Document:

<PAGE>   1
                                                                   Exhibit 10.30

                               ESOP LOAN AGREEMENT

         THIS ESOP LOAN AGREEMENT (this "Agreement") is dated as of June 30,
1999, by and between MBIA Inc., a Connecticut corporation (the "Company"), and
the CapMAC Employee Stock Ownership Plan Trust (the "Trust"), established
pursuant to the CapMAC Employee Stock Ownership Plan (the "ESOP") by a trust
agreement dated as of June 25, 1992 (the "Trust Agreement") by and between
CapMAC Holdings Inc. (to which the Company is a successor), as settlor, and HSBC
Bank USA, as trustee ("the Trustee").

                              W I T N E S S E T H:

         WHEREAS, the Trustee is the trustee of the Trust, established pursuant
to the ESOP;

         WHEREAS, the Trustee was a party to an ESOP loan agreement by and
between CapMAC Holdings Inc. ("CapMAC"), the Trust and the ESOP;

         WHEREAS, as of February 17, 1998, CapMAC merged into the Company, with
shares of the Company being exchanged for shares of CapMAC;

         WHEREAS, as of July 1, 1999, the ESOP will be merged into the MBIA Inc.
Employees Profit Sharing Plan and 401(k) Salary Deferral Plan (the "MBIA Plan"),
converting the latter into an employee stock ownership plan, as defined by
Section 4975(e)(7) of the Internal Revenue Code of 1986, as amended (the
"Code"), with its employer matching contributions;
<PAGE>   2
         WHEREAS, the ESOP and the Trust Agreement contemplate a refinancing of
the outstanding balance of the original CapMAC loan agreement, par value $0.01
per share, of the Company ("Common Stock");

         WHEREAS, as consideration for such refinancing, the Company will lend
Eight Hundred, Sixty-Seven Thousand, Four Hundred Fifty-Five Dollars and
Seventy-Five Cents ($867,455.75) in addition to the amount of the refinancing,
and will sell 13,397 additional shares to the ESOP at the closing price of the
stock on 6/29/99 (the "Additional Shares").

         WHEREAS, under the terms of the ESOP and the Trust Agreement, the
Trustee has full power and authority to act for and on behalf of the Trust and
may, in its sole discretion, cause the Trust to refinance the purchase of Common
Stock on terms in the best interests of the ESOP's participants and
beneficiaries;

         WHEREAS, the Company has agreed to lend the sum of Five Million, Three
Hundred Sixty-Four Thousand, Nine Hundred Five Dollars and Seventy-Five Cents
($5,364,905.75) (the "ESOP Loan") to the Trust for the purpose of refinancing
the original CapMAC ESOP loan and the purchase of the Additional Shares of the
Common Stock (the "Shares"), and the Trustee, acting for and on behalf of the
Trust, has determined that such actions are in the best interests of the
participants of the ESOP;

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<PAGE>   3
         WHEREAS, the ESOP Loan is intended to be an "exempt loan" as described
in Section 4975(d)(3) of the Code and as defined in Section 54.4975-7(b)(l)(iii)
of the Treasury Regulations (the "Regulations");

         NOW THEREFORE, in consideration of the premises and mutual covenants
made herein, it is agreed as follows:

         1. Agreement to Lend and Borrow Funds. On June 30, 1999 (the "Closing
Date"), the Company will refinance the existing CapMAC ESOP loan to the Trust
and lend sufficient additional funds to the Trust to purchase the Additional
Shares in the aggregate principal amount of Five Million, Three Hundred
Sixty-Four Thousand, Nine Hundred Five Dollars and Seventy-Five Cents
($5,364,905.75)

         2. The Note. The ESOP Loan shall be evidenced by a promissory note
executed and delivered by the Trust to the Company on the Closing Date in the
form attached hereto as Exhibit A (the "Note"). The Trust shall, pursuant to the
attached Exhibit B, make scheduled principal payments. The Trust shall also pay
interest on the aggregate unpaid principal amount of the ESOP Loan on the first
day of each quarter, beginning on the first day of the second full quarter
following the Closing Date. The Trust may at its option at any time upon one (1)
day's written notice, prepay without penalty the ESOP Loan in any amount and
also may prepay without penalty the ESOP Loan to the extent that shares which
are not allocated to the accounts of participants in the ESOP are sold pursuant
to the ESOP; provided, however, that no repayment or prepayment of the ESOP Loan
shall be required or permitted if it would cause the Company to incur an

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<PAGE>   4
excise tax under Section 4972 of the Code or it would adversely affect (a) the
qualification of the ESOP or the Trust under the Code or the Employee Retirement
Income Security Act of 1974, as amended from time to time ("ERISA"), or (b) the
status of the ESOP Loan as an "exempt loan" as such term is described in Section
4975(d)(3) of the Code. Any such prepayments shall be applied to remaining
installments of principal of the ESOP Loan in the normal order of their stated
maturity.

         3. Interest On the ESOP Loan. The Trust shall pay interest on the
aggregate unpaid principal amount of the ESOP Loan outstanding from time to time
during each calendar quarter until payment in full of such amount at an interest
rate per annum equal to the rate that the most creditworthy international banks
dealing in the London interbank eurodollar market charge each other for large
eurodollar loans with a term of three months as quoted on the money rate screen
by Bloomberg L.P. at the close of business on the second business day preceding
the commencement of such calendar quarter plus 1.75%; provided, however, that in
no event shall the interest rate exceed 7.52% per annum for any calendar
quarter.

         4. Source of Funds. The Note and any interest thereon (a) shall be
payable from contributions (other than contributions of employer securities)
made to the Trust in accordance with the ESOP to enable the Trust to pay its
obligations under the Note, from earnings attributable to such contributions and
from dividends on the Shares purchased with the proceeds of the ESOP Loan, and
(b) may be payable from the proceeds of any sale of the Shares not then
allocated to participants' accounts that are sold as permitted by

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<PAGE>   5
this Agreement to the extent and in the manner that such payments are permitted
by law, provided, however, that such sale would not constitute a prohibited
transaction under Section 4975 of the Code or Section 406 of ERISA. No
contributions, earnings, dividends and proceeds may be applied in payment of the
Note or any interest thereon if such application would cause the Company to
incur an excise tax under Section 4972 of the Code or would adversely affect (a)
the qualification of the ESOP or the Trust under the Code or ERISA or (b) the
status of the ESOP Loan as an "exempt loan" as such term is described in section
4975(d)(3) of the Code.

         5. Purpose of the ESOP Loan. The proceeds of the ESOP Loan shall be
used by the Trust only to refinance the existing ESOP Loan and to purchase the
Additional Shares and should the Trustee determine that the Trust is unable to
purchase the Additional Shares or is prohibited from purchasing the Additional
Shares or should any purchase of the Additional Shares be rescinded, then the
trust shall return the proceeds of the ESOP Loan to the Company pursuant to
Section 12 hereof, but only to the extent of the total purchase price of the
Additional Shares.

         6. Covenant of the Company. The Company will cause contributions to be
made to the Trust at such times and in such amounts sufficient to enable the
Trust to meet all obligations under the ESOP Loan provided, however, that the
Company shall have no obligation to cause any contributions to be made that
could reasonably be expected (i) to have an adverse effect on the qualification
of the ESOP or the tax-exempt status of the

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Trust under the Code or ERISA, or (ii) not to be deductible under Section 404
of the Code.

         7. Representations of the Trustee, The Trustee represents and warrants
to the Company that:

                  (a) This Agreement and the Note have been duly executed and
         delivered by the Trustee;

                  (b) This Agreement and the Note are in all respects valid,
         legally binding upon the Trust and enforceable against the Trust in
         accordance with their respective terms, except to the extent that the
         enforcement thereof may be limited by bankruptcy, insolvency,
         reorganization or other similar laws affecting the enforcement of
         creditors' rights generally, ERISA or general principles of equity. The
         execution, delivery and performance of this Agreement, the Note, and
         all other documents or instruments executed or delivered by the Trustee
         for and on behalf of the Trust in connection with the ESOP Loan are
         within the Trustee's and the Trust's powers and have been duly
         authorized by all necessary action;

                  (c) The Trustee has determined that the ESOP's investment in
         the Additional Shares is prudent, in the best interests of the
         participants in the Plan, and in accordance with its fiduciary
         obligations under ERISA and the Code;

                  (d) The Trustee is a commercial bank validly existing and in
         good standing under the laws of the State of New York; and

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<PAGE>   7
                  (e) The Trustee has all requisite corporate power and
         authority to execute, deliver and perform this Agreement.

         8. Contingencies to Performance by the Company. This Agreement shall
become effective only upon satisfaction of the following conditions:

                  (a) The Company shall have received originals (which may be
         executed in several counterparts), duly executed by the Trustee, of
         this Agreement and the Note;

                  (b) Prior to the Closing Date, there shall have been no legal
         action or administrative proceeding initiated or threatened which
         affects this Agreement, the Note or consummation of any of the
         transactions contemplated hereby or thereby;

                  (c) All legal matters incident to this Agreement, the Note and
         the other documents and transactions contemplated hereby and thereby,
         shall be reasonably satisfactory in form and substance to the Company
         and its counsel;

         9. Collateral. The Shares shall be and are hereby pledged by the Trust
as security for the Note (the "Collateral"). Each time there is a payment on
the ESOP Loan by the Trust, the Collateral shall be reduced by the number of
Shares that are to be allocated to the ESOP participants as a result of that
contribution, in accordance with the provisions of the ESOP.

         10. Default/Remedies.

                  (a) The failure of the Trust to pay when due any payment of
         principal or interest on the Note shall constitute an event of default
         ("Event of Default").

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<PAGE>   8
                  (b) Notwithstanding any provision in the Trust Agreement, the
         Note, or in any document referred to therein or entered into in
         connection therewith, the obligations of the Trust under this Agreement
         are without recourse to the Trust except as provided in this Agreement.
         If an Event of Default shall occur and be continuing, the Company shall
         have no rights to assets of the Trust other than contributions (other
         than contributions of employer securities) that are made by the Company
         to enable the Trust to meet its obligations hereunder and earnings
         attributable to the investment of such contributions and the
         Collateral; provided, however, that (i) the value of Trust assets
         transferred in satisfaction of the ESOP Loan shall not exceed the
         amount in default (without regard to any acceleration of the payment
         schedule that occurs as a result of the default, and (ii) Trust assets
         shall he transferred to the Company only to the extent of the failure
         of the Trust to meet the payment schedule of the ESOP Loan.

         11. Amendments of this Agreement. Each of the parties hereto agrees
that it will not, without the prior written consent of the other party hereto,
(i) cancel or terminate this Agreement or consent to or accept any cancellation
or termination hereof, or (ii) amend or otherwise modify this Agreement.

         12. Construction and Purpose. All provisions hereof shall be construed
so as to maintain (i) the ESOP as a qualified leveraged employee stock ownership
plan under Section 401(a) and Section 4975(e)(7) of the Code, (ii) the Trust as
exempt from taxation under Section 501(a) of the Code and (iii) this ESOP Loan
as an exempt loan under

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<PAGE>   9
Section 54.4975-7(b)(1)(iii) of the Regulations. The parties agree that the
purpose of the ESOP Loan is to enable the Trust to refinance the existing ESOP
Loan and to purchase the Additional Shares. The parties further agree that, to
the extent permitted by Section 54.4975-7(b) of the Regulations, should the
Trust be prohibited from purchasing the Additional Shares or should the purchase
of the Additional Shares by the Trust pursuant thereto be rescinded pursuant to
any government decree or court order, writ or judgment, then this Agreement will
be considered to be rescinded and the Trust shall promptly pay to the Company,
or its assigns, the proceeds of the ESOP Loan to the extent that such proceeds
are returned to the Trust pursuant to the rescission of the purchase of the
Additional Shares. In no event shall payments made with respect to the ESOP Loan
exceed an amount equal to the sum of contributions, dividends, proceeds and
earnings received during or prior to the due date of such payments, less such
payments in prior years.

         13. Notices. It shall be a sufficient giving of any notice or other
communication hereunder if the party giving the same shall either deliver said
notice personally or shall mail a copy thereof by express mail or registered or
certified first class mail, postage prepaid, addressed as follows:

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<PAGE>   10
(a) To the Trustee:

        HSBC Bank USA
        140 Broadway
        New York, New York 10005

        Telephone: (212) 658-7713
        Facsimile: (212) 658-7780

        Attention: Stephen J. Hartman, Jr.

(b) To the Company:

        MBIA Inc.
        113 King Street
        Armonk, New York 10504

        Telephone: 914-765-3872
        Facsimile: 914-765-3299

        Attention:  Alan Pearlman

The date of giving any such notice, or other communication shall be the date on
which such envelope was either personally delivered or deposited. The post
office receipt showing the date of such deposit shall be prima facie evidence of
these facts. Either party may change the address to which notices are sent to it
in the manner herein provided for giving notice to the other party.

14. Miscellaneous.

                  (a) Amendments and Waivers. No amendment or waiver of any
         provisions of this Agreement, nor consent to any departure by the Trust
         therefrom, shall in any event be effective unless the same shall be in
         writing and signed by the Company and the Trust, and then such waiver
         or consent shall be effective only in the specific instance and for the
         specific purpose for which given. No failure on the part of the

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<PAGE>   11
         Company to exercise any rights hereunder shall operate as a waiver
         thereof, nor shall any single waiver of any right hereunder preclude
         any other future exercise thereof.

                  (b) Governing Law. The interpretation and construction of this
         Agreement, and all matters relating hereto, shall be governed by the
         laws of the State of New York without regard to conflicts of laws rules
         or principles.

                  (c) Assignment. This Agreement shall be binding upon and,
         shall inure to the benefit of the parties hereto and their respective
         permitted successors and assigns.

                  (d) Counterparts. This Agreement may he executed in two or
         more counterparts, all of which taken together shall constitute one
         instrument.

                  (e) Integration. This Agreement, including the other documents
         referred to herein which form a part hereof, contains the entire
         understanding of the parties hereto with respect to the subject matter
         contained herein and therein. This Agreement supersedes all prior
         agreements and understandings between the parties with respect to such
         subject matter.

         IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.

                                        MBIA Inc.

                                        By:  /s/ illegible
                                            ------------------------------------
                                        Title: E.V.P. CAO
                                               ---------------------------------

                                       11
<PAGE>   12
                                        MBIA INC. EMPLOYEES PROFIT
                                        SHARING AND 401(k) SALARY
                                        DEFERRAL TRUST

                                        By: HSBC Bank USA, not in its individual
                                            or corporate capacity but solely as
                                            Trustee

                                        By:  /s/  Stephen J. Hartman, Jr.
                                            ------------------------------------
                                        Title: Senior Vice President
                                               ---------------------------------

                                       12
<PAGE>   13
                          NON-RECOURSE PROMISSORY NOTE

$5,364,905.75                                                      June 30, 1999

         FOR VALUE RECEIVED, the undersigned CapMAC Employee Stock Ownership
Plan (the "Borrower") PROMISES TO PAY to the order of MBIA Inc. (the "Lender")
the principal sum of Five Million, Three Hundred Sixty-Four Thousand, Nine
Hundred Five Dollars and Seventy-Five Cents ($5,364,905.75), in accordance with
and pursuant to the terns of the loan agreement, dated June 30, 1999, by and
between the Lender, the Borrower, pursuant to the terms of the CapMAC Employee
Stock Ownership Plan (the "ESOP") and the CapMAC Employee Stock Ownership Trust
Agreement (the "Trust Agreement"), and HSBC Bank USA (the "Trustee")
(hereinafter the "Loan Agreement").

         The Borrower promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid in full at such interest rates and at
such times as are specified in the Loan Agreement. The unpaid principal amount
of this obligation at any time shall be the total amounts advanced hereunder
less any amount of principal payments made hereon by the Borrower.

         Both principal and interest are payable in lawful money of the United
States of America to the Lender at 113 King Street, Armonk, New York 10504 (or
other location specified by the Lender) in immediately available funds.
<PAGE>   14
         This document is the Note referred to in, and is subject to the terms
of, the Loan Agreement. This Note is subject to prepayment as provided in the
Loan Agreement.

         Presentment and demand for payment, notice of dishonor, protest and
notice of protest are hereby waived.

         The obligations of the Borrower hereunder are without recourse to the
borrower, except as otherwise provided for in the Loan Agreement.

         This Note (a) may not be amended orally, but only in writing; (b) shall
be governed in all respects by the laws of the State of New York without regard
to conflicts of laws rules or principles (except as the same may be preempted by
federal law); and (c) shall inure to the benefit of and shall be binding upon
the Borrower, the Lender and their respective successors and assigns.

                                    CapMAC EMPLOYEE STOCK OWNERSHIP PLAN

                                    By: HSBC Bank, USA
                                             not in its individual or corporate
                                             capacity but solely as Trustee

                                    By:  /s/ Stephen J. Hartman, Jr.
                                        ---------------------------------------
                                    Title: Senior Vice President
                                           ------------------------------------

                                        2
<PAGE>   15
         MBIA agrees to make the following quarterly payments of principal on or
before the corresponding dates:

<TABLE>
<CAPTION>
                            Date                   Principal Payment
                            ----                   -----------------
<S>                                                <C>
                         07/01/1999                     $75,000
                         10/01/1999                     $75,000
                         01/01/2000                    $175,000
                         04/01/2000                    $175,000
                         07/01/2000                    $175,000
                         10/0l/2000                    $175,000
                         01/01/2001                    $175,000
                         04/01/2001                    $175,000
                         07/01/2001                    $175,000
                         10/01/2001                    $175,000
                         01/01/2002                    $175,000
                         04/01/2002                    $175,000
                         07/01/2002                    $175,000
                         10/01/2002                    $175,000
                         01/01/2003                    $175,000
                         04/01/2003                    $175,000
                         07/01/2003                    $175,000
                         10/01/2003                    $175,000
                         01/01/2004                    $175,000
                         04/01/2004                    $175,000
                         07/01/2004                    $175,000
                         10/01/2004                    $175,000
                         01/01/2005                    $175,000
                         04/01/2005                    $175,000
                         07/01/2005                    $175,000
                         10/01/2005                    $175,000
                         01/01/2006                    $175,000
                         04/01/2006                    $175,000
                         07/01/2006                    $175,000
                         10/01/2006                    $489,905.75
</TABLE><PAGE>   1

                                                                   EXHIBIT 10.46

                  KEY EMPLOYEE EMPLOYMENT PROTECTION AGREEMENT

                  THIS AGREEMENT between MBIA Inc., a Connecticut corporation
(the "Company"), and John S. Pizzarelli (the "Executive"), dated as of this.14th
day of March, 2000.

                                   WITNESSETH:

                  WHEREAS, the Company has employed the Executive in an officer
position and has determined that the Executive holds an important positron with
the Company;

                  WHEREAS, the Company believes that, in the event it is
confronted with a situation that could result in a change in ownership or
control of the Company, continuity of management will be essential to its
ability to evaluate and respond to such a situation in the best interests of
shareholders;

                  WHEREAS, the Company understands that any such situation will
present significant concerns for the Executive with respect to his financial and
job security;

                  WHEREAS, the Company desires to assure itself of the
Executive's services during the period in which it is confronting such a
situation; and to provide the Executive certain financial. assurances to enable
the Executive to perform the responsibilities of his position without undue
distraction and to exercise his judgment without bias due to his personal
circumstances;

                  WHEREAS, to achieve these objectives, the Company and the
Executive desire to enter into an agreement providing the Company and the
Executive with certain rights and obligations upon the occurrence of a Change of
Control or Potential Change of Control (as defined in Section 2);

                  NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is hereby agreed by and between the Company and
-the Executive as follows:

                  1. Operation of Agreement. (a) Effective Date. The effective
date of this Agreement shall be the date on which a Change of Control occurs
(the "Effective Date"), provided that, except as provided in Section 1(b), if
the Executive is not employ-
<PAGE>   2
ed by the Company on the Effective Date, this Agreement shall be void and
without effect.

        (b)  Termination of Employment Following a Potential Change of Control.
Notwithstanding Section 1(a), if (i) the Executive's employment is terminated by
the Company Without Cause (as defined in Section 6(c)) after the occurrence of a
Potential Change of Control and prior to the occurrence of a Change of Control
and prior to the time at which the Board of Directors of the Company (the
Board) has adopted a Nullification Resolution (as defined in Section 2(b)
hereof) with respect to such Potential Change of Control or (ii) a Change of
Control (as defined in Section 2(a) hereof) and (ii) a Change of Control occurs
within two years of such termination, the Executive shall be deemed, solely for
purposes of determining his rights under this Agreement, to have remained
employed until the date such Change of Control occurs and to have been
terminated by the Company Without Cause immediately after this Agreement
becomes effective, with any amounts payable hereunder reduced by the amount of
any other severance benefits provided to him in connection with such
termination.

     2.   Definitions. (a) Change of Control. For the purposes of this
Agreement, a "Change of Control" shall be deemed to have occurred if:

     (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 1934 Act) of 25% or more of the voting Power
of the Company;

     (ii) on any date, 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 at beginning of any 24-month period ending with such date
(or another date specified by the (Committee), 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 of this subsection 2(a)(ii);

     (iii)  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

                                       2
<PAGE>   3
         consolidation, the surviving or resulting corporation, (y) in the case
         of a share exchange, the acquiring corporation or (2) 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 Executive 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) Potential Change of Control. For the purposes of this
Agreement, a Potential Change of Control shall be deemed to have occurred if:

                  (i) a Person commences a tender offer (with adequate
         financing) for securities representing at last 15% of the Voting Power
         of the Company's securities;

                  (ii) the Company enters into an agreement the consummation of
         which would constitute a Change of Control;

                  (iii) proxies for the election of directors of the Company are
         solicited by anyone other than the Company; or

                  (iv) any other event occurs which is deemed to be a Potential
         Change of Control by the Board.

Notwithstanding the foregoing, if, after a Potential Change of Control and
before a Change of Control, the Board makes a good faith determination that
such Potential Change of Control will not result in a Change of Control, the
Board may nullify the effect of the Potential Change of Control (a
"Nullification") by resolution (a "Nullification Resolution"), in which case the
Executive shall have no further rights and obligations under this Agreement by
reason of such Potential Change of Control; provided, however, that if the
Executive shall have delivered a Notice of Termination (within the meaning of
Section 6(f) hereof) prior to the date of the Nullification Resolution, such
Resolution shall not effect the Executive's rights hereunder. If a Nullification
Resolution has been adopted and the Executive has not delivered a Notice of
Termination prior thereto, the Effective rate for purposes of this Agreement
shall be the date, if any, during the term hereof on which another Potential
Change of Control or any actual Change of Control occurs.

                  (c) Voting Power refined. A specified percentage of "Voting
Power" of a company shall mean such number of the Voting Securities as shall
enable the holders

                                       3
<PAGE>   4
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.

                  3. Employment Period. Subject to Section 6 of this Agreement,
the Company agrees to continue the Executive in its employ, and the Executive
agrees to remain in the employ of the Company, for the period (the "Employment
Period") commencing on the Effective Date and ending on the third anniversary of
the Effective Date. Notwithstanding the foregoing, if, prior to the Effective
Date, the Executive is demoted to a lower position than the position held on the
date first set forth above, the Board may declare that this Agreement shall be
without force and effect by written notice delivered to the Executive (i) within
30 days following such demotion and (ii) prior to the occurrence of a Potential
Change of Control or a Change of Control.

                  4. Position and. Duties. (a) No Reduction in Position. During
the Employment Period, the Executive's position (including titles), authority
and responsibilities shall be at least commensurate with those held, exercised
and assigned immediately prior to the Effective Date. It is understood that,
for purposes of this Agreement, such position, authority and responsibilities
shall not be regarded as not commensurate merely by virtue of the fact that a
successor shall have acquired all or substantially all of the business and/or
assets of the Company as contemplated by Section 12(b) of this Agreement. The
Executive's services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date.

                  (b) business Time. From and after the Effective Date, the
Executive agrees to devote his full attention during normal business hours to
the business and affairs of the Company and to use his best efforts to perform
faithfully and efficiently the responsibilities assigned to him hereunder,
to the extent necessary to discharge such responsibilities, except for (i) time
spent in managing his personal, financial and legal affairs and serving on
corporate, civic or charitable boards or committees, in each case only if and
to the extent not substantially interfering with the performance of such
responsibilities, and (ii) periods of vacation and sick leave to which he is
entitled. It is expressly understood and agreed that the Executive's continuing
to serve on any boards and committees on which he is serving or with which he is
otherwise associated immediately preceding the Effective Date shall not be
deemed to interfere with the performance of the Executive's services to the
Company.

                  5. Compensation. (a) Base Salary. During the Employment
Period, the Executive shall receive a base salary at a monthly rate at least
equal to the monthly salary paid to the Executive by the Company and any of its
affiliated companies immediately prior to the Effective date. The base salary
shall be reviewed at least once each year after the Effective Date, and may be
increased (but not decreased) at any time

                                       4
<PAGE>   5
and from time to time by action of the Board or any committee thereof or any
individual having authority to take such action in accordance with the Company's
regular practices. The Executive's base salary, as it may be increased from tune
to time, shall hereafter be referred to as "Base Salary". Neither the Base
Salary nor any increase in Base Salary after the Effective Date shall serve to
limit or reduce any other obligation of the Company hereunder.

                  (b) Annual Bonus. During the Employment Period, in addition to
the Base Salary, for each fiscal year of the Company ending during the
Employment Period, the Executive shall be afforded the opportunity to receive an
annual bonus on terms and conditions no less favorable to the Executive (taking
into account reasonable changes in the Company's goals and objectives and taking
into account actual performance) than the annual bonus opportunity that had been
made available to the Executive for the fiscal year ended immediately prior to
the Effective Date (the "Annual Bonus Opportunity"). Any amount payable in
respect of the Annual Bonus Opportunity shall be paid as soon as practicable
following the year for which the amount (or prorated portion) is earned or
awarded, unless electively deferred by the Executive pursuant to any deferral
programs or arrangements that the Company may male available to the Executive.

                  (c) Long-term Incentive Compensation Programs. During the
Employment Period, the Executive shall participate in all long-term incentive
compensation programs for key executives at a level that is commensurate with
the Executive's participation in such plans immediately prior to the Effective
Date, or, if more favorable to the Executive, at the level made available to the
Executive or other similarly situated officers at any time thereafter.

                  (d) Benefit Plans. During the Employment Period, the Executive
(and, to the extent applicable, his dependents) shall be entitled to participate
in or be covered under all pension, retirement, deferred compensation, savings,
medical, dental, health, disability, group life and accidental death insurance
plans and programs of the Company and its affiliated companies at a level that
is commensurate with the Executive's participation in such plans immediately
prior to the Effective Date, or, if more favorable to the Executive, at the
level made available to the Executive or other similarly situated officers at
any time thereafter.

                  (e) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the policies and procedures of the
Company as in effect immediately prior to the Effective Date. Notwithstanding
the foregoing, the Company may apply the policies and procedures in effect after
the Effective Date to the Executive, if such policies and procedures are not
less favorable to the Executive than those in effect immediately prior to the
Effective Date.

                                       5
<PAGE>   6
                  (f) Vacation and Fringe Benefits. During the Employment
Period, the Executive shall be entitled to paid vacation and fringe benefits at
a level that is commensurate with the paid vacation and fringe benefits
available to the Executive immediately prior to the Effective Date, or, if more
favorable to the Executive, at the level made available from time to time to the
Executive or other similarly situated officers at any tine thereafter.

                  (g) Indemnification. During and after the Employment Period,
the Company shall indemnify the Executive and hold the Executive harmless from
and against any claim, loss or cause of action arising from or out of the
Executive's performance as an officer, director or employee of the Company or
any of its Subsidiaries or in any other capacity, including any fiduciary
capacity, in which the Executive serves at the request of the Company to the
maximum extent permitted by applicable law and the Company's Certificate of
Incorporation and By-Laws (the "Governing Documents"), provided that in no
event shall the protection afforded to the Executive hereunder be less than that
afforded. under the Governing Documents as in effect immediately prior to the
Effective Date.

                  (h) Office and Support Staff: The Executive shall be entitled
to an office with furnishings and other appointments, and to secretarial and
other assistance, at a level that is at least commensurate with the foregoing
provided to other similarly situated officers.

                  6. Termination. (a) Death, Disability or Retirement. Subject
to the provisions of Section 1 hereof, this Agreement shall terminate
automatically upon the Executive's death, termination due to "Disability" (as
defined below or voluntary retirement under any of the Company's retirement
plans as in effect from time to time. For purposes of this Agreement,
Disability shall mean the Executive has met the conditions to qualify for
long-term disability benefits under the Company's policies, as in effect
immediately prior to the Effective date.

                  (b) Voluntary Termination. Notwithstanding anything in this
Agreement to the contrary, following a Change of Control the Executive may, upon
not less than 60 days' written notice to the Company, voluntarily terminate
employment for any reason (including early retirement under the terms of any of
the Company's retirement plans as in effect from time to time), provided that
any termination by the Executive pursuant to Section 6(d) on account of Good
Reason (as defined therein) shall not be, treated as a voluntary termination
under this Section 6(b).

                  (c) Cause. The Company may terminate the Executive's
employment for Cause. For purposes of this Agreement, "Cause" means (i) the
Executive's conviction

                                       6
<PAGE>   7
or plea of nolo contendere to a felony; (ii) an act or acts of dishonesty or
gross misconduct on the Executive's part which result or are intended to result
in material damage to the Company's business or reputation; or (iii) repeated
material violations by the Executive of his obligations under Section 4 of this
Agreement, which violations are demonstrably willful and deliberate on the
Executive's part and which result in material damage to the Company's business
or reputation.

                  (d) Good Reason. Following the occurrence of a Change of
Control, the Executive may terminate his employment for Good Reason. For
purposes of this Agreement, "Good Reason" means the occurrence of any of the
following, without the express written consent of the Executive, after the
occurrence of a Change of Control:

                  (i) the assignment to the Executive of any duties inconsistent
         in any material adverse respect with the Executive's position,
         authority or responsibilities as contemplated by Section 4 of this
         Agreement, or any other material adverse change in such position,
         including titles, authority or responsibilities;

                  (ii) any failure by the Company to comply with any of the
         provisions of Section 5 of this Agreement, other than an insubstantial
         or inadvertent failure remedied by the Company promptly after receipt
         of notice thereof given by the Executive;

                  (iii) the Company's requiring the Executive to be based at any
         office or location more than 50 miles (or such other distance as shall
         be set forth in the Company's relocation policy as in effect at the
         Effective Time) from that location at which he performed his services
         specified under the provisions of Section 4 immediately prior to the
         Change of Control, except for travel reasonably required in the
         performance of the Executive's responsibilities; or

                  (iv) any failure by the Company to obtain the assumption and
         agreement to perform this Agreement by a successor as contemplated by
         Section 12(b).

In no event shall the mere occurrence of a Change of Control, absent any further
impact on the Executive, be deemed to constitute Good Reason..

                  (e) Special Window Period. The Executive shall also have the
right to terminate his employment at any time and for any reason during the 30-
day period commencing on the first anniversary of the date on which a Change
of Control occurs (the "Special Window Period").

                                       7
<PAGE>   8
                  (f) Notice of Termination. Any termination by the Company for
Cause or by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 13(e).
For purposes of this Agreement, a "Notice of Termination" means a written notice
given, in the case of a termination for Cause, within 10 business days of the
Company's having actual knowledge of the events giving rise to such termination,
and in the case of a termination for Good Reason, within 90 days of the
Executive's having actual knowledge of the events giving rise to such
termination, and which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the termination date
is other than the date of receipt of such notice, specifies the termination date
of this Agreement (which date shall be not more than 15 days after the giving of
such notice. The failure by the Executive to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason shall not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing his rights
hereunder.

                  (g) Date of Termination. For the purpose of this Agreement,
the term. "Date of Termination" means (i) in the case of a termination for which
a Notice of Termination is required, the date of receipt of such Notice of
Termination or, if later, the date specified therein, as the case may be, and
(ii) in all other cases, the actual date on which the Executive's employment
terminates during the Employment Period.

                  7. Obligations of the Company upon Termination. (a) Death or
Disability. If the Executive's employment is terminated during the Employment
Period by reason of the Executive's death or Disability, this Agreement shall
terminate without further obligations to the Executive or the Executive's legal
representatives under this Agreement other than those obligations accrued
hereunder at the Date of Termination, and the Company shall pay to the Executive
(or his beneficiary or estate) (i) the Executive's full Base Salary trough the
Date of Termination (the "Earned Salary"), (ii) any vested amounts or benefits
owing to the Executive under the Company's otherwise applicable employee benefit
plans and programs, including any compensation previously deferred by the
Executive (together with any accrued earnings thereon) and not yet paid by the
Company and any accrued vacation pay not yet paid by the Company (the "Accrued
Obligations"), and (iii) any other benefits payable due to the Executive's death
or Disability under the Company's plans, policies or programs (the "Additional
Benefits").

                  Any Earned Salary shall be paid in cash in a single lump sum
as soon as practicable, but in no event more than 10 days (or at such earlier
date required by law),

                                       8
<PAGE>   9
following the Date of Termination. Accrued Obligations and Additional Benefits
shall be paid in accordance with the terms of the applicable plan, program or
arrangement.

                  (b) Cause and Voluntary Termination. If, during the Employment
Period, the Executive's employment shall be terminated for Cause or voluntarily
terminated by the Executive (other than on account of Good Reason following a
Change of Control), the Company shall pay the Executive (i) the Earned Salary in
cash in a single lump sum as soon as practicable, but in no event more than 10
days, following the Date of Termination, and (ii) the Accrued Obligations in
accordance with the terms of the applicable plan, program or arrangement.

                  (c) Termination by the Company other than for Cause and
Termination by the Executive for Good Reason or in the Special Window Period. If
(x) the Company terminates the Executive's employment other than for Cause
during the Employment Period, (y) the Executive terminates his employment at any
time during the Employment Period for Good Reason or (z) the Executive
terminates his employment with or without Good Reason during the Special Window
Period, the Company shall provide the Executive with the following benefits:

                  (i) Severance and Other Termination Payments. The Company
         shall pay the Executive the following:

                  (A)      the Executive's Earned Salary; and

                  (B)      an amount (the Pro-Rated Annual Incentive) equal to
                           the average of the annual bonuses payable to the
                           Executive for the two fiscal years of the Company
                           ended prior to the Effective Date for which bonuses
                           have been determined (the "Average Annual
                           Bonus") multiplied by a fraction, the
                           numerator of which is the number of months in such
                           fiscal year which have elapsed on or before (and
                           including) the last day of the month in which the
                           Date of Termination occurs and the denominator of
                           which is 12; and

                  (C)      an aggregate amount (the Book Value Award Amount)
                           equal to the sum of the amounts payable to the
                           Executive in respect of each outstanding incentive
                           award related to the Company's adjusted book value,
                           determined as of the end of the month in which the
                           Date of Termination occurs; and

                  (D)      the Accrued Obligations; and

                                       9
<PAGE>   10
                  (E)      a cash amount (the "Severance Amount") equal to three
                           times the sum of

                           (1)      the Executive's annual Ease Salary;

                           (2)      an amount equal to the Average Annual Bonus;

         The Earned Salary, Pro-Rated Annual Incentive and Severance Amount
         shall be paid in cash in a single lump sum as soon as practicable,
         but in no event more than l0 days (or at such earlier date required by
         law), following the Date of Termination. The Book Value Award Amounts
         shall be paid in cash as soon as practicable after the amount of each
         such payment can be determined. Accrued Obligations shall be paid in
         accordance with the terms of the applicable plan, program or
         arrangement.

                  (ii) Continuation of Benefits. If, during the Employment
         Period, the Company terminates the Executive's employment other than
         for Cause or the Executive terminates his employment for Good Reason,
         the Executive (and, to the extent applicable, his dependents) shall be
         entitled, after the Date of Termination until the earlier of (1) the
         third anniversary of the Date of Termination (the "End Date") and
         (2) the date the Executive becomes eligible for comparable benefits
         under a similar plan, policy or program of a subsequent employer, to
         continue participation in all of the Company's group health and group
         life employee benefits plans (the "Group Benefit Plans"). To the extent
         any such benefits cannot be provided under the terms of the applicable
         plan, policy or program, the Company shall provide a comparable benefit
         under another plan or from the Company's general assets. The
         Executive's participation in the Group Benefit Plans will be on the
         same terms and conditions (including, without limitation, any condition
         that the Executive make contributions toward the cost of such coverage
         on the same terms and conditions generally applicable to similarly
         situated employees) that would have applied had the Executive continued
         to be employed by the Company through the End Date.

                  (iii) Restricted Stock. Any and all awards of restricted stock
         held by the Executive at the Date of Termination shall immediately
         become fully vested.

                  (iv) Post-Termination Exercise Period. Notwithstanding
         anything else contained in Section 14 of the Company's 1987 Stock
         Option Plan to the contrary, in the event that Executive is entitled to
         receive the severance benefits described above pursuant to the terms of
         this Agreement, all of his outstanding Options and SARs awarded under
         such 1987 Stock Option Plan shall automatically be and become fully
         exercisable on the Date of Termination without further action on

                                       10
<PAGE>   11
         anyone's part and the Executive shall have the right to exercise any
         such Option or SAR until the earlier to occur of the expiration of the
         term of such Option or SAR and the fifth anniversary of the Date of
         Termination.

                  (v) Retirement Contribution Credits. The Executive shall
         receive credits to the Company's nonqualified excess benefits plan with
         respect to the amounts that would otherwise have been contributed on
         his behalf under the Company's Money Purchase Pension Plan and Profit
         Sharing Plan had the Executive continued in the company's employ for
         three years following the Date of Termination.

                  (vi) Outplacement Services. The Executive shall be provided at
         the Company's expense with outplacement services customary for
         executives at his level (including, without limitation, office space
         and telephone support services) provided by a qualified and experienced
         third party provider selected by the Company.

                  (d) Discharge of the Company's Obligations. Except as
expressly provided in the last sentence of this Section 7(d); the amounts
payable to the Executive pursuant to this Section 7 following termination of his
employment shall be in full and complete satisfaction of the Executive's rights
under this Agreement and any other claims he may have in respect of his
employment by the Company or any of its Subsidiaries. Such amounts shall
constitute liquidated damages with respect to any and all such rights and
claims and, upon the Executive's receipt of such amounts, the Company shall be
released and discharged from any and all liability to the Executive in
connection With this Agreement or otherwise in connection with the Executive's
employment with the Company and its Subsidiaries. Nothing in this Section 7(d)
shall be construed to release the Company from its commitment to indemnify the
Executive and hold the Executive harmless from and against any claim, loss or
cause of action arising from or out of the Executive's performance as an
officer, director or employee of the Company or any of its Subsidiaries
or in any other capacity, including any fiduciary capacity, in which the
Executive served at the request of the Company to the maximum extent permitted
by applicable law and the Governing Documents.

                  (e) Certain Further Payments by the Company.

                  (i) In the event that any amount or benefit paid or
         distributed to the Executive pursuant to this Agreement, taken
         together with any amounts or benefits otherwise paid or distributed to
         the Executive by the Company or any affiliated company (collectively,
         the "Covered Payments"), are or become subject to the tax (the "Excise
         Fax") imposed under Section 4999 of the Internal Revenue Code of 1986,
         as amended (the "Code"), or any similar tax that may hereafter be

                                       11
<PAGE>   12
         imposed, the Company shall pay to the Executive at the time specified
         in Section 7(e)(v) below an additional amount (the "Tax Reimbursement
         Payment") such that the net amount retained by the Executive with
         respect to such Covered Payments, after deduction of any Excise Tax on
         the Covered Payments and any Federal, state and local income or
         employment tax and Excise Tax on the Tax Reimbursement Payment provided
         for by this Section 7(e), but before deduction for any Federal, state
         or local income or employment tax withholding on such Covered Payments,
         shall be equal to the amount of the Covered Payments.

                  (ii) For purposes of determining whether any of the Covered
         Payments will be subject to the Excise Tax and the amount of such
         Excise Tax,

                  (A)      such Covered Payments will be treated as "parachute
                           payments" within the meaning of Section 280G of the
                           Code, and all "parachute payments" in excess of the
                           "base amount" (as defined under Section 280G(b)(3) of
                           the Code) shall be treated as subject to the Excise
                           Tax, unless, and except to the extent that, in the
                           good faith judgment of the Company's independent
                           certified public accountants appointed prior to the
                           Change of Control Date or tax counsel selected by
                           such Accountants (the "Accountants"), the
                           Company has a reasonable basis to conclude that
                           such Covered Payments (in whole or in part) either do
                           not constitute "parachute payments" or represent
                           reasonable compensation for personal services
                           actually rendered (within the meaning of Section
                           280G(b)(4)(B) of the Code) in excess of the "base
                           amount," or such "parachute payments" are otherwise
                           not subject to such Excise Tax, and

                  (B)      the value of any non-cash benefits or any deferred
                           payment or benefit shall be determined by the
                           Accountants in accordance with the principles of
                           Section 280G of the Code.

                  (iii) For purposes of determining the amount of the Tax
         Reimbursement Payment, the Executive shall be deemed to pay:

                  (A)      Federal income taxes at the highest applicable
                           marginal rate of Federal income taxation for the
                           calendar year in which the Tax Reimbursement Payment
                           is to be made, and

                  (B)      any applicable state and local income taxes at the
                           highest applicable marginal rate of taxation for the
                           calendar year in which the Tax Reimbursement Payment
                           is to be made, net of the

                                       12
<PAGE>   13
                           maximum reduction in Federal income taxes which could
                           be obtained from the deduction of such state or local
                           taxes if paid in such year.

                  (iv) In the event that the Excise Tax is subsequently
         determined by the Accountants or pursuant to any proceeding or
         negotiations with the Internal Revenue Service to be less than the
         amount taken into account hereunder in calculating the Tax
         Reimbursement Payment made, the Executive shall repay to the Company,
         at the time that the amount of such reduction in the Excise Tax is
         finally determined, the portion of such prior Tax Reimbursement Payment
         that would not have been paid if such Excise Tax had been applied in
         initially calculating such Tax Reimbursement Payment, plus interest on
         the amount of such repayment at the rate provided in Section
         1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event
         any portion of the Tax Reimbursement Payment to be refunded to the
         Company has been paid to any Federal, state or local tax authority,
         repayment thereof shall not be required until actual refund or credit
         of such portion has been made to the Executive, and interest payable to
         the Company shall not exceed interest received or credited to the
         Executive by such tax authority for the period it held such portion.
         The Executive and the Company shall mutually agree upon the course of
         action to be pursued (and the method of allocating the expenses
         thereof) if the Executive's good faith claim for refund or credit is
         denied.

                  In the event that the Excise Tax is later determined by the
         Accountants or pursuant to any proceeding or negotiations with the
         Internal Revenue Service to exceed the amount taken into account
         hereunder at the time the Tax Reimbursement Payment is made (including,
         but not limited to, by reason of any payment the existence or amount
         of which cannot be determined at the time of the Tax Reimbursement
         Payment), the Company shall male an additional Tax Reimbursement
         Payment in respect of such excess (plus any interest or penalty payable
         with respect to such excess) at the time that the amount of such excess
         is finally determined.

                  (v) The Tax Reimbursement Payment (or portion thereof)
         provided for in Section 7(e)(i) above shall be paid to the Executive
         not later than 10 business days following the payment of the Covered
         Payments; provided, however, that if the amount of such Tax
         Reimbursement Payment (or portion thereof) cannot be finally determined
         on or before the date on which payment is due, the Company shall pay to
         the Executive by such date an amount estimated in good faith by the
         Accountants to be the minimum amount of such Tax Reimbursement Payment
         and shall pay the remainder of such Tax Reimbursement Payment (together
         with interest at the rate provided in Section 1274(b)(2)(B) of the
         Code) as soon as the

                                       13
<PAGE>   14
         amount thereof can be determined, but in no event later than 45
         calendar days after payment of the related Covered Payment. In the
         event that the amount of the estimated Tax Reimbursement payment
         exceeds the amount subsequently determined to have been due, such
         excess shall constitute a loan by the Company to the Executive, payable
         on the fifth business day after written demand by the Company for
         payment (together with interest at the rate provided in Section
         1274(b)(2)(B) of the Code).

                  8. Non-exclusivity of Rights. Except as expressly provided
herein, nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under any other
agreements with the Company or any of its affiliated companies, including
employment agreements or stock option agreements. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan or
program.

                  9. No Offset. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others whether by reason of the
subsequent employment of the Executive or otherwise.

                  10. Legal Fees and Expenses. If the Executive asserts any
claim in any contest (whether initiated by the Executive or by the Company) as
to the validity, enforceability or interpretation of any provision of this
Agreement, the Company shall pay the Executive's legal expenses (or cause such
expenses to be paid) including, without limitation, his reasonable attorney's
fees, on a quarterly basis, upon presentation of proof of such expenses in a
form acceptable to the Company, provided that the Executive shall reimburse the
Company for such amounts, plus simple interest thereon at the 90-day United
States Treasury Bill rate as in effect from time to time, compounded annually,
if the arbitrator referred to in Section 13(b) or a court of competent
jurisdiction shall find that the Executive did not have a good faith and
reasonable basis to believe that he would prevail as to at least one material
issue presented to such arbitrator or court.

                  11. Confidential Information: Company Property. By and in
consideration of the salary and benefits to be provided by the Company
hereunder, including the severance arrangements set forth herein, the Executive
agrees that:

                                       14
<PAGE>   15
                  (a) Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, (i) obtained by the
Executive during his employment by the Company or any of its affiliated
companies and (ii) not otherwise public knowledge (other than by reason of an
unauthorized act by the Executive). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company, unless compelled pursuant to an order of a court or
other body having jurisdiction over such matter, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it.

                  (b) Nonsolicitation of Employees. The Executive agrees
that for two years after the Date of Termination, he will not attempt, directly
or indirectly, to induce any employee of the Company, or any subsidiary or any
affiliate thereof to be employed or perform services elsewhere or otherwise to
cease providing services to the Company, or any subsidiary or affiliate thereof.

                  (c) Company Property. Except as expressly provided herein,
promptly following the Executive's termination of employment, the Executive
shall return to the Company all property of the Company and all copies thereof
in the Executive's possession or under his control.

                  (d) Injunctive Relief and Other Remedies with Respect to
Covenants. The Executive acknowledges and agrees that the covenants and
obligations of the Executive with respect to confidentiality and Company
property relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations will cause the
Company irreparable injury for which adequate remedies are not available at law.
Therefore, the Executive agrees that the Company shall be entitled to an
injunction, restraining order or such other equitable relief (without the
requirement to post bond) restraining Executive from committing any violation of
the covenants and obligations contained in this Section 11 These remedies are
cumulative and are in addition to any other rights and remedies the Company may
have at law or in equity. In no event shall an asserted violation of the
provisions of this Section II constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.

                  12. Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company, shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.

                                       15
<PAGE>   16
                  (b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors. The Company shall require any
successor to all or substantially all of the business and/or assets of the
Company, whether direct or indirect, by purchase, merger, consolidation,
acquisition of stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place.

                  13. Miscellaneous. (a) Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the States of New York,
applied without reference to principles of conflict of laws.

                  (b) Arbitration. Except to the extent provided in Section 77
(c), any dispute or controversy arising under or in connection with this
Agreement shall be resolved by binding arbitration. The arbitration shall be
held in the city of White Plains, New York and, except to the extent
inconsistent with this Agreement, shall be conducted in accordance with the
Expedited Employment Arbitration Rules of the American Arbitration Association
then in effect at the time of the arbitration (or such other rules as :the
parties may agree to in writing), and otherwise in accordance with principles
which would be applied by a court of law or equity. The arbitrator shall be
acceptable to both the Company and the. Executive. If the parties cannot agree
on an acceptable arbitrator, the dispute shall be heard by a panel of three
arbitrators, one appointed by each of the parties and the third appointed by the
other two arbitrators.

                  (c) Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

                  (d) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the matters referred to
herein. No other agreement relating to the terms of the Executive's employment
by the Company, oral or otherwise, shall be binding between the parties unless
it is in writing and signed by the party against whom enforcement is sought.
There are no promises, representations, inducements or statements between the
parties other than those that are expressly contained herein. The Executive
acknowledges that he is entering into this Agreement of his own free will and
accord, and with no duress, that he has read this Agreement and that he
understands it and its legal consequences.

                  (e) Note. All notices and other communications hereunder shall
be in writing and shall be given by hand-delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

                                       16
<PAGE>   17
         If to the Executive:          at the home address of the Executive
                                       noted on the records of the Company

         If to the Company:            MBIA Inc.
                                       113 King Street
                                       Armonk, New York 10504
                                       Attn.: Secretary

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

                  (f) Tax withholding. The Company shall withhold from any
amounts payable under this Agreement such Federal, state or local taxes as shall
be required to be withheld pursuant to any applicable law or regulation.

                  (g) Severability; Reformation. In the event that one or more
of the provisions of this Agreement shall become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby. In the
event that any of the provisions of any of Section 77 (a) are not enforceable
in accordance with its terms, the Executive and the Company agree that such
Section shall be reformed to make such Section enforceable in a planner which
provides the Company the maximum rights permitted at law.

                  (h) Waiver. Waiver by any party hereto of any breach or
default by the other party of any of the terms of this Agreement shall not
operate as a waiver of any other breach or default, whether similar to or
different from the breach or default waived. No waiver of any provision of this
Agreement shall be implied from any course of dealing between the parties hereto
or from any failure by either party hereto to assert its or his rights hereunder
on any occasion or series of 'occasions.

                  (i) Survival. The provisions of Section 7(c)(iii) (and so much
Of Section 7(d) as provides a benefit identical to that payable under such
Section 7(c)(iii)) shall survive the termination of the Employment Period
hereunder and shall be binding upon and enforceable against the Company in
accordance with its terms. In the event that any dispute arises with respect to
the Executive's entitlement to such enhanced retirement benefits, the dispute
resolutions provisions contained in Section 13(b) and the legal fees provision
contained in Section 10 shall also survive the end of the Employment Period and
shall be applied as though the dispute arose within the Employment Period.

                                       17
<PAGE>   18
     (j)  Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.

     (k)  Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.

     IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Company
has caused this Agreement to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its Secretary, all as of
the day and year first above written.

                    MBIA INC.

                    -------------------------------------
                    By: Kevin D. Silva
                    Title: Vice President of MBIA Inc.

                    EXECUTIVE:

                    /s/ John A. Pizzarelli
                    ---------------------------------------

                                       18

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