<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [ ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
IRWIN FINANCIAL CORP.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
Irwin Financial Corporation 500 Washington Street, Columbus, Indiana 47201
- --------------------------------------------------------------------------------
March 29, 1999
Notice of Annual Meeting of Shareholders
- --------------------------------------------------------------------------------
To the Shareholders:
The Annual Meeting of Shareholders of Irwin Financial
Corporation (the "Corporation") will be held at the Ramada
Inn, 2485 Jonathan Moore Pike, Columbus, Indiana, on Thursday,
April 29, 1999, at 4:00 p.m., Columbus time, for the following
purposes:
1. to elect a Board of Directors to serve for the ensuing year;
2. to act upon the confirmation of independent auditors for the
calendar year 1999;
3. to approve the Irwin Financial Corporation Employees' Stock
Purchase Plan III;
4. to approve the Irwin Financial Corporation 1999 Outside
Director Restricted Stock Compensation Plan;
5. to amend the Articles of Incorporation to increase the total
number of authorized Preferred Shares of the Corporation;
6. to amend the Articles of Incorporation to delete an outdated
section of Article V;
7. to hear such reports as may be presented; and
8. to transact such other business as may properly come before
the meeting or any adjournment thereof.
Registration of shareholders will start at 3:15 p.m. and the
meeting will start at 4:00 p.m. Following the meeting,
refreshments will be served.
I encourage you to date, sign, and mail the enclosed proxy in
the postpaid envelope that is provided. If you are present at
the meeting and desire to do so, you may revoke your proxy and
vote in person.
A copy of the Corporation's Annual Report to Shareholders for
1998 is enclosed and a Proxy Statement accompanies this
notice.
Matt Souza, Secretary
<PAGE> 3
Proxy Statement of Irwin Financial Corporation
- --------------------------------------------------------------------------------
For Annual Meeting of Shareholders to be held April 29, 1999
General Information
- --------------------------------------------------------------------------------
This proxy statement and the accompanying form of proxy are
furnished in connection with the solicitation by the Board of
Directors of Irwin Financial Corporation (the "Corporation")
of proxies to be used at the Corporation's Annual Meeting of
Shareholders on Thursday, April 29, 1999, at the Ramada Inn,
Columbus, Indiana, at 4:00 p.m., Columbus time, or any
adjournment thereof.
The costs of the solicitation of proxies in the accompanying
form will be borne by the Corporation. The solicitation of
proxies will be limited to the use of the mails.
A shareholder who signs and returns a proxy in such form will
have the power to revoke it at any time before it is exercised
by giving notice of revocation to the Secretary of the
Corporation. All shares represented by the accompanying proxy,
if the proxy is executed and returned, will be voted as
directed by the shareholder. If a shareholder executes and
returns a proxy, but makes no direction as to such
shareholder's vote, then the shares will be voted on each
matter to come before the meeting in accordance with the
recommendation of the Board of Directors.
The main offices of the Corporation are located at 500
Washington Street, Columbus, Indiana 47201.
This proxy statement will be mailed to shareholders on or
about March 30, 1999.
1.
<PAGE> 4
Voting Securities and Principal Holders
- --------------------------------------------------------------------------------
Only shareholders of record at the close of business on March
11, 1999, will be entitled to vote. On March 11, 1999, there
were common shares outstanding and entitled to vote.
Each common share is entitled to one vote on each matter to be
voted on at the meeting.
The following information is given as of March 11, 1999, for
persons known by management to beneficially own more than 5%
of the common shares of the Corporation. All of the shares
listed are beneficially owned through voting and investment
power held solely by the reported owner, except as otherwise
indicated.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Title of Amount and Nature of
Class Name and Address Beneficial Ownership % of Class
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common IFC Trust Under Trust 5,160,592(1) %
Shares Agreement
dated 6/29/90,
Clementine M. Tangeman,
Donor,
Irwin Miller, Trustee
301 Washington Street
Columbus, Indiana
Common Irwin Miller 5,304,972(1,2) %
Shares 301 Washington Street
Columbus, Indiana
Common William I. Miller 10,835,607(1,3) %
Shares 500 Washington Street
Columbus, Indiana
-------------------------------------------------------------------------------------------
</TABLE>
1. Certain shares owned by the IFC Trust (5,160,592 shares which
were donated to the Trust by the Estate of Mrs. Clementine
Tangeman) and Mr. Irwin Miller (5,160,544 shares) are subject
to an irrevocable proxy held by Mr. William I. Miller to vote
such shares. Mr. William I. Miller holds a right to acquire
these same 10,321,136 shares, pursuant to options purchased
by Mr. Miller from Mrs. Clementine Tangeman and Mr. Irwin
Miller, within 60 days but subject to certain contingencies.
2. Includes 130,000 shares owned by Mr. Irwin Miller's wife,
Xenia S. Miller, as to which Mr. Miller holds no voting or
investment power and for which Mr. Miller expressly disclaims
any beneficial interest; 9,024 shares as to which Mr. Miller
holds voting and investment power; 4,604 shares held for the
account of Mr. Irwin Miller under the Corporation's Outside
Director Restricted Stock Compensation Plan as to which Mr.
Miller holds sole voting power but no investment power; and
800 shares which Mr. Miller has the right to acquire within
60 days of the record date through the exercise of stock
options. See "Outside Director Restricted Stock Compensation
Plan."
3. See Footnote 1 above. Includes 167,525 shares as to which Mr.
Miller holds voting and investment power; 22,812 shares that
Mr. Miller is the custodian of on behalf of his children and
for which Mr. Miller expressly disclaims any beneficial
interest; 2,289 shares that are held in the 1998 William I.
Miller Annual Exclusion Trust, Lynne M. Maguire, Trustee, for
which Mr. Miller expressly disclaims any beneficial interest;
and 321,845 shares which Mr. Miller has the right to acquire
within 60 days of the record date through the exercise of
stock options.
2.
<PAGE> 5
Security Ownership
of Management: The following information is given as of March 11, 1999, for
the nominees for directors, individually, and all executive
officers of the Corporation as a group.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Title of Name of Amount and Nature of
Class Beneficial Owner Beneficial Ownership(4) % of Class
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Shares Sally A. Dean(3) 10,178 %
Common Shares David W. Goodrich(3) 14,724 %
Common Shares John T. Hackett(3) 27,988 %
Common Shares William H. Kling(3) 8,309 %
Common Shares Brenda J. Lauderback(3) 2,988 %
Common Shares John C. McGinty, Jr.(3) 11,100 %
Common Shares Irwin Miller(3) 5,304,972(1) %
Common Shares William I. Miller(3) 10,835,607(2) %
Common Shares John A. Nash(3) 583,715 %
Common Shares Lance R. Odden(3) 11,181 %
Common Shares Theodore M. Solso(3) 21,194 %
Common Shares Director Nominees and
Executive Officers as a
Group (24 persons) 12,236,026(5) %
-------------
</TABLE>
1. See Footnotes 1 and 2 under "Voting Securities and Principal
Holders."
2. See Footnotes 1 and 3 under "Voting Securities and Principal
Holders."
3. Director nominee.
4. For director nominees, Dean (5,078 shares), Goodrich (3,668
shares), Hackett (2,800 shares), Kling (5,809 shares),
Lauderback (2,288 shares,) McGinty (6,752 shares), Irwin
Miller (4,604 shares), Odden (5,809 shares) and Solso (5,490
shares), includes shares as to which the director nominee
holds sole voting power but no investment power under the
Corporation's Outside Director Restricted Stock Compensation
Plan.
5. Includes shares which the following director nominees and
executive officers have the right to acquire within 60 days
of the record date through the exercise of stock options:
William Miller (321,845 shares), Nash (278,210 shares), other
director nominees and executive officers (307,520 shares).
Also includes an aggregate of 42,298 shares held for the
accounts of nine director nominees as to which the director
nominees hold sole voting power, but limited or no investment
power. See "Outside Director Restricted Stock Compensation
Plan" and Footnote 4 above.
3.
<PAGE> 6
1. Election of Directors
- --------------------------------------------------------------------------------
Eleven directors are to be elected to the Corporation's Board
of Directors at the Annual Meeting. Proxies granted for use at
the Annual Meeting cannot be voted for more than eleven
nominees.
Directors are elected annually to hold office until the next
Annual Meeting of Shareholders and until their successors are
elected and have qualified. The persons named as Proxies in
the accompanying form of proxy will, unless otherwise
indicated in the form of proxy, vote the shares covered by
proxies for the election of the nominees named in the
following table. Management has no reason to believe that any
nominee named herein will be unable to serve. However, should
any nominee for director become unavailable for election, and
unless the Board of Directors or the Executive Committee shall
reduce the size of the Board to a number that shall be equal
to the number of nominees who are able and willing to serve,
the persons named in the accompanying form of proxy will vote
for a substitute who will be designated by the Board of
Directors or the Executive Committee.
The following table sets forth, as of March 11, 1999, (a) the
name, age, year in which the nominee was first elected as a
director of the Corporation or of Irwin Union Bank and Trust
Company, and principal occupation for the past five years of
each nominee for election as a director; (b) the percentage of
the total number of meetings of the Board of Directors of the
Corporation, and meetings of committees of the Board of
Directors of the Corporation of which the director is a
member, attended by each director during 1998; and (c) all
other directorships held by each nominee in other corporations
subject to the reporting requirements of the Securities
Exchange Act of 1934 and in any investment company. There are
no family relationships among any of the director nominees or
executive officers, except that William I. Miller is the son
of Irwin Miller.
--------------------------------------------------------------
Sally A. Dean Sally A. Dean
(Director since 1995)
Ms. Dean is a retired Senior Vice President of Dillon, Read &
Co. Inc. (investment bank). She serves as Chairman of the
Paideia School Endowment Board and Trustee and Immediate Past
President of the Board of Trustees, Randolph-Macon Woman's
College. In 1998, Ms. Dean attended 100% of the Corporation's
Board and Committee meetings of which she is a member. Age 50.
--------------------------------------------------------------
4.
<PAGE> 7
<TABLE>
<S> <C>
David W. Goodrich David W. Goodrich
(Director since 1986)
Mr. Goodrich is President of the Indianapolis, Indiana Colliers Turley Martin Tucker
Company (realty company). He is the Vice Chairman of Clarian Health Partners, Inc., Vice
President of the Board of Citizens Gas and Coke Utility; Board member of American United
Life Insurance Company and Colliers Turley Martin Tucker Company. In 1998, Mr. Goodrich
attended 100% of the Corporation's Board and Committee meetings of which he is a member.
Age 51.
------------------------------------------------------------------------------------------
John T. Hackett John T. Hackett*
(Director since 1981)
Mr. Hackett is Managing General Partner of CID Equity Partners, L.P. (a private equity
investment partnership). He is a board member of Meridian Insurance Group, Inc., the
Wabash National Corp., and the Ball Corporation. In 1998, Mr. Hackett attended 100% of the
Corporation's Board and Committee meetings of which he is a member. Age 66.
------------------------------------------------------------------------------------------
William H. King William H. Kling
(Director since 1993)
Mr. Kling has been President of Minnesota Public Radio since 1966(regional network of 29
public radio stations). In 1987, he became the President of the Greenspring Company (a
diversified media, direct marketing, and mail order company). He is a board member of The
St. Paul Companies, The Wenger Corporation, Media One of St. Paul and several Funds of the
American Funds family of the Capital Group. In 1998, Mr. Kling attended 100% of the
Corporation's Board and Committee meetings of which he is a member. Age 56.
------------------------------------------------------------------------------------------
Brenda J. Lauderback Brenda J. Lauderback
(Director since 1996)
Ms. Lauderback was Former President of the Wholesale Group of the Nine West Group, Inc.
She is a board member of Consolidated Stores, a Trustee for the Hord Foundation, and
serves on the Advisory Committee of For All Kids Foundation. In 1998, Ms. Lauderback
attended 100% of the Corporation's Board meetings. Age 48.
------------------------------------------------------------------------------------------
John C. McGinty, Jr. John C.McGinty Jr.*
(Director since 1939)
Mr. McGinty is President of Peregrine Associates, Inc.(healthcare, governance, and
leadership consulting firm). He is the Managing Director of The Greeley Company
(healthcare leadership consulting, strategic planning, education, and publications). From
1986 to 1997, Mr. McGinty was the President and Chief Executive Officer of Southeastern
Indiana Health Management, Inc. and Columbus Regional Hospital. In 1998, Mr. McGinty
attended 100% of the Corporation's Board and Committee meetings of which he is a member.
Age 48.
------------------------------------------------------------------------------------------
</TABLE>
5.
<PAGE> 8
<TABLE>
<S> <C>
Irwin Miller Irwin Miller(1)
(Director since 1939)
Mr. Miller is the former Chairman of Cummins Engine Company, Inc. (manufacturer of diesel
engines). He is a former director of Cummins Engine Company, Inc. and a member of the
Business Council, The American Academy of Arts and Sciences, and the American
Philosophical Society. In 1998, Mr. Miller attended 40% of the Corporation's Board and
Committee meetings of which he is a member. Age 89.
------------------------------------------------------------------------------------------
William I. Miller William I. Miller*
(Director since 1985)
Mr. Miller is Chairman of Irwin Financial Corporation. He is a director of Cummins Engine
Company, Inc., The Tennant Company, Public Radio International, and the New Perspective
Fund, Inc. of the American Funds family of the Capital Group. He is a Trustee of
EuroPacific Growth Fund of the American Funds family of the Capital Group and Taft School.
In 1998, Mr. Miller attended 100% of the Corporation's Board and Committee meetings of
which he is a member. Age 42.
------------------------------------------------------------------------------------------
John A. Nash John A. Nash*
(Director since 1972)
Mr. Nash is Chairman of the Executive Committee and the President of Irwin Financial
Corporation. He is the past Chairman of the Columbus Indiana Economic Development Board
and the Chairman of the Board of Trustees of Columbus Regional Hospital. In 1998, Mr. Nash
attended 100% of the Corporation's Board and Committee meetings of which he is a member.
Age 61.
------------------------------------------------------------------------------------------
Lance R. Odden Lance R. Odden
(Director since 1991)
Mr. Odden is President of Taft School (private educational institution). He has been
Headmaster since 1972. Mr. Odden is a Trustee of the National Association of Independent
Schools, The Gunnery School, and The Mattuck Museum. In 1998, Mr. Odden attended 89% of
the Corporation's Board and Committee meetings of which he is a member. Age 59.
------------------------------------------------------------------------------------------
Theodore M. Solso Theodore M. Solso*
(Director since 1993)
Mr. Solso is President and Chief Operating Officer of Cummins Engine Company, Inc. He
served as Executive Vice President and Chief Operating Officer of Cummins during 1994 and
1995. Mr. Solso was Executive Vice President-Operations of Cummins from 1992 to 1994. He
is a board member of the Cyprus AMAX Minerals Company, and Cummins Engine Company, Inc.,
and a Trustee of DePauw University. In 1998, Mr. Solso attended 100% of the Corporation's
Board meetings. Age 52.
------------------------------------------------------------------------------------------
</TABLE>
6.
<PAGE> 9
* Member of the Executive Committee
1. Includes service as a director of Irwin Union Bank and Trust
Company prior to the formation of the Corporation in 1972.
There are no material proceedings to which any director,
executive officer, or affiliate of the Corporation, any owner
of record or beneficial owner of more than five percent of any
class of voting securities of the Corporation, or any
associate of any such director, executive officer, affiliate,
or security holder is a party adverse to the Corporation or
any of its subsidiaries or has a material interest adverse to
the Corporation or any of its subsidiaries.
Compliance with
Section 16(a)
of the Securities
Exchange
Act of 1934 Section 16(a) of the Securities Exchange Act of 1934 requires
the Corporation's directors and executive officers, and
persons who own more than ten percent of a registered class of
the Corporation's equity securities, to file with the
Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of common shares
and other equity securities of the Corporation. Executive
officers, directors, and greater than ten percent shareholders
are required by SEC regulation to furnish the Corporation with
copies of all Section 16(a) forms they file.
To the Corporation's knowledge, based solely on a review of
the copies of such reports furnished to the Corporation and
written representations that no other reports were required,
all Section 16(a) filing requirements applicable to its
executive officers, directors, and greater than ten percent
shareholders were met.
7.
<PAGE> 10
Director Meetings and Committees
- --------------------------------------------------------------------------------
The Board of Directors of the Corporation held five meetings
in 1998.
The Corporation's Audit Committee has primary responsibility
for the discharge of the following functions: recommendation
of the firm to be employed as the Corporation's independent
auditors; consultation with the independent auditors with
regard to the plan of audit; review, in consultation with the
independent auditors, of the report of audit, or proposed
report of audit, and the accompanying management letter, if
any; review and direction of the work performed by the
internal audit department of the Corporation; review of
regulatory examination reports received by the Corporation and
its subsidiaries; and consultation with the independent and
internal auditors with regard to the adequacy of internal
controls. In 1998, the Audit Committee was composed of
directors Dean, Hackett, and McGinty. The Committee held four
meetings during 1998.
The Corporation's Compensation Committee reviews and considers
recommendations from management concerning the executive
compensation policies, employee benefit plans and the salary
administration program of the Corporation, which includes an
annual review of the total compensation and recommended
adjustments for all officers of the Corporation and its
subsidiaries. The Committee administers the Management
Performance Plan and the Long-Term Performance Plan. The
Committee also administers existing stock option and employee
savings plans. The deliberations of the Committee are reported
to the Board of Directors for review and approval. The
Committee members are Dean, Goodrich, and Kling. The
Compensation Committee held two meetings in 1998.
The Corporation's Nominating Committee makes recommendations
to the Board of Directors regarding general qualifications for
nominees as directors, desired areas of community and business
representation, size of the Board of Directors, director
compensation, and the retirement policy for directors. On the
basis of these general determinations, the Committee
recommends qualified individuals to serve as directors.
Shareholder recommendations for nominees will be accepted by
the Committee; however, no formal procedures have been
developed to consider such recommendations. In 1998, the
members of the Nominating Committee were directors Goodrich,
McGinty, W. Miller, Nash, and Odden. The Nominating Committee
held four meetings in 1998.
The Corporation's Executive Committee acts on the Board's
behalf at such times as may be designated by the Board
pursuant to the conduct of the business of the Board. In 1998,
the members of the Executive Committee were directors Hackett,
McGinty, W. Miller, Nash, and Solso. The Executive Committee
held no meetings in 1998.
8.
<PAGE> 11
Outside Director
Compensation Under the outside directors' fee schedule, effective January
1, 1997, each outside director of the Corporation earns a
retainer of $15,000 for one year's service. $5,000 of the
retainer is paid in the form of stock options. The remainder
of the retainer is payable in cash, additional stock options,
or in common shares issued pursuant to the Outside Director
Restricted Stock Compensation Plan.
In addition to the annual retainer described above, in 1998,
each outside director of the Corporation received $1,000 for
attendance at each meeting of the Board of Directors of the
Corporation, $1,000 for attendance at each meeting of a
subsidiary Board, $500 for attendance at each meeting of a
committee of the Board of Directors, and $350 for attendance
at each meeting of a committee of the Board of Directors of a
subsidiary company.
The Outside Director Restricted Stock Compensation Plan (the
"Plan") covers only non-employee directors of the Corporation
and its subsidiaries. The Plan allows an outside director to
elect to receive his or her annual retainer and/or meeting
fees in cash or in common shares with a market value
equivalent to the cash. The Plan permits the grant of up to
540,000 common shares over a ten-year period. Grants under the
Plan may be for one or more years of future service, and in
such cases, the common shares granted under the Plan are
forfeitable until vested in accordance with the Plan.
The Plan is administered by a Committee, appointed by the
Board of Directors. Directors may elect vesting of common
shares issued pursuant to multiple-year grants in equal
amounts at the end of each year covered by the grant. Common
share certificates issued by the Plan Committee are held by
the Corporation for at least two years prior to their delivery
to participants. Upon cessation of a participant's service as
an outside director for any reason other than ordinary
retirement, permanent disability, or death, non-vested common
shares will revert to the Corporation. Directors have voting
and dividend rights with respect to granted shares commencing
on the date of grant, but may not sell, pledge, or otherwise
transfer or encumber any such shares until they are vested, or
the director receives certificates representing such shares
from the Corporation, whichever is later.
During 1998, director nominees Dean, Goodrich, Hackett, Kling,
Lauderback, McGinty, Irwin Miller, Odden, and Solso
participated in the Plan. At present, a total of 42,298 common
shares are registered in the names of the participating
director nominees. Other grants made under the Plan since its
inception in 1989 total 57,664 common shares. A total of
99,962 shares have been granted to participants in the plan.
No other fees are paid to directors for services rendered in
that capacity. Directors who are officers of the Corporation
or any of its subsidiaries do not receive any directors' fees.
9.
<PAGE> 12
Executive Compensation and Other Information
- --------------------------------------------------------------------------------
Summary of Cash and Certain Other Compensation
- --------------------------------------------------------------------------------
The following table provides certain summary information
concerning compensation paid or accrued by the Corporation and
its subsidiaries, to or on behalf of the Corporation's
Chairman (the Corporation does not formally use the title of
Chief Executive Officer) and each of the four other most
highly compensated executive officers of the Corporation for
the fiscal years ended December 31, 1996, 1997 and 1998:
SUMMARY COMPENSATION TABLE
--------------------------------------------------------------
<TABLE>
<CAPTION>
Long-Term
Compensation All Other
Annual Compensation(1,4) Awards Compensation(7)
----------------------------------------------------------------------------------------------------
Name & Principal Position Year Salary(2) Bonus(3) Option/SAR(#)
(a) (b) (c) (d) (g) (i)
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------
William I. Miller 1998 $393,000 $440,000 28,020 8$0,624(5,6)
Chairman 1997 $374,600 $425,863 42,180 6$9,481(5,6)
1996 $347,200 $437,588 41,400 4$9,328(5,6)
----------------------------------------------------------------------------------------------------
John A. Nash 1998 $295,000 $240,000 16,760 19$2,988(5,6)
President 1997 $281,667 $232,902 27,240 15$8,886(5,6)
1996 $273,000 $234,250 33,800 15$0,752(5,6)
----------------------------------------------------------------------------------------------------
Rick L. McGuire 1998 $213,333 $289,007 2,420 1$0,172(6,8)
President-Irwin 1997 $200,000 $227,286 4,320 1$0,172(6,8)
Mortgage Corporation 1996 $185,000 $226,700 6,800 $9,772(6,8)
----------------------------------------------------------------------------------------------------
Thomas D. Washburn 1998 $186,667 $133,000 6,140 $3,269(6)
Senior Vice President and 1997 $175,000 $128,709 12,500 $3,840(6)
Chief Financial Officer 1996 $161,667 $125,606 14,800 $2,445(6)
----------------------------------------------------------------------------------------------------
Claude E. Davis 1998 $150,000 $105,710 3,700 $2,925(6)
President-Irwin Union 1997 $138,000 $110,242 6,960 $3,840(6)
Bank and Trust Company 1996 $130,000 $ 56,767 11,200 $3,840(6)
----------------------------------------------------------------------------------------------------
</TABLE>
1. Amounts other than salary are reported on an accrual basis.
2. Includes amounts directed by the executive officer to be
contributed on a pre-tax basis to Corporation savings plans.
3. Includes short-term bonus payments from the Corporation and
certain subsidiaries.
4. With respect to each individual named in the Summary
Compensation Table there were no perquisites or other
personal benefits, securities or property which, in the
aggregate, exceeded either $50,000 or 10% of the total of
such individual's annual salary and bonus.
5. Includes accruals made under a Supplemental Retirement
Benefit Plan. See "Supplemental Retirement Benefit Plan."
(See Note 7.)
6. Includes contributions by the Corporation or certain
subsidiaries to qualified savings plans. (See Note 7.)
7. Detailed information relevant to the "All Other Compensation"
column in the Summary Compensation Table above is shown in
the following table.
8. Excludes compensation payable to Rick L. McGuire under the
terms of the Inland Mortgage Corporation Long-Term Incentive
Plan disclosed elsewhere herein. (See Long-Term Incentive
Plans.)
10.
<PAGE> 13
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Qualified Corporate Life
Name SERP Savings Plan Insurance
-----------------------------------------------------------------------------------------
1998 1998 1998
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
William I. Miller $76,784 $3,840 0
John A. Nash $189,148 $3,840 0
Rick L. McGuire 0 $7,400 2$,772
Thomas D. Washburn 0 $3,269 0
Claude E. Davis 0 $2,925 0
-----------------------------------------------------------------------------------------
</TABLE>
Stock Options and Stock Appreciation Rights
- --------------------------------------------------------------------------------
The following table contains information concerning the grant
of stock options under the Corporation's 1997 Stock Option
Plan to the named executive officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
--------------------------------------------------------------
<TABLE>
<CAPTION>
Percent of Alternative to (f)
Total and (g):
Options/SARs Exercise Grant Date Value
Options/ Granted to or Base ------------------
SARs Employees Price Expiration Grant Date
Name Granted(1)# in Fiscal Year ($/SH) Date Present Value(2)
(a) (b) (c) (d) (e) (h)
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
William I. Miller 28,020 21.85% $28.1875 4/20/2008 $343,245
John A. Nash 16,760 13.07% $28.1875 4/20/2008 $205,310
Rick L. McGuire 2,420 1.89% $28.1875 4/20/2008 $ 29,645
Thomas D. Washburn 6,140 4.79% $28.1875 4/20/2008 $ 75,215
Claude E. Davis 3,700 2.88% $28.1875 4/20/2008 $ 45,325
</TABLE>
--------------------------------------------------------------
1. All grants are subject to a vesting schedule where 25% of
each grant is vested on the date of the grant and 25% of each
grant vests on the anniversary date of each grant in each of
the three years following the grant.
2. Total option values shown in Column (h) were derived using
the Binomial option pricing model. Assumptions used in the
valuation included an expected volatility factor of .25, an
expected future dividend yield of .01, and a risk-free rate
of return of .0585. The Binomial model suggests a valuation
of $12.25 per share under these assumptions. The
Black-Scholes option pricing model would suggest a valuation
of $12.14 per share under these same assumptions. The use of
a single value as shown in the table above implies a
precision to stock option valuation which the Corporation
does not believe exists and which therefore may cause the
above table to be misleading. Accordingly, there is no
assurance that the value realized on the options, if any,
will be at or near the value estimated by the Binomial option
pricing model. Future compensation resulting from option
grants is based solely upon the performance of the
Corporation's stock price.
11.
<PAGE> 14
Option/SAR Exercises and Holdings
- --------------------------------------------------------------------------------
The following table provides information, with respect to the
named executive officers, concerning the exercise of options
and/or SARs during the last fiscal year and unexercised
options and SARs held as of the end of the fiscal year:
AGGREGATED OPTIONS/SARs EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Shares
Acquired Number of Unexercised
on Options/SARs at Fiscal Value of Unexercised
Exercise Value Year-End In-the-Money Options/SARs
Name (#) Realized (#) at Fiscal Year-End(1)
----------------------------------------------------------------------------------------------------------
(d) (e)
(a) (b) (c) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------
William I. Miller n/a n/a 293,945 52,455 $5,890,148 $455,816
John A. Nash n/a n/a 258,760 34,640 $5,397,734 $323,559
Rick L. McGuire 9,000 $309,847.50 41,665 5,675 $ 865,185 $ 57,263
Thomas D. Washburn 6,000 $860,895.00 80,285 14,555 $1,575,723 $145,541
Claude E. Davis 4,000 $ 91,210.00 42,605 9,055 $ 804,283 $ 93,268
----------------------------------------------------------------------------------------------------------
</TABLE>
1. The 1998 year-end stock price was $27.19 per share.
Long-Term Incentive Plans
- --------------------------------------------------------------------------------
The following table provides information concerning an award
made during the last fiscal year under the Inland Mortgage
Corporation Long-Term Incentive Plan to named executive Rick
McGuire. The award represents an accrued liability. This award
is performance based with targets established by the Board of
Directors of Irwin Mortgage Corporation.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
--------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares, Performance or
Units or Other Period Until Estimated Future Payouts
Other Maturation or Under Non-Stock Price-Based
Name Rights Payout Plans ($ or #)
(a) (b) (c) (d)
<S> <C> <C> <C>
----------------------------------------------------------------------------------------
Deferrable Compensation
Rick L. McGuire $144,265 under Terms of the Plan $144,265
----------------------------------------------------------------------------------------
</TABLE>
12.
<PAGE> 15
PENSION PLAN TABLE
--------------------------------------------------------------
<TABLE>
<CAPTION>
Years of Service
-------------------------------------------------------------------------------
Remuneration 15 20 25 30 35
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 50,000 11,600 15,500 19,300 19,900 20,500
75,000 18,900 25,200 31,500 32,900 34,400
100,000 26,200 35,000 43,700 45,900 48,200
125,000 33,500 44,700 55,900 58,900 62,000
150,000 40,800 54,500 68,100 71,900 75,800
175,000 43,800 58,400 72,900 77,100 81,300
200,000 43,800 58,400 72,900 77,100 81,300
225,000 43,800 58,400 72,900 77,100 81,300
250,000 43,800 58,400 72,900 77,100 81,300
275,000 43,800 58,400 72,900 77,100 81,300
300,000 43,800 58,400 72,900 77,100 81,300
350,000 43,800 58,400 72,900 77,100 81,300
400,000 43,800 58,400 72,900 77,100 81,300
450,000 43,800 58,400 72,900 77,100 81,300
500,000 43,800 58,400 72,900 77,100 81,300
-------------------------------------------------------------------------------
</TABLE>
Pension Plan A non-contributory qualified defined benefit Employees'
Pension Plan is maintained by the Corporation and certain of
its subsidiaries. The Plan provides principally for retirement
benefits to substantially all of the officers and employees of
these companies. Under the provisions of the Plan,
participating companies will contribute assets sufficient to
pay all benefits to Plan participants. Contributions to the
Plan are actuarially determined to fund the Plan's current
service cost on a current basis and to fund initial past
service costs over a period of 30 years. Employees who have
completed one year of service (1,000 hours worked during a
12-month period) are eligible for participation. Benefits vest
after five years of credited service. In addition to benefits
paid to retiring employees, death and deferred termination
benefits are available to employees who meet certain
conditions under the Plan.
The table above shows the estimated annual benefits payable,
based upon reasonable assumptions, under the Plan as in effect
on December 31, 1998. Basic wages considered for the Plan are
for the five consecutive Plan years of highest compensation,
and include basic compensation, commissions, and payments from
short-term bonus plans. In accordance with Section 401(a)(17)
of the Internal Revenue Code of 1986, basic wages above
$160,000 are not used in the calculation of Plan benefits.
The current years of service at December 31, 1998, for the
individuals named in the compensation tables above, are as
follows: Mr. Nash (32), Mr. Washburn (22), Mr. Davis (11), and
Mr. Miller (8). Mr. McGuire is not covered by the Plan.
Benefits listed in the pension plan table are payable as
straight life annuity amounts and are not subject to any
deduction for Social Security or other offset amounts. The
Plan was amended effective January 1, 1994. For service after
January 1, 1994, Mr. Washburn will receive an additional
benefit accrual equal to 45% of his usual benefit. For service
after January 1, 1994, Mr. Miller will receive an additional
benefit accrual equal to 75% of his usual benefit.
13.
<PAGE> 16
Supplemental Retirement Benefit Plan
- --------------------------------------------------------------------------------
On May 19, 1992, the Board of Directors approved the
Compensation Committee's recommendation to provide a
supplemental executive retirement benefit to William I.
Miller. A similar Plan was approved prior to 1992 for John A.
Nash. The Plan provides Mr. Miller with an amount of company-
provided benefits not provided under the Pension Plan because
of the limitations imposed by Sections 415 and 401(a)(17) of
the Internal Revenue Code of 1986, as amended. Criteria used
to determine amounts payable under the supplemental Plan are
the same as those used by the Pension Plan; that is, service
with the Corporation, age at retirement, and earnings.
Benefits are measured in the same manner as under the Pension
Plan, using credited service with the Corporation. Method of
payment of the supplemental benefit is a monthly annuity
payable for life, with a guarantee of 180 payments.
Compensation Committee Interlocks and Insider Participation
- --------------------------------------------------------------------------------
No member of the Compensation Committee of the Corporation's
Board of Directors was, during 1998, an officer or employee of
the Corporation or any of its subsidiaries.
Board Compensation Committee Report on Executive Compensation
- --------------------------------------------------------------------------------
Executive compensation is reviewed and approved annually by
the Compensation Committee of the Board of Directors. Each
member of the Compensation Committee is a non-employee
Director. Members of the Committee are Ms. Sally A. Dean, Mr.
David W. Goodrich, and Mr. William H. Kling. Set forth below
is a report submitted by Ms. Dean and Messrs. Goodrich and
Kling in their capacity as the Board's Compensation Committee
addressing the Corporation's compensation policies for 1998.
The Corporation does not formally use the title "Chief
Executive Officer." The principal executive officer of the
Corporation is the Chairman, Mr. William I. Miller.
I. Compensation Policy for Executive Officers
-------------------------------------------------------------------------
The Compensation Committee believes that compensation plans
make up only one element in the overall management system of
the Corporation. Furthermore, appropriate compensation
policies are a necessary, but not sufficient, condition for
achieving the Corporation's goals. A good compensation system
will not guarantee that we achieve our goals, but a poor
system can result in those goals not being achieved.
This interdependence requires that the Corporation's
compensation system grow out of and be consistent with our
corporate philosophy, our mission and our strategy.
Accordingly, what we believe (our Guiding Philosophy), what we
want to be (our mission), what we want to do (our strategy),
and the kinds of people needed to bring that vision to life
are the starting points for developing our philosophy and
system of compensation.
14.
<PAGE> 17
The Corporation's executive compensation system focuses on the
total compensation package of the Corporation's top
executives. The Corporation's objective is to correlate total
compensation with company performance so that median
performance relative to similar companies in its industry will
produce median total compensation for individuals relative to
comparable positions in peer companies, inferior performance
will produce below median compensation, and superior
performance will produce above median compensation.
This approach requires that the Corporation start by defining
the appropriate peer group, both for individual positions and
the Corporation as a whole. For individual positions, this
decision is based on the relative level and scope of
responsibilities inherent in the position, and the talent and
skills required for success.
The traditional measure for the scope of responsibilities in
commercial banks and bank holding companies is asset size.
Mortgage banking companies generally look at both loan closing
volume and loan servicing size. Consumer finance companies
consider origination volume. The Corporation's strategy is to
enhance capital productivity, which is defined as generating
proportionately larger streams of revenues and profits from a
given capital and asset base. Accordingly, asset growth in
itself is not one of the strategic objectives of the
Corporation, and the Corporation's success at pursuing its
strategy is not best defined only by asset size, loan volume,
or servicing size. As a result, in calibrating the scope of
responsibility of a given position, the Corporation looks at
comparable positions in other companies in multiple asset-size
groups as well as peer companies defined by other measures
(such as total market capitalization or revenues) when they
are available.
Performance comparisons are generally made from the
shareholders' perspective. That is, groups of companies are
selected that may be seen as alternative investments by
current and prospective investors. Even so, the Corporation's
most direct competitors for executive talent are not
necessarily all of the companies that would be included in a
peer group selected to compare shareholder returns. Thus,
although there may be some overlap, the surveys selected for
compensation review purposes do not contain information on the
same companies as those found in the peer group indices in the
Comparison of Five-Year Cumulative Total Return graph which
follows this report.
All of the Corporation's operating companies (including the
Corporation as a separate entity) use multiple sources of both
compensation and performance data because experience has shown
that results can vary greatly from one survey to the next. In
the case of compensation market data, the Compensation
Committee is provided with multiple sources of data on each
executive position reviewed. When available, the information
is in the form of 25th percentile, median, and 75th percentile
compensation. Five different market compensation comparisons
were considered for the Chairman in 1998.
Historically, total compensation has been defined in surveys
to include only base salary and the annual bonus. When
reliable information on the present value of long-term grants
is available, it is used as additional support for
compensation decisions.
15.
<PAGE> 18
The percent of total compensation that is variable increases
with the executive's position with the Corporation. This
approach is consistent both with the individual's influence on
results and his/her economic capacity to tolerate volatility
in compensation levels.
In addition to information on the market level of
compensation, members of the Committee review a summary of
individual performance over the past year including key
accomplishments, strengths, and weaknesses. They also may
consider their own subjective assessments of an executive's
performance and relative contribution to the organization.
16.
<PAGE> 19
II. The Elements of Executive Compensation and Corporate Performance
-------------------------------------------------------------------------
There are three elements of Executive Compensation and
Corporate Performance: Base Salary, Annual Short-Term Bonus,
and Long-Term Incentives.
A. Base Salary
Turning to a review of each of the elements of the total
compensation package, base salary is important in achieving
one of the Corporation's compensation goals which is
attracting and retaining qualified executives. Base salary is
generally targeted to be at the median of similar positions in
the industry. Exceptions may exist when a higher level of base
salary would be required to attract or retain a uniquely
qualified executive officer. In order to maintain the target
position, annual increases are approximately equal to the
median increases in the respective industries in which our
operating companies compete unless the growth of the company
warrants comparison with a larger peer group in that industry.
The total base salary paid to the Chairman in 1998 was
$393,000, up 5% from 1997.
B. Annual Short-Term Bonus
The annual bonus is the component that provides a variable
current cash compensation reward for above median current
performance. Each executive officer participating in the
annual bonus plan has a payment target expressed as a
percentage of base salary. The Corporation believes that this
method, when combined with properly selected performance
targets, rewards managers for making investments in future
performance, valuing consistency, and managing risk.
Operating company presidents receive part of their target
annual bonuses based upon the performance of their respective
companies, and part based upon consolidated performance of the
Corporation. Thus, they have financial incentives to achieve
synergies between operating companies.
We believe that the best performance targets are those which
are objectively and consistently measured, as well as easily
understood by participants. The bonus plans of the Corporation
and its operating companies include return on equity or a
proxy therefor as a key performance measure. Specific
performance targets for each year are approved by the board of
directors of each operating company and of the Corporation and
are based upon a variety of factors including historical and
expected industry performance, the estimated required rate of
return by investors, and the prior year's budgeted and actual
performance. Bonus payments begin at a threshold level and
increase proportionately as performance increases.
The short-term bonus design includes a mechanism to smooth,
over three year rolling periods, the payment of amounts
greater than twice target performance and less than threshold
performance.
C. Long-Term Incentives
Long-term incentive plans are provided to supplement the
incentive provided by annual bonus plans for building the
value of the Corporation over the long term. Operating company
heads may receive the majority of their long-term compensation
based upon growth in the value of their subsidiary operating
company.
17.
<PAGE> 20
Certain holding company executive officers and some operating
company executive officers are provided with long-term
incentive compensation through grants of non-qualified stock
options. Existing stock option plans of the Corporation
include the ability to grant stock appreciation rights in
addition to options.
18.
<PAGE> 21
III. Formulation of the Chairman's Compensation
-------------------------------------------------------------------------
The Chairman's current compensation package includes a base
salary of $400,000 plus an annual bonus at target performance
of 55% of base salary or $220,000. As noted above, there is no
single, clear measure of market compensation for executive
positions in the Corporation. The Compensation Committee used
five different market surveys for the Chairman's position in
1998. Based on these surveys, estimates of the 25th
percentile, median, and 75th percentile points of total annual
compensation were made.
Actual total cash compensation paid to the Chairman for 1998
was $833,000, up 4% from 1997. Return on average equity for
1998 was 22.84%, compared to 19.66% in 1997. We believe that
both returns are in the top decile of peer performance. Total
shareholder return (including dividends and price
appreciation) was 30.59% for 1998 and 70.6% for 1997 for Irwin
Financial. These returns compare to -9.74% in 1998 and 20.6%
in 1997 for the Russell 2000 Financial Services Sector Index.
For long-term incentive compensation purposes, the Chairman
received an option grant of 28,020 shares in 1998 at an
exercise price of $28.1875 per share (representing the mean
between the high and low prices on the grant date). The
Chairman also has received the following grants:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Number of Options Exercise Price
-----------------------------------------------------------------------------------
<S> <C> <C>
1997 42,180 $13.6875
1996 41,400 10.65625
1995 54,800 7.84375
1994 66,400 5.6875
1993 57,600 5.525
1992 56,000 2.953125
-----------------------------------------------------------------------------------
</TABLE>
These seven grants are the only long-term grants outstanding
for the Chairman. Through employment of the "Binomial" option
pricing models, we estimate that the present value of the 1998
options at grant date was $343,245.
Sally A. Dean David W. Goodrich William H. Kling
19.
<PAGE> 22
Comparison of Five-Year Cumulative Total Return
Irwin Financial Corporation, Russell 2000 & Russell 2000 Financial Services
Sector(1)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Irwin Financial 100 109 164 206 351 458
- ----------------------------------------------------------------------------------------------
Russell 2000 100 98 126 147 177 173
- ----------------------------------------------------------------------------------------------
Russell 2000 Financial Services Center 100 101 140 177 231 208
- ----------------------------------------------------------------------------------------------
</TABLE>
1. The Corporation is included in both the Russell 2000 and the
Russell 2000 Financial Services indices.
Interest of Management in Certain Transactions
- --------------------------------------------------------------------------------
Certain directors and officers of the Corporation or its
subsidiaries, and the associates of such persons, were
customers of and had transactions with subsidiaries of the
Corporation in the ordinary course of business during the past
year, including insurance services, corporate and personal
trust services, and general commercial and mortgage banking
business. Additional transactions may be expected to take
place between such persons and these subsidiaries. All
outstanding loans and commitments included in such
transactions were made in the ordinary course of business and
on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other employees and did not involve more
than the normal risk of collectibility or present other
unfavorable features.
Companies controlled by Irwin Miller, the Estate of Clementine
M. Tangeman, and William I. Miller purchased commercial paper
from the Corporation from time to time during the year. The
maximum amount outstanding during 1997 was $21,602,536 and the
amount outstanding at year end was $18,807,537. In the opinion
of management, the rates paid by the Corporation on these
commercial paper transactions were comparable to the
prevailing rates for such transactions at the time of the
respective transactions.
20.
<PAGE> 23
In addition to corporate and personal trust services and
general banking business, companies owned or controlled by
Messrs. Miller and the Estate of Clementine M. Tangeman
purchased insurance services (offered by a subsidiary of Irwin
Union Bank, Irwin Union Insurance, Inc., to the companies and
to the public, generally, as a regular service) for the sale
of which Irwin Union Insurance, Inc. received gross
commissions in 1998 of approximately $26,004. The commissions
paid were at the same rate as those prevailing on comparable
sales to the general public.
During 1998, the Corporation made payments totaling $45,600 to
a company controlled by Messrs. Miller and the Estate of
Clementine M. Tangeman in exchange for the administrative and
support services of an employee of such company. In the
opinion of management, such payment was comparable to, or more
favorable to the Corporation than, the cost of hiring an
additional employee.
On November 3, 1998, the Corporation purchased a 12.5%
interest in a Hawker 800 aircraft owned by Cummins Engine
Company, Inc., primarily for the purpose of enhancing the
Chairman's productivity by reducing travel time, leading to
increased time available at business meetings and the office.
The Corporation paid $1,176,888 for its ownership interest.
Concurrently, Cummins agreed to provide maintenance and flight
services for the aircraft for management fees and operating
costs estimated to be $139,984 for 1999. The agreement
terminates on December 31, 2001 at which time Cummins will
repurchase the aircraft. The Corporation also entered into a
timeshare agreement with Cummins for the use of a substitute
aircraft when the jointly-owned aircraft is undergoing major
maintenance. The costs charged under the timeshare agreement
are those permitted by Federal Aviation Regulations. The costs
and terms associated with the ownership interest and operation
of the aircraft were considered at least as favorable as other
alternative aircraft arrangements. Director nominee William I.
Miller is also a director of Cummins Engine Company, Inc.
Director nominee Irwin Miller is the former Chairman of
Cummins Engine Company, Inc. and was a director of Cummins
Engine Company, Inc. until April 7, 1998. Director nominee
Theodore M. Solso is President and Chief Operating Officer and
a board member of Cummins Engine Company, Inc.
In 1979, Irwin Union Insurance, Inc., as an independent
property/casualty insurance agency, was appointed to represent
and offer property/casualty and liability products of The St.
Paul Companies to its customers. Director Nominee Kling is
also a director of The St. Paul Companies. In 1998, Irwin
Union Insurance, Inc. received gross agency commissions of
$77,221 from The St. Paul Companies. Director Nominee Hackett
is a director of Meridian Insurance Group, Inc. In 1998, Irwin
Union Insurance, Inc. received gross agency commissions of
$103,226 from Meridian Insurance Group, Inc.
2. Confirming Appointment of Auditors
- --------------------------------------------------------------------------------
The Board of Directors recommends confirmation of the
appointment of PricewaterhouseCoopers L.L.P., certified public
accountants, to audit the books and accounts of the
Corporation for 1999. No member of the firm has any material
interest, financial or otherwise, in the Corporation or any of
its subsidiaries.
21.
<PAGE> 24
Although the selection and appointment of independent public
accountants is not required to be submitted to a vote of the
shareholders, the Board of Directors has decided, as in the
past, to ask the Corporation's shareholders to confirm the
appointment. The Board of Directors reserves the right,
however, to select a new independent accounting firm at any
time during the year if the Board of Directors believes, in
its discretion, that such a change would be in the best
interests of the Corporation and its shareholders.
In accordance with past practice, management has invited
representatives of PricewaterhouseCoopers L.L.P. to be present
at the Annual Shareholders' Meeting. Management expects the
representatives to attend the meeting. If present, these
representatives will have an opportunity to make a statement,
if they so desire, and will be available to respond to
appropriate questions from shareholders. See "Director
Meetings and Committees" for information regarding the
Corporation's Audit Committee.
22.
<PAGE> 25
3. Proposal to Adopt an Employee Stock Purchase Plan
- --------------------------------------------------------------------------------
Subject to approval by the shareholders, the Board of
Directors has adopted the Irwin Financial Corporation
Employees' Stock Purchase Plan III (the "Plan") pursuant to
which full-time employees with six months or more of service
will be permitted to purchase common shares of the
Corporation. The Corporation intends to register the common
shares to be issued under the Plan under the federal
securities laws and the Plan will become effective at the same
time as such registration. No common shares will be issued or
delivered until all applicable federal and state requirements
pertaining to the offer and sale of the shares to be issued
under the Plan have been satisfied. The essential features of
the Plan are summarized below. Copies of the Plan may be
obtained by any shareholder upon written request to Matthew F.
Souza, Secretary of the Corporation. The Plan is designed to
replace the Irwin Financial Corporation Employees' Stock
Purchase Plan II, which expires on June 30, 1999 and which was
approved by shareholders on April 26, 1994.
Purpose The purpose of the Plan is to provide employees of the
Corporation and its subsidiaries with the opportunity and
incentive to purchase Corporation common shares in order to
provide such employees with a more direct and proprietary
interest in the welfare of the Corporation. All employees of
the Corporation or its subsidiaries are eligible to
participate in the Plan after the completion of six (6) or
more months of service, except employees with customary
employment of less than twenty (20) hours per week, and
employees with customary employment of not more than five (5)
months in any calendar year. Management estimates that
approximately 1700 employees will be eligible to participate
in the Plan.
Administration The Plan will be administered by a committee which shall
consist of three members appointed by and serving at the
discretion of the Board of Directors (the "Committee"). Each
member will be a director, officer, or other employee of the
Corporation. The Committee will have the power to interpret
and construe the provisions of the Plan. The Board of
Directors will appoint a custodian to maintain a record of
each participant's interest in the Plan. The custodian may be
removed by the Board of Directors on thirty (30) days' written
notice. The Corporation will register common shares as
designated by participants and deliver such common shares to
participants in the Plan. Participants will have no right to
assign, transfer, pledge or otherwise dispose of funds or
rights credited to the Plan on the participant's behalf except
pursuant to the terms of the Plan.
Option to
Purchase The Plan grants to eligible employees who become participants
the option to purchase up to an aggregate of 750,000 common
shares of the Corporation. Shares required to satisfy
exercises of this option may be provided out of the
Corporation's treasury shares or its authorized and unissued
common shares. The Plan provides that no participant may be
granted an option under the Plan if such option, when
aggregated with similar options under any other stock purchase
plan of the Corporation or any of its affiliates, would
entitle the participant to purchase common shares having a
fair market value in excess of $25,000 for each calendar year
in which such option is outstanding at any time. The Plan also
prohibits the granting of an option to a participant who,
after the option is granted, would own shares possessing five
percent (5%) or more of the total combined voting power
23.
<PAGE> 26
or value of all classes of shares of the Corporation or any of
its affiliates. Unless terminated earlier by the Board of
Directors, the Plan will terminate on the exercise date on
which the remaining common shares reserved for the grant of
options are insufficient to enable each participant on such
date to purchase at least one share.
Payroll DeductionsIn order to participate in the Plan, an eligible employee must
authorize his or her employer to deduct a specified amount
from the employee's compensation. A participant's
authorization remains effective until the participant revokes
it by giving notice to the Corporation. The Corporation will
transfer all amounts withheld from the participating
employee's compensation to the custodian designated by the
Board of Directors. The custodian will credit the appropriate
amounts to a separate account for each participant. No amount
withheld from an employee's compensation pursuant to an
authorization under the Plan may be used by the Corporation or
any affiliate for any purpose other than the purchase of
shares pursuant to the Plan. The Plan provides that the
minimum amount of a participant's payroll deduction must be at
least $5.00.
Purchase of SharesThe option granted under the Plan will be exercised
automatically on behalf of each participant on the first
business day following a payday or at such frequency as may be
established by the Committee. On the date of each exercise,
the custodian will use the funds accumulated in each
participant's account to purchase from the Corporation for the
participant the largest number of whole shares for which
sufficient funds are available in the participant's account.
Initially, the option price for the common shares purchased by
the custodian under the Plan will be 85% of the closing price
of such shares as reported by the National Association of
Securities Dealers Automated Quotation/National Market System
("NASDAQ/NMS") for the last trading day prior to each exercise
date or, if not so reported, as reported by such other source
as the Committee shall designate. On March 11, 1999, the
closing price of the common shares as reported by the
NASDAQ/NMS was $ . Upon written request to the
Committee, a participant shall be entitled to receive a
certificate representing the number of whole common shares
credited to the participant's account. No certificate will be
issued representing fractional shares purchased under the
Plan. Amounts credited to a participant's account and not used
to purchase shares on any exercise date will remain credited
to the account and will be available for future purchases. No
interest will be paid on amounts held for a participant's
account under the Plan.
Withdrawals A participant may suspend payroll deductions or withdraw from
the Plan at any time with proper notice to the Committee. Upon
such withdrawal, the custodian will pay any balance in the
participant's account to the participant. An employee who
withdraws from the Plan will be eligible to participate again
in the Plan as of the next quarterly enrollment. If a
participant's employment terminates for any reason, the
balance of the participant's account with the custodian will
be paid to the participant or to the beneficiary designated by
the participant in case of the participant's death.
Federal Income Tax
Consequences The Plan is intended to be an "employee stock purchase plan"
as defined in Section 423 of the Internal Revenue Code. As a
general matter, an employee who purchases shares under the
Plan will not realize any taxable income until disposition of
the shares, and the employee's basis in the shares will be the
24.
<PAGE> 27
purchase price. If an employee remains in the employ of the
Corporation and holds the shares acquired under the Plan for
at least two years from the date of purchase ("holding
period"), on disposition of the shares the employee will
realize ordinary income in an amount equal to the excess of
(i) the lesser of the fair market value of the shares at the
date of purchase or date of disposition, over (ii) the
purchase price. Any additional gain on the sale after the
holding period is long-term capital gain or, if there is no
gain on the disposition of the shares after the holding
period, any loss incurred is long-term capital loss. For tax
purposes, if an employee dies during the holding period, he or
she is deemed to have met the holding period as of the date of
death. If a participant disposes of shares purchased under the
Plan before the expiration of the holding period, other than
by death, he or she will recognize taxable ordinary income in
an amount equal to the excess of the fair market value of the
shares on the date of purchase over the purchase price, and
the difference between the fair market value of the shares on
the date of purchase and the disposition price will be capital
gain or loss. The Corporation will not be entitled to any tax
deduction in connection with the grant or exercise of the
option under the Plan unless a participant disposes of shares
acquired under the Plan before the expiration of the holding
period, in which case the Corporation will be entitled to a
tax deduction in an amount equal to the amount of ordinary
income recognized by the participant at the time of such
disposition.
Recapitalization The Plan provides that the number of shares subject to
purchase thereunder shall be adjusted to account for certain
recapitalizations, share dividends, or share splits effected
without receipt of consideration by the Corporation.
Amendments The Plan may be altered, amended, suspended or discontinued at
any time by the Board of Directors with respect to any common
shares for which an option has not been granted, except that
the Board of Directors may not, without further approval by
the holders of a majority of the outstanding common shares of
the Corporation, approve an amendment which would (a) increase
the maximum number of shares which may be issued under the
Plan; (b) change the class of shares which may be issued under
the Plan; (c) modify the requirements as to eligibility for
participation in the Plan, or (d) change the provisions of the
Plan concerning the option price.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF THIS PLAN.
4. Proposal to Adopt an Outside Director Restricted Stock Compensation Plan
- --------------------------------------------------------------------------------
Subject to approval by the shareholders, the Board of
Directors has adopted the Irwin Financial Corporation 1999
Outside Director Restricted Stock Compensation Plan (the
"Plan") pursuant to which outside directors may receive
Corporation common shares in lieu of payment of directors
fees. The affirmative vote of holders of not less than a
majority of the issued and outstanding common shares is
required to adopt the Plan. Common shares issued under the
Plan will not be issued or delivered until all applicable
federal and state securities requirements pertaining to the
offer and sale of securities issued under the Plan have been
met. The essential features of the Plan are summarized below
and
25.
<PAGE> 28
copies of the Plan may be obtained by any shareholder upon
written request to Matthew F. Souza, Secretary of the
Corporation.
Purpose The Plan is designed to encourage ownership of Corporation
common shares by outside directors in order to provide such
directors with a more direct and proprietary interest in the
welfare of the Corporation and to encourage their continuation
as directors. The Plan provides outside directors with the
opportunity to elect to receive their annual retainer fees
and/or meeting attendance fees (collectively "Director Fees")
in the form of common shares rather than in cash. Only outside
directors of the Corporation or of its subsidiaries
(currently, a total of 16 persons) will be eligible to
participate in the Plan.
Administration The Plan will be administered by a Plan Committee, which shall
initially consist of the Secretary of the Corporation. The
Plan Committee will have the power to interpret and construe
the provisions of the Plan.
Reservation of Shares
The Plan permits the issuance of up to 100,000 common shares
of the Corporation from July 1, 1999 through December 31,
2009. Authorized but unissued shares and reacquired shares may
be made available for issuance under the Plan. The Plan
provides that the number of shares that may be issued and
subject to each outstanding election shall be adjusted to
account for a subdivision or consolidation of shares or other
capital adjustment, share dividend, share split, or other
increase or decrease in the common shares effected without
receipt of consideration by the Corporation.
Election to Receive
Common Shares The Plan provides that unless an outside director makes an
election, Director Fees will be paid in cash. Either or both
of the retainer fees and/or meeting fees will be payable at
the election of the outside director in the form of a grant of
Corporation common shares equal to the cash value of the fees.
The number of common shares issued to a director under the
Plan will be determined by dividing the market value of one
common share into the dollar amount of Director Fees covered
by an election. On March 11, 1999 the closing price of the
common shares as reported by NASD was $ .
Except for 1999 and an election for a calendar year in which a
person first becomes an outside director, each election shall
be effective for not less than one calendar year but may be
made for additional calendar years subject to any limitation
imposed by the Plan Committee at the time an election is made.
A grant of common shares for multiple years of service will be
equal to the value of the cash retainer and meeting fees
multiplied by the number of service years covered by the
grant.
Each outside director may elect to receive grants under the
Plan by delivering to the Plan Committee a written election
form. Each election made under the Plan will be irrevocable
and will be effective only for the Plan year or Plan years to
which such election relates. In the event that an outside
director elects to receive a grant covering multiple years of
prospective service, such director will not be eligible to
make another election under the Plan until all years of
service pertaining to the multiple year election have been
served.
Issuance of
Certificates Before delivery to outside directors, certificates issued by
the Plan Committee will be held by the Corporation Secretary
for one year after the last date covered by
26.
<PAGE> 29
the election pursuant to which the common shares were issued,
or an earlier date determined by the Committee. Certificates
issued under the Plan are subject to forfeiture on a pro rata
basis if the outside director recipient does not serve until
the end of the Plan year to which such certificates apply.
Common shares so forfeited will revert to the Corporation. If
cessation of service is due to retirement, death or
disability, the Committee may waive the forfeiture provisions
with the result that the outside director may receive the
common shares to be issued for the full Plan year in which the
cessation of service occurs.
Recapitalization The aggregate number of common shares which may be issued
under the Plan will be proportionately adjusted for any
increase or decrease in the number of issued and outstanding
common shares resulting from a subdivision or consolidation of
shares of the Corporation or any other capital adjustment of
the Corporation, the payment of a share dividend, a share
split, or any other increase or decrease in common shares
effected without receipt of consideration by the Corporation.
Other than with regard to the laws of descent and distribution
and by will, no right to receive shares under the Plan will be
assignable or transferable.
Rights as a
Shareholder An outside director shall have no rights as a shareholder with
respect to common shares subject to an election until the date
of issuance of a certificate representing those shares. Upon
the issuance of a certificate, the shares represented thereby
shall be fully paid and nonassessable common shares of the
Corporation, the outside director shall have the power to vote
those common shares on all matters presented to a vote of the
shareholders of the Corporation and shall be entitled to
receive all dividends and other distributions declared or paid
by the Corporation on those shares. No adjustment will be made
for dividends or other rights for which the record date is
prior to the date such certificate is issued. An outside
director shall have no right to sell, pledge, encumber or
otherwise dispose of any common shares issued pursuant to the
Plan during the time the certificates representing common
shares are held by the Secretary, other than for transactions
between the outside director and the Corporation or any
director of the Corporation or an affiliate.
Term of the Plan
and Amendments If approved by the holders of a majority of the issued and
outstanding common shares voting in person or by proxy at the
1999 Annual Meeting of Shareholders of the Corporation, the
Plan shall become effective on July 1, 1999. The Plan shall
terminate on December 31, 2009, or on such earlier date as the
Board of Directors may determine. No common shares shall be
issued under the Plan after the termination date. The Board of
Directors, except any members participating in the Plan, may
from time to time, alter, amend, suspend, or discontinue the
Plan with respect to any common shares for which certificates
have not been issued.
Federal Income Tax
Consequences The issuance of shares to an outside director pursuant to the
Plan will have no income tax consequences to the Corporation
or the director to the extent the shares are nontransferable
and subject to a substantial risk of forfeiture under Section
83(a) of the Internal Revenue Code ("Code"). Unless a Code
Section 83(b) election is made, the director will be deemed to
have received ordinary income in an amount equal to the fair
market value of the shares on the date the shares first become
either transferable or no longer subject to a substantial risk
of forfeiture.
27.
<PAGE> 30
Pursuant to Code Section 83(b) and the Treasury Regulations
thereunder, directors receiving shares which are
nontransferable and subject to a substantial risk of
forfeiture may elect in the alternative to include in income
the fair market value of the shares on the date of issuance.
An election pursuant to Code Section 83(b) must be made in
writing within 30 days of the issuance of the shares to the
director pursuant to the Plan, and the election may not be
revoked without the consent of the Commissioner of the
Internal Revenue Service.
The director's basis in the shares will equal the fair market
value of the shares on the date used to determine the amount
to be included in the director's income as ordinary income.
The Corporation generally will be entitled to a deduction, in
an amount equal to the amount included in the director's
income as ordinary income, in the tax year in which the
director is required to include the amount in income. Upon the
disposition of shares acquired pursuant to the Plan, the
director generally will recognize capital gain or capital
loss, as the case may be, to the extent of the difference
between the director's basis in the shares and the sale price,
provided the director is not a dealer in securities.
The Plan does not impose any obligation on the Corporation or
any affiliate to nominate any individual for reelection as a
director by the shareholders of the Corporation or an
affiliate.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF THIS PLAN.
5. Approval of Amendment of Articles of Incorporation to Increase Authorized
Preferred Shares of the Company.
- --------------------------------------------------------------------------------
The Company currently has two authorized classes of shares:
Common Shares and Preferred Shares. The Board of Directors has
adopted, subject to shareholder approval, a proposed amendment
to Article V, Section 1 of the Articles of Incorporation of
the Company, pursuant to which the number of authorized
Preferred Shares would be increased from 50,000 to 4,000,000
shares.
No Preferred Shares are presently outstanding. Under the terms
of the Articles of Incorporation, the Board of Directors has
full authority to issue Preferred Shares and to determine the
terms thereof without further approval by the shareholders.
The terms of any Preferred Shares, when issued, could include
dividend rates, conversion prices and terms, voting rights,
redemption prices, maturity dates and similar matters. The
ability of the Board of Directors to determine the terms of
Preferred Shares and approve their issuance could operate as a
deterrent to a change in control of the Company resulting from
the accumulation of outstanding Common Shares by a third
party, as it allows the Board of Directors to grant voting and
other rights to a person or persons determined by the Board of
Directors and thereby dilute the voting power of the
outstanding Common Shares and/or to otherwise affect their
value. To the knowledge of management, no third party has
expressed interest in acquiring control of the Company. The
Board of Directors has had this authority since the
Corporation was formed in 1972. Increasing the number of
authorized Preferred Shares will not in substance change the
authority of the Board of Directors in this regard.
28.
<PAGE> 31
The Board of Directors believes that the increase in the
authorized Preferred Shares is appropriate in light of the
substantial increase in the number of authorized Common Shares
since the time at which the Company's capital structure was
initially determined, and in order to provide additional
flexibility to the Board of Directors in managing the
Company's capital needs. In 1972, when the number of 50,000
authorized Preferred Shares was set, the Corporation had
authorized Common Shares of 500,000. Since then, the number of
authorized Common Shares has increased to 40,000,000. The
proposal to increase the authorized Preferred Shares to
4,000,000 would restore the original ratio of authorized
Preferred Shares to authorized Common Shares. The Preferred
Shares could be issued in order to raise capital to support
the operations of the Company or as consideration for the
acquisition of other companies or assets. Except as described
below, the Board of Directors has no plans or commitments for
the issuance of Preferred Shares.
The Board of Directors has approved in principle a program
under which Preferred Shares convertible into up to 250,000
Common Shares could be issued to investors thought to be in a
position to assist the Company's subsidiary, Irwin Union Bank
and Trust Company, in generating deposits for branch banking
operations. It is contemplated that each Preferred Share
issued to those investors would be issued for cash at a price
bearing a close relationship to the current market value of
one Common Share and would automatically convert into one
Common Share at a specified future date. However, if the
branch banking operation reached a specified level of deposits
prior to the conversion date, then the number of Common Shares
into which a Preferred Share converts would be increased by as
much as 25%, depending upon the date on which the deposit
level was attained.
As noted above, the Board of Directors already has the
authority to implement this program. If the proposal to
increase the number of authorized Preferred Shares is passed,
Preferred Shares issued under this program could have a
one-for-one conversion ratio into Common Shares, as described
above. Without the increase in the number of authorized
Preferred Shares, the conversion ratio would need to be much
higher; for example, a ratio of 1,000 Common Shares for one
Preferred Share could be used. The implementation of this
program is subject to continuing review and development by
management and to the resolution of certain legal and
regulatory issues.
THE BOARD OF DIRECTORS BELIEVES THAT THE INCREASE IN THE
NUMBER OF AUTHORIZED PREFERRED SHARES IS IN THE BEST INTERESTS
OF THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS THAT
SHAREHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT.
6. Approval of Amendment of the Articles of Incorporation to Delete an Outdated
Section of Article V.
- --------------------------------------------------------------------------------
The Company's Articles of Incorporation contain two similar
sections: Article V, Section 1 and Article V, Section
5.20. Article V, Section 1, which shareholders have been asked
to amend in item 5 above, has been amended over the years to
increase authorized shares and eliminate par value. Article V,
Section 5.20 is a
29.
<PAGE> 32
remnant of an earlier version of the Articles and still
authorizes the issuance of 500 common shares, par value $10,
and 500 preferred shares without par value.
THE BOARD OF DIRECTORS BELIEVES THAT SECTION 5.20 OF ARTICLE V
IS OUTDATED AND NO LONGER APPLICABLE AND RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE DELETION OF THIS SECTION.
Voting Procedures
- --------------------------------------------------------------------------------
Shareholders owning a majority of all the common shares
outstanding must be present in person or represented by proxy
in order to constitute a quorum for the transaction of
business. Thus, approximately shares will be
required at the meeting for such quorum. The eleven nominees
receiving the greatest number of votes at the meeting, either
in person or by proxy, will be elected as directors for the
ensuing year. In order to confirm the appointment of
PricewaterhouseCoopers as the Corporation's principal
auditors, a majority of the votes present at the meeting,
either in person or by proxy, will be required. In order to
adopt each of the Irwin Financial Corporation Employees' Stock
Purchase Plan III, and the Irwin Financial Corporation 1999
Outside Director Restricted Stock Compensation Plan, the
approval at the meeting of a majority of the holders of the
issued and outstanding common shares of the Corporation,
either in person or by proxy, will be required. In order to
amend the Articles of Incorporation, a majority of the
outstanding common shares of the Corporation will be required.
Proxies returned by brokers as "non-votes" on behalf of shares
held in street name because the beneficial owner has withheld
voting instructions, and proxies returned with abstentions,
will be treated as present for purposes of determining a
quorum but will not be counted as voting on any matter as to
which a non-vote or abstention is indicated on the proxy.
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
Management will furnish to any shareholder, without charge, a
copy of the Corporation's Annual Report on Form 10-K for 1998,
together with all financial statements, the schedules thereto,
and a list of the Exhibits filed therewith. If any shareholder
wishes a copy of the Exhibits filed with the Corporation's
Annual Report on Form 10-K, the Corporation will furnish the
Exhibits without charge. All requests for copies should be in
writing and directed to Thomas D. Washburn, Chief Financial
Officer, Irwin Financial Corporation, P.O. Box 929, Columbus,
Indiana 47202. The Annual Report on Form 10-K will be
available to requesting shareholders on or about March 31,
1999.
Deadline for Shareholder Proposals for the 2000 Annual Meeting
- --------------------------------------------------------------------------------
As required by law, all proposals of shareholders of the
Corporation which are otherwise eligible for inclusion in the
Corporation's proxy material must be received at the
Corporation's principal executive offices, 500 Washington
Street, Columbus, Indiana 47201, prior to December 1, 1999, in
order for the proposals to be considered for inclusion in the
Corporation's proxy statement and form of proxy for the 2000
Annual Meeting.
30.
<PAGE> 33
Miscellaneous
- --------------------------------------------------------------------------------
As of the date of this proxy statement, the Board of Directors
of the Corporation has no knowledge of any matters to be
presented for consideration at the meeting other than the
matters described herein. If (a) any matters not within the
knowledge of the Board of Directors as of the date of this
proxy statement should properly come before the meeting; (b) a
person not named herein is nominated at the meeting for
election as a director because a nominee named herein is
unable to serve or for good cause will not serve; (c) any
proposals properly omitted from this proxy statement and the
form of proxy should come before the meeting; or (d) any
matters should arise incident to the conduct of the meeting,
then the proxies will be voted in accordance with the
recommendation of the Board of Directors of the Corporation.
MATT SOUZA, Secretary
March 30, 1999
31.
<PAGE> 34
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IRWIN FINANCIAL CORPORATION PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
PROXY SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The undersigned does hereby nominate, constitute, and appoint John A. Nash
and William I. Miller and each of them (with full power to act without
the other), with full power of substitution to each, the true and
lawful Proxies of the undersigned to attend the Annual Meeting of the
Shareholders of the Corporation, to be held at the Ramada Inn, 2485
Jonathan Moore Pike, Columbus, Indiana, on Thursday, April 29, 1999,
at 4:00 p.m. (Columbus time), or at any adjournment thereof, and to
vote all shares of the Corporation which the undersigned is entitled
to vote upon the matters referred to in this proxy and in the notice
of said meeting to the same extent and with all the powers the
undersigned would possess if personally present and voting at such
meeting or at any adjournment thereof, and the Proxies are directed
to:
1. Vote FOR [ ] or WITHHOLD AUTHORITY to vote for [ ] the election of the
11 directors listed below. (The Board of Directors recommends a VOTE FOR
this proposal.) S. A. Dean; D. W. Goodrich; J. T. Hackett; W. H. Kling;
B. J. Lauderback, J. C. McGinty, Jr.; Irwin Miller; W. I. Miller; J. A.
Nash; L. R. Odden and T. M. Solso.
Instructions: to withhold authority to vote for any individual nominee,
print that nominee's name in the space provided below.
----------------------------------------------------------------------
2. Vote FOR [ ] or AGAINST [ ] or ABSTAIN from voting for [ ] confirmation
of the appointment of the firm of PricewaterhouseCoopers, certified
public accountants, as the Corporation's independent auditors. (The
Board of Directors recommends a VOTE FOR this proposal.)
3. Vote FOR [ ] or AGAINST [ ] or ABSTAIN from voting for [ ] the approval
of the Employees' Stock Purchase Plan III. (The Board of Directors
recommends a VOTE FOR this proposal.)
4. Vote FOR [ ] or AGAINST [ ] or ABSTAIN from voting for [ ] the approval
of the 1999 Outside Director Restricted Stock Compensation Plan. (The
Board of Directors recommends a VOTE FOR this proposal.)
5. Vote FOR [ ] or AGAINST [ ] or ABSTAIN from voting for [ ] the amendment
to the Articles of Incorporation to increase the number of authorized
Preferred Shares. (The Board of Directors recommends a VOTE FOR this
proposal.)
(Continued on other side)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Continued from other side)
6. Vote FOR [ ] or AGAINST [ ] or ABSTAIN from voting for [ ] the amendment
to the Articles of Incorporation to delete an outdated section of
Article V. (The Board of Directors recommends a VOTE FOR this proposal.)
7. Vote in their discretion upon such other business as may properly come
before the meeting or any adjournments thereof.
This proxy will be voted as you specify on this proxy card. IF NO
SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THE PROXY WILL BE
VOTED FOR THE DIRECTORS NAMED IN THE PROXY STATEMENT, FOR THE APPROVAL
OF THE EMPLOYEES' STOCK PURCHASE PLAN III, FOR THE APPROVAL OF THE
OUTSIDE DIRECTOR PLAN, FOR THE AMENDMENTS TO THE ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED PREFERRED SHARES
AND TO DELETE AN OUTDATED SECTION OF ARTICLE V, FOR THE CONFIRMATION
OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS AS THE CORPORATION'S
INDEPENDENT AUDITORS, AND THE PROXIES MAY VOTE IN THEIR DISCRETION
UPON SUCH OTHER MATTERS AS PROPERLY MAY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
The undersigned acknowledges receipt of notice of said meeting and the
accompanying proxy statement and hereby revokes all proxies heretofore
given by the undersigned for said meeting.
<TABLE>
<S> <C>
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE VOTING Dated: 1999
THEREOF. ------------------------------------------------
SIGN EXACTLY AS NAME(S) APPEAR(S) HERE. ------------------------------------------------
------------------------------------------------
(If there are two or more co-owners, all must
sign.)
IMPORTANT: Please sign, date, and return this
proxy promptly in the enclosed envelope. No
postage required if mailed in the United
States.)
</TABLE>
<PAGE> 35
IRWIN FINANCIAL CORPORATION
1999 OUTSIDE DIRECTOR RESTRICTED STOCK COMPENSATION PLAN
1. Purpose. The purpose of this Plan is to encourage ownership of the Common
Shares of Irwin Financial Corporation by Outside Directors of the Corporation
and its subsidiary companies in order to provide Outside Directors with a more
direct and proprietary interest in the welfare and success of the Company and to
encourage their continuation as directors. The Plan is further intended to
increase the incentive to promote the welfare of the Company by those who are
primarily responsible for shaping and carrying out the long-term plans and
objectives of the Company, thereby furthering and securing the Company's
continued growth and financial success.
2. Definitions. The following terms shall have the meanings hereinafter set
forth:
(a) "Affiliate" means a corporation that is a parent or subsidiary
corporation of the Company.
(b) "Board of Directors" means the board of directors of the Company
as it shall exist from time to time.
(c) "Common Shares" means the Common Shares of the Company.
(d) "Company" means Irwin Financial Corporation, an Indiana
corporation.
(e) "Director Fees" means the amounts payable to an Outside Director
for Retainer Fees and/or Meeting Fees.
(f) "Meeting Fees" means the amounts payable to an Outside Director
for his or her attendance at meetings of the Board of Directors or of
committees of the Board of Directors.
(g) "Election" means an election by an Outside Director to receive
Common Shares in payment for Meeting Fees and/or Retainer Fees in
accordance with the terms of this Plan.
(h) "Market Value" means the closing price of the Common Shares on the
last trading day prior to the effective date of an Election, or on such
other date as may be designated by the Plan Committee, as reported by the
National Association of Securities Dealers, Inc. or, if not so reported, by
such other source as the Plan Committee shall designate.
(i) "Outside Director" means any director of the Company or an
Affiliate who is not employed by the Company or any Affiliate in any
capacity.
(j) "Plan" means this Irwin Financial Corporation 1999 Outside
Director Restricted Stock Compensation Plan.
(k) "Plan Committee" means the individual or group of individuals
appointed by the Board of Directors as the committee responsible for
administration of the Plan.
(l) "Plan Year" means the twelve month period commencing on January 1
and ending on December 31 of each year or such other dates as may be
established by the Plan Committee from time to time.
(m) "Retainer Fees" means the amount payable to an Outside Director
for service as a director of the Company for a fixed period of time.
(n) "Secretary" means the Secretary of the Company.
3. Administration. The Plan shall be administered by the Plan Committee. The
Plan Committee shall have the power to interpret and construe the provisions of
the Plan, and its interpretations and
<PAGE> 36
constructions shall be final and binding. The Plan Committee may prescribe,
amend and rescind rules and regulations relative to the Plan or its construction
or interpretation. The initial Plan Committee shall have one member, who shall
be the Secretary. The Plan Committee shall not be liable for any action or
determination made in good faith.
4. Participation. All persons who are Outside Directors shall be eligible to
participate in the Plan.
5. Shares. The shares to be issued pursuant to the Plan shall be the Company's
authorized but unissued, or reacquired, Common Shares. The total number of the
Common Shares that may be issued under the Plan shall not exceed one hundred
thousand (100,000) shares in the aggregate, subject to adjustment in accordance
with the provisions set forth in paragraph 6(e) hereof. In the event any Common
Shares represented by certificates held by the Secretary pursuant to the Plan
revert to the Company for any reason during the term of this Plan, those Common
Shares may again be issued under the Plan. During the term of the Plan, the
Company shall reserve and keep available a sufficient number of Common Shares to
satisfy its obligations hereunder.
6. Operation of the Plan. The Plan shall operate in accordance with and subject
to the following terms and conditions:
(a) Election to Receive Common Shares. Unless an Election is made,
Director Fees shall be paid in United States dollars. An Election may be
made with respect to Retainer Fees or Meeting Fees, or both. Except as
provided herein with respect to calendar year 1999 and with respect to an
Election relating to the calendar year in which a person is first elected
as an Outside Director, each Election shall be effective for not less than
one calendar year but may be made for additional calendar years subject to
any limitation that may be imposed by the Plan Committee at the time an
Election is made. In order to make an Election, an Outside Director must
deliver a written Election form to the Plan Committee (i) within thirty
(30) days following the effective date of the Plan (to be effective as of
July 1, 1999) with respect to the Plan Year ending December 31, 1999, (ii)
within thirty (30) days following the date of his or her first election as
an Outside Director, or (iii) at least thirty (30) days prior to the first
day of each Plan Year thereafter, specifying the Plan Year(s) covered by
the Election. Elections, when made, are irrevocable.
(b) Determination of Number of Common Shares. The number of Common
Shares to be issued to an Outside Director pursuant to an Election shall be
the largest number of whole shares resulting from the division of (i) the
dollar amount of the Director Fees covered by the Election by (ii) the
Market Value of one Common Share. No fractional shares shall be issued
under the Plan and cash shall be paid in lieu thereof based upon the Market
Value of one Common Share. For purposes of this paragraph, the dollar
amount of Retainer Fees subject to an Election covering more than one Plan
Year shall be an amount equal to the Retainer Fees established for the
first Plan Year to which the Election applies, multiplied by the total
number of Plan Years covered by the Election. If Retainer Fees are
increased in subsequent Plan Years to which an Election applies, the
Company shall issue additional Common Shares with respect to the increase
in Retainer Fees in accordance with the formula contained in the paragraph,
and based upon the Market Value of Common Shares on the effective date of
the increase in Retainer Fees.
(c) Issuance of Certificates and Delivery to Outside Director.
(i) As soon as practicable after the first day of the first Plan
Year covered by an Election with respect to Retainer Fees, the Plan
Committee shall cause the Company to issue a share certificate, in the
name of each Outside Director making an Election with respect to
Retainer Fees, for that number of Common Shares, determined in the
manner provided in this Plan, issuable with respect to all Plan Years
covered by the Election. The rights of the
2
<PAGE> 37
Outside Directors with respect to Common Shares issued in payment for
Retainer Fees shall vest as of the last day of each Plan Year covered by
an Election.
(ii) As soon as practicable after the last day of each calendar
quarter of each Plan Year, the Plan Committee shall cause the Company to
issue, in the name of each Outside Director making an Election with
respect to Meeting Fees payable for that calendar quarter, a share
certificate with respect to the number of Common Shares determined in
the manner provided in this Plan.
(iii) Each share certificate issued pursuant to paragraph 6(c)(i)
or (ii) shall be delivered to the Secretary, who shall hold the share
certificate(s) for the benefit of the Outside Director until the
expiration of a period of one year following the last date covered by
the Election pursuant to which the Common Shares were issued, or until
such earlier date as the Committee may determine in its discretion, at
which time the Secretary shall promptly deliver to the Outside Director
the certificate(s) representing the Common Shares to which the Outside
Director is entitled.
(iv) If requested by an Outside Director at the time an Election is
made, share certificate(s) may be issued jointly to the Outside Director
and any other person or persons.
(v) An Outside Director may elect to defer delivery of share
certificates until the expiration of the last Plan Year covered by an
Election. An election made pursuant to this subparagraph shall be
irrevocable.
(d) Forfeiture of Shares Issued in Payment for Retainer Fees. If an
Outside Director does not continue to serve as an Outside Director for the
entirety of each Plan Year covered by an Election with respect to Retainer
Fees, the Outside Director shall forfeit that number of Common Shares to be
issued with respect to Retainer Fees for that Plan Year in the same
proportion that the number of full months of the Plan Year for which the
Outside Director did not serve bears to 12; for example, if the Outside
Director ceases to serve on August 15, and there were 120 Common Shares to
be issued to him or her with respect to that Plan Year, he or she would
forfeit 30 of those Common Shares. In the event that the cessation of
service is the result of the death, disability or retirement of the Outside
Director, the Committee may waive the provisions of this subsection, with
the result that the Outside Director may receive the Common Shares to be
issued with respect to Retainer Fees for the Plan Year in which the
cessation of service occurs. Any Common Shares forfeited in accordance with
this paragraph shall immediately revert to the Company. Any waiver of the
provisions of this subsection granted by the Committee shall not be
affected by the subsequent death or disability of the Outside Director.
(e) Recapitalization. The aggregate number of Common Shares which may
be issued hereunder, and the number of Common Shares subject to each
outstanding Election, shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding Common Shares resulting
from a subdivision or consolidation of shares of the Company or any other
capital adjustment of the Company, the payment of a share dividend, a share
split or any other increase or decrease in the Common Shares effected
without receipt of consideration by the Company.
(f) Nonassignability. No right to receive shares pursuant to an
Election shall be assignable or transferable except by will or under the
laws of descent and distribution.
(g) Issuance of Shares and Compliance with Securities Laws. The
Company may postpone the issuance and/or delivery of certificates
representing Common Shares until (i) the admission of such shares to
listing on any stock exchange on which shares of the Company of the same
class are
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<PAGE> 38
then listed or the admission of such shares for quotation in any automated
inter-dealer quotation system in which such shares are then quoted and (ii)
the completion of such registration or other qualification of such shares
under any state or Federal law, rule or regulation or the rules and
regulations of any exchange upon which the Common Shares are traded as the
Company shall determine to be necessary or advisable, which registration or
other qualification the Company shall use its best efforts to complete. Any
person acquiring Common Shares pursuant to the Plan may be required to make
such representations and furnish such information as may, in the opinion of
counsel for the Company, be appropriate to permit the Company, in light of
the existence or non-existence with respect to such shares of an effective
registration under the Securities Act of 1933, as amended, or any similar
state statute, to issue the shares in compliance with the provisions of
those or any comparable acts. Certificates representing Common Shares
issued pursuant to the Plan may bear such legends or other statements
concerning restrictions on the transferability of the shares as the Company
may determine to be necessary or advisable to comply with applicable
securities laws.
(h) Rights as a Shareholder.
(i) An Outside Director shall have no rights as a shareholder with
respect to Common Shares subject to an Election until the date of
issuance of a certificate representing those shares. Upon the issuance
of a certificate, the shares represented thereby shall be fully paid and
nonassessable Common Shares of the Company, the Outside Director shall
have the power to vote those Common Shares on all matters presented to a
vote of the shareholders of the Company and shall be entitled to receive
all dividends and other distributions declared or paid by the Company
with respect thereto. No adjustment will be made for dividends or other
rights for which the record date is prior to the date such certificate
is issued.
(ii) An Outside Director shall have no right to sell, convey,
transfer, mortgage, pledge, hypothecate, encumber or otherwise dispose
of any Common Shares issued pursuant to the Plan during the time the
certificates representing Common Shares are held by the Secretary, other
than for transactions between the Outside Director and the Company or
any director of the Company or an Affiliate.
7. Term of Plan. If approved by the holders of majority of the issued and
outstanding Common Shares voting in person or by proxy at the 1999 Annual
Meeting of Shareholders of the Company, the Plan shall become effective on July
1, 1999. The Plan shall terminate on December 31, 2009, or on such earlier date
as the Board of Directors may determine. No Common Shares shall be issued under
the Plan after the termination date.
8. Amendment of the Plan. The Board of Directors, except any members
participating in the Plan, may from time to time, alter, amend, suspend or
discontinue the Plan with respect to any Common Shares for which certificates
have not been issued.
9. No Right to Reelection as a Director. Neither the adoption of the Plan, the
issuance of any Common Shares hereunder, nor any other action taken relating to
the Plan shall impose any obligation on the Company or any Affiliate or the
Board of Directors thereof to nominate any Outside Director for reelection as a
director by the shareholders of the Company or any Affiliate.
10 Withholdings. The Company shall have the right to require an Outside Director
to remit to the Company amounts sufficient to satisfy any applicable withholding
requirements set forth in the Internal Revenue Code of 1986, as amended, or
under state or local law relating to Common Shares issued to that Outside
Director. The Company shall have the right, to the extent permitted by law, to
deduct from any payment of any kind otherwise due to an Outside Director who
receives Common Shares
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under the Plan any federal, state or local taxes of any kind required by law to
be withheld with respect to the issuance of those Common Shares. An Outside
Director may elect to reduce the number of Common Shares to be received by him
under the Plan in order to satisfy any federal, state or local withholding
obligation.
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IRWIN FINANCIAL CORPORATION
EMPLOYEES' STOCK PURCHASE PLAN III
WITNESSETH:
WHEREAS, Irwin Financial Corporation ("Corporation") desires to provide eligible
employees of the Corporation and certain affiliated companies with an
opportunity to acquire a proprietary interest in the Corporation through the
purchase of Common Shares of the Corporation; and
WHEREAS, the Corporation desires to offer further inducement to eligible
employees to remain as employees by providing a form of additional compensation,
for services which the employees have rendered or will hereafter render, through
the purchase of Common Shares at a discounted rate.
NOW, THEREFORE, the Corporation hereby establishes this employee stock purchase
plan pursuant to the provisions of section 423 of the Internal Revenue Code of
1986, as amended, as follows:
ARTICLE I
ESTABLISHMENT OF PLAN
The 1999 Irwin Financial Corporation Employees' Stock Purchase Plan (the "Plan")
is hereby established effective as of the date the registration of the Common
Shares to be issued hereunder is declared effective by the Securities and
Exchange Commission, provided however, that this Plan shall not become effective
unless it has received the approval of the holders of a majority of the issued
and outstanding Common Shares of the Corporation who are either present or
represented and are entitled to vote at a meeting of shareholders of the
Corporation duly held within twelve (12) months before or after the date the
Plan is adopted by the Board of Directors.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
Section 2.01. Definitions. When the initial letter of a word or phrase is
capitalized, the meaning of such word or phrase shall be as follows:
(a) "Account" means the record of a Participant's interest in the Plan, as
maintained by the Committee or its designee pursuant to Section 7.01(c),
consisting of the sum of the Participant's payroll deductions under the Plan,
the deduction of the amounts expended on behalf of the Participant to exercise
his or her options under the Plan, the credit of the number of Common Shares
(including fractional shares) purchased under the Plan for the Participant and
held by the Custodian and the amounts, if any, carried forward on behalf of the
Participant from one Date of Exercise to the next Date of Exercise.
(b) "Affiliate" means a corporation which is a parent or subsidiary of the
Corporation, or a corporation or a parent or subsidiary corporation of such
corporation issuing or assuming an option in a transaction to which Code Section
425(a) applies.
(c) "Board of Directors" means the board of directors of the Corporation as it
shall exist from time to time.
(d) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(e) "Committee" means the committee appointed by the Board of Directors under
Section 7.01 to administer the Plan.
<PAGE> 41
(f) "Common Shares" means the Common Shares of the Corporation.
(g) "Corporation" means Irwin Financial Corporation, an Indiana corporation, and
its successors and assigns.
(h) "Custodian" means any party designated by the Board of Directors pursuant to
Section 7.02 to act as custodian under the Plan.
(i) "Date of Exercise" means the first business day following a Payday and/or
such other date or dates as may be established by the Committee as a date upon
which options granted under the Plan are to be exercised.
(j) "Effective Date" means the effective date of this Plan, which is the date
the registration under the Securities Act of 1933, as amended, of Common Shares
to be issued hereunder is declared effective by the Securities and Exchange
Commission.
(k) "Eligible Employee" means any person employed by the Corporation as a common
law employee or any of its Affiliates except for:
(1) employees who have been employed less than six months (other than
former Participants re-employed by the Company);
(2) employees who customary employment is less than twenty (20) hours
per week; and
(3) employees whose customary employment is for not more than five (5)
months in any calendar year.
(l) "Option Price" means the price to be paid by Participants upon the exercise
of options granted under this Plan, determined as provided in Section 5.02.
(m) "Participant" means an Eligible Employee who (i) authorizes the Corporation
or an Affiliate to make payroll deductions from Plan Compensation for the
purpose of purchasing Common Shares pursuant to the Plan, (ii) has commenced
participation in the Plan pursuant to Section 3.01, and (iii) has not incurred a
voluntary or involuntary withdrawal, pursuant to Article VI or Section 7.04
since his or her most recent commencement of participation pursuant to Section
3.01.
(n) "Payday" means the date on which an Eligible Employee receives any Plan
Compensation.
(o) "Plan" means the 1999 Irwin Financial Corporation Employees' Stock Purchase
Plan, as amended from time to time.
(p) "Plan Compensation" means all cash payments made by the Corporation or any
Affiliate to an Employee through its payroll system for services as an employee
including, without limitation, wages, salary, incentive compensation, bonuses
and profit sharing payments.
(q) "Section," when not preceded by the word "Code," means a section of this
Plan.
Section 2.02. Construction and Governing Law
(a) This Plan shall be construed, enforced and administered and the validity
thereof determined in accordance with the Code and the regulations thereunder,
and in accordance with the laws of the State of Indiana when such laws are not
inconsistent with the Code.
(b) This Plan is intended to qualify as an employee stock purchase plan under
Code Section 423 and the regulations thereunder. The provisions of the Plan
shall be construed so as to fulfill this intention.
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ARTICLE III
PARTICIPATION
Section 3.01. Participation.
(a) Any person who is an Eligible Employee on the Effective Date may become a
Participant in the Plan as of the first Payday after the Effective Date, by
completing and delivering to the Committee such forms as the Committee shall
require to authorize payroll deductions and to request participation in the
Plan, within the time period established by the Committee.
(b) After the Effective Date, an Eligible Employee who is not a participant may
become a Participant in the Plan as of the first day of a calendar quarter, by
completing and returning to the Committee at least thirty (30) days before such
date such forms as the Committee shall require to authorize payroll deductions
and request participation in the Plan.
Section 3.02. Payroll Deductions.
(a) Payroll deductions for a Participant shall commence on the first Payday
after an Eligible Employee becomes a Participant and shall continue until the
earlier of (i) the termination of the Plan or (ii) the date the Participant
suspends his or her payroll deductions or ceases participation pursuant to
subsection (b) of this Section 3.02. Each Participant shall authorize his or her
employer to make deductions from his or her Plan Compensation on each Payday
during the time he or she is a Participant in the Plan in a specified whole
dollar amount; provided, however, the minimum amount of the payroll deduction
authorized by the Participant must be at least $5.00 per Payday.
(b) A Participant may suspend or change his or her payroll deduction in the Plan
effective as of any Payday by filing written notice with the Committee at least
ten (10) days prior to such Payday. A Participant's suspension of his or her
payroll deductions shall not automatically result in his or her withdrawal from
participation in the Plan.
Section 3.03. Participant's Account. On each Payday, the Corporation or its
Affiliate, as the case may be, shall deduct the authorized amount from each
Participant's Plan Compensation and shall credit the Account of each Participant
with the amount of the Participant's payroll deduction under the Plan effective
as of the Payday on which it was deducted.
ARTICLE IV
COMMON SHARES
The shares subject to options granted under this Plan shall be Common Shares.
The total number of Common Shares on which options may be granted under this
Plan shall not exceed in the aggregate Seven Hundred Fifty Thousand (750,000)
Common Shares, except as such number of Common Shares shall be adjusted in
accordance with Section 8.01 of this Plan. Common Shares required to satisfy
purchases pursuant to the Plan may be provided out of the Corporation's treasury
shares or its authorized and unissued Common Shares.
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<PAGE> 43
ARTICLE V
GRANTING AND EXERCISE OF OPTIONS
Section 5.01. Grant of Options.
(a) On each Payday, there shall be granted automatically by the Corporation to
each Participant, except those identified in subsection (b) of this Section
5.01, an option to purchase on the next succeeding Date of Exercise at the
Option Price such number of the Common Shares, including fractional shares,
reserved for issuance pursuant to this Plan as the balance in such Participant's
Account on such Date of Exercise enables him or her to purchase.
(b) Notwithstanding any provision in this Plan to the contrary, no Participant
shall be granted an option:
(1) if the Participant, immediately after the option is granted, would own
shares possessing five percent (5%) or more of the total combined voting power
or value of all classes of shares of the Corporation or its Affiliates, provided
that (i) the rules of Code Section 425(d) shall apply in determining the share
ownership of an individual, and (ii) shares which the Participant may purchase
under outstanding options shall be deemed to be owned by the Participant; or
(2) which permits his or her rights to purchase shares under all employee stock
purchase plans of the Corporation and its Affiliates to accrue at a rate which
exceeds Twenty-five Thousand Dollars ($25,000) of fair market value of Common
Shares (determined at the time such option is granted) for each calendar year in
which such option is outstanding at any time.
Section 5.02. Option Price. The option price for Common Shares purchased as of
each Date of Exercise shall be eighty-five percent (85%) of the closing price of
the Common Shares as reported by the National Association of Securities Dealers
Automated Quotation/National Market System ("Nasdaq/ NMS") for the last trading
day prior to such Date of Exercise or, if not so reported, as reported by such
other source as the Committee shall designate.
Section 5.03. Exercise of Option; Limitations. As of each Date of Exercise, each
Participant's option to purchase Common Shares shall be exercised automatically
for his or her Account. The Participant shall purchase the number of shares,
including fractional shares, which the amount of cash credited to his or her
Account on that Date of Exercise shall enable him or her to purchase at the
Option Price. As soon as administratively reasonable after each Date of
Exercise, the Corporation shall notify the Custodian of the number of Common
Shares purchased for the Account of each Participant on such Date of Exercise.
Section 5.04. Interest in Shares. A Participant shall have no interest in or
rights as a shareholder with respect to Common Shares subject to an option
granted under this Plan until such option has been exercised and the number of
Common Shares purchased has been credited to the Participant's Account. Upon
written request directed to the Committee, a Participant shall be entitled to
receive a certificate representing the number of whole Common Shares and/or cash
in lieu of any fractional shares credited to the Participant's Account. Upon
receipt of any such request, the Committee shall promptly direct the Custodian
to distribute such certificates, if any, and the Corporation to pay such cash,
if any, to the Participant.
Section 5.05. Fractional Shares. A Participant shall be entitled to participate
in any dividend or other distribution with respect to any fractional share
credited to the Participant's Account, but shall have no right to vote any
fractional share. No certificates will be issued representing fractional shares
purchased pursuant to the Plan. Upon a Participant's withdrawal from the Plan
under Article VI or Section 7.04 or upon the Committee's receipt of a request to
issue certificates pursuant to Section 5.04, there shall be paid in lieu of any
fractional share held in a Participant's Account an amount in cash equal to the
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product of (i) the amount of the fraction, multiplied by (ii) the closing price
of the Common Shares as reported by the NASDAQ/NMS for the effective date of the
Participant's withdrawal from the Plan or the date on which the Committee
receives the request pursuant to Section 5.04, whichever applies.
ARTICLE VI
WITHDRAWAL
Section 6.01. Voluntary Withdrawal. A Participant may withdraw from
participation in the Plan as of any Payday by delivering written notice to the
Committee at least ten (10) days prior to such Payday. The Committee shall
promptly notify the Custodian of the withdrawal of any Participant. As soon as
administratively reasonable after the effective date of a Participant's
withdrawal from the Plan, the Corporation shall cause the balance of the
Participant's Account, including without limitation certificates representing
the number of whole Common Shares therein and cash in lieu of any fractional
shares, to be paid to him or her. A Participant's withdrawal from participation
in the Plan shall not prevent his or her further participation in the Plan. Any
Eligible Employee who withdraws from the Plan shall be entitled to resume
payroll deductions and become a Participant as of the next quarterly enrollment
period, as provided in Section 3.01(b).
Section 6.02. Involuntary Withdrawal. Upon termination of a Participant's
employment with the Corporation or its Affiliates for any reason, including
resignation, discharge, disability or retirement, the balance of the
Participant's Account, including without limitation certificates representing
the number of whole Common Shares therein and cash in lieu of any fractional
shares, shall be paid to him or her, or, in the case of his or her death, to his
or her beneficiary as provided in Section 6.04. The Corporation shall cause such
amount to be paid as soon as administratively reasonable after such termination
of employment.
Section 6.03. Interest. No interest shall be payable in amounts held in a
Participant's Account, or on amounts payable to a Participant or a beneficiary.
Section 6.04. Participant's Beneficiary
(a) A Participant may file with the Committee a written designation of a
beneficiary who is to receive any Common Shares or cash credited to the
Participant's Account under the Plan in the event of the Participant's death.
Such designation of beneficiary may be changed by the Participant at any time by
written notice.
(b) On the death of a Participant, and on receipt by the Committee of reasonable
proof of the identity and existence of the Participant's designated beneficiary,
the Corporation shall cause the shares or cash provided in Section 6.04(a), if
any, to be delivered to such beneficiary as soon as administratively reasonable.
If a Participant dies without a surviving designated beneficiary, the
Corporation shall cause such shares or cash to be delivered to the estate or a
representative of the estate of the Participant.
(c) No designated beneficiary, and no heir or beneficiary of the estate, of a
deceased Participant shall acquire any interest in the Common Shares or cash
credited to the Participant's Account under the Plan prior to the death of the
Participant.
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<PAGE> 45
ARTICLE VII
PLAN ADMINISTRATION
Section 7.01. Administrative Committee.
(a) The Plan shall be administered, at the expense of the Corporation, by the
Committee. The Committee shall consist of not less than three (3) members, who
shall be appointed by the Board of Directors. Each member of the Committee shall
be either a director, officer or employee of the Corporation. Each member of the
Committee shall serve until removed by the Board of Directors and such removal
may be without cause and without advance notice.
(b) The Committee shall be vested with full authority to make, administer and
interpret such rules and regulations as it deems necessary to administer the
Plan. Any determination, decision or action of the Committee in connection with
the construction, interpretation, administration, or application of the Plan
shall be final, conclusive and binding on all Participants, beneficiaries and
any and all other persons claiming under or through any Participant.
(c) The Committee shall keep or cause to be kept accurate and detailed accounts
of all contributions, receipts, disbursements and purchases of Common Shares,
and all accounts, books and records relating thereto shall be open to inspection
and audit at all reasonable times by any person designated by the Board of
Directors or the Committee.
Section 7.2. Custodian
(a) The Board of Directors, in its sole discretion, shall appoint a Custodian.
The custodian may, but need not, be an Affiliate of the Corporation. The
Custodian may be removed by the Board of Directors at any time with thirty (30)
days prior notice in writing to the Custodian.
(b) The Custodian shall maintain complete and accurate records of the number of
whole and fractional shares in each Participant's Account and shall deliver
certificates representing such whole shares to the Participant upon receipt of
written direction from the Committee.
Section 7.03. Registration of Shares; Dividends
(a) Common Shares purchased for a Participant's Account under this Plan may, in
the discretion of the Custodian, be registered in the name of its nominee. The
certificates for Common Shares to be delivered to Participants under the Plan
shall be registered in the name of the Participant or, if the Participant so
directs by written notice delivered to the Committee at least ten (10) days
prior to the Date of Exercise, in the names of the Participant and one other
person designated by the participant, as joint tenants with rights of
survivorship, to the extent permitted by applicable law. The Committee shall
timely notify the Custodian of its receipt of any such written notice.
(b) All dividends paid with respect to the whole and fractional shares in a
Participant's Account shall be credited to his or her Account and used to
purchase Common Shares on the next Date of Exercise.
Section 7.04. Transferability. Neither payroll deductions credited to a
Participant's Account nor any rights with regard to the exercise of an option or
to receive Common Shares under the Plan may be assigned, transferred, pledged,
or otherwise disposed of in any way by the Participant, except with respect to
the death of the Participant as provided in Sections 6.02 and 6.04 or pursuant
to a qualified domestic relations order as defined by the Code, Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder. Any such attempted assignment, transfer, pledge, or other
disposition shall be without effect, except that the Committee, in it sole
discretion, may treat such act as an election to withdraw from the Plan.
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Section 7.05. Separate Accounting for Payroll Deductions. No payroll deductions
received or held by the Corporation or any Affiliate under this Plan may be used
by the Corporation or the Affiliate for any corporate purpose, and the
Corporation and the Affiliate shall separately account for such payroll
deductions.
Section 7.06. Only Employees Eligible to Participate. Notwithstanding any other
provision of this Plan, to be eligible to exercise an option a Participant shall
be an employee of the Corporation or its Affiliates at all times during the
period beginning with the date the option is granted and ending on the Date of
Exercise.
Section 7.07. Equal Rights and Privileges. Notwithstanding any other provision
of the Plan, all Eligible Employees shall have the same rights and privileges
under the Plan, as required by Code Section 423 and the regulations thereunder,
and the Committee shall administer the Plan and interpret and apply the
provisions of the Plan accordingly.
Section 7.08. Claims Procedures.
(a) Any person who believes that he or she is entitled to any benefits under
this Plan shall present such claim in writing to the Committee. The Committee
shall within sixty (60) days provide adequate notice in writing to any claimant
as to the decision on any such claim. If such claim has been denied, in whole or
in part, such notice shall set forth: (i) the specific reasons for such denial;
(ii) specific reference to any pertinent provisions of the Plan on which denial
is based; (iii) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary; and (iv) an explanation of the Plan's
review procedure. Such notice shall be written in a manner calculated to be
understood by the claimant. Within sixty (60) days after receipt by the claimant
of notification of denial, the claimant shall have the right to present a
written appeal to the Committee. If such appeal is not filed within said sixty
(60) day period, the decision of the committee shall be final and binding. The
Committee shall act as a fiduciary in making a full and fair review of such
denial. The claimant or his or her duly authorized representative may review any
Plan documents, which are pertinent to the claim and may submit issues and
comments to the Committee in writing.
(b) A decision by the Committee shall be made promptly, and in any event not
later than sixty (60) days after its receipt of the appeal, provided, however,
if the Committee decides a hearing at which the claimant or his or her duly
authorized representative may be present is necessary and such a hearing is
held, such decision shall be rendered as soon as possible, but no later than one
hundred twenty (120) days after its receipt of the appeal. Any such decision of
the Committee shall be in writing and provide adequate notice to the claimant
setting forth the specific reasons for any denial and written in a manner
calculated to be understood by a Participant. Any such decision by the Committee
shall be final.
ARTICLE VIII
AMENDMENT AND TERMINATION
Section 8.01. Recapitalization. The aggregate number of Common Shares which may
be issued hereunder shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding Common Shares resulting from a
subdivision or consolidation of shares of the Corporation or any other capital
adjustment of the Corporation, the payment of a share dividend, a share split or
any other increase or decrease in the Common Shares effected without receipt of
consideration by the Corporation. In the event that, prior to the purchase of
all of the Common Shares provided for herein, there shall be a capital
reorganization or reclassification of the capital of the Corporation resulting
in a substitution of other shares for the common shares, there shall be
substituted the number of substitute
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<PAGE> 47
shares which would have been issued pursuant to the option in exchange for the
Common Shares then subject to the option as if such Common Shares had been then
issued and outstanding.
Section 8.02. Amendment and Termination.
(a) Except as provided in subsection (c) of this Section 8.02, the Board of
Directors of the Corporation, except any members participating in the Plan, may
from time to time, alter, amend, suspend or discontinue the Plan with respect to
any Common Shares for which an option has not been granted; provided, however,
that the Board of Directors may not, without further approval by the holders of
a majority of the issued and outstanding Common Shares of the Corporation who
are either present or represented and are entitled to vote at a meeting of
shareholders of the Corporation:
(1) increase the maximum number of Common Shares that may be issued
under the Plan;
(2) change the class of shares, which may be issued under the Plan;
(3) change the designation of the persons or class of persons eligible
to receive Common Shares under the Plan; or
(4) change the provisions of Section 5.02 concerning the option price.
(b) Unless earlier terminated by the Board of Directors pursuant to subsection
(a) of this Section 8.02, this Plan will terminate on the Date of Exercise on
which the remaining Common Shares reserved for the grant of options under this
Plan are not sufficient to enable each Participant on such date to purchase at
least one share. No option may be granted after the termination of the Plan.
(c) Notwithstanding the provisions of subsection (a) of this Section 8.02, the
provisions of Sections 2.01(k) defining "Eligible Employee," Section 3.01
concerning participation in the Plan, Section 5.01(a) concerning the timing and
amount of the options granted to Participants, and Section 5.02 concerning the
Option Price, shall not be amended more than once every six months, other than
to comport with changes in the Code, the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Notices. All notices or other communications by a Participant to
the Committee under or in connection with the Plan shall be deemed to have been
duly given when received by the Secretary of the Corporation, or when received
in the form and at the location or by the person specified by the Committee. Any
notices or other communications by the Committee to a Participant under or in
connection with the Plan shall be deemed to have been duly given when mailed by
the Committee to the address of the Participant on the business records of the
Corporation or its Affiliates.
Section 9.02. No Right to Continued Employment. Neither the establishment nor
the maintenance of the Plan nor any amendment thereof nor any act or omission
under the Plan or resulting from the operation of the Plan shall be construed as
giving any Eligible Employee the right to be retained in the service of the
Corporation or to interfere with the right of the Corporation to discharge any
Eligible Employee or any other person at any time in its discretion.
8
