EXHIBIT 10.1
INDEMNIFICATION
AGREEMENT
INDEMNIFICATION AGREEMENT (this
“Agreement”), effective as of the
day of
, 20 , by and between The PMI
Group, Inc., a Delaware corporation (the “Company”),
and
(the “Indemnitee”), an officer and/or a director of the
Company or of one or more of its subsidiaries;
WHEREAS, the Indemnitee is currently
serving as an officer and/or a director of the Company or of one or
more subsidiaries of the Company and in such capacity has rendered
and will render valuable services to the Company; and
WHEREAS, the Company desires to
provide its officers and directors and those of its subsidiaries
with adequate protection against various legal risks and potential
liabilities to which such individuals are subject due to their
positions with the Company or such subsidiaries, and has concluded
that available liability insurance and statutory protections may
provide inadequate and unacceptable protection to certain
individuals requested to serve as its officers and directors or as
officers and directors of its subsidiaries; and
WHEREAS, in order to induce and
encourage highly experienced and capable persons such as the
Indemnitee to continue to serve as an officer and/or a director of
the Company or of one or more of its subsidiaries, the Board of
Directors have determined, after due consideration and
investigation of the terms and provisions of this Agreement and the
various other options available to the Company and the Indemnitee
in lieu hereof, that this Agreement is not only reasonable and
prudent, but necessary to promote the best interests of the Company
and its stockholders;
NOW, THEREFORE, in consideration of
the premises and mutual agreements hereinafter set forth, and other
good and valuable consideration, the receipt of which hereby is
acknowledged, and in order to induce the Indemnitee to continue to
serve as an officer and/or a director of the Company or, at the
Company’s request, of certain subsidiaries, the Company and
the Indemnitee hereby agree as follows:
1. Definitions . As used in
this Agreement:
1.1 The term “ Change in
Control ” shall mean:
(a) The acquisition by any
individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or
(ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in
the election of directors (the
“Outstanding Company Voting Securities”); provided,
however, that for purposes of this subsection (a), the following
shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (iv) any acquisition
pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (c) of this Paragraph
1.1. Notwithstanding the foregoing, in its sole discretion, the
Board may increase the 20% threshold set forth above in this
subsection (a) prior to any acquisition of 20% or more
beneficial ownership of the Outstanding Company Common Stock or the
Outstanding Company Voting Securities; provided, that (i) such
increased threshold shall apply only to the acquisition and
maintenance of beneficial ownership by any Person eligible to
report such beneficial ownership at the time of such acquisition on
Schedule 13G under the Exchange Act, and (ii) in the event
that any Person initially eligible to so report on Schedule 13G
thereafter ceases to be eligible to so report on Schedule 13G, the
occurrence of the event causing such Person no longer to be
eligible to so report shall be deemed an acquisition by such Person
of all of the Outstanding Company Common Stock and Outstanding
Company Voting Securities beneficially owned by such Person
immediately prior to such occurrence; or
(b) Individuals who, as of the date
hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a
vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(c) Consummation by the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another entity (a
“Business Combination”), in each case, unless,
following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, as such, directly or
indirectly, more than 60% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the
Company’s
assets either directly or through
one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation
except to the extent that such ownership existed prior to the
Business Combination and (iii) at least a majority of the
members of the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
or
(d) Approval by the shareholders of
the Company of a complete liquidation or dissolution of the
Company.
Notwithstanding the foregoing, a
Change of Control shall not be deemed to occur solely because any
Person acquires beneficial ownership of 20% or more of the
Outstanding Company Voting Securities or Outstanding Company Common
Stock as a result of the acquisition of such securities or stock by
the Company, which acquisition reduces the number of the
Outstanding Company Voting Securities or Outstanding Company Common
Stock; provided, that if after such acquisition by the Company such
Person (while such Person remains the beneficial owner of 20% or
more of the Outstanding Company Voting Securities or Outstanding
Company Common Stock) becomes the beneficial owner of additional
shares of such Outstanding Company Voting Securities or Outstanding
Company Common Stock (as the case may be) and as a result of
acquiring such beneficial ownership such Person’s percentage
beneficial ownership of the Outstanding Company Voting Securities
or Outstanding Company Common Stock increases by any amount, a
Change of Control shall then occur. Capitalized terms used in this
Paragraph 1.1, not otherwise defined, shall have the meaning set
forth in the form of change of control employment agreement as
approved at the February 12, 1998 meeting of the Board of
Directors and as subsequently amended.
1.2 The term “ Board of
Directors ” shall mean the Board of Directors of the
Company.
1.3 The term “
Disinterested Director ,” with respect to any request
by the Indemnitee for indemnification hereunder, shall mean a
director of the Company who neither is nor was a party to the
Proceeding in respect of which indemnification is being sought by
the Indemnitee.
1.4 The term “ Expenses
” shall mean, without limitation, expenses related to or in
connection with Proceedings, including attorneys’ fees,
disbursements and retainers, accounting and witness fees, expenses
related to the preparation or service as a witness, travel and
deposition costs, expenses of investigations, judicial or
administrative proceedings and appeals, amounts paid in settlement
of a Proceeding by or on behalf of the Indemnitee, costs of
attachment or similar bonds, any expenses of attempting to
establish or establishing a right to indemnification, pursuant to
this Agreement, under applicable law or otherwise, and reasonable
compensation for time spent by the Indemnitee in connection with
the investigation, defense or appeal of a Proceeding or action for
indemnification for which he or she is not otherwise compensated by
the Company or any third party. The term “Expenses”
shall not include the amount of judgments, fines or penalties, or
excise taxes or other amounts assessed with respect to any employee
benefit plan, which are actually levied against or sustained by the
Indemnitee.
1.5 The term “Independent
Legal Counsel” shall mean (subject to Section 8(b)) any
firm of attorneys (a) selected by lot from a list consisting
of firms which meet minimum size criteria and other reasonable
criteria established by the Board of Directors of the Company, so
long as such firm has not represented the Company, the Indemnitee,
any entity controlled by the Indemnitee, or any party adverse to
the Company, the Indemnitee or any entity controlled by the
Indemnitee, within the preceding five (5) years, and
(b) reasonably acceptable to the Indemnitee. Notwithstanding
the foregoing, the term “Independent Legal Counsel”
shall not include any person who, under applicable standards of
professional conduct then prevailing, would have a conflict of
interest in representing either the Company or the Indemnitee in an
action to determine the Indemnitee’s right to indemnification
under this Agreement, applicable law or otherwise.
1.6 The term “ Other
Enterprises ” shall mean a corporation (other than the
Company, and including, without limitation, subsidiaries of the
Company and any partnership, joint venture, trust, employee benefit
plan or other enterprise for which the Indemnitee is or was serving
as a director, officer, employee, trustee, fiduciary, advisor or
agent at the request of the Company.
1.7 The term “
Proceeding ” shall mean any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution
mechanism, or any other proceeding (including, without limitation,
an appeal therefrom), formal or informal, whether brought in the
name of the Company or otherwise, whether of a civil, criminal,
administrative or investigative nature, whether by, in or involving
a public official, law enforcement organization, public or
government-sponsored board or commission, self-regulatory body,
court or an administrative, other governmental or private entity or
body (including, without limitation, an investigation by the
Company or its Board of Directors of a committee thereof), and as
to which the Indemnitee was or is a party or threatened to be made
a party or was or is otherwise involved in by reason of
(i) the fact that the Indemnitee is or was an officer or a
director of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, fiduciary,
advisor or agent of an Other Enterprise, or was a director,
officer, employee, trustee, fiduciary,
advisor or agent of a corporation
which was a predecessor corporation of the Company or of another
enterprise at the request of such predecessor corporation, whether
or not he or she is serving in such capacity at the time any
liability or expense is incurred for which indemnification or
reimbursement is to be provided under this Agreement, including,
without limitation, any such Proceeding arising out of or related
to any act or omission of the Indemnitee in connection with the
business of the Company or any of the Other Enterprises prior to,
at the time of or subsequent to the date hereof, or (ii) the
Indemnitee attempting to establish or establishing a right to
indemnification pursuant to this Agreement, applicable law or
otherwise.
1.8 The phrase “ serving at
the request of the Company ” shall include, without
limitation, (i) any service as an officer, director, employee,
or agent which imposes duties on, or involves services by, such
officer or director with respect to the Company or any Other
Enterprise, and (ii) any service as an officer, director,
employee or agent of a corporation which was a predecessor
corporation of the Company or of an Other Enterprise at the request
of the Company or any such predecessor corporation.
2. Services by the Indemnitee
. The Indemnitee agrees to continue to serve as an officer and/or a
director of the Company under the terms of his or her agreement
with the Company for so long as he or she is duly elected and
qualified, appointed or until such time as he or she tenders his or
her resignation in writing or is removed as an officer and/or a
director; provided , however , that the Indemnitee
may at any time and for any reason resign from such positions
(subject to any other contractual obligation or other obligation
imposed by operation of law).
3. Proceeding Other Than a
Proceeding By or In the Right of the Company . The Company
shall indemnify the Indemnitee if the Indemnitee was or is a party
to or threatened to be made a party to or was or is otherwise
involved in any Proceeding (other than a Proceeding by or in the
right of the Company to procure a judgment in its favor), by reason
of the fact that the Indemnitee was or is an officer or a director
of the Company, or was or is serving at the request of the Company
as a director, officer, employee, trustee, fiduciary, advisor or
agent of an Other Enterprise, or was a director, officer, employee,
trustee, fiduciary, advisor or agent of a corporation which was a
predecessor corporation of the Company or of another enterprise at
the request of the Company or any such predecessor corporation,
against all Expenses, judgments, fines, forfeitures, disgorgements
and penalties, and excise taxes and any other amounts assessed with
respect to any employee benefit plan, which are actually incurred
by the Indemnitee in connection with such a Proceeding, to the
fullest extent permitted by applicable law and not prohibited by
the Company’s Certificate of Incorporation, as amended, or
the Company’s By-Laws, as amended, and subject in each case
to Paragraph 7 below; provided, that any settlement of a Proceeding
be approved in advance in writing by the Company and the
Indemnitee, except that the Indemnitee’s approval shall not
be required for a settlement of a Proceeding that is limited to the
payment of money and a full release of the Indemnitee and that does
not impose any penalty, bar, disqualification or limitation on or
otherwise adversely affect the Indemnitee (including, but without
limitation, by involving any admission or other statement of
liability, guilt or any illegal, improper or negligent act or
omission on the part of or concerning the Indemnittee).
4. Proceedings By or In the Right
of the Company . The Company shall indemnify the Indemnitee if
the Indemnitee was or is a party to or threatened to be made a
party to or was or is otherwise involved in any Proceeding by or in
the right of the Company to procure a judgment in its favor by
reason of the fact that the Indemnitee was or is an officer or a
director of the Company, or was or is serving at the request of the
Company as a director, officer, employee, trustee, fiduciary,
advisor or agent of an Other Enterprise, or was a director,
officer, employee, trustee, fiduciary, advisor or agent of a
corporation which was a predecessor corporation of the Company or
of another enterprise at the request of the Company or any such
predecessor corporation, against all Expenses, judgments, fines,
forfeitures, disgorgements and penalties, and excise taxes and any
other amounts assessed with respect to any employee benefit plan,
which are actually incurred by the Indemnitee in connection with
such a Proceeding, to the fullest extent permitted by applicable
law and not prohibited by the Company’s Certificate of
Incorporation, as amended, or the Company’s By-Laws, as
amended, and subject in each
