Exhibit 10.9
1997 Form 1
MGIC INVESTMENT CORPORATION
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of _______________, between
MGIC Investment Corporation, a Wisconsin corporation (the "Company") and
the key employee or executive officer of the Company or a subsidiary
thereof whose name is set forth on the signature page hereof (the
"Employee").
WHEREAS, the Company is of the opinion that its interests will
be advanced by encouraging and enabling key employees and executive
officers of the Company and its subsidiaries to acquire Common Stock, par
value $1.00 per share of the Company ("Common Stock"), through stock
options and believes that the granting of such options will stimulate the
efforts of the key employees and executive officers, strengthen their
desire to remain in the employ of the Company and its subsidiaries or
affiliates, provide them with a more direct interest in its welfare, and
to that end the Company duly adopted the MGIC Investment Corporation 1991
Stock Incentive Plan, as amended (herein called the "Amended Plan")
attached hereto as Exhibit A; and
WHEREAS, the Board of Directors has determined that it is in
furtherance of the objective of the Amended Plan, and in the best
interests of the Company, to grant a stock option to the Employee to
purchase the number of shares of Common Stock hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing and of the
mutual covenants hereinafter set forth, and other good and valuable
consideration, the parties hereto agree as follows:
1. The Company hereby grants to the Employee, as a matter of
incentive and to encourage stock ownership in the Company, the right and
option (the "Stock Option") to purchase from the Company, on the terms and
conditions hereinafter set forth, the number of shares of Common Stock set
forth on the signature page hereof (the "Option Shares"), at a purchase
price of $_____ per share (the "Option Price") and exercisable as
hereinafter stated; provided, however, that such number of shares and/or
Option Price is subject to adjustment as provided in Section 6 of this
Stock Option Agreement. The Stock Option shall be exercisable in whole or
in part, to the extent provided in Section 4 hereof. As a condition of
the grant of the Stock Option, Employee must execute a covenant not to
compete in the form of Exhibit B hereto. The Stock Option is a
nonstatutory stock option and not an Incentive Stock Option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended.
2. The Stock Option, and any part thereof, shall be exercised
by the giving of ten days' (or such shorter period as the Company may
permit) prior written notice of exercise to the Secretary of the Company
accompanied by a letter, generally in the form of Exhibit C hereto,
specifying the number of whole Option Shares to be purchased and
accompanied by payment in full of the aggregate Option Price for the
number of Option Shares to be purchased. Such notice shall be deemed to
have been given when hand-delivered, telecopied or mailed, first class
postage prepaid, and, subject to Section 4(c), shall be irrevocable and
unconditional once given. The aggregate Option Price for such Option
Shares may be paid either by cash or a certified or bank cashier's check
payable to the order of the Company, or as otherwise permitted by the
Company.
The Employee shall be responsible for paying all withholding
taxes applicable to the exercise of any Stock Option. The Company shall
have the right to take any action necessary to insure that the Employee
pays the required withholding taxes. Upon payment of the aggregate Option
Price for the Option Shares and the required withholding taxes, the
Company shall cause the Option Shares so purchased to be delivered to the
Employee. The Optionee shall be permitted to satisfy the Company's tax
withholding requirements by making an election (the "Election") to have
the Company withhold Option Shares otherwise issuable to the Optionee, or
to deliver to the Company shares of Common Stock, having a fair market
value on the date income is recognized with respect to the exercise of the
Stock Option (the "Tax Date") equal in amount to the amount to be so
withheld. If the number of shares of Common Stock determined pursuant to
the preceding sentence includes a fractional share, the number of shares
withheld or delivered shall be reduced to the next lower whole number and
the Optionee shall deliver to the Company cash or its equivalent in lieu
of such fractional share, or otherwise make arrangements satisfactory to
the Company for payment of such amount. The Election shall be irrevocable
and must be received by the Secretary of the Company at his corporate
office prior to the Optionee's Tax Date. The Election shall be made in
writing and be made according to such rules and regulations and in such
form as the Committee shall determine and shall be subject to approval
(including approval given in advance of the Election) by the Committee.
3. Neither the Employee nor his legal representative shall be
or have any rights or privileges of a shareholder of the Company in
respect of any of the Option Shares issuable upon exercise of this Stock
Option unless and until such Option Shares shall have been issued upon the
exercise of the Stock Option.
4. (a) Stock Options shall be deemed to have been granted
as of the date of this Stock Option Agreement and shall become exercisable
or vested as follows:
(i) The portion of the Option Shares which shall vest or
become exercisable on _______________ and on each of the next
three one-year anniversaries of such date (__________________
and each of such three anniversaries referred to herein as an
"Anniversary Date") shall be equal to the number of Option
Shares awarded hereunder multiplied by a fraction, the numerator
of which is the earnings per share of the Company for the fiscal
year ending immediately prior to such Anniversary Date and the
denominator of which is $_____ (the Company's cumulative
earnings per share target for the fiscal year ended
__________________, computed by compounding its ____ earnings
per share at a ____ annual rate), provided, however, that the
Company's earnings per share for any such fiscal year shall be
deemed to be zero for the purpose of determining the numerator
of the fraction referred to in the preceding sentence if such
earnings per share are greater than zero and not ten percent
higher than the Company's earnings per share for the immediately
preceding fiscal year.(1) For purposes hereof, "earnings per
share" means the amount of earnings (net of extraordinary items)
attributable to each share of the Company's Common Stock
outstanding (on a fully diluted basis), all as determined in
accordance with generally accepted accounting principles;
(ii) If a change in control occurs, the Stock Option shall
be exercisable in full as of the date thereof. For this
purpose, "change in control" shall mean any event which results
in the legal or beneficial ownership in one person or group of
persons acting in concert of shares of Common Stock of the
Company representing more than fifty percent (50%) of the
outstanding Common Stock of the Company on the date of such
event. It is understood that if a change in control occurs,
this Section 4(a)(ii) shall apply even if the transaction by
which such change in control occurs is also described in Section
4(c);
(iii) At the request of the Employee, the chief financial
officer of the Company in consultation with the Board of
Directors will determine the number of Option Shares that have
become exercisable and provide a certificate setting forth the
basis for such determination; and
(iv) In the event that some or all of the Option Shares
have not vested pursuant to Section 4(a)(i) above or other
provisions of this Stock Option Agreement, such unvested Option
Shares shall vest as of January 22, 2006.
--------------------
(1) By way of example, if the Company's earnings per share for the
fiscal years ending _____________________ through __________________ are
as shown in the earnings per share column in the table below, the
percentage of the option shares which would vest on each Anniversary Date
is as shown in the vesting line of the table:
Cumulative
12/31/__ 12/31/__ 12/31/__ 12/31/__ Vesting
Earnings per share
Vesting on the next
Anniversary Date
following fiscal year
end
(b) If the Employee's employment with the Company terminates
for any reason other than death as provided in Section 4(e) below, the
Stock Option to the extent not exercisable or vested as of the date of
termination shall not become exercisable or vested as a result of events
(including the passage of time or the achievement of another Anniversary
Date) occurring subsequent to the date of termination. The vested but
unexercised portion of the Stock Option shall automatically and without
notice terminate and become null and void at the time of the earliest date
(the "Termination Date") to occur of the following:
(i) Thirty (30) days after the termination of the
Employee's employment with the Company and all subsidiaries
thereof for any reason (including without limitation, disability
or termination by the Company and all subsidiaries thereof, with
or without cause) other than by reason of the Employee's death
or a leave of absence approved by the Company or by reason of
the Employee's retirement from the Company and all subsidiaries
thereof after reaching age 55 and after having been employed by
the Company or any subsidiary thereof for an aggregate period of
at least seven (7) years; or
(ii) Three Hundred Sixty-Five (365) days following the
termination of the Employee's employment with the Company by
reason of the Employee's death or by reason of the Employee's
retirement from the Company after reaching age 55 and after
having been employed by the Company or any subsidiary thereof
for an aggregate period of at least seven (7) years; or
(iii) Thirty (30) days after expiration or termination of a
leave of absence approved by the Company unless the Employee
becomes reemployed with the Company prior to such 30-day period
in which event the Stock Option shall continue in effect in
accordance with its terms.
(iv) ____________________.
(c) In the event of a sale, lease or transfer of all or
substantially all of the Company's assets, equity securities or
businesses, or merger, consolidation or other business combination
involving the Company, the Committee may in its discretion elect to
declare that all or any portion of the Stock Option is immediately
exercisable and to take all such action as it deems necessary in
connection therewith and thereafter the Employee may exercise this Stock
Option to such extent, contingent upon the consummation of such event, and
this Stock Option, if and to the extent so exercised, shall be deemed
exercised immediately prior to such consummation.
(d) The Committee, in its sole discretion, may from time to
time accelerate or waive any conditions to the exercise of the Stock
Option.
(e) If the Employee dies while in the employ of the Company or
any subsidiary and if the Employee's death occurs after the fiscal year in
which the Stock Option is granted then, regardless of whether the Stock
Option is subject to exercise under Section 4(a) above, the Stock Option
shall become immediately vested and exercisable by the personal
representative of the Employee or the person to whom the Employee's rights
under the Stock Option are transferred by law or applicable laws of
descent and distribution.
5. Nothing herein contained shall confer upon the Employee the
right to continue in the employment of the Company or affect the right of
the Company to terminate the Employee's employment at any time, or permit
the exercise of this Stock Option as a result of the Company electing to
terminate at any time the employment of the Employee subject, however, to
the provisions of any agreement of employment between the Company and the
Employee.
6. In the event of any change in the outstanding shares of the
Company ("capital adjustment") for any reason, including but not limited
to, any stock split, stock dividend, recapitalization, merger,
consolidation, reorganization, combination or exchange of shares or other
similar event, an adjustment in the number or kind of shares of Common
Stock subject to this Stock Option, the Option Price under this Stock
Option and the Company's cumulative earnings per share target for purposes
of Section 4(a)(i) hereof shall be made by the Committee in a manner
consistent with such capital adjustment. The determination of the
Committee as to any such adjustment shall be conclusive and binding for
all purposes of this Stock Option Agreement.
7. Notwithstanding any provision of this Stock Option Agreement
to the contrary, the Committee may take whatever action it may consider
necessary or appropriate to comply with the Securities Act of 1933, as
amended, or any other applicable securities law, including limiting the
exercisability of this Stock Option or the issuance of Option Shares
hereunder.
8. This Stock Option may not be exercised if the issuance of
such Option Shares upon such exercise would constitute a violation of any
applicable Federal or state securities law or other law or regulation. As
a condition to the exercise of this Stock Option, the Company may require
the Employee to make any representation and warranty to the Company as may
be required by any applicable law or regulation.
9. Except as herein otherwise provided, the Stock Option and
any rights and privileges conferred by this Stock Option Agreement shall
not be transferred, assigned, pledged or hypothecated in any way (whether
by operation of law or otherwise) and shall not be subject to execution,
attachment, or similar process. Upon any attempt so to transfer, assign,
pledge, hypothecate, or otherwise dispose of the Stock Option, or of any
right or privilege conferred hereby, contrary to the provisions hereof, or
upon the levy of an attachment or similar process upon the rights and
privileges conferred hereby, the Stock Option and the rights and
privileges conferred hereby shall immediately become null and void.
10. This Stock Option shall be deemed to have been granted
pursuant to the Amended Plan and is subject to the terms and provisions
thereof. In the event of any conflict between the terms hereof and the
provisions of the Amended Plan, the terms and conditions of the Amended
Plan shall prevail. Any and all terms used herein, unless otherwise
specifically defined herein, shall have the meaning ascribed to them in
the Amended Plan.
11. This Stock Option Agreement shall be binding upon and inure
to the benefit of the parties hereto and any successors to the business of
the Company, but neither this Stock Option Agreement nor any rights
hereunder shall be assignable by the Employee.
12. All decisions or interpretations of the Committee with
respect to any question arising under the Amended Plan or under this Stock
Option Agreement shall be binding, conclusive and final. As a condition
of the granting of the Stock Option, the Employee agrees, for himself and
his personal representatives, that any dispute or disagreement which may
arise under or as a result of or pursuant to this Stock Option Agreement
shall be determined by the Committee in its sole discretion, and that any
interpretation or determination by the Committee shall be final, binding
and conclusive.
13. The waiver by the Company of any provision of this Stock
Option Agreement shall not operate as or be construed to be a subsequent
waiver of the same provisions or waiver of any other provision hereof.
14. Except as herein otherwise provided, this Stock Option
shall be irrevocable before the Termination Date and its validity and
construction shall be governed by the laws of the State of Wisconsin.
The Employee hereby acknowledges his acceptance of the Stock
Option by executing the duplicate of this Stock Option Agreement in the
space provided and returning it to the Secretary of the Company as
directed by the Company. By accepting this Stock Option Agreement, the
Employee, and each person claiming under or through him, shall be
conclusively deemed to have indicated his acceptance and ratification of,
and consent to, any action taken under the Amended Plan by the Company or
the Committee.
MGIC INVESTMENT CORPORATION
By:
_______________________________________
President and Chief Executive Officer
ACCEPTED BY:
______________________________________
Name of Employee:_____________________
Number of Shares:_____________________
