EX-10.4






EXHIBIT 10.4




FORM OF

CHANGE OF CONTROL

EMPLOYMENT AGREEMENT

Pre-2008 Form, as revised November 19, 2008




AGREEMENT by and between The PMI Group, Inc., a Delaware corporation (the “Company”), and
     (“Executive”), dated as of the      day of      ,      , and
superseding, as of this date, the prior change of control employment agreement between the Company
and Executive.



The Board of Directors of the Company (the “Board”), has determined that it is in the best
interests of the Company and its shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of
Control (as defined below) of the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal uncertainties and risks created
by a pending or threatened Change of Control and to encourage the Executive’s full attention and
dedication to the Company currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and benefits arrangements upon a Change of
Control which ensure that the compensation and benefits expectations of the Executive will be
satisfied and which are competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into this Agreement.



NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:



1. Certain Definitions. (a) The “Effective Date” shall mean the first date during
the Change of Control Period (as defined in Section 1(b)) on which a Change of Control (as defined
in Section 2) occurs. Anything in this Agreement to the contrary notwithstanding, if (A) the
Executive’s employment with the Company is terminated by the Company, (B) the Date of Termination
(as defined herein) is prior to the date on which the Change of Control occurs, and (C) it is
reasonably demonstrated by the Executive that such termination of employment (i) was at the request
of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of
this Agreement the “Effective Date” shall mean the date immediately prior to such Date of
Termination.



(b) The “Change of Control Period” shall mean the period commencing on the date hereof and
ending on the third anniversary of the date hereof; provided, however, that commencing on the date
one year after the date hereof, and on each annual anniversary of such date (such date and each
annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”), unless
previously terminated, the Change of Control Period shall be automatically extended so as to
terminate three years from such Renewal Date, unless at least 60 days prior to the Renewal Date the
Company shall give notice to the Executive that the Change of Control Period shall not be so
extended.



2. Change of Control. For the purpose of this Agreement, a “Change of 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, (iv) any beneficial ownership maintained by (but not additional acquisitions by), The
Allstate Corporation and its subsidiaries, and their respective successors (“Allstate”), pending
such time that Allstate distributes or transfers its current ownership interest in the Outstanding
Company Common Stock and Outstanding Company Voting Securities as contemplated by the Prospectus
dated April 10, 1995, relating to the initial public offering of the common stock of the Company,
or (v) any acquisition pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section 2. 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, 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), a Change of Control shall then occur.



3. Employment Period. The Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms
and conditions of this Agreement, for the period commencing on the Effective Date and ending on the
third anniversary of such date (the “Employment Period”). 



4. Terms of Employment. (a) Position and Duties.




(i) During the Employment Period, (A) the Executive’s position (including status,
offices, titles and reporting requirements), authority, duties and responsibilities shall be
at least commensurate in all material respects with the most significant of those held,
exercised and assigned to the Executive at any time during the 90-day period immediately
preceding the Effective Date and (B) the Executive’s services shall be performed at the
location where the Executive was employed immediately preceding the Effective Date or any
office or location less than 50 miles from such location.




(ii) During the Employment Period, and excluding any periods of vacation and sick leave
to which the Executive is entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to the Executive hereunder, to
use the Executive’s reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of this
Agreement for the Executive to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do not
significantly interfere with the performance of the Executive’s responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive’s responsibilities
to the Company.



(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary (“Annual Base Salary”), which shall be paid at a
monthly rate, at least equal to twelve times the highest monthly base salary paid or payable,
including any base salary which has been earned but deferred, to the Executive by the Company and
its affiliated companies in respect of the twelve-month period immediately preceding the month in
which the Effective Date occurs. During the Employment Period, the Annual Base Salary shall be
reviewed no more than 12 months after the last salary increase awarded to the Executive prior to
the Effective Date and thereafter at least annually. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base
Salary shall not be reduced after any such increase and the term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as so increased. As used in this Agreement, the
term “affiliated companies” shall include any company controlled by, controlling or under common
control with the Company.




(ii) Annual Bonus. In addition to the Annual Base Salary, the Executive shall
be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the
“Annual Bonus”) in cash at least equal to the Executive’s highest bonus earned under the
Company’s annual incentive plans, or any comparable bonus under any predecessor or successor
plan, for the last three full fiscal years prior to the Effective Date (or for such lesser
number of full fiscal years prior to the Effective Date for which the Executive was eligible
to earn such a bonus, and annualized in the case of any bonus earned for a partial fiscal
year) (the “Recent Annual Bonus”). If the Executive has not been eligible to earn such a
bonus for any period prior to the Effective Date, the Recent Annual Bonus shall mean the
Executive’s target Annual Bonus for the year in which the Effective Date occurs. Each such
Annual Bonus shall be paid no later than two and a half months after the end of the fiscal
year next following the fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual Bonus. pursuant to an arrangement
that meets the requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”).




 




(iii) Incentive, Savings and Retirement Plans. During the Employment Period,
the Executive shall be entitled to participate in all incentive, savings and retirement
plans, practices, policies and programs applicable generally to other peer executives of the
Company and its affiliated companies, but in no event shall such plans, practices, policies
and programs (other than equity-based incentives) provide the Executive with incentive
opportunities (measured with respect to both regular and special incentive opportunities, to
the extent, if any, that such distinction is applicable), savings opportunities and
retirement benefit opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at any time during
the 90-day period immediately preceding the Effective Date or if more favorable to the
Executive, those provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.




(iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or
the Executive’s family, as the case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices, policies and programs provided
by the Company and its affiliated companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with benefits which are less
favorable, in the aggregate, than the most favorable of such plans, practices, policies and
programs in effect for the Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.




(v) Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of the Company and its
affiliated companies in effect for the Executive at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of the Company
and its affiliated companies.




(vi) Fringe Benefits. During the Employment Period, the Executive shall be
entitled to fringe benefits, including, without limitation, tax and financial planning
services, payment of club dues, and, if applicable, use of an automobile and payment of
related expenses, in accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.




(vii) Office and Support Staff. During the Employment Period, the Executive
shall be entitled to an office or offices of a size and with furnishings and other
appointments, and to exclusive personal secretarial and other assistance, at least equal to
the most favorable of the foregoing provided to the Executive by the Company and its
affiliated companies at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company and its affiliated
companies.




(viii) Vacation. During the Employment Period, the Executive shall be entitled
to paid vacation or paid-time off in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect for the
Executive at any time during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.



5. Termination of Employment. (a) Death or Disability. The Executive’s
employment shall terminate automatically upon the Executive’s death during the Employment Period.
If the Company determines in good faith that the Disability of the Executive has occurred during
the Employment Period (pursuant to the definition of Disability set forth below), it may give to
the Executive written notice in accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive’s employment. In such event, the Executive’s employment with the Company
shall terminate effective on the 30th day after receipt of such notice by the Executive (the
“Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive’s duties. For purposes of this
Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with
the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to
mental or physical illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive’s legal
representative.



(b) Cause. The Company may terminate the Executive’s employment during the Employment
Period for Cause. For purposes of this Agreement, “Cause” shall mean:




(i) the willful and continued failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the Board or the Chief Executive
Officer of the Company which specifically identifies the manner in which the Board or Chief
Executive Officer believes that the Executive has not substantially performed the
Executive’s duties, or




(ii) the willful engaging by the Executive in illegal conduct or gross misconduct which
is materially and demonstrably injurious to the Company.



For purposes of this provision, no act or failure to act, on the part of the Executive, shall be
considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of
the Company or based upon the advice of counsel for the Company shall be conclusively presumed to
be done, or omitted to be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless
and until there shall have been delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.



(c) Good Reason. The Executive’s employment may be terminated by the Executive for
Good Reason. For purposes of this Agreement, “Good Reason” shall mean:




(i) the assignment to the Executive of any duties inconsistent in any substantial
respect with the Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section 4(a) of this
Agreement, or any other action by the Company which results in a substantial diminution in
such position, authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied
by the Company promptly after receipt of notice thereof given by the Executive;




(ii) any failure by the Company to comply with any of the provisions of Section 4(b) of
this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring
in bad faith and which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;




(iii) the Company’s requiring the Executive to be based at any office or location other
than as provided in Section 4(a)(i)(B) hereof or the Company’s requiring the Executive to
travel on Company business to a substantially greater extent than required immediately prior
to the Effective Date;




(iv) any purported termination by the Company of the Executive’s employment otherwise
than as expressly permitted by this Agreement; or




(v) any failure by the Company to comply with and satisfy Section 11(c) of this
Agreement.



For purposes of this Section 5(c), any good faith determination of “Good Reason” made by the
Executive shall be conclusive. Anything in this Agreement to the contrary notwithstanding, a
termination by the Executive for any reason during the 30-day period immediately following the
first anniversary of the Effective Date shall be deemed to be a termination for Good Reason for all
purposes of this Agreement.



(d) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a
“Notice of Termination” means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date (which date shall
be not more than thirty days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.



(e) Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii)
if the Executive’s employment is terminated by the Company other than for Cause or Disability, the
date on which the Company notifies the Executive of such termination, (iii) if the Executive
resigns without Good Reason, the date on which the Executive notifies the Company of such
termination, and (iv) if the Executive’s employment is terminated by reason of death or Disability,
the date of death of the Executive or the Disability Effective Date, as the case may be.
Notwithstanding the foregoing, in no event shall the Date of Termination occur until the Executive
experiences a “separation from service” within the meaning of Section 409A of the Code (a
“Separation from Service”), and notwithstanding anything contained herein to the contrary, the date
on which such separation from service takes place shall be the “Date of Termination.”



6. Obligations of the Company upon Termination. (a) Good Reason; Other Than for
Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the
Executive’s employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason:




(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after
the Date of Termination the aggregate of the following amounts:




(A) the sum of (1) the Executive’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid; (2) the Executive’s business
expenses that are reimbursable pursuant to Section 4(b)(v) but have not been
reimbursed by the Company as of the Date of Termination; (3) the Executive’s Annual
Bonus for the fiscal year immediately preceding the fiscal year in which the Date of
Termination occurs, if such bonus has been determined but not paid as of the Date of
Termination; (4) any accrued vacation or paid-time off pay to the extent not
theretofore paid (the sum of the amounts described in subclauses (1), (2), (3) and
(4), the “Accrued Obligations”); and (5) the product of (x) the higher of (I) the
Recent Annual Bonus and (II) the Annual Bonus paid or payable, including any bonus
or portion thereof that has been earned but deferred (and annualized for any fiscal
year consisting of less than 12 full months or during which the Executive was
employed for less than 12 full months), for the most recently completed fiscal year
during the Employment Period, if any (such higher amount, the “Highest Annual
Bonus”) and (y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the denominator of which is
365 (the “Pro Rata Bonus”). Notwithstanding the foregoing, if the Executive has
made an irrevocable election under any deferred compensation arrangement subject to
Section 409A of the Code to defer any portion of the compensation described above,
then for all purposes of this Section 6 (including, without limitation, Sections
6(b) through 6(d)), such deferral election, and the terms of the applicable
arrangement shall apply to the same portion of the amount described in such clause
(3), and such portion shall not be considered as part of the “Accrued Obligations”
but shall instead be an “Other Benefit” (as defined below);




(B) the amount equal to the product of (1) [MULTIPLIER] and (2) the sum of (x)
the Executive’s Annual Base Salary and (y) the Highest Annual Bonus; and




(C) an amount equal to the difference between (I) the aggregate benefit under
the Company’s qualified defined benefit retirement plan (currently entitled The PMI
Group, Inc. Retirement Plan) (the “Retirement Plan”) and the Company’s excess or
supplemental defined benefit retirement plan(s) in which the Executive participates
(currently entitled The PMI Group, Inc. Supplemental Employee Retirement Plan) (the
“SERP”) which the Executive would have accrued (whether or not vested) if the
Executive’s employment had continued for [MULTIPLIER] years after the Date of
Termination (for purposes of this clause (I) of Section 6(a)(i)(C), the Executive
shall be treated as vested in, and eligible to receive, his accrued benefits under
the Retirement Plan and SERP, based upon the Executive’s credited service under such
plans, plus the additional years of credited service under this Section) and (II)
the actual vested benefit, if any, of the Executive under the Retirement Plan and
the SERP, determined as of the Date of Termination (with the foregoing amounts to be
computed on an actuarial present value basis, based on the assumption that the
Executive’s compensation in each of the [MULTIPLIER] years following such
termination would have been that required by Section 4(b)(i) and Section 4(b)(ii) of
this Agreement, and using actuarial assumptions no less favorable to the Executive
than the most favorable of those in effect for purposes of computing benefit
entitlements under the Retirement Plan and the SERP at any time from the day before
the Effective Date) through the Date of Termination (no amendment to or termination
of the Retirement plan or SERP on or after the Effective Date shall adversely effect
the Executive’s right to receive the benefits under this Section 6(a)(i)(C), based
upon the Executive’s credited service through the date of such amendment or
termination, plus the additional years of service credited under this Section
6(a)(i)(C));




(ii) for [MULTIPLIER] years after the Executive’s Date of Termination, or such longer
period as may be provided by the terms of the appropriate plan, program, practice or policy
(the “Benefit Continuation Period”), the Company shall provide health care and life
insurance benefits to the Executive and/or the Executive’s family at least equal to those
which would have been provided to them in accordance with the plans, programs, practices and
policies providing health care and life insurance benefits and at the benefit level
described in Section 4(b)(iv) of this Agreement if the Executive’s employment had not been
terminated or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its affiliated companies
and their families, provided, however, that, the health care benefits provided during the
Benefit Continuation Period shall be provided in such a manner that such benefits (and the
costs and premiums thereof) are excluded from the Executive’s income for federal income tax
purposes and, if the Company reasonably determines that providing continued coverage under
one or more of its health care benefit plans contemplated herein could be taxable to the
Executive, the Company shall provide such benefits at the level required hereby through the
purchase of individual insurance coverage; provided, however, that if the Executive becomes
reemployed with another employer and is eligible to receive health care and life insurance
benefits under another employer-provided plan, the health care and life benefits
described herein shall be secondary to those provided under such other plan during such
applicable period of eligibility.  For purposes of determining eligibility (but
not the time of commencement of benefits) of the Executive for retiree benefits pursuant to
such plans, practices, programs and policies, the Executive shall be considered to have
remained employed until [MULTIPLIER] years after the Date of Termination and to have
retired on the last day of such period; provided however, that notwithstanding anything else
contained in this Section 6(a)(ii), if the Executive has reached the age of 50 on or prior
to his Date of Termination, he shall be deemed fully eligible for retiree health benefits.
To comply with Section 409A of the Code, (I) the amount of benefits that the Company is
obligated to provide under this Section 6(a)(ii) in any given calendar year shall not affect
the amount of such benefits that the Company is obligated to pay in any other calendar year;
and (II) the Executive’s right to have the Company provide such benefits may not be
liquidated or exchanged for any other benefit;




(iii) the Company shall, at its sole expense as incurred, provide the Executive with
reasonable outplacement services the scope and provider of which shall be selected by the
Executive in the Executive’s sole discretion; provided, however, that the cost of such
outplacement benefits shall not exceed 15% of the Executive’s Annual Base Salary; and
provided, further, that such outplacement benefits shall end not later than the last day of
the second calendar year that begins after the Date of Termination;




(iv) to the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies, including compensation
previously deferred by the Executive, together with any accrued interest or earnings
thereon, (such other amounts and benefits shall be hereinafter referred to as the “Other
Benefits”), in accordance with the terms of their underlying governing documents.



Notwithstanding the foregoing provisions of this Section 6(a)(i), in the event that the Executive
is a “specified employee” within the meaning of Section 409A of the Code (as determined in
accordance with the methodology established by the Company as in effect on the Date of Termination)
(a “Specified Employee”), amounts that would otherwise be payable and benefits that would otherwise
be provided under Section 6(a)(i) (other than the Accrued Obligations) during the period from the
Executive’s Date of Termination through the Delayed Payment Date (as defined below) shall instead
be paid, with interest on any delayed payment at the applicable federal rate provided for in
Section 7872(f)(2)(A) of the Code (“Interest”) determined as of the Date of Termination, or
provided on the earlier of (x) the first business day after the date that is six months following
the Executive’s Separation from Service or (y) the first business day after the Executive’s death
(the “Delayed Payment Date”).



(b) Death. If the Executive’s employment is terminated by reason of the Executive’s
death during the Employment Period, this Agreement shall terminate without further obligations to
the Executive’s legal representatives under this Agreement, other than for payment of Accrued
Obligations and Pro Rata Bonus and the timely payment or provision of Other Benefits. Subject to
the proviso set forth in Section 6(a)(i)(A) regarding prior deferral elections to the extent
applicable, Accrued Obligations and Pro Rata Bonus shall be paid to the Executive’s estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With
respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section
6(b) shall include, without limitation, and the Executive’s estate and/or beneficiaries shall be
entitled to receive, benefits at least equal to the most favorable benefits provided by the Company
and affiliated companies to the estates and beneficiaries of peer executives of the Company and
such affiliated companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any
time during the 90-day period immediately preceding the Effective Date or, if more favorable to the
Executive’s estate and/or the Executive’s beneficiaries, as in effect on the date of the
Executive’s death with respect to other peer executives of the Company and its affiliated companies
and their beneficiaries.



(c) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations and Pro Rata Bonus (in
each case, subject to the proviso set forth in Section 6(a)(i)(A) regarding prior deferral
elections to the extent applicable) and the timely payment or delivery of the Other Benefits in
accordance with the terms of the underlying plans or agreements, and shall have no other severance
obligations under this Agreement. The Accrued Obligations and the Pro Rata Bonus (in each case,
subject to the proviso set forth in Section 6(a)(i)(A) regarding prior deferral elections to the
extent applicable) shall be paid to the Executive in a lump sum in cash within 30 days of the Date
of Termination, provided, that in the event that the Executive is a Specified Employee on the date
that the Executive has a Separation from Service, the Pro Rata Bonus shall be paid, with Interest,
to the Executive on the Delayed Payment Date. With respect to the provision of Other Benefits, the
term Other Benefits as utilized in this Section 6(c) shall include, and the Executive shall be
entitled after the Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and its affiliated companies
to disabled executives and/or their families in accordance with such plans, programs, practices and
policies relating to disability, if any, as in effect generally with respect to other peer
executives and their families at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive’s family, as in effect
at any time thereafter generally with respect to other peer executives of the Company and its
affiliated companies and their families.



(d) Cause; Other than for Good Reason. If the Executive’s employment shall be
terminated for Cause during the Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the Executive (x) Accrued
Obligations (subject to the proviso set forth in Section 6(a)(i)(A) regarding prior deferral
elections to the extent applicable) and (y) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment Period, excluding
a termination for Good Reason, this Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the Pro Rata Bonus (in each case, subject to the
proviso set forth in Section 6(a)(i)(A) regarding prior deferral elections to the extent
applicable) and the timely payment or delivery of the Other Benefits and shall have no other
severance obligations under this Agreement. In such case, all Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of Termination, provided, that in
the event that the Executive is a Specified Employee on the date that the Executive has a
Separation from Service, the Pro Rata Bonus shall be paid, with Interest, to the Executive on the
Delayed Payment Date.



7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies and for which the Executive may qualify, nor,
subject to Section 12(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or agreement except
as explicitly modified by this Agreement.



8. Full Settlement; Legal Fees. The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations hereunder shall, subject to
Section 12(g), not be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by way of mitigation of
the amounts payable to the Executive under any of the provisions of this Agreement and except as
specifically provided in Section 6(a)(ii), such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay as incurred, (within ten days
following the Company’s receipt of an invoice from the Executive), at any time from the Effective
Date of this Agreement through the Executive’s remaining lifetime (or, if longer, through the 20th
anniversary of the Effective Date) to the full extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Company, the Executive or others of the validity or enforceability of, or liability
or entitlement under, any provision of this Agreement or any guarantee of performance thereof
(whether such contest is between the Company and the Executive or between either of them and any
third party, and including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case Interest determined as of the date such
legal fees and expenses were incurred. In order to comply with Section 409A of the Code, in no
event shall the payments by the Company under this Section 8 be made later than the end of the
calendar year next following the calendar year in which such fees and expenses were incurred,
provided, that the Executive shall have submitted an invoice for such fees and expenses at least 10
days before the end of the calendar year next following the calendar year in which such fees and
expenses were incurred. The amount of such legal fees and expenses that the Company is obligated
to pay in any given calendar year shall not affect the legal fees and expenses that the Company is
obligated to pay in any other calendar year, and the Executive’s right to have the Company pay such
legal fees and expenses may not be liquidated or exchanged for any other benefit.



9. Certain Additional Payments by the Company. (a) Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any payment, award, benefit or
distribution by the Company (or any of its affiliated entities) or by any entity which effectuates
a Change of Control (or any of its affiliated entities) to or for the benefit of the Executive
(whether pursuant to the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 9) (a “Payment”) would be subject to the excise tax
imposed by Section 4999 of the Code or any corresponding provisions of state or local tax laws, or
any interest or penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter collectively referred to
as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a
“Gross–Up Payment”) in an amount such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, but excluding any income taxes and penalties imposed pursuant to Section
409A of the Code, the Executive retains an amount of the Gross–Up Payment equal to the Excise Tax
imposed upon the Payments. The payment of a Gross–Up Payment under this Section 9(a) shall not be
conditioned upon the Executive’s termination of employment. Notwithstanding the foregoing
provisions of this Section 9(a), if it shall be determined that the Executive is entitled to a
Gross-Up Payment, but that the portion of the Payments that would be treated as “parachute
payments” under Section 280G of the Code does not exceed 110% of the greatest amount (the “Safe
Harbor Amount”) that could be paid to the Executive such that the receipt of Payments would not
give rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive and the
amounts payable under this Agreement shall be reduced so that the Payments, in the aggregate, are
reduced to the Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable,
shall be made by reducing the payments and benefits under the following sections in the following
order: (i) Section 6(a)(i)(B), (ii) Section 6(a)(i)(C), (iii) Section 6(a)(i)(A)(5) and (iv)
Section 6(a)(ii). For purposes of reducing the Payments to the Safe Harbor Amount, only amounts
payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the
amounts payable under this Agreement would not result in a reduction of the Payments to the Safe
Harbor Amount, no amounts payable under this Agreement shall be reduced pursuant to this Section
9(a) and the Executive shall be entitled to the Gross–Up Payment.



(e) Subject to the provisions of Section 9(c), all determinations required to be made under
this Section 9, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by Deloitte & Touche LLP or such other certified public accounting firm as may be designated
by the Executive (the “Accounting Firm”), which Accounting Firm shall provide detailed
supporting calculations both to the Company and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control, the Executive shall
appoint another nationally recognized accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been
made by the Company should have been made (“Underpayment”), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.



(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten business days after
the Executive is informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on which the Executive
gives such notice to the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest such claim, the Executive shall:




(i) give the Company any information reasonably requested by the Company relating to
such claim,




(ii) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the
Company,




(iii) cooperate with the Company in good faith in order effectively to contest such
claim, and




(iv) permit the Company to participate in any proceedings relating to such claim;



provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the
Company shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such payment or with respect to any imputed
income with respect to such payment; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.



(d) If, after the receipt by the Executive of a Gross-Up Payment or payment by the Company of
an amount on the Executive’s behalf pursuant to Section 9(c), the Executive becomes entitled to
receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with
respect to such claim, the Executive shall (subject to the Company’s complying with the
requirements of Section 9(c)) promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable thereto). If, after payment by the
Company of an amount on the Executive’s behalf pursuant to Section 9(c), a determination is made
that the Executive shall not be entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then the amount of such payment shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.



(e) Any Gross-Up Payment, as determined pursuant to this Section 9, shall be remitted by the
Company to the Internal Revenue Service or any other applicable taxing authority (collectively, the
“Taxing Authorities”) within five days of the receipt of the Accounting Firm’s determination;
provided that, the Gross-Up Payment shall in all events be paid no later than the end of the
Executive’s taxable year next following the Executive’s taxable year in which the Excise Tax (and
any income or other related taxes or interest or penalties thereon) on a Payment are remitted to
the Taxing Authorities or, in the case of amounts relating to a claim described in Section 9(c)
that does not result in the remittance of any federal, state, local and foreign income, excise,
social security and other taxes, the calendar year in which the claim is finally settled or
otherwise resolved. Notwithstanding any other provision of this Section 8, the Company may, in its
sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable
taxing authority, for the benefit of the Executive, all or any portion of any Gross-Up Payment, and
the Executive hereby consents to such withholding.



10. Confidential Information. The Executive shall hold in a fiduciary capacity for
the benefit of the Company all secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive’s employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement). After termination
of the Executive’s employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of this Section 10
constitute a basis for deferring or withholding any amounts otherwise payable to the Executive
under this Agreement.



11. Successors. (a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s legal representatives.



(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns. 



(c) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.



12. Miscellaneous. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and shall have no force
or effect. This Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal representatives.



(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:



If to the Executive:




[NAME]




[ADDRESS]



If to the Company:



The PMI Group, Inc.



3003 Oak Road



Walnut Creek, California 94597



Attention: General Counsel



or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.



(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.



(d) The Company may withhold from any amounts payable under this Agreement such Federal,
state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or
regulation.



(e) The Executive’s or the Company’s failure to insist upon strict compliance with any
provision hereof or any other provision of this Agreement or the failure to assert any right the
Executive or the Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)-(v) of this
Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.



(f) The Executive and the Company acknowledge that, except as may otherwise be provided under
any other written agreement between the Executive and the Company, the employment of the Executive
by the Company is “at will” and, prior to the Effective Date, the Executive’s employment may be
terminated by either the Executive or the Company at any time prior to the Effective Date, in which
case the Executive shall have no further rights under this Agreement. From and after the Effective
Date this Agreement shall supersede any other agreement between the parties with respect to the
subject matter hereof, including, without limitation, the right of the Executive to participate in
any severance plan of the Company or otherwise receive severance benefits from the Company.



(g) The Agreement is intended to comply with the requirements of Section 409A of the Code or
an exemption or exclusion therefrom and shall in all respects be administered in accordance with
Section 409A of the Code. Each payment under this Agreement shall be treated as a separate payment
for purposes of Section 409A of the Code. In no event may the Executive, directly or indirectly,
designate the calendar year of any payment to be made under this Agreement. If the Executive dies
following the Date of Termination and prior to the payment of the any amounts delayed on account of
Section 409A of the Code, such amounts shall be paid to the personal representative of the
Executive’s estate within 30 days after the date of the Executive’s death. All reimbursements and
in-kind benefits provided under this Agreement that constitute deferred compensation within the
meaning of Section 409A of the Code shall be made or provided in accordance with the requirements
of Section 409A of the Code, including, without limitation, that (i) in no event shall
reimbursements by the Company under this Agreement be made later than the end of the calendar year
next following the calendar year in which the applicable fees and expenses were incurred, provided,
that the Executive shall have submitted an invoice for such fees and expenses at least 10 days
before the end of the calendar year next following the calendar year in which such fees and
expenses were incurred; (ii) the amount of in-kind benefits that the Company is obligated to pay or
provide in any given calendar year shall not affect the in-kind benefits that the Company is
obligated to pay or provide in any other calendar year; (iii) the Executive’s right to have the
Company pay or provide such reimbursements and in-kind benefits may not be liquidated or exchanged
for any other benefit; and (v) in no event shall the Company’s obligations to make such
reimbursements or to provide such in-kind benefits apply later than the Executive’s remaining
lifetime (or if longer, through the 20th anniversary of the Effective Date). Prior to the
Effective Date but within the time period permitted by the applicable Treasury Regulations (or such
later time as may be permitted under Section 409A or any IRS or Department of Treasury rules or
other guidance issued thereunder), the Company may, in consultation with the Executive, modify the
Agreement, in the least restrictive manner necessary and without any diminution in the value of the
payments to the Executive, in order to cause the provisions of the Agreement to comply with the
requirements of Section 409A of the Code, so as to avoid the imposition of taxes and penalties on
the Executive pursuant to Section 409A of the Code.



13. Survivorship. Upon the expiration or other termination of this Agreement or the
Executive’s employment, the respective rights and obligations of the parties hereto shall survive
to the extent necessary to carry out the intentions of the parties under this Agreement.



IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the
authorization from its Board of Directors, the Company has caused this Agreement to be executed in
its name on its behalf, all as of the day and year first above written.



[Executive]




THE PMI GROUP, INC.




By:




Louis G. Lower II




Compensation Committee Chair