Irwin Financial Corporation
Amended and Restated
2007 Performance Unit Plan
The purpose of
this Irwin Financial Corporation 2007 Performance Unit Plan is to
attract, retain and motivate key executives and to increase the
long-term value of the lines of business of IFC by providing
selected employees with the opportunity to share in the value of
their respective lines of business through grants of Performance
Units (as defined below) at a level intended to provide median
competitive long-term incentive award opportunities.
The Plan was
adopted by the board of directors of IFC (the “Board”)
on March 28, 2007. It is hereby amended and restated as of
March 28, 2007 retroactive to its original effective date. The
initial Plan Cycle begins on January 1, 2007 and ends on
December 31, 2009. Plan Cycles beginning prior to
January 1, 2007 shall be covered, as applicable, by the Irwin
Union Bank Amended and Restated Performance Unit Plan, the Irwin
Home Equity Corporation Performance Unit Plan and the Irwin
Commercial Finance Amended and Restated Plan, each as approved by
the IFC’s shareholders on April 6, 2006, and as
subsequently amended. Adoption of the Plan is subject to the
approval of the IFC stockholders. Any Awards granted prior to
May 9, 2007 shall be void if IFC’s stockholders do not
approve the Plan at the 2007 annual stockholders’
meeting.
It is the
intent of this Plan that payment of any Award hereunder shall be
made no later than March 15 of the year following the year in which
the Award is no longer subject to a substantial risk of forfeiture,
so that Section 409A of the Code will not apply to the Plan as
a result of the application of the “short term
deferral” rule as described in the final Treasury regulations
promulgated under Section 409A of the Code.
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(a)
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AWARD means a payment made pursuant
to the Plan.
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(b)
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BENEFICIAL OWNER means a
“beneficial owner” as defined in Rule 13d-3 under
the Exchange Act.
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(c)
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BOARD means the board of directors
of IFC.
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This change is
simply to alert the reader as to how the Plan is being administered
and interpreted. It is for convenience only.
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(d)
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BUSINESS COMBINATION means a
Company’s becoming a party to an agreement of a
reorganization, merger or consolidation or the sale or other
disposition of all or substantially all of its assets.
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(e)
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CHANGE IN CONTROL means, with
respect to a Company, the occurrence of any of the following
events:
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(i)
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any
Person, other than (i) a trustee or other fiduciary holding
securities under an employee benefit plan of IFC or any of its
subsidiaries, or (ii) an entity owned directly or indirectly
by the stockholders of IFC in substantially the same proportions as
their ownership of stock of IFC, is or becomes the Beneficial
Owner, directly or indirectly, of securities representing 50% or
more of the total voting power of the then outstanding shares of
that Company’s Voting Stock; or
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(ii)
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a
Business Combination, unless all or substantially all of the
individuals and entities who were the Beneficial Owners,
respectively, of that Company’s Voting Stock immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the total voting power represented by
the voting securities entitled to vote generally in the election of
directors of the entity resulting from the Business Combination
(including, without limitation, a corporation which as a result of
the Business Combination owns all or substantially all of a
Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership immediately prior to the Business Combination of that
Company’s Voting Stock.
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(f)
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CODE means the Internal Revenue Code
of 1986, as amended. The term “Code” when used in the
Plan shall also refer to applicable regulations, rulings, notices
and other guidance issued by the Internal Revenue Service with
respect to the cited Section.
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(g)
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COMMITTEE means the committee
appointed by the Board 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
Board as constituted from time to time; provided, that the
Committee shall be comprised solely of at least two members of the
Board 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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(h)
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COMPANY means Irwin Union Bank &
Trust Company, Irwin Commercial Finance Corporation and Irwin Home
Equity Corporation and such other subsidiaries of IFC designated by
the Committee. For purposes of the Plan, employment with the
Company shall be deemed to include employment with a subsidiary of
the Company.
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(i)
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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
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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 employees of the Company that
employs the Participant.
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(j)
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EXCHANGE ACT means the Securities
Exchange Act of 1934, as amended.
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(k)
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EXECUTIVE OFFICER means any employee
who is an “executive officer” (as defined under SEC
Rule 3b-7) of IFC.
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(l)
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IFC
means Irwin Financial Corporation.
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(m)
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PARTICIPANT means an individual
employed by a Company that is entitled to participate in the
Plan.
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(n)
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PERSON means a “person”
as such term is used in Sections 13(d) and 14(d) of the Exchange
Act.
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(o)
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PERFORMANCE UNIT means, with respect
to a Company, a component used to represent the incremental cash
value of that Company that is awarded to Participants in the Plan
at the beginning of each Plan Cycle.
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(p)
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PLAN means this Irwin Financial
Corporation 2007 Performance Unit Plan.
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(q)
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PLAN CYCLE means the three-year
vesting period designated for a Performance Unit.
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(r)
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STIP means, with respect to a
Company, its short-term incentive plan approved by IFC’s
stockholders.
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(s)
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VOTING STOCK means, with respect to
a Company, capital stock entitled to vote generally in the election
of that Company’s directors.
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The Committee
shall designate which employees of each Company are eligible to
become Participants and receive Performance Units. A Participant
shall only be eligible to receive Performance Units with respect to
the Company that employs that individual at the time of the Award.
Selection of an individual to participate in the Plan does not
guarantee any rights to receive additional Performance Units or
continue employment with any Company or IFC. A Participant’s
employer reserves the right, which may be exercised at any time, to
terminate a Participant’s employment or adjust a
Participant’s compensation with or without cause.
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(a)
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The
Committee is responsible for, and shall have full power to,
administer the Plan subject to the requirements of applicable law.
The Committee shall have the right to make rules and regulations as
it deems appropriate to administer the Plan, to construe and
interpret the Plan, to decide all questions of eligibility, and to
determine the amount and
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time of payment of benefits
hereunder to the fullest extent provided by law and in its sole
discretion. Any interpretations or decisions made in good faith by
the Committee will be conclusive and binding on all persons having
any interest in the Plan.
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(b)
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The
Committee may delegate (i) to one or more of its members such
of its duties, powers and responsibilities as it may determine;
(ii) to the management board or management committee of the
relevant line of business the power to grant Awards to Participants
who are not Executive Officers as of the time of grant and to make
plan amendments to the extent of the Committee’s authority
under Section 7 below; and (iii) to such other
individuals as it determines such ministerial tasks as it deems
appropriate. In the event of any delegation described in the
preceding sentence, the term “Committee” shall include
the person or persons so delegated to the extent of such
delegation.
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(c)
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The
Committee and each member thereof, and any person acting pursuant
to authority delegated by the Committee, shall be entitled, in good
faith, to rely or act upon any report or other information
furnished by any Executive Officer, other officer or employee of
the Company or a parent, subsidiary or affiliate, the
Company’s independent auditors, consultants or any other
agents assisting in the administration of the Plan. Members of the
Committee, any person acting pursuant to authority delegated by the
Committee, and any officer or employee of the Company or a parent,
subsidiary or affiliate acting at the direction or on behalf of the
Committee or a delegee shall not be personally liable for any
action or determination taken or made in good faith with respect to
the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such
action or determination.
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(d)
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It
is IFC’s intention that the Plan will be interpreted in a
manner consistent with complying with Section 162(m) of the Code
and avoiding any violation of Section 409A of the Code to the
maximum extent practicable.
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(a)
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Plan Cycles . Each Plan Cycle with respect to a
Performance Unit is three years in length beginning on January
1 st and ending December 31
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three years later. The
first Plan Cycle will begin January 1, 2007 and end
December 31, 2009. 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 effective as of the beginning of each
Plan Cycle. A Participant is eligible to receive a cash payment
equal to the value of his or her Performance Units to the extent
vested. Performance Units vest and become payable as provided in
this Section 6. Appendix A sets forth special provisions
that apply in lieu of Section 6 only to Participants employed
by a specific Company.
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(c)
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Performance Units
. Performance Units are
components used to represent the incremental cash value of a
Company. The number of Performance Units under the Plan with
respect to each Company and the initial value for each Performance
Unit as of January 1, 2007 under the Plan is set forth in
Appendix A. Except as provided in Section 6(g) below,
the
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value per
Performance Unit at any time after January 1, 2007 shall equal
(a) the value per Performance Unit as of the immediately
preceding valuation date multiplied by (b) a fraction, the
numerator of which is the applicable Company valuation as of the
then current valuation date and the denominator of which is the
applicable Company valuation as of the immediately preceding
valuation date.
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(d)
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Valuation . The standard value is fair market
value. Fair market value of the Performance Units will be annually
determined as of each December 31st (or such other date as
selected by the Committee in its sole discretion) using the Uniform
Standards of Professional Appraisal Practice. Valuations shall be
adjusted for any capital contributions. The Committee shall engage
an outside appraiser to determine fair market value; provided,
however, that the Committee may itself determine fair market value
in lieu of engaging an outside appraiser by using the same
valuation method that was used in the most recent valuation
previously performed by an appraiser under this
Section 6(d).
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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 the Company that employs
the Participant on the date of the Award with respect to the then
current Plan Cycle, each as determined in the Committee’s
sole discretion.
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