Employment Agreement - IndyMac Inc. and S. Blair Abernathy
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") has been executed as of September 1,
1997 by and between IndyMac, Inc. ("Employer") and S. Blair Abernathy
("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 Senior Vice President and Chief
Investment Officer of INMC Mortgage Holdings, Inc. ("Holdings") and as
Executive Vice President and Chief Investment Officer of Employer. 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 shall have such executive 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.
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, which
policies shall be consistent with this Agreement. Officer agrees to serve
without additional remuneration as an officer of Holdings or of one or more
(direct or indirect) subsidiaries or affiliates of Employer or Holdings as
the Board may from
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time to time request, subject to appropriate authorization by the affiliate or
subsidiary involved and any limitation under applicable law. Officer's failure
to discharge an order or perform a function because Officer reasonably and in
good faith believes such would violate a law or regulation or be dishonest
shall not be deemed a breach by him of his obligations or duties pursuant to
any of the provisions of this Agreement, including without limitation pursuant
to Section 5(c) hereof.
During the course of Officer's employment as a full-time officer hereunder,
Officer shall not, without the consent of the Board, 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, 1997 at the
annual rate of $195,000 (the "Annual Rate"). In respect of the Fiscal
Years ending in 1998, 1999, and 2000, the Compensation Committee of the
Board (the "Compensation Committee) may, based upon the recommendation of
Michael W. Perry 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, an
earnings per share increase for Holdings of 15% would result in an increase
in the Annual Rate of 10%, but could exceed such percentage if warranted.
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 at the beginning 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 of the applicable
audited financial statements for such Fiscal Year. In the event of a
material one-time charge against earnings by Holdings associated with
Holdings' buyout of Countrywide Asset Management Corporation, as manager of
Holdings, the earnings of Holdings shall not be decreased for such charge
in the calculation of EPS in connection with the determination of Officer's
base and incentive compensation hereunder. In the event of a material one-
time charge against earnings by Holdings associated with increasing
Holdings' loan loss reserves, the earnings of Holdings shall not be
decreased for such charge in the calculation of EPS in connection with the
determination of Officer's base and incentive compensation hereunder.
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c. STOCK OPTIONS. Beginning with the 1997 Fiscal Year and in respect of each
of the following Fiscal Years during the term of this Agreement, Holdings
may grant to Officer stock options for such number of shares of Holdings'
common stock as the Compensation Committee in its sole discretion
determines, taking into account Officer's and Holdings' 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 senior executives of IndyMac. The
stock options described in this Section 4(c) in respect of a Fiscal Year
shall be granted at the same time as Holdings grants stock options to its
other senior executives in respect of such Fiscal Year.
All stock options granted in accordance with this Section 4(c): (i) shall
be granted pursuant to Holdings' 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 that Officer's employment is terminated due to
death or Disability or by Employer other than for Cause (as defined in
Section 5(c)), or in the event that this Agreement terminates according to
its terms (as provided in Section 5(g)), 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 four (4) 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.
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e. DEFERRAL OF AMOUNTS PAYABLE HEREUNDER. In the event Officer should desire
to defer receipt of any cash payments to which he would otherwise be
entitled hereunder, he may present such a written request to the
Compensation Committee which, in its sole discretion, may enter into a
separate deferred compensation agreement with Officer.
f. CERTAIN PERQUISITES.
(i) CLUB MEMBERSHIPS. Employer shall pay for the initial membership fee
(not to exceed $20,000), monthly dues and any business related charges for
Officer's membership in a country club, subject to the provisions of that
certain Note Agreement, attached hereto as EXHIBIT I, and to be executed at
the time that Officer requests payment of the initial membership fee.
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 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 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 Employer's disinterested directors.
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
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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 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 Subsection 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 Employer specifying such
breach, or (ii) Officer's conviction by a court of competent jurisdiction
of a felony, 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 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), 4(c), and 4(f) 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), 4(c), and 4(f) hereof are suspended, Officer
shall continue to be entitled to receive Additional Benefits under Section
4(d) until the conviction of the felony 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. Anything herein to the contrary
notwithstanding, termination for Cause shall not include termination by
reason of Officer's job performance or a job performance rating given to
Officer for his job performance or the financial performance of Holdings or
any affiliated company.
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d. SEVERANCE. If during the term of this Agreement, Officer's employment
shall be terminated by Employer other than for Cause, 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.
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.
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. 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.
g. NON-RENEWAL OF AGREEMENT. If Employer does not intend to renew this
Agreement, Employer shall provide written notice to Officer of such
intention, at least 90 days prior to the termination date of this
Agreement. If Employer fails to provide Officer with such notice, Officer
shall have the option of renewing the terms of the Agreement for a one year
period. In the event that this Agreement terminates according to its terms
on
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December 31, 2000, and is not renewed on terms mutually acceptable to
Employer and Officer, such termination of Officer's employment pursuant to
this Section 5(g) shall not affect Officer's entitlement to all benefits in
which he has become vested or which are otherwise payable with respect to
periods ending on or prior to his termination of employment, provided that,
to the extent not otherwise vested, all outstanding stock options granted
to Officer pursuant to Section 4(c) shall thereupon vest.
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 indemnify Officer and hold him harmless for any
acts or decisions made by him in good faith while performing services for
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 Holdings or Indy Mac, or to any successor of
either of them, subject to such assignee's express assumption of all
obligations of Employer hereunder, and Officer hereby consents to any such
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.
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: General
Counsel/Secretary, with a copy to the Chairman of the Compensation
Committee 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,
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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.
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 agrees that he will not divulge or otherwise
disclose, directly or indirectly, any trade secret or other confidential
information concerning the business or policies of Employer or any of its
subsidiaries 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 subsidiaries, 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.
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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 any
termination by Employer, either for Cause or other than for Cause (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 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) 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); 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:___________________________
Name:_________________________
Title:________________________
Officer:
______________________________
in his individual capacity
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APPENDIX A
ANNUAL INCENTIVE PLAN
Annual Incentive Award:
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Officer shall be eligible for an Annual Incentive Award which shall be
comprised of the following three components:
1. Earnings Per Share Growth
2. Meeting Specific Goals and Objectives
3. Discretionary/Subjective
These components shall be measured as follows:
1. EARNINGS PER SHARE GROWTH:
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1997 1998 1999 2000
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Earnings Per Share Target $ 1.74* $ 2.00 $ 2.30 $ 2.65
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Target Incentive Award $100,000 $120,000 $144,000 $172,800
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If Earnings Per Share $1,000 for each $1,250 for each $1,500 for each $1,750 for each
exceed target, incentive $.01 in excess $.01 in excess $.01 in excess $.01 in excess
award shall be increased of target of target of target of target
by: earnings per earnings per earnings per earnings per
share share share share
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If Earnings Per Share do $2,000 for each $2,000 for each $2,000 for each $2,000 for each
not meet target, $.01 below $.01 below $.01 below $.01 below
incentive award shall be target earnings target earnings target earnings target earnings
decreased by: per share per share per share per share
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* Please refer to Section 4.b. regarding the non-applicability of certain one-
time charges in 1997.
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2. GOALS AND OBJECTIVES FOR SECONDARY MARKETING, HEDGING AND MANAGEMENT OF
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INVESTMENT FOR 1997:
-------------------
Maximum Potential Performance Percentage:
Discretionary Incentive Excellent/Good/Satisfactory/Poor
Goal/Objective Amount ----
------------- ------
a. Increase investment portfolio from $15,000 110% /100% / 50% / 0%
$1.9 billion to $3.5 billion by 12/31/97.
b. Increase net interest income from $15,000 110% /100% / 50% / 0%
$94.5 million in 1996 to $120 million in
1997.
c. Purchase prime and subprime loan $15,000 110% /100% / 50% / 0%
volume of $4.84 billion in 1997
compared to $4.1 billion in 1996.
d. Generate gain on sale of prime, $15,000 110% / 110% / 50% / 0%
subprime, and manufactured housing of $60
million in 1997 or 1.00% of loans sold.
e. Monitor and improve pipeline hedging $15,000 110% / 100% / 50% / 0%
and asset liability management.
Total discretionary incentive amount: $75,000 (max. $82,500)
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The Potential Discretionary Incentive Award for Goals and Objectives for
Secondary Marketing, Hedging and Management of Investment shall be calculated by
(1) multiplying (x) the Performance Percentage for each Goal/Objective times (y)
-----
the Maximum Potential Discretionary Incentive Amount for such Goal/Objective,
and (2) adding all sums determined pursuant to the preceding clause (1) for each
Goal/Objective. The Maximum Potential Discretionary Incentive Award for Goals
and Objectives for Secondary Marketing, Hedging and Management of Investment for
1997 shall be $82,500.
The Maximum Potential Discretionary Incentive Award for Goals and Objectives
for Secondary Marketing, Hedging and Management of Investment for 1998 shall be
$90,000, for 1999 shall be $108,000 and for 2000 shall be $129,600. The Goals
and Objectives for 1998, 1999 and 2000 and the Incentive Award amount
applicable to each goal or objective shall be determined by January 31 of each
respective Fiscal Year, as mutually agreed upon by Employer and Officer.
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3. SUBJECTIVE:
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Officer shall be eligible for an additional Subjective Incentive Award. Whether
a Subjective Incentive Award shall be granted and the amount of any such award
shall be determined by the CEO and President of IndyMac, in his sole and
absolute discretion. The fact that a Subjective Incentive Award is granted in
any year is not a guarantee that such award shall be granted in following years.
The maximum Subjective Incentive Award that Officer shall be eligible for is as
follows:
1997: up to $30,000
1998: up to $36,000
1999: up to $43,200
2000: up to $51,840
TOTAL ANNUAL INCENTIVE AWARD
----------------------------
The total Annual Incentive Award shall be calculated by adding the amounts
determined pursuant to Paragraphs 1, 2 and 3 above.
<PAGE>
EXHIBIT I
NOTE AGREEMENT
This NOTE AGREEMENT is made and entered into as of the _______ day of
_____________, 199_ by and between IndyMac, Inc. ("IndyMac") and S. Blair
Abernathy with reference to the following facts:
A. Abernathy desires to become a member of ______________________ (the
"Club"); and
B. IndyMac desires to finance the membership initiation fees necessary for
Abernathy to join the Club;
NOW, THEREFORE, in consideration of the promises and agreements set forth
below, the parties hereto do hereby agree as follows:
1. IndyMac shall reimburse Abernathy on or before _____________, 199_,
the full amount of the Club's membership initiation fees amounting to
____________________________ dollars ($_________) (the "Membership Fee").
2. IndyMac agrees that the Club membership may be issued in Abernathy's
name, and IndyMac shall have no security interest in or to the Club
membership.
3. For so long as Abernathy remains a full time employee of IndyMac or
any affiliate of IndyMac, Abernathy shall have no obligation to repay the
Membership Fee. Within thirty (30) days of (a) the termination of
Abernathy's Club membership for any reason including, without limitation,
voluntary or involuntary termination, or (b) the termination of
Abernathy's employment by IndyMac for any reason including, without
limitation voluntary termination, involuntary termination or termination
by reason of death or disability, Abernathy or his successors and assigns,
as applicable, shall pay to IndyMac the greater of (i) the Membership
Amount or (ii) the fair market value of the Club membership less any
amount that would be treated as a commission or other amount payable to
the Club, all as determined in accordance with the rules and regulations
of the Club.
4. For so long as Abernathy remains a full time employee of IndyMac or
any affiliate of IndyMac, IndyMac shall reimburse Abernathy for all
monthly Club dues as well as for any company-related charges in accordance
with IndyMac's normal policy regarding expense reimbursement.
<PAGE>
5. If any payment required in accordance with Paragraph 3 above is
not paid when due (the "Overdue Membership Fee"), Abernathy promises to
pay interest of 5% of the Overdue Membership Fee so overdue and such rate
of interest shall continue to accrue on such Overdue Membership Fee until
the full amount or the Overdue Membership Fee plus all interest on such
amount is paid in full. Any interest amount not paid when due shall bear
like interest as the Overdue Membership Fees.
6. If IndyMac is required to enforce its rights under this Note
Agreement through collection efforts, Abernathy shall pay all costs and
expenses of IndyMac, including reasonable attorney's fees, whether or not
a suit is brought.
7. Abernathy hereby expressly waives diligence, demand, protest and
any type of notice.
8. This Note Agreement shall be governed and construed in accordance
with the laws of the State of California, without reference to its
conflict of laws principles.
IN WITNESS WHRREOF, the undersigned have executed this Note Agreement as
of the day and year first above written.
IndyMac, Inc. S. Blair Abernathy
By:______________________ By:___________________________
Name:_________________________
Title:________________________