EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") has been executed as of January 1,
1998 by and between IndyMac, Inc. ("Employer") and Xxxx Xxxxx ("Officer").
WITNESSETH:
WHEREAS, Employer desires to obtain the benefit of continued services of Officer
and Officer desires to continue to render services to Employer and its
affiliates.
WHEREAS, Employer and Officer desire to set forth the terms and conditions of
Officer's employment with Employer and its affiliates under this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, the parties hereto agree as follows:
1. Term. Employer agrees to employ Officer and Officer agrees to serve
Employer and its affiliates, in accordance with the terms hereof, for a
term beginning on the date first written above and ending on December 31,
2000, unless earlier terminated in accordance with the provisions hereof.
2. Position, Duties and Responsibilities. Employer and Officer hereby agree
that, subject to the provisions of this Agreement, Employer will employ
Officer and Officer will serve Employer, as a senior manager of either
IndyMac Mortgage Holdings, Inc. ("NDE") or Employer, or a similarly
structured entity in which NDE owns the majority of the economic interest,
as determined in the sole discretion of Employer. Officer's role may, from
time to time, be redefined by Employer, except that Officer shall at all
times remain a senior manager. Employer agrees that Officer's duties
hereunder shall be the usual and customary duties of such office and such
further duties shall not be inconsistent with the provisions of applicable
law. Officer agrees that Employer may add to or change Officer's duties as
business considerations dictate, as determined by the President of
Employer. Officer shall have such official power and authority as shall
reasonably be required to enable him to discharge his duties in the offices
which he may hold. All compensation paid to Officer by Employer or any of
its affiliates shall be aggregated in determining whether Officer has
received the benefits provided for herein, but without prejudice to the
allocation of costs among the entities to which Officer renders services
hereunder. If Employer requests Officer to relocate outside of Los Angeles
County, Ventura County or Orange County in connection with the relocation
of Employer's headquarters, Officer shall have the option of agreeing to
such relocation and the terms of this contract shall continue in full
force and effect. If Officer declines to relocate, either Officer or
Employer shall provide the other party with a Notice of Termination in
accordance with Section 5(f) and all of the rights and obligations of both
parties under this Agreement shall cease upon such termination and no
provisions shall survive (including, without limitation, Sections 5(d) and
8(k)), except for Section 8(g) and the right to enforce that provision
through injunctive relief pursuant to Section 8(h). If Employer requests
Officer to relocate outside of Los Angeles County, Ventura County or Orange
County and Employer's headquarters are not also relocating, Officer shall
have the option of agreeing to such relocation and
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the terms of this contract shall continue in full force and effect. If
Officer declines to relocate, Employer's request to relocate shall be
deemed a termination other than for Cause pursuant to Section 5(d).
3. Scope of this Agreement and Outside Affiliations. During the term of this
Agreement, Officer shall devote his full business time and energy, except
as expressly provided below, to the business, affairs and interests of
Employer and its affiliates, and matters related thereto, and shall use his
best efforts and abilities to promote their respective interests. Officer
agrees that he will diligently endeavor to promote the business, affairs
and interests of Employer and its affiliates and perform services
contemplated hereby, in accordance with the policies established by the
Board of the applicable entity, which policies shall be consistent with
this Agreement. Officer agrees to serve without additional remuneration as
an officer of one or more (direct or indirect) subsidiaries or affiliates
of Employer as Employer may from time to time request, subject to
appropriate authorization by the affiliate or subsidiary involved and any
limitation under applicable law.
During the course of Officer's employment as a full-time officer hereunder,
Officer shall not, without the consent of Employer, compete, directly or
indirectly, with Employer in the business then conducted by Employer or any
of its affiliates.
Officer may make and manage personal business investments of his choice and
serve in any capacity with any civic, educational or charitable
organization, or any governmental entity or trade association, without
seeking or obtaining approval by the Board, provided such activities and
services do not materially interfere or conflict with the performance of
his duties hereunder.
4. Compensation and Benefits.
a. Base Salary. Employer shall pay to Officer a base salary in respect of
the fiscal year of Employer (a "Fiscal Year") ending December 31, 1998
at the annual rate as set forth on Appendix A (the "Annual Rate"). In
respect of the Fiscal Years ending in 1999 and 2000, the Compensation
Committee of the Board (the "Compensation Committee) may, based upon
the recommendation of Xxxxxxx X. Xxxxx and the performance of Officer
and Employer, increase the Annual Rate. While any such increase shall
be at the discretion of the Compensation Committee, it is anticipated
that, for any Fiscal Year, a performance rating of good would result
in an increase in the Annual Rate of between 5% and 15%. During the
term of this Agreement, Employer may not decrease the Annual Rate
below the amount set forth in Appendix A unless decreased by the same
percentage for all officers at Officer's level.
b. Incentive Compensation. Employer shall pay to Officer for each of the
Fiscal Years ending during the term of this Agreement an incentive
compensation award in an amount determined pursuant to the Annual
Incentive Plan attached hereto as Appendix A. The terms of the Annual
Incentive Plan shall be determined in the first quarter of each Fiscal
year during the term of this Contract, as mutually agreed upon by
Employer and Officer. The incentive compensation award payable to
Officer for any Fiscal Year shall be paid no later than thirty (30)
days after completion and publication of the applicable audited
financial statements for such Fiscal Year.
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c. Stock Options. Beginning with the 1998 Fiscal Year and in respect of
each of the following Fiscal Years during the term of this Agreement,
NDE may grant to Officer stock options for such number of shares of
NDE's common stock as the Compensation Committee in its sole
discretion determines, taking into account Officer's and NDE's
performance and the competitive practices then prevailing regarding
the granting of stock options. Subject to the foregoing, it is
anticipated that the number of shares in respect of each annual stock
option grant shall be in accordance with the number of shares granted
to officers of Employer at a level similar to Officer's level. The
stock options described in this Section 4(c) in respect of a Fiscal
Year shall be granted at the same time as NDE grants stock options to
its other officers in respect of such Fiscal Year.
All stock options granted in accordance with this Section 4(c): (i)
shall be granted pursuant to NDE's current stock option plan, or such
other stock option plan or plans as may be or come into effect during
the term of this Agreement, (ii) shall have a per share exercise price
equal to the fair market value (as defined in the current Plan or such
other plan or plans) of the common stock at the time of grant, (iii)
shall become exercisable in three equal installments on each of the
first three anniversaries of the date of grant, (iv) shall become
immediately and fully exercisable in the event of a Change in Control
(as defined in Appendix B) or in the event that Officer's employment
is terminated due to death or Disability or by Employer other than for
Cause (as defined in Section 5(c)), and (v) shall be subject to such
other reasonable and consistent terms and conditions as may be
determined by the Compensation Committee and set forth in the
agreement evidencing the award.
d. Additional Benefits. Officer shall also be entitled to all rights and
benefits for which he is otherwise eligible under any bonus plan,
stock purchase plan, participation or extra compensation plan,
executive compensation plan, pension plan, profit-sharing plan, life
and medical insurance policy, or other plans or benefits, which
Employer or its subsidiaries may provide for him, or provided he is
eligible to participate therein, for senior officers generally or for
employees generally, during the term of this Agreement (collectively,
"Additional Benefits"). Officer shall also be entitled to three (3)
weeks of vacation each Fiscal Year, subject to all applicable policies
of Employer relating to vacation time. This Agreement shall not affect
the provision of any other compensation, retirement or other benefit
program or plan of Employer. If Officer's employment is terminated
hereunder, pursuant to Section 5(a), 5(b) or 5(d), Employer shall
continue for the period specified in Section 5(a), 5(b) or 5(d)
hereof, to provide benefits substantially equivalent to Additional
Benefits (other than qualified pension or profit sharing plan benefits
and option, equity or stock appreciation or other incentive plan
benefits as distinguished from health, disability and welfare type
benefits) on behalf of Officer and his dependents and beneficiaries
which were being provided to them immediately prior to Officer's
Termination Date, but only to the extent that Officer is not entitled
to comparable benefits from other employment.
5. Termination. The compensation and benefits provided for herein and the
employment of Officer by Employer shall be terminated only as provided for
below in this Section 5:
a. Disability. In the event that Officer shall fail, because of illness,
injury or similar incapacity ("Disability"), to render for four (4)
consecutive calendar months, or for shorter periods
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aggregating eighty (80) or more business days in any twelve (12) month
period, services contemplated by this Agreement, Officer's full-time
employment hereunder may be terminated, by written Notice of
Termination from Employer to Officer; and thereafter, Employer shall
continue, from the Termination Date until Officer's death or December
31, 2000, whichever first occurs (the "Disability Payment Period"),
(i) to pay compensation to Officer, in the same manner as in effect
immediately prior to the Termination Date, in an amount equal to (1)
fifty percent (50%) of the then existing base salary payable
immediately prior to the termination, minus (2) the amount of any cash
payments due to him under the terms of Employer's disability insurance
or other disability benefit plans or Employer's tax-qualified Defined
Benefit Pension Plan, and any compensation he may receive pursuant to
any other employment, and (ii) to provide during the Disability
Payment Period the additional benefits specified in the last sentence
of Section 4(d) hereof.
The determination of Disability shall be made only after 30 days'
notice to Officer and only if Officer has not returned to performance
of his duties during such 30-day period. In order to determine
Disability, both Employer and Officer shall have the right to provide
medical evidence to support their respective positions, with the
ultimate decision regarding Disability to be made by a majority of the
members of Employer's Benefits Committee.
b. Death. In the event that Officer shall die during the term of this
Agreement, Employer shall pay Officer's base salary for a period of
twelve (12) months following the date of Officer's death and in the
manner otherwise payable hereunder, to such person or persons as
Officer shall have directed in writing or, in the absence of a
designation, to his estate (the "Beneficiary"). Employer shall also
(1) pay to such Beneficiary (x) an amount equal to the incentive
compensation that would have been payable to Officer pursuant to
Section 4(b) in respect of the Fiscal Year in which the Officer's
death occurs multiplied by a fraction, the numerator of which is the
number of days in such Fiscal Year through the date of Officer's death
and the denominator of which is 365 and (y) any unpaid incentive
compensation payable to Officer pursuant to Section 4(b) in respect of
the Fiscal Year immediately preceding the Fiscal Year in which his
death occurs and (2) provide during the twelve-month period following
the date of Officer's death the additional benefits specified in the
last sentence of Section 4(d) hereof. If Officer's death occurs while
he is receiving payments for Disability under Section 5(a) above, such
payments shall cease and the Beneficiary shall be entitled to the
payments and benefits under this Section 5(b), which shall continue
for a period of twelve months thereafter at the full rate of base
salary in effect immediately prior to the Disability. This Agreement
in all other respects will terminate upon the death of Officer;
provided, however, that (i) the termination of the Agreement shall not
affect Officer's entitlement to all other benefits in which he has
become vested or which are otherwise payable in respect of periods
ending prior to its termination, and (ii) to the extent not otherwise
vested, all outstanding stock options granted to Officer pursuant to
Section 4(c) will vest upon his death.
c. Cause. Employer may terminate Officer's employment under this
Agreement for "Cause." A termination for Cause is a termination by
reason of (i) a material breach of this Agreement by, Officer (other
than as a result of incapacity due to physical or mental illness)
which is committed in bad faith or without reasonable belief that such
breach is in the best interests of Employer and which is not remedied
within a reasonable period of time after receipt of written notice
from
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Employer specifying such breach, or (ii) Officer's conviction by a
court of competent jurisdiction of a felony or misdemeanor carrying a
jail term of one year or more, or (ii) entry of an order duly issued
by any federal or state regulatory agency having jurisdiction in the
matter removing Officer from office of Employer or its affiliates or
permanently prohibiting him from participation in the conduct of the
affairs of Employer of any of its affiliates. If Officer shall be
convicted of a felony or misdemeanor carrying a jail term, or shall be
removed from office and/or temporarily prohibited from participating
in the conduct of Employer's or any of its affiliates' affairs by any
federal or state regulatory authority having jurisdiction in the
matter, Employer's obligations under Sections 4(a), 4(b), and 4(c)
hereof shall be automatically suspended provided, however, that if the
charges resulting in such removal or prohibition are finally dismissed
or if a final judgment on the merits of such charges is issued in
favor of Officer, or if the conviction is overturned on appeal, then
Officer shall be reinstated in full with back pay for the removal
period plus accrued interest at the rate then payable on judgments.
During the period that Employer's obligations under Sections 4(a),
4(b), and 4(c) hereof are suspended, Officer shall continue to be
entitled to receive Additional Benefits under Section 4(d) until the
conviction of the felony, or misdemeanor carrying a jail term, or
removal from office has become final and non-appealable. When the
conviction of the felony or removal from office has become final and
non-appealable, all of Employer's obligations hereunder shall
terminate; provided, however, that the termination of Officer's
employment pursuant to this Section 5(c) shall not affect Officer's
entitlement to all benefits in which he has become vested or which are
otherwise payable in respect of periods ending prior to his
termination of employment.
x. Xxxxxxxxx.
(i) Except as provided in Section 5(d)(ii) below, if during the
term of this Agreement, Officer's employment shall be
terminated by Employer other than for Cause, or by Officer
because Employer has committed a "Material Breach" of this
Agreement, then Employer shall (1) pay Officer in a single
payment as soon as practicable after the Termination Date, but
in no event later than thirty (30) days thereafter, (A) an
amount in cash equal to one year of Officer's base salary at
the Annual Rate at the Termination Date and (B) an amount
equal to the incentive compensation paid or payable to
Officer pursuant to Section 4(b) in respect of the Fiscal Year
immediately preceding the Fiscal Year in which Officer's
Termination Date occurs (the "Bonus Rate"); provided,
however, that in the event the first anniversary of the
Termination Date occurs on a date prior to the end of a
Fiscal Year, Employer shall also pay Officer an amount equal
to the product of (x) the Bonus Rate and (y) a fraction, the
numerator of which is (I) the number of days elapsed since the
end of the immediately preceding Fiscal Year through the end
of the Severance Period and (II) the denominator of which is
365, and (2) until the first anniversary of the Termination
Date, provide the benefits specified in the last sentence of
Section 4(d) hereof. Employer shall also pay in a single
payment as soon as practicable after the Termination Date,
but in no event later than thirty (30) days thereafter, any
unpaid incentive compensation payable to Officer pursuant to
Section 4(b) in respect of the Fiscal Year immediately
preceding the Fiscal Year in which Officer's Termination Date
occurs, as calculated pursuant to the terms and conditions
of this Agreement, including, but not limited to, the terms
of Appendix A. For the purpose of this provision, the term
"Material Breach" shall mean a material breach of this
Agreement by Employer which is committed in bad faith
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and which is not remedied within a reasonable period of time
after receipt of written notice from Officer specifying such
breach.
(ii) If within two (2) years after a "Change in Control" (as
defined in Appendix B to this Agreement) and during the term
of this Agreement, Officer's employment shall be terminated by
Employer other than for Cause or by Officer for Good Reason,
then (A) Employer shall pay Officer in a single payment as
soon as practicable after the Termination Date, but in no
event later than thirty (30) days thereafter, (x) as severance
pay and in lieu of any further salary and incentive
compensation for periods subsequent to the Termination Date,
an amount in cash equal to one times the sum of (1) Officer's
base salary at the Annual Rate at the Termination Date and (2)
the incentive compensation paid or payable to Officer pursuant
to Section 4(b) in respect of the Fiscal Year immediately
preceding the Fiscal Year in which Officer's Termination Date
occurs and (y) any unpaid incentive compensation payable to
Officer pursuant to Section 4(b) in respect of the Fiscal Year
immediately preceding the Fiscal Year in which Officer's
Termination Date occurs, and (B) Employer shall continue to
provide for one year from the Termination Date the benefits
specified in the last sentence of Section 4(d) hereof.
(iii) For purposes of this Agreement, "Good Reason" shall be deemed
to occur if Employer (x) commits a Material Breach of this
Agreement (as defined in Section 5(d)(i)) or (y) takes any
other action which results in the substantial diminution in
Officer's status, title, position, authority and
responsibilities.
(iv) Notwithstanding anything in this Agreement to the contrary, in
the event it shall be determined that any payment or
distribution by Employer or any other person or entity to or
for the benefit of Officer (within the meaning of Section
28OG(b)(2) of the Internal Revenue Code of 1986, as amended
(the "Code"), whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise in connection with, or arising out of, his
employment with Employer or a change in ownership or effective
control of Employer or a substantial portion of its assets (a
"Payment"), would be subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), the Payments
shall be reduced (but not below zero) to the extent necessary
so that no Excise Tax would be imposed. If the application of
the preceding sentence should require a reduction in Payments
or other "parachute payment" (within the meaning of Section
280G of the Code), unless Officer shall have designated
otherwise, such reduction shall be implemented, first, by
reducing any non-cash benefits (other than stock options) to
the extent necessary, second, by reducing any cash benefits to
the extent necessary and, third, by reducing any stock options
to the extent necessary. In each case, the reductions shall
be made starting with the payment or benefit to be made on the
latest date following the Termination Date and reducing
payments or benefits in reverse chronological order therefrom.
All determinations concerning the application of this
paragraph shall be made by a nationally recognized firm of
independent accountants, selected by Officer and satisfactory
to Employer, whose determination shall be conclusive and
binding on all parties. The fees and expenses of such
accountants shall be borne by Employer.
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e. Resignation. If during the term of this Agreement, Officer shall resign
voluntarily, all of his rights to payment or benefits hereunder shall
immediately terminate; provided, however, that the termination of
Officer's employment pursuant to this Section 5(e) shall not affect
Officer's entitlement to all benefits in which he has become vested or
which are otherwise payable in respect of periods ending prior to his
termination of employment, and all obligations of Officer under Sections
8(g) and 8(k) shall expressly survive such termination.
f. Notice of Termination. Any purported termination by Employer or by Officer
shall be communicated by a written Notice of Termination to the other
party hereto which indicates the specific termination provision in this
Agreement, if any, relied upon and which sets forth in reasonable detail
the facts and circumstances, if any, claimed to provide a basis for
termination of Officer's employment under the provision so indicated
(except in the event of Officer's death or physical incapacity, in which
case such written Notice of Termination shall be provided by Officer's
executor or legal representative). For purposes of this Agreement, no such
purported termination shall be effective without such Notice of
Termination. The "Termination Date" shall mean the date specified in the
Notice of Termination, which shall be no less than 30 or more than 60 days
from the date of the Notice of Termination. Notwithstanding any other
provision of this Agreement, in the event of any termination of Officer's
employment hereunder for any reason, Employer shall pay Officer his full
base salary through the Termination Date, plus any Additional Benefits
which have been earned or become payable, but which have not yet been
paid, as of such Termination Date.
6. Reimbursement of Business Expenses. During the term of this Agreement,
Employer shall reimburse Officer promptly for all business expenditures to
the extent that such expenditures meet the requirements of the Code for
deductibility by Employer for federal income tax purposes or are otherwise in
compliance with the rules and policies of Employer and are substantiated by
Officer as required by the Internal Revenue Service and rules and policies of
Employer.
7. Indemnity. To the extent permitted by applicable law, the Certificate of
Incorporation and the By-Laws of Employer (as from time to time in effect)
and any indemnity agreements entered into from time to time between Employer
and Officer, Employer shall defend and indemnify Officer and hold him
harmless for any acts or decisions made by him in good faith while performing
services for Employer (including any subsidiary or affiliate of Employer),
and shall use reasonable efforts to obtain coverage for him under liability
insurance policies now in force or hereafter obtained during the term of this
Agreement covering the other officers or directors of Employer.
8. Miscellaneous.
a. Succession. This Agreement shall inure to the benefit of and shall be
binding upon Employer, its successors and assigns, but without the prior
written consent of Officer, this Agreement may not be assigned other than
in connection with a merger or sale of substantially all the assets of
Employer or similar transaction. Notwithstanding the foregoing, Employer
may assign, whether by assignment agreement, merger, operation of law or
otherwise, this Agreement to NDE or IndyMac, or to any successor or
affiliate of either of them, subject to such assignee's express assumption
of all obligations of Employer hereunder, and Officer hereby consents to
any such
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assignment. The failure of any successor to or assignee of the Employer's
business and/or assets in such transaction to expressly assume all
obligations of Employer hereunder shall be deemed a material breach of
this Agreement by Employer, triggering the severance provision of Section
5(d).
The obligations and duties of Officer hereby shall be personal and not
assignable.
b. Notices. Any notices provided for in this Agreement shall be sent to
Employer at its corporate headquarters, Attention: Chief Administrative
Officer, with a copy to the Director of Human Resources at the same
address, or to such other address as Employer may from time to time in
writing designate, and to Officer at such address as he may from time to
time in writing designate (or his business address of record in the
absence of such designation). All notices shall be deemed to have been
given two (2) business days after they have been deposited as certified
mail, return receipt requested, postage paid and properly addressed to the
designated address of the party to receive the notices.
c. Entire Agreement This instrument contains the entire agreement of the
parties relating to the subject matter hereof, and it replaces and
supersedes any prior agreements between the parties relating to said
subject matter. No modifications or amendments of this Agreement shall be
valid unless made in writing and signed by the parties hereto.
d. Waiver. The waiver of the breach of any term or of any condition of this
Agreement shall not be deemed to constitute the waiver of any other breach
of the same or any other term or condition.
e. California Law. This Agreement shall be construed and interpreted in
accordance with the laws of California, without reference to its
conflicts of laws principles.
f. Attorneys' Fees in Action on Contract. If any litigation shall occur
between the Officer and Employer, which litigation arises out of or as a
result of this Agreement or the acts of the parties hereto pursuant to
this Agreement, or which seeks an interpretation of this Agreement, the
prevailing party in such litigation, in addition to any other judgment or
award, shall be entitled to receive such sums as the court hearing the
matter shall find to be reasonable as and for the attorneys' fees of the
prevailing party.
g. Confidentiality. Officer hereby acknowledges and agrees that Employer and
its affiliates have developed and own valuable information related to
their business, personnel and customers, including, but not limited to,
concepts, ideas, customer lists, business lists, business and strategic
plans, financial data, accounting procedures, secondary marketing and
hedging models, trade secrets, computer programs and plans, and
information related to officers, directors, employees and agents. Officer
hereby agrees that all such information, and all codes, concepts, copies
and forms relating to such information, Employer's plans and intentions
with respect thereto, and any information provided by Employer or its
affiliates to Officer with respect to any of the foregoing, shall be
considered "Confidential Information" for the purpose of this Agreement.
Officer acknowledges and agrees that all such Confidential Information is
a valuable asset of Employer, and if developed by Officer, is developed by
Officer in the course of Officer's employment with
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Employer, and is the sole property of Employer. Officer agrees that he
will not divulge or otherwise disclose, directly or indirectly, any
Confidential Information concerning the business or policies of Employer
or any of its affiliates which he may have learned as a result of his
employment during the term of this Agreement or prior thereto as an
employee, officer or director of or consultant to Employer or any of its
affiliates, except to the extent such use or disclosure is (i) necessary
or appropriate to the performance of this Agreement and in furtherance of
Employer's best interests, (ii) required by applicable law or in response
to a lawful inquiry from a governmental or regulatory authority, (iii)
lawfully obtainable from other sources, or (iv) authorized by Employer.
The provisions of this subsection shall survive the expiration, suspension
or termination, for any reason, of this Agreement.
h. Remedies of Employer. Officer acknowledges that the services he is
obligated to render under the provisions of this Agreement are of a
special, unique, unusual, extraordinary and intellectual character, which
gives this Agreement peculiar value to Employer. The loss of these
services cannot be reasonably or adequately compensated in damages in an
action at law and it would be difficult (if not impossible) to replace
these services. By reason thereof, Officer agrees and consents that if he
violates any of the material provisions of this Agreement, Employer, in
addition to any other rights and remedies available under this Agreement
or under applicable law, shall be entitled during the remainder of the
term to seek injunctive relief, from a tribunal of competent jurisdiction,
restraining Officer from committing or continuing any violation of this
Agreement. The provisions of this subsection shall survive the expiration,
suspension or termination, for any reason, of this Agreement.
i. Severability. If any provision of this Agreement is held invalid or
unenforceable, the remainder of this Agreement shall nevertheless remain
in full force and effect, and if any provision is held invalid or
unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.
j. No Obligation to Mitigate. Officer shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise and, except as provided in Section 5(a)(i)(2)
hereof, no payment hereunder shall be offset or reduced by the amount of
any compensation or benefits provided to Officer in any subsequent
employment.
k. Covenant Not to Compete
(i) In General. Officer agrees that while he is employed by Employer
during the term of this Agreement and for a period of one year after
the termination of such employment for whatever reason other than (x)
any termination by Employer, either for Cause or other than for Cause
or (y) the expiration of this Agreement according to its terms (the
"Non-Compete Period"), he shall not, unless Officer shall have
received the prior written consent of Employer within North America:
(A) engage in any business, whether as an employee, consultant,
partner, principal, agent, representative or stockholder (other
than as a stockholder of less than a one percent (1%) equity
interest) or in any other corporate or representative capacity
with any other
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business whether in corporate, proprietorship, or partnership form
or otherwise, where such business is engaged in any activity which
competes with the business of Employer (or its subsidiaries or
affiliates, excluding Countrywide Credit Industries and its
subsidiaries, other than Employer) as conducted on the date
Officer's employment terminated or which will compete with any
proposed business activity of Employer (or its subsidiaries or
affiliates) in the planning stage on such date;
(B) solicit business from, or perform services for, any company or
other business entity which at any time during the two-year period
immediately preceding Officer's termination of employment with
Employer was a client of Employer (or its subsidiaries or
affiliates) (including without limitation any lessee, vendor or
supplier); provided that Officer may solicit business from another
company or business entity during such time as Officer is employed
by Employer (and prior to a Notice of Termination being provided
pursuant to Section 5(f)), so long as such solicitation is solely
for the intended benefit of Employer and carried out in the
ordinary course of the performance of Officer's duties; or
(C) offer, or cause to be offered, employment, either on a full-time,
part-time or consulting basis, to any person who was employed by
Employer (or its subsidiaries or affiliates) on the date Officer's
employment terminated.
(ii) Consideration. The consideration for the foregoing covenant not to
compete, the sufficiency of which is hereby acknowledged, is
Employer's agreement to continue to employ Officer and provide
compensation and benefits pursuant to this Agreement, including but
not limited to Section 5(d).
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(iii) Equitable Relief and Other Remedies. Officer acknowledges and agrees
that Employer's remedies at law for a breach or threatened breach of
any of the provisions of this Section would be inadequate and, in
recognition of this fact, Officer agrees that, in the event of such a
breach or threatened breach, in addition to any remedies at law,
Employer, without posting any bond, shall be entitled to obtain
equitable relief in the form of specific performance, a temporary
restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.
(iv) Reformation. If the foregoing covenant not to compete would otherwise
be determined invalid or unenforceable by a court of competent
jurisdiction, such court shall exercise its discretion in reforming
the provisions of this Section to the end that Officer be subject to
a covenant not to compete, reasonable under the circumstances,
enforceable by Employer.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EMPLOYER
By: /s/ Xxxxxxx X. Xxxxx
--------------------------
Name: Xxxxxxx X. Xxxxx
-------------------------
Title: President and Chief
------------------------
Executive Officer
------------------------
Officer:
/s/ Xxxx Xxxxx
--------------------------
in his individual capacity
11
APPENDIX A
ANNUAL INCENTIVE PLAN
Annual Base Rate for 1998: $205,000
Target Bonus for 1998: $356,000 Maximum Bonus for 1998: $402,280
Annual Incentive Award:
----------------------
Officer shall be eligible for an Annual Incentive Award which shall be
comprised of the following five components and their corresponding
weightings:
1. Financial Plan Goals (50%)
2. Operations/Systems Controls/Loan Quality (15%)
3. Cost Control (15%)
4. Earnings Per Share Growth (10%)
5. Discretionary/Subjective (10%)
These components shall be measured as follows:
1. Financial Plan Goals for 1998 (50%):
-----------------------------------
Attached hereto as Exhibit A, is the Financial Plan for 1998 for Officer's areas
of responsibilities. The Financial Plan for 1999 and 2000 shall be determined by
January 15 of each respective Fiscal Year, as mutually agreed upon by Employer
and Officer. Any production goals set forth in the Financial Plans for 1999 and
2000 shall be reasonable in light of Employer's financial, business and
strategic plans as a whole.
Year Target Amount Maximum Amount Minimum Amount
1998 $178,000 $213,600 $0
1999 $204,700 $245,640 $0
2000 $235,405 $282,486 $0
______________________________________________________________________________
Division % of Total Target Amount Maximum Net Income % of Net
Target Amount AECPTACS Income
______________________________________________________________________________
TPL West 40% $ 71,200 $85,440 $43,176,418 00.16%
------------------------------------------------------------------------------
TPL East 30% $ 53,400 $64,080 $ 5,034,790 01.06%
------------------------------------------------------------------------------
WLCA 15% $ 26,700 $32,040 $ 8,809,444 00.30%
------------------------------------------------------------------------------
CLD 15% $ 26,700 $32,040 $12,462,767 00.21%
------------------------------------------------------------------------------
Officer shall be paid a Financial Plan Incentive Award to be determined by
summing the amounts determined as follows for each of Officer's profit centers.
1
TPL West, TPL East & WLCA
-------------------------
The Financial Plan Incentive Award shall be determined by calculating the
specified percentage of Net Income After Earnings Credit Plus Tax Affected
Corporate Support (as calculated in Exhibit A) for each of Officer's profit
centers, as determined by the Head of Financial Planning and President of
Employer, in their sole discretion, subject to the applicable Maximum Amount set
forth above. The 1998 goal for Net Income After Earnings Credit Plus Tax
Affected Corporate Support for each of Officer's profit centers is set forth
above. This goal assumes a Return on Equity Plus Tax Affected Corporate Support
of greater than 25% (as calculated in Exhibit A).
CLD
---
The Financial Plan Incentive Award shall be determined by (i) calculating the
specified percentage of Net Income After Earnings Credit Plus Tax Affected
Corporate Support (as calculated in Exhibit A) for CLD, as determined by the
Head of Financial Planning and President of Employer, in their sole discretion,
subject to the applicable Maximum Amount set forth above and (ii) multiplying
such amount by the applicable Fully Leveraged Return On Equity Factor set forth
below. The 1998 goal for Net Income After Earnings Credit Plus Tax Affected
Corporate Support is set forth above.
Return on Equity - Fully Leveraged Plus Tax Affected Corporate Support
Actual XXX 20% * Target 10% * Target Target 10% ** Target 20% ** Target
XXX Factor 50% 75% 100% 110% 125%
* Less Than
** More Than
The Target Return on Equity - Fully Leveraged Plus Tax Affected Corporate
Support (XXX - FLPTACS as calculated in Exhibit A) for the CLD division for 1998
is 34.54%. The Target XXX - FLPTACS for CLD for 1999 and 2000 shall be
determined by January 15 of each respective Fiscal Year, as mutually agreed upon
by Employer and Officer.
2. Operations/Systems Controls/Loan Qualify Goals (15%):
----------------------------------------------------
Target Incentive Performance Percentage:
Goal Amount Excellent Good Satisfactory Poor
----
a. Introduction and implementation of $13,400 110% 100% 50% 0%
automated underwriting and
risk based pricing (e-MITS) to
a select group of clients, and
expansion of this client base
as the technology is refined,
50% of our correspondent business
handled by e-MITS by year end.
b. Full use and implementation of sales $10,000 110% 100% 50% 0%
force accountability system by 6/30/98.
c. Completion of a customer profitability, $10,000 110% 100% 50% 0%
accountability, and measurement
2
Target Incentive Performance Percentage:
Goal Amount Excellent Good Satisfactory Poor
----
system to be implemented by December
31, 1998.
d. Implementation of operational staff $10,000 110% 100% 50% 0%
accountability system by May 31, 1998.
e. Shall minimize turnover in 4 and 3 $10,000 110% 100% 50% 0%
rated employees, and shall have a
minimum of 50% turnover in 2 rated
employees, and 100% turnover in 1
rated employees. Turnover includes an
employee leaving the company or being
reclassified due to either improved or
decreased performance.
Total incentive amount: $53,400
---------------------- (max. $58,740)
The Incentive Award for Operations/Systems Controls/Loan Quality Goals for
Officer shall be calculated by (1) multiplying (x) the Performance Percentage
for each Goal times (y) the Target Incentive Amount for such Goal/Objective, and
-----
(2) adding all sums determined pursuant to the preceding clause (1) for each
Goal. The Target Incentive Award for Operations/Systems Controls/Loan Quality
Goals for 1998 shall be $53,400 and the Maximum shall be $58,740.
The Target Incentive Award for Operations/Systems Controls/Loans Quality Goals
for Officer for 1999 shall be $61,410 and for 2000 shall be S70,622. The
Operations/Systems Controls/Loan Quality Goals for 1999 and 2000 and the
Incentive Award amount applicable to each goal or objective shall be determined
by January 15 of each respective Fiscal Year, as mutually agreed upon by
Employer and Officer.
3. Cost Control Goals (15%):
------------------------
The following are Officer's 1998 cost control goals:
Maximum Performance Percentage:
Goal Incentive 100%-95% 94%-90% 89%-80% * 80%
---- Amount
a. Hold the level of direct expenses for $26,700 100% 80% 50% 0%
TPL Western Region at or below 50 basis
points of funded volume for 1998.
* Less Than
** More Than
3
Goal Maximum Performance Percentage:
---- Incentive 100%-95% 94%-90% 89%-80% * 80%
Amount
b. Hold the level of direct expenses for $16,020 100% 80% 50% 0%
TPL Eastern Region at or below 60
basis points of funded volume for 1998.
c. Maintain direct expenses as percentage $ 5,340 100% 80% 50% 0%
of net revenues for WLCA at 47,8% for
1998.
d. Maintain direct expenses as percentage $ 5,340 100% 80% 50% 0%
of net revenues for CLD at 34.7% for
1998.
Total incentive amount: $53,400
-----------------------
The Incentive Award for Cost Control Goals for Officer shall be calculated by
(1) multiplying (x) the Performance Percentage for each Goal times (y) the
-----
Maximum Incentive Amount for such Goal, and (2) adding all sums determined
pursuant to the preceding clause (1) for each Goal. The Maximum Incentive Award
for Cost Control Goals for Officer for 1998 shall be $53,400.
The Maximum Incentive Award for Cost Control Goals for Officer for 1999 shall be
$61,410 and for 2000 shall be $70,622. The Cost Control Goals for 1999 and 2000
and the Incentive Award amount applicable to each goal shall be determined by
January 15 of each respective Fiscal Year, as mutually agreed upon by Employer
and Officer.
4
4. Earnings Per Share Growth (10%):
--------------------------------
1998 1999 2000
---- ---- ----
Earnings Per Share Target $ 2.10 XXX XXX
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Target Incentive Award $35,600 $40,940 $47,081
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Maximum Incentive Award $40,940 $47,081 $54,143
------------------------------------------------------------------------------------------------------------------------------
If Earnings Per Share $1,369 for each $.01 $TBD for each $.01 $TBD for each $.01
exceed target, incentive in excess of target in excess of target in excess of target
award shall be increased by: earnings per share, earnings per share, earnings per share,
subject to Maximum subject to Maximum subject to Maximum
------------------------------------------------------------------------------------------------------------------------------
If Earnings Per Share do not $2,738 for each $.01 $TBD for each $.01 $TBD for each $.01
meet target, incentive award below target below target earnings below target earnings
shall be decreased by: earnings per share per share per share
------------------------------------------------------------------------------------------------------------------------------
5. Discretionary/Subjective (10%):
------------------------------
Officer shall be eligible for an additional Discretionary/Subjective Incentive
Award. Whether a Discretionary/Subjective Incentive Award shall be granted and
the amount of any such award shall be determined by the President of Employer,
in his sole and absolute discretion. Factors which will be included in the
determination of a Discretionary/Subjective Incentive Award shall be Officer's
management skills, ability to be a corporate team player and such other factors
as shall be determined by the President of Employer, in his sole and absolute
discretion. The fact that a Discretionary/Subjective Incentive Award is granted
in any year is no indication whether any such award will be granted in following
years. The maximum Discretionary/Subjective Incentive Award that Officer shall
be eligible for is as follows:
1998: up to $35,600
1999: up to $40,940
2000: up to $47,081
5
6. Net lncome After Earnings Credit Plus Tax Affected Corporate Support (Net
--------------------------------------------------------------------------
Income AECPTACS) Discount Factor
---------------------------------
% of Net Income AECPTACS Goal Met Net Income Discount Factor
--------------------------------- --------------------------
* 89% of Net Income AECPTACS 100%
80% - 89% of Net Income AECPTACS 90%
70% - 79% of Net Income AECPTACS 70%
60% - 69% of Net Income AECPTACS 50%
** 60% of Net Income AECPTACS 0%
7. Total Annual Incentive Award
----------------------------
The total Annual Incentive Award shall be calculated by multiplying (X) the sum
of the amounts calculated pursuant to Paragraphs 2, 3, 4 and 5 above times (y)
the Net Income Discount Factor determined pursuant to Paragraph 6 above and
adding such amount to the amount determined pursuant to Paragraph 1 above.
* Greater Than
** Less Than
6
EXHIBIT A
INDYMAC
1999 FINANCIAL PLAN
EARNINGS BY BUSINESS LINE FOR BONUS CALCULATIONS
DOLLAR AMOUNTS IN THOUSANDS
Third Party Investment Master LoanWorks
Combined Lending Portfolio Servicing Servicing CLCA
-------- ----------- ---------- --------- --------- ------
I. NET INCOME AFTER EARNINGS CREDIT PLUS TAX EFFECTED
CORPORATE SUPPORT
Net Income after Earnings Credit 131,070 47,067 38,028 295 (9,358) 20,882
Corporate Support 33,798 11,883 2,957 882 3,187 2,836
Taxes on Corporate Support 10,681 5,050 860 375 0 0
----------------------------------------------------------------------
Corporate Support, Net of taxes 23,117 6,833 2,097 507 3,187 2,836
----------------------------------------------------------------------
Net Income after Earnings Credit plus Tax Effected
Corporate Support @ 100% 154,187 53,900 40,125 803 (6,171) 23,718
======================================================================
Net Income after Earnings Credit plus Tax Effected
Corporate Support @ 80% 123,350 43,120 32,100 642 (4,936) 18,974
Net Income after Earnings Credit plus Tax Effected
Corporate Support @ 150% 231,281 80,850 60,187 1,204 (9,256) 35,577
II. CONTROLLABLE RETURN ON EQUITY
Net Income-Fully Leveraged 120,303 40,477 38,028 295 (9,358) 19,552
Corporate Support 33,798 11,883 2,957 882 3,187 2,836
Taxes on Corporate Support 10,681 5,050 860 375 0 0
----------------------------------------------------------------------
Corporate Support, Net of taxes 23,117 6,833 2,097 507 3,187 2,836
----------------------------------------------------------------------
Net Income-Fully Leveraged plus Tax Effected
Corporate Support 143,420 47,310 40,125 803 (6,171) 22,388
======================================================================
Average Equity-Fully Leveraged 676,115 18,334 479,841 (796) (4,278) 97,877
======================================================================
Corporate Support Net Liability Allocative 52,736 18,542 4,614 1,376 4,973 4,425
----------------------------------------------------------------------
Fully Leveraged Equity before Corporate Support 728,851 36,876 484,455 589 695 102,302
======================================================================
----------------------------------------------------------------------
XXX-Fully Leveraged-before CS balance sheet allocative 19.68% 128.29% 8.28% 138.40% 887.65% 21.88%
======================================================================
Income IndyMac Tax Benefit
Property CLD WLCA LoanWorks MHD HID Adjustment
-------- ------- ------ --------- ----- ----- -----------
I. NET INCOME AFTER EARNINGS CREDIT PLUS TAX EFFECTED
CORPORATE SUPPORT
Net Income after Earnings Credit 4,549 9,194 7,234 2,702 4,653 1,846 3,977
Corporate Support 537 1,920 2,518 1,768 3,265 2,045 0
Taxes on Corporate Support 0 33 0 751 1,388 869 1,355
----------------------------------------------------------------------
Corporate Support, Net of taxes 537 1,887 2,518 1,016 1,877 1,176 (1,355)
----------------------------------------------------------------------
Net Income after Earnings Credit plus Tax Effected
Corporate Support @ 100% 5,086 11,081 9,752 3,719 6,530 3,022 2,623
======================================================================
Net Income after Earnings Credit plus Tax Effected
Corporate Support @ 80% 4,069 8,865 7,801 2,975 5,224 2,418 2,098
Net Income after Earnings Credit plus Tax Effected
Corporate Support @ 150% 7,630 16,621 14,628 5,578 9,796 4,533 3,934
II. CONTROLLABLE RETURN ON EQUITY
Net Income-Fully Leveraged 4,407 8,513 6,270 2,702 4,036 1,401 3,977
Corporate Support 537 1,920 2,518 1,768 3,265 2,045 0
Taxes on Corporate Support 0 33 0 751 1,388 869 1,355
----------------------------------------------------------------------
Corporate Support, Net of taxes 537 1,887 2,518 1,016 1,877 1,176 (1,355)
----------------------------------------------------------------------
Net Income-Fully Leveraged plus Tax Effected
Corporate Support 4,945 10,400 8,788 3,719 5,914 2,577 2,623
======================================================================
Average Equity-Fully Leveraged 34,376 35,623 9,163 83 (484) 6,377 0
======================================================================
Corporate Support Net Liability Allocative 839 2,995 3,929 2,758 5,094 3,191 0
----------------------------------------------------------------------
Fully Leveraged Equity before Corporate Support 35,214 38,618 13,091 2,841 4,611 9,567 0
======================================================================
----------------------------------------------------------------------
XXX-Fully Leveraged-before CS balance sheet allocative 14.04% 26.93% 67.13% 130.91% 128.26% 26.94% N/A
======================================================================
APPENDIX B
A "Change in Control" shall mean the occurrence during the term of the
Agreement, of any one of the following events:
A. An acquisition (other than directly from Employer) of any common stock
or other "Voting Securities" (as hereinafter defined) of Employer by any
"Person" (as the term person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of twenty five percent (25%) or more of the then
outstanding shares of Employer's common stock or the combined voting
power of Employer's then outstanding Voting Securities; provided,
however, in determining whether a Change in Control has occurred, Voting
Securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which would
cause a Change in Control. For purposes of this Agreement, (1) "Voting
Securities" shall mean Employer's outstanding voting securities entitled
to vote generally in the election of directors and (2) a "Non-Control
Acquisition" shall mean an acquisition by (i) an employee benefit plan
(or a trust forming a part thereof) maintained by (A) Employer or (B)
any corporation or other Person of which a majority of its voting power
or its voting equity securities or equity interest is owned, directly or
indirectly, by Employer (for purposes of this definition, a
"Subsidiary"), (ii) Employer or any of its Subsidiaries, (iii) any
Person in connection with a "Non-Control Transaction" (as hereinafter
defined) or (iv) Countrywide Credit Industries, Inc. or any of its
affiliates or subsidiaries ("Countrywide Credit").
B. The individuals who, as of the date of the Agreement are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at
least two-thirds of the members of the Board; provided, however, that if
the election, or nomination for election by Employer's common
stockholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for purposes
of this Agreement, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially assumed
office as result of either an actual or threatened "Election Contest"
(as described in Rule 14A-11 promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any Election Contest
or Proxy Contest; or
1
C. The consummation of:
(i) A merger, consolidation or reorganization involving Employer, unless such
merger, consolidation or reorganization is a "Non-Control Transaction". A
"Non-Control Transaction" shall mean a merger, consolidation or
reorganization of Employer into, with or involving Countrywide Credit, NDE
or where:
a. the stockholders of Employer, immediately before such merger,
consolidation or reorganization, own directly or indirectly
immediately following such merger, consolidation or reorganization,
at least seventy percent (70%) of the combined voting power of the
outstanding Voting Securities of the corporation resulting from such
merger, consolidation or reorganization (the "Surviving Corporation")
in substantially the same proportion as their ownership of the Voting
Securities immediately before such merger, consolidation or
reorganization;
b. the individuals who were members of the Incumbent Board immediately
prior to the execution of the agreement providing for such merger,
consolidation or reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving Corporation, or in
the event that, immediately following the consummation of such
transaction, a corporation beneficially owns, directly or indirectly,
a majority of the Voting Securities of the Surviving Corporation, the
board of directors of such corporation: and
c. no Person other than (i) Employer, (ii) any Subsidiary, (iii) any
employee benefit plan (or any trust forming a part thereof)
maintained by the Employer, the Surviving Corporation, or any
Subsidiary, (iv) Countrywide Credit, or (v) any Person who,
immediately prior to such merger, consolidation or reorganization had
Beneficial Ownership of twenty five percent (25%) or more of the
combined voting power of the Surviving Corporation's then outstanding
Voting Securities or its common stock, owns directly or indirectly
more than twenty five percent (25%) or more of the combined voting
power of the Surviving Corporation's then outstanding Voting
Securities or its common stock;
(ii) A complete liquidation or dissolution or Employer; or
(iii) The sale or other disposition of all or substantially all of the
assets of Employer to any Person (other than a transfer to a
Subsidiary of Countrywide Credit).
2
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of more than the permitted amount of the then outstanding common stock or Voting
Securities as a result of the acquisition of common stock or Voting Securities
by Employer which, by reducing the number of shares of common stock or Voting
Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person; provided, however, that if a Change of
Control would occur (but for the operation of this sentence) as a result of the
acquisition of common stock or Voting Securities by Employer, and after such
share acquisition by Employer, the Subject Person becomes the Beneficial Owner
of any additional common stock or Voting Securities which increases the
percentage of the then outstanding common stock or Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control shall occur.
3
