FIRST MERCHANTS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN (1994)
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 December 14, 1993, subject to approval of the Company's
shareholders at their annual meeting on March 31, 1994. The effective date of
the Plan shall be July 1, 1994, if it is approved by the shareholders. The pur-
pose of the Plan is to provide eligible employees of the Company and its subsid-
iaries a convenient opportunity to purchase shares of common stock of the
Company through annual offerings financed by payroll deductions. 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 par-
ticipants 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 Retire-
ment 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 Committee (the "COMMITTEE"), which
consists of three or more members of the Board, none of whom are eligible to
participate in the Plan and all of whom shall be "disinterested persons," as
such term is defined in the rules of the Securities and Exchange Commission, as
amended from time to time. 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 and its members may be addressed in
care of the Company at its principal executive office. The members of the Com-
mittee 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 112,500 shares of common stock, without par value, of the Com-
pany (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
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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 sub-
sidiary 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 Com-
pany 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 eligi-
ble 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 remuner-
ation 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 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 sus-
pend his or her payroll deduction, or may withdraw the entire balance of his or
her payroll deduction
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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 the fair market value of such Common Stock (determined
at the effective date of the offering) 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.
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 securi-
ties 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.
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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 partici-
pating 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 Securities Exchange Act of 1934 (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.
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