CHANGE OF CONTROL AGREEMENT
This Agreement is made and entered into this _____ day of
______________, 1999, by and between First Merchants Corporation, an Indiana
corporation (hereinafter referred to as "Corporation"), and First Merchants
Bank, National Association (hereinafter referred to as "Bank"), a wholly-owned
subsidiary of the Corporation, both with their principal offices located at 200
East Jackson Street, Muncie, Indiana, and ______________ (hereinafter referred
to as "Executive"), of Muncie, Indiana.
WHEREAS, the Corporation and the Bank consider the continuance of
proficient and experienced management to be essential to protecting and
enhancing the best interests of the Corporation, the Bank, and the Corporation's
shareholders; and
WHEREAS, the Corporation and the Bank desire to assure the continued
services of the Executive on behalf of the Corporation and the Bank; and
WHEREAS, the Corporation and the Bank recognize that if faced with a
proposal for a Change of Control, as hereinafter defined, the Executive will
have a significant role in helping the Board of Directors assess the options and
advising the Board of Directors on what is in the best interests of the
Corporation, the Bank, and the Corporation's shareholders; and it is necessary
for the Executive to be able to provide this advice and counsel without being
influenced by the uncertainties of the Executive's own situation; and
WHEREAS, the Corporation and the Bank desire to provide fair and reasonable
benefits to the Executive on the terms and subject to the conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained and the continued employment of the Executive by the
[Corporation] [Bank] as _____________________________________, the
Corporation, the Bank, and the Executive, each intending to be legally bound,
covenant and agree as follows:
1. TERM OF AGREEMENT.
This Agreement shall continue in effect through December 31, 1999;
provided, however, that commencing on December 31, 1999 and each December 31
thereafter, the term of this Agreement shall automatically be extended for one
additional year unless, not later than October 31, 1999 or October 31
immediately preceding any December 31 thereafter, the Corporation or the Bank
shall have given the Executive notice that it does not wish to extend this
Agreement; and provided further, that if a Change of Control of the Corporation
or the Bank, as defined in Section 2, shall have occurred during the original or
extended term of this Agreement, this Agreement shall continue in effect for a
period of not less than twenty-four (24) months beyond the month in which such
Change of Control occurred.
2. DEFINITIONS.
For purposes of this Agreement, the following definitions shall apply:
A. CAUSE: "Cause" shall mean:
(1) professional incompetence;
(2) willful misconduct;
(3) personal dishonesty;
(4) breach of fiduciary duty involving personal profit;
(5) intentional failure to perform stated duties;
(6) willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final cease
and desist orders; and
(7) any intentional material breach of any term, condition or
covenant of this Agreement.
B. CHANGE OF CONTROL: "Change of Control" shall mean:
(1) any person (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 ["Exchange
Act"]), other than the Corporation, is or becomes the
Beneficial Owner (as defined in Rule 13d-3 under the
Exchange Act) directly or indirectly of securities of the
Corporation or the Bank representing twenty-five percent
(25%) or more of the combined voting power of the
Corporation's or the Bank's then outstanding securities;
(2) persons constituting a majority of the Board of Directors
of the Corporation or the Bank were not directors of the
respective Board for at least the twenty-four (24)
preceding months;
(3) the stockholders of the Corporation or the Bank approve a
merger or consolidation of the Corporation or the Bank with
any other corporation, other than (a) a merger or
consolidation which would result in the voting securities
of the Corporation or the Bank outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than fifty percent (50%) of the
combined voting power of the voting securities of the
Corporation or the Bank or such surviving entity
outstanding immediately after such a merger or
consolidation, or (b) a merger or consolidation effected to
implement a recapitalization of the Corporation or the
Bank (or similar transaction) in which no person acquires
fifty percent (50%) or more of the combined voting power of
the Corporation's or the Bank's then outstanding
securities; or
(4) the stockholders of the Corporation approve a plan of
complete liquidation of the Corporation or the Bank or an
agreement for the sale or disposition by the Corporation or
the Bank of all or substantially all of the Corporation's
or the Bank's assets.
C. DATE OF TERMINATION: "Date of Termination" shall mean the date
stated in the Notice of Termination (as hereinafter defined) or
thirty (30) days from the date of delivery of such notice, as
hereinafter defined, whichever comes first.
D. DISABILITY: "Disability" shall mean the definition of such term
as used in the disability policy then in effect for the
Corporation or the Bank, and a determination of full disability
by the Corporation or the Bank; provided that in the event
there is no disability insurance then in force, "disability"
shall mean incapacity due to physical or mental illness which
will have caused the Executive to have been unable to perform
his duties with the Corporation and/or the Bank on a full time
basis for one hundred eighty (180) consecutive calendar days.
E. NOTICE OF TERMINATION: "Notice of Termination" shall mean a
written notice, communicated to the other parties hereto, which
shall indicate the specific termination provisions of this
Agreement relied upon and set forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provisions
so indicated.
F. RETIREMENT: "Retirement" shall mean termination of employment
by the Executive in accordance with the Corporation's or the
Bank's normal retirement policy generally applicable to its
salaried employees in effect at the time of a Change of
Control.
3. Termination.
A. GENERAL. If any of the events described in Section 2
constituting a Change in Control of the Corporation or the Bank
shall have occurred, the Executive shall be entitled to the
benefits described in Section 4 upon the subsequent termination
of the Executive's employment during the term of this
Agreement, unless such termination is (a) because of the death
or Disability of the Executive, (b) by the Corporation or the
Bank for Cause, or (c) by the Executive other than on account
of Constructive Termination (as hereinafter defined).
B. If, following a Change of Control, the Executive's employment
shall be terminated for Cause, the Corporation and/or the Bank
shall pay him his salary through the Date of Termination at the
rate in effect on the date of the Notice of Termination, and
the Corporation and the Bank shall have no further obligations
under this Agreement. If, following a Change of Control, the
Executive's employment shall be terminated as a result of death
or Disability, compensation to the Executive shall be made
pursuant to the Corporation's and the Bank's then existing
policies on death or Disability, and the Corporation and the
Bank shall have no further obligations under this Agreement.
If, following a Change of Control, the Executive's employment
is terminated by and at the request of the Executive as a
result of Retirement, compensation to the Executive shall be
made pursuant to the Corporation's and the Bank's normal
retirement policy generally applicable to its salaried
employees at the time of the Change of Control, and the
Corporation and the Bank shall have no further obligations
under this Agreement.
C. CONSTRUCTIVE TERMINATION. The Executive shall be entitled to
terminate his employment upon the occurrence of Constructive
Termination. For purposes of this Agreement, "Constructive
Termination" shall mean, without the Executive's express
written consent, the occurrence, after a Change of Control of
the Corporation or the Bank, of any of the following
circumstances:
(1) the assignment to the Executive of any duties inconsistent
(unless in the nature of a promotion) with the position in
the Corporation or the Bank that the Executive held
immediately prior to the Change of Control of the
Corporation or the Bank, or a significant adverse reduction
or alteration in the nature or status of the Executive's
position, duties or responsibilities or the conditions of
the Executive's employment from those in effect immediately
prior to such Change of Control;
(2) a reduction in the Executive's annual base salary, as in
effect immediately prior to the Change of Control of the
Corporation or the Bank or as the same may be adjusted from
time to time, except for across-the-board salary reductions
similarly affecting all management personnel of the
Corporation or the Bank;
(3) the Bank and/or the Corporation requires the Executive to
e relocated anywhere other than their offices in
Muncie, Indiana;
(4) the taking of any action to deprive the Executive of any
material fringe benefit enjoyed by him at the time of the
Change of Control, or the failure to provide him with the
number of paid vacation days to which he is entitled on the
basis of years of service with the Corporation and/or the
Bank and in accordance with the Corporation's or the Bank's
normal vacation policy in effect at the time of the Change
of Control;
(5) the failure to continue to provide the Executive with
benefits substantially similar to those enjoyed by the
Executive under any of the Corporation's or the Bank's life
insurance, medical, health and accident, or disability
plans in which the Executive was participating at the time
of the Change of Control of the Corporation or the Bank, or
the taking of any action which would directly or indirectly
materially reduce any of such benefits; or
(6) the failure of the Corporation or the Bank to continue this
Agreement in effect, or to obtain a satisfactory agreement
from any successor to assume and agree to perform this
Agreement, as contemplated in Section 5 hereof.
4. COMPENSATION UPON TERMINATION.
Following a Change of Control, if his employment by the Corporation
or the Bank shall be terminated by the Executive on account of
Constructive Termination or by the Corporation or the Bank other than
for Cause, death, Disability, or Retirement (by and at the request of
the Executive), then the Executive shall be entitled to the benefits
provided below:
A. No later than the fifth day following the Date of Termination,
the Corporation or the Bank shall pay to the Executive his full
base salary through the Date of Termination, at the rate in
effect at the time Notice of Termination is given, plus all
other amounts to which the Executive is entitled under any
incentive, bonus or other compensation plan of the Corporation
or the Bank in effect at the time such payments are due;
B. In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, no later than
the fifth day following the Date of Termination, the
Corporation or the Bank shall pay to the Executive a lump sum
severance payment, in cash, equal to ________ (____) times the
sum of (a) the Executive's annual base salary rate as in effect
on the date of the
Notice of Termination, and (b) the largest bonus received by
he Executive during the two (2) years immediately preceding the
Date of Termination under the Corporation's Management
Incentive Plan covering the Executive;
C. During the period beginning with the Executive's Date of
Termination and continuing until the earlier of (a) the second
anniversary of such Date of Termination, or (b) Executive's
sixty-fifth (65th) birthday, the Corporation or the Bank shall
arrange to provide the Executive with life, disability,
accident and health insurance benefits substantially similar to
those which the Executive was receiving immediately prior to
he Notice of Termination and shall pay the same percentage of
the cost of such benefits as the Corporation or the Bank was
paying on the Executive's behalf on the date of such Notice;
D. In lieu of shares of common stock of the Corporation
("Corporation Shares") issuable upon the exercise of
outstanding options ("Options"), if any, granted to the
Executive under any Corporation stock option plan (which
Options shall be cancelled upon the making of the payment
referred to below), the Executive shall receive an amount in
cash equal to the product of (a) the excess of the higher of
the closing price of Corporation Shares as reported on the
NASDAQ National Market System, the American Stock Exchange or
the New York Stock Exchange, wherever listed, on or nearest the
Date of Termination or the highest per share price for
Corporation Shares actually paid in connection with any Change
of Control of the Corporation, over the per share exercise
price of each Option held by the Executive (whether or not then
fully exercisable), times (b) the number of Corporation Shares
covered by each such Option;
E. If the payments or benefits, if any, received or to be received
by the Executive (whether under this Agreement or under any
other plan, arrangement, or agreement between the Executive and
the Corporation or the Bank), in connection with termination or
Constructive Termination of the Executive's employment
following a Change of Control, constitute an "excess parachute
payment" within the meaning ofss.280G of the Internal Revenue
Code ("Code"), the Corporation or the Bank shall pay to the
Executive, no later than the fifth day following the Date of
Termination, an additional amount (as determined by the
Corporation's independent public accountants) equal to the
excise tax, if any, imposed on the "excess parachute payment"
underss.4999 of the Code; provided, however, if the amount of
such excise tax is finally determined to be more or less than
the amount paid to the Executive hereunder, the Corporation or
the Bank (or the Executive if the finally determined amount is
less than the original amount paid) shall pay the difference
between the amount originally paid and the finally determined
amount to the other party no later than the fifth day following
the date such final determination is made;
F. The Corporation or the Bank shall pay to the Executive all
reasonable legal fees and expenses incurred by the Executive
as a result of such termination (including all such fees and
expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement), unless the decision-maker
in any proceeding, contest, or dispute arising hereunder makes
a formal finding that the Executive did not have a reasonable
basis for instituting such proceeding, contest, or dispute;
G. The Corporation or the Bank shall provide the Executive with
individual out- placement services in accordance with the
general custom and practice generally accorded to an executive
of the Executive's position.
5. SUCCESSORS; BINDING AGREEMENT.
A. The Corporation or the Bank shall require any successor
(whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business
and/or assets of the Corporation or the Bank to expressly
assume and agree to perform this Agreement in the same manner
and to the same extent that the Corporation or the Bank would
be required to perform it if no such succession had taken
place. Failure of the Corporation or the Bank to obtain such
assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall
entitle the Executive to compensation from the Corporation or
the Bank in the same amount and on the same terms to which the
Executive would be entitled hereunder if the Executive
terminates his employment on account of Constructive
Termination following a Change of Control of the Corporation or
the Bank, except that for the purposes of implementing the
foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in
this Agreement, "the Corporation or the Bank" shall mean the
Corporation or the Bank and any successor to their business
and/or assets as aforesaid which assumes and agrees to perform
this Agreement, by operation of law or otherwise.
B. This Agreement shall inure to the benefit of and be enforceable
by the Executive and his personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any
amount would still be payable to the Executive hereunder had
the Executive continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the
devisee, legatee or other designee or, if there is no such
designee, to his estate.
6. GUARANTEE BY CORPORATION AND BANK.
In consideration of the value of the continued employment of the
Executive by the Corporation or the Bank, and the benefits derived by
the Corporation and the Bank from the Executive's employment by the
Corporation or the Bank, the Corporation and the Bank hereby
unconditionally and fully guarantee and endorse the obligations of the
other hereunder, and agree to be fully bound by the terms of this
Agreement in the event that the other fails to perform, honor, or
otherwise complete fully its obligations hereunder.
7. MISCELLANEOUS.
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer as may be
specifically designated by the Corporation. No waiver by either party
hereto at the time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar of
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreement or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been
made by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Indiana
without regard to its conflicts of law principles. All references to a
section of the Exchange Act or the Code shall be deemed also to refer to
any successor provisions to such section. Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law. The obligations of the Corporation and the
Bank under Section 4 shall survive the expiration of the term of this
Agreement.
8. VALIDITY.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and
effect.
9. COUNTERPARTS.
This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
10. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before
a panel of three (3) arbitrators in Muncie, Indiana in accordance with
the rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to
seek specific performance of his right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising
under or in connection with this Agreement.
11. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer,
employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein
is hereby terminated and cancelled.
IN WITNESS WHEREOF, the Corporation and the Bank have caused this Agreement
to be executed by their duly authorized officers, and the Executive has
hereunder subscribed his name, this _______ day of ______________________, 1999.
"CORPORATION" "EXECUTIVE"
FIRST MERCHANTS CORPORATION
By ______________________________ By ______________________________
Stefan S. Anderson, __________________
Chairman of the Board
"BANK"
FIRST MERCHANTS BANK, NATIONAL ASSOCIATION
By ______________________________
Stefan S. Anderson,
Chairman of the Board
SCHEDULE A TO FIRST MERCHANTS CORPORATION
CHANGE OF CONTROL AGREEMENT
The Corporation's Change of Control Agreement covering Roger M. Arwood,
Larry R. Helms, Jack L. Demaree, and Roy A. Eon are all in the form of Exhibit
10.1. The multiples of the executives' annual base salaries are as follows:
Roger M. Arwood 299 percent, Jack L. Demaree 200 percent, Larry R. Helms 200
percent, and Roy A.Eon 200 percent.