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Exhibit
10.1
Employment
Agreement
THIS EMPLOYMENT AGREEMENT
(the “ Agreement ”) is entered into by and
between Radian Group Inc. (the “ Company ”) and
S.A. Ibrahim (the “ Executive ”) as of
May 5, 2008 (the “ Effective Date
”).
WHEREAS, the Executive and
the Company are parties to an Employment Agreement dated
April 20, 2005 (“ Existing Agreement ”);
and
WHEREAS, the Executive and
the Company now desire to amend and restate the Existing Agreement
to extend the term for three years, to comply with section 409A of
the Internal Revenue code of 1986, as amended (the “
Code ”) and to make other appropriate
changes.
NOW, THEREFORE, the parties
agree that the Existing Agreement is amended and restated as of the
Effective Date to read as follows:
1. Employment .
(a) Term . The term of
the Existing Agreement commenced on May 4, 2005 and continues
until May 3, 2008. This Agreement shall continue in effect
from the Effective Date until May 3, 2011 unless sooner
terminated by either party as hereinafter provided (the “
Term ”). If a Change of Control (as defined in
Section 11(b)) occurs during the Term, the Term of the
Agreement shall be automatically extended to the later of
(i) two years after the consummation of the Change of Control
or (ii) the end of the then current Term. In no event shall
the expiration of this Agreement be deemed, in and of itself, a
termination of the Executive’s employment for purposes of
this Agreement, including a termination without Cause for purposes
of Sections 10 and 11.
(b) Duties
.
(1) The Executive shall serve
as the Chief Executive Officer of the Company with the duties,
responsibilities and authority commensurate therewith and shall
report to the Board of Directors of the Company (the “
Board ”) and the non-executive Chairman of the Board
(the “ Chairman ”). The Executive shall perform
all duties and accept all responsibilities incident to such
position as may be reasonably assigned to him by the Board or the
Chairman and consistent with his position as the Chief Executive
Officer. During the Term, when applicable, the Company shall cause
the Executive to be nominated as a member of the Board.
(2) The Executive represents
to the Company that he is not subject to or a party to any
employment agreement, non-competition covenant, understanding or
restriction which would be breached by or prohibit the Executive
from executing this Agreement and performing fully his duties and
responsibilities hereunder.
(c) Best Efforts .
During the Term, the Executive shall devote his best efforts and
full time and attention to promote the business and affairs of the
Company and its affiliated companies, and shall be engaged in other
business activities only to the extent that such activities do not
materially interfere or conflict with his obligations to the
Company hereunder, including, without limitation, obligations
pursuant to Section 17 below. The foregoing also shall not be
construed
as preventing the Executive from
(1) serving on civic, educational, philanthropic or charitable
boards or committees, or, with the consent of the Board, in its
sole discretion, on corporate boards (2) delivering lectures,
fulfilling speaking engagements or lecturing at educational
institutions and (3) managing personal investments, so long as
such activities do not significantly interfere with the performance
of the Executive’s responsibilities hereunder and are
permitted under the Company’s Code of Conduct and employment
policies; provided, however, that the Executive shall be permitted
to own passively not more than 5% of the stock of those companies
whose securities are listed on a national securities exchange or on
the NASDAQ system, except that the Executive shall not invest in
any business competitive with the Company or that would otherwise
violate the provisions of Section 17 below.
2. Base Salary and Bonus . As
compensation for the services to be rendered hereunder, the Company
shall pay to the Executive an annual base salary at the rate of
$800,000 (“ Base Salary ”). This amount may be
subject to adjustment at the beginning of each Company fiscal year,
as determined by the Board, in its sole discretion. The
Executive’s Base Salary shall be paid in accordance with the
Company’s existing payroll policies, and shall be subject to
applicable withholding taxes. In addition, with respect to each
fiscal year of the Company ending during the Term, the Executive
shall be eligible for annual bonus payments under the
Company’s annual incentive plan if certain individual and
corporate performance goals and targets, established by the
Compensation and Human Resources Committee of the Board (the
“ Compensation Committee ”), in its sole
discretion, are met. At the beginning of each fiscal year, the
Compensation Committee shall establish the target award and the
performance goals, which shall be based on criteria such as group
financial performance goals, business unit financial performance
goals, shared executive goals and individual goals, and with such
weightings, as the Compensation Committee deems appropriate.
Promptly after the Compensation Committee’s receipt of the
financial information on which the performance goals are based
after the end of the fiscal year, the Compensation Committee shall
review actual performance against the applicable performance goals
and targets and shall notify the Executive of the amount of his
bonus, if any. The Executive’s bonus shall be paid to him
after the end of the fiscal year to which it relates, at the same
time and under the same terms and conditions as other executives of
the Company; provided that the Compensation Committee shall have
the right to claw back all or part of the Executive’s bonus
if required by applicable law. With respect to each fiscal year of
the Company ending during the Term, the Executive’s target
annual bonus shall be no less than 1.75 times Base Salary, at the
rate in effect for the applicable fiscal year. The total direct
compensation for which the Executive is eligible during a fiscal
year (taking into account Base Salary, target annual bonus and
target long-term incentive compensation (as described in
Section 3)) shall not be materially less than the total direct
compensation for which the Executive was eligible during the 2007
fiscal year.
3. Long-Term Incentive
Compensation .
(a) With respect to each
fiscal year of the Company ending during the Term, the Executive
shall be eligible to participate in any long-term equity incentive
programs established by the Company for its senior level executives
generally, including the Company’s Equity Compensation Plan
(the “ Equity Plan ”) at levels determined by
the Compensation Committee in its sole discretion, commensurate
with the Executive’s position as Chief Executive Officer.
With respect to each fiscal year of the Company ending during the
Term, the target level of long-term incentive compensation, in the
aggregate, for which the Executive is eligible,
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shall be no less than 3.0 times Base
Salary, at the rate in effect for the applicable fiscal year. The
Executive agrees to comply with the Company’s share ownership
guidelines for Company executives, as in effect from time to
time.
(b) If the Executive’s
employment terminates (i) by the Executive or by the Company
for any reason (other than by the Company for Cause (as defined
below)), after the Executive completes five full years of service
with the Company from his date of hire, whether during or after the
expiration of the Term, or (ii) due to his death or Disability
(as defined below), notwithstanding anything contained to the
contrary in any applicable equity compensation plan or award
agreement thereunder, the Executive’s outstanding stock
options, restricted stock and other equity awards shall become
immediately and fully vested and, in the case of options,
exercisable, all restrictions and conditions on all such awards
shall immediately lapse and all outstanding stock options shall
remain exercisable for the balance of the original full option
term. Notwithstanding the foregoing or anything contained in
Sections 10(b)(5) or 11(a)(5) of this Agreement, in the event any
such awards constitute “nonqualified deferred
compensation” within the meaning of section 409A of the Code,
the delivery of shares of common stock or cash (as applicable) in
settlement of such awards shall be made on the date that is six
months after the Executive’s “separation from
service,” if required by section 409A, or if earlier,
immediately following any permissible payment event under section
409A of the Code.
4. Retirement and Welfare
Benefits .
(a) The Executive shall be
entitled to participate in the Company’s health, life
insurance, long and short-term disability, dental, retirement,
savings, deferred compensation and medical programs, if any,
pursuant to their respective terms and conditions. Nothing in this
Agreement shall preclude the Company or any affiliate of the
Company from terminating or amending any employee benefit plan or
program from time to time after the Effective Date.
(b) If the Executive’s
employment terminates (i) by the Executive or by the Company
for any reason (other than by the Company for Cause), after the
Executive completes five full years of service with the Company
from his date of hire, whether during or after the expiration of
the Term, (ii) the Executive’s employment terminates due
to his death or Disability or (iii) the Company terminates the
Executive’s employment without Cause or the Executive resigns
for Good Reason (as defined below) at any time during the Term, the
Company shall permit the Executive (or, in the event of his death,
his current wife Nina Ibrahim (“ Mrs. Ibrahim
”)) to elect medical coverage for himself and, where
applicable, Mrs. Ibrahim under the Company’s medical
plan in effect at the date of his termination (with such coverage
to be provided in a manner such that the coverage is non-taxable to
the Executive and Mrs. Ibrahim), as the same may be changed by
the Company from time to time for employees generally, for the
Coverage Period (as defined below), if the Executive executes and
does not revoke the Release as described in Section 10(c)
below (in the event of the Executive’s death no Release will
be required of Mrs. Ibrahim) prior to the 45
th
day following the
Executive’s date of termination. The coverage shall be
provided as follows:
(1) The “ Coverage
Period ” for the Executive shall be the period beginning
on his termination date and continuing until the first to occur of
(i) the date on which the Executive attains age 65,
(ii) the date on which the Executive is eligible for medical
coverage under a
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plan maintained by a new employer, under
a plan maintained by his spouse’s employer, or under Social
Security Medicare, whichever is sooner, or (iii) the date of
the Executive’s death. The Coverage Period for
Mrs. Ibrahim shall be the period beginning on the
Executive’s termination date and continuing until the first
to occur of (i) the date on which Mrs. Ibrahim attains
age 65, (ii) the date on which Mrs. Ibrahim is eligible
for medical coverage under a plan maintained by a new employer,
under a plan maintained by her spouse’s employer, or under
Social Security Medicare, whichever is sooner, or (iii) the
date of Mrs. Ibrahim’s death. The Executive (or, where
applicable, Mrs. Ibrahim) shall notify the Company of his or
her eligibility for alternate coverage as described above within 30
days of becoming eligible for any such coverage.
(2) The Executive (or, where
applicable, Mrs. Ibrahim) shall pay the full monthly premium
cost of medical coverage under this Section 4(b) for the
Coverage Period. The monthly premium cost shall be the monthly
COBRA premium during the COBRA health care continuation coverage
period under section 4980B of the Code (the “ COBRA
Period ”). After the COBRA Period, the monthly premium
cost shall be the Company’s deemed premium cost of such
medical coverage for the Executive and Mrs. Ibrahim, which
shall be determined actuarially by the Company’s advisors.
The COBRA Period shall run concurrently with the Coverage
Period.
(3) Subject to the
Executive’s execution of a Release as described above in
Section 4(b), during the portion of the Coverage Period in
which the Executive and/or Mrs. Ibrahim (as applicable)
continue to receive coverage under the Company’s medical
plan, the Company shall pay the Executive (or, where applicable,
Mrs. Ibrahim) an amount equal to the premium cost described in
subparagraph (2) above, minus the same employee contribution
rate as is paid by Company employees for medical coverage, as in
effect from time to time, which payment shall be made in advance on
the first payroll day of each month, commencing with the month
immediately following the Executive’s date of termination,
provided that the first such payment shall be made within 30 days
after the Executive’s termination date.
(4) As an alternative to
continuing coverage under the Company’s group medical plan as
described above, the Company may provide comparable coverage to the
Executive and Mrs. Ibrahim under an individual fully-insured
medical policy for the Coverage Period, with the monthly premium
cost of such insurance to be at the Company’s sole expense
and to be paid monthly directly to the insurance
carrier.
5. Benefit Restoration Plan . The
Executive shall be entitled to participate in the Company’s
Benefit Restoration Plan (the “ BRP ”) pursuant
to its terms and conditions (or shall be provided with a benefit
with an economically equivalent value); provided, however, that for
purposes of benefit accrual under the BRP only (and not vesting),
the Executive shall earn two years of service for every one year of
service completed during his first five full years of service with
the Company from his date of hire (thereafter the Executive shall
earn only one year of service for each completed year of service)
and provided, further, that upon his completion of five full years
of service with the Company from his date of hire, the Executive
shall be fully vested in the amount of his accrued benefit under
the BRP (or economically equivalent benefit) (in either case,
determined based on his years of service with the Company as
modified by this Section 5).
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6. Vacation . The Executive shall
be entitled to vacation, holiday and sick leave at levels
commensurate with those provided to other senior executive officers
of the Company, in accordance with the Company’s vacation,
holiday and other pay for time not worked policies.
7. Expenses . The Company shall
reimburse the Executive for all necessary and reasonable travel and
other business expenses incurred by the Executive in the
performance of his duties hereunder in accordance with such
reasonable accounting procedures as the Company may adopt generally
from time to time for executives.
8. Perquisites . The Executive
shall be provided with such other executive perquisites as may be
provided to other senior executive officers of the
Company.
9. Indemnification . The Company
agrees to indemnify the Executive against all claims arising out of
actions or omissions during the Executive’s employment by the
Company, to the same extent and on the same terms and conditions
provided for in the Company’s bylaws or under the Delaware
General Corporation Law, each as in effect on the Effective Date.
The Company agrees it will continue to maintain officers’ and
directors’ liability insurance to fund the indemnity
described above in the same amount and to the same extent it
maintains such coverage for the benefit of its other officers and
directors.
10. Termination Without Cause;
Resignation for Good Reason – Prior to a Change of
Control . If the Executive’s employment is terminated by
the Company without Cause or the Executive resigns for Good Reason,
in either case, at any time prior to a Change of Control, this
Section 10 shall apply.
(a) The Company may terminate
the Executive’s employment with the Company at any time
without Cause upon not less than 15 days’ prior written
notice to the Executive; provided that in the event that such
notice is given, the Executive shall be under no obligation to
render any additional services to the Company and shall be allowed
to seek other employment. In addition, the Executive may initiate a
termination of employment by resigning under this Section 10
for Good Reason. On the date of termination or resignation, as
applicable, specified in such notice, the Executive agrees to
resign all positions, including as an officer, and Board
memberships related to the Company and its subsidiaries and
affiliates. The Company and the Executive shall take all steps
necessary (including with regard to any post-termination services
the Executive provides) to ensure that any termination of
employment described in this Agreement constitutes a
“separation from service” within the meaning of section
409A of the Code, and notwithstanding anything contained in this
Agreement to the contrary, the date on which such “separation
from service” takes place shall be the date of the
termination of the Executive’s employment.
(b) Unless the Executive
complies with the provisions of Section 10(c) below, upon
termination or resignation, as applicable, under Section 10(a)
above, the Executive shall be entitled to receive only the amount
due to the Executive under the Company’s then current
severance pay plan for employees, if any, but only to the extent
not conditioned on the execution of a Release by the Executive. No
other payments or benefits shall be due under this Agreement to the
Executive, but the Executive shall be entitled to any benefits
accrued and due in accordance with the terms of any applicable
benefit plans and programs of the Company.
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(c) Notwithstanding the
provisions of Section 10(b), upon termination or resignation,
as applicable, under Section 10(a) above, if the Executive
executes and does not revoke a written release prior to the
45 th day
following the Executive’s date of termination, in a form
acceptable to the Company, but substantially in the form attached
hereto as Exhibit A (subject to any necessary adjustment
reasonably determined by the Company to be necessary to comply with
applicable law at the time of the Executive’s termination or
resignation and provided that, following a Change of Control, the
release set forth on Exhibit A shall be the applicable release) of
any and all claims against the Company and all related parties with
respect to all matters arising out of the Executive’s
employment by the Company, or the termination thereof (other than
claims for any entitlements under the terms of this Agreement,
under any plans or programs of the Company under which the
Executive has accrued and is due a benefit or any rights to
indemnification from the Company under any agreement with or
arrangement of the Company) (the “ Release ”),
the Executive shall be entitled to receive, in lieu of the payment
described in Section 10(b) and any other payments due under
any severance plan or program for employees or executives, the
following:
(1) An amount equal to 2.0
times Executive’s Base Salary (at the rate in effect
immediately before the Executive’s termination or
resignation, as applicable), which shall be paid as follows,
subject to the Company’s receipt of an effective Release:
(i) the maximum amount that can be paid under the
“separation pay” exception of section 409A of the Code
($460,000 for 2008, subject to adjustment as provided under
applicable Treasury regulations) shall be payable in accordance
with the Company’s normal payroll practices in 12 equal
monthly installments over the 12-month period following the
Executive’s termination date (the “ Severance
Period ”), commencing within 15 days of the effectiveness
of the Release and in no event later than the 60 th day following the Executive’s
termination date (such date, the “ Payment Date
”), and (ii) the remainder of the amount shall be paid
in a lump sum payment between March 1 and March 15 of the
calendar year following the Executive’s termination
date.
(2) An amount equal to 2.0
times the Executive’s target annual bonus for the year in
which the Executive’s termination or resignation (as
applicable) occurs (and, if the Executive’s target bonus for
such year has not been established, based on the target bonus for
the immediately preceding fiscal year of the Company), which shall
be paid, subject to the Company’s receipt of an effective
Release, in a lump sum payment between March 1 and
March 15 of the calendar year following the Executive’s
termination date.
(3) A pro rata annual bonus
for the year in which the Executive’s termination date
occurs, subject to the Company’s receipt of an effective
Release, payable in a lump sum on the Payment Date (to the extent
not subject to any prior deferral election, and if the Executive
has previously made a deferral election, such amount will be paid
in accordance with the terms of the arrangement under which such
deferral election was made). The pro rata bonus shall be based on
the Executive’s target annual bonus for the year in which the
Executive’s termination date occurs (and, if the
Executive’s target bonus for such year has not been
established, based on the target bonus for the immediately
preceding fiscal year of the Company), multiplied by a fraction,
the numerator of which is the number of days during which the
Executive was employed by the Company in the year of his
termination and the denominator of which is 365.
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(4) Medical coverage and
reimbursement for medical premium costs as described and at the
times set forth in Section 4(b) above.
(5) Notwithstanding anything
contained to the contrary in any applicable equity compensation
plan or award agreement thereunder, the Executive’s
outstanding stock options, restricted stock and other equity awards
shall become immediately and fully vested and, in the case of
options, exercisable, all restrictions and conditions on any such
awards shall immediately lapse, and all outstanding stock options
shall remain exercisable for the balance of the original full
option term.
(6) Any other amounts earned,
accrued and owing but not yet paid under Section 2 above and
any benefits accrued and due under any applicable benefit plans and
programs of the Company.
(d) For purposes of this
Agreement, “ Good Reason ” shall be limited to
the following (unless the Executive and the Company shall execute a
written agreement specifically stating that the occurrence of such
event shall not constitute “Good Reason” under this
Agreement):
(1) The scope of the
Executive’s duties and responsibilities as the Chief
Executive Officer of the Company are, in the aggregate, materially
reduced.
(2) Any material change in
the geographic location at which the Executive must perform
services under this Agreement, which, for purposes of this
Agreement, means a requirement that the Executive’s principal
work location be relocated to a geographic area other than
(i) the San Francisco, CA metropolitan area or (ii) the
area on the East Coast including and between Fairfield County, CT
and the Washington D.C. metropolitan area, other than on travel
reasonably required to carry out the Executive’s obligations
under this Agreement.
(3) A material breach by the
Company of any of the terms of this Agreement, including without
limitation any failure of the Company to fulfill its obligations
under Section 24.
Notwithstanding the foregoing, no event
described in this subsection (d) shall constitute Good Reason
unless (i) the Executive gives the Company written notice of
his intention to terminate employment for Good Reason and the
grounds for such termination within 90 days after the event giving
rise to the Good Reason termination occurs, and (ii) such
grounds for termination are not corrected by the Company within
30 days after its receipt of such written notice. If the
Company does not correct the grounds for termination during the
30-day period following the Executive’s notice of
termination, the Executive’s termination of employment for
Good Reason must become effective within 30 days after the end of
the cure period.
11. Termination Without Cause;
Resignation for Good Reason – After a Change of Control
.
(a) If a Change of Control
occurs and the Executive’s employment is terminated by the
Company without Cause or the Executive resigns for Good Reason, as
described in Section 10(a), in either case, upon or after a
Change of Control, and prior to the 45 th day following the Executive’s date
of termination, the Executive executes and does not revoke a
Release, the Executive shall be entitled to receive the following,
in lieu of the payments and benefits described in Sections 10(b)
and 10(c) and any other payments due under any severance plan or
program for employees or executives, the following:
(1) An amount equal to 3.0
times the sum of the Executive’s Base Salary (at the rate in
effect immediately before the Executive’s termination or
resignation, as applicable) plus the Executive’s target
annual bonus for the year in which the Executive’s
termination or resignation, as applicable, occurs (and, if the
Executive’s target bonus for such year has not been
established, based on the target bonus for the immediately
preceding fiscal year of the Company), payable in a lump sum on the
Payment Date.
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(2) A pro rata annual bonus
for the year in which the Executive’s termination of
employment occurs, subjec
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