EXHIBIT 10.13
2/20/02
NON-COMPETITION, CONFIDENTIALITY AND SEVERANCE AGREEMENT
As a condition to and in partial consideration of the grant of a Stock
Option pursuant to the MGIC Investment Corporation (the "Company") 1991 Stock
Incentive Plan, as amended, by the Company to Xxxx X. Xxxx (hereinafter
"Employee"); and
In recognition of the circumstances that,
the Employee was recently a senior officer of Xxxxxxx Mac, which views
itself as, and in substance is, a competitor of the Company's principal
subsidiary, Mortgage Guaranty Insurance Corporation ("MGIC"); and that
the Employee is being hired as an employee of MGIC and as a senior
officer of the Company and its subsidiaries (individually, a "Subsidiary" and
collectively, the "Subsidiaries"), and in that capacity will be made aware of
various confidential information regarding the Company and the Subsidiaries and
will have, or is anticipated to have in due course, management responsibility
for a broad range of functions of the Company and the Subsidiaries, and will
have wide interaction with the senior executives of the Company and the
Subsidiaries; and
In further consideration for the Company's agreement to cause severance
benefits to be paid to the Employee as provided below,
the Employee and the Company agree as follows:
1. (a) Employee shall not render "services" to any "competitor" during
the term of his employment with MGIC and for a period of one year after the
termination of his employment with MGIC.
(b) The term "competitor" means any company (regardless of the form of
its organization), including a proprietorship,
(i) engaged in the business of guaranteeing or insuring mortgages in any
geographic area in which the Company, MGIC or another Subsidiary is engaged in
guaranteeing or insuring mortgages, or
(ii) engaged in any other business in which the Company or a Subsidiary
is engaged, in any geographic area in which the Company or a Subsidiary is so
engaged, but only if such business accounted for at least 10% of the revenues of
the Company and its Subsidiaries, on a consolidated basis, during the four
fiscal
quarters preceding the fiscal quarter in which the Employee's employment
terminated.
It is understood that, without creating any implication that in the
absence of this sentence Xxxxxx Xxx or Xxxxxxx Mac would not be a "competitor"
as defined above, Xxxxxx Mae and Xxxxxxx Mac are "competitors." It is also
understood that because the business of MGIC is conducted throughout the United
States and in Puerto Rico, the geographic scope of the restriction under clause
(i) above shall be the United States and Puerto Rico, and if the business of
MGIC or a Subsidiary expands beyond the those areas, the scope of such
restriction shall expand so that it is coincident with the scope of such
expansion.
(c) The term "services" means services incident to having oversight or
management responsibilities for any or all of corporate or business development,
corporate or business strategy, risk management, underwriting, capital markets
activities and e-commerce, regardless of whether such services are performed as
an employee of a competitor, as an independent contractor for a competitor, an
employee of an independent contractor for a competitor or otherwise.
2. (a) During the term of his employment with MGIC and for a period of
three years after the termination of such employment, the Employee shall not
make any "unauthorized disclosure" nor shall the Employee make any "unauthorized
use." Notwithstanding the foregoing, the Employee's obligations hereunder not to
make any unauthorized disclosure and not to make any unauthorized use shall
continue beyond such three-year period for an additional seven years (for a
total of ten years) with respect to any information that is a "trade secret" as
defined in Section 134.90 of the Wisconsin Statutes, or any successor thereto.
(b) The term "unauthorized disclosure" means disclosure by the Employee
to any person of any "confidential information." The term "confidential
information" means information relating to the business or operations of the
Company or a Subsidiary obtained by the Employee (it is understood that for
purposes of this Agreement information obtained by the Employee includes
information that is prepared by the Employee) while employed by MGIC or that was
communicated to him in connection with discussions with MGIC in connection with
his retention as an employee, including, but not limited to, information with
respect to business strategies, methods to execute such strategies, product
offerings, product research, product development, assumptions underlying the
pricing of products or products in development, and customer relationships.
Confidential information does not include information generally known in the
mortgage insurance, mortgage guaranty, mortgage banking or mortgage
securitization industries, other than as a result of disclosure by Employee in
violation of this Agreement. Confidential information shall
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cease to be such upon its being disclosed to the public, other than as a result
of disclosure by Employee in violation of this Agreement.
(c) The term "unauthorized use" means use of confidential information for
any purpose other than a purpose that the Employee reasonably believes is in the
best interests of the Company and the Subsidiaries.
(d) The Employee agrees that all memoranda, notes, financial models,
analytics, data and other documents and information and all copies thereof
relating to the business or operations of the Company or any Subsidiary obtained
by Employee while employed by MGIC (such memoranda, notes and other items
referred to above are collectively herein called the "Items") are the exclusive
property of the Company and the Subsidiaries. The Employee shall not copy or
duplicate any of the Items, and shall not remove them from the facilities of the
Company or any Subsidiary. The Employee agrees that he will deliver the original
and all copies of all of the Items that may be in his possession or control to
MGIC on termination of his employment with MGIC, or at any other time on MGIC's
request.
(e) It is understood that the restrictions on disclosure in Paragraph
2(b) shall not be violated due to disclosure to an employee of MGIC or to a
person to whom disclosure is reasonably necessary or appropriate in connection
with the performance of Employee's duties as an employee or officer of MGIC or
of the Company and its Subsidiaries. It is understood that the restrictions on
copying, duplicating and removal in Paragraph 2(d) shall not be violated due to
copying, duplication or removal that is reasonably necessary or appropriate in
connection with the performance of Employee's duties as an employee or officer
of MGIC or of the Company and its Subsidiaries.
(f) If the Employee is requested under legal process to make any
disclosure that is prohibited by this Agreement, the Employee will provide the
Company with prompt notice of such request so that it may seek an appropriate
protective order or other appropriate remedy. Subject to the foregoing, and
notwithstanding the preceding provisions of Paragraph 2, the Employee may
disclose that portion (and only that portion) of the confidential information
that the Employee reasonably believes he is legally compelled by such process to
disclose and shall advise the Company of the portion of the confidential
information that was so disclosed.
3. (a) If Employee's employment with MGIC and all Subsidiaries terminates
prior to February 25, 2004, other than due to an "uncovered termination," and
the termination does not entitle the Executive to a "Termination Payment" under
the Key Executive Employment and Severance Agreement of even date herewith
between the Executive and the Company, subject to the cessation and repayment of
severance
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benefits as provided in Paragraph 3(d), the Company will cause MGIC to provide
the Employee with "severance benefits."
(b) The term "uncovered termination" means a termination of employment
due to
(i) Employee's death;
(ii) Employee's inability to perform his job responsibilities on a
substantially full-time basis for a period of at least 60 consecutive days or
for 90 days during any period of 180 days due to physical or mental illness or
injury;
(iii) the Employee's conviction of, or his plea of guilty or no contest
to, a felony; willful misconduct by the Employee in performing his duties for
MGIC or the Employee's unreasonable refusal to perform such duties; or the
Employee's breach of this Agreement; or
(iv) voluntary resignation by the Employee, other than voluntary
resignation as a result of a meaningful reduction in Employee's job status,
responsibilities or compensation, compared to such status, responsibilities and
compensation at the inception of Employee's employment with MGIC.
(c) The term "severance benefits" means
(i) severance pay of $300,000 in the aggregate, paid in 26 equal,
consecutive bi-weekly installments of $11,538.48 each, with the first
installment to be paid on MGIC's first regularly scheduled pay day after the
bi-weekly pay period in which Employee's termination of employment occurred (the
period during which such payments are made is herein referred to as the
"severance period"); and
(ii) Employee's continued participation during the severance period in
the medical, dental, vision (if enrollment in the medical and dental coverages
had been waived by Employee), life and accidental death and disability, spousal
life and accidental death and disability, child life, and long-term disability
coverages in which Employee had enrolled prior to his termination of employment,
with the right to change such coverages at the next enrollment period after his
termination of employment in accordance with the terms available to employees of
MGIC in general if the coverages that would be changed would be effective during
the severance period.
MGIC shall be entitled to deduct from all payments under Paragraphs 3(c)(i), all
legally required payroll deductions on account of severance benefits, including
but not limited to federal and state income tax and FICA withholding, and will
further deduct all payroll deductions for the coverages in which the Employee is
enrolled as contemplated by Paragraph 3(c)(ii).
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(d) No severance benefits will be provided to Employee or if due to the
timing of Employee's termination of employment, the Employee has already been
provided with severance benefits, no further severance benefits will be provided
to Employee,
(i) unless Employee (or his executor, in the circumstances contemplated
below) signs and delivers to the Company the Release and Covenant Not to Xxx
attached as Exhibit A (the "Release") within 22 days after the day on which
Employee's employment terminated; or
(ii) if Employee revokes the Release as provided in Paragraph 5 of the
Release.
In addition, if Employee does not sign and deliver the Release within such
22-day period (or such longer period in the circumstances in which a longer
period is provided as set forth below) or revokes the Release as contemplated
above, Employee (or his estate in the circumstances set forth below) shall
immediately pay MGIC the sum of the aggregate amount of all payments made to
Employee under Paragraph 3(c)(i) and the aggregate amount of MGIC's cost in
providing the benefits provided under Paragraph 3(c)(ii). If during such 22-day
period and prior to the time at which the Employee signs and delivers the
Release to the Company, the Employee dies or becomes disabled due to physical
illness or injury such that the Employee is not physically capable of signing
the Release, the 22-day period shall be extended to, in the case of the
Employee's death, 30 days after an executor is validly appointed for the
Employee's estate, and in the case of such disability, 30 days after the
Employee is physically capable of signing the Release. Notwithstanding such
extension, no further payments will be made under Paragraph 3(d)(i) after the
end of the 22-day period until the signed Release is delivered to the Company in
accordance with the preceding sentence, at which time all payments that would
have been made had the Release been signed within the 22-day period will be made
in a lump sum. As used in this Paragraph 3(d), the term "signed" means signed,
dated and notarized in accordance with the notarization block on the signature
page of the Release.
(e) The severance benefits are in lieu of any other compensation or
benefit on account of Employee's termination of employment, all of which
compensation and benefits are hereby waived by the Employee. This waiver does
not apply, however, to benefits under life or other insurance policies.
4. The Employee represents that he is not subject to any restriction that
on its face would prevent him from performing his duties incident to being an
employee of MGIC or from being an officer of MGIC, the Company or the
Subsidiaries.
5. The provisions of this Non-Competition, Confidentiality and Severance
Agreement shall bind the Employee and inure to the benefit of the Company and
each Subsidiary, notwithstanding any termination of the Stock Option Agreement
associated with this Non-Competition, Confidentiality and Severance Agreement,
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or any termination of the related stock option, or any issuance of shares to the
Employee upon exercise of the stock option.
The Employee acknowledges that the Company and each Subsidiary are third
party beneficiaries of this Agreement and each one is entitled to enforce the
provisions of this Agreement by an action for injunction, damages or both, and
for such other relief as may be proper. If in a final judgment by a court of
competent jurisdiction, the Employee is found to have violated the restrictions
of Paragraphs 1 or 2 of this Agreement, damages shall be comprised of the sum of
the aggregate amount of all payments made to Employee under Paragraph 3(c)(i) of
this Agrement and the aggregate amount of MGIC's cost in providing the benefits
provided under Paragraph 3(c)(ii) of this Agreement plus such other damages to
which the Company and the Subsidiaries are entitled.
The Employee was given a copy of a predecessor version of this Agreement
for his review on or about February 12, 2002 and that he was advised through the
medium of this sentence in such copy that he could discuss the restrictions in
this Agreement with the Company's General Counsel and ask questions about such
restrictions. In response to a request for a severance arrangement, the
severance provisions of Paragraph 3 were added to this Agreement and the
Employee was e-mailed this Agreement, including Exhibit A, on or about February
20, 2002. The Agreement e-mailed to the Employee was redlined to show the
changes made to the predecessor version, other than the addition of Paragraph 3
and Exhibit A, which did not appear in the predecessor version.
The Employee acknowledges that nothing herein creates an obligation,
whether or not legally enforceable, regarding the Employee's future prospects or
position with the Company or any Subsidiary, including any obligation to
continue the employment of Employee.
The validity and construction of this Agreement shall be governed by the
internal laws of the State of Wisconsin (excluding the conflict of laws
provisions of such laws).
Dated: As of this 25th day of February, 2002.
MGIC Investment Corporation
/s/ Xxxx X. Xxxx By /s/ Xxxx X. Xxxxxx
---------------------------- ------------------------
Xxxx X. Xxxx Xxxx X. Xxxxxx
Chief Executive Officer
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Exhibit A
Release and Covenant Not to Xxx
This is the Release and Covenant Not to Xxx contemplated by Paragraph
3(d) of the Non-Competition, Confidentiality and Severance Agreement, dated as
of February 25, 2002 (such Agreement is herein referred to as the
"Non-Competition, Confidentiality and Severance Agreement" and the provisions of
Paragraph 3 of the Non-Competition, Confidentiality and Severance Agreement are
herein referred to as the "Severance Provisions"), between MGIC Investment
Corporation (the "Company") and Xxxx X. Xxxx ("Former Employee").
1. (a) Former Employee hereby fully releases and forever discharges the
Company and its Subsidiaries, and its and their present and former directors,
officers, employees, attorneys, agents representatives, predecessors,
successors, and assigns from any and all claims, demands, liens, agreements,
contracts, covenants, actions, suits, causes of action, obligations,
controversies, debts, costs, expenses, damages, judgments, orders and
liabilities, of whatever kind or nature, in law, equity or otherwise, including
attorneys' fees, whether now known or unknown, vested or contingent, suspected
or unsuspected, and whether concealed or hidden, which have existed, may have
existed or which do exist relating to the employment of Former Employee by the
Company or its Subsidiaries, or the resignation or termination of Former
Employee's employment with the Company or its Subsidiaries, with the exception
of any claimed breach(es) of the Severance Provisions or any other agreements in
writing between the Company and Former Employee if such agreements have been
signed on behalf of the Company by its President, any Executive Vice President
or any Senior Vice President (such other agreements are herein referred to as
"Other Agreements").
(b) Without in any way limiting the generality of the foregoing language,
this release shall include any and all claims, demands or causes of action
arising out of or in any way connected with any occurrences, acts, omissions,
transactions, practices or policies which were, or could have been, asserted in
connection with a civil action brought under federal common law, state common
law, including but not limited to a tort or wrongful discharge claim, breach of
contract claim, and/or under any other federal, state or local statute, law,
ordinance, regulation, rule or order, including, but not limited to, any claims
under the Age Discrimination in Employment Act, 29 U.S.C.ss.621 et seq., as
amended; Title VII of the Civil Rights Act of 1964, 42 U.S.C.ss.2000e et seq.,
as amended; the Americans with Disabilities Act of 1990, 42 U.S.C.ss.12101 et
seq., as amended; the Wisconsin Fair Employment Law, Wis. Stat.ss.111.31 et
seq., as amended; any similar laws of the United States, the State of Wisconsin,
or any other state or municipality; or pursuant to any claims whatsoever arising
out of, or related to the employment of him by the Company or a Subsidiary, the
termination of his employment with the Company or
a Subsidiary, and/or related to any allegations by Former Employee of
discrimination or wrong-doing by the Company or any Subsidiary.
2. Except for actions relating to the breach of the Severance Provisions
or any Other Agreements, Former Employee further covenants and agrees never to
institute, directly or indirectly, or in any manner to aid another person in,
any action or proceeding of any kind against the Company, any Subsidiary, or any
of their respective current or former officers, directors or employees regarding
his employment by the Company or any Subsidiary or any matter related to the
termination of his employment by the Company or any Subsidiary or regarding any
of the restrictions imposed by Paragraphs 1 or 2 of the Non-Competition,
Confidentiality and Severance Agreement .
3. It is the intention of Former Employee in executing this Agreement
that it shall be effective as a bar to each and every claim, demand and cause of
action described above. Former Employee expressly consents that the release and
covenant not to xxx contained herein shall be given full force and effect
according to each and all of their respective terms and conditions. Former
Employee acknowledges and agrees that the release and covenant not to xxx
contained herein are essential and material terms of the Severance Provisions
and that without such terms, the Company would have been unwilling to agree to
cause the payments and benefits contemplated by the Severance Provisions to be
made, and would not be otherwise be required to cause there to be provided the
payments and benefits contemplated by the Severance Provisions. Former Employee
understands and acknowledges the significance and consequences of such terms.
4. Former Employee acknowledges, represents and warrants that an
unexecuted copy of this Release and Covenant Not to Xxx was in his possession on
the day on which his employment with the Company and the Subsidiaries
terminated; that the Company has advised Former Employee to consult with an
attorney prior to signing this Release and Covenant Not to Xxx; and that the
Company has given Former Employee at least twenty-one days in which to consider
this Release and Covenant Not to Xxx and seek the advice of counsel.
5. This Release and Covenant Not to Xxx will not become effective or
enforceable for a period of seven days after execution by Former Employee.
Former Employee may revoke this Release and Covenant Not to Xxx during such
seven day period by providing the Company with written notice of revocation
within such period, which notice shall be directed to the Company at 000 Xxxx
Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, Attention: General Counsel. In the
event Former Employee does not provide the Company with notice of revocation
within such seven day period, this Release and Covenant Not to Xxx shall then be
fully binding on, and non-revocable by, Former Employee. In the event Former
Employee revokes this Release and Covenant Not to Xxx pursuant to the terms
hereof, this Release and Covenant Not to Xxx shall be null and void and of
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no further force and effect, and Former Employee shall immediately pay MGIC the
sum of the aggregate amount of all payments made to Former Employee under
Paragraph 3(c)(i) of the Non-Competition, Confidentiality and Severance
Agreement and the aggregate amount of MGIC's cost in providing the benefits
provided under Paragraph 3(c)(ii).
6. The Employee acknowledges that the Company and each Subsidiary are
third party beneficiaries of this Release and Covenant Not to Xxx and each one
is entitled to enforce the provisions of this Release and Covenant Not to Xxx by
an action for injunction, damages or both, and for such other relief as may be
proper. Capitalized definitional terms used in this Release and Covenant Not to
Xxx are used as defined in the Non-Competition, Confidentiality and Severance
Agreement. The validity and construction of this Release and Covenant Not to Xxx
shall be governed by the internal laws of the State of Wisconsin (excluding the
conflict of laws provisions of such laws).
Dated: ___________________
-------------------------
Xxxx X. Xxxx
State of _________)
)
County of _______)
I, , a Notary Public in and for said County, in the State aforesaid, do
hereby certify that Xxxx X. Xxxx, personally known to me to be the same person
whose name is subscribed to the foregoing Release and Covenant Not to Xxx,
appeared before me this day in person and acknowledged that he signed and
delivered the said instrument as his free and voluntary act for the uses and
purposes therein set forth.
GIVEN under my hand and Notarial Seal this _____ day of ________, 200_.
------------------------------------
Notary Public
My Commission Expires:______________
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