EXHIBIT 10.1
IRWIN BANK AND TRUST COMPANY
DEFERRED COMPENSATION PLAN
FOR
BANK DIRECTORS
1. Purpose. Irwin Bank and Trust Company, a Pennsylvania banking
corporation (herein "the Bank"), hereby establishes and maintains the bank's
Deferred Compensation Plan for Directors (the "Plan"), under which Directors of
the Bank may defer all or part of the fees payable for services rendered by them
as Directors and certain pre-retirement Death Benefits are provided.
2. Definitions. The following definitions apply to the Plan:
a. Beneficiary means one or more persons or other entities
designated by a Director to receive the benefits provided under this Plan
payable by reason of the Director's death. If a Director makes no valid
designation, or if the designated beneficiary fails to survive the Director or
otherwise fails to elect to receive such benefits, the Director's Beneficiary
shall then be the first of the following persons who survives the Director:
(i) The Director's surviving spouse, if any;
(ii) If there is no surviving spouse, then the
Director's beneficiary shall be the Director's estate.
If there is a surviving spouse but she should die
prior to payment of all benefits due hereunder, then the remaining benefits
hereunder shall be administered and distributed as part of her estate.
The Committee (as hereinafter defined) will provide
each Director with a Beneficiary Designation Form on which the Director may
designate his Beneficiary. The Director may change his designated beneficiary
hereunder by filing written notice of such change with the Committee on the form
specified.
b. Benefit Schedule means the Schedule, attached as Exhibit"A"
and based on guaranteed net rate of return of thirteen percent (13%, pursuant to
which is determined the amount of Deferred Income Benefits to which each
Director is entitled under this Plan.
c. Binder Agreement means the Agreements, attached hereto and
composing Exhibit "B", by which each Director's pre-retirement Death Benefits
are established and each Director (by executive of his individual Binder
Agreement) acknowledges and agrees to certain terms related to such Death
Benefits.
d. Board of Directors means the Board of Directors of the Bank.
e. Committee means the Committee appointed by the Board of
Directors to administer this Plan, as further described in Section 10 and other
provisions of this Plan.
f. Compensation means the fees payable by the Bank to a
Director for services rendered as a Director. "Compensation" shall include a
Director's retainer fees, regular meeting fees, and committee meeting fees. It
shall not include any compensation or benefits received by a Director as an
employee of the Bank.
g. Bank means the Bank and any successor by merger or
otherwise, as further addressed in Section 14 below.
h. Death Benefit means the Annual Death Benefit described in
Section 5 and as individually determined pursuant to the applicable Binder
Agreement included in Exhibit "B".
i. Deferral Period means the forty-eight (48) consecutive
month period to which a Director's election to defer payment of Compensation
applies, and which commences after the Committee's receipt and acceptance of the
Director's Deferred Election Form.
j. Deferred Income Benefit means the deferred benefit
described in Section 5 and as determined pursuant to Exhibit "A".
k. Director means a member of the Board of Directors of the
Bank, whether or not a full-time employee of the Bank.
l. Plan means this Plan, the Bank's Deferred Compensation Plan
for Director's (the "Plan").
3. Deferral Election.
a. A Director may defer payment of part or all of his
Compensation by filing a completed Deferral Election Form with the Committee
before the first day of the Deferral Period to which the election is to apply. A
Director may not defer less than One Thousand Dollars ($1,000) of Compensation
per Deferral Year (as defined below). A deferral shall apply to Compensation
that is payable to the Director for services rendered after the effective date
of the Deferral Election and after the Deferral Election Form is filed with and
accepted by the Committee. A Director may not elect to defer payment of
Compensation if the Director will have reached age 70 prior to or at the
beginning of the Deferral Period, except with the consent of the Committee,
which consent shall not be withheld if consistent with this Plan. The Committee
will provide Directors with Deferral Election Forms.
b. A Director may not terminate his Deferral Election during
a Deferral Period without the Committee's consent. A termination of a Deferral
Election shall be effective on or after
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the date on which the Committee consents to the termination and shall relate
only to Compensation payable for services rendered after the effective date to
such termination.
c. A Director must specify on his Deferral Election Form the
date on which payment of his deferred benefits hereunder will begin, which
commencement date shall be on or after the Director's seventieth (70th)
birthday, except if earlier only with the Committee's prior consent. Thereafter,
such payment date may be changed only with the Committee's prior consent and
such consent may be granted only if a different payment date is for reasons of
administrative convenience. No Director who is a member of the Committee may
vote on a matter regarding change in payment of his deferred benefits.
4. Change in Form of Benefit.
a. The Committee may require that a Director undergo a health
examination as a condition of accepting the Director's election to defer
Compensation. If a Director is not able to provide the Committee with evidence
of good health that is satisfactory to the Committee, then the Committee, in its
sole discretion, shall determine whether (i) the amount of the Director's
Deferred Income Benefits shall be actuarially adjusted to take into account the
condition of the Director's health, or (ii) the Director's Deferral Election
will not be accepted.
b. If, during a Deferral Period, for any reason other than his
death, a participating director in the Plan (i) ceases to be a Director, or (ii)
terminates his title to receive a Deferred Income Benefit with respect to his
Compensation previously deferred during the Deferral Period in which the
foregoing event occurs, (except that if a director is not re-elected to the
Board but continues to contribute the equivalent of the Compensation, with
Committee approval and in its sole discretion, he may be continued as a
participant without a change of form of benefit as herein provided). If the
above events occur and no exception is made, then the Director's sole
entitlement for the Deferral Period shall be to receive a Deferred Cash Benefit
equal to the amount of Compensation that was deferred during the Deferral
Period, plus interest, as if the Compensation had been credited when earned to a
book account. The interest rate applied to each bok account shall be equal to
the rate that would have been payable had the average balance credited to the
book account during the preceding calendar quarter been invested on the first
day of the quarter in a 6 month certificate of deposit of Irwin Bank and Trust
Company (or such other bank as the Committee may determine), issued in
denominations of $10,000. A Director's Deferred Cash Benefit shall be equal to
the amount credited to his book account.
5. Deferred Income Benefits, Death Benefits and Distributions.
a. Except as otherwise provided in Section 4, a Director who
has elected to defer Compensation shall be entitled to a Deferred Income Benefit
and/or a pre-retirement Death Benefit, based on the Benefit Schedule and
applicable Binder Agreement attached as Exhibits "A" and "B" hereto.
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b. A Deferral Period is a forty-eight consecutive month
period, or four periods of twelve consecutive months (each such period shall be
known as a "Deferral Year"). If the amount of Compensation deferred by a
Director during the second, third, or fourth Deferral Years exceeds or is less
than the amount of Compensation deferred during the first Deferral Year, then
the Deferred Income Benefit to which the Director shall be entitled with respect
to the Deferral Period shall be actuarially increased or decreased accordingly.
c. A Director shall be entitled to receive the sum of his
Deferred Income Benefits, determined separately with respect to each Deferral
Period, beginning on the date specified by the Director in his Deferral Election
form for such Deferral Period. If payment begins on a date other than the later
of (i) the Director's seventieth (70th) birthday, or (ii) upon the expiration of
the Deferral Period (in the case of a Deferral Period which will expire after
the Director attains seventy (70) years of age), the amount of the Director's
Deferred Income Benefit will remain the amount which would have been payable at
the later of the above two dates. The Deferred Income Benefits shall be paid in
ten (10) equal annual installments, unless the Committee, in its sole
discretion, determines another form of payment which is actuarially equivalent
to such ten-year payment.
d. If a Director who has elected to receive a Deferred Income
Benefit dies other than by suicide prior to his retirement age as set forth in
his applicable Binder Agreement included in Exhibit "B" hereto and before
payment of his Deferred Income Benefit has begun, in lieu of his Deferred Income
Benefit hereunder, his Beneficiary shall receive an Annual Death Benefit as set
forth in the Binder Agreement. The applicable Death Benefit shall be payable in
equal annual installments, unless the Committee, in its sole discretion,
determines another form of payment that is actuarially equivalent to such
ten-year payment. The Annual Payments for individual Directors shall be as set
forth in the Binder Agreements. The total Death Benefits payable shall be equal
to ten (10) years of Annual Payments or Annual Payments until the Director's
Retirement Age, whichever results in the greater total Death Benefit, except
that if the accumulation of principal and interest on the Director's Deferred
Income Benefit exceeds the Death Benefit payable under the above formula, as
applied to the factors applicable to an individual Director as set forth in his
Binder Agreement, then his Beneficiary shall receive an amount equal to the
Total Retirement Benefit in equal annual installments in lieu of the otherwise
applicable Death Benefit.
e. If a Director dies upon or after attaining his retirement
age, his Deferred Income Benefits per Exhibit "A" shall be paid to his
Beneficiary in the manner heretofore provided in lieu of any Death Benefits
hereunder. Where such death occurs after payment of his Deferred Income Benefit
has begun, regardless of the Director's age at the time of such death the
remaining installments of his Deferred Income Benefit will be paid to his
Beneficiary, per Exhibit "A", in lieu of any Death Benefits, for the balance of
the ten year period (or such other period as was fixed by the Committee when
payments began).
6. Natures of Bank's Obligation. The Bank's obligation under the Plan
shall be in the nature of an unfunded and unsecured promise to pay. The Bank
shall not be obligated under any circumstances to fund its financial obligation
sunder the Plan. The Bank may purchase a policy or
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policies of insurance on the lives of Directors and will be the owner,
beneficiary and premium payer of any such insurance policies, and neither the
Director nor his Beneficiary(s) shall have any ownership rights in such policies
or any proceeds thereof. Such policies are not earmarked for the payment of any
benefits under this Agreement, provided, however, that the Bank shall not be
required to pay any death benefits if a denial of insurance proceeds is based
upon suicide or pre- existing health conditions not accurately or completely
revealed by the Director. Any other assets which the Bank may acquire to help
cover its financial obligations also are and remain general assets of the Bank
subject to the claims of its creditors. The Bank does not give, nor does the
Plan or the Director (or his Beneficiary) receive, any beneficial ownership
interest in any asset of the Bank. All rights of ownership in any such assets
are and remain in the Bank.
7. Unsecured Promise. The rights of the Director and any designated
Beneficiary(ies) of the Director, or any other person claiming through the
Director under the Plan, shall be solely those of an unsecured general creditor
of the Bank. The Director, or the designated Beneficiary(ies) of the Director,
shall have the right to receive those payments specified under the Plan only
from the Bank, and has no right to look to any general or specific asset or
assets of the Bank, or any specific or special property separate from the Bank,
to satisfy a claim for benefit payments.
The Director agrees that he, his designated Beneficiary, or any other
person claiming through the Director shall have no rights or beneficial
ownership interests whatsoever in any general assets the Bank may acquire or use
to help support its financial obligations under the Plan.
Any such general assets used or acquired by the Bank in connection with
the liabilities it has assumed under the Plan shall not be deemed to be held
under any trust for the benefit of the Director or his designated Beneficiary,
nor shall any such general assets be considered security for the performance of
the obligations of the Bank. Any such asset or assets shall remain general,
unpledged, and unrestricted assets of the Bank.
The Director also understands and agrees that his participation in the
acquisition of any such general asset for the Bank shall not constitute a
representation to the Director, his designated Beneficiary, or any person
claiming through or under the Director, that any of them has a specific or
beneficial interest in such general asset or assets.
8. Independence of Benefits. The Benefits payable under the Plan shall
be independent of, and in addition to, any other benefits or compensation
payable under any other agreements that now exist or may hereafter exist from
time to time between the Bank and the Director. This Agreement shall not be
deemed to constitute a contract of employment between the parties hereto, nor
shall any provision hereof restrict the right of the Bank to dismiss the
Director, with or without cause, nor restrict the right of the Director to
terminate services with the Bank, nor restrict the rights of an employee
Director or the Bank in any way with respect to the employment relationship.
9. Nonassignable Rights. Neither the Director nor his Beneficiary shall
have the right to commute, sell, assign, transfer, or otherwise convey the right
to receive any payments hereunder,
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which payments and the rights thereto hereby are expressly declared to be
nonassignable and nontransferable.
10. Committee. The Board of Directors shall appoint a Committee to
administer the Plan. The members of the Committee may, but need not be,
Directors. The Committee shall establish the forms and procedures by which a
Director may make Deferral Elections under this Plan, and the Committee shall
have the complete authority and discretion to administer and interpret the Plan.
The Committee shall exercise its discretion according to its determination of
what is in the best interests of both the Bank and the Directors. No Director
shall have any power to direct how the Committee shall exercise its discretion.
All decisions of the Committee concerning the administration and interpretation
of this Plan shall be final, conclusive, and binding.
11. Claims Procedure.
a. Benefits shall be paid in accordance with the provisions of
this Plan. The Employee, or a designated recipient, or any other person claiming
through the Employee (hereinafter collectively referred to as the "Claimant")
shall make a written request for the benefits provided under this Plan. This
written claim shall be mailed or delivered to the Named Fiduciary specified in
Section 12 below.
b. If a claim is denied, either wholly or partially, notice of
the decision shall be mailed to the Claimant within a reasonable time period.
This time period shall not exceed 90 days after the receipt of the claim by the
Named Fiduciary.
c. The Named Fiduciary shall provide written notice to every
Claimant who is denied a claim for benefits under this Plan. The notice shall
set forth the following information:
(1) the specific reasons for the denial;
(2) the specific reference to pertinent Plan provisions
on which the denial is based on;
(3) 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
(4) appropriate information and explanation of the
claims procedure under this Plan so as to permit the Claimant to submit his
claim for review.
d. The claims procedure under this Plan shall allow the
Claimant a reasonable opportunity to appeal a denial of claim and to receive
fair review of that decision by the Named Fiduciary, as follows:
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(1) The Claimant shall exercise his right of appeal
by submitting a written request for a review of the denied claim to the Named
Fiduciary. This written request for review must be submitted to the Named
Fiduciary not less than 60 days after receipt by the Claimant of the written
notice of denial.
(2) The Claimant shall have the following rights
under this appeal procedure:
(i) to request a review upon written
application to the Named Fiduciary;
(ii) to review any other pertinent documents
respecting the Plan;
(iii) to submit issues and comments in
writing;
(iv) to request an extension of time to make
a written submission
of issues and comments; and
(v) to request that a hearing be held to
consider Claimant's appeal.
e. The decision on the review of the denied claim
shall promptly be made by the Named Fiduciary.
(1) not more than 60 days after the receipt
of the request for review if no hearing is held; or
(2) not more than 120 days after the receipt
of the request for review, if an extension of time is necessary in order to hold
a hearing.
(i) If an extension of time is
necessary in order to hold a hearing, the Named Fiduciary shall give the
Claimant written notice of the extension of time and of the hearing. This notice
shall be given prior to any extension.
(ii) The written notice of
extension shall indicate that an extension of time will occur in order to hold a
hearing on Claimant's appeal. The notice also shall specify the place, date, and
time of that hearing and the Claimant's opportunity to participate in the
hearing. It also may include any other information the Named Fiduciary believes
relevant to the Claimant's appeal.
f. The decision to hold a hearing to consider the
Claimant's appeal of the denied claim shall be within the sole discretion of the
Named Fiduciary, whether or not the Claimant requests such a hearing.
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g. The Named Fiduciary's decision to review shall be
made in writing and provided to the Claimant within the specified time periods
in Section 11-d above. This written decision on review shall contain the
following information:
(1) the decision;
(2) the reasons for the decision; and
(3) specific references to the provisions
of the Plan on which the decision is based.
12. Named Fiduciary. The Bank is the "Named Fiduciary"
(as herein referenced) under this Plan.
13. Amendment and Termination. The Board of Directors shall
have the right, in its sole discretion, to modify this Plan from time to tome or
to terminate the Plan entirely; provided, however, that no such modification or
termination of the Plan shall divest any Director or his Beneficiary of benefits
hereunder to which the Director is entitled as of the date of such modification
or termination. If at any time the Federal income tax laws as applied to the
Plan make the income tax treatment of the Deferred Income Benefits and/or Death
Benefits substantially less favorable to the Bank and/or a Director that is
contemplated at the time this Plan is established, then a majority of the
members of the Board of Directors may, in their sole discretion, terminate the
Plan or direct the Committee to adjust the benefits accordingly, provided that
in no event shall the total benefits received by a Director and/or his
Beneficiary be less than the amount that would have bee paid had the Director
been entitled to receive, with respect to his deferred Compensation, a Deferred
Cash Benefit in lieu of a Deferred Income Benefit and/or a Death Benefit. The
Committee may adjust Deferred Income Benefits and/or death Benefits payable
pursuant to the authority granted herein. If the Plan is terminated, or if
benefits are adjusted pursuant to this Plan, the Committee may authorize a
Director's deferred benefits hereunder to be paid before the date specified on
the Director's Deferral Election Form.
14. Successor Obligations. This Agreement shall be binding upon and
inure to the benefit of the Bank, its successors and assigns, and the Director
and his heirs, executors, administrators and legal representatives. The Bank
shall not merge or consolidate with any bank or other third party ("entity"), or
reorganize, unless and until such succeeding or continuing entity agrees to
assume and discharge the obligations of the Bank under this Agreement.
15. Effective Date. This Plan shall be effective as of January 1,
1986.
16. Construction. This Plan is created, adopted, and maintained
pursuant to and in accordance with the laws of the Commonwealth of Pennsylvania,
except to the extent that those laws are superseded by, or in conflict with, the
laws of the United States of America. The headings and captions appearing in
this document are only for convenience and are not intended to have
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substantive meaning. If a provision of this Plan is at any time determined by a
court of law having jurisdiction to be unenforceable, such unenforceability
shall not affect any other provision of the Plan.
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