<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for use of
[_] Definitive Proxy Statement Commission only (as permitted by
[_] Definitive Additional Materials Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
INMC MORTGAGE HOLDINGS, INC.
(dba INDYMAC MORTGAGE HOLDINGS, INC.)
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
INMC MORTGAGE HOLDINGS, INC.
(dba INDYMAC MORTGAGE HOLDINGS, INC.)
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TITLE OF
EACH CLASS AGGREGATE
OF NUMBER OF PER UNIT PRICE PROPOSED
SECURITIES SECURITIES TO OR OTHER MAXIMUM
TO WHICH WHICH UNDERLYING AGGREGATE AMOUNT OF
TRANSACTION TRANSACTION VALUE OF VALUE OF FILING
APPLIES APPLIES(1) TRANSACTION(1) TRANSACTION(1) FEE(1)(2)
- ------------------------------------------------------------------
<S> <C> <C> <C> <C>
N/A N/A N/A N/A N/A
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
----------------
[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount previously paid: N/A
2) Form, Schedule or Registration Statement No.: Schedule 14A
3) Filing Party: INMC Mortgage Holdings, Inc.
4) Date Filed: March 6, 1998
<PAGE>
[LOGO OF INDYMAC] April , 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
INMC Mortgage Holdings, Inc., dba IndyMac Mortgage Holdings, Inc., a real
estate investment trust ("IndyMac REIT"). The meeting will be held on Tuesday,
May 19, 1998 at 10 a.m. at The Ritz-Carlton Huntington Hotel, 1401 South Oak
Knoll Avenue, Pasadena, California. The formal notice and proxy statement for
this meeting are attached to this letter.
We hope you can attend the Annual Meeting. It is important that you sign,
date and return your proxy, or submit your voting instructions electronically
or via telephone in the manner indicated on the enclosed proxy card, as soon
as possible, even if you currently plan to attend the meeting. You may still
attend the Annual Meeting and vote in person if you desire, but returning your
proxy card or submitting your voting instructions electronically or via
telephone now will assure that your vote is counted if you are unable to
attend. Your vote, regardless of the number of shares you own, is important.
We urge you to indicate your approval by voting FOR the matters indicated in
the notice.
On behalf of the Board of Directors, I thank you for your cooperation.
Sincerely,
/s/ David S. Loeb
David S. Loeb
Chairman of the Board
<PAGE>
INMC MORTGAGE HOLDINGS, INC.
(dba INDYMAC MORTGAGE HOLDINGS, INC.)
155 NORTH LAKE AVENUE
PASADENA, CALIFORNIA 91109-7211
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1998
----------------
To the Stockholders of INMC MORTGAGE HOLDINGS, INC., dba INDYMAC MORTGAGE
HOLDINGS, INC.:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of INMC Mortgage Holdings, Inc., dba IndyMac Mortgage Holdings,
Inc., a real estate investment trust ("IndyMac REIT") will be held at The
Ritz-Carlton Huntington Hotel, 1401 South Oak Knoll Avenue, Pasadena,
California on May 19, 1998 at 10 a.m., local time, for the following purposes:
1. To elect the Board of Directors for the ensuing year;
2. To approve an amendment to the Certificate of Incorporation of INMC
Mortgage Holdings, Inc. ("Certificate of Incorporation") to change the name
of INMC Mortgage Holdings, Inc. to "IndyMac Mortgage Holdings, Inc.";
3. To approve an amendment to the Certificate of Incorporation to
increase the authorized number of shares of Common Stock from 100 million
to 200 million shares;
4. To approve an amendment to the Certificate of Incorporation to
authorize the creation of 10 million shares of Preferred Stock;
5. To approve the INMC Mortgage Holdings, Inc. 1998 Stock Incentive Plan;
6. To approve the selection by the Board of Directors of Grant Thornton
LLP as independent accountants for IndyMac REIT for the year ending
December 31, 1998; and
7. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Each of the proposals referred to above is more fully described in the
accompanying Proxy Statement and Appendices thereto, which form a part of this
Notice.
The Board of Directors has fixed the close of business on March 23, 1998 as
the record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof. Only stockholders of record on the Record Date will be
entitled to notice of and to vote at the Annual Meeting or any adjournments or
postponements thereof. A list of such stockholders will be available for
inspection at the offices of IndyMac REIT at 155 North Lake Avenue, Pasadena,
California 91101, at least ten days prior to the Annual Meeting.
<PAGE>
If you plan to be present at the Annual Meeting, please notify the
undersigned so that identification can be prepared for you. Whether or not you
plan to attend the Annual Meeting, please execute, date and return the
enclosed proxy card, or submit your voting instructions electronically or via
telephone in the manner prescribed on the enclosed proxy card. If you choose
to return the enclosed proxy card via United States mail, a return envelope is
enclosed for this purpose and requires no postage for mailing in the United
States. If you are present at the Annual Meeting you may, if you wish,
withdraw your proxy and vote in person. Thank you for your interest and
consideration of the proposals listed above.
By Order of the Board of Directors
/s/ Richard H. Wohl
Richard H. Wohl
Secretary
APRIL , 1998
EACH VOTE IS IMPORTANT. FOR CERTAIN PROPOSALS, VOTES NOT CAST MAY HAVE THE
EFFECT OF A VOTE "AGAINST" SUCH PROPOSAL AND RESULT IN THE DEFEAT OF SUCH
PROPOSAL. TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED
PROXY CARD AND MAIL IT IN THE ENCLOSED RETURN ENVELOPE, OR SUBMIT YOUR VOTING
INSTRUCTIONS ELECTRONICALLY OR VIA TELEPHONE IN THE MANNER INDICATED ON THE
ENCLOSED PROXY CARD.
2
<PAGE>
INMC MORTGAGE HOLDINGS, INC.
(dba INDYMAC MORTGAGE HOLDINGS, INC.)
155 NORTH LAKE AVENUE
PASADENA, CALIFORNIA 91109-7211
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1998
This Proxy Statement is furnished to stockholders of INMC Mortgage Holdings,
Inc., dba IndyMac Mortgage Holdings, Inc., a real estate investment trust
("IndyMac REIT") in connection with the solicitation by the Board of Directors
of IndyMac REIT of proxies to be voted at the 1998 Annual Meeting of
Stockholders (the "Annual Meeting") to be held at The Ritz-Carlton Huntington
Hotel, 1401 South Oak Knoll Avenue, Pasadena, California on May 19, 1998, at
10 a.m. or at any adjournment or postponement thereof. IndyMac REIT expects to
mail the proxy solicitation materials for the Annual Meeting on or about April
, 1998.
The principal solicitation of proxies is being made by mail. However,
certain officers, directors and employees of IndyMac REIT, none of whom will
receive additional compensation therefor, may solicit proxies by telegram,
telephone or other personal contact. IndyMac REIT has retained Morrow & Co.,
Inc. to assist in the solicitation of proxies for an estimated fee of $8,000
plus reimbursement for certain expenses. IndyMac REIT will bear the cost of
the solicitation of the proxies, including postage, printing and handling, and
will reimburse brokerage firms and other record holders of shares beneficially
owned by others for their reasonable expenses incurred in forwarding
solicitation material to beneficial owners of shares.
A stockholder may revoke his or her proxy at any time before it is voted by
delivering a letter dated, signed proxy or other written notice of revocation
to IndyMac REIT. Any stockholder present at the Annual Meeting may also
withdraw his or her proxy and vote in person on each matter brought before the
Annual Meeting. All shares represented by each properly signed and returned
proxy in the accompanying form, unless revoked, will be voted at the Annual
Meeting or at any adjournment thereof, in accordance with the instructions
thereon. If no instructions are given, the shares will be voted in favor of
Proposals One through Six described herein.
Only holders of IndyMac REIT shares of Common Stock, par value $0.01 per
share (the "Common Stock"), are entitled to vote at the Annual Meeting. Each
holder of record of Common Stock at the close of business on March 23, 1998 is
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. On that date, there were shares of Common Stock outstanding and
entitled to one vote per share.
Votes cast in person or by proxy at the meeting will be tabulated by the
inspector of elections appointed for the meeting. Pursuant to IndyMac REIT's
Bylaws and the Delaware General Corporation Law (the "DGCL"), the presence of
the holders of shares representing a majority of the outstanding shares of
Common Stock entitled to vote, whether in person or by properly executed
proxy, is necessary to constitute a quorum for the transaction of business at
the Annual Meeting. Under the DGCL, abstentions and "broker non-votes" (in
general, proxies from brokers or nominees indicating that such persons have
not received instructions from the beneficial owner or other persons entitled
to vote with respect to a matter on which the brokers or nominees do not have
the discretionary power to vote) will be treated as present for purposes of
determining the presence of a quorum. For purposes of determining approval of
a matter presented at the meeting, abstentions will be deemed present and
entitled to vote and will, therefore, have the same legal effect as a vote
"against" a matter presented at the meeting. With respect to any proposal
requiring the affirmative vote of a majority of the outstanding shares of
Common Stock entitled to vote at the Annual Meeting, a broker non-vote will
have the same effect as a vote "against" the proposal. With respect to any
proposal requiring the affirmative vote of a majority of the shares of Common
Stock present or represented by proxy and entitled to vote on the matter at
the Annual Meeting, a broker non-vote will be deemed "not entitled to vote" on
the subject matter for which the non-vote is indicated and will, therefore
have no legal effect on the vote on that particular matter. Therefore, with
respect to Proposals Two through Four described herein, broker non-votes will
have the same legal effect as a vote "against" such proposal, and with respect
to each other proposal contained herein, broker non-votes will have no legal
effect on the vote on such proposal.
1
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table shows, with respect to each person or entity known by
IndyMac REIT to be the beneficial owner of more than 5% of IndyMac REIT Common
Stock as of February 12, 1998, (i) the number of shares of IndyMac REIT Common
Stock so owned and (ii) the percentage of all shares outstanding represented
by such ownership (based upon the number of shares outstanding as of
February 12, 1998).
<TABLE>
<CAPTION>
NAME AND ADDRESS OF
BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
- ------------------- ---------------- ----------------
<S> <C> <C>
Countrywide Credit Industries, Inc. (1)...... 4,560,860 7.1%
4500 Park Granada Boulevard
Calabasas, California 91302
Neuberger & Berman LLC (2)................... 3,600,392 5.6%
605 Third Avenue
New York, NY 10158
</TABLE>
- --------
(1) Based upon a Schedule 13D dated July 10, 1997 filed with the Securities
and Exchange Commission.
(2) Based upon a Schedule 13G dated February 11, 1998 filed with the
Securities and Exchange Commission.
PROPOSAL ONE
ELECTION OF DIRECTORS
IndyMac REIT currently has six directors. The six current directors are
nominees for election as directors to serve until the next annual meeting
after their election and until their successors are elected and have
qualified. In the absence of contrary instructions, it is the intention of the
persons named in the accompanying proxy to vote for the nominees listed below.
In the event any nominee becomes unavailable for any reason, an event the
Board of Directors does not anticipate, the proxies will be voted for the
election of the person, if any, who is designated by the Board of Directors to
replace the nominee.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information concerning the beneficial
ownership of IndyMac REIT Common Stock by each director nominee, IndyMac
REIT's Chief Executive Officer, each of IndyMac REIT's other four most highly
compensated executive officers (one of whom is also a director of IndyMac
REIT), and all executive officers and directors as a group, as of February 28,
1998. Except as otherwise indicated, all persons listed below have (i) sole
voting power and investment power with respect to their shares, except to the
extent that authority is shared by spouses under applicable law, and (ii)
record and beneficial ownership with respect to their shares. The shares and
percentages set forth below include shares of IndyMac REIT Common Stock which
were outstanding or issuable within 60 days upon the exercise of options
outstanding as of February 28, 1998.
<TABLE>
<CAPTION>
SHARES OF COMMON
YEAR FIRST STOCK OWNED
BECAME BENEFICIALLY AS OF PERCENT
NAME AGE A DIRECTOR FEBRUARY 28, 1998(1)(2) OF CLASS
---- --- ---------- ----------------------- --------
<S> <C> <C> <C> <C>
David S. Loeb.................. 74 1985 210,800(3) *
Angelo R. Mozilo............... 59 1985 225,431(4) *
Lyle E. Gramley................ 71 1993 123,634(5) *
Thomas J. Kearns............... 59 1990 150,159(6) *
Frederick J. Napolitano........ 68 1985 153,984 *
Michael W. Perry............... 35 1997 131,528 *
Richard H. Wohl................ -- -- 23,762 *
Kathleen H. Rezzo.............. -- -- 16,978 *
S. Blair Abernathy............. -- -- 12,071 *
All directors and executive
officers as a group
(11 persons).................. 1,054,357 1.63%
</TABLE>
- --------
* Less than one percent of class.
(1) Unless otherwise indicated, sole voting and investment power.
(2) Includes shares which may be purchased through stock options exercisable
within 60 days of February 28, 1998 held by the following persons:
Mr. Loeb, 200,000 shares; Mr. Mozilo, 194,307 shares; Mr. Gramley, 32,609
shares; Mr. Kearns, 58,409 shares; Mr. Perry, 98,763 shares; Ms. Rezzo,
15,833 shares; Mr. Abernathy, 1 share; all directors and executive
officers as a group, 599,922 shares.
(3) Includes 10,000 shares owned by Heidi Loeb, the wife of David Loeb.
(4) Includes 1,000 shares owned by Phyllis Mozilo, the wife of Angelo Mozilo,
as to which shares he disclaims any beneficial interest.
(5) Includes 13,225 shares owned by Marlys Gramley, the wife of Lyle Gramley.
(6) Includes 890 shares owned by Gabrielle Kearns, the daughter of Thomas
Kearns.
DIRECTOR NOMINEES
The following persons have each been nominated to serve as a director for
IndyMac REIT for the ensuing year:
DAVID S. LOEB has been Chairman of the Board of Directors of IndyMac REIT
since its formation in 1985. From 1985 to January 1997, Mr. Loeb served as
Chief Executive Officer of IndyMac REIT. He is also a co-founder of
Countrywide Credit Industries, Inc., an affiliate of IndyMac REIT ("CCI"), and
has been President and Chairman of CCI since its formation in March 1969.
ANGELO R. MOZILO has been the Chief Executive Officer of IndyMac REIT since
January 1997. Prior to becoming the Chief Executive Officer, Mr. Mozilo served
as the President of IndyMac REIT since its formation in 1985. Mr. Mozilo has
been Vice Chairman of the Board of Directors since 1993 and a director since
October 31, 1985. Mr. Mozilo is also a co-founder of CCI, has been Vice
Chairman of the Board of Directors and Executive Vice President of CCI since
its formation in March 1969 and was appointed Chief Executive
3
<PAGE>
Officer of CHL in February 1998. Mr. Mozilo served as President of Countrywide
Home Loans, Inc. ("CHL"), a subsidiary of CCI which is engaged in certain
transactions with IndyMac REIT, from 1978 to March 1995. Mr. Mozilo currently
serves as Chairman and Chief Executive Officer of CHL.
MICHAEL W. PERRY is currently the President and Chief Operating Officer and
a director of IndyMac REIT. From January 1993 to January 1997, Mr. Perry had
served as Executive Vice President and Chief Operating Officer of IndyMac
REIT. Mr. Perry is also the President and Chief Executive Officer and a
director of IndyMac, Inc., an affiliate of IndyMac REIT ("IndyMac Operating").
Mr. Perry has been with IndyMac REIT since January 1993 and has direct
responsibility for the management of IndyMac REIT, its subsidiaries and
IndyMac Operating. From May 1987 to December 1992, he served as Senior
Executive Vice President in charge of the Mortgage Banking Division of
Commerce Security Bank and as Chief Financial Officer of Commerce Security
Bank. He has 14 years of business experience with financial institutions, real
estate firms and mortgage banking companies, including four years as a
certified public accountant with KPMG Peat Marwick LLP.
LYLE E. GRAMLEY became a director of IndyMac REIT in January 1993. He is a
former member of the Board of Governors of the Federal Reserve System. Since
September 1985, he has been employed by the Mortgage Bankers Association of
America as its chief economist and more recently as a consulting economist,
and during that period he has also been self-employed as an economic
consultant. He serves on the Board of Trustees of the following mutual funds
distributed by Dreyfus Service Corporation: Cash Management, Cash Management
Plus, Inc., Government Cash Management, Treasury Cash Management, Treasury
Prime Cash Management, Tax Exempt Cash Management, Municipal Cash Management
Plus and New York Municipal Cash Management. He also serves on the Board of
Directors and the Compensation Committee of the Board of Directors of NuWave
Technologies, Inc., a company specializing in video imaging.
THOMAS J. KEARNS has been a director of IndyMac REIT since June 1990. He has
been in the securities business for 30 years and he spent approximately 16
years with Merrill Lynch Capital Markets as a First Vice President. He was
also Senior Vice President and Director of Financial Services for Josephthal
Lyon & Ross, Inc. from 1995 to 1997 and a Managing Director of Commonwealth
Associates from April 1994 to February 1995.
FREDERICK J. NAPOLITANO has been a director of IndyMac REIT since its
formation in 1985 and has been Chairman of the Board of Pembroke Enterprises,
Inc., a real estate development company located in Virginia, since 1973. He
was also a director of Home Mortgage Access Corporation and serves on the
Board of Directors and executive committee of the National Association of Home
Builders and was President of the National Association of Home Builders in
1982. He served on the Federal Home Loan Bank Board Advisory Council from 1983
to 1985, Federal Home Loan Mortgage Corporation Advisory Committee from 1981
to 1983, Federal National Mortgage Association Advisory Board from 1984 to
1985, was chairman of the Hampton Roads Chamber of Commerce in 1989, and was a
member of the Industrial Development Services Advisory Board for the
Commonwealth of Virginia.
VOTE REQUIRED; BOARD RECOMMENDATION
A majority of the votes cast at the Annual Meeting, at which a quorum is
present, is sufficient to elect a director.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF THE
NOMINEES. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
THE STOCKHOLDER SPECIFIES OTHERWISE.
BOARD MEETINGS AND ATTENDANCE
During the fiscal year ended December 31, 1997, the Board of Directors held
five meetings, in person or by telephone. Each Board member attended 75% or
more of the board and applicable committee meetings held during the fiscal
year ended December 31, 1997.
The Audit Committee of the Board of Directors consults with and reviews
reports and recommendations of IndyMac REIT's independent certified public
accountants and reports thereon to the Board. The Audit
4
<PAGE>
Committee held four meetings during the fiscal year ended December 31, 1997.
This committee consists of Messrs. Gramley, Kearns and Napolitano.
The Compensation Committee of the Board of Directors administers IndyMac
REIT's Stock Option Plans as well as IndyMac REIT's Deferred Compensation Plan
and Loan Plans, and approves the compensation of IndyMac REIT's executive
officers. The Compensation Committee held seven meetings during the fiscal
year ended December 31, 1997. This committee consists of Messrs. Gramley,
Kearns and Napolitano.
The Board of Directors does not have a nominating committee.
EXECUTIVE OFFICERS
The executive officers of IndyMac REIT are:
<TABLE>
<CAPTION>
OFFICER
NAME AGE OFFICE SINCE
---- --- ------ -------
<S> <C> <C> <C>
David S. Loeb........... 74 Chairman of the Board of Directors 1985
Angelo R. Mozilo........ 59 Vice Chairman of the Board of Directors and 1985
Chief Executive Officer
Michael W. Perry........ 35 President and Chief Operating Officer 1993
Richard H. Wohl......... 39 Senior Executive Vice President, General 1994
Counsel and Secretary
Kathleen H. Rezzo....... 44 Senior Executive Vice President/CLCA 1994
S. Blair Abernathy...... 36 Executive Vice President and Chief 1994
Investment Officer
James P. Gross.......... 48 Executive Vice President and Chief 1996
Financial Officer
J. Mark Kempton......... 52 Executive Vice President, Finance and 1997
Investor Relations
</TABLE>
Biographical information with respect to Messrs. Loeb, Mozilo and Perry is
set forth above under "Election of Directors--Director Nominees."
RICHARD H. WOHL is currently the Senior Executive Vice President, General
Counsel and Secretary of IndyMac REIT. Mr. Wohl is responsible for legal
affairs, compliance, treasury, human resources and administration. Mr. Wohl is
also a director of IndyMac Operating. Prior to joining IndyMac REIT in April
1994, Mr. Wohl practiced as an attorney with Morrison & Foerster in Los
Angeles. In that capacity, he worked extensively in the institutional lending
and corporate areas, and represented a number of major warehouse lenders and
other financial institutions in the mortgage banking industry. Mr. Wohl
graduated with distinction from Stanford University and received his J.D. from
the Harvard Law School, where he was an editor of the Harvard Law Review.
KATHLEEN H. REZZO is currently the Senior Executive Vice President,
Construction Lending Corporation of America ("CLCA") of IndyMac REIT and the
President and Chief Executive Officer of CLCA, a division of IndyMac REIT.
Until joining IndyMac REIT in August 1994, Ms. Rezzo held various positions at
Security Pacific National Bank, which included Real Estate Chief Credit
Officer and positions within the Commercial Lending Group and the Real Estate
Industries Group. Ms. Rezzo also managed the Participating Mortgage Unit, and
held the position of Senior Vice President/Los Angeles Division Manager for
Real Estate Industries Division, of Bank of America, where she was responsible
for a loan portfolio in excess of $2 billion.
STERLING BLAIR ABERNATHY is currently the Executive Vice President and Chief
Investment Officer of IndyMac REIT and Executive Vice President of Secondary
Marketing of IndyMac Operating. Mr. Abernathy is responsible for the hedging,
trading, asset liability management, and secondary market functions of IndyMac
5
<PAGE>
REIT. Prior to joining IndyMac REIT in February 1994, Mr. Abernathy managed
the accounting and investment functions of Commerce Security Bank, a state
chartered bank in Sacramento, California, as its Senior Vice President and
Chief Financial Officer. From July 1988 to January 1993, Mr. Abernathy served
as the Vice President and Controller of Sunrise Bancorp of California, a
publicly traded bank holding company with banking and mortgage banking
subsidiaries.
JAMES P. GROSS is currently the Executive Vice President and Chief Financial
Officer of IndyMac REIT. Mr. Gross is responsible for accounting and master
servicing. Prior to joining IndyMac REIT, Mr. Gross was Chief Financial
Officer of J.I. Kislak, Inc. and Senior Vice President and Chief Financial
Officer of J.I. Kislak Mortgage Corporation from 1990 through September 30,
1996. Previously, Mr. Gross spent ten years with "Big Six" public accounting
firms specializing in banking and mortgage banking. Mr. Gross received his
B.A. degree from Ohio Wesleyan University with a major in economics and his
M.B.A. from Rutgers University.
J. MARK KEMPTON is currently Executive Vice President, Finance and Investor
Relations of IndyMac REIT. Mr. Kempton is responsible for the financial
planning, central MIS, corporate development, and investor relations functions
of IndyMac REIT. Prior to joining IndyMac REIT in November 1997, Mr. Kempton
worked as a financial management consultant for Budetti, Harrison, Nerland and
Associates LLC, a firm specializing in management consulting. At this firm he
was responsible for corporate restructuring and financial planning. He also
worked for Kempton & Associates as a principal in management consulting. These
consulting services included business planning and corporate restructuring.
Additionally, he spent six years working as Chief Financial Officer of
Merksamer Jewelers where he was responsible for accounting, reporting, tax,
financing and consumer credit operations. Prior to 1990, he was a partner at
KPMG Peat Marwick in Sacramento, California specializing in financial
institutions. Mr. Kempton brings over twenty-five years experience in
financial accounting matters to his position at IndyMac REIT.
EXECUTIVE COMPENSATION
Director Compensation. During 1997, each director, other than Mr. Perry who
became a director in the fourth quarter of 1997 and was compensated as an
executive officer of IndyMac REIT during 1997, was paid an annual retainer of
$35,000 and was reimbursed for expenses related to attendance at each meeting.
Each director who served on the Special Committee that was formed during 1996
and served through the second quarter of 1997 in connection with IndyMac
REIT's acquisition of its manager, Countrywide Asset Management Corporation
("CAMC"), which was consummated upon receipt of stockholder approval at the
end of the second quarter of 1997 ("Merger"), was paid a fee of $500 for each
Special Committee meeting attended in person and was reimbursed for related
expenses. On June 2, 1997, each outside director received a grant of stock
options for 34,318 shares, each at an exercise price of $21.00 per share.
These options become exercisable one year after the grant date. On June 2,
1997, Messrs. Loeb and Mozilo, who were both officers of IndyMac REIT during
the fiscal year ended December 31, 1997, each received a grant of stock
options for 285,660 shares, each at an exercise price of $21.00 per share.
These options become exercisable one year after the grant date. On July 1,
1997, Mr. Perry received a grant of stock options for 125,000 shares at an
exercise price of $23.9375 per share. These options become exercisable over a
period of three years, one-third each on the first, second and third
anniversary dates of the grant date.
Effective July 21, 1995, the Board of Directors adopted a deferred
compensation plan allowing payment of directors' fees to be deferred until the
following year. No directors' fees earned in the fiscal year ended
December 31, 1997 were deferred until 1998.
General. Prior to the consummation of the Merger on June 30, 1997, IndyMac
REIT had no salaried employees and reimbursed CAMC, its manager, for operating
expenses, including personnel costs, incurred by CAMC in operating IndyMac
REIT's businesses. Upon consummation of the Merger, IndyMac REIT employed
various salaried personnel hired from CAMC and other companies.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------------------------ ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(8) OPTIONS(#) COMPENSATION(9)
- --------------------------- ---- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
David S. Loeb........................ 1997 $ 35,000(1) $ -- $ -- 285,660 $ --
Chairman of the Board 1996 35,000(1) -- -- 200,000 --
1995 31,200(1) -- -- 100,000 --
Angelo R. Mozilo..................... 1997 35,000(1) -- -- 285,660 --
Vice Chairman of the Board and 1996 35,000(1) -- -- 200,000 --
Chief Executive Officer 1995 31,200(1) -- -- 100,000 --
Michael W. Perry(2).................. 1997(3) 605,000 850,000 2,083 125,000 39,673
President and Chief 1996(3) 475,000 817,500 3,092 200,000 25,823
Operating Officer 1995 350,000 550,000 1,075 20,000 19,298
Richard H. Wohl(4)................... 1997(5) 225,000 -- 40,000 4,750
Senior Executive Vice President, 1996(5) 200,000 205,000 17 20,000 5,625
Secretary and General Counsel 1995 175,000 130,000 -- 10,000 1,750
Kathleen H. Rezzo(4)................. 1997(6) 180,000 217 25,000 4,750
Senior Executive Vice 1996(6) 165,000 200,000 -- 20,000
President, CLCA 1995 -- 10,000
S. Blair Abernathy(4)................ 1997(7) 195,000 1,032 17,500 8,415
Executive Vice President and 1996(7) 180,000 160,000 499 15,000 9,634
Chief Investment Officer 1995 180,000 100,000 -- 10,000 3,015
</TABLE>
- --------
(1) Messrs. Loeb and Mozilo are directors and executive officers of IndyMac
REIT. The amounts in this column represent fees paid for their services as
directors of IndyMac REIT. Messrs. Loeb and Mozilo received no salary or
bonus for their services as officers of IndyMac REIT.
(2) Mr. Perry is a director and an executive officer of IndyMac REIT. Mr.
Perry, who became a director in the fourth quarter of 1997, was
compensated as an executive officer of IndyMac REIT during 1997. See
"Compensation Committee Report on Executive Compensation."
(3) 1997 compensation includes $48,583 of salary and $81,750 of bonus deferred
until ; 1996 compensation includes $88,333 of salary and $81,750 of
bonus deferred until January 2001.
(4) Messrs. Wohl and Abernathy and Ms. Rezzo are executive officers of IndyMac
REIT. See "Compensation Committee Report on Executive Compensation."
(5) 1997 compensation includes $2,000 salary deferred until ; 1996
compensation includes $1,167 of salary deferred until January 2001.
(6) 1997 compensation includes $17,000 of salary and $20,000 of bonus deferred
until ; 1996 compensation includes $ of salary deferred until .
(7) 1997 compensation includes $50,146 of salary and $120,000 of bonus
deferred until ; 1996 compensation includes $45,000 of salary and
$120,000 of bonus deferred until January 2001.
(8) The amount of other annual compensation consists of interest accrued on
deferred compensation in excess of the applicable federal rate.
(9) Amounts shown for 1997 consist of the following: (i) Mr. Perry: IndyMac
REIT contribution to deferred compensation account--$12,605; split-dollar
life insurance premiums paid by IndyMac REIT--$22,318; IndyMac REIT
contribution to 401(k) Plan--$4,750; (ii) Mr. Wohl: IndyMac REIT
contribution to 401(k) Plan--$4,750; (iii) Ms. Rezzo: IndyMac REIT
contribution to 401(k) Plan--$4,750; and (iv) Mr. Abernathy: IndyMac REIT
contribution to deferred compensation account--$4,063; IndyMac REIT
contribution to 401(k) Plan--$4,352.
7
<PAGE>
STOCK OPTION PLANS
General. Pursuant to IndyMac REIT's 1985 Stock Option Plan (the "1985 Plan")
and IndyMac REIT's 1996 Stock Incentive Plan (the "1996 Plan") (the 1985 Plan
and the 1996 Plan are collectively referred to herein as the "Stock Option
Plans"), stock options have been granted to directors and officers of IndyMac
REIT, among others. Stock options also were granted previously to certain
directors and executive officers of IndyMac REIT under the 1994 Stock
Incentive Plan (the "1994 Plan"), which was cancelled in connection with
IndyMac REIT's adoption of the 1996 Plan. The cancellation of the 1994 Plan
did not affect the validity of stock options, certain of which are currently
outstanding, granted thereunder prior to such cancellation.
STOCK OPTION GRANTS IN FISCAL 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE
OPTIONS TO EMPLOYEES PRICE EXPIRATION GRANT DATE
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE)(3) DATE PRESENT VALUE(4)
---- ---------- --------------- ------------ ---------- ----------------
<S> <C> <C> <C> <C> <C>
David S. Loeb........... 285,660(1) 18.81% $21.0000 6/2/02 $864,893
Angelo R. Mozilo........ 285,660(1) 18.81 21.0000 6/2/02 864,893
Michael W. Perry........ 125,000(2) 8.23 23.9375 7/1/02 431,400
Richard H. Wohl......... 40,000(2) 2.63 23.9375 7/1/02 138,048
Kathleen H. Rezzo....... 25,000(2) 1.64 23.9375 7/1/02 86,280
S. Blair Abernathy...... 17,500(2) 1.15 23.9375 7/1/02 60,396
</TABLE>
- --------
(1) Option was granted on June 2, 1997 and becomes exercisable on the first
anniversary of the grant date, except in the event of a "Change of
Control" as defined in the 1996 Plan (as used herein, an "IndyMac REIT
Change in Control"). Upon an IndyMac REIT Change in Control, all options
become immediately exercisable.
(2) Options were granted on July 1, 1997 and become exercisable as follows,
except in the event of an IndyMac REIT Change in Control: one-third on the
first anniversary of the grant date, one-third on the second anniversary
of the grant date, and one-third on the third anniversary of the grant
date. Upon an IndyMac REIT Change in Control, all options become
immediately exercisable.
(3) The exercise price is the market value (defined as the average of the high
and low stock prices on the New York Stock Exchange) on the date of grant.
(4) The present value of the options as of the grant date was calculated using
the Black-Scholes options pricing model which has been modified to
consider estimated cash dividends to be paid. The assumptions used in the
model were: expected volatility of 30%, risk-free rate of return
(approximately equal to the three year Treasury rate at the grant date) of
6.2%, dividend yield of 8% and time to exercise of three years. No
discounting was done to account for non-transferability or vesting. The
actual value, if any, an executive officer may realize will depend on the
excess of the stock price over the exercise price on the date the option
is exercised.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997 AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END(#) AT FY-END($)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David S. Loeb........... 0 $ 0 200,000 285,660 $1,143,760 $651,676
Angelo R. Mozilo........ 55,693 580,221 235,705 285,660 1,593,750 651,676
Michael W. Perry........ 8,602 105,106 108,763 258,333 821,716 470,838
Richard H. Wohl......... 18,666 113,951 5,000 43,334 28,594 38,862
Kathleen H. Rezzo....... 0 0 15,833 41,667 152,313 115,111
S. Blair Abernathy...... 7,828 60,153 1 31,338 6 98,932
</TABLE>
Loan Plans. The Board of Directors has adopted three Loan Plans (the "Loan
Plans") under which loans may be made to officers, directors and employees of
IndyMac REIT in connection with the exercise of stock options granted under
the 1985 Plan, the 1994 Plan and the 1996 Plan. Under the 1994 Loan Plan and
the 1996 Loan Plan, the principal of any loan may not exceed (x) the purchase
price required to be paid to IndyMac REIT upon the exercise of one or more
options, plus (y) any applicable withholding taxes (so long as the sum of the
preceding (x) and (y) does not exceed the fair market value of the stock on
the date of the loan), less (z) any margin or other legally required amount,
and any loan proceeds must be paid directly to IndyMac REIT in connection with
the sale of such options. The 1985 Plan, by contrast, does not provide for
loan amounts to include applicable withholding taxes. Under the 1985, 1994 and
1996 Loan Plans, loans may be extended for a period of five years, which term
may be renewed, at an interest rate which is set by the Compensation Committee
and is, at the option of the borrower, either fixed for the term of the loan
or adjustable annually by the Compensation Committee, with such interest rate
to be at all times at least sufficient to avoid imputed interest under the
Internal Revenue Code of 1986, as amended (the "Code"). The loans under the
Loan Plans are recourse loans and are secured by pledges of the Common Stock
purchased upon the exercise of the stock options to which they relate. In the
event of the sale or transfer of any of the shares of Common Stock pledged as
security, except under certain limited conditions, the unpaid principal
balance and accrued interest shall become immediately due and payable to the
extent of the proceeds (net of brokerage fees) realized from such sale or
transfer. The principal and interest on the loans made under the Loan Plans
are payable quarterly, with any dividends paid on the pledged stock being
applied against such installments. To the extent that a dividend for any
quarter is insufficient to pay the accrued interest for a quarterly
installment, the difference is added to the principal of the loan, and to the
extent a quarterly dividend is insufficient to pay a quarterly installment of
principal, the difference is payable at the end of the term of the loan.
9
<PAGE>
The following table sets forth information as of December 31, 1997 relating
to loans made by IndyMac REIT to certain executive officers and directors of
IndyMac REIT under the Loan Plans in connection with the exercise of stock
options under the 1985 Plan, the 1994 Plan and the 1996 Plan.
<TABLE>
<CAPTION>
HIGHEST
NOTES BALANCE AT BALANCE INTEREST
NAME OUTSTANDING DECEMBER 31, 1997 DURING 1997 RATE
---- ----------- ----------------- ----------- --------
<S> <C> <C> <C> <C>
S. Blair Abernathy......... Note 1 $ 17,104 $ 17,788 3.93%*
Note 2 36,425 38,932 3.93%*
Note 3 59,167 61,535 3.93%*
Lyle E. Gramley ........... Note 1 $ 96,654 $146,183 6.87%**
Thomas J. Kearns........... Note 1 $222,348 $244,270 6.63%**
Angelo R. Mozilo........... Note 1 $ 88,044 $ 98,031 6.58%**
Note 2 732,462 781,665 6.23%**
Note 3 98,021 101,086 6.49%**
Frederick J. Napolitano.... Note 1 $ 81,750 $119,209 6.83%**
Note 2 85,081 130,704 6.83%**
Note 3 347,598 372,241 3.93%*
Note 4 0 27,685 5.49%**
Michael W. Perry........... Note 1 $ 80,299 $ 92,267 5.61%**
Note 2 96,690 100,511 3.92%*
Richard H. Wohl............ Note 1 $ 25,675 $ 26,703 3.93%*
Note 2 59,174 61,542 3.93%*
Note 3 40,069 42,827 3.93%*
Note 4 199,836 199,836 3.93%*
</TABLE>
- --------
* Adjustable rate note. Rate will be adjusted each subsequent year after the
origination date according to the Applicable Federal Rate in effect at that
time.
** Fixed rate note.
EMPLOYMENT AGREEMENTS
On November 14, 1996, Michael W. Perry, the President and Chief Operating
Officer of IndyMac REIT, entered into an employment agreement with CAMC, which
IndyMac REIT assumed in connection with the Merger. During 1997, IndyMac REIT
also entered into employment agreements with Richard H. Wohl, Senior Executive
Vice President and General Counsel, Kathleen H. Rezzo, Senior Executive Vice
President, CLCA and S. Blair Abernathy, Executive Vice President and Chief
Investment Officer. Each of the foregoing employment agreements provide for
certain base compensation, incentive compensation, stock options, as well as
certain other specified benefits, and, subject to certain limitations, each of
the employment agreements will expire on December 31, 2000.
Pursuant to the terms of their individual employment agreements, Messrs.
Perry, Wohl and Abernathy and Ms. Rezzo were paid base salaries of $605,000,
$225,000, $195,000 and $180,000, respectively, for fiscal year 1997. Although
each of the employment agreements contemplates that a 15% increase in IndyMac
REIT's earnings per share over the preceding fiscal year normally would result
in a 10% increase in the annual rate of base compensation for each of the
foregoing officers, the amount of such increase, if any, is to be determined
by the Compensation Committee. The employment agreements also provide for
incentive compensation in respect of each fiscal year ending during the term
thereof in the form of an annual cash bonus calculated as follows: Mr. Perry,
based on an incentive matrix relating to earnings per share for the applicable
fiscal year and the percentage change in earnings per share from the prior
year; Mr. Wohl, one-half based on an incentive matrix relating to earnings per
share for the applicable fiscal year and the percentage of change in earnings
per share
10
<PAGE>
from the prior year and one-half based on the achievement of administrative
and operational objectives by Mr. Wohl; Mr. Abernathy, one-half based on an
incentive matrix relating to targeted earnings per share growth and one-half
based on the achievement of administrative and operational objectives by Mr.
Abernathy; and Ms. Rezzo, 80% based on the CLCA Division's profitability for
the applicable fiscal year and 20% based on Ms. Rezzo's achievement of
corporate objectives. For fiscal year 1997, each of Messrs. Perry, Wohl and
Abernathy and Ms. Rezzo received a cash bonus in the amount of $850,000,
$ , $ and $ , respectively. In 1997, IndyMac REIT's
stockholders approved the annual cash incentive compensation provisions of Mr.
Perry's employment agreement so that such compensation will qualify for a tax
deduction for IndyMac REIT pursuant to Section 162(m) of the Code. Section
162(m) limits the corporate deduction for compensation paid to the executive
officers named in the Summary Compensation Table to $1 million unless the
amount by which such compensation exceeds the $1 million threshold is based
upon performance goals that are subject to stockholder approval.
The employment agreements provide for additional incentive compensation in
the form of grants of stock options for such number of shares of IndyMac REIT
Common Stock as the Compensation Committee in its sole discretion determines,
taking into account each officer's and IndyMac REIT's performance and the
competitive practices then prevailing regarding the granting of stock options.
Messrs. Perry's and Wohl's employment agreements further contemplate that,
subject to the foregoing, Messrs. Perry and Wohl will receive an annual stock
option with respect to between 100,000 and 150,000 shares and between 25,000
and 75,000 shares, respectively, with each annual grant targeted at 125,000
and 50,000, respectively, for "good performance." All stock options granted to
Messrs. Perry, Wohl and Abernathy and Ms. Rezzo will be awarded pursuant to
IndyMac REIT's then current stock option plan, will have an exercise price
equal to the fair market value of the IndyMac REIT Common Stock at the time of
the grant, will become exercisable in three equal installments on each of the
first three anniversaries of the date of the grant, and will become
immediately and fully exercisable in the event of a Change of Control (as such
term is defined in the employment agreements) or in the event that Messrs.
Perry's, Wohl's or Abernathy's or Ms. Rezzo's employment, as the case may be,
is terminated due to death or disability or by IndyMac REIT (or any successor
thereto) other than for Cause (as such term is defined in the employment
agreements).
In consideration of an agreement generally not to compete with IndyMac REIT
within North America for a period of one year after termination of employment,
Messrs. Perry, Wohl and Abernathy and Ms. Rezzo will receive certain severance
payments upon termination of employment for reasons other than for Cause (as
such term is defined in the employment agreements), or with respect to Messrs.
Perry and Wohl, Good Reason (as such term is defined in the employment
agreements). Under the terms of the employment agreements, the amount of the
severance payment will equal the sum of the officer's annual base salary at
the time of termination, the incentive compensation relating to the
immediately preceding fiscal year, any unpaid incentive compensation that
relates to the prior fiscal year, and any proportional payment of incentive
compensation due for the current year, based on the aggregate incentive
compensation for the immediately preceding fiscal year (if such termination
occurs on a date prior to the end of a fiscal year). In addition, with respect
to Messrs. Perry and Wohl, if either officer is terminated within two years
after a Change of Control (as such term is defined in the employment
agreements), each officer's severance payment will equal twice the sum of the
foregoing amount.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General
Compensation for the executive officers of IndyMac REIT is administered
under the direction of the Compensation Committee. The Compensation Committee
is composed of Messrs. Gramley, Kearns and Napolitano, who are non-employee
directors of IndyMac REIT. IndyMac REIT's executive compensation program
consists of three main components: (1) base compensation, (2) annual cash
incentive compensation, and (3) stock options to provide long-term incentives
for performance and to align executive officer and stockholder interests.
The philosophy behind IndyMac REIT's executive compensation programs is to
attract, motivate and retain the executives needed in order to maximize the
creation of long-term stockholder value. The factors generally used by the
Compensation Committee to calculate compensation of executive officers are as
follows: (i) the
11
<PAGE>
responsibilities of the executive officers with IndyMac REIT, (ii) completion
of individual business objectives established prior to the beginning of each
fiscal year, (iii) business unit and overall performance of IndyMac REIT,
including earnings per share for the applicable fiscal year and the percentage
change in earnings per share from the prior fiscal year, and (iv) amount, form
and timing of prior compensation amounts.
Compensation of Chairman, Vice Chairman and Chief Executive Officer, and
President and Chief Operating Officer
During fiscal year 1997, Messrs. Loeb and Mozilo received no base salary or
cash bonus compensation for their services as IndyMac REIT executive officers.
As directors of IndyMac REIT, each of Messrs. Loeb and Mozilo was paid an
annual retainer of $35,000 and was reimbursed for expenses related to
attendance at each IndyMac REIT Board meeting.
Compensation for fiscal year 1997 for Mr. Perry was determined pursuant to
the terms of his employment agreement. See "Employment Agreements." Mr.
Perry's employment agreement contemplates that a 15% increase in IndyMac
REIT's earnings per share over the preceding fiscal year normally would result
in a 10% increase in the annual rate of base compensation, although the exact
amount of such increase, if any, is determined by the Compensation Committee.
The percentage change in earnings per share between fiscal years 1995 and 1996
was 25.6%. Based on this factor, the Compensation Committee increased Mr.
Perry's 1996 base compensation rate by 10%, to $605,000, for fiscal year 1997.
For fiscal year 1997, the Compensation Committee also awarded an annual cash
incentive to Mr. Perry, which was determined by reference to an incentive
matrix contained in Mr. Perry's employment agreement. The two variables in the
incentive matrix are the earnings per share of IndyMac REIT for the applicable
fiscal year and the percentage change in earnings per share from the prior
year. For fiscal year 1997, IndyMac REIT's earnings per share were $1.79 and
the percentage change in earnings per share from fiscal year 1996 was 18.5%.
Based on the foregoing factors, the Compensation Committee awarded Mr. Perry
an annual cash incentive of $850,000 for fiscal year 1997.
Compensation of Other Named Executive Officers
Compensation for fiscal year 1997 for Messrs. Wohl and Abernathy and Ms.
Rezzo was determined pursuant to the terms of their respective employment
agreements. See "Employment Agreements." Pursuant to their respective
employment agreements, for fiscal year 1997, the annual base compensation
rates for Messrs. Wohl and Abernathy and Ms. Rezzo were set at $225,000,
$195,000 and $180,000, respectively. In setting these 1997 annual base
compensation rates for Messrs. Wohl and Abernathy and Ms. Rezzo, the
Compensation Committee considered the responsibilities of these executive
officers, the completion of previously established business objectives by each
of them, individual business unit and overall performance of IndyMac REIT, and
the amount, form and timing of prior compensation amounts for each of them.
For fiscal year 1997, the Compensation Committee also awarded an annual cash
incentive of $ , $ and $ to Messrs. Wohl and Abernathy
and Ms. Rezzo, respectively, based on the following: for Mr. Wohl, an
incentive matrix relating to earnings per share for fiscal year 1997 and the
percentage of change in earnings per share from fiscal year 1996 and Mr.
Wohl's achievement of administrative and operational objectives; for
Mr. Abernathy, an incentive matrix relating to targeted earnings per share
growth and Mr. Abernathy's achievement of administrative and operational
objectives; and for Ms. Rezzo, the CLCA Division's profitability for fiscal
year 1997 and Ms. Rezzo's achievement of corporate objectives.
Stock Options
In addition to reviewing the compensation arrangements of executive
officers, the Compensation Committee awarded stock options pursuant to the
1996 Plan, which was approved by stockholders on May 29, 1996. Under the 1996
Plan, executive officers are eligible to receive options, stock appreciation
rights and certain other share related awards. The Compensation Committee
determined such awards by using the criteria set forth in the 1996 Plan, which
includes the responsibilities and contributions of the individual and the
other compensation payable to such person.
12
<PAGE>
In considering the stock option awards for Messrs. Loeb and Mozilo during
fiscal year 1997, the Compensation Committee followed the guidelines adopted
by the Committee in July, 1996 to aid the Committee's annual determination of
appropriate stock option awards for Messrs. Loeb and Mozilo. The guidelines
are discretionary and do not constitute a binding commitment on the part of
the Committee to grant specific awards to Messrs. Loeb and Mozilo, and may be
revised or revoked by the Committee at any time.
The guidelines seek to condition the award of stock options to Messrs. Loeb
and Mozilo on the growth (if any) in IndyMac REIT's aggregate earnings, and on
whether IndyMac REIT meets its earnings per share goals as established by the
Board of Directors for each fiscal year. The guidelines create a formula which
takes (a) prior fiscal year aggregate earnings for IndyMac REIT, multiplied by
(b) a multiplier factor of .003, multiplied by (c) a percentage which varies
between 125% to 50%, based on whether IndyMac REIT exceeded or failed to meet
its earnings per share goal for the prior fiscal year, multiplied by (d) a
fraction, the numerator of which is aggregate earnings for IndyMac REIT for
the prior fiscal year, and the denominator of which is aggregate earnings for
IndyMac REIT for the fiscal year preceding the prior fiscal year. The
multiplier factor of .003 was determined by taking the number of options
awarded to each of Mr. Loeb and Mr. Mozilo for 1995 (150,000) divided by
IndyMac REIT's aggregate earnings for 1995 ($50,000,000). The guidelines also
provide for a minimum award of 150,000 shares and a maximum award of 0.5% of
the total IndyMac REIT Common Stock outstanding at the time of the grant for
each of Messrs. Loeb and Mozilo.
The Committee adopted the guidelines with a view toward creating long-term
incentives for performance on the part of Mr. Loeb and Mr. Mozilo, and to
better align their interests with those of IndyMac REIT's stockholders. The
Committee recognized that Mr. Loeb and Mr. Mozilo contribute substantial time
and experience to the business affairs of IndyMac REIT, and that they receive
no base, incentive or other compensation besides stock options and directors'
fees. Based on the foregoing guidelines, the Compensation Committee awarded
each of Messrs. Loeb and Mozilo 285,660 stock options during fiscal year 1997.
Pursuant to the terms of each of Messrs. Perry's, Wohl's and Abernathy's and
Ms. Rezzo's employment agreements, in considering the stock option award for
each of Messrs. Perry, Wohl and Abernathy and Ms. Rezzo during fiscal year
1997, the Compensation Committee considered the performance of each of Messrs.
Perry, Wohl and Abernathy and Ms. Rezzo and the performance of IndyMac REIT in
meeting earnings per share goals. Based on the foregoing, the Compensation
Committee awarded Messrs. Perry, Wohl and Abernathy and Ms. Rezzo 125,000,
40,000, 17,500 and 25,000 stock options, respectively, during fiscal year
1997.
Deductibility of Compensation
Section 162(m) of the Code limits the corporate deduction for compensation
paid to the executive officers named in the Summary Compensation Table to $1
million unless the amount by which such compensation exceeds the $1 million
threshold is based upon performance goals that are subject to stockholder
approval. In 1997, IndyMac REIT's stockholders approved the annual cash
incentive compensation provisions of Mr. Perry's employment agreement so that
such compensation will qualify for a tax deduction for IndyMac REIT pursuant
to Section 162(m).
The Committee's policy on deductibility is generally to develop compensation
plans that provide for the payment of compensation which is tax deductible to
IndyMac REIT, while recognizing that the legitimate interests of IndyMac REIT
and its stockholders may at times be better served by compensation
arrangements that are not deductible.
The Compensation Committee
Lyle E. Gramley
Thomas J. Kearns
Frederick J. Napolitano
13
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1997, Messrs. Gramley, Kearns and Napolitano served as members
of the Compensation Committee. No member of the Compensation Committee was,
during the fiscal year, an officer or employee of IndyMac REIT, nor was any
member of the Compensation Committee formerly an officer of IndyMac REIT.
No executive officer of IndyMac REIT served (i) as a member of the
compensation committee or board of directors of another entity, one of whose
executive officers served on the Compensation Committee or (ii) as a member of
the compensation committee of another entity, one of whose executive officers
served on the Board of Directors.
CERTAIN TRANSACTIONS WITH MANAGEMENT AND BUSINESS RELATIONSHIPS
IndyMac REIT, through its CLCA Division, has from time to time made loans to
builders of residential construction projects secured by real property
purchased by such builders from a company doing business as Loeb Enterprises,
LLC, in which IndyMac REIT's chairman and former chief executive officer is a
major investor together with his family. The non-family executive managers of
Loeb Enterprises, LLC, who run the day-to-day operations of Loeb Enterprises,
LLC, own approximately 34 percent of the equity and profits of that company.
Each project is part of a master planned community being developed by Loeb
Enterprises, LLC, which includes various amenities, including an 18 hole golf
course.
In the case of each project financed by the CLCA Division, the builder is
not affiliated with either IndyMac REIT or Loeb Enterprises, LLC, the general
risk characteristics of the construction loan are comparable to those for
similar projects funded by the CLCA Division, and the construction loan
facility between the CLCA Division and the builder has been negotiated at
arms' length on terms consistent with those of similar loans made by the CLCA
Division to other unaffiliated builders. Moreover, the terms of each credit
facility have been disclosed to and approved by the disinterested members of
the Board of Directors of IndyMac REIT pursuant to Section 144 of the DGCL.
As of December 31, 1997, the CLCA Division had extended six construction
loan facilities to builders secured by property originally purchased from Loeb
Enterprises, LLC, with total dollar commitments of $19,757,323, and total loan
outstandings of $7,162,256. Loeb Enterprises, LLC, has posted a bond for the
completion of certain infrastructure improvements such as arterial roads,
drainage, and utilities in the portion of the master planned community in
which builders are currently building, and these improvements have been
substantially completed. In addition, the builders are contractually
responsible to the city of Sparks, Nevada for certain other improvements such
as roads, drainage, and utilities, within the specific subdivisions of
property they have purchased.
From time to time, certain directors and executive officers of IndyMac REIT
and IndyMac and associates of such persons were indebted to IndyMac REIT and
IndyMac, as customers, in connection with mortgage loans and other extensions
of credit by IndyMac REIT and IndyMac. These transactions were in the ordinary
course of business; they were substantially on the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unrelated persons, except that for some loan products
interest rates charged were the same as the lowest interest rates charged
other persons or were more favorable for IndyMac REIT and IndyMac employees
and directors than for other persons; and they did not involve more than the
normal risk of collectibility or present other unfavorable features. In
addition, directors, officers and employees of IndyMac REIT and IndyMac are
entitled to receive certain discounts or waivers of fees or commissions for
certain products and services offered by IndyMac REIT and IndyMac.
14
<PAGE>
STOCK PERFORMANCE GRAPH
The following chart compares the total stockholder return (stock price
increase plus dividends) on the IndyMac REIT Common Stock from January 1, 1993
through December 31, 1997 with the total stockholder returns for the NYSE
Market Index and the Peer Group Index. The graph assumes that the value of the
investment in the IndyMac REIT Common Stock and each index was $100 on January
1, 1993 and that all dividends were reinvested.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN(1)
AMONG INMC MORTGAGE HOLDINGS, INDUSTRY INDEX AND BROAD MARKET
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period INMC MORTGAGE INDUSTRY BROAD
(Fiscal Year Covered) HOLDINGS INDEX MARKET
- --------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt- 1992 $100 $100 $100
FYE 1993 $199.02 $116.88 $113.54
FYE 1994 $185.48 $117.86 $111.33
FYE 1995 $403.79 $138.42 $144.36
FYE 1996 $555.18 $185.07 $173.9
FYE 1997 $653.38 $218.05 $228.78
</TABLE>
ASSUMES $100 INVESTED ON JAN. 1, 1993
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING DEC. 31, 1997
(1) Peer group is Media General Financial Services industry group of real
estate investment trusts, which includes IndyMac REIT.
SECTION 16 DISCLOSURE
Section 16 of the Securities Exchange Act of 1934 requires IndyMac REIT's
directors and executive officers to report their ownership of and transactions
in IndyMac REIT's Common Stock to the Securities and Exchange Commission and
the New York Stock Exchange. Copies of these reports are also required to be
supplied to IndyMac REIT. Specific dates for filing these reports have been
established by the Securities and Exchange Commission, and IndyMac REIT is
required to report in this Proxy Statement any failure of its directors and
executive officers to file by the relevant due date any of these reports during
1997. Based solely on its review of the copies of the reports prepared or
received by it, IndyMac REIT believes that all such filing requirements were
satisfied, except that Mr. Mozilo filed one late report relating to the exempt
exercise of stock options as a result of an error by IndyMac REIT.
15
<PAGE>
PROPOSAL TWO
CHANGING THE NAME OF INMC MORTGAGE HOLDINGS, INC.
The Board of Directors has determined that it would be in the best interests
of INMC Mortgage Holdings, Inc. to amend Article I of its Certificate of
Incorporation to change INMC Mortgage Holdings, Inc.'s name to "IndyMac
Mortgage Holdings, Inc.", a name that INMC Mortgage Holdings, Inc. has been
using as a fictitious business name since the fourth quarter of 1997, in order
to reflect the increasingly distinctive market identity of the "IndyMac" name
and the businesses and proprietary products associated with that name. The
Board of Directors has voted unanimously to recommend such amendment to INMC
Mortgage Holdings, Inc.'s stockholders for adoption.
IndyMac Operating previously granted INMC Mortgage Holdings, Inc. a license
to use the "IndyMac" name, and INMC Mortgage Holdings, Inc. previously filed
fictitious business name applications in several counties of California, New
York and Delaware relating to its use of the "IndyMac Mortgage Holdings, Inc."
name. The text of the proposed amendment is included as Appendix A to this
Proxy Statement.
VOTING
Under the DGCL, the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
required to adopt the proposed amendment to the Certificate of Incorporation.
Shares not voted, abstentions and broker non-votes will have the same effect
as a vote against the proposed amendment. If shares are held by a broker in a
street name, the broker will be entitled to vote such shares absent specific
instructions from the beneficial owners thereof.
If the required vote is obtained, INMC Mortgage Holdings, Inc. intends to
file a Certificate of Amendment with the Secretary of State of the State of
Delaware to effect the amendment immediately following the Annual Meeting. In
accordance with Delaware law and notwithstanding approval of the amendment by
the stockholders, at any time prior to the filing of the Certificate of
Amendment, the Board of Directors may, in its discretion, abandon the proposed
amendment without further action by the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT TO THE
CERTIFICATE OF INCORPORATION. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL
BE SO VOTED UNLESS THE STOCKHOLDER SPECIFIES OTHERWISE.
PROPOSAL THREE
AMENDMENT OF CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF SHARES OF AUTHORIZED COMMON STOCK
The Board of Directors has determined that an amendment to IndyMac REIT's
Certificate of Incorporation increasing the number of authorized shares of
Common Stock from 100,000,000 to 200,000,000 shares is advisable and has voted
unanimously to recommend such amendment to IndyMac REIT's stockholders for
adoption.
The full text of the proposed amendment is included herein as Appendix B to
this Proxy Statement, and the following description is qualified in its
entirety by reference thereto.
IndyMac REIT's presently authorized capital stock consists of a single class
of 100,000,000 shares of Common Stock. At December 31, 1997, 63,351,616 shares
of Common Stock were outstanding and an aggregate of 4,892,592 shares of
Common Stock were reserved for issuance upon exercise of options granted or
which may be granted under IndyMac REIT's stock option plans. The Board of
Directors has recommended that the stockholders increase the number of
authorized shares of Common Stock to 200,000,000 shares.
The Board of Directors believes that it is prudent to have available for
issuance additional shares of Common Stock for such corporate purposes as the
Board of Directors, from time to time, may deem necessary and advisable,
including but not limited to raising capital, financing acquisitions, possible
stock splits or stock dividends or implementing a stockholder rights plan.
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If the proposed amendment is approved, the additional shares may be issued
for proper purposes under terms and conditions approved by the Board of
Directors without further actions by the stockholders, except with such
stockholder approval as may be required by law or the rules and policies of
the stock exchanges on which the Common Stock is then listed. In addition, the
increase in the number of authorized shares of Common Stock would allow the
Board of Directors to oppose a hostile takeover attempt or delay or prevent
changes in control of management of IndyMac REIT.
The existence of unissued and unreserved Common Stock will not, by itself,
have any effect on the rights of holders of existing Common Stock. The
issuance of additional shares of Common Stock could adversely affect existing
holders of shares of Common Stock by diluting the per share earnings and the
voting power of the outstanding Common Stock and diminishing the amount of
assets available for the existing Common Stock holders upon dissolution,
liquidation or winding up of IndyMac REIT.
Under IndyMac REIT's Certificate of Incorporation, IndyMac REIT's
stockholders do not have preemptive rights to acquire capital stock that may
be issued by IndyMac REIT.
VOTING
Under the DGCL, the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
required to adopt the proposed amendment to the Certificate of Incorporation.
Shares not voted, abstentions and broker non-votes will have the same effect
as a vote against the proposed amendment. If shares are held by a broker in a
street name, the broker will be entitled to vote such shares absent specific
instructions from the beneficial owners thereof.
If the required vote is obtained, IndyMac REIT intends to file a Certificate
of Amendment with the Secretary of State of Delaware to effect the amendment
immediately following the Annual Meeting. In accordance with Delaware law and
notwithstanding approval of the amendment by the stockholders, at any time
prior to the filing of the Certificate of Amendment, the Board of Directors
may, in its discretion, abandon the proposed amendment without further action
by the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSED
INCREASE IN THE AUTHORIZED SHARES OF COMMON STOCK. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS THE STOCKHOLDER SPECIFIES
OTHERWISE.
PROPOSAL FOUR
AMENDMENT OF CERTIFICATE OF INCORPORATION TO AUTHORIZE
THE CREATION OF 10,000,000 SHARES OF PREFERRED STOCK.
The Board of Directors has determined that an amendment to IndyMac REIT's
Certificate of Incorporation authorizing the creation of 10,000,000 shares of
preferred stock, $0.01 par value ("Preferred Stock"), is advisable and has
voted unanimously to recommend such amendment to IndyMac REIT's stockholders
for adoption.
The full text of the proposed amendment is included herein as Appendix B to
this Proxy Statement, and the following description is qualified in its
entirety by reference thereto.
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The Preferred Stock would be issuable by the Board of Directors, from time
to time, in one or more series, with the designation, powers, preferences and
rights as determined by the Board of Directors without any further stockholder
approval unless required by law or applicable stock exchange rules. Such
designation, powers, preferences and rights may include, but are not limited
to, (i) the number of shares, (ii) dividend rights, (iii) voting rights,
(iv) conversion privileges, (v) redemption provisions, (vi) sinking fund
provisions, (vii) rights upon liquidation, dissolution or winding up of
IndyMac REIT and (viii) other rights, preferences and limitations of such
series.
As a real estate investment trust, IndyMac REIT is required to distribute
95% of its annual taxable income to its stockholders and is therefore limited
in its ability to retain earnings. As a result, IndyMac REIT is more reliant
on measures such as the issuance of Preferred Stock to raise capital. The
proposed amendment would make available to IndyMac REIT the flexibility to
address potential future financing needs by creating a series of Preferred
Stock customized to meet the needs of any particular transaction, for such
corporate purposes as the Board of Directors, from time to time, may deem
necessary and advisable, including but not limited to raising capital and
financing acquisitions.
Furthermore, the authorization of the Preferred Stock would place the Board
of Directors in a position to make a change of control in IndyMac REIT more
difficult. Depending upon the terms and provisions applied to a new series of
Preferred Stock, a voting impediment could be created that might tend to
frustrate persons seeking to effect a takeover of IndyMac REIT. Such Preferred
Stock could be privately placed with purchasers supporting the Board of
Directors in opposing a change in control. In addition, the Board of Directors
could authorize holders of a series of Preferred Stock to vote as a class,
either separately or with the holders of Common Stock, and the Preferred Stock
could be issued with such extraordinary conversion or redemption features as
would make IndyMac REIT less attractive to a potential takeover bidder.
There are no present arrangements, commitments, undertakings or pending
negotiations for the issuance of the Preferred Stock. The holders of shares of
IndyMac REIT's Common Stock are not entitled to any preemptive rights and the
issuance of shares of Preferred Stock could have the effect of reducing or
otherwise affecting the relative rights of the holders of the Common Stock
with respect to their voting rights, dividend privileges and liquidation
preferences in IndyMac REIT. To the extent that dividends will be payable on
any issued shares of Preferred Stock, the result would be to reduce the amount
otherwise available for payment of dividends on the shares of Common Stock
that are presently issued. To the extent that voting rights are conferred upon
the holders of Preferred Stock, the general effect of the authorization of the
Preferred Stock, upon issuance, would be to dilute the present voting power of
the current holders of Common Stock. In addition, to the extent that holders
of Preferred Stock receive superior rights in the event of any dissolution,
liquidation or winding up of IndyMac REIT, the rights of holders of Common
Stock to a distribution of IndyMac REIT's assets will be diminished.
VOTING
Under the DGCL, the affirmative vote of the holders of a majority of the
outstanding shares of IndyMac REIT Common Stock entitled to vote at the Annual
Meeting is required to adopt the proposed amendment. Shares not voted,
abstentions and broker-non votes will have the same effect as a vote against
the proposed amendment. If shares are held by a broker in a street name, the
broker will not be entitled to vote such shares absent specific instructions
from the beneficial owners thereof.
If the required vote is obtained, IndyMac REIT intends to file a Certificate
of Amendment with the Secretary of State of the State of Delaware to effect
the amendment immediately following the Annual Meeting. In accordance with
Delaware law and notwithstanding approval of the proposed amendment by the
stockholders, at any time prior to the filing of the Certificate of Amendment,
the Board of Directors may, in its discretion, abandon such proposed amendment
without further action by the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSED
CREATION OF PREFERRED STOCK. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL
BE SO VOTED UNLESS THE STOCKHOLDER SPECIFIES OTHERWISE.
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PROPOSAL FIVE
APPROVAL OF THE 1998 STOCK INCENTIVE PLAN
At the annual meeting, stockholders will be asked to approve IndyMac REIT's
1998 Stock Incentive Plan (the "Plan" or the "1998 Plan"), adopted by the
Board of Directors on January 27, 1998, which authorizes 6,400,000 shares
(subject to adjustments under the Plan) of IndyMac REIT's Common Stock, $0.01
par value, for issuance under the Plan. The closing price of IndyMac REIT's
Common Stock on February 27, 1998 was $26.50.
This summary of the material terms of the Plan is qualified in its entirety
by the full text of the Plan, a copy of which is available for review at the
principal executive offices of IndyMac REIT and will be furnished to
stockholders without charge upon written request directed to Investor
Relations, INMC Mortgage Holdings, Inc., 155 North Lake Avenue, P.O. Box 7137,
Pasadena, CA 91109-7137 (telephone: (818) 225-3551).
DESCRIPTION OF PLAN
The purpose of the Plan is to enable IndyMac REIT, IndyMac Operating and any
of their respective subsidiaries or affiliates to attract, retain and motivate
their employees, consultants, agents, officers and directors by providing
incentives related to equity interests in and the financial performance of
IndyMac REIT. The Plan consists of two separate components: the Employee
Program and the Non-Employee Director Program.
Under the Employee Program, awards may be granted to any person (including
any director of IndyMac REIT or IndyMac Operating) who is an officer or
employee of IndyMac REIT, IndyMac Operating, or any of their respective
subsidiaries or affiliates or an individual who performs services for IndyMac
REIT, IndyMac Operating, or any of their respective subsidiaries or affiliates
of a nature similar to those performed by officers or employees, such as
consultants and agents, and any non-employee director of IndyMac Operating who
is not also a member of the Board of Directors of IndyMac REIT (any of the
foregoing, an "Employee").
Under the Non-Employee Director Program, nonqualified options ("Director
Options") will be automatically granted to each director of IndyMac REIT who
is not an officer or employee of IndyMac REIT, IndyMac Operating, or any of
their respective subsidiaries or affiliates and who does not perform services
for IndyMac REIT, IndyMac Operating, or any of their respective subsidiaries
or affiliates of a nature similar to those performed by employees ("Non-
Employee Director"). Currently, there are three Non-Employee Directors of
IndyMac REIT. Non-Employee Directors are not eligible for awards under the
Employee Program. Directors who are Employees (as previously defined) are
eligible to receive awards only under the Employee Program. Messrs. David S.
Loeb, Angelo R. Mozilo and Michael W. Perry currently are eligible for
Employee Awards under the Employee Program. All other IndyMac REIT directors
currently are eligible only for the Director Options.
The Employee Program does not prescribe limitations on the price of awards
(except that stock options may not be granted at less than fair market value
on the date of grant) or require minimum holding periods or vesting periods.
To the extent such restrictions are deemed appropriate by the Compensation
Committee of the Board of Directors (the "Committee") to a particular type of
award, to particular individuals, or in particular circumstances, such
restrictions will be included in the individual award memorandum memorializing
the grant of the award to the recipient and setting forth certain specifics
with respect to the terms and conditions of the award (the "Award
Memorandum").
The Employee Program will be administered by the Committee. The Board of
Directors has delegated to the Committee complete administrative authority
with respect to the Employee Program, including the authority to grant (and
amend) any award or combination of stock options, stock appreciation rights,
restricted or performance stock, stock bonuses, dividend equivalents,
performance awards and other stock related benefits, payable in stock and/or
cash. The Non-Employee Director Program is a formula plan and, to the maximum
extent feasible, self-effectuating.
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As of February 28, officers and employees of IndyMac REIT and
approximately officers and employees of IndyMac are eligible under the
Employee Program, subject to the power of the Committee to determine all
eligible employees and other persons (other than ineligible directors) to whom
awards will be granted.
The maximum number of shares subject to stock options, stock appreciation
rights (individually "SAR", collectively "SARs") and awards of restricted
stock which may be granted under the Employee Program to any eligible
individual under the Employee Program in any year may not exceed 500,000,
subject to adjustment. The limit on the total number of Shares that may be
granted under the Plan is 6,400,000 shares, plus the number of shares
remaining for grant under the 1996 Plan on the date the 1996 Plan is canceled.
(On February 28, 1998, 1,417,860 shares were remaining under the 1996 Plan.)
The Committee may grant to a holder of an award under the Employee Program,
if he or she is otherwise eligible and (where consent is required) consents, a
new or modified award in lieu of an award previously granted with respect to a
number of shares, at an exercise price and for a length of time, which is
greater or lesser than that under the earlier award, or may do so by
cancellation and regrant, amendment, substitution or otherwise, subject only
to the general limitations of the Plan or under applicable law.
In determining the persons to whom awards will be granted under the Employee
Program and the amount of such awards, the Committee typically will consider
the responsibilities and contributions of such persons, their other
compensation, other factors deemed relevant in light of the type of award
under consideration and the purposes of the Plan, as well as applicable legal
requirements.
Options and similar rights, as well as restricted shares or other awards
(prior to vesting), will be non-transferrable, with limited exceptions. In
general, stock options exercisable as of the date of a participant's
termination of service will remain exercisable for a period of three months
following termination of service, except that special provisions apply in the
event of death, permanent disability or termination for cause.
Employee Program
Awards under the Employee Program are not limited to any particular form or
structure and the Committee may grant any combination of stock options (both
incentive and non-qualified), restricted or performance stock, cash and stock
bonuses, SARs, dividend equivalents, performance awards and other stock
related benefits.
The Committee may delegate ministerial, non-discretionary functions to
individuals who are officers or employees of IndyMac REIT. The Committee also
may delegate to certain officers of IndyMac REIT (i) the authority to grant
awards under the Employee Program, provided that such delegation is set forth
in writing and includes all applicable limitations and parameters to such
awards, and provided further that such awards are subsequently ratified by the
Committee; and (ii) with respect to unvested awards that are incentive stock
options that have been granted to an employee of IndyMac REIT (other than an
employee who is subject to Section 16 of the Exchange Act), the authority to
accelerate the exercisability of such incentive stock options to allow them to
be exercised within the three-month period commencing upon the date that the
employee's employment by IndyMac REIT terminates by reason of the transfer of
such employee to employment by IndyMac Operating, provided, however, that to
the extent (A) such accelerated stock options are not exercised prior to the
expiration of such three-month period, or (B) the acceleration of the
exercisability of such stock options causes such stock options to fail to
satisfy the requirements of Section 422(d) of the Code, such stock options
shall automatically be converted into non-qualified stock options and shall
continue to be exercisable in accordance with their terms (as accelerated
stock options) until they expire or otherwise terminate under the terms of the
Plan.
Stock options provide for the right to purchase Common Stock at a price not
less than the fair market value of the Common Stock on the effective date of
the grant. Options may be granted, typically without any specific
consideration but subject to vesting limitations, for a term that may not
exceed ten years. Incentive stock options, if used, will be designed to comply
with the provisions of the Code and will be subject to restrictions contained
in the Code, but may be subsequently modified to disqualify them from such
treatment.
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SARs may be granted in connection with stock options and other awards, or
separately. SARs granted by the Committee in connection with stock options or
other awards typically will provide for payments to the holder based upon the
increase in the price of IndyMac REIT's Common Stock over the exercise price
of the related option or other award, but may also or alternatively be based
upon criteria such as book value or earnings. The SARs may provide that the
holder of the SARs may exercise the SAR and/or the option or other awards in
whole or in part. The Committee may elect to pay SARs in cash or in Common
Stock or in a combination of cash and Common Stock. SARs limited to change in
control situations or other extraordinary events are also authorized.
Restricted and unrestricted stock may be awarded or sold to eligible
participants under the Plan for such lawful consideration with a value not
less than the par value per share and subject to such restrictions as may be
determined by the Committee. Restricted stock typically will be subject to
forfeiture if the applicable restrictions (which may include the lapse of
time, performance criteria or other factors) do not lapse and generally will
be nontransferable until such restrictions lapse. Recipients of restricted
stock, unlike recipients of options, may have voting rights and receive
dividends on the shares prior to the time when the restrictions lapse.
Performance awards may be granted by the Committee. Generally, these awards,
if granted in the future, will be based upon specific agreements and may be
paid in cash or in Common Stock or in a combination of cash and Common Stock.
Performance awards may include "phantom" stock awards that provide for
payments based upon increases in the price or value of IndyMac REIT's Common
Stock over a predetermined period. These awards do not involve the issuance of
IndyMac REIT stock but are hypothetical stock "units" that are granted to a
participant and upon which the value of any incentive award will be
calculated. Performance awards may also include cash and stock bonuses that
may be granted by the Committee on an individual or group basis and may be
payable in cash or in Common Stock or in a combination of cash and Common
Stock.
If expressly provided by the Committee, awards of restricted stock may be
made to the holder of any option, based upon dividends or distributions that
would have been received had the Common Stock covered by the option been
issued and outstanding on the applicable dividend record date. The terms and
conditions of any such awards of restricted stock will be specified by the
applicable Award Memorandum.
The Committee may approve any combination of payment in cash or Common Stock
to any participant in respect of any performance or incentive award under the
Plan and may approve a payment in Common Stock, or an option or other right to
purchase Common Stock, as part of a deferred compensation arrangement, made in
lieu of all or any portion of the compensation otherwise payable to an
eligible employee.
If the recipient of a stock option award under the Employee Program
terminates service as an Employee for a reason other than cause (as determined
by the Committee in its sole discretion), death, or permanent and total
disability, the holder may at any time within a period of three months after
such termination exercise such stock option to the extent such stock option
was exercisable on the date of such termination. If the holder terminates
service as an Employee by reason of permanent and total disability, or if the
holder becomes permanently and totally disabled within three months after
termination (other than termination for cause), the holder may at any time
within a period of twelve months after such termination exercise such stock
option to the extent such stock option was exercisable on the date of such
termination. Finally, if the holder terminates service as an Employee by
reason of death, or if the holder dies within three months after termination
(other than termination for cause), then such stock option may be exercised
within a period of twelve months after the holder's termination of service as
an Employee, to the extent such stock option was exercisable on the date of
such termination. In no event, however, may any stock option be exercised by
any holder after its expiration date.
The Plan generally provides for full vesting and acceleration of exercise of
awards under the Employee Program in the event of a change in control of
IndyMac REIT, although the Committee may limit the duration of such
acceleration of Employee awards. A change in control occurs under the Plan
when (w) there is a complete liquidation or dissolution of IndyMac REIT or a
disposition of all or substantially all of the assets of IndyMac REIT (other
than a transfer to a subsidiary of IndyMac REIT); (x) a merger, consolidation
or reorganization involving IndyMac REIT is consummated, unless such
transaction is a Non-Control Transaction (as defined in
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the Plan); (y) any entity or group acquires (other than directly from IndyMac
REIT) 25% or more of the then outstanding Common Stock or the combined voting
power of IndyMac REIT's then outstanding voting securities (provided that
acquisitions of such securities by (i) IndyMac REIT or any of its
subsidiaries, (ii) any employee benefit plan maintained by IndyMac REIT,
IndyMac Operating or any subsidiary of IndyMac REIT or (iii) any other entity
or group in connection with a Non-Control Transaction shall not constitute a
change in control for purposes of the Plan); or (z) the individuals who as of
January 27, 1998 were members of the board of directors (the "Incumbent
Board") cease for any reason to constitute at least two-thirds of the members
of the board of directors, (provided that any new director nominated or
elected by the stockholders and approved by a vote of at least two-thirds of
the Incumbent Board will be treated as a member of the Incumbent Board for
purposes of the Plan).
Non-Employee Director Program
Subject to shareholder approval of the Plan, each Non-Employee Director will
be granted automatically on June 1, 1998, and on the first business day in
June in each calendar year during the term of the Plan, a Director Option to
purchase the number of shares of Common Stock equal to 30,000 multiplied by a
fraction, the numerator of which is the earnings per share ("EPS") of the
Common Stock (on a fully diluted basis, excluding the one time charge to
earnings resulting from the Merger) of IndyMac REIT for the fiscal year of
IndyMac REIT ended immediately before the date of grant of the Director Option
(as reported in the audited Financial Statements included in IndyMac REIT's
Annual Report on Form 10-K filed with the Securities and Exchange Commission,
but in no event less than zero) (the "EPS Numerator Amount") and the
denominator of which is $1.51 in 1998 and, in each year after 1998, the
greater of (x) $1.79 compounded at a rate of 15% per year (i.e., in 1999,
$2.06; in 2000, $2.37; in 2001, $2.72; in 2002, $3.13), or (y) the EPS
Numerator Amount for the fiscal year of IndyMac REIT ended immediately before
the fiscal year used in determining the EPS Numerator Amount. This formula for
determining the number of shares subject to Director Options awarded annually
may be amended by subsequent action of the Board to provide either an
alternative formula for calculating the number of shares of Common Stock
subject to Director Options to be awarded annually or to provide for a fixed
number of shares of Common Stock subject to Director Options to be awarded
annually, provided that, in either case, the number of shares of Common Stock
to be awarded under such alternative formula or fixed number is no greater
than that provided for under the formula set forth above, and that each Non-
Employee Director receives the same number of shares of Common Stock as every
other Non-Employee Director. However, no Non-Employee Director will receive
Director Options to purchase fewer than 20,000 or more than 50,000 shares of
Common Stock in any calendar year. The purchase price per share of Common
Stock covered by each such option, payable in cash and/or shares (at then fair
market value), is the fair market value of the Common Stock on the date the
option is granted. The options are fully exercisable the first anniversary of
the date of grant, and, unless earlier terminated, terminate ten years after
they are granted, or upon any earlier liquidation of IndyMac REIT.
If a Non-Employee Director's services as a Board member are terminated as a
result of death, disability, or retirement, options will become immediately
exercisable in full for a period of one year or until the expiration of the
stated term of the Director Option, whichever period is shorter. If a Non-
Employee Director's services are terminated for any other reason (other than
for Cause as defined in the Plan), any Director Option exercisable as of the
date of termination shall remain exercisable for a period of three months
after termination or the balance of the Director Option's term, whichever
period is shorter. The Plan also provides for full vesting and acceleration of
exercise dates of the Director Options in the event of and in certain
circumstances prior to a change in control of IndyMac REIT (as defined above).
Miscellaneous Provisions
The Plan contains provisions relating to adjustments for certain changes in
IndyMac REIT's capitalization or Common Stock or upon certain specified
events. The number and type of shares or other securities, cash or other
property that may be acquired under the Plan, share limits (individual and
otherwise), the EPS and fixed dollar amounts, the maximum number and type of
shares or other securities that may be delivered pursuant to awards, and such
other terms as are necessarily affected by such specified events are subject
to adjustment in the
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event of a reorganization, merger, recapitalization, stock split, stock
dividend, consolidation, restructuring or similar events. Adjustments relating
to Director Options may only be based on objective criteria and must be
approved by stockholders or otherwise consistent with the treatment of
stockholders generally in respect of their shares.
The Employee Program permits the payment of the option or award price at the
Committee's discretion in cash or with shares of the IndyMac REIT's Common
Stock valued at their fair market value or a combination of shares and cash.
Other lawful consideration, which may include (for example) a note (under any
award financing plan that may be available or as otherwise approved by the
Committee), services, or cash compensation offset, may also be applied to the
purchase or exercise price of an award under the Employee Program, to the
extent so authorized by the Committee. Payment of the exercise price of
Director Options may be in cash or with shares of IndyMac REIT's Common Stock
valued at their fair market value or a combination of shares and cash. Subject
to the requirements of applicable law, the Board may authorize loans to Non-
Employee Directors to finance the exercise of awards; provided, however, that
no loan shall be made to any Non-Employee Director to finance the exercise of
an award unless (i) such loan is made pursuant to a full recourse promissory
note, and (ii) such loan, if secured by Common Stock, is made in compliance
with applicable regulations of the Federal Reserve Board.
Shares held by a participant other than a Non-Employee Director may also be
used to discharge tax withholding obligations related to exercise of options
or receipt of other awards, to the extent authorized by the Committee. In
addition, the Committee may grant under the Employee Program a cash bonus in
the amount of any tax related to awards.
The authority to grant new options or awards under the Plan will terminate
on January 27, 2008, unless it is extended or terminated prior to that time by
the Board of Directors. The termination of the Plan will not affect rights of
participants which accrued prior to such termination. The Board may, without
stockholder approval, suspend or amend the Plan at any time, and the Committee
may, with the consent of a holder, substitute awards or modify the terms and
conditions of an outstanding award, to, among other changes, extend the term
(subject to the maximum 10-year term limit), reduce the price (but not, in the
case of options, below the then market price), accelerate exercisability or
vesting or otherwise preserve benefits of the award. The Plan provides that
the Board may, without stockholder approval, at any time and from time to
time, suspend, discontinue or amend the Plan in any respect whatsoever, except
that no such amendment shall impair any rights under any award previously made
under the Plan without the consent of the holder of such award. Except as and
to the extent otherwise permitted by the provisions of the Plan, no such
amendment may, without stockholder approval, cause the Plan to cease to
satisfy any applicable condition of Rule 16b-3 promulgated under Section 16(b)
of the Securities Exchange Act of 1934 or cause any award under the Plan to
cease to qualify for any applicable exception under Section 162(m) of the
Code.
Shares subject to awards that expire or terminate or otherwise do not vest
for any reason are available for subsequent awards under the Plan.
TAX CONSEQUENCES OF THE PLAN
The federal income tax consequences of the Plan under current federal law,
which is subject to change, are summarized in the following discussion which
deals with the general tax principles applicable to the Plan. State and local
tax consequences are beyond the scope of this summary.
Nonqualified Stock Options
No taxable income will be realized by an optionee upon the grant of a
nonqualified stock option. Upon exercise of a nonqualified stock option, the
optionee will realize ordinary income in an amount measured by the excess of
the fair market value of the shares on the date of exercise over the option
price, and IndyMac REIT will be entitled to a corresponding deduction. Upon a
subsequent disposition of the shares, the participant will realize short-term
or long-term capital gain or loss (depending upon how long the shares were
held). IndyMac REIT will not be entitled to any further deduction at that
time.
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Special rules will apply if the participant uses previously owned shares to
pay some or all of the option exercise price.
Incentive Stock Options
An optionee who receives an incentive stock option will not be treated as
receiving taxable income upon the grant of the option or upon the exercise of
the option, provided the exercise occurs, in general, during employment or
within three months after termination of employment. However, any appreciation
in share value after the date of grant will be an item of tax preference at
the time of exercise in determining liability for the alternative minimum tax.
If stock acquired pursuant to an incentive stock option is not sold or
otherwise disposed of within two years from the date of grant of the option
nor within one year after the date of exercise, any gain or loss resulting
from disposition of the stock will be treated as long-term capital gain or
loss. If stock acquired upon exercise of an incentive stock option is disposed
of prior to the expiration of such holding periods (a "disqualifying
disposition"), the optionee will realize ordinary income in the year of such
disposition in an amount equal to the excess of the fair market value of the
stock on the date of exercise over the exercise price or, if less, the excess
of the amount realized on the disqualifying disposition over the exercise
price. Any remaining gain will be taxed at capital gains rates.
IndyMac REIT will not be entitled to any deduction as a result of the grant
or exercise of an incentive stock option, or on a later disposition of the
stock received, except that in the event of a disqualifying disposition
IndyMac REIT will be entitled to a deduction equal to the amount of ordinary
income realized by the optionee.
Special rules will apply if the participant uses previously owned shares to
pay some or all of the option exercise price.
Restricted Stock
The recipient of restricted stock will recognize ordinary income equal to
the excess of the fair market value of the restricted stock at the time the
restrictions lapse over the amount, if any, which the recipient paid for the
restricted stock. However, the recipient may elect, within 30 days after the
date of receipt, to report the fair market value of the stock as ordinary
income at the time of receipt. IndyMac REIT may deduct an amount equal to the
income recognized by the recipient at the time the recipient recognizes the
income.
The tax treatment of restricted stock which is disposed of will depend upon
whether the recipient made an election to include the value of the stock in
income when awarded. If the recipient made such an election, any disposition
after the restrictions lapse will result in a long-term or short-term capital
gain or loss depending upon the period the restricted stock is held. If,
however, such election is made and for any reason the restrictions imposed on
the restricted stock fail to lapse, the individual will not be entitled to a
deduction. If an election is not made, disposition after the lapse of
restrictions will result in short-term or long-term capital gain or loss equal
to the difference between the amount received on disposition and the greater
of the amount paid for the stock by the recipient or its fair market value at
the date the restrictions lapsed.
Special rules will apply if the participant uses previously owned shares to
pay some or all of the purchase price, if any, of restricted stock.
Stock Appreciation Rights
At the time of receiving a SAR, the participant will not recognize any
taxable income. Likewise, IndyMac REIT will not be entitled to a deduction for
the SAR. Upon the exercise of a SAR, the participant will generally recognize
ordinary income in an amount equal to the cash and/or fair market value of the
shares received. If a participant receives stock, then the amount recognized
as ordinary income becomes the participant's tax basis for determining gains
or losses (taxable either as short-term or long-term capital gain or loss,
depending on how long the shares are held on the subsequent sale of such
stock. The holding period for such shares commences as
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<PAGE>
of the date ordinary income is recognized. IndyMac REIT will be entitled to a
deduction in the amount and at the time that the participant first recognizes
ordinary income.
Performance Awards
A participant who has been granted a performance award will not realize
taxable income at the time of grant, and IndyMac REIT will not be entitled to
a deduction at that time. When an award is paid, whether in cash or shares,
the participant will have ordinary income, and IndyMac REIT will have a
corresponding deduction. The measure of such income and deduction will be the
amount of cash and the fair market value of the shares at the time the award
is paid.
Dividend Equivalents
A recipient of a dividend equivalent award will not realize taxable income
at the time of grant and IndyMac REIT will not be entitled to a deduction at
that time. When a dividend equivalent is paid, the participant will recognize
ordinary income, and IndyMac REIT will be entitled to a deduction. The measure
of the income and deduction will be the amount of cash and the fair market
value of the shares at the time the dividend equivalent award is paid.
Stock Payments and Bonuses
A participant who receives a stock bonus, or a stock payment in lieu of a
cash payment, will be taxed at the value of the stock on the date of award,
and IndyMac REIT will have a deduction in the same amount.
Accelerated Payments
If, as a result of certain changes in control of IndyMac REIT, a
participant's options or SARs become immediately exercisable, or if
restrictions immediately lapse on restricted stock, or if shares covered by a
performance award are immediately issued, the additional economic value, if
any, attributable to the acceleration may be deemed a "parachute payment." The
additional value will be deemed a parachute payment if such value, when
combined with the value of other payments which are deemed to result from the
change in control, equals or exceeds a threshold amount equal to 300% of the
participant's average annual taxable compensation over the five calendar years
preceding the year in which the change in control occurs. In such case, the
excess of the total parachute payments over such participant's average annual
taxable compensation will be subject to a 20% non-deductible excise tax in
addition to any income tax payable. IndyMac REIT will not be entitled to a
deduction for that portion of any parachute payment which is subject to the
excise tax.
Section 162(m) Limits
Notwithstanding the foregoing discussion of the deductibility of
compensation under the Plan by IndyMac REIT, Section 162(m) of the Code would
render non-deductible to IndyMac REIT certain compensation to certain persons
required to be named in the Summary Compensation Table ("Named Executive
Officers") to the extent such person's total compensation exceeds $1,000,000
in any year unless such excess compensation is "qualified performance-based
compensation" (as defined) or is otherwise exempt from these limits on
deductibility. The applicable conditions of an exemption for qualified
performance-based compensation plans include, among others, a requirement that
the stockholders approve the material terms of the plans. The Plan has been
adopted by the Committee subject to stockholder approval. Although IndyMac
REIT believes that certain performance awards under the Plan may be exempt
from such limits as performance based compensation in any event, other awards
under the Plan would not be. No assurances can be given that compensation
payable under the Plan to such persons will be deductible to IndyMac REIT if
such $1,000,000 limitation is exceeded.
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SPECIFIC BENEFITS
No Awards have been made under the Plan. However, the formula currently used
to determine Director Options under the 1998 Plan is the same as under the
existing 1996 Plan. Accordingly, the same options would have been granted in
1997 under the 1998 Plan as were granted under the 1996 Plan. Specific
benefits after 1998 are based on the formula and are not presently
determinable; but Director Options may not in any year exceed 50,000 shares
per eligible director or be less than 20,000 shares. A minimum of 600,000
shares and a maximum of 1,500,000 shares (subject to adjustments under the
Plan) may be delivered to existing Non-Employee Directors on exercise of
Director Options to be granted under the Plan.
The following table sets forth the number of shares subject to options that
would have been granted during fiscal 1997 to Non-Employee Directors and to
officers and employees of IndyMac REIT, assuming that the 1998 Plan had been
in effect during fiscal year 1997 and that all stock options granted under
IndyMac REIT's existing 1996 Plan to officers and employees of IndyMac REIT
during fiscal year 1997 had been granted instead under the 1998 Plan. The
amounts shown below are not necessarily indicative of the amounts which may be
granted in any future period under the 1998 Plan.
FIRST YEAR PLAN BENEFITS
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND POSITION SUBJECT TO OPTIONS
- ----------------- ------------------
<S> <C>
David S. Loeb, Chairman..................................... 285,660
Angelo R. Mozilo, Vice Chairman and CEO..................... 285,660
Michael W. Perry, President and COO......................... 125,000
Richard H. Wohl, Senior Executive Vice President............ 40,000
Kathleen H. Rezzo, Senior Executive Vice President.......... 25,000
S. Blair Abernathy, Executive Vice President................ 17,500
Executive Officers as a Group (8 persons)................... 791,945
Non-Employee Directors as a Group (3 persons)............... 102,954
All Officers and Employees Excluding Executive Officers..... 155,983
</TABLE>
RELATIONSHIP TO 1996 PLAN
If the 1998 Plan is approved by stockholders, the 1996 Plan will be canceled
and thereafter no additional options can be granted under the 1996 Plan.
However, the cancellation will have no effect on outstanding options under the
1996 Plan. In addition, as described above, on the date the 1996 Plan is
canceled, any shares remaining under such Plan will be added to the shares
available under the 1998 Plan.
VOTE REQUIRED
Approval of the Plan requires the affirmative vote of holders of a majority
of the shares present or represented and entitled to vote on the matter at the
meeting. The total votes cast on the proposal must represent over 50% of the
shares entitled to vote on the proposal. If shares are held by a broker in a
street name, the broker will not be entitled to vote such shares absent
specific instructions from the beneficial owners thereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE 1998 STOCK
INCENTIVE PLAN. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED
UNLESS THE STOCKHOLDER SPECIFIES OTHERWISE.
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<PAGE>
PROPOSAL SIX
APPROVING THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the accounting firm of Grant Thornton
LLP ("Grant Thornton") to audit IndyMac REIT's financial statements for the
year ending December 31, 1998. Grant Thornton has acted as the independent
accounting firm for IndyMac REIT since 1985. In accordance with a resolution
of the Board of Directors, this selection is being presented to stockholders
for ratification at this meeting. The affirmative vote of a majority of the
votes cast at the Annual Meeting is necessary for ratification. A
representative of Grant Thornton will be present at the Annual Meeting, will
have an opportunity to make a statement if he or she wishes to do so and will
be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF GRANT THORNTON
AS INDYMAC REIT'S INDEPENDENT ACCOUNTANTS. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE SO VOTED UNLESS THE STOCKHOLDER SPECIFIES OTHERWISE.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
The following paragraphs contain a description of certain transactions and
relationships between IndyMac REIT or any of its affiliates and CCI or any of
its affiliates. For a description of CCI's ownership of IndyMac REIT Common
Stock, see "Principal Stockholders."
INDYMAC
IndyMac REIT's mortgage conduit operations are primarily conducted through
IndyMac Operating, a taxable corporation that is not consolidated with IndyMac
REIT for tax or financial reporting purposes. Although IndyMac REIT owns all
of IndyMac Operating's outstanding non-voting preferred stock and 99% of the
economic interest in IndyMac Operating, CHL, a wholly-owned subsidiary of CCI,
owns all of IndyMac Operating's outstanding voting Common Stock and 1% of the
economic interest in IndyMac Operating. Accordingly, CCI, through its stock
ownership of CHL, has the power to elect directors and officers of CHL and
IndyMac Operating, and consequently CCI has the power to direct CHL's and
IndyMac Operating's day-to-day operations. Currently, two directors of IndyMac
Operating are officers of CCI and CHL.
In connection with the Merger, CCI agreed with IndyMac REIT to amend the
certificate of incorporation of IndyMac Operating to provide that if a CCI
Change of Control (as defined in IndyMac Operating's certificate of
incorporation) occurs, or if CCI ceases to beneficially own more than 5.0% of
the issued and outstanding shares of IndyMac REIT Common Stock, or if neither
Mr. Loeb nor Mr. Mozilo is a director of IndyMac REIT, IndyMac REIT will be
entitled, in its sole discretion, to compel the dissolution of IndyMac
Operating and to receive all assets of IndyMac Operating, other than a certain
amount of cash, which will be payable to CCI in an amount equal to 3% of the
book value of IndyMac Operating, unless CCI requests an independent appraisal.
If such appraisal is requested, CCI shall receive such higher or lower value
that corresponds to 1% of the fair market value of IndyMac Operating's assets.
In connection with the Merger, IndyMac Operating's certificate of
incorporation was also amended to prohibit a holder of IndyMac Operating
securities (such as CCI) from causing any assets of IndyMac Operating to be
used for any purpose other than in furtherance of IndyMac Operating's
business.
In connection with the Merger, IndyMac REIT agreed that in the event that
IndyMac REIT (i) establishes or acquires a majority ownership interest in an
entity, the business activities of which are substantially the same as all of
the business activities then being conducted by IndyMac Operating or (ii)
transfers to such other entity substantially all of the assets of IndyMac
Operating, then IndyMac REIT shall, at CCI's option, purchase CCI's interest
in IndyMac Operating at a purchase price equal to the amount required to be
paid to CCI in the event of a dissolution of IndyMac Operating as described
above.
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<PAGE>
In 1997, IndyMac Operating purchased all of the mortgage loans that it
subsequently securitized from IndyMac REIT, consistent with its past practice.
In January 1996, IndyMac REIT and IndyMac Operating entered into a Master
Forward Commitment and Services Agreement (which replaced an earlier agreement
entered into in 1993) pursuant to which IndyMac REIT agrees to sell and
IndyMac Operating agrees to purchase certain mortgage loans, and IndyMac
Operating agrees to act as the master servicer with respect to certain assets
acquired by IndyMac REIT for an annual fee, which equals the product of .025%
and the aggregate unpaid principal balance of assets under its management.
IndyMac Operating has granted IndyMac REIT a license to use the "IndyMac"
name to enable IndyMac REIT to change its name as described in Proposal Two--
"Changing the Name of INMC Mortgage Holdings, Inc." above. The name change of
IndyMac REIT is intended to reflect the increasingly distinctive market
identity of the "IndyMac" name.
Following consummation of the Merger, substantially all the operating
personnel then employed by CAMC were hired by IndyMac REIT or IndyMac
Operating, on the basis of the respective business activities of each entity,
the current and expected duties of each employee and any time-sharing
arrangements negotiated between IndyMac REIT and IndyMac Operating. In
addition, IndyMac REIT and IndyMac Operating have arranged for appropriate
cost-sharing arrangements with respect to any employees whose services support
the business activities of both entities.
CHL
IndyMac REIT's mortgage loan conduit operations consist of the purchase of
residential mortgage loans by IndyMac REIT from originators and the sale of
such mortgage loans to IndyMac Operating, securitization of the mortgage loans
and the sale of the resulting securities to investors or sales of the mortgage
loans on a whole loan basis. IndyMac REIT and the sellers of the mortgage
loans negotiate whether the seller will retain, or IndyMac REIT will purchase,
the rights to service the mortgage loans purchased by IndyMac REIT and IndyMac
Operating. Since IndyMac REIT and IndyMac Operating do not generally perform
primary servicing on their portfolio of mortgage loans held for sale or
investment, IndyMac REIT and IndyMac Operating have negotiated contractual
arrangements with established servicers, including CHL, a wholly-owned
subsidiary of CCI, to sub-service loans for which IndyMac REIT and IndyMac
Operating acquire the servicing rights. The sub-servicing arrangement among
IndyMac REIT, IndyMac Operating and CHL is governed by the 1987 Amended and
Restated Servicing Agreement, as amended (the "Sub-Servicing Agreement").
Under the Sub-Servicing Agreement, CHL retains a monthly fee of $6.25 per loan
for "A" paper loans and $15.00 per loan for subprime loans. In addition, CHL
retains setup fees in the normal course. Under the Sub-Servicing Agreement,
CHL earned sub-servicing fees of approximately $1.9 million and $1.1 million
for the years ended December 31, 1997 and 1996, respectively. In the opinion
of management, the overall terms of the sub-servicing arrangements with CHL
are as favorable to IndyMac REIT as could have been negotiated with
unaffiliated parties. IndyMac REIT, IndyMac Operating and CHL are in the
process of negotiating a new sub-servicing agreement.
IndyMac REIT and IndyMac Operating purchase a relatively small portion of
the mortgage loans they securitize from CHL pursuant to the 1996 Amended and
Extended Loan Purchase and Administrative Services Agreement (the "Purchase
and Service Agreement"). Pursuant to the Purchase and Service Agreement, CHL
retains the servicing rights on all conforming loans it sells to IndyMac REIT
and IndyMac Operating. During the years ended December 31, 1997 and 1996,
IndyMac REIT and IndyMac Operating purchased mortgage loans from CHL with
principal balances aggregating approximately $926,000 and $30.7 million,
respectively.
In addition, CHL services the mortgage loans that secure three series of
CMOs issued by a subsidiary of IndyMac REIT or trusts established by a
subsidiary of IndyMac REIT pursuant to servicing agreements entered into in
1987 and 1993. These agreements provide for servicing fees up to .32% of the
aggregate unpaid principal balance of the mortgage loans being serviced. CHL
received servicing fees of approximately $186,000 and $200,000 under these
agreements for the years ended December 31, 1997 and 1996, respectively.
28
<PAGE>
CCI
In connection with the Merger, CCI acquired 3,440,860 shares of IndyMac REIT
Common Stock. As a condition to the Merger, IndyMac REIT entered into an
agreement with CCI (the "Registration Rights Agreement") pursuant to which CCI
may require, under certain circumstances and subject to certain limitations,
that IndyMac REIT register any or all of the IndyMac REIT Common Stock issued
to CCI in connection with the Merger. Under the Registration Rights Agreement,
CCI, on two occasions commencing two years after the date of the Registration
Rights Agreement, which is June 30, 1997, may request that IndyMac REIT file a
registration statement covering the IndyMac REIT Common Stock issued pursuant
to the Merger ("Demand Registration"). Only one request for a Demand
Registration may be made during any nine month period. Each Demand
Registration request must be for a minimum of (i) 1,250,000 shares of IndyMac
REIT Common Stock or (ii) the number of shares of IndyMac REIT Common Stock
having a market value of $20,000,000, whichever is less. A Demand Registration
will not be deemed to have been effected until the registration statement
filed in connection therewith is declared effective by the Securities and
Exchange Commission. All costs of the registration, including, among other
things, registration and filing fees, printing expenses, attorneys' fees,
accountants' fees and other reasonable expenses, will be borne by IndyMac
REIT.
If IndyMac REIT determines that, in light of the pendency of a material
transaction, it would be materially detrimental to IndyMac REIT and its
stockholders to file a registration statement pursuant to a request for a
Demand Registration, IndyMac REIT may defer such Demand Registration for not
more than 90 days after receipt of such request. IndyMac REIT also is
permitted to defer the filing of a registration statement pursuant to a
request for a Demand Registration for an additional period of 60 days after
the expiration of the initial 90 day period in order to satisfy its disclosure
obligations under the Securities Act with respect to certain material
transactions.
If IndyMac REIT proposes to file a registration statement covering the
IndyMac REIT Common Stock under the Securities Act of 1933 (except for
registration (a) on Form S-8, or a successor or substantially similar form, of
an employee share option, share purchase or compensation plan or of IndyMac
REIT Common Stock issued or issuable pursuant to any such plan, (b) of a
dividend reinvestment plan or (c) on Form S-4, or a successor or substantially
similar form, of shares issuable in connection with any acquisition, merger,
exchange or similar transaction) IndyMac REIT will, subject to certain
limitations, use its best efforts to arrange to include in such registration
statement all of the IndyMac REIT Common Stock as to which it has received a
request for inclusion. Such IndyMac REIT Common Stock will not be included,
however, to the extent that the underwriters indicate that such inclusion will
interfere with the successful marketing of IndyMac REIT Common Stock being
issued by IndyMac REIT.
In connection with the Merger, IndyMac REIT has granted CCI the right (the
"Right of First Offer") to purchase from IndyMac REIT in an offering (an
"Offering") of voting capital stock (or a security convertible or exchangeable
into or exercisable for voting capital stock) such number of shares of the
capital stock as may be required for CCI to maintain its then proportionate
voting interest in IndyMac REIT. Any purchase by CCI pursuant to the Right of
First Offer shall be made on the terms and be subject to the conditions
applicable to other purchasers in the Offering.
OTHER MATTERS
The Board of Directors knows of no matters other than those listed in the
attached Notice of Annual Meeting which are likely to be brought before the
Annual Meeting. However, if any other matters should properly come before the
Annual Meeting, the persons named in the enclosed proxy will vote all proxies
given to them in accordance with their best judgment on such matters.
29
<PAGE>
ANNUAL REPORT AND FORM 10-K
The 1997 Annual Report to Stockholders containing the consolidated financial
statements of IndyMac REIT for the year ended December 31, 1997 accompanies
this proxy statement.
STOCKHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF INDYMAC REIT'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT THE ACCOMPANYING EXHIBITS, BY
WRITING TO INVESTOR RELATIONS, INMC MORTGAGE HOLDINGS, INC., 155 NORTH LAKE
AVENUE, P.O. BOX 7137, PASADENA, CALIFORNIA 91109-7137. A LIST OF EXHIBITS IS
INCLUDED IN THE FORM 10-K, AND EXHIBITS ARE AVAILABLE FROM INDYMAC REIT UPON
THE PAYMENT TO INDYMAC REIT OF THE COST OF FURNISHING THEM.
STOCKHOLDER PROPOSALS
Any proposal that a stockholder wishes to present for consideration at the
1999 Annual Meeting must be received by IndyMac REIT no later than December 4,
1998, in order to be included in the proxy statement and form of proxy for
that Annual Meeting. Proposals should be directed to the Secretary of IndyMac
REIT.
By Order of the Board of Directors
/s/ Richard H. Wohl
Richard H. Wohl
Secretary
Dated: April , 1998
30
<PAGE>
APPENDIX A
AMENDMENT TO THE
CERTIFICATE OF INCORPORATION OF
INMC MORTGAGE HOLDINGS, INC.
The Certification of Incorporation of INMC Mortgage Holdings, Inc. is hereby
amended to revise ARTICLE I so that, as amended, ARTICLE I shall read as
follows:
"ARTICLE I
NAME
----
The name of the Corporation is:
IndyMac Mortgage Holdings, Inc. (the "Corporation")."
A-1
<PAGE>
APPENDIX B
"ARTICLE IV
CAPITAL STOCK
Section 1. The total number of shares of capital stock which the Corporation
shall have the authority to issue is Two Hundred Ten Million (210,000,000),
consisting of (i) Two Hundred Million (200,000,000) shares of Common Stock
("Common Stock") having a par value of $0.01 per share and (ii) Ten Million
(10,000,000) shares of preferred stock ("Preferred Stock") having a par value
of $0.01 per share.
The Board of Directors is authorized, subject to limitations prescribed by
law and the provisions of this Article IV, to provide for the issuance of
shares of Preferred Stock in series, and by filing a certificate pursuant to
the applicable law of the State of Delaware, to establish from time to time
the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each series of
Preferred Stock shall include, but not be limited to, determination of the
following:
(a) the number of shares constituting that series and the distinctive
designation of that series;
(b) the dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that
series;
(c) whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
(d) whether that series shall have conversion privileges, and, if so, the
terms and conditions of such conversion, including provision for adjustment
of the conversion rate or conversion price in such events as the Board of
Directors shall determine;
(e) whether or not the shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the date or date
upon or after which they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of such
sinking fund;
(g) the rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the corporation, and
the relative rights of priority, if any, of payment of shares of that
series; and
(h) any other relative rights, preferences and limitations of that
series.
Dividends on outstanding shares of Preferred Stock shall be paid or declared
and set apart for payment before any dividends shall be paid or declared and
set apart for payment on the Common Stock with respect to the same dividend
period.
If upon any voluntary or involuntary liquidation, dissolution or winding up
of the corporation, the assets available for distribution to holders of shares
of Preferred Stock of all series shall be insufficient to pay such holders the
full preferential amount to which they are entitled, then such assets shall be
distributed ratably among the shares of all series of Preferred Stock in
accordance with the respective preferential amounts (including unpaid
cumulative dividends, if any) payable with respect thereto."
B-1
<PAGE>
VOTE BY TELEPHONE/INTERNET
1-888-XXX-XXXX (No Charge For Call)
[_] http://_________proxvoting.com
UNMARKED PROXIES SHALL BE VOTED IN FAVOR OF EACH OF THE FOLLOWING MATTERS unless
specified to the contrary.
1. Election of Directors
FOR all nominees
listed below [_]
WITHHOLD AUTHORITY to vote
for all nominees listed below [_]
*EXCEPTIONS [_]
Nominees: David S. Loeb, Angelo R. Mozilo, Michael W. Perry, Lyle E. Gramley,
Thomas J. Kearns, Frederick J. Napolitano
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions ____________________________________________________________________
2. To approve an amendment to the Certificate of Incorporation to change the
name of INMC Mortgage Holdings, Inc. to "IndyMac Mortgage Holdings, Inc.";
FOR [_] AGAINST [_] ABSTAIN [_]
3. To approve an amendment to the Certificate of Incorporation to increase the
authorized number of shares of Common Stock from 100 million to 200 million
shares;
FOR [_] AGAINST [_] ABSTAIN [_]
4. To approve an amendment to the Certificate of Incorporation to authorize the
creation of 10 million shares of Preferred Stock;
FOR [_] AGAINST [_] ABSTAIN [_]
5. To approve the INMC Mortgage Holdings, Inc. 1998 Stock Incentive Plan.
FOR [_] AGAINST [_] ABSTAIN [_]
6. To approve the selection of Grant Thornton LLP as the Independent Accountants
to audit the Company's financial statements for the year ending December 31,
1997.
FOR [_] AGAINST [_] ABSTAIN [_]
I PLAN TO Change of Address or
ATTEND THE MEETING [_] Comments Mark Here [_]
Receipt of copies of the Annual
Report to Stockholders, the Notice
of the Annual Meeting of
Stockholders and the Proxy Statement
dated April , 1998 is hereby
acknowledged.
Please date and sign exactly as name
appears on this proxy. Joint owners
should each sign. If the signer is a
corporation, please sign full
corporate name by duly authorized
officer. Executors, trustees, etc.
should give full title as such.
Dated:________________________, 1998
____________________________________
If You Vote By Signature(s)
Telephone/Internet
Do Not Mail Back ____________________________________
Your Proxy Signature(s)
- ---------------------
Control Number VOTES MUST BE INDICATED
- --------------------- (_) IN BLACK OR BLUE INK [_]
PLEASE RETURN PROMPTLY IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE U.S.A.
- --------------------------------------------------------------------------------
INMC MORTGAGE HOLDINGS, INC.
P R O X Y
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, MAY 19, 1998
The undersigned hereby appoints David S. Loeb and Angelo R. Mozilo, or
either of them, with full power of substitution, the attorney and proxy of the
undersigned, to appear and to vote all of the shares of stock of INMC Mortgage
Holdings, Inc. which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders of INMC Mortgage Holdings, Inc. to
be held at The Ritz-Carlton Huntington Hotel, 1401 South Oak Knoll Avenue,
Pasadena, California on May 19, 1998 at 10:00 a.m. and any adjournment thereof.
(Continued and to be signed on reverse side)
INMC MORTGAGE HOLDINGS, INC.
P.O. BOX 11294
NEW YORK, N.Y. 10203 0294
YOUR VOTE IS IMPORTANT!
You can vote in one of three ways:
1. Call toll-free 888-XXX-XXXX on a touch tone phone and follow the
instructions.
2. Vote by Internet at our Internet Address:
http://__________proxyvoting.com
3. Mark, sign and date your proxy card and return it promptly in the
enclosed envelope.
PLEASE VOTE
