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"), with its principal
office located at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxx, and ____________
(hereinafter referred to as "Executive"), of Portland, Indiana.
WHEREAS, the Corporation is the parent corporation of The First National
Bank of Portland, a national banking association (hereinafter referred to as
"Bank"), with its principal office located at 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx,
Xxxxxxx; and
WHEREAS, Executive is the _______________________ of the Bank; and
WHEREAS, the Corporation considers the continuance of proficient and
experienced management to be essential to protecting and enhancing the best
interests of the Bank, the Corporation, and the Corporation's shareholders; and
WHEREAS, the Corporation desires to assure the continued services of
Executive on behalf of the Bank and the Corporation; and
WHEREAS, the Corporation recognizes that if a proposal for a Change of
Control, as hereinafter defined, should occur, the uncertainty and questions
which may be raised among management may result in the departure or distraction
of key management personnel, to the detriment of the Bank, the Corporation, and
the Corporation's shareholders; and
WHEREAS, the Corporation desires 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 the mutual covenants and undertakings
herein contained and the continued employment of Executive by the Bank as its
Chief Executive Officer, 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 until
________________________________; provided, however, if a Change of Control of
the Corporation, as defined in Section 2, shall have occurred during the term of
this Agreement, this Agreement shall continue in effect until the earlier of (a)
the second anniversary of the Executive's Date of Termination, as defined in
Section 2, or (b) Executive's sixty-fifth (65th) birthday.
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.
X. XXXX 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,
and a determination of full disability by 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 Executive to have been
unable to perform his duties with 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 party 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
Executive in accordance with 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 shall have
occurred, 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
Executive, (b) by the
Bank or the Corporation for Cause, or (c) by Executive other
than on account of Constructive Termination (as hereinafter
defined).
B. If, following a Change of Control, Executive's employment shall
be terminated for Cause, 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 Bank and the
Corporation shall have no further obligations under this
Agreement. If, following a Change of Control, Executive's
employment shall be terminated as a result of death or
Disability, compensation to Executive shall be made pursuant to
the Bank'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,
Executive's employment is terminated by and at the request of
Executive as a result of Retirement, compensation to the
Executive shall be made pursuant to the Bank's normal retirement
policy generally applicable to its salaried employees at the
time of the Change of Control, and the Bank and the Corporation
shall have no further obligations under this Agreement.
C. CONSTRUCTIVE TERMINATION. Executive shall be entitled to
terminate his employment upon the occurrence of Constructive
Termination. For purposes of this Agreement, "Constructive
Termination" shall mean, without Executive's express written
consent, the occurrence, after a Change in Control of the
Corporation, of any of the following circumstances:
(1) the assignment to Executive of any duties inconsistent
(unless in the nature of a promotion) with the position in
the Bank that Executive held immediately prior to the Change
in Control of the Corporation, or a significant adverse
reduction or alteration in the nature or status of
Executive's position, duties or responsibilities or the
conditions of Executive's employment from those in effect
immediately prior to such Change in Control;
(2) a reduction in Executive's annual base salary, as in effect
immediately prior to the Change in 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 Bank;
(3) the Bank and/or the Corporation requires Executive to be
relocated anywhere other than the Bank's offices in
Portland, Indiana;
(4) the taking of any action to deprive 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 Bank and in accordance with the Bank's normal
vacation policy in effect at the time of the Change of
Control;
(5) the failure to continue to provide Executive with benefits
substantially similar to those enjoyed by Executive under
any of the Bank's life insurance, medical, health and
accident, or disability plans in which 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 Bank shall
be terminated by Executive on account of Constructive Termination or by
the Bank or the Corporation other than for Cause, death, Disability, or
Retirement (by and at the request of Executive), then Executive shall be
entitled to the benefits provided below:
A. No later than the fifth day following the Date of Termination,
the Bank or the Corporation shall pay to 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 Executive is entitled under any incentive, bonus or
other compensation plan of the Bank in effect at the time such
payments are due;
B. The Bank or the Corporation shall pay to 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 ss.280G of the Internal
Revenue Code and regulations thereunder, shall equal two hundred
ninety-nine percent (299%) of the "base amount," as defined
under ss.280G of the Internal Revenue Code; provided, however:
(1) the amount payable under this Section 4(B) shall be reduced
to the extent necessary to prevent it from constituting a
"parachute payment" within the meaning of ss.280G of the
Internal Revenue Code; except that the reduction, if any,
(2) the reduction, if any, made pursuant to clause (1) of this
Section 4(B) shall not include any benefits payable to
Executive under certain benefit plans which were established
by the Bank through Bank Compensation Strategies Group prior
to March 31, 1999, and previously disclosed to the
Corporation, even if such non-inclusion causes the amount
payable under this Section 4(B) to constitute a "parachute
payment"within the meaning of ss.280G of the Internal
Revenue Code;
C. During the period beginning with 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 Bank or the 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.
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 Executive to compensation from the 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 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, "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 Executive and his personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amount
would still be payable to Executive hereunder had 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 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
Internal Revenue 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. 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 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.
9. 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 canceled.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officer, and Executive has hereunder subscribed
his name, this _______ day of ______________________, 1999.
"CORPORATION" "EXECUTIVE"
FIRST MERCHANTS CORPORATION
By ______________________________ By ______________________________
Xxxxxxx X. Xxx, President __________________
SCHEDULE A TO FIRST MERCHANTS CORPORATION
CHANGE OF CONTROL AGREEMENT
The Corporation's Change of Control Agreement covering Xxxxx Xxxxxx and
Xxxxx X. Xxxxxxxxxx are all in the form of Exhibit 10.2 and are substantially
identical with the exception of Section 1. The term of Xxxxx Xxxxxx'x agreement
is as follows:
The Agreement shall continue in effect until Executive is no longer
the Chief Executive Officer of the Bank; provided, however, if a Change of
Control of the Corporation, as defined in Section 2, shall have occurred
during the term of this Agreement, this Agreement shall continue in effect
until the earlier of (a) the second anniversary of the Executive's Date of
Termination, as defined in Section 2, or (b) Executive's sixty-fifth (65th)
birthday.
The term of Xxxxx Xxxxxxxxxx'x agreement is as follows:
The Agreement shall continue in effect until March 31, 2002, unless
Executive's employment with the Bank terminates before that date; provided,
however, if a Change of Control of the Corporation, as defined in Section
2, shall have occurred during the term of this Agreement, this Agreement
shall continue in effect until the earlier of (a) the second anniversary of
the Executive's Date of Termination, as defined in Section 2, or (b)
Executive's sixty-fifth (65th) birthday.
