Exhibit 10.21
CONFIDENTIAL TRANSITION AND
RETIREMENT AGREEMENT
AND GENERAL
RELEASE
THIS AGREEMENT, made and entered
into on this 22nd day of November, 2004, by and between Radian
Group Inc. a Delaware corporation (hereinafter “Radian”
or the “Company”), and Frank P. Filipps
(“Executive”), reads as follows:
I. RECITALS
A. The Company currently employs
Executive as its Chief Executive Officer. The Company and Executive
have mutually agreed that Executive will retire on June 30, 2005 or
on an earlier date as designated by the Board, referred to herein
as the “Retirement Date.” The Retirement Date will not
be earlier than March 31, 2005. Until the Retirement Date,
Executive’s employment by the Company will be continued, but,
during the period commencing on the date of this Agreement and
ending on the Retirement Date, Executive will transition out of his
duties and employment and assist the Company in the identification
and recruitment of a successor. Executive will resign all offices,
directorships and positions with the Company no later than the
Retirement Date and will retire from employment on the Retirement
Date.
B. In appreciation for
Executive’s dedicated and successful service to the Company
over many years, his foresight, wisdom and leadership of the
Company and in exchange for all of Executive’s undertakings
in this Agreement, the Company and Executive wish to enter into an
agreement to (i) provide for transitional services to be rendered
by Executive prior to the Retirement Date, (ii) provide mutual
releases by the Company of Executive and by Executive of the
Company as to any claims including, without limitation, claims that
might be asserted by Executive under the Age Discrimination in
Employment Act, as further described herein, and (iii) assuming
that Executive performs the services required by this Agreement,
retires on the Retirement Date and executes and does not rescind
the Second Release, as defined below, provide Executive with the
benefits and entitlements described in Section 2 of Article
II.
II. SUBSTANTIVE
PROVISIONS
In consideration of the mutual
promises contained in this Agreement, the Company and Executive,
intending to be legally bound, agree as follows:
1. The Company and Executive agree
that Executive shall continue in employment and perform such duties
for the Company as are required of his position with the Company,
reporting to the Company’s Board of Directors (the
“Board”) and the Company’s Lead Director until
the Retirement Date. On or before the Retirement Date, as described
below, Executive shall resign all offices, executive positions and
directorships with the Company and all affiliates, but shall retire
from employment on the Retirement Date; provided, however, that (i)
Executive may remain a member of the board of directors of Primus,
and (ii) Executive shall make himself reasonably available for
consultation with his successor and the Board through the date that
is 18 months after the Retirement Date, but it is intended that
such consultation shall not interfere with any of Executive’s
business activities during that period of time. The
Company
shall pay Executive’s reasonable travel
costs required for such consultation if Executive provides
consulting services at the Company’s request and Executive is
not living in the Philadelphia, Pennsylvania area at the time.
Executive and the Company agree that proper notice was given under
Section 1(a) of that certain Employment Agreement entered into
between Executive and the Company as of November 11, 2003 (the
“Employment Agreement”), of the termination of
Executive’s employment under the Employment Agreement,
effective as of the date of this Agreement, and the extension of
his employment until the Retirement Date under the terms of this
Agreement. Until the Retirement Date, Executive shall perform his
duties faithfully and assist the Board in the identification and
recruitment of, and transition to, his successor. Executive agrees
that if his successor is recruited and commences employment prior
to the Retirement Date, that individual may be designated as the
Company’s Chief Executive Officer or Chairman or both, even
if that is prior to the Retirement Date, and, if so requested by
the Board, Executive may cease to perform active duties for the
Company before the Retirement Date, without causing a termination
of Executive’s employment before the Retirement Date. The
Company shall continue to pay Executive’s base salary at the
rate in effect on the date of this Agreement through the Retirement
Date. The parties agree that, except as specifically provided
below, the Employment Agreement shall terminate and be of no
further force or effect on the date of this Agreement. The parties
agree that the change in control agreement between Executive and
the Company dated January 25, 1995 (the “CIC
Agreement”) shall terminate and be of no further force or
effect on the Retirement Date.
2. In consideration of the
performance of the obligations undertaken by Executive under
Sections 5 and 8, the releases provided by Executive under Section
7 and, as contemplated by Section 1, Executive’s cooperation
with the Company, provision to the Company of reasonable transition
services through the Retirement Date, and retirement on the
Retirement Date, and in lieu of any payment under the
Company’s then current severance pay plan for employees or
executives, and assuming no payments are due to Executive under the
CIC Agreement, the Company shall pay or cause to be paid or
provided to Executive, subject to applicable employment and income
tax withholdings and deductions, the following amounts and
benefits:
(a) Executive shall receive salary
continuation payments, at the monthly rate of base salary in effect
for Executive on the Retirement Date, for the period beginning on
the Retirement Date and ending on the date that is 18 months after
the Retirement Date (referred to as the “Severance
Period”). Such salary continuation payments shall be made in
equal monthly installments on the first day of each month during
the Severance Period, beginning on the first day of the month
following the Retirement Date.
(b) Executive shall receive a
monthly bonus payment in an amount equal to the dollar amount of
Executive’s target bonus for the 2004 fiscal year (which
target bonus is equal to 200% of his base salary), divided by 12.
The bonus payment shall be payable in cash in equal monthly
installments on the first day of each month during the Severance
Period, beginning on the first day of the month following the
Retirement Date.
(c) Executive shall receive his
normal bonus for 2004 when otherwise paid to executives generally,
in the amount determined by the Compensation Committee of the
Board
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following its usual procedures. If the Company
achieves its 2004 EPS target and ROE target as approved by the
Executive Committee of the Board on December 15, 2003, it is
anticipated that Executive will receive the following bonuses for
2004, subject to the terms of the 2004 annual bonus plan: (i) a
cash bonus of $1,350,000 and (ii) phantom shares of Company stock
equal to $1,350,000 divided by the per share value of the
Company’s common stock as of the date of grant of the phantom
shares. The phantom shares will be granted according to the terms
of the Company’s equity compensation plan and the 2004 bonus
plan and will be distributed one year after the date of
grant.
(d) Executive shall receive a pro
rata cash bonus for 2005, reflecting the period January 1 through
the Retirement Date, when the 2005 bonus is otherwise paid to
executives generally. The pro rata 2005 bonus will be the cash
portion of the annual bonus only (no phantom shares), as determined
by the Compensation Committee of the Board following its usual
procedures, equal to the Executive’s target bonus for 2005
multiplied by a fraction, the numerator of which is the number of
days in the 2005 calendar year before the Retirement Date and the
denominator of which is 365. The Executive’s 2005 target
bonus will be equal to 200% of Executive’s base salary on the
date of this Agreement.
(e) Executive, his spouse and
dependents shall receive medical coverage for the period following
Executive’s Retirement Date until the end of the Severance
Period or, if earlier, until the date on which Executive is
eligible for coverage under a plan maintained by a new employer
(including any self-employment or partnership) or under a plan
maintained by his spouse’s employer. Such coverage, including
cost-sharing, shall be substantially identical to the coverage
provided during such period by the Company for its employees
generally, as if Executive had continued in employment during such
period; or, alternatively, the Company may pay an additional amount
of cash that is sufficient on an after-tax basis for the Executive
to obtain such coverage under the Company’s health plan or
from a qualified health insurer. The COBRA health care continuation
coverage period under section 4980B of the Internal Revenue Code of
1986, as amended (the “Internal Revenue Code”), shall
commence after the foregoing benefit period, if permitted by the
Company’s medical plan provider or stop-loss carrier or,
alternatively, if such continued coverage is not permitted, the
Company will pay Executive an additional amount of cash for such
COBRA period (up to a maximum of 18 months) that is equal, on an
after-tax basis, to the COBRA cost that would have been payable for
such coverage under the Company’s health plan.
(f) The period from the Retirement
Date through the end of the Severance Period shall be taken into
account in determining Executive’s retirement benefit under
Company’s Supplemental Executive Retirement Plan (the
“SERP”).
All payments and benefits due in accordance with
the terms of this Section 2 shall be made to Executive (or his
estate) regardless of whether he dies or becomes disabled following
the date of this Agreement and prior to payment being made. No
payments or benefits shall be payable pursuant to this Section 2 if
any payments are due to Executive under the CIC
Agreement.
Notwithstanding the foregoing, if payment of any
of the foregoing amounts is required to be postponed in order to
avoid disadvantageous tax treatment under Section 409A of the
Internal
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Revenue Code (as added by the American Jobs
Creation Act of 2004), payment of such amounts shall postponed for
up to six months until payment is permitted under Section 409A. If
payment of any such amount is postponed, the postponed portion will
be paid as soon as payment is permitted under Section
409A.
3. Upon his retirement on the
Retirement Date, Executive shall be fully vested in (1) all
outstanding equity awards held by Executive on his Retirement Date
and (2) the benefit payable under the terms of the SERP, but
without regard to the additional service under Section 2(f),
regardless of whether Executive signs and does not revoke the
Second Release; provided that all outstanding equity awards held by
Executive on the Retirement Date shall remain subject to the terms
of the applicable agreements and/or the plans pursuant to which
they were granted and the benefit to which Executive is entitled
under the SERP shall be payable in accordance with the terms of the
plan document, as in effect on the Retirement Date.
4. Executive agrees and acknowledges
that the Company, on a timely basis, has paid, or agreed to pay, to
Executive all other amounts due and owing based on his prior
services and that the Company has no obligation, contractual or
otherwise to Executive, except as provided herein, nor does it have
any obligation to hire, rehire or re-employ Executive in the
future. Executive also acknowledges that the Company is not
required to enter into this Agreement and that the provisions of
Section 2 will provide Executive with compensation and benefits
that are in excess of that to which Executive otherwise would have
been entitled.
5.(a) Executive further agrees and
acknowledges that by reason of his employment by and service to the
Company, he has had access to confidential information of the
Company, and, therefore, Executive hereby reaffirms his obligations
under, and agrees that he shall continue to be subject to, the
terms of Section 15(d) of the Employment Agreement notwithstanding
the termination of the Employment Agreement.
(b) Executive also hereby
acknowledges the requirements of, and reaffirms his obligations
under and pursuant to, Sections 15(a), (b), (c), and (e) and
Sections 16 and 17 of the Employment Agreement for the period
following the Retirement Date until the date that is 18 months
after the Retirement Date, regardless of the term specified under
such sections in the Employment Agreement and the termination of
the Employment Agreement. However, if Executive so requests, the
Company will agree that the noncompetition covenants of Sections
15(a) and (c) of the Employment Agreement will not apply as of a
specified date (the “Non-Compete Termination Date”)
after the first anniversary of the Retirement Date and before the
date that is 18 months after the Retirement Date, in exchange for
which (i) all payments and benefits under Section 2 of this
Agreement shall cease as of the Non-Compete Termination Date, and
(ii) all references in Section 2 of this Agreement to “the
Severance Period” shall automatically be changed to mean the
period from the Retirement Date to the Non-Compete Termination
Date.
(c) For the purposes of this Section
5, Section 6 and Section 7, the term “Company” shall be
deemed to include Radian and the subsidiaries and affiliates of
Radian.
6.(a) Executive acknowledges and
agrees that the restrictions contained in Section 5 are reasonable
and necessary to protect and preserve the legitimate
interests,
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properties, goodwill and business of the
Company, that the Company would not have entered into this
Agreement in the absence of such restrictions and that irreparable
injury will be suffered by the Company should Executive breach
the
