GREAT FINANCIAL CORPORATION
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
THIS AGREEMENT is entered into by and among Great Financial Corporation, a
Delaware corporation ("GFC"), PNC Bank of Kentucky, Inc., as Trustee of the
Great Financial Corporation Rabbi Trust (the "GFC RABBI TRUST"), PAUL BAKER (the
"EMPLOYEE"), and PNC BANK OF KENTUCKY, Inc. as Trustee of the PAUL BAKER
Irrevocable Trust.
1. PURPOSES OF AGREEMENT
1.1 GFC is a holding company of which Great Financial Bank, F.S.B., a Federal
savings bank ("GFB"), is an affiliate. Employee is a valuable employee of GFB
and is and will continue to be instrumental to the continued growth and
profitability of both GFB and GFC. As such, both GFB and GFC have insurable
interests in the Policy.
1.2 GFC wishes to retain and encourage Employee to remain in GFB's employ;
therefore, GFC will provide additional employment related benefits to Employee.
Employee would like to obtain additional life insurance death benefit protection
to provide for Employee's family upon Employee's death. The parties have agreed
to obtain and continue to provide life insurance death benefit protection for
Employee.
1.3 GFC is willing to pay all of the premiums due on a life insurance policy
insuring Employee's life subject to the terms and conditions set forth herein.
1.4 The Employee or a Trust established by the Employee for the benefit of
Employee's family will own the life insurance policy acquired pursuant to this
Agreement, and the owner will possess all incidents of ownership in and to the
policy. The policy will be assigned to GFC as collateral to secure the repayment
of GFC's interest in the policy.
1.5 The parties desire to have a full understanding of their mutual and
respective obligations; accordingly, in consideration of their mutual agreements
and covenants contained herein, the parties agree as follows:
2. DEFINITIONS
As used in this Agreement:
2.1 "CAUSE" shall mean only the final, non-appealable conviction of or the
Employee's plea of guilty or nolo contendre to a felony involving fraud,
embezzlement, theft, or dishonesty or other criminal conduct against GFC or GFB.
2.2 "CHANGE IN CONTROL" shall mean the occurrence of any of the following:
2.2(a) during any period of three consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of GFB cease for
any reason to constitute a majority thereof unless the election or nomination
for election of each new Director was approved by a vote of at least two-thirds
of the Board members then still in office who were Board members at the
beginning of the period or who were similarly nominated;
2.2(b) the business of GFB for which Employee's services are
principally performed is disposed of pursuant to a partial or complete
liquidation of GFB, a sale of GFB's assets, or otherwise;
2.2(c) GFB's or GFC's Board of Directors adopts a resolution to the
effect that a Change in Control for purposes of this Agreement has occurred;
2.2(d) an event that would be required to be reported in response to
item 1(a) of the current report on Form 8-K as in effect on the date of this
Agreement, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 occurs;
2.2(e) any "person" (as that term is used in Sections 13(d) or 14(d) of
the Securities Exchange Act or 1934) is or becomes the "beneficial owner" (as
that term is defined in Rule 13d-3 of the Securities Exchange Act of 1934),
directly or indirectly, of GFB's securities representing 20 percent or more of
GFB's outstanding securities except for any securities of GFB purchased by GFB's
employee stock ownership plan and trust.
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2.2(f) GFB approves, adopts, or otherwise consummates a plan of
reorganization, merger, consolidation, sale of all or substantially all of GFB's
assets or a similar transaction in which GFB is not the surviving entity; or
2.2(g) a change in control that shall have occurred as described in 12
C.F.R. Section 574.4(a) or its successor regulations.
2.3 "COLLATERAL ASSIGNMENT" shall mean the Owner's assignment of the Policy to
GFC as collateral pursuant to the assignment instrument attached hereto as
Exhibit B and incorporated herein by reference.
2.4 "CORPORATE INTEREST" means GFC's interest in the Policy ( as set forth in
Exhibit A, attached hereto and incorporated herein by reference) which GFC is to
receive in the event of a Policy Rollout. Under no circumstances will the
Corporate Interest be less than the cumulative Policy premiums that GFC has
advanced pursuant to this Agreement.
2.5 "DEATH PROCEEDS" shall mean the face amount of the death benefit provided in
the Policy, plus any increase in the death benefit from dividends, cash, or
accumulation value as those terms may be defined in the Policy.
2.6 "ECONOMIC VALUE" means the lower of the PS-58 rate or the Insurer's current
published premium rate for annually renewable term insurance for standard risks,
assuming a death benefit equal to Employee's Death Benefit.
2.7 "EMPLOYEE'S DEATH BENEFIT" shall mean that Employee's death benefit as set
forth in Exhibit A.
2.8 "GFC DEATH BENEFIT" shall mean GFC's death benefit as set forth in Exhibit
A.
2.9 "INSURER" shall mean the insurance company identified in Exhibit A.
2.10 "OWNER" shall mean the Employee or a Trust established for the benefit of
Employee's family, as the case may be.
2.11 "POLICY" shall mean the life insurance policy (identified in Exhibit A) on
the Employee's life.
2.12 "POLICY ROLLOUT" shall mean the procedure by which GFC receives its
Corporate Interest in the Policy and by which the Owner receives its interest in
the Policy in the event this Agreement is terminated for reasons other than the
Employee's death.
2.13 "ROLLOUT AGE" shall mean the end of the policy year in which Employee
reaches insurance age sixty-five.
3. THE POLICY
3.1 APPLICATION FOR INSURANCE. The Owner has obtained the Policy issued by the
Insurer in an initial face amount of Three Million Nine Hundred Thirty Five
Thousand Four Hundred Ninety Eight Dollars ($ 3,935,498.00). The parties hereto
have taken all necessary action to cause Insurer to issue the Policy and will
take any additional actions necessary to cause the Policy to comply with this
Agreement's provisions.
3.2 ASSIGNMENT OF POLICY. The Owner has assigned the Policy to GFC pursuant to
the Collateral Assignment, which secures the repayment to GFC of its Corporate
Interest in the Policy arising pursuant to this Agreement. The Owner will file
the Collateral Assignment with the Insurer.
4. POLICY OWNERSHIP
4.1 POLICY OWNERSHIP. The Owner will be the Policy's sole and absolute owner,
including any supplemental riders and endorsements, and may exercise all
ownership rights granted by the Policy's terms, except as otherwise expressly
provided herein.
4.2 GFC'S RIGHTS AND DUTIES. GFC's rights and duties in the Policy will be
limited to the following:
4.2(a) The right to receive the GFC Death Benefit at the Employee's
death;
4.2(b) The right to receive its Corporate Interest after a Policy
Rollout, as hereinafter provided;
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4.2(c) The right to physical possession of the Policy;
4.2(d) The duty to release the Collateral Assignment after GFC receives
its Corporate Interest; and
4.4(e) The duty to make the Policy reasonably available to the Owner
and Insurer at their request.
4.3 GFC will have no right to borrow against the Policy, except as expressly
permitted herein.
4.4 OWNER'S RIGHTS. As Policy owner, the Owner will retain all other Policy
rights that this Agreement has not expressly granted to GFC, including, but not
limited to, the following:
4.4(a) The right to succeed to full ownership of the Policy's cash
values upon satisfaction of the Corporate Interest following a Policy Rollout;
4.4(b) The right to designate and change the beneficiary(ies) of the
Employee Death Benefit as hereinafter provided;
4.4(c) The right to assign its rights in the Policy.
4.5 Notwithstanding anything in this Agreement to the contrary, the Owner will
have no right to borrow against the Policy before Policy Rollout.
4.6 Application of Dividends. Policy dividends may be used to pay premiums or to
purchase paid-up additional insurance protection.
5. PREMIUM PAYMENTS
5.1 PREMIUM PAYMENTS. On or before each Policy premium's due date, or within the
grace period granted therein, GFC or the GFC Rabbi Trust or both, as the case
may be, will be obligated to pay to the Insurer the Policy premiums (including
the cost associated with all supplemental riders and endorsements) according to
the schedule of planned annual premiums set forth in the Policy. GFC's and the
GFC Rabbi Trust's obligation to pay the aforesaid Policy premiums will continue
in full force and effect, unless GFB terminates Employee's employment for
"Cause."
5.2 CHANGE IN CONTROL. Upon a Change of Control, GFC shall immediately make an
irrevocable contribution to the GFC Rabbi Trust in an amount that is sufficient
to pay all of the then remaining Policy premiums.
5.3 NOTICE TO OWNER. Upon receipt of Owner's written request, GFC will promptly
furnish the Owner evidence of its timely payment of Policy premiums.
5.4 CURRENT TAXATION OF PREMIUMS. Each taxable year, Employee will include in
his or her gross income, for Federal and, if applicable, state income tax
purposes, the Economic Value attributable to the life insurance protection this
Agreement provides for Employee during such taxable year.
6. DEATH BENEFITS
6.1 EMPLOYEE'S DEATH BENEFIT. If Employee dies before Policy Rollout, Employee's
designated beneficiary(ies) set forth in the Policy will be entitled to receive
Employee's Death Benefit shown on Exhibit A or as adjusted because of Policy
dividends or because the assumptions utilized by the Insurer to generate the
values shown on Exhibit A have changed since the date this Agreement was
executed.
6.2 GFC DEATH BENEFIT. If Employee dies before Policy Rollout, GFC will be
entitled to receive the GFC Death Benefit as shown on Exhibit A or as adjusted
because of Policy dividends or because the assumptions utilized by the Insurer
to generate the values shown on Exhibit A have changed since the date this
Agreement was executed.
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7. TERMINATION OF AGREEMENT
7.1 TERMINATION OF AGREEMENT. This Agreement will terminate, without notice and
without any further action by the parties hereto, upon GFB's termination of the
Employee's employment for "Cause."
7.2 FORFEITURES. Notwithstanding anything in this Agreement to the contrary,
Owner will forfeit all rights to the Policy if GFB terminates Employee's
employment for "Cause," in which case Owner will be required to execute any
document or documents required by Insurer to transfer the policy to GFC.
Notwithstanding the foregoing, Employee will not be deemed to have been
terminated for Cause unless and until there shall have been delivered to
Employee a copy of a resolution duly adopted by GFB's Board of Directors at a
meeting of GFB's Board called and held for that purpose, finding that in the
good faith opinion of GFB's Board, GFB has cause for terminating Employee and
specifying the particulars thereof in detail. Should Employee dispute whether he
was terminated for Cause, then GFB, GFC, and the Employee will enter immediately
into arbitration as provided hereinafter.
8. POLICY ROLLOUT
8.1 TIMES FOR POLICY ROLLOUT. Policy Rollout will occur when the Employee
reaches Rollout Age.
8.2 POLICY ROLLOUT PROCEDURE. To accomplish the Policy Rollout, GFC and the
Owner will apply to Insurer to split the Policy into two separate life insurance
policies. One policy will provide a death benefit for GFC and will have a cash
value equal to GFC's Corporate Interest in such amounts as set forth in Exhibit
A or as adjusted because of Policy dividends or because the assumptions utilized
by the Insurer to generate the values listed on Exhibit A have changed since the
date this Agreement was executed (the "FIRST POLICY"). The other policy will
have the remaining cash surrender value and death benefits of the original
Policy, as set forth in Exhibit A or as adjusted if because of Policy dividends
or because the assumptions utilized by the Insurer to generate the values listed
on Exhibit A have changed since the date this Agreement was executed (the
"SECOND POLICY"). Ownership of the First Policy will be transferred to GFC, and
upon receipt of First Policy, GFC will execute all document(s) required by
Insurer to release the Collateral Assignment. The First Policy will be free and
clear of any obligation to Owner, and GFC may, in its sole discretion, hold
First Policy or surrender it for its cash value without notice to or permission
from the Owner. Ownership of the Second Policy will be transferred to Owner and
will be free and clear from any obligations to GFC.
9. ADMINISTRATION AND CLAIMS PROCEDURE
9.1 PLAN ADMINISTRATION. The Compensation Committee of GFB will serve as the
administrator for this Agreement; provided, however, that a member of such
Committee will take no action with respect to his or her own benefit.
9.2 AUTHORITY OF ADMINISTRATOR. The Compensation Committee will have all power
and authority necessary to carry out the provisions of this Agreement. The
Compensation Committee will have the full power to interpret and construe this
Agreement and to delegate administrative duties to such persons as it sees fit.
All costs involved in administration of this Agreement will be borne by GFB.
9.3 CLAIMS. Any person claiming a benefit or requesting an interpretation or
ruling under this Agreement shall present the request in writing to the
Compensation Committee.
9.4 DENIAL OF CLAIMS. The Compensation Committee shall make all determinations
as to the right of any person to a benefit under this Agreement. If any claim is
wholly or partially denied, the claimant shall be notified of such decision
thirty (30) days after the Compensation Committee received the claim. The
Compensation Committee will provide to every claimant who is denied a claim for
benefits written notice setting forth:
9.4(a) The specific reason(s) for the denial;
9.4(b) Specific reference to pertinent provisions of this Agreement
upon which the denial is based;
9.4(c) A description of any additional information necessary for the
claimant to perfect the claim, and an explanation of why such material or
information is necessary; and
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9.4(d) An explanation of the claim review procedure under this Agreement.
9.5 REVIEW OF CLAIM. A claimant shall have sixty (60) days following his or her
receipt of the claim denial to file with the Compensation Committee a written
request for GFB's Board of Directors (excluding claimant should claimant then be
serving as a member of the Board of Directors) to review the claim. All such
requests will be written and will state the reason for the claimant's
disagreement with the decision. A claimant's failure to request the Board of
Directors review of the decision within the aforesaid sixty (60) day period will
be deemed a waiver of the claiman's right to reconsideration of the
Compensation Committee's decision. Such failure will not, however, preclude the
claimant from establishing his entitlement at a later date based on additional
information and evidence not available to claimant at the time of the
Compensation Committee's decision. A decision by the Board of Directors will be
made not later than 60 days after its receipt of a request for review. The
claimant will be advised of the Board's decision in writing.
9.6 FINAL DECISION. Should the claimant dispute the Board of Director's decision
about the claimant's entitlement to benefits provided by this Agreement, then
claimant, GFC, and GFB will enter immediately into arbitration as provided
hereinafter.
10. ARBITRATION
10.1 ISSUES TO BE ARBITRATED. The parties agree to submit all disputed issues to
final and binding arbitration; except for those issues requiring extraordinary
relief that may only be obtained by the issuance of a restraining order,
injunction or similar type of equitable relief. A "disputed issue" means any
disagreement in regard to any of the terms and conditions of this Agreement, and
any dispute between the parties concerning their relationships, issues involving
an accounting, and the right to recision, as well as any issues not directly
covered by this Agreement.
10.2 PROHIBITION OF COURT APPEAL. Any dispute, as defined above, and which is
subject to arbitration will not be subject to appeal to any court except to
permit a party to seek court enforcement of any arbitration award rendered
hereunder.
10.3 SELECTION OF ARBITRATOR. If the parties agree to the appointment of a
single arbitrator, then the single arbitrator will determine and decide any
dispute arising hereunder. If the parties cannot agree to the selection of a
single arbitrator, then each party will designate an attorney to serve as an
arbitrator, and the selected attorneys will select an arbitrator, who is a
certified public accountant, to be the third arbitrator. The arbitrator(s) will
establish rules for the conduct of the arbitration consistent with the rules of
the American Arbitration Association, and KRS 417.050 et. seq. The arbitrator(s)
will be impartial and will have no prior or present relationship with any of the
parties. The arbitration hearing and proceedings will take place in the State of
Kentucky, and will be enforceable in the State of Kentucky. The arbitrator(s)
will be empowered to hear, conclusively determine and resolve all claims and
disputes between the parties. Arbitration fees and expenses will be shared
equally by the parties to the arbitration, unless otherwise agreed by the
arbitrator(s).
10.4 CONFIDENTIALITY. The parties agree that all matters to be arbitrated and
the arbitration award will be maintained on a confidential basis. All issues and
the results thereof will not be disclosed by the parties or their
representatives, and the parties and their representatives will not report any
of their proceedings to the public. These provisions will not prohibit any party
from securing witnesses, experts, or other advisors as is necessary in order for
the parties to present their case, etc.
11. AGREEMENT DRAFTED BY GFC'S ATTORNEYS
The parties each acknowledge that GFC's counsel, Lynch, Cox, Gilman & Mahan,
P.S.C., prepared this Agreement at their joint request. The parties consent to
such representation, and they acknowledge that they have been advised that
possible conflicts may exist between them, that each has had an opportunity to
seek the advice of independent counsel, and they have received no
representations from counsel as to the economic fairness and the material
consequences affecting the transactions contemplated by this Agreement. Further,
the parties acknowledge that in the event of any dispute, counsel will represent
the interests of GFC and not any party in opposition thereto.
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12. NOTICES
Any and all notices, requests, or communications required or permitted to be
given pursuant to this Agreement will be written and signed by the appropriate
party and will be deemed to have been given when delivered personally to the
party to be notified or when deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed as
follows:
To Employee at: 329 West Main Street
Suite 1900
Louisville, KY. 40202
If applicable, To Trustee at: Citizens Plaza
Lousiville, KY. 40202
To GFC: 329 West Main Street
Suite 1900
Louisville, KY. 40202
Any party may change the address to which such notices, etc. are to be directed
to them, by giving notice to the other party hereto in the manner set forth
above.
13. MISCELLANEOUS PROVISIONS
13.1 INSURER NOT A PARTY. Insurer will be fully discharged from its obligations
under the Policy by payment of the Policy death benefit to the beneficiary(ies)
named in the Policy, subject to the Policy's terms and conditions. Under no
circumstances will Insurer be considered a party to this Agreement or subsequent
modifications or amendments of it, if any. Further, no provision of this
Agreement, or subsequent modifications or amendments of it, will in any way be
construed as varying or otherwise affecting the Insurer's obligations as
expressly provided in the Policy, except insofar as this Agreement's provisions
are made part of the Policy by the Collateral Assignment filed with Insurer in
connection herewith.
13.2 ACKNOWLEDGEMENT REGARDING EXHIBIT A. The parties hereto expressly
acknowledge and agree that the projections and results for the Owner and for GFC
illustrated on Exhibit A represent mere estimates and may be adjusted because of
Policy dividends or because the assumptions utilized by the Insurer to generate
the values shown on Exhibit A have changed since the date this Agreement was
executed.
13.3 MODIFICATION. No change or modification to this Agreement will be valid,
unless in writing and signed by all the parties hereto, or their respective
successors or permitted assigns.
13.4 GOVERNING LAW. This Agreement will be deemed to be made under and will be
construed in accordance with the laws of the State of Kentucky.
13.5 INTERPRETATION. The parties intend that this Agreement be interpreted
consistent with its being a welfare benefit plan for a select group of
management and highly compensated employees.
13.6 ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement between the parties hereto with respect to the matters set forth
herein and supersedes any prior understandings and agreements among them with
respect to the same.
13.7 WAIVER. The failure of any party hereto to insist upon strict performance
of a covenant or condition in this Agreement will not be a waiver of his right
to demand strict compliance therewith in the future.
13.8 SEVERABILITY. The invalidity or unenforceability of a particular provision
of this Agreement will not affect the other provisions hereof, and the Agreement
will be construed in all respects as if such invalid or unenforceable provisions
were omitted.
13.9 BENEFITS. All benefits payable pursuant to this Agreement will be payable
only from the Policy and only to the extent provided in Policy.
13.10 PARTIES BOUND. This Agreement will be binding upon and inure to the
benefit of the parties hereto, their heirs, legal representatives, successors
and permitted assigns of the parties.
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13.11 THIRD PARTY BENEFICIARIES. This Agreement does not create, and will not be
construed as creating, any rights enforceable by any person not a party to this
Agreement.
13.12 SECTION HEADINGS. The section headings contained herein are for the
purposes of convenience only, and will not be deemed to constitute a part of
this Agreement or to affect the meaning or interpretation of this Agreement in
any way.
In order to evidence their understanding of and agreement to all the terms
and conditions of this Agreement, the parties have executed multiple copies of
this instrument, each one of which, when signed by all the parties, will be
considered an original.
Date: March 28, 1997.
GREAT FINANCIAL CORPORATION IRREVOCABLE TRUST
PNC Bank, KY., Inc. Trustee
By: /S/ RICHARD M. KLAPHEKE By: /S/ MAJORIE L. BASSLET
Title: EVP/CFO Title: V. P. & TRUST OFFICER
PNC BANK KENTUCKY, INC.,
TRUSTEE OF THE GFC RABBI TRUST
By: /S/ MAJORIE L. BASSLET /S/ PAUL BAKER
Employee
Title: V. P. & TRUST OFFICER
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GREAT FINANCIAL CORPORATION
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
THIS AGREEMENT is entered into by and among Great Financial Corporation, a
Delaware corporation ("GFC"), PNC Bank of Kentucky, Inc., as Trustee of the
Great Financial Corporation Rabbi Trust (the "GFC RABBI TRUST"), ARTHUR L.
HARRELD (the "EMPLOYEE"), and OWENSBORO NATIONAL BANK as Trustee of the ARTHUR
L. HARRELD Irrevocable Trust, dated March 27, 1997.
1. PURPOSES OF AGREEMENT
1.1 GFC is a holding company of which Great Financial Bank, F.S.B., a Federal
savings bank ("GFB"), is an affiliate. Employee is a valuable employee of GFB
and is and will continue to be instrumental to the continued growth and
profitability of both GFB and GFC. As such, both GFB and GFC have insurable
interests in the Policy.
1.2 GFC wishes to retain and encourage Employee to remain in GFB's employ;
therefore, GFC will provide additional employment related benefits to Employee.
Employee would like to obtain additional life insurance death benefit protection
to provide for Employee's family upon Employee's death. The parties have agreed
to obtain and continue to provide life insurance death benefit protection for
Employee.
1.3 GFC is willing to pay all of the premiums due on a life insurance policy
insuring Employee's life subject to the terms and conditions set forth herein.
1.4 The Employee or a Trust established by the Employee for the benefit of
Employee's family will own the life insurance policy acquired pursuant to this
Agreement, and the owner will possess all incidents of ownership in and to the
policy. The policy will be assigned to GFC as collateral to secure the repayment
of GFC's interest in the policy.
1.5 The parties desire to have a full understanding of their mutual and
respective obligations; accordingly, in consideration of their mutual agreements
and covenants contained herein, the parties agree as follows:
2. DEFINITIONS
As used in this Agreement:
2.1 "CAUSE" shall mean only the final, non-appealable conviction of or the
Employee's plea of guilty or nolo contendre to a felony involving fraud,
embezzlement, theft, or dishonesty or other criminal conduct against GFC or GFB.
2.2 "CHANGE IN CONTROL" shall mean the occurrence of any of the following:
2.2(a) during any period of three consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of GFB cease for
any reason to constitute a majority thereof unless the election or nomination
for election of each new Director was approved by a vote of at least two-thirds
of the Board members then still in office who were Board members at the
beginning of the period or who were similarly nominated;
2.2(b) the business of GFB for which Employee's services are
principally performed is disposed of pursuant to a partial or complete
liquidation of GFB, a sale of GFB's assets, or otherwise;
2.2(c) GFB's or GFC's Board of Directors adopts a resolution to the
effect that a Change in Control for purposes of this Agreement has occurred;
2.2(d) an event that would be required to be reported in response to
item 1(a) of the current report on Form 8-K as in effect on the date of this
Agreement, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 occurs;
2.2(e) any "person" (as that term is used in Sections 13(d) or 14(d) of
the Securities Exchange Act or 1934) is or becomes the "beneficial owner" (as
that term is defined in Rule 13d-3 of the Securities Exchange Act of 1934),
directly or indirectly, of GFB's securities representing 20 percent or more of
GFB's outstanding securities except for any securities of GFB purchased by GFB's
employee stock ownership plan and trust.
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2.2(f) GFB approves, adopts, or otherwise consummates a plan of
reorganization, merger, consolidation, sale of all or substantially all of GFB's
assets or a similar transaction in which GFB is not the surviving entity; or
2.2(g) a change in control that shall have occurred as described in 12
C.F.R. Section 574.4(a) or its successor regulations.
2.3 "COLLATERAL ASSIGNMENT" shall mean the Owner's assignment of the Policy to
GFC as collateral pursuant to the assignment instrument attached hereto as
Exhibit B and incorporated herein by reference.
2.4 "CORPORATE INTEREST" means GFC's interest in the Policy ( as set forth in
Exhibit A, attached hereto and incorporated herein by reference) which GFC is to
receive in the event of a Policy Rollout. Under no circumstances will the
Corporate Interest be less than the cumulative Policy premiums that GFC has
advanced pursuant to this Agreement.
2.5 "DEATH PROCEEDS" shall mean the face amount of the death benefit provided in
the Policy, plus any increase in the death benefit from dividends, cash, or
accumulation value as those terms may be defined in the Policy.
2.6 "ECONOMIC VALUE" means the lower of the PS-58 rate or the Insurer's current
published premium rate for annually renewable term insurance for standard risks,
assuming a death benefit equal to Employee's Death Benefit.
2.7 "EMPLOYEE'S DEATH BENEFIT" shall mean that Employee's death benefit as set
forth in Exhibit A.
2.8 "GFC DEATH BENEFIT" shall mean GFC's death benefit as set forth in Exhibit
A.
2.9 "INSURER" shall mean the insurance company identified in Exhibit A.
2.10 "OWNER" shall mean the Employee or a Trust established for the benefit of
Employee's family, as the case may be.
2.11 "POLICY" shall mean the life insurance policy (identified in Exhibit A) on
the Employee's life.
2.12 "POLICY ROLLOUT" shall mean the procedure by which GFC receives its
Corporate Interest in the Policy and by which the Owner receives its interest in
the Policy in the event this Agreement is terminated for reasons other than the
Employee's death.
2.13 "ROLLOUT AGE" shall mean the end of the policy year in which Employee
reaches insurance age sixty-five.
3. THE POLICY
3.1 APPLICATION FOR INSURANCE. The Owner has obtained the Policy issued by the
Insurer in an initial face amount of One Million Three Hundred Ninety Six
Thousand Nine Hundred Twelve Dollars ($ 1,396,912.00). The parties hereto have
taken all necessary action to cause Insurer to issue the Policy and will take
any additional actions necessary to cause the Policy to comply with this
Agreement's provisions.
3.2 ASSIGNMENT OF POLICY. The Owner has assigned the Policy to GFC pursuant to
the Collateral Assignment, which secures the repayment to GFC of its Corporate
Interest in the Policy arising pursuant to this Agreement. The Owner will file
the Collateral Assignment with the Insurer.
4. POLICY OWNERSHIP
4.1 POLICY OWNERSHIP. The Owner will be the Policy's sole and absolute owner,
including any supplemental riders and endorsements, and may exercise all
ownership rights granted by the Policy's terms, except as otherwise expressly
provided herein.
4.2 GFC's Rights and Duties. GFC's rights and duties in the Policy will be
limited to the following:
4.2(a) The right to receive the GFC Death Benefit at the Employee's
death;
4.2(b) The right to receive its Corporate Interest after a Policy
Rollout, as hereinafter provided;
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4.2(c) The right to physical possession of the Policy;
4.2(d) The duty to release the Collateral Assignment after GFC receives
its Corporate Interest; and
4.4(e) The duty to make the Policy reasonably available to the Owner
and Insurer at their request.
4.3 GFC will have no right to borrow against the Policy, except as expressly
permitted herein.
4.4 OWNER'S RIGHTS. As Policy owner, the Owner will retain all other Policy
rights that this Agreement has not expressly granted to GFC, including, but not
limited to, the following:
4.4(a) The right to succeed to full ownership of the Policy's cash
values upon satisfaction of the Corporate Interest following a Policy Rollout;
4.4(b) The right to designate and change the beneficiary(ies) of the
Employee Death Benefit as hereinafter provided;
4.4(c) The right to assign its rights in the Policy.
4.5 Notwithstanding anything in this Agreement to the contrary, the Owner will
have no right to borrow against the Policy before Policy Rollout.
4.6 APPLICATION OF DIVIDENDS. Policy dividends may be used to pay premiums or to
purchase paid-up additional insurance protection.
5. PREMIUM PAYMENTS
5.1 PREMIUM PAYMENTS. On or before each Policy premium's due date, or within the
grace period granted therein, GFC or the GFC Rabbi Trust or both, as the case
may be, will be obligated to pay to the Insurer the Policy premiums (including
the cost associated with all supplemental riders and endorsements) according to
the schedule of planned annual premiums set forth in the Policy. GFC's and the
GFC Rabbi Trust's obligation to pay the aforesaid Policy premiums will continue
in full force and effect, unless GFB terminates Employee's employment for
"Cause."
5.2 CHANGE IN CONTROL. Upon a Change of Control, GFC shall immediately make an
irrevocable contribution to the GFC Rabbi Trust in an amount that is sufficient
to pay all of the then remaining Policy premiums.
5.3 NOTICE TO OWNER. Upon receipt of Owner's written request, GFC will promptly
furnish the Owner evidence of its timely payment of Policy premiums.
5.4 CURRENT TAXATION OF PREMIUMS. Each taxable year, Employee will include in
his or her gross income, for Federal and, if applicable, state income tax
purposes, the Economic Value attributable to the life insurance protection this
Agreement provides for Employee during such taxable year.
6. DEATH BENEFITS
6.1 EMPLOYEE'S DEATH BENEFIT. If Employee dies before Policy Rollout, Employee's
designated beneficiary(ies) set forth in the Policy will be entitled to receive
Employee's Death Benefit shown on Exhibit A or as adjusted because of Policy
dividends or because the assumptions utilized by the Insurer to generate the
values shown on Exhibit A have changed since the date this Agreement was
executed.
6.2 GFC DEATH BENEFIT. If Employee dies before Policy Rollout, GFC will be
entitled to receive the GFC Death Benefit as shown on Exhibit A or as adjusted
because of Policy dividends or because the assumptions utilized by the Insurer
to generate the values shown on Exhibit A have changed since the date this
Agreement was executed.
38
7. TERMINATION OF AGREEMENT
7.1 TERMINATION OF AGREEMENT. This Agreement will terminate, without notice and
without any further action by the parties hereto, upon GFB's termination of the
Employee's employment for "Cause."
7.2 FORFEITURES. Notwithstanding anything in this Agreement to the contrary,
Owner will forfeit all rights to the Policy if GFB terminates Employee's
employment for "Cause," in which case Owner will be required to execute any
document or documents required by Insurer to transfer the policy to GFC.
Notwithstanding the foregoing, Employee will not be deemed to have been
terminated for Cause unless and until there shall have been delivered to
Employee a copy of a resolution duly adopted by GFB's Board of Directors at a
meeting of GFB's Board called and held for that purpose, finding that in the
good faith opinion of GFB's Board, GFB has cause for terminating Employee and
specifying the particulars thereof in detail. Should Employee dispute whether he
was terminated for Cause, then GFB, GFC, and the Employee will enter immediately
into arbitration as provided hereinafter.
8. POLICY ROLLOUT
8.1 TIMES FOR POLICY ROLLOUT. Policy Rollout will occur when the Employee
reaches Rollout Age.
8.2 POLICY ROLLOUT PROCEDURE. To accomplish the Policy Rollout, GFC and the
Owner will apply to Insurer to split the Policy into two separate life insurance
policies. One policy will provide a death benefit for GFC and will have a cash
value equal to GFC's Corporate Interest in such amounts as set forth in Exhibit
A or as adjusted because of Policy dividends or because the assumptions utilized
by the Insurer to generate the values listed on Exhibit A have changed since the
date this Agreement was executed (the "First Policy"). The other policy will
have the remaining cash surrender value and death benefits of the original
Policy, as set forth in Exhibit A or as adjusted if because of Policy dividends
or because the assumptions utilized by the Insurer to generate the values listed
on Exhibit A have changed since the date this Agreement was executed (the
"Second Policy"). Ownership of the First Policy will be transferred to GFC, and
upon receipt of First Policy, GFC will execute all document(s) required by
Insurer to release the Collateral Assignment. The First Policy will be free and
clear of any obligation to Owner, and GFC may, in its sole discretion, hold
First Policy or surrender it for its cash value without notice to or permission
from the Owner. Ownership of the Second Policy will be transferred to Owner and
will be free and clear from any obligations to GFC.
9. ADMINISTRATION AND CLAIMS PROCEDURE
9.1 PLAN ADMINISTRATION. The Compensation Committee of GFB will serve as the
administrator for this Agreement; provided, however, that a member of such
Committee will take no action with respect to his or her own benefit.
9.2 AUTHORITY OF ADMINISTRATOR. The Compensation Committee will have all power
and authority necessary to carry out the provisions of this Agreement. The
Compensation Committee will have the full power to interpret and construe this
Agreement and to delegate administrative duties to such persons as it sees fit.
All costs involved in administration of this Agreement will be borne by GFB.
9.3 CLAIMS. Any person claiming a benefit or requesting an interpretation or
ruling under this Agreement shall present the request in writing to the
Compensation Committee.
9.4 DENIAL OF CLAIMS. The Compensation Committee shall make all determinations
as to the right of any person to a benefit under this Agreement. If any claim is
wholly or partially denied, the claimant shall be notified of such decision
thirty (30) days after the Compensation Committee received the claim. The
Compensation Committee will provide to every claimant who is denied a claim for
benefits written notice setting forth:
9.4(a) The specific reason(s) for the denial;
9.4(b) Specific reference to pertinent provisions of this Agreement
upon which the denial is based;
9.4(c) A description of any additional information necessary for the
claimant to perfect the claim, and an explanation of why such material or
information is necessary; and
39
9.4(d) An explanation of the claim review procedure under this Agreement.
9.5 REVIEW OF CLAIM. A claimant shall have sixty (60) days following his or her
receipt of the claim denial to file with the Compensation Committee a written
request for GFB's Board of Directors (excluding claimant should claimant then be
serving as a member of the Board of Directors) to review the claim. All such
requests will be written and will state the reason for the claimant's
disagreement with the decision. A claimant's failure to request the Board of
Directors review of the decision within the aforesaid sixty (60) day period will
be deemed a waiver of the claimant's right to reconsideration of the
Compensation Committee's decision. Such failure will not, however, preclude the
claimant from establishing his entitlement at a later date based on additional
information and evidence not available to claimant at the time of the
Compensation Committee's decision. A decision by the Board of Directors will be
made not later than 60 days after its receipt of a request for review. The
claimant will be advised of the Board's decision in writing.
9.6 FINAL DECISION. Should the claimant dispute the Board of Director's decision
about the claimant's entitlement to benefits provided by this Agreement, then
claimant, GFC, and GFB will enter immediately into arbitration as provided
hereinafter.
10. ARBITRATION
10.1 ISSUES TO BE ARBITRATED. The parties agree to submit all disputed issues to
final and binding arbitration; except for those issues requiring extraordinary
relief that may only be obtained by the issuance of a restraining order,
injunction or similar type of equitable relief. A "disputed issue" means any
disagreement in regard to any of the terms and conditions of this Agreement, and
any dispute between the parties concerning their relationships, issues involving
an accounting, and the right to recision, as well as any issues not directly
covered by this Agreement.
10.2 PROHIBITION OF COURT APPEAL. Any dispute, as defined above, and which is
subject to arbitration will not be subject to appeal to any court except to
permit a party to seek court enforcement of any arbitration award rendered
hereunder.
10.3 SELECTION OF ARBITRATOR. If the parties agree to the appointment of a
single arbitrator, then the single arbitrator will determine and decide any
dispute arising hereunder. If the parties cannot agree to the selection of a
single arbitrator, then each party will designate an attorney to serve as an
arbitrator, and the selected attorneys will select an arbitrator, who is a
certified public accountant, to be the third arbitrator. The arbitrator(s) will
establish rules for the conduct of the arbitration consistent with the rules of
the American Arbitration Association, and KRS 417.050 et. seq. The arbitrator(s)
will be impartial and will have no prior or present relationship with any of the
parties. The arbitration hearing and proceedings will take place in the State of
Kentucky, and will be enforceable in the State of Kentucky. The arbitrator(s)
will be empowered to hear, conclusively determine and resolve all claims and
disputes between the parties. Arbitration fees and expenses will be shared
equally by the parties to the arbitration, unless otherwise agreed by the
arbitrator(s).
10.4 CONFIDENTIALITY. The parties agree that all matters to be arbitrated and
the arbitration award will be maintained on a confidential basis. All issues and
the results thereof will not be disclosed by the parties or their
representatives, and the parties and their representatives will not report any
of their proceedings to the public. These provisions will not prohibit any party
from securing witnesses, experts, or other advisors as is necessary in order for
the parties to present their case, etc.
11. AGREEMENT DRAFTED BY GFC'S ATTORNEYS
The parties each acknowledge that GFC's counsel, Lynch, Cox, Gilman & Mahan,
P.S.C., prepared this Agreement at their joint request. The parties consent to
such representation, and they acknowledge that they have been advised that
possible conflicts may exist between them, that each has had an opportunity to
seek the advice of independent counsel, and they have received no
representations from counsel as to the economic fairness and the material
consequences affecting the transactions contemplated by this Agreement. Further,
the parties acknowledge that in the event of any dispute, counsel will represent
the interests of GFC and not any party in opposition thereto.
40
12. NOTICES
Any and all notices, requests, or communications required or permitted to be
given pursuant to this Agreement will be written and signed by the appropriate
party and will be deemed to have been given when delivered personally to the
party to be notified or when deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed as
follows:
To Employee at: 4112 Hunting Creek Drive
Owensboro, KY. 42303
If applicable, To Trustee at: P.O. Box 10001
Owensboro, KY. 42302
To GFC: 329 West Main Street
Suite 1900
Louisville, KY. 40202
Any party may change the address to which such notices, etc. are to be directed
to them, by giving notice to the other party hereto in the manner set forth
above.
13. MISCELLANEOUS PROVISIONS
13.1 INSURER NOT A PARTY. Insurer will be fully discharged from its obligations
under the Policy by payment of the Policy death benefit to the beneficiary(ies)
named in the Policy, subject to the Policy's terms and conditions. Under no
circumstances will Insurer be considered a party to this Agreement or subsequent
modifications or amendments of it, if any. Further, no provision of this
Agreement, or subsequent modifications or amendments of it, will in any way be
construed as varying or otherwise affecting the Insurer's obligations as
expressly provided in the Policy, except insofar as this Agreement's provisions
are made part of the Policy by the Collateral Assignment filed with Insurer in
connection herewith.
13.2 ACKNOWLEDGEMENT REGARDING EXHIBIT A. The parties hereto expressly
acknowledge and agree that the projections and results for the Owner and for GFC
illustrated on Exhibit A represent mere estimates and may be adjusted because of
Policy dividends or because the assumptions utilized by the Insurer to generate
the values shown on Exhibit A have changed since the date this Agreement was
executed.
13.3 MODIFICATION. No change or modification to this Agreement will be valid,
unless in writing and signed by all the parties hereto, or their respective
successors or permitted assigns.
13.4 GOVERNING LAW. This Agreement will be deemed to be made under and will be
construed in accordance with the laws of the State of Kentucky.
13.5 INTERPRETATION. The parties intend that this Agreement be interpreted
consistent with its being a welfare benefit plan for a select group of
management and highly compensated employees.
13.6 ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement between the parties hereto with respect to the matters set forth
herein and supersedes any prior understandings and agreements among them with
respect to the same.
13.7 WAIVER. The failure of any party hereto to insist upon strict performance
of a covenant or condition in this Agreement will not be a waiver of his right
to demand strict compliance therewith in the future.
13.8 SEVERABILITY. The invalidity or unenforceability of a particular provision
of this Agreement will not affect the other provisions hereof, and the Agreement
will be construed in all respects as if such invalid or unenforceable provisions
were omitted.
13.9 BENEFITS. All benefits payable pursuant to this Agreement will be payable
only from the Policy and only to the extent provided in Policy.
13.10 PARTIES BOUND. This Agreement will be binding upon and inure to the
benefit of the parties hereto, their heirs, legal representatives, successors
and permitted assigns of the parties.
41
13.11 THIRD PARTY BENEFICIARIES. This Agreement does not create, and will not be
construed as creating, any rights enforceable by any person not a party to this
Agreement.
13.12 SECTION HEADINGS. The section headings contained herein are for the
purposes of convenience only, and will not be deemed to constitute a part of
this Agreement or to affect the meaning or interpretation of this Agreement in
any way.
In order to evidence their understanding of and agreement to all the terms
and conditions of this Agreement, the parties have executed multiple copies of
this instrument, each one of which, when signed by all the parties, will be
considered an original.
Date: March 28, 1997.
GREAT FINANCIAL CORPORATION IRREVOCABLE TRUST
Owensboro National Bank, Trustee
By: /S/ RICHARD M. KLAPHEKE By: /S/ GERALD W. SAWDERS
Title: EVP/CFO Title: FIRST SENIOR VICE PRESIDENT
PNC BANK KENTUCKY, INC.,
TRUSTEE OF THE GFC RABBI TRUST
By: /S/ ANN M. RILEY /S/ ARTHUR L. HARRELD
Employee
Title: VICE PRESIDENT
42
GREAT FINANCIAL CORPORATION
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
THIS AGREEMENT is entered into by and among Great Financial Corporation, a
Delaware corporation ("GFC"), PNC Bank of Kentucky, Inc., as Trustee of the
Great Financial Corporation Rabbi Trust (the "GFC RABBI TRUST"), RICHARD M.
KLAPHEKE (the "EMPLOYEE"), and WILLIAM J. LINTNER as Trustee of the RICHARD M.
KLAPHEKE Irrevocable Trust.
1. PURPOSES OF AGREEMENT
1.1 GFC is a holding company of which Great Financial Bank, F.S.B., a Federal
savings bank ("GFB"), is an affiliate. Employee is a valuable employee of GFB
and is and will continue to be instrumental to the continued growth and
profitability of both GFB and GFC. As such, both GFB and GFC have insurable
interests in the Policy.
1.2 GFC wishes to retain and encourage Employee to remain in GFB's employ;
therefore, GFC will provide additional employment related benefits to Employee.
Employee would like to obtain additional life insurance death benefit protection
to provide for Employee's family upon Employee's death. The parties have agreed
to obtain and continue to provide life insurance death benefit protection for
Employee.
1.3 GFC is willing to pay all of the premiums due on a life insurance policy
insuring Employee's life subject to the terms and conditions set forth herein.
1.4 The Employee or a Trust established by the Employee for the benefit of
Employee's family will own the life insurance policy acquired pursuant to this
Agreement, and the owner will possess all incidents of ownership in and to the
policy. The policy will be assigned to GFC as collateral to secure the repayment
of GFC's interest in the policy.
1.5 The parties desire to have a full understanding of their mutual and
respective obligations; accordingly, in consideration of their mutual agreements
and covenants contained herein, the parties agree as follows:
2. DEFINITIONS
As used in this Agreement:
2.1 "CAUSE" shall mean only the final, non-appealable conviction of or the
Employee's plea of guilty or nolo contendre to a felony involving fraud,
embezzlement, theft, or dishonesty or other criminal conduct against GFC or GFB.
2.2 "CHANGE IN CONTROL" shall mean the occurrence of any of the following:
2.2(a) during any period of three consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of GFB cease for
any reason to constitute a majority thereof unless the election or nomination
for election of each new Director was approved by a vote of at least two-thirds
of the Board members then still in office who were Board members at the
beginning of the period or who were similarly nominated;
2.2(b) the business of GFB for which Employee's services are
principally performed is disposed of pursuant to a partial or complete
liquidation of GFB, a sale of GFB's assets, or otherwise;
2.2(c) GFB's or GFC's Board of Directors adopts a resolution to the
effect that a Change in Control for purposes of this Agreement has occurred;
2.2(d) an event that would be required to be reported in response to
item 1(a) of the current report on Form 8-K as in effect on the date of this
Agreement, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 occurs;
2.2(e) any "person" (as that term is used in Sections 13(d) or 14(d) of
the Securities Exchange Act or 1934) is or becomes the "beneficial owner" (as
that term is defined in Rule 13d-3 of the Securities Exchange Act of 1934),
directly or indirectly, of GFB's securities representing 20 percent or more of
GFB's outstanding securities except for any securities of GFB purchased by GFB's
employee stock ownership plan and trust.
43
2.2(f) GFB approves, adopts, or otherwise consummates a plan of
reorganization, merger, consolidation, sale of all or substantially all of GFB's
assets or a similar transaction in which GFB is not the surviving entity; or
2.2(g) a change in control that shall have occurred as described in 12
C.F.R. Section 574.4(a) or its successor regulations.
2.3 "COLLATERAL ASSIGNMENT" shall mean the Owner's assignment of the Policy to
GFC as collateral pursuant to the assignment instrument attached hereto as
Exhibit B and incorporated herein by reference.
2.4 "CORPORATE INTEREST" means GFC's interest in the Policy ( as set forth in
Exhibit A, attached hereto and incorporated herein by reference) which GFC is to
receive in the event of a Policy Rollout. Under no circumstances will the
Corporate Interest be less than the cumulative Policy premiums that GFC has
advanced pursuant to this Agreement.
2.5 "DEATH PROCEEDS" shall mean the face amount of the death benefit provided in
the Policy, plus any increase in the death benefit from dividends, cash, or
accumulation value as those terms may be defined in the Policy.
2.6 "ECONOMIC VALUE" means the lower of the PS-58 rate or the Insurer's current
published premium rate for annually renewable term insurance for standard risks,
assuming a death benefit equal to Employee's Death Benefit.
2.7 "EMPLOYEE'S DEATH BENEFIT" shall mean that Employee's death benefit as set
forth in Exhibit A.
2.8 "GFC DEATH BENEFIT" shall mean GFC's death benefit as set forth in Exhibit
A.
2.9 "INSURER" shall mean the insurance company identified in Exhibit A.
2.10 "OWNER" shall mean the Employee or a Trust established for the benefit of
Employee's family, as the case may be.
2.11 "POLICY" shall mean the life insurance policy (identified in Exhibit A) on
the Employee's life.
2.12 "POLICY ROLLOUT" shall mean the procedure by which GFC receives its
Corporate Interest in the Policy and by which the Owner receives its interest in
the Policy in the event this Agreement is terminated for reasons other than the
Employee's death.
2.13 "ROLLOUT AGE" shall mean the end of the policy year in which Employee
reaches insurance age sixty-five.
3. THE POLICY
3.1 APPLICATION FOR INSURANCE. The Owner has obtained the Policy issued by the
Insurer in an initial face amount of One Million One Hundred Ninety Two Thousand
One Hundred Forty Five Dollars ($ 1,192,145.00). The parties hereto have taken
all necessary action to cause Insurer to issue the Policy and will take any
additional actions necessary to cause the Policy to comply with this Agreement's
provisions.
3.2 ASSIGNMENT OF POLICY. The Owner has assigned the Policy to GFC pursuant to
the Collateral Assignment, which secures the repayment to GFC of its Corporate
Interest in the Policy arising pursuant to this Agreement. The Owner will file
the Collateral Assignment with the Insurer.
4. POLICY OWNERSHIP
4.1 POLICY OWNERSHIP. The Owner will be the Policy's sole and absolute owner,
including any supplemental riders and endorsements, and may exercise all
ownership rights granted by the Policy's terms, except as otherwise expressly
provided herein.
4.2 GFC'S RIGHTS AND DUTIES. GFC's rights and duties in the Policy will be
limited to the following:
4.2(a) The right to receive the GFC Death Benefit at the Employee's
death;
4.2(b) The right to receive its Corporate Interest after a Policy
Rollout, as hereinafter provided;
44
4.2(c) The right to physical possession of the Policy;
4.2(d) The duty to release the Collateral Assignment after GFC receives
its Corporate Interest; and
4.4(e) The duty to make the Policy reasonably available to the Owner
and Insurer at their request.
4.3 GFC will have no right to borrow against the Policy, except as expressly
permitted herein.
4.4 OWNER'S RIGHTS. As Policy owner, the Owner will retain all other Policy
rights that this Agreement has not expressly granted to GFC, including, but not
limited to, the following:
4.4(a) The right to succeed to full ownership of the Policy's cash
values upon satisfaction of the Corporate Interest following a Policy Rollout;
4.4(b) The right to designate and change the beneficiary(ies) of the
Employee Death Benefit as hereinafter provided;
4.4(c) The right to assign its rights in the Policy.
4.5 Notwithstanding anything in this Agreement to the contrary, the Owner will
have no right to borrow against the Policy before Policy Rollout.
4.6 APPLICATION OF DIVIDENDS. Policy dividends may be used to pay premiums or to
purchase paid-up additional insurance protection.
5. PREMIUM PAYMENTS
5.1 PREMIUM PAYMENTS. On or before each Policy premium's due date, or within the
grace period granted therein, GFC or the GFC Rabbi Trust or both, as the case
may be, will be obligated to pay to the Insurer the Policy premiums (including
the cost associated with all supplemental riders and endorsements) according to
the schedule of planned annual premiums set forth in the Policy. GFC's and the
GFC Rabbi Trust's obligation to pay the aforesaid Policy premiums will continue
in full force and effect, unless GFB terminates Employee's employment for
"Cause."
5.2 CHANGE IN CONTROL. Upon a Change of Control, GFC shall immediately make an
irrevocable contribution to the GFC Rabbi Trust in an amount that is sufficient
to pay all of the then remaining Policy premiums.
5.3 NOTICE TO OWNER. Upon receipt of Owner's written request, GFC will promptly
furnish the Owner evidence of its timely payment of Policy premiums.
5.4 CURRENT TAXATION OF PREMIUMS. Each taxable year, Employee will include in
his or her gross income, for Federal and, if applicable, state income tax
purposes, the Economic Value attributable to the life insurance protection this
Agreement provides for Employee during such taxable year.
6. DEATH BENEFITS
6.1 EMPLOYEE'S DEATH BENEFIT. If Employee dies before Policy Rollout, Employee's
designated beneficiary(ies) set forth in the Policy will be entitled to receive
Employee's Death Benefit shown on Exhibit A or as adjusted because of Policy
dividends or because the assumptions utilized by the Insurer to generate the
values shown on Exhibit A have changed since the date this Agreement was
executed.
6.2 GFC DEATH BENEFIT. If Employee dies before Policy Rollout, GFC will be
entitled to receive the GFC Death Benefit as shown on Exhibit A or as adjusted
because of Policy dividends or because the assumptions utilized by the Insurer
to generate the values shown on Exhibit A have changed since the date this
Agreement was executed.
45
7. TERMINATION OF AGREEMENT
7.1 TERMINATION OF AGREEMENT. This Agreement will terminate, without notice and
without any further action by the parties hereto, upon GFB's termination of the
Employee's employment for "Cause."
7.2 FORFEITURES. Notwithstanding anything in this Agreement to the contrary,
Owner will forfeit all rights to the Policy if GFB terminates Employee's
employment for "Cause," in which case Owner will be required to execute any
document or documents required by Insurer to transfer the policy to GFC.
Notwithstanding the foregoing, Employee will not be deemed to have been
terminated for Cause unless and until there shall have been delivered to
Employee a copy of a resolution duly adopted by GFB's Board of Directors at a
meeting of GFB's Board called and held for that purpose, finding that in the
good faith opinion of GFB's Board, GFB has cause for terminating Employee and
specifying the particulars thereof in detail. Should Employee dispute whether he
was terminated for Cause, then GFB, GFC, and the Employee will enter immediately
into arbitration as provided hereinafter.
8. POLICY ROLLOUT
8.1 TIMES FOR POLICY ROLLOUT. Policy Rollout will occur when the Employee
reaches Rollout Age.
8.2 POLICY ROLLOUT PROCEDURE. To accomplish the Policy Rollout, GFC and the
Owner will apply to Insurer to split the Policy into two separate life insurance
policies. One policy will provide a death benefit for GFC and will have a cash
value equal to GFC's Corporate Interest in such amounts as set forth in Exhibit
A or as adjusted because of Policy dividends or because the assumptions utilized
by the Insurer to generate the values listed on Exhibit A have changed since the
date this Agreement was executed (the "First Policy"). The other policy will
have the remaining cash surrender value and death benefits of the original
Policy, as set forth in Exhibit A or as adjusted if because of Policy dividends
or because the assumptions utilized by the Insurer to generate the values listed
on Exhibit A have changed since the date this Agreement was executed (the
"Second Policy"). Ownership of the First Policy will be transferred to GFC, and
upon receipt of First Policy, GFC will execute all document(s) required by
Insurer to release the Collateral Assignment. The First Policy will be free and
clear of any obligation to Owner, and GFC may, in its sole discretion, hold
First Policy or surrender it for its cash value without notice to or permission
from the Owner. Ownership of the Second Policy will be transferred to Owner and
will be free and clear from any obligations to GFC.
9. ADMINISTRATION AND CLAIMS PROCEDURE
9.1 PLAN ADMINISTRATION. The Compensation Committee of GFB will serve as the
administrator for this Agreement; provided, however, that a member of such
Committee will take no action with respect to his or her own benefit.
9.2 AUTHORITY OF ADMINISTRATOR. The Compensation Committee will have all power
and authority necessary to carry out the provisions of this Agreement. The
Compensation Committee will have the full power to interpret and construe this
Agreement and to delegate administrative duties to such persons as it sees fit.
All costs involved in administration of this Agreement will be borne by GFB.
9.3 CLAIMS. Any person claiming a benefit or requesting an interpretation or
ruling under this Agreement shall present the request in writing to the
Compensation Committee.
9.4 DENIAL OF CLAIMS. The Compensation Committee shall make all determinations
as to the right of any person to a benefit under this Agreement. If any claim is
wholly or partially denied, the claimant shall be notified of such decision
thirty (30) days after the Compensation Committee received the claim. The
Compensation Committee will provide to every claimant who is denied a claim for
benefits written notice setting forth:
9.4(a) The specific reason(s) for the denial;
9.4(b) Specific reference to pertinent provisions of this Agreement
upon which the denial is based;
9.4(c) A description of any additional information necessary for the
claimant to perfect the claim, and an explanation of why such material or
information is necessary; and
46
9.4(d) An explanation of the claim review procedure under this
Agreement.
9.5 REVIEW OF CLAIM. A claimant shall have sixty (60) days following his or her
receipt of the claim denial to file with the Compensation Committee a written
request for GFB's Board of Directors (excluding claimant should claimant then be
serving as a member of the Board of Directors) to review the claim. All such
requests will be written and will state the reason for the claimant's
disagreement with the decision. A claimant's failure to request the Board of
Directors review of the decision within the aforesaid sixty (60) day period will
be deemed a waiver of the claimant's right to reconsideration of the
Compensation Committee's decision. Such failure will not, however, preclude the
claimant from establishing his entitlement at a later date based on additional
information and evidence not available to claimant at the time of the
Compensation Committee's decision. A decision by the Board of Directors will be
made not later than 60 days after its receipt of a request for review. The
claimant will be advised of the Board's decision in writing.
9.6 FINAL DECISION. Should the claimant dispute the Board of Director's decision
about the claimant's entitlement to benefits provided by this Agreement, then
claimant, GFC, and GFB will enter immediately into arbitration as provided
hereinafter.
10. ARBITRATION
10.1 ISSUES TO BE ARBITRATED. The parties agree to submit all disputed issues to
final and binding arbitration; except for those issues requiring extraordinary
relief that may only be obtained by the issuance of a restraining order,
injunction or similar type of equitable relief. A "disputed issue" means any
disagreement in regard to any of the terms and conditions of this Agreement, and
any dispute between the parties concerning their relationships, issues involving
an accounting, and the right to recision, as well as any issues not directly
covered by this Agreement.
10.2 PROHIBITION OF COURT APPEAL. Any dispute, as defined above, and which is
subject to arbitration will not be subject to appeal to any court except to
permit a party to seek court enforcement of any arbitration award rendered
hereunder.
10.3 SELECTION OF ARBITRATOR. If the parties agree to the appointment of a
single arbitrator, then the single arbitrator will determine and decide any
dispute arising hereunder. If the parties cannot agree to the selection of a
single arbitrator, then each party will designate an attorney to serve as an
arbitrator, and the selected attorneys will select an arbitrator, who is a
certified public accountant, to be the third arbitrator. The arbitrator(s) will
establish rules for the conduct of the arbitration consistent with the rules of
the American Arbitration Association, and KRS 417.050 et. seq. The arbitrator(s)
will be impartial and will have no prior or present relationship with any of the
parties. The arbitration hearing and proceedings will take place in the State of
Kentucky, and will be enforceable in the State of Kentucky. The arbitrator(s)
will be empowered to hear, conclusively determine and resolve all claims and
disputes between the parties. Arbitration fees and expenses will be shared
equally by the parties to the arbitration, unless otherwise agreed by the
arbitrator(s).
10.4 CONFIDENTIALITY. The parties agree that all matters to be arbitrated and
the arbitration award will be maintained on a confidential basis. All issues and
the results thereof will not be disclosed by the parties or their
representatives, and the parties and their representatives will not report any
of their proceedings to the public. These provisions will not prohibit any party
from securing witnesses, experts, or other advisors as is necessary in order for
the parties to present their case, etc.
11. AGREEMENT DRAFTED BY GFC'S ATTORNEYS
The parties each acknowledge that GFC's counsel, Lynch, Cox, Gilman & Mahan,
P.S.C., prepared this Agreement at their joint request. The parties consent to
such representation, and they acknowledge that they have been advised that
possible conflicts may exist between them, that each has had an opportunity to
seek the advice of independent counsel, and they have received no
representations from counsel as to the economic fairness and the material
consequences affecting the transactions contemplated by this Agreement. Further,
the parties acknowledge that in the event of any dispute, counsel will represent
the interests of GFC and not any party in opposition thereto.
47
12. NOTICES
Any and all notices, requests, or communications required or permitted to be
given pursuant to this Agreement will be written and signed by the appropriate
party and will be deemed to have been given when delivered personally to the
party to be notified or when deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed as
follows:
To Employee at: 1215 Carpenter Drive
Crestwood, KY. 40014
If applicable, To Trustee at: 8 River Hill Road
Louisville, KY. 40207
To GFC: 329 West Main Street
Suite 1900
Louisville, KY. 40202
Any party may change the address to which such notices, etc. are to be directed
to them, by giving notice to the other party hereto in the manner set forth
above.
13. MISCELLANEOUS PROVISIONS
13.1 INSURER NOT A PARTY. Insurer will be fully discharged from its obligations
under the Policy by payment of the Policy death benefit to the beneficiary(ies)
named in the Policy, subject to the Policy's terms and conditions. Under no
circumstances will Insurer be considered a party to this Agreement or subsequent
modifications or amendments of it, if any. Further, no provision of this
Agreement, or subsequent modifications or amendments of it, will in any way be
construed as varying or otherwise affecting the Insurer's obligations as
expressly provided in the Policy, except insofar as this Agreement's provisions
are made part of the Policy by the Collateral Assignment filed with Insurer in
connection herewith.
13.2 ACKNOWLEDGEMENT REGARDING EXHIBIT A. The parties hereto expressly
acknowledge and agree that the projections and results for the Owner and for GFC
illustrated on Exhibit A represent mere estimates and may be adjusted because of
Policy dividends or because the assumptions utilized by the Insurer to generate
the values shown on Exhibit A have changed since the date this Agreement was
executed.
13.3 MODIFICATION. No change or modification to this Agreement will be valid,
unless in writing and signed by all the parties hereto, or their respective
successors or permitted assigns.
13.4 GOVERNING LAW. This Agreement will be deemed to be made under and will be
construed in accordance with the laws of the State of Kentucky.
13.5 INTERPRETATION. The parties intend that this Agreement be interpreted
consistent with its being a welfare benefit plan for a select group of
management and highly compensated employees.
13.6 ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement between the parties hereto with respect to the matters set forth
herein and supersedes any prior understandings and agreements among them with
respect to the same.
13.7 WAIVER. The failure of any party hereto to insist upon strict performance
of a covenant or condition in this Agreement will not be a waiver of his right
to demand strict compliance therewith in the future.
13.8 SEVERABILITY. The invalidity or unenforceability of a particular provision
of this Agreement will not affect the other provisions hereof, and the Agreement
will be construed in all respects as if such invalid or unenforceable provisions
were omitted.
13.9 BENEFITS. All benefits payable pursuant to this Agreement will be payable
only from the Policy and only to the extent provided in Policy.
13.10 PARTIES BOUND. This Agreement will be binding upon and inure to the
benefit of the parties hereto, their heirs, legal representatives, successors
and permitted assigns of the parties.
48
13.11 THIRD PARTY BENEFICIARIES. This Agreement does not create, and will not be
construed as creating, any rights enforceable by any person not a party to this
Agreement.
13.12 SECTION HEADINGS. The section headings contained herein are for the
purposes of convenience only, and will not be deemed to constitute a part of
this Agreement or to affect the meaning or interpretation of this Agreement in
any way.
In order to evidence their understanding of and agreement to all the terms
and conditions of this Agreement, the parties have executed multiple copies of
this instrument, each one of which, when signed by all the parties, will be
considered an original.
Date: March 28, 1997.
GREAT FINANCIAL CORPORATION IRREVOCABLE TRUST
By: /S/ PAUL BAKER By: /S/ WILLIAM J. LINTNER, JR.
Title: PRESIDENT Title: TRUSTEE
PNC BANK KENTUCKY, INC.,
TRUSTEE OF THE GFC RABBI TRUST
By: /S/ ANN M. RILEY /S/ RICHARD M. KLAPHEKE
Employee
Title: VICE PRESIDENT
49
GREAT FINANCIAL CORPORATION
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
This Agreement is entered into by and among Great Financial Corporation, a
Delaware corporation ("GFC"), PNC Bank of Kentucky, Inc., as Trustee of the
Great Financial Corporation Rabbi Trust (the "GFC RABBI TRUST"), JAMES F.
STATLER (the "EMPLOYEE"), and RICHARD M. KLAPHEKE as Trustee of the JAMES F.
STATLER Irrevocable Trust.
1. PURPOSES OF AGREEMENT
1.1 GFC is a holding company of which Great Financial Bank, F.S.B., a Federal
savings bank ("GFB"), is an affiliate. Employee is a valuable employee of GFB
and is and will continue to be instrumental to the continued growth and
profitability of both GFB and GFC. As such, both GFB and GFC have insurable
interests in the Policy.
1.2 GFC wishes to retain and encourage Employee to remain in GFB's employ;
therefore, GFC will provide additional employment related benefits to Employee.
Employee would like to obtain additional life insurance death benefit protection
to provide for Employee's family upon Employee's death. The parties have agreed
to obtain and continue to provide life insurance death benefit protection for
Employee.
1.3 GFC is willing to pay all of the premiums due on a life insurance policy
insuring Employee's life subject to the terms and conditions set forth herein.
1.4 The Employee or a Trust established by the Employee for the benefit of
Employee's family will own the life insurance policy acquired pursuant to this
Agreement, and the owner will possess all incidents of ownership in and to the
policy. The policy will be assigned to GFC as collateral to secure the repayment
of GFC's interest in the policy.
1.5 The parties desire to have a full understanding of their mutual and
respective obligations; accordingly, in consideration of their mutual agreements
and covenants contained herein, the parties agree as follows:
2. DEFINITIONS
As used in this Agreement:
2.1 "CAUSE" shall mean only the final, non-appealable conviction of or the
Employee's plea of guilty or nolo contendre to a felony involving fraud,
embezzlement, theft, or dishonesty or other criminal conduct against GFC or GFB.
2.2 "CHANGE IN CONTROL" shall mean the occurrence of any of the following:
2.2(a) during any period of three consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of GFB cease for
any reason to constitute a majority thereof unless the election or nomination
for election of each new Director was approved by a vote of at least two-thirds
of the Board members then still in office who were Board members at the
beginning of the period or who were similarly nominated;
2.2(b) the business of GFB for which Employee's services are
principally performed is disposed of pursuant to a partial or complete
liquidation of GFB, a sale of GFB's assets, or otherwise;
2.2(c) GFB's or GFC's Board of Directors adopts a resolution to the
effect that a Change in Control for purposes of this Agreement has occurred;
2.2(d) an event that would be required to be reported in response to
item 1(a) of the current report on Form 8-K as in effect on the date of this
Agreement, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 occurs;
2.2(e) any "person" (as that term is used in Sections 13(d) or 14(d) of
the Securities Exchange Act or 1934) is or becomes the "beneficial owner" (as
that term is defined in Rule 13d-3 of the Securities Exchange Act of 1934),
directly or indirectly, of GFB's securities representing 20 percent or more of
GFB's outstanding securities except for any securities of GFB purchased by GFB's
employee stock ownership plan and trust.
50
2.2(f) GFB approves, adopts, or otherwise consummates a plan of
reorganization, merger, consolidation, sale of all or substantially all of GFB's
assets or a similar transaction in which GFB is not the surviving entity; or
2.2(g) a change in control that shall have occurred as described in 12
C.F.R. Section 574.4(a) or its successor regulations.
2.3 "COLLATERAL ASSIGNMENT" shall mean the Owner's assignment of the Policy to
GFC as collateral pursuant to the assignment instrument attached hereto as
Exhibit B and incorporated herein by reference.
2.4 "CORPORATE INTEREST" means GFC's interest in the Policy ( as set forth in
Exhibit A, attached hereto and incorporated herein by reference) which GFC is to
receive in the event of a Policy Rollout. Under no circumstances will the
Corporate Interest be less than the cumulative Policy premiums that GFC has
advanced pursuant to this Agreement.
2.5 "DEATH PROCEEDS" shall mean the face amount of the death benefit provided in
the Policy, plus any increase in the death benefit from dividends, cash, or
accumulation value as those terms may be defined in the Policy.
2.6 "ECONOMIC VALUE" means the lower of the PS-58 rate or the Insurer's current
published premium rate for annually renewable term insurance for standard risks,
assuming a death benefit equal to Employee's Death Benefit.
2.7 "EMPLOYEE'S DEATH BENEFIT" shall mean that Employee's death benefit as set
forth in Exhibit A.
2.8 "GFC DEATH BENEFIT" shall mean GFC's death benefit as set forth in Exhibit
A.
2.9 "Insurer" shall mean the insurance company identified in Exhibit A.
2.10 "OWNER" shall mean the Employee or a Trust established for the benefit of
Employee's family, as the case may be.
2.11 "POLICY" shall mean the life insurance policy (identified in Exhibit A) on
the Employee's life.
2.12 "POLICY ROLLOUT" shall mean the procedure by which GFC receives its
Corporate Interest in the Policy and by which the Owner receives its interest in
the Policy in the event this Agreement is terminated for reasons other than the
Employee's death.
2.13 "ROLLOUT AGE" shall mean the end of the policy year in which Employee
reaches insurance age sixty-five.
3. THE POLICY
3.1 APPLICATION FOR INSURANCE. The Owner has obtained the Policy issued by the
Insurer in an initial face amount of One Million One Hundred Eighty Nine
Thousand Eight Hundred Ninety Nine Dollars ($ 1,189,899.00). The parties hereto
have taken all necessary action to cause Insurer to issue the Policy and will
take any additional actions necessary to cause the Policy to comply with this
Agreement's provisions.
3.2 ASSIGNMENT OF POLICY. The Owner has assigned the Policy to GFC pursuant to
the Collateral Assignment, which secures the repayment to GFC of its Corporate
Interest in the Policy arising pursuant to this Agreement. The Owner will file
the Collateral Assignment with the Insurer.
4. POLICY OWNERSHIP
4.1 POLICY OWNERSHIP. The Owner will be the Policy's sole and absolute owner,
including any supplemental riders and endorsements, and may exercise all
ownership rights granted by the Policy's terms, except as otherwise expressly
provided herein.
4.2 GFC'S RIGHTS AND DUTIES. GFC's rights and duties in the Policy will be
limited to the following:
4.2(a) The right to receive the GFC Death Benefit at the Employee's
death;
51
4.2(b) The right to receive its Corporate Interest after a Policy
Rollout, as hereinafter provided;
4.2(c) The right to physical possession of the Policy;
4.2(d) The duty to release the Collateral Assignment after GFC receives
its Corporate Interest; and
4.4(e) The duty to make the Policy reasonably available to the Owner
and Insurer at their request.
4.3 GFC will have no right to borrow against the Policy, except as expressly
permitted herein.
4.4 OWNER'S RIGHTS. As Policy owner, the Owner will retain all other Policy
rights that this Agreement has not expressly granted to GFC, including, but not
limited to, the following:
4.4(a) The right to succeed to full ownership of the Policy's cash
values upon satisfaction of the Corporate Interest following a Policy Rollout;
4.4(b) The right to designate and change the beneficiary(ies) of the
Employee Death Benefit as hereinafter provided;
4.4(c) The right to assign its rights in the Policy.
4.5 Notwithstanding anything in this Agreement to the contrary, the Owner will
have no right to borrow against the Policy before Policy Rollout.
4.6 APPLICATION OF DIVIDENDS. Policy dividends may be used to pay premiums or to
purchase paid-up additional insurance protection.
5. PREMIUM PAYMENTS
5.1 PREMIUM PAYMENTS. On or before each Policy premium's due date, or within the
grace period granted therein, GFC or the GFC Rabbi Trust or both, as the case
may be, will be obligated to pay to the Insurer the Policy premiums (including
the cost associated with all supplemental riders and endorsements) according to
the schedule of planned annual premiums set forth in the Policy. GFC's and the
GFC Rabbi Trust's obligation to pay the aforesaid Policy premiums will continue
in full force and effect, unless GFB terminates Employee's employment for
"Cause."
5.2 CHANGE IN CONTROL. Upon a Change of Control, GFC shall immediately make an
irrevocable contribution to the GFC Rabbi Trust in an amount that is sufficient
to pay all of the then remaining Policy premiums.
5.3 NOTICE TO OWNER. Upon receipt of Owner's written request, GFC will promptly
furnish the Owner evidence of its timely payment of Policy premiums.
5.4 CURRENT TAXATION OF PREMIUMS. Each taxable year, Employee will include in
his or her gross income, for Federal and, if applicable, state income tax
purposes, the Economic Value attributable to the life insurance protection this
Agreement provides for Employee during such taxable year.
6. DEATH BENEFITS
6.1 EMPLOYEE'S DEATH BENEFIT. If Employee dies before Policy Rollout, Employee's
designated beneficiary(ies) set forth in the Policy will be entitled to receive
Employee's Death Benefit shown on Exhibit A or as adjusted because of Policy
dividends or because the assumptions utilized by the Insurer to generate the
values shown on Exhibit A have changed since the date this Agreement was
executed.
6.2 GFC DEATH BENEFIT. If Employee dies before Policy Rollout, GFC will be
entitled to receive the GFC Death Benefit as shown on Exhibit A or as adjusted
because of Policy dividends or because the assumptions utilized by the Insurer
to generate the values shown on Exhibit A have changed since the date this
Agreement was executed.
52
7. TERMINATION OF AGREEMENT
7.1 TERMINATION OF AGREEMENT. This Agreement will terminate, without notice and
without any further action by the parties hereto, upon GFB's termination of the
Employee's employment for "Cause."
7.2 FORFEITURES. Notwithstanding anything in this Agreement to the contrary,
Owner will forfeit all rights to the Policy if GFB terminates Employee's
employment for "Cause," in which case Owner will be required to execute any
document or documents required by Insurer to transfer the policy to GFC.
Notwithstanding the foregoing, Employee will not be deemed to have been
terminated for Cause unless and until there shall have been delivered to
Employee a copy of a resolution duly adopted by GFB's Board of Directors at a
meeting of GFB's Board called and held for that purpose, finding that in the
good faith opinion of GFB's Board, GFB has cause for terminating Employee and
specifying the particulars thereof in detail. Should Employee dispute whether he
was terminated for Cause, then GFB, GFC, and the Employee will enter immediately
into arbitration as provided hereinafter.
8. POLICY ROLLOUT
8.1 TIMES FOR POLICY ROLLOUT. Policy Rollout will occur when the Employee
reaches Rollout Age.
8.2 POLICY ROLLOUT PROCEDURE. To accomplish the Policy Rollout, GFC and the
Owner will apply to Insurer to split the Policy into two separate life insurance
policies. One policy will provide a death benefit for GFC and will have a cash
value equal to GFC's Corporate Interest in such amounts as set forth in Exhibit
A or as adjusted because of Policy dividends or because the assumptions utilized
by the Insurer to generate the values listed on Exhibit A have changed since the
date this Agreement was executed (the "First Policy"). The other policy will
have the remaining cash surrender value and death benefits of the original
Policy, as set forth in Exhibit A or as adjusted if because of Policy dividends
or because the assumptions utilized by the Insurer to generate the values listed
on Exhibit A have changed since the date this Agreement was executed (the
"Second Policy"). Ownership of the First Policy will be transferred to GFC, and
upon receipt of First Policy, GFC will execute all document(s) required by
Insurer to release the Collateral Assignment. The First Policy will be free and
clear of any obligation to Owner, and GFC may, in its sole discretion, hold
First Policy or surrender it for its cash value without notice to or permission
from the Owner. Ownership of the Second Policy will be transferred to Owner and
will be free and clear from any obligations to GFC.
9. ADMINISTRATION AND CLAIMS PROCEDURE
9.1 PLAN ADMINISTRATION. The Compensation Committee of GFB will serve as the
administrator for this Agreement; provided, however, that a member of such
Committee will take no action with respect to his or her own benefit.
9.2 AUTHORITY OF ADMINISTRATOR. The Compensation Committee will have all power
and authority necessary to carry out the provisions of this Agreement. The
Compensation Committee will have the full power to interpret and construe this
Agreement and to delegate administrative duties to such persons as it sees fit.
All costs involved in administration of this Agreement will be borne by GFB.
9.3 CLAIMS. Any person claiming a benefit or requesting an interpretation or
ruling under this Agreement shall present the request in writing to the
Compensation Committee.
9.4 DENIAL OF CLAIMS. The Compensation Committee shall make all determinations
as to the right of any person to a benefit under this Agreement. If any claim is
wholly or partially denied, the claimant shall be notified of such decision
thirty (30) days after the Compensation Committee received the claim. The
Compensation Committee will provide to every claimant who is denied a claim for
benefits written notice setting forth:
9.4(a) The specific reason(s) for the denial;
9.4(b) Specific reference to pertinent provisions of this Agreement
upon which the denial is based;
9.4(c) A description of any additional information necessary for the
claimant to perfect the claim, and an explanation of why such material or
information is necessary; and
53
9.4(d) An explanation of the claim review procedure under this
Agreement.
9.5 REVIEW OF CLAIM. A claimant shall have sixty (60) days following his or her
receipt of the claim denial to file with the Compensation Committee a written
request for GFB's Board of Directors (excluding claimant should claimant then be
serving as a member of the Board of Directors) to review the claim. All such
requests will be written and will state the reason for the claimant's
disagreement with the decision. A claimant's failure to request the Board of
Directors review of the decision within the aforesaid sixty (60) day period will
be deemed a waiver of the claimant's right to reconsideration of the
Compensation Committee's decision. Such failure will not, however, preclude the
claimant from establishing his entitlement at a later date based on additional
information and evidence not available to claimant at the time of the
Compensation Committee's decision. A decision by the Board of Directors will be
made not later than 60 days after its receipt of a request for review. The
claimant will be advised of the Board's decision in writing.
9.6 FINAL DECISION. Should the claimant dispute the Board of Director's decision
about the claimant's entitlement to benefits provided by this Agreement, then
claimant, GFC, and GFB will enter immediately into arbitration as provided
hereinafter.
10. ARBITRATION
10.1 ISSUES TO BE ARBITRATED. The parties agree to submit all disputed issues to
final and binding arbitration; except for those issues requiring extraordinary
relief that may only be obtained by the issuance of a restraining order,
injunction or similar type of equitable relief. A "disputed issue" means any
disagreement in regard to any of the terms and conditions of this Agreement, and
any dispute between the parties concerning their relationships, issues involving
an accounting, and the right to recision, as well as any issues not directly
covered by this Agreement.
10.2 PROHIBITION OF COURT APPEAL. Any dispute, as defined above, and which is
subject to arbitration will not be subject to appeal to any court except to
permit a party to seek court enforcement of any arbitration award rendered
hereunder.
10.3 SELECTION OF ARBITRATOR. If the parties agree to the appointment of a
single arbitrator, then the single arbitrator will determine and decide any
dispute arising hereunder. If the parties cannot agree to the selection of a
single arbitrator, then each party will designate an attorney to serve as an
arbitrator, and the selected attorneys will select an arbitrator, who is a
certified public accountant, to be the third arbitrator. The arbitrator(s) will
establish rules for the conduct of the arbitration consistent with the rules of
the American Arbitration Association, and KRS 417.050 et. seq. The arbitrator(s)
will be impartial and will have no prior or present relationship with any of the
parties. The arbitration hearing and proceedings will take place in the State of
Kentucky, and will be enforceable in the State of Kentucky. The arbitrator(s)
will be empowered to hear, conclusively determine and resolve all claims and
disputes between the parties. Arbitration fees and expenses will be shared
equally by the parties to the arbitration, unless otherwise agreed by the
arbitrator(s).
10.4 CONFIDENTIALITY. The parties agree that all matters to be arbitrated and
the arbitration award will be maintained on a confidential basis. All issues and
the results thereof will not be disclosed by the parties or their
representatives, and the parties and their representatives will not report any
of their proceedings to the public. These provisions will not prohibit any party
from securing witnesses, experts, or other advisors as is necessary in order for
the parties to present their case, etc.
11. AGREEMENT DRAFTED BY GFC'S ATTORNEYS
The parties each acknowledge that GFC's counsel, Lynch, Cox, Gilman & Mahan,
P.S.C., prepared this Agreement at their joint request. The parties consent to
such representation, and they acknowledge that they have been advised that
possible conflicts may exist between them, that each has had an opportunity to
seek the advice of independent counsel, and they have received no
representations from counsel as to the economic fairness and the material
consequences affecting the transactions contemplated by this Agreement. Further,
the parties acknowledge that in the event of any dispute, counsel will represent
the interests of GFC and not any party in opposition thereto.
54
12. NOTICES
Any and all notices, requests, or communications required or permitted to be
given pursuant to this Agreement will be written and signed by the appropriate
party and will be deemed to have been given when delivered personally to the
party to be notified or when deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed as
follows:
To Employee at: 17206 Ash Hill Drive
Louisville, KY. 40245
If applicable, To Trustee at: 329 West Main Street
Suite 1900
Louisville, KY. 40202
To GFC: 329 West Main Street
Suite 1900
Louisville, KY. 40202
Any party may change the address to which such notices, etc. are to be directed
to them, by giving notice to the other party hereto in the manner set forth
above.
13. MISCELLANEOUS PROVISIONS
13.1 INSURER NOT A PARTY. Insurer will be fully discharged from its obligations
under the Policy by payment of the Policy death benefit to the beneficiary(ies)
named in the Policy, subject to the Policy's terms and conditions. Under no
circumstances will Insurer be considered a party to this Agreement or subsequent
modifications or amendments of it, if any. Further, no provision of this
Agreement, or subsequent modifications or amendments of it, will in any way be
construed as varying or otherwise affecting the Insurer's obligations as
expressly provided in the Policy, except insofar as this Agreement's provisions
are made part of the Policy by the Collateral Assignment filed with Insurer in
connection herewith.
13.2 ACKNOWLEDGEMENT REGARDING EXHIBIT A. The parties hereto expressly
acknowledge and agree that the projections and results for the Owner and for GFC
illustrated on Exhibit A represent mere estimates and may be adjusted because of
Policy dividends or because the assumptions utilized by the Insurer to generate
the values shown on Exhibit A have changed since the date this Agreement was
executed.
13.3 MODIFICATION. No change or modification to this Agreement will be valid,
unless in writing and signed by all the parties hereto, or their respective
successors or permitted assigns.
13.4 GOVERNING LAW. This Agreement will be deemed to be made under and will be
construed in accordance with the laws of the State of Kentucky.
13.5 INTERPRETATION. The parties intend that this Agreement be interpreted
consistent with its being a welfare benefit plan for a select group of
management and highly compensated employees.
13.6 ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement between the parties hereto with respect to the matters set forth
herein and supersedes any prior understandings and agreements among them with
respect to the same.
13.7 WAIVER. The failure of any party hereto to insist upon strict performance
of a covenant or condition in this Agreement will not be a waiver of his right
to demand strict compliance therewith in the future.
13.8 SEVERABILITY. The invalidity or unenforceability of a particular provision
of this Agreement will not affect the other provisions hereof, and the Agreement
will be construed in all respects as if such invalid or unenforceable provisions
were omitted.
13.9 BENEFITS. All benefits payable pursuant to this Agreement will be payable
only from the Policy and only to the extent provided in Policy.
55
13.10 PARTIES BOUND. This Agreement will be binding upon and inure to the
benefit of the parties hereto, their heirs, legal representatives, successors
and permitted assigns of the parties.
13.11 THIRD PARTY BENEFICIARIES. This Agreement does not create, and will not be
construed as creating, any rights enforceable by any person not a party to this
Agreement.
13.12 SECTION HEADINGS. The section headings contained herein are for the
purposes of convenience only, and will not be deemed to constitute a part of
this Agreement or to affect the meaning or interpretation of this Agreement in
any way.
In order to evidence their understanding of and agreement to all the terms
and conditions of this Agreement, the parties have executed multiple copies of
this instrument, each one of which, when signed by all the parties, will be
considered an original.
Date: March 28, 1997.
GREAT FINANCIAL CORPORATION IRREVOCABLE TRUST
By: /S/ PAUL BAKER By: /S/ RICHARD M. KLAPHEKE
Title: PRESIDENT Title: TRUSTEE
PNC BANK KENTUCKY, INC.,
TRUSTEE OF THE GFC RABBI TRUST
By: /S/ ANN M. RILEY /S/ JAMES F. STATLER
Employee
Title: VICE PRESIDENT
56