EXHIBIT 4.02
FIRST MERCHANTS CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
INTRODUCTION
The First Merchants Corporation Employee Stock Purchase Plan (the "Plan") was
adopted by the Board of Directors (the "Board") of First Merchants Corporation
(the "Company") on February 9, 1999, subject to approval of the Company's
shareholders at their annual meeting on April 14, 1999. The effective date of
the Plan shall be July 1, 1999, if it is approved by the shareholders. The
purpose of the Plan is to provide eligible employees of the Company and its
subsidiaries a convenient opportunity to purchase shares of common stock of the
Company through annual offerings financed by payroll deductions. As used in this
Plan, "subsidiary" means a corporation or other form of business association of
which shares (or other ownership interests) having 50% or more of the voting
power are, or in the future become, owned or controlled, directly or indirectly,
by the Company.
The Plan may continue until all the stock allocated to it has been purchased or
until after the fifth offering is completed, whichever is earlier. The Board may
terminate the Plan at any time, or make such amendment of the Plan as it may
deem advisable, but no amendment may be made without the approval of the
Company's shareholders if it would materially: (i) increase the benefits
accruing to participants under the Plan; (ii) modify the requirements as to
eligibility for participation in the Plan; (iii) increase the number of shares
which may be issued under the Plan, (iv) increase the cost of the Plan to the
Company; or (v) alter the allocation of Plan benefits among participating
employees.
The Plan is not qualified under Section 401(a) of the Internal Revenue Code of
1986 (the "Code") and is not subject to any provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). It is the Company's intention to
have the Plan qualify as an "employee stock purchase plan" under Section 423 of
the Code, and the provisions of the Plan shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that Section
of the Code.
ADMINISTRATION
The Plan is administered by the Compensation and Human Resources Committee (the
"Committee"), which consists of two or more members of the Board, none of whom
are eligible to participate in the Plan and all of whom are "non-employee
directors," as such term is defined in Rule 16b-3(b)(3) of the Securities and
Exchange Commission, under the Securities Exchange Act of 1934, as amended (the
"1934 Act"). The Committee shall prescribe rules and regulations for the
administration of the Plan and interpret its provisions. The Committee may
correct any defect, reconcile any inconsistency or resolve any ambiguity in the
Plan. The actions and determinations of the Committee on matters relating to the
Plan are conclusive. The Committee
10
and its members may be addressed in care of the Company at its principal office.
The members of the Committee do not serve for fixed periods but may be appointed
or removed at any time by the Board.
STOCK SUBJECT TO THE PLAN
An aggregate of 250,000 shares of common stock, without par value, of the
Company (the "Common Stock") is available for purchase under the Plan. Shares of
Common Stock which are to be delivered under the Plan may be obtained by the
Company by authorized purchases on the open market or from private sources, or
by issuing authorized but unissued shares of Common Stock. In the event of any
change in the Common Stock through recapitalization, merger, consolidation,
stock dividend or split, combination or exchanges of shares or otherwise, the
Committee may make such equitable adjustments in the Plan and the then
outstanding offering as it deems necessary and appropriate including, but not
limited to, changing the number of shares of Common Stock reserved under the
Plan and the price of the current offering. If the number of shares of Common
Stock that participating employees become entitled to purchase is greater than
the number of shares of Common Stock available, the available shares shall be
allocated by the Committee among such participating employees in such manner as
it deems fair and equitable. No fractional shares of Common Stock shall be
issued or sold under the Plan.
ELIGIBILITY
All employees of the Company and such of its subsidiaries as shall be designated
by the Committee will be eligible to participate in the Plan. No employee shall
be eligible to participate in the Plan if his or her customary employment is
less than 20 hours per week. No employee shall be eligible to participate in an
offering unless he or she has been continuously employed by the Company or
subsidiary for at least six months as of the first day of such offering. No
employee shall be eligible to participate in the Plan if, immediately after an
option is granted under the Plan, the employee owns more than five percent (5%)
of the total combined voting power or value of all classes of shares of the
Company or of any parent or subsidiary of the Company.
OFFERINGS, PARTICIPATING, DEDUCTIONS
The Company may make up to five offerings of 12 months' duration each to
eligible employees to purchase Common Stock under the Plan. An eligible employee
may participate in such offering by authorizing at any time prior to the first
day of such offering a payroll deduction for such purpose in whole dollar
amounts, up to a maximum of twenty percent (20%) of his or her basic salary or
wages, excluding any bonus, overtime, incentive or other similar extraordinary
remuneration received by such employee. The Committee may at any time suspend an
offering if required by law or if determined by the Committee to be in the best
interests of the Company.
The Company will maintain or cause to be maintained payroll deduction accounts
for all participating employees. All funds received or held by the Company or
its subsidiaries under the
11
Plan may be, but need not be, segregated from other corporate funds. Payroll
deduction accounts will be credited with interest at such rates and intervals as
the Committee shall determine from time to time. Any balance remaining in any
employee's payroll deduction account at the end of an offering period will be
refunded to the employee.
Each participating employee will receive a statement of his or her payroll
deduction account and the number of shares of Common Stock purchased therewith
following the end of each offering period.
Subject to rules, procedures and forms adopted by the Committee, a participating
employee may at any time during the offering period increase, decrease or
suspend his or her payroll deduction, or may withdraw the entire balance of his
or her payroll deduction account and thereby withdraw from participation in an
offering. Under the initial rules established by the Committee, payroll
deductions may not be altered more than once in each offering period and
withdrawal requests may be received on or before the last day of such offering.
In the event of a participating employee's retirement, death or termination of
employment, his or her participation in any offering under the Plan shall cease,
no further amounts shall be deducted pursuant to the Plan, and the balance in
the employee's account shall be paid to the employee, or, in the event of the
employee's death, to the employee's beneficiary designated on a form approved by
the Committee (or, if the employee has not designated a beneficiary, to his or
her estate).
PURCHASE, LIMITATIONS, PRICE
Each employee participating in any offering under the Plan will be granted an
option, upon the effective date of such offering, for as many full shares of
Common Stock as the amount of his or her payroll deduction account at the end of
any offering period can purchase. No employee may be granted an option under the
Plan which permits his or her rights to purchase Common Stock under the Plan,
and any other stock purchase plan of the Company or a parent or subsidiary of
the Company qualified under Section 423 of the Code, to accrue at a rate which
exceeds $25,000 of Fair Market Value of such Common Stock (determined at the
time the option is granted) for each calendar year in which the option is
outstanding at any time. As of the last day of the offering period, the payroll
deduction account of each participating employee shall be totaled. If such
account contains sufficient funds to purchase one or more full shares of Common
Stock as of that date, the employee shall be deemed to have exercised an option
to purchase the largest number of full shares of Common Stock at the offering
price. Such employee's account will be charged for the amount of the purchase
and a stock certificate representing such shares will be issued.
12
The Committee shall determine the purchase price of the shares of Common Stock
which are to be sold under each offering, which price shall be the lesser of (i)
an amount equal to 85 percent of the Fair Market Value of the Common Stock at
the time such option is granted, or (ii) an amount equal to 85 percent of the
Fair Market Value of the Common Stock at the time such option is exercised.
"Fair Market Value" of a share of Common Stock on a given date is defined as the
average price between the highest "bid" and lowest "offered" quotations of a
share on such date (or, if none, on the most recent date on which there were bid
and offered quotations of a share), as reported by the National Association of
Securities Dealers Automated Quotation System, or other similar service selected
by the Committee. However, if the Common Stock is listed on a national
securities exchange, "Fair Market Value" is defined as the last reported sale
price of a share on such date, or if no sale took place, the last reported sale
price of a share of stock on the most recent day on which a sale of a share of
stock took place as recorded on such exchange. If the Common Stock is neither
listed on such date on a national securities exchange nor traded in the
over-the-counter market, "Fair Market Value" is defined as the fair market value
of a share on such date as determined in good faith by the Committee.
TRANSFER OF INTERESTS, STOCK CERTIFICATES
No option, right or benefit under the Plan may be transferred by a participating
employee other than by will or the laws of descent and distribution, and all
options, rights and benefits under the Plan may be exercised during the
participating employee's lifetime only by such employee or the employee's
guardian or legal representative. There are no restrictions imposed by or under
the Plan upon the resale of shares of Common Stock issued under the Plan.
Certain officers of the Company are subject to restrictions under Section 16(b)
of the 1934 Act. With respect to such officers, transactions under the Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the 1934 Act. To the extent any provision of the Plan or action
by the Committee fails to so comply, it shall be deemed null and void if
permitted by law and deemed advisable by the Committee.
Certificates for Common Stock purchased under the Plan may be registered only in
the name of the participating employee, or, if such employee so indicates on his
or her authorization form, in his or her name jointly with a member of his or
her family, with right of survivorship. An employee who is a resident of a
jurisdiction which does not recognize such a joint tenancy may have certificates
registered in the employee's name as tenant in common with a member of the
employee's family, without right of survivorship.
13