Employment Agreement - IndyMac Bank FSB and Carmella Grahn
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") has been executed as of November 1,
2000 by and between IndyMac Bank, F. S. B. ("Employer") and Carmella Grahn
("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, 2003, 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 an Executive Vice President
of Employer, or its affiliated companies, as determined by Employer.
Affiliated companies shall include, without limitation, any direct or
indirect subsidiary of Employer in which Employer holds less than 100%
but at least a majority of the beneficial interest and voting control (a
"New Public Company"). 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, provided such changes are consistent
with an Executive Vice President position of Employer as determined by
the Chief Executive Officer 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.
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
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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 Directors of the applicable entity, which policies shall be
consistent with this Agreement. If so requested by Employer, Officer
agrees to serve without additional remuneration as an officer of one or
more (direct or indirect) subsidiaries, affiliates or successors of
Employer, subject to appropriate authorization by the affiliate,
subsidiary or successor 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 or successors.
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 of Directors, 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, 2000 at the annual rate as set forth on Appendix A
(the "Annual Rate"). In respect of the Fiscal Years ending in
2001, 2002 and 2003, the Chief Executive Officer of Employer may
increase the Annual Rate. While any such increase shall be at
the discretion of the Chief Executive Officer, it is anticipated
that, for any Fiscal Year, if Employer obtains its earnings per
share goal and the Officer receives a performance rating of
"meets expectations consistently," the Annual Rate would
possibly be increased between 0% and 10%. During the term of
this Agreement, Employer may not decrease the Annual Rate below
the amount set forth in Appendix A.
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
Agreement, as mutually agreed upon by Employer and Officer. If a
new annual incentive plan is not executed by Employer and
Officer for any reason by the end of the first quarter of the
Fiscal Year (or within 90 days of the date of this Agreement for
the year 2000), then the maximum incentive compensation award
for the new Fiscal Year shall be deemed set at the lesser of 25%
of the prior year's target incentive
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compensation or 25% of Officer's base salary. In order to be
eligible for the incentive compensation award, Officer must
still be employed as of March 31st of the Fiscal Year following
the relevant Fiscal Year. 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.
c. GUARANTEED MINIMUM ANNUAL COMPENSATION. For each of the Fiscal
Years ending during the term of this Agreement, Officer shall
receive a guaranteed minimum annual cash compensation equal to
125% of the base salary, the components of which shall include
his base salary for such Fiscal Year and any incentive
compensation award applicable to such Fiscal Year, provided
Officer is still employed by Employer as of March 31 of the
following Fiscal Year.
d. STOCK OPTIONS AND RESTRICTED STOCK. Beginning with the 2000
Fiscal Year and in respect of each of the following Fiscal Years
during the term of this Agreement, Employer's public company
affiliate, IndyMac Mortgage - Holdings, Inc., or any successor
public company ("Public Company"), may grant to Officer stock
options and/or restricted stock for such number of shares of the
Public Company's common stock as the Compensation Committee of
the Board of Directors of the Public Company ("Compensation
Committee") in its sole discretion determines, taking into
account Officer's and the Public Company'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
and/or restricted stock 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 and/or restricted
stock described in this Section 4(d) in respect of a Fiscal Year
shall be granted at the same time as the Public Company grants
stock options and/or restricted stock to its other officers in
respect of such Fiscal Year.
Officer agrees that any stock options or restricted stock
granted to him under his prior Employment Agreement(s), or
granted separate from any such Employment Agreement(s), shall be
subject to the terms of the 2000 Stock Option Plan except as may
be expressly provided otherwise in this Agreement.
All stock options and restricted stock granted in accordance
with this Section 4(d): (i) shall be granted pursuant to the
Public Company'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 be priced and vest in
accordance with the terms set by the Compensation Committee,
(iii) shall be subject to such other reasonable and consistent
terms and conditions as may be determined by the Compensation
Committee and set
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forth in the agreement or other document evidencing the award,
(iv) in the event that Officer's employment is terminated due to
death or Disability, shall, if then unvested, become immediately
and fully vested, (v) in the event that Officer's employment is
terminated through resignation or by Employer for either Cause
(as defined in Section 5(c)) or Poor Performance (as defined in
Section 5(d)), shall, if not then vested, immediately terminate,
and (vi) in the event that Officer's employment is terminated by
Employer other than for Cause (as defined in Section 5(e)),
shall, if not then vested, become immediately and fully vested
only to the extent that such restricted stock or stock options
would, under the terms of such restricted stock or stock
options, vest within one (1) year of such termination.
If the Board of Directors of Employer determines, in its sole
and absolute discretion, that Officer is exhibiting "Poor
Performance," as described in Section 5(d), but there is not a
resulting termination of Officer's employment, the Compensation
Committee may, in its sole and absolute discretion, cancel any
outstanding, but unvested stock options or restricted stock that
were previously granted to Officer.
In the event that a New Public Company is formed and Officer is
assigned by the Chief Executive Officer to be employed by that
New Public Company, if such New Public Company is traded on the
New York Stock Exchange or the NASDAQ, then, in the discretion
of the Chief Executive Officer, up to 50% of the not-yet-vested
stock options and restricted stock of Officer (whether
previously granted hereunder or otherwise) may be terminated and
replaced with such alternate incentive compensation (which may
include stock options and/or restricted stock of the New Public
Company) as the Chief Executive Officer may determine in his
sole and absolute discretion, provided such replacement
compensation is equivalent to the value of the replaced stock
options and restricted stock. Such alternate incentive
compensation may be granted on such terms and conditions as
determined by the Chief Executive Officer, which terms and
conditions may differ from those in this Agreement for
comparable compensation, provided such terms and conditions
provide an equivalent value to the replaced compensation. The
Company shall select and retain a nationally recognized firm to
determine the value of the stock options and restricted stock to
be replaced and the value of the replacement compensation, and
such firm's final valuation shall be accepted by both parties.
e. 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, deferred compensation plan, life and
medical insurance policy, or other plans or benefits, which
Employer or its subsidiaries may provide for him, or
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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(e),
Employer shall continue for the period specified in Section
5(a), 5(b) or 5(e) hereof, to provide benefits substantially
equivalent to the life, disability and medical insurance
policies 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 (with or
without reasonable accommodation), 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, 2003, 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(e) hereof. To the
extent not otherwise vested, all outstanding stock options and
restricted stock granted to Officer pursuant to Section 4(d)
will vest upon his termination because of Disability.
The determination of Disability shall be made only after 30
days' notice to Officer (which may run concurrently with the
Notice of Termination). 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.
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b. DEATH. In the event that Officer shall die during the term of
this Agreement, Employer shall pay to such person or persons as
Officer shall have directed in writing or, in the absence of a
designation, to his estate (the "Beneficiary") an amount equal
to two times the guaranteed annual compensation as defined in
Section 4(c). Such payment shall be made within 45 days of the
death of Officer. Employer shall also provide during the
twelve-month period following the date of Officer's death the
additional benefits specified in the last sentence of Section
4(e) 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). 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
and restricted stock granted to Officer pursuant to Section 4(d)
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,
(ii) an act or omission to act by the Officer involving (a)
negligence or misconduct resulting in a material loss or
material loss in revenue (material to be determined in the sole
discretion of the CEO) (negligence or misconduct shall include,
but not be limited to, the failure to properly supervise staff,
the failure to establish, maintain and enforce proper written
policies and procedures, and the failure to properly staff and
train to ensure the proper and consistent enforcement of
policies and procedures), (b) gross negligence, (c) gross
misconduct with respect to or intentional failure to perform
Officer's stated duties, (d) commission of a fraud, theft,
dishonesty, or any knowing or deliberate action or inaction in
contravention of a direct order from the Officer's direct
supervisor which is within the scope of this Agreement and does
not involve the performance of an illegal act or omission to
act, (iii) Officer's willful violation of any law, rule or
regulation of a governmental authority (other than traffic
violations or similar offenses) or final cease-and-desist order,
or (iv) 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 suspended or temporarily
prohibited from participating in the conduct of Employer's or
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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(d)
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(d)
hereof are suspended, Officer shall continue to be entitled to
receive Additional Benefits under Section 4(e) 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. Following a termination for Cause, Officer shall be
entitled to payment of his base salary through his last day of
employment, and any accrued vacation pay, but no other payments
or benefits hereunder or otherwise whatsoever.
d. POOR PERFORMANCE. Employer may terminate Officer's employment
under this Agreement for "Poor Performance." Poor Performance is
a failure of the Officer to properly meet the duties and
responsibilities of his position in a competent fashion, as
determined by the Chief Executive Officer. Following a
termination for Poor Performance, the Officer shall be entitled
to payment of his base salary through his last day of
employment, and, within 30 days after such last day, a single
payment in an amount equal to the guaranteed minimum annual
compensation as defined in Section 4(c), but no other payments
or benefits hereunder or otherwise whatsoever, subject to the
terms of Section 5(e)(iii).
e. TERMINATION OTHER THAN FOR CAUSE OR POOR PERFORMANCE.
(i) Except as provided in Section 5(e)(ii) below, if during
the term of this Agreement, Officer's employment shall
be terminated by Employer other than for Cause or Poor
Performance, then Officer shall be entitled to:
1. payment of his base salary through his last day
of employment, but no payment on account of any
further incentive compensation hereunder, and
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2. within 30 days after such last day, a single
payment in an amount equal to an amount in cash
equal to two times the guaranteed minimum annual
compensation as defined in Section 4(c); and
3. for a period of one year following such last
day, the benefits specified in the last sentence
of Section 4(e) hereof.
(ii) Not withstanding 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 foe the benefit of Officer (within the
meaning of Section 280G(b)(2) of the Internal Revenue
Code of 1986, as amended (the "Code")), whether be 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.
(iii) In order to receive the amounts provided by Sections
5(d) or 5(e), other than Base Salary through the last
day of employment, Officer agrees that for a period of
one year after termination of employment either for Poor
Performance or other than for Cause, Officer shall not
engage in any business, whether as an employee,
consultant, partner, principal, agent, representative or
stockholder (other than as a stockholder of less than 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
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proposed business activity of Employer or its
subsidiaries or affiliates, in the planning stage on
such date.
If the foregoing agreement is determined invalid or
unenforceable by a Court, then Officer agrees that he
shall return the amounts received pursuant to Sections
5(d) and 5(e), other than the Base Salary through the
last day of employment.
f. RESIGNATION. If during the term of this Agreement, Officer shall
resign voluntarily, Officer shall be entitled to payment of his
base salary through his last day of employment, but all other
rights to payment or benefits hereunder shall immediately
terminate; provided, however, that the termination of Officer's
employment pursuant to this Section 5(f) 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 9(f) and 9(j) shall
expressly survive such termination. If Officer resigns as a
result of a material breach by Employer, which breach is not
cured by Employer within 30 days' receipt of written notice,
then Officer's resignation will be considered as a Termination
Other Than For Cause pursuant to Section 5(e) for all purposes
of this Agreement.
g. 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.
6. LOCATION OF SERVICES. Officer is required to perform his services under
this Agreement at such present or future business location of Company as
may be designated by the Chief Executive Officer in the Counties of Los
Angeles, Orange or Ventura, California or wherever the Corporate
Headquarters of Employer may be located.
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a. IN GENERAL. If Employer requests Officer to relocate outside of
the locations referenced above, Officer shall have the option of
agreeing to such relocation and the terms of this Agreement
shall continue in full force and effect. If Officer declines to
relocate outside of the locations referenced above, either the
Officer or Employer shall provide the other party with a Notice
of Termination in accordance with Section 5(g) and the Officer
will be deemed to have been terminated pursuant to Section 5(e).
b. CHANGE IN CONTROL. For two years following a change in control
of the Company, as declared by the Board of Directors, Employer
may only require Officer to relocate within the three counties
identified above and only if - such relocation is to the
Corporate Headquarters location of Employer. During this time
period, if Employer requests that Officer relocate outside of
the three counties identified above, or within the three
counties, but not to the Corporate Headquarters location,
Officer shall have the option of agreeing to such relocation and
the terms of this Agreement shall continue in full force and
effect. If Officer declines to relocate outside of the locations
referenced above, either the Officer or Employer shall provide
the other party with a Notice of Termination in accordance with
Section 5(g) and the Officer will be deemed to have been
terminated pursuant to Section 5(e).
7. 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.
8. 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.
9. MISCELLANEOUS.
a. SUCCESSORSHIP. 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 Employer or the sale of
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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 the Public Company or to any successor or
affiliate of Employer or the Public Company, subject to such
assignee's express assumption of all obligations of Employer
hereunder. 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 Termination Other Than For Cause pursuant to Section
5(e).
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, 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; provided, however, that all
provisions of Employer's Employee Handbook shall be incorporated
herein by this reference and Officer hereby expressly
acknowledges that all provisions of the Employee Handbook are
applicable to his employment relationship with Employer, except
to the extent that any such provisions directly conflict with
any term contained in this Agreement; provided, further, that
Officer hereby expressly acknowledges that Officer has executed
Employer's standard Arbitration Agreement which generally
requires that any dispute under this Agreement will be
arbitrated. 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.
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f. 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 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. Furthermore,
in order to protect the trade secret or confidential information
of Employer, Officer hereby agrees not to accept any employment
or engage in any activities competitive with the Employer for a
period of one year after termination of employment if the loyal
and complete fulfillment of the duties of the competitive
employment or activities would inherently call upon Officer to
reveal or use any of the trade secret or Confidential
Information of Employer to which Officer had access during
employment by Employer. The provisions of this subsection shall
survive the expiration, suspension or termination, for any
reason, of this Agreement.
g. 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
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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.
h. 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.
i. 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) hereof, no payment hereunder shall
be offset or reduced by the amount of any compensation or
benefits provided to Officer in any subsequent employment.
j. NO SOLICITATION.
(i) IN GENERAL. Officer agrees that during employment and
for a period of one year after termination of such
employment, Officer shall not:
(1) Solicit, or cause to be solicited, any customers
of Employer for purposes of promoting or selling
any products or services competitive with those
of Employer;
(2) 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; or
(3) Solicit for employment, 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, unless Officer shall have received
the prior written consent of Employer.
(ii) CONSIDERATION. The consideration for the foregoing
covenants, 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), (e), and (f).
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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. The foregoing No Solicitation provisions
are intended to restrict Officer only to the extent
permitted by law in the jurisdiction where Officer is
then a resident. To the extent the No Solicitation
Provisions 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 shall
be subject to reasonable no solicitation provisions that
are enforceable by Employer under the laws of the
jurisdiction where Officer is then a resident. If the
laws of the state where the Officer is then a resident
completely prohibit any form of the foregoing covenants,
then Employer and Officer understand and agree that the
foregoing covenants are of no effect.
10. REGULATORY INTERVENTION. Notwithstanding anything in this Agreement to
the contrary, this Agreement is subject to the following terms and
conditions:
(i) If Officer is suspended and/or temporarily prohibited from
participating in the conduct of Employer's affairs by a notice
served under Section 8(e)(3) or (g)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1818 (e)(3) and (g)(1)), Employer's
obligations hereunder shall be suspended as of the date of
service unless stayed by appropriate proceedings. If the charges
in the notice are dismissed, Employer shall (x) pay Officer all
or part of the compensation withheld while Employer's contract
obligations were suspended, and (y) reinstate any of Employer's
obligations which were suspended.
(ii) If Officer is removed and/or permanently prohibited from
participating in the conduct of Employer's affairs by an order
issued under Section 8(e)(4) or (g)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1818 (e)(4) and (g)(1)), all
obligations of Employer under this Agreement shall terminate as
of the effective date of the order, but vested rights of the
parties shall not be affected.
(iii) If Employer is in default (as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act (12 U.S.C. 1813 (x)(1)), all
obligations under
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this Agreement shall terminate as of the date of default, but
any vested rights of Officer shall not be affected.
(iv) All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of the contract is
necessary for the continued operation of Employer, (x) by the
Office of Thrift Supervision ("OTS") at the time the Federal
Deposit Insurance Corporation ("FDIC") enters into an agreement
to provide assistance to or on behalf of Employer under the
authority contained in Section 13(c) of the Federal Deposit
Insurance Act (12 U.S.C. 1823 (c)); or (y) by the OTS at the
time the OTS approves a supervisory merger to resolve problems
related to operation of Employer or when Employer is determined
by the OTS to be in an unsafe or unsound condition. Any rights
of Officer that shall have vested under this Agreement shall not
be affected by such action.
(v) With regard to the provisions of this Section 10(i) through
(iv):
A. Employer agrees to use its best efforts to oppose any
such notice of charges as to which there are reasonable
defenses;
B. In the event the notice of charges is dismissed or
otherwise resolved in a manner that will permit Employer
to resume its obligations to pay compensation hereunder,
Employer will promptly make such payment hereunder; and
C. During the period of suspension, the vested rights of
the contracting parties shall not be affected except to
the extent precluded by such notice.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EMPLOYER
By:
--------------------------------------
Name: Michael W. Perry
Title: Vice Chairman and Chief Executive Officer
Officer:
-----------------------------------------
in his individual capacity
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APPENDIX A
COST CENTER
ANNUAL INCENTIVE PLAN FOR CARMELLA GRAHN
Annual Rate for 2000: $225,000 Annual Grant of Stock Options:
Target Bonus for 2000: $200,000 25% of Total Comp (# of shares to be
Maximum Bonus for 2000: $411,840 calculated by dividing Total Comp by
Black Scholes Value of Options)
Annual Incentive Award:
Officer shall be eligible for an Annual Incentive Award which shall be
comprised of the following three components:
1. Meeting Specific Goals and Objectives (70%)
2. Cost Control (30%)
3. Leadership Qualities (Adjustment Factors)
These components shall be measured as follows:
1. GOALS AND OBJECTIVES FOR OFFICER FOR 2000 (70%):
Target Potential
Discretionary Performance Percentage:
Goal/Objective Incentive Amount Excellent/Good/Satisfactory/Poor
-------------- ---------------- --------------------------------
a. Improve/highly automate and integrate GAAP $28,000 120% /100% / 70% / 0%
and cash flow forecasting including various
interest rate scenarios.
b. Minimize the effective tax rate and tax $28,000 120% /100% / 70% / 0%
payments by use/creation of significant
deferred tax liability. Develop effective
project accounting systems. Work w/ B.
Dingle.
c. Fully implement decentralized accounting $28,000 120% /100% / 70% / 0%
and accountability of Divisional CFO's.
d. With respect to all subjective assets $28,000 120% /100% / 70% / 0%
(securities, MSR's, LLR, REO, MTM), document
details of FASBS's and all conclusions and
monthly valuation assumptions.
e. Provide advice/guidance to CEO that lead to $28,000 120% /100% / 70% / 0%
greater profitability throughout the Company.
Total discretionary incentive amount: $140,000 (max.
$168,000)
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The Discretionary Incentive Award for Goals and Objectives for Officer shall be
calculated by (1) multiplying (x) the Performance Percentage for each
Goal/Objective times (y) the Target 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 Target Potential Discretionary
Incentive Award for Goals and Objectives for Officer for 2000 shall be $140,000
and the Maximum shall be $168,000.
2. COST CONTROL GOALS (30%):
Attached hereto as Exhibit A, is the Financial Plan for 2000 for Officer's areas
of responsibilities.
Target Potential Discretionary Performance Percentage
Department Incentive Amount 110%/100%/90%/80%/less than 80%
---------- ---------------- --------------------------------
Office of CFO budget $60,000 110%/100%/80%/70%/0%
Total $60,000
(max. $66,000)
The Discretionary Incentive Award for Cost Control Goals and Objectives for
Officer shall be calculated by (1) multiplying (x) the Performance Percentage
for each Department times (y) the Target Potential Discretionary Incentive
Amount for such Department, and (2) adding all sums determined pursuant to the
preceding clause (1) for each Department. The Target Potential Discretionary
Incentive Award for Cost Control Goals and Objectives for Officer for 2000 shall
be $60,000 and the Maximum shall be $66,000. The performance percentage for Cost
Control Goals and Objectives shall be calculated based on controllable variances
between budget and actual as calculated by FPA and President. Variances will be
evaluated on a line item basis and in total for the department. In instances
whereby Officer is responsible for multiple departments, such departments will
be weighted based on the relative size of the budget.
3. EPS DISCOUNT FACTORS
Earnings Per Share Target: $1.30 (Earnings is defined as recurring
earnings as disclosed in IndyMac's Earnings Press Release).
% of EPS Target Met EPS Discount Factor
------------------- -------------------
greater than 110% 110%
90% - 110% 100%
80% - 89% 90%
70% - 79% 70%
less than 70% 0%
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4. LEADERSHIP ASSESSMENT
The Total Actual Incentive Award shall be calculated by multiplying (x) the sum
of the amounts determined pursuant to Paragraphs 1 and 2 above times (y) the EPS
Discount Factor. The Total Actual Incentive Award shall then be adjusted based
upon the following factors:
Leadership Quality Above Expectations At Expectations Below Expectations
------------------ ------------------ --------------- ------------------
1. Internal Controls, Policies & +25% Adjustment 0% Adjustment -25% Adjustment
Procedures, Credit Policies, Risk
Management
2. Goal Attainment Process +25% Adjustment 0% Adjustment -25% Adjustment
3. Web-izing & Automating Business +25% Adjustment 0% Adjustment -25% Adjustment
4. Recruiting/training, turnover +25% Adjustment 0% Adjustment -25% Adjustment
The maximum adjustment based upon the Leadership Quality factors, shall be 60%
(either up or down).
As an example, if the calculated Total Actual Incentive Amount were $50,000 and
Officer received the following ratings:
Internal Controls At Expectations (0% Adjustment)
Goal Attainment Process Above Expectations (25% Adjustment)
Web-izing & Automating Business Below Expectations (-25% Adjustment)
Recruiting/training, turnover Above Expectations (25% Adjustment)
the Officer's Final Total Actual Incentive Amount would be $62,500 ($50,000 +
25% of $50,000). If Officer was rated Above Expectations in each category, his
Final Total Actual Incentive Amount would be $80,000 ($50,000 + 60% of $50,000).
The assessment of Officer's performance on the Leadership Qualities shall be at
the sole discretion of the Chief Executive Officer of Employer. Officer must be
employed by Employer on the date that the bonus is paid to be eligible for
payment of the bonus.
--------------------------- ------------------------------
Carmella Grahn Roger Molvar
Executive Vice President, Executive Vice President,
Chief Financial Officer Chief Administrative Officer
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