ESSA BANK & TRUST
ENDORSEMENT SPLIT DOLLAR
LIFE INSURANCE AGREEMENT
THIS ENDORSEMENT SPLIT-DOLLAR LIFE INSURANCE AGREEMENT (the "Agreement") is
adopted this 1st day of October, 2008, by and between ESSA Bank & Trust (the
"Bank"), and Allan A. Muto (the "Executive").
The purpose of this Agreement is to retain and reward the Executive, by
dividing the death proceeds of certain life insurance policies which are owned
by the Bank on the life of the Executive with the designated beneficiary of the
Executive. The Bank will pay the life insurance premiums from its general
assets.
Article 1
Definitions
Whenever used in this Agreement, the following terms shall have the
meanings specified:
1.1 "Bank's Interest" means the benefit set forth in Section 2.1.
1.2 "Beneficiary" means each designated person, or the estate of the deceased
Executive, entitled to benefits, if any, upon the death of the Executive.
1.3 "Beneficiary Designation Form" means the form established from time to time
by the Plan Administrator that the Executive completes, signs and returns
to the Plan Administrator to designate one or more Beneficiaries.
1.4 "Board" means the Board of Directors of the Bank as from time to time
constituted.
1.5 "Executive's Interest" means the benefit set forth in Section 2.2.
1.6 "Insurer" means the insurance company issuing the Policy on the life of the
Executive.
1.7 "Net Death Proceeds" means the total death proceeds of the Policy minus the
greater of (i) the cash surrender value or (ii) the aggregate premiums paid
by the Bank.
1.8 "Normal Retirement Age" means the Executive's attainment of age 65.
1.9 "Policy" or "Policies" means the individual insurance policy or policies
adopted by the Bank for purposes of insuring the Executive's life under
this Agreement.
Article 2
Policy Ownership/Interests
2.1 Bank's Interest. The Bank shall own the Policies and shall have the right
to exercise all incidents of ownership, except as limited herein. The Bank
shall be the beneficiary of the remaining death proceeds of the Policies
after the Executive's Interest is determined according to Section 2.2
below.
2.2 Executive's Interest. Upon Executive's death (1) while employed by the
Bank; and (2) prior to Normal Retirement Age, the Executive's Beneficiary
shall be entitled to an amount of death proceeds equal to four times (4X)
current base salary (as defined by the Bank) or 100% of the net-at-risk
insurance portion of the proceeds, whichever is less. The net-at-risk
insurance portion is the total proceeds less the cash value of the Policy.
In no event shall the death benefit hereunder exceed the Net Death Proceeds
of the Policy. The Executive, or the Executive's assignee, shall have the
right to designate the Beneficiary pursuant to the terms of this Agreement.
Upon the earlier of (1) Executive's termination of employment for any
reason; or (2) Executive's attainment of Normal Retirement Age, this
Agreement shall automatically terminate and no death benefit shall be due
hereunder.
2.3 Bank has no Obligation to Pay. Death proceeds payable under this Agreement
shall be paid solely by the Insurer from the proceeds of any Policy(ies) on
the life of the Insured. In no event shall the Bank be obligated to pay a
death benefit under this Agreement from its general funds. Should an
Insurer refuse or be unable to pay death proceeds endorsed to Insured under
the express terms of this Agreement, or should the Bank cancel the
Policy(ies) for any reason, Executive's Beneficiary(ies) shall not be
entitled to a death benefit.
Article 3
Premiums and Imputed Income
3.1 Premium Payment. The Bank shall pay all premiums due on all Policies.
3.2 Economic Benefit. The Bank shall determine the economic benefit
attributable to the Executive based on the life insurance premium factor
for the Executive's age multiplied by the aggregate death benefit payable
to the Beneficiary. The "life insurance premium factor" is the minimum
factor applicable under guidance published pursuant to Treasury Reg. ss.
1.61-22(d)(3)(ii) or any subsequently applicable authority.
3.3 Imputed Income. The Bank shall impute the economic benefit to the Executive
on an annual basis, by adding the economic benefit to the Executive's W-2,
or if applicable, Form 1099.
Article 4
General Limitations
4.3 Suicide or Misstatement. No benefits shall be payable if the Executive
commits suicide during the Policy exclusion period, or if the insurance
company denies coverage (i) for material misstatements of fact made by the
Executive on any application for life insurance purchased by the Bank, or
(ii) for any other reason; provided, however that the Bank shall evaluate
the reason for the denial, and upon advice of legal counsel and in its sole
discretion, consider judicially challenging any denial.
Article 5
Beneficiaries
5.1 Beneficiary. The Executive shall have the right, at any time, to designate
a Beneficiary(ies) to receive any benefits payable under the Agreement upon
the death of the Executive. The Beneficiary designated under this Agreement
may be the same as or different from the beneficiary designation under any
other Agreement of the Bank in which the Executive participates.
5.2 Beneficiary Designation; Change. The Executive shall designate a
Beneficiary by completing and signing the Beneficiary Designation Form, and
delivering it to the Bank or its designated agent. The Executive's
beneficiary designation shall be deemed automatically revoked if the
Beneficiary predeceases the Executive or if the Executive names a spouse as
Beneficiary and the marriage is subsequently dissolved. The Executive shall
have the right to change a Beneficiary by completing, signing and otherwise
complying with the terms of the Beneficiary Designation Form and the Bank's
rules and procedures, as in effect from time to time. Upon the acceptance
by the Bank of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be cancelled. The Bank shall be
entitled to rely on the last Beneficiary Designation Form filed by the
Executive and accepted by the Bank prior to the Executive's death.
5.3 Acknowledgment. No designation or change in designation of a Beneficiary
shall be effective until received, accepted and acknowledged in writing by
the Bank or its designated agent.
5.4 No Beneficiary Designation. If the Executive dies without a valid
designation of beneficiary, or if all designated Beneficiaries predecease
the Executive, then the Executive's surviving spouse shall be the
designated Beneficiary. If the Executive has no surviving spouse, the
benefits shall be made payable to the personal representative of the
Executive's estate.
5.5 Facility of Payment. If the Bank determines in its discretion that a
benefit is to be paid to a minor, to a person declared incompetent, or to a
person incapable of handling the disposition of that person's property, the
Bank may direct payment of such benefit to the guardian, legal
representative or person having the care or custody of such minor,
incompetent person or incapable person. The Bank may require proof of
incompetence, minority or guardianship as it may deem appropriate prior to
distribution of the benefit. Any payment of a benefit shall be a payment
for the account of the Executive and the Executive's Beneficiary, as the
case may be, and shall be a complete discharge of any liability under the
Agreement for such payment amount.
Article 6
Assignment
The Executive may irrevocably assign without consideration all of the
Executive's Interest in this Agreement to any person, entity, or trust. In the
event the Executive shall transfer all of the Executive's Interest, then all of
the Executive's Interest in this Agreement shall be vested in the Executive's
transferee, who shall be substituted as a party hereunder, and the Executive
shall have no further interest in this Agreement.
Article 7
Insurer
The Insurer shall be bound only by the terms of its given Policy. The
Insurer shall not be bound by or deemed to have notice of the provisions of this
Agreement. The Insurer shall have the right to rely on the Bank's
representations with regard to any definitions, interpretations or Policy
interests as specified under this Agreement.
Article 8
Claims And Review Procedure
8.1 Claims Procedure. The Executive or Beneficiary ("claimant") who has not
received benefits under the Agreement that he or she believes should be
paid shall make a claim for such benefits as follows:
8.1.1 Initiation - Written Claim. The claimant initiates a claim by
submitting to the Bank a written claim for the benefits.
8.1.2 Timing of Bank Response. The Bank shall respond to such claimant
within 90 days after receiving the claim. If the Bank determines that
special circumstances require additional time for processing the
claim, the Bank can extend the response period by an additional 90
days by notifying the claimant in writing, prior to the end of the
initial 90-day period, that an additional period is required. The
notice of extension must set forth the special circumstances and the
date by which the Bank expects to render its decision.
8.1.3 Notice of Decision. If the Bank denies part or all of the claim, the
Bank shall notify the claimant in writing of such denial. The Bank
shall write the notification in a manner calculated to be understood
by the claimant. The notification shall set forth:
(a) The specific reasons for the denial;
(b) A reference to the specific provisions of the Agreement on which
the denial is based;
(c) A description of any additional information or material necessary
for the claimant to perfect the claim and an explanation of why
it is needed;
(d) An explanation of the Agreement's review procedures and the time
limits applicable to such procedures; and (e) A statement of the
claimant's right to bring a civil action under ERISA Section
502(a) following an adverse benefit determination on review.
8.2 Review Procedure. If the Bank denies part or all of the claim, the claimant
shall have the opportunity for a full and fair review by the Bank of the
denial, as follows:
8.2.1 Initiation - Written Request. To initiate the review, the claimant,
within 60 days after receiving the Bank's notice of denial, must file
with the Bank a written request for review.
8.2.2 Additional Submissions - Information Access. The claimant shall then
have the opportunity to submit written comments, documents, records
and other information relating to the claim. The Bank shall also
provide the claimant, upon request and free of charge, reasonable
access to, and copies of, all documents, records and other information
relevant (as defined in applicable ERISA regulations) to the
claimant's claim for benefits.
8.2.3 Considerations on Review. In considering the review, the Bank shall
take into account all materials and information the claimant submits
relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.
8.2.4 Timing of Bank's Response. The Bank shall respond in writing to such
claimant within 60 days after receiving the request for review. If the
Bank determines that special circumstances require additional time for
processing the claim, the Bank can extend the response period by an
additional 60 days by notifying the claimant in writing, prior to the
end of the initial 60-day period, that an additional period is
required. The notice of extension must set forth the special
circumstances and the date by which the Bank expects to render its
decision.
8.2.5 Notice of Decision. The Bank shall notify the claimant in writing of
its decision on review. The Bank shall write the notification in a
manner calculated to be understood by the claimant. The notification
shall set forth:
(a) The specific reasons for the denial;
(b) A reference to the specific provisions of the Agreement on which
the denial is based;
(c) A statement that the claimant is entitled to receive, upon
request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant (as defined
in applicable ERISA regulations) to the claimant's claim for
benefits; and
(d) A statement of the claimant's right to bring a civil action under
ERISA Section 502(a).
Article 9
Amendments and Termination
This Agreement may be amended or terminated unilaterally by the Bank for any
reason.
Article 10
Administration
10.1 Plan Administrator Duties. This Agreement shall be administered by a Plan
Administrator which shall consist of the Board, or such committee or
persons as the Board may choose. The Plan Administrator shall also have the
discretion and authority to (i) make, amend, interpret and enforce all
appropriate rules and regulations for the administration of this Agreement
and (ii) decide or resolve any and all questions including interpretations
of this Agreement, as may arise in connection with this Agreement.
10.2 Agents. In the administration of this Agreement, the Plan Administrator may
employ agents and delegate to them such administrative duties as it sees
fit, (including acting through a duly appointed representative), and may
from time to time consult with counsel who may be counsel to the Bank.
10.3 Binding Effect of Decisions. The decision or action of the Plan
Administrator with respect to any question arising out of or in connection
with the administration, interpretation and application of this Agreement
and the rules and regulations promulgated hereunder shall be final and
conclusive and binding upon all persons having any interest in this
Agreement.
10.4 Indemnity of Plan Administrator. The Bank shall indemnify and hold harmless
the members of the Plan Administrator against any and all claims, losses,
damages, expenses or liabilities arising from any action or failure to act
with respect to this Agreement, except in the case of willful misconduct by
the Plan Administrator or any of its members.
10.5 Information. To enable the Plan Administrator to perform its functions, the
Bank shall supply full and timely information to the Plan Administrator on
all matters relating to the date and circumstances of termination or death
of the Executive, and such other pertinent information as the Plan
Administrator may reasonably require.
Article 11
Miscellaneous
11.1 Binding Effect. This Agreement shall bind the Executive and the Bank, their
beneficiaries, survivors, executors, administrators and transferees and any
Beneficiary.
11.2 No Guarantee of Employment. This Agreement is not an employment policy or
contract. It does not give the Executive the right to remain an Executive
of the Bank, nor does it interfere with the Bank's right to discharge the
Executive. It also does not require the Executive to remain an Executive
nor interfere with the Executive's right to terminate employment at any
time.
11.3 Applicable Law. The Agreement and all rights hereunder shall be governed by
and construed according to the laws of the state where the principal
offices of the Bank reside, except to the extent preempted by the laws of
the United States of America.
11.4 Notice. Any notice or filing required or permitted to be given to the Bank
under this Agreement shall be sufficient if in writing and hand-delivered,
or sent by registered or certified mail, to the address below:
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Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark or the
receipt for registration or certification.
Any notice or filing required or permitted to be given to the Executive
under this Agreement shall be sufficient if in writing and hand-delivered,
or sent by mail, to the last known address of the Executive.
11.5 Entire Agreement. This Agreement, along with the Executive's Beneficiary
Designation Form, constitutes the entire agreement between the Bank and the
Executive as to the subject matter hereof. No rights are granted to the
Executive under this Agreement other than those specifically set forth
herein.
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
set forth below.
ESSA BANK & TRUST
9-30-2008 By: /s/ Gary S. Olson
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Date
9-30-2008 /s/ Allan A. Muto
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Date Executive