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 Xxxx as 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. ----------------------------------------------------------------------------------------------- [n] [A] [B] [C] [D] INDEX [Annual OPPORTUNITY COST CASH SURRENDER Policy A0 = premium ANNUAL CUMULATIVE END OF VALUE OF LIFE Income] A0+Cn-1x.05x BENEFIT BENEFIT YEAR INSURANCE POLICY An-An-1 (1-42%) B-C 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 $29,841 $22,659 $43,659 ----------------------------------------------------------------------------------------------- 3 $1,157,625 $55,125 $30,706 $24,419 $68,078 ----------------------------------------------------------------------------------------------- . . . ----------------------------------------------------------------------------------------------- Assumptions: Initial Insurance = $1,000,000 Effective Tax Rate = 42% One Year US Treasury Yield = 5%

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 Xxxx as published in the Wall Street Journal. The applicable tax rate used to calculate the Opportunity Cost shall be the EmployerBank's marginal tax rate until the ExecutiveDirector'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] [A] [B] [C] [D] END OF CASH SURRENDER INDEX [Annual OPPORTUNITY COST CASH SURRENDER Policy A0 = premium ANNUAL CUMULATIVE END OF YEAR VALUE OF LIFE [Annual A(0) = premium BENEFIT BENEFIT INSURANCE POLICY Policy A(0)+C(n-1)x.05x B-C D+D(n-1) Income] A0+Cn-1x.05x BENEFIT BENEFIT YEAR INSURANCE POLICY An-An-1 (1-42%) B-C D+Dn-1 A(n)-A(n-1) ----------------------------------------------------------------------------------------------- 0 $1,000,000 1, 000,000 -- -- -- -- ----------------------------------------------------------------------------------------------- 1 $1,050,000 $50,000 $29,000 $21,000 $21,000 ----------------------------------------------------------------------------------------------- 2 $1,102,500 $52,500 $29,841 $22,659 $43,659 ----------------------------------------------------------------------------------------------- 3 $1,157,625 $55,125 $30,706 $24,419 $68,078 ----------------------------------------------------------------------------------------------- . . . ----------------------------------------------------------------------------------------------- Assumptions: Initial Insurance = $1,000,000 Effective Tax Rate = 42% One Year US Treasury Yield = 5%-----------------------------------------------------------------------------------------------

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 Xxxx as 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. ----------------------------------------------------------------------------------------------- [n] [A] [B] [C] [D] INDEX VALUE OF LIFE [Annual OPPORTUNITY COST CASH SURRENDER Policy A0 A(0) = premium ANNUAL CUMULATIVE END OF VALUE OF LIFE Income] A0+Cn-1x.05x A(0)+C(n-1)x.05x BENEFIT BENEFIT YEAR INSURANCE POLICY An-An-1 A(n)-A(n-1) (1-42%) B-C D+Dn-1 D+D(n-1) ----------------------------------------------------------------------------------------------- 0 $1,000,000 -- -- -- -- ----------------------------------------------------------------------------------------------- 1 $1,050,000 $50,000 $29,000 $21,000 $21,000 ----------------------------------------------------------------------------------------------- 2 $1,102,500 $52,500 $29,841 $22,659 $43,659 ----------------------------------------------------------------------------------------------- 3 $1,157,625 $55,125 $30,706 $24,419 $68,078 ----------------------------------------------------------------------------------------------- . . . ----------------------------------------------------------------------------------------------- Assumptions: Initial Insurance = $1,000,000 Effective Tax Rate = 42% One Year US Treasury Yield = 5%

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 Xxxx as published in the Wall Street Journal. The applicable tax rate used to calculate the Opportunity Cost shall be the EmployerBank's marginal tax rate until the ExecutiveDirector'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] [A] [B] [C] [D] INDEX VALUE OF LIFE [Annual OPPORTUNITY COST CASH SURRENDER Policy A0 A(0) = premium ANNUAL CUMULATIVE END OF VALUE OF LIFE Income] A0+Cn-1x.05x A(0)+C(n-1)x.05x BENEFIT BENEFIT YEAR INSURANCE POLICY An-An-1 A(n)-A(n-1) (1-42%) B-C D+Dn-1 D+D(n-1) ----------------------------------------------------------------------------------------------- 0 $1,000,000 1, 000,000 -- -- -- -- ----------------------------------------------------------------------------------------------- 1 $1,050,000 $50,000 $29,000 $21,000 $21,000 ----------------------------------------------------------------------------------------------- 2 $1,102,500 $52,500 $29,841 $22,659 $43,659 ----------------------------------------------------------------------------------------------- 3 $1,157,625 $55,125 $30,706 $24,419 $68,078 ----------------------------------------------------------------------------------------------- . . . ----------------------------------------------------------------------------------------------- Assumptions: Initial Insurance = $1,000,000 Effective Tax Rate = 42% One Year US Treasury Yield = 5%

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 Xxxx as 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] [A] [B] [C] [D] INDEX [Annual OPPORTUNITY COST CASH SURRENDER Policy A0 A(0) = premium ANNUAL CUMULATIVE END OF VALUE OF LIFE Income] A0+Cn-1x.05x A(0)+C(n-1)x.05x BENEFIT BENEFIT YEAR INSURANCE POLICY An-An-1 A(n)-A(n-1) (1-42%) B-C D+Dn-1 D+D(n-1) ----------------------------------------------------------------------------------------------- 0 $1,000,000 -- -- -- -- ----------------------------------------------------------------------------------------------- 1 $1,050,000 $50,000 $29,000 $21,000 $21,000 ----------------------------------------------------------------------------------------------- 2 $1,102,500 $52,500 $29,841 $22,659 $43,659 ----------------------------------------------------------------------------------------------- 3 $1,157,625 $55,125 $30,706 $24,419 $68,078 ----------------------------------------------------------------------------------------------- . . . ----------------------------------------------------------------------------------------------- Assumptions: Initial Insurance = $1,000,000 Effective Tax Rate = 42% One Year US Treasury Yield = 5%