Cause, or by you in a Constructive Termination Without Cause, such LTI Awards shall continue to vest in accordance with their terms as if you remained employed with the Company through the Termination Date (including, without limitation, for purposes of Paragraph 4(b) above). (d) Certain Provisions. Upon the occurrence of a Change of Control or any termination of your employment with the Company due to death, disability, retirement or termination by the Company without Cause (constructively or otherwise, all as defined in the Option Agreements), then notwithstanding anything to the contrary in any Option Agreement, there shall be no requirement that you continue to hold either any shares of the stock of the Company or the securities of any successor in interest to the Company. 4 5. Benefits. During the Employment Period, you will continue to receive benefits at a level, and on terms and conditions, no less favorable to you than those applying to any other Company senior executive. You will be entitled to four weeks vacation per year, prompt reimbursement of all properly documented business expenses and of legal and consulting expenses incurred in connection with entering into these arrangements. 6. Change of Control Protection. The Award Agreement contains a provision designed to hold you harmless, on an after tax basis, from any excise tax you incur in connection with your employment under section 4999 of the Internal Revenue Code of 1986, as amended. For the avoidance of doubt, any benefits payable to you under the terms of this Agreement will be taken into account in determining whether, and to what extent, you are entitled to receive any benefits under such provision. Nothing herein shall affect that certain Key Employee Employment Protection Agreement, dated as of January 7, 1999, between you and the Company, which remains in full force and effect. 7. Indemnification. If you are made a party, or are threatened to be made a party, to any threatened or actual action, suit or proceeding, whether civil, criminal, administrative, investigative, appellate or otherwise (a "Proceeding") by reason of the fact that you are or were a director, officer, employee, agent, manager, consultant or representative of the Company or are or were serving at the request of the Company as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, or if any claim, demand, request, investigation, dispute, controversy, threat, discovery request or request for testimony or information (a "Claim") is made, or threatened to be made, that arises out of or relates to your service in any of the foregoing capacities, then you shall promptly be indemnified and held harmless by the Company to the fullest extent legally permitted or authorized by the Company's certificate of incorporation, bylaws or Board resolutions or, if greater, by the laws of the State of Connecticut, against any and all costs, expenses, liabilities and losses (including, without limitation, attorneys' fees, judgments, interest, expenses of investigation, penalties, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) incurred or suffered by you in connection therewith, and such indemnification shall continue as to you even if you shall have ceased to be a director, member, employee, agent, manager, consultant or representative of the Company or other entity and shall inure to the benefit of your heirs, executors and administrators. The Company shall advance to you all costs and expenses incurred by you in connection with any such Proceeding or Claim within 15 days after receiving written notice requesting such an advance. Such notice shall include an undertaking by you to repay the amount advanced if you are ultimately determined not to be entitled to indemnification against such costs and expenses. In the 5 event you request indemnification or advancement of costs and expenses as provided in the preceding paragraph of this Paragraph 7, a determination as to your entitlement to indemnification shall be made in good faith pursuant to the procedures set forth in Section 33-775 of the General Statutes of Connecticut as in effect on the date hereof. Such determination shall be made promptly in order to permit timely indemnification pursuant to this Paragraph 7 including, without limitation, the advancement of costs and expenses. Neither the failure of the Company (including the Board, independent legal counsel or stockholders) to have made a determination in connection with any request for indemnification or advancement that you have satisfied any applicable standard of conduct, nor a determination by the Company (including the Board, independent legal counsel or stockholders) that you have not met any applicable standard of conduct, shall create a presumption that you have not met an applicable standard of conduct. During your employment with the Company and for a period of six years thereafter, to the extent that the Company shall keep in place a directors and officers' liability insurance policy (or policies) providing comprehensive coverage to any other active or retired senior executive or director, it shall also maintain such coverage in effect for you. 8. Early Termination Provisions. In the event that, prior to the Termination Date, your employment is terminated by the Company other than for Cause, or by you in a Constructive Termination Without Cause, you shall be entitled to receive the salary and bonus compensation that you would otherwise have been entitled to receive under Paragraphs 3(a) and 3(b) above in respect of the period from the date of your termination through the Termination Date, to the extent not previously paid, in cash and at the time that you would have received such amounts had your employment continued through the Termination Date. For purposes of this Paragraph 8, upon a termination of your employment by the Company other than for Cause, or by you in a Constructive Termination Without Cause, your bonus amounts with respect to each of calendar years 2004, 2005 and 2006 (which bonus amounts are scheduled for payment in the first quarter of 2005, 2006 and 2007, respectively) shall be determined by the Board at the time of such termination of employment (to the extent that a bonus for one or more of such calendar years has not been paid prior to your termination date). Each annual bonus amount determined by the Board pursuant to the preceding sentence shall equal no less than the greater of (i) 50% of your maximum bonus opportunity as set forth in Paragraph 3(b) above and (ii) the average of your actual annual bonus payments for the two years preceding your termination of employment. 9. Post-Termination Restrictive Covenants. You hereby agree that during the Employment Period and for two years thereafter, you shall not (i) directly or indirectly personally hire, personally solicit or personally help another person hire or solicit any Company employee, (ii) directly or indirectly induce or encourage any Company employee to terminate employment with the Company, 6 (iii) direct any business opportunities developed on behalf of the Company for your own benefit or for the benefit of any of your future employers, (iv) directly or indirectly solicit any of the Company's customers to use the services of another entity in lieu of those of the Company, or (v) seek or accept employment with any of the entities (or their affiliates) listed on Appendix A attached hereto or with any other entity created after the date hereof that materially competes with any of the Company's substantial business operations. Please confirm your acceptance of the terms set forth in this letter agreement by signing below. Sincerely, /s/ David C. Clapp - -------------------------------- David C. Clapp Member of the Board of Directors /s/ Kevin D. Silva - --------------------------------- Kevin D. Silva Vice President & Chief Administrative Officer Agreed and Accepted: /s/ Joseph W. Brown --------------------------- Joseph W. Brown Date: May 6 , 2004 ------------ 7 APPENDIX A ACE Guaranty Corp. Ambac Assurance Corp. CIFG DePfa Financial Guaranty Insurance Co. (FGIC) Financial Security Assurance (FSA) Radian Asset Assurance Inc. XL Capital The above listed companies shall be deemed to include each of the subsidiaries and affiliates of each of such companies, whether now existing or hereafter created. 8 EX-10.67 3 a4635848ex10p67.txt LETTER AGREEMENT - DUNTON Exhibit 10.67 [MBIA LETTERHEAD] May 6, 2004 Gary C. Dunton 98 Golf Lane Ridgefield, CT 06877 Dear Gary: On behalf of MBIA Inc. (the "Company") and the Board of Directors (the "Board"), we want to thank you for your outstanding efforts on behalf of the Company and congratulate you on your promotion to Chief Executive Officer. We are confident that you possess the skills, experience and leadership characteristics required to help the Company further build its business. We have outlined below the impact that certain terminations of your employment will have on equity and long-term incentive awards granted to you by the Company. Except as expressly set forth herein or in your Key Employee Employment Protection Agreement dated as of January 25, 1999, (i) you will not be eligible for any other severance or termination payments or benefits in connection with any termination of your employment and (ii) the terms of your existing equity-based and long-term incentive awards shall continue to be governed by the terms of the original award agreements. 1. Modifications to Outstanding Awards. (a) Stock Option Awards. Reference is made to your stock option agreements with the Company dated as of January 9, 1998, December 9, 1998, January 7, 1999, December 9, 1999, January 11, 2001, February 7, 2002, February 12, 2003 and February 10, 2004 (the "Option Agreements"). Each of the Option Agreements is hereby amended to provide that if your employment is terminated by the Company other than for Cause, or by you in a Constructive Termination Without Cause (the date of such termination of employment, the "Termination Date"), in each case on or before the fourth anniversary of the date hereof (such date, the "Target Date"), the vesting and exercisability terms with respect to such stock options shall be determined as if you remained employed with the Company through the fifth anniversary of the Termination Date (such date, the "Vesting Measure Date"), and any stock options that have not previously vested shall become fully vested and exercisable on the Vesting Measure Date. Following the Vesting Measure Date, your stock options shall remain exercisable until the earlier of (i) the first anniversary of the Vesting Measure Date and (ii) the expiration of the original term with respect to each such stock option as provided under the applicable Option Agreement. Notwithstanding the foregoing, if on any date prior to the Vesting Measure Date (such date, the "Acceleration Date"), the Company's common stock closes at a trading price that is (i) greater than or equal to $90 per share and (ii) greater than or equal to 150% of the closing price on the Termination Date, then all of your previously unvested options shall vest and become immediately exercisable and remain exercisable until the earlier of (i) the first anniversary of the Acceleration Date and (ii) the expiration of the original term with respect to each such stock option as provided under the applicable Option Agreement and shall thereafter expire and be forfeited. Except as expressly provided in this Paragraph 1(a), the terms of your Option Agreements shall continue in full force and effect. For purposes of this letter agreement, the terms "Cause" and "Constructive Termination Without Cause" shall each have the meanings assigned to such terms under the award agreement of even date herewith setting forth the terms and conditions of the award of 125,000 Company shares of restricted stock (the "2004 Award Agreement"). (b) MBV Awards. In the event that your employment is terminated by the Company other than for Cause, or by you in a Constructive Termination Without Cause, any of your then outstanding MBV awards shall be paid to you solely in the discretion of the Board in a manner consistent with past practice. For the avoidance of doubt, the restricted shares subject to your 2004 Award Agreement shall not be treated as MBV awards, and shall be governed by the terms of the 2004 Award Agreement. 2. Severance. In the event that your employment is terminated by the Company other than for Cause, or by you in a Constructive Termination Without Cause, severance shall be paid to you solely in the discretion of the Board in a manner consistent with past practice, taking into account your base salary, annual bonus opportunity and anticipated retirement plan contributions at the time of your termination of employment. 3. Change of Control Protection. The 2004 Award Agreement contains a provision designed to hold you harmless, on an after tax basis, from any excise tax you incur in connection with your employment under section 4999 of the Internal Revenue Code of 1986, as amended. For the avoidance of doubt, any benefits payable to you under the terms of this Agreement that are treated as being contingent upon, or otherwise related to, a change of control of the Company, will be taken into account in determining whether, and to what extent, you are entitled to receive any benefits under such provision. 4. Post-Termination Restrictive Covenants. You hereby agree that during the Employment Period and for two years thereafter, you shall not directly or indirectly personally hire, personally solicit or personally help another hire or solicit any Company employees, (ii) directly or indirectly induce or 2 encourage any Company employee to terminate employment with the Company, (iii) direct any business opportunities developed on behalf of the Company for your own benefit or for the benefit of any of your future employers, (iv) directly or indirectly solicit any of the Company's customers to use the services of another entity in lieu of those of the Company, or (v) seek or accept employment with any of the entities (or their affiliates) listed on Appendix A attached hereto or with any other entity created after the date hereof that materially competes with any of the Company's substantial business operations. Please confirm your acceptance of the terms set forth in this letter agreement by signing below. Sincerely, /s/ David C. Clapp - -------------------------------- David C. Clapp Member of the Board of Directors /s/ Kevin D. Silva - -------------------------------- Kevin D. Silva Vice President & Chief Administrative Officer Agreed and Accepted: /s/ Gary C. Dunton ------------------------------- Gary C. Dunton Date: May 6 , 2004 --------------- 3 APPENDIX A ACE Guaranty Corp. Ambac Assurance Corp. CIFG DePfa Financial Guaranty Insurance Co. (FGIC) Financial Security Assurance (FSA) Radian Asset Assurance Inc. XL Capital The above listed companies shall be deemed to include each of the subsidiaries and affiliates of each of such companies, whether now existing or hereafter created. 4 EX-10.68 4 a4635848ex10p68.txt RESTRICTED STOCK AGREEMENT - BROWN Exhibit 10.68 FORM OF RESTRICTED STOCK AWARD AGREEMENT ---------------------------------------- AGREEMENT made and entered into as of this 6th day of May, 2004 between MBIA Inc., a Connecticut corporation (the "Company"), and Joseph W. Brown (the "Grantee"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Company has established the MBIA Inc. Annual and Long-Term Incentive Plan, as amended (the "Plan") providing, among other things, for the award of shares of Common Stock, par value $1 per share, of the Company ("Shares") to key employees of the Company and certain wholly-owned subsidiaries of the Company, contingent upon the achievement of performance objectives established by the Compensation and Organization Committee (the "Committee") of the Board of Directors of the Company (the "Board"); WHEREAS, the Grantee has served as the Company's Chairman of the Board of Directors ("Chairman") and Chief Executive Officer, and the Company desires that he continue his service in the role of executive Chairman for the period commencing on the date hereof and ending on the earlier of the date of the Company's May 2007 annual shareholders meeting and May 31, 2007 (the "Termination Date") (such period through the Termination Date, the "Transition Period"); WHEREAS, the Company has determined that, as an inducement for the Grantee to continue serving the Company during the Transition Period, as an incentive for his continuing efforts during the Transition Period and as a reward for taking actions intended to enhance the Company's performance, both during and beyond the Transition Period, it is in the interest of the Company and its shareholders for the Grantee to be granted an award of Shares subject to the terms and conditions set forth herein, including, without limitation, the requirement that, in the ordinary course, such Shares will only be and become vested upon the achievement of the performance conditions set forth herein; and WHEREAS, the Committee has determined to grant to the Grantee the number of Shares set forth below, subject to the terms and restrictions set forth herein; NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, and for other good and valuable consideration, receipt of which is hereby acknowledged, the Company and the Grantee (together, the "Parties") do hereby agree as follows: 1. Grant of Restricted Stock. The Company hereby evidences and confirms its grant to the Grantee, effective as of the date hereof (the "Grant Date"), of 200,000 Shares subject to the terms and restrictions contained herein (the "Restricted Stock"). 2. Vesting of Restricted Stock. (a) Restricted Period. Except as provided in Section 5 hereof, the Restricted Stock granted hereby may not be sold, assigned, transferred, pledged, hypothecated or otherwise directly or indirectly encumbered or disposed of except to the extent that the Restricted Stock has "vested" (i.e., become (i) non-forfeitable and (ii) freely transferable except for restrictions imposed by law or regulation) pursuant to Sections 2(b) through 2(d) below. (b) MBV Appreciation. A percentage of the Restricted Stock, determined pursuant to the table set forth below, shall become vested on the earlier of (i) the first date on or following the Termination Date on which MBV Appreciation equals or exceeds 50% and (ii) January 1, 2009 (such earlier date, the "MBV Trigger Date"), based on the applicable MBV Appreciation measured as of such MBV Trigger Date; provided that, if MBV Appreciation shall have equaled or exceeded 50% as of any date prior to the Termination Date, 100% of the Restricted Stock shall vest, subject to Section 2(e) below, on the Termination Date: ------------------------------------ ------------------------------- MBV Appreciation as of MBV Trigger Vested Percentage of Date Restricted Stock ------------------------------------ ------------------------------- ------------------------------------ ------------------------------- 0% 0% ------------------------------------ ------------------------------- 10% 20% ------------------------------------ ------------------------------- 20% 40% ------------------------------------ ------------------------------- 30% 60% ------------------------------------ ------------------------------- 40% 80% ------------------------------------ ------------------------------- 50% or more 100% ------------------------------------ ------------------------------- Intermediate levels of vesting shall be determined by linear interpolation (e.g., MBV Appreciation as of the MBV Trigger Date of 25% will yield 50% vesting). (c) Accelerated Vesting upon Certain Terminations of Employment. To the extent that the Restricted Stock shall not have previously become vested pursuant to Section 2(b) above or been forfeited pursuant to Section 2(e) below, the Restricted Stock shall become fully vested upon the termination of the Grantee's employment with the Company prior to the Termination Date: (i) due to the Grantee's death or Disability; (ii) by the Company other than for Cause; (iii) in a Constructive Termination Without Cause; or (iv) for any reason (including, without limitation, a voluntary termination by the Grantee) 2 following or as a result of a Change of Control that is not a Change of Control described in Section 2(d). Any termination of the Grantee's employment with the Company (for any reason) occurring on or after the Termination Date shall have no impact on the vesting or forfeiture of the Restricted Stock. (d) Certain Change of Control Transactions. The Restricted Stock shall become fully vested immediately upon the occurrence of a Change of Control following which the Company ceases to be a "publicly held corporation" within the meaning of section 162(m)(2) of the Code, irrespective of whether the Grantee's employment terminates in connection therewith. (e) Forfeiture Events. The Restricted Stock shall be forfeited, and shall not thereafter vest, upon (i) a voluntary termination of his employment with the Company by the Grantee prior to the Termination Date (other than due to Disability, in a Constructive Termination Without Cause or upon or following a Change of Control) or (ii) a termination of the Grantee's employment by the Company for Cause prior to the Termination Date. Any termination of the Grantee's employment with the Company (for any reason) occurring on or after the Termination Date shall have no impact on the vesting or forfeiture of the Restricted Stock. Additionally, any portion of the Restricted Stock that remains unvested after the MBV Trigger Date under Section 2(b) above shall be forfeited and shall not thereafter vest. 3. No Right to Continued Employment. The grant of the Restricted Stock hereunder shall not be construed as granting to the Grantee any right of continued employment, and the right of the Company to terminate the Grantee's employment at any time at will (whether by dismissal, discharge or otherwise) is specifically reserved. 4. Excise Tax. In the event that any payment or benefit made or provided to or for the benefit of the Grantee under this Agreement, or under any plan, agreement, program or arrangement of the Company or any of its affiliates (a "Payment") is determined to be subject to any excise tax ("Excise Tax") imposed by Section 4999 of the Code, the Company shall pay to the Grantee at or prior to the time any Excise Tax is payable with respect to such Payment (through withholding or otherwise), an additional amount which, after the imposition of all income, employment, excise and other taxes payable by the Grantee thereon, is equal to the sum of (i) the Excise Tax on such Payment plus (ii) any penalty and interest assessments associated with such Excise Tax. The determination of whether any Payment is subject to the Excise Tax and, if so, the amount to be paid by the Company to the Grantee and the time of payment pursuant to this Section 4 shall be made by an independent, nationally recognized United States public accounting firm (the "Auditor") jointly selected by the Parties and paid by the Company. If the Parties cannot agree on the firm to serve as the Auditor, then the Parties shall each select one nationally recognized United States accounting firm and those two firms shall jointly select the accounting firm to serve as the Auditor, which firm shall not have acted in any way on behalf of the Company during the two years preceding its 3 selection. The Parties shall cooperate with each other in connection with any proceeding or claim relating to the existence or amount of any liability for any Excise Tax. All expenses relating to any such proceeding or claim (including any attorneys' fees and other expenses associated therewith) shall be paid by the Company promptly upon demand by the Grantee, and any such payment shall be subject to gross up in the event that the Grantee is subject to any income tax, employment tax or Excise Tax on it. In the event that the Grantee is entitled to a gross-up from the Company under the provisions of this Agreement and any other agreement or arrangement with the Company, the payment, if any, to be made in respect of any Excise Tax under this Section 4 shall not be in addition to or duplicative of any such other payment. 5. Nonassignability of Restricted Stock. The Restricted Stock is personal and, prior to the vesting of such Restricted Stock, no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and no such rights shall be subject to execution, attachment or similar process, except that the Restricted Stock may be transferred, in whole or in part, (i) by will or the laws of descent and distribution or (ii) to any Immediate Family Member or to any trust, the sole beneficiaries of which are the Grantee and/or his Immediate Family Members, or to any entity (including, without limitation, any corporation, partnership or limited liability company) in which the Grantee, his Immediate Family Members or trusts solely for the benefits of such persons hold all the beneficial interests, provided that such Immediate Family Members and/or trusts and/or other entities (and upon distribution their beneficiaries) are bound by the provisions of this Agreement. For purposes of this Agreement, the term "Immediate Family Member" shall mean the Grantee's parents and spouse and any of the lineal descendants of the Grantee, his spouse or either of his parents (including, without limitation, descendants by adoption). Any person or entity to whom these Shares has been transferred in whole or in part in part in accordance with this Section 5 shall to the extent of the transfer, succeed to the rights and obligations of the Grantee under this Agreement. 6. Rights as Stockholder. Except as otherwise provided in this Agreement, Grantee shall have, with respect to all Restricted Stock, the right to vote such Restricted Stock and the right to receive cash and other dividends, if any, as may be declared on the Restricted Stock from time to time. Any securities issued to or received by the Grantee with respect to Restricted Stock as a result of a stock split, a dividend payable in capital stock or other securities, a combination of shares or any other change or exchange of the Restricted Stock for other securities, by reclassification, reorganization, distribution, liquidation, merger, consolidation, or otherwise, shall be subject to the same restrictions on transfer and vesting, have the same status, and bear the same legend, as the Restricted Stock, unless otherwise determined by the Committee. 7. Legend. Until the vesting of the Restricted Stock pursuant to Section 2, each certificate evidencing Shares subject to the Grantee's 4 Restricted Stock shall be registered in the Grantee's name and shall bear the following legend: "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) CONTAINED IN A RESTRICTED STOCK AWARD AGREEMENT BETWEEN MBIA INC. AND JOSEPH W. BROWN, AND NEITHER THIS CERTIFICATE NOR THE SHARES REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN ACCORDANCE WITH SUCH AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY." Promptly following the determination of the Grantee's vested portion of Restricted Stock pursuant to Section 2 above, the Grantee shall be furnished certificate(s) for any such vested Shares that bear no such legend. 8. Withholding. The Grantee agrees to make appropriate arrangements with the Company for satisfaction of any applicable tax withholding requirements ("tax obligations") arising out of this Agreement. Such tax obligations may be satisfied in cash or, at the election of the Grantee, with vested Shares of Restricted Stock that have an aggregate Market Value on the date of vesting equal to the amount of taxes required to be withheld. 9. Amendment or Waiver. No provision of this Agreement may be amended unless such amendment is set forth in a writing signed by the Parties. No waiver by any person of any breach of any condition or provision contained in this Agreement shall be deemed a waiver of any similar or dissimilar condition or provision at the same or any prior or any subsequent time. To be effective, any waiver must be in writing signed by the waiving person. 10. References and Headings. References herein to rights and obligations of the Grantee shall apply, where appropriate, to the estate or other legal representative of the Grantee or his successors and assigns as permitted under this Agreement, as the case may be, without regard to whether specific reference to such estate or other legal representative or his successors and assigns is contained in a particular provision of this Agreement. The headings of Sections contained in this Agreement are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement. 11. Notices. Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given (i) when delivered directly to the person concerned or (ii) three business days after being sent by postage-prepaid certified or registered mail or by nationally recognized overnight carrier, return receipt requested, duly addressed to the person concerned at the location indicated below (or to such changed address as such party may subsequently by similar process give notice of): 5 If to the Company, at the Company's headquarters and to the attention of the Office of the Secretary, with a copy to Debevoise & Plimpton LLP, 919 Third Ave., New York, New York, 10022, Attention: Lawrence K. Cagney. If to the Grantee, at the Company's headquarters and to the attention of the Grantee, with a copy to Morrison Cohen Singer & Weinstein, LLP, 750 Lexington Avenue, New York, New York 10022, Attention: Robert M. Sedgwick. If to a transferee permitted under Section 5, to the address (if any) supplied by the Grantee to the Company. 12. Resolution of Disputes. Any dispute or controversy arising out of or relating to this Agreement, the Grantee's employment with the Company, or the termination thereof, shall be resolved by binding confidential arbitration, to be held in New York City before three arbitrators in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Each of the Parties shall be entitled to appoint one of the three arbitrators and the third arbitrator shall be appointed by the arbitrators appointed by the Parties. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The Company shall promptly pay all costs and expenses, including without limitation reasonable attorneys' fees, incurred by the Grantee (or his permitted successors and assigns) in resolving any claim raised in such an arbitration, other than any claim brought by the Grantee (or the Grantee's permitted successors and assigns) that the arbitrator(s) determine to have been brought (i) in bad faith or (ii) without any reasonable basis. 13. The Company's Representations. The Company represents and warrants that (i) sufficient shares are available under the Plan for the grant of the Shares hereunder; (ii) it is fully authorized by action of the Board and of the Committee (and of any other person or body whose action is required) to enter into this Agreement and to perform its obligations hereunder; (iii) the grant of the Restricted Stock and this Agreement have been approved in accordance with Rule 16b-3(d)(1) promulgated under the 1934 Act; (iv) the execution, delivery and performance of this Agreement by the Company does not violate any applicable law, regulation, order, judgment or decree or any agreement, plan or corporate governance document of the Company; (v) the grant of the Restricted Stock complies with an exemption to the registration requirements under the Securities Act of 1933, as amended; and (vi) upon the execution and delivery of this Agreement by the Company and the Grantee, this Agreement shall be the valid and binding obligation of the Company, enforceable in accordance with its terms, except to the extent enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally. 6 14. Definitions. For purposes of this Agreement, the following terms shall have the following meanings: (a) "Change of Control" shall mean the occurrence of any of the following events: (i) any "person", as such term is currently used is Section 13(d) or 14(d) of the 1934 Act, other than the Company, its majority owned subsidiaries, or any employee benefit plan of the Company or any of its majority-owned subsidiaries, becomes a "beneficial owner" (as such term is currently used in Rule 13d-3, as promulgated under the 1934 Act) of 25% or more of the Voting Power of the Company; (ii) a majority of the Board consists of individuals other than Incumbent Directors, which term means the members of the Board who were serving on the Board on the date hereof, provided that any individual who becomes a director subsequent to that date whose election or nomination for election was supported by two-thirds of the directors who then comprised the Incumbent Directors shall be considered to be an Incumbent Director for purposes hereof; (iii) the Board adopts any plan of liquidation providing for the distribution of all or substantially all of the Company's assets; (iv) the stockholders of the Company approve a merger, consolidation, share exchange, division, sale or other disposition of substantially all of the assets of the Company (a "Corporate Event"), as a result of which the shareholders of the Company immediately prior to such Corporate Event (the "Company Shareholders") shall not hold, directly or indirectly, immediately following such Corporate Event a majority of the Voting Power of (x) in the case of a merger or consolidation, the surviving or resulting corporation, (y) in the case of a share exchange, the acquiring corporation or (z) in the case of a division or a sale or other disposition of substantially all of the Company's assets, each surviving, resulting or acquiring corporation; provided that, such a division or sale shall not be a Change of Control for purposes of this Agreement to the extent that, following such Corporate Event, the Grantee continues to be employed by a surviving, resulting or acquiring entity with respect to which the Company Shareholders hold, directly or indirectly, a majority of the Voting Power immediately following such Corporate Event. (b) "Cause" shall mean: (i) the Grantee is convicted of a felony involving moral turpitude or (ii) the Grantee engages in conduct that constitutes willful gross neglect or willful gross misconduct in carrying out 7 his duties for the Company, resulting, in either case, in material economic harm to the Company, unless the Grantee believed in good faith that such conduct was in, or not opposed to, the best interests of the Company. Notwithstanding the immediately preceding sentence, Cause shall not exist for purposes of this Agreement unless the following procedural requirements have been complied with. The Grantee shall be given written notice by the Board of its intention to terminate his employment for Cause, which notice shall state in detail the particular circumstances that constitute the grounds on which the proposed termination for Cause is based. The Grantee shall have the right to have a timely hearing before the Board, and to present evidence to the Board in defense of such proposed termination and to be represented and assisted by counsel at such hearing. A determination that Cause exists may only be made upon a vote of two-thirds of the members of the Board (excluding the Grantee) after such hearing and only on the basis of the grounds set forth in the notice initially sent to the Grantee regarding such action. (c) "Code" shall mean the Internal Revenue Code of 1986, as amended. Any reference to a particular section of the Code shall be deemed to include any successor to such section. (d) "Constructive Termination Without Cause" shall mean a termination by the Grantee of his employment with the Company on written notice given to the Company within 60 days following the occurrence, without his prior written consent, of any of the following events during the Transition Period: (i) the failure to elect or reelect the Grantee as a member of the Board, or as Chairman of the Board, or the removal of him from any such position other than in connection with an actual termination of employment by the Company for Cause in accordance with the provisions hereof; (ii) the assignment to the Grantee of duties or responsibilities that are not commensurate with the Grantee's position as executive Chairman, or any material diminution in the Grantee's duties or authorities as executive Chairman (other than as may be agreed from time to time by the Grantee in writing), or any change in the reporting structure so that the Grantee reports to any person or entity other than the Board; (iii) any material breach of any material obligation of the Company to the Grantee, whether under this Agreement or otherwise, which breach is not cured by the Company within 10 business days of receipt by the Company of written notice thereof setting forth in reasonable detail the grounds on which such breach is alleged. (e) "Disability" shall mean the Grantee's inability, due to physical or mental incapacity, to substantially perform his duties and responsibilities as 8 Chairman for a period of 180 consecutive days as determined by an approved medical doctor. For this purpose, an approved medical doctor shall mean a medical doctor selected by the Parties. If the Parties cannot agree on a medical doctor, each Party shall select a medical doctor and the two doctors shall select a third who shall be the approved medical doctor for this purpose. (f) "GAAP" shall mean generally accepted accounting principles as in effect in the United States from time to time. (g) "Market Value", when used with respect to the value of Shares on a particular day, shall mean the closing price for which a Share is purchased that day (or, if such day is not a trading day, on the most recent preceding trading day on which such a purchase occurred) on the principal national securities exchange or national market system on which Shares are then listed or eligible for sale (or, if Shares are not listed or eligible for sale on any such exchange or market system, the price as determined by agreement between the Parties or, in then absence of such agreement, the price as determined in accordance with Section 12). (h) "MBV" as of any date shall mean the Company's per Share GAAP book value as of the relevant date adjusted to (i) reverse the effects of unrealized gains and losses on investments and derivatives, (ii) reverse the effects of unearned compensation pertaining to restricted stock awards held by the Company's employees and directors, (iii) add dividends declared on the Company's Shares since January 1, 2004 and (iv) add interest accrued on dividends declared on the Company's Shares since January 1, 2004. In the event of any merger, consolidation, reorganization, recapitalization, spin-off, split-up, combination, share exchange, liquidation, dissolution, stock split, extraordinary cash dividend, stock dividend, distribution of stock or other property in respect of the Shares or other securities of the Company, or other change in corporate structure or capitalization affecting the Shares, appropriate adjustment(s) will be made to the calculation of MBV so as to avoid dilution or enlargement of the rights of the Grantee and of the economic opportunity and value represented by the Restricted Stock. (i) "MBV Appreciation" as of any measurement date shall mean the percentage increase in MBV from January 1, 2004 through such measurement date, determined pursuant to the following formula: (A minus B) / B where "A" equals MBV as of such measurement date and "B" equals MBV as of January 1, 2004. (j) "Person", when used in the definition of a Change of Control, shall have the meaning ascribed to such term in Section 3(a)(9) of the 1934 Act, as 9 supplemented by Section 13(d)(3) of the 1934 Act; provided, however, that Person shall not include (i) the Company or any subsidiary of the Company or (ii) any employee benefit plan sponsored by the Company or any subsidiary of the Company. (k) "1934 Act" shall mean the Securities Exchange Act of 1934, as amended. (l) When used in the definition of a Change of Control, a specified percentage of "Voting Power" of a company shall mean such number of the Voting Securities as shall enable the holders thereof to cast such percentage of all the votes which could be cast in an annual election of directors and "Voting Securities" shall mean all securities of a company entitling the holders thereof to vote in an annual election of directors. 15. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Connecticut without regard to the principles of conflict of laws. 16. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which, when taken together, shall constitute one document. 10 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above. MBIA INC. By: /s/ Ram D. Wertheim -------------------------------- Name: Ram D. Wertheim Title: Gen GRANTEE /s/ Joseph W. Brown --------------------------------- Joseph W. Brown 11 EX-10.69 5 a4635848ex10p69.txt RESTRICTED STOCK AGREEMENT - DUNTON Exhibit 10.69 FORM OF RESTRICTED STOCK AWARD AGREEMENT ---------------------------------------- AGREEMENT made and entered into as of this 6th day of May 2004 between MBIA Inc., a Connecticut corporation (the "Company"), and Gary C. Dunton (the "Grantee"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Company has established the MBIA Inc. Annual and Long-Term Incentive Plan, as amended (the "Plan") providing, among other things, for the award of shares of Common Stock, par value $1 per share, of the Company ("Shares") to key employees of the Company and certain wholly-owned subsidiaries of the Company, contingent upon the achievement of performance objectives established by the Compensation and Organization Committee (the "Committee") of the Board of Directors of the Company (the "Board"); WHEREAS, the Plan limits the value of all long-term incentive awards payable thereunder to a "Covered Employee" (as defined in the Plan) for any performance period to $5 million; WHEREAS, the Grantee has served as the Company's President, and the Company is now promoting the Grantee to serve as the Company's Chief Executive Officer commencing on the date hereof; WHEREAS, the Company has determined that, in recognition of the Grantee's past contributions to the Company and as an inducement for the Grantee to continue serving the Company, it is in the interest of the Company and its shareholders for the Grantee to be granted an award of Shares subject to the terms and conditions set forth herein, including, without limitation, the requirement that, in the ordinary course, such Shares will only be and become vested upon the achievement of the performance conditions set forth herein; and WHEREAS, the Committee has determined to grant to the Grantee the number of Shares set forth below, subject to the terms and restrictions set forth herein; NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, and for other good and valuable consideration, receipt of which is hereby acknowledged, the Company and the Grantee (together, the "Parties") do hereby agree as follows: 1. Grant of Restricted Stock. Subject to the limitations under Section 2(e) below, the Company hereby evidences and confirms its grant to the Grantee, effective as of the date hereof (the "Grant Date"), of 125,000 Shares subject to the terms and restrictions contained herein (the "Restricted Stock"). 2. Vesting of Restricted Stock. (a) Restricted Period. Except as provided in Section 5 hereof, the Restricted Stock granted hereby may not be sold, assigned, transferred, pledged, hypothecated or otherwise directly or indirectly encumbered or disposed of except to the extent that the Restricted Stock has "vested" (i.e., become (i) non-forfeitable and (ii) freely transferable except for restrictions imposed by law or regulation) pursuant to Sections 2(b) through 2(d) below. (b) MBV Appreciation. A percentage of the Restricted Stock, determined pursuant to the table set forth below, shall become vested on the earlier of (i) the first date on which MBV Appreciation equals or exceeds 50% and (ii) January 1, 2009 (such earlier date, the "MBV Trigger Date"), based on the applicable MBV Appreciation measured as of such MBV Trigger Date: ------------------------------------ ------------------------------- MBV Appreciation as of MBV Trigger Vested Percentage of Date Restricted Stock ------------------------------------ ------------------------------- ------------------------------------ ------------------------------- 0% 0% ------------------------------------ ------------------------------- 10% 20% ------------------------------------ ------------------------------- 20% 40% ------------------------------------ ------------------------------- 30% 60% ------------------------------------ ------------------------------- 40% 80% ------------------------------------ ------------------------------- 50% or more 100% ------------------------------------ ------------------------------- Intermediate levels of vesting shall be determined by linear interpolation (e.g., MBV Appreciation as of the MBV Trigger Date of 25% will yield 50% vesting). (c) Accelerated Vesting upon Certain Terminations of Employment. To the extent that the Restricted Stock shall not have previously become vested pursuant to Section 2(b) above or been forfeited pursuant to Section 2(e) below, the Restricted Stock shall become fully vested upon the termination of the Grantee's employment with the Company prior to January 1, 2009 (the "Normal Vesting Date"): (i) due to the Grantee's death or Disability; (ii) by the Company other than for Cause; (iii) in a Constructive Termination Without Cause; or (iv) for any reason (including, without limitation, a voluntary termination 2 by the Grantee) following or as a result of a Change of Control that is not a Change of Control described in Section 2(d). Any termination of the Grantee's employment with the Company (for any reason) occurring on or after the Normal Vesting Date shall have no impact on the vesting or forfeiture of the Restricted Stock. (d) Certain Change of Control Transactions. The Restricted Stock shall become fully vested immediately upon the occurrence of a Change of Control following which the Company ceases to be a "publicly held corporation" within the meaning of section 162(m)(2) of the Code, irrespective of whether the Grantee's employment terminates in connection therewith. (e) Limitation on Shares Issuable; "Top-Up Amount". In the event that the Market Value of the Restricted Stock that would otherwise vest in a calendar year pursuant to any of subsections (b), (c) or (d) above, when added to the value of any other long-term incentive awards that will or may become vested or payable to the Grantee under the Plan during the same calendar year, exceeds $5 million, then the amount of Restricted Stock that vests under this Agreement shall be limited to the maximum number of Shares that may be delivered to the Grantee for such calendar year without exceeding such $5 million limit under the Plan. The Market Value of the portion of Restricted Stock that fails to vest solely as a result of the operation of the foregoing sentence shall be paid to the Grantee by the Company as a special cash award outside of the Plan (such amount, the "Top-Up Amount"); provided, however, that the Company may in its sole discretion elect to pay all or a portion of the Top-Up Amount in additional Shares if, prior to the MBV Trigger Date, the Company has adopted a new equity-based compensation plan under which Shares are available to satisfy the Company's obligation under this Agreement. (f) Forfeiture Events. The Restricted Stock shall (to the extent not yet vested) be forfeited, and shall not thereafter vest, upon (i) a voluntary termination of his employment with the Company by the Grantee prior to the Normal Vesting Date (other than due to Disability, in a Constructive Termination Without Cause or upon or following a Change of Control) or (ii) a termination of the Grantee's employment by the Company for Cause prior to the Normal Vesting Date. Any termination of the Grantee's employment with the Company (for any reason) occurring on or after the Normal Vesting Date shall have no impact on the vesting or forfeiture of the Restricted Stock. Additionally, any portion of the Restricted Stock that remains unvested after the MBV Trigger Date under Section 2(b) above shall be forfeited and shall not thereafter vest. 3. No Right to Continued Employment. The grant of the Restricted Stock hereunder shall not be construed as granting to the Grantee any right of continued employment, and the right of the Company to terminate the Grantee's employment at any time at will (whether by dismissal, discharge or otherwise) is specifically reserved. 4. Excise Tax. In the event that any payment or benefit made or provided to or for the benefit of the Grantee under this Agreement, or under any 3 plan, agreement, program or arrangement of the Company or any of its affiliates (a "Payment") is determined to be subject to any excise tax ("Excise Tax") imposed by Section 4999 of the Code, the Company shall pay to the Grantee at or prior to the time any Excise Tax is payable with respect to such Payment (through withholding or otherwise), an additional amount which, after the imposition of all income, employment, excise and other taxes payable by the Grantee thereon, is equal to the sum of (i) the Excise Tax on such Payment plus (ii) any penalty and interest assessments associated with such Excise Tax. The determination of whether any Payment is subject to the Excise Tax and, if so, the amount to be paid by the Company to the Grantee and the time of payment pursuant to this Section 4 shall be made by an independent, nationally recognized United States public accounting firm (the "Auditor") jointly selected by the Parties and paid by the Company. If the Parties cannot agree on the firm to serve as the Auditor, then the Parties shall each select one nationally recognized United States accounting firm and those two firms shall jointly select the accounting firm to serve as the Auditor, which firm shall not have acted in any way on behalf of the Company during the two years preceding its selection. The Parties shall cooperate with each other in connection with any proceeding or claim relating to the existence or amount of any liability for any Excise Tax. All expenses relating to any such proceeding or claim (including any attorneys' fees and other expenses associated therewith) shall be paid by the Company promptly upon demand by the Grantee, and any such payment shall be subject to gross up in the event that the Grantee is subject to any income tax, employment tax or Excise Tax on it. In the event that the Grantee is entitled to a gross-up from the Company under the provisions of this Agreement and any other agreement or arrangement with the Company, the payment, if any, to be made in respect of any Excise Tax under this Section 4 shall not be in addition to or duplicative of any such other payment. 5. Nonassignability of Restricted Stock. The Restricted Stock is personal and, prior to the vesting of such Restricted Stock, no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and no such rights shall be subject to execution, attachment or similar process, except that the Restricted Stock may be transferred, in whole or in part, (i) by will or the laws of descent and distribution or (ii) to any Immediate Family Member or to any trust, the sole beneficiaries of which are the Grantee and/or his Immediate Family Members, or to any entity (including, without limitation, any corporation, partnership or limited liability company) in which the Grantee, his Immediate Family Members or trusts solely for the benefits of such persons hold all the beneficial interests, provided that such Immediate Family Members and/or trusts and/or other entities (and upon distribution their beneficiaries) are bound by the provisions of this Agreement. For purposes of this Agreement, the term "Immediate Family Member" shall mean the Grantee's parents and spouse and any of the lineal descendants of the Grantee, his spouse or either of his parents (including, without limitation, descendants by adoption). Any person or entity 4 to whom these Shares has been transferred in whole or in part in part in accordance with this Section 5 shall to the extent of the transfer, succeed to the rights and obligations of the Grantee under this Agreement. 6. Rights as Stockholder. Except as otherwise provided in this Agreement, Grantee shall have, with respect to all Restricted Stock, the right to vote such Restricted Stock and the right to receive cash and other dividends, if any, as may be declared on the Restricted Stock from time to time. Any securities issued to or received by the Grantee with respect to Restricted Stock as a result of a stock split, a dividend payable in capital stock or other securities, a combination of shares or any other change or exchange of the Restricted Stock for other securities, by reclassification, reorganization, distribution, liquidation, merger, consolidation, or otherwise, shall be subject to the same restrictions on transfer and vesting, have the same status, and bear the same legend, as the Restricted Stock, unless otherwise determined by the Committee. 7. Legend. Until the vesting of the Restricted Stock pursuant to Section 2, each certificate evidencing Shares subject to the Grantee's Restricted Stock shall be registered in the Grantee's name and shall bear the following legend: "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) CONTAINED IN A RESTRICTED STOCK AWARD AGREEMENT BETWEEN MBIA INC. AND GARY C. DUNTON, AND NEITHER THIS CERTIFICATE NOR THE SHARES REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN ACCORDANCE WITH SUCH AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY." Promptly following the determination of the Grantee's vested portion of Restricted Stock pursuant to Section 2 above, the Grantee shall be furnished certificate(s) for any such vested Shares that bear no such legend. 8. Withholding. The Grantee agrees to make appropriate arrangements with the Company for satisfaction of any applicable tax withholding requirements ("tax obligations") arising out of this Agreement. Such tax obligations may be satisfied in cash or, at the election of the Grantee, with vested Shares of Restricted Stock that have an aggregate Market Value on the date of vesting equal to the amount of taxes required to be withheld. 9. Amendment or Waiver. No provision of this Agreement may be amended unless such amendment is set forth in a writing signed by the Parties. No waiver by any person of any breach of any condition or provision contained in this Agreement shall be deemed a waiver of any similar or dissimilar condition or provision at the same or any prior or any subsequent time. To be effective, any waiver must be in writing signed by the waiving person. 5 10. References and Headings. References herein to rights and obligations of the Grantee shall apply, where appropriate, to the estate or other legal representative of the Grantee or his successors and assigns as permitted under this Agreement, as the case may be, without regard to whether specific reference to such estate or other legal representative or his successors and assigns is contained in a particular provision of this Agreement. The headings of Sections contained in this Agreement are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement. 11. Notices. Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given (i) when delivered directly to the person concerned or (ii) three business days after being sent by postage-prepaid certified or registered mail or by nationally recognized overnight carrier, return receipt requested, duly addressed to the person concerned at the location indicated below (or to such changed address as such party may subsequently by similar process give notice of): If to the Company, at the Company's headquarters and to the attention of the Office of the Secretary, with a copy to Debevoise & Plimpton LLP, 919 Third Ave., New York, New York, 10022, Attention: Lawrence K. Cagney. If to the Grantee, at the Company's headquarters and to the attention of the Grantee. If to a transferee permitted under Section 5, to the address (if any) supplied by the Grantee to the Company. 12. Resolution of Disputes. Any dispute or controversy arising out of or relating to this Agreement, the Grantee's employment with the Company, or the termination thereof, shall be resolved by binding confidential arbitration, to be held in New York City before three arbitrators in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Each of the Parties shall be entitled to appoint one of the three arbitrators and the third arbitrator shall be appointed by the arbitrators appointed by the Parties. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The Company shall promptly pay all costs and expenses, including without limitation reasonable attorneys' fees, incurred by the Grantee (or his permitted successors and assigns) in resolving any claim raised in such an arbitration, other than any claim brought by the Grantee (or the Grantee's permitted successors and assigns) that the arbitrator(s) determine to have been brought (i) in bad faith or (ii) without any reasonable basis. 6 13. The Company's Representations. The Company represents and warrants that (i) sufficient shares are available under the Plan for the grant of the Shares hereunder; (ii) it is fully authorized by action of the Board and of the Committee (and of any other person or body whose action is required) to enter into this Agreement and to perform its obligations hereunder; (iii) the grant of the Restricted Stock and this Agreement have been approved in accordance with Rule 16b-3(d)(1) promulgated under the 1934 Act; (iv) the execution, delivery and performance of this Agreement by the Company does not violate any applicable law, regulation, order, judgment or decree or any agreement, plan or corporate governance document of the Company; (v) the grant of the Restricted Stock complies with an exemption to the registration requirements under the Securities Act of 1933, as amended; and (vi) upon the execution and delivery of this Agreement by the Company and the Grantee, this Agreement shall be the valid and binding obligation of the Company, enforceable in accordance with its terms, except to the extent enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally. 14. Definitions. For purposes of this Agreement, the following terms shall have the following meanings: (a) "Change of Control" shall mean the occurrence of any of the following events: (i) any "person", as such term is currently used is Section 13(d) or 14(d) of the 1934 Act, other than the Company, its majority owned subsidiaries, or any employee benefit plan of the Company or any of its majority-owned subsidiaries, becomes a "beneficial owner" (as such term is currently used in Rule 13d-3, as promulgated under the 1934 Act) of 25% or more of the Voting Power of the Company; (ii) a majority of the Board consists of individuals other than Incumbent Directors, which term means the members of the Board who were serving on the Board on the date hereof, provided that any individual who becomes a director subsequent to that date whose election or nomination for election was supported by two-thirds of the directors who then comprised the Incumbent Directors shall be considered to be an Incumbent Director for purposes hereof; (iii) the Board adopts any plan of liquidation providing for the distribution of all or substantially all of the Company's assets; (iv) the stockholders of the Company approve a merger, consolidation, share exchange, division, sale or other disposition of substantially all of the assets of the Company (a "Corporate Event"), as a 7 result of which the shareholders of the Company immediately prior to such Corporate Event (the "Company Shareholders") shall not hold, directly or indirectly, immediately following such Corporate Event a majority of the Voting Power of (x) in the case of a merger or consolidation, the surviving or resulting corporation, (y) in the case of a share exchange, the acquiring corporation or (z) in the case of a division or a sale or other disposition of substantially all of the Company's assets, each surviving, resulting or acquiring corporation; provided that, such a division or sale shall not be a Change of Control for purposes of this Agreement to the extent that, following such Corporate Event, the Grantee continues to be employed by a surviving, resulting or acquiring entity with respect to which the Company Shareholders hold, directly or indirectly, a majority of the Voting Power immediately following such Corporate Event. (b) "Cause" shall mean: (i) the Grantee is convicted of a felony involving moral turpitude or (ii) the Grantee engages in conduct that constitutes willful gross neglect or willful gross misconduct in carrying out his duties for the Company, resulting, in either case, in material economic harm to the Company, unless the Grantee believed in good faith that such conduct was in, or not opposed to, the best interests of the Company. Notwithstanding the immediately preceding sentence, Cause shall not exist for purposes of this Agreement unless the following procedural requirements have been complied with. The Grantee shall be given written notice by the Board of its intention to terminate his employment for Cause, which notice shall state in detail the particular circumstances that constitute the grounds on which the proposed termination for Cause is based. The Grantee shall have the right to have a timely hearing before the Board, and to present evidence to the Board in defense of such proposed termination and to be represented and assisted by counsel at such hearing. A determination that Cause exists may only be made upon a vote of two-thirds of the members of the Board (excluding the Grantee) after such hearing and only on the basis of the grounds set forth in the notice initially sent to the Grantee regarding such action. (c) "Code" shall mean the Internal Revenue Code of 1986, as amended. Any reference to a particular section of the Code shall be deemed to include any successor to such section. (d) "Constructive Termination Without Cause" shall mean a termination by the Grantee of his employment with the Company on written notice given to the Company within 60 days following the occurrence, without his prior written consent, of any of the following events during the Transition Period: (i) the assignment to the Grantee of duties or responsibilities that are not commensurate with the Grantee's position as Chief Executive Officer, or any material diminution in the Grantee's duties or authorities as Chief Executive Officer (other than as may be agreed from time to time by the Grantee in writing), or any change in the reporting structure so 8 that the Grantee reports to any person or entity other than the Company's Chairman or the Board; (ii) any material breach of any material obligation of the Company to the Grantee, whether under this Agreement or otherwise, which breach is not cured by the Company within 10 business days of receipt by the Company of written notice thereof setting forth in reasonable detail the grounds on which such breach is alleged. (e) "Disability" shall mean the Grantee's inability, due to physical or mental incapacity, to substantially perform his duties and responsibilities as Chairman for a period of 180 consecutive days as determined by an approved medical doctor. For this purpose, an approved medical doctor shall mean a medical doctor selected by the Parties. If the Parties cannot agree on a medical doctor, each Party shall select a medical doctor and the two doctors shall select a third who shall be the approved medical doctor for this purpose. (f) "GAAP" shall mean generally accepted accounting principles as in effect in the United States from time to time. (g) "Market Value", when used with respect to the value of Shares on a particular day, shall mean the closing price for which a Share is purchased that day (or, if such day is not a trading day, on the most recent preceding trading day on which such a purchase occurred) on the principal national securities exchange or national market system on which Shares are then listed or eligible for sale (or, if Shares are not listed or eligible for sale on any such exchange or market system, the price as determined by agreement between the Parties or, in then absence of such agreement, the price as determined in accordance with Section 12). (h) "MBV" as of any date shall mean the Company's per Share GAAP book value as of the relevant date adjusted to (i) reverse the effects of unrealized gains and losses on investments and derivatives, (ii) reverse the effects of unearned compensation pertaining to restricted stock awards held by the Company's employees and directors, (iii) add dividends declared on the Company's Shares since January 1, 2004 and (iv) add interest accrued on dividends declared on the Company's Shares since January 1, 2004. In the event of any merger, consolidation, reorganization, recapitalization, spin-off, split-up, combination, share exchange, liquidation, dissolution, stock split, extraordinary cash dividend, stock dividend, distribution of stock or other property in respect of the Shares or other securities of the Company, or other change in corporate structure or capitalization affecting the Shares, appropriate adjustment(s) will be made to the calculation of MBV so as to avoid dilution or enlargement of the rights of the Grantee and of the economic opportunity and value represented by the Restricted Stock. 9 (i) "MBV Appreciation" as of any measurement date shall mean the percentage increase in MBV from January 1, 2004 through such measurement date, determined pursuant to the following formula: (A minus B) / B where "A" equals MBV as of such measurement date and "B" equals MBV as of January 1, 2004. (j) "Person", when used in the definition of a Change of Control, shall have the meaning ascribed to such term in Section 3(a)(9) of the 1934 Act, as supplemented by Section 13(d)(3) of the 1934 Act; provided, however, that Person shall not include (i) the Company or any subsidiary of the Company or (ii) any employee benefit plan sponsored by the Company or any subsidiary of the Company. (k) "1934 Act" shall mean the Securities Exchange Act of 1934, as amended. (l) When used in the definition of a Change of Control, a specified percentage of "Voting Power" of a company shall mean such number of the Voting Securities as shall enable the holders thereof to cast such percentage of all the votes which could be cast in an annual election of directors and "Voting Securities" shall mean all securities of a company entitling the holders thereof to vote in an annual election of directors. 15. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Connecticut without regard to the principles of conflict of laws. 16. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which, when taken together, shall constitute one document. 10 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above. MBIA INC. By: /s/ Ram D. Wertheim -------------------------- Name: Ram D. Wertheim Title: General Counsel GRANTEE /s/ Gary C. Dunton ----------------------------- Gary C. Dunton 11 EX-99.1 6 a4635848ex991.txt PRESS RELEASE - BROWN AND DUNTON Exhibit 99.1 Gary Dunton Named MBIA CEO; Jay Brown Continues as Executive Chairman; Neil Budnick Promoted to President of MBIA Insurance Corp. ARMONK, N.Y.--(BUSINESS WIRE)--May 6, 2004--As announced in its succession plan in March, the Board of Directors of MBIA Inc. (NYSE:MBI) named Gary C. Dunton as chief executive officer, effective at the Company's Annual Shareholder Meeting today. Formerly president of MBIA, Mr. Dunton succeeds Jay Brown, who will continue as executive chairman through 2007. Neil G. Budnick, who was chief financial officer, was named president of MBIA Insurance Corporation, responsible for the Company's global public and structured finance businesses. "The legacy of Jay's leadership is the vibrant, dynamic company that MBIA is today - a company that is well positioned to take advantage of opportunities ahead," said Mr. Dunton. "With Jay at the helm, we strengthened every aspect of our operations from the foundation up, including our balance sheet, pricing, risk management, loss reserving and our human resources programs, all while building value for our shareholders." "I look forward to continuing my partnership with Jay," Mr. Dunton continued, "and with Neil, whose understanding of the business, coupled with his financial expertise, make him the best choice to extend MBIA's franchise into the global marketplace." Before being named president and a director of MBIA Inc. in 1999, Mr. Dunton was president of MBIA Insurance Corporation's Public Finance Division and chief investment officer. Previously, he was president of the Family and Business Insurance Group of USF&G Insurance. Mr. Dunton also spent 12 years with Aetna Life and Casualty, where he participated in the establishment of MBIA in its present form. Mr. Budnick has been CFO since 1999. Before taking that assignment, he served as president of MBIA's Public Finance Division. From 1993 to 1996, Mr. Budnick was assistant to the chairman. He joined MBIA in 1984 from Standard & Poor's Corporation. At the company's Annual Shareholders Meeting, all nominees for the Board of Directors standing for election were confirmed, and PricewaterhouseCoopers was reappointed independent auditors for 2004. MBIA Inc., through its subsidiaries, is a leading financial guarantor and provider of specialized financial services. MBIA's innovative and cost-effective products and services meet the credit enhancement, financial and investment needs of its public and private sector clients, domestically and internationally. MBIA Inc.'s principal operating subsidiary, MBIA Insurance Corporation, has a financial strength rating of Triple-A from Moody's Investors Service, Standard & Poor's Ratings Services, Fitch Ratings, and Rating and Investment Information, Inc. Please visit MBIA's Web site at http://www.mbia.com. CONTACT: MBIA Inc. Michael Ballinger, 914/765 3893 EX-99.2 7 a4635848ex992.txt PRESS RELEASE - FERRERI Exhibit 99.2 Nicholas Ferreri Named MBIA Chief Financial Officer ARMONK, N.Y.--(BUSINESS WIRE)--May 6, 2004--Nicholas Ferreri has been named chief financial officer of MBIA, effective immediately. Mr. Ferreri will also serve on the Executive Policy Committee, the company's senior policy-making arm. He succeeds Neil G. Budnick, who was named president of MBIA Insurance Corporation. "Nick has a deep understanding of the needs of our business," said Gary C. Dunton, MBIA chief executive officer. "He has a rock-solid financial background as well as considerable business management experience, both of which will serve MBIA well." Most recently, Mr. Ferreri was managing director of global public finance in MBIA's Insured Portfolio Management Division, responsible for the surveillance of all public finance transactions insured by MBIA globally. Mr. Ferreri was named managing director in MBIA's Business Analysis Division in 2000, responsible for pricing all of MBIA's new business transactions in Global Public Finance and Global Structured Finance. In addition to his duties as CFO, Mr. Ferreri will continue to serve as chief executive officer of MBIA MuniServices, an MBIA subsidiary responsible for revenue enhancement and municipal consulting services throughout the United States. He was named chief financial officer of MuniServices in 1997 and chief executive officer in 2001. Before joining MBIA in 1997, Mr. Ferreri was a vice president/senior analyst at Moody's Investors Service, responsible for the ratings of the major bond insurers and reinsurers. From 1982-1992, Mr. Ferreri was a senior manager at Ernst & Young. A Summa Cum Laude graduate of St. Johns' University with a B.S. in Accounting, Mr. Ferreri is a Certified Public Accountant. MBIA Inc., through its subsidiaries, is a leading financial guarantor and provider of specialized financial services. MBIA's innovative and cost-effective products and services meet the credit enhancement, financial and investment needs of its public and private sector clients, domestically and internationally. MBIA Inc.'s principal operating subsidiary, MBIA Insurance Corporation, has a financial strength rating of Triple-A from Moody's Investors Service, Standard & Poor's Ratings Services, Fitch Ratings, and Rating and Investment Information, Inc. Please visit MBIA's Web site at http://www.mbia.com. CONTACT: MBIA Inc. Michael Ballinger, 914-765-3893 www.mbia.com -----END PRIVACY-ENHANCED MESSAGE-----