Exhibit 10.5
OGDENSBURG FEDERAL SAVINGS & LOAN ASSOCIATION
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Employment Agreement with
Todd R. Mashaw
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AGREEMENT entered into and effective this ________ day of _______________,
199_, by and between Ogdensburg Federal Savings & Loan Association (the
"Association") and Todd R. Mashaw (the "Employee").
WHEREAS, the Employee has heretofore been employed by the Association as
its President and is experienced in all phases of the business of the
Association; and
WHEREAS, the Board of Directors (the "Board") of the Association believes
it is in the best interests of the Association to enter into this Agreement with
the Employee in order to assure continuity of management of the Association and
to reinforce and encourage the continued attention and dedication of the
Employee to his assigned duties; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Association and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Defined Terms
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When used anywhere in this Agreement, the following terms shall have the
meaning set forth herein.
(a) "Change in Control" shall mean any one of the following events:
(i) the acquisition of ownership, holding or power to vote more than 25% of the
voting stock of the Association or the Company, (ii) the acquisition of the
ability to control the election of a majority of the Association's or the
Company's directors, (iii) the acquisition of a controlling influence over the
management or policies of the Association or of the Company by any person or by
persons acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934), or (iv) during any period of two consecutive
years, individuals (the "Continuing Directors") who at the beginning of such
period constitute the Board of Directors of the Association or of the Company
(the "Existing Board") cease for any reason to constitute at least two-thirds
thereof, provided that any individual whose election or nomination for election
as a member of the Existing Board was approved by a vote of at least two-thirds
of the Continuing Directors then in office shall be considered a Continuing
Director. Notwithstanding the foregoing, the Company's ownership of the
Association shall not of itself constitute a Change in Control for purposes of
the Agreement.
For purposes of this paragraph only, the term "person" refers to an individual
or a corporation, partnership, trust, association, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization or any other form of
entity not specifically listed herein.
(b) "Company" shall mean [Holding Company]
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and regulations
in effect from time to time.
(d) "Code '280G Maximum" shall mean the product of 2.99 and the
Employee's "base amount" as defined in Code '280G(b)(3).
(e) "Disability" shall mean a physical or mental infirmity which
impairs the Employee's ability to substantially perform his duties under this
Agreement and which results in the Employee becoming eligible for long-term
disability benefits under the Association's long-term disability plan (or, if
the Association has no such plan in effect, which impairs the Employee's ability
to substantially perform his duties under this Agreement for a period of 180
consecutive days).
(f) "Effective Date" shall mean the date referenced in the opening
paragraph of this Agreement.
(g) "Good Reason" shall mean any of the following events, which has
not been consented to in advance by the Employee in writing: (i) the requirement
that the Employee move his personal residence, or perform his principal
executive functions, more than 30 miles from his primary office as of the later
of the Effective Date and the most recent voluntary relocation by the Employee;
(ii) a material reduction in the Employee's base compensation under this
Agreement as the same may be increased from time to time; (iii) the failure by
the Association or the Company to continue to provide the Employee with
compensation and benefits provided under this Agreement as the same may be
increased from time to time, or with benefits substantially similar to those
provided to him under any of the employee benefit plans in which the Employee
now or hereafter becomes a participant, or the taking of any action by the
Association or the Company which would directly or indirectly reduce any of such
benefits or deprive the Employee of any material fringe benefit enjoyed by him
under this Agreement; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his
position; (v) a failure to reelect the Employee to the Board of Directors of the
Association or the Company, if the Employee has served on such Board at any time
during the term of the Agreement; or (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with his employment with the Association.
(h) "Just Cause" shall mean, in the good faith determination of the
Association's Board of Directors, the Employee's personal dishonesty,
incompetence, willful misconduct, breach
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of fiduciary duty involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final cease-and-desist order, or
material breach of any provision of this Agreement. The Employee shall have no
right to receive compensation or other benefits for any period after termination
for Just Cause. No act, or failure to act, on the Employee's part shall be
considered "willful" unless he has acted, or failed to act, with an absence of
good faith and without a reasonable belief that his action or failure to act was
in the best interest of the Association and the Company.
(i) "Protected Period" shall mean the period that begins on the date
six months before a Change in Control and ends on the later of the first annual
anniversary of the Change in Control or the expiration date of this Agreement.
(j) "Trust" shall mean a grantor trust that is designed in accordance
with Revenue Procedure 92-64 and has a trustee independent of the Association
and the Company.
2. Employment. The Employee is employed as the President of the
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Association. The Employee shall render such administrative and management
services for the Association as are currently rendered and as are customarily
performed by persons situated in a similar executive capacity. The Employee
shall also promote, by entertainment or otherwise, as and to the extent
permitted by law, the business of the Association. The Employee's other duties
shall be such as the Board may from time to time reasonably direct, including
normal duties as an officer of the Association.
3. Base Compensation. The Association agrees to pay the Employee during
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the term of this Agreement a salary at the rate of $__________________ per
annum, payable in cash not less frequently than monthly. The Board shall
review, not less often than annually, the rate of the Employee's salary, and in
its sole discretion may decide to increase his salary.
4. Discretionary Bonuses. The Employee shall participate in an equitable
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manner with all other senior management employees of the Association in
discretionary bonuses that the Board may award from time to time to the
Association's senior management employees. No other compensation provided for
in this Agreement shall be deemed a substitute for the Employee's right to
participate in such discretionary bonuses.
5. Participation in Retirement, Medical and Other Plans.
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(a) The Employee shall be eligible to participate in any of the
following plans or programs that the Association may now or in the future
maintain: group hospitalization, disability, health, dental, sick leave, life
insurance, travel and/or accident insurance, auto allowance/auto lease,
retirement, pension, and/or other present or future qualified or nonqualified
plans provided by the Association, generally which benefits, taken as a whole,
must be at least as favorable as those in effect on the Effective Date.
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(b) The Employee shall also be eligible to participate in any fringe
benefits which are or may become available to the Association's senior
management employees, including for example: any stock option or incentive
compensation plans, and any other benefits which are commensurate with the
responsibilities and functions to be performed by the Employee under this
Agreement. The Employee shall be reimbursed for all reasonable out-of-pocket
business expenses which he shall incur in connection with his services under
this Agreement upon substantiation of such expenses in accordance with the
policies of the Association.
6. Term. The Association hereby employs the Employee, and the Employee
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hereby accepts such employment under this Agreement, for the period commencing
on the Effective Date and ending 36 months thereafter (or such earlier date as
is determined in accordance with Section 10 or 12 hereof). Additionally, on
each annual anniversary date from the Effective Date, the Employee's term of
employment shall be extended for an additional one-year period beyond the then
effective expiration date, provided the Board determines in a duly adopted
resolution that the performance of the Employee has met the Board's requirements
and standards, and that this Agreement shall be extended. Only those members of
the Board of Directors who have no personal interest in this Employment
Agreement shall discuss and vote on the approval and subsequent review of this
Agreement.
7. Loyalty; Noncompetition.
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(a) During the period of his employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all his full business time, attention, skill, and efforts
to the faithful performance of his duties hereunder; provided, however, from
time to time, the Employee may serve on the boards of directors of, and hold any
other offices or positions in, companies or organizations, which will not
present any conflict of interest with the Association or any of its subsidiaries
or affiliates, or unfavorably affect the performance of the Employee's duties
pursuant to this Agreement, or will not violate any applicable statute or
regulation. "Full business time" is hereby defined as that amount of time
usually devoted to like companies by similarly situated executive officers.
During the term of his employment under this Agreement, the Employee shall not
engage in any business or activity contrary to the business affairs or interests
of the Association.
(b) Nothing contained in this Section shall be deemed to prevent or
limit the Employee's right to invest in the capital stock or other securities of
any business dissimilar from that of the Association, or, solely as a passive or
minority investor, in any business.
8. Standards. The Employee shall perform his duties under this Agreement
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in accordance with such reasonable standards as the Board may establish from
time to time. The Association will provide the Employee with the working
facilities and staff customary for similar executives and necessary for him to
perform his duties.
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9. Vacation and Sick Leave. At such reasonable times as the Board shall
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in its discretion permit, the Employee shall be entitled, without loss of pay,
to absent himself voluntarily from the performance of his employment under this
Agreement, all such voluntary absences to count as vacation time, provided that:
(a) The Employee shall be entitled to an annual vacation in accordance
with the policies that the Board periodically establishes for senior management
employees of the Association.
(b) The Employee shall not receive any additional compensation from
the Association on account of his failure to take a vacation or sick leave, and
the Employee shall not accumulate unused vacation or sick leave from one fiscal
year to the next, except in either case to the extent authorized by the Board.
(c) In addition to the aforesaid paid vacations, the Employee shall be
entitled without loss of pay, to absent himself voluntarily from the performance
of his employment with the Association for such additional periods of time and
for such valid and legitimate reasons as the Board may in its discretion
determine. Further, the Board may grant to the Employee a leave or leaves of
absence, with or without pay, at such time or times and upon such terms and
conditions as such Board in its discretion may determine.
(d) In addition, the Employee shall be entitled to an annual sick
leave benefit as established by the Board.
10. Termination and Termination Pay. Subject to Section 12 hereof, the
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Employee's employment hereunder may be terminated under the following
circumstances:
(a) Death. The Employee's employment under this Agreement shall
terminate upon his death during the term of this Agreement, in which event the
Employee's estate shall be entitled to receive the compensation due the Employee
through the last day of the calendar month in which his death occurred.
(b) Disability. (1) The Association may terminate the Employee's
employment after having established the Employee's Disability, in which event
the Employee shall be entitled to the compensation and benefits provided for
under this Agreement for (i) any period during the term of this Agreement and
prior to the establishment of the Employee's Disability during which the
Employee is unable to work due to the physical or mental infirmity, and (ii) any
period of Disability which is prior to the Employee's termination of employment
pursuant to this Section 10(b); provided that any benefits paid pursuant to the
Association's long term disability plan will continue as provided in such plan
without reduction for payments made pursuant to this Agreement.
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(2) During any period that the Employee shall receive disability
benefits and to the extent that the Employee shall be physically and mentally
able to do so, he shall furnish such information, assistance and documents so as
to assist in the continued ongoing business of the Association and, if able,
shall make himself available to the Association to undertake reasonable
assignments consistent with his prior position and his physical and mental
health. The Association shall pay all reasonable expenses incident to the
performance of any assignment given to the Employee during the disability
period.
(c) Just Cause. The Board may, by written notice to the Employee,
immediately terminate his employment at any time, for Just Cause. The Employee
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause.
(d) Without Just Cause; Constructive Discharge. The Board may, by
written notice to the Employee, immediately terminate his employment at any time
for a reason other than his Disability or Just Cause, in which event the
Employee shall be entitled to receive the salary provided pursuant to Section 3
hereof, up to the expiration date of this Agreement, including any renewal term
(the "Expiration Date"), plus said salary for an additional 12-month period
(unless such termination occurs during the Protected Period, in which event the
benefits and compensation provided for in Section 12 shall apply).
All amounts payable to the Employee shall be paid, at the option of the
Employee, either (I) in periodic payments, through the Expiration Date, or (II)
in one lump sum within ten days of such termination.
(e) Good Reason. The Employee shall be entitled to receive the
compensation and benefits payable under subsection 10(d) hereof in the event
that the Employee voluntarily terminates employment within 90 days of an event
that constitutes Good Reason, (unless such voluntary termination occurs during
the Protected Period, in which event the benefits and compensation provided for
in Section 12 shall apply).
(f) Termination or Suspension Under Federal Law. (1) If the Employee
is removed and/or permanently prohibited from participating in the conduct of
the Association's affairs by an order issued under Sections 8(e)(4) or 8(g)(1)
of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C. 1818(e)(4) and (g)(1)),
all obligations of the Association under this Agreement shall terminate, as of
the effective date of the order, but vested rights of the parties shall not be
affected.
(2) If the Association is in default (as defined in Section
3(x)(1) of FDIA), all obligations under this Agreement shall terminate as of the
date of default; however, this Paragraph shall not affect the vested rights of
the parties.
(3) If a notice served under Section 8(e)(3) or (g)(1) of the
FDIA (12 U.S.C. 1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits the
Employee from
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participating in the conduct of the Association's affairs, the Association's
obligations under this Agreement shall be suspended as of the date of such
service, unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Association may in its discretion (i) pay the Employee all or
part of the compensation withheld while its contract obligations were suspended,
and (ii) reinstate (in whole or in part) any of its obligations which were
suspended.
(4) Any payments made to the Employee pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with both 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder,
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and Regulatory Bulletin 27A, but only to the extent required thereunder on the
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date any payment is required pursuant to this Agreement.
(g) Voluntary Termination by Employee. Subject to Section 12 hereof,
the Employee may voluntarily terminate employment with the Association during
the term of this Agreement, upon at least 90 days' prior written notice to the
Board of Directors, in which case the Employee shall receive only his
compensation, vested rights and employee benefits up to the date of his
termination (unless such termination occurs pursuant to Section 10(d) hereof or
within the Protected Period, in Section 12(a) hereof, in which event the
benefits and compensation provided for in Sections 10(d) or 12, as applicable,
shall apply).
11. No Mitigation. The Employee shall not be required to mitigate the
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amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.
12. Change in Control.
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(a) Trigger Events. The Employee shall be entitled to collect the
severance benefits set forth in Subsection (b) hereof in the event that either
(i) the Employee voluntarily terminates employment for any reason within the 30-
day period beginning on the date of a Change in Control, (ii) the Employee
voluntarily terminates employment within 90 days of an event that both occurs
during the Protected Period and constitutes Good Reason, or (iii) the
Association or the Company or their successor(s) in interest terminate the
Employee's employment without his written consent and for any reason other than
Just Cause during the Protected Period.
(b) Amount of Severance Benefit. If the Employee becomes entitled to
collect severance benefits pursuant to Section 12(a) hereof, the Association
shall:
(i) pay the Employee a severance benefit equal to the difference
between the Code '280G Maximum and the sum of any other "parachute
payments" as defined under Code '280G(b)(2) that the Employee receives
on account of the Change in Control, and
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(ii) pay for long-term disability and provide such medical
benefits as are available to the Employee under the provisions of
COBRA, for eighteen (18) months (or such longer period, up to 24
months, if COBRA is amended).
The amount payable under this Section 12(b) shall be paid either (i) in one
lump sum within ten days of the later of the date of the Change in Control and
the Employee's last day of employment with the Association or the Company, or
(ii) if prior to the date which is 90 days before the date on which a Change in
Control occurs, the Employee filed a duly executed irrevocable written election
in the form attached hereto as Exhibit "A", payment of such amount shall be made
according to the elected schedule. Deferred amounts shall bear interest from
the date on which they would otherwise be payable until the date paid at a rate
equal to 120% of the applicable federal rate, compounded semiannually, as
determined under Code Section 1274(d) and the regulations thereunder.
In the event that the Employee, the Association, and the Company jointly
agree that the Employee has collected an amount exceeding the Code '280G
Maximum, the parties may agree in writing that such excess shall be treated as a
loan ab initio, which the Employee shall repay to the Association, on terms and
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conditions mutually agreeable to the parties, together with interest at the
applicable federal rate provided for in Section 7872(f)(2)(B) of the Code.
(c) Funding of Grantor Trust upon Change in Control. Not later than
ten business days after a Change in Control, the Association shall (i) deposit
in a Trust an amount equal to the Code '280G Maximum, unless the Employee has
previously provided a written release of any claims under this Agreement, and
(ii) provide the trustee of the Trust with a written direction to hold said
amount and any investment return thereon in a segregated account for the benefit
of the Employee, and to follow the procedures set forth in the next paragraph as
to the payment of such amounts from the Trust.
During the 15-consecutive month period after a Change in Control, the
Employee may provide the trustee of the Trust with a written notice directing
the trustee to pay to Employee an amount designated in the notice as being
payable pursuant to this Agreement. Within three business days after receiving
said notice, the trustee of the Trust shall pay such amount to the Employee, and
coincidentally shall provide the Association or its successor with notice of
such payment. Upon the earlier of the Trust's final payment of all amounts due
under the preceding paragraph or the date 15 months after the Change in Control
of the Association, the trustee of the Trust shall pay to the Association the
entire balance remaining in the segregated account maintained for the benefit of
the Employee. The Employee shall thereafter have no further interest in the
Trust.
13. Indemnification. The Association and the Company agree that their
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respective Bylaws shall continue to provide for indemnification of directors,
officers, employees and agents of the Association and the Company, including the
Employee during the full term of this Agreement, and to at all times provide
adequate insurance for such purposes.
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14. Reimbursement of Employee for Enforcement Proceedings. In the event
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that any dispute arises between the Employee and the Association as to the terms
or interpretation of this Agreement, whether instituted by formal legal
proceedings or otherwise, including any action that the Employee takes to defend
against any action taken by the Association or the Company, the Employee shall
be reimbursed for all costs and expenses, including reasonable attorneys' fees,
arising from such dispute, proceedings or actions, provided that the Employee
obtains either a written settlement or a final judgement by a court of competent
jurisdiction substantially in his favor. Such reimbursement shall be paid
within ten days of the Employee's furnishing to the Association written
evidence, which may be in the form, among other things, of a canceled check or
receipt, of any costs or expenses incurred by the Employee.
15. Federal Income Tax Withholding. The Association may withhold all
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federal and state income or other taxes from any benefit payable under this
Agreement as shall be required pursuant to any law or government regulation or
ruling.
16. Successors and Assigns.
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(a) Association. This Agreement shall not be assignable by the
Association, provided that this Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the Association which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Association.
(b) Employee. Since the Association is contracting for the unique and
personal skills of the Employee, the Employee shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the written
consent of the Association; provided, however, that nothing in this paragraph
shall preclude (i) the Employee from designating a beneficiary to receive any
benefit payable hereunder upon his death, or (ii) the executors, administrators,
or other legal representatives of the Employee or his estate from assigning any
rights hereunder to the person or persons entitled thereunto.
(c) Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to exclusion, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
17. Amendments. No amendments or additions to this Agreement shall be
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binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
18. Applicable Law. Except to the extent preempted by federal law, the
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laws of the State of New York shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
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19. Severability. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
20. Entire Agreement. This Agreement, together with any understanding or
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modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto and shall supersede any prior
agreement between the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.
OGDENSBURG FEDERAL SAVINGS
& LOAN ASSOCIATION
Witnessed by:
By:
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Secretary Its Chairman of the Board
Witnessed by:
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Todd R. Mashaw
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EXHIBIT "A"
OGDENSBURG FEDERAL SAVINGS & LOAN ASSOCIATION
EMPLOYMENT AGREEMENT
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DEFERRED PAYMENT ELECTION FORM
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AGREEMENT, made this ____ day of ________, 19__, by and between _________
(the "Employee") and Ogdensburg Federal Savings & Loan Association (the
"Association") with respect to payment of severance compensation to the Employee
pursuant to Section 12(b) of his employment agreement ("Agreement") with the
Association dated _______, 199__.
NOW THEREFORE, it is mutually agreed as follows:
1. Form of Payment. The Employee, by the execution hereof, in accordance
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with Section 12(b) of the Agreement, elects to have his change in control
severance benefits (plus earnings thereon) distributed in cash as follows:
[_] in one lump sum payment.
[_] in substantially equal annual payments over a period of _____ years
(no more than 10).
2. In the event of the Employee's death, his benefits shall be
distributed --
[_] in one lump sum payment.
[_] in accordance with the payment schedule selected in paragraph 1
hereof (with payments made as though the Employee survived to
collect all benefits, and as though the Employee terminated service
on the date of his death, if payments had not already begun).
3. Designation of Beneficiary. In the event of the Employee's death
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before he has collected all of the benefits payable pursuant to the Agreement
and this election, any such benefits payable shall be distributed to the
beneficiary or beneficiaries designated under subparagraphs a and b of this
paragraph 3 in the manner elected pursuant to paragraph 2 above:
Employment Agreement
Deferred Payment Election Form
Page 2
a. Primary Beneficiary. The Employee hereby designates the person(s)
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named below to be his primary beneficiary and to receive the balance of any
unpaid benefits under the Agreement:
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Name of Mailing Address Percentage of
Primary Beneficiary Death Benefit
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%
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%
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b. Contingent Beneficiary. In the event that the primary beneficiary or
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beneficiaries named above are not living at the time of the Employee's death,
the Employee hereby designates the following person(s) to be his contingent
beneficiary for purposes of the Agreement:
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Name of Percentage of
Contingent Beneficiary Mailing Address Death Benefit
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%
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%
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4. Effect of Election. The elections made in paragraph 1 hereof shall
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become irrevocable 90 days prior to the change in control. The Employee may, by
submitting an effective superseding Deferred Payment Election Form at any time
and from time to time, prospectively change the beneficiary designation and the
manner of payment to a beneficiary. Such elections shall, however, become
irrevocable upon the Employee's death.
5. Commitments. The Association agrees to make payment of all amounts due
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the Employee in accordance with the terms of the Agreement and the elections
made by the Employee herein.
Employment Agreement
Deferred Payment Election Form
Page 3
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the
day and year first above-written.
EMPLOYEE
Witnessed by:
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Todd R. Mastaw
OGDENSBURG FEDERAL SAVINGS
& LOAN ASSOCIATION
Witnessed by:
By
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Secretary Its Chairman of the Board