Exhibit 10.17

CASH RETENTION AWARD AND RESTRICTED STOCK AGREEMENT

This Cash Retention Award and Restricted Stock Agreement (this “Agreement”) is
made and entered into as of December 21, 2012 between MBIA Inc., a Connecticut
corporation (together with its successors and assigns, the “Company”), and
Anthony McKiernan (the “Grantee”).

W I T N E S S E T H:

WHEREAS, the Grantee has agreed to continue to serve as an executive officer of
the Company, and the Company desires that he continue such service; and

WHEREAS, the Company maintains the MBIA Inc. 2005 Omnibus Incentive Plan (as
amended, the “Plan”), pursuant to which the Compensation and Governance
Committee (the “Committee”) of the Company’s Board of Directors (the “Board”)
may grant, among other awards, shares of common stock (the “Restricted Stock”),
par value $1 per share, of the Company, subject to a period of time (the
“Restriction Period”) selected by the Committee during which the grant of
Restricted Stock is subject to forfeiture and/or restrictions on transfer
pursuant to the terms of the Plan;

WHEREAS, the Committee desires to award 400,000 shares of Restricted Stock (the
“Shares”) to the Grantee on December 31, 2012 (the “Grant Date”) in part as an
inducement award for the Grantee agreeing to continue to serve as an executive
officer of the Company, and in part contingent upon the achievement of
performance objectives established by the Committee, 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. Cash Retention Award. Upon execution of this Agreement, the Grantee will
receive a one-time, non-recurring $2,000,000 cash retention award. The Grantee
hereby agree that, in the event the Grantee voluntarily terminate his employment
with the Company on or before December 31, 2015 without the Board’s mutual
consent, the Grantee shall repay the Company that portion of this award
determined by multiplying (a) $1,200,000 by (b) a fraction, the numerator of
which is the number of days from the date the Grantee’s employment terminates
through December 31, 2015 and the denominator of which is 1,095. The Grantee
acknowledges that he will not receive any annual bonus for his services in 2012
in addition to the retention award.

2. Grant of Restricted Stock. Subject to the terms and conditions set forth in
this Agreement and set forth in the Plan, the Company hereby evidences its grant
of the Shares to the Grantee in accordance with Section 6 of the Plan.
Capitalized terms used in this Agreement without definition shall have the
meanings ascribed to such terms in the Plan.

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3. Vesting of Shares.

(a) Restriction Period. Except as provided in Sections 3(f) or 5 below, the
Shares 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 Shares have become “vested” (i.e., become
non-forfeitable) pursuant to Section 3(b) through 3(e) below.

(b) Time-Based Vesting Shares. To the extent not previously forfeited, one-half
of the Shares (that is, 200,000 Shares) shall become vested on the third
(3rd) anniversary of the Grant Date if the Grantee is continuously employed by
the Company through such third (3rd) anniversary of the Grant Date; provided,
however, that such Shares shall become vested in connection with the occurrence
of a Change in Control or the Grantee’s death or Disability, or the Company’s
termination the Grantee’s employment without Cause, in each case as set forth in
the Plan, that occurs prior to such third (3rd) anniversary of the Grant Date.
Any such Shares that do not become vested on or prior to the third
(3rd) anniversary as described in the previous sentence shall be forfeited by
the Grantee unless otherwise approved by the Board.

(c) Performance-Based Vesting Shares

i) To the extent not previously forfeited, one-quarter of the Shares (that is,
100,000 Shares) shall become vested on the First Performance Vesting Date (as
defined below) (x) so long as the Grantee is continuously employed by the
Company through the First Performance Vesting Date; provided, however, that this
employment vesting condition shall be waived in connection the Grantee’s
Retirement after December 31, 2015, death or Disability, or the Company’s
termination of the Grantee’s employment without Cause, in each case as set forth
in the Plan, that occurs prior to the First Performance Vesting Date and (y) to
the extent that the Market Value Appreciation performance criteria are satisfied
as of the First Performance Vesting Date. The “First Performance Vesting Date”
shall mean the earliest to occur of (i) the fourth (4th) anniversary of the
Grant Date or (ii) the date of a Change in Control. Any Shares described in this
Section 3(c)(i) that do not become vested on the First Performance Vesting Date
as described in the previous sentence shall be forfeited by the Grantee on the
First Performance Vesting Date.

ii) To the extent not previously forfeited, one-quarter of the Shares (that is,
100,000 Shares) shall become vested on the Second Performance Vesting Date (as
defined below) (x) so long as the Grantee is continuously employed by the
Company through the Second Performance Vesting Date; provided, however, that
this employment vesting condition shall be waived in connection the Grantee’s
Retirement after December 31, 2015, death or Disability, or the Company’s
termination of the Grantee’s employment without Cause, in each case as set forth
in the Plan, that occurs prior to the Second Performance Vesting Date and (y) to
the extent that the Market Value Appreciation performance criteria are satisfied
as of the

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Second Performance Vesting Date. The “Second Performance Vesting Date” shall
mean the earliest to occur of (i) the fifth (5th) anniversary of the Grant Date
or (ii) the date of a Change in Control. Any Shares described in this
Section 3(c)(ii) that do not become vested on the Second Performance Vesting
Date as described in the previous sentence shall be forfeited by the Grantee.

(d) Market Value Appreciation. The Market Value Appreciation performance
criteria shall be satisfied upon the applicable Performance Vesting Date as to
that percentage of the Shares that is subject to vesting on such Performance
Vesting Date (to the extent not previously vested or forfeited) determined in
accordance with the table set forth below, with the percentage of the applicable
Shares to become vested based on any Fair Market Value between any two values
specified in the table to be determined by linear interpolation:

 

Fair Market Value Per Share

  

Percentage Vested

$10 or less

   0%

$13

   20%

$16

   40%

$17.50

   50%

$19

   60%

$22

   80%

$25 or more

   100%

For purposes of applying the table above, the “Fair Market Value per Share” as
of a Performance Vesting Date shall be deemed to be (x) the average Fair Market
Value per share of Common Stock for the 60 previous Trading Days (if such
Performance Vesting Date is not the date of a Change in Control) or (y) the Fair
Market Value per share of Common Stock immediately prior to the occurrence of
the Change in Control (if such Performance Vesting Date is the date of a Change
in Control). “Trading Day” shall mean a day on which the New York Stock Exchange
(or any successor thereto) is fully open for trading.

(e) Accelerated Market Value Appreciation. Notwithstanding anything in
Section 3(d) to the contrary, the Market Value Appreciation performance criteria
shall be satisfied upon the first date after the Grant Date on which the Fair
Market Value per share of Common Stock over the 20 previous consecutive Trading
Days has been at least $25 per Share, in which case the percentage of the
applicable Shares to become vested on the applicable Performance Vesting Date
shall be 100%.

(f) Additional Forfeiture Event. The Shares shall (to the extent not yet vested)
be forfeited, and shall not thereafter vest, upon a voluntary termination of the
Grantee’s employment with the Company by the Grantee (other than in connection
with the Grantee’s Retirement or as otherwise approved by the Board) or the
termination of the Grantee’s employment for Cause.

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(g) Equitable Adjustments. 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, the Committee shall make appropriate
adjustment(s) to the table above and/or to other terms and conditions set forth
in this Agreement, so as to avoid dilution or enlargement of the rights of the
Grantee and of the economic opportunity and value represented by the Shares.

4. No Right to Continued Employment; Post- Employment Restrictions.

(a) The grant of the Shares 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.

(b) For the period during which the Grantee is employed with the Company and for
five (5) years thereafter (or such shorter maximum period as permitted by
applicable law), the Grantee shall not personally, other than in connection with
performing services for the Company or any of its Subsidiaries: (i) directly or
indirectly hire, solicit, or help another person to hire or solicit, any
employee of the Company or any of its Subsidiaries away from the Company or any
of its Subsidiaries, (ii) directly or indirectly induce or encourage any
employee of the Company or any of its Subsidiaries to terminate employment with
the Company or any of its Subsidiaries, (iii) directly or indirectly divert any
business opportunity developed on behalf of the Company or any of its
Subsidiaries for his own benefit or for the benefit of any of his future
employers, (iv) directly or indirectly solicit any of the Company’s or its
Subsidiaries’ customers to use the services of another entity in lieu of those
of the Company or its Subsidiaries, (v) seek or accept employment with any
entity that competes materially with any of the Company’s or its Subsidiaries’
substantial business operations; or (vi) otherwise engage in any activity that
competes materially with any of the Company’s or its Subsidiaries’ substantial
business operations. If any provision of this Section 4(b) is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule, such provision shall be subject to modification by the arbitrator referred
to in Section 12 or the appropriate court, which shall modify this Section 4(b)
to the minimum extent necessary to achieve such validity and enforceability.

5. Nonassignability of the Shares. The Shares are personal to the Grantee and,
except as expressly permitted in this Agreement or the Plan, 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 Shares may be
transferred, in whole or in part, to any Permitted Transferee, provided that
such Permitted Transferees shall be bound by the provisions of this Agreement.
Any person or entity to whom the Shares have been transferred in whole or 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.

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6. Rights as Stockholder. Except as otherwise provided in this Agreement,
Grantee shall have, with respect to all Shares, the right to vote such Shares
and the right to receive cash and other dividends, if any, as may be declared on
the Shares from time to time. Any securities issued to or received by the
Grantee in respect of the Shares 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 Shares for other securities, by
reclassification, reorganization, distribution, liquidation, merger or
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
Shares, unless otherwise determined by the Committee in a manner more favorable
to the Grantee.

7. Legend. Until the vesting of the Shares pursuant to Section 2 above, each
certificate evidencing such Shares 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 CASH
RETENTION AWARD AND RESTRICTED STOCK AGREEMENT BETWEEN MBIA INC. AND Anthony
McKiernan, 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 vesting of any Shares pursuant to Section 3 above, the Grantee shall be
furnished certificate(s) that bear no such legend for any such Shares that have
vested.

8. Withholding. Without limiting the Company’s authority under the Plan, 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 that have an aggregate
Fair 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 that is signed by the Parties and that
specifically identifies the provision(s) being amended. No waiver by any person
of any breach of any condition or provision contained in this Agreement shall be
deemed a waiver of any breach of a 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.

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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 (a) when delivered
directly to the person concerned or (b) 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 Avenue, 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 (a) in bad faith or (b) without any reasonable basis.

13. The Company’s Representations. The Company represents and warrants that
(a) 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; (b) the grant of the Shares and this
Agreement have been approved in accordance with Rule 16b-3(d)(1) promulgated
under the 1934 Act; (c) 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; and (d) 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.

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14. Successors.

(a) This Agreement shall be binding upon and inure to the benefit of the Parties
and their respective permitted successors, heirs (in the case of the Grantee)
and assigns.

(b) No rights or obligations of the Company under this Agreement may be assigned
or transferred by the Company except that such rights and obligations may be
assigned or transferred pursuant to a merger, consolidation or other combination
in which the Company is not the continuing entity, or a sale or liquidation of
all or substantially all of the business and assets of the Company, provided
that the assignee or transferee is the successor to all or substantially all of
the business and assets of the Company and such assignee or transferee expressly
assumes the liabilities, obligations and duties of the Company as set forth in
this Agreement. In the event of any merger, consolidation, other combination,
sale of business and assets, or liquidation as described in the preceding
sentence, the Company shall use its best reasonable efforts to cause such
assignee or transferee to promptly and expressly assume the liabilities,
obligations and duties of the Company hereunder.

15. Expense Reimbursement. Promptly upon presentation of reasonable supporting
documentation, the Company shall pay (or reimburse the Grantee for) any expenses
(including attorneys’ fees and other charges of counsel) reasonably incurred by
him in connection with the negotiation, documentation and implementation of this
Agreement.

16. 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.

17. 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.

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:   Chief Legal Officer

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GRANTEE

/s/ Anthony McKiernan

Anthony McKiernan