<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
MARKET FINANCIAL CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
MARKET FINANCIAL CORPORATION
7522 HAMILTON AVENUE
CINCINNATI, OHIO 45231
(513) 521-9772
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 2000 Annual Meeting of Shareholders of
Market Financial Corporation ("MFC") will be held at Shuller's Wigwam
Restaurant, 6210 Hamilton Avenue, Cincinnati, Ohio 45224, on January 25, 2000,
at 10:00 a.m., Eastern Time (the "Annual Meeting"), for the following purposes,
all of which are more completely set forth in the accompanying Proxy Statement:
1. To reelect three directors of MFC for terms expiring in 2002;
2. To ratify the selection of Grant Thornton LLP as the auditors of
MFC for the current fiscal year; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Only shareholders of MFC of record at the close of business on December
10, 1999, will be entitled to receive notice of and to vote at the Annual
Meeting and at any adjournments thereof. Whether or not you expect to attend the
Annual Meeting, we urge you to consider the accompanying Proxy Statement
carefully and to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO THAT YOUR
SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A QUORUM
AT THE ANNUAL MEETING MAY BE ASSURED. The giving of a proxy does not affect your
right to vote in person in the event you attend the Annual Meeting.
By Order of the Board of Directors
Cincinnati, Ohio John T. Larimer, President
December 22, 1999
<PAGE> 3
MARKET FINANCIAL CORPORATION
7522 HAMILTON AVENUE
CINCINNATI, OHIO 45231
(513) 521-9772
PROXY STATEMENT
PROXIES
The enclosed proxy is being solicited by the Board of Directors of
Market Financial Corporation, an Ohio corporation ("MFC"), for use at the 2000
Annual Meeting of Shareholders of MFC to be held at Shuller's Wigwam Restaurant,
6210 Hamilton Avenue, Cincinnati, Ohio 45224, on January 25, 2000, at 10:00
a.m., Eastern Time, and at any adjournments thereof (the "Annual Meeting").
Without affecting any vote previously taken, the proxy may be revoked by a
shareholder by execution of a later dated proxy which is received by MFC before
the proxy is exercised or by giving notice of revocation to MFC in writing or in
open meeting before the proxy is exercised. Attendance at the Annual Meeting
will not, of itself, revoke a proxy.
Each properly executed proxy received prior to the Annual Meeting and
not revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted:
FOR the reelection of Robert Gandenberger, John T. Larimer and
Edgar H. May as directors of MFC for terms expiring in 2002;
and
FOR the ratification of the selection of Grant Thornton LLP
("Grant Thornton") as the auditors of MFC for the current
fiscal year.
Proxies may be solicited by the directors, officers and other employees
of MFC and Market Bank, a wholly-owned subsidiary of MFC ("Market"), in person
or by telephone, telecopy, telegraph or mail, only for use at the Annual
Meeting. Such proxies will not be used for any other meeting. The cost of
soliciting proxies will be borne by MFC.
Only shareholders of record as of the close of business on December 10,
1999 (the "Voting Record Date"), are entitled to vote at the Annual Meeting.
Each such shareholder will be entitled to cast one vote for each share owned.
MFC's records disclose that, as of the Voting Record Date, there were 1,259,439
votes entitled to be cast at the Annual Meeting.
This Proxy Statement is first being mailed to the shareholders of MFC
on or about December 31, 1999.
<PAGE> 4
VOTE REQUIRED
ELECTION OF DIRECTORS
Under Ohio law and MFC's Code of Regulations (the "Regulations"), the
three nominees receiving the greatest number of votes will be elected as
directors. Each shareholder will be entitled to cast one vote for each share
owned. Shares as to which the authority to vote is withheld are not counted
toward the election of directors or toward the election of the individual
nominees specified in the enclosed Proxy. If the enclosed Proxy is signed and
dated by the shareholder but no vote is specified thereon, the shares held by
such shareholder will be voted FOR the re-election of the three nominees. No
shareholder may cumulate votes in the election of directors.
RATIFICATION OF SELECTION OF AUDITORS
The affirmative vote of the holders of a majority of the shares of MFC
represented in person or by proxy at the Annual Meeting is necessary to ratify
the selection of Grant Thornton as the auditors of MFC for the current fiscal
year. Shares which are held by a nominee for a beneficial owner and which are
represented in person or by proxy at the Annual Meeting but not voted with
respect to such proposals ("non-votes") will have the same effect as a vote
against the approval of such ratification, as will abstentions. If, however, a
shareholder has signed and dated a proxy in the form of the enclosed Proxy but
has not voted on the ratification of the selection of Grant Thornton by checking
an appropriate block on the Proxy, such person's shares will be voted FOR the
ratification of the selection of Grant Thornton and will not be considered
non-votes.
VOTING SECURITIES AND OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
only persons known to MFC to own beneficially more than five percent of the
outstanding common shares of MFC as of November 30, 1999:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Beneficial Ownership Shares Outstanding
-------------------- ------------------
Name and Address
- ----------------
<S> <C> <C>
Market Financial Corporation
Employee Stock Ownership Plan
1201 Broadway
Quincy, Illinois 62301 104,924 (1) 8.3%
John T. Larimer
4315 Redstar Court
Cincinnati, Ohio 45238 72,141.117 (2) 5.6%
L. Craig Martin
8340 Indian Hill Road
Cincinnati, Ohio 45243 67,774 (3) 5.4%
----------------------------
</TABLE>
(1) Includes 84,096 unallocated shares with respect to which First Bankers
Trust Company, N.A. (the "Trustee"), as the Trustee for the Market
Financial Corporation Employee Stock Ownership Plan (the "ESOP") has
sole voting power. The Trustee has limited shared investment power over
all ESOP shares.
(Footnotes continued on next page)
2
<PAGE> 5
(2) This number includes 34,729 shares that may be acquired upon the
exercise of options awarded pursuant to the Market Financial
Corporation 1998 Stock Option and Incentive Plan (the "Stock Option
Plan") and 4,800 shares owned jointly with Mr. Larimer's spouse. It
does not include 22,101 shares owned by Mr. Larimer's spouse
individually.
(3) This number includes 6,345 shares that may be acquired upon the
exercise of options awarded pursuant to the Stock Option Plan.
The following table sets forth certain information with respect to the
number of common shares of MFC beneficially owned by each director of MFC and
Market and by all directors and executive officers of MFC and Market as a group
as of November 30, 1999:
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
--------------------------------------------
Sole Voting and Shared Voting and Percent of
Name and Address (1) Investment Power Investment Power Shares Outstanding
- -------------------- ---------------- ---------------- ------------------
<S> <C> <C> <C>
Robert Gandenberger 6,345 (2) 47,242 (3) 4.2%
John T. Larimer 67,341.117 (4) 4,800 5.6
Rae Skirvin Larimer 28,446 (2)(5) 4,800 2.6
Edgar H. May 11,746 (2) - 0.9
L. Craig Martin (6) 64,774 (2) 3,000 5.4
R. C. Meyerenke 6,746 (2) 2,500 0.7
Wilbur H. Tisch 11,746 (2) - 0.9
Una E. Schaeperklaus (6) 15,246 (2) - 1.2
Kathleen A. White 6,746 (2) 46,341 (3) 4.2
All directors of and executive officers of
MFC and Market as a group
(10 people) 235,976.729 (7) 64,111 (8) 22.1
</TABLE>
- ------------
(1) Each of the persons listed in this table may be contacted at the
address of MFC.
(2) This number includes 6,345 shares that may be acquired upon the
exercise of options awarded pursuant to the Stock Option Plan.
(3) This number includes 44,341 shares held by the Recognition and
Retention Plan (the "RRP") Trust with regard to which Mr. Gandenberger
and Ms. White have voting power as Trustees of the RRP Trust.
(4) This number includes 34,729 shares that may be acquired upon the
exercise of options awarded pursuant to the Stock Option Plan, but does
not include 22,101 shares owned by Mr. Larimer's spouse, Rae Skirvin
Larimer.
(5) This number does not include 32,612.117 shares owned by Ms. Larimer's
spouse, John T. Larimer.
(6) Mr. Martin and Ms. Schaeperklaus are directors of Market but are not
directors of MFC.
(7) This number includes 98,846 shares that may be acquired upon the
exercise of options awarded pursuant to the Stock Option Plan.
(8) The 44,341 shares held by the RRP Trust are reflected in each Trustees'
amount but counted only once in the amount beneficially owned by all
directors and executive officers of MFC as a group.
3
<PAGE> 6
PROPOSAL ONE - ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The Regulations provide for a Board of Directors consisting of seven
persons divided into two classes. In accordance with Section 2.02 of the
Regulations, nominees for election as directors may be proposed only by the
directors or by a shareholder entitled to vote for directors if such shareholder
has submitted a written nomination to the Secretary of MFC by the later of the
October 31st immediately preceding the annual meeting of shareholders or the
sixtieth day before the first anniversary of the most recent annual meeting of
shareholders held for the election of directors. Each such written nomination
must state the name, age, business or residence address of the nominee, the
principal occupation or employment of the nominee, the number of common shares
of MFC owned either beneficially or of record by each such nominee and the
length of time such shares have been so owned.
The Board of Directors proposes the re-election of the following
persons to serve until the Annual Meeting of Shareholders in 2002 and until
their successors are duly elected and qualified or until their earlier
resignation, removal from office or death:
<TABLE>
<CAPTION>
Director of Director of
Name Age (1) Positions Held MFC Since (2) Market Since
- ---- ------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
Robert Gandenberger 71 Director 1996 -
John T. Larimer 66 Director and 1996 1975
President
Edgar H. May 75 Director and 1996 1992
Vice President
- -----------------------------
</TABLE>
(1) As of December 10, 1999.
(2) Each person became a director of MFC in connection with the conversion
of Market from mutual to stock form (the "Conversion") and the
formation of MFC as the holding company for Market.
If any nominee is unable to stand for election, any proxies granting
authority to vote for such nominee will be voted for such substitute as the
Board of Directors recommends.
The following directors will continue to serve as directors of MFC
after the Annual Meeting for the terms indicated:
<TABLE>
<CAPTION>
Director Director
of MFC of Market
Name Age (1) Position(s) Held Since (2) Term Expires Since
---- ------- ---------------- --------- ------------ -----
<S> <C> <C> <C> <C> <C>
Rae Skirvin Larimer 63 Director and Secretary 1996 2001 -
R.C. Meyerenke 77 Director and Treasurer 1996 2001 1974
Wilbur H. Tisch 83 Director 1996 2001 -
Kathleen A. White 42 Director 1996 2001 -
- -----------------------------
</TABLE>
(1) As of December 10, 1999.
(2) Each person became a director of MFC in connection with the Conversion.
ROBERT GANDENBERGER. Mr. Gandenberger retired as Supervisor of the
Hamilton County Recorder's Office in 1994. From 1991 to 1994, Mr. Gandenberger
served as a director of Cleves-North Bend.
4
<PAGE> 7
JOHN T. LARIMER. Mr. Larimer, an attorney, has been a director of
Market since 1975, President of Market since 1993, Managing Officer of Market
since November 1995, and President of MFC since April 1996. Mr. Larimer is Rae
Skirvin Larimer's spouse and is a brother-in-law of Una Schaeperklaus.
EDGAR H. MAY. Mr. May has served as a director of Market since 1992 and
as Vice President of Market and MFC since January 14, 1997. From 1960 until his
retirement in 1994, Mr. May was a broker and partner in Ed May Realty Co.,
located in Deer Park, Ohio.
RAE SKIRVIN LARIMER. Ms. Larimer has been legal counsel for Market
since 1975. From 1979 to 1994, Ms. Larimer served as a director of The
Cleves-North Bend Building and Loan Company, an Ohio savings and loan
association which merged into Market in December 1994 ("Cleves-North Bend"). Ms.
Larimer is John T. Larimer's spouse and the sister of Una Schaeperklaus, a
director of Market.
R.C. MEYERENKE. Mr. Meyerenke has served Market as a director since
1974 and as the Secretary and the Treasurer since 1972. From 1974 until his
retirement in 1991, Mr. Meyerenke was the Managing Officer of Market.
WILBUR H. TISCH. Mr. Tisch retired as owner and President of General
Metal Works in 1983. Mr. Tisch served as a director of Cleves-North Bend from
1975 to 1994 and as President from 1986 to 1994.
KATHLEEN A. WHITE. Ms. White has been employed as a real estate title
examiner since 1980.
MEETINGS OF DIRECTORS
The Board of Directors of MFC met eight times for regularly scheduled
and special meetings and took action by unanimous written consent nine times
during the fiscal year ended September 30, 1999.
The Board of Directors of Market met 12 times for regularly scheduled
meetings and took action by unanimous written consent once during the fiscal
year ended September 30, 1999.
COMMITTEES OF DIRECTORS
The Board of Directors of MFC does not have a nominating committee or a
compensation committee. The Board of Directors of MFC has a Stock Option
Committee, an Audit Committee and an RRP Committee. Nominees for election to the
Board of Directors are selected by the entire Board of Directors.
The Stock Option Committee is responsible for administering the Stock
Option Plan, including interpreting the Stock Option Plan and awarding options
pursuant to its terms. The members of the Stock Option Committee are Messrs.
Gandenberger and May and Ms. White. The Stock Option Committee met twice and
took action by unanimous written consent twice during the fiscal year ended
September 30, 1999.
The Audit Committee of MFC reviews and reports to the full Board of
Directors on the independent audit of MFC. The members of the Audit Committee
are Messrs. Gandenberger and Tisch and Ms. White. The Audit Committee met once
during the fiscal year ended September 30, 1999.
The RRP Committee administers the RRP. Such committee consists of
Messrs. Gandenberger, Martin and Tisch. The RRP Committee took action by
unanimous written consent once during the 1999 fiscal year.
The Board of Directors of Market has an Audit Committee, a Compensation
Committee and an Executive Committee.
The Audit Committee of Market is responsible for reviewing and
reporting to the full Board of Directors on the independent audit of MFC and
reviewing Market's loan files for regulatory compliance and adherence to
Market's lending policies. The Audit Committee recommends audit firms to the
full Board of Directors and reviews and approves the annual independent audit
report. The members of the Audit Committee are Messrs. Martin, Meyerenke and Ms.
Schaeperklaus. The Audit Committee met once during the fiscal year ended
September 30, 1999.
5
<PAGE> 8
Market's Compensation Committee is comprised of Messrs. Martin, May and
Meyerenke. The function of the Compensation Committee is to make recommendations
to the Board of Directors regarding the compensation of Market's executive
officers and employees. The Compensation Committee met once during the fiscal
year ended September 30, 1999.
The members of the Executive Committee of Market are Ms. Schaeperklaus
and Messrs. Larimer, May and Meyerenke. The Executive Committee is authorized to
act on behalf of the Board of Directors between regular meetings of the Board of
Directors. The Executive Committee did not meet during the fiscal year ended
September 30, 1999.
EXECUTIVE OFFICERS
The following table sets forth certain information with
respect to the current executive officers of MFC:
Name Age(1) Position(s) Held
- ---- ------ ----------------
John T. Larimer 66 President and Director
Rae Skirvin Larimer 63 Secretary and Director
Edgar H. May 75 Vice President and
Director
Julie M. Bertsch 38 Chief Financial Officer
- --------------------------
(1) As of December 15, 1999.
JULIE M. BERTSCH, a Certified Public Accountant, was hired as Chief
Financial Officer of MFC and Market in June 1996. Prior to joining MFC, Ms.
Bertsch was employed from August 1987 until June 1996 with Grant Thornton, LLP,
independent certified public accountants.
For biographical information regarding John T. Larimer, Rae Skirvin
Larimer and Edgar H. May, see "PROPOSAL ONE - ELECTION OF DIRECTORS."
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
The following table presents certain information regarding the cash
compensation received by the President and Chief Executive Officer of MFC and
Market. No other executive officer of MFC or Market received compensation in
excess of $100,000 during the fiscal years ended September 30, 1999, 1998 and
1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- --------------------------------- ------------ ------------------------------------- -----------------------------------------
Annual Compensation Long term compensation
------------------------------------- -----------------------------------------
Name and principal position Year Salary ($)(1) Bonus ($) Awards
-----------------------------------------
Securities
Restricted stock underlying
awards ($) options/SARs (#)
- --------------------------------- ------------ ------------------ ------------------ ------------------- ---------------------
<S> <C> <C> <C> <C> <C>
John T. Larimer, President 1999 $99,800 $13,238 $ 7,619 (2) 34,729 (3)
and Chief Executive Officer 1998 97,007 11,135 180,320 (2) 33,393 (4)
1997 94,500 4,835 -- --
- -----------------------------
</TABLE>
(Footnotes on next page)
6
<PAGE> 9
(1) Does not include amounts attributable to other miscellaneous benefits
received by executive officers. The cost to MFC or Market of providing
such benefits to Mr. Larimer was less than 10% of his cash
compensation.
(2) On June 30, 1998 and June 30, 1999, Mr. Larimer was awarded 13,357 and
802 common shares, respectively, pursuant to the RRP. Mr. Larimer paid
no consideration for such shares. Such shares are earned and
non-forfeitable at the rate of one-fifth per year on the anniversary of
the date of award, assuming continued employment with, or service on
the Board of Directors of, MFC. The market price of MFC's shares on
June 30, 1998 and June 30, 1999, determined by reference to the mean
between the closing high bid and low asked quotation for MFC's shares
on the Nasdaq Small Cap Market ("Nasdaq") on each date, was $13.50 and
$9.50 per share, respectively. The aggregate market value of the shares
awarded to Mr. Larimer under the RRP on June 30, 1998, was
approximately $180,320. The aggregate market value of the shares
awarded to Mr. Larimer under the RRP on June 30, 1999, was $7,619. As
of September 30, 1999, the 14,159 shares had an aggregate market value
of approximately $139,820, based on the $9.875 fair market value for
the MFC shares on such date. In addition, dividends and other
distributions paid on such shares and earnings on such dividends and
distributions will be distributed to Mr. Larimer according to the
vesting schedule of the award.
(3) Represents the number of common shares of MFC underlying options
granted to Mr. Larimer pursuant to the Stock Option Plan during the
fiscal year ended September 30, 1999.
(4) Represents the number of commons shares of MFC underlying options
granted to Mr. Larimer pursuant to the Stock Option Plan during the
fiscal year ended September 30, 1998. These options were cancelled on
May 3, 1999.
STOCK OPTION PLAN
On June 30, 1998, the shareholders of MFC adopted the Stock Option
Plan. Pursuant to the Stock Option Plan, 133,572 common shares were reserved for
issuance by MFC upon the exercise of options to be granted to certain directors,
officers and employees of MFC and Market from time to time under the Stock
Option Plan. Options to purchase 113,526 common shares were granted pursuant to
the Stock Option Plan during the fiscal year ended September 30, 1999. These
options were cancelled on May 3, 1999, and options to purchase 125,558 common
shares were granted on May 4, 1999.
The Stock Option Plan is administered by the Stock Option Committee
which is composed of at least three directors of MFC who are not employees of
MFC. The Stock Option Committee may grant options under the Stock Option Plan at
such times as they deem most beneficial to Market and MFC on the basis of the
individual participant's position and duties and the value of the individual's
services and responsibilities to Market and MFC.
Options granted under the Stock Option Plan do not qualify under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
MFC will receive no monetary consideration for the granting of options
under the Stock Option Plan. Upon the exercise of options, MFC will receive
payment of cash or, if acceptable to the Stock Option Committee, common shares
of MFC or outstanding awarded stock options.
The following table sets forth information regarding all grants of
options to purchase common shares of MFC made to Mr. Larimer during the fiscal
year ended September 30, 1999:
<TABLE>
<CAPTION>
Options/SAR Grants In Last Fiscal Year
------------------------------------------------------------------------------------------------
Number of Securities % of Total Options/SARs
Underlying Options/ Granted to Employees in Exercise or Base
Name SARs Granted (#) 1999 Fiscal Year Price ($/Share) Expiration Date
- ---- ---------------------- ------------------------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
John T. Larimer 34,729 27.7% $9.6875 May 4, 2009 (1)
- --------------------
</TABLE>
(1) The options were granted on May 4, 1999.
7
<PAGE> 10
The following table sets forth information regarding the cancellation
and regrant of an option to Mr. Larimer during the fiscal year ended September
30, 1999:
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
- -------------------- --------------- ---------------- ------------------ -------------------- ------------ --------------------
Securities
Underlying Length of Original
Number of Market Price of Option Term
Options/SARs Stock at Time of Exercise Price at New Remaining at Date
Repriced or Repricing or Time of Repricing Exercise of Repricing or
Name Date Amended (#) Amendment ($) or Amendment ($) Price Amendment
---- ---- ------------- ------------- ---------------- --------- -----------
- -------------------- --------------- ---------------- ------------------ -------------------- ------------ --------------------
<S> <C> <C> <C> <C> <C> <C>
John T. Larimer May 4, 1999 33,393 $9.6875 $13.50 $9.6875 9 years
- -------------------- --------------- ---------------- ------------------ -------------------- ------------ --------------------
</TABLE>
The following table sets forth information regarding the number and
value of unexercised options held by Mr. Larimer at September 30, 1999:
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and 9/30/99 Option/SAR Values
-------------------------------------------------------------------------------------------------
Number of Securities Underlying
Unexercised Options/SARs at Value of Unexercisable
Shares Acquired Value 9/30/99(#) "In The Money" Options/
Name on Exercise(#) Realized($) Exercisable/Unexercisable SARs at 9/30/99(#)(1)
- ---- -------------- ----------- ------------------------- ---------------------
<S> <C> <C> <C> <C>
John T. Larimer -0- N/A 34,729/-0- $6,512
- ----------------------
</TABLE>
(1) For purposes of this table, the value of the option was determined by
multiplying the number of shares subject to the unexercised option by
the difference between the $9.6875 exercise price and the fair market
value of MFC's common shares, which was $9.875 on September 30, 1999,
based on the last sale of MFC shares reported by the Nasdaq Small Cap
Market.
In June 1998, the Stock Option Committee determined to grant options to
purchase common shares of MFC to John T. Larimer, President of MFC and Market,
as well as to the other directors and executive officers of MFC and Market. The
exercise price for the June 1998 options was set at $13.50, the market price of
MFC shares on the date of grant. During 1998 and 1999, the stock price of MFC
common shares declined markedly, along with the share prices of other thrift
stocks generally. In fact, despite share repurchases by MFC, as of May 1999 the
market price of an MFC share had fallen below $10.00, the initial offering price
for the shares. Many other thrift stocks have experienced a similar decline in
their market value. The Board of Directors determined that with exercise prices
almost $4.00 above the current market price, the June 1998 options could not
serve their purpose of promoting a financial interest in MFC on the part of
directors, management and employees. The Board and the Stock Option Committee
therefore determined, with the consent of each option holder, to cancel the
outstanding June 1998 options and make new grants with an exercise price equal
to the current market value of MFC stock as of May 4, 1999.
Submitted by the MFC Board of Directors
Robert Gandenberger R.C. Meyerenke
John T. Larimer Wilbur H. Tisch
Rae Skirvin Larimer Kathleen A. White
Edgar H. May
8
<PAGE> 11
RECOGNITION AND RETENTION PLAN AND TRUST
The shareholders of MFC adopted the RRP on June 30, 1998. The RRP
purchased 53,429 common shares of MFC, 45,409 and 8,020 of which were awarded to
directors, executive officers and employees of MFC and Market in June 1998 and
June 1999, respectively.
The RRP is administered by the RRP Committee which is composed of three
directors of MFC who are not employees of Market or MFC. The RRP Committee
determines which directors and employees of MFC and Market will be awarded
shares under the RRP and the number of shares awarded.
Unless the RRP Committee specifies a longer period of time, one-fifth
of the number of shares awarded to an individual will become earned and
non-forfeitable on each of the first five anniversaries of the date of such
award. Compensation expense in the amount of the fair market value of the RRP
shares will be recognized as the shares are earned. Until shares awarded are
earned by the participant, such shares will be forfeited in the event that the
participant ceases to be either a director of MFC or Market or an employee of
Market or MFC, except that in the event of the death, disability or retirement
at or after age 65 of a participant or of a change in control of MFC or Market,
the participant's shares will be deemed to be earned and non-forfeitable.
The RRP shares, together with any cash dividends or distributions paid
thereon, will be distributed as soon as practicable after they are earned. A
participant may direct the voting of all shares awarded to him or her which have
been earned but have not yet been distributed to him or her. Shares that have
been awarded but not earned will be voted in the discretion of the RRP Trustee
to be appointed by the RRP Committee. Shares that have been awarded but not
earned may not be transferred.
DIRECTOR COMPENSATION
Each director of MFC who is not a director of Market receives an annual
fee of $10,000, payable quarterly. Each director of Market currently receives a
fee of $19,500 per year, payable quarterly. Mr. Larimer does not receive
director's fees from MFC or Market.
EMPLOYMENT AGREEMENTS
On April 1, 1999, Market entered into an employment agreement with Mr.
Larimer (the "Employment Agreement").
The Employment Agreement provides for a term of three years, a salary
of not less than $99,800 and a performance review by the Board of Directors not
less often than annually. The Employment Agreement also provides for the
inclusion of Mr. Larimer in any formally established employee benefit, bonus,
pension and profit-sharing plans for which senior management personnel are
eligible.
The Employment Agreement is terminable by Market at any time. In the
event of termination by Market for "just cause," as defined in the Employment
Agreement, Mr. Larimer will have no right to receive any compensation or other
benefits for any period after such termination. In the event of termination by
Market before the end of the term of the Employment Agreement other than for
just cause, or in connection with a "change of control," as defined in the
Employment Agreement, Mr. Larimer will be entitled to a continuation of salary
payments for a period of time equal to the term of the Employment Agreement and
a continuation of benefits substantially equal to those being provided at the
date of termination of employment until the earliest to occur of the end of the
term of the Employment Agreement or the date on which Mr. Larimer becomes
employed full-time by another employer.
The Employment Agreement also contains provisions with respect to the
occurrence of the following within one year of a "change of control": (1) the
termination of employment of Mr. Larimer for any reason other than just cause,
retirement or termination at the end of the term of the Employment Agreement;
(2) a material change in the capacity or circumstances in which Mr. Larimer is
employed; or (3) a material reduction in his responsibilities, authority,
compensation or other benefits provided under the Employment Agreement. In the
event of any such occurrence, Mr. Larimer will be entitled to receive an amount
equal to three times his average annual compensation for the three taxable years
immediately preceding the termination of employment. In addition, Mr. Larimer
will be entitled to continued coverage under all benefit plans until the
earliest of the end of the term of the Employment Agreement or the date on which
he is included in another employer's benefit plans as a full-time employee. The
maximum which Mr. Larimer may receive under such provisions,
9
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however, is limited to an amount that will not result in the imposition of a
penalty tax pursuant to Section 280G(b)(3) of the Internal Revenue Code of 1986,
as amended (the "Code"), and an amount that will not violate applicable
restrictions of the Office of Thrift Supervision (the "OTS"). A "change of
control," as defined in the Employment Agreement, generally refers to the
acquisition by any person or entity of the ownership or power to vote 25% or
more of the voting stock of Market or MFC, the control of the election of a
majority of the directors of Market or MFC or the exercise of a controlling
influence over the management or policies of Market or MFC.
CERTAIN TRANSACTIONS
In accordance with OTS regulations, Market makes loans to executive
officers and directors of Market and MFC in the ordinary course of business and
on the same terms and conditions, including interest rates and collateral, as
those of comparable loans to other persons. All outstanding loans to executive
officers and directors during the last two fiscal years were made pursuant to
such policy, do not involve more than the normal risk of collectibility or
present other unfavorable features and are current in their payments.
Rae Skirvin Larimer, the spouse of John T. Larimer and director of MFC,
serves as general counsel to Market. During the fiscal year ended September 30,
1999, Market paid $20,310 in legal fees to Ms. Larimer for her services. Ms.
Larimer does not serve as legal counsel to MFC.
PROPOSAL TWO - SELECTION OF AUDITORS
The Board of Directors has selected Grant Thornton as the auditors of
MFC and Market for the current fiscal year and recommends that the shareholders
ratify such selection. Management expects that a representative of Grant
Thornton will be present at the Annual Meeting, will have the opportunity to
make a statement if he or she so desires and will be available to respond to
appropriate questions.
PROPOSALS OF SHAREHOLDERS AND OTHER MATTERS
Any proposals of qualified shareholders intended to be included in the
proxy statement for the 2001 Annual Meeting of Shareholders of MFC should be
sent to MFC by certified mail and must be received by MFC not later than August
31, 2000. In addition, if a shareholder intends to present a proposal at the
2001 Annual Meeting without including the proposal in the proxy materials
related to that meeting, and if the proposal is not received by November 15,
2000, then the proxies designated by the Board of Directors of MFC for the 2001
Annual Meeting of Shareholders of MFC may vote in their discretion on any such
proposal any shares for which they have been appointed proxies without mention
of such matter in the proxy statement or on the proxy card for such meeting.
Management knows of no other business which may be brought before the
Annual Meeting. It is the intention of the persons named in the enclosed Proxy
to vote such Proxy in accordance with their best judgment on any other matters
which may be brought before the Annual Meeting.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND
RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
By Order of the Board of Directors
Cincinnati, Ohio John T. Larimer, President
December 22, 1999
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MARKET FINANCIAL CORPORATION
MARKET FINANCIAL CORPORATION 2000 ANNUAL MEETING OF SHAREHOLDERS
JANUARY 25, 2000
The undersigned shareholder of Market Financial Corporation ("MFC")
hereby constitutes and appoints Julie M. Bertsch and Kathleen A. White, or
either of them, as the Proxy or Proxies of the undersigned with full power of
substitution and resubstitution, to vote at the Annual Meeting of Shareholders
of MFC to be held at Shuller's Wigwam Restaurant, 6210 Hamilton Avenue,
Cincinnati, Ohio 45224, on January 25, 2000, at 10:00 a.m. local time (the
"Annual Meeting"), all of the shares of MFC which the undersigned is entitled to
vote at the Annual Meeting, or at any adjournment thereof, on each of the
following proposals, all of which are described in the accompanying Proxy
Statement:
1. The election of three directors:
[ ] FOR all nominees [ ] WITHHOLD authority to
listed below vote for all nominees
(except as marked to the listed below:
contrary below):
Robert Gandenberger
John T. Larimer
Edgar H. May
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).
- -------------------------------------------------------------------------------
2. The ratification of the selection of Grant Thornton LLP, certified
public accountants, as the auditors of MFC for the current fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, upon such other business as may properly come
before the Annual Meeting or any adjournments thereof.
The Board of Directors recommends a vote "FOR" the nominees and the
proposals listed above.
IMPORTANT: PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.
<PAGE> 14
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. Unless otherwise specified, the
shares will be voted FOR proposals 1 and 2.
All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the 2000 Annual Meeting of Shareholders of MFC and of
the accompanying Proxy Statement is hereby acknowledged.
Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should give
their full titles.
- ---------------------------- ------------------------------
Signature Signature
- ---------------------------- ------------------------------
Print or Type Name Print or Type Name
Dated: Dated:
--------------------- -----------------------
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED FOR MAILING IN THE USA
