CHANGE OF CONTROL AGREEMENT
This Agreement is made and entered into this ______ day of ______ , 1996,
by and between First Merchants Bank, National Association (hereafter referred
to as "Bank"), and First Merchants Corporation, an Indiana corporation
which owns Bank (hereinafter referred to as "Corporation"), both with their
principal offices and business located at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxx, and ___________ (hereinafter, referred to as "Executive" of Muncie,
Indiana).
WHEREAS, the Bank and Corporation consider the continuance of proficient
and experienced management to be essential to protecting and enhancing the
best interest of the Bank, Corporation and its shareholders, and
WHEREAS, the Bank and Corporation desire to assure the continued
services of Executive on behalf of Bank and Corporation, and
WHEREAS, the Bank and Corporation recognize that if faced with a
proposal for Change of Control, as hereinafter defined, 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 Bank
and Corporation and the shareholders, and it is necessary for 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 Bank and Corporation desire to provide fair and reasonable
benefits to Executive on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of these promises, the mutual covenants
and undertakings herein contained and the continued employment of Executive
by the Corporation as its ______ and by the Bank as its _______ , the Bank,
the Corporation and the Executive, each intending to be legally bound,
covenant and agree as follows:
1. TERM OF AGREEMENT.
The Agreement shall continue in effect through December 31, 1997;
provided, however, that commencing on December 31, 1997, and each December 31
thereafter, the term of this Agreement shall automatically be extended for
one additional year unless, not later that October 31st immediately preceding
each December 31, and every October 31, thereafter, the Bank or Corporation
shall have given notice that it does not wish to extend this Agreement; and
provided, further, that if a Change of Control of the Bank or 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 terms of this Article shall have the
following meaning throughout this Agreement:
(A) CAUSE: "Cause" shall be defined as:
(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 the following:
(1) any person (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than the Corporation, is or
becomes the Beneficial Owner (as defined
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in Rule 13d-3 under the Exchange Act) directly or indirectly of
securities of the Corporation or Bank representing twenty-five
percent (25%) or more of the combined voting power of the Bank
or Corporation's then outstanding securities;
(2) persons constituting a majority of the Board of Directors
of the Corporation or Bank were not directors of Employer for at
least twenty-four (24) preceding months;
(3) the stockholders of the Bank or Corporation approve a
merger or consolidation of the Bank or Corporation with any other
corporation, other than (1) a merger or consolidation which would
result in the voting securities of the Bank or 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 50 percent
of the combined voting power of the voting securities of the Bank
or Corporation or such surviving entity outstanding immediately
after such merger or consolidation or (2) a merger or
consolidation effected to implement a recapitalization of the Bank
or corporation (or similar transaction) in which no person acquires
50 percent or more of the combined voting power of the Bank or
Corporation's then outstanding securities; or
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(4) the stockholders of the Corporation approve a plan of complete
liquidation of the Bank or Corporation or an agreement for the sale or
disposition by the Bank or 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 Bank or
Corporation and a determination of full disability by the parties;
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 Executive to have been unable to perform
his duties with the Bank and/or Corporation on a full time basis for
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 Executive's employment
under the provisions so indicated.
(F) RETIREMENT: "Retirement" shall mean termination of employment
by the Executive in accordance with Bank's or Corporation's normal
retirement policy generally applicable to its salaried employees in
effect at the time of Change of Control
(3) TERMINATION
(A) GENERAL. If any of the events described in Section 2
constituting a Change in Control of the Bank or Corporation shall
have occurred, the Executive shall be entitled to the benefits
provided 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 Bank or Corporation for Cause of (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 Bank and Corporation
shall pay him his full salary through the Date of Termination at
the rate in effect on the date of the Notice of Termination, and the
Bank and Corporation shall have no further obligations under this
Agreement. If, following a Change of Control, the Executive's
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employment shall be terminated as a result of death or Disability,
compensation to the Executive shall be made pursuant to the Bank's
and Corporation's then existing policies on death or Disability and
the Bank 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 Bank's and Corporation's normal retirement policy
generally applicable to its salaried employees at the time of Change
of Control and the Bank and 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 in Control of the Bank or 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 Bank
or Corporation that the Executive held immediately prior to the Change
in Control of the Bank or 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 in Control;
(2) a reduction by the Bank or Corporation in the Executive's
annual base salary as in effect immediately prior to the Change in
Control of the Bank or Corporation or as the same may be increased
from time to time, except for across-the-board salary reductions
similarly affecting all management personnel of the Bank or
Corporation;
(3) the Bank and/or Corporation requires Executive to be
relocated anywhere other than the offices in Muncie, Indiana;
(4) the taking of any action by the Bank and/or Corporation to
deprive Executive of any material fringe benefit enjoyed by him at
the time of the Change of Control, or the failure by the Bank
and/or Corporation to provide him with the number of paid
vacation days to which he is entitled on the basis of years of
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service with the Bank and/or Corporation and in accordance with the
Bank's and/or Corporation's normal vacation policy in effect at the
time of Change of Control;
(5) the failure by the Bank or Corporation to continue to
provide Executive with benefits substantially similar to those
enjoyed by the Executive under any of the Bank or Corporation's
life insurance, medical, health and accident, or disability plans
in which the Executive was participating at the time of the Change
in Control of the Bank or Corporation, or the taking of any action
by the Bank or Corporation which would directly or indirectly
materially reduce any of such benefits; or
(6) the failure of the Bank or 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 in Control, if the employment by the Bank or
Corporation shall be terminated by the Executive on account of Constructive
Termination or by the Bank or 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, at the time such payments are due;
(B) Pay Executive an amount in cash, in a lump sum, which, when
added to the present value of all other compensation, benefits and
payments required to be included in the calculation under Section 280G of
the Internal Revenue Code and regulations thereunder, shall equal 299%
of the "base amount" as defined under Section 280G of the Internal Revenue
Code, provided such payment shall be reduced to the extent necessary
to prevent it from constituting a "parachute payment" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended.
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(C) For a period beginning with Executive's termination of
employment and not to exceed two years, the Bank or Corporation
shall arrange to provide Executive with life, disability, accident
and health insurance benefits substantially similar to those which
Executive was receiving immediately prior to the Notice of Termination.
(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 Executive under any Corporation stock
option plan (which Options shall be canceled upon the making of the
payment, referred to below), 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 shares price for Corporation Shares actually paid in connection with
any Change in Control of the Corporation, over the per share exercise
price of each Option held by Executive (whether or not then fully
exercisable), times (B) the number of Corporation Shares covered by
each such Option;
(E) The Bank or Corporation shall pay to 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;
(F) The Bank or Corporation shall provide Executive with individual
out placement services in accordance with the general custom and
practice generally accorded to an executive of Executive's position.
5. SUCCESSORS; BINDING AGREEMENT.
A. The Bank or Corporation will 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 Bank
or Corporation to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Bank or Corporation
would be required to perform it if no such succession had taken place.
Failure of the Bank or Corporation to obtain such assumption and
agreement prior to the effectiveness of any such
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succession shall be a breach of this Agreement and shall entitle
Executive to compensation from the Bank or Corporation in the same
amount and on the same terms to which Executive would be entitled
hereunder if Executive terminates his employment on account of
Constructive Termination following a Change in Control of the Bank
or 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, "Bank or Corporation" shall mean the Bank or Corporation
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 their estate.
6. GUARANTEE BY CORPORATION AND BANK
In consideration of the value of the continued employment of Executive
by the Bank or the Corporation, and the benefits derived by the Bank and the
Corporation from Executive's employment by the Bank and the Corporation, 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.
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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 you and such officer as may be specifically designated by the
Board. 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 section of the Exchange Act or
the Code shall be deemed also to refer to any successor provisions to such
sections. 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.
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 will 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 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.
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IN WITNESS WHEREOF, the Bank and the Corporation have caused this
Agreement to be executed by duly authorized officers of the respective
entities and the seals of the Bank and the Corporation to be affixed hereto,
and the Executive has hereunder subscribed his name, this __________ day of
______________, 1996.
"CORPORATION" "BANK"
FIRST MERCHANTS CORPORATION FIRST MERCHANTS BANK,
NATIONAL
ASSOCIATION
By: _____________________________ By: _____________________________
Printed: Xxxxxx X. Xxxxxxxx Printed: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board Its: Chairman of the Board
"EXECUTIVE"
By: _________________________________
Printed: ____________________________
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SCHEDULE A TO FIRST MERCHANTS CORPORATION
CHANGE OF CONTROL AGREEMENT
The Corporation's Change of Control Agreement covering Xxxxxx X.
Xxxxxxxx and Xxxxxxx X. Xxx are all in the form of Exhibit 10.5 and are
substantially identical.
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