EXHIBIT 4.3

                    AGREEMENT AS TO EXPENSES AND LIABILITIES

     AGREEMENT AS TO EXPENSES AND  LIABILITIES  (this  "Agreement")  dated as of
April 17, 2002, between FIRST MERCHANTS CORPORATION, an Indiana corporation (the
"Company"),  and FIRST MERCHANTS CAPITAL TRUST I, a Delaware business trust (the
"Trust").

                                    RECITALS

     WHEREAS,  the Trust  intends to issue its common  securities  (the  "Common
Securities")  to,  and  receive  8.75%  Junior   Subordinated   Debentures  (the
"Debentures") from, the Company and to issue and sell its 8.75% Cumulative Trust
Preferred Securities (the "Preferred Securities") with such powers,  preferences
and special rights and restrictions as are set forth in the Amended and Restated
Trust Agreement dated as of April 17, 2002, as the same may be amended from time
to time (the "Trust Agreement");

     WHEREAS,  the Company shall  directly or  indirectly  own all of the Common
Securities of the Trust and shall issue the Debentures;

     NOW,  THEREFORE,  in  consideration  of the  purchase by each holder of the
Preferred Securities, which purchase the Company hereby agrees shall benefit the
Company and which  purchase the Company  acknowledges  shall be made in reliance
upon the execution and delivery of this Agreement, the Company, including in its
capacity  as holder of the  Common  Securities,  and the Trust  hereby  agree as
follows:

                                    ARTICLE I

     1.1 Guarantee by the Company.

     Subject to the terms and conditions hereof,  the Company,  including in its
capacity  as  holder  of  the  Common   Securities,   hereby   irrevocably   and
unconditionally  guarantees to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries") the full payment when
and as  due,  of any  and  all  Obligations  (as  hereinafter  defined)  to such
Beneficiaries.  As used  herein,  "Obligations"  means any  costs,  expenses  or
liabilities  of the Trust other than  obligations of the Trust to pay to holders
of any Preferred  Securities or other similar interests in the Trust the amounts
due such holders pursuant to the terms of the Preferred Securities or such other
similar interests,  as the case may be. This Agreement is intended to be for the
benefit of, and to be  enforceable  by, all such  Beneficiaries,  whether or not
such Beneficiaries have received notice hereof.

     1.2 Term of Agreement.

     This Agreement  shall  terminate and be of no further force and effect upon
the later of (a) the date on which  full  payment  has been made of all  amounts
payable to all holders of all the Preferred Securities (whether upon redemption,
liquidation,  exchange  or  otherwise);  and (b) the date on which  there are no
Beneficiaries remaining;  provided,  however, that this Agreement shall continue
to be

<PAGE>

effective or shall be reinstated,  as the case may be, if at any time any holder
of Preferred Securities or any Beneficiary must restore payment of any sums paid
under the  Preferred  Securities,  under  any  obligation,  under the  Preferred
Securities Guarantee Agreement dated the date hereof by the Company and Wachovia
Trust Company, National Association as guarantee trustee or under this Agreement
for  any  reason   whatsoever.   This  Agreement  is  continuing,   irrevocable,
unconditional and absolute.

     1.3 Waiver of Notice.

     The Company hereby waives notice of acceptance of this Agreement and of any
obligation  to which it applies  or may apply,  and the  Company  hereby  waives
presentment,  demand  for  payment,  protest,  notice of  nonpayment,  notice of
dishonor, notice of redemption and all other notices and demands.

     1.4 No Impairment.

     The obligations, covenants, agreements and duties of the Company under this
Agreement  shall in no way be affected  or  impaired by reason of the  happening
from time to time of any of the following:

          (a) the  extension  of time for the payment by the Trust of all or any
     portion of the Obligations or for the  performance of any other  obligation
     under, arising out of, or in connection with, the Obligations;

          (b) any failure,  omission,  delay or lack of diligence on the part of
     the  Beneficiaries  to enforce,  assert or exercise  any right,  privilege,
     power  or  remedy  conferred  on  the  Beneficiaries  with  respect  to the
     Obligations or any action on the part of the Trust  granting  indulgence or
     extension of any kind; or

          (c) the voluntary or involuntary liquidation, dissolution, sale of any
     collateral,  receivership,   insolvency,  bankruptcy,  assignment  for  the
     benefit  of   creditors,   reorganization,   arrangement   composition   or
     readjustment of debt of, or other similar proceedings affecting,  the Trust
     or any of the assets of the Trust.

There shall be no obligation of the  Beneficiaries  to give notice to, or obtain
the  consent  of,  the  Company  with  respect  to the  happening  of any of the
foregoing.

     1.5 Enforcement.

     A Beneficiary may enforce this Agreement directly against the Company,  and
the  Company  waives any right or remedy to  require  that any action be brought
against the Trust or any other person or entity  before  proceeding  against the
Company.


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<PAGE>

                                   ARTICLE II

     2.1 Binding Effect.

     All guarantees and  agreements  contained in this Agreement  shall bind the
successors,  assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the Beneficiaries.

     2.2 Amendment.

     So long as there remains any Beneficiary or any Preferred Securities of any
series are  outstanding,  this Agreement shall not be modified or amended in any
manner  adverse to such  Beneficiary  or to any of the holders of the  Preferred
Securities.

     2.3 Notices.

     Any notice,  request or other  communication  required or  permitted  to be
given  hereunder  shall be given in writing by delivering  the same by facsimile
transmission  (confirmed by mail),  telex,  or by registered or certified  mail,
addressed as follows (and if so given, shall be deemed given when mailed or upon
receipt of an answer back, if sent by facsimile):

     If to the Company:      First Merchants Corporation
                             200 East Jackson Street
                             Post Office Box 792
                             Muncie, Indiana 47308
                             Fax:  (765) 741-7283
                             Attention: Larry R. Helms, Esq.,
                                        Senior Vice President & General Counsel

     If to the Trust:        Wachovia Trust Company, National Association
                             One Rodney Square
                             920 King Street, Suite 102
                             Wilmington, DE 19801
                             Fax: (302) 888-7544
                             Attention: Corporate Trust Trustee Administration

     2.4  Governing Law.

     This  agreement  shall be  governed by and  construed  and  interpreted  in
accordance with the laws of the State of Delaware (without regard to conflict of
laws principles).

                           [Signatures on next page.]


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<PAGE>

     THIS AGREEMENT is executed as of the day and year first above written.

FIRST MERCHANTS CORPORATION

By:  /s/  Larry R. Helms
     ------------------------------------------------
     Name: Larry R. Helms, Esq.
     Title: Senior Vice President and General Counsel

FIRST MERCHANTS CAPITAL TRUST I

By:         /s/  Larry R. Helms                      , as Administrative Trustee
     ------------------------------------------------
     Name:  Larry R. Helms, Esq.


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