Exhibit 10.5
DIRECTOR SUPPLEMENTAL INCOME PLAN AGREEMENT
THIS AGREEMENT, made and entered into this 20th day of April, 2004, by and
between Osage Federal Savings and Loan Association of Pawhuska, an Institution
organized and existing under the laws of the United States of America
(hereinafter referred to as the "Institution"), and Xxxx Xxxxxx, a member of the
Board of Directors of the Institution (hereinafter referred to as the
"Director").
W I T N E S S E T H:
WHEREAS, it is the consensus of the Board of Directors (hereinafter
referred to as the "Board") that the Director's services to the Institution in
the past have been of exceptional merit and have constituted an invaluable
contribution to the general welfare of the Institution and in bringing it to its
present status of operating efficiency, and its present position in its field of
activity;
WHEREAS, the Director's experience, knowledge of the affairs of the
Institution, reputation, and contacts in the industry are so valuable that
assurance of the Director's continued services is essential for the future
growth and profits of the Institution and it is in the best interests of the
Institution to arrange terms of continued service for the Director so as to
reasonably assure the Director's remaining in the Institution's service during
the Director's lifetime;
WHEREAS, it is the desire of the Institution that the Director's services
be retained as herein provided;
WHEREAS, the Director is willing to continue to serve the Institution
provided the Institution agrees to pay the Director or the Director's
beneficiary(ies), certain benefits in accordance with the terms and conditions
hereinafter set forth;
ACCORDINGLY, it is the desire of the Institution and the Director to enter
into this Agreement under which the Institution will agree to make certain
payments to the Director at age sixty-five (65) or the Director's
beneficiary(ies) in the event of the Director's death pursuant to this
Agreement;
FURTHERMORE, it is the intent of the parties hereto that this Director Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental income benefits for the Director, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Director is fully advised of the
Institution's financial status and has had substantial input in the design and
operation of this benefit plan; and
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. SERVICE
The Director will continue to serve the Institution in such capacity and
with such duties and responsibilities as may be assigned, and with such
compensation as may be determined from time to time by the Board of
Directors of the Institution.
II. FRINGE BENEFITS
The Supplemental Income benefits provided by this Agreement are granted by
the Institution as a fringe benefit to the Director and are not part of any
fee reduction plan or an arrangement deferring a bonus or a fee increase.
The Director has no option to take any current payment or bonus in lieu of
the supplemental income benefits except as set forth hereinafter.
III. BENEFIT DATE, NORMAL BENEFIT AGE, EARLY BENEFIT DATE AND PAYMENT
ELIGIBILITY DATE
A. Benefit Date:
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For purposes of this plan, if the Director continuously serves the
Institution, the Director shall qualify for Supplemental Income
benefits on the December 31st nearest the Director's sixty-fifth
(65th) birthday, unless by action of the Board of Directors this
period of active service shall be shortened or extended.
B. Normal Benefit Age:
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Normal Benefit Age shall mean the date on which the Director attains
age sixty-five (65).
C. Early Benefit Date:
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Early Benefit Date shall mean a benefit from service which is
effective prior to the Normal Benefit Age stated herein, provided the
Director has attained age sixty-two (62).
D. Payment Eligibility Date:
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Upon mutual agreement by the Institution and the Director, the Payment
Eligibility Date shall be the date the deferred payment of the benefit
is
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payable. Such date shall be selected prior to the Early Benefit Date
or the Normal Benefit Age and shall occur subsequent to such. If such
election is not made in accordance with this section, the Payment
Eligibility Date shall be the Normal Benefit Age.
IV. NORMAL BENEFIT, EARLY BENEFIT AND DISABILITY BENEFIT
A. Normal Benefit:
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Upon the Payment Eligibility Date, the Institution shall pay the
Director an annual benefit equal to Six Thousand and 00/100th Dollars
($6,000.00). Said benefit shall be paid in equal monthly installments
(1/12th of the annual benefit) until the death of the Director. In the
event the Director should die and there is a balance in the accrued
liability account, the Institution shall pay such balance, in a lump
sum or in equal monthly installments (1/12th of the annual benefit),
at the discretion of the Institution, to such individual or
individuals the Director may have designated in writing and filed with
the Institution. In the absence of any effective beneficiary
designation, any such amounts becoming due and payable upon the death
of the Director shall be payable to the duly qualified executor or
administrator of the Director's estate. Said payments due hereunder
shall begin the first day of the second month following the decease of
the Director.
B. Early Benefit:
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Should the Director elect Early Benefit subsequent to the Early
Benefit Date [Subparagraph III (C)], the Director shall be entitled to
receive an annual benefit payment of Six Thousand and 00/100th Dollars
($6,000.00) actuarially reduced based on the liability account
balance. Beginning with the Early Benefit Date and continuing through
the first day of the month in which the Director's death occurs, said
benefit shall be paid in equal monthly installments (each 1/12th of
the annual benefit) on the first day of each month beginning with the
Early Benefit Date. In the event the Director should die and there is
a balance in the accrued liability account, the Institution shall pay
such balance, in a lump sum or in equal monthly installments (1/12th
of the annual benefit), at the discretion of the Institution, to such
individual or individuals the Director may have designated in writing
and filed with the Institution. In the absence of any effective
beneficiary designation, any such amounts becoming due and payable
upon the death of the Director shall be payable to the duly qualified
executor or administrator of the Director's estate. Said payments due
hereunder shall begin the first day of the second month following the
decease of the Director.
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C. Disability Benefit:
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In the event the Director becomes disabled prior to the Benefit Date,
or prior to termination of service with the Institution, and the
Director's service is subsequently terminated due to such disability,
the Director shall be one hundred percent (100%) vested in the accrued
liability account. Within thirty (30) days of said termination, the
Director shall receive a lump sum distribution in the amount of said
account as of the date of termination, or equal monthly installments,
(1/12th of the annual benefit) for a period of one hundred twenty
(120) months, at the discretion of the Institution.
The Director will be considered to be disabled if he/she is unable to
attend thirty percent (30%) of the Board of Director meetings. If
there is a dispute regarding whether the Director is disabled, such
dispute shall be resolved by a physician selected by the Institution
and such resolution shall be binding upon all parties to this
Agreement.
V. DEATH BENEFIT PRIOR TO AGE 65
In the event the Director should die while actively serving the
Institution at any time after the date of this Agreement but prior to
the Director attaining age sixty-five (65) [Subparagraph III (A)] (or
such later age as may be agreed upon), the Institution will pay the
accrued liability of the Director's account balance, in a lump sum or
in equal monthly installments (1/12 of the annual benefit) for a period
of one hundred twenty (120) months, at the discretion of the
Institution, to such individual or individuals as the Director may have
designated in writing and filed with the Institution. In the absence of
any effective beneficiary designation, any such amounts becoming due
and payable upon the death of the Director shall be payable to the duly
qualified executor or administrator of the Director's estate. Said
payments due hereunder shall begin the first day of the second month
following the decease of the Director.
VI. BENEFIT ACCOUNTING
The Institution shall account for this benefit using the regulatory
accounting principles of the Institution's primary federal regulator.
The Institution shall establish an accrued liability account for the
Director into which appropriate reserves shall be accrued.
VII. VESTING
The Director shall be one hundred percent (100%) vested in a reduced
benefit upon attaining age sixty-two (62) and become fully vested in
the Six Thousand
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and 00/100th Dollars ($6,000.00) annual Supplemental Income benefit
upon attaining the age of sixty-five (65).
VIII. OTHER TERMINATION OF SERVICE
A. Subject to Subparagraph VIII (i) hereinbelow, in the event
that the service of the Director shall terminate prior to the
Early Benefit Date, by the Director's voluntary action, or by
the Director's discharge by the Institution without cause,
then this Agreement shall terminate upon the date of such
termination of service.
(i) Discharge for Cause: In the event the Director
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shall be discharged for cause at any time, all
benefits provided herein shall be forfeited. The
term "for cause" shall mean any of the following
that result in an adverse effect on the
Institution: (i) gross negligence or gross
neglect; (ii) the commission of a felony or gross
misdemeanor involving fraud or dishonesty; (iii)
the willful violation of any law, rule, or
regulation (other than a traffic violation or
similar offense); (iv) an intentional failure to
perform stated duties; or (v) a breach of
fiduciary duty involving personal profit. If a
dispute arises as to discharge "for cause," such
dispute shall be resolved by arbitration as set
forth in this Director Plan.
B. Termination Before Normal Benefit Age After Merger,
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Conversion, or a Change of Control After Conversion: If the
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Director is terminated within three years after the
Institution is merged into another Institution, or undergoes a
stock conversion, or after a stock conversion, there is a
Change of Control as defined below and the Director is
terminated for any reason other than discharge for cause or
his base fee is reduced without his consent prior to Normal
Benefit Age, the Director shall be entitled to complete
payment of benefits under the applicable provision below:
(i) if the Director has reached an age which would permit
an Early Benefit under Subparagraph IV (B), the
Director will receive the benefit permitted under the
Agreement for his attained age with no other
conditions being applicable;
(ii) if the Director has reached an age which would not
yet permit an early benefit under the terms above,
the Director will receive a benefit equal to the
minimum early benefit with no other requirements
being applicable. Payments to be made as if the
Director had attained earliest permitted benefit age.
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(iii) For the purposes of this subsection, Change of
Control shall mean any time ten percent (10%) or more
of the voting stock of the Institution shall be
transferred by any means other than by will or
intestate and acquired by one party or parties acting
in concert. This shall not apply to any transfer of
stock to a trust for the benefit of the Institution's
Directors.
IX. CHANGE OF CONTROL
Change of Control shall be deemed to be the cumulative transfer of
more than ten percent (10%) of the voting stock of the Institution
from the date of this Agreement. For the purposes of this Agreement,
transfers made on account of death or gifts, transfers between family
members or transfers to a qualified retirement plan maintained by the
Institution, shall not be considered in determining whether there has
been a change in control. Upon a Change of Control, if the Director
subsequently suffers a Termination of Service (voluntary or
involuntary), except for cause, then the Director shall receive the
benefits in Paragraph IV herein upon attaining Normal Benefit Age or
Early Benefit Age (Subparagraph III [B] & [C]), as if the Director had
been continuously serving the Institution until the Director attains
age sixty-five (65).
X. RESTRICTIONS ON FUNDING
The Institution shall have no obligation to set aside, earmark or
entrust any fund or money with which to pay its obligations under this
Director Plan. The Directors, their beneficiary(ies), or any successor
in interest shall be and remain simply a general creditor of the
Institution in the same manner as any other creditor having a general
claim for matured and unpaid compensation.
The Institution reserves the absolute right, at its sole discretion,
to either fund the obligations undertaken by this Director Plan or to
refrain from funding the same and to determine the extent, nature and
method of such funding. Should the Institution elect to fund this
Director Plan, in whole or in part, through the purchase of life
insurance, mutual funds, disability policies or annuities, the
Institution reserves the absolute right, in its sole discretion, to
terminate such funding at any time, in whole or in part. At no time
shall any Director be deemed to have any lien or right, title or
interest in or to any specific funding investment or assets of the
Institution.
If the Institution elects to invest in a life insurance, disability or
annuity policy upon the life of the Director, then the Director shall
assist the Institution by freely submitting to a physical exam and
supplying such additional information necessary to obtain such
insurance or annuities.
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XI. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
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Neither the Director, nor the Director's surviving spouse, nor any
other beneficiary(ies) under this Director Plan shall have any power
or right to transfer, assign, anticipate, hypothecate, mortgage,
commute, modify or otherwise encumber in advance any of the benefits
payable hereunder nor shall any of said benefits be subject to seizure
for the payment of any debts, judgments, alimony or separate
maintenance owed by the Director or the Director's beneficiary(ies),
nor be transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Director or any beneficiary
attempts assignment, commutation, hypothecation, transfer or disposal
of the benefits hereunder, the Institution's liabilities shall
forthwith cease and terminate.
B. Binding Obligation of the Institution and any Successor in Interest:
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The Institution shall not merge or consolidate into or with another
Institution or sell substantially all of its assets to another
Institution, firm or person until such Institution, firm or person
expressly agree, in writing, to assume and discharge the duties and
obligations of the Institution under this Director Plan. This Director
Plan shall be binding upon the parties hereto, their successors,
beneficiaries, heirs and personal representatives.
C. Amendment or Revocation:
-----------------------
Subject to Paragraph XIII, it is agreed by and between the parties
hereto that, during the lifetime of the Director, this Director Plan
may be amended or revoked at any time or times, in whole or in part,
by the mutual written consent of the Director and the Institution.
D. Gender:
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Whenever in this Director Plan words are used in the masculine or
neuter gender, they shall be read and construed as in the masculine,
feminine or neuter gender, whenever they should so apply.
E. Effect on Other Institution Benefit Plans:
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Nothing contained in this Director Plan shall affect the right of the
Director to participate in or be covered by any qualified or
non-qualified pension, profit-sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a part
of the Institution's existing or future compensation structure.
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F. Headings:
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Headings and subheadings in this Director Plan are inserted for
reference and convenience only and shall not be deemed a part of this
Director Plan.
G. Applicable Law:
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The validity and interpretation of this Agreement shall be governed by
the laws of the State of Oklahoma.
H. 12 U.S.C.ss.1828(k) (Golden Parachute and Indemnification Payment):
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Any payments made to the Director pursuant to this Director Plan, or
otherwise, are subject to and conditioned upon the Institution's
compliance with 12 U.S.C. ss. 1828(k) or any regulations promulgated
thereunder.
I. Partial Invalidity:
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If any term, provision, covenant, or condition of this Director Plan
is determined by an arbitrator or a court, as the case may be, to be
invalid, void, or unenforceable, such determination shall not render
any other term, provision, covenant, or condition invalid, void, or
unenforceable, and the Director Plan shall remain in full force and
effect notwithstanding such partial invalidity.
J. Continuation as Director:
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Neither this Agreement nor the payments of any benefits hereunder
shall be construed as giving to the Director any right to be retained
as a member of the Board of Directors of the Institution.
XII. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
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The "Named Fiduciary and Plan Administrator" of this Director Plan
shall be Osage Federal Savings and Loan Association of Pawhuska until
its resignation or removal by the Board. As Named Fiduciary and Plan
Administrator, the Institution shall be responsible for the
management, control and administration of the Director Plan. The Named
Fiduciary may delegate to others certain aspects of the management and
operation responsibilities of the Director Plan including the
employment of advisors and the delegation of ministerial duties to
qualified individuals.
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B. Claims Procedure and Arbitration:
--------------------------------
In the event a dispute arises over benefits under this Director Plan
and benefits are not paid to the Director (or to the Director's
beneficiary(ies) in the case of the Director's death) and such
claimants feel they are entitled to receive such benefits, then a
written claim must be made to the Named Fiduciary and Plan
Administrator named above within sixty (60) days from the date
payments are refused. The Named Fiduciary and Plan Administrator shall
review the written claim and if the claim is denied, in whole or in
part, it shall provide in writing within sixty (60) days of receipt of
such claim its specific reasons for such denial, reference to the
provisions of this Director Plan upon which the denial is based and
any additional material or information necessary to perfect the claim.
Such written notice shall further indicate the additional steps to be
taken by claimants if a further review of the claim denial is desired.
A claim shall be deemed denied if the Named Fiduciary and Plan
Administrator fail to take any action within the aforesaid sixty-day
period.
If claimants desire a second review they shall notify the Named
Fiduciary and Plan Administrator in writing within sixty (60) days of
the first claim denial. Claimants may review this Director Plan or any
documents relating thereto and submit any written issues and comments
it may feel appropriate. In their sole discretion, the Named Fiduciary
and Plan Administrator shall then review the second claim and provide
a written decision within sixty (60) days of receipt of such claim.
This decision shall likewise state the specific reasons for the
decision and shall include reference to specific provisions of the
Plan Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon
completed performance of this Director Plan or the meaning and effect
of the terms and conditions thereof, then claimants may submit the
dispute to an arbitrator for final arbitration. The arbitrator shall
be selected by mutual agreement of the Institution and the claimants.
The arbitrator shall operate under any generally recognized set of
arbitration rules. The parties hereto agree that they and their heirs,
personal representatives, successors and assigns shall be bound by the
decision of such arbitrator with respect to any controversy properly
submitted to it for determination.
Where a dispute arises as to the Institution's discharge of the
Director "for cause," such dispute shall likewise be submitted to
arbitration as above described and the parties hereto agree to be
bound by the decision thereunder.
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XIII.TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW,
RULES OR REGULATIONS
The Institution is entering into this Agreement upon the assumption that
certain existing tax laws, rules and regulations will continue in effect in
their current form. If any said assumptions should change and said change
has a detrimental effect on this Director Plan, then the Institution
reserves the right to terminate or modify this Agreement accordingly. Upon
a Change of Control (Paragraph IX), this paragraph shall become null and
void effective immediately upon said Change of Control.
XIV. DEFERRAL BENEFITS
A. Deferral Election:
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Any Director wishing to defer any portion or all of the Director's
fees may elect to do so for a maximum of five (5) years. At the end of
the five-year period, the Board shall have the option of extending the
deferral period for any amount of time it shall deem to be
appropriate. The Director will make the election to defer by filing
with the Institution a written statement setting forth the amount of
the deferrals and the Director's election of payment as set forth in
Subparagraph XIV (C) hereinafter. This statement must be filed prior
to having earned the deferred income.
B. Deferred Compensation Account:
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The Institution shall establish a Deferred Compensation Account in the
name of the Director and credit that account with the deferrals. The
Institution shall also credit interest to the Deferred Compensation
Account balance on December 31st of each year. The interest rate
credited shall be the average prime lending rate as of December 31st
as listed on the Federal Reserve Board website.
C. Benefit, Termination of Service or Death:
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Upon the Director attaining age sixty-five (65) or Termination of
Service from the Board (Subparagraph III [A], Paragraphs IV and VIII
hereinabove), the balance of the Director's Deferred Compensation
Account shall be payable as elected by the Director one (1) year prior
to receiving said benefit payable to the Director thirty (30) days
following said event. If the Director fails to make said payment
election, then the Director shall be paid in ten (10) equal annual
installments as set forth herein. Should the Director die while there
is a balance in the Director's
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Deferred Compensation Account, such balance shall be paid pursuant to
Paragraph IV hereinabove.
XV. CONVERSIONS
In the event the Institution undergoes a conversion from mutual to stock
form, the provisions of this Agreement shall remain binding and enforceable
upon both parties. The parties may elect to amend this Agreement under the
provision of Subparagraph XI (C) for the purpose of more accurately
representing the intentions of the parties in terminology more applicable
to the Institution's new form.
XVI. EFFECTIVE DATE
The Effective Date of this Agreement shall be January 1, 2004.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully
read this Agreement and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming copy.
OSAGE FEDERAL SAVINGS AND LOAN
ASSOCIATION OF PAWHUSKA
Pawhuska, Oklahoma
/s/ Xxxxxxx Xxxxxxxx By:/s/ Xxxx X. Xxxxx, President and CEO
-------------------- ------------------------------------------------
Witness (Institution Officer other than Insured) Title
/s/ Xxxxxxx Xxxxxxxx /s/ Xxxx Xxxxxx
-------------------- ---------------------------------------------------
Witness Xxxx Xxxxxx
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BENEFICIARY DESIGNATION FORM
FOR THE DIRECTOR SUPPLEMENTAL INCOME AGREEMENT
I. PRIMARY DESIGNATION
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(You may refer to the beneficiary designation information prior to
completion.)
A. PERSON(S) AS A PRIMARY DESIGNATION:
----------------------------------
(Please indicate the percentage for each beneficiary.)
Name Xxxxxxx X. Xxxxxx Relationship Wife / 100%
------------------------------- --------- ------
Address: 000 Xxxxxx xxxxxx Xxxxxxxx Xxxxxxxx 00000
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(Street) (City) (State) (Zip)
Name___________________________________ Relationship________ / _______%
Address:___________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship________ / _______%
Address:___________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship________ / _______%
Address:___________________________________________________________________
(Street) (City) (State) (Zip)
B. ESTATE AS A PRIMARY DESIGNATION:
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My Primary Beneficiary is The Estate of _________________________________
as set forth in the last will and testament dated the _____ day of
_____________, _______ and any codicils thereto.
C. TRUST AS A PRIMARY DESIGNATION:
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Name of the Trust: _____________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee: _____________________________________________________
Beneficiary(ies) of the Trust
(please indicate the percentage for each beneficiary):
___________________________________________________________________________
___________________________________________________________________________
Is this an Irrevocable Life Insurance Trust? ________ Yes ________ No (If
yes and this designation is for a Split Dollar agreement, an Assignment of
Rights form should be completed.)
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II. SECONDARY (CONTINGENT) DESIGNATION
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A. PERSON(S) AS A SECONDARY (CONTINGENT) DESIGNATION:
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(Please indicate the percentage for each beneficiary.)
Name___________________________________ Relationship________ / _______%
Address:___________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship________ / _______%
Address:___________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship________ / _______%
Address:___________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship________ / _______%
Address:___________________________________________________________________
(Street) (City) (State) (Zip)
B. ESTATE AS A SECONDARY (CONTINGENT) DESIGNATION:
----------------------------------------------
My Secondary Beneficiary is The Estate of _________________________ as set
forth in my last will and testament dated the _____ day of _____________,
_______ and any codicils thereto.
C. TRUST AS A SECONDARY (CONTINGENT) DESIGNATION:
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Name of the Trust: _______________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee: ______________________________________________________
Beneficiary(ies) of the Trust
(please indicate the percentage for each beneficiary):
___________________________________________________________________________
___________________________________________________________________________
All sums payable under the Director Supplemental Income Agreement by reason
of my death shall be paid to the Primary Beneficiary(ies), if he or she
survives me, and if no Primary Beneficiary(ies) shall survive me, then to
the Secondary (Contingent) Beneficiary(ies). This beneficiary designation
is valid until the participant notifies the Institution in writing.
/s/ Xxxx Xxxxxx 4-20-04
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Xxxx Xxxxxx Date
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DEFERRAL DECLARATION
I. AUTHORIZATION AND AMOUNT OF DEFERRAL
The undersigned Xxxx Xxxxxx, a Director of the Board of Osage Federal
Savings and Loan Association of Pawhuska, hereby elects to defer
___________ ($ or percent) of the Director's income for the year ______ and
all subsequent years thereafter pursuant to the Director Supplemental
Income Agreement dated ______ day of ___________, _____, unless modified by
the Director accordingly. The undersigned is a party to the
above-referenced Agreement.
II. DISTRIBUTION ELECTION
Pursuant to the Provisions of my Director Supplemental Income Agreement
with Osage Federal Savings and Loan Association of Pawhuska, I hereby elect
to have any distribution of the balance in my Deferral Account paid to me
in installments as designated below:
_____ Lump sum.
_____ Five (5) annual installments with the amount of each
installment determined as of each installment date by
dividing the entire amount in my Benefit Account by the
number of installments then remaining to be paid, with the
final installment to be the entire remaining balance in the
Benefit Account.
_____ Ten (10) annual installments with the amount of each
installment determined as of each installment date by
dividing the entire amount in my Benefit Account by the
number of installments then remaining to be paid, with the
final installment to be the entire remaining balance in the
Benefit Account.
_____ Fifteen (15) annual installments with the amount of each
installment determined as of each installment date by
dividing the entire amount in my Benefit Account by the
number of installments then remaining to be paid, with the
final installment to be the entire remaining balance in the
Benefit Account.
_____ The aforestated length of time for payments in monthly
installments.
Date:____________________ Xxxx Xxxxxx:_____________________________
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LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer: Northwestern Mutual Life Insurance
Policy Number: 16687960
Institution: Osage Federal Savings and Loan
Association of Pawhuska
Insured: Xxxx Xxxxxx
Relationship of Insured to Institution: Director
The respective rights and duties of the Institution and the Insured in the
above-referenced policy shall be pursuant to the terms set forth below:
I. DEFINITIONS
Refer to the policy contract for the definition of any terms in this
Agreement that are not defined herein. If the definition of a term in the
policy is inconsistent with the definition of a term in this Agreement,
then the definition of the term as set forth in this Agreement shall
supersede and replace the definition of the terms as set forth in the
policy.
II. POLICY TITLE AND OWNERSHIP
Title and ownership shall reside in the Institution for its use and for the
use of the Insured all in accordance with this Agreement. The Institution
alone may, to the extent of its interest, exercise the right to borrow or
withdraw on the policy cash values. Where the Institution and the Insured
(or assignee, with the consent of the Insured) mutually agree to exercise
the right to increase the coverage under the subject Split Dollar policy,
then, in such event, the rights, duties and benefits of the parties to such
increased coverage shall continue to be subject to the terms of this
Agreement.
III. BENEFICIARY DESIGNATION RIGHTS
The Insured (or assignee) shall have the right and power to designate a
beneficiary or beneficiaries to receive the Insured's share of the proceeds
payable upon the death of the Insured, and to elect and change a payment
option for such beneficiary, subject to any right or interest the
Institution may have in such proceeds, as provided in this Agreement.
IV. PREMIUM PAYMENT METHOD
The Institution shall pay an amount equal to the planned premiums and any
other premium payments that might become necessary to keep the policy in
force.
V. TAXABLE BENEFIT
Annually the Insured will receive a taxable benefit equal to the assumed
cost of insurance as required by the Internal Revenue Service. The
Institution (or its administrator) will report to the Insured the amount of
imputed income each year on Form W-2 or its equivalent.
VI. DIVISION OF DEATH PROCEEDS
Subject to Paragraphs VII and IX herein, the division of the death proceeds
of the policy is as follows:
A. Should the Insured be serving on the Board of the Institution at the
time of death, or be retired or terminated due to disability at the
time of death, the Insured's beneficiary(ies), designated in
accordance with Paragraph III, shall be entitled to an amount equal to
fifty percent (50%) of the net-at-risk insurance portion of the
proceeds. The net-at-risk insurance portion is the total proceeds less
the cash value of the policy.
B. Should the Insured not be serving on the Board of the Institution at
the time of his or her death, the Insured's beneficiary(ies),
designated in accordance with Paragraph III, shall be entitled to the
percentage as set forth hereinbelow of the proceeds described in
Subparagraph VI (A) above that corresponds to the age of the Insured.
Age upon Termination
of Service with the Institution Vested (to a maximum of 100%)
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prior to age 62 $20,000
62 27%
63 50%
64 75%
65 100%
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C. The Institution shall be entitled to the remainder of such proceeds.
D. The Institution and the Insured (or assignees) shall share in any
interest due on the death proceeds on a pro rata basis as the proceeds
due each respectively bears to the total proceeds, excluding any such
interest.
VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY
The Institution shall at all times be entitled to an amount equal to the
policy's cash value, as that term is defined in the policy contract, less
any policy loans and unpaid interest or cash withdrawals previously
incurred by the Institution and any applicable surrender charges. Such cash
value shall be determined as of the date of surrender or death as the case
may be.
VIII. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS
In the event the policy involves an endowment or annuity element, the
Institution's right and interest in any endowment proceeds or annuity
benefits, on expiration of the deferment period, shall be determined under
the provisions of this Agreement by regarding such endowment proceeds or
the commuted value of such annuity benefits as the policy's cash value.
Such endowment proceeds or annuity benefits shall be considered to be like
death proceeds for the purposes of division under this Agreement.
IX. TERMINATION OF AGREEMENT
This Agreement shall terminate upon the occurrence of any one of the
following:
A. The Insured shall be discharged from service with the Institution for
cause. The term "for cause" shall mean any of the following that
result in an adverse effect on the Institution: (i) gross negligence
or gross neglect; (ii) the commission of a felony or gross misdemeanor
involving fraud or dishonesty; (iii) the willful violation of any law,
rule, or regulation (other than a traffic violation or similar
offense); (iv) an intentional failure to perform stated duties; or (v)
a breach of fiduciary duty involving personal profit; or
B. Surrender, lapse, or other termination of the Policy by the
Institution.
Upon such termination, the Insured (or assignee) shall have a fifteen
(15) day option to receive from the Institution an absolute assignment
of the policy in consideration of a cash payment to the Institution,
whereupon this Agreement
3
shall terminate. Such cash payment referred to hereinabove shall be
the greater of:
A. The Institution's share of the cash value of the policy on the date of
such assignment, as defined in this Agreement; or
B. The amount of the premiums which have been paid by the Institution
prior to the date of such assignment.
If, within said fifteen (15) day period, the Insured fails to exercise said
option, fails to procure the entire aforestated cash payment, or dies, then
the option shall terminate and the Insured (or assignee) agrees that all of
the Insured's rights, interest and claims in the policy shall terminate as
of the date of the termination of this Agreement.
The Insured expressly agrees that this Agreement shall constitute
sufficient written notice to the Insured of the Insured's option to receive
an absolute assignment of the policy as set forth herein.
Except as provided above, this Agreement shall terminate upon distribution
of the death benefit proceeds in accordance with Paragraph VI above.
X. INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS
The Insured may not, without the written consent of the Institution, assign
to any individual, trust or other organization, any right, title or
interest in the subject policy nor any rights, options, privileges or
duties created under this Agreement.
XI. AGREEMENT BINDING UPON THE PARTIES
This Agreement shall bind the Insured and the Institution, their heirs,
successors, personal representatives and assigns.
XII. ERISA PROVISIONS
The following provisions are part of this Agreement and are intended to
meet the requirements of the Employee Retirement Income Security Act of
1974 ("ERISA"):
A. Named Fiduciary and Plan Administrator.
--------------------------------------
The "Named Fiduciary and Plan Administrator" of this Endorsement
Method Split Dollar Agreement shall be Osage Federal Savings and Loan
Association of Pawhuska, until its resignation or removal by the Board
of Directors. As Named Fiduciary and Plan Administrator, the
Institution
4
shall be responsible for the management, control, and administration
of this Split Dollar Plan as established herein. The Named Fiduciary
may delegate to others certain aspects of the management and operation
responsibilities of the Plan, including the employment of advisors and
the delegation of any ministerial duties to qualified individuals.
B. Funding Policy.
--------------
The funding policy for this Split Dollar Plan shall be to maintain the
subject policy in force by paying, when due, all premiums required.
C. Basis of Payment of Benefits.
----------------------------
Direct payment by the Insurer is the basis of payment of benefits
under this Agreement, with those benefits in turn being based on the
payment of premiums as provided in this Agreement.
D. Claim Procedures.
----------------
Claim forms or claim information as to the subject policy can be
obtained by contacting Benmark, Inc. (800-544-6079). When the Named
Fiduciary has a claim which may be covered under the provisions
described in the insurance policy, they should contact the office
named above, and they will either complete a claim form and forward it
to an authorized representative of the Insurer or advise the Named
Fiduciary what further requirements are necessary. The Insurer will
evaluate and make a decision as to payment. If the claim is payable, a
benefit check will be issued in accordance with the terms of this
Agreement.
In the event that a claim is not eligible under the policy, the
Insurer will notify the Named Fiduciary of the denial pursuant to the
requirements under the terms of the policy. If the Named Fiduciary is
dissatisfied with the denial of the claim and wishes to contest such
claim denial, they should contact the office named above and they will
assist in making an inquiry to the Insurer. All objections to the
Insurer's actions should be in writing and submitted to the office
named above for transmittal to the Insurer.
XIII. GENDER
Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine or
neuter gender, whenever they should so apply.
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XIV. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT
The Insurer shall not be deemed a party to this Agreement, but will respect
the rights of the parties as herein developed upon receiving an executed
copy of this Agreement. Payment or other performance in accordance with the
policy provisions shall fully discharge the Insurer from any and all
liability.
XV. CHANGE OF CONTROL
Change of Control shall be deemed to be the cumulative transfer of more
than ten percent (10%) of the voting stock of the Institution from the date
of this Agreement. For purposes of this Agreement, transfers on account of
death or gifts, transfers between family members, or transfers to a
qualified retirement plan maintained by the Institution shall not be
considered in determining whether there has been a Change of Control. Upon
a Change of Control, if the Insured's service is subsequently terminated,
except for cause, then the Insured shall be one hundred percent (100%)
vested in the benefits promised in this Agreement and, therefore, upon the
death of the Insured, the Insured's beneficiary(ies) (designated in
accordance with Paragraph III) shall receive the death benefit provided
herein as if the Insured had died while employed by the Institution (See
Subparagraphs VI [A] & [B]).
XVI. AMENDMENT OR REVOCATION
It is agreed by and between the parties hereto that, during the lifetime of
the Insured, this Agreement may be amended or revoked at any time or times,
in whole or in part, by the mutual written consent of the Insured and the
Institution.
XVII. EFFECTIVE DATE
The Effective Date of this Agreement shall be January 1, 2004.
XVIII. SEVERABILITY AND INTERPRETATION
If a provision of this Agreement is held to be invalid or unenforceable,
the remaining provisions shall nonetheless be enforceable according to
their terms. Further, in the event that any provision is held to be over
broad as written, such provision shall be deemed amended to narrow its
application to the extent necessary to make the provision enforceable
according to law and enforced as amended.
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XIX. APPLICABLE LAW
The validity and interpretation of this Agreement shall be governed by the
laws of the State of Oklahoma.
XX. CONVERSIONS
In the event the Institution undergoes a conversion from mutual to stock
form, the provisions of this Agreement shall remain binding and enforceable
upon both parties. The parties may elect to amend this Agreement under the
provision of Subparagraph XVI for the purpose of more accurately
representing the intentions of the parties in terminology more applicable
to the Institution's new form.
Executed at Pawhuska, Oklahoma, this 20th day of April, 2004.
OSAGE FEDERAL SAVINGS AND
LOAN ASSOCIATION OF PAWHUSKA
Pawhuska, Oklahoma
/s/ Xxxxxxx Xxxxxxxx By: /s/Xxxx X. Xxxxx, President/CEO
-------------------- -------------------------------------------------
Witness (Institution Officer other than Insured) Title
/s/Xxxxxxx Xxxxxxxx /s/Xxxx Xxxxxx
-------------------- -------------------------------------------------
Witness Xxxx Xxxxxx
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BENEFICIARY DESIGNATION FORM
FOR LIFE INSURANCE ENDORSEMENT METHOD
SPLIT DOLLAR PLAN AGREEMENT
I. PRIMARY DESIGNATION
-------------------
(You may refer to the beneficiary designation information prior to
completion.)
A. PERSON(S) AS A PRIMARY DESIGNATION:
----------------------------------
(Please indicate the percentage for each beneficiary.)
Name Xxxxxxx X. Xxxxxx Relationship wife / 100%
--------------------------------------- --------- --------
Address: 000 Xxxxxx Xxxxxx Xxxxxxxx XX 00000
------------------------------------------------------------------
(Street) (City) (State) (Zip)
Name _____________________________________ Relationship__________/_______%
Address:___________________________________________________________________
(Street) (City) (State) (Zip)
Name _____________________________________ Relationship__________/_______%
Address:___________________________________________________________________
(Street) (City) (State) (Zip)
Name _____________________________________ Relationship__________/_______%
Address:___________________________________________________________________
(Street) (City) (State) (Zip)
B. ESTATE AS A PRIMARY DESIGNATION:
-------------------------------
My Primary Beneficiary is The Estate of ___________________________ as set
forth in the last will and testament dated the _____ day of _____________,
_______ and any codicils thereto.
C. TRUST AS A PRIMARY DESIGNATION:
-------------------------------
Name of the Trust: _______________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee: ______________________________________________________
Beneficiary(ies) of the Trust
(please indicate the percentage for each beneficiary):
___________________________________________________________________________
___________________________________________________________________________
Is this an Irrevocable Life Insurance Trust? ________ Yes ________ No (If
yes and this designation is for a Split Dollar agreement, an Assignment of
Rights form should be completed.)
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II. SECONDARY (CONTINGENT) DESIGNATION
----------------------------------
A. PERSON(S) AS A SECONDARY (CONTINGENT) DESIGNATION:
---------------------------------------------------
(Please indicate the percentage for each beneficiary.)
Name _____________________________________ Relationship__________/_______%
Address:___________________________________________________________________
(Street) (City) (State) (Zip)
Name _____________________________________ Relationship__________/_______%
Address:___________________________________________________________________
(Street) (City) (State) (Zip)
Name _____________________________________ Relationship__________/_______%
Address:___________________________________________________________________
(Street) (City) (State) (Zip)
Name _____________________________________ Relationship__________/_______%
Address:___________________________________________________________________
(Street) (City) (State) (Zip)
B. ESTATE AS A SECONDARY (CONTINGENT) DESIGNATION:
----------------------------------------------
My Secondary Beneficiary is The Estate of ___________________________ as set
forth in my last will and testament dated the _____ day of ____________, _______
and any codicils thereto.
C. TRUST AS A SECONDARY (CONTINGENT) DESIGNATION:
----------------------------------------------
Name of the Trust: __________________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee: _________________________________________________________
Beneficiary(ies) of the Trust
(please indicate the percentage for each beneficiary):
________________________________________________________________________________
________________________________________________________________________________
All sums payable under the Life Insurance Endorsement Method Split Dollar Plan
Agreement by reason of my death shall be paid to the Primary Beneficiary(ies),
if he or she survives me, and if no Primary Beneficiary(ies) shall survive me,
then to the Secondary (Contingent) Beneficiary(ies). This beneficiary
designation is valid until the participant notifies the Institution in writing.
/s/Xxxx Xxxxxx 4-20/04
------------------------------ --------------
Xxxx Xxxxxx Date
9
