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EXHIBIT 10.2 -- Trust Under First Merchants Corporation
Supplemental Executive Retirement Plan
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This Agreement made this 1st day of March, 1997, by and between First
Merchants Corporation ("EMPLOYER"), and First Merchants Bank, N.A.
("TRUSTEE"):
WHEREAS, Employer has adopted the nonqualified deferred compensation
plan known as the First Merchants Corporation Supplemental Executive
Retirement Plan ("PLAN");
WHEREAS, Employer has incurred or expects to incur liability under the
terms of such Plan with respect to the individuals participating in such
Plan;
WHEREAS, Employer wishes to establish a trust (hereinafter called
"TRUST") and to contribute to the Trust assets that shall be held therein,
subject to the claims of Employer's creditors in the event of Employer's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Plan as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act
of 1974; and
WHEREAS, it is the intention of Employer to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Plan.
NOW, THEREFORE, the parties do hereby establish the trust and agree that
the Trust shall be comprised, held and disposed of as follows:
SECTION 1. ESTABLISHMENT OF TRUST.
(a) Employer hereby deposits with Trustee in trust the cash and
insurance policies listed in Schedule A, which shall become the principal of
the Trust to be held, administered and disposed of by Trustee as provided in
this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which Employer is
the grantor, within the meaning of subpart E, part I, subchapter J, chapter
1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
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(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of Employer and shall be used exclusively
for the uses and purposes of Plan participants and general creditors as
herein set forth. Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any assets of
the Trust. Any rights created under the Plan and this Trust Agreement shall
be mere unsecured contractual rights of Plan participants and their
beneficiaries against Employer. Any assets held by the Trust will be subject
to the claims of Employer's general creditors under federal and state law in
the event of Insolvency, as defined in Section 3(a) herein.
(e) Employer, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property in trust with
Trustee to augment the principal to be held, administered and disposed of by
Trustee as provided in this Trust Agreement. Neither Trustee nor any Plan
participant or beneficiary shall have any right to compel such additional
deposits.
SECTION 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
(a) Employer shall deliver to Trustee a schedule (the "PAYMENT
SCHEDULE") that indicates the amounts payable in respect of each Plan
participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable,
the form in which such amount is to be paid (as provided for or available
under the Plan), and the time of commencement for payment of such amounts.
Except as otherwise provided herein, Trustee shall make payments to the Plan
participants and their beneficiaries in accordance with such Payment
Schedule. The Trustee shall make provision for the reporting and withholding
of any federal, state or local taxes that may be required to be withheld with
respect to the payment of benefits pursuant to the terms of the Plan and
shall pay amounts withheld to the appropriate taxing authorities or determine
that such amounts have been reported, withheld and paid by Employer.
(b) The entitlement of a Plan participant or his or her beneficiaries
to benefits under the Plan shall be determined by Employer or such party as
it shall designate under the Plan, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plan.
(c) Employer may make payment of benefits directly to Plan participants
or their beneficiaries as they become due under the terms of the Plan.
Employer shall notify Trustee of its decision to make payment of benefits
directly prior to the time amounts are payable to participants or their
beneficiaries. In addition if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with
the terms of the Plan, Employer shall make the balance of each such payment
as it falls due. Trustee shall notify Employer where principal and earnings
are not sufficient.
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SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY
WHEN EMPLOYER IS INSOLVENT.
(a) Trustee shall cease payment of benefits to Plan participants and
their beneficiaries if the Employer is Insolvent. Employer shall be
considered "Insolvent" for purposes of this Trust Agreement if (i) Employer
is unable to pay its debts as they become due, or (ii) Employer is subject to
a pending proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject
to claims of general creditors of Employer under federal and state law as set
forth below.
(1) The Board of Directors and the Chief Executive Officer of
Employer shall have the duty to inform Trustee in writing of Employer's
insolvency. If a person claiming to be a creditor of Employer alleges in
writing to Trustee that Employer has become insolvent, Trustee shall
determine whether Employer is Insolvent and, pending such determination,
Trustee shall discontinue payment of benefits to Plan participants or
their beneficiaries.
(2) Unless Trustee has actual knowledge of Employer's insolvency, or
has received notice from Employer or a person claiming to be a creditor
alleging that Employer is Insolvent, Trustee shall have no duty to inquire
whether Employer is Insolvent. Trustee may in all events rely on such
evidence concerning Employer's solvency as may be furnished to Trustee and
that provides Trustee with a reasonable basis for making a determination
concerning Employer's solvency.
(3) If at any time Trustee has determined that Employer is
insolvent, Trustee shall discontinue payments to Plan participants or
their beneficiaries and shall hold the assets of the Trust for the
benefit of Employer's general creditors. Nothing in this Trust Agreement
shall in any way diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general creditors of Employer
with respect to benefits due under the Plan or otherwise.
(4) Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of
this Trust Agreement only after Trustee has determined that Employer is
not Insolvent (or is no longer Insolvent).
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(c) Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan for the
period of such discontinuance, less the aggregate amount of any payments made
to Plan participants or their beneficiaries by Employer in lieu of the
payments provided for hereunder during any such period of discontinuance.
SECTION 4. PAYMENTS TO EMPLOYER.
Except as provided in Section 3 hereof, after the Trust has become
irrevocable, Employer shall have no right or power to direct Trustee to
return to Employer or to divert to others any of the Trust assets before all
payment of benefits have been made to Plan participants and their
beneficiaries pursuant to the terms of the Plan.
SECTION 5. INVESTMENT AUTHORITY.
(a) The Trustee shall invest and reinvest the principal and income
received by and held in the Trust, and keep such assets invested without
distinction between principal and income, in insurance contracts, common or
preferred stocks, corporate and government bonds and notes, and other
securities in accordance with such investment guidelines as Employer may
provide to the Trustee from time to time.
(b) Subject to paragraph (a) of this Section, Trustee may invest in
securities (including stock or rights to acquire stock) or obligations issued
by Employer. All rights associated with assets of the Trust shall be
exercised by Trustee or the person designated by Trustee, and shall in no
event be exercisable by or rest with Plan participants.
(c) Employer shall have the right at any time, and from time to time in
its sole discretion, to substitute assets of equal fair market value for any
asset held by the Trust. This right is exercisable by Employer in a
nonfiduciary capacity without the approval or consent of any person in a
fiduciary capacity.
SECTION 6. DISPOSITION OF INCOME.
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
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SECTION 7. ACCOUNTING BY TRUSTEE.
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Employer and Trustee. With sixty (60) days following the close of each
calendar year and within sixty (60) days after the removal or resignation of
Trustee, Trustee shall deliver to Employer a written account of its
administration of the Trust during such year or during the period from the
close of the last preceding year to the date of such removal or resignation,
setting forth all investments, receipts, disbursements and other transactions
effected by it, including a description of all securities and investments
purchased and sold with the cost or net proceeds of such purchases or sales
(accrued interest paid or receivable being shown separately), and showing all
cash, securities and other property held in the Trust at the end of such year
or as of the date of such removal or resignation, as the case may be.
SECTION 8. RESPONSIBILITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant
to a direction, request or approval given by Employer which is contemplated
by, and in conformity with, the terms of the Plan or this Trust and is given
in writing by Employer. In the event of a dispute between Employer and a
party, Trustee may apply to a court of competent jurisdiction to resolve the
dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Employer agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If Employer does not pay such costs, expenses and liabilities
in a reasonably timely manner, Trustee may obtain payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel for
Employer generally) with respect to any of its duties or obligations
hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the
Trust, Trustee shall have no power to name a beneficiary of the policy other
than the Trust, to assign the policy (as distinct from conversion of the
policy to a different form) other than to a successor Trustee, or to loan to
any person the proceeds of any borrowing against such policy.
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(f) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of Section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to the Internal
Revenue Code.
SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.
Employer shall pay all administrative and Trustee's fees and expenses.
If not so paid, the fees and expenses shall be paid from the Trust.
SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to Employer, which
shall be effective thirty (30) days after receipt of such notice unless
Employer and Trustee agree otherwise.
(b) Trustee may be removed by Employer on thirty (30) days' notice or
upon shorter notice accepted by Trustee.
(c) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the
successor Trustee. The transfer shall be completed within sixty (60) days
after receipt of notice of resignation, removal or transfer, unless Employer
extends the time limit.
(d) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraph (a) or (b) of this Section. If no such appointment
has been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
SECTION 11. APPOINTMENT OF SUCCESSOR.
(a) If Trustee resigns or is removed in accordance with Section 10(a)
or (b) hereof, Employer may appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee powers under
state law, as a successor to replace Trustee upon resignation or removal.
The appointment shall be effective when accepted in writing by the new
Trustee, who shall have all of the rights and powers of the former Trustee,
including ownership rights in the Trust assets. The former Trustee shall
execute any instrument necessary or reasonably requested by Employer or the
successor Trustee to evidence the transfer.
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(b) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for
and Employer shall indemnify and defend the successor Trustee from any claim
or liability resulting from any action or inaction of any prior Trustee or
from any other past event, or any condition existing at the time it becomes
successor Trustee.
SECTION 12. AMENDMENT OR TERMINATION.
(a) This Trust may be amended by a written instrument executed by
Trustee and Employer. Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the Plan or shall make the Trust revocable after
it has become irrevocable in accordance with Section 1(b) hereof.
(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits
pursuant to the terms of the Plan. Upon termination of the Trust any assets
remaining in the Trust shall be returned to Employer.
(c) Upon written approval of all participants and beneficiaries then or
thereafter entitled to payment of benefits pursuant to the terms of the Plan,
Employer may terminate this Trust prior to the time all benefit payments
under the Plan have been made. All assets in the Trust at termination shall
be returned to Employer.
SECTION 13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participants and their beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana.
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SECTION 14. EFFECTIVE DATE.
The effective date of this Trust Agreement shall be March 1, 1997.
First Merchants Corporation First Merchants Bank, N.A.
By: /s/ Stefan S. Anderson By: /s/ Roger W. Gilcrest
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Title: President Title: Executive Vice President
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EMPLOYER TRUSTEE
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