Common use of Opportunity Cost Clause in Contracts

Opportunity Cost. The Opportunity Cost for any Plan Year shall be calculated by multiplying (a) the sum of (i) the total amount of premiums set forth in the insurance policies described above, (ii) the amount of any Index Benefits (described at subparagraph b above), and (iii) the amount of all previous years after-tax Opportunity Costs; by (b) the average annualized after-tax cost of funds calculated using a one-year U.S. Treasury Bixx xs published in the Wall Street Journal. The applicable tax rate used to calculate the Opportunity Cost shall be the Employer's marginal tax rate until the Executive's Retirement, or other termination of service (including a Change in Control). Thereafter, the Opportunity Cost shall be calculated with the assumption of a marginal forty-two percent (42%) corporate tax rate each year regardless of whether the actual marginal tax rate of the Employer is higher or lower. EXAMPLE INDEX BENEFITS [n] End of Cash Surrender Index Opportunity Annual Cumulative Year Value of Life [Annual Cost Benefit Benefit Insurance Policy Policy A0=premium B-C D+Dn-1 Income] A0+Cn-1x.05x An-An-1 (1-42%) 0 $1,000,000 -- -- -- -- 1 $1,050,000 $50,000 $29,000 $21,000 $21,000 2 $1,102,500 $52,500 $29,840 $22,650 $43,659 3 $1,157,620 $55,120 $30,700 $24,410 $68,078 . . . Assumptions: Initial Insurance = $1,000,000 Effective Tax Rate = 42% One Year US Treasury Yield = 5% 104

Opportunity Cost. The Opportunity Cost for any Plan Year shall be calculated by multiplying (a) the sum of (i) the total amount of premiums set forth in the insurance policies described above, (ii) the amount of any Index Benefits (described at subparagraph b above), and (iii) the amount of all previous years after-tax Opportunity Costs; by (b) the average annualized after-tax cost of funds calculated using a one-year U.S. Treasury Bixx xs Bill as published in ix the Wall Street Journal. The applicable tax rate used to calculate the Opportunity Cost shall be the Employer's marginal tax rate until the Executive's Retirement, or other termination of service (including a Change in Control). Thereafter, the Opportunity Cost shall be calculated with the assumption of a marginal forty-two percent (42%) corporate tax rate each year regardless of whether the actual marginal tax rate of the Employer is higher or lower. EXAMPLE INDEX BENEFITS [n] End of Cash Surrender Index Opportunity Annual Cumulative Year Value of Life [Annual Cost Benefit Benefit Insurance Policy Policy A0=premium B-C D+Dn-1 Income] A0+Cn-1x.05x A0+cn-1x.05x An-An-1 (1-42%) 0 $1,000,000 -- -- -- -- 1 $1,050,000 $50,000 $29,000 $21,000 $21,000 2 $1,102,500 $52,500 $29,840 $22,650 $43,659 3 $1,157,620 $55,120 $30,700 $24,410 $68,078 . . . Assumptions: Initial Insurance = $1,000,000 Effective Tax Rate = 42% One Year US Treasury Yield = 5% 104%

Opportunity Cost. The Opportunity Cost for any Plan Year shall be calculated by multiplying (a) the sum of (i) the total amount of premiums set forth in the insurance policies described above, (ii) the amount of any Index Benefits Benefit (described at subparagraph b above), and (iii) the amount of all previous years after-tax Opportunity Costs; by (b) the average annualized after-tax cost of funds calculated using a one-year U.S. Treasury Bixx xs Xxxx as published in the Wall Street Journal. The applicable tax rate used to calculate the Opportunity Cost shall be the Employer's Bank’s marginal tax rate until the Executive's Director’s Retirement, or other termination of service (including a Change in Control). Thereafter, the Opportunity Cost shall be calculated with the assumption of a marginal forty-two percent (42%) corporate tax rate each year regardless of whether the actual marginal tax rate of the Employer Bank is higher or lower. EXAMPLE INDEX BENEFITS [n] End of Year [A] Cash Surrender Index Opportunity Annual Cumulative Year Value of Life Insurance Policy [B] Index [Annual Cost Benefit Benefit Insurance Policy Policy A0=premium B-C D+Dn-1 Income] A0+Cn-1x.05x An-An-1 [C] Opportunity Cost Ao = premium Ao+Cn-1 x 0.5x (1-42%) [D] Annual Benefit B-C Cumulative Benefit D+Dn-1 0 $1,000,000 -- -- -- -- — — — — 1 $1,050,000 $50,000 $29,000 $21,000 $21,000 2 $1,102,500 $52,500 $29,840 29,841 $22,650 22,659 $43,659 3 $1,157,620 1,157,625 $55,120 55,125 $30,700 30,706 $24,410 24,419 $68,078 . . . Assumptions: Initial Insurance = $1,000,000 Effective Tax Rate = 42% One Year US Treasury Yield = 5% 104%

Opportunity Cost. The Opportunity Cost for any Plan Year shall be calculated by multiplying (a) the sum of (i) the total amount of premiums set forth in the insurance policies described above, (ii) the amount of any Index Benefits Benefit (described at subparagraph b above), and (iii) the amount of all previous years after-tax Opportunity Costs; by (b) the average annualized after-tax cost of funds calculated using a one-year U.S. Treasury Bixx xs Xxxx as published in the Wall Street Journal. The applicable tax rate used to calculate the Opportunity Cost shall be the Employer's Bank’s marginal tax rate until the Executive's Director’s Retirement, or other termination of service (including a Change in Control). Thereafter, the Opportunity Cost shall be calculated with the assumption of a marginal forty-two percent (42%) corporate tax rate each year regardless of whether the actual marginal tax rate of the Employer Bank is higher or lower. EXAMPLE INDEX BENEFITS [n] End of Year [A] Cash Surrender Index Opportunity Annual Cumulative Year Value of Life Insurance Policy [B] Index [Annual Policy IncomeAn-An-1] [C] Opportunity Cost Benefit Benefit Insurance Policy Policy A0=A0 = premium B-C D+Dn-1 Income] A0+Cn-1x.05x An-An-1 A0+C n-1x.05x (1-42%) [D] Annual Benefit B-C Cumulative Benefit D+Dn-1 0 $1,000,000 -- -- -- -- - - - - 1 $1,050,000 $50,000 $29,000 $21,000 $21,000 2 $1,102,500 $52,500 $29,840 29,841 $22,650 22,659 $43,659 3 $1,157,620 1,157,625 $55,120 55,125 $30,700 30,706 $24,410 24,419 $68,078 . . . Assumptions: Initial Insurance = $1,000,000 Effective Tax Rate = 42% One Year US Treasury Yield = 5% 104%