Agreement, General Release and Covenant Not to Sue

Agreement, General Release and Covenant Not to Sue

     This Agreement, General Release and Covenant Not to Sue ("Agreement") is entered into between Irwin Financial Corporation and Thomas D. Washburn ("Executive").

Recitals

     A. Executive has been employed by Irwin Financial Corporation at its headquarters in Columbus, Indiana. Irwin Financial Corporation has made the decision to terminate the employment of the Executive as of December 30, 2007. Such a termination by Irwin Financial Corporation is an "involuntary separation from service" under Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder ("Section 409A").

     B.  Irwin and Executive have determined that it is in each party's best interests that Irwin continue to employ Executive for a period of time, so long as Executive chooses to remain employed by Irwin, in order to provide for a transition of the duties and responsibilities of Executive, with such transition period beginning on December 30, 2007 and ending on a date selected by Executive on or prior to June 30, 2008.

     C.  In recognition of Executive's service with the Company, and in consideration of the mutual covenants, promises, and obligations contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is mutually acknowledged, the parties agree as follows:

     1.   Definitions . Throughout this Agreement, the term "Irwin" used alone, shall encompass the following: (a) Irwin Financial Corporation, as well as any subsidiary, parent company, affiliated entity, related entity, successor, predecessor, or division of any of the foregoing; and (b) any current or former officer, director, trustee, agent, employee, shareholder, representative, insurer, or employee benefit or welfare program or plan (including the administrators, trustees, and fiduciaries of such program or plan) of an entity referenced in or encompassed by (a) of this sentence. Throughout this Agreement, the term "Termination Date" shall mean December 30, 2007, or such earlier date as Executive's employment terminates pursuant to Paragraph 2. Throughout this Agreement, the term "Retirement Date" shall mean a date selected by Executive between and inclusive of December 31, 2007 and ending June 30, 2008.

     2.   Employment . As part of the severance package, Irwin agrees that Executive will continue in the employ of Irwin until December 30, 2007 and Executive agrees that Executive will not terminate Executive's employment with Irwin prior to December 30, 2007; provided , however , such employment shall cease upon Executive's death prior to such date and Irwin may cease such employment prior to such date in the event Executive fails to perform his current duties or in the event Executive engages in conduct that materially injures or harms Irwin. Beginning December 30, 2007, Executive may continue in the employ of Irwin to perform the duties and responsibilities of Executive's position as described on Exhibit C attached hereto and made a part hereof until the Retirement Date selected by Executive in Executive's sole discretion; provided, however, if a Retirement Date is not selected prior to June 30, 2008 or the date of death of Executive, the Retirement Date shall automatically be June 30, 2008 or the date of death of Executive, as applicable. Furthermore, so long as Executive chooses to continue in the employ of Irwin after December 30, 2007 and for such period, Executive shall be subject to all Irwin policies, procedures, guidelines and other workplace requirements in place, without limitation, as of and prior to December 30, 2007 and as amended prior to the Retirement Date.

     3.   Severance Payment and Other Consideration . As part of the severance package, if (A) Executive remains employed through December 30, 2007, (B) Executive signs this Agreement and this Agreement is not revoked by Executive by or before December 30, 2007, and (C) Executive delivers, fully executed by Executive and dated December 30, 2007 the Reaffirmation of Agreement, General Release and Covenant Not to Sue attached as Exhibit A (the "Reaffirmation"), Irwin shall provide Executive with the following, all in consideration of the terms and conditions and releases contained in this Agreement:

(a) Irwin agrees to pay Executive a settlement payment in the gross sum of One Million Seventy Thousand and No/100 Dollars ($1,070,000) (the "Settlement Payment"). Due to the involuntary separation from service under Section 409A, $450,000 will be paid in immediately available funds to Executive on January 2, 2008. $620,000 will be paid to Executive on January 2, 2009. Any Settlement Payment will be less all applicable payroll withholdings, including all state, local and federal taxes. The Settlement Payment shall be reported by Irwin on the appropriate tax form.

 

(b) Irwin and Executive acknowledge that Executive is permitted to participate, at Executive's cost, in the Irwin Financial Corporation Health Plan (the "Medical Plan") as a retiree pursuant to the terms and conditions contained in the Medical Plan as of the Retirement Date. Irwin agrees to reimburse Executive for the difference between the cost of participation of Executive as a retiree in the Medical Plan less the current cost of participation of Executive (if a positive number) in the Medical Plan, using the same plan choice and other options chosen by Executive for the 2007 Medical Plan year, until such time that Executive is no longer eligible to participate in the Medical Plan pursuant to the terms of the Medical Plan. These reimbursement payments will be made on the 15 ^th day of each month following satisfactory proof and verification that Executive elected to continue retiree benefits under the Medical Plan, is a participant in the Medical Plan and made the premium payment under the Medical Plan for which reimbursement is sought. Reimbursement of Executive shall not begin until the first day of the seventh month after the Retirement Date, and all amounts incurred by Executive from the Retirement Date until the first day of the seventh month after the Retirement Date shall be paid by Irwin on the first day of the seventh month after the Retirement Date. Irwin will issue Executive the appropriate tax document for the value of the payments as determined by Irwin.

 

(c) For a period of twelve (12) months after the Retirement Date Irwin will provide for outplacement services for Executive by enrolling Executive as a participant in the Right Choice Executive Service Package from Right Management. In the event Executive chooses to receive all, or a portion of, the value of this service in cash, Executive shall notify Irwin in writing and Irwin shall make cash payment to Executive after adjusting such payment for the value of any payments made by Irwin for services to Executive from Right Management. Any cash payment delivered to Executive for this item will be made to Executive on January 2, 2009 and will satisfy in full Irwin's obligations under this paragraph. Irwin will issue Executive the appropriate tax document for the value of the payments as determined by Irwin.

 

(d) Irwin acknowledges that Irwin's Compensation Committee has consented to the "retirement" of Executive under the terms of the Irwin Financial Corporation 1997 Stock Option Plan, as amended (the "1997 Plan"), and the Irwin Financial Corporation Amended and Restated 2001 Stock Plan, as amended (the "2001 Plan" and, collectively with the 1997 Plan, the "Plans"), and that, therefore, Executive shall be deemed retired under the Plans beginning on the Retirement Date. Executive acknowledges and agrees that all restricted stock and options granted to the Executive under the Plans that are not vested, and that have not otherwise expired pursuant to 1997 Plan and 2001 Plan provisions, on the Retirement Date are forfeited and that only the restricted stock and nonqualified stock options which are vested on the Retirement Date under the Plans, all of which are set forth on Exhibit B attached hereto and made a part hereof, remain exercisable after the Retirement Date and are exercisable and expire in accordance with Exhibit B attached hereto and made a part hereof.

 

(e) Notwithstanding anything contained herein to the contrary, Executive's rights under the Irwin Financial Corporation Amended and Restated Short Term Incentive Plan, the Medical Plan, the Irwin Financial Corporation Supplemental Executive Retirement Plan for Executive, and the Irwin Financial Corporation Employees' Savings Plan shall be governed by the provisions set forth in such plans, as applicable, and not this Agreement.

(f) Irwin will continue to reimburse Executive for the cost of financial planning services requested by Executive and provided by Irwin Union Advisory Services beginning on the Retirement Date and ending two years after the Retirement Date. Reimbursement of Executive shall not begin until the first day of the seventh month after the Retirement Date, and all amounts incurred by Executive from the Retirement Date until the first day of the seventh month after the Retirement Date shall be paid by Irwin on the first day of the seventh month after the Retirement Date. Irwin will issue Executive the appropriate tax document for the value of the payments as determined by Irwin.

(g) No payment or other consideration under this Paragraph 3 shall be made until after the effective date of this Agreement (as determined pursuant to this Agreement). Each payment shall be mailed to Executive's address listed in Irwin's records.

     In paying the amount specified in this Paragraph 3, Irwin makes no representation as to the tax consequences or liability arising from said payment including, without limitation, under Section 409A. Moreover, the parties understand and agree that any tax consequences and/or liability arising from the payment to Executive shall be the sole responsibility of Executive. To this extent, Executive acknowledges and agrees that Executive will pay any and all income tax which may be determined to be due in connection with the payment described in this Paragraph 3. Executive also agrees to indemnify Irwin for any and all tax liability (including, but not limited to, fines, penalties, interest, and costs and expenses, including attorneys' fees) arising from or relating to the payment described in this Paragraph 3 and/or imposed by the Internal Revenue Service, the State of Indiana, or any other taxing agency or tribunal as a result of Executive's failure to timely pay taxes on said payment or any portion thereof.

     The payments and obligations assumed by Irwin in this Paragraph 3 reflect consideration provided to Executive over and above anything of value to which Executive already is entitled, and will be subject to all applicable taxes, withholdings, and deductions. Executive acknowledges and agrees that no other sums or amounts are or will be due or owing to him and expressly waives any rights or claims to additional sums, amounts, privileges, or benefits not expressly provided for in this Paragraph 3.

     4.   General Release and Waiver . Executive (for himself, his agents, assigns, heirs, executors, and administrators) releases and discharges Irwin from any claim, demand, action, or cause of action, known or unknown, which arose at any time from the beginning of time to the date Executive executes this Agreement, and waives all rights relating to, arising out of, or in any way connected with Executive's employment with Irwin Financial Corporation, the cessation of that employment, or the compensation or benefits payable in connection with that employment or the cessation of that employment, including (without limitation) any claim, demand, action, cause of action or right, including claims for money damages and claims for attorneys' fees, based on but not limited to (a) Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000(e), et seq .; (b) The Americans With Disabilities Act of 1990, 42 U.S.C. § 12101, et seq .; (c) The Family and Medical Leave Act of 1993, 29 U.S.C. § 2601, et seq. ; (d) The Age Discrimination in Employment Act, 29 U.S.C. § 621, et seq .; (e) The Civil Rights Act of 1866, as amended 42 U.S.C. § 1981; (f) The Executive Retirement Income Security Act, 29 U.S.C. § 1001, et seq .; (g) The Fair Credit Reporting Act; (h) The Indiana Civil Rights Law, I ND . C ODE 22 - 9 - 1, et seq .; (i) any wage law, including the Indiana wage payment and wage claims acts, I ND . C ODE § 22 - 2 - 2 - 4, 22 - 2 - 5 - 2, 22 - 2 - 5 - 9, 22 - 2 - 9 - 1, et seq .; (j) the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq .; (k) the Equal Pay Act, as amended 29 U.S.C. § 206, et seq .;(l) any existing or potential agreement, contract, representation, policy, procedure, statement, or entitlement (whether the foregoing might be oral or written, express or implied); and/or (m) any other federal, state, or local law, whether arising or emanating from statute, executive order, regulation, code, constitution, case law, common law, or other source, including without limitation all actions sounding in tort or contract (which include, but are not limited to, wrongful discharge, retaliation, breach of implied contract and breach of the covenant of good faith and fair dealing). This Agreement shall not apply to rights or claims that arise after the date the Agreement is executed by Executive; nor shall any provision in this Agreement be interpreted to waive or extinguish any rights or claims which - by express and unequivocal terms of law - may not under any circumstances be waived or extinguished.

     5.   Mutual Disclaimer . This Agreement shall not be construed as an admission of liability or wrong - doing by either party, but is entered into in an effort to provide Executive with a severance package and to end the parties' employment relationship on an amicable basis. Accordingly, on behalf of Irwin, the undersigned Irwin representative states under penalties of perjury that - at the time this Agreement is executed - he is not aware of any facts or incidents that constitute or might constitute legal liability or legal wrongdoing on the part of Executive from the beginning of time up to the date Executive signed this Agreement. Likewise, Executive states under penalties of perjury that - at the time he executes this Agreement - Executive is not aware of any facts or incidents that constitute or might constitute liability, wrongdoing, or discrimination by Irwin from the beginning of time up to the date Executive signs the Agreement.

     6.   Confidentiality . Until such time as this entire Agreement is filed with the Securities and Exchange Commission, Executive agrees to keep the terms of this Agreement that are not disclosed in any 8K filing by Irwin with the Securities and Exchange Commission confidential and will not disclose any such information concerning this Agreement to anyone except Executive's spouse, tax advisor, legal counsel, or anyone required by law to know the contents of the Agreement, provided that Executive informs any of these specified persons that Executive is bound by a confidentiality covenant and that the person is not to disclose any information concerning the Agreement. Executive acknowledges that disclosure of the terms or amounts of this Agreement would cause irreparable harm to Irwin but in an amount incapable of precise determination. S