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Exhibit
2.1
TERMINATION
AND RELEASE AGREEMENT
THIS
TERMINATION AND RELEASE AGREEMENT (this
“ Agreement
”)
is made and entered into this 4 th
day of
September, 2007, by and between Radian Group Inc., a Delaware
corporation (“ Radian
”), and MGIC
Investment Corporation, a Wisconsin corporation (“
MGIC
”)
(together with Radian, the “ Parties
”).
W I T N E S S
E T H:
WHEREAS
, Radian
and MGIC entered into that certain Agreement and Plan of Merger,
dated as of February 6, 2007, as heretofore amended (the
“ Merger
Agreement ,” terms not
otherwise defined herein shall have the respective meanings
ascribed to them in the Merger Agreement to the extent defined
therein);
WHEREAS
, in
connection with communications relating to the transactions
contemplated by the Merger Agreement, Radian and MGIC entered into
a Confidentiality Agreement, dated as of January 12, 2007 (the
“ Confidentiality
Agreement ”);
WHEREAS,
each of
the Parties holds approximately 40.96% of the Class A Common Units
and 50% of the Preferred Units in Sherman Financial Group LLC
(“ Sherman
”);
WHEREAS,
the
Parties have been in negotiations with a third person set forth on
Schedule 1 (the “ Third
Person ”) with
respect to the terms of a potential transaction (the “
Potential Sherman
Transaction ”), whereby
the Third Person or its affiliates would acquire from each of the
Parties approximately 1,425,335 of their respective Class A Common
Units (such interests, the “ Class A Interests
to be Sold ”) and all of
their respective Preferred Units;
WHEREAS,
each of
the Parties holds an interest of approximately 46% in Credit-Based
Asset Servicing and Securitization LLC (“
C-Bass
”);
and
WHEREAS
, the
boards of directors of each of Radian and MGIC have determined to
terminate the Merger Agreement and release each other from duties,
rights, claims, obligations and liabilities arising from, in
connection with, or relating to, the Merger Agreement, in each case
on the terms and subject to the conditions and limitations set
forth herein.
NOW,
THEREFORE , in consideration
of the covenants and agreements herein set forth and for other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby,
Radian and MGIC agree as follows:
1.
Termination of
Merger Agreement . Effective
immediately, Radian and MGIC hereby abandon the Merger and all
other transactions contemplated by the Merger Agreement and
mutually terminate the Merger Agreement pursuant to Section 8.1(a)
thereof, as a result of which no provision of the Merger Agreement,
including Section 8.2 and Article IX thereof, shall survive.
Notwithstanding anything to the contrary contained in the Merger
Agreement, no Radian Releasee (as defined herein) or MGIC Releasee
(as defined herein) shall have any liability or obligation under
the Merger Agreement, including as a result of any action or
failure to act in connection with the Merger Agreement.
2.
Publicity;
Confidentiality Agreements; Clean Team .
(a) Radian and MGIC
shall issue a joint press release in the form, and containing the
contents, of Exhibit
A to this Agreement
before the opening of the New York Stock Exchange on the first
Business Day immediately following the execution and delivery
hereof (or if this Agreement is executed and delivered on a
Business Day prior to the opening of such Exchange, as promptly as
practicable after such execution and delivery).
(b) The
Confidentiality Agreement shall remain in full force and effect in
accordance with its terms, except for the third and sixth
paragraphs thereof, which shall be deemed terminated as of the date
hereof, and except as expressly amended by the third sentence of
this Section 2(b). In addition, all information furnished pursuant
to Section 6.2(a) of the Merger Agreement shall continue to be
subject to the Confidentiality Agreement. The fourth to last
paragraph of the Confidentiality Agreement is hereby amended so
that the phrase “second anniversary of the date hereof”
shall instead be a reference to the second anniversary of the date
of this Agreement. The changes to the Confidentiality Agreement
effected by the first and third sentences of this Section 2(b) are
referred to as the “ Confidentiality
Agreement Changes .” The online
data rooms that the Parties have separately maintained through
Merrill Communications LLC (“ Merrill
”)
shall be shut down as soon as practicable, and the Parties shall
each instruct Merrill accordingly. As soon as practicable, MGIC
shall instruct Deloitte Consulting LLP to immediately terminate
both Parties’ access to the online data rooms maintained by
Documentum, a division of EMC Corporation (“
Documentum
”). At a time
that the Parties mutually agree in light of the collaboration
regarding Clean Team Members contemplated by Section 2(d), MGIC
shall instruct Deloitte Consulting LLP to have destroyed all
information in the online data rooms maintained by Documentum,
including all back-up copies thereof.
(c) Except as
necessary to comply with applicable regulatory requirements
relating to the preservation of records and applicable law related
to spoliation (which shall be conclusively determined for purposes
of this Agreement by advice rendered in good faith by outside
counsel to the Party to whom such exception applies), each Party
shall promptly (i) destroy all written Evaluation Material (as
defined in the Confidentiality Agreement) received by such Party
pursuant to the Confidentiality Agreement or Section 6.2(a) of the
Merger Agreement and will not retain any copies, extracts or other
reproductions in whole or in part of such written material, in each
case pursuant and subject to the provisions of the eighth paragraph
of the Confidentiality Agreement, and (ii) deliver to the other
Party a written certificate executed by an authorized officer of
the certifying Party, certifying such destruction. The Parties
acknowledge that they have other agreements relating to the
confidential treatment of information, including the Joint Defense
Agreement, dated February 1, 2007, among MGIC, Radian, Foley &
Lardner LLP and Wachtell, Lipton, Rosen & Katz, as amended (the
“ JDA
”), and agree
that information provided under such agreements constitutes
Evaluation Material under the Confidentiality Agreement and shall
be destroyed as provided in this Section 2(c).
(d) The (i)
“MGIC / Radian Merger ‘Clean Team’
Procedures” dated as of June 26, 2007 (the “
Clean
Team Procedures ”) agreed
upon by MGIC and Radian and (ii) confidentiality letter agreements
(the “ Clean Team
Confidentiality Agreements ”) executed
by MGIC, Radian and the persons identified on Exhibit A of the
Clean Team Procedures (the “ Clean Team
Members ”) shall
remain in full force and effect. On the first Business
Day
immediately
following the execution and delivery hereof, each Party shall send
an e-mail to each Clean Team Member that is an employee of such
Party (y) stating that the applicable Clean Team Confidentiality
Agreement is unaffected by this Agreement and remains in full force
and effect and (z) instructing such Clean Team Member to
immediately report, to the Party’s Chief Compliance Officer
(in the case of MGIC) or the Party’s Chief Compliance Officer
or General Counsel (in the case of Radian), any attempt by any
person to induce such Clean Team Member to violate the applicable
Clean Team Confidentiality Agreement. Promptly after the date of
this Agreement, the Parties shall use reasonable best efforts to
agree on appropriate measures to protect the information covered by
the Clean Team Confidentiality Agreements, including appropriate
job responsibilities of the Clean Team Members.
(e) By executing
this Agreement, MGIC and Radian hereby withdraw from the JDA.
However, as set forth in the JDA, such withdrawal does not affect
or impair the obligations imposed under the JDA nor affect the
existence of attorney client privilege or work product protection
with respect to Communications and Materials, as defined under the
JDA, furnished prior to the withdrawal and pursuant to the
JDA.
3.
Non-Solicitation
. Each
of the Parties agrees that, for a period of twelve months from the
date hereof, none of its officers, directors or employees, or those
of their respective controlled affiliates, who were involved in the
negotiation of the Merger Agreement or the integration planning for
the Potential Merger, or who had access to or were provided with
the Evaluation Material, will, directly or indirectly, solicit to
employ or employ any of the current officers or employees of the
other Party or its subsidiaries with whom the Party or its
Representatives (as defined in the Confidentiality Agreement) had
contact in connection with such negotiation or integration planning
(which shall include officers and employees that such Party
interviewed, in person or telephonically, for potential employment
by the Surviving Corporation), without obtaining the prior written
consent of the other Party; provided that (i) the foregoing shall
not apply (w) to specific employees with whom either Party, as the
case may be, had commenced discussions regarding a potential
employment relationship prior to such contact or identification, as
applicable, (x) to general solicitations through media
advertisements or employment search firms in the ordinary course of
business that are not specifically targeted at the other Party or
its subsidiaries or its or their officers or employees, or (y) to
solicitations made directly by the Party’s non-employee
parent company directors of officers or employees of the other
Party (1) with whom such directors have not had contact with in
connection with the matters contemplated hereby and (2) who were
not identified to such independent directors, directly or
indirectly, as a result of our investigation of the other Party,
and (ii) neither Party shall be precluded from hiring any officer
or employee who is not, at the time of commencement of employment
discussions between the hiring Party and such employee, in the
employ of the other Party or its subsidiaries, in each case
provided such hiring is consistent with such employee’s
contractual obligations to the other Party or its
subsidiaries.
4.
Fees
and Expenses . No Party shall
pay any fee to the other Party pursuant to Section 8.2 of Merger
Agreement as a result of the termination of the Merger Agreement
contemplated hereby. All costs and expenses incurred in connection
with this Agreement and the Merger Agreement and the transactions
contemplated hereby and thereby shall be paid by the Party
incurring such cost or expense; provided
,
however
, that
there shall be borne equally by MGIC and Radian (i) the costs and
expenses of printing and mailing the Joint Proxy
Statement,
all filing and
other fees paid to the SEC in connection with the Merger, (ii) any
filing fee required under the HSR Act in connection with the
Merger, and (iii) the fees and expenses of Deloitte Consulting LLP
incurred in connection with technology matters relating to the
Merger pursuant to letter agreements between MGIC and Deloitte
dated May 30, 2007 and June 22, 2007; and provided
,
further
, that
expenses through the date hereof (or in the case of investment
banking fees and expenses due at the closing of the Potential
Sherman Transaction, as of the date on which such fees and expenses
are due) associated with the disposal or attempted disposal of
portions of MGIC’s and Radian’s interests in C-Bass and
Sherman shall be borne as provided in Schedule 5.2 of the MGIC
Disclosure Schedule to the Merger Agreement, except that the
expenses of MGIC to be taken into account under this proviso shall
not exceed $500,000 and the expenses of Radian to be taken into
account under this proviso shall not exceed $25,000.
5.
Mutual
Release .
(a) As of the date
hereof, MGIC, on behalf of itself and each of its successors,
subsidiaries, controlled affiliates, divisions, and assignees (the
“ MGIC
Releasors ”) does, to
the fullest extent permitted by law, hereby fully release, forever
discharge and covenant not to sue Radian, any of its successors,
subsidiaries, affiliates, divisions, or assignees, and any of their
respective officers, directors, employees, representatives, agents,
financial advisors, auditors, attorneys, heirs, administrators,
devisees or legatees (collectively the “
Radian
Releasees
”)
(it is understood that neither C-Bass nor Sherman nor any of their
respective officers or employees are MGIC Releasors or Radian
Releasees), of, from, and with respect to, any and all manner of
claims, rights, actions, causes of action, suits, liens,
obligations, accounts, debts, demands, agreements, promises,
liabilities, controversies, costs, expenses and fees (including
attorney’s, financial advisor’s, lender’s or
other fees) whatsoever, whether arising in law or equity, whether
based on any federal, state or foreign law or right of action,
mature or unmatured, contingent or fixed, liquidated or
unliquidated, known or unknown, accrued or unaccrued, which MGIC
Releasors, or any of them, ever had or now have or can have or
shall or may hereafter have against the Radian Releasees or any of
them, in connection with, arising out of or which are in any way
related to the Merger Agreement, or any duties, actions, omissions,
commitments, agreements, transactions, statements, or
representations made to the MGIC Releasors in connection with the
Merger, which include any actions taken prior to the date hereof in
connection with the proposed dispositions of C-Bass and Sherman or
the liquidity crisis involving C-Bass; provided, however, that
nothing herein shall be deemed to constitute a release, discharge
or covenant not to sue with respect to any claim, action, cause of
action or suit arising
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