Exhibit 10.17
**DEFERRED COMPENSATION AGREEMENT**
     THIS DEFERRED COMPENSATION AGREEMENT (the “Agreement”) is entered into as of the 22nd day ofDecember, 2004, among **IRWIN HOME EQUITY CORPORATION**(the “Corporation”), **IRWIN FINANCIALCORPORATION**(“Irwin Financial”) and **ELENA DELGADO**(“Delgado”).
RECITALS
     A. Delgado is the President and a key employee of the Corporation and is the owner of five(5) shares of Common Stock of the Corporation (the “Delgado Shares”), which shares are subject tothe provisions of a Shareholder Agreement dated October 8, 1996, as amended on December 22, 2004(the “Shareholder Agreement”), setting forth certain terms and conditions relating to their vestingand transfer. The parties have also entered into an agreement relating to certain federal andstate income tax issues arising with respect to certain of Delgado’s rights under the ShareholderAgreement (the “Related Agreement”). Capitalized terms used but not otherwise defined herein havethe meanings ascribed to them in the Shareholder Agreement.
     B. Effective December 22, 2004, the Shareholder Agreement provides for certain “Call” rightsof the Corporation and certain “Put” rights of Delgado with the result that the purchase and saleof the Delgado Shares may be triggered by the exercise of such a Call or a Put under theShareholder Agreement on or after such effective date.
     C. On December 22, 2004, the Corporation exercised its “Call” rights to redeem 1.36 ofDelgado’s shares for cash payments to be made on December 31, 2004 and January 28, 2005 pursuant toa Redemption and Loan Repayment Agreement with Delgado.
     D. The establishment of “Call” rights and “Put” Rights under the Shareholder Agreementeffective as of December 22, 2004 with respect to the remaining 3.64 shares may be viewed to be anonqualified deferred compensation plan for purposes of U.S. federal tax laws and applicableregulations promulgated thereunder.
     E. The parties desire to comply with the provisions of Section 409A of the Internal RevenueCode of 1986, as amended (the “Code”) such that Delgado will realize taxable income only uponactual receipt of payments that she has elected to defer hereunder.
     F. On December 20, 2004, the U.S. Department of Treasury and the Internal Revenue Serviceissued Notice 2005-1, which provides transition guidance under Section 409A that the parties intendto follow under the terms of this Agreement.
     G. In furtherance of the foregoing, and in the event that a Put or Call is exercised underthe Shareholder Agreement after the date hereof with respect to the remaining 3.64 of the 5 DelgadoShares (the “Remaining Delgado Shares”), Delgado wishes to defer receipt of the
 

 

purchase price attributable to any such exercise and any related amounts payable pursuant tothe Related Agreement, all as provided herein.
AGREEMENT
     NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained herein,and for other good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto agree as follows:
     Section 1. Deferral Election. In the event that a Put or Call is exercisedunder the Shareholder Agreement after the date hereof with respect to the Remaining Delgado Shares,Delgado hereby irrevocably elects, subject to Section 14 below, to defer, pursuant to Section 2below, the receipt of the portion of the purchase price attributable to the Remaining DelgadoShares that are purchased or sold as a result of subsequent exercise(s) of a Put or Call, togetherwith any related taxable amounts that are payable to Delgado under the Related Agreement in respectof the Remaining Delgado Shares (collectively, the “Deferred Purchase Price”).
     Section 2. Installment Payment of Deferred Purchase Price. Until the earlierto occur of (i) the payment in full of the Deferred Purchase Price or (ii) a Full DistributionTrigger Event (as defined in Section 3 but without regard to an event described in clause (v)thereof unless such event would result in a full payment of the Deferred Purchase Price), Delgadoshall receive, on January 31, 2006 and on each January 31 thereafter, an installment payment ofthe Deferred Purchase Price for such Remaining Delgado Shares, according to the schedule ofpayments set forth on Schedule A attached hereto.
     Section 3. Full Distribution Trigger Events. For purposes of this Agreement,a “Full Distribution Trigger Event” shall mean (i) Delgado’s separation of service from theCorporation for any reason, (ii) a Change in Control as defined in the regulations promulgated fromtime to time under Section 409A of the Code, (iii) Delgado’s disability as defined in Section409A(a)(2)(C) of the Code, (iv) Delgado’s death, or (v) the occurrence of an unforeseeableemergency as defined in Section 409A(a)(2)(B)(ii) of the Code.
     Section 4. Payment of Deferred Purchase Price. The Deferred Purchase Pricewill be paid to Delgado according to Schedule A attached hereto. Notwithstanding theforegoing sentence, the Corporation shall pay to Delgado (or her personal representative) the fullunpaid balance of the Deferred Purchase Price (i) within 30 business days following the occurrenceof a Full Distribution Trigger Event (other than Delgado’s separation of service) or (ii) promptlyupon the expiration of the 6-month period following Delgado’s separation of service from theCorporation for any reason.
     Section 5. Interest. Portions of the Deferred Purchase Price that remainunpaid shall accrue interest from the date of the Call Closing or the Put Closing, as the case maybe, until paid in full, at two percent (2.0%) over the national prime rate as reported in TheWall Street Journal as of the Effective Date (in the event of a Call) or the Exercise Date (inthe event of a Put), as the case may be. The interest rate will be adjusted annually on eachpayout date set forth in Schedule A.
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     Section 6. Tax Withholding. The Corporation shall be entitled to withholdfrom any compensation payable to Delgado all amounts required to be withheld for federal, state andlocal income and other tax laws, including, without limitation, all employment taxes that may berequired to be paid on the Deferred Purchase Price.
     Section 7. Unsecured Rights; Nontransferability. Delgado’s rights under thisAgreement shall be those of a general unsecured creditor of the Corporation, and all payments toDelgado of the Deferred Purchase Price shall be made from the general assets of the Corporation.Notwithstanding the foregoing, the Corporation may in its discretion set aside funds or assets tosatisfy its obligations hereunder through the establishment of a grantor trust subject to theclaims of the Corporation’s creditors, or through any other set aside of funds or assets that areheld as part of the Corporation’s general assets. Delgado’s rights under this Agreement may notbe anticipated, alienated, sold, transferred, assigned, pledge, encumbered, attached or garnishedby creditors of Delgado.
     Section 8. Successors; Beneficiary. This Agreement shall inure to thebenefit of and be binding upon the successors and assigns of the Corporation upon any sale of allor substantially all of the Corporation’s assets, or upon any merger, consolidation orreorganization of the Corporation with or into any other corporation, all as though such successorsand assigns of the Corporation and their respective successors and assigns were the Corporation.This Agreement shall inure to the benefit of and be binding upon the executors, heirs, assignsand/or designees of Delgado. Delgado shall be entitled to designate a beneficiary for the paymentupon her death of any amounts of Deferred Purchase Price to which Delgado is entitled under thisAgreement.
     Section 9. No Third Party Beneficiaries. This Agreement is for the benefitof only Delgado, the Corporation and Irwin Financial and, except as expressly provided in Section8, no other person shall be entitled to any benefits hereunder.
     Section 10. Amendments. This Agreement may be amended only by a writtenagreement executed by each of the parties hereto.
     Section 11. Governing Law. This Agreement shall be governed by and construedin accordance with the laws of the State of Indiana, without giving effect to the choice of lawprinciples thereof.
     Section 12. Entire Agreement. This Agreement, together with the ShareholderAgreement and the Related Agreement, constitutes the entire agreement and understanding among theparties pertaining to the subject matter hereof and thereof and supersedes any and all prioragreements, whether written or oral, relating hereto or thereto.
     Section 13. No Waiver. Failure to insist upon strict compliance with any ofthe terms, covenants, or conditions of this Agreement shall not be deemed to be a waiver of suchterm, covenant, or condition, nor shall any waiver or relinquishment of any right or power underthis Agreement at any one or more times be deemed a waiver or relinquishment of such right or powerat any other time or times.
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     Section 14. Compliance with Section 409A. It is the intention of the partiesthat any amounts payable under this Agreement comply with Section 409A of the Code. This Agreementshall be interpreted and operated in good faith compliance with Section 409A and Notice 2005-1 forthe 2005 calendar year. The parties agree to mutually cooperate to amend this Agreement, theRelated Agreement or any other agreement between the parties before the end of 2005 to the extentthat an amendment is necessary to comply with Section 409A and any subsequent regulations, noticesor other interpretative guidance issued by the Internal Revenue Service.
     Section 15. Counterparts. This Agreement may be executed in twocounterparts, each of which shall be deemed an original and both of which, when taken together,shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and yearfirst above written.
CORPORATION:
IRWIN HOME EQUITY CORPORATION    By: /s/ Thomas D. Washburn Printed: Thomas D. WashburnTitle: Chairman DELGADO: /s/ Elena Delgado Elena Delgado 
IRWIN FINANCIAL:
IRWIN FINANCIAL CORPORATION    By: /s/ Matthew F. Souza Printed: Matthew F. SouzaTitle: Senior Vice President/Secretary
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Schedule A