Exhibit 10.26

 

                              EMPLOYMENT AGREEMENT

 

                                 BY AND BETWEEN

 

                              INDYMAC BANCORP, INC.

 

                                       AND

 

                                MICHAEL W. PERRY

 

                           EFFECTIVE FEBRUARY 1, 2002

 

 

<PAGE>

 

 

 

 

                                TABLE OF CONTENTS

 

 

<TABLE>

<CAPTION>

                                                                      Page

                                                                      ----

<S>                                                                   <C>

1.  Term...............................................................1

 

2.  Position, Duties and Responsibilities..............................1

 

3.  Scope of this Agreement and Outside Affiliations...................2

 

4.  Compensation and Benefits..........................................2

 

    (a)    Base Salary.................................................2

    (b)    Incentive Compensation......................................2

    (c)    Stock Options...............................................3

    (d)    Performance Based Option....................................3

    (e)    Shareholder Approval........................................4

    (f)    Deferred Compensation.......................................4

    (g)    Additional Benefits.........................................5

    (h)    Certain Perquisites.........................................5

 

5.  Termination........................................................6

 

    (a)    Disability..................................................6

    (b)    Death.......................................................8

    (c)    Cause.......................................................9

    (d)    Termination Other Than For Cause or Disability.............10

    (e)    Good Reason................................................12

    (f)    Resignation................................................12

    (g)    Change in Control..........................................13

    (h)    Notice of Termination......................................15

    (i)    Expiration of Five Year Employment Term....................15

 

6.  Certain Additional Payments by Employer...........................15

 

7.  Reimbursement of Business Expenses................................18

 

8.  Indemnity.........................................................18

 

 

9.  Miscellaneous.....................................................19

 

    (a)    Successorship..............................................19

    (b)    Notices....................................................19

    (c)    Entire Agreement...........................................19

    (d)    Waiver.....................................................19

    (e)    California Law.............................................19

    (f)    Arbitration................................................19

    (g)    Confidentiality............................................20

 

</TABLE>

 

<PAGE>

 

                                TABLE OF CONTENTS

 

<TABLE>

<CAPTION>

                                                                      Page

                                                                      ----

<S>                                                                   <C>

 

    (h)    No Solicitation............................................20

    (i)    Consideration; Remedies of Employer........................21

    (j)    Reformation................................................21

    (k)    Severability...............................................21

    (l)    No Obligation to Mitigate..................................21

    (m)    Adjustment of Options......................................22

    (n)    Legal Fees.................................................22

 

10. Regulatory Authority..............................................22

 

 

</TABLE>

 

                                       ii

 

<PAGE>

 

 

 

                              EMPLOYMENT AGREEMENT

 

            THIS EMPLOYMENT AGREEMENT (the "Agreement") is executed effective

as of February 1, 2002 (the "Effective Date") by and between IndyMac Bancorp,

Inc. ("Employer") and Michael W. Perry ("Officer").

 

                                   WITNESSETH:

 

            WHEREAS, Employer, Officer and IndyMac Bank, F.S.B. ("IndyMac Bank")

have entered into that certain Employment Agreement, dated as of February 4,

2000, as amended December 1, 2000 (the "Original Agreement");

 

            WHEREAS, Employer and Officer desire to (i) enter into a new

employment agreement upon the terms set forth in this Agreement and (ii)

terminate the Original Agreement;

 

            WHEREAS, Employer desires to obtain the benefit of continued

services of Officer and Officer desires to continue to render services to

Employer, IndyMac Bank 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; and

 

           WHEREAS, subject to Section 4(e) below, as of the Effective Date, the

parties hereby intend that the Original Agreement shall automatically terminate

and be of no further force and effect, and neither parties have any further

rights or obligations thereunder.

 

           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, IndyMac Bank and its affiliates, in accordance with the terms hereof,

for a term beginning on the Effective Date and ending on December 31, 2006,

unless earlier terminated in accordance with the provisions hereof (the

"Employment Term").

 

        2. POSITION, DUTIES AND RESPONSIBILITIES. Employer and Officer hereby

agree that, subject to the provisions of this Agreement, Officer shall serve as

Chief Executive Officer of Employer and IndyMac Bank. Employer agrees that

Officer shall have the authority and duties customary for his positions in

similarly situated entities and such other duties, commensurate with his

position, as assigned by the Board of Directors of the Employer (the "Board") or

the Board of Directors of IndyMac Bank (the "IndyMac Bank Board") from time to

time. Officer shall have such executive power and authority as shall reasonably

be required to enable him to discharge his duties in the offices which he may

hold. All compensation paid to Officer by Employer or any of its affiliates

shall be aggregated in determining whether Officer has received the benefits

provided for herein, but without prejudice to the allocation of costs among the

entities to which Officer renders services hereunder.

 

<PAGE>

 

           Employer agrees that, as long as Officer serves on the Board or the

IndyMac Bank Board, he shall serve as Vice Chairman of the applicable Board or,

if so elected during the term of this Agreement, Chairman of the applicable

Board. Employer shall cause Officer to be nominated to the respective Boards.

 

        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,

IndyMac Bank and its affiliates, and matters related thereto. Officer shall

report only to the Board and the IndyMac Bank Board and shall perform his

duties, subject to their authority. Officer agrees to serve without additional

remuneration as the chief executive officer or director of one or more (direct

or indirect) subsidiaries or affiliates of Employer as the Board may from time

to time reasonably request, subject to appropriate authorization by the

affiliate or subsidiary involved and any limitation under applicable law,

provided, that Officer shall be indemnified and covered by directors' and

officers' liability insurance of Employer and IndyMac Bank as provided under

Section 8 hereof with regard to such service. Officer's failure to discharge an

order or perform a function because Officer reasonably and in good faith

believes such would violate a law or regulation or be dishonest shall not be

deemed a breach by him of his obligations or duties pursuant to any of the

provisions of this Agreement, including without limitation pursuant to Section

5(c) hereof.

 

           During the course of Officer's employment as a full-time officer

hereunder, Officer shall not, without the consent of the Board, engage in any

outside business activity (as distinguished from personal investment activity

and affairs) with a "Competitor" (as defined below) including, without

limitation, activity as a consultant, agent, partner, officer or director or

provide services of any nature directly or indirectly to a corporation or other

business enterprise that is a Competitor.

 

           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.

Officer may serve as a director (or on the advisory committee) of corporations

or other business enterprises with prior approval of the Management Development

and Compensation Committee of the Board (the "Compensation Committee") which

shall not be unreasonably withheld, provided such activities or services do not

materially interfere or conflict with the performance of Officer's duties

hereunder.

 

        4. COMPENSATION AND BENEFITS.

 

           (a) BASE SALARY. During the Employment Term, Employer shall pay to

Officer a base salary at the annual rate of $1,000,000 (the "Base Salary"). At

the sole discretion of the Compensation Committee, the Base Salary may be

increased from time to time but shall not be reduced, and that any increased

rate shall thereafter be the rate of "Base Salary" hereunder.

 

           (b) INCENTIVE COMPENSATION. Subject to shareholder approval in 2002

of the IndyMac Bancorp, Inc. 2002 Stock Incentive Plan (the "2002 Plan"),

Officer shall be eligible to

 

 

                                       2

<PAGE>

 

receive an annual bonus (the "Annual Bonus") for each fiscal year of the

Employment Term pursuant to the terms of the Plan or any new plan with an annual

bonus target of at least 50% of the Base Salary and an annual maximum bonus

opportunity of at least 100% of the Base Salary based on achievement of

reasonable performance objectives and strategic goals established by the

Compensation Committee after consultation with Officer.

 

           (c) STOCK OPTIONS. Subject to shareholder approval of the 2002 Plan,

Employer shall grant to Officer a stock option grant of 1,000,000 shares of

Employer's common stock (the "Option") on the date of such stockholder approval

(the "Grant Date") and such Option shall be designated as an "incentive stock

option" (within the meaning of Code Section 422) to the maximum extent permitted

under Code Section 422. The Option shall have a per share exercise price equal

to the Fair Market Value (as defined in the 2002 Plan) of the common stock on

the Grant Date and a ten (10) year stated term. Twenty percent (20%) of the

shares subject to the Option shall vest on each December 31, provided Officer is

then employed by, or otherwise provides services to, Employer, IndyMac Bank or

an affiliate, beginning on December 31, 2002 so that all the shares subject to

the Option shall be vested on December 31, 2006.

 

           In the event of a "Change in Control" (as defined in Appendix A), the

Option and any other options or other equity awards granted to Officer (other

than the Performance Option (defined below)) shall become fully vested if not

yet vested on the first anniversary of the Change in Control, provided that

Officer is employed by Employer or its successor on such date.

 

           The Option 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 memorandum evidencing the award of the Option, which shall include

the expiration and acceleration provisions set forth in Section 5 below and

otherwise be in conformity with the Agreement.

 

           (d) PERFORMANCE BASED OPTION. Subject to shareholder approval of the

2002 Plan, Employer shall grant to Officer a stock option grant of 500,000

shares of Employer's common stock (the "Performance Option") on the Grant Date.

The Performance Option shall have a per share exercise price equal to the Fair

Market Value of the common stock on the Grant Date and a ten (10) year stated

term.

 

           The shares subject to the Performance Option shall vest on the

seventh anniversary of the Grant Date provided Officer is then employed by, or

otherwise providing services to, Employer, IndyMac Bank or an affiliate;

provided, however, that the vesting of the shares subject to the Performance

Option shall be accelerated if the following share price targets are achieved:

 

<TABLE>

<CAPTION>

  SHARE PRICE TARGET   # SHARES SUBJECT TO ACCELERATED VESTING

  ------------------   ---------------------------------------

  <S>                 <C>

          $35                        166,667

          $45                        166,667

          $55                        166,666

</TABLE>

 

 

                 (i)   Achievement of each share price target shall be

                       determined based on the average of the Fair Market Value

                       of Employer's common

 

 

                                       3

<PAGE>

                       stock for each trading day in a calendar quarter. Upon

                       achievement of a share price target, the number of shares

                       subject to the Performance Option specified above shall

                       vest on the last day of such quarter.

 

                 (ii)  Notwithstanding clause (i) above, on a Change in Control,

                       achievement of each share price target shall be

                       determined based on the Fair Market Value of Employer's

                       common stock on the date of the Change in Control. Upon

                       achievement of a share price target, the number of shares

                       subject to the Performance Option specified above shall

                       vest on the date of the Change in Control.

 

           Except as provided below, upon the termination of Officer's

employment for any reason, the unvested portion of the Performance Option shall

expire immediately. The expiration of the vested portion of the Performance

Option shall be governed by the terms set forth in Section 5 below; provided,

however, that upon a termination of Officer's employment by Employer other than

for Cause or Disability or by Officer for Good Reason, achievement under clause

(i) or (ii) above shall be measured through the end of the "Specified Period."

For purposes of this Agreement, the "Specified Period" shall mean the end of the

then calendar quarter if the termination of employment is prior to and not in

contemplation of a Change in Control and one year after the end of such quarter

if the termination of employment is in contemplation of or after a Change in

Control.

 

           The Performance Option 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 memorandum evidencing the award of the

Performance Option and otherwise be in conformity with this Agreement.

 

           (e) SHAREHOLDER APPROVAL. Employer shall use its best efforts to

obtain shareholder approval of the 2002 Plan. In the event the shareholders do

not approve the 2002 Plan in 2002, at the election of Officer, upon written

notice to Employer, this Agreement shall become null and void as of the

Effective Date and the terms of the Original Agreement shall continue in effect.

 

           (f) DEFERRED COMPENSATION. In satisfaction of Employer's and IndyMac

Bank's obligations to pay Officer a payment at the expiration of the term of the

Original Agreement, on January 1, 2003 (the "Credit Date"), provided that

Officer is employed by Employer on such date, Employer shall credit Officer's

account (the "Account") under the IndyMac Bancorp, Inc. Deferred Compensation

Plan (the "Deferred Compensation Plan") with $5,000,000 (the "Deferred

Compensation Credit"). Twenty five percent (25%) of such amount plus any accrued

earnings thereon (the "Deferred Amount") shall vest on the day before each

anniversary of the Credit Date so that the Deferred Amount shall be fully vested

on the day before the fourth anniversary of the Credit Date and as otherwise

provided herein. The Deferred Amount shall become payable to Officer in

accordance with Officer's distribution election under the Deferred Compensation

Plan but in no event earlier than thirty (30) days following the Termination

Date (as defined in Section 5(h)). In the event of the termination of Officer's

employment before January 1, 2003 pursuant to Sections 5(a), (b), (d), (e) or

(g), the Account

 

 

                                       4

<PAGE>

 

shall be credited with the Deferred Compensation Credit as therein provided. In

the event of the termination of Officer's employment pursuant to Sections 5(c)

or (f), any unvested portion of the Deferred Amount shall be forfeited on the

Termination Date.

 

           (g) ADDITIONAL BENEFITS. Officer shall also be entitled to

participate, at a level commensurate with his position, in 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, of Employer for senior

officers generally or for employees generally, during the term of this Agreement

as well as any benefits or rights specifically provided for Officer

(collectively, "Additional Benefits"), provided, however, that Employer shall

have no obligation to grant any stock options or other equity awards to Officer

except as provided in Sections 4(c) and (d). This Agreement shall not affect the

provision of any other compensation, retirement or other benefit program or plan

of Employer, except as provided herein.

 

           (h) CERTAIN PERQUISITES.

 

               (i)   CLUB MEMBERSHIPS. Employer shall pay standard annual and

                     monthly membership fees and any business related charges

                     for Officer's participation in the Young Presidents'

                     Organization, the San Gabriel Country Club, the California

                     Club, the Annandale Golf Club, the Jonathan Club and such

                     other memberships as may be approved by the Compensation

                     Committee.

 

               (ii)  CAR ALLOWANCE. Employer shall either provide Officer with

                     an appropriate luxury automobile for Officer's exclusive

                     use or pay Officer an equivalent monthly automobile

                     allowance which shall in either case include car insurance,

                     maintenance and operating expenses, such automobile or

                     amount to be mutually agreed to by the Compensation

                     Committee and Officer.

 

               (iii) TRAVEL. In connection with business travel, Officer shall

                     be permitted to travel first class, or by chartered or

                     other private plane service where appropriate, at

                     Employer's expense, it being recognized that travel by

                     charter or other private plane service will be necessary

                     for security reasons.

 

               (iv)  FINANCIAL PLANNING SERVICES. Employer shall pay for the

                     financial planning and tax services of AYCO for Officer,

                     including a full tax gross-up for any imputed income to

                     Officer resulting from such benefit. The annual amount that

                     Employer shall be required to pay for such services shall

                     not exceed $25,000, exclusive of the tax gross-up.

 

               (v)   SPLIT DOLLAR LIFE INSURANCE. Employer shall provide a split

                     dollar whole life insurance policy on the life of Officer

                     for the benefit of a beneficiary designated by Officer and

                     owned, as designated by

 

 

                                       5

<PAGE>

 

                     Officer, by Officer, an insurance trust, or the Employer in

                     a face amount equal to four (4) times Officer's Base Salary

                     with Officer not being required to make any payment thereon

                     (other than payment of any tax obligations) and Employer's

                     recovery being limited to the lesser of the cash surrender

                     value of the policy and the premiums paid and a right to

                     assume the policy on any termination of employment in

                     exchange for Employer's interest; provided, however, that

                     if Employer cannot purchase a split dollar life insurance

                     policy on behalf of Officer at standard rates, then the

                     face amount of the insurance policy shall be reduced to

                     that amount purchasable by Employer at standard rates.

 

               (vi)  LONG TERM DISABILITY. To the extent available at a

                     commercially reasonable rate of premiums not to exceed

                     $15,000 in any year and provided Officer remains insurable,

                     Employer shall provide Officer long term disability

                     coverage which shall provide annual benefits to Officer

                     equal to 65% of his Base Salary during any period which

                     Officer is disabled if the disability arose during the

                     Employment Term. During any period prior to the Termination

                     Date while Officer is disabled and receiving long term

                     disability benefits as described in this clause (vi) and is

                     otherwise entitled to receive his Base Salary under this

                     Agreement, any Base Salary payments to Officer shall be

                     reduced by the amount of any benefits paid for the same

                     period of time pursuant to such long term disability

                     coverage.

 

        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, to render for six (6) consecutive months

or for shorter periods aggregating one hundred eighty (180) or more business

days in any twelve (12) month period, the material services contemplated by this

Agreement ("Disability"), Officer's full-time employment hereunder may be

terminated, by written Notice of Termination from Employer to Officer while

Officer remains so incapacitated; and thereafter,

 

               (i)   Employer shall pay Officer a single severance payment as

                     soon as practicable after the Termination Date, but in no

                     event later than thirty (30) days thereafter, an amount in

                     cash equal to two (2) times the Base Salary as in effect on

                     the Termination Date,

 

               (ii)  Employer shall pay Officer an amount equal to Officer's

                     Annual Bonus, pro rated from January 1 of the year in which

                     the termination occurs through the Termination Date, based

                     on Employer's actual performance for such year, payable at

                     such time

 

 

                                       6

<PAGE>

 

                     or times when Employer or IndyMac Bank pays such bonuses to

                     its executives,

 

               (iii) All Officer's outstanding unvested options and any other

                     equity grants, other than the Performance Option, shall

                     become immediately vested and any vested options (including

                     the Performance Option) shall remain exercisable until the

                     earlier of twelve (12) months following the Termination

                     Date or their full-term expiration date,

 

               (iv)  For a period of two (2) years following the Termination

                     Date, Employer shall provide Officer and Officer's eligible

                     family members with continued health and welfare benefits

                     at Employer's expense, with the benefits substantially

                     equivalent to the life, disability, and medical insurance

                     policies which were being provided to Officer and his

                     eligible family members immediately prior to the

                     Termination Date, but only to the extent that Officer is

                     not entitled to comparable benefits from other employment,

 

               (v)   All amounts, including any earnings, credited to Officer's

                     Account under the Deferred Compensation Plan shall

                     immediately become vested and nonforfeitable; provided,

                     however, that if Officer's Termination Date as a result of

                     Disability occurs prior to January 1, 2003, Employer shall

                     credit the Deferred Compensation Credit to Officer's

                     Account. The amounts in Officer's Account shall be payable

                     to Officer in accordance with Officer's distribution

                     election under the Deferred Compensation Plan,

 

               (vi)  To the full extent permitted by law, so long as Employer or

                     IndyMac Bank (or a successor) maintains directors' and

                     officers' liability insurance for its executives or

                     directors, Employer shall, and shall cause IndyMac Bank to,

                     continue to provide Officer following the Termination Date

                     with directors' and officers' liability insurance insuring

                     Officer against insurable events which occur or have

                     occurred while Officer was a director or officer of

                     Employer, IndyMac Bank or an affiliate or a fiduciary of an

                     employee benefit plan of any of the foregoing, such

                     insurance to have policy limits aggregating not less than

                     the amount in effect immediately prior to the Termination

                     Date or, if higher, that provided to other officers or

                     directors of Employer and IndyMac Bank. In addition,

                     Officer's rights of indemnification hereunder or otherwise

                     with regard to service on behalf of Employer, IndyMac Bank

                     or an affiliate or a fiduciary of an employee benefit plan

                     of any of the foregoing prior to such termination ("Rights

                     of Indemnification") shall continue, and

 

 

                                       7

<PAGE>

 

               (vii) Officer shall be entitled to his accrued rights, including

                     but not limited to earned but unpaid Base Salary, accrued

                     but unused vacations and earned but unpaid bonus for any

                     prior completed fiscal year and any earned but unpaid

                     benefits under any plan or program of the Employer

                     ("Accrued Amounts").

 

            The determination of Disability shall be made only after Officer has

failed to render services for the above stated time periods and shall be made

only after 30 days notice to Officer (which may run concurrently with the Notice

of Termination).

 

            (b) DEATH. In the event of Officer's death during the term of this

Agreement,

 

               (i)   Employer shall pay Officer an amount equal to Officer's

                     Annual Bonus, pro rated from January 1 of the year in which

                     the termination occurs through the Termination Date, based

                     on Employer's actual performance for such year, payable at

                     such time or times when Employer or IndyMac Bank pays such

                     bonuses to its executives,

 

               (ii)  All amounts, including any earnings, credited to the

                     Account under the Deferred Compensation Plan shall

                     immediately become vested and nonforfeitable; provided,

                     however, that if Officer's Termination Date as result of

                     death occurs prior to January 1, 2003, Employer shall

                     credit the Deferred Compensation Credit to Officer's

                     Account. The amounts in Officer's Account shall be payable

                     to Officer's beneficiaries in accordance with Officer's

                     distribution election under the Deferred Compensation Plan,

 

               (iii) All outstanding unvested options and other equity grants,

                     other than the Performance Option, shall become immediately

                     vested and any vested options (including the Performance

                     Option) shall remain exercisable until the earlier of

                     twelve (12) months following the Termination Date or their

                     full-term expiration date,

 

               (iv)  For a period of three (3) years following the Termination

                     Date, Employer shall provide Officer's eligible family

                     members with continued health benefits at Employer's

                     expense, with the benefits substantially equivalent to the

                     medical insurance policies which were being provided to

                     Officer and his eligible family members immediately prior

                     to the Termination Date, but only to the extent that such

                     individuals are not entitled to comparable benefits from

                     other employment,

 

               (v)   To the full extent permitted by law, so long as Employer or

                     IndyMac Bank (or a successor) maintains directors' and

                     officers' liability insurance for its executives or

                     directors, Employer shall, and shall cause IndyMac Bank to,

                     continue to provide Officer

 

 

                                       8

<PAGE>

 

                     following the Termination Date with directors' and

                     officers' liability insurance insuring Officer against

                     insurable events which occur or have occurred while Officer

                     was a director or officer of Employer, IndyMac Bank or an

                     affiliate or a fiduciary of an employee benefit plan of any

                     of the foregoing, such insurance to have policy limits

                     aggregating not less than the amount in effect immediately

                     prior to the Termination Date or, if higher, that provided

                     to other officers or directors of Employer and IndyMac

                     Bank. In addition, Officer's Rights of Indemnification

                     shall continue, and

 

               (vi)  Officer shall be entitled to his Accrued Amounts.

 

            (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, for any breach that is remediable, or can be cured going forward, is

not remedied or cured within a reasonable period of time after receipt of

written notice from Employer specifying such breach, or (ii) Officer's

conviction by a court of competent jurisdiction of a felony involving acts of

fraud, embezzlement, dishonesty or moral turpitude, or (iii) entry of a final

non-appealable order duly issued by any federal or state regulatory agency

having jurisdiction in the matter removing Officer from office of IndyMac Bank

or permanently prohibiting him from participating in a material portion of the

affairs of IndyMac Bank, provided that the order resulted from act(s) of Officer

which were committed in bad faith and without reasonable belief that such act(s)

were in the best interests of Employer.

 

            Notwithstanding the foregoing, Officer's employment shall not be

deemed to have been terminated for Cause unless and until there have been

delivered to Officer a copy of a resolution duly adopted by the affirmative vote

of not less than two-thirds of the non-employee directors of the Board (the

"Outside Directors") (after reasonable notice to Officer and an opportunity for

Officer, together with Officer's counsel, to be heard before the Outside

Directors), finding that in the Outside Directors' good faith opinion Officer

was guilty of conduct set forth above in this Section 5(c) and specifying the

particulars thereof in reasonable detail.

 

            If Officer shall be (A) convicted of a felony of a type set forth

above or (B) shall be suspended and/or temporarily prohibited from participating

in the conduct of IndyMac Bank'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)) by any federal or state regulatory authority having jurisdiction in the

matter, by the affirmative vote of two thirds of the Outside Directors (after

reasonable notice to Officer and an opportunity for Officer, together with

Officer's counsel, to be heard before the Outside Directors), provided the

provisions of the next paragraph have been complied with, the Outside Directors

may suspend Officer from some or all of his duties and authority while such

suspension or prohibition or conviction is in effect and, if they elect to do

so, may also during such period suspend Officer's right to some or, if no duties

are to be performed, all of Officer's Base Salary and Annual Bonus accruing

during such suspension

 

 

                                       9

<PAGE>

 

period and may suspend Officer's right to be granted the Option and the

Performance Option as described in Sections 4(c) and (d) if the Grant Date

occurs within such suspension period; provided, however, that if the conviction

is overturned on appeal or if the charges resulting in such suspension or

prohibition are finally dismissed or if a final judgment on the merits of such

charges is issued in favor of Officer, then Officer shall be reinstated in full

with back amounts for the suspension period plus accrued interest at the rate

then payable on judgments and Officer shall be granted the Option and

Performance Option, if not previously granted, as described in Sections 4(c) and

(d).

 

            With regard to clause (B) above, (1) Employer shall, and shall cause

IndyMac Bank, to use its best efforts to oppose and defend against any such

notice of charges as to which there are reasonable defenses and to permit

Officer to participate in such effort by counsel of his selection fully paid by

Employer; (2) 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 shall promptly make such payment hereunder; and

(3) during the period of suspension, the vested rights of the contracting

parties shall not be affected except to the extent precluded by such notice.

 

            During the period that Employer's obligations under Sections 4(a),

4(b), 4(c), (d), (f) and 4(h) hereof are suspended, Officer shall continue to be

entitled to receive Additional Benefits under Section 4(g) until the conviction

of the felony has become final and non-appealable. When the conviction of the

felony 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 Date. To the full extent

permitted by law, so long as Employer or IndyMac Bank (or a successor) maintains

directors' and officers' liability insurance for its executives or directors,

Employer shall, and shall cause IndyMac Bank to, continue to provide Officer

following the Termination Date with directors' and officers' liability insurance

insuring Officer against insurable events which occur or have occurred while

Officer was a director or officer of Employer, IndyMac Bank or an affiliate or a

fiduciary of an employee benefit plan of any of the foregoing, such insurance to

have policy limits aggregating not less than the amount in effect immediately

prior to the Termination Date or, if higher, that provided to other officers or

directors of Employer and IndyMac Bank. In addition, Officer's Rights of

Indemnification shall continue. Officer shall also be entitled to his Accrued

Amounts.

 

            Upon termination for Cause, Officer is not entitled to any severance

or bonus and all options shall expire on the Termination Date. Anything herein

to the contrary notwithstanding, termination for Cause shall not include

termination by reason of Officer's job performance or a job performance rating

given to Officer for his job performance or the financial performance of

Employer, IndyMac Bank or any affiliated company.

 

            (d) TERMINATION OTHER THAN FOR CAUSE OR DISABILITY. If during the

term of this Agreement, Officer's employment shall be terminated by Employer

other than for Cause or Disability (other than in connection with a Change in

Control as provided in Section 5(g)), then

 

 

                                       10

<PAGE>

 

               (i)   Employer shall pay Officer in a single severance payment as

                     soon as practicable after the Termination Date, but in no

                     event later than thirty (30) days thereafter, an amount in

                     cash equal to 2.5 times the sum of the Base Salary and the

                     target Annual Bonus as in effect on the Termination Date,

 

               (ii)  Employer shall pay Officer an amount equal to Officer's

                     Annual Bonus, pro rated from January 1 of the year in which

                     the termination occurs through the Termination Date, based

                     on Employer's actual performance for such year, payable at

                     such time or times when Employer or IndyMac Bank pays such

                     bonuses to its executives,

 

               (iii) All outstanding unvested options and other equity grants,

                     other than the Performance Option, shall become immediately

                     vested and any vested options (including the Performance

                     Option) shall remain exercisable until the earlier of

                     twelve (12) months following the Termination Date or their

                     full-term expiration date,

 

               (iv)  All amounts, including any earnings, credited to Officer's

                     Account under the Deferred Compensation Plan shall

                     immediately become vested and nonforfeitable; provided,

                     however, that if Officer's Termination Date occurs prior to

                     January 1, 2003, Employer shall credit the Deferred

                     Compensation Credit to Officer's Account. The amounts in

                     Officer's Account shall be payable to Officer in accordance

                     with Officer's distribution election under the Deferred

                     Compensation Plan,

 

               (v)   For a period of two (2) years following the Termination

                     Date, Employer shall provide Officer and Officer's eligible

                     family members with continued health and welfare benefits

                     at Employer's expense, with the benefits substantially

                     equivalent to the life, disability, and medical insurance

                     policies which were being provided to Officer and his

                     eligible family members immediately prior to the

                     Termination Date but only to the extent that Officer is not

                     entitled to comparable benefits from other employment,

 

               (vi)  To the full extent permitted by law, so long as Employer or

                     IndyMac Bank (or a successor) maintains directors' and

                     officers' liability insurance for its executives or

                     directors, Employer shall, and shall cause IndyMac Bank to,

                     continue to provide Officer following the Termination Date

                     with directors' and officers' liability insurance insuring

                     Officer against insurable events which occur or have

                     occurred while Officer was a director or officer of

                     Employer, IndyMac Bank or an affiliate or a fiduciary of an

                     employee benefit plan of any of the foregoing, such

                     insurance to have policy limits aggregating not less than

                     the amount in effect

 

 

                                       11

<PAGE>

 

                     immediately prior to the Termination Date or, if higher,

                     that provided to other officers or directors of Employer

                     and IndyMac Bank. In addition, Officer's Rights of

                     Indemnification shall continue, and

 

               (vii) Officer shall be entitled to his Accrued Amounts.

 

           (e) GOOD REASON. Officer may terminate Officer's employment at any

time for "Good Reason." "Good Reason" means that any one or more of the

following have occurred without Officer's written consent (other than as a

result of Officer's Disability or termination of Officer's employment for Cause)

which is not cured by Employer within 30 days after written notice thereof is

given to Employer by Officer:

 

               (i)   other than temporarily as a result of Officer's suspension

                     as provided in Section 5(c), any diminution in Officer's

                     then titles or positions, including with IndyMac Bank, or

                     any material diminution in Officer's then powers, reporting

                     requirements, duties or responsibilities, including with

                     IndyMac Bank,

 

               (ii)  shareholders of Employer do not elect Officer to the Board

                     or Employer does not elect Officer to the IndyMac Bank

                     Board or Officer is removed therefrom,

 

               (iii) Officer is not re-elected as Vice Chairman of the Board and

                     of the IndyMac Bank Board (or Chairman of the Board and the

                     IndyMac Bank Board if Officer is elected to such positions

                     during the term of this Agreement),

 

               (iv)  Officer is not elected as Chairman of the Board and the

                     IndyMac Bank Board, as applicable, when the current

                     Chairman of the Board and the IndyMac Bank Board ceases to

                     serve in the applicable capacity,

 

               (v)   Officer is required to relocate place of employment to a

                     location which is more than 50 miles from IndyMac Bank's

                     current headquarters, or

 

               (vi)  any material breach by Employer of the terms of this

                     Agreement.

 

               If during the term of this Agreement, Officer's employment shall

be terminated by Officer for Good Reason (other than in connection with a Change

in Control as provided in Section 5(g)), Officer shall receive the payments and

benefits described in Section 5(d).

 

           (f) RESIGNATION. If during the term of this Agreement, Officer shall

resign other than for Good Reason,

 

               (i)   all of his rights to payment or benefits hereunder shall

                     immediately terminate; provided, however, that the

                     termination of Officer's

 

 

                                       12

<PAGE>

 

                     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,

 

               (ii)  any unvested options shall expire immediately and

 

                     (A) any vested portion of the Option, the Performance

                         Option or any option granted to Officer after the

                         Effective Date shall remain exercisable until the

                         earlier of three (3) months following the Termination

                         Date or their full-term expiration, and

 

                     (B) all vested options granted to Officer prior to the

                         Effective Date shall remain exercisable until the

                         earlier of twelve (12) months following the Termination

                         Date or their full-term expiration,

 

               (iii) to the full extent permitted by law, so long as Employer or

                     IndyMac Bank (or a successor) maintains directors' and

                     officers' liability insurance for its executives or

                     directors, Employer shall, and shall cause IndyMac Bank to,

                     continue to provide Officer following the Termination Date

                     with directors' and officers' liability insurance insuring

                     Officer against insurable events which occur or have

                     occurred while Officer was a director or officer of

                     Employer, IndyMac Bank or an affiliate or a fiduciary of an

                     employee benefit plan of any of the foregoing, such

                     insurance to have policy limits aggregating not less than

                     the amount in effect immediately prior to the Termination

                     Date or, if higher, that provided to other officers or

                     directors. In addition, Officer's Rights of Indemnification

                     shall continue, and

 

               (iv)  Officer shall be entitled to his Accrued Amounts.

 

           (g) CHANGE IN CONTROL. During the term of this Agreement, if within

two (2) years after a Change in Control Officer's employment is terminated (x)

by Employer other than for Cause or Disability or (y) by Officer for Good

Reason, then:

 

               (i)   Employer shall pay Officer in a single severance payment as

                     soon as practicable after the Termination Date, but in no

                     event later than thirty (30) days thereafter, an amount in

                     cash equal to three (3) times the sum of (A) Base Salary

                     and (B) the higher of target Annual Bonus as in effect on

                     the Termination Date or target bonus at the time of Change

                     in Control,

 

               (ii)  Employer shall pay Officer an amount equal to Officer's

                     Annual Bonus, pro rated from January 1 of the year in which

                     the termination occurs through the Termination Date, based

                     on

 

 

                                       13

<PAGE>

 

                     Employer's actual performance for such year, payable at

                     such time or times when Employer or IndyMac Bank pays such

                     bonuses to its executives,

 

               (iii) Any unvested stock options and other equity grants, other

                     than the Performance Option, shall become immediately and

                     fully vested and any vested options (including the

                     Performance Option) shall remain exercisable until the

                     earlier of twelve (12) months following the Termination

                     Date or their full-term expiration,

 

               (iv)  All amounts, including any earnings, credited to Officer's

                     Account under the Deferred Compensation Plan shall

                     immediately become vested and nonforfeitable; provided,

                     however, that if Officer's Termination Date occurs prior to

                     January 1, 2003, Employer shall credit the Deferred

                     Compensation Credit to Officer's Account. The amounts in

                     Officer's Account shall be payable to Officer in accordance

                     with Officer's distribution election under the Deferred

                     Compensation Plan,

 

               (v)   For a period of three (3) years following the Termination

                     Date, Employer shall provide Officer and Officer's eligible

                     family members with continued health and welfare benefits

                     at Employer's expense, with the benefits substantially

                     equivalent to the life, disability, and medical insurance

                     policies which were being provided to Officer and his

                     eligible family members immediately prior to the

                     Termination Date but only to the extent that Officer is not

                     entitled to comparable benefits from other employment,

 

               (vi)  To the full extent permitted by law, so long as Employer or

                     IndyMac Bank (or a successor) maintains directors' and

                     officers' liability insurance for its executives or

                     directors, Employer shall, and shall cause IndyMac Bank to,

                     continue to provide Officer following the Termination Date

                     with directors' and officers' liability insurance insuring

                     Officer against insurable events which occur or have

                     occurred while Officer was a director or officer of

                     Employer, IndyMac Bank or an affiliate or a fiduciary of an

                     employee benefit plan of any of the foregoing, such

                     insurance to have policy limits aggregating not less than

                     the amount in effect immediately prior to the Termination

                     Date or, if higher, that provided to other officers or

                     directors. In addition, Officer's Rights of Indemnification

                     shall continue, and

 

               (vii) Officer shall be entitled to his Accrued Amounts.

 

        Notwithstanding anything contained herein, if a Change in Control occurs

and Officer's employment with Employer is terminated other than for Cause or

Disability or a Good Reason event occurs prior to the Change in Control, and if

such termination of employment or event was

 

 

                                       14

<PAGE>

 

at the request, suggestion or initiative of a third party who has taken steps

reasonably calculated to effect the Change in Control, then Officer upon

occurrence of the Change in Control shall be entitled to receive the payments

and benefits set forth in this Section 5(g), in lieu of the payments and

benefits set forth in Section 5(d).

 

           (h) 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.

 

           (i) EXPIRATION OF FIVE YEAR EMPLOYMENT TERM. At the expiration of the

five (5) year Employment Term, then

 

               (i)   Any unvested stock options and other equity grants, other

                     than the Performance Option, shall become immediately and

                     fully vested and any vested options (including the

                     Performance Option) shall remain exercisable until the

                     earlier of twelve (12) months following the Termination

                     Date or their full-term expiration,

 

               (ii)  To the full extent permitted by law, so long as Employer or

                     IndyMac Bank (or a successor) maintains directors' and

                     officers' liability insurance for its executives or

                     directors, Employer shall, and shall cause IndyMac Bank to,

                     continue to provide Officer following the Termination Date

                     with directors' and officers' liability insurance insuring

                     Officer against insurable events which occur or have

                     occurred while Officer was a director or officer of

                     Employer, IndyMac Bank or an affiliate or a fiduciary of an

                     employee benefit plan of any of the foregoing, such

                     insurance to have policy limits aggregating not less than

                     the amount in effect immediately prior to the Termination

                     Date or, if higher, that provided to other officers or

                     directors of Employer and IndyMac Bank. In addition,

                     Officer's Rights of Indemnification shall continue, and

 

               (iii) Officer shall be entitled to his Accrued Amounts.

 

        6. CERTAIN ADDITIONAL PAYMENTS BY EMPLOYER. Anything in this Agreement

to the contrary notwithstanding, if it shall be determined that any payment or

distribution to Officer or for Officer's benefit (whether paid or payable or

distributed or distributable) pursuant to the terms of this Agreement or

otherwise pursuant to or by reason of any other agreement, policy, plan, program

or arrangement, including without limitation any stock option, stock

appreciation right or similar right, or the lapse or termination of any

restriction on or the vesting or

 

 

                                       15

<PAGE>

 

exercisability of any of the foregoing (the "Payments") would be subject to the

excise tax imposed by section 4999 of the Internal Revenue Code of 1986, as

amended (the "Code") by reason of being "contingent on a change in the ownership

or control" of Employer, within the meaning of Section 280G of the Code or to

any similar tax imposed by state or local law, or any interest or penalties with

respect to such excise tax (such tax or taxes, together with any such interest

or penalties, are collectively referred to as the "Excise Tax"), then Officer

shall be entitled to receive from Employer an additional payment (the "Gross-Up

Payment") in an amount such that the net amount of the Payments and the Gross-Up

Payment retained by Officer after the calculation and deduction of all Excise

Taxes (including any interest or penalties imposed with respect to such taxes)

on the payment and all federal, state and local income tax, employment tax and

Excise Tax (including any interest or penalties imposed with respect to such

taxes) on the Gross-Up Payment provided for in this Section 6, and taking into

account any lost or reduced tax deductions on account of the Gross-Up Payment,

shall be equal to the Payments;

 

           (a) All determinations required to be made under this Section 6,

including whether and when the Gross-Up Payment is required and the amount of

such Gross-Up Payment, and the assumptions to be utilized in arriving at such

determinations shall be made by the Accountants (as defined below) which shall

provide Officer and Employer with detailed supporting calculations with respect

to such Gross-Up Payment within fifteen (15) business days of the receipt of

notice from Officer or Employer that Officer has received or will receive a

Payment. For purposes of making the determinations and calculations required

herein, the Accountants may make reasonable assumptions and approximations

concerning applicable taxes and may rely on reasonable, good faith

interpretations concerning the application of Section 280G and 4999 of the Code,

provided that the Accountant's determinations must be made on the basis of

"substantial authority" (within the meaning of Section 6662 of the Code). For

the purposes of this Section 6, the "Accountants" shall mean Employer's

independent certified public accountants serving immediately prior to the Change

in Control. In the event that the Accountants are also serving as accountant or

auditor for the individual, entity or group effecting the Change in Control,

Officer shall appoint another nationally recognized public accounting firm to

make the determinations required hereunder (which accounting firm shall then be

referred to as the Accountants hereunder). All fees and expenses of the

Accountants shall be borne solely by Employer.

 

           (b) For the purposes of determining whether any of the Payments will

be subject to the Excise Tax and the amount of such Excise Tax, such Payments

will be treated as "parachute payments" within the meaning of section 280G of

the Code, and all "parachute payments" in excess of the "base amount" (as

defined under section 280G(b)(3) of the Code) shall be treated as subject to the

Excise Tax, unless and except to the extent that in the opinion of the

Accountants such Payments (in whole or in part) either do not constitute

"parachute payments" or represent reasonable compensation for services actually

rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the

"base amount," or such "parachute payments" are otherwise not subject to such

Excise Tax. For purposes of determining the amount of the Gross-Up Payment

Officer shall be deemed to pay Federal income taxes at the highest applicable

marginal rate of Federal income taxation for the calendar year in which the

Gross-Up Payment is to be made and to pay any applicable state and local income

taxes at the highest applicable marginal rate of taxation for the calendar year

in which the Gross-Up Payment is to be made, net of the maximum reduction in

Federal income taxes which could be obtained

 

 

                                       16

<PAGE>

 

from the deduction of such state or local taxes if paid in such year (determined

without regard to limitations on deductions based upon the amount of Officer's

adjusted gross income); and to have otherwise allowable deductions for Federal,

state and local income tax purposes at least equal to those disallowed because

of the inclusion of the Gross-Up Payment in Officer's adjusted gross income. To

the extent practicable, any Gross-Up Payment with respect to any Payment shall

be paid by Employer at the time Officer is entitled to receive the Payments and

in no event will any Gross-Up Payment be paid later than five days after the

receipt by Officer of the Accountant's determination. Any determination by the

Accountants shall be binding upon Employer and Officer.

 

           (c) As a result of uncertainty in the application of section 4999

of the Code at the time of the initial determination by the Accountants

hereunder, it is possible that the Gross-Up Payment made will have been an

amount less than Employer should have paid pursuant to this Section 6 (the

"Underpayment"). In the event that Employer exhausts its remedies pursuant to

Section 6(e) and Officer is required to make a payment of any Excise Tax, the

Underpayment shall be promptly paid by Employer to or for Officer's benefit.

 

           (d) Officer and Employer shall each provide the Accountants access to

and copies of any books, records and documents in the possession of Employer or

Officer, as the case may be, reasonably requested by the Accountants, and

otherwise cooperate with the Accountants in connection with the preparation and

issuance of the determination contemplated by this Section 6.

 

           (e) Officer shall notify Employer in writing of any claim by the

Internal Revenue Service that, if successful, would require the payment by

Employer of the Gross-Up Payment. Such notification shall be given as soon as

practicable after Officer is informed in writing of such claim and shall apprise

Employer of the nature of such claim and the date on which such claim is

requested to be paid. Officer shall not pay such claim prior to the expiration

of the 30-day period following the date on which Officer give such notice to

Employer (or such shorter period ending on the date that any payment of taxes,

interest and/or penalties with respect to such claim is due). If Employer

notifies Officer in writing prior to the expiration of such period that it

desires to contest such claim, Officer shall:

 

               (i)   give Employer any information reasonably requested by

                     Employer relating to such claim;

 

               (ii)  take such action in connection with contesting such claim

                     as Employer shall reasonably request in writing from time

                     to time, including, without limitation, accepting legal

                     representation with respect to such claim by an attorney

                     reasonably selected by Employer;

 

               (iii) cooperate with Employer in good faith in order to

                     effectively contest such claim; and

 

               (iv)  permit Employer to participate in any proceedings relating

                     to such claims; provided, however, that Employer shall bear

                     and pay

 

 

                                       17

<PAGE>

 

                     directly all costs and expenses (including additional

                     interest and penalties) incurred in connection with such

                     contest and shall indemnify Officer for and hold Officer

                     harmless from, on an after-tax basis, any Excise Tax or

                     income tax (including interest and penalties with respect

                     thereto) imposed as a result of such representation and

                     payment of all related costs and expenses. Without limiting

                     the foregoing provisions of this Section 6, Employer shall

                     control all proceedings taken in connection with such

                     contest and, at its sole option, may pursue or forgo any

                     and all administrative appeals, proceedings, hearings and

                     conferences with the taxing authority in respect of such

                     claim and may, at its sole option, either direct Officer to

                     pay the tax claimed and sue for a refund or contest the

                     claim in any permissible manner, and Officer agree to

                     prosecute such contest to a determination before any

                     administrative tribunal, in a court of initial jurisdiction

                     and in one or more appellate courts, as Employer shall

                     determine; provided, however, that if Employer directs

                     Officer to pay such claim and sue for a refund, Employer

                     shall advance the amount of such payment to Officer , on an

                     interest-free basis, and shall indemnify Officer for and

                     hold Officer harmless from, on an after-tax basis, any

                     Excise Tax or income tax (including interest or penalties

                     with respect thereto) imposed with respect to such advance

                     or with respect to any imputed income with respect to such

                     advance (including as a result of any forgiveness by

                     Employer of such advance); provided, further, that any

                     extension of the statute of limitations relating to the

                     payment of taxes for the taxable year of Officer with

                     respect to which such contested amount is claimed to be due

                     is limited solely to such contested amount. Furthermore,

                     Employer's control of the contest shall be limited to

                     issues with respect to which a Gross-Up Payment would be

                     payable hereunder and Officer shall be entitled to settle

                     or contest, as the case may be, any other issue raised by

                     the Internal Revenue Service or any other taxing authority.

 

           These rights shall be deemed fully vested rights, not subject to

suspension or forfeiture and shall survive any termination of employment.

 

        7. REIMBURSEMENT OF BUSINESS EXPENSES. During the term of this

Agreement, Employer shall reimburse Officer promptly for all reasonable and

appropriate business expenditures to the extent that such expenditures are

substantiated by Officer as required by the Internal Revenue Service and rules

and policies of Employer.

 

        8. INDEMNITY. To the fullest extent permitted by applicable law, the

Certificate of Incorporation and the By-Laws of Employer and IndyMac Bank (as

from time to time in effect) and any indemnity agreements entered into from time

to time between Employer and/or IndyMac Bank, on the one hand, and Officer, on

the other hand, Employer shall, and shall cause IndyMac Bank to, indemnify

Officer and hold him harmless for actions or inactions as an Officer or

 

 

                                       18

<PAGE>

 

Director of Employer, IndyMac Bank or any affiliate or as a fiduciary of any

employee benefit plan of any of the foregoing and shall maintain coverage for

him under liability insurance policies of a minimum amount of fifty million

dollars, or such higher amount as provided for any other officers or directors

of Employer and IndyMac Bank.

 

        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 all or substantially all the assets of

Employer and IndyMac Bank or similar transaction to or with a company with a

larger net worth, higher credit rating and greater profit than Employer. 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 in

a writing promptly delivered to Officer shall be deemed a material breach of

this Agreement by Employer.

 

           (b) NOTICES. Any notices provided for in this Agreement shall be sent

to Employer at its corporate headquarters, Attention: Corporate

Counsel/Secretary, with a copy to the Chairman of the Compensation Committee at

the same address, or to such other address as Employer may from time to time in

writing designate, and to Officer at such address as he may from time to time in

writing designate (or his business address of record in the absence of such

designation). All notices shall be deemed to have been given two (2) business

days after they have been deposited as certified mail, return receipt requested,

postage paid and properly addressed to the designated address of the party to

receive the notices. Notices may be delivered personally or by overnight

service.

 

           (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 except as provided in Section 4(e); provided, however, that the parties

hereby expressly acknowledge that the parties have executed IndyMac Bank's

standard Mutual Agreement to Arbitrate Claims which is not replaced or

superseded by this Agreement. 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 principles of

conflict of laws.

 

           (f) ARBITRATION. Any disagreement, dispute, controversy or claim

arising out of or relating to this Agreement or the interpretation of this

Agreement or arrangements relating to this Agreement or contemplated in this

Agreement shall be settled by arbitration in accordance with the terms of

IndyMac Bank's Mutual Agreement to Arbitrate Claims, as executed by Officer and

IndyMac Bank on the date hereof.

 

 

                                       19

<PAGE>

 

           (g) CONFIDENTIALITY. Officer agrees that he will not divulge or

otherwise disclose, directly or indirectly, any trade secret or other

confidential information concerning the business or policies of Employer,

IndyMac Bank or any of their 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, IndyMac Bank or any

of their affiliates, except to the extent such use or disclosure is (i) decided

in good faith by Officer to be necessary or desirable to the performance of

Officer's duties, (ii) required by applicable law or in response to an inquiry

from a governmental or regulatory authority, (iii) lawfully obtainable from

other sources, or (iv) authorized by Employer or IndyMac Bank. Furthermore, in

order to protect the trade secret or confidential information of Employer,

Officer hereby agrees to the limits set forth below following the early

termination of this Agreement, if the 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. Employer agrees not to

assert inevitable disclosure in any other situation. The provisions of this

subsection shall survive the expiration, suspension or termination, for any

reason, of this Agreement. In the event of an early termination of this

Agreement, pursuant to the terms described in Section 5(a), (c), (d), (e), (f),

(g) or (i) hereof, Officer agrees that for a period of one year after such

termination, Officer shall not engage in any business, whether as an employee,

consultant, partner, principal, agent, representative or stockholder (other than

as a stockholder or bondholder of less than 1% interest), on behalf of or for a

"Competitor." For the purposes of this Agreement, a "Competitor" shall mean up

to 15 corporations or business entities which are competitors of the company and

are designated in writing by the Compensation Committee from time to time as a

Competitor provided that such designation is made at least 90 days prior to the

Termination Date and in the aggregate at any time does not exceed 15 entities.

In the event of Officer's noncompliance with the covenant set forth in this

Section (the "Event") and such noncompliance is not cured within twenty (20)

days after written notice thereof from the Employer to Officer,

 

               (i)   Officer shall immediately forfeit any unexercised portion

                     of the Option and the Performance Option,

 

               (ii)  Officer shall immediately forfeit any severance payments

                     payable by Employer pursuant to Sections 5(a)(i), (d)(i),

                     (e) or (g)(i) of this Agreement and shall repay to Employer

                     any such severance payments which were previously paid by

                     Employer, and

 

               (iii) If Officer's termination of employment is a result of

                     Officer's voluntary resignation without Good Reason or by

                     Employer for Cause, then in addition to the foregoing,

                     Officer shall pay to Employer any profits realized from the

                     exercise of any portion of the Option and the Performance

                     Option within six (6) months of the date of the Event.

 

           (h) NO SOLICITATION. Officer agrees that during employment and for a

period of one year following an early termination of this Agreement, pursuant to

the terms described in Section 5(c), (d), (e), (f), (g) or (i) hereof, Officer

shall not: (i) solicit, or cause to be solicited, any customers of Employer or

IndyMac Bank or their subsidiaries for purposes of promoting or

 

 

                                       20

<PAGE>

 

selling any products or services competitive with those of Employer or IndyMac

Bank, (ii) 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 customer of

Employer, IndyMac Bank or their subsidiaries, or (iii) 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, IndyMac Bank or

their affiliates on the date Officer's employment terminated, unless Officer

shall have received the prior written consent of Employer or IndyMac Bank or

such person has ceased for six (6) months to be employed by Employer, IndyMac

Bank or its affiliates. The foregoing clauses (i) through (iii) shall be

violated only by the personal solicitation or personally directed and targeted

solicitation by Officer and not by (A) general marketing or solicitation, (B)

solicitation by other employees of entities employing Officer of companies,

other business entities or individuals who are not specifically identified by

Officer, or (C) the providing of services by Officer's new employer to companies

or other business entities not so solicited by Officer.

 

           (i) CONSIDERATION; REMEDIES OF EMPLOYER. The consideration for the

Officer's covenants set forth in Sections 9(g) and (h), 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). 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

seek 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.

 

           (j) REFORMATION. The provisions of Sections 9(g) and (h) are intended

to restrict Officer only to the extent permitted by law in the jurisdiction

where Officer is then a resident. To the extent any of such 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 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.

 

           (k) 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.

 

           (l) 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 no payment hereunder shall be offset or

reduced by the amount of any compensation or benefits provided to Officer in any

subsequent employment except as expressly otherwise provided by Section 5.

 

 

                                       21

<PAGE>

 

            (m) ADJUSTMENT OF OPTIONS. The number of shares of common stock

subject to the Option and the Performance Option, and the share price target

applicable to the Performance Option, shall be equitably adjusted by the

Committee pursuant to Section 6 of the Plan in the event of the occurrence of

any of the events described therein.

 

            (n) LEGAL FEES. The Employer shall pay the Officer's reasonable

legal fees and costs associated with entering into this Agreement.

 

        10. REGULATORY AUTHORITY. The Employer and Officer acknowledge that 12

U.S.C. 1828(k) may apply to IndyMac Bank and to the Employer and Officer, as

persons who may be a "depository institution holding company" or an

"institution-affiliated party," respectively, as defined under such statute,

with respect to IndyMac Bank.

 

 

                                       22

<PAGE>

 

               IN WITNESS WHEREOF, the parties have executed this Agreement as

of the date first a written.

 

                                      EMPLOYER

 

                                      By:

                                         ------------------------------------

                                      Name:  David Loeb

                                      Title:  Chairman of the Board

 

                                      OFFICER:

 

                                      ---------------------------------------

                                      Michael W. Perry

                                      in his individual capacity

 

<PAGE>

 

                                   APPENDIX A

 

A "Change in Control" shall mean the occurrence during the term of the

Agreement, of any one of the following events:

 

A. An acquisition of any common stock or other "Voting Securities" (as

hereinafter defined) of IndyMac Bancorp, Inc. ("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, or (iii) any Person in connection with a "Non-Control

Transaction" (as hereinafter defined).

 

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 a majority

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 a 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 reorganization of Employer where:

 

        a.  the stockholders of Employer, immediately before such merger,

            consolidation or reorganization, own directly or indirectly

            immediately following such merger, consolidation or reorganization

            more than fifty percent (50% ) of the combined voting power of the

            outstanding Voting Securities of the corporation resulting from such

            merger, consolidation or

 

<PAGE>

 

            reorganization (the "Surviving Corporation") in substantially the

            same proportion as their ownership of the Voting Securities

            immediately before such merger, consolidation or reorganization;

            provided, however, that if the stockholders of Parent, immediately

            before such merger, consolidation or reorganization, own directly or

            indirectly immediately following such merger, consolidation or

            reorganization forty-five percent to fifty percent (45% to 50%) of

            the combined voting power of the outstanding Voting Securities of

            the Surviving Corporation in substantially the same proportion as

            their ownership of the Voting Securities immediately before such

            merger, consolidation or reorganization, then a Change in Control

            shall be deemed to have occurred unless the members of the Incumbent

            Board who are not employees of Parent determine otherwise; and

 

        b.  no Person other than (i) Employer, (ii) any Subsidiary, (iii) any

            employee benefit plan (or any trust forming a part thereat)

            maintained by Employer, the Surviving Corporation or any Subsidiary,

            or (iv) any Person who, immediately prior to such merger,

            consolidation or reorganization had Beneficial Ownership of

            twenty-five percent (25%) or more of the then outstanding Voting

            Securities or common stock of Employer, has 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;

 

  (ii)  Employer's stockholders approve a complete liquidation or dissolution of

        Employer;

 

  (iii) The sale or other disposition of all or substantially all of the assets

        of Employer to any Person or Persons (other than a transfer to a

        Subsidiary); or

 

  (iv)  The sale or other disposition of all or substantially all of the stock

        or assets of IndyMac Bank, F.S.B to any Person or Persons (other than a

        transfer to a Subsidiary).

 

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur

solely because any Person (the "Subject Person") acquired Beneficial Ownership

of more than the permitted amount of the then outstanding common stock or Voting

Securities as a result of the acquisition of common stock or Voting Securities

by Employer which, by reducing the number of shares of common stock or Voting

Securities then outstanding, increases the proportional number of shares

Beneficially Owned by the Subject Person; provided, however, that if a Change of

Control would occur (but for the operation of this sentence) as a result of the

acquisition of common stock or Voting Securities by Employer, and after such

share acquisition by Employer, the Subject Person becomes the Beneficial Owner

of any additional common stock or Voting Securities which increases the

percentage of the then outstanding common stock or Voting Securities

Beneficially Owned by the Subject Person, then a Change in Control shall occur.

 

 

 

</TEXT>

</DOCUMENT>