exv10w17



 







Exhibit 10.17




DEFERRED COMPENSATION AGREEMENT




     THIS DEFERRED COMPENSATION AGREEMENT (the “Agreement”) is entered into as of the 22nd day of
December, 2004, among IRWIN HOME EQUITY CORPORATION (the “Corporation”), IRWIN FINANCIAL
CORPORATION (“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 to
the 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 vesting
and transfer. The parties have also entered into an agreement relating to certain federal and
state income tax issues arising with respect to certain of Delgado’s rights under the Shareholder
Agreement (the “Related Agreement”). Capitalized terms used but not otherwise defined herein have
the meanings ascribed to them in the Shareholder Agreement.



     B. Effective December 22, 2004, the Shareholder Agreement provides for certain “Call” rights
of the Corporation and certain “Put” rights of Delgado with the result that the purchase and sale
of the Delgado Shares may be triggered by the exercise of such a Call or a Put under the
Shareholder Agreement on or after such effective date.



     C. On December 22, 2004, the Corporation exercised its “Call” rights to redeem 1.36 of
Delgado’s shares for cash payments to be made on December 31, 2004 and January 28, 2005 pursuant to
a Redemption and Loan Repayment Agreement with Delgado.



     D. The establishment of “Call” rights and “Put” Rights under the Shareholder Agreement
effective as of December 22, 2004 with respect to the remaining 3.64 shares may be viewed to be a
nonqualified deferred compensation plan for purposes of U.S. federal tax laws and applicable
regulations promulgated thereunder.



     E. The parties desire to comply with the provisions of Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”) such that Delgado will realize taxable income only upon
actual 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 Service
issued Notice 2005-1, which provides transition guidance under Section 409A that the parties intend
to follow under the terms of this Agreement.



     G. In furtherance of the foregoing, and in the event that a Put or Call is exercised under
the Shareholder Agreement after the date hereof with respect to the remaining 3.64 of the 5 Delgado
Shares (the “Remaining Delgado Shares”), Delgado wishes to defer receipt of the



 









 




purchase price attributable to any such exercise and any related amounts payable pursuant to
the 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 hereby
acknowledged, the parties hereto agree as follows:



     Section 1. Deferral Election. In the event that a Put or Call is exercised
under 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 2
below, the receipt of the portion of the purchase price attributable to the Remaining Delgado
Shares that are purchased or sold as a result of subsequent exercise(s) of a Put or Call, together
with any related taxable amounts that are payable to Delgado under the Related Agreement in respect
of the Remaining Delgado Shares (collectively, the “Deferred Purchase Price”).



     Section 2. Installment Payment of Deferred Purchase Price. Until the earlier
to occur of (i) the payment in full of the Deferred Purchase Price or (ii) a Full Distribution
Trigger 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), Delgado
shall receive, on January 31, 2006 and on each January 31 thereafter, an installment payment of
the Deferred Purchase Price for such Remaining Delgado Shares, according to the schedule of
payments 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 the
Corporation for any reason, (ii) a Change in Control as defined in the regulations promulgated from
time to time under Section 409A of the Code, (iii) Delgado’s disability as defined in Section
409A(a)(2)(C) of the Code, (iv) Delgado’s death, or (v) the occurrence of an unforeseeable
emergency as defined in Section 409A(a)(2)(B)(ii) of the Code.



     Section 4. Payment of Deferred Purchase Price. The Deferred Purchase Price
will be paid to Delgado according to Schedule A attached hereto. Notwithstanding the
foregoing sentence, the Corporation shall pay to Delgado (or her personal representative) the full
unpaid balance of the Deferred Purchase Price (i) within 30 business days following the occurrence
of a Full Distribution Trigger Event (other than Delgado’s separation of service) or (ii) promptly
upon the expiration of the 6-month period following Delgado’s separation of service from the
Corporation for any reason.



     Section 5. Interest. Portions of the Deferred Purchase Price that remain
unpaid shall accrue interest from the date of the Call Closing or the Put Closing, as the case may
be, until paid in full, at two percent (2.0%) over the national prime rate as reported in The
Wall Street Journal as of the Effective Date (in the event of a Call) or the Exercise Date (in
the event of a Put), as the case may be. The interest rate will be adjusted annually on each
payout date set forth in Schedule A.



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     Section 6. Tax Withholding. The Corporation shall be entitled to withhold
from any compensation payable to Delgado all amounts required to be withheld for federal, state and
local income and other tax laws, including, without limitation, all employment taxes that may be
required to be paid on the Deferred Purchase Price.



     Section 7. Unsecured Rights; Nontransferability. Delgado’s rights under this
Agreement shall be those of a general unsecured creditor of the Corporation, and all payments to
Delgado 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 to
satisfy its obligations hereunder through the establishment of a grantor trust subject to the
claims of the Corporation’s creditors, or through any other set aside of funds or assets that are
held as part of the Corporation’s general assets. Delgado’s rights under this Agreement may not
be anticipated, alienated, sold, transferred, assigned, pledge, encumbered, attached or garnished
by creditors of Delgado.



     Section 8. Successors; Beneficiary. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the Corporation upon any sale of all
or substantially all of the Corporation’s assets, or upon any merger, consolidation or
reorganization of the Corporation with or into any other corporation, all as though such successors
and 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, assigns
and/or designees of Delgado. Delgado shall be entitled to designate a beneficiary for the payment
upon her death of any amounts of Deferred Purchase Price to which Delgado is entitled under this
Agreement.



     Section 9. No Third Party Beneficiaries. This Agreement is for the benefit
of only Delgado, the Corporation and Irwin Financial and, except as expressly provided in Section
8, no other person shall be entitled to any benefits hereunder.



     Section 10. Amendments. This Agreement may be amended only by a written
agreement executed by each of the parties hereto.



     Section 11. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Indiana, without giving effect to the choice of law
principles thereof.



     Section 12. Entire Agreement. This Agreement, together with the Shareholder
Agreement and the Related Agreement, constitutes the entire agreement and understanding among the
parties pertaining to the subject matter hereof and thereof and supersedes any and all prior
agreements, whether written or oral, relating hereto or thereto.



     Section 13. No Waiver. Failure to insist upon strict compliance with any of
the terms, covenants, or conditions of this Agreement shall not be deemed to be a waiver of such
term, covenant, or condition, nor shall any waiver or relinquishment of any right or power under
this Agreement at any one or more times be deemed a waiver or relinquishment of such right or power
at any other time or times.



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     Section 14. Compliance with Section 409A. It is the intention of the parties
that any amounts payable under this Agreement comply with Section 409A of the Code. This Agreement
shall be interpreted and operated in good faith compliance with Section 409A and Notice 2005-1 for
the 2005 calendar year. The parties agree to mutually cooperate to amend this Agreement, the
Related Agreement or any other agreement between the parties before the end of 2005 to the extent
that an amendment is necessary to comply with Section 409A and any subsequent regulations, notices
or other interpretative guidance issued by the Internal Revenue Service.



     Section 15. Counterparts. This Agreement may be executed in two
counterparts, 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 year
first above written.



CORPORATION:




IRWIN HOME EQUITY CORPORATION




	 	 	 	 
	By:

	 	/s/ Thomas D. Washburn	 
	Printed: Thomas D. Washburn
	Title: Chairman
	 
	DELGADO:

	 
	/s/ Elena Delgado	 
	Elena Delgado	 







IRWIN FINANCIAL:




IRWIN FINANCIAL CORPORATION




	 	 	 	 
	By:

	 	/s/ Matthew F. Souza	 
	Printed: Matthew F. Souza
	Title: Senior Vice President/Secretary






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Schedule A

Schedule of Payments of Deferred Purchase Price




	 	 	 
	Year	 	Payment
	January 31, 2006

	 	The lesser of $600,000 or the remaining unpaid balance
	January 31, 2007

	 	The lesser of $600,000 or the remaining unpaid balance
	January 31, 2008

	 	The lesser of $600,000 or the remaining unpaid balance
	January 31, 2009

	 	The remaining unpaid balance







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