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): January 23, 2007
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FIRST MERCHANTS CORPORATION
(Exact name of registrant as specified in its charter)
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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 January 23, 2007, Michael L. Cox announced he intends to
retire from his positions as President and Chief Executive Officer of the
Corporation, effective April 24, 2007. On January 23, 2007, the Board of
Directors of First Merchants Corporation (the "Corporation") entered into a
letter agreement (the "Agreement") with Mr. Cox engaging him to provide certain
consulting services to the Corporation following his retirement. A copy of the
Agreement is attached hereto as Exhibit 10.1.
Item 5.02. Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers.
(b) As discussed above, Michael L. Cox, President and Chief
Executive Officer of the Corporation is retiring as an officer of the
Corporation effective as of April 24, 2007. He will continue as a Director of
the Corporation through the remainder of his term which expires upon the 2007
annual meeting of the shareholders. In accordance with the provisions of the
Agreement, the Nominating and Governance Committee of the Board of Directors
will nominate Mr. Cox for re-election at that meeting and, if elected, Mr. Cox
has agreed to retire as a Director effective upon the 2009 annual meeting of the
shareholders.
(c) The Corporation has elected Michael C. Rechin who is
currently the Executive Vice President and Chief Operating Officer of the
Corporation to serve as the President and Chief Executive Officer of the
Corporation upon Mr. Cox's retirement. A copy of the Corporation's press
release, dated January 24, 2007, announcing the retirement of Mr. Cox and the
appointment of Mr. Rechin is attached hereto as Exhibit 99.
Item 8.01. Other Events.
The Board of Directors of the Corporation has approved the reorganization of
certain of its wholly-owned subsidiaries pending approval from the subsidiaries'
federal banking regulator. Through the reorganization, United Communities
National Bank, The First National Bank of Portland, Decatur Bank & Trust
Company, National Association and Frances Slocum Bank & Trust Company, National
Association will be merged with and into First Merchants Bank, National
Association. A copy of the Corporation's press release, dated January 24, 2007,
announcing the reorganization is attached hereto as Exhibit 99.
Item 9.01. Financial Statements and Exhibits.
(c) (10.1) Letter Agreement between the Corporation and Michael L.
Cox, dated January 23, 2007; and
(99.1) Press Release dated January 24, 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.
First Merchants Corporation
(Registrant)
By: /s/ Mark K. Hardwick
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Mark K. Hardwick
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Principal Accounting Officer)
Dated: January 24, 2007
EXHIBIT INDEX
10.1 Letter Agreement between the Corporation and Michael L. Cox,
dated January 23, 2007
99.1 Press Release dated January 24, 2007
Letter Agreement
Exhibit 10.1
January 23, 2007
January 23, 2007
Michael L. Cox, President and CEO
First Merchants Corporation
200 East Jackson Street
Muncie, IN 47305
Re: Agreement Concerning Retirement and for Consulting Services
Dear Mike:
You came to Chuck Schalliol and me in early December and requested that we
discuss your possible retirement as the President and CEO of First Merchants
Corporation as of the 2007 annual meeting of shareholders. As you know, we
reported our discussions to the Board of Directors in an executive session held
during the Board's December 12 meeting and at that time I appointed an ad hoc
committee comprised of the Chairs of the standing committees of the Board to
meet and report back to the Board with recommendations concerning your
retirement and related management succession issues.
I am pleased to state that, following meetings of the ad hoc committee and other
communications involving committee members, you, me, and others, the Board today
unanimously approved the committee's recommendations concerning your retirement
and engagement of your services as a consultant following your retirement. The
Board has authorized me to accept your request to retire as the President and
CEO of First Merchants Corporation and as an employee of the Corporation,
effective as of April 24, 2007, and engage your services on behalf of the
Corporation as a consultant following your retirement, all in accordance with
the following terms and conditions, to which you agree by signing your name at
the end of this letter:
1. You will retire as the President and CEO of First Merchants Corporation and
as an employee of the Corporation effective as of April 24, 2007, the date of
the 2007 annual meeting of shareholders.
2. You will provide services to the Corporation as a nonemployee consultant for
a period of two years, beginning April 24, 2007 and continuing until the earlier
of April 24, 2009 or the date of the 2009 annual meeting of shareholders. You
will report directly to the President and CEO of the Corporation. Your services
to the Corporation will be as requested by the President and CEO of the
Corporation and are expected to include, among other things, advice and
assistance with matters relating to mergers, acquisitions and other business
expansion opportunities, and matters relating to Project Gold Shield. You will
also represent the Corporation as an officer and director of the Indiana Bankers
Association and as a director of the Indiana State Chamber of Commerce, unless
the President and CEO requests otherwise. However, in your capacity as a
Michael L. Cox, President and CEO
January 23, 2007
Page 2
consultant, you will not act as an agent of the Corporation without the prior
written consent of the President and CEO of the Corporation. We will not expect
a time commitment from you for your consulting services of more than 50%. You
will be paid $175,000 in the first year and $100,000 in the second year for
these services, in substantially equal monthly installments. In addition, while
serving as a consultant to the Corporation, you will be reimbursed for your
reasonable out-of-pocket travel and other expenses, under the Corporation's
standard policies and procedures for its employees, incurred on behalf and at
the request of the President and CEO of the Corporation. You will also be
provided the following amenities and benefits: administrative and secretarial
assistance, a computer, and a cell phone. You will also have the option of
continuing coverage for you and your spouse under the Corporation's healthcare
plan until you (and she) become eligible for Medicare, if you pay 100% of the
premiums for the coverage. However, your life and disability insurance coverages
and other employee benefits will cease when you retire, and you will not be
provided a car or car insurance. You will be solely responsible for the payment
of all applicable federal, state and local income taxes, social security
contributions, unemployment, disability or worker's compensation insurance
contributions, and any and all other payroll taxes or payroll deductions with
respect to the amounts payable to you by the Corporation for your consulting
services under this agreement.
3. You will be eligible to commence payment of benefits under the Corporation's
qualified retirement plans in which you are a participant, effective as of the
date of your retirement as an employee of the Corporation, in accordance with
the provisions of these plans. The Corporation's Supplemental Executive
Retirement Plan in which you are a participant will be amended, consistent with
the provisions of Section 409A of the Internal Revenue Code, to provide that
your benefits under the plan will vest when you retire. Payment of these
benefits will be made in accordance with the provisions of the plan, as amended
to comply with Section 409A.
4. Your salary for the period from January 1, 2007 through April 24, 2007 will
remain the same as your 2006 salary.
5. In February 2007 you will be paid the bonus you earned for 2006 under the
Senior Management Incentive Compensation Program. You will be eligible to
participate in the Program for 2007 on a pro rata basis, which means that your
bonus will be a fraction of the annual bonus payable to the President and CEO
under the Program, the numerator of which is the number of days you are employed
as President and CEO during 2007 and the denominator of which is 365. You
presently have 850.9 nonvested deferred stock units under the Program which will
vest upon your retirement and will be payable in January or February 2008 in
accordance with the provisions of the program.
6. You have a total of 108,439 vested and 12,000 nonvested unexercised options
to purchase shares of the Corporation as of the date of this agreement under the
1999 First Merchants Corporation Long-Term Equity Incentive Plan and the 1994
First Merchants Corporation Stock Option Plan. The nonvested options will vest
upon your retirement. To the extent they are incentive stock options, your
options must be exercised within three months following the date of your
retirement. If they are exercised after that three-month period, they will be
Michael L. Cox, President and CEO
January 23, 2007
Page 3
nonqualified options. You have also been awarded 3,400 shares of restricted
stock under the 1999 First Merchants Corporation Long-Term Equity Incentive
Plan. The restrictions will be eliminated and the shares will vest upon your
retirement. You will not be eligible for an award of stock options or restricted
stock under the 1999 First Merchants Corporation Long-Term Equity Incentive Plan
in February 2007.
7. Since you will not be employed by the Corporation on June 30, 2007, you will
not be eligible to purchase shares of the Corporation under the 2004 Employee
Stock Purchase Plan for the offering period ending June 30, 2007. Any money
deducted from your salary during this offering period to purchase shares under
the plan will be refunded to you.
8. The Change of Control Agreement presently in effect between you and the
Corporation will terminate as of the date of your retirement.
9. The Confidentiality and Non-Solicitation Agreement presently in effect
between you and the Corporation will remain in effect following your retirement.
The provisions of Part II of that agreement, concerning non-solicitation, will
continue to apply for a period of one year after the date you are no longer
providing consulting services to the Corporation under this agreement.
10. While you are providing consulting services to the Corporation under this
agreement, you will be governed by the Corporation's Code of Business Conduct
that is applicable to its employees, officers and directors.
11. Your engagement by the Corporation as a consultant, as described in
paragraph 2 above, will terminate immediately, without any further payment or
financial obligation to you, in the event: (a) the Board of Directors determines
that there is "Cause" for such termination, as that term is defined in the
Change of Control Agreement presently in effect between you and the Corporation;
or (b) you directly or indirectly, without the prior written consent of the
Chairman of the Corporation's Board of Directors, render services to or for an
entity or engage in a business that is, in the judgment of the Board of
Directors, in competition with the Corporation or any of its subsidiaries or
affiliates. In the event your engagement as a consultant is terminated, as
provided in this paragraph 11, you will submit your written resignation as a
Director of the Corporation to the Chairman of the Board of Directors, effective
immediately.
12. Your current term as a Director of the Corporation expires as of the 2007
annual meeting of shareholders. You will be nominated by the Nominating and
Governance Committee to serve as a Director for one additional three-year term,
subject to the vote of the shareholders, commencing as of the 2007 annual
meeting of shareholders. However, you agree to submit your written resignation
as a Director of the Corporation to the Chairman of the Board of Directors in
January 2009, effective as of the date of the 2009 annual meeting of
shareholders.
13. You will resign from the boards of directors of all of the Corporation's
subsidiaries and affiliates on which you are currently serving, effective as of
the date of your retirement.
Michael L. Cox, President and CEO
January 23, 2007
Page 4
Mike, I know I speak for the entire Board of Directors when I express our great
appreciation for your many contributions to First Merchants Corporation and our
desire to be supportive of your decision to transition to a less full-time
working relationship.
Very truly yours,
/s/ Robert M. Smitson
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Robert M. Smitson
Chairman of the Board of Directors
I hereby request retirement as the President and CEO of First Merchants
Corporation and as an employee of the Corporation effective as of April 24,
2007. I agree to the above and foregoing terms and conditions concerning my
retirement as the President and CEO of First Merchants Corporation and the
Corporation's engagement of my services as a consultant following my retirement.
Dated this 23rd day of January, 2007.
/s/ Michael L. Cox
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Michael L. Cox
President and CEO
First Merchants Corporation
Exhibit No. 99.1
Press Release, dated January 24, 2007
News release
For immediate release
For further information, contact:
Jennifer Dzwonar, Susan Matthews - media 317-631-6400
Mark Hardwick, Executive VP and Chief Financial Officer 765-751-1857
FIRST MERCHANTS CORPORATION ANNOUNCES
CEO TRANSITION AND STRUCTURE CHANGE
(Muncie, Ind., January 24, 2007) First Merchants Corporation (NASDAQ:FRME) today
announced that Michael C. Rechin will become President and CEO upon the
retirement of Michael L. Cox. The change will become effective at the
corporation's annual meeting, to be held April 24, 2007.
Rechin, who is currently serving as chief operating officer, joined First
Merchants Corporation 15 months ago. Since that time, he has worked closely with
the affiliate bank presidents in local communities to reinforce the brand and
identify growth opportunities in served markets.
Robert M. Smitson, Chairman of the Board said, "On behalf of the entire board of
directors, I want to express our great appreciation to Mike Cox for his many
contributions to First Merchants Corporation. Mike assumed the role of CEO in
April, 1999, and under his leadership, the corporation's total assets have more
than doubled in size."
"The board is pleased to have someone of Mike Rechin's background and experience
to succeed Mike Cox. Rechin has been a driving force in the development of the
2007 business plan, and we are confident he will successfully implement the plan
and build upon the strong foundation that has been established," Smitson said.
Before joining First Merchants, Rechin was Executive Vice President of corporate
banking for National City Bank, managing its Indiana operations. He began his
career with BancOhio National Bank in Columbus, Ohio, in 1983 as a corporate
banking trainee and joined National City upon the acquisition of BancOhio in
1984. Rechin holds an undergraduate degree and an MBA in finance from Miami
University of Ohio.
"It has been a pleasure to serve First Merchants Corporation as CEO for the past
eight years and as a director since 1984. I am proud of our accomplishments and
believe the corporation is positioned for even greater success. In meeting with
our local bank boards over the past few weeks, I've seen how fully supportive
they are of the 2007 initiatives. It has been a pleasure to work closely with
Mike Rechin, and I have every confidence that this will be a smooth transition,"
Cox said.
"I sincerely appreciate the confidence the First Merchants board has placed in
me, as well as the solid foundation Mike Cox helped build over the past several
years. We are positioned well for the future," Rechin said.
Structural change to reduce number of bank charters to four
The corporation further announced that a key 2007 initiative will be the
combination of five of its bank charters into one. Subject to the approval of
the Office of the Comptroller of the Currency (OCC), Frances Slocum Bank & Trust
Company, Decatur Bank &Trust, First National Bank, and United Communities
National Bank will combine with First Merchants Bank. This will create the
largest bank holding company headquartered in Central Indiana. The anticipated
effective date of the combinations is April 2, 2007.
In addition, the corporation plans to pursue the approval of the OCC to combine
the Hamilton County, Indiana, offices of First Merchants Bank and Madison
Community Bank under the name of First Merchants Bank of Central Indiana. The
two other First Merchants Corporation banks, Lafayette Bank & Trust Company as
well as Commerce National Bank, will retain their names and charters. As a
result, First Merchants Corporation will hold four bank charters: First
Merchants Bank, First Merchants Bank of Central Indiana, Lafayette Bank & Trust
Company, and Commerce National Bank.
"Four strong charters will allow us to better build our brand in our four served
regions. Each bank will be able to expand its market position and continue its
focus on customer needs. For our local communities, there will be little change.
Each bank will retain its local leadership, and regional presidents will
continue to focus on serving customers, growing new relationships, and providing
greater profit contributions to the corporation," said CEO Cox.
"This is a positive step toward higher performance that will take advantage of
increased efficiencies. Each of the banks already shares products,
infrastructure and common systems. In so many ways, we're already one bank. Over
the past five years, through diligent effort, we've moved to centralized
departments for operations, HR, marketing, risk management and finance. Reducing
the numbers of charters and names is simply the next, critical step in the
journey to increased efficiency and continued improvements to our performance,"
said Rechin, who currently oversees banking operations.
James Meinerding, current President and CEO of United Communities National Bank,
will become President and CEO of the newly combined First Merchants Bank.
Michael Baker, currently President and CEO of Madison Community Bank, will
become President and CEO of First Merchants Bank of Central Indiana. Leadership
at Lafayette Bank & Trust and Commerce National Bank will remain unchanged.
"Jim and Mike are proven leaders and a critical part of the team that will drive
higher performance. As an Indiana-based company, we place a high value on
relationships with our customers and our communities, and each of our CEOs and
regional presidents is committed to further strengthening our local impact,"
Rechin said.
Leadership for the four First Merchants Corporation banks is anticipated to be
as follows:
First Merchants Bank
o Jim Meinerding - President and CEO - Randolph, Union, Fayette and Wayne
counties in Indiana; Butler County, OH
o Jack Demaree - Regional President - Delaware and Henry counties, IN
o Ron Kerby - Regional President - Wabash, Miami and Howard counties, IN
o Steve Bailey - Regional President - Adams County, IN
o Bob Bell - Regional President - Jay County, IN
First Merchants Bank of Central Indiana
o Mike Baker - President and CEO
o Bill Redman - Indianapolis Market Executive
Lafayette Bank & Trust
o Tony Albrecht - President and CEO
Commerce National Bank
o Tom McAuliffe - Chairman of the Board and CEO
o John Romelfanger - President and COO
Conference call
First Merchants Corporation will conduct a conference call at 2:30 p.m. (EDT)
today, Wednesday, January 24, 2007. To participate dial (Toll Free) 877-407-9210
and reference First Merchants Corporation's fourth quarter earnings release. A
replay will be available until January 31, 2007. To access replay, US/Canada
participants should dial (Toll Free) 877-660-6853. The replay will require the
Account # 286 and Conference ID # 226600.
During the call we may make Forward Looking statements about our relative
business outlook. These Forward Looking statements and all other statements made
during the call that do not concern historical facts are subject to risks and
uncertainties that may materially affect actual results.
Specific Forward Looking statements include but are not limited to any
indications regarding the Financial Services industry, the economy and future
growth of the balance sheet or income statement.
First Merchants Corporation's common stock is traded over-the-counter on the
NASDAQ National Market System under the symbol FRME. Quotations are carried in
daily newspapers and can be found on the company's Internet web page
(http://www.firstmerchants.com).