Employment Agreement - IndyMac Mortgage Holdings Inc. and Mark Nelson
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") has been executed as of April 1,
1999 by and between IndyMac Mortgage Holdings, Inc. ("Employer") and Mark Nelson
("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,
2001, 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 Executive Vice President and
Chief Financial Officer, IndyMac Commercial Lending, and Senior Vice
President of Employer, or a similarly structured entity in which Employer
owns the majority of the economic interest, as determined in the sole
discretion 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 agrees that Employer may add to or change Officer's duties as
business considerations dictate, provided such changes are consistent with
Officer's role as Chief Financial Officer, IndyMac Commercial Lending 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. If Employer
requests Officer to relocate outside of Los Angeles County, 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).
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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, 1999
at the annual rate as set forth on Appendix A (the "Annual Rate").
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 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.
c. Stock Options and Restricted Stock. Beginning with the 1999 Fiscal
Year and in respect of each of the following Fiscal Years during the
term of this Agreement, Employer may grant to Officer stock options
and/or restricted stock for such number of shares of Employer's common
stock as the Compensation Committee of the Board (the "Compensation
Committee") in its sole discretion determines, taking into account
Officer's and Employer'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(c) in respect of a Fiscal
Year shall be granted at the same time as Employer grants stock
options
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and/or restricted stock to its other officers in respect of such
Fiscal Year. For 1999 Fiscal Year, Employer will grant Officer 20,000
stock options.
All stock options granted in accordance with this Section 4(c): (i)
shall be granted pursuant to Employer'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. All restricted stock granted in accordance with this Section
4(c): (i) shall be granted pursuant to Employer's current stock option
plan, or such other stock option plan or plans as may be in effect 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 become immediately and fully vested 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)), provided, however, that with respect to a termination by
Employer other than for Cause (as defined in Section 5(c)), restricted
stock granted in accordance with this Section 4(c) shall become
immediately and fully vested only to the extent that such restricted
stock would, under the terms of such restricted stock, vest within
twelve (12) months of such termination, and (iv) 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 or other document evidencing the award. Notwithstanding the
foregoing, in the event that Officer's employment is terminated by
Employer other than for Cause (as defined in Section 5(c)) and the
Board of Directors of Employer determines, in its sole and absolute
discretion, that the Officer is performing "seriously below
expectations" (as defined below), then the Board of Directors of the
Employer may determine, in its sole and absolute discretion, that the
provisions set forth in subsections (iv) and (iii) of the preceding
two sentences, respectively, shall not apply. For purposes of this
provision, Officer's performance shall be deemed to be "seriously
below expectations" if (i) in the case of an Officer who is a profit
center manager, Officer has failed to meet at least 50% of the volume
and cost control goals set forth in Appendix A hereto for the
applicable Fiscal Year, and (ii) in the case of an Officer who is a
cost center manager, Officer has failed to meet (x) the top two Goals
and Objectives of Officer set forth in Appendix A hereto for the
applicable Fiscal Year and (y) at least 50% of the cost control goals
set forth in Appendix A hereto for the applicable Fiscal Year;
provided, however, that the Board of Directors of Employer will
consider allowances to the foregoing in the event that Employer takes
action that impedes Officer's ability to meet the foregoing goals
(e.g., the Employer discontinues a business or product line).
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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
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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 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, 2001, 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
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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 effort 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 and restricted stock 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; provided, however, that the
parties hereto acknowledge that a breach of the confidentiality
provisions set forth in Section 8(g) of this Agreement shall not be
remediable and, therefore, Employer shall not be required to provide a
remedy period in connection with a termination pursuant to this
provision by reason of a breach of Section 8(g), (ii) an act or
omission to act by the Officer involving gross negligence, gross
misconduct, 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, each of which the parties hereto acknowledge shall
not be remediable and, therefore, no remedy period shall be required,
(iii) Officer's conviction by a court of competent jurisdiction of a
felony or misdemeanor carrying a jail term of one year or more, 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
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
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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.
d. Severance.
(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 six months
of Officer's base salary at the Annual Rate at the
Termination Date and (B) an amount equal to one-half 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; 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 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) a fraction, the numerator of which is (I) the number of
days elapsed since the end of the immediately preceding
Fiscal Year through Officer's Termination Date and (II) the
denominator of which is 365, and
(2) until the first anniversary of such 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 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-half 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
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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 six months 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 280G(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 28OG of the Code), unless Officer shall have designated
otherwise, such reduction shall be implemented, first, by
reducing any noncash 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.
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
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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 IndyMac,
Inc., or to any successor or affiliate of Employer or IndyMac, Inc.,
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, 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
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(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 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.
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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 six months
after the termination of such employment for whatever reason
other than (x) any termination by Employer, either for Cause or
other than for Cause, (y) a termination by Officer pursuant to
Section 5(d)(i) due to Employer having committed a "Material
Breach" or pursuant to Section 5(d)(ii) for "Good Reason," or (z)
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 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,
including Countrywide Credit Industries, Inc. ("Countrywide
Credit") and its subsidiaries) 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, including Countrywide Credit and
its subsidiaries) in the planning stage on such date;
10
<PAGE>
(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; and which solicitation or performance
of services is not 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).
(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.
11
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EMPLOYER
By:/s/ Stephanie Irey
---------------------------
Name: Stephanie Irey
-------------------------
Title: EVP, CAO
------------------------
Officer:
/s/ Mark Nelson
------------------------------
in his individual capacity
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<PAGE>
APPENDIX A
ANNUAL INCENTIVE PLAN
Annual Base Rate for 1999: $200,000.00
Target Bonus for 1999: $ 80,000.00 Maximum Bonus for 1999: $90,000.00
Annual Incentive Award:
----------------------
Officer shall be eligible for an Annual Incentive Award which shall be
comprised of the following five components:
1. Meeting Business Plan/ROE Goals (30%)
2. Operations/Systems Controls/Loan Quality (30%)
3. Cost Control (20%)
4. Earnings Per Share Growth (10%)
5. Discretionary/Subjective (10%)
These components shall be measured as follows:
1. Business Plan/ROE Goals for Officer for 1999 (30%):
---------------------------------------------------
Attached hereto as Exhibit A, is the Business Plan for 1999 for Officer's areas
of responsibilities: CLCA and Income Property.
Year Target Amount Maximum Amount Minimum Amount
(125% of Target, if ROE is 20%* than target)
1999 $24,000.00 $30,000.00 $0
Officer shall be paid a Business Plan/ROE Incentive Award to be determined
by (i) calculating .07% of Net Income After Earnings Credit Plus Tax
Affected Corporate Support (as defined below) of Officer's profit
center(s), 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
Return On Equity Factor set forth below.
Net Income After Earnings Credit Plus Tax Affected Corporate Support shall
mean Net Earnings, before Corporate Overhead Allocation and after Earnings
Credit (goal for Net Income After Earnings Credit Plus Tax Affected
Corporate Support is $28,804,000.00.)
Return on Equity Factor
Actual ROE 20%**Target 10%**Target Target 10%*Target 20%*Target
ROE Factor 50% 75% 100% 110% 125%
The Target Return on Equity for CLCA for 1999 is 21.88% (weighted 82%) and for
Income Property is 14.04% (weighted 18%).
* greater than
** less than
<PAGE>
2. Operations/Systems Controls/Loan Quality Goals and Objectives (30%):
-------------------------------------------------------------------
Target Potential Performance Percentage:
Goal/Objective Discretionary Excellent/Good/Satisfactory/Poor
--------------
Incentive Amount
----------------
a. Timely, accurate and automated reporting to $ 4,000.00 110%/100%/50%/0%
Treasury, Accounting, Bankers Trust and lenders
and other appropriate internal and external
recipients. Financial reporting systems should
be integrated to primary related loan accounting
and other systems to provide for efficient
processing of data. Financial reporting and
analysis to include monthly profit center
performance analysis and budget variance
analysis.
b. Establish and lead an Information Technology $ 2,000.00 110%/100%/50%/0%
Development Team comprised of appropriate
representatives of each of CLCA's operating
groups and Corporate MIS personnel. The
charter of this team is to provide strategic
oversight to the development of our IT and
business process systems, establish priorities for
development, evaluate and rationalize
investments in IT systems and software, and
maintain and monitor project development
efforts.
c. Introduce and facilitate Strategia strategic $ 2,000.00 110%/100%/50%/0%
planning, implementation and review process
and integrate into monthly and other periodic
review sessions with CLCA and IndyMac
management personnel
d. Assist in sourcing of sufficient capital that is $16,000.00 110%/100%/50%/0%
adequate for CLCA/Income Property to
maximize Plan projections. Assist in due
diligence efforts as required. Develop borrowing
capacity analysis models to evaluate the adequacy of
our financing sources and to assist in managing our
borrowing within committed limits. The borrowing
capacity analysis should provide a 12-month
rolling projection of principal outstandings
to targeted outstandings for each financing
facility for CLCA/Income Property.
Total discretionary incentive amount: $24,000 (max. $26,400)
-------------------------------------
The Discretionary Incentive Award for Operations/Systems Controls/Loan Quality
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
2
<PAGE>
sums determined pursuant to the preceding clause (1) for each Goal/Objective.
The Target Potential Discretionary Incentive Award for Operations/Systems
Controls/Loan Quality Goals and Objectives for Officer for 1999 shall be
$24,000.00 and the Maximum shall be $26,400.00.
3. Cost Control Goals (20%):
------------------------
The following are Officer's 1999 cost control goals:
Maximum Potential Performance Percentage:
Goal/Objective Discretionary 100%-95%94%-90%/89%-
--------------
Incentive Amount 80%/*/80%
----------------
a. 100% of Direct Expenses as per 1999 $16,000.00 100%/80%/50%/0%
business plans for CLCA and Income
Property
The Discretionary Incentive Award for Cost Control Goals and Objectives for
Officer shall be calculated by multiplying (x) the applicable Performance
Percentage for the Goal/Objective times (y) the Maximum Potential Discretionary
-----
Incentive Amount for such Goal/Objective. The Maximum Potential Discretionary
Incentive Award for Cost Control Goals and Objectives for Officer for 1999 shall
be $16,000.00.
4. Earnings Per Share Growth (10%):
--------------------------------
1999
----
-------------------------------------------------------------
Earnings Per Share Target $ 1.57
-------------------------------------------------------------
Target Incentive Award $8,000.00
-------------------------------------------------------------
If Earnings Per Share $500 for each $.01
exceed target, incentive in excess of target
award shall be increased by: earnings per share
-------------------------------------------------------------
If Earnings Per Share does $350 for each- $.01
not Meet target, incentive below target
awards shall be decreased by: earnings per share
--------------------------------------------------------------
* means less than
<PAGE>
5. Subjective (10%):
----------------
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 President of Employer, in his sole and absolute
discretion. Factors which will be included in the determination of a 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 Subjective
Incentive Award is granted in any year is no indication whether any such award
will be granted in following years. The maximum Subjective Incentive Award that
Officer shall be eligible for is as follows:
1999: up to $8,000.00
6. EPS Discount Factor
-------------------
% of EPS Target Met EPS Discount Factor
------------------- -------------------
*90% 100%
80% - 89% 90%
70% - 79% 70%
*70% 0%
* greater than
** less than
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 1, 2, 3, 4 and 5 above times
(y) the EPS Discount Factor determined pursuant to Paragraph 6 above.
4
<PAGE>
EXHIBIT A
INDYMAC
1999 FINANCIAL PLAN
EARNINGS BY BUSINESS LINE FOR BONUS CALCULATIONS
DOLLLAR AMOUNTS IN THOUSANDS
Third Party Investment Master LoanWorks Income
Combined Lending Portfolio Servicing Servicing CLCA Property
--------- ----------- ---------- --------- ---------- ------- --------
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 4,549
Corporate Support 33,798 11,883 2,957 882 3,187 2,836 537
Taxes on Corporate Support 10,681 5,050 860 375 0 0 0
----------------------------------------------------------------------------
Corporate Support, Net of taxes 23,117 6,883 2,097 507 3,187 2,836 537
----------------------------------------------------------------------------
Net Income after Earnings Credit plus Tax Effected
Corporate Support @ 100% 154,187 53,900 40,125 803 (6,171) 23,718 5,086
============================================================================
Net Income after Earnings Credit plus Tax Effected
Corporate Support @ 80% 123,350 43,120 32,100 642 (4,936) 18,974 4,069
Net Income after Earnings Credit plus Tax Effected
Corporate Support @ 150% 231,281 80,850 60,187 1,204 (9,256) 35,577 7,630
II. CONTROLLABLE RETURN ON EQUITY
Net Income-Fully Leveraged 120,303 40,477 38,028 295 (9,358) 19,552 4,407
Corporate Support 33,798 11,883 2,957 882 3,187 2,836 537
Taxes on Corporate Support 10,681 5,050 860 375 0 0 0
----------------------------------------------------------------------------
Corporate Support, Net of Taxes 23,117 6,833 2,097 507 3,187 2,836 537
----------------------------------------------------------------------------
Net Income-Fully Leveraged plus Tax Effected
Corporate Support 143,420 47,310 40,125 803 (6,171) 22,388 4,945
============================================================================
Average Equity-Fully Leverage 676,115 18,334 479,841 (796) (4,278) 97,877 34,376
============================================================================
Corporate Support Net Liability Allocaties 52,736 18,542 4,614 1,376 4,973 4,425 839
----------------------------------------------------------------------------
Fully Leverage Equity before Corporate Support 728,851 36,876 484,455 589 695 102,302 35,314
============================================================================
----------------------------------------------------------------------------
ROE-Fully Leverage-before CS balance sheet
allocation 19.68% 128.29% 8.28% 138.40% 887.65% 21.88% 14.04%
============================================================================
IndyMac Tax Benefit
CLD WLCA LoanWorks MHB HID Adjustment
----------- ---------- --------- ---------- ------- -----------
I. NET INCOME AFTER EARNINGS CREDIT PLUS TAX
EFFECTED CORPORATE SUPPORT
Net Income after Earnings Credit 9,194 7,234 2,702 4,653 1,846 3,977
Corporate Support 1,920 2,518 1,768 3,265 2,045 0
Taxes on Corporate Support 33 0 751 1,388 869 1,355
--------------------------------------------------------------------
Corporate Support, Net of taxes 1,887 2,518 1,016 1,877 1,176 (1,355)
--------------------------------------------------------------------
Net Income after Earnings Credit plus Tax Effected
Corporate Support @ 100% 11,081 9,752 3,719 6,530 3,022 2,623
====================================================================
Net Income after Earnings Credit plus Tax Effected
Corporate Support @ 80% 8,865 7,801 2,975 5,224 2,418 2,098
Net Income after Earnings Credit plus Tax Effected
Corporate Support @ 150% 16,621 14,628 5,578 9,796 4,533 3,934
II. CONTROLLABLE RETURN ON EQUITY
Net Income-Fully Leveraged 8,513 6,270 2,702 4,036 1,401 3,977
Corporate Support 1,920 2,518 1,768 3,265 2,045 0
Taxes on Corporate Support 33 0 751 1,388 869 1,355
--------------------------------------------------------------------
Corporate Support, Net of taxes 1,887 2,518 1,016 1,877 1,176 (1,355)
--------------------------------------------------------------------
Net Income-Fully Leveraged plus Tax Effected
Corporate Support 10,400 8,788 3,719 5,914 2,577 2,623
====================================================================
Average Equity-Fully Leverage 35,623 9,163 83 (454) 6,377 0
====================================================================
Corporate Support Net Liability Allocaties 2,995 3,929 2,758 5,094 3,191 0
--------------------------------------------------------------------
Fully Leverage Equity before Corporate Support 38,618 13,091 2,841 4,611 9,567 0
====================================================================
--------------------------------------------------------------------
ROE-Fully Leverage-before CS balance sheet
allocation 26.93% 67.13% 130.91% 128.26% 26.94% N/A
====================================================================
<PAGE>
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
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
13
<PAGE>
reorganization of Employer into, with or involving Countrywide Credit, IndyMac,
Inc. 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).
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
14
<PAGE>
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.
15