EXHIBIT 10.17
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KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT is made and entered into as of the ___ day of
___________, by and between MGIC Investment Corporation, a Wisconsin corporation
(hereinafter referred to as the "Company"), and the person whose name appears on
the signature page hereof (hereinafter referred to as "Executive").
W I T N E S S E T H
WHEREAS, the Executive is employed by the Company and/or a subsidiary
of the Company (hereinafter referred to collectively as the "Employer") in a key
executive capacity and the Executive's services are valuable to the conduct of
the business of the Company;
WHEREAS, the Company desires to continue to attract and retain
dedicated and skilled management employees in a period of actual and potential
industry consolidation and changes in regulatory barriers regarding the
ownership of insurance companies, consistent with achieving a transaction in the
best interests of its shareholders in any change in control of the Company;
WHEREAS, the Company recognizes that circumstances may arise in which
a change in control of the Company occurs, through acquisition or otherwise,
thereby causing a potential conflict of interest between the Company's needs for
the Executive to remain focused on the Company's business and for the necessary
continuity in management prior to and following a change in control, and the
Executive's reasonable personal concerns regarding future employment with the
Employer and economic protection in the event of loss of employment as a
consequence of a change in control;
WHEREAS, the Company and the Executive are desirous that any proposal
for a change in control or acquisition of the Company will be considered by the
Executive objectively and with reference only to the best interests of the
Company and its shareholders;
WHEREAS, the Executive will be in a better position to consider the
Company's best interests if the Executive is afforded reasonable economic
security, as provided in this Agreement, against altered conditions of
employment which could result from any such change in control or acquisition;
WHEREAS, the Executive possesses intimate knowledge of the business
and affairs of the Company and has acquired certain confidential information and
data with respect to the Company; and
WHEREAS, the Company desires to insure, insofar as possible, that it
will continue to have the benefit of the Executive's services and to protect its
confidential information and goodwill.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
1. Definitions.
(a) Act. For purposes of this Agreement, the term "Act"
means the Securities Exchange Act of 1934, as amended.
(b) Affiliate and Associate. For purposes of this Agreement,
the terms "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule l2b-2 of the General Rules and
Regulations under the Act.
(c) Beneficial Owner. For purposes of this Agreement, a
Person shall be deemed to be the "Beneficial Owner" of any securities:
(i) which such Person or any of such Person's
Affiliates or Associates has the right to acquire (whether
such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, (A) securities
tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted
for purchase, or (B) securities issuable upon exercise of
Rights issued pursuant to the terms of the Company's Rights
Agreement, dated as of July 22, 1999, between the Company
and Firstar Bank Milwaukee, N.A., as amended from time to
time (or any successor to such Rights Agreement), at any
time before the issuance of such securities;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of or has "beneficial ownership" of
(as determined pursuant to Rule l3d-3 of the General Rules
and Regulations under the Act), including pursuant to any
agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, any security under this Subsection 1
(c) as a result of an agreement, arrangement or
understanding to vote such security if the agreement,
arrangement or understanding: (A) arises solely from a
revocable proxy or consent given to such Person in response
to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations
under the Act and (B) is not also then reportable on a
Schedule l3D under the Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except pursuant to a revocable
proxy as described in Subsection 1(c) (ii) above) or
disposing of any voting securities of the Company.
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(d) Cause. "Cause" for termination by the Employer of the
Executive's employment in connection with a Change in Control of the
Company shall, for purposes of this Agreement, be limited to (i) the
engaging by the Executive in intentional conduct not taken in good
faith which has caused demonstrable and serious financial injury to
the Employer, as evidenced by a determination in a binding and final
judgment, order or decree of a court or administrative agency of
competent jurisdiction, in effect after exhaustion or lapse of all
rights of appeal, in an action, suit or proceeding, whether civil,
criminal, administrative or investigative; (ii) conviction of a felony
(as evidenced by binding and final judgment, order or decree of a
court of competent jurisdiction, in effect after exhaustion of all
rights of appeal) which substantially impairs the Executive's ability
to perform his duties or responsibilities; and (iii) continuing
willful and unreasonable refusal by the Executive to perform the
Executive's duties or responsibilities (unless significantly changed
without the Executive's consent).
(e) Change in Control of the Company. A "Change in Control
of the Company" shall be deemed to have occurred if an event set forth
in any one of the following paragraphs shall have occurred:
(i) any Person (other than (A) the Company or any
of its subsidiaries, (B) a trustee or other fiduciary
holding securities under any employee benefit plan of the
Company or any of its subsidiaries, (C) an underwriter
temporarily holding securities pursuant to an offering of
such securities or (D) a corporation owned, directly or
indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of
stock in the Company ("Excluded Persons")) is or becomes the
Beneficial Owner, directly or indirectly, of securities of
the Company (not including in the securities beneficially
owned by such Person any securities acquired directly from
the Company or its Affiliates after July 22, 1999, pursuant
to express authorization by the Board of Directors of the
Company (the "Board") that refers to this exception)
representing 50% or more of either the then outstanding
shares of common stock of the Company or the combined voting
power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors; or
(ii) the following individuals cease for any
reason to constitute a majority of the number of directors
of the Company then serving: (A) individuals who, on July
22, 1999, constituted the Board and (B) any new director
(other than a director whose initial assumption of office is
in connection with an actual or threatened election contest,
including but not limited to a consent solicitation,
relating to the election of directors of the Company, as
such terms are used in Rule 14a-11 of Regulation 14A under
the Act) whose appointment or election by the Board or
nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on
July 22, 1999, or whose initial appointment, election or
nomination for election as a director which occurred after
July 22, 1999 was approved by such vote of the directors
then still in office at the time of such initial
appointment, election or nomination who were themselves
either
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directors on July 22, 1999 or initially appointed, elected
or nominated by such two-thirds (2/3) vote as described
above ad infinitum (collectively the "Continuing
Directors"); provided, however, that individuals who are
appointed to the Board pursuant to or in accordance with the
terms of an agreement relating to a merger, consolidation,
or share exchange involving the Company (or any direct or
indirect subsidiary of the Company) shall not be Continuing
Directors for purposes of this Agreement until after such
individuals are first nominated for election by a vote of at
least two-thirds (2/3) of the then Continuing Directors and
are thereafter elected as directors by the shareholders of
the Company at a meeting of shareholders held following
consummation of such merger, consolidation, or share
exchange; and, provided further, that in the event the
failure of any such persons appointed to the Board to be
Continuing Directors results in a Change in Control of the
Company, the subsequent qualification of such persons as
Continuing Directors shall not alter the fact that a Change
in Control of the Company occurred; or
(iii) a merger, consolidation or share exchange of
the Company with any other corporation is consummated or
voting securities of the Company are issued in connection
with a merger, consolidation or share exchange of the
Company (or any direct or indirect subsidiary of the
Company) pursuant to applicable stock exchange requirements,
other than (A) a merger, consolidation or share exchange
which would result in the voting securities of the Company
entitled to vote generally in the election of directors
outstanding immediately prior to such merger, consolidation
or share exchange continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) at
least 50% of the combined voting power of the voting
securities of the Company or such surviving entity or any
parent thereof entitled to vote generally in the election of
directors of such entity or parent outstanding immediately
after such merger, consolidation or share exchange, or (B) a
merger, consolidation or share exchange effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person (other than an Excluded
Person) is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in
the securities beneficially owned by such Person any
securities acquired directly from the Company or its
Affiliates after July 22, 1999, pursuant to express
authorization by the Board that refers to this exception)
representing at least 50% of the combined voting power of
the Company's then outstanding voting securities entitled to
vote generally in the election of directors; or
(iv) the sale or disposition by the Company of all
or substantially all of the Company's assets (in one
transaction or a series of related transactions within any
period of 24 consecutive months), other than a sale or
disposition by the Company of all or substantially all of
the
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Company's assets to an entity of which at least 75% of the
combined voting power of the voting securities entitled to
vote generally in the election of directors immediately
after such sale are owned by Persons in substantially the
same proportions as their ownership of the Company
immediately prior to such sale.
(f) Code. For purposes of this Agreement, the term "Code"
means the Internal Revenue Code of 1986, including any amendments
thereto or successor tax codes thereof.
(g) Covered Termination. Subject to Subsection 2(b) hereof,
for purposes of this Agreement, the term "Covered Termination" means
any termination of the Executive's employment during the Employment
Period where the Notice of Termination is delivered on, or the
Termination Date is, any date prior to the end of the Employment
Period.
(h) Employment Period. Subject to Subsection 2(b) hereof,
for purposes of this Agreement, the term "Employment Period" means a
period commencing on the date of a Change in Control of the Company,
and ending at 11:59 p.m. Central Time on the earlier of the third
anniversary of such date or the Executive's Normal Retirement Date.
(i) Good Reason. For purposes of this Agreement, the
Executive shall have "Good Reason" for termination of employment in
connection with a Change in Control of the Company in the event of:
(i) any breach of this Agreement by the Employer,
including specifically any breach by the Employer of the
agreements contained in Sections 4, 5, or 6 hereof, other
than an isolated, insubstantial and inadvertent failure not
occurring in bad faith that the Employer remedies promptly
after receipt of notice thereof given by the Executive;
(ii) the removal of the Executive from, or any
failure to reelect or reappoint the Executive to, any of the
offices held with MGIC on the date of the Change in Control
of the Company (or if the Executive then held no office with
MGIC, then with the Company), except in the event that such
removal or failure to reelect or reappoint relates to the
termination by the Employer of the Executive's employment
for Cause or by reason of disability pursuant to Section 12
hereof; it is understood that if a description of the
Executive's job function is part of the title of his office,
e.g., "Vice President--Capital Markets, --Claims,--Managing
Director,--Risk Management" or the like, such description
shall be disregarded in determining whether the Executive
has been removed from, or not reelected or appointed to, an
office under this clause (ii), but this clause shall not
affect the Executive's rights under clause (i) above by
virtue of Section 4 hereof with respect to any change in the
Executive's job function;
(iii) a material reduction in the aggregate level
of support services, staff, secretarial and other comparable
assistance directly available to the Executive during the
90-day period prior to the Change in Control of
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the Company if such reduction makes the performance of the
Executive's job functions materially more difficult than
during such 90-day period; or
(iv) failure by the Company to obtain the
Agreement referred to in Section 17(a) hereof as provided
therein.
(j) MGIC. For purposes of this Agreement, the term "MGIC"
means Mortgage Guaranty Insurance Corporation.
(k) Normal Retirement Date. For purposes of this Agreement,
the term "Normal Retirement Date" means the date on which the
Executive can retire from service with the Employer and commence
receiving retirement payments within 31 days thereafter, without any
reduction in such payments on account of early retirement, under the
primary qualified defined benefit pension plan applicable to the
Executive, or any successor plan, as in effect on the date of the
Change in Control of the Company.
(l) Person. For purposes of this Agreement, the term
"Person" shall mean any individual, firm, partnership, corporation or
other entity, including any successor (by merger or otherwise) of such
entity, or a group of any of the foregoing acting in concert.
(m) Termination Date. For purposes of this Agreement, except
as otherwise provided in Subsection 2(b), Subsection 10(b), and
Subsection 17(a) hereof, the term "Termination Date" means (i) if the
Executive's employment is terminated by the Executive's death, the
date of death; (ii) if the Executive's employment is terminated by
reason of voluntary early retirement, as agreed in writing by the
Employer and the Executive, the date of such early retirement which is
set forth in such written agreement; (iii) if the Executive's
employment is terminated for purposes of this Agreement by reason of
disability pursuant to Section 12 hereof, the earlier of thirty days
after the Notice of Termination is given or one day prior to the end
of the Employment Period; (iv) if the Executive's employment is
terminated by the Executive voluntarily (other than for Good Reason),
the date the Notice of Termination is given; (v) if the Executive's
employment is terminated by the Employer for Cause, the earlier of ten
days after the Notice of Termination is given or one day prior to the
end of the Employment Period; and (vi) if the Executive's employment
is terminated by the Employer (other than for Cause or by reason of
disability pursuant to Section 12 hereof) or by the Executive for Good
Reason, the earlier of thirty days after the Notice of Termination is
given or one day prior to the end of the Employment Period.
Notwithstanding the foregoing,
(1) If termination is for Cause pursuant to
Subsection 1(d)(iii) of this Agreement and if the Executive
has cured the conduct constituting such Cause as described
by the Employer in its Notice of Termination within such
ten-day or shorter period, then the Executive's employment
hereunder shall continue as if the Employer had not
delivered its Notice of Termination; provided, however, the
right of the Executive to cure such conduct shall apply only
to the first Notice of Termination indicating that the
termination is for Cause.
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(2) If the party receiving the Notice of
Termination notifies the other party that a dispute exists
concerning the termination within the appropriate period
following receipt thereof and it is finally determined that
the reason asserted in such Notice of Termination did not
exist, then (i) if such Notice was delivered by the
Executive, the Executive will be deemed to have voluntarily
terminated his employment and the Termination Date shall be
the earlier of the date fifteen days after the Notice of
Termination is given or one day prior to the end of the
Employment Period and (ii) if delivered by the Company, the
Company will be deemed to have terminated the Executive
other than by reason of death, disability or Cause.
2. Termination or Cancellation Prior to Change in Control.
(a) Subject to Subsection 2(b) hereof, the Employer and the
Executive shall each retain the right to terminate the employment of
the Executive at any time prior to a Change in Control of the Company.
Subject to Subsection 2(b) hereof, in the event the Executive's
employment is terminated prior to a Change in Control of the Company,
this Agreement shall be terminated and cancelled and of no further
force and effect, and any and all rights and obligations of the
parties hereunder shall cease.
(b) Anything in this Agreement to the contrary
notwithstanding, if a Change in Control of the Company occurs and if
the Executive's employment with the Employer is terminated (other than
a termination due to the Executive's death or as a result of the
Executive's disability) during the period of 90 days prior to the date
on which the Change in Control of the Company occurs, and if it is
reasonably demonstrated by the Executive that such termination of
employment (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control of the Company or
(ii) otherwise arose in connection with or in anticipation of a Change
in Control of the Company, then for all purposes of this Agreement
such termination of employment shall be deemed a "Covered
Termination," "Notice of Termination" shall be deemed to have been
given, and the "Employment Period" shall be deemed to have begun on
the date of such termination which shall be deemed to be the
"Termination Date" and the date of the Change of Control of the
Company for purposes of this Agreement.
3. Employment Period; Vesting of Certain Benefits. If a Change in
Control of the Company occurs when the Executive is employed by the Employer,
(a) the Employer will continue thereafter to employ the Executive during the
Employment Period, and the Executive will remain in the employ of the Employer
in accordance with and subject to the terms and provisions of this Agreement,
and (b) (i) the Company shall cause all restrictions on restricted stock awards
made to the Executive prior to the Change in Control to lapse such that the
Executive is fully and immediately vested in his or her restricted stock at the
time at which the Change in Control of the Company occurs, and (ii) the Company
shall cause all unexercised stock options granted to the Executive prior to the
Change in Control to be fully vested and exercisable in full at such time. Any
termination of the Executive's employment during the Employment Period, whether
by the Company or the Employer, shall be deemed a termination by the Company for
purposes of this Agreement.
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4. Duties. During the Employment Period, the Executive (a) shall,
devote the Executive's best efforts and all of the Executive's business time,
attention and skill to the business and affairs of the Employer and (b) shall be
entitled to materially the same job function as held by the Executive at the
time of the Change in Control of the Company or in such other job function or
functions as shall be mutually agreed upon in writing by the Executive and the
Employer from time to time. The services which are to be performed by the
Executive hereunder are to be rendered in the same metropolitan area in which
the Executive was employed at the date of such Change in Control of the Company,
or in such other place or places as shall be mutually agreed upon in writing by
the Executive and the Employer from time to time. Any travel incident to the
Executive's job function shall not be deemed to result in a breach of the
immediately preceding sentence by the Company.
5. Compensation. During the Employment Period, the Executive shall be
compensated as follows:
(a) The Executive shall receive, at reasonable intervals
(but not less often than monthly) and in accordance with such standard
policies as may be in effect immediately prior to the Change in
Control of the Company, an annual base salary in cash equivalent of
not less than the Executive's highest annual base salary in effect at
any time during the 90-day period immediately prior to the Change in
Control of the Company, or if prior to the Change in Control of the
Company, the Employer had approved an increase in such base salary to
take effect after the Change in Control of the Company, at such higher
rate beginning on the date on which such increase was to take effect
(which base salary shall, unless otherwise agreed in writing by the
Executive, include the current receipt by the Executive of any amounts
which, prior to the Change in Control of the Company, the Executive
had elected to defer, whether such compensation is deferred under
Section 401(k) of the Code or otherwise), subject to adjustment as
hereinafter provided in Section 6 (such salary amount as adjusted
upward from time to time is hereafter referred to as the "Annual Base
Salary").
(b) The Executive shall be reimbursed, at such intervals and
in accordance with such standard policies that were in effect at any
time during the 90-day period immediately prior to the Change in
Control of the Company, for any and all monies advanced in connection
with the Executive's employment for reasonable and necessary expenses
incurred by the Executive on behalf of the Employer, including travel
expenses.
(c) The Executive and/or the Executive's family, as the case
may be, shall be included, to the extent eligible thereunder (which
eligibility shall not be conditioned on the Executive's salary grade
or on any other requirement which excludes persons of comparable
status to the Executive unless such exclusion was in effect for such
plan or an equivalent plan at any time during the 90-day period
immediately prior to the Change in Control of the Company), in any and
all plans providing benefits for the Employer's salaried employees in
general, including but not limited to group life insurance,
hospitalization, medical, dental, profit sharing and stock bonus
plans.
(d) The Executive shall annually be entitled to not less
than the amount of paid vacation and not fewer than the highest number
of paid holidays to which the Executive was entitled annually at any
time during the 90-day period immediately prior to the Change in
Control of the Company.
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(e) The Executive shall be included in all plans providing
additional benefits to executives of the Employer of comparable status
and position to the Executive, including but not limited to deferred
compensation, split-dollar life insurance, supplemental retirement,
stock option, stock appreciation, stock bonus and similar or
comparable plans, and shall receive fringe benefits made available to
executives of the Employer of comparable status and position to the
Executive; provided, that, the Employer's obligation to include the
Executive in bonus or incentive compensation plans shall be determined
by Subsection 5(g) hereof.
(f) The aggregate annual value of the benefits made
available to the Executive pursuant to Subsections 5(c) and (e) shall
not be less than 75% of the highest aggregate annual value of the
benefits of the type referred to in such Subsections that were made
available to the Executive at any time during the 90-day period
immediately prior to the Change in Control of the Company, except that
if executives based in the United States of Affiliated Companies whose
status and position with such Companies are approximately comparable
to the Executive do not generally receive stock options, restricted
stock or other stock-based compensation, during any period in which
the Executive does not receive such benefits, (i) the highest
aggregate value of the benefits during such 90-day period shall be
computed without regard the value of stock options, restricted stock
or other stock-based compensation, and (ii) the percentage in the
preceding portion of this sentence shall be increased to 100% from
75%. The term "Affiliated Companies" means companies that become
Affiliates of the Employer as a result of the Change in Control of the
Company.
(g)(i) To assure that the Executive will have an opportunity
to earn annual incentive compensation after a Change in Control of the
Company, the Executive shall be included in a bonus plan of the
Employer which shall satisfy the standards described below (such plan,
the "Post-Change Bonus Plan"). Bonuses under the Post-Change Bonus
Plan shall be payable annually with respect to achieving such annual
financial or other goals reasonably related to the business of the
Employer (or, in the case of an Executive whose primary responsibility
is sales of the products of the Employer or an Affiliate, to the
extent so provided by the Employer or the Affiliate, reasonably
related to such sales) as the Employer shall establish (the "Goals"),
all of which Goals that are determinable under objective standards
shall be attainable on a annual basis with approximately the same
degree of probability as the comparable goals under the Employer's
bonus plan or plans as in effect at any time during the 90-day period
immediately prior to the Change in Control of the Company (whether one
or more, the "Pre-Change Company Bonus Plan") and in view of the
Employer's existing and projected financial and business circumstances
applicable at the time. The determination of whether any of the Goals
that are determinable under subjective standards has been achieved
shall be made by the Compensation Committee (as hereinafter defined).
In the event a majority of the members of the Compensation Committee
are not persons who were on the Compensation Committee or were
officers of MGIC during the 90-day period prior to the date of the
Change in Control of the Company or the highest ranking member of the
Compensation Committee is not a person who was on the Compensation
Committee during such 90-day period, none of the Goals shall be
subjective. The term "Compensation Committee" means the Board of
Directors of the Company, an appropriate committee thereof or a
committee comprised of members of management of the Employer, in each
case, in accordance with the Company's practice prior to the Change in
Control of the Company with respect to executives of comparable
position to the Executive.
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(ii) The maximum amount of the bonus (the "Bonus Amount")
that the Executive is eligible to earn under the Post-Change Bonus
Plan shall be no less than the product of the Executive's Annual Base
Salary multiplied by a percentage that is at least 75% of the
percentage that determined the Executive's maximum award provided in
the Pre-Change Company Bonus Plan (such maximum bonus amount herein
referred to as the "Targeted Bonus"), and in the event the Goals
(other than any objective Goal) are not achieved such that the entire
Targeted Bonus is not payable, the Bonus Plan shall provide for a
payment of a Bonus Amount equal to a portion of the Targeted Bonus
reasonably related to that portion of the Goals which were achieved.
The Bonus Amount earned shall be paid within 75 days after the end of
the related fiscal year; at the option of the Employer, up to
one-third of the Bonus Amount may be paid in restricted stock if the
class of stock of which such restricted stock is a part is
publicly-traded in an active market in the United States and such
stock becomes fully vested by continued employment for a period of not
more than one year after the date on which the Bonus Amount is paid.
6. Annual Compensation Adjustments. During the Employment Period, the
Compensation Committee (as defined in Subsection 5(g)(i) hereof) will consider
and appraise, annually, the contributions of the Executive to the Company, and
in accordance with the Company's practice prior to the Change in Control of the
Company, good faith consideration shall be given to the upward adjustment of the
Executive's Annual Base Salary, annually.
7. Termination For Cause or Without Good Reason. If there is a Covered
Termination for Cause or due to the Executive's voluntarily terminating his or
her employment other than for Good Reason (any such terminations to be subject
to the procedures set forth in Section 13 hereof), then the Executive shall be
entitled to receive only Accrued Benefits pursuant to Section 9(a) hereof.
8. Termination Giving Rise to a Termination Payment.
(a) If there is a Covered Termination by the Executive for
Good Reason, or by the Company other than by reason of (i) death, (ii)
disability pursuant to Section 12 hereof, or (iii) Cause (any such
terminations to be subject to the procedures set forth in Section 13
hereof), then the Executive shall be entitled to receive, and the
Company shall promptly pay, Accrued Benefits and, in lieu of further
Annual Base Salary for periods following the Termination Date, as
liquidated damages and additional severance pay and in consideration
of the covenant of the Executive set forth in Subsection 14(a) hereof,
the Termination Payment pursuant to Subsection 9(b) hereof.
(b) If there is a Covered Termination and the Executive is
entitled to Accrued Benefits and the Termination Payment, then the
Company shall provide to the Executive the following additional
benefits:
(i) The Executive shall receive, at the expense of
the Company, outplacement services, on an individualized
basis at a level of service commensurate with the
Executive's status with the Company immediately prior to the
date of the Change in Control of the Company (or, if higher,
immediately prior to the termination of the Executive's
employment), provided by a nationally recognized executive
placement firm
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selected by the Company; provided that the cost to the
Company of such services shall not exceed 10% of the
Executive's Annual Base Salary.
(ii) Until the earlier of the end of the
Employment Period or such time as the Executive has obtained
new employment and is covered by benefits which in the
aggregate are at least equal in value to the following
benefits, the Executive shall continue to be covered, at the
expense of the Company, by the same or equivalent life
insurance, hospitalization, medical and dental coverage as
was required hereunder with respect to the Executive
immediately prior to the date the Notice of Termination is
given.
(iii) The Company shall cause the Executive to be
fully and immediately vested in his or her accrued benefit
under any supplemental executive retirement plan of the
Employer providing benefits for the Executive (the "SERP")
and in any restricted stock paid as part of the Executive's
Bonus Amount as contemplated by Subsection 5(g)(ii).
(iv) If the Executive is not fully vested in all
accrued benefits under any defined contribution retirement
plan of the Employer, the Company shall make a lump sum
payment to the Executive in an amount equal to the
difference between the fully vested amount of the
Executive's account balances under such plan at the
Termination Date and the vested amount of such balances at
such time.
(v) The Company shall reimburse the Executive for
up to an aggregate of $10,000 in (A) tax preparation
assistance fees for the tax year in which the Termination
Payment is made and (B) fees and expenses of consultants
and/or legal or accounting advisors engaged by the Executive
to advise the Executive as to matters relating to the
computation of benefits due and payable under Subsection
9(b).
9. Payments.
(a) Accrued Benefits. For purposes of this Agreement, the
Executive's "Accrued Benefits" shall include the following amounts,
payable as described herein: (i) all Annual Base Salary for the time
period ending with the Termination Date; (ii) reimbursement for any
and all monies advanced in connection with the Executive's employment
for reasonable and necessary expenses incurred by the Executive on
behalf of the Employer for the time period ending with the Termination
Date; (iii) any and all other cash earned through the Termination Date
and deferred at the election of the Executive or pursuant to any
deferred compensation plan then in effect; (iv) a lump sum payment of
the bonus or incentive compensation otherwise payable to the Executive
with respect to the year in which termination occurs under all bonus
or incentive compensation plan or plans in which the Executive is a
participant; and (v) all other payments and benefits to which the
Executive (or in the event of the Executive's death, the Executive's
surviving spouse or other beneficiary) may be entitled as compensatory
fringe benefits or under any benefit plan of the Employer, excluding
severance payments under any Employer severance policy, practice or
agreement in effect immediately prior to the Change in Control of the
Company. Payment of
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Accrued Benefits shall be made promptly in accordance with the
Company's prevailing practice with respect to Subsections 9(a)(i) and
(ii) or, with respect to Subsections 9(a)(iii), (iv) and (v), pursuant
to the terms of the benefit plan or practice establishing such
benefits.
(b) Termination Payment and Other Payments.
(i) The Termination Payment shall be an amount
equal to (A) the Executive's Annual Base Salary (determined
as of the time of the Change in Control of the Company or,
if higher, immediately prior to the date the Notice of
Termination is given) plus (B) an amount equal to the
greater of the Executive's Targeted Bonus for the year in
which the Termination Date occurs or the bonus the Executive
received (x) for the year in which the Change in Control of
the Company occurred or (y) for the year prior to the year
in which the Change in Control of the Company occurred (each
year described in clauses (x) and (y) is herein referred to
as a "Prior Year") plus (C) an amount equal to the
"actuarial equivalent" (as defined in the Company's defined
benefit pension plan on the determination date) of the
Executive's benefit accruals under the pension plan and the
SERP for, whichever is greater, the year in which the
Termination Date occurs or a Prior Year plus an amount equal
to the Company's matching contribution and profit sharing
contribution under the Company's defined contribution profit
sharing and savings plan for, whichever is greater, the year
in which the Termination Date occurs or a Prior Year (the
aggregate amount set forth in (A), (B) and (C) hereof shall
hereafter be referred to as "Annual Cash Compensation"),
times (D) two less, if the Termination Date occurs more than
three months after the date of Change in Control of the
Company, the portion of the Employment Period that has
elapsed at the Termination Date (measured by the number of
months that have elapsed from the date of the Change in
Control of the Company to the Termination Date divided by
33); provided, however, that such amount shall not be less
than the severance benefits to which the Executive would
have been entitled under the Company's severance policies
and practices in effect immediately prior to the Change in
Control of the Company. The Termination Payment shall be
paid to the Executive in cash equivalent ten (10) business
days after the Termination Date. Such lump sum payment shall
not be reduced by any present value or similar factor, and
the Executive shall not be required to mitigate the amount
of the Termination Payment by securing other employment or
otherwise, nor will such Termination Payment be reduced by
reason of the Executive securing other employment or for any
other reason. The Termination Payment shall be in lieu of,
and acceptance by the Executive of the Termination Payment
shall constitute the Executive's release of any rights of
Executive to, any other severance payments under any Company
severance policy, practice or agreement.
(ii) Notwithstanding any other provision of this
Agreement, if any portion of any payment under this
Agreement, or under any other agreement with or plan of the
Employer, including payments that
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may be deemed to have occurred on account of accelerated
vesting of restricted stock or stock options under Section
3(b) hereof (in the aggregate "Total Payments"), would
constitute an "excess parachute payment," the Company shall
pay the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive
after deduction of any excise tax imposed under Section 4999
of the Code, any interest charges or penalties in respect of
the imposition of such excise tax (but not any federal,
state or local income tax, or employment tax) on the Total
Payments, and any federal, state and local income tax,
employment tax, and excise tax upon the payment provided for
by this Subsection 9(b)(ii), shall be equal to the Total
Payments. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay
federal income tax and employment taxes at the highest
marginal rate of federal income and employment taxation in
the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the
Executive's domicile for income tax purposes on the date the
Gross-Up Payment is made, net of the maximum reduction in
federal income taxes that may be obtained from the deduction
of such state and local taxes.
(iii) For purposes of this Agreement, the terms
"excess parachute payment" and "parachute payments" shall
have the meanings assigned to them in Section 280G of the
Code and such "parachute payments" shall be valued as
provided therein. Present value for purposes of this
Agreement shall be calculated in accordance with Section
1274(b)(2) of the Code (or any successor provision).
Promptly following a Covered Termination or notice by the
Company to the Executive of its belief that there is a
payment or benefit due the Executive which will result in an
excess parachute payment as defined in Section 280G of the
Code (or if the Company fails to give such notice and the
Executive furnishes notice to the Company setting forth
computations in reasonable detail supporting the Executive's
belief that there has been such an excess parachute payment,
promptly after such notice by the Executive unless the
Executive has withdrawn such notice after the Company's
response to such computations), the Executive and the
Company, at the Company's expense, shall obtain the opinion
(which need not be unqualified) of nationally recognized tax
counsel ("National Tax Counsel") selected by the Company's
independent auditors and reasonably acceptable to the
Executive (which may be regular outside counsel to the
Company), which opinion sets forth (i) the amount of the
Base Period Income, (ii) the amount and present value of
Total Payments, (iii) the amount and present value of any
excess parachute payments, and (iv) the amount of any
Gross-Up Payment. As used in this Agreement, the term "Base
Period Income" means an amount equal to the Executive's
"annualized includible compensation for the base period" as
defined in Section 280G(d)(1) of the Code. For purposes of
such opinion, the value of any noncash benefits or any
deferred payment or benefit shall be determined by the
Company's independent auditors in accordance with the
principles of
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Section 280G(d)(3) and (4) of the Code (or any successor
provisions), which determination shall be evidenced in a
certificate of such auditors addressed to the Company and
the Executive. The opinion of National Tax Counsel shall be
addressed to the Company and the Executive and, subject to
any adjustment pursuant to Subsection 9(b)(iv), shall be
binding upon the Company and the Executive. If such National
Tax Counsel so requests in connection with the opinion
required by this Subsection 9(b) of Section 9, the Executive
and the Company shall obtain, at the Company's expense, and
the National Tax Counsel may rely on, the advice of a firm
of recognized executive compensation consultants as to the
reasonableness of any item of compensation to be received by
the Executive solely with respect to its status under
Section 280G of the Code and the regulations thereunder.
Within five (5) days after the National Tax Counsel's
opinion is received by the Company and the Executive, the
Company shall pay (or cause to be paid) or distribute (or
cause to be distributed) to or for the benefit of the
Executive such amounts as are then due to the Executive
under this Agreement.
(iv) In the event that upon any audit by the
Internal Revenue Service, or by a state or local taxing
authority, of the Total Payments or Gross-Up Payment, a
change is finally determined to be required in the amount of
taxes paid by the Executive, appropriate adjustments shall
be made under this Agreement such that the net amount which
is payable to the Executive after taking into account the
provisions of Section 4999 of the Code shall reflect the
intent of the parties as expressed in this Section 9, in the
manner determined by the National Tax Counsel.
(v) The Company agrees to bear all costs
associated with, and to indemnify and hold harmless, the
National Tax Counsel of and from any and all claims,
damages, and expenses resulting from or relating to its
determinations pursuant to this Subsection 9(b), except for
claims, damages or expenses resulting from the gross
negligence or willful misconduct of such firm.
10. Death.
(a) Except as provided in Subsection 10(b) hereof, in the
event of a Covered Termination due to the Executive's death, the
Executive's estate, heirs and beneficiaries shall receive all the
Executive's Accrued Benefits through the Termination Date.
(b) In the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive for
Good Reason, the Executive's estate, heirs and beneficiaries shall be
entitled to the benefits described in Subsection 10(a) hereof and,
subject to the provisions of this Agreement, to such Termination
Payment as the Executive would have been entitled to had the Executive
lived. For purposes of this Subsection 10(b), the Termination Date
shall be the earlier of thirty days following the giving of the Notice
of Termination, or one day prior to the end of the Employment Period.
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11. Retirement. If, during the Employment Period, the Executive and
the Employer shall execute an agreement providing for the early retirement of
the Executive from the Employer, or the Executive shall otherwise give notice
that he is voluntarily choosing to retire early from the Employer, the Executive
shall receive Accrued Benefits through the Termination Date; provided, that if
the Executive's employment is terminated by the Executive for Good Reason or by
the Company other than by reason of death, disability or Cause and the Executive
also, in connection with such termination, elects voluntary early retirement,
the Executive shall also be entitled to receive a Termination Payment pursuant
to Subsection 8(a) hereof.
12. Termination for Disability. If, during the Employment Period, as a
result of the Executive's disability due to physical or mental illness or injury
(regardless of whether such illness or injury is job-related), the Executive
shall have been absent from the Executive's duties hereunder on a full-time
basis for a period of six consecutive months and, within thirty days after the
Company notifies the Executive in writing that it intends to terminate the
Executive's employment (which notice shall not constitute the Notice of
Termination contemplated below), the Executive shall not have returned to the
performance of the Executive's duties hereunder on a full-time basis, the
Company may terminate the Executive's employment for purposes of this Agreement
pursuant to a Notice of Termination given in accordance with Section 13 hereof.
If the Executive's employment is terminated on account of the Executive's
disability in accordance with this Section, the Executive shall receive Accrued
Benefits in accordance with Subsection 9(a) hereof and shall remain eligible for
all benefits provided by any long term disability programs of the Company in
effect at the time of such termination.
13. Termination Notice and Procedure. Any Covered Termination by the
Company or the Executive (other than a termination of the Executive's employment
that is a Covered Termination by virtue of Subsection 2(b) hereof) shall be
communicated by a written notice of termination ("Notice of Termination") to the
Executive, if such Notice is given by the Company, and to the Company, if such
Notice is given by the Executive, all in accordance with the following
procedures and those set forth in Section 23 hereof:
(a) If such termination is for disability, Cause or Good
Reason, the Notice of Termination shall indicate in reasonable detail
the facts and circumstances alleged to provide a basis for such
termination.
(b) If the Notice is given by the Executive for Good Reason,
the Executive may cease performing his duties hereunder on or after
the date fifteen days after the delivery of Notice of Termination and
shall in any event cease employment on the Termination Date. If the
Notice is given by the Company, then the Executive may cease
performing his duties hereunder on the date of receipt of the Notice
of Termination, subject to the Executive's rights hereunder.
(c) To the extent provided by Subsection 1(m)(1), the
Executive shall have ten days, or such longer period as the Company
may determine to be appropriate, to cure any conduct or act, if
curable, alleged to provide grounds for termination of the Executive's
employment for Cause under this Agreement pursuant to Subsection 1(d)
(iii) hereof.
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(d) The recipient of any Notice of Termination shall
personally deliver or mail in accordance with Section 23 hereof
written notice of any dispute relating to such Notice of Termination
to the party giving such Notice within fifteen days after receipt
thereof; provided, however, that if the Executive's conduct or act
alleged to provide grounds for termination by the Company for Cause is
curable, then such period shall be thirty days. After the expiration
of such period, the contents of the Notice of Termination shall become
final and not subject to dispute.
14. Further Obligations of the Executive.
(a) Competition. The Executive agrees that, in the event of
any Covered Termination where the Executive is entitled to Accrued
Benefits and the Termination Payment, the Executive shall not, for a
period expiring twelve months after the Termination Date, without the
prior written approval of the Company's Board of Directors,
participate in the management of, be employed by or own any business
enterprise at a location within the United States that engages in
substantial competition with MGIC, where such enterprise's revenues
from any such competitive activities amount to 10% or more of such
enterprise's net revenues and sales for its most recently completed
fiscal year; provided, however, that nothing in this Subsection 14(a)
shall prohibit the Executive from owning stock or other securities of
a competitor amounting to less than five percent of the outstanding
capital stock of such competitor.
(b) Confidentiality. During and following the Executive's
employment by the Company, the Executive shall hold in confidence and
not directly or indirectly disclose or use or copy or make lists of
any confidential information or proprietary data of the Company
(including that of the Employer), except to the extent authorized in
writing by the Board of Directors of the Company or required by any
court or administrative agency, other than to an employee of the
Company or a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of
duties as an executive of the Company. Confidential information shall
not include any information known generally to the public or any
information of a type not otherwise considered confidential by persons
engaged in the same business or a business similar to that of the
Company. All records, files, documents and materials, or copies
thereof, relating to the business of the Company which the Executive
shall prepare, or use, or come into contact with, shall be and remain
the sole property of the Company and shall be promptly returned to the
Company upon termination of employment with the Company.
15. Expenses and Interest. If, after a Change in Control of the
Company, (i) a dispute arises with respect to the enforcement of the Executive's
rights under this Agreement, (ii) any arbitration proceeding shall be brought to
enforce or interpret any provision contained herein or to recover damages for
breach hereof, or (iii) any legal proceeding shall be brought with respect to
the arbitration provisions hereof, in each case so long as, and to the extent
that, the Executive prevails in such proceeding, the Executive shall recover
from the Company the reasonable attorneys' fees and necessary costs and
disbursements incurred as a result of the dispute, arbitration or legal
proceeding as to which the Executive has prevailed ("Expenses"), and prejudgment
interest on any arbitration award obtained by the Executive calculated at the
rate of interest announced by Firstar Bank Milwaukee, N.A., Milwaukee, Wisconsin
(or its successor), from time to time at its prime or base lending rate from the
date that payments to him or her should have been made under this Agreement. Any
dispute as to the reasonableness of the Expenses incurred, or the extent to
which the Executive has prevailed, shall be resolved by the arbitrator.
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16. Payment Obligations Absolute. The Company's obligation during and
after the Employment Period to pay the Executive the amounts and to make the
benefit and other arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against him or anyone else. Except as provided in Section
15 of this Agreement, all amounts payable by the Company hereunder shall be paid
without notice or demand. Each and every payment made hereunder by the Company
shall be final, and the Company will not seek to recover all or any part of such
payment from the Executive, or from whomsoever may be entitled thereto, for any
reason whatsoever.
17. Successors.
(a) If the Company sells, assigns or transfers all or
substantially all of its business and assets to any Person or if the
Company merges into or consolidates or otherwise combines (where the
Company does not survive such combination) with any Person (any such
event, a "Sale of Business"), then the Company shall assign all of its
right, title and interest in this Agreement as of the date of such
event to such Person, and the Company shall cause such Person, by
written agreement (an "Assumption Agreement"), to expressly assume and
agree to perform from and after the date of such assignment all of the
terms, conditions and provisions imposed by this Agreement upon the
Company, and the Assumption Agreement shall be in form and substance
reasonably satisfactory to the Executive (but if at the time of a Sale
of Business, the chief executive officer of the Company or any officer
of Company who is among the next four highest ranking officers of the
Company has a Key Executive Employment and Severance Agreement, and
any of such officers approves the Assumption Agreement, the Executive,
if not one of such five officers, shall be deemed to have approved the
Assumption Agreement). Failure of the Company to obtain an Assumption
Agreement prior to the effective date of such Sale of Business shall
be a breach of this Agreement constituting "Good Reason" hereunder,
except that for purposes of implementing the foregoing the date upon
which such Sale of Business becomes effective shall be deemed the
Termination Date. In case of such assignment by the Company and of
assumption and agreement by such Person, as used in this Agreement,
"Company" shall thereafter mean such Person which executes and
delivers the Assumption Agreement or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law,
and this Agreement shall inure to the benefit of, and be enforceable
by, such Person. The Executive shall, in his or her discretion, be
entitled to proceed against any or all of such Persons, any Person
which theretofore was such a successor to the Company and the Company
(as so defined) in any action to enforce any rights of the Executive
hereunder. Except as provided in this Subsection 17(a), this Agreement
shall not be assignable by the Company. This Agreement shall not be
terminated by the voluntary or involuntary dissolution of the Company.
(b) This Agreement and all rights of the Executive shall
inure to the benefit of and be enforceable by the Executive's personal
or legal representatives, executors, administrators, heirs and
beneficiaries. All amounts payable to the Executive under Sections 7,
8, 9, 10, 11, 12 and 15 hereof if the Executive had lived shall be
paid, in the event of the Executive's death, to the Executive's
estate, heirs and representatives; provided, however, that the
foregoing shall not be construed to modify any terms of any benefit
plan of the Employer, as such terms are in effect on the date of the
Change in Control of the Company, that expressly govern benefits under
such plan in the event of the Executive's death.
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18. Severability. The provisions of this Agreement shall be regarded
as divisible, and if any of said provisions or any part hereof are declared
invalid or unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts hereof and the
applicability thereof shall not be affected thereby.
19. Contents of Agreement; Waiver of Rights; Amendment. This Agreement
sets forth the entire understanding between the parties hereto with respect to
the subject matter hereof, and the Executive hereby waives all rights under any
prior or other agreement or understanding between the parties with respect to
such subject matter. Any implication to the contrary in the preceding sentence
notwithstanding, this Agreement shall not affect the Executive's obligations
under non-competition or confidentiality agreement with the Company, the
Employer or MGIC. This Agreement may not be amended or modified at any time
except by written instrument executed by the Company and the Executive.
20. Withholding. The Company shall be entitled to withhold from
amounts to be paid to the Executive hereunder any federal, state or local
withholding or other taxes or charges which it is from time to time required to
withhold; provided, that the amount so withheld shall not exceed the minimum
amount required to be withheld by law. The Company shall be entitled to rely on
an opinion of the National Tax Counsel if any question as to the amount or
requirement of any such withholding shall arise.
21. Certain Rules of Construction. No party shall be considered as
being responsible for the drafting of this Agreement for the purpose of applying
any rule construing ambiguities against the drafter or otherwise. No draft of
this Agreement shall be taken into account in construing this Agreement. Any
provision of this Agreement which requires an agreement in writing shall be
deemed to require that the writing in question be signed by the Executive and an
authorized representative of the Company.
22. Governing Law; Resolution of Disputes. This Agreement and the
rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Wisconsin applicable to contracts made
therein between residents thereof. Any dispute arising out of this Agreement
shall be determined by arbitration under the rules of the American Arbitration
Association then in effect. The venue for the arbitration (and any legal action
to enforce the foregoing obligation to arbitrate) shall be Milwaukee, Wisconsin
or, if the Executive is not then residing or working in the Milwaukee, Wisconsin
metropolitan area, in the judicial district encompassing the city in which the
Executive resides; provided, that, if the Executive is not then residing in the
United States, the election of the Executive with respect to such venue shall be
either Milwaukee, Wisconsin or in the judicial district encompassing that city
in the United States among the thirty cities having the largest population (as
determined by the most recent United States Census data available at the
Termination Date) which is closest to the Executive's residence. For purposes of
any legal action to enforce the foregoing obligation to arbitrate, the parties
consent to personal jurisdiction in each trial court in the selected venue
having subject matter jurisdiction notwithstanding their residence or situs, and
each party irrevocably consents to service of process in the manner provided
hereunder for the giving of notices.
23. Notice. Notices given pursuant to this Agreement shall be in
writing and, except as otherwise provided by Subsection 13(d) hereof, shall be
deemed given when actually
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received by the Executive or actually received by the Company's Secretary or any
officer of the Company other than the Executive. If mailed, such notices shall
be mailed by United States registered or certified mail, return receipt
requested, addressee only, postage prepaid, if to the Company, to MGIC
Investment Corporation, Attention: Secretary (or President, if the Executive is
then Secretary), 250 East Kilbourn Avenue, Milwaukee, Wisconsin 53202, or if to
the Executive, at the address set forth below the Executive's signature to this
Agreement, or to such other address as the party to be notified shall have
theretofore given to the other party in writing.
24. No Waiver. No waiver by either party at any time of any breach by
the other party of, or compliance with, any condition or provision of this
Agreement to be performed by the other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
25. Headings. The headings herein contained are for reference only and
shall not affect the meaning or interpretation of any provision of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
MGIC INVESTMENT CORPORATION
By: ___________________________________
Name: Curt S. Culver
Title: President
Attest: _______________________________
Name: Jeffrey H. Lane
Title: Secretary
EXECUTIVE:
_________________________________(SEAL)
Address: ______________________________
______________________________
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