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): August 1, 2007
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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) On July 24, 2007, the Board of Directors of First Merchants Corporation
(the "Corporation") approved the establishment of the 2007 Directors' Deferred
Compensation Plan (the "Plan") for the purpose of permitting the non-employee
directors of the Corporation and the non-employee directors of certain
affiliates of the Corporation to elect to defer until a future date all or a
portion of the fees payable to them for their services as board members.
Effective as of August 1, 2007, the definitive Plan document was finalized and
executed by the Corporation. A copy of the Plan is attached hereto as Exhibit
10.1.
The Plan provides that participating non-employee directors may choose to defer
receipt until future periods of the fees payable to them based on their service
as directors. The Plan outlines several criteria for how deferral elections are
to be made, the parameters for how long receipt can be deferred, and the
occurrences that will accelerate payment of the deferred fees. Upon payment of
the fees under the Plan, the director will receive the deferred amount plus
interest at a variable rate equal to the greater of: (i) the Fed Funds Rate or
(ii) the Five-Year Treasury Interest Rate, but in no event shall the interest
rate exceed 120 percent of the Applicable Long Term Federal Rate for monthly
compounding.
The Corporation also intends to establish a "rabbi trust" in connection with the
Plan and to make contributions to the trust to provide itself with a source of
funds to assist it in meeting its liabilities under the Plan. However, the
Corporation's obligations under the Plan will remain an unsecured, unfunded
promise to pay benefits to the participants in accordance with the Plan's
provisions.
Item 9.01. Financial Statements and Exhibits.
(d) (10.1) 2007 Directors' Deferred Compensation Plan, dated as of August
1, 2007.
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: August 15, 2007
FIRST MERCHANTS CORPORATION
By: /s/Mark K. Hardwick
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Mark K. Hardwick,
Executive Vice President and
Chief Financial Officer
EXHIBIT INDEX
10.1 2007 Directors' Deferred Compensation Plan, dated as of August 1, 2007
Exhibit 10.1
FIRST MERCHANTS CORPORATION
2007 DIRECTORS' DEFERRED COMPENSATION PLAN
(Effective as of August 1, 2007)
Krieg DeVault LLP
One Indiana Square, Suite 2800
Indianapolis, IN 46204-2079
www.kriegdevault.com
ADOPTION OF
FIRST MERCHANTS CORPORATION
2007 DIRECTORS' DEFERRED COMPENSATION PLAN
Pursuant to resolutions adopted by the Board of Directors of First
Merchants Corporation (the "Company"), the undersigned officers of the Company
hereby adopt the First Merchants Corporation 2007 Directors' Deferred
Compensation Plan, effective as of August 1, 2007, on behalf of the Company, in
the form attached hereto.
Dated this 24th day of July, 2007.
FIRST MERCHANTS CORPORATION
By: /s/Michael C. Rechin
--------------------------------
Michael C. Rechin, President and
Chief Executive Officer
ATTEST:
/s/Mark K. Hardwick
-------------------------------------
Mark K. Hardwick, Executive Vice President and
Chief Financial Officer
FIRST MERCHANTS CORPORATION
2007 DIRECTORS' DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
PAGE
ARTICLE I INTRODUCTION............................................................................................1
Section 1.1 Purpose............................................................................1
Section 1.2 Effective Date; Plan Year..........................................................1
Section 1.3 Administration.....................................................................1
Section 1.4 Affiliates.........................................................................1
Section 1.5 Supplements........................................................................1
Section 1.6 Definitions........................................................................1
ARTICLE II ELIGIBILITY AND PARTICIPATION..........................................................................2
Section 2.1 Eligibility........................................................................2
Section 2.2 Deferral Election Form.............................................................2
ARTICLE III CONTRIBUTIONS AND ALLOCATIONS.........................................................................2
Section 3.1 Participant Deferral Contributions.................................................2
Section 3.2 Deferral Elections.................................................................2
Section 3.3 Plan Account.......................................................................4
Section 3.4 Investment Credits.................................................................4
Section 3.5 Account Allocations................................................................4
ARTICLE IV BENEFIT PAYMENTS.......................................................................................5
Section 4.1 Time of Payment of Benefits........................................................5
Section 4.2 Method of Payment..................................................................5
Section 4.3 Method of Payment Elections........................................................5
Section 4.4 Vesting............................................................................6
Section 4.5 Change in Control..................................................................6
Section 4.6 Unforeseeable Emergency............................................................7
Section 4.7 Acceleration of Time of Payment....................................................8
ARTICLE V PLAN ADMINISTRATION....................................................................................10
Section 5.1 Appointment of the Committee......................................................10
Section 5.2 Powers and Responsibilities of the Committee......................................10
Section 5.3 Liabilities.......................................................................10
ARTICLE VI BENEFIT CLAIMS........................................................................................11
ARTICLE VII FUNDING AND TRANSFERS................................................................................11
Section 7.1 Unfunded Status...................................................................11
Section 7.2 Trust.............................................................................11
ARTICLE VIII AMENDMENT AND TERMINATION OF THE PLAN...............................................................11
Section 8.1 Amendment of the Plan.............................................................11
Section 8.2 Termination of the Plan...........................................................11
ARTICLE IX PARTICIPATION BY AFFILIATES...........................................................................11
Section 9.1 Affiliate Participation...........................................................11
Section 9.2 Company Action Binding on Other Employers.........................................12
ARTICLE X MISCELLANEOUS..........................................................................................12
Section 10.1 Governing Law.....................................................................12
Section 10.2 Headings and Gender...............................................................12
Section 10.3 Withholding of Taxes..............................................................12
Section 10.4 Spendthrift Clause................................................................12
Section 10.5 Counterparts......................................................................12
Section 10.6 No Enlargement of Rights..........................................................12
Section 10.7 Limitations on Liability..........................................................12
Section 10.8 Incapacity of Participant or Beneficiary..........................................12
Section 10.9 Evidence..........................................................................13
Section 10.10 Action by Company.................................................................13
Section 10.11 Severability......................................................................13
Section 10.12 Information to be Furnished by a Participant......................................13
Section 10.13 Binding on Successors.............................................................13
ARTICLE I
INTRODUCTION
Section 1.1 Purpose. The purpose of the First Merchants Corporation 2007
Directors' Deferred Compensation Plan (the "Plan") is to permit non-employee
members of the Board of Directors (the "Board") of First Merchants Corporation
(the "Company") and non-employee members of the board of directors of Affiliates
who adopt the Plan with the Company's consent in accordance with Section 9.1, to
elect to defer all or a portion of the fees payable to them for their services
as board members. It is the intention of the Company and Affiliates that the
Plan constitute a deferred compensation arrangement that complies with Section
409A of the Internal Revenue Code of 1986, as amended (the "Code").
Consequently, the Plan will be administered and its provisions interpreted
consistently with that intention.
Section 1.2 Effective Date; Plan Year. The "Effective Date" of the Plan is
August 1, 2007. The "Plan Year" is the 12-month period beginning on each January
1 and ending on the next following December 31.
Section 1.3 Administration. The Plan will be administered by the
Compensation Committee of the Board (the "Committee"). The Committee, from time
to time, may adopt any rules and procedures it deems necessary or desirable for
the proper and efficient administration of the Plan that are consistent with the
terms of the Plan. The Committee may also delegate day-to-day administration to
individual employees of First Merchants Bank. Any notice or document required to
be given or filed with the Committee will be properly given or filed if
delivered to or mailed, by registered mail, postage paid, to the Compensation
Committee of the Board of Directors, First Merchants Corporation, 200 East
Jackson, Muncie, Indiana 47308, Attention: Human Resource Department.
Section 1.4 Affiliates. Any corporation or trade or business whose
employees are treated as being employed by the Company under Code Sections
414(b), 414(c), 414(m) or 414(o) (an "Affiliate") may adopt the Plan with the
Company's consent in accordance with Section 9.1.
Section 1.5 Supplements. The provisions of the Plan may be modified by
supplements to the Plan. The terms and provisions of each supplement are a part
of the Plan and supersede any other provisions of the Plan to the extent
necessary to eliminate any inconsistencies between the supplement and any other
Plan provisions.
Section 1.6 Definitions. The following terms are defined in the Plan in
the following Sections:
Term Plan Section
Acceleration Event........................................ 4.7
Account................................................... 3.3
Affiliate................................................. 1.4
Board..................................................... 1.1
Change in Control......................................... 4.5
Code...................................................... 1.1
Committee................................................. 1.3
Company................................................... 1.1
Director.................................................. 2.1
Effective Date............................................ 1.2
ERISA..................................................... 7.2
Fees...................................................... 3.1
Participant............................................... 2.2
Participant Deferral Contribution......................... 3.1
Plan...................................................... 1.1
Plan Year................................................. 1.2
Separation from Service................................... 4.1(b)
Total and Permanent Disability............................ 3.2(e)(ii)
Trust..................................................... 7.2
Unforeseeable Emergency................................... 3.2(e)(i)
ARTICLE II
ELIGIBILITY AND PARTICIPATION
Section 2.1 Eligibility. Any duly elected and serving non-employee member
of the Board or board of directors of an Affiliate that has adopted the Plan
under Article IX ("Director") is eligible to become a Participant in the Plan as
of the later of the Effective Date or the date the individual becomes a
Director.
Section 2.2 Deferral Election Form. A Director will become a "Participant"
by completing a deferral election form pursuant to Article III. A Participant
will cease to be an active Participant effective as of the earlier of the date
the Plan is terminated or the date the Participant is no longer serving as a
Director, so that he or she will not be entitled to make deferrals under Article
III on or after that date.
ARTICLE III
CONTRIBUTIONS AND ALLOCATIONS
Section 3.1 Participant Deferral Contributions. Subject to the terms and
limitations of this Article III, a Participant may elect, pursuant to Section
3.2, to have all or a portion of his Fees payable in any Plan Year withheld by
the Company and credited as a "Participant Deferral Contribution" under the
Plan. The term "contribution" is used for ease of reference; however,
contributions are merely credits to each Participant's Account, which is a
bookkeeping account. The term "Fees," for purposes of the Plan, means the fees
payable by the Company or an Affiliate to the Participant for the Participant's
services as a Director, including retainer fees for attendance at regularly
scheduled meetings, special meetings called from time to time, and fees for
attendance at any and all meetings of committees of the applicable board of
directors.
Section 3.2 Deferral Elections. Participant Deferral Contributions will be
withheld from a Participant's Fees in accordance with the following terms and
conditions.
(a) Requirement for Deferral Elections. As a condition to the Company's or an
Affiliate's obligation to withhold and the Committee's obligation to credit
Participant Deferral Contributions for the benefit of a Participant
pursuant to Section 3.1, the Participant must complete and file a deferral
election form with the Committee (in a format prescribed by the Committee).
(b) Timing of Execution and Delivery of Elections. To be effective to defer
any portion of a Participant's Fees, a deferral election form must be filed
with the Committee on or prior to the last day of the calendar year
preceding the initial Plan Year in which the services giving rise to the
Fees are performed. This Fee deferral election will remain effective for
all future years unless the Participant files a new Fee deferral election,
terminating or amending the Participant's Fee deferral election. For
example, to defer Fees payable with respect to director services performed
during the 2008 and subsequent Plan Years, an election must be filed on or
before December 31, 2007. This deferral election will apply in the 2008
Plan Year and all subsequent Plan Years until terminated or amended with
respect to a future Plan Year.
(c) Initial Eligibility. In the case of the first Plan Year in which an
individual becomes eligible to participate, the deferral election form may
be filed at any time within 30 days of the date the individual first
becomes eligible to participate (rather than the date specified under
subsection 3.2(b)). This initial election will only apply to Fees paid for
services performed after the filing of the deferral election form. This
special initial eligibility election rule will not apply if the Director is
or has been a participant in a deferred compensation arrangement required
to be aggregated with this Plan under the rules of Code Section 409A.
(d) Change of Deferral Elections. Subject to the provisions of subsection
3.2(e), as of December 31 of each year, a deferral election made for Fees
payable in a subsequent Plan Year will remain in effect for the Plan Year
and all future Plan Years, unless and until the election is revoked or a
new election filed, effective solely for future Plan Years. The revocation
or new election must be filed in accordance with the requirements of
subsection 3.2(b). No deferral election may be changed for Fees payable for
a Plan Year after the last day of the election period described in
subsection 3.2(b). For example, any election in place for 2008 Fees may not
be changed after December 31,2007, however, in December 2009 the
Participant may submit a new deferral election that terminates or changes
the amount of the deferral for the year 2010.
(e) Cancellation of Elections.
(i) Unforeseeable Emergency. The Committee, in its sole discretion, may
cancel a Participant's election to defer Fees if the Committee
determines the Participant has suffered an "Unforeseeable Emergency"
or has taken a hardship distribution pursuant to Treasury Regulation
1.401(k)-1(d)(3) from a plan qualified under Code Section 401(k). The
cancellation will apply to the period after the Committee's
determination. The Participant must submit a signed statement of the
facts causing the severe financial hardship and any other information
required by the Committee, in its sole discretion. "Unforeseeable
Emergency" means a severe financial hardship of the Participant
resulting from an illness or accident of the Participant, the
Participant's spouse, the Participant's beneficiary, or the
Participant's dependent (as defined in Code Section 152(a), without
regard to Code Sections 152(b)(1), (b)(2) and (d)(1)(B)); loss of the
Participant's property due to casualty (including the need to rebuild
a home following damage to a home not otherwise covered by insurance,
for example, not as a result of a natural disaster); imminent
foreclosure of or eviction from the Participant's primary residence;
the need to pay for medical expenses, including non-refundable
deductibles, as well as for the costs of prescription drug medication;
the need to pay for the funeral expenses of a spouse or a dependent
(as defined in Code Section 152(a)) or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the
control of the Participant.
(ii) Total and Permanent Disability. The Committee in its sole discretion,
may also cancel a Participant's election to defer fees if the
Committee determines that the Participant has incurred a "Total and
Permanent Disability." The determination of Total and Permanent
Disability will be made by a physician approved by the Committee. Any
cancellation will apply to the period after the Committee's
determination. A "Total and Permanent Disability" is a medically
determinable physical or mental impairment resulting in the
Participant's inability to perform the duties of his or her position
or any substantially similar position, where such impairment can be
expected to result in death or can be expected to last for a
continuous period of not less than six months.
Section 3.3 Plan Account. The Committee will establish and maintain an
"Account" under the Plan for each Participant and will increase and decrease a
Participant's Account as provided in Section 3.5.
Section 3.4 Investment Credits. A Participant's Account will be increased
or decreased to reflect the increase or decrease in the value of the Account
established for the Participant. The amount of interest credited will be
determined by treating the Participant's Account as if such balance were
invested in the greater of the Fed Funds Rate or the Five-Year Treasury Interest
Rate determined as of the first business day of each quarter of the calendar
year, but not to exceed 120 percent of the Applicable Long Term Federal rate for
monthly compounding. In the event any Participant is entitled to a distribution
of the Account under Article IV, the increase or decrease in the value of the
Account will be allocated as of the last day of the quarter immediately
preceding the quarter in which the payment to the Participant will be made.
Section 3.5 Account Allocations. As of each accounting date, each
Participant's Account will be:
(i) Increased by the amount credited to the Account under Section 3.1
since the last accounting;
(ii) Increased or decreased by the amount determined under Section 3.4
since the last accounting; and
(iii) Decreased by any payment made under Article IV.
The accounting date under this Section will be any date determined by the
Committee. However, the accounting required under this Section must be made, at
a minimum, as of the last day of each Plan Year.
ARTICLE IV
BENEFIT PAYMENTS
Section 4.1 Time of Payment of Benefits. Except as provided in Sections
4.5 through 4.7, a Participant will receive or will begin to receive payment of
his Account balance (as determined under Article III) within 90 days following
the date specified for payment or the commencement of payment effectively
elected by the Participant, as provided in subsection 4.1(a).
(a) Timing of Execution and Delivery of Election. A Participant may elect the
date his Account balance will be paid or will begin to be paid by
completing and filing with the Committee a payment election form approved
by the Committee. To be effective, the election under this Section must be
filed with the Committee no later than the later of: (i) the time the
Participant first makes a deferral election under this Plan (or under any
other plan required to be aggregated with this Plan pursuant to the
requirements of Code Section 409A); or (ii) December 31, 2007. If no date
is specified, payment will be made or commenced within 90 days following
the Participant's Separation from Service.
(b) Separation from Service. "Separation from Service" means the date on
which the Participant ceases to be a Director.
(c) Change of Payment Election. An election as to the date payment will be
made or commenced may be changed by a Participant by filing a new payment
election form with the Committee; provided, however, that: (i) the new
election will not take effect until at least 12 months after the date the
new election is filed, (ii) the single lump sum payment or the commencement
of installment payments will be delayed for a period of not less than five
years from the date the payment or first payment would otherwise have been
made, and (iii) the new election is filed with the Committee at least 12
months prior to the date of the first scheduled payment under the Plan.
Section 4.2 Method of Payment. Except as provided in Sections 4.5 through 4.7,
a Participant may elect, in accordance with Section 4.3, to have the balance of
his or her Account distributed in cash in:
(a) A single lump sum payment; or
(b) Annual installment payments over a period of 2 to 10 years.
Section 4.3 Method of Payment Elections.
(a) Initial Election. A Participant may elect the manner in which his Account
balance will be paid to him under Section 4.2 in accordance with the terms
and conditions of this Section. To make an election, a Participant must
file an election with the Committee (on a form or forms prescribed by the
Committee). To be effective, the election under this Section must be filed
with the Committee no later than the later of: (i) the time the Participant
first makes a deferral election under the Plan; or (ii) December 31, 2007.
If no election is made or if the election is not timely or properly made,
distribution will be made in the form of a single lump sum payment.
(b) Change of Method of Payment Election. An election as to the manner of
payment may not be changed after the payment has been made or payments have
commenced. Prior to that time, a Participant may change his election by
filing a new election form with the Committee; provided, however, that: (i)
the new election will not take effect until at least 12 months after the
date the new election is filed; (ii) the single lump sum payment or the
commencement of installment payments with respect to which such election is
made must be deferred for a period of not less than five years from the
date such payment would otherwise have been made; and (iii) the new
election is filed at least 12 months prior to the date of the first
scheduled payment under the Plan.
(c) Installments. If installment distributions are elected, the initial
annual installment amount will be the Account balance otherwise payable in
a single sum multiplied by a fraction, the numerator of which is one and
the denominator of which is the total number of installment distributions.
Subsequent annual installments will also be a fraction of the unpaid
Account balance, the numerator of which is always one but the denominator
of which is the denominator used in calculating the previous installment
minus one. For example, if five annual installment payments are elected,
the initial installment will be one-fifth of the vested single sum Account
balance, the second installment will be one-fourth of the remaining Account
balance and the third installment will be one-third of the remaining
Account balance, and so on.
Section 4.4 Vesting. A Participant will be fully "vested" in his Account
balance at all times.
Section 4.5 Change in Control. In the event a Change in Control occurs,
the Participant's Account will be distributed no later than 90 days following
such determination, in a single lump sum payment. A "Change in Control" means
any of the following:
(a) A change in the ownership of the Company occurs on the date that any
person, or group of persons, as defined below, acquires ownership of stock
of the Company that, together with stock held by the person or group,
constitutes more than 50 percent of the total fair market value or total
voting power of the stock of the Company. However, if any person or group
is considered to own more than 50 percent of the total fair market value or
total voting power of the stock, the acquisition of additional stock by the
same person or group is not considered to cause a change in the ownership
of the Company (or to cause a change in the effective control of the
Company as defined in subsection 4.5(b)). An increase in the percentage of
stock owned by any person or group, as a result of a transaction in which
the Company acquires its stock in exchange for property will be treated as
an acquisition of stock for purposes of this subsection. This subsection
only applies when there is a transfer of stock of the Company (or issuance
of stock of a corporation) and stock in the Company remains outstanding
after the transaction.
For purposes of this subsection and subsection 4.5(b), persons will
not be considered to be acting as a group solely because they purchase or
own stock of the Company at the same time, or as a result of the same
public offering. However, persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock or similar business
transaction with the Company. If a person, including an entity, owns stock
in both corporations that enter into a merger, consolidation, purchase or
acquisition of stock or similar transaction, such shareholder is considered
to be acting as a group with other shareholders only with respect to the
ownership in that corporation before the transaction giving rise to the
change and not with respect to the ownership interest in the other
corporation.
(b) Change in the Effective Control. A change in the effective control of the
Company will occur when: (i) any person or group acquires, or has acquired
during the 12-month period ending on the date of the most recent
acquisition by such person(s), ownership of stock of the Company possessing
30 percent or more of the total voting power; or (ii) a majority of members
of the Board is replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the members of the
board of directors prior to the date of the appointment or election.
However, if any person or group is considered to effectively control the
Company, the acquisition of additional control of the Company by the same
person(s) is not considered to cause a change in the effective control.
(c) Change in the Ownership of a Substantial Portion of the Company's Assets.
A change in the ownership of a substantial portion of the Company's assets
occurs on the date that any person or group acquires, or has acquired
during the 12-month period ending on the date of the most recent
acquisition by such person(s), assets from the Company that have a total
gross fair market value equal to or more than 40 percent of the total gross
fair market value of all of the assets of the Company immediately prior to
such acquisition(s). Gross fair market value means the value of the assets
of the Company, or the value of the assets being disposed of, determined
without regard to any liabilities associated with such assets.
However, there is no Change in Control under this subsection when
there is a transfer to an entity that is controlled by the shareholders of
the Company immediately after the transfer. A transfer of assets by the
Company is not treated as a change in the ownership of such assets if the
assets are transferred to: (i) a shareholder of the Company (immediately
before the asset transfer) in exchange for or with respect to its stock;
(ii) an entity, 50 percent or more of the total value or voting power of
which is owned, directly or indirectly, by the Company; (iii) a person, or
group of persons, that owns, directly or indirectly, 50 percent or more of
the total value or voting power of all the outstanding stock of the Company
or (iv) an entity, at least 50 percent of the total value or voting power
of which is owned, directly or indirectly, by a person described in (iii).
For purposes of this subsection, except as otherwise provided, a person's
status is determined immediately after the transfer of the assets. For
example, a transfer to a corporation in which the Company has no ownership
interest before the transaction, but which is a majority-owned subsidiary
of the Company after the transaction, is not treated as a change in the
ownership of the assets of the Company.
For purposes of this subsection, persons will not be considered to be
acting as a group solely because they purchase assets of the Company at the
same time. However, persons will be considered to be acting as a group if
they are owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of assets, or similar business transaction with the
Company. If a person, including an entity shareholder, owns stock in both
corporations that enter into a merger, consolidation, purchase or
acquisition of assets, or similar transaction, such shareholder is
considered to be acting as a group with other shareholders in a corporation
only to the extent of the ownership in that corporation before the
transaction giving rise to the change and not with respect to the ownership
interest in the other corporation.
Notwithstanding the foregoing, the acquisition of common stock of the
Company by any retirement plan sponsored by the Company or an Affiliate
will not constitute a Change in Control.
Section 4.6 Unforeseeable Emergency. In the event the Committee determines
in its sole discretion that a Participant has experienced an Unforeseeable
Emergency, all or a portion of a Participant's Account may be distributed no
later than 90 days following such determination, in a single lump sum payment.
The Participant must submit a signed statement of the facts causing the severe
financial hardship and any other information required by the Committee, in its
sole discretion. Payment under this Section is subject to the following
conditions:
(a) The emergency must not be able to be relieved through reimbursement or
compensation from insurance or otherwise, by liquidation of the
Participant's assets, to the extent liquidation of such assets would not
cause severe financial hardship, or by cessation of deferrals under this
Plan.
(b) The amount of the distribution must be limited to the amount reasonably
necessary to satisfy the emergency need (which may include amounts
necessary to pay any Federal, state or local income taxes or penalties
reasonably anticipated to result from the distribution) and must take into
account any additional compensation available due to cancellation of a
deferral election under subsection 3.2(e).
Section 4.7 Acceleration of Time of Payment. Except as provided in
Sections 4.5, 4.6 or this Section, the time or schedule of payment of a
Participant's Account provided in Sections 4.1 through 4.4 may not be
accelerated. The time or schedule of payment of a Participant's Account may be
accelerated in the following circumstances, each of which is an "Acceleration
Event," to a time that is no later than 90 days following the Committee's
determination that one of the Acceleration Events has occurred:
(a) Domestic Relations Order. The time or schedule of a payment from a
Participant's Account may be accelerated to make a payment to an individual
other than the Participant as may be necessary to fulfill a domestic
relations order (as defined in Code Section 414(p)(1)(B)).
(b) Conflicts of Interest. The time or schedule of a payment from a
Participant's Account may be accelerated to the extent reasonably necessary
to avoid the violation of an applicable Federal, state, local or foreign
ethics law or conflicts of interest law (including where such payment is
reasonably necessary to permit the service provider to participate in
activities in the normal course of his or her position in which the service
provider would otherwise not be able to participate under an applicable
rule). A payment is reasonably necessary to avoid the violation of Federal,
state, local or foreign ethics laws or conflicts of interest law if the
payment is a necessary part of a course of action that results in
compliance with a Federal, state, local or foreign ethics law or conflicts
of interest law that would be violated absent such course of action,
regardless of whether other actions would also result in compliance with
the Federal, state, local or foreign ethics law or conflicts of interest
law.
(c) Income Inclusion Under Code Section 409A. The time or schedule of a
payment from a Participant's Account may be accelerated to pay the income
tax, interest and penalties imposed if the Plan fails to meet the
requirements of Code Section 409A and related regulations; provided,
however, such payment will not exceed the amount required to be included in
income as a result of the failure to comply with the requirements of Code
Section 409A and related regulations.
(d) Plan Termination. The time or schedule of payment or commencement of
payments from a Participant's Account may be accelerated when the Plan is
terminated in accordance with one of the following:
(i) The Company terminates the Plan within 12 months of a corporate
dissolution taxed under Code Section 331, or with the approval of a
bankruptcy court pursuant to 11 U.S.C. ss.503(b)(1)(A), provided that
the amounts deferred under the Plan are included in the Participants'
gross incomes in the latest of the following years (or, if earlier,
the taxable year in which the amount is constructively received).
(A) The calendar year in which the Plan termination and liquidation
occurs;
(B) The first calendar year in which the amount is no longer subject
to a substantial risk of forfeiture; or
(C) The first calendar year in which the payment is administratively
practicable.
(ii) The Company's irrevocable action to terminate and liquidate the Plan
within the 30 days preceding or the 12 months following a change in
control as defined in Treasury Regulation 1.409A-3(i)(5). For purposes
of this subsection 4.7(e)(ii), the Plan may be terminated only if all
agreements, methods, programs, and other arrangements sponsored by the
Company and all participating Affiliates immediately after the time of
the change in control with respect to which deferrals of compensation
are treated as having been deferred under a single plan under Treasury
Regulation 1.409A-1(c)(2) are terminated and liquidated with respect
to each Participant that experienced the change in control, so that
under the terms of the termination and liquidation all such
Participants are required to receive all amounts of compensation
deferred under the Plan and other arrangements within 12 months of the
date the Company irrevocably takes all necessary action to terminate
and liquidate the Plan and other arrangements.
(iii)The Company's termination and liquidation of the Plan, provided that:
(A) The termination and liquidation does not occur proximate to a
downturn in the financial health of the Company;
(B) The Company terminates and liquidates all agreements, programs,
and other arrangements that would be aggregated under Treasury
Regulation ss.1.409A-1(c) if the Participant had deferrals of
compensation under all of the agreements, methods, programs, and
other arrangements that are terminated and liquidated;
(C) No payments in liquidation of the Plan are made within 12 months
of the date the Company takes all necessary action to irrevocably
terminate and liquidate the plan other than payments that would
be payable under the terms of the Plan if the action to terminate
and liquidate the Plan had not occurred;
(D) All payments are made within 24 months of the date the Company
takes all necessary action to irrevocably terminate and liquidate
the Plan; and
(E) The Company does not adopt a new plan or arrangement that would
be aggregated with any terminated and liquidated plan or
arrangement under Treasury Regulation ss.1.409A-1(c) if the same
Participant participated in both plans or arrangements, at any
time within three years following the date the Company takes all
necessary action to irrevocably terminate and liquidate the Plan.
(iv) Such other events and conditions as the Internal Revenue Service may
prescribe in generally applicable guidance published in the Internal
Revenue Bulletin.
ARTICLE V
PLAN ADMINISTRATION
Section 5.1 Appointment of the Committee. The Committee, or a duly
authorized officer or officers of the Company empowered by the Committee to act
on its behalf, will be responsible for administering the Plan, and the Committee
will be charged with the full power and the responsibility for administering the
Plan in all its details.
Section 5.2 Powers and Responsibilities of the Committee.
(a) Committee Powers. The Committee will have all powers necessary to
administer the Plan, including the power to construe and interpret the Plan
documents; to decide all questions relating to an individual's eligibility
to participate in the Plan; to determine the amount, manner and timing of
any distribution of benefits or withdrawal under the Plan; to resolve any
claim for benefits in accordance with Article VI, and to appoint or employ
advisors, including legal counsel, to render advice with respect to any of
the Committee's responsibilities under the Plan. Any construction,
interpretation, or application of the Plan by the Committee will be final,
conclusive and binding.
(b) Records and Reports. The Committee will be responsible for maintaining
sufficient records to determine each Participant's eligibility to
participate in the Plan, and for purposes of determining the amount of
contributions that may be made on behalf of the Participant under the Plan.
(c) Rules and Decisions. The Committee may adopt such rules as it deems
necessary, desirable, or appropriate in the administration of the Plan. All
rules and decisions of the Committee will be applied uniformly and
consistently to all Participants in similar circumstances. When making a
determination or calculation, the Committee will be entitled to rely upon
information furnished by a Participant or beneficiary, the Company or the
legal counsel of the Company.
(d) Application for Benefits. The Committee may require a Participant or
beneficiary to complete and file with it an application for a benefit, and
to furnish all pertinent information requested by it. The Committee may
rely upon all such information so furnished to it, including the
Participant's or beneficiary's current mailing address.
(e) Delegation. The Committee may authorize one or more officers of the
Company to perform administrative responsibilities on its behalf under the
Plan. Any such duly authorized officer will have all powers necessary to
carry out the administrative duties delegated to such officer by the
Committee.
Section 5.3 Liabilities. The individual members of the Committee will be
indemnified and held harmless by the Company with respect to any alleged breach
of responsibilities performed or to be performed hereunder.
ARTICLE VI
BENEFIT CLAIMS
While a Participant or beneficiary need not file a claim to receive his
benefit under the Plan, if he wishes to do so, a claim must be made in writing
and filed with the Committee. If a claim is denied, the Committee will furnish
the claimant with written notice of its decision. A claimant may request a
review of the denial of a claim for benefits by filing a written request with
the Committee. The Committee will afford the claimant a full and fair review of
such request.
ARTICLE VII
FUNDING AND TRANSFERS
Section 7.1 Unfunded Status. The Plan will be maintained in such a fashion
that at all times for purposes of the Code it will be unfunded and will
constitute a mere promise by the Company to make Plan benefit payments in the
future. Any and all rights created under this Plan will be unsecured contractual
rights against the Company.
Section 7.2 Trust. Notwithstanding the provisions of Section 7.1, the
Committee may, in its discretion, satisfy all or any part of the Company's
obligations under the Plan from a trust established by the Company in connection
with the Plan ("Trust") or from an insurance contract, annuity or similar
vehicle owned by the Company or by setting aside and investing amounts deferred
under the Plan as an asset of the Company. Any such Trust or other vehicle will
constitute solely a means to assist the Company in meeting its promised
obligations under the Plan and will not constitute a funded account within the
meaning of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or the Code, nor will it create a security interest for the benefit of
any Participant or beneficiary. Any Trust created hereunder will conform in
substantially all respects to the terms of the Model Trust, as described in
Revenue Procedure 92-64.
ARTICLE VIII
AMENDMENT AND TERMINATION OF THE PLAN
Section 8.1 Amendment of the Plan. The Company may amend the Plan at any
time in its sole discretion. Notwithstanding the foregoing, the Company may not
amend the Plan to reduce a Participant's Account balance as determined on the
day preceding the effective date of the amendment.
Section 8.2 Termination of the Plan. The Company may terminate the Plan at
any time in its sole discretion. Absent an amendment to the contrary, Plan
benefits that had accrued prior to the termination will be paid at the times and
in the manner provided for by the Plan at the time of the termination.
ARTICLE IX
PARTICIPATION BY AFFILIATES
Section 9.1 Affiliate Participation. Any Affiliate may adopt the Plan and
become a participating Company under the Plan by filing with the Committee:
(a) A certified copy of a resolution of its board of directors to that
effect; and
(b) A written document signed by an authorized officer of the Company which
indicates the consent of the Company to that action.
Notwithstanding any provision herein to the contrary, First Merchants Bank,
N.A., First Merchants Bank of Central Indiana, N.A., First Merchants Trust
Company, N.A., Commerce National Bank and Lafayette Bank and Trust, N.A., shall
automatically be participating Affiliates as of the Effective Date.
Section 9.2 Company Action Binding on Other Employers. As long as the
Company is the sponsor of the Plan, it is empowered to act for any other
participating Affiliate in all matters relating to the Plan or the Committee.
ARTICLE X
MISCELLANEOUS
Section 10.1 Governing Law. The Plan shall be construed, regulated and
administered according to the laws of the State of Indiana, without reference to
that state's choice of law principles, except in those areas preempted by the
laws of the United States of America in which case the federal laws will
control.
Section 10.2 Headings and Gender. The headings and subheadings in the Plan
have been inserted for convenience of reference only and will not affect the
construction of the Plan provisions. In any necessary construction, the
masculine will include the feminine and the singular the plural, and vice versa.
Section 10.3 Withholding of Taxes. The Company will withhold from any
amount payable under this Plan all federal, state, city and local taxes as
legally required.
Section 10.4 Spendthrift Clause. No benefit or interest available under
the Plan will be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment or garnishment by
creditors of a Participant or a Participant's beneficiary, either voluntarily or
involuntarily.
Section 10.5 Counterparts. This Plan may be executed in any number of
counterparts, each one constituting but one and the same instrument, and may be
sufficiently evidenced by any one counterpart.
Section 10.6 No Enlargement of Rights. Nothing contained in the Plan may
be construed as a contract of employment between the Company and any person, nor
may the Plan be deemed to give any person the right to be retained as a director
or limit the right of the Company to dismiss a director.
Section 10.7 Limitations on Liability. Notwithstanding any other provision
of the Plan, neither the Company nor any individual acting as an employee or
agent of the Company will be liable to a Participant or any beneficiary for any
claim, loss, liability or expense incurred in connection with the Plan, except
when the same has been judicially determined to be due to the gross negligence
or willful misconduct of that person.
Section 10.8 Incapacity of Participant or Beneficiary. If any person
entitled to receive a distribution under the Plan is physically or mentally
incapable of personally receiving and giving a valid receipt for any payment due
(unless a prior claim for the distribution has been made by a duly qualified
guardian or other legal representative), then, unless and until a claim for the
distribution has been made by a duly appointed guardian or other legal
representative of the person, the Committee may provide for the distribution to
be made to any other individual or institution then contributing toward or
providing for the care and maintenance of the person. Any payment made for the
benefit of the person under this Section will be a payment for the account of
such person and a complete discharge of any liability of the Company and the
Plan.
Section 10.9 Evidence. Evidence required of anyone under the Plan may be
by certificate, affidavit, document or other information which the person
relying on the evidence considers pertinent and reliable, and signed, made or
presented by the proper party or parties.
Section 10.10 Action by Company. Any action required of or permitted by
the Company under the Plan will be by resolution of the Board, by the
Compensation Committee of the Board, or by a person or persons authorized by
resolution of the Compensation Committee or the Board.
Section 10.11 Severability. In the event any provisions of the Plan are
held to be illegal or invalid for any reason, the illegality or invalidity will
not affect the remaining parts of the Plan, and the Plan will be construed and
endorsed as if the illegal or invalid provisions had never been contained in the
Plan.
Section 10.12 Information to be Furnished by a Participant. A Participant,
or any other person entitled to benefits under the Plan, must furnish the
Committee with any and all documents, evidence, data or other information the
Committee considers necessary or desirable for the purpose of administering the
Plan. Benefit payments under the Plan are conditioned on a Participant (or other
person who is entitled to benefits) furnishing full, true and complete data,
evidence or other information to the Committee, and on the prompt execution of
any document reasonably related to the administration of the Plan requested by
the Committee.
Section 10.13 Binding on Successors. The Plan will be binding upon and
inure to the benefit of the Company and its successors and assigns, and the
successors, assigns, designees and estates of a Participant. The Plan will also
be binding upon and inure to the benefit of any successor organization
succeeding to substantially all of the assets and business of the Company, but
nothing in the Plan will preclude the Company from merging or consolidating into
or with, or transferring all or substantially all of its assets to, another
organization which assumes the Plan and all obligations of the Company
hereunder. The Company agrees that it will make appropriate provision for the
preservation of a Participant's rights under the Plan in any agreement or plan
which it may enter into to effect any merger, consolidation, reorganization or
transfer of assets. Upon such a merger, consolidation, reorganization, or
transfer of assets and assumption of Plan obligations of the Company, the term
"Company" will refer to such other organization and the Plan will continue in
full force and effect.