Document:

EXHIBIT 10.8
                                                                    ------------

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
the first day of January,  2000 by and between  WILLIAM H. LACY,  an  individual
currently residing at 1797 Shalom Drive, West Bend, Wisconsin 53095 (hereinafter
referred  to as "Lacy"),  on behalf of himself and his agents,  representatives,
heirs,  executors,  attorneys,  administrators,   successors  and  assigns;  and
MORTGAGE GUARANTY INSURANCE CORPORATION, a stock insurance company organized and
existing  under  the  laws  of  the  State  of  Wisconsin,  with  its  principal
administrative offices located at 250 East Kilbourn Avenue, Milwaukee, Wisconsin
53202 (hereinafter referred to as the "Company").

                                   WITNESSETH:

     WHEREAS,  Lacy was employed by the Company as its Chairman  until  December
31, 1999; and in connection with Lacy's  retirement as an officer of the Company
and its affiliates,  which was effective as of the close of business on December
31,  1999,  Lacy and the Company  desire to continue the  employment  of Lacy as
Special  Advisor  until  January  31,  2005,  on the  terms and  subject  to the
conditions set forth herein.

     NOW,  THEREFORE,  in consideration of the foregoing and the mutual promises
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged,  Lacy and the Company hereby agree
as follows:

     1.  Confirmation of Officer  Retirement;  Continuation of Employment.  Lacy
hereby confirms that he has retired from and resigned his officer positions with
the Company and all parent, subsidiary,  and affiliated corporations,  effective
as of the close of the  Company's  business on December  31, 1999 (the  "Offices
Retirement  Date").  Lacy's retirement as an officer shall not be deemed to be a
termination  of  employment,  and Lacy shall  continue his  employment  with the
Company  hereunder and shall provide advice and counsel to the Company's  senior
management  regarding the Company's  operations  and such other  services to the
Company  commensurate with Lacy's prior position and status,  substantially on a
full-time  basis  consistent  with Lacy's past  practice,  in each case,  to the
extent requested by the Chief Executive  Officer or a person  designated by him,
for a period  ending at the close of business on January 31,  2005.  Lacy agrees
that he has no right to continue his  employment  after January 31, 2005. To the
extent feasible,  Lacy will be entitled to perform the services  required hereby
from his home.

     2. Base  Salary.  Subject to the terms and  conditions  of this  Agreement,
following the Offices Retirement Date, the Company shall pay Lacy as follows:

          (a) Base Salary.  Beginning on January 1, 2000,  the Company shall pay
Lacy a base salary at an annualized  rate of $500,000.00  ("Base  Salary") until
the earlier of: (i)

<PAGE>
termination of Lacy's  employment with the Company  pursuant to Section 9 below,
or (ii)  January  31,  2005,  at which time the  Company  shall stop making such
payments.

          (b) Amount and Timing of Payments.  All Base Salary  payments  will be
paid in bi-weekly  installments on such dates as the Company  generally pays its
other employees.  The first and last such  installments  will be prorated if the
installment period is less than two full weeks.

          (c) Deductions.  The Company will deduct from all Base Salary payments
all legally  required payroll  deductions,  including but not limited to federal
and  state  income  tax and FICA  withholding,  as well as all  other  customary
deductions elected by Lacy.

     3. Pension Plan.  During the period in which Base Salary  payments are made
to Lacy,  he will  participate  in the Company's  pension plan and  Supplemental
Executive Retirement Program ("SERP") as an employee of the Company.

     4.  Profit  Sharing  Plan.  Lacy will be  entitled  to  participate  in the
Company's  profit  sharing  plan for each year  during  the period in which Base
Salary  payments are made,  provided he remains  eligible to receive Base Salary
payments as of December 31st of such year. Lacy's participation in the Company's
profit  sharing  plan for each such year  shall be to the same  extent  as,  and
subject to the same terms and  conditions  that apply to, other active full time
employees of the Company,  provided  Lacy has complied with all of the terms and
conditions of Sections 7 and 8 below. The Company's profit sharing  contribution
to Lacy for  such  year  will be based  solely  upon the  eligible  compensation
received by Lacy from the Company during such year. Lacy also  acknowledges  and
agrees that he will not be entitled to receive any profit sharing  contributions
for any calendar year after 2004.

     5.  Insurance.  During the period in which Base Salary payments are made to
Lacy,  he will be eligible to  participate  in the  Company's  group  health and
dental insurance plans, as well as the Company's long term disability  insurance
plan.  During such period,  the Company will provide such insurance  benefits to
Lacy  on the  same  basis  it  provides  these  benefits  to all  other  Company
employees,  including,  but not limited to,  those terms and  conditions  of the
plans  requiring  the  payment  by the  employee  of the  employee's  portion of
insurance  premiums.  During such period, the Company also shall continue to pay
the  Company's  portion of the premium for Lacy's  split-dollar  life  insurance
coverage  and  supplementary  long-term  disability  insurance  coverage for the
calendar years of 2000 through 2004, inclusive.  (No split-dollar life insurance
coverage  or  supplementary  long-term  disability  insurance  coverage  will be
purchased  by the Company for Lacy for any period after 2004.) To the extent the
Company's long-term disability insurance plan, as in effect on January 31, 2005,
provides a feature  allowing a terminating  Company employee to convert coverage
under  the plan to an  individual  policy,  the  Company  will take no action to
impair Lacy's  ability to exercise any right he may have under the plan to elect
such conversion,  provided, however, that any such conversion shall be at Lacy's
sole option, cost and expense.

                                      -2-
<PAGE>

     6. No Other  Compensation or Benefits.  Lacy  acknowledges and agrees that,
except as is  specifically  provided for in this Agreement and any written stock
option  agreements  he may have  previously  entered  into with MGIC  Investment
Corporation,  he will not be entitled to receive from the Company (or any of its
parent or affiliated  corporations)  any salary,  wages,  bonuses (except to the
extent a bonus is  awarded to him with  respect  to the year  ended  December31,
1999),  contributions,  insurance,  stock option  rights,  or other  benefits or
compensation  of any kind,  whatsoever.  Without  limiting the generality of the
foregoing,  Lacy acknowledges and agrees that he will not be entitled to receive
any severance  compensation  or other bonuses,  incentive  payments,  or similar
payments  at any time  after the date of this  Agreement,  except  as  otherwise
expressly set forth herein.

     7. Return of Confidential Information.  On or prior to January 31, 2005 (or
if this  Agreement is earlier  terminated or the Company so requests in writing,
as promptly as  practicable  thereafter),  Lacy shall  return to the Company all
written or otherwise tangible MGIC Confidential Information in his possession or
subject to his  control.  For  purposes  of this  Agreement,  MGIC  Confidential
Information  shall include,  without  limitation,  all business  information and
records  that  relate to the  Company or any of its direct or  indirect  parent,
subsidiary or affiliated companies, which are not known to the public generally.
MGIC Confidential Information shall include,  without limitation,  all originals
and all  full or  partial  copies  of any  written  or  electronically  captured
materials  received  (from the  Company  or any third  party),  sent,  reviewed,
developed  or  prepared  by Lacy  during the course of his  employment  with the
Company, all financial statements and other accounting or financial information,
customer lists,  customer  profiles,  customer  buying  records,  sales records,
market  surveys,  marketing  plans and  information,  short-term  and long-range
business plans,  compensation and benefit  information,  supplier lists,  claims
information,  risk management  information,  underwriting  information,  product
information,  business  methods  and  operations,  research,  studies,  reports,
manuals,  correspondence,  memoranda,  forms, systems,  procedures, and computer
records and software, of whatever nature, regardless of form. During the term of
Lacy's  employment  with  the  Company  and for a  period  of  three  (3)  years
thereafter,  Lacy will not retain,  disclose or deliver to any third  person any
MGIC Confidential Information.

     8. Compliance with Terms of Non-Compete  Agreements.  In  consideration  of
various stock options and/or other  consideration  previously granted to Lacy by
MGIC Investment  Corporation or the Company,  Lacy executed numerous non-compete
agreements for the benefit of MGIC  Investment  Corporation  and/or the Company,
including,  but not  necessarily  limited to an Agreement  Not to Compete  dated
February 14, 1990,  an Agreement Not to Compete dated May 29, 1991, an Agreement
Not to Compete dated March 3, 1994,  an Agreement Not to Compete dated  February
19, 1997,  and an Agreement Not to Compete dated May 29, 1991 (the  "Non-Compete
Agreements"). Lacy agrees to comply with the terms of the Non-Compete Agreements
and  agrees  that both MGIC  Investment  Corporation  and the  Company  shall be
entitled to enforce the terms and conditions of the Non-Compete Agreements.

                                      -3-
<PAGE>

     9.  Termination.  Lacy's  employment  with the Company  will  automatically
terminate  on January 31,  2005,  without  any  further  action or notice by the
Company,  unless (i)  terminated  earlier  pursuant to the terms and  conditions
hereof, (ii) Lacy earlier terminates such employment in writing, which he may do
in his sole discretion or (iii) Lacy dies, in which event Lacy's employment will
terminate on the date of Lacy's death.  The Company  shall not terminate  Lacy's
employment  prior to January  31,  2005,  except  upon the  following  terms and
conditions:

          (a) Breach of Any Non-Compete  Agreement.  The Company may immediately
terminate Lacy's employment upon written notice to Lacy if Lacy breaches any one
or more of the Non-Compete Agreements described in Section 8 above.

          (b) Breach of this Agreement.  The Company may  immediately  terminate
Lacy's  employment upon written notice to Lacy if Lacy  materially  breaches the
agreements of Lacy set forth in Sections 1 or 7 (last sentence) above.

Lacy  acknowledges and agrees that termination of Lacy's employment for a breach
referred to in Sections 9(a) or (b) above is in addition to, and not in lieu of,
all other remedies available to the Company or MGIC Investment Corporation under
applicable law or in equity arising from such breach.

     10.  Severability.  If any  term or  provision  of this  Agreement,  or the
application  thereof,  shall to any extent be invalid or unenforceable,  and the
intent of the parties  hereto in entering into this  Agreement is not materially
frustrated  or  negated  thereby,  the  remainder  of  this  Agreement,  or  the
application of such term or provision to circumstances other than those to which
it is invalid or  unenforceable,  shall not be  affected  thereby,  and shall be
enforced to the full extent permitted by law.

     11. Binding  Effect.  This Agreement shall be binding upon and inure to the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns,  except  that  no  assignment  or  other  transfer  of  any  rights  or
obligations under this Agreement shall be effective  without the prior,  express
written consent of the other party hereto.

     12. Title and Headings.  The title and section  headings of this  Agreement
have been inserted for convenience of reference only,  shall not be deemed to be
a part of this  Agreement,  and shall not be  construed  to  limit,  expand,  or
otherwise modify the effect of any provision of this Agreement.

     13. No  Assignment.  This  Agreement  may not be assigned  by either  party
without the prior, express, written consent of the other party hereto.

                                      -4-
<PAGE>

     14.  Governing  Law.  This  Agreement  shall be governed by,  construed and
interpreted under the internal laws of the State of Wisconsin, without reference
to such State's conflict of laws principles.

     15. Notices.  Except as otherwise  expressly  provided herein,  any notice,
demand, or other communication which either party desires or is required to give
to the other party in  connection  with this  Agreement  shall be in writing and
shall be either served  personally,  sent by Federal Express  overnight  courier
service,  or sent by prepaid United States mail  (certified  with return receipt
requested), addressed to the other party as follows:

          To Lacy:          William H. Lacy
                            1797 Shalom Drive
                            West Bend, Wisconsin 53095

          To Company:       Mortgage Guaranty Insurance Corporation
                            250 East Kilbourn Avenue
                            Milwaukee, Wisconsin 53202
                            Attention: Chief Executive Officer

                            With a copy to:

                            Mortgage Guaranty Insurance Corporation
                            250 East Kilbourn Avenue
                            Milwaukee, Wisconsin 53202
                            Attention: General Counsel and Vice President-Human
                                       Resources

Such notice shall be deemed given upon such personal delivery, courier delivery,
or mailing.  Either party may at anytime change its address for notice  purposes
hereunder by providing the other party with written notice,  as provided herein,
of the new address.

     16. Waiver.  Failure or delay by any party to enforce  compliance  with any
term or condition of this  Agreement  shall not constitute a waiver of such term
or condition.  A waiver of any breach or default under this Agreement  shall not
constitute a waiver of any subsequent breach or default.

     17.  Amendments.  No  modification  or amendment of this Agreement shall be
binding unless in writing and signed by the party sought to be bound.

     18. Entire Agreement.  Each of the parties hereby  acknowledges that it has
read this  Agreement  and  understands  and  agrees to be bound by its terms and
conditions.  This  Agreement and is the complete and exclusive  statement of the
agreement  between the parties  hereto which  supersedes  all prior  agreements,
offers,  proposals,  understandings and other communications between the parties
hereto, oral or written, regarding the terms of

                                      -5-
<PAGE>
Lacy's  retirement as an officer of the Company and MGIC Investment  Corporation
and the terms on which Lacy's  employment  will  continue and may be  terminated
hereafter,  and no other  agreement  concerning  such  subject  matter  shall be
binding upon the Company  unless in writing and signed by an authorized  officer
of the Company.

     IN WITNESS WHEREOF, Lacy and the Company have executed this Agreement as of
the date first set forth above.

WILLIAM H. LACY                          MORTGAGE GUARANTY INSURANCE
                                         CORPORATION

____________________________________     By:__________________________________
                                              Curt S. Culver
                                              Chief Executive Officer

                                      -6-EXHIBIT 10.9
                                                                    ------------

                           MGIC INVESTMENT CORPORATION
                             STOCK OPTION AGREEMENT

          STOCK OPTION  AGREEMENT,  dated as of January 26,  2000,  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  acting  through the  Committee (or a
subcommittee  thereof) has determined that it is in furtherance of the objective
of the 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.

<PAGE>

          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  (the  "Grant  Date")  and  shall  become
exercisable or vested as follows:

          (i) The  portion  of the  Option  Shares  which  shall  vest or become
     exercisable  on each of the next five one-year  anniversaries  of the Grant
     Date (each such  anniversary  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

                                      -2-

<PAGE>

     the fiscal year ending  immediately  prior to such Anniversary Date and the
     denominator  of which is  $31.21,  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) Without  limiting the discretion of the Committee to act in other
     cases,  if a "Change in Control of the  Company"  (as  defined in the Annex
     attached  hereto) occurs,  the Stock Option shall be exercisable in full as
     of the date thereof;

          (iii) At the request of the Employee,  the chief financial  officer of
     the Company in consultation with the Committee 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 26,
     2009.

          (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  unless a different  result occurs in or pursuant to Section
4(e) below.  Except as provided in or pursuant to Section 4(e) below, the vested
but  unexercised  portion of the Stock  Option shall  automatically  and

---------------
          1 By way of  example,  if the  Company's  earnings  per  share for the
fiscal years ending December 31, 2000 through  December 31, 2004 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
                          12/31/00 12/31/01 12/31/02 12/31/03 12/31/04   Vesting
Earnings per share          $4.81    $5.53    $5.97    $6.69    $7.83

Vesting on the next         15.4%    17.7%      -0-    21.4%    25.1%      79.6%
Anniversary Date
followingfiscal year end

                                      -3-
<PAGE>

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 and all subsidiaries thereof by
     reason of the Employee's  death 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

          (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; or

          (iv) January 26, 2010.

          (c) The  Committee,  in its sole  discretion,  may  from  time to time
accelerate or waive any conditions to the exercise of the Stock Option.

          (d) If the  Employee  dies while in the  employ of the  Company or any
subsidiary,  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.

          (e)  (i) If  the  Employee's  employment  with  the  Company  and  all
subsidiaries  terminates by reason of retirement after reaching age 62 and after
having been employed by the Company or any  subsidiary  thereof for an aggregate
period of at least seven (7) years,  (A) the Stock Option shall continue to vest
during the balance of the vesting  period if (x) no later than the date on which
employment  terminates,  the Employee  enters into an agreement with the Company
(which  agreement shall be drafted by and acceptable to the Company) under which
the Employee agrees not to compete with the Company and its subsidiaries  during
the balance of such  period and for one year  thereafter,  and (y) the  Employee
complies  with such  agreement,  and (B) if the  conditions  in  clause  (A) are

                                      -4-
<PAGE>

satisfied,  (x) upon the  Employee's  death any  unvested  portion  of the Stock
Option  shall  become   immediately  vested  and  exercisable  by  the  personal
representative  or  other  person  referred  to in  Section  4(d)  and  (y)  the
Termination  Date shall be 365 days after the date on which the last  vesting of
the Stock Option occurs (including vesting as a result of death) or, if earlier,
the date specified in Section 4(b)(iv), except that if the Employee was employed
by  a  combination  of  the  Company  or  any  subsidiary  and  WMAC  Investment
Corporation  or any of its  subsidiaries  for  an  aggregate  continuous  period
(disregarding any break in service of less than three months) of at least twenty
(20)  years,  the  Termination  Date  shall be the  date  specified  in  Section
4(b)(iv).

          (ii)  If  the   Employee's   employment   with  the  Company  and  all
subsidiaries  terminates by reason of retirement after reaching age 55 and after
having been employed by the Company or any subsidiary for an aggregate period of
at least seven (7) years,  without  creating any implication  that the Committee
may not act in other cases, the Committee may take action in its sole discretion
to  provide  that the Stock  Option,  or a  portion  thereof  determined  by the
Committee, shall become vested upon the Employee's death, shall continue to vest
during the balance of the vesting  period and shall  continue to be  exercisable
after termination of employment, all as contemplated in Subsection 4(e)(i) above
if the  Employee  complies  with  the  conditions  in  clauses  (x)  and  (y) of
Subsection 4(e)(i).

          (iii)  If  the  Employee  enters  into  a   noncompetition   agreement
contemplated  by Subsection  4(e)(i) or (ii) and  thereafter  breaches the terms
thereof,  the  Termination  Date  shall  occur on the date of the breach and any
portion of the Stock Option that is not then vested shall not become exercisable
or vested thereafter.

          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
written  agreement  of  employment  between the Company  and the  Employee.  The
Employee  acknowledges that a termination of employment could occur at a time at
which the portion of the Stock  Option that is not  exercisable  or vested could
have substantial  value and that as a result of such  termination,  the Employee
will not be able to realize  such value nor will the Employee be entitled to any
compensation  on account of such value. In addition,  the Employee  acknowledges
that a termination  of employment  will likely cause the vested but  unexercised
portion of the Stock Option to terminate  earlier than it otherwise would,  with
the result  that the value to the  Employee of having a longer  exercise  period
will be lost without any compensation to the Employee on account of such loss.

          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

                                      -5-
<PAGE>
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.

                                      -6-
<PAGE>

          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  (excluding  the  conflict of
laws provisions of such laws).

          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: _________________________

                                      -7-
<PAGE>

                                      ANNEX

       Definition of "Change in Control of the Company" and Related Terms

          1.  Change in  Control  of the  Company.  A "Change  in Control of the
Company"  shall be deemed to have  occurred  if an event set forth in any one of
the following paragraphs shall have occurred:

                    (i) any  Person  (other  than (A) the  Company or any of its
          subsidiaries,  (B) a trustee  or other  fiduciary  holding  securities
          under  any  employee  benefit  plan  of  the  Company  or  any  of its
          subsidiaries,   (C)  an  underwriter  temporarily  holding  securities
          pursuant to an offering of such securities or (D) a corporation owned,
          directly  or  indirectly,  by  the  shareholders  of  the  Company  in
          substantially  the same proportions as their ownership of stock in the
          Company  ("Excluded  Persons"))  is or becomes the  Beneficial  Owner,
          directly or indirectly, of securities of the Company (not including in
          the  securities  beneficially  owned  by such  Person  any  securities
          acquired  directly from the Company or its  Affiliates  after July 22,
          1999,  pursuant to express  authorization by the Board of Directors of
          the Company (the "Board") that refers to this exception)  representing
          50% or more of either the then  outstanding  shares of common stock of
          the  Company  or the  combined  voting  power  of the  Company's  then
          outstanding  voting  securities  entitled  to  vote  generally  in the
          election of directors; or

                    (ii) the  following  individuals  cease  for any  reason  to
          constitute  a majority of the number of  directors of the Company then
          serving: (A) individuals who, on July 22, 1999,  constituted the Board
          and  (B)  any  new  director  (other  than a  director  whose  initial
          assumption  of office is in  connection  with an actual or  threatened
          election contest, including but not limited to a consent solicitation,
          relating to the election of  directors  of the Company,  as such terms
          are used in Rule  14a-11  of  Regulation  14A  under  the  Act)  whose
          appointment or election by the Board or nomination for election by the
          Company's  shareholders  was approved by a vote of at least two-thirds
          (2/3) of the directors  then still in office who either were directors
          on July 22, 1999, or whose initial appointment, election or nomination
          for  election  as a director  which  occurred  after July 22, 1999 was
          approved  by such vote of the  directors  then  still in office at the
          time of such  initial  appointment,  election or  nomination  who were
          themselves  either directors on July 22, 1999 or initially  appointed,
          elected or nominated by such two-thirds  (2/3) vote as described above
          ad infinitum  (collectively  the  "Continuing  Directors");  provided,
          however,  that  individuals who are appointed to the Board pursuant to
          or in accordance with the terms of an agreement  relating to a merger,
          consolidation,  or share exchange involving the Company (or any direct
          or  indirect  subsidiary  of the  Company)  shall  not  be  Continuing
          Directors for purposes of this Agreement until after such

                                      -8-
<PAGE>
          individuals  are first  nominated  for  election by a vote of at least
          two-thirds  (2/3) of the then Continuing  Directors and are thereafter
          elected as directors by the  shareholders  of the Company at a meeting
          of   shareholders   held  following   consummation   of  such  merger,
          consolidation,  or share exchange;  and, provided further, that in the
          event the  failure of any such  persons  appointed  to the Board to be
          Continuing  Directors  results in a Change in Control of the  Company,
          the subsequent  qualification of such persons as Continuing  Directors
          shall  not alter the fact  that a Change  in  Control  of the  Company
          occurred; or

                    (iii) a  merger,  consolidation  or  share  exchange  of the
          Company with any other corporation is consummated or voting securities
          of the Company are issued in connection  with a merger,  consolidation
          or share exchange of the Company (or any direct or indirect subsidiary
          of the Company)  pursuant to applicable  stock exchange  requirements,
          other than (A) a merger,  consolidation  or share exchange which would
          result  in the  voting  securities  of the  Company  entitled  to vote
          generally in the election of directors  outstanding  immediately prior
          to  such  merger,   consolidation  or  share  exchange  continuing  to
          represent (either by remaining  outstanding or by being converted into
          voting  securities of the surviving  entity or any parent  thereof) at
          least 50% of the combined voting power of the voting securities of the
          Company or such  surviving  entity or any parent  thereof  entitled to
          vote  generally  in the election of directors of such entity or parent
          outstanding  immediately  after such  merger,  consolidation  or share
          exchange, or (B) a merger, consolidation or share exchange effected to
          implement a recapitalization  of the Company (or similar  transaction)
          in which no Person  (other than an Excluded  Person) is or becomes the
          Beneficial Owner, directly or indirectly, of securities of the Company
          (not including in the securities beneficially owned by such Person any
          securities  acquired directly from the Company or its Affiliates after
          July 22,  1999,  pursuant to express  authorization  by the Board that
          refers to this  exception)  representing  at least 50% of the combined
          voting  power of the  Company's  then  outstanding  voting  securities
          entitled to vote generally in the election of directors; or

                    (iv)  the  sale  or  disposition  by the  Company  of all or
          substantially  all of the Company's  assets (in one  transaction  or a
          series of related  transactions  within  any period of 24  consecutive
          months),  other than a sale or  disposition  by the  Company of all or
          substantially  all of the  Company's  assets  to an entity of which at
          least  75% of the  combined  voting  power  of the  voting  securities
          entitled to vote  generally in the  election of directors  immediately
          after  such  sale  are  owned by  Persons  in  substantially  the same
          proportions  as their  ownership of the Company  immediately  prior to
          such sale.

                                      -9-
<PAGE>

          2.  Related  Definitions.  For purposes of this Annex,  the  following
terms, when capitalized, shall have the following meanings:

                    (i) Act. The term "Act" means the Securities Exchange Act of
          1934, as amended.

                    (ii)  Affiliate and  Associate.  The terms  "Affiliate"  and
          "Associate" shall have the respective  meanings ascribed to such terms
          in Rule l2b-2 of the General Rules and Regulations under the Act.

                    (iii)Beneficial  Owner.  A Person  shall be deemed to be the
          "Beneficial Owner" of any securities:

                              (a)  which  such  Person  or any of such  Person's
                    Affiliates or Associates  has the right to acquire  (whether
                    such  right is  exercisable  immediately  or only  after the
                    passage of time) pursuant to any  agreement,  arrangement or
                    understanding,  or upon the exercise of  conversion  rights,
                    exchange rights, rights,  warrants or options, or otherwise;
                    provided,  however,  that a Person  shall not be deemed  the
                    Beneficial Owner of, or to beneficially  own, (A) securities
                    tendered  pursuant to a tender or exchange  offer made by or
                    on behalf of such Person or any of such Person's  Affiliates
                    or Associates  until such tendered  securities  are accepted
                    for purchase,  or (B)  securities  issuable upon exercise of
                    Rights issued pursuant to the terms of the Company's  Rights
                    Agreement,  dated as of July 22,  1999,  between the Company
                    and Firstar Bank  Milwaukee,  N.A.,  as amended from time to
                    time (or any  successor  to such Rights  Agreement),  at any
                    time before the issuance of such securities;

                              (b)  which  such  Person  or any of such  Person's
                    Affiliates or Associates,  directly or  indirectly,  has the
                    right to vote or dispose of or has "beneficial ownership" of
                    (as  determined  pursuant to Rule l3d-3 of the General Rules
                    and Regulations  under the Act),  including  pursuant to any
                    agreement, arrangement or understanding;  provided, however,
                    that a Person shall not be deemed the  Beneficial  Owner of,
                    or to beneficially own, any security under this Subsection 1
                    (c)  as  a   result   of  an   agreement,   arrangement   or
                    understanding  to  vote  such  security  if  the  agreement,
                    arrangement  or  understanding:  (A)  arises  solely  from a
                    revocable  proxy or consent given to such Person in response
                    to a public proxy or consent  solicitation made pursuant to,
                    and in accordance with, the applicable rules and regulations
                    under  the Act  and (B) is not  also  then  reportable  on a
                    Schedule l3D under the Act (or any  comparable  or successor
                    report); or

                              (c)  which are  beneficially  owned,  directly  or
                    indirectly,  by any other  Person  with which such Person or
                    any of  such  Person's  Affiliates  or  Associates  has  any
                    agreement,  arrangement or

                                      -10-
<PAGE>
                    understanding for the purpose of acquiring,  holding, voting
                    (except  pursuant  to a  revocable  proxy  as  described  in
                    Subsection  1(c) (ii)  above)  or  disposing  of any  voting
                    securities of the Company.

                    (iv) Person.  The term "Person"  shall mean any  individual,
          firm,  partnership,   corporation  or  other  entity,   including  any
          successor (by merger or  otherwise) of such entity,  or a group of any
          of the foregoing acting in concert.

                                      -11-
<PAGE>
                           MGIC INVESTMENT CORPORATION
                             STOCK OPTION AGREEMENT

          STOCK  OPTION  AGREEMENT,  dated  as of  May  5,  1999,  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  (the  "Plan")
attached hereto as Exhibit A; and

          WHEREAS,  the Board of Directors  acting  through the  Committee (or a
subcommittee  thereof) has determined that it is in furtherance of the objective
of the 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"),  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  an
agreement 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.  A
partial  exercise of the Stock Option may not be made with respect to fewer than
ten (10) Option Shares  unless the Option Shares  purchased are the total number
then available for purchase under the

                                      -1-
<PAGE>

Stock   Option.   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 a certificate
for 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, if any, 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 the Stock Option unless and until a
certificate or  certificates  for such Option Shares shall have been issued upon
the exercise of the Stock Option.

          4. (a) The Stock Option 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 percentage of the Option Shares which shall vest and
          may be  exercised  by the  Employee  shall be as set forth  below with
          respect to the given date:

                                      -2-
<PAGE>

                  Date:                       Percent Exercisable or Vested:
                  -----                       ------------------------------
          Prior to May 5, 2000                              0%
               May 5, 2000                                  20%
               May 5, 2001                                  40%
               May 5, 2002                                  60%
               May 5, 2003                                  80%
               May 5, 2004                                 100%

          For  purposes  of the  foregoing,  vesting  shall  occur  on the  date
          specified and in the percentage indicated; and

                    (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 (x) 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 or (y) a  transaction  between  the
          Company and  another  person as a result of which less than a majority
          of the combined voting power of the  then-outstanding  common stock of
          the Company or such person  immediately  after the transaction is held
          in the  aggregate  by the  holders  of  common  stock  of the  Company
          immediately prior to the transaction. Without creating any implication
          that this sentence is necessary for the following result to occur, for
          purposes of determining whether a change in control has occurred,  (x)
          shares of Common Stock of the Company  include  shares of common stock
          of  any  successor  to  the  Company  and  ownership  of  such  shares
          immediately  after such event  shall be deemed to have  resulted  from
          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).

          (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 for vesting and exercise)
occurring subsequent to the date of termination unless a different result occurs
in or  pursuant  to Section  4(f)  below.  Except as  provided in or pursuant to
Section 4(f) below, 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,

                                      -3-
<PAGE>

          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 and all
          subsidiaries thereof by reason of the Employee's death 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

                    (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; or

                    (iv) May 5, 2009.

          (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 the
Stock Option to such extent, contingent upon the consummation of such event, and
the 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  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.

          (f)  (i) If  the  Employee's  employment  with  the  Company  and  all
subsidiaries  terminates by reason of retirement after reaching age 62 and after
having been employed by the Company or any  subsidiary  thereof for an aggregate
period of at least seven (7) years,  (A) the Stock Option shall continue to vest
during the balance of the vesting  period if (x) no later than the date on which
employment  terminates,  the Employee  enters into an agreement with the Company
(which  agreement shall be drafted by and acceptable to the Company) under which
the Employee agrees not to compete with the Company and its subsidiaries  during
the balance of such  period and for one year  thereafter,  and (y) the  Employee
complies  with such  agreement,

                                      -4-
<PAGE>
and (B) if the conditions in clause (A) are  satisfied,  (x) upon the Employee's
death any unvested portion of the Stock Option shall become  immediately  vested
and  exercisable by the personal  representative  or other person referred to in
Section  4(e) and (y) the  Termination  Date shall be 365 days after the date on
which the last vesting of the Stock Option occurs (including vesting as a result
of death) or, if earlier, the date specified in Section 4(b)(iv); except that if
the Employee was employed by a combination  of the Company or any subsidiary and
WMAC  Investment  Corporation  or  any  of its  subsidiaries  for  an  aggregate
continuous period  (disregarding any break in service of less than three months)
of at least twenty (20) years,  the Termination Date shall be the date specified
in Section 4(b)(iv); and

          (ii)  If  the   Employee's   employment   with  the  Company  and  all
subsidiaries  terminates by reason of retirement after reaching age 55 and after
having been employed by the Company or any subsidiary for an aggregate period of
at least seven (7) years,  without  creating any implication  that the Committee
may not act in other cases, the Committee may take action in its sole discretion
to  provide  that the Stock  Option,  or a  portion  thereof  determined  by the
Committee, shall become vested upon the Employee's death, shall continue to vest
during the balance of the vesting  period and shall  continue to be  exercisable
after termination of employment, all as contemplated in Subsection 4(f)(i) above
if the  Employee  complies  with  the  conditions  in  clauses  (x)  and  (y) of
Subsection 4(f)(i).

          (iii)  If  the  Employee  enters  into  a   noncompetition   agreement
contemplated  by Subsection  4(f)(i) or (ii) and  thereafter  breaches the terms
thereof,  the  Termination  Date  shall  occur on the date of the breach and any
portion of the Stock Option that is not then vested shall not become exercisable
or vested thereafter.

          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
the 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 the Stock Option, the Option
Price  under  the  Stock  Option  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 the Stock
Option or the issuance of Option Shares hereunder.

          8. The 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

                                      -5-
<PAGE>
or other law or regulation.  As a condition to the exercise of the 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 or as otherwise  permitted by
the Committee,  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. The Stock Option shall be deemed to have been granted  pursuant to
the 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 Plan, the terms and
conditions  of the Plan shall  prevail.  Any and all terms used  herein,  unless
otherwise  specifically  defined herein, shall have the meaning ascribed to them
in the 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,  except as may be permitted  pursuant to Section 9
above.

          12. All decisions or  interpretations of the Committee with respect to
any question  arising under the 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,  the 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.

                                      -6-
<PAGE>

          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 Plan
by the Company or the Committee.

                                        MGIC INVESTMENT CORPORATION

                                        By:___________________________________
                                           President

                                        ACCEPTED BY:

                                        _______________________________________
                                        Name of Employee:______________________
                                        Number of Shares:______________________

                                      -7-

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