MARKET FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
SECTION PAGE
1 PARTICIPATION. . . . . . . . . . . . . . . . . . 1
1.01 Eligibility Requirements . . . . . . . . 1
1.02 Service for Eligibility. . . . . . . . . 1
2 CONTRIBUTIONS. . . . . . . . . . . . . . . . . . 1
2.01 Regular Employer Contribution. . . . . . 1
2.02 Employer Contribution to Reduce Loan
Obligation . . . . . . . . . . . . . . 2
2.03 Rollover Contributions/Participant
Contributions. . . . . . . . . . . . . 2
2.04 Limitations on Annual Additions. . . . . 2
2.05 Dual Plan Limitation . . . . . . . . . . 3
2.06 Corrective Adjustments . . . . . . . . . 4
2.07 Contributions Conditioned on
Plan Qualification . . . . . . . . . . 4
3 ALLOCATION OF EMPLOYER CONTRIBUTIONS . . . . . . 5
3.01 Allocation of Regular Contributions
and Forfeitures. . . . . . . . . . . . 5
3.02 Allocation of Employer Shares Purchased
with Proceeds of Plan Loan . . . . . . 5
3.03 Special Restriction on Allocation. . . . 5
4 PARTICIPANTS' ACCOUNTS . . . . . . . . . . . . . 6
4.01 Establishment of Employer Contributions
Accounts . . . . . . . . . . . . . . . 6
4.02 Establishment of Suspense Account. . . . 6
5 PLAN INVESTMENTS . . . . . . . . . . . . . . . . 6
5.01 Primary Investments. . . . . . . . . . . 6
5.02 Diversification Requirements . . . . . . 7
SECTION PAGE
6 VALUATION OF PARTICIPANTS' ACCOUNTS. . . . . . . 7
6.01 Valuations . . . . . . . . . . . . . . . 7
6.02 Method of Adjustment . . . . . . . . . . 8
7 RETIREMENT BENEFITS. . . . . . . . . . . . . . . 9
7.01 Time of Retirement . . . . . . . . . . . 9
7.02 Amount of Retirement Benefits. . . . . . 9
8 DEATH BENEFITS . . . . . . . . . . . . . . . . . 9
8.01 Amount of Death Benefit. . . . . . . . . 9
8.02 Designation of Beneficiary . . . . . . . 9
8.03 Distribution of Death Benefit. . . . . . 10
9 DISABILITY BENEFITS. . . . . . . . . . . . . . . 11
9.01 Amount of Disability Benefit . . . . . . 11
9.02 Determination of Total and Permanent
Disability . . . . . . . . . . . . . . 11
10 TERMINATION OF EMPLOYMENT. . . . . . . . . . . . 11
10.01 Amount of Benefits Upon Termination of
Employment . . . . . . . . . . . . . . 11
11 VESTING. . . . . . . . . . . . . . . . . . . . . 12
11.01 Fully Vested Benefits. . . . . . . . . . 12
11.02 Full Vesting at Normal Retirement Age,
Death or Disability. . . . . . . . . . 12
11.03 Termination After Eligibility for
Retirement . . . . . . . . . . . . . . 12
12 PAYMENT OF BENEFITS. . . . . . . . . . . . . . . 13
12.01 Method of Payment. . . . . . . . . . . . 13
12.02 Timing of Payments . . . . . . . . . . . 13
12.03 Installment Payments . . . . . . . . . . 13
12.04 Distributions After Death. . . . . . . . 14
SECTION PAGE
12.05 Cash-Outs. . . . . . . . . . . . . . . . 15
12.06 Put Option . . . . . . . . . . . . . . . 15
12.07 Right of First Refusal . . . . . . . . . 16
12.08 Eligible Rollover Distributions. . . . . 17
13 BREAK IN SERVICE RULES . . . . . . . . . . . . . 18
13.01 Effect of Break in Service on
Eligibility. . . . . . . . . . . . . . 18
13.02 Effect of Break in Service on Vesting. . 19
13.03 Authorized Leaves of Absence . . . . . . 19
14 TRUST AGREEMENT. . . . . . . . . . . . . . . . . 20
14.01 Description of Trust Agreement. . . . . . 20
15 PLAN ADMINISTRATION. . . . . . . . . . . . . . . 20
15.01 Plan Administrator . . . . . . . . . . . 20
15.02 Duties of Plan Administrator . . . . . . 20
16 AMENDMENTS . . . . . . . . . . . . . . . . . . . 21
16.01 Employer's Right to Amend Plan. . . . . . 21
17 DISTRIBUTIONS ON PLAN TERMINATION. . . . . . . . 22
17.01 Full Vesting on Plan Termination . . . . 22
17.02 Payment on Plan Termination. . . . . . . 22
17.03 Discontinuance of Contributions;
Partial Termination of Plan. . . . . . 22
18 CREDITORS OF PARTICIPANTS. . . . . . . . . . . . 22
18.01 Non-Assignability. . . . . . . . . . . . 22
18.02 Qualified Domestic Relations Orders. . . 23
19 CLAIMS PROCEDURES. . . . . . . . . . . . . . . . 23
19.01 Filing a Claim for Benefits. . . . . . . 23
19.02 Denial of Claim. . . . . . . . . . . . . 23
19.03 Remedies Available to Participants . . . 24
SECTION PAGE
20 VOTING RIGHTS. . . . . . . . . . . . . . . . . . 24
20.01 Participant Voting Rights with
Respect to Allocated Shares. . . . . . 24
20.02 Participant Voting Rights with
Respect to Unallocated Shares. . . . . . 25
21 TOP HEAVY RULES. . . . . . . . . . . . . . . . . 25
21.01 Definitions. . . . . . . . . . . . . . . 25
21.02 Top Heavy Status . . . . . . . . . . . . 26
21.03 Minimum Contributions. . . . . . . . . . 27
22 EXEMPT LOANS . . . . . . . . . . . . . . . . . . 28
22.01 Authority to Borrow. . . . . . . . . . . 28
22.02 Requirements for Plan Loans. . . . . . . 28
23 MISCELLANEOUS. . . . . . . . . . . . . . . . . . 30
23.01 Employment Rights. . . . . . . . . . . . 30
23.02 Gender . . . . . . . . . . . . . . . . . 30
23.03 Notice Requirement . . . . . . . . . . . 30
23.04 Merger or Consolidation. . . . . . . . . 30
23.05 Social Security Benefits . . . . . . . . 30
23.06 Forfeitures. . . . . . . . . . . . . . . 31
23.07 Named Fiduciaries. . . . . . . . . . . . 31
23.08 Limitations on Payment . . . . . . . . . 31
23.09 Interpretation of Document . . . . . . . 31
23.10 Nonterminable Protections and Rights . . 32
23.11 Use of Income With Respect to
Employer Shares. . . . . . . . . . . . 32
24 CERTAIN DEFINITIONS. . . . . . . . . . . . . . . 32
24.01 Account. . . . . . . . . . . . . . . . . 32
24.02 Adjustment Factor. . . . . . . . . . . . 32
24.03 Affiliate. . . . . . . . . . . . . . . . 32
24.04 Annual Additions . . . . . . . . . . . . 33
24.05 Beneficiary. . . . . . . . . . . . . . . 33
24.06 Code . . . . . . . . . . . . . . . . . . 33
24.07 Compensation . . . . . . . . . . . . . . 34
SECTION PAGE
24.08 Current Participant. . . . . . . . . . . 34
24.09 Intentionally Omitted. . . . . . . . . . 34
24.10 Effective Date . . . . . . . . . . . . . 34
24.11 Employee . . . . . . . . . . . . . . . . 34
24.12 Employer . . . . . . . . . . . . . . . . 35
24.13 Employer Contributions Account . . . . . 35
24.14 Employer Shares or Shares. . . . . . . . 35
24.15 Employment Commencement Date . . . . . . 35
24.16 Entry Date . . . . . . . . . . . . . . . 35
24.17 ERISA. . . . . . . . . . . . . . . . . . 35
24.18 Family Member. . . . . . . . . . . . . . 35
24.19 Forfeiture . . . . . . . . . . . . . . . 36
24.20 Full Time. . . . . . . . . . . . . . . . 36
24.21 Highly-Compensated Employee. . . . . . . 36
24.22 Hour of Service. . . . . . . . . . . . . 37
24.23 Late Retirement Date . . . . . . . . . . 38
24.24 Leased Employee. . . . . . . . . . . . . 39
24.25 Limitation Year. . . . . . . . . . . . . 39
24.26 Normal Retirement Age. . . . . . . . . . 39
24.27 Normal Retirement Date . . . . . . . . . 39
24.28 One-Year Break in Service. . . . . . . . 40
24.29 Participant. . . . . . . . . . . . . . . 40
24.30 Plan . . . . . . . . . . . . . . . . . . 40
24.31 Plan Administrator . . . . . . . . . . . 40
24.32 Plan Year. . . . . . . . . . . . . . . . 40
24.33 Projected Annual Benefit . . . . . . . . 40
24.34 Spouse or Surviving Spouse . . . . . . . 41
24.35 Trust Agreement. . . . . . . . . . . . . 41
24.36 Trust Fund . . . . . . . . . . . . . . . 41
24.37 Trustee. . . . . . . . . . . . . . . . . 41
24.38 Valuation Date . . . . . . . . . . . . . 41
24.39 Year of Service. . . . . . . . . . . . . 41
25 MULTIEMPLOYER PROVISIONS . . . . . . . . . . . . 42
25.01 Adoption by Affiliates of Market
Financial Corporation. . . . . . . . . 42
25.02 Administration . . . . . . . . . . . . . 42
25.03 Common Fund. . . . . . . . . . . . . . . 42
25.04 Withdrawal-Termination . . . . . . . . . 42
MARKET FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Market Financial Corporation hereby adopts the following employee
stock ownership plan (hereinafter referred to as the "Plan"), effective as of
the Effective Date. The Plan shall be for the exclusive benefit of eligible
Employees and, where applicable, the designated Beneficiaries of such
Employees. It is intended that this Plan, together with the Trust Agreement,
shall comply with the applicable provisions of the Code and ERISA.
SECTION L
PARTICIPATION
1.01. ELIGIBILITY REQUIREMENTS
Each Employee who was (i) a Full-Time Employee during the 12 month
period immediately preceding the Effective Date, and (ii) employed by the
Employer and at least 21 years of age on the Effective Date, shall become a
Participant in the Plan on the Effective Date. Each other Employee of the
Employer shall be eligible to participate in the Plan on the Entry Date
coinciding with or first following the date on which he has attained 21 years
of age and has completed 12 months of service as a Full-Time Employee.
1.02. SERVICE FOR ELIGIBILITY
The 12-month period during which the Employee must meet the
Full-Time requirement shall initially be the 12 consecutive months beginning
with his Employment Commencement Date, and, thereafter shall be each Plan
Year beginning with the Plan Year that includes the first anniversary of the
Employee's Employment Commencement Date.
SECTION 2
CONTRIBUTIONS
2.01. REGULAR EMPLOYER CONTRIBUTION
Subject to its right to terminate or amend this Plan, the Employer
may contribute and pay to the Trustee of the Trust Fund created for the
purpose of carrying out this Plan a contribution in cash or Employer Shares
as the Board of Directors of the Employer may in its discretion determine.
The amount of such contribution by the Employer to be paid to the
Plan in any year shall be such amount as the Board of Directors of the
Employer may in its discretion determine; provided, however, that in any year
the amount contributed shall not exceed the maximum amount deductible from
the Employer's income for such year under Section 404(a)(3) of the Code, or
any succeeding statute of similar import.
2.02. EMPLOYER CONTRIBUTION TO REDUCE LOAN OBLIGATION
In addition to the contributions authorized by Section 2.01, the
Employer may in its discretion contribute amounts sufficient to enable the
Trustee to pay, on or before the due date thereof, each installment of
principal and interest on any Plan loan used to acquire Employer Shares;
provided, that the amounts contributed by the Employer pursuant to this
Section 2.02, in any year, shall not exceed the maximum amount deductible
from the Employer's income for such year under Section 404(a)(9) of the Code,
or any succeeding statute of similar import.
2.03. ROLLOVER CONTRIBUTIONS/PARTICIPANT CONTRIBUTIONS
Neither rollover contributions nor participant contributions to the
Plan are permitted.
2.04. LIMITATIONS ON ANNUAL ADDITIONS
Annual Additions to each Participant's Account shall not exceed the
lesser of (a) $30,000 [or if greater, 1/4th of the defined benefit dollar
limitation in effect under Code Section 415(b)(l) for the Limitation Year];
or (b) 25% of the Participant's compensation for the Limitation Year;
provided, however, that for any Plan Year in which the conditions of Code
Section 415(c)(6) are satisfied by the Plan, the limitations contained in
this Section 2.04 shall be adjusted to the maximum amount permitted under
such section of the Code. For purposes of this Section 2.04, the portion of
such Employer contribution which is deemed to be allocated to a Participant's
Account shall be an amount which bears the same ratio to the total
contribution made by or on behalf of the Employer for such Plan Year which is
used to repay principal on one or more Plan loans, or to purchase Employer
Shares, as the number of Employer Shares allocated to such Participant's
Account in respect of such Plan Year bears to the total number of Employer
Shares allocated to the Accounts of all Participants in respect of such Plan
Year.
For purposes of this Section 2.04, "compensation" shall mean
compensation as defined in Treasury Regulation Section 1.415-2(d) and shall
include wages, salaries, fees for professional services, percentage of
profits, earned income in the case of a self-employed Participant, disability
payments under Code Section 105(d), paid or reimbursed moving expenses to the
extent not deductible by the Participant, medical reimbursement items and the
value of a non-qualified stock option to the extent includable in an
Employee's gross income upon making the election under Code Section 83(b).
Specifically excluded are salary deferral contributions; contributions to or
distributions from most deferred compensation plans; amounts realized from
the sale of a non-qualified stock option plan or from the sale, exchange or
other disposition of stock acquired under a qualified stock option plan and
most amounts which receive special tax benefits.
2.05. DUAL PLAN LIMITATION
If the Participant is, or was, covered under a defined benefit plan
and a defined contribution plan maintained by the Employer, the sum of the
Participant's defined benefit plan fraction and defined contribution plan
fraction may not exceed 1.0 in any Limitation Year.
The defined benefit plan fraction is a fraction, the numerator of
which is the sum of the Participant's Projected Annual Benefits under all
defined benefit plans (whether or not terminated) maintained by the Employer
and the denominator of which is the lesser of (a) 1.25 times the dollar
limitation of Section 415(b)(1)(A) of the Code in effect for the Limitation
Year; or (b) 1.4 times the Participant's average compensation for the three
consecutive years that produced the highest average.
The defined contribution plan fraction is a fraction, the numerator
of which is the sum of the Annual Additions to the Participant's Accounts
under all defined contribution plans maintained by the Employer (whether or
not terminated) for the current and all prior Limitation Years, and the
denominator of which is the sum of the lesser of the following amounts
determined for such year and for each prior Year of Service with the
Employer: (a) 1.25 times the dollar limitation in effect under Section
415(c)(1)(A) of the Code for such year; or (b) 1.4 times the amount which may
be taken into account under Section 415(c)(1)(B) of the Code.
For any years in which the Plan is "top heavy," "1.0" shall be
substituted for "1.25" in the preceding two paragraphs.
If, in any Limitation Year, the sum of the defined benefit plan
fraction and the defined contribution plan fraction exceeds 1.0, the rate of
benefit accruals under this Plan will be reduced so that the sum of the
fractions equals 1.0.
2.06. CORRECTIVE ADJUSTMENTS
If, due to a reasonable error in estimating a Participant's annual
compensation or due to the allocation of Forfeitures an excess Annual
Addition exists, such excess will be used to reduce Employer contributions
for such Participant in the next, and succeeding, Limitation Years. If the
Participant was not covered by the Plan at the end of the Limitation Year,
such excess will be applied to reduce Employer contributions for all
remaining Participants in the next, and succeeding, Limitation Years.
2.07. CONTRIBUTIONS CONDITIONED ON PLAN QUALIFICATION
All Employer contributions under this Plan will be made with the
understanding that the Plan will qualify under the provisions of Section
401(a) of the Code. In the event the Internal Revenue Service initially
determines that this Plan fails to meet the requirements for a qualified plan
and the Employer is unable to amend the Plan so as to receive a favorable
determination, then all Employer contributions under the Plan,
less any expenses and adjusted by any gains or losses, will be refunded to
the Employer.
SECTION 3
ALLOCATION OF EMPLOYER CONTRIBUTIONS
3.01. ALLOCATION OF REGULAR CONTRIBUTIONS AND FORFEITURES
Each Plan Year, the Employer's regular contribution made pursuant
to Section 2.01, and any Forfeitures available for such year, shall be
allocated to the Accounts of Current Participants. In that regard, the
amount allocated to the Account of a particular Current Participant shall be
in the same proportion to the total amounts available for allocation as the
Compensation of such Current Participant for the Plan Year bears to the
Compensation of all Current Participants for such Plan Year.
3.02. ALLOCATION OF EMPLOYER SHARES PURCHASED WITH PROCEEDS OF PLAN LOAN
Any Employer Shares purchased with the proceeds of Plan loans shall
be held in a suspense account and allocated to Participants' Employer
Contributions Accounts as such loans are reduced and such Shares are released
pursuant to the terms of the loans. Each year the number of Employer Shares
released under all Plan loans shall be allocated to each Participant's
Employer Contributions Account in the same manner as the Employer's regular
contribution is allocated under Section 3.01.
3.03. SPECIAL RESTRICTION ON ALLOCATION
Notwithstanding any provision contained herein, no portion of the
assets of the Plan attributable to Employer Shares acquired by the Plan in a
sale to which either Sections 1042 or 2057 of the Code applies may be
allocated, either directly or indirectly, (i) to the Employer Contributions
Account of a Participant who owns, after application of Section 318(a) of the
Code, more than 25% of either (a) any class of outstanding stock of the
Employer; or (b) the total value of any outstanding stock of the Employer; or
(ii) during the nonallocation period [as defined in Code Section 409(n)] to
the Employer Contributions Account of a Participant -- or any person related
to such Participant within the meaning of Code Section 267(b) -- who
makes an election under Code Section 1042(a) with respect to Employer Shares.
SECTION 4
PARTICIPANTS' ACCOUNTS
4.01. ESTABLISHMENT OF EMPLOYER CONTRIBUTIONS ACCOUNTS
The Plan Administrator shall establish and maintain an Employer
Contributions Account for each Participant to record:
(a) his share of the Employer contributions and Forfeitures
allocated under Section 3; and
(b) his share of the net income, or net losses, resulting from the
investment thereof.
4.02. ESTABLISHMENT OF SUSPENSE ACCOUNT
The Plan Administrator shall establish and maintain a suspense
account to record the number of Employer Shares encumbered under all
outstanding Plan loans. As described in Section 3.02, Employer Shares shall
be transferred from the suspense account and allocated to the Participants'
Employer Contributions Accounts as such Shares are released from encumbrance
under the terms of such Plan loans.
SECTION 5
PLAN INVESTMENTS
5.01. PRIMARY INVESTMENTS
As an employee stock ownership plan, this Plan shall invest
primarily in Employer Shares. Any Plan assets not invested in Employer
Shares shall be invested in other investment vehicles by the Trustee, in its
discretion, pursuant to the provisions of the Trust Agreement.
5.02. DIVERSIFICATION REQUIREMENTS
(a) Any Participant who has completed at least ten years of
participation in the Plan and who has attained age 55 (the "diversification
requirements"), may elect within the first 90 days of each of the six Plan
Years immediately following the Plan Year in which he first satisfies the
diversification requirements, to direct the Plan as to the investment of up
to 25% of the total balance of his Account attributable to Employer Shares
(to the extent such 25% portion exceeds the amount to which a prior election
under this paragraph applies). In the case of the Plan Year in which the
Participant can make his last such election, the preceding sentence shall be
applied by substituting "50%" for "25%." The Participant's direction (i)
shall be provided to the Plan Administrator in writing.
(b) The Plan shall, in each instance, distribute
[notwithstanding Section 409(d) of the Code] the portion of the Participant's
Account that is covered by the election within the first 180 days of the Plan
Year in which the election is made. This paragraph (b) shall apply
notwithstanding any other provision of the Plan other than such provisions as
require the consent of the Participant to a distribution with a present value
in excess of $3,500. If the Participant does not consent, such amount shall
be retained in the Plan.
(c) In lieu of making the distribution described in paragraph (b)
above, the Plan may satisfy the requirements of paragraph (a) by offering at
least three investment options (other than Employer Shares) to each
Participant making the election described in paragraph (a); and if the
Participant so elects by investing, within the 180 day period specified in
paragraph (b), the amount in question in the option(s) selected by the
Participant.
SECTION 6
VALUATION OF PARTICIPANTS' ACCOUNTS
6.01. VALUATIONS
As of each Valuation Date, or more frequently at the election of
the Plan Administrator, the Plan Administrator shall obtain an evaluation of
the assets of the Trust Fund from the Trustee on the basis of the market
value of the assets of the
Trust Fund. On the basis of such valuation, the Participants' Accounts shall
be adjusted as of such Valuation Date to reflect the effect of income
received or accrued, realized and unrealized profits and losses, expenses,
Forfeitures, payments to Participants and all other transactions in the
period since the last preceding Valuation Date.
For purposes of valuation of Employer Shares under this Section and
with respect to all other activities carried on by the Plan which require the
valuation of Employer Shares, at all times during which the Employer Shares
are not readily tradable on an established securities market, such valuations
shall be made by an independent appraiser, within the meaning of Section
401(a)(28)(C) of the Code.
6.02. METHOD OF ADJUSTMENT
The amount to the credit of each Participant's Account as of each
Valuation Date shall be adjusted as of each succeeding Valuation Date by the
following credits and charges in the order specified:
(a) In the case of each Participant to, for or on behalf of whom
disbursements from the Plan have been made, there shall be debited the total
amount of any disbursements made to him or for his account from his Account
during the period since the last Valuation Date.
(b) In the case of each Participant (including former Employees
for whom Accounts are being maintained), there shall be credited or debited
to his Account that portion of the net increase (including an amount equal to
the non-distributed dividends on allocated Employer Shares) or net decrease
of the value of the assets of the Trust Fund since the last Valuation Date
which the balance of his Account (after completion of the adjustment called
for in Section 6.02(a) above) bears to the total balance of all Accounts
after completion of the adjustments called for in Section 6.02(a) above.
(c) In the case of each Current Participant, there shall be
credited to his Account the Employer's contributions, Forfeiture and Employer
Shares released under Plan loans that are allocable to him under Section 3 of
this Plan. In allocating Forfeitures, Employer Shares shall be allocated only
after other
assets in the terminated Participants' Accounts have been allocated.
SECTION 7
RETIREMENT BENEFITS
7.01. TIME OF RETIREMENT
A Participant may retire from the employ of the Employer on his Normal
Retirement Date or his Late Retirement Date.
7.02. AMOUNT OF RETIREMENT BENEFITS
The amount which a Participant shall be entitled to receive upon
reaching his Normal Retirement Date or his Late Retirement Date shall be an
amount equal to the value of the Employer Shares credited to his Account and
the net value of the other assets of such Account as of the first Valuation
Date following his Normal Retirement Date or his Late Retirement Date.
SECTION 8
DEATH BENEFITS
8.01. AMOUNT OF DEATH BENEFIT
The death benefit under this Plan shall be an amount equal to the
value of the Employer Shares and the net value of the other assets credited
to the deceased Participant's Account as of the first Valuation Date
following the date of his death.
8.02. DESIGNATION OF BENEFICIARY
Subject to the provisions of Section 8.03, each Participant shall
designate, by a written instrument filed with the Plan Administrator, one or
more Beneficiaries who, upon the death of the Participant, shall be entitled
to receive the death benefit described in Section 8.01. If more than one
Beneficiary is named, the Participant may specify the sequence and/or
proportion in which payments must be made to each Beneficiary. In the
absence of such specification, payments shall be made in equal shares to all
named Beneficiaries then living at the time of the Participant's death. To
the extent otherwise consistent
with this Plan, a Participant may change his Beneficiary from time to time by
written notice delivered to the Plan Administrator in the manner prescribed
by the Plan Administrator. The Plan Administrator may, in its discretion,
limit the number of Beneficiaries that may be designated by a Participant.
If no Beneficiary has been designated or if no designated Beneficiary is
living at the time of the Participant's death, payment of such death benefit,
if any, to the extent permitted by law, shall be made to the surviving person
or persons in the first of the following classes of successive preference of
beneficiaries: (a) Surviving Spouse; (b) issue, then living, per stirpes; (c)
executors or administrators. Any minor's share shall be paid to such adult or
adults as have, in the opinion of the Plan Administrator, assumed custody and
support of such minor. Proof of death satisfactory to the Plan Administrator
must be furnished prior to the payment of any death benefit under the Plan.
Once benefits begin to be paid to a Beneficiary pursuant to this Section,
such Beneficiary shall name an individual or individuals to receive the
remainder of such benefit, if any, upon the death of the Beneficiary. In the
absence of such a designation by the Beneficiary, such remaining benefit, if
any, shall be paid to the estate of the Beneficiary.
8.03. DISTRIBUTION OF DEATH BENEFIT
If a Participant dies without a Surviving Spouse either before
retirement or after retirement, but before a complete distribution of his
Accounts, the death benefit described in Section 8.01 shall be distributed to
the person or persons specified in Section 8.02, in accordance with the
provisions of Section 12 hereof.
If a Participant dies with a Surviving Spouse either before
retirement or after retirement, but before a complete distribution of his
Accounts, then, notwithstanding the provisions of Section 8.02 hereof, the
death benefit described in Section 8.01 shall be paid to his Surviving Spouse
in accordance with the provisions of Section 12 hereof, UNLESS such Surviving
Spouse, in accordance with the provisions of this paragraph, has consented to
an alternate Beneficiary, in which case, such death benefit shall be
distributed to such alternate Beneficiary in accordance with the provisions
of Section 12. For purposes of the preceding sentence, the consent of the
Spouse must (a) be in writing; (b) designate a specific Beneficiary,
including any class of beneficiaries or contingent beneficiaries, which may
not
be changed without spousal consent (or the Spouse expressly permits
designations by the Participant without further spousal consent); (c)
acknowledge the effect of such consent; and (d) be witnessed by a Plan
representative or notary public.
SECTION 9
DISABILITY BENEFITS
9.01. AMOUNT OF DISABILITY BENEFIT
If a Participant becomes "totally and permanently disabled" as
defined in Section 9.02 below, such Participant shall be entitled to receive
as a disability benefit an amount equal to the value of the Employer Shares
credited to his Account and the net value of other assets of such Account as
of the first Valuation Date following the date that the Plan Administrator
determines him to be "totally and permanently disabled".
9.02. DETERMINATION OF TOTAL AND PERMANENT DISABILITY
A Participant shall be considered to be "totally and permanently
disabled" if it is established by a licensed physician selected by the Plan
Administrator that (i) the Participant has suffered a disability which is
expected to result in his death or last for not less than 12 months; and (ii)
the Participant is not able to perform his job or any job for which he is
reasonably suited as a result of his education, training and experience. The
determination by the Plan Administrator with respect to whether a Participant
is totally and permanently disabled shall be made in a nondiscriminatory
manner.
SECTION 10
TERMINATION OF EMPLOYMENT
10.01. AMOUNT OF BENEFITS UPON TERMINATION OF EMPLOYMENT
If a Participant leaves the employ of the Employer for any reason
other than retirement, death or disability in accordance with Sections 7, 8
or 9 hereof, he shall be entitled to receive an amount equal to the
nonforfeitable percentage of the value of the Employer Shares and the net
value of the other assets credited to his Account as of the first Valuation
Date following the date of his termination of employment. Such
nonforfeitable percentage shall be determined in accordance with Section
11.01 hereof.
SECTION 11
VESTING
11.01. FULLY VESTED BENEFITS
Notwithstanding any provision of this Plan to the contrary, each
Participant shall at all times be fully vested in all amounts allocated to
his Employer Contribution Account.
11.02. FULL VESTING AT NORMAL RETIREMENT AGE, DEATH OR DISABILITY
Notwithstanding any provision in this Plan to the contrary, the
value of a Participant's Accounts shall be fully vested and nonforfeitable
upon the Participant's (i) attaining his Normal Retirement Age, (ii) becoming
totally and permanently disabled, or (iii) death.
11.03. TERMINATION AFTER ELIGIBILITY FOR RETIREMENT
The termination of a Participant's employment after he has attained
his Normal Retirement Age shall be considered a retirement for purposes of
this Plan.
SECTION 12
PAYMENT OF BENEFITS
12.01. METHOD OF PAYMENT
At the time a Participant becomes entitled to receive any amount
because of his retirement, death, disability or termination of employment,
the Trustee, acting in accordance with the written instructions of the Plan
Administrator, shall make payment from the Trust Fund to such individual (or
his Beneficiary) in a lump sum. All such payments shall be made by the
Trustee, at the option of the Participant (or his Beneficiary) in Employer
Shares, in cash or both.
12.02. TIMING OF PAYMENTS
Unless the Participant or Beneficiary elects otherwise, the payment
of retirement, death, disability and termination benefits shall begin no
later than 60 days after the close of the Plan Year in which the Participant
retires, dies, becomes disabled or otherwise terminates service with the
Employer.
Notwithstanding any provisions hereof to the contrary, benefit
payments under this Plan shall in all instances commence by the April 1
following the end of the calendar year in which the Participant attains age
70 1/2.
12.03. INSTALLMENT PAYMENTS
Notwithstanding any provisions in this Plan to the contrary, if a
Participant's entire interest is to be distributed in other than an immediate
lump sum, minimum annual payments under the Plan must be paid over one of the
following periods (or a combination thereof):
(a) a period certain not extending beyond the life expectancy of
the Participant; or
(b) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated Beneficiary.
If a Participant's entire interest is to be distributed in other
than a lump sum, then the amount to be distributed each
year must be at least an amount equal to the quotient obtained by dividing
the Participant's entire interest by the life expectancy of the Participant
or joint and last survivor expectancy of the Participant and designated
Beneficiary. If the Participant's Spouse is not the designated Beneficiary,
the method of distribution selected must assure that at least 50% of the
present value of the amount available for distribution is paid within the
life expectancy of the Participant.
12.04. DISTRIBUTIONS AFTER DEATH
If the distribution of the Participant's Account has begun and he
dies before his entire Account has been distributed to him, the remaining
portion of such Account will be distributed at least as rapidly as under the
method of distribution being used prior to the Participant's death.
Subject to the succeeding paragraph, if the Participant dies before
his distribution has begun, his entire Account shall be distributed within
five years of his death unless (a) a portion of his Account is payable to or
on behalf of a designated Beneficiary; (b) such portion will be distributed
over the life of such designated Beneficiary; and (c) such distribution
begins not later than one year after the date of the Participant's death (or
such date as prescribed by the Secretary of Treasury).
Notwithstanding the preceding paragraph if the designated
Beneficiary is the Participant's Surviving Spouse, the date by which
distribution must commence under (c) in the preceding paragraph shall be the
date the Participant would have attained age 70 1/2. If the Surviving Spouse
dies before distribution to said Spouse begins, this section shall apply as
if the Surviving Spouse were the Participant. Life expectancy of a Surviving
Spouse may be recalculated annually; however, in the case of any other
designated Beneficiary, such life expectancy will be calculated at the time
that payment first commences without further calculations. In addition, any
amount paid to a child of the Participant will be treated as if it had been
paid to the Surviving Spouse if the amount becomes payable to the Surviving
Spouse when the child reaches the age of majority.
The provisions of this Section 12.04 are subject to the provisions
of Section 12.01 hereof.
12.05. CASH-OUTS
If for any reason a Participant terminates service and the value of
his nonforfeitable Accounts does not exceed (or at the time of any prior
distribution has not exceeded) $3,500, the Participant shall receive a
distribution of the value of the entire nonforfeitable portion of such
Accounts as soon as administratively feasible after the first Valuation Date
following his date of termination; and the remainder of such Accounts will be
treated as a Forfeiture. For purposes of this section, if the value of a
Participant's nonforfeitable Accounts is zero, the Participant shall be
deemed to have received a distribution of such nonforfeitable Account.
If a Participant receives a distribution pursuant to this Section
which is less than the value of his Employer Contributions Account and
resumes employment covered under this Plan, the Participant's Accounts will
be restored to the amount on the date of distribution if he repays to the
Plan the full amount of his distribution before the earlier of (a) five years
after the first date on which the Participant is subsequently reemployed by
the Employer; or (b) the date on which he incurs five consecutive One Year
Breaks in Service following the date of distribution.
12.06. PUT OPTION
Except as otherwise provided in this Section 12.06, any Employer
Shares which are not publicly traded at the time they are distributed to
Participants or former Participants shall be subject to a put option which
will permit the Participant to put those Employer Shares to the Employer.
Put options shall be exercisable at least during the 16-month period which
begins on the date the Employer Shares subject to the option are distributed
by this Plan. Such an option may be exercised by the holder of the Shares
notifying the Employer in writing that the put option is being exercised.
The price at which the put option must be exercisable is the fair market
value of the Shares determined in accordance with the provisions of Treasury
Regulation Section 54.4975-11(d)(5).
If, pursuant to this Section, the Employer is required to
repurchase Employer Shares which are distributed to a Participant within one
taxable year in a distribution that represents the balance to the credit of
the Participant's
Account, the amount to be paid for such Employer Shares shall be paid in
substantially equal periodic payments (not less frequently than annually)
over a period beginning not later than 30 days after the exercise of the put
option described in this Section and not exceeding five years. Adequate
security shall be provided and reasonable interest shall be paid on the
unpaid amounts referred to in the preceding sentence.
If, pursuant to this Section, the Employer is required to
repurchase Employer Shares which are distributed to a Participant as part of
an installment distribution, the amount to be paid for such Employer Shares
shall be paid not later than 30 days after the exercise of the put option
described in this Section.
Notwithstanding any provision of this Plan to the contrary, to the
extent that the Employer is prohibited by law from redeeming or purchasing it
own securities, consistent with the provisions of Section 409(h)(3) of the
Code, Employer Shares under this Plan shall not be subject to the put option
described in this Section 12.06 and, as such, a Participant will not be
permitted to put such Employer Shares to the Employer.
12.07. RIGHT OF FIRST REFUSAL
(a) During any period when Employer Shares are not publicly
traded, all distributions of Employer Shares to any Participant or his
Beneficiary by the Plan shall be subject to a "right of first refusal" upon
the terms and conditions hereinafter set forth. The "right of first refusal"
shall provide that prior to any transfer (as determined by the Plan
Administrator) of the Employer Shares, the Participant or Beneficiary must
first offer to sell such shares to the Plan; and if the Plan refuses to
exercise its right to purchase the Employer Shares, then the Employer shall
have a "right of first refusal" to purchase such Shares. Neither the Plan
nor the Employer shall be required to exercise the "right of first refusal."
This Section 12.07 shall not be operative unless and until the Board of
Directors of the Employer so directs.
(b) The terms and conditions of the "right of first refusal" shall
be determined as follows:
(i) If the Participant or Beneficiary receives a bona fide offer
for the purchase of all or any part of
his Employer Shares from a third party, the Participant or
Beneficiary shall forthwith deliver (by registered mail, return
receipt requested) a copy of any such offer to the Plan
Administrator. The Trustee (as directed by the Plan Administrator)
or the Employer, as the case may be, shall then have 14 days
after receipt by the Plan Administrator of the written offer to
exercise the right to purchase all or any portion of the Employer
Shares.
(ii) The selling price and other terms under the "right of first
refusal" must not be less favorable to the Participant or Beneficiary
than the purchase price and other terms offered by a buyer other than
the Employer or the Plan, making a good faith offer to purchase the
security.
12.08. ELIGIBLE ROLLOVER DISTRIBUTIONS
(a) Notwithstanding any provision of this Plan to the contrary
that would otherwise limit a distributee's election under the Plan, a
distributee may elect at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover distribution made
on or after January l, 1993 paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
(b) The following definitions will apply for purposes of this Section
12.08:
(i) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the balance
to the credit of the distributee, except that an eligible rollover
distribution does not include: (A) any distribution that is one of a
series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated Beneficiary; (B) any
distribution that is for a specified period of ten years or more; (C)
any distribution to the extent such distribution is required under
Code Section 401(a)(9); and (D) the portion of any distribution that
is not includable in
gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(ii) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a) or a qualified trust
described in Code Section 401(a) that accepts the distributee's
eligible rollover distribution. However, in the case of an eligible
rollover distribution to the Surviving Spouse, an eligible retirement
plan is an individual retirement account or individual retirement
annuity.
(iii) Distributee: A distributee includes an Employee or former
Employee. In addition, the Spouse or Surviving Spouse of an Employee
or former Employee is a distributee with regard to the interest of the
Spouse or Surviving Spouse.
(iv) Direct rollover: A direct rollover is a payment by the Plan
to the eligible retirement plan specified by the distributee.
SECTION 13
BREAK IN SERVICE RULES
13.01. EFFECT OF BREAK IN SERVICE ON ELIGIBILITY
If a Participant terminates his employment with the Employer and
subsequently resumes employment after incurring a One Year Break in Service,
the rehired Participant shall again participate in the Plan as of the date of
his reemployment.
13.02. EFFECT OF BREAK IN SERVICE ON VESTING
In the case of a Participant who has five or more consecutive
One-Year Breaks in Service, Years of Service performed by such Participant
after such One-Year Breaks in Service will be disregarded for the purpose of
determining the vested percentage of any Employer Contributions that accrued
to his Account before the commencement of such One-Year Breaks in Service.
Accordingly, upon the occurrence of five consecutive One-Year Breaks in
Service, the non-vested portion of the Participant's, if any, Account shall be
treated as a Forfeiture.
Moreover, if a Participant incurs five or more consecutive One-Year
Breaks in Service, such Participant's pre-break service will be disregarded in
determining the vested percentage of any post-break Employer Contributions that
accrue to his Account if (a) he has no vested interest in his Account at the
time of his separation from service, and (b) upon returning to service, the
number of his consecutive One-Year Breaks in Service is greater than the number
of his pre-break Years of Service.
Separate accounts will be maintained for the Participant's
pre-break and post-break Employer contributions. Both accounts will share in
the earnings and losses of the Trust Fund.
In the case of a Participant who does not have five consecutive One-
Year Breaks in Service, both pre-break and post- break Years of Service will
count in determining the vested percentage of pre-break and post-break Employer
contributions that accrue to his Account.
13.03. AUTHORIZED LEAVES OF ABSENCE
Authorized leaves of absence, as determined by the Plan Administrator,
including military service recognized by law as leave of absence, will be
included in determining Years of Service for both eligibility and vesting
purposes. All Employees in similar circumstances will be treated alike.
SECTION 14
TRUST AGREEMENT
14.01. DESCRIPTION OF TRUST AGREEMENT
The Employer proposes to enter into a Trust Agreement with the Trustee
to provide for the administration of the Trust Fund. The Trust Agreement shall
be deemed to form a part of this Plan, and any and all rights or benefits which
may accrue to any person under this Plan shall be subject to all the terms and
provisions of the Trust Agreement. The Plan is designed to
invest primarily in Employer Shares. If and to the extent that Employer
Shares are not available at a price acceptable to the Trustee, the Trustee is
authorized to make other investments as provided in the Trust Agreement.
SECTION 15
PLAN ADMINISTRATION
15.01. PLAN ADMINISTRATOR
The Plan shall be administered by a Plan Administrator. Such Plan
Administrator shall be a committee of one or more individuals who shall be
appointed by and serve at the pleasure of the Employer. In the event that no
such appointment is made, Market Financial Corporation shall serve as Plan
Administrator.
15.02. DUTIES OF PLAN ADMINISTRATOR
The Plan Administrator shall supervise the maintenance of such
accounts and records as shall be necessary or desirable to show the
contributions of the Employer, allocation to Participants' Accounts, payments
from Participants' Accounts, valuations of the Trust Fund and all other
transactions pertinent to the Plan.
The Plan Administrator is authorized to perform all functions
necessary to administer the Plan, including, without limitation, to determine
the eligibility and qualification of Employees for benefits under the Plan;
to determine the allocation and vesting of contributions, earnings and
profits of the Plan; to interpret and construe the terms of Plan; to adopt
rules, regulations and procedures consistent therewith and to decide all
disputes with respect to the rights and obligations of Participants in the
Plan. If the Trust Agreement permits, the Plan Administrator may direct the
Trustee with respect to investment of the assets of the Trust Fund or may
employ investment counsel to do so. The Plan Administrator will have
absolute discretion in carrying out its duties and responsibilities under
this paragraph.
The Plan Administrator may employ one or more persons to render
advice with regard to any responsibility it has under
the Plan and may designate others to carry out any of' its responsibilities.
SECTION 16
AMENDMENTS
16.01. EMPLOYER'S RIGHT TO AMEND PLAN
The Employer shall have the right at any time, by an instrument in
writing, to modify, alter or amend this Plan in whole or in part; provided,
that no such change shall in any way affect the vested rights of the
Employees under this Plan; and provided further, that the provisions of this
Plan with respect to the amount, price and timing of awards to officers shall
not be amended more than once every six months, other than to comply with
applicable provisions of the Code, ERISA or regulations thereunder. If an
amendment changes the nonforfeitable rights provided in Section 11, each
Participant having not less than three Years of Service may elect, during the
period beginning when the amendment is adopted and ending no earlier than the
latest of (a) 60 days after the amendment's adoption; (b) 60 days after the
amendment's effective date; or (c) 60 days after the Participant is issued a
written notice of the amendment, to have his nonforfeitable rights computed
without regard to such amendment. No amendment to the Plan shall decrease a
Participant's Account balance or eliminate an optional form of distribution.
Any amendment to the Plan shall be executed by any individual authorized by
the Board of Directors of the Employer.
SECTION 17
DISTRIBUTIONS ON PLAN TERMINATION
17.01. FULL VESTING ON PLAN TERMINATION
When and if this Plan is terminated, or upon dissolution or
liquidation of the Employer, after the payment of all expenses and after all
adjustments of Participants' Accounts to reflect such expenses, fund profits
or losses, income and allocations-to date of termination, each Participant
shall be entitled to receive that number of Employer Shares as is then
credited to his Accounts and the net value of other assets of such Accounts.
17.02. PAYMENT ON PLAN TERMINATION
The Plan Administrator shall make payment of each Participant's
Account in cash or Employer Shares. Such payment shall be made to each
Participant in a single lump sum payment.
17.03. DISCONTINUANCE OF CONTRIBUTIONS; PARTIAL TERMINATION OF PLAN
Any complete discontinuance of contributions by the Employer or
partial termination of the Plan will be treated as a termination with all
affected Participants acquiring nonforfeitable interests in amounts
contributed to such date of termination.
SECTION 18
CREDITORS OF PARTICIPANTS
18.01. NON-ASSIGNABILITY
Except to the extent permitted by ERISA, assignment, pledge or
encumbrance of any character of the benefits under the Plan is not permitted
or recognized under any circumstances; and such benefits shall not be subject
to claims of creditors, execution, attachment, garnishment or any other legal
process.
18.02. QUALIFIED DOMESTIC RELATIONS ORDERS
Section 18.01 shall also apply to the creation, assignment or
recognition of a right to any benefit payable with respect to a Participant
pursuant to a domestic relations order, unless such order is determined to be
a qualified domestic relations order
[as defined in Section 414(p) of the Code], or any domestic relations order
entered before January l, 1985.
SECTION 19
CLAIMS PROCEDURES
19.01. FILING A CLAIM FOR BENEFITS
A Participant or Beneficiary, or the Employer acting on behalf of
such Participant or Beneficiary, shall notify the Plan Administrator of a
claim for benefits under the Plan. Such
request shall be in writing to the Plan Administrator and shall set forth the
basis of such claim and shall authorize the Plan Administrator to conduct
such examinations as may be necessary to determine the validity of the claim
and to take such steps as may be necessary to facilitate the payment of
benefits to which the Participant or Beneficiary may be entitled under the
terms of the Plan.
A decision by the Plan Administrator shall be made promptly and not
later than 90 days after the Plan Administrator's receipt of the claim for
benefits under the Plan, unless special circumstances require an extension of
the time for processing, in which case a decision shall be rendered as soon as
possible, but not later than 180 days after the initial receipt of the claim for
benefits.
19.02. DENIAL OF CLAIM
Whenever a claim for benefits by any Participant or Beneficiary has
been denied by the Plan Administrator, a written notice prepared in a manner
calculated to be understood by the Participant or Beneficiary shall be provided
setting forth (a) the specific reasons for the denial; (b) the specific
reference to the pertinent Plan provisions on which the denial is based; (c) a
description of any additional material or information necessary for the claimant
to perfect the claim and an explanation of why such material or information is
necessary; and (d) an explanation of the Plan's claim review procedure.
19.03. REMEDIES AVAILABLE TO PARTICIPANTS
Upon denial of his claim by the Plan Administrator, a Participant or
Beneficiary
(a) may request a review by a named fiduciary, other than the Plan
Administrator, upon written application to the Plan;
(b) may review pertinent Plan documents; and
(c) may submit issues and comments in writing to a named fiduciary.
A Participant or Beneficiary shall have 60 days after receipt by the
claimant of written notification of a denial of a claim to request a review of a
denied claim.
A decision by a named fiduciary shall be made promptly and not
later than 60 days after the named fiduciary's receipt of a request for
review, unless special circumstances require an extension of the time for
processing; in which case, a decision shall be rendered as soon as possible,
but not later than 120 days after receipt of a request for review. The
decision on review by a named fiduciary shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant, and specific references to the pertinent Plan
provisions on which the decision is based.
SECTION 20
VOTING RIGHTS
20.01. PARTICIPANT VOTING RIGHTS WITH RESPECT TO ALLOCATED SHARES
All Employer Shares held in the Trust Fund and allocated to
Participants' Accounts shall be voted by the Trustee pursuant to written
instructions received from the Participants. With respect to Allocated Shares
for which the Trustee does not receive written instructions from Participants,
such Shares shall be voted by the Trustee in its sole discretion.
20.02. PARTICIPANT VOTING RIGHTS WITH RESPECT TO UNALLOCATED SHARES
All Employer Shares held in the Trust Fund and not allocated to
Participants' Accounts shall be voted by the Trustee in its sole discretion.
SECTION 21
TOP HEAVY RULES
21.01. DEFINITIONS
If the Plan is or becomes top heavy in any Plan Year, the
provisions of this Section 21 will supersede any conflicting
provisions in the Plan. The following definitions and rules are necessary to
comply with related federal tax requirements:
(a) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination
period was (i) an officer of the Employer if such individual's annual
compensation exceeds 50% of the dollar limitation under Code Section
415(b)(1)(A); (ii) an owner (or considered an owner under Code Section 318)
of one of the ten largest interests in the Employer if such individual's
annual compensation exceeds the dollar limitation under Code Section
415(c)(l)(A); (iii) a 5% owner of the Employer; or (iv) a 1% owner of the
Employer who has annual compensation of more than $150,000. For purposes of
this section, annual compensation means compensation as defined in Code
Section 415(c)(3), but including amounts contributed by the Employer pursuant
to a salary reduction agreement which are excludable from the Employee's
gross income under Code Section 125, 402(a)(8), 402(h) or 403(b). The
determination period is the Plan Year containing the Determination Date and
the four preceding Plan Years. The determination of who is a Key Employee
will be made in accordance with Code Section 416(i)(1) and the regulations
thereunder.
(b) Non-Key Employee: Any Employee or former Employee of the
Employer who is not a Key Employee. The Beneficiary of a Non-Key Employee
will be treated as a Non-Key Employee, and the Beneficiary of a former
Non-Key Employee will be treated as a former Non-Key Employee.
(c) Determination Date: For any Plan Year subsequent to the first
Plan Year, the last day of the preceding Plan Year. For the first Plan Year,
the last day of such Plan Year.
(d) Permissive Aggregation Group: The Required Aggregation Group
of plans plus any other plan or plans of the Employer which, when considered
as a group with the Required Aggregation Group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
(e) Required Aggregation Group: (i) Each qualified plan of the
Employer in which at least one Key Employee participates or participated at
any time during the determination period (regardless of whether the Plan has
terminated); and (ii) any other qualified plan of the Employer which enables
a plan
described in (i) to meet the requirements of Code Sections 401(a)(4) or 410.
(f) Top-Heavy Plan: The Plan, if it meets the requirements of
Section 21.02.
21.02. TOP HEAVY STATUS
This Plan, and any other plans aggregated with it, will become top
heavy pursuant to this Section 21.02, as of the Determination Date, if the
present value of accrued benefits for Key Employees is more than 60% (90% in
the case of "super top heavy") of the sum of the present value of accrued
benefits of all Employees, excluding former Key Employees. In the case of
more than one plan which is to be aggregated, the present value of the
accrued benefits (including distributions for Key Employees and all
Employees) is first determined separately for each plan as of each plan's
determination date. The plans then will be aggregated by adding the results
of each plan as of the determination dates for such plans that fall within
the same calendar year. The combined results will indicate whether the plans
are top heavy.
The account balances and accrued benefits of a Participant who has
not been credited with an Hour of Service for the Employer maintaining the
Plan during the five-year period ending on the Determination Date will be
disregarded.
The present value of accrued benefits as of the Determination Date
for any individual is the sum of (a) the Account balance as of the most
recent Valuation Date occurring within a 12-month period ending on the
Determination Date; (b) an adjustment for contributions due as of the
Determination Date; and (c) the aggregate distributions made with respect to
such individual under the Plan during the five-year period ending on the
Determination Date. For an employee stock-ownership plan, the adjustment in
(b) is generally the amount of contributions actually made after the
Valuation Date but on or before the Determination Date.
In determining whether the Plan is top heavy, it must be aggregated
with each plan included in the Required Aggregation Group. In addition, the
Employer may aggregate plans included in the Permissive Aggregation Group.
21.03. MINIMUM CONTRIBUTIONS
For each Plan Year in which the Plan is top heavy, each Participant
who is a Non-Key Employee (including those Participants who did not complete
1,000 Hours of Service in the Plan Year) must receive an annual allocation of
contributions and Forfeitures (disregarding Social Security benefits) equal
to at least 3% of his Compensation; provided that if the largest percentage
of Compensation allocated to a Key Employee for a Plan Year is less than 3%,
that largest percentage will be substituted for 3%. For any year in which
the Employer maintains a defined benefit plan in addition to this Plan, the
requirements of this paragraph will be satisfied by providing each Non-Key
Employee with the minimum annual benefit provided under the top heavy
provisions of the defined benefit plan. For any year in which the Employer
maintains another defined contribution plan in addition to this Plan, the
minimum benefit described in this paragraph shall be provided by such other
defined contribution plan.
SECTION 22
EXEMPT LOANS
22.01. AUTHORITY TO BORROW
The Trustee may borrow funds on behalf of the Plan to purchase
Employer Shares, provided that any Plan loan is an exempt loan within the
meaning of Treasury Regulation Section 54.4975-7(b)(l)(iii).
22.02. REQUIREMENTS FOR PLAN LOANS
Any loan made to the Plan pursuant to this Section 22 must meet the
following requirements:
(a) The proceeds of the loan must be used within a reasonable time
after their receipt by the Plan either (i) to acquire Employer Shares; (ii)
to repay such loan; or (iii) to repay a prior exempt loan.
(b) The interest rate of the loan must not be in excess of a
reasonable rate of interest. All relevant factors will be considered in
determining a reasonable rate of interest, including the amount and duration
of the loan, the security and guarantee (if any) involved, the credit
standing of the Plan and the guarantor (if any) and the interest rate
prevailing for comparable loans.
(c) The loan must be for a specific term. Such loan may not be
payable at the demand of any person, except in the case of default.
(d) The loan must be without recourse against the Plan.
Furthermore, the only assets of the Plan that may be given as collateral for
the loan are Employer Shares of two classes--those acquired with the proceeds
of the loan and those that were used as collateral on a prior exempt loan
repaid with the proceeds of the current loan. No person entitled to payment
under the exempt loan shall have any rights to assets of the Plan other than
(i) collateral given for the loan; (ii) contributions (other than
contributions of Employer Shares) that are made under the Plan to meet its
obligations under the loan; and (iii)
earnings attributable to such collateral and the investment of such
contributions.
(e) The loan must provide for the release from encumbrance of Plan
assets used as collateral for the loan. For each Plan Year during the
duration of the loan, the number of securities released must equal the number
of encumbered securities held immediately before release for the current
Plan Year multiplied by a fraction. The numerator of the fraction is the
amount of principal and interest paid for the year. The denominator of the
fraction is the sum of the numerator plus the principal and interest to be
paid for all future years. The number of future years under the loan must be
definitely ascertainable and must be determined without taking into account
any possible extensions or renewal periods. If the interest rate under the
loan is variable, the interest to be paid in future years must be computed by
using the interest rate applicable as of the end of the Plan Year. If
collateral includes more than one class of securities, the number of
securities of each class to be released for a Plan Year must be determined by
applying the same fraction to each class.
(f) All other requirements of Treasury Regulation Section
54.4975-7(b).
SECTION 23
MISCELLANEOUS
23.01. EMPLOYMENT RIGHTS
The right of the Employer to terminate the employment of any of its
Employees shall not in any way be affected by the Employee's participation in
this Plan.
23.02. GENDER
Wherever used in this Plan the masculine pronoun refers to both men
and women.
23.03. NOTICE REQUIREMENT
Notice of the existence and provisions of the Plan and of any
amendment thereto shall be communicated by the Employer to those entitled to
notice thereof.
23.04. MERGER OR CONSOLIDATION
In case of any merger or consolidation with, or transfer of assets
or liabilities to, any other plan, each Participant in the Plan would (if
this Plan then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to, or greater than, the benefit he
would have been entitled to receive immediately before the merger,
consolidation or transfer (if the Plan then terminated).
23.05. SOCIAL SECURITY BENEFITS
Post-separation Social Security benefit increases shall not affect
benefits under this Plan.
23.06. FORFEITURES
Forfeitures resulting from termination of employment shall be
allocated to other Participants as of the first day of the month coincident
with or following the earlier of the date on which the Participant (a)
receives an actual distribution of his nonforfeitable Account; or (b) incurs
five consecutive One-Year Breaks in Service. In the event that a Participant
who received a distribution of his nonforfeitable Account returns to the
employment of the Employer before he incurs five consecutive One Year Breaks
in Service and takes such action as is necessary to reinstate the portion of
his account that was previously forfeited, the forfeited portion of his
Account shall be restored first from Forfeitures available for allocation in
that year and then from additional Employer contributions, if necessary.
23.07. NAMED FIDUCIARIES
The named fiduciary of this Plan shall be Market Financial
Corporation.
23.08. LIMITATIONS ON PAYMENT
No payment shall be made to any incompetent person (through
minority or otherwise) until the Plan Administrator shall have been furnished
evidence satisfactory to it of the person to whom such payment shall be made
and his right to receive the same. Until furnished such evidence, all amounts
so payable shall be held in trust for the person or persons entitled
to receive them, separate and apart from the Plan's general Trust Fund.
23.09. INTERPRETATION OF DOCUMENT
The construction and interpretation of the Plan provisions are
vested with the Plan Administrator, in its absolute discretion, including,
without limitation, the determination of benefits, eligibility and
interpretation of Plan provisions. All such decisions, determinations and
interpretations shall be final, conclusive and binding upon all parties
having an interest in the Plan.
23.10. NONTERMINABLE PROTECTIONS AND RIGHTS
Notwithstanding anything contained herein to the contrary, no
security acquired with the proceeds of an exempt loan may be subject to a
put, call or other option, or buy-sell or similar arrangement while held by
and or distributed from this Plan. The rights and protections specified in
the preceding sentence, together with the put option rights provided for in
Section 12.06 hereof, shall be non-terminable regardless of whether this Plan
ceases to be an employee stock ownership plan or an exempt loan is paid in
full.
23.11. USE OF INCOME WITH RESPECT TO EMPLOYER SHARES
The Plan reserves the right to use income with respect to Employer
Shares acquired with the proceeds of an exempt loan to repay such loan.
SECTION 24
CERTAIN DEFINITIONS
Whenever used in this Plan, the following words and phrases shall
have the meanings specified below. Additional words and phrases may be
defined in the text of the Plan.
24.01. ACCOUNT
"Account" means a Participant's Employer Contributions Account.
24.02. ADJUSTMENT FACTOR
"Adjustment Factor" means the cost-of-living adjustment prescribed
by the Secretary of the Treasury under Code Section 415(d) for years
beginning after December 31, 1987, as applied to such items and in such
manner as the Secretary shall provide.
24.03. AFFILIATE
"Affiliate" means any other employer which, together with Market
Financial Corporation, is a member of a controlled group of corporations or
of a commonly controlled trade or business [as defined in Code
Sections 414(b) and (c) and as modified by Code Section 415(h)]
or of an affiliated service group [as defined in Code Section 414(m)] or
other organization described in Code Section 414(o).
24.04. ANNUAL ADDITIONS
"Annual Additions" means the sum of the following amounts credited
to a Participant for the Limitation Year under all defined contribution plans
maintained by the Employer:
(a) Employer contributions;
(b) Forfeitures;
(c) amounts allocated after March 31, 1984 to an individual
medical account, as defined in Section 415(l) (l) of the Code, which is part
of a defined benefit plan maintained by the Employer; and
(d) amounts derived from contributions paid or accrued after
December 31, 1985 in taxable years ending after such date which are
attributable to post-retirement medical benefits allocated to the separate
account of a key employee [as defined in Section 416(i) of the Code] under a
welfare benefit fund [as defined in Section 419(e) of the Code] maintained by
the Employer. The amounts described under this paragraph (d) shall not be
subject to the 25% of compensation limit provided in Section 2.04.
24.05. BENEFICIARY
"Beneficiary" means the individual, individuals or trust designated
by the Participant under the terms of Section 8.02 hereof to receive the
death benefit payable under the Plan.
24.06. CODE
"Code" means the Internal Revenue Code of 1986, as may be amended
from time to time, and corresponding provisions of future federal internal
revenue codes.
24.07. COMPENSATION
"Compensation" means compensation, as defined in Section 2.04
hereof, including, to the extent applicable, Earned Income; provided,
however, that Compensation shall not include (i) any amounts paid or accrued
to Participant during any Plan Year under any Recognition and Retention Plan
adopted by the Employer after the Effective Date, or (ii) any amounts paid by
the Employer during any Plan Year in excess of $150,000, adjusted under Code
Section 401(a)(17). In determining the compensation of a Participant for
purposes of the $150,000 limit, the family aggregation rules of Code Section
414(g)(6) will apply, except in applying such rules, the term "family" will
include only the Spouse of the participant and any lineal descendants of the
participant who have not attained age 19 before the close of the year. If,
as a result of the application of such rules, compensation would exceed the
adjusted $150,000 limitation, then the limitation will be prorated among the
affected persons in proportion to each such person's compensation as
determined under this paragraph prior to the application of this limitation.
For purposes of a Participant's first Plan Year of eligibility, only
Compensation paid to such Participant after the Entry Date on which he begins
to participate in the Plan shall be considered for purposes of determining
allocations under Section 3 hereof.
24.08. CURRENT PARTICIPANT
"Current Participant" means, for any Plan Year, (i) a Participant
who was both a Full-Time Employee during such Plan Year and employed by the
Employer on the last day of such Plan Year, and (ii) a Participant who died,
retired or became totally and permanently disabled during such Plan Year.
24.09. INTENTIONALLY OMITTED
24.10. EFFECTIVE DATE
"Effective Date" means January 1, 1996.
24.11. EMPLOYEE
"Employee" means any person who is an employee in the regular
employment of the Employer. For this purpose, the term "Employee" shall not
include any Leased Employee.
24.12. EMPLOYER
"Employer" means Market Financial Corporation and any Affiliate
that adopts this Plan pursuant to the provisions of Section 25 hereof.
24.13. EMPLOYER CONTRIBUTIONS ACCOUNT
"Employer Contributions Account" means the account established for
each Participant under this Plan pursuant to Section 4.01.
24.14. EMPLOYER SHARES OR SHARES
"Employer Shares" or "Shares" means securities which constitute
"employer securities" under Section 409(l) of the Code and "qualifying
employer securities" under Section 4975(e)(8) of the Code and Section
407(d)(5) of ERISA.
24.15. EMPLOYMENT COMMENCEMENT DATE
"Employment Commencement Date" means the date on which an Employee
first performs an Hour of Service for the Employer.
24.16. ENTRY DATE
"Entry Date" means April 1 and October l of each year.
24.17. ERISA
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
24.18. FAMILY MEMBER
"Family Member" means, with respect to any individual, such
individual's Spouse and lineal ascendants or descendants and the spouses of such
lineal ascendants or descendants.
24.19. FORFEITURE
"Forfeiture" means the amount of the value of any Participant's
Account that such Participant is not entitled to receive under Section 11 on
the termination of his employment.
24.20. FULL TIME
"Full Time" means employment with the Employer for not less than
1,000 hours during the 12 consecutive calendar months for which a
determination is made.
24.21. HIGHLY-COMPENSATED EMPLOYEE
"Highly-Compensated Employee" means a highly-compensated active
employee and a highly-compensated former employee. A highly-compensated
active employee includes any Employee who performs service for the Employer
during the determination year and who, during the look-back year (a) received
compensation from the Employer in excess of $75,000 multiplied by the
Adjustment Factor; (b) received compensation from the Employer in excess of
$50,000 multiplied by the Adjustment Factor and was a member of the top-paid
group for such year; or (c) was an officer of the Employer and received
compensation during such year that is greater than 50% of the dollar
limitation in effect under Code Section 415(b)(l)(A).
The term Highly-Compensated Employee also includes: (a) Employees
who are both described in the preceding paragraph if the term "determination
year" is substituted for the term "look-back year" and the Employee is one of
the 100 Employees who received the most compensation from the Employer during
the determination year; and (b) Employees who are 5% owners at any time
during the look-back year or determination year. If no officer has satisfied
the compensation requirement of (c) in the preceding paragraph during either
a determination year or look-back year, the highest paid officer for such
year shall be treated as a Highly-Compensated Employee. For this purpose,
the determination year shall be the Plan Year. The look-back year
shall be the 12-month period immediately preceding the determination year.
A highly-compensated former Employee includes any Employee who
separated from service (or was deemed to have separated) prior to the
determination year, performs no service for the Employer during the
determination year and was a highly compensated active employee for either
the separation year or any determination year ending on or after the
Employee's 55th birthday. If an Employee is, during a determination year or
look-back year, a Family Member of either a 5% owner who is an active or
former Employee or a Highly-Compensated Employee who is one of the 10 most
highly-compensated employees ranked on the basis of compensation paid by the
Employer during such year, then the Family Member and the 5% owner or top-10
highly-compensated employee shall be aggregated. In such case, the Family
Member and 5% owner or top-10 highly-compensated employee shall be treated as
a single Employee receiving compensation and Plan contributions or benefits
equal to the sum of such compensation and contributions or benefits of the
Family Member and 5% owner or top-10 highly-compensated employee.
The determination of who is a Highly-Compensated Employee,
including the determinations of the number and identity of Employees in the
top-paid group, the top 100 Employees, the number of Employees treated as
officers and the compensation that is considered, will be made in accordance
with Code Section 414(q) and the regulations thereunder.
24.22. HOUR OF SERVICE
"Hour of Service" means
(a) each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer or an Affiliate.
These hours shall be credited to the Employee for the computation period or
periods in which the duties are performed; and
(b) each hour for which an Employee is paid, or entitled to
payment, by the Employer or an Affiliate on account of a period of time
during which no duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, absence for maternity or
paternity reasons, jury duty, military duty or leave of absence. No more
than 501 hours of service shall be credited under this paragraph for any
single continuous period (whether or not such period occurs in a single
computation period). Hours under this paragraph shall be calculated and
credited pursuant to Section 2530.200b-2 of the Department of Labor
Regulations, which are incorporated herein by this reference; and
(c) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer or an Affiliate. The
same hours of service shall not be credited both under paragraph (a) or
paragraph (b), as the case may be, and under this paragraph (c). These hours
shall be credited to the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
agreement or payment is made; and
(d) in the case of a Participant who is absent from work for
maternity or paternity reasons, such Participant shall have credited, solely
for purposes of determining whether a One-Year Break in Service has occurred
for eligibility and vesting, in the year in which the absence begins if
necessary to prevent a One Year Break in Service for such year; or in the
following year, the number of hours that would normally have been credited
but for such absence; or in any case in which such hours cannot be
determined, 8 hours of service per day of such absence. The total number of
hours treated as hours of service under this paragraph shall not exceed 501
hours. For purposes of this paragraph, an absence from work for maternity or
paternity reasons means an absence (i) by reason of pregnancy of the
Participant; (ii) by reason of the birth of a child of the Participant; (iii)
by reason of the placement of a child with the Participant in connection with
the adoption of such child by such Participant; or (iv) for purposes of
caring for such child for a period beginning immediately following such birth
or placement.
24.23. LATE RETIREMENT DATE
"Late Retirement Date" means the first day of the month following
the date on which a Participant elects to retire after his Normal Retirement
Date.
24.24. LEASED EMPLOYEE
"Leased Employee" means any person (other than an employee of the
recipient) who, pursuant to an agreement between the recipient and any other
person (leasing organization), has performed services for the recipient
[or for the recipient and related persons determined in accordance with
Code Sections 414(n) and 414(o)] on a substantially full-time basis for
a period of at least one year, and such services are of a type historically
performed by employees in the business field of the recipient employer.
Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the recipient
employer shall be treated as provided by the recipient employer.
A Leased Employee shall not be considered an employee of the
recipient if (a) such employee is covered by a money purchase pension plan
providing (i) a nonintegrated employer contribution rate of at least 10% of
compensation, as defined in Code Section 415(c)(3), but including amounts
contributed by the employer pursuant to a salary reduction agreement which
are excludable from the employee's gross income under Code Section 125,
Section 402(a)(8), Section 402(h) or Section 403(b); (ii) immediate
participation; and (iii) full and immediate vesting; and (b) Leased Employees
do not constitute more than 20% of the recipient's non-highly-compensated
work force.
24.25. LIMITATION YEAR
"Limitation Year" means the Plan Year.
24.26. NORMAL RETIREMENT AGE
"Normal Retirement Age" means age 65.
24.27. NORMAL RETIREMENT DATE
"Normal Retirement Date" means the first day of the month
coincident with or following the date on which the Participant attains Normal
Retirement Age; provided, however, that this Plan shall not be interpreted to
require that a Participant retire prior to attaining any specific age.
24.28. ONE-YEAR BREAK IN SERVICE
"One-Year Break in Service" means, for eligibility and vesting
purposes, a Plan Year during which a Participant has not completed more than
500 Hours of Service.
24.29. PARTICIPANT
"Participant" means either (a) an Employee who is participating in
the Plan in accordance with Section 1.01 for whom Accounts are being
maintained; or (b) a former Employee for whom Accounts are being maintained.
24.30. PLAN
"Plan" means the Market Financial Corporation Employee Stock
Ownership Plan as in effect from time to time.
24.31. PLAN ADMINISTRATOR
"Plan Administrator" means an administrative committee appointed by
the Employer to administer this Plan pursuant to Section 15, or if no such
appointment is made, Market Financial Corporation.
24.32. PLAN YEAR
"Plan Year" means the fiscal year of the Plan which begins each
January l and ends each December 30.
24.33. PROJECTED ANNUAL BENEFIT
"Projected Annual Benefit" means the annual benefit to which the
Participant would be entitled under all Employer sponsored defined benefit
plans, assuming that the Participant continues employment until his Normal
Retirement Date, that the Participant's Compensation continues until his
Normal Retirement Date at the rate in effect during the current calendar year
and that all other factors relevant for determining benefits under the plans
remain constant at the level in effect during the current calendar year.
24.34. SPOUSE OR SURVIVING SPOUSE
"Spouse" or "Surviving Spouse" means an individual who is legally
married to the Participant, provided that an individual who was formerly
married to the Participant will be treated as the Spouse or Surviving Spouse
to the extent provided under a qualified domestic relations order as
described in Section 414(p) of the Code.
24.35. TRUST AGREEMENT
"Trust Agreement" means the agreement, and any amendments made
thereto, by and between the Employer and the Trustee for the management,
investment and disbursement of funds held in the Trust Fund.
24.36. TRUST FUND
"Trust Fund" means the fund established pursuant to the terms of
the Trust Agreement.
24.37. TRUSTEE
"Trustee" means the bank, trust company and/or individual or
individuals designated by the Employer to hold and invest the Trust Fund and
to pay benefits and expenses as authorized by the Plan Administrator in
accordance with the terms and provisions of the agreement by and between the
Employer and such bank, trust company and/or individual or individuals.
24.38. VALUATION DATE
"Valuation Date" means the last day of each Plan Year and any other
date fixed by the Plan Administrator for the valuation of assets and
adjustments of individual Accounts.
24.39. YEAR OF SERVICE
"Year of Service" means a Plan Year during which a Participant is,
and each 12 month period (beginning on October 1 and ending on September 30)
prior to the Effective Date during which such Participant was, a Full-Time
Employee of the Employer.
SECTION 25
MULTIEMPLOYER PROVISIONS
25.01. ADOPTION BY AFFILIATES OF MARKET FINANCIAL CORPORATION
Effective as of the Effective Date, any Affiliate may adopt the
Plan with the approval of the Board of Directors of Market Financial
Corporation. However, notwithstanding such adoption by any Affiliate, or any
other provision of this Plan, Market Financial Corporation shall have the
sole and exclusive right to amend the Plan or Trust Agreement and it shall
not be necessary for any adopting Affiliate to execute the original or any
amended Plan or Trust Agreement.
25.02. ADMINISTRATION
Market Financial Corporation shall have the exclusive right to
appoint the Plan Administrator under Section 15 hereof, and Market Financial
Corporation and the Plan Administrator shall have exclusive administrative
authority over the Plan, although responsibility for those internal matters
peculiar to a particular Affiliate may be delegated to that Affiliate.
25.03. COMMON FUND.
The Trustee of the Plan need not earmark or keep separate the
assets attributable to each Affiliate, but may commingle them with assets
attributable to other Affiliates. The Trust shall be available to pay
benefits to Participants and their Beneficiaries without distinction as to
the Affiliate to which particular assets or amounts are attributable.
25.04. WITHDRAWAL - TERMINATION.
Any Affiliate, by action of its Board of Directors or other
governing authority, and notice to the Plan Administrator and the Trustee,
may withdraw from the Plan, or may terminate the Plan with respect to its
employees, without affecting any other Affiliates. A withdrawing Affiliate
may arrange for the continuation of this Plan in separate form for its own
employees, with such amendments as it may deem proper, and may arrange for
continuation of the Plan by merger with an existing plan and trust, and
transfer of Trust Fund assets. Notwithstanding anything contained herein to
the contrary, by action of its Board
of Directors, Market Financial Corporation, in its absolute discretion, may
terminate the entire Plan or an Affiliate's participation at any time,
without the consent of any Affiliate, Participant or Beneficiary.
IN WITNESS WHEREOF, the undersigned has caused this Plan to be
executed by its duly authorized officer effective as of the Effective Date.
MARKET FINANCIAL CORPORATION
By:____________________________
Name (Print):__________________
Title:_________________________
Date:_____________________