Amended and Restated Performance
Unit Plan
The purpose of
the Irwin Commercial Finance Performance Unit Plan is to attract,
retain and motivate key executives and to increase the long-term
value of ICF by providing selected employees with the opportunity
to share in the value of ICF through grants of performance units at
a level intended to provide median competitive long-term incentive
award opportunities.
The Performance
Unit Plan was presented to the Board for adoption on
August 22, 2005. The Plan was amended and restated to account
for changes in the law. The initial Plan Cycle is January 1,
2005 – December 31, 2007. Adoption of the restated Plan
is subject to shareholder approval.
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a)
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AWARD means a payment made pursuant
to the Plan at the end of a Plan Cycle.
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b)
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BOARD means the Board of Directors
of Irwin Commercial Finance.
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c)
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CHAIRMAN means Chairman of the
Board.
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d)
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CODE means the Internal Revenue Code
of 1986, as amended.
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e)
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COMMITTEE means the committee
appointed by the Board to administer the Plan, which shall consist
solely of the Chairman until such time as the Plan is amended in
accordance with Section 7(a) hereof.
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f)
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COMPANY means Irwin Commercial
Finance.
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g)
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COVERED OFFICER means any individual
who, on the last day of the taxable year of IFC, is the chief
executive officer of IFC and any other officer of the Company who
is, for such taxable year, determined to be among IFC’s four
“highest compensated officers (other than the chief executive
officer of IFC) as defined under Code
Section 162(m)(3).
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h)
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DISABILITY means the participant is
unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, or is, by reason
of any medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months
under an accident and health plan covering the Company’s
employees.
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1
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i)
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EXCHANGE ACT means the Securities
Exchange Act of 1934, as amended.
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j)
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IFC
COMMITTEE means the committee appointed by the board of directors
of IFC to administer such long-term incentive plans as may be
adopted by such board from time to time or, in the absence of such
a committee, the standing compensation committee of IFC’s
board of directors as constituted from time to time; provided, that
any such IFC Committee shall be comprised solely of at least two
members of the IFC board of directors who qualify as an
“outside director” under Code Section 162(m) and the
regulations promulgated thereunder and as a “non-employee
director” within the meaning of Rule 16b-3(b)(3) (or any
successor rule) under the Exchange Act.
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k)
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PERFORMANCE UNIT means a component
used to represent the incremental cash value of the Company that is
awarded to participants in the Plan at the beginning of each Plan
Cycle.
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l)
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PLAN means the Irwin Commercial
Finance Performance Unit Plan.
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m)
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PLAN CYCLE means the three-year
period in which the plan will run.
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n)
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P/E
means a valuation ratio of the current unit price compared to
per-share earnings.
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o)
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ROE
means Return on Equity.
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Executive
employees, as recommended and approved by the Company President or
the Board of Directors, and approved by the Board of Directors of
ICF, are eligible to participate in the Plan. Key ICF executives
(Vice President and above positions, based on market practice for
granting programmatic long-term incentive opportunities) who would
participate in annual grants of Irwin Commercial Finance
Performance Units as approved by the ICF Board.
Selection of an
employee for participation in the Plan does not guarantee being
selected to participate in the Plan for any subsequent Plan Cycle.
Selection of any employee to participate in the Plan does not give
the participant any right to continued employment with the Company.
The Company reserves the right, which may be exercised at any time,
to terminate a Plan participant’s employment or adjust the
compensation of a Plan participant with or without
cause.
The Board will
be requested to approve each Performance Unit Plan at the beginning
of the Plan Cycle. The Committee will then carry out the daily
administration of the Plan. To the extent required by
Section 409A of the Internal Revenue Code, the Plan will be
administered in accordance with Section 409A of the
Code.
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a)
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Plan Cycles . Each Plan Cycle is three years in
length with the first cycle starting January 1st, 2005 and ending
December 31st, 2007. All subsequent Plan Cycles will start
January
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2
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1
st and end December 31
st - three years later. A new Plan Cycle will start
at the beginning of each calendar year.
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b)
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Plan Operation
. Participants are
awarded Performance Units at the beginning of each Plan Cycle.
Performance Units vest in accordance with Section 6(f) below. At
the end of each Plan Cycle, the vested Performance Units are cashed
out based on the value of the Performance Units at the end of the
Plan Cycle to the extent the participant is employed by the Company
at the end of the Plan Cycle.
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c)
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Performance Units
. Performance Units are
components used to represent the incremental cash value of the
Company. The number of units can divide the beginning value of the
Company in order to make the beginning value for a Performance Unit
in the first Plan Cycle equal to $100 (or any other number).
Subsequent valuations will use the calculated number of units in
order to determine the per unit value.
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d)
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Valuation . An outside appraiser in conformity
with the Uniform Standards of Professional Appraisal Practice will
do valuations. Valuations are performed annually unless the Board
determines that significant volatility suggests the need for more
frequent valuations. The standard value is fair market
value. The outside appraiser will recommend a valuation
approach or approaches, such as the combination of a market
approach, income approach and net asset approach. The valuation
should be adjusted for any capital contributions.
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e)
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Award Opportunities
. Award opportunities
are based on a median competitive expected value divided by the
starting value of a Performance Unit for each Plan
Cycle.
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f)
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Vesting . Performance Units will cliff vest
based on continued employment over the Plan Cycle and average ROE
performance as follows:
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(i) No
Performance Units will be vested if average ROE over the Plan Cycle
is less than or equal to the average of threshold ROEs stated in
the annual Short Term Incentive Plan for each of the years of the
Plan Cycle..
(ii) All
of the Performance Units will vest at the end of the Plan Cycle if
average ROE performance at least equals the average of the target
ROEs in the annual Short-Term Incentive Plan for each of the years
of the Plan Cycle and if the participant is employed continuously
for the entire Plan Cycle.
(iii) A
prorated portion of Performance Units will vest at the end of the
Plan Cycle if average ROE is between the average of the threshold
ROEs stated in the annual Short-Term Incentive Plan for each of the
years of the Plan Cycle and the average of the target ROEs in the
annual Short-Term Incentive Plan for each of the years of the Plan
Cycle.
The Right to
receive the value of vested Performance Units shall be contingent
upon employment with the Company on the last day of the Plan
Cycle.
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g)
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Rights Upon Separation from
Service . In
the event of separation from service, as such phrase is defined in
Section 409A of the Code, for reasons other than death,
Disability,
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3
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retirement,
transfer pursuant to Section 6(h) below, or company-initiated
Separation from Service unrelated to job performance, the
Participant forfeits all Performance Units in effect on the date of
separation. In the event of separation from service by reason of
death, Disability (as such term is defined in Section 409A of
the Code) retirement, transfer pursuant to Section 6(h) below, or
Company-initiated Separation from Service unrelated to the
participant’s jo
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