UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT (Date of earliest event reported): January 1, 2008
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FIRST MERCHANTS CORPORATION
(Exact name of registrant as specified in its charter)
-------------------------------
INDIANA 0-17071 35-1544218
(State or other jurisdiction (Commission file number) (IRS Employer
of incorporation) Identification No.)
200 East Jackson Street
P.O. Box 792
Muncie, IN 47305-2814
(Address of principal executive offices, including zip code)
(765) 747-1500
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
(a) Effective as of January 1, 2008, First Merchants Corporation amended
its Change of Control Agreements (the "Agreements") with the following
individuals: Robert R. Connors, its Senior Vice President and Chief Information
Officer; and Kimberly J. Ellington, its Senior Vice President and Director of
Human Resources. The amendments serve to modify the "Compensation Upon
Termination" section of each Agreement to provide for a lump sum severance
payment equal to one and five tenths (1.50) times the sum of the defined base
salary rate and bonus, rather than the previous multiple of two (2.00). Copies
of the Agreements, as amended, are attached hereto as Exhibits 10.1 and 10.2,
respectively.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
(10.1) Change of Control Agreement between First Merchants Corporation and
Robert R. Connors, dated August 14, 2002, as amended on January 1, 2008.
(10.2) Change of Control Agreement between First Merchants Corporation and
Kimberly J. Ellington, dated January 1, 2005, as amended on January 1, 2008.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATE: January 3, 2008
FIRST MERCHANTS CORPORATION
By: /s/ Mark K. Hardwick
Mark K. Hardwick,
Executive Vice President and
Chief Financial Officer
EXHIBIT INDEX
10.1 Change of Control Agreement between First Merchants Corporation and
Robert R. Connors, dated August 14, 2002, as amended on January 1, 2008.
10.2 Change of Control Agreement between First Merchants Corporation and
Kimberly J. Ellington, dated January 1, 2005, as amended on January 1, 2008.
Exhibit 10.1
CONNORS
CHANGE OF CONTROL AGREEMENT
This Agreement is made and entered into as of January 1, 2008, by and
between First Merchants Corporation, an Indiana corporation (hereinafter
referred to as "Corporation"), with its principal office located at 200 East
Jackson Street, Muncie, Indiana, and Robert C. Connors (hereinafter referred to
as "Executive"), of Carmel, Indiana.
WHEREAS, the Corporation considers the continuance of proficient and
experienced management to be essential to protecting and enhancing the best
interests of the Corporation and its shareholders; and
WHEREAS, the Corporation desires to assure the continued services of the
Executive on behalf of the Corporation; and
WHEREAS, the Corporation recognizes 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 and its
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 desires 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 as its Senior Vice President and Chief Information Officer, the
Corporation 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, 2008;
provided, however, that commencing on December 31, 2008 and each December 31
thereafter, the term of this Agreement shall automatically be extended for one
additional year unless, not later than October 31, 2008 or October 31
immediately preceding any December 31 thereafter, the Corporation 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, 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
representing twenty-five percent (25%) or
more of the combined voting power of the
Corporation's then outstanding securities;
(2) persons constituting a majority of the Board
of Directors of the Corporation were not
directors of the Corporation for at least
the twenty-four (24) preceding months;
(3) the stockholders of the Corporation approve
a merger or consolidation of the Corporation
with any other corporation, other than (a) a
merger or consolidation which would result
in the voting securities of the Corporation
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 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 similar transaction) in
which no person acquires fifty percent (50%)
or more of the combined voting power of the
Corporation's then outstanding securities;
or
(4) the stockholders of the Corporation approve
a plan of complete liquidation of the
Corporation or an agreement for the sale or
disposition by the Corporation of all or
substantially all of the Corporation'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, and a determination of full
disability by the Corporation; 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 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 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
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 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 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 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 then existing policies on
death or Disability, and the Corporation 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 normal
retirement policy generally applicable to its salaried
employees at the time of the Change of Control, and the
Corporation 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, 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 that the Executive held
immediately prior to the Change of Control
of the Corporation, 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
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;
(3) the Corporation requires the Executive to be
relocated anywhere other than its 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 in accordance with
the Corporation'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 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 taking of
any action which would directly or
indirectly materially reduce any of such
benefits; or
(6) the failure of the Corporation 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 shall
be terminated by the Executive on account of Constructive Termination or by the
Corporation 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 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 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 shall pay to the Executive
a lump sum severance payment, in cash, equal to one and
one-half (1.50) 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 the 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 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 the Notice
of Termination and shall pay the same percentage of the
cost of such benefits as the Corporation 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), 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 of ss.280G of the Internal Revenue
Code ("Code"), the Corporation 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" under ss.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 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 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 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 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 to expressly
assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation
would be required to perform it if no such succession
had taken place. Failure of the Corporation 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 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,
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" shall mean the Corporation and any
successor to its 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. 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 or
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 under Section 4
shall survive the expiration of the term of this Agreement.
7. 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.
8. 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.
9. 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.
10. 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 has caused this Agreement to be
executed by their duly authorized officers, and the Executive has hereunder
subscribed his name, as of the day and year first above written.
"CORPORATION" "EXECUTIVE"
FIRST MERCHANTS CORPORATION
By ______________________________ By ______________________________
Michael C. Rechin Robert C. Connors
President & Chief Executive Officer
Exhibit 10.2
ELLINGTON
CHANGE OF CONTROL AGREEMENT
This Agreement is made and entered into as of January 1, 2008, by and
between First Merchants Corporation, an Indiana corporation (hereinafter
referred to as "Corporation"), with its principal office located at 200 East
Jackson Street, Muncie, Indiana, and Kimberly J. Ellington (hereinafter referred
to as "Executive"), of Yorktown, Indiana.
WHEREAS, the Corporation considers the continuance of proficient and
experienced management to be essential to protecting and enhancing the best
interests of the Corporation and its shareholders; and
WHEREAS, the Corporation desires to assure the continued services of the
Executive on behalf of the Corporation; and
WHEREAS, the Corporation recognizes 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 and its
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 desires 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 as its Senior Vice President and Director of Human Resources, the
Corporation 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, 2008;
provided, however, that commencing on December 31, 2008 and each December 31
thereafter, the term of this Agreement shall automatically be extended for one
additional year unless, not later than October 31, 2008 or October 31
immediately preceding any December 31 thereafter, the Corporation 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, 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
representing twenty-five percent (25%) or
more of the combined voting power of the
Corporation's then outstanding securities;
(2) persons constituting a majority of the Board
of Directors of the Corporation were not
directors of the Corporation for at least
the twenty-four (24) preceding months;
(3) the stockholders of the Corporation approve
a merger or consolidation of the Corporation
with any other corporation, other than (a) a
merger or consolidation which would result
in the voting securities of the Corporation
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 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 similar transaction) in
which no person acquires fifty percent (50%)
or more of the combined voting power of the
Corporation's then outstanding securities;
or
(4) the stockholders of the Corporation approve
a plan of complete liquidation of the
Corporation or an agreement for the sale or
disposition by the Corporation of all or
substantially all of the Corporation'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, and a determination of full disability by the
Corporation; 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 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 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 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 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
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 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 then existing policies on
death or Disability, and the Corporation 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 normal retirement policy
generally applicable to its salaried employees at the time
of the Change of Control, and the Corporation 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, 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 that the Executive held
immediately prior to the Change of Control
of the Corporation, 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
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;
(3) the Corporation requires the Executive to be
relocated anywhere other than its 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 in accordance with
the Corporation'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 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 taking of
any action which would directly or
indirectly materially reduce any of such
benefits; or
(6) the failure of the Corporation 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 shall
be terminated by the Executive on account of Constructive Termination or by the
Corporation 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 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 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 shall pay to the Executive a lump sum severance
payment, in cash, equal to one and one-half (1.50) 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 the 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
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 the Notice of Termination and
shall pay the same percentage of the cost of such benefits
as the Corporation 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), 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 of ss.280G of
the Internal Revenue Code ("Code"), the Corporation 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" under ss.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 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 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 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 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 to expressly assume and
agree to perform this Agreement in the same manner and to
the same extent that the Corporation would be required to
perform it if no such succession had taken place. Failure of
the Corporation 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 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, 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"
shall mean the Corporation and any successor to its 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. 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 or
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 under Section 4
shall survive the expiration of the term of this Agreement.
7. 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.
8. 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.
9. 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.
10. 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 has caused this Agreement to be
executed by their duly authorized officers, and the Executive has hereunder
subscribed his name, as of the day and year first above written.
"CORPORATION" "EXECUTIVE"
FIRST MERCHANTS CORPORATION
By ______________________________ By ______________________________
Michael C. Rechin Kimberly J. Ellington
President & Chief Executive Officer