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| TABLE OF CONTENTS                                  |                                                          |
|----------------------------------------------------|---------------------------------------------------------------|
|                                               |                                                          | Page |
| ARTICLE I                                          |                                                          |
|                                               |                                                          |   |
| DEFINITIONS                                        |                                                          |
|                                               |                                                          |
| Section 1.1                                        | Definitions                                                   | 2 |
|                                               |                                                          |   |
| ARTICLE II                                         |                                                          |
|                                               |                                                          |   |
| TRUST INDENTURE ACT                                |                                                          |
|                                               |                                                          |
| Section 2.1                                        | Trust Indenture Act; Application                              | 5 |
| Section 2.2                                        | List of Holders                                               | 5 |
| Section 2.3                                        | Reports by the Guarantee Trustee                              | 5 |
| Section 2.4                                        | Periodic Reports to the Guarantee Trustee                     | 5 |
| Section 2.5                                        | Evidence of Compliance with Conditions Precedent              | 6 |
| Section 2.6                                        | Events of Default; Waiver                                     | 6 |
| Section 2.7                                        | Event of Default; Notice                                      | 6 |
| Section 2.8                                        | Conflicting Interests                                         | 6 |
|                                               |                                                          |   |
| ARTICLE III                                        |                                                          |
|                                               |                                                          |   |
| POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE |                                                          |
|                                               |                                                          |
| Section 3.1                                        | Powers and Duties of the Guarantee Trustee                    | 7 |
| Section 3.2                                        | Certain Rights of Guarantee Trustee                           | 8 |
| Section 3.3                                        | Compensation; Indemnity; Fees                                 | 10 |
|                                               |                                                          |   |
| ARTICLE IV                                         |                                                          |
|                                               |                                                          |   |
| GUARANTEE TRUSTEE                                  |                                                          |
|                                               |                                                          |
| Section 4.1                                        | Guarantee Trustee; Eligibility                                | 11 |
| Section 4.2                                        | Appointment, Removal and Resignation of the Guarantee Trustee | 11 |
|                                               |                                                          |   |
| ARTICLE V                                          |                                                          |
|                                               |                                                          |   |
| GUARANTEE                                          |                                                          |
|                                               |                                                          |
| Section 5.1                                        | Guarantee                                                     | 12 |
| Section 5.2                                        | Waiver of Notice and Demand                                   | 12 |
| Section 5.3                                        | Obligations Not Affected                                      | 12 |

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| Section 5.4                 | Rights of Holders          | 13     |
|-----------------------------|----------------------------|--------|
| Section 5.5                 | Guarantee of Payment       | 13     |
| Section 5.6                 | Subrogation                | 13     |
| Section 5.7                 | Independent Obligations    | 14     |
|                        |                       |   |
| ARTICLE VI                  |                       |
|                        |                       |   |
| COVENANTS AND SUBORDINATION |                       |
|                        |                       |
| Section 6.1                 | Subordination              | 14     |
| Section 6.2                 | Pari Passu Guarantees      | 14     |
|                        |                       |   |
| ARTICLE VII                 |                       |
|                        |                       |   |
| TERMINATION                 |                       |
|                        |                       |
| Section 7.1                 | Termination                | 14     |
|                        |                       |   |
| ARTICLE VIII                |                       |
|                        |                       |   |
| MISCELLANEOUS               |                       |
|                        |                       |
| Section 8.1                 | Successors and Assigns     | 15     |
| Section 8.2                 | Amendments                 | 15     |
| Section 8.3                 | Notices                    | 15     |
| Section 8.4                 | Benefit                    | 16     |
| Section 8.5                 | Governing Law              | 16     |
| Section 8.6                 | Counterparts               | 16     |
| Section 8.7                 | Incorporation by Reference | 16     |
| Section 8.8                 | Waiver of Jury Trial       | 16     |
| Section 8.9                 | Force Majeure              | 16     |

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|   | First Merchants Corporation |
|--------|-----------------------------|

|   | 200 East Jackson Street |
|--------|-------------------------|

|   | P.O. Box 792 |
|--------|--------------|

|   | Muncie, Indiana 47305-2814 |
|--------|----------------------------|

|   | Attention:  Mark K. Hardwick, Chief Financial Officer and Executive |
|--------|-------------------------------------------------------------------------------|

|   |                       Vice President |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Telecopy:  (765) 747-1447 |
|--------|-------------------------------------|

|   | U.S. Bank Trust National Association |
|--------|--------------------------------------|

|   | 300 Delaware Avenue, 9th Floor |
|--------|--------------------------------|

|   | Wilmington, Delaware  19801 |
|--------|---------------------------------------|

|   | Attention:  Corporate Trust Group |
|--------|---------------------------------------------|

|   | Telecopy:  (302) 576-3717 |
|--------|-------------------------------------|

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|   | with a copy to: |
|--------|-----------------|

|   | First Merchants Capital Trust III |
|--------|-----------------------------------|

|   | c/o First Merchants Corporation |
|--------|---------------------------------|

|   | 200 East Jackson Street |
|--------|-------------------------|

|   | P.O. Box 792 |
|--------|--------------|

|   | Muncie, Indiana 47305-2814 |
|--------|----------------------------|

|   | Attention:  Mark K. Hardwick, Chief Financial Officer and Executive |
|--------|-------------------------------------------------------------------------------|

|   |                          Vice President |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Telecopy:  (765) 747-1447 |
|--------|-------------------------------------|

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|   | FIRST MERCHANTS CORPORATION, as Guarantor |
|--------|-------------------------------------------|

|   | Name:  Mark K. Hardwick |
|--------|-----------------------------------|

|   | Title:  Chief Financial Officer and |
|--------|-----------------------------------------------|

|   |               Executive Vice President |
|--------|--------------------------------------------------------------------------------------------------------------|

|   | U.S. BANK TRUST NATIONAL ASSOCIATION, |
|--------|---------------------------------------|

|   | as Guarantee Trustee |
|--------|----------------------|

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