-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E+O9E7UxBYtWiJAvphEa57WnTgkZZayVmPhkHs35nLJQ9DPrPGrlA2rJQKu4XvwA 19XtbXoAmtwsuGW5Vp8tvw== 0000943374-08-001520.txt : 20081006 0000943374-08-001520.hdr.sgml : 20081006 20081006114208 ACCESSION NUMBER: 0000943374-08-001520 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20080930 ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20081006 DATE AS OF CHANGE: 20081006 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ESSA Bancorp, Inc. CENTRAL INDEX KEY: 0001382230 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 000000000 STATE OF INCORPORATION: PA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-33384 FILM NUMBER: 081108601 BUSINESS ADDRESS: STREET 1: 200 PALMER STREET CITY: STROUDSBURG STATE: PA ZIP: 18360 BUSINESS PHONE: (570) 421-0531 MAIL ADDRESS: STREET 1: 200 PALMER STREET CITY: STROUDSBURG STATE: PA ZIP: 18360 8-K 1 form8k_100608.txt FORM 8-K 409A REVISIONS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 30, 2008 ESSA BANCORP, INC. ------------------ (Exact name of Registrant as specified in its charter) Pennsylvania 001-33384 20-8023072 ------------- --------- ---------- (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 200 Palmer Street, Stroudsburg, PA 18360 ---------------------------------------- (Address of principal executive offices) (570)-421-0531 -------------- Registrant's telephone number, including area code Not Applicable -------------- (Former Name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. (a) Not applicable. (b) Not applicable. (c) Not applicable. (d) Not applicable. (e) Amended and Restated Employment Agreements. On September 30, 2008, ESSA Bank & Trust (the "Bank") a wholly-owned subsidiary of ESSA Bancorp, Inc. (the "Company"), entered into amended and restated employment agreements with Gary S. Olson, Robert S. Howes, Allan A. Muto, Diane K. Reimer, and V. Gail Warner (the "Employment Agreements"). The agreements were revised to comply with the requirements of Section 409A of the Internal Revenue Code. Supplemental Executive Retirement Plan. On September 30, 2008, the Bank adopted the Supplemental Executive Retirement Plan (the "Plan"), which consolidates, supersedes and replaces the individual executive salary continuation agreements entered into by and between the Bank and Mr. Olson, Mr. Howes, and Ms. Reimer. The Plan was drafted to comply with the requirements of Section 409A of the Internal Revenue Code. Split Dollar Agreements. On September 30, 2008, the Bank and each of Mr. Olson, Mr. Muto, Mr. Howes, Ms. Reimer and Ms. Warner entered into split dollar life insurance agreements, effective October 1, 2008. These agreements pertain to Bank-owned life insurance policies which have been in place for several years. Accordingly, we will not incur any additional expense as a result of entering into the agreements. Item 9.01. Financial Statements and Exhibits. (a) Financial Statements of Businesses Acquired: None (b) Pro Forma Financial Information: None (c) Shell company transactions: None (d) Exhibits: Exhibit Number Description -------------- ----------- Exhibit 10.1 Amended and Restated Employment Agreement for Gary S. Olson 2 Exhibit 10.2 Amended and Restated Employment Agreement for Robert S. Howes Exhibit 10.3 Amended and Restated Employment Agreement for Allan A. Muto Exhibit 10.4 Amended and Restated Employment Agreement for Diane K. Reimer Exhibit 10.5 Amended and Restated Employment Agreement for V. Gail Warner Exhibit 10.6 Supplemental Executive Retirement Plan Exhibit 10.7 Endorsement Split Dollar Life Insurance Agreement for Gary S. Olson Exhibit 10.8 Endorsement Split Dollar Life Insurance Agreement for Robert S. Howes Exhibit 10.9 Endorsement Split Dollar Life Insurance Agreement for Allan A. Muto Exhibit 10.10 Endorsement Split Dollar Life Insurance Agreement for Diane K. Reimer Exhibit 10.11 Endorsement Split Dollar Life Insurance Agreement for V. Gail Warner 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ESSA BANCORP, INC. Date: 9/30/2008 By: /s/ Gary S. Olson ----------------------------- ------------------------------ Gary S. Olson President and Chief Executive Officer (Duly Authorized Representative) 4 EX-10.4 2 exh104_100608.txt AMENDED AND RESTATED EMPLOYMENT AGREEMENT - REIMER AMENDED AND RESTATED EMPLOYMENT AGREEMENT This Amended and Restated Employment Agreement (the "Agreement") is made effective as of September 30, 2008 (the "Effective Date"), by and between ESSA Bank & Trust, a Pennsylvania chartered stock savings association with its principal office in Stroudsburg, Pennsylvania (the "Bank"), and Diane K. Reimer ("Executive"). Any reference to the "Company" shall mean ESSA Bancorp, Inc., a stock holding company which owns 100% of the common stock of the Bank. WHEREAS, the Executive is currently employed as Vice President, Delivery Systems Division of the Bank pursuant to an employment agreement that was effective March 31, 2007 (the "Original Agreement"); and WHEREAS, the Bank desires to amend and restate the Original Agreement in order to make changes to comply with the final regulations issued under Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), in April, 2007; and WHEREAS, Executive is willing to serve the Bank on the terms and conditions hereinafter set forth and has agreed to such changes; and WHEREAS, the Board of Directors of the Bank and the Executive believe it is in the best interests of the Bank to enter into the Agreement in order to reinforce and reward the Executive for her service and dedication to the continued success of the Bank and incorporate the changes required by the final regulations under Code Section 409A. NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows: 1. POSITION AND RESPONSIBILITIES. During the period of her employment hereunder, Executive agrees to serve as Vice President, Delivery Systems Division of the Bank (the "Executive Position"). Executive shall be responsible for the overall management of the Bank's administrative services functions, and shall be responsible for establishing the business objectives, policies and strategic plans in conjunction with the Chief Executive Officer (the "CEO"). 2. TERM AND DUTIES. (a) Two Year Contract; Annual Renewal. Executive's period of employment with the Bank ("Employment Period") shall begin on the Effective Date and shall renew on each anniversary date thereafter, until the date that the Bank gives Executive written notice of non-renewal ("Non-Renewal Notice"). The Employment Period shall end on the date that is twenty-four (24) months after the date of the Non-Renewal Notice, unless the parties agree that the Employment Period shall end on an earlier date. Notwithstanding the foregoing, all changes to the Agreement intended to comply with Code Section 409A shall be retroactively effective to March 31, 2007; then provided further that no retroactive change shall affect the compensation or benefits previously provided to the Executive. (b) Annual Performance Evaluation. On either a fiscal year or calendar year basis, (consistently applied from year to year), the Bank shall conduct an annual evaluation of Executive's performance. The annual performance evaluation proceedings shall be included in the minutes of the Board meeting that next follows such annual performance review. (c) Continued Employment Following Termination of Employment Period. Nothing in this Agreement shall mandate or prohibit a continuation of Executive's employment following the expiration of the Employment Period upon such terms and conditions as the Bank and Executive may mutually agree. (d) Duties; Membership on Other Boards. During the Employment Period, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence approved by the CEO, Executive shall devote substantially all her business time, attention, skill, and efforts to the faithful performance of her duties hereunder including activities and services related to the organization, operation and management of the Bank; provided, however, that, with the approval of the CEO, Executive may serve, or continue to serve, on the boards of directors of, and hold any other offices or positions in, business companies or business organizations, which, in the CEO's judgment, will not present any conflict of interest with the Bank, or materially affect the performance of Executive's duties pursuant to this Agreement it being understood that membership in and service on boards or committees of social, religious, charitable or similar organizations does not require CEO approval pursuant to this Section 2(d). For purposes of this Section 2(d), CEO approval shall be deemed to have been granted as to service with any such business company or organization that Executive was serving as of the date of this Agreement. 3. COMPENSATION, BENEFITS AND REIMBURSEMENT. (a) Base Salary. The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2. The Bank shall pay Executive as compensation a salary of not less than $108,227 per year ("Base Salary"). Such Base Salary shall be payable biweekly, or with such other frequency as officers and employees are generally paid. During the period of this Agreement, Executive's Base Salary shall be reviewed at least annually. Such review may be conducted by the CEO, and the Bank may increase, but not decrease (except a decrease that is generally applicable to all employees) Executive's Base Salary (with any increase in Base Salary to become "Base Salary" for purposes of this Agreement). (b) Bonus and Incentive Compensation. Executive will be entitled to incentive compensation and bonuses as provided in any plan of the Bank in which Executive is eligible to participate. Nothing paid to Executive under any such plan or arrangement will be deemed to be in lieu of other compensation to which Executive is entitled under this Agreement. (c) Employee Benefits. The Bank will provide Executive with employee benefit plans, arrangements and perquisites substantially equivalent to those in which Executive was participating or otherwise deriving benefit from immediately prior to the beginning of the term of this Agreement, and the Bank will not, without Executive's prior written consent, make any changes in such plans, 2 arrangements or perquisites which would adversely affect Executive's rights or benefits thereunder, except as to any changes that are applicable to all participating employees or as reasonably or customarily available. Without limiting the generality of the foregoing provisions of this Section 3(c), Executive will be entitled to participate in or receive benefits under any employee benefit plans including, but not limited to, retirement plans, supplemental retirement plans, pension plans, profit-sharing plans, health-and-accident insurance plans, medical coverage or any other employee benefit plan or arrangement made available by the Bank in the future to its senior executives, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. (d) Paid Time Off. Executive shall be entitled to paid vacation time each year during the Employment Period (measured on a fiscal or calendar year basis, in accordance with the Bank's usual practices), as well as sick leave, holidays and other paid absences in accordance with the Bank's policies and procedures for senior executives. Any unused paid time off during an annual period shall be treated in accordance with the Bank's personnel policies as in effect from time to time. (e) Expense Reimbursements. During the Employment Period, the Bank shall pay or reimburse Executive for all reasonable travel, entertainment and other reasonable expenses incurred by Executive during the course of performing her obligations under this Agreement, upon presentation to the Bank of an itemized account of such expenses in such form as the Bank may reasonably require. All reimbursements under this Section 3(e) shall be paid as soon as practicable by the Bank; provided, however, that no payment shall be made later than March 15 of the year immediately following the year in which the expense was incurred. 4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION. (a) Upon the occurrence of an Event of Termination (as herein defined) during Executive's term of employment under this Agreement, the provisions of this section shall apply. As used in this Agreement, an "Event of Termination" shall mean and include any one or more of the following: (i) the termination by the Bank of Executive's full-time employment hereunder for any reason other than a Termination for Cause, as defined in Section 8 hereof, or a termination upon Retirement as defined in Section 7 hereof, or a termination for Disability as set forth in Section 6 hereof; and (ii) Executive's resignation from the Bank's employ upon any of the following (which shall be treated as termination of employment for "Good Reason"), unless consented to by Executive: (A) failure to appoint Executive to the Executive Position set forth in Section 1 above, or a material change in Executive's function, duties, or responsibilities, which change would cause Executive's position to become one of lesser responsibility, importance, or scope from the position and responsibilities described in Section 1 above, to which Executive has not agreed in writing (and any such material change shall be deemed a continuing breach of this Agreement); 3 (B) a relocation of Executive's principal place of employment to a location that is more than 50 miles from the location of the Bank's principal executive offices as of the date of this Agreement; (C) a material reduction in the benefits and perquisites, including Base Salary, to Executive from those being provided as of the Effective Date (except for any reduction that is part of a reduction in pay or benefits that is generally applicable to officers or employees); (D) a liquidation or dissolution of the Bank other than liquidations or dissolutions that are caused by reorganizations that do not affect the status of the Executive; or (E) a material breach of this Agreement by the Bank. Upon the occurrence of any event described in clause (ii) above, Executive shall have the right to elect to terminate her employment under this Agreement by resignation within 90 days after the event giving rise to said right to elect, which termination by Executive shall be an Event of Termination. The Bank shall have at least 30 days to remedy any event set forth in clauses (ii)(A) through (E) above; provided, however, that the Bank shall be entitled to waive such period and make an immediate payment hereunder. If the Bank remedies the condition within such 30 day cure period, then no Good Reason shall be deemed to exist with respect to such event. If the Bank does not remedy the event within such 30 days cure period, then the Executive may deliver a Notice of Termination, as defined in Section 9(c), for Good Reason at any time within 60 days following the expiration of such cure period. (iii) Executive's resignation from the Bank's employ following a Change in Control (as defined below in Section 5). No payments or benefits shall be due to Executive under this Agreement upon the termination of Executive's employment except as provided in Section 4 or 5 hereof. (b) Within 30 days following the occurrence of an Event of Termination, the Bank shall pay Executive, or, in the event of her subsequent death, her beneficiary or beneficiaries, or her estate, as the case may be, as severance pay or liquidated damages, or both, a lump sum cash amount equal to two times the sum of (i) the highest annual rate of Base Salary paid to Executive at any time under the Agreement, plus (ii) the highest bonus paid to Executive with respect to the two completed fiscal years prior to the Event of Termination. Such payments shall not be reduced in the event Executive obtains other employment following termination of employment. (c) Within 30 days following the occurrence of an Event of Termination, the Bank shall pay Executive, or in the event of her subsequent death, her beneficiary or beneficiaries, or her estate, as the case may be, a lump sum equal to the excess, if any, of the present value of the benefit that Executive would have been entitled to under the Bank's defined benefit pension plan if Executive had continued working for the Bank for twenty-four (24) months after the effective date of such Event of Termination, over the present value of the benefits to which Executive was actually entitled as of the effective date of such Event of Termination. (d) Upon the occurrence of an Event of Termination, the Bank will provide at the Bank's expense, life insurance and non-taxable medical, dental and vision coverage substantially comparable, as reasonably or customarily available, to 4 the coverage maintained by the Bank for Executive prior to her termination, except to the extent such coverage may be changed in its application to all Bank employees. Such coverage shall cease twenty-four (24) months following the Event of Termination. (e) Notwithstanding the foregoing, in the event the Executive is a Specified Employee (as defined herein), solely to the extent necessary to avoid penalties under Code Section 409A, payment of the Executive's benefit pursuant to Sections 4(b), 4(c) and 4(d), if applicable, shall be made to the Executive on the first day of the seventh month following the Executive's Event of Termination. "Specified Employee" shall be interpreted to comply with Code Section 409A and shall mean a key employee within the meaning of Code Section 416(i) (without regard to paragraph 5 thereof), but an individual shall be a "Specified Employee" only if the Bank or any affiliate is a publicly traded company. (f) For purposes of this Agreement, Event of Termination shall be construed to required a "Separation from Service" as defined in Code Section 409A and the Treasury regulations promulgated thereunder, such that the Bank and Executive reasonably anticipate that the level of bona fide services Executive would perform after termination would permanently decrease to a level that is less than 50% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period. 5. CHANGE IN CONTROL. (a) For purposes of this Agreement, the term "Change in Control" shall mean: (i) a change in control of a nature that would be required to be reported in response to Item 5.01(a) of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) a change in control of the Bank the Company within the meaning of the Home Owners Loan Act, as amended ("HOLA"), and applicable rules and regulations promulgated thereunder, as in effect at the time of the Change in Control; or (iii) any of the following events, upon which a Change in Control shall be deemed to have occurred: (A) any "person" (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of Company's outstanding securities except for any securities purchased by the Bank's employee stock ownership plan or trust; or (B) individuals who constitute the Board on the date hereof (the "Incumbent Board") cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company's stockholders was approved by the same Nominating Committee serving 5 under an Incumbent Board, shall be, for purposes of this subsection (B), considered as though she were a member of the Incumbent Board; or (C) a sale of all or substantially all the assets of the Bank or the Company, or a plan of reorganization, merger, consolidation, or similar transaction occurs in which the security holders of the Company immediately prior to the consummation of the transaction do not own at least 50.1% of the securities of the surviving entity to be outstanding upon consummation of the transaction; or (D) a proxy statement is issued soliciting proxies from stockholders of the Company by someone other than the current management of the Company, seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or similar transaction with one or more corporations as a result of which the outstanding shares of the class of securities then subject to the plan are to be exchanged for or converted into cash or property or securities not issued by the Company; or (E) a tender offer is made for 25% or more of the voting securities of the Company and the shareholders owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror. (b) Notwithstanding the preceding paragraphs of this Section, in the event that the aggregate payments or benefits to be made or afforded to Executive in the event of a Change in Control would be deemed to include an "excess parachute payment" under Section 280G of the Code or any successor thereto, then the cash severance payable under Section 4 shall be reduced by the minimum amount necessary to result in no portion of the payments and benefits payable by the Bank under Section 4 being non-deductible pursuant to Code Section 280G and subject to an excise tax imposed under Code Section 4999. 6. TERMINATION FOR DISABILITY OR DEATH. (a) Termination of Executive's employment based on "Disability" shall be construed to comply with Code section 409A and shall be deemed to have occurred if (i) the Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death, or last for a continuous period of not less than 12 months; (ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death, or last for a continuous period of not less than 12 months, the Executive is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Bank; or (iii) the Executive is determined to be totally disabled by the Social Security Administration. The provisions of paragraph 6(b) and (c) shall apply upon the termination of the Executive's employment for Disability. (b) The Executive shall be entitled to receive benefits under any short or long term disability plan maintained by the Bank. To the extent such benefits are less than the Executive's Base Salary, the Bank will pay Executive an amount equal to the difference between such disability plan benefits and the amount of Executive's Base Salary for the longer of (i) the remaining term of the 6 Agreement or (ii) one year following her termination of employment due to Disability. Any payments required hereunder shall be payable in monthly installments and shall commence within 30 days following the date on which Executive is determined to be Disabled. (c) The Bank will cause to be continued life insurance and non-taxable medical, dental and vision coverage substantially comparable, as reasonable or customarily available, to the coverage maintained by the Bank for Executive prior to her termination for Disability, except to the extent such coverage may be changed in its application to all Bank employees or not available on an individual basis to an employee terminated for Disability. This coverage shall cease upon the earlier of (i) the date Executive returns to the full-time employment of the Bank; (ii) Executive's full-time employment by another employer; (iii) Executive attaining the age of 65; or (iv) Executive's death. (d) In the event of Executive's death during the term of the Agreement, her estate, legal representatives or named beneficiaries (as directed by executive in writing) shall be paid Executive's Base Salary as defined in paragraph 3(a) at the rate in effect at the time of Executive's death for a period of one (1) year from the date of Executive's death, and the Bank will continue to provide non-taxable medical, dental, vision and other insurance benefits normally provided for Executive's family (in accordance with its customary co-pay percentages) for one (1) year after Executive's death. Such payments are in addition to any other life insurance benefits that the Executive's beneficiaries may be entitled to receive under any employee benefit plan maintained by the Bank for the benefit of the Executive, including, but not limited to, the Bank's tax-qualified retirement plans and the Executive Salary Continuation Agreement (SERP). 7. TERMINATION UPON RETIREMENT. Termination of Executive's employment based on "Retirement" shall mean termination of Executive's employment at age 65 or in accordance with any retirement policy established by the Board with Executive's consent with respect to her. Upon termination of Executive based on Retirement, no amounts or benefits shall be due Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Bank and other plans to which Executive is a party. 8. TERMINATION FOR CAUSE. (a) The Bank may terminate the Executive's employment at any time, but any termination other than Termination for Cause, as defined herein, shall not prejudice the Executive's right to compensation or other benefits under the Agreement. The Executive shall have no right to receive compensation or other benefits for any period after Termination for Cause. Termination for Cause shall include termination because of the Executive's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, material breach of the Bank's Code of Ethics, material violation of the Sarbanes-Oxley requirements for officers of public companies that in the reasonable opinion of the CEO or the Board will likely cause substantial 7 financial harm or substantial injury to the reputation of the Bank, willfully engaging in actions that in the reasonable opinion of the CEO or the Board will likely cause substantial financial harm or substantial injury to the business reputation of the Bank, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the Agreement. (b) For purposes of this Section 8, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Bank. Any act, or failure to act, based upon the direction of the CEO or based upon the advice of counsel for the Bank shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Bank. 9. NOTICE. (a) Any purported termination by the Bank for Cause shall be communicated by Notice of Termination to Executive. If, within 30 days after any Notice of Termination for Cause is given, Executive notifies the Bank that a dispute exists concerning the termination, the parties shall promptly proceed to arbitration. Notwithstanding the pendency of any such dispute, the Bank shall discontinue paying Executive's compensation until the dispute is finally resolved in accordance with this Agreement. If it is determined that Executive is entitled to compensation and benefits under Section 4 of this Agreement, the payment of such compensation and benefits by the Bank shall commence immediately following the date of resolution by arbitration, with interest due Executive on the cash amount that would have been paid pending arbitration (at the prime rate as published in The Wall Street Journal from time to time). (b) Any other purported termination by the Bank or by Executive shall be communicated by a Notice of Termination to the other party. If, within 30 days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the parties shall promptly proceed to arbitration as provided in Section 19 of this Agreement. Notwithstanding the pendency of any such dispute, the Bank shall continue to pay Executive her Base Salary, and other compensation and benefits in effect when the notice giving rise to the dispute was given (except as to termination of Executive for Cause); provided, however, that such payments and benefits shall not continue beyond the date that is 24 months from the date the Notice of Termination is given. In the event the voluntary termination by Executive of her employment is disputed by the Bank, and if it is determined in arbitration that Executive is not entitled to termination benefits pursuant to this Agreement, she shall return all cash payments made to her pending resolution by arbitration, with interest thereon at the prime rate as published in The Wall Street Journal from time to time if it is determined in arbitration that Executive's voluntary termination of employment was not taken in good faith and not in the reasonable belief that grounds existed for her voluntary termination. If it is determined that the Executive is entitled to receive severance benefits under this Agreement, then any continuation of Base Salary and other compensation and benefits made to the Executive under this Section 9 shall offset the amount of any severance benefits that are due to the Executive under this Agreement. (c) For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and 8 circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated and "Date of Termination" shall mean the date of the Notice of Termination. 10. POST-TERMINATION OBLIGATIONS. (a) The Executive hereby covenants and agrees that, for a period of one year following her termination of employment with the Bank, she shall not, without the written consent of the Bank, either directly or indirectly: (i) solicit, offer employment to, or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any officer or employee of the Bank or any of its affiliates to terminate his or her employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any business whatsoever that competes with the business of the Bank or any of its affiliates or has headquarters or offices within 50 miles of the locations in which the Bank or its affiliates has business operations or has filed an application for regulatory approval to establish an office; (ii) become an officer, employee, consultant, director, independent contractor, agent, sole proprietor, joint venturer, greater than 5% equity-owner or stockholder, partner or trustee of any savings bank, savings and loan association, savings and loan holding company, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker or any other entity competing with the Bank or its affiliates in the same geographic locations where the Bank or its affiliates has material business interests; provided, however, that this restriction shall not apply if the Executive's employment is terminated following a Change in Control; or (iii) solicit, provide any information, advice or recommendation or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any customer of the Bank or its affiliates to terminate an existing business or commercial relationship with the Bank or its affiliates. (b) Executive shall, upon reasonable notice, furnish such information and assistance to the Bank and/or its affiliates, as may reasonably be required by the Bank and/or its affiliates, in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between the Executive and the Bank, or any of its affiliates. (c) All payments and benefits to the Executive under this Agreement shall be subject to the Executive's compliance with this Section. The parties hereto, recognizing that irreparable injury will result to the Bank, its business and property in the event of the Executive's breach of this Section, agree that, in the event of any such breach by the Executive, the Bank will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by the Executive and all persons acting for or with the Executive. The Executive represents and admits that the Executive's experience and capabilities are such that the Executive can obtain employment in 9 a business engaged in other lines and/or of a different nature than the Bank, and that the enforcement of a remedy by way of injunction will not prevent the Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies for such breach or threatened breach, including the recovery of damages from the Executive. 11. SOURCE OF PAYMENTS. All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank. 12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS. This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor of the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to her without reference to this Agreement. 13. NO ATTACHMENT; BINDING ON SUCCESSORS. (a) 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 execution, 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. (b) This Agreement shall be binding upon, and inure to the benefit of, Executive and the Bank and their respective successors and assigns. 14. MODIFICATION AND WAIVER. (a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto. (b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived. 15. REQUIRED PROVISIONS. (a) The Bank may terminate Executive's employment at any time, but any termination by the Bank's Board other than Termination for Cause as defined in Section 8 hereof shall not prejudice Executive's right to compensation or other 10 benefits under this Agreement. Executive shall have no right to receive compensation or other benefits for any period after Termination for Cause. (b) If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank's affairs by a notice served under Section 8(e)(3) [12 U.S.C. ss.1818(e)(3)] or 8(g)(1) [12 U.S.C. ss.1818(g)(1)] of the Federal Deposit Insurance Act, the Bank's obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion (i) pay Executive all or part of the compensation withheld while its Agreement obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended. (c) If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank's affairs by an order issued under Section 8(e)(4) [12 U.S.C. ss.1818(e)(4)] or 8(g)(1) [12 U.S.C. ss.1818(g)(1)] of the Federal Deposit Insurance Act, all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected. (d) If the Bank is in default as defined in Section 3(x)(1) [12 U.S.C. ss.1813(x)(1)] of the Federal Deposit Insurance Act, all obligations of the Bank under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties. (e) All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the Agreement is necessary for the continued operation of the Bank, (i) by the Director of the OTS or his or her designee, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) [12 U.S.C. ss.1823(c)] of the Federal Deposit Insurance Act; or (ii) by the Director or his or her designee at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action. (f) Notwithstanding anything herein contained to the contrary, any payments to Executive, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359. 16. SEVERABILITY. If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect. 11 17. HEADINGS FOR REFERENCE ONLY. The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. 18. GOVERNING LAW. This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania but only to the extent not superseded by federal law. 19. ARBITRATION. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single arbitrator sitting in a location selected by the Executive within twenty-five miles of Stroudsburg, Pennsylvania in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of her right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. 20. INDEMNIFICATION. (a) The Executive shall be provided with coverage under a standard directors' and officers' liability insurance policy. The Bank shall indemnify Executive to the fullest extent permitted against all expenses and liabilities reasonably incurred by her in connection with or arising out of any action, suit or proceeding in which she may be involved by reason of her having been an officer of the Bank (whether or not she continues to be an officer at the time of the of incurring such expenses or liabilities) such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys' fees and the cost of reasonable settlements (such settlements must be approved by the Board), provided that the Bank shall not be required to indemnify or reimburse Executive for legal expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive. Any such indemnification shall be made consistent with Section 545.121 of the OTS Regulations and Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. ss.1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359. 21. NOTICE. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below: 12 To the Bank: ESSA Bank & Trust 200 Palmer Street Stroudsburg, PA 18360 To Executive: Diane K. Reimer 2246 Valley View Drive Bangor, PA 18013 SIGNATURES IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by its duly authorized representative, and Executive has signed this Agreement, on the date first above written. ESSA BANK & TRUST 9/30/2008 By: /s/ Gary S. Olson - ------------------------- ----------------------------- Date Gary S. Olson, President and Chief Executive Officer EXECUTIVE: 9/30/2008 /s/ Diane K. Reimer - ------------------------- ----------------------------- Date Diane K. Reimer EX-10.3 3 exh103_100608.txt AMENDED AND RESTATED EMPLOYMENT AGREEMENT - MUTO AMENDED AND RESTSTATED EMPLOYMENT AGREEMENT This Amended and Restated Employment Agreement (the "Agreement") is made effective as of September 30, 2008 (the "Effective Date"), by and between ESSA Bank & Trust, a Pennsylvania chartered stock savings association with its principal office in Stroudsburg, Pennsylvania (the "Bank"), ESSA Bancorp, Inc. a Pennsylvania corporation that owns 100% of the common stock of the Bank (the "Company"), and Allan A. Muto ("Executive"). Any reference to the "Employer" shall mean both the Company and the Bank. WHEREAS, the Executive is currently employed as Executive Vice President and Chief Financial Officer of the Employer pursuant to an employment agreement that was effective March 31, 2007 (the "Original Agreement"); and WHEREAS, the Employer desires to amend and restate the Original Agreement in order to make changes to comply with the final regulations issued under Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), in April, 2007; and WHEREAS, Executive is willing to serve the Employer on the terms and conditions hereinafter set forth and has agreed to such changes; and WHEREAS, the Board of Directors of the Employer and the Executive believe it is in the best interests of the Employer to enter into the Agreement in order to reinforce and reward the Executive for his service and dedication to the continued success of the Employer and incorporate the changes required by the final regulations under Code Section 409A. NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows: 1. POSITION AND RESPONSIBILITIES. During the period of his employment hereunder, Executive agrees to serve as Executive Vice President and Chief Financial Officer of the Employer (the "Executive Position"). Executive shall be responsible for the overall management of the Employer's financial matters, and shall be responsible for establishing business objectives, policies and strategic plans in conjunction with the Chief Executive Officer (the "CEO"). 2. TERM AND DUTIES. (a) Three Year Contract; Annual Renewal. Executive's period of employment with the Employer ("Employment Period") shall begin on the Effective Date and shall renew on each anniversary date thereafter, until the date that the Employer gives Executive written notice of non-renewal ("Non-Renewal Notice"). The Employment Period shall end on the date that is thirty-six (36) months after the date of the Non-Renewal Notice, unless the parties agree that the Employment Period shall end on an earlier date. Notwithstanding the foregoing, all changes to the Agreement intended to comply with Code Section 409A shall be retroactively effective to March 31, 2007; and provided further that no retroactive change shall affect the compensation or benefits previously provided to the Executive. (b) Annual Performance Evaluation. On either a fiscal year or calendar year basis, (consistently applied from year to year), the Employer shall conduct an annual evaluation of Executive's performance. The annual performance evaluation proceedings shall be included in the minutes of the Board meeting that next follows such annual performance review. (c) Continued Employment Following Termination of Employment Period. Nothing in this Agreement shall mandate or prohibit a continuation of Executive's employment following the expiration of the Employment Period upon such terms and conditions as the Employer and Executive may mutually agree. (d) Duties; Membership on Other Boards. During the Employment Period, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence approved by the CEO, Executive shall devote substantially all his business time, attention, skill, and efforts to the faithful performance of his duties hereunder including activities and services related to the organization, operation and management of the Employer; provided, however, that, with the approval of the CEO, Executive may serve, or continue to serve, on the boards of directors of, and hold any other offices or positions in, business companies or business organizations, which, in the CEO's judgment, will not present any conflict of interest with the Employer, or materially affect the performance of Executive's duties pursuant to this Agreement it being understood that membership in and service on boards or committees of social, religious, charitable or similar organizations does not require CEO approval pursuant to this Section 2(d). For purposes of this Section 2(d), CEO approval shall be deemed to have been granted as to service with any such business company or organization that Executive was serving as of the date of this Agreement. 3. COMPENSATION, BENEFITS AND REIMBURSEMENT. (a) Base Salary. The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2. The Employer shall pay Executive as compensation a salary of not less than $160,685 per year ("Base Salary"). Such Base Salary shall be payable biweekly, or with such other frequency as officers and employees are generally paid. During the period of this Agreement, Executive's Base Salary shall be reviewed at least annually. Such review may be conducted by the CEO, and the Employer may increase, but not decrease (except a decrease that is generally applicable to all employees) Executive's Base Salary (with any increase in Base Salary to become "Base Salary" for purposes of this Agreement). (b) Bonus and Incentive Compensation. Executive will be entitled to incentive compensation and bonuses as provided in any plan of the Employer in which Executive is eligible to participate. Nothing paid to Executive under any such plan or arrangement will be deemed to be in lieu of other compensation to which Executive is entitled under this Agreement. (c) Employee Benefits. The Employer will provide Executive with employee benefit plans, arrangements and perquisites substantially equivalent to those in which Executive was participating or otherwise deriving benefit from immediately prior to the beginning of the term of this Agreement, and the Employer will not, without Executive's prior written consent, make any changes in such plans, 2 arrangements or perquisites which would adversely affect Executive's rights or benefits thereunder, except as to any changes that are applicable to all participating employees or as reasonably or customarily available. Without limiting the generality of the foregoing provisions of this Section 3(c), Executive will be entitled to participate in or receive benefits under any employee benefit plans including, but not limited to, retirement plans, supplemental retirement plans, pension plans, profit-sharing plans, health-and-accident insurance plans, medical coverage or any other employee benefit plan or arrangement made available by the Employer in the future to its senior executives, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. (d) Paid Time Off. Executive shall be entitled to paid vacation time each year during the Employment Period (measured on a fiscal or calendar year basis, in accordance with the Employer's usual practices), as well as sick leave, holidays and other paid absences in accordance with the Employer's policies and procedures for senior executives. Any unused paid time off during an annual period shall be treated in accordance with the Employer's personnel policies as in effect from time to time. (e) Expense Reimbursements. During the Employment Period, the Employer shall pay or reimburse Executive for all reasonable travel, entertainment and other reasonable expenses incurred by Executive during the course of performing his obligations under this Agreement, upon presentation to the Employer of an itemized account of such expenses in such form as the Employer may reasonably require. All reimbursements under this Section 3(e) shall be paid as soon as practicable by the Employer; provided, however, that no payment shall be made later than March 15 of the year immediately following the year in which the expense was incurred. 4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION. (a) Upon the occurrence of an Event of Termination (as herein defined) during Executive's term of employment under this Agreement, the provisions of this section shall apply. As used in this Agreement, an "Event of Termination" shall mean and include any one or more of the following: (i) the termination by the Employer of Executive's full-time employment hereunder for any reason other than a Termination for Cause, as defined in Section 8 hereof, or a termination upon Retirement as defined in Section 7 hereof, or a termination for Disability as set forth in Section 6 hereof; and (ii) Executive's resignation from the Employer's employ upon any of the following (which shall be treated as termination of employment for "Good Reason"), unless consented to by Executive: (A) failure to appoint Executive to the Executive Position set forth in Section 1 above, or a material change in Executive's function, duties, or responsibilities, which change would cause Executive's position to become one of lesser responsibility, importance, or scope from the position and responsibilities described in Section 1 above, to which Executive has not agreed 3 in writing (and any such material change shall be deemed a continuing breach of this Agreement); (B) a relocation of Executive's principal place of employment to a location that is more than 50 miles from the location of the Employer's principal executive offices as of the date of this Agreement; (C) a material reduction in the benefits and perquisites, including Base Salary, to Executive from those being provided in the Agreement as of the Effective Date (except for any reduction that is part of a reduction in pay or benefits that is generally applicable to officers or employees); (D) a liquidation or dissolution of the Bank or the Company other than liquidations or dissolutions that are caused by reorganizations that do not affect the status of the Executive; or (E) a material breach of this Agreement by the Employer. Upon the occurrence of any event described in clause (ii) above, Executive shall have the right to elect to terminate his employment under this Agreement by resignation within 90 days after the event giving rise to said right to elect, which termination by Executive shall be an Event of Termination. The Employer shall have at least 30 days to remedy any event set forth in clauses (ii)(A) through (E) above; provided, however, that the Employer shall be entitled to waive such period and make an immediate payment hereunder. If the Employer remedies the event within such 30 day cure period, then no Good Reason shall be deemed to exist with respect to such event. If the Employer does not remedy the event within such 30 days cure period, then the Executive may deliver a Notice of Termination, as defined in Section 9(c) hereof, for Good Reason at any time within 60 days following the expiration of such cure period. (iii) Executive's resignation from the Employer's employ following a Change in Control (as defined in Section 5 below). No payments or benefits shall be due to Executive under this Agreement upon the termination of Executive's employment except as provided in Section 4 or 5 hereof. (b) Within 30 days following the occurrence of an Event of Termination, the Employer shall pay Executive, or, in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, as severance pay or liquidated damages, or both, a lump sum cash amount equal to three times the sum of (i) the highest annual rate of Base Salary paid to Executive at any time under the Agreement, plus (ii) the highest bonus paid to Executive with respect to the three completed fiscal years prior to the Event of Termination. Such payments shall not be reduced in the event Executive obtains other employment following termination of employment. (c) Within 30 days following the occurrence of an Event of Termination, the Employer shall pay Executive, or in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, a lump sum equal to the excess, if any, of the present value of the benefit that Executive would have been entitled to under the Employer's defined benefit pension plan if 4 Executive had continued working for the Employer for 36 months after the effective date of such Event of Termination, over the present value of the benefits to which Executive was actually entitled as of the effective date of such Event of Termination. (d) Upon the occurrence of an Event of Termination, the Employer will provide at the Employer's expense, life insurance and non-taxable medical, dental and vision coverage substantially comparable, as reasonably or customarily available, to the coverage maintained by the Employer for Executive prior to his termination, except to the extent such coverage may be changed in its application to all Employer employees. Such coverage shall cease 36 months following the Event of Termination. (e) Notwithstanding the foregoing, in the event the Executive is a Specified Employee (as defined herein), solely to the extent necessary to avoid penalties under Code Section 409A, payment to the Executive's benefit pursuant to Sections 4(b), 4(c) and 4(d), if applicable, shall be made to the Executive on the first day of the seventh month following the Executive's Event of Termination. "Specified Employee" shall be interpreted to comply with Code Section 409A and shall mean a key employee within the meaning of Code Section 416(i) (without regard to paragraph 5 thereof), but an individual shall be a "Specified Employee" only if the Company or the Bank or any affiliate is a publicly traded company. (f) For purposes of this Agreement, Event of Termination shall be construed to require a "Separation from Service" as defined in Code Section 409A and the Treasury Regulations promulgated thereunder, such that the Employer and Executive reasonably anticipate that the level of bona fide services Executive would perform after termination would permanently decrease to a level that is less than 50% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period. 5. CHANGE IN CONTROL. (a) Except for payments that are subject to Code Section 409A, for purposes of this Agreement, the term "Change in Control" shall mean: (i) a change in control of a nature that would be required to be reported in response to Item 5.01(a) of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) a change in control of the Bank or the Company within the meaning of the Home Owners Loan Act, as amended ("HOLA"), and applicable rules and regulations promulgated thereunder, as in effect at the time of the Change in Control; or (iii) any of the following events, upon which a Change in Control shall be deemed to have occurred: (A) any "person" (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the 5 Company representing 25% or more of the combined voting power of Company's outstanding securities except for any securities purchased by the Bank's employee stock ownership plan or trust; or (B) individuals who constitute the Board on the date hereof (the "Incumbent Board") cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company's stockholders was approved by the same Nominating Committee serving under an Incumbent Board, shall be, for purposes of this subsection (B), considered as though he were a member of the Incumbent Board; or (C) a sale of all or substantially all the assets of the Bank or the Company, or a plan of reorganization, merger, consolidation, or similar transaction occurs in which the security holders of the Company immediately prior to the consummation of the transaction do not own at least 50.1% of the securities of the surviving entity to be outstanding upon consummation of the transaction; or (D) a proxy statement is issued soliciting proxies from stockholders of the Company by someone other than the current management of the Company, seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or similar transaction with one or more corporations as a result of which the outstanding shares of the class of securities then subject to the plan are to be exchanged for or converted into cash or property or securities not issued by the Company; or (E) a tender offer is made for 25% or more of the voting securities of the Company and the shareholders owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror. (b) Notwithstanding the preceding paragraphs of this Section, in the event that the aggregate payments or benefits to be made or afforded to Executive in the event of a Change in Control would be deemed to include an "excess parachute payment" under Section 280G of the Code or any successor thereto, then the cash severance payable under Section 4 shall be reduced by the minimum amount necessary to result in no portion of the payments and benefits payable by the Employer under Section 4 being non-deductible pursuant to Code Section 280G and subject to an excise tax imposed under Code Section 4999. 6. TERMINATION FOR DISABILITY OR DEATH. (a) Termination of Executive's employment based on "Disability" shall be construed to comply with Code section 409A and shall be deemed to have occurred if (i) the Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death, or last for a continuous period of not less than 12 months; (ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death, or last for a continuous period of not less than 12 months, the Executive is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Employer; or (iii) the Executive is determined to 6 be totally disabled by the Social Security Administration. The provisions of paragraph 6(b) and (c) shall apply upon the termination of the Executive's employment for Disability. (b) The Executive shall be entitled to receive benefits under any short or long term disability plan maintained by the Employer. To the extent such benefits are less than the Executive's Base Salary, the Employer will pay Executive an amount equal to the difference between such disability plan benefits and the amount of Executive's Base Salary for the longer of (i) the remaining term of the Agreement or (ii) one year following his termination of employment due to Disability. Any payments required hereunder shall be payable in monthly installments and shall commence within 30 days following the date on which Executive is determined to be Disabled. (c) The Employer will cause to be continued life insurance and non-taxable medical, dental and vision coverage substantially comparable, as reasonable or customarily available, to the coverage maintained by the Employer for Executive prior to his termination for Disability, except to the extent such coverage may be changed in its application to all Employer employees or not available on an individual basis to an employee terminated for Disability. This coverage shall cease upon the earlier of (i) the date Executive returns to the full-time employment of the Employer; (ii) Executive's full-time employment by another employer; (iii) Executive attaining the age of 65; or (iv) Executive's death. (d) In the event of Executive's death during the term of the Agreement, his estate, legal representatives or named beneficiaries (as directed by executive in writing) shall be paid Executive's Base Salary as defined in paragraph 3(a) at the rate in effect at the time of Executive's death for a period of one (1) year from the date of Executive's death, and the Employer will continue to provide non-taxable medical, dental, vision and other insurance benefits normally provided for Executive's family (in accordance with its customary co-pay percentages) for one (1) year after Executive's death. Such payments are in addition to any other life insurance benefits that the Executive's beneficiaries may be entitled to receive under any employee benefit plan maintained by the Employer for the benefit of the Executive, including, but not limited to, the Employer's tax-qualified retirement plans and the Executive Salary Continuation Agreement (SERP). 7. TERMINATION UPON RETIREMENT. Termination of Executive's employment based on "Retirement" shall mean termination of Executive's employment at age 65 or in accordance with any retirement policy established by the Board with Executive's consent with respect to him. Upon termination of Executive based on Retirement, no amounts or benefits shall be due Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Employer and other plans to which Executive is a party. 8. TERMINATION FOR CAUSE. (a) The Employer may terminate the Executive's employment at any time, but any termination other than Termination for Cause, as defined herein, shall not prejudice the Executive's right to compensation or other benefits under the 7 Agreement. The Executive shall have no right to receive compensation or other benefits for any period after Termination for "Cause." Termination for "Cause" shall include termination because of the Executive's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, material breach of the Employer's Code of Ethics, material violation of the Sarbanes-Oxley requirements for officers of public companies that in the reasonable opinion of the CEO or the Board will likely cause substantial financial harm or substantial injury to the reputation of the Employer, willfully engaging in actions that in the reasonable opinion of the CEO or the Board will likely cause substantial financial harm or substantial injury to the business reputation of the Employer, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the Agreement. (b) For purposes of this Section 8, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Employer. Any act, or failure to act, based upon the direction of the CEO or based upon the advice of counsel for the Employer shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Employer. 9. NOTICE. (a) Any purported termination by the Employer for Cause shall be communicated by Notice of Termination to Executive. If, within 30 days after any Notice of Termination for Cause is given, Executive notifies the Employer that a dispute exists concerning the termination, the parties shall promptly proceed to arbitration. Notwithstanding the pendency of any such dispute, the Employer shall discontinue paying Executive's compensation until the dispute is finally resolved in accordance with this Agreement. If it is determined that Executive is entitled to compensation and benefits under Section 4 of this Agreement, the payment of such compensation and benefits by the Employer shall commence immediately following the date of resolution by arbitration, with interest due Executive on the cash amount that would have been paid pending arbitration (at the prime rate as published in The Wall Street Journal from time to time). (b) Any other purported termination by the Employer or by Executive shall be communicated by a Notice of Termination to the other party. If, within 30 days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the parties shall promptly proceed to arbitration as provided in Section 19 of this Agreement. Notwithstanding the pendency of any such dispute, the Employer shall continue to pay Executive his Base Salary, and other compensation and benefits in effect when the notice giving rise to the dispute was given (except as to termination of Executive for Cause); provided, however, that such payments and benefits shall not continue beyond the date that is 36 months from the date the Notice of Termination is given. In the event the voluntary termination by Executive of his employment is disputed by the Employer, and if it is determined in arbitration that Executive is not entitled to termination benefits pursuant to this Agreement, he shall return all cash payments made to him pending resolution by arbitration, with interest thereon at the prime rate as published in The Wall Street Journal from time to time if it 8 is determined in arbitration that Executive's voluntary termination of employment was not taken in good faith and not in the reasonable belief that grounds existed for his voluntary termination. If it is determined that the Executive is entitled to receive severance benefits under this Agreement, then any continuation of Base Salary and other compensation and benefits made to the Executive under this Section 9 shall offset the amount of any severance benefits that are due to the Executive under this Agreement. (c) For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated and "Date of Termination" shall mean the date of the Notice of Termination. 10. POST-TERMINATION OBLIGATIONS. (a) The Executive hereby covenants and agrees that, for a period of one year following his termination of employment with the Employer, he shall not, without the written consent of the Employer, either directly or indirectly: (i) solicit, offer employment to, or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any officer or employee of the Employer or any of its affiliates to terminate his or her employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any business whatsoever that competes with the business of the Employer or any of its affiliates or has headquarters or offices within 50 miles of the locations in which the Employer or its affiliates has business operations or has filed an application for regulatory approval to establish an office; (ii) become an officer, employee, consultant, director, independent contractor, agent, sole proprietor, joint venturer, greater than 5% equity-owner or stockholder, partner or trustee of any savings bank, savings and loan association, savings and loan holding company, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker or any other entity competing with the Employer or its affiliates in the same geographic locations where the Employer or its affiliates has material business interests; provided, however, that this restriction shall not apply if the Executive's employment is terminated following a Change in Control; or (iii) solicit, provide any information, advice or recommendation or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any customer of the Employer or its affiliates to terminate an existing business or commercial relationship with the Employer or its affiliates. (b) Executive shall, upon reasonable notice, furnish such information and assistance to the Employer and/or its affiliates, as may reasonably be required by the Employer and/or its affiliates, in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information 9 or assistance with respect to any litigation between the Executive and the Employer, or any of its affiliates. (c) All payments and benefits to the Executive under this Agreement shall be subject to the Executive's compliance with this Section. The parties hereto, recognizing that irreparable injury will result to the Employer, its business and property in the event of the Executive's breach of this Section, agree that, in the event of any such breach by the Executive, the Employer will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by the Executive and all persons acting for or with the Executive. The Executive represents and admits that the Executive's experience and capabilities are such that the Executive can obtain employment in a business engaged in other lines and/or of a different nature than the Employer, and that the enforcement of a remedy by way of injunction will not prevent the Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Employer from pursuing any other remedies for such breach or threatened breach, including the recovery of damages from the Executive. 11. SOURCE OF PAYMENTS. All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank. The Company, however, guarantees payment and provision of all amounts and benefits due hereunder to Executive, and if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company. 12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS. This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Employer or any predecessor of the Employer and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement. 13. NO ATTACHMENT; BINDING ON SUCCESSORS. (a) 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 execution, 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. (b) This Agreement shall be binding upon, and inure to the benefit of, Executive and the Employer and their respective successors and assigns. 14. MODIFICATION AND WAIVER. (a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto. 10 (b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived. 15. REQUIRED PROVISIONS. (a) The Employer may terminate Executive's employment at any time, but any termination by the Employer's Board other than Termination for Cause as defined in Section 8 hereof shall not prejudice Executive's right to compensation or other benefits under this Agreement. Executive shall have no right to receive compensation or other benefits for any period after Termination for Cause. (b) If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Employer's affairs by a notice served under Section 8(e)(3) [12 U.S.C. ss.1818(e)(3)] or 8(g)(1) [12 U.S.C. ss.1818(g)(1)] of the Federal Deposit Insurance Act, the Employer's obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Employer may in its discretion (i) pay Executive all or part of the compensation withheld while its Agreement obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended. (c) If Executive is removed and/or permanently prohibited from participating in the conduct of the Employer's affairs by an order issued under Section 8(e)(4) [12 U.S.C. ss.1818(e)(4)] or 8(g)(1) [12 U.S.C. ss.1818(g)(1)] of the Federal Deposit Insurance Act, all obligations of the Employer under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected. (d) If the Employer is in default as defined in Section 3(x)(1) [12 U.S.C. ss.1813(x)(1)] of the Federal Deposit Insurance Act, all obligations of the Employer under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties. (e) All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the Agreement is necessary for the continued operation of the Employer, (i) by the Director of the OTS or his or her designee, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Employer under the authority contained in Section 13(c) [12 U.S.C. ss.1823(c)] of the Federal Deposit Insurance Act; or (ii) by the Director or his or her designee at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Employer or when the Employer is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action. (f) Notwithstanding anything herein contained to the contrary, any payments to Executive, whether pursuant to this Agreement or otherwise, are subject to 11 and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359. 16. SEVERABILITY. If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect. 17. HEADINGS FOR REFERENCE ONLY. The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. 18. GOVERNING LAW. This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania but only to the extent not superseded by federal law. 19. ARBITRATION. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single arbitrator sitting in a location selected by the Executive within twenty-five miles of Stroudsburg, Pennsylvania in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of his right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. 20. INDEMNIFICATION. (a) The Executive shall be provided with coverage under a standard directors' and officers' liability insurance policy. The Employer shall indemnify Executive to the fullest extent permitted against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his having been an officer of the Employer (whether or not he continues to be an officer at the time of the of incurring such expenses or liabilities) such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys' fees and the cost of reasonable settlements (such settlements must be approved by the Board), provided that the Employer shall not be required to indemnify or reimburse Executive for legal expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive. Any such indemnification shall be made consistent with Section 545.121 of the OTS Regulations and Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. ss.1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359. 12 21. NOTICE. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below: To the Company: ESSA Bancorp, Inc. 200 Palmer Street Stroudsburg, PA 18360 To the Bank: ESSA Bank & Trust 200 Palmer Street Stroudsburg, PA 18360 To Executive: Allan A. Muto 1321 Crestwood Drive Archbald, PA 18403 13 SIGNATURES IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed by its duly authorized representative, and Executive has signed this Agreement, on the date first above written. ESSA BANCORP, INC. 9/30/2008 By: /s/ Gary S. Olson - ------------------------------------ ----------------------------- Date Gary S. Olson, President and Chief Executive Officer ESSA BANK & TRUST 9/30/2008 By: /s/ Gary S. Olson - ------------------------------------ ----------------------------- Date Gary S. Olson, President and Chief Executive Officer EXECUTIVE: 9/30/2008 /s/ Allan A. Muto - ----------------------------------- ---------------------------- Date Allan A. Muto EX-10.2 4 exh102_100608.txt AMENDED AND RESTATED EMPLOYMENT AGREEMENT - HOWES AMENDED AND RESTATED EMPLOYMENT AGREEMENT This Amended and Restated Employment Agreement (the "Agreement") is made effective as of September 30, 2008 (the "Effective Date"), by and between ESSA Bank & Trust, a Pennsylvania chartered stock savings association with its principal office in Stroudsburg, Pennsylvania (the "Bank"), and Robert S. Howes ("Executive"). Any reference to the "Company" shall mean ESSA Bancorp, Inc., a stock holding company which owns 100% of the common stock of the Bank. WHEREAS, Executive is currently employed as Senior Vice President, Lending Services Division of the Bank pursuant to an employment agreement that was effective March 31, 2007 (the "Original Agreement"); and WHEREAS, the Bank desires to amend and restate the Original Agreement in order to make changes to comply with the final regulations issued under Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), in April, 2007; and WHEREAS, Executive is willing to serve the Bank on the terms and conditions hereinafter set forth and has agreed to such changes; and WHEREAS, the Board of Directors of the Bank and the Executive believe it is in the best interests of the Bank to enter into the Agreement in order to reinforce and reward the Executive for his service and dedication to the continued success of the Bank and incorporate the changes required by the final regulations issued under Code Section 409A. NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows: 1. POSITION AND RESPONSIBILITIES. During the period of his employment hereunder, Executive agrees to serve as Senior Vice President, Lending Services Division of the Bank (the "Executive Position"). Executive shall be responsible for the overall management of the Bank's lending services functions, and shall be responsible for establishing the business objectives, policies and strategic plans in conjunction with the Chief Executive Officer (the "CEO"). 2. TERM AND DUTIES. (a) Two Year Contract; Annual Renewal. Executive's period of employment with the Bank ("Employment Period") shall begin on the Effective Date and shall renew on each anniversary date thereafter, until the date that the Bank gives Executive written notice of non-renewal ("Non-Renewal Notice"). The Employment Period shall end on the date that is twenty-four (24) months after the date of the Non-Renewal Notice, unless the parties agree that the Employment Period shall end on an earlier date. Notwithstanding the foregoing, all changes to the Agreement intended to comply with Code Section 409A shall be retroactively effective to March 31, 2007; and provided further that no retroactive change shall affect the compensation or benefits previously provided to the Executive. (b) Annual Performance Evaluation. On either a fiscal year or calendar year basis, (consistently applied from year to year), the Bank shall conduct an annual evaluation of Executive's performance. The annual performance evaluation proceedings shall be included in the minutes of the Board meeting that next follows such annual performance review. (c) Continued Employment Following Termination of Employment Period. Nothing in this Agreement shall mandate or prohibit a continuation of Executive's employment following the expiration of the Employment Period upon such terms and conditions as the Bank and Executive may mutually agree. (d) Duties; Membership on Other Boards. During the Employment Period, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence approved by the CEO, Executive shall devote substantially all his business time, attention, skill, and efforts to the faithful performance of his duties hereunder including activities and services related to the organization, operation and management of the Bank; provided, however, that, with the approval of the CEO, Executive may serve, or continue to serve, on the boards of directors of, and hold any other offices or positions in, business companies or business organizations, which, in the CEO's judgment, will not present any conflict of interest with the Bank, or materially affect the performance of Executive's duties pursuant to this Agreement it being understood that membership in and service on boards or committees of social, religious, charitable or similar organizations does not require CEO approval pursuant to this Section 2(d). For purposes of this Section 2(d), CEO approval shall be deemed to have been granted as to service with any such business company or organization that Executive was serving as of the date of this Agreement. 3. COMPENSATION, BENEFITS AND REIMBURSEMENT. (a) Base Salary. The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2. The Bank shall pay Executive as compensation a salary of not less than $130,378 per year ("Base Salary"). Such Base Salary shall be payable biweekly, or with such other frequency as officers and employees are generally paid. During the period of this Agreement, Executive's Base Salary shall be reviewed at least annually. Such review may be conducted by the CEO, and the Bank may increase, but not decrease (except a decrease that is generally applicable to all employees) Executive's Base Salary (with any increase in Base Salary to become "Base Salary" for purposes of this Agreement). (b) Bonus and Incentive Compensation. Executive will be entitled to incentive compensation and bonuses as provided in any plan of the Bank in which Executive is eligible to participate. Nothing paid to Executive under any such plan or arrangement will be deemed to be in lieu of other compensation to which Executive is entitled under this Agreement. (c) Employee Benefits. The Bank will provide Executive with employee benefit plans, arrangements and perquisites substantially equivalent to those in which Executive was participating or otherwise deriving benefit from immediately prior to the beginning of the term of this Agreement, and the Bank will not, without Executive's prior written consent, make any changes in such plans, 2 arrangements or perquisites which would adversely affect Executive's rights or benefits thereunder, except as to any changes that are applicable to all participating employees or as reasonably or customarily available. Without limiting the generality of the foregoing provisions of this Section 3(c), Executive will be entitled to participate in or receive benefits under any employee benefit plans including, but not limited to, retirement plans, supplemental retirement plans, pension plans, profit-sharing plans, health-and-accident insurance plans, medical coverage or any other employee benefit plan or arrangement made available by the Bank in the future to its senior executives, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. (d) Paid Time Off. Executive shall be entitled to paid vacation time each year during the Employment Period (measured on a fiscal or calendar year basis, in accordance with the Bank's usual practices), as well as sick leave, holidays and other paid absences in accordance with the Bank's policies and procedures for senior executives. Any unused paid time off during an annual period shall be treated in accordance with the Bank's personnel policies as in effect from time to time. (e) Expense Reimbursements. During the Employment Period, the Bank shall pay or reimburse Executive for all reasonable travel, entertainment and other reasonable expenses incurred by Executive during the course of performing his obligations under this Agreement, upon presentation to the Bank of an itemized account of such expenses in such form as the Bank may reasonably require. All reimbursements under this Section 3(e) shall be paid as soon as practicable by the Bank, provided, however, that no payment shall be made later than March 15 of the year immediately following the year in which the expense was incurred. 4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION. (a) Upon the occurrence of an Event of Termination (as herein defined) during Executive's term of employment under this Agreement, the provisions of this section shall apply. As used in this Agreement, an "Event of Termination" shall mean and include any one or more of the following: (i) the termination by the Bank of Executive's full-time employment hereunder for any reason other than a Termination for Cause, as defined in Section 8 hereof, or a termination upon Retirement as defined in Section 7 hereof, or a termination for Disability as set forth in Section 6 hereof; and (ii) Executive's resignation from the Bank's employ upon any of the following (which shall be treated as termination of employment for "Good Reason"), unless consented to by Executive: (A) failure to appoint Executive to the Executive Position set forth in Section 1 above, or a material change in Executive's function, duties, or responsibilities, which change would cause Executive's position to become one of lesser responsibility, importance, or scope from the position and responsibilities described in Section 1 above, to which Executive has not agreed in writing (and any such material change shall be deemed a continuing breach of this Agreement); 3 (B) a relocation of Executive's principal place of employment to a location that is more than 50 miles from the location of the Bank's principal executive offices as of the date of this Agreement; (C) a material reduction in the benefits and perquisites, including Base Salary, to the Executive from those being provided in the Agreement as of the Effective Date (except for any reduction that is part of a reduction in pay or benefits that is generally applicable to officers or employees); (D) a liquidation or dissolution of the Bank other than liquidations or dissolutions that are caused by reorganizations that do not affect the status of the Executive; (E) a material breach of this Agreement by the Bank; or Upon the occurrence of any event described in clause (ii) above, Executive shall have the right to elect to terminate his employment under this Agreement by resignation within 90 days after the event giving rise to said right to elect, which termination by Executive shall be an Event of Termination. The Bank shall have at least 30 days to remedy any event set forth in clauses (ii)(A) through (E) above, provided, however, that the Bank shall be entitled to waive such period and make an immediate payment hereunder. If the Bank remedies the event within such 30 day cure period, then no Good Reason shall be deemed to exist with respect to such event. If the Bank does not remedy the event within such 30 day cure period, then the Executive may deliver a Notice of Termination, as defined in Section 9(c) hereof, for Good Reason at any time within 60 days following the expiration of such cure period. No payments or benefits shall be due to Executive under this Agreement upon the termination of Executive's employment except as provided in Section 4 or 5 hereof. (iii) Executive's resignation from the Bank's employ following a Change in Control (as defined in Section 5 below). No payments or benefits shall be due to Executive under this Agreement upon the termination of Executive's employment except as provided in Section 4 or 5 hereof. (b) Within 30 days following the occurrence of an Event of Termination, the Bank shall pay Executive, or, in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, as severance pay or liquidated damages, or both, a lump sum cash amount equal to two times the sum of (i) the highest annual rate of Base Salary paid to Executive at any time under the Agreement, plus (ii) the highest bonus paid to Executive with respect to the two completed fiscal years prior to the Event of Termination. Such payments shall not be reduced in the event Executive obtains other employment following termination of employment. (c) Within 30 days following the occurrence of an Event of Termination, the Bank shall pay Executive, or in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, a lump sum equal to the excess, if any, of the present value of the benefit that Executive would have been entitled to under the Bank's defined benefit pension plan if Executive had continued working for the Bank for 24 months after the effective date of such Event of Termination, over the present value of the benefits to which Executive was actually entitled as of the effective date of such Event of Termination. 4 (d) Upon the occurrence of an Event of Termination, the Bank will provide at the Bank's expense, life insurance and non-taxable medical, dental and vision coverage substantially comparable, as reasonably or customarily available, to the coverage maintained by the Bank for Executive prior to his termination, except to the extent such coverage may be changed in its application to all Bank employees. Such coverage shall cease 24 months following the Event of Termination. (e) Notwithstanding the foregoing, in the event the Executive is a Specified Employee (as defined herein), solely to the extent necessary to avoid penalties under Code Section 409A, payment of the Executive's benefit pursuant to Sections 4(b), 4(c) and 4(d), if applicable, shall be made to the Executive on the first day of the seventh month following the Executive's Event of Termination. "Specified Employee" shall be interpreted to comply with Code Section 409A and shall mean a key employee within the meaning of Code Section 416(i) (without regard to paragraph 5 thereof), but an individual shall be a "Specified Employee" only if the Bank or any affiliate is a publicly traded company. (f) For purposes of this Agreement, Event of Termination shall be construed to require a "Separation from Service" as defined in Code Section 409A and the Treasury Regulations promulgated thereunder, such that the Bank and Executive reasonably anticipate that the level of bona fide services Executive would perform after termination would permanently decrease to a level that is less than 50% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period. 5. CHANGE IN CONTROL. (a) For purposes of this Agreement, the term "Change in Control" shall mean: (i) a change in control of a nature that would be required to be reported in response to Item 5.01(a) of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) a change in control of the Bank or the Company within the meaning of the Home Owners Loan Act, as amended ("HOLA"), and applicable rules and regulations promulgated thereunder, as in effect at the time of the Change in Control; or (iii) any of the following events, upon which a Change in Control shall be deemed to have occurred: (A) any "person" (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of Company's outstanding securities except for any securities purchased by the Bank's employee stock ownership plan or trust; or (B) individuals who constitute the Board on the date hereof (the "Incumbent Board") cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date 5 hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company's stockholders was approved by the same Nominating Committee serving under an Incumbent Board, shall be, for purposes of this subsection (B), considered as though he were a member of the Incumbent Board; or (C) a sale of all or substantially all the assets of the Bank or the Company, or a plan of reorganization, merger, consolidation, or similar transaction occurs in which the security holders of the Company immediately prior to the consummation of the transaction do not own at least 50.1% of the securities of the surviving entity to be outstanding upon consummation of the transaction; or (D) a proxy statement is issued soliciting proxies from stockholders of the Company by someone other than the current management of the Company, seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or similar transaction with one or more corporations as a result of which the outstanding shares of the class of securities then subject to the plan are to be exchanged for or converted into cash or property or securities not issued by the Company; or (E) a tender offer is made for 25% or more of the voting securities of the Company and the shareholders owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror. (b) Notwithstanding the preceding paragraphs of this Section, in the event that the aggregate payments or benefits to be made or afforded to Executive in the event of a Change in Control would be deemed to include an "excess parachute payment" under Section 280G of the Code or any successor thereto, then the cash severance payable under Section 4 shall be reduced by the minimum amount necessary to result in no portion of the payments and benefits payable by the Bank under Section 4 being non-deductible pursuant to Code Section 280G and subject to an excise tax imposed under Code Section 4999. 6. TERMINATION FOR DISABILITY OR DEATH. (a) Termination of Executive's employment based on "Disability" shall be construed to comply with Code section 409A and shall be deemed to have occurred if (i) the Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death, or last for a continuous period of not less than 12 months; (ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death, or last for a continuous period of not less than 12 months, the Executive is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Bank; or (iii) the Executive is determined to be totally disabled by the Social Security Administration. The provisions of paragraph 6(b) and (c) shall apply upon the termination of the Executive's employment for Disability. (b) The Executive shall be entitled to receive benefits under any short or long term disability plan maintained by the Bank. To the extent such benefits are less than the Executive's Base Salary, the Bank will pay Executive an amount equal to the difference between such disability plan benefits and the amount of 6 Executive's Base Salary for the longer of (i) the remaining term of the Agreement or (ii) one year following his termination of employment due to Disability. Any payments required hereunder shall be payable in monthly installments and shall commence within 30 days following the date on which Executive is determined to be Disabled. (c) The Bank will cause to be continued life insurance and non-taxable medical, dental and vision coverage substantially comparable, as reasonable or customarily available, to the coverage maintained by the Bank for Executive prior to his termination for Disability, except to the extent such coverage may be changed in its application to all Bank employees or not available on an individual basis to an employee terminated for Disability. This coverage shall cease upon the earlier of (i) the date Executive returns to the full-time employment of the Bank; (ii) Executive's full-time employment by another employer; (iii) Executive attaining the age of 65; or (iv) Executive's death. (d) In the event of Executive's death during the term of the Agreement, his estate, legal representatives or named beneficiaries (as directed by executive in writing) shall be paid Executive's Base Salary as defined in paragraph 3(a) at the rate in effect at the time of Executive's death for a period of one (1) year from the date of Executive's death, and the Bank will continue to provide non-taxable medical, dental, vision and other insurance benefits normally provided for Executive's family (in accordance with its customary co-pay percentages) for one (1) year after Executive's death. Such payments are in addition to any other life insurance benefits that the Executive's beneficiaries may be entitled to receive under any employee benefit plan maintained by the Bank for the benefit of the Executive, including, but not limited to, the Bank's tax-qualified retirement plans and the Executive Salary Continuation Agreement (SERP). 7. TERMINATION UPON RETIREMENT. Termination of Executive's employment based on "Retirement" shall mean termination of Executive's employment at age 65 or in accordance with any retirement policy established by the Board with Executive's consent with respect to him. Upon termination of Executive based on Retirement, no amounts or benefits shall be due Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Bank and other plans to which Executive is a party. 8. TERMINATION FOR CAUSE. (a) The Bank may terminate the Executive's employment at any time, but any termination other than Termination for Cause, as defined herein, shall not prejudice the Executive's right to compensation or other benefits under the Agreement. The Executive shall have no right to receive compensation or other benefits for any period after Termination for Cause. Termination for Cause shall include termination because of the Executive's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, material breach of the Bank's Code of Ethics, material violation of the Sarbanes-Oxley requirements for officers of public companies that in the reasonable opinion of the CEO or the Board will likely cause substantial 7 financial harm or substantial injury to the reputation of the the Bank, willfully engaging in actions that in the reasonable opinion of the CEO or the Board will likely cause substantial financial harm or substantial injury to the business reputation of the Bank, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the Agreement. (b) For purposes of this Section 8, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Bank. Any act, or failure to act, based upon the direction of the CEO or based upon the advice of counsel for the Bank shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Bank. 9. NOTICE. (a) Any purported termination by the Bank for Cause shall be communicated by Notice of Termination to Executive. If, within 30 days after any Notice of Termination for Cause is given, Executive notifies the Bank that a dispute exists concerning the termination, the parties shall promptly proceed to arbitration. Notwithstanding the pendency of any such dispute, the Bank shall discontinue paying Executive's compensation until the dispute is finally resolved in accordance with this Agreement. If it is determined that Executive is entitled to compensation and benefits under Section 4of this Agreement, the payment of such compensation and benefits by the Bank shall commence immediately following the date of resolution by arbitration, with interest due Executive on the cash amount that would have been paid pending arbitration (at the prime rate as published in The Wall Street Journal from time to time). (b) Any other purported termination by the Bank or by Executive shall be communicated by a Notice of Termination to the other party. If, within 30 days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the parties shall promptly proceed to arbitration as provided in Section 19 of this Agreement. Notwithstanding the pendency of any such dispute, the Bank shall continue to pay Executive his Base Salary, and other compensation and benefits in effect when the notice giving rise to the dispute was given (except as to termination of Executive for Cause); provided, however, that such payments and benefits shall not continue beyond the date that is 24 months from the date the Notice of Termination is given. In the event the voluntary termination by Executive of his employment is disputed by the Bank, and if it is determined in arbitration that Executive is not entitled to termination benefits pursuant to this Agreement, he shall return all cash payments made to him pending resolution by arbitration, with interest thereon at the prime rate as published in The Wall Street Journal from time to time if it is determined in arbitration that Executive's voluntary termination of employment was not taken in good faith and not in the reasonable belief that grounds existed for his voluntary termination. If it is determined that the Executive is entitled to receive severance benefits under this Agreement, then any continuation of Base Salary and other compensation and benefits made to the Executive under this Section 9 shall offset the amount of any severance benefits that are due to the Executive under this Agreement. 8 (c) For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated and "Date of Termination" shall mean the date of the Notice of Termination. 10. POST-TERMINATION OBLIGATIONS. (a) The Executive hereby covenants and agrees that, for a period of one year following his termination of employment with the Bank, he shall not, without the written consent of the Bank, either directly or indirectly: (i) solicit, offer employment to, or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any officer or employee of the Bank or any of its affiliates to terminate his or her employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any business whatsoever that competes with the business of the Bank or any of its affiliates or has headquarters or offices within 50 miles of the locations in which the Bank or its affiliates has business operations or has filed an application for regulatory approval to establish an office; (ii) become an officer, employee, consultant, director, independent contractor, agent, sole proprietor, joint venturer, greater than 5% equity-owner or stockholder, partner or trustee of any savings bank, savings and loan association, savings and loan holding company, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker or any other entity competing with the Bank or its affiliates in the same geographic locations where the Bank or its affiliates has material business interests; provided, however, that this restriction shall not apply if the Executive's employment is terminated following a Change in Control; or (iii) solicit, provide any information, advice or recommendation or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any customer of the Bank or its affiliates to terminate an existing business or commercial relationship with the Bank or its affiliates. (b) Executive shall, upon reasonable notice, furnish such information and assistance to the Bank and/or its affiliates, as may reasonably be required by the Bank and/or its affiliates, in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between the Executive and the Bank, or any of its affiliates. (c) All payments and benefits to the Executive under this Agreement shall be subject to the Executive's compliance with this Section. The parties hereto, recognizing that irreparable injury will result to the Bank, its business and property in the event of the Executive's breach of this Section, agree that, in the event of any such breach by the Executive, the Bank will be entitled, in 9 addition to any other remedies and damages available, to an injunction to restrain the violation hereof by the Executive and all persons acting for or with the Executive. The Executive represents and admits that the Executive's experience and capabilities are such that the Executive can obtain employment in a business engaged in other lines and/or of a different nature than the Bank, and that the enforcement of a remedy by way of injunction will not prevent the Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies for such breach or threatened breach, including the recovery of damages from the Executive. 11. SOURCE OF PAYMENTS. All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank. 12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS. This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor of the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement. 13. NO ATTACHMENT; BINDING ON SUCCESSORS. (a) 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 execution, 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. (b) This Agreement shall be binding upon, and inure to the benefit of, Executive and the Bank and their respective successors and assigns. 14. MODIFICATION AND WAIVER. (a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto. (b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived. 10 15. REQUIRED PROVISIONS. (a) The Bank may terminate Executive's employment at any time, but any termination by the Bank's Board other than Termination for Cause as defined in Section 8 hereof shall not prejudice Executive's right to compensation or other benefits under this Agreement. Executive shall have no right to receive compensation or other benefits for any period after Termination for Cause. (b) If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank's affairs by a notice served under Section 8(e)(3) [12 U.S.C. ss.1818(e)(3)] or 8(g)(1) [12 U.S.C. ss.1818(g)(1)] of the Federal Deposit Insurance Act, the Bank's obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion (i) pay Executive 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. (c) If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank's affairs by an order issued under Section 8(e)(4) [12 U.S.C. ss.1818(e)(4)] or 8(g)(1) [12 U.S.C. ss.1818(g)(1)] of the Federal Deposit Insurance Act, all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected. (d) If the Bank is in default as defined in Section 3(x)(1) [12 U.S.C. ss.1813(x)(1)] of the Federal Deposit Insurance Act, all obligations of the Bank under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties. (e) All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the Agreement is necessary for the continued operation of the Bank, (i) by the Director of the OTS or his or her designee, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) [12 U.S.C. ss.1823(c)] of the Federal Deposit Insurance Act; or (ii) by the Director or his or her designee at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action. (f) Notwithstanding anything herein contained to the contrary, any payments to Executive, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359. 16. SEVERABILITY. If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each 11 such other provision and part thereof shall to the full extent consistent with law continue in full force and effect. 17. HEADINGS FOR REFERENCE ONLY. The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. 18. GOVERNING LAW. This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania but only to the extent not superseded by federal law. 19. ARBITRATION. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single arbitrator sitting in a location selected by the Executive within twenty-five miles of Stroudsburg, Pennsylvania in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of his right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. 20. INDEMNIFICATION. (a) The Executive shall be provided with coverage under a standard directors' and officers' liability insurance policy. The Bank shall indemnify Executive to the fullest extent permitted against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his having been an officer of the Bank (whether or not he continues to be an officer at the time of the of incurring such expenses or liabilities) such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys' fees and the cost of reasonable settlements (such settlements must be approved by the Board), provided that the Bank shall not be required to indemnify or reimburse Executive for legal expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive. Any such indemnification shall be made consistent with Section 545.121 of the OTS Regulations and Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. ss.1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359. 21. NOTICE. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below: 12 To the Bank: ESSA Bank & Trust 200 Palmer Street Stroudsburg, PA 18360 To Executive: Robert S. Howes 452 Creekwood Drive Stroudsburg, PA 18360 SIGNATURES IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by its duly authorized representative, and Executive has signed this Agreement, on the date first above written. ESSA BANK & TRUST 9/30/2008 /s/ Gary S. Olson - ------------------------------ By: ----------------------------- Date Gary S. Olson, President and Chief Executive Officer EXECUTIVE: 9/30/2008 /s/ Robert S. Howes - ------------------------------ --------------------------------- Date Robert S. Howes EX-10.1 5 exh101_100608.txt AMENDED AND RESTATED EMPLOYMENT AGREEMENT - OLSON AMENDED AND RESTATED EMPLOYMENT AGREEMENT This Amended and Restated Employment Agreement (the "Agreement") is made effective as of September 30, 2008 (the "Effective Date"), by and between ESSA Bank & Trust, a Pennsylvania chartered stock savings association with its principal office in Stroudsburg, Pennsylvania (the "Bank"), ESSA Bancorp, Inc. a Pennsylvania corporation that owns 100% of the common stock of the Bank (the "Company"), and Gary S. Olson ("Executive"). Any reference to the "Employer" shall mean both the Company and the Bank. WHEREAS, the Executive is currently employed as President and Chief Executive Officer of the Employer pursuant to an employment agreement that was effective March 31, 2007 (the "Original Agreement"); and WHEREAS, the Employer desires to amend and restate the Original Agreement in order to make changes to comply with the final regulations issued under Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), in April, 2007; and WHEREAS, Executive is willing to serve the Employer on the terms and conditions hereinafter set forth and has agreed to such changes; and WHEREAS, the Board of Directors of the Employer and the Executive believe it is in the best interests of the Employer to enter into the Agreement in order to reinforce and reward the Executive for his service and dedication to the continued success of the Employer and incorporate the changes required by the final regulations under Code Section 409A. NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows: 1. POSITION AND RESPONSIBILITIES. During the period of his employment hereunder, Executive agrees to serve as President and Chief Executive Officer of the Employer (the "Executive Position"). Executive shall be responsible for the overall management, and shall be responsible for establishing the Employer's business objectives, policies and strategic plans in conjunction with the Board of Directors (the "Board"). Executive shall also be responsible for providing leadership and direction to all departments or divisions, and shall be the primary contact between the Board and the staff. As Chief Executive Officer, Executive shall directly report to the Board. Executive shall also be nominated as a member of the Board, subject to election by shareholders. Executive also agrees to serve, if elected, as an officer and director of any affiliate of the Employer. 2. TERM AND DUTIES. (a) Three Year Contract; Annual Renewal. Executive's period of employment with the Employer ("Employment Period") shall begin on the Effective Date and shall renew on each anniversary date thereafter, until the date that the Employer gives Executive written notice of non-renewal ("Non-Renewal Notice"). The Employment Period shall end on the date that is thirty-six (36) months after the date of the Non-Renewal Notice, unless the parties agree that the Employment Period shall end on an earlier date. Notwithstanding the foregoing, all changes to the Agreement intended to comply with Code Section 409A shall be retroactively effective to March 31, 2007; and provided further that no retroactive change shall affect the compensation or benefits previously provided to the Executive. (b) Annual Performance Evaluation. On either a fiscal year or calendar year basis, (consistently applied from year to year), the Employer shall conduct an annual evaluation of Executive's performance. The annual performance evaluation proceedings shall be included in the minutes of the Board meeting that next follows such annual performance review. (c) Continued Employment Following Termination of Employment Period. Nothing in this Agreement shall mandate or prohibit a continuation of Executive's employment following the expiration of the Employment Period upon such terms and conditions as the Employer and Executive may mutually agree. (d) Duties; Membership on Other Boards. During the Employment Period, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence approved by the Board, Executive shall devote substantially all his business time, attention, skill, and efforts to the faithful performance of his duties hereunder including activities and services related to the organization, operation and management of the Employer; provided, however, that, with the approval of the Board, as evidenced by a resolution of such Board, from time to time, Executive may serve, or continue to serve, on the boards of directors of, and hold any other offices or positions in, business companies or business organizations, which, in the Board's judgment, will not present any conflict of interest with the Employer, or materially affect the performance of Executive's duties pursuant to this Agreement it being understood that membership in and service on boards or committees of social, religious, charitable or similar organizations does not require Board approval pursuant to this Section 2(d). For purposes of this Section 2(d), Board approval shall be deemed to have been granted as to service with any such business company or organization that Executive was serving as of the date of this Agreement. 3. COMPENSATION, BENEFITS AND REIMBURSEMENT. (a) Base Salary. The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2. The Employer shall pay Executive as compensation a salary of not less than $252,703 per year ("Base Salary"). Such Base Salary shall be payable biweekly, or with such other frequency as officers and employees are generally paid. During the period of this Agreement, Executive's Base Salary shall be reviewed at least annually. Such review may be conducted by a Committee designated by the Board, and the Employer may increase, but not decrease (except a decrease that is generally applicable to all employees) Executive's Base Salary (with any increase in Base Salary to become "Base Salary" for purposes of this Agreement). (b) Bonus and Incentive Compensation. Executive will be entitled to incentive compensation and bonuses as provided in any plan of the Employer in which Executive is eligible to participate. Nothing paid to Executive under any such plan or arrangement will be deemed to be in lieu of other compensation to which Executive is entitled under this Agreement. 2 (c) Employee Benefits. The Employer will provide Executive with employee benefit plans, arrangements and perquisites substantially equivalent to those in which Executive was participating or otherwise deriving benefit from immediately prior to the beginning of the term of this Agreement, and the Employer will not, without Executive's prior written consent, make any changes in such plans, arrangements or perquisites which would adversely affect Executive's rights or benefits thereunder, except as to any changes that are applicable to all participating employees or as reasonably or customarily available. Without limiting the generality of the foregoing provisions of this Section 3(c), Executive will be entitled to participate in or receive benefits under any employee benefit plans including, but not limited to, retirement plans, supplemental retirement plans, pension plans, profit-sharing plans, health-and-accident insurance plans, medical coverage or any other employee benefit plan or arrangement made available by the Employer in the future to its senior executives, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. (d) Paid Time Off. Executive shall be entitled to paid vacation time each year during the Employment Period (measured on a fiscal or calendar year basis, in accordance with the Employer's usual practices), as well as sick leave, holidays and other paid absences in accordance with the Employer's policies and procedures for senior executives. Any unused paid time off during an annual period shall be treated in accordance with the Employer's personnel policies as in effect from time to time. (e) Expense Reimbursements. During the Employment Period, the Employer shall pay or reimburse Executive for the full cost of the use of an automobile that is mutually agreeable to the Employer and Executive. The Employer shall also pay or reimburse Executive for all reasonable travel, entertainment and other reasonable expenses incurred by Executive during the course of performing his obligations under this Agreement, including, without limitation, fees for memberships in such clubs and organizations as Executive and the Board shall mutually agree are necessary and appropriate in connection with the performance of his duties under this Agreement, upon presentation to the Employer of an itemized account of such expenses in such form as the Employer may reasonably require. All reimbursements under this Section 3(e) shall be paid as soon as practicable by the Employer; provided, however, that no payment shall be made later than March 15 of the year immediately following the year in which the expense was incurred. 4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION. (a) Upon the occurrence of an Event of Termination (as herein defined) during Executive's term of employment under this Agreement, the provisions of this section shall apply; provided, however, that benefits shall be provided either under Section 4 or Section 5 (related to a Change in Control), but not both, such that to the extent the Executive has received payments under one of those Sections, the Executive shall not receive payments under the other Section. As used in this Agreement, an "Event of Termination" shall mean and include any one or more of the following: (i) the termination by the Employer of Executive's full-time employment hereunder for any reason other than a Change in Control, as defined in Section 5 hereof, a Termination for Cause, as defined in Section 8 hereof, or 3 a termination upon Retirement as defined in Section 7 hereof, or a termination for Disability as set forth in Section 6 hereof; and (ii) Executive's resignation from the Employer's employ upon any of the following (which shall be treated as termination of employment for "Good Reason"), unless consented to by Executive: (A) failure to appoint Executive to the Executive Position set forth in Section 1 above, or a material change in Executive's function, duties, or responsibilities, which change would cause Executive's position to become one of lesser responsibility, importance, or scope from the position and responsibilities described in Section 1 above, to which Executive has not agreed in writing (and any such material change shall be deemed a continuing breach of this Agreement); (B) a relocation of Executive's principal place of employment to a location that is more than 50 miles from the location of the Employer's principal executive offices as of the date of this Agreement; (C) a material reduction in the benefits and perquisites, including Base Salary, to Executive from those being provided as of the Effective Date (except for any reduction that is part of a reduction in pay or benefits that is generally applicable to officers or employees); (D) a liquidation or dissolution of the Company or the Bank other than liquidations or dissolutions that are caused by reorganizations that do not affect the status of the Executive; or (E) a material breach of this Agreement by the Company or the Bank. Upon the occurrence of any event described in clause (ii) above, Executive shall have the right to elect to terminate his employment under this Agreement by resignation within 90 days after the event giving rise to said right to elect, which termination by Executive shall be an Event of Termination. The Employer shall have at least 30 days to remedy an event set forth in clauses (ii)(A) through (E) above; provided, however, that the Employer shall be entitled to waive such period and make an immediate payment hereunder. If the Employer remedies the condition within such 30 day cure period, then no Good Reason shall be deemed to exist with respect to such event. If the Employer does not remedy the event within such 30 day cure period, then the Executive may deliver a Notice of Termination, as defined in Section 10(c), for Good Reason at any time within 60 days following the expiration of such cure period. No payments or benefits shall be due to Executive under this Agreement upon the termination of Executive's employment except as provided in Section 4 or 5 hereof. (b) Within 30 days following the occurrence of an Event of Termination, the Employer shall pay Executive, or, in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, as severance pay or liquidated damages, or both, a lump sum cash amount equal to three times the sum of (i) the highest annual rate of Base Salary paid to Executive at any time under the Agreement, plus (ii) the highest bonus paid to Executive with respect to the three completed fiscal years prior to the Event of Termination. 4 Such payments shall not be reduced in the event Executive obtains other employment following termination of employment. (c) Within 30 days following the occurrence of an Event of Termination, the Employer shall pay Executive, or in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, a lump sum equal to the excess, if any, of the present value of the benefit that Executive would have been entitled to under the Employer's defined benefit pension plan if Executive had continued working for the Employer for 36 months after the effective date of such Event of Termination, over the present value of the benefits to which Executive was actually entitled as of the effective date of such Event of Termination. (d) Upon the occurrence of an Event of Termination, the Employer will provide at the Employer's expense, life insurance and non-taxable medical and dental coverage substantially comparable, as reasonably or customarily available, to the coverage maintained by the Employer for Executive prior to his termination, except to the extent such coverage may be changed in its application to all Employer employees. Such coverage shall cease 36 months following the Event of Termination. In the alternative, the Employer may elect to pay to Executive a cash amount equal to Executive's cost of obtaining such benefits on his own, adjusted for any federal or state income taxes Executive has to pay on the cash amount within 30 days following the occurrence of an Event of Termination. (e) Notwithstanding the foregoing, in the event the Executive is a Specified Employee (as defined herein), solely to the extent necessary to avoid penalties under Code Section 409A, payment of the Executive's benefit pursuant to Sections 4(b), 4(c) and 4(d), if applicable, shall be made to the Executive on the first day of the seventh month following the Executive's Event of Termination. "Specified Employee" shall be interpreted to comply with Code Section 409A and shall mean a key employee within the meaning of Code Section 416(i) (without regard to paragraph 5 thereof), but an individual shall be a "Specified Employee" only if the Company, the Bank, or any affiliate is a publicly traded company. (f) For purposes of Section 4, Event of Termination shall be construed to require a "Separation from Service" as defined in Code Section 409A and the Treasury Regulations promulgated thereunder, such that the Employer and Executive reasonably anticipate that the level of bona fide services Executive would perform after termination would permanently decrease to a level that is less than 50% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period. 5. CHANGE IN CONTROL. (a) Any payment made under this Section 5 is in lieu of any payments that may otherwise be owed to the Executive under Section 4, such that the Executive shall either receive payments under Section 4 or under Section 5, but not under both Sections. (b) Except for payments that are subject to Code Section 409A, for purposes of this Agreement, the term "Change in Control" shall mean: 5 (i) a change in control of a nature that would be required to be reported in response to Item 5.01(a) of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) a change in control of the Bank or the Company within the meaning of the Home Owners Loan Act, as amended ("HOLA"), and applicable rules and regulations promulgated thereunder, as in effect at the time of the Change in Control; or (iii) any of the following events, upon which a Change in Control shall be deemed to have occurred: (A) any "person" (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of Company's outstanding securities except for any securities purchased by the Bank's employee stock ownership plan or trust; or (B) individuals who constitute the Board on the date hereof (the "Incumbent Board") cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company's stockholders was approved by the same Nominating Committee serving under an Incumbent Board, shall be, for purposes of this subsection (B), considered as though he were a member of the Incumbent Board; or (C) a sale of all or substantially all the assets of the Bank or the Company, or a plan of reorganization, merger, consolidation, or similar transaction occurs in which the security holders of the Company immediately prior to the consummation of the transaction do not own at least 50.1% of the securities of the surviving entity to be outstanding upon consummation of the transaction; or (D) a proxy statement is issued soliciting proxies from stockholders of the Company by someone other than the current management of the Company, seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or similar transaction with one or more corporations as a result of which the outstanding shares of the class of securities then subject to the plan are to be exchanged for or converted into cash or property or securities not issued by the Company; or (E) a tender offer is made for 25% or more of the voting securities of the Company and the shareholders owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror. (c) With respect to any payments hereunder that are subject to Code Section 409A, "Change in Control" shall mean (i) a change in the ownership of the Bank or the Company, (ii) a change in the effective control of the Bank or Company, or (iii) a change in the ownership of a substantial portion of the assets of the Bank or Company, as described below. 6 (i) A change in ownership occurs on the date that any one person, or more than one person acting as a group (as defined in Final Treasury Regulations section 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Bank or Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of such corporation. (ii) A change in the effective control of the Bank or Company occurs on the date that either (i) any one person, or more than one person acting as a group (as defined in Final Treasury Regulations section 1.409A-3(i)(5)(vi)(D)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Bank or Company possessing 30% or more of the total voting power of the stock of the Bank or Company, or (ii) a majority of the members of the Bank's or Company's board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Bank's or Company's board of directors prior to the date of the appointment or election, provided that this subsection 5(c)(ii) is inapplicable where a majority shareholder of the Bank or Company is another corporation. (iii) A change in a substantial portion of the Bank's or Company's assets occurs on the date that any one person or more than one person acting as a group (as defined in Final Treasury Regulations section 1.409A-3(i)(5)(vii)(C)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Bank or Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of (i) all of the assets of the Bank or Company, or (ii) the value of the assets being disposed of, either of which is determined without regard to any liabilities associated with such assets. For all purposes of this subsection 5(c), the definition of Change in Control shall be construed to be consistent with the requirements of Final Treasury Regulations section 1.409A-3(i)(5), except to the extent that such final regulations are superseded by subsequent guidance. (d) Within 30 days following the effective date of a Change in Control, Executive, or, in the event of his death following a Change in Control, his beneficiary or beneficiaries, or his estate, as the case may be, shall receive as severance pay or liquidated damages, or both, a lump sum payment equal to three times the sum of (i) Executive's highest annual rate of Base Salary plus (ii) the highest rate of bonus awarded to Executive during the prior three years. (e) Within 30 days following the termination of the Executive's employment (other than for Cause) following a Change in Control, the Employer shall pay Executive, or in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, a lump sum equal to the excess, if any, of the present value of the benefit that Executive would have been entitled to under the Employer's defined benefit pension plan if Executive had continued working for the Employer for thirty-six (36) months after the effective date of such termination of employment, over the present value of the benefits to which Executive was actually entitled as of the effective date of such termination of employment. (f) Upon the termination of the Executive's employment (other than for Cause) following a Change in Control, the Employer will provide at the Employer's expense, life insurance and non-taxable medical and dental coverage substantially comparable, as reasonably or customarily available, to the 7 coverage maintained by the Employer for Executive prior to his termination, except to the extent such coverage may be changed in its application to all Employer employees. Such coverage shall cease thirty-six (36) months following the Executive's termination of employment. (g) Notwithstanding the preceding paragraphs of this Section, in the event that the aggregate payments or benefits to be made or afforded to Executive in the event of a Change in Control would be deemed to include an "excess parachute payment" under Section 280G of the Code or any successor thereto, then at the election of Executive, (i) such payments or benefits shall be payable or provided to Executive over the minimum period necessary to reduce the present value of such payments or benefits to an amount which is one dollar ($1.00) less than three times Executive's "base amount" under Section 280G of the Code or (ii) the payments or benefits to be provided under this Section 5 shall be reduced to the extent necessary to avoid treatment as an excess parachute payment with the allocation of the reduction among such payments and benefits to be determined by Executive. Notwithstanding the foregoing, in the event if it is determined that such election by the Executive shall be in violation of Code Section 409A, then the cash severance payable pursuant to Section 5 hereof shall be reduced by the minimum amount necessary to result in no portion of the payments and benefits payable by the Employer under Section 5 being non-deductible pursuant to Code Section 280G and subject to excise tax imposed under Code Section 4999. (h) Notwithstanding the foregoing, in the event the Executive is a Specified Employee, solely to the extent necessary to avoid penalties under Code Section 409A, payment of the Executive's benefit pursuant to Sections 5(e) and 5(f) if applicable, shall be made to the Executive on the first day of the seventh month following the Executive's termination of employment following a Change in Control. (i) For purposes of this Section 5, termination of employment shall be construed to require a "Separation from Service" as defined in Code Section 409A and the Treasury Regulations promulgated thereunder, such that the Employer and Executive reasonably anticipate that the level of bona fide services Executive would perform after termination would permanently decrease to a level that is less than 50% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period. 6. TERMINATION FOR DISABILITY OR DEATH. (a) Termination of Executive's employment based on "Disability" shall be construed to comply with Code section 409A and shall be deemed to have occurred if (i) the Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death, or last for a continuous period of not less than 12 months; (ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death, or last for a continuous period of not less than 12 months, the Executive is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Employer; or (iii) the Executive is determined to be totally disabled by the Social Security Administration. The provisions of 8 paragraph 6(b) and (c) shall apply upon the termination of the Executive's employment for Disability. (b) The Executive shall be entitled to receive benefits under any short or long term disability plan maintained by the Employer. To the extent such benefits are less than the Executive's Base Salary, the Employer will pay Executive an amount equal to the difference between such disability plan benefits and the amount of Executive's Base Salary for the longer of (i) the remaining term of the Agreement or (ii) one year following his termination of employment due to Disability. Any payments required hereunder shall be payable in monthly installments and shall commence within 30 days following the date on which Executive is determined to be Disabled. (c) The Employer will cause to be continued life insurance and non-taxable medical and dental coverage substantially comparable, as reasonable or customarily available, to the coverage maintained by the Employer for Executive prior to his termination for Disability, except to the extent such coverage may be changed in its application to all Employer employees or not available on an individual basis to an employee terminated for Disability. This coverage shall cease upon the earlier of (i) the date Executive returns to the full-time employment of the Employer; (ii) Executive's full-time employment by another employer; (iii) Executive attaining the age of 65; or (iv) Executive's death. (d) In the event of Executive's death during the term of the Agreement, his estate, legal representatives or named beneficiaries (as directed by executive in writing) shall be paid Executive's Base Salary as defined in paragraph 3(a) at the rate in effect at the time of Executive's death for a period of one (1) year from the date of Executive's death, and the Employer will continue to provide non-taxable medical, dental and other insurance benefits normally provided for Executive's family (in accordance with its customary co-pay percentages) for one (1) year after Executive's death. Such payments are in addition to any other life insurance benefits that the Executive's beneficiaries may be entitled to receive under any employee benefit plan maintained by the Employer for the benefit of the Executive, including, but not limited to, the Employer's tax-qualified retirement plans and the Executive Salary Continuation Agreement (SERP). 7. TERMINATION UPON RETIREMENT. Termination of Executive's employment based on "Retirement" shall mean termination of Executive's employment at age 65 or in accordance with any retirement policy established by the Board with Executive's consent with respect to him. Upon termination of Executive based on Retirement, no amounts or benefits shall be due Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Employer and other plans to which Executive is a party. 8. TERMINATION FOR CAUSE. (a) The Employer may terminate the Executive's employment at any time, but any termination other than Termination for Cause, as defined herein, shall not prejudice the Executive's right to compensation or other benefits under the Agreement. The Executive shall have no right to receive compensation or other 9 benefits for any period after Termination for Cause. Termination for Cause shall include termination because of the Executive's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, material breach of the Employer's Code of Ethics, material violation of the Sarbanes-Oxley requirements for officers of public companies that in the reasonable opinion of the Board will likely cause substantial financial harm or substantial injury to the reputation of the Employer, willfully engaging in actions that in the reasonable opinion of the Board will likely cause substantial financial harm or substantial injury to the business reputation of the Employer, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the Agreement. (b) For purposes of this Section 8, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Employer. Any act, or failure to act, based upon the direction of the Board or based upon the advice of counsel for the Employer shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Employer. 9. RESIGNATION FROM BOARDS OF DIRECTORS In the event of Executive's termination of employment for any reason, Executive's service as a director of the Bank, the Company and any affiliate shall immediately terminate. This Section of the Agreement shall constitute a resignation notice for such purposes. 10. NOTICE. (a) Any purported termination by the Employer for Cause shall be communicated by Notice of Termination to Executive. If, within 30 days after any Notice of Termination for Cause is given, Executive notifies the Employer that a dispute exists concerning the termination, the parties shall promptly proceed to arbitration, as provided in Section 20 below. Notwithstanding the pendency of any such dispute, the Employer shall discontinue paying Executive's compensation until the dispute is finally resolved in accordance with this Agreement. If it is determined that Executive is entitled to compensation and benefits under Sections 4 or 5 of this Agreement, the payment of such compensation and benefits by the Employer shall commence immediately following the date of resolution by arbitration, with interest due Executive on the cash amount that would have been paid pending arbitration (at the prime rate as published in The Wall Street Journal from time to time). (b) Any other purported termination by the Employer or by Executive shall be communicated by a Notice of Termination to the other party. If, within 30 days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the parties shall promptly proceed to arbitration as provided in Section 20 below. Notwithstanding the pendency of any such dispute, the Employer shall continue to pay Executive his Base Salary, and other compensation and benefits in effect when the notice giving rise to the dispute was given (except as to termination of Executive for Cause); provided, however, that such payments and benefits shall not continue beyond the date that is 36 months from the date 10 the Notice of Termination is given. In the event the voluntary termination by Executive of his employment is disputed by the Employer, and if it is determined in arbitration that Executive is not entitled to termination benefits pursuant to this Agreement, he shall return all cash payments made to him pending resolution by arbitration, with interest thereon at the prime rate as published in The Wall Street Journal from time to time if it is determined in arbitration that Executive's voluntary termination of employment was not taken in good faith and not in the reasonable belief that grounds existed for his voluntary termination. If it is determined that the Executive is entitled to receive severance benefits under this Agreement, then any continuation of Base Salary and other compensation and benefits made to the Executive under this Section 10 shall offset the amount of any severance benefits that are due to the Executive under this Agreement. (c) For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated and "Date of Termination" shall mean the date of the Notice of Termination. 11. POST-TERMINATION OBLIGATIONS. (a) The Executive hereby covenants and agrees that, for a period of one year following his termination of employment with the Employer, he shall not, without the written consent of the Employer, either directly or indirectly: (i) solicit, offer employment to, or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any officer or employee of the Bank, the Company or any of their respective subsidiaries or affiliates to terminate his or her employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any business whatsoever that competes with the business of the Bank or the Company or any of their direct or indirect subsidiaries or affiliates or has headquarters or offices within 50 miles of the locations in which the Bank or the Company has business operations or has filed an application for regulatory approval to establish an office; (ii) become an officer, employee, consultant, director, independent contractor, agent, sole proprietor, joint venturer, greater than 5% equity-owner or stockholder, partner or trustee of any savings bank, savings and loan association, savings and loan holding company, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker or any other entity competing with the Employer or its affiliates in the same geographic locations where the Employer or its affiliates has material business interests; provided, however, that this restriction shall not apply if the Executive's employment is terminated following a Change in Control; or (iii) solicit, provide any information, advice or recommendation or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any customer of the Bank or the Company to terminate an existing business or commercial relationship with the Bank or the Company. 11 (b) Executive shall, upon reasonable notice, furnish such information and assistance to the Bank and/or the Company, as may reasonably be required by the Bank and/or the Company, in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between the Executive and the Bank, the Company or any of its subsidiaries or affiliates. (c) All payments and benefits to the Executive under this Agreement shall be subject to the Executive's compliance with this Section. The parties hereto, recognizing that irreparable injury will result to the Employer, its business and property in the event of the Executive's breach of this Section 11, agree that, in the event of any such breach by the Executive, the Employer will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by the Executive and all persons acting for or with the Executive. The Executive represents and admits that the Executive's experience and capabilities are such that the Executive can obtain employment in a business engaged in other lines and/or of a different nature than the Employer, and that the enforcement of a remedy by way of injunction will not prevent the Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Employer and the Company from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from the Executive. 12. SOURCE OF PAYMENTS. All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank. The Company, however, guarantees payment and provision of all amounts and benefits due hereunder to Executive, and if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company. 13. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS. This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Employer or any predecessor of the Employer and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement. 14. NO ATTACHMENT; BINDING ON SUCCESSORS. (a) 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 execution, 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. (b) This Agreement shall be binding upon, and inure to the benefit of, Executive and the Employer and their respective successors and assigns. 12 15. MODIFICATION AND WAIVER. (a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto. (b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived. 16. REQUIRED PROVISIONS. (a) The Employer may terminate Executive's employment at any time, but any termination by the Employer's Board other than Termination for Cause as defined in Section 8 hereof shall not prejudice Executive's right to compensation or other benefits under this Agreement. Executive shall have no right to receive compensation or other benefits for any period after Termination for Cause. (b) If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Employer's affairs by a notice served under Section 8(e)(3) [12 U.S.C. ss.1818(e)(3)] or 8(g)(1) [12 U.S.C. ss.1818(g)(1)] of the Federal Deposit Insurance Act, the Employer's obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Employer may in its discretion (i) pay Executive all or part of the compensation withheld while its Agreement obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended. (c) If Executive is removed and/or permanently prohibited from participating in the conduct of the Employer's affairs by an order issued under Section 8(e)(4) [12 U.S.C. ss.1818(e)(4)] or 8(g)(1) [12 U.S.C. ss.1818(g)(1)] of the Federal Deposit Insurance Act, all obligations of the Employer under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected. (d) If the Employer is in default as defined in Section 3(x)(1) [12 U.S.C. ss.1813(x)(1)] of the Federal Deposit Insurance Act, all obligations of the Employer under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties. (e) All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the Agreement is necessary for the continued operation of the Employer, (i) by the Director of the OTS or his or her designee, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Employer under the authority contained in Section 13(c) [12 U.S.C. ss.1823(c)] of the Federal Deposit Insurance Act; or (ii) by the Director or his or her designee at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Employer or when the Employer is determined by the Director to 13 be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action. (f) Notwithstanding anything herein contained to the contrary, any payments to Executive by the Company, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359. 17. SEVERABILITY. If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect. 18. HEADINGS FOR REFERENCE ONLY. The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. 19. GOVERNING LAW. This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania but only to the extent not superseded by federal law. 20. ARBITRATION. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators sitting in a location selected by the Executive within twenty-five miles of Stroudsburg, Pennsylvania in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of his right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. 21. INDEMNIFICATION. (a) The Executive shall be provided with coverage under a standard directors' and officers' liability insurance policy, and shall be indemnified for the term of the Agreement and for a period of six years thereafter to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his having been a director or officer of the Employer or any affiliate (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys' fees and the cost of reasonable settlements (such settlements must be approved by the Board), provided, however, the Executive shall not be indemnified or reimbursed for legal expenses or 14 liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive. Any such indemnification shall be made consistent with Section 545.121 of the OTS Regulations and Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. ss.1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359. (b) Any indemnification by the Employer shall be subject to compliance with any applicable regulations of the OTS. 22. NOTICE. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below: To the Company: ESSA Bancorp, Inc. 200 Palmer Street Stroudsburg, PA 18360 To the Bank: ESSA Bank & Trust 200 Palmer Street Stroudsburg, PA 18360 To Executive: Gary S. Olson 7015 Bangor Mountain Road Stroudsburg PA 18360 15 SIGNATURES IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed by their duly authorized representatives, and Executive has signed this Agreement, on the date first above written. ESSA BANCORP, INC. 9/30/2008 /s/ John E. Burrus - ------------------------------- By: ----------------------------- Date John E. Burrus, Chairman of the Board ESSA BANK & TRUST 9/30/2008 /s/ John E. Burrus - ------------------------------- By:------------------------------ Date John E. Burrus, Chairman of the Board EXECUTIVE: 9/30/2008 /s/ Gary S. Olson - ------------------------------ --------------------------------- Date Gary S. Olson EX-10.5 6 exh105_100608.txt AMENDED AND RESTATED EMPLOYMENT AGREEMENT - WARNER AMENDED AND RESTATED EMPLOYMENT AGREEMENT This Amended and Restated Employment Agreement (the "Agreement") is made effective as of September 30, 2008 (the "Effective Date"), by and between ESSA Bank & Trust, a Pennsylvania chartered stock savings association with its principal office in Stroudsburg, Pennsylvania (the "Bank"), and V. Gail Warner ("Executive"). Any reference to the "Company" shall mean ESSA Bancorp, Inc., a stock holding company which owns 100% of the common stock of the Bank. WHEREAS, the Executive is currently employed as Vice President, Retail Services Division of the Bank pursuant to an employment agreement that was effective March 31, 2007 (the "Original Agreement"); and WHEREAS, the Bank desires to amend and restate the Original Agreement in order to make changes to comply with the final regulations issued under Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), in April, 2007; and WHEREAS, Executive is willing to serve the Bank on the terms and conditions hereinafter set forth and has agreed to such changes; and WHEREAS, the Board of Directors of the Bank and the Executive believe it is in the best interests of the Bank to enter into the Agreement in order to reinforce and reward the Executive for her service and dedication to the continued success of the Bank and incorporate the changes required by the final regulations under Code Section 409A. NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows: 1. POSITION AND RESPONSIBILITIES. During the period of her employment hereunder, Executive agrees to serve as Vice President, Retail Services Division of the Bank (the "Executive Position"). Executive shall be responsible for the overall management of the Bank's retail services functions, and shall be responsible for establishing the business objectives, policies and strategic plans in conjunction with the Chief Executive Officer (the "CEO"). 2. TERM AND DUTIES. (a) Two Year Contract; Annual Renewal. Executive's period of employment with the Bank ("Employment Period") shall begin on the Effective Date and shall renew on each anniversary date thereafter, until the date that the Bank gives Executive written notice of non-renewal ("Non-Renewal Notice"). The Employment Period shall end on the date that is twenty-four (24) months after the date of the Non-Renewal Notice, unless the parties agree that the Employment Period shall end on an earlier date. Notwithstanding the foregoing, all changes to the Agreement intended to comply with Code Section 409A shall be retroactively effective to March 31, 2007; and provided further that no retroactive change shall affect the compensation or benefits previously provided to the Executive. (b) Annual Performance Evaluation. On either a fiscal year or calendar year basis, (consistently applied from year to year), the Bank shall conduct an annual evaluation of Executive's performance. The annual performance evaluation proceedings shall be included in the minutes of the Board meeting that next follows such annual performance review. (c) Continued Employment Following Termination of Employment Period. Nothing in this Agreement shall mandate or prohibit a continuation of Executive's employment following the expiration of the Employment Period upon such terms and conditions as the Bank and Executive may mutually agree. (d) Duties; Membership on Other Boards. During the Employment Period, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence approved by the CEO, Executive shall devote substantially all her business time, attention, skill, and efforts to the faithful performance of her duties hereunder including activities and services related to the organization, operation and management of the Bank; provided, however, that, with the approval of the CEO, Executive may serve, or continue to serve, on the boards of directors of, and hold any other offices or positions in, business companies or business organizations, which, in the CEO's judgment, will not present any conflict of interest with the Bank, or materially affect the performance of Executive's duties pursuant to this Agreement it being understood that membership in and service on boards or committees of social, religious, charitable or similar organizations does not require CEO approval pursuant to this Section 2(d). For purposes of this Section 2(d), CEO approval shall be deemed to have been granted as to service with any such business company or organization that Executive was serving as of the date of this Agreement. 3. COMPENSATION, BENEFITS AND REIMBURSEMENT. (a) Base Salary. The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2. The Bank shall pay Executive as compensation a salary of not less than $127,030 per year ("Base Salary"). Such Base Salary shall be payable biweekly, or with such other frequency as officers and employees are generally paid. During the period of this Agreement, Executive's Base Salary shall be reviewed at least annually. Such review may be conducted by the CEO, and the Bank may increase, but not decrease (except a decrease that is generally applicable to all employees) Executive's Base Salary (with any increase in Base Salary to become "Base Salary" for purposes of this Agreement). (b) Bonus and Incentive Compensation. Executive will be entitled to incentive compensation and bonuses as provided in any plan of the Bank in which Executive is eligible to participate. Nothing paid to Executive under any such plan or arrangement will be deemed to be in lieu of other compensation to which Executive is entitled under this Agreement. (c) Employee Benefits. The Bank will provide Executive with employee benefit plans, arrangements and perquisites substantially equivalent to those in which Executive was participating or otherwise deriving benefit from immediately prior to the beginning of the term of this Agreement, and the Bank will not, without Executive's prior written consent, make any changes in such plans, 2 arrangements or perquisites which would adversely affect Executive's rights or benefits thereunder, except as to any changes that are applicable to all participating employees or as reasonably or customarily available. Without limiting the generality of the foregoing provisions of this Section 3(c), Executive will be entitled to participate in or receive benefits under any employee benefit plans including, but not limited to, retirement plans, supplemental retirement plans, pension plans, profit-sharing plans, health-and-accident insurance plans, medical coverage or any other employee benefit plan or arrangement made available by the Bank in the future to its senior executives, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. (d) Paid Time Off. Executive shall be entitled to paid vacation time each year during the Employment Period (measured on a fiscal or calendar year basis, in accordance with the Bank's usual practices), as well as sick leave, holidays and other paid absences in accordance with the Bank's policies and procedures for senior executives. Any unused paid time off during an annual period shall be treated in accordance with the Bank's personnel policies as in effect from time to time. (e) Expense Reimbursements. During the Employment Period, the Bank shall pay or reimburse Executive for all reasonable travel, entertainment and other reasonable expenses incurred by Executive during the course of performing her obligations under this Agreement, upon presentation to the Bank of an itemized account of such expenses in such form as the Bank may reasonably require. All reimbursements under this Section 3(e) shall be paid as soon as practicable by the Bank; provided, however, that no payment shall be made later than March 15 of the year immediately following the year in which the expense was incurred. 4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION. (a) Upon the occurrence of an Event of Termination (as herein defined) during Executive's term of employment under this Agreement, the provisions of this section shall apply. As used in this Agreement, an "Event of Termination" shall mean and include any one or more of the following: (i) the termination by the Bank of Executive's full-time employment hereunder for any reason other than a Termination for Cause, as defined in Section 8 hereof, or a termination upon Retirement as defined in Section 7 hereof, or a termination for Disability as set forth in Section 6 hereof; and (ii) Executive's resignation from the Bank's employ upon any of the following (which shall be treated as termination of employment for "Good Reason"), unless consented to by Executive: (A) failure to appoint Executive to the Executive Position set forth in Section 1 above, or a material change in Executive's function, duties, or responsibilities, which change would cause Executive's position to become one of lesser responsibility, importance, or scope from the position and responsibilities described in Section 1 above, to which Executive has not agreed in writing (and any such material change shall be deemed a continuing breach of this Agreement); 3 (B) a relocation of Executive's principal place of employment to a location that is more than 50 miles from the location of the Bank's principal executive offices as of the date of this Agreement; (C) a material reduction in the benefits and perquisites, including Base Salary, to paid to the Executive from those being provided as of the Effective Date (except for any reduction that is part of a reduction in pay or benefits that is generally applicable to officers or employees); (D) a liquidation or dissolution of the Bank other than liquidations or dissolutions that are caused by reorganizations that do not affect the status of the Executive; or (E) a material breach of this Agreement by the Bank. Upon the occurrence of any event described in clause (ii) above, Executive shall have the right to elect to terminate her employment under this Agreement within 90 days after the event giving rise to said right to elect, which termination by Executive shall be an Event of Termination. The Bank shall have at least 30 days to remedy any event set forth in clauses (ii)(A) through (E) above; provided, however, that the Bank shall be entitled to waive such period and make an immediate payment hereunder. If the Bank remedies the condition within such 30 day cure period, then no Good Reason shall be deemed to exist with respect to such event. If the Bank does not remedy the event within such 30 day cure period, then the Executive may deliver a Notice of Termination, as defined in Section 9(c) hereof, for Good Reason at any time within 60 days following the expiration of such cure period. (iii) Executive's resignation from the Bank's employ following a Change in Control (as defined below in Section 5). No payments or benefits shall be due to Executive under this Agreement upon the termination of Executive's employment except as provided in Section 4 or 5 hereof. (b) Within 30 days following the occurrence of an Event of Termination, the Bank shall pay Executive, or, in the event of her subsequent death, her beneficiary or beneficiaries, or her estate, as the case may be, as severance pay or liquidated damages, or both, a lump sum cash amount equal to two times the sum of (i) the highest annual rate of Base Salary paid to Executive at any time under the Agreement, plus (ii) the highest bonus paid to Executive with respect to the two completed fiscal years prior to the Event of Termination. Such payments shall not be reduced in the event Executive obtains other employment following termination of employment. (c) Within 30 days following the occurrence of an Event of Termination, the Bank shall pay Executive, or in the event of her subsequent death, her beneficiary or beneficiaries, or her estate, as the case may be, a lump sum equal to the excess, if any, of the present value of the benefit that Executive would have been entitled to under the Bank's defined benefit pension plan if Executive had continued working for the Bank for twenty-four (24) months after the effective date of such Event of Termination, over the present value of the benefits to which Executive was actually entitled as of the effective date of such Event of Termination. 4 (d) Upon the occurrence of an Event of Termination, the Bank will provide at the Bank's expense, life insurance and non-taxable medical, dental and vision coverage substantially comparable, as reasonably or customarily available, to the coverage maintained by the Bank for Executive prior to her termination, except to the extent such coverage may be changed in its application to all Bank employees. Such coverage shall cease 24 months following the Event of Termination. (e) Notwithstanding the foregoing, in the event the Executive is a Specified Employee (as defined herein), solely to the extent necessary to avoid penalties under Code Section 409A, payment of the Executive's benefit pursuant to Sections 4(b), 4(c) and 4(d), if applicable, shall be made to the Executive on the first day of the seventh month following the Executive's Event of Termination. "Specified Employee" shall be interpreted to comply with Code Section 409A and shall mean a key employee within the meaning of Code Section 416(i) (without regard to paragraph 5 thereof), but an individual shall be a "Specified Employee" only if the Bank or any affiliate is a publicly traded company. (f) For purposes of the Agreement, Event of Termination shall be construed to required a "Separation from Service" as defined in Code Section 409A and the Treasury regulations promulgated thereunder, such that the Bank and Executive reasonably anticipate that the level of bona fide services Executive would perform after termination would permanently decrease to a level that is less than 50% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period. 5. CHANGE IN CONTROL. (a) For purposes of this Agreement, the term "Change in Control" shall mean: (i) a change in control of a nature that would be required to be reported in response to Item 5.01(a) of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) a change in control of the Bank or the Company within the meaning of the Home Owners Loan Act, as amended ("HOLA"), and applicable rules and regulations promulgated thereunder, as in effect at the time of the Change in Control; or (iii) any of the following events, upon which a Change in Control shall be deemed to have occurred: (A) any "person" (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of Company's outstanding securities except for any securities purchased by the Bank's employee stock ownership plan or trust; or (B) individuals who constitute the Board on the date hereof (the "Incumbent Board") cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date 5 hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company's stockholders was approved by the same Nominating Committee serving under an Incumbent Board, shall be, for purposes of this subsection (B), considered as though he were a member of the Incumbent Board; or (C) a sale of all or substantially all the assets of the Bank or the Company, or a plan of reorganization, merger, consolidation, or similar transaction occurs in which the security holders of the Company immediately prior to the consummation of the transaction do not own at least 50.1% of the securities of the surviving entity to be outstanding upon consummation of the transaction; or (D) a proxy statement is issued soliciting proxies from stockholders of the Company by someone other than the current management of the Company, seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or similar transaction with one or more corporations as a result of which the outstanding shares of the class of securities then subject to the plan are to be exchanged for or converted into cash or property or securities not issued by the Company; or (E) a tender offer is made for 25% or more of the voting securities of the Company and the shareholders owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror. (b) Notwithstanding the preceding paragraphs of this Section, in the event that the aggregate payments or benefits to be made or afforded to Executive in the event of a Change in Control would be deemed to include an "excess parachute payment" under Section 280G of the Code or any successor thereto, then the cash severance payable under Section 4 shall be reduced by the minimum amount necessary to result in no portion of the payments and benefits payable by the Bank under Section 4 being non-deductible pursuant to Code Section 280G and subject to an excise tax imposed under Code Section 4999. 6. TERMINATION FOR DISABILITY OR DEATH. (a) Termination of Executive's employment based on "Disability" shall be construed to comply with Code section 409A and shall be deemed to have occurred if (i) the Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death, or last for a continuous period of not less than 12 months; (ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death, or last for a continuous period of not less than 12 months, the Executive is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Bank; or (iii) the Executive is determined to be totally disabled by the Social Security Administration. The provisions of paragraph 6(b) and (c) shall apply upon the termination of the Executive's employment for Disability. (b) The Executive shall be entitled to receive benefits under any short or long term disability plan maintained by the Bank. To the extent such benefits 6 are less than the Executive's Base Salary, the Bank will pay Executive an amount equal to the difference between such disability plan benefits and the amount of Executive's Base Salary for the longer of (i) the remaining term of the Agreement or (ii) one year following her termination of employment due to Disability. Any payments required hereunder shall be payable in monthly installments and shall commence within 30 days following the date on which Executive is determined to be Disabled. (c) The Bank will cause to be continued life insurance and non-taxable medical, dental and vision coverage substantially comparable, as reasonable or customarily available, to the coverage maintained by the Bank for Executive prior to her termination for Disability, except to the extent such coverage may be changed in its application to all Bank employees or not available on an individual basis to an employee terminated for Disability. This coverage shall cease upon the earlier of (i) the date Executive returns to the full-time employment of the Bank; (ii) Executive's full-time employment by another employer; (iii) Executive attaining the age of 65; or (iv) Executive's death. (d) In the event of Executive's death during the term of the Agreement, her estate, legal representatives or named beneficiaries (as directed by executive in writing) shall be paid Executive's Base Salary as defined in paragraph 3(a) at the rate in effect at the time of Executive's death for a period of one (1) year from the date of Executive's death, and the Bank will continue to provide non-taxable medical, dental, vision and other insurance benefits normally provided for Executive's family (in accordance with its customary co-pay percentages) for one (1) year after Executive's death. Such payments are in addition to any other life insurance benefits that the Executive's beneficiaries may be entitled to receive under any employee benefit plan maintained by the Bank for the benefit of the Executive, including, but not limited to, the Bank's tax-qualified retirement plans and the Executive Salary Continuation Agreement (SERP). 7. TERMINATION UPON RETIREMENT. Termination of Executive's employment based on "Retirement" shall mean termination of Executive's employment at age 65 or in accordance with any retirement policy established by the Board with Executive's consent with respect to her. Upon termination of Executive based on Retirement, no amounts or benefits shall be due Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Bank and other plans to which Executive is a party. 8. TERMINATION FOR CAUSE. (a) The Bank may terminate the Executive's employment at any time, but any termination other than Termination for Cause, as defined herein, shall not prejudice the Executive's right to compensation or other benefits under the Agreement. The Executive shall have no right to receive compensation or other benefits for any period after Termination for Cause. Termination for Cause shall include termination because of the Executive's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, material breach of the Bank's Code of Ethics, material violation of the Sarbanes-Oxley requirements for officers of public companies that in the reasonable opinion of the CEO or the Board will likely cause substantial 7 financial harm or substantial injury to the reputation of the Bank, willfully engaging in actions that in the reasonable opinion of the CEO or the Board will likely cause substantial financial harm or substantial injury to the business reputation of the Bank, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the Agreement. (b) For purposes of this Section 8, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Bank. Any act, or failure to act, based upon the direction of the CEO or based upon the advice of counsel for the Bank shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Bank. 9. NOTICE. (a) Any purported termination by the Bank for Cause shall be communicated by Notice of Termination to Executive. If, within 30 days after any Notice of Termination for Cause is given, Executive notifies the Bank that a dispute exists concerning the termination, the parties shall promptly proceed to arbitration. Notwithstanding the pendency of any such dispute, the Bank shall discontinue paying Executive's compensation until the dispute is finally resolved in accordance with this Agreement. If it is determined that Executive is entitled to compensation and benefits under Section 4 of this Agreement, the payment of such compensation and benefits by the Bank shall commence immediately following the date of resolution by arbitration, with interest due Executive on the cash amount that would have been paid pending arbitration (at the prime rate as published in The Wall Street Journal from time to time). (b) Any other purported termination by the Bank or by Executive shall be communicated by a Notice of Termination to the other party. If, within 30 days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the parties shall promptly proceed to arbitration as provided in Section 19 of this Agreement. Notwithstanding the pendency of any such dispute, the Bank shall continue to pay Executive her Base Salary, and other compensation and benefits in effect when the notice giving rise to the dispute was given (except as to termination of Executive for Cause); provided, however, that such payments and benefits shall not continue beyond the date that is 24 months from the date the Notice of Termination is given. In the event the voluntary termination by Executive of her employment is disputed by the Bank, and if it is determined in arbitration that Executive is not entitled to termination benefits pursuant to this Agreement, he shall return all cash payments made to her pending resolution by arbitration, with interest thereon at the prime rate as published in The Wall Street Journal from time to time if it is determined in arbitration that Executive's voluntary termination of employment was not taken in good faith and not in the reasonable belief that grounds existed for her voluntary termination. If it is determined that the Executive is entitled to receive severance benefits under this Agreement, then any continuation of Base Salary and other compensation and benefits made to the Executive under this Section shall offset the amount of any severance benefits that are due to the Executive under this Agreement. 8 (c) For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated and "Date of Termination" shall mean the date of the Notice of Termination. 10. POST-TERMINATION OBLIGATIONS. (a) The Executive hereby covenants and agrees that, for a period of one year following her termination of employment with the Bank, he shall not, without the written consent of the Bank, either directly or indirectly: (i) solicit, offer employment to, or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any officer or employee of the Bank or any of its affiliates to terminate his or her employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any business whatsoever that competes with the business of the Bank or any of its affiliates or has headquarters or offices within 50 miles of the locations in which the Bank or its affiliates has business operations or has filed an application for regulatory approval to establish an office; (ii) become an officer, employee, consultant, director, independent contractor, agent, sole proprietor, joint venturer, greater than 5% equity-owner or stockholder, partner or trustee of any savings bank, savings and loan association, savings and loan holding company, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker or any other entity competing with the Bank or its affiliates in the same geographic locations where the Bank or its affiliates has material business interests; provided, however, that this restriction shall not apply if the Executive's employment is terminated following a Change in Control; or (iii) solicit, provide any information, advice or recommendation or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any customer of the Bank or its affiliates to terminate an existing business or commercial relationship with the Bank or its affiliates. (b) Executive shall, upon reasonable notice, furnish such information and assistance to the Bank and/or its affiliates, as may reasonably be required by the Bank and/or its affiliates, in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between the Executive and the Bank, or any of its affiliates. (c) All payments and benefits to the Executive under this Agreement shall be subject to the Executive's compliance with this Section. The parties hereto, recognizing that irreparable injury will result to the Bank, its business and property in the event of the Executive's breach of this Section, agree that, in the event of any such breach by the Executive, the Bank will be entitled, in addition to any other remedies and damages available, to an injunction to 9 restrain the violation hereof by the Executive and all persons acting for or with the Executive. The Executive represents and admits that the Executive's experience and capabilities are such that the Executive can obtain employment in a business engaged in other lines and/or of a different nature than the Bank, and that the enforcement of a remedy by way of injunction will not prevent the Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies for such breach or threatened breach, including the recovery of damages from the Executive. 11. SOURCE OF PAYMENTS. All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank. 12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS. This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor of the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to her without reference to this Agreement. 13. NO ATTACHMENT; BINDING ON SUCCESSORS. (a) 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 execution, 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. (b) This Agreement shall be binding upon, and inure to the benefit of, Executive and the Bank and their respective successors and assigns. 14. MODIFICATION AND WAIVER. (a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto. (b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived. 10 15. REQUIRED PROVISIONS. (a) The Bank may terminate Executive's employment at any time, but any termination by the Bank's Board other than Termination for Cause as defined in Section 8 hereof shall not prejudice Executive's right to compensation or other benefits under this Agreement. Executive shall have no right to receive compensation or other benefits for any period after Termination for Cause. (b) If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank's affairs by a notice served under Section 8(e)(3) [12 U.S.C. ss.1818(e)(3)] or 8(g)(1) [12 U.S.C. ss.1818(g)(1)] of the Federal Deposit Insurance Act, the Bank's obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion (i) pay Executive all or part of the compensation withheld while its Agreement obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended. (c) If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank's affairs by an order issued under Section 8(e)(4) [12 USC ss.1818(e)(4)] or 8(g)(1) [12 U.S.C. ss.1818(g)(1)] of the Federal Deposit Insurance Act, all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected. (d) If the Bank is in default as defined in Section 3(x)(1) [12 U.S.C. ss.1813(x)(1)] of the Federal Deposit Insurance Act, all obligations of the Bank under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties. (e) All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank, (i) by the Director of the OTS or his or her designee, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) [12 U.S.C. ss.1823(c)] of the Federal Deposit Insurance Act; or (ii) by the Director or his or her designee at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action. (f) Notwithstanding anything herein contained to the contrary, any payments to Executive, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359. 16. SEVERABILITY. If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each 11 such other provision and part thereof shall to the full extent consistent with law continue in full force and effect. 17. HEADINGS FOR REFERENCE ONLY. The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. 18. GOVERNING LAW. This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania but only to the extent not superseded by federal law. 19. ARBITRATION. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single arbitrator sitting in a location selected by the Executive within twenty-five miles of Stroudsburg, Pennsylvania in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of her right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. 20. INDEMNIFICATION. (a) The Executive shall be provided with coverage under a standard directors' and officers' liability insurance policy. The Bank shall indemnify Executive to the fullest extent permitted against all expenses and liabilities reasonably incurred by her in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of her having been an officer of the Bank (whether or not he continues to be an officer at the time of the of incurring such expenses or liabilities) such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys' fees and the cost of reasonable settlements (such settlements must be approved by the Board), provided that the Bank shall not be required to indemnify or reimburse Executive for legal expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive. Any such indemnification shall be made consistent with Section 545.121 of the OTS Regulations and Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. ss.1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359. 21. NOTICE. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below: 12 To the Bank: ESSA Bank & Trust 200 Palmer Street Stroudsburg, PA 18360 To Executive: V. Gail Warner 111 Smiley Lane Stroudsburg, PA 18360 SIGNATURES IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by its duly authorized representative, and Executive has signed this Agreement, on the date first above written. ESSA BANK & TRUST 9/30/2008 By:/s/ Gary S. Olson - --------------------- --------------------------- Date Gary S. Olson, President and Chief Executive Officer EXECUTIVE: 9/30/2008 /s/ V. Gail Warner - --------------------- --------------------------- Date V. Gail Warner EX-10.6 7 exh106_100608.txt SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ESSA BANK & TRUST SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN This Supplemental Executive Retirement Plan (the "Plan") is established by ESSA Bank & Trust (the "Bank") effective January 1, 2005 (the "Effective Date") for the purpose of providing additional retirement benefits to a select group of management or highly compensated employees ("Participants"), as selected by the Board of Directors of the Bank (the "Board"). Accordingly, the Plan is intended to qualify as a "top hat" plan for purposes of the Employee Retirement Income Security Act of 1974, as amended. The Plan consolidates, supersedes and replaces the individual Executive Salary Continuation Agreements entered into during September, 2004 by and between the Bank and each of Gary Olson, Robert Howes, Jr., Diane Reimer and Thomas Grayuski (collectively, the "Predecessor Agreements"), such that as of the Effective Date, the Participant's entire benefit is determined solely under the terms of this Plan. All accruals and benefits under the Predecessor Agreements shall be deemed to have been transferred to this Plan, effective January 1, 2005. The Plan is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"). ARTICLE I DEFINITIONS ----------- When used herein, the following words shall have the meanings below unless the context clearly indicates otherwise: 1.1 "Administrator" means the Board. 1.2 "Bank" means ESSA Bank & Trust and any successor thereto. 1.3 "Beneficiary" means the person(s) designated by Participant as the beneficiary in accordance with the Participation Agreement. If no beneficiary is so designated, then the Participant's estate will be the Beneficiary. 1.4 "Cause" means any of the following that result in material measurable adverse effect on the Bank: (i) the conviction of a felony or gross misdemeanor involving fraud or dishonesty; (ii) an intentional failure to perform stated duties as provided by the Bank; (iii) a breach of fiduciary duty involving personal profit. If a dispute arises as to the Participant's termination of participation under the Plan for Cause, such dispute shall be resolved by arbitration, as set forth in Section 8.4. A Participant's termination of participation under this Plan for "Cause" may occur regardless of whether the Participant's employment with the Bank has been terminated for "Cause." 1.5 "Change in Control" means the following: (i) a change in ownership of the Company or the Bank under paragraph (a) below, or (ii) a change in effective control of the Company or the Bank under paragraph (b) below, or (iii) a change in the ownership of a substantial portion of the assets of the Company or the Bank under paragraph (c) below: (a) Change in the ownership of the Company or the Bank. A change in the ownership of the Company or the Bank shall occur on the date that any one person, or more than one person acting as a group (as defined in paragraph (b)), acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of such corporation. However, if any one person or more than one person acting as a group, is considered to own more than 50% of the total fair market value or total voting power of the stock of a corporation, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the corporation (or to cause a change in the effective control of the corporation (within the meaning of paragraph (b) below)). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the corporation acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this section. This paragraph (a) applies only when there is a transfer of stock of a corporation (or issuance of stock of a corporation) and stock in such corporation remains outstanding after the transaction. (b) Change in the effective control of the Company or the Bank. A change in the effective control of the Company or the Bank shall occur on the date that either (i) any one person, or more than one person acting as a group (as determined below), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing 30% or more of the total voting power of the stock of such corporation; or (ii) a majority of members of the corporation's board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation's board of directors prior to the date of the appointment or election, provided that for purposes of this paragraph (b)(ii), the term corporation refers solely to a corporation for which no other corporation is a majority shareholder. In the absence of an event described in paragraph (i) or (ii), a change in the effective control of a corporation will not have occurred. If any one person, or more than one person acting as a group, is considered to effectively control a corporation (within the meaning of this paragraph (b)), the acquisition of additional control of the corporation by the same person or persons is not considered to cause a change in the effective control of the corporation (or to cause a change in the ownership of the corporation within the meaning of paragraph (a)). Persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering. (c) Change in the ownership of a substantial portion of the Company's or the Bank's assets. A change in the ownership of a substantial portion of the Company's or the Bank's assets shall occur on the date that any one person, or more than one person acting as a group (as determined below), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. There is no Change in Control event under this paragraph (c) when there 2 is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer. 1.6 "Company" means ESSA Bancorp, Inc., the stock holding company of the Bank. 1.7 "Disabled" or "Disability" means that the Participant: (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Participant's employer; or (c) is determined to be disabled by the Social Security Administration. 1.8 "Early Retirement Benefit" means, with respect to each Participant, an annual cash benefit equal to the Participant's Normal Retirement Benefit reduced by .05% for each calendar month in between the date on which the Participant Separates from Service following the Early Retirement Date and the Participant's Normal Retirement Date. 1.9 "Early Retirement Date" means that date on which the Participant has attained at least age 60 with 30 Years of Service with the Bank. 1.10 "Liability Reserve Account" means a bookkeeping account established and maintained by the Bank for the benefit of the Participant under this Plan, where a portion of the Participant's Normal Retirement Benefit is expensed and accrued under any appropriate method which the Administrator may select in its sole discretion. 1.11 "Normal Retirement Date" means the date on which the Participant attains age 65. 1.12 "Normal Retirement Benefit" means, with respect to each Participant, an annual cash benefit in the amount as provided in the Participant's Participation Agreement. 1.13 "Participation Agreement" means a written agreement between the Bank and the Participant, pursuant to which the Bank agrees to provide the Participant with the benefits described in the Plan and the Participation Agreement. Each Participation Agreement shall contain such information, terms and conditions as the Administrator in its discretion may specify, including without limitation the following: (i) the effective date of the Participant's participation in the Plan; (ii) the Normal Retirement Benefit in which the Participant is entitled to under the Plan and the form in which such benefits are to be paid in (i.e., installments or lump sum); (iii) the identity of the Participant's Beneficiary; and (iv) any other provisions which supplement the terms and conditions contained in the Plan and which are not inconsistent with the terms and conditions of the Plan. 1.14 "Separation from Service" or "Separates from Service" means the Participant's retirement or other termination of employment with the Bank within the meaning of Code Section 409A. No Separation from Service shall be deemed to occur due to military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed 6 months or, if longer, so long as the 3 Participant's right to reemployment is provided by law or contract. If the leave exceeds 6 months and the Participant's right to reemployment is not provided by law or by contract, then the Participant shall have a Separation from Service on the first date immediately following such 6-month period. Whether a Separation from Service has occurred is determined based on whether the facts and circumstances indicate that the Bank and the Participant reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Participant would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to less than 50% of the average level of bona fide services performed over the immediately preceding 36 months (or such lesser period of time in which the Participant performed services for the Bank). 1.15 "Years of Service" means the number of whole calendar years during which the Participant has been employed by the Bank. ARTICLE II ELIGIBILITY AND VESTING ----------------------- 2.1 Eligibility. The Plan is available to a select group of management and/or highly compensated employees of the Bank, determined from time to time by the Board. Each employee, who is eligible to participate in the Plan, shall enroll in the Plan by entering into a Participation Agreement and completing all other forms as the Administrator may request. An eligible employee's participation in the Plan shall commence as of the date specified in the Participation Agreement. 2.2 Vesting. Each Participant shall become vested in his or her Plan benefits in accordance with the following vesting schedule: Years of Service Vested Percentage --------------- ----------------- 1 0% 2 0% 3 0% 4 0% 5 100% Vesting is automatically accelerated upon death, Disability, Change in Control or Early or Normal Retirement. 4 ARTICLE III BENEFITS -------- 3.1 Normal Retirement Benefit. Upon Separation from Service on or after Normal Retirement Date, the Participant shall be entitled to the Normal Retirement Benefit. Payment of the Normal Retirement Benefit shall commence on the first day of the second month following the date on which the Participant Separates from Service following the Participant's Normal Retirement Date, and shall be payable in the manner in which the Participant elects in accordance with Section 3.7 below. 3.2 Early Retirement Benefit. In the event of the Participant's Separation from Service on or after the Early Retirement Date, but prior to the Normal Retirement Date, the Participant shall be entitled to the Early Retirement Benefit. Payment of the Early Retirement Benefit shall commence on the first day of the second month following the date on which the Participant Separates from Service following Participant's Early Retirement Date, and shall be payable in the manner in which the Participant elects in accordance with Section 3.7 below. 3.3 Change in Control. In the event of the Participant's Separation from Service within two (2) years following a Change in Control, the Participant shall be entitled to the Normal Retirement Benefit as if the Participant had been continuously employed by the Bank until the Normal Retirement Date and Separated from Service on such date. Payment of the Normal Retirement Benefit shall be made as a cash lump sum on the first day of the second month following the date on which the Participant Separates from Service with Bank. 3.4 Separation from Service Before Early Retirement Date. If the Participant Separates from Service before reaching the Early Retirement Date, the Participant shall be entitled to the vested accrued balance of the Participant's Liability Reserve Account, determined as of the date of the Participant's Separation from Service. Such benefit shall be paid in a cash lump sum no later than the first day of the second month following the Participant's Separation from Service. 3.5 Disability. If the Participant becomes Disabled before reaching his or her Early Retirement Date, the Participant shall be entitled to the accrued balance of the Participant's Liability Reserve Account, determined as of the date the Participant became Disabled. Such benefit shall be paid to the Participant in a single cash lump sum no later than the first day of the second month following the date on which the Participant became Disabled. 3.6 Termination of Participation for Cause. Notwithstanding anything herein or in the Participation Agreement to the contrary, all benefits payable under this Plan shall be forfeited in the event the Participant's participation in the Plan is terminated for Cause. 3.7 Distribution Elections for Payment of Benefits. (a) Distribution Elections for New Participants. Except as provided in Section 3.7(b), within 30 days after first becoming eligible to participate in 5 the Plan, a new Participant may elect the time and manner of payment of his or her Normal Retirement Benefit or Early Retirement Benefit by completing a Participation Agreement. Benefits may be paid in any of the following forms: (i) lifetime monthly installments; (ii) lifetime annual installments; or (iii) a single cash lump sum. In the event the Participant fails to make a timely election in his or her Participation Agreement, the Participant shall be deemed to have elected a cash lump sum. (b) Transition Year Elections. Notwithstanding Section 3.7(a), a Participant who was a party to a Predecessor Agreement shall have the right to elect in a Participation Agreement that is signed and dated no later than December 31, 2008, the time and manner of payment of his or her Normal Retirement Benefit and Early Retirement Benefit. Benefits may be paid in any of the following forms: (i) lifetime monthly installments; (ii) lifetime annual installments; or (iii) a single cash lump sum. In the event the Participant fails to make a timely transition year election, the Participant shall be deemed to have elected a single cash lump sum. 3.8 Calculation of Present Value and Lump Sums. For all Plan purposes, the present value of any amount hereunder shall be determined using the discount rate that is used in FASB 87 calculations. In addition, all lump sums hereunder shall be calculated as if the payments required under this Plan were otherwise payable for 16 years following the Participant's Separation from Service. 3.9 Delay in the Commencement Date for Payment of Benefits. Notwithstanding the foregoing, if the Participant is a "specified employee" (i.e., a "key employee" of a publicly traded company within the meaning of Code Section 409A and the final regulations issued thereunder) and the distribution under the Plan is due to Separation from Service (other than due to Disability or death), then solely to the extent necessary to avoid penalties under Code Section 409A, no distribution shall be made during the first six (6) months following the Participant's Separation from Service. Rather, any distribution which would otherwise be paid to the Participant during such period shall be accumulated and paid to the Participant in a lump sum on the first day of the seventh month following such Separation from Service. All subsequent distributions shall be paid in the manner specified in the Plan and the Participant's Participation Agreement. ARTICLE IV DEATH BENEFITS -------------- 4.1 Death Before Normal Retirement Date. If the Participant dies while employed with the Bank but prior to reaching Normal Retirement Date, the Participant's Beneficiary shall be entitled to the vested accrued balance of the Participant's Liability Reserve Account, determined as of the Participant's date of death. Such benefit shall be paid to the Participant's Beneficiary in a single cash lump sum distribution by no later than the first day of the second month following the date of the Participant's death. 4.2 Death After Benefit Payments Begin. Notwithstanding the foregoing, in the event that payment of the Participant's Normal Retirement Benefit or Early Retirement Benefit has commenced, and the Participant dies prior to receiving at least 192 monthly installments or 16 annual installments (as applicable), the 6 Bank shall pay the present value of the remainder of such installment payments to the Participant's Beneficiary in a single cash lump sum distribution no later than the first day of the second month following the Participant's date of death. ARTICLE V PARTICIPANT'S RIGHT TO ASSETS ----------------------------- The rights of the Participant, the Participant's Beneficiary, or any other person claiming through Participant under this Plan shall be solely those of an unsecured general creditor of the Bank. The Participant, the Beneficiary of the Participant, or any other person claiming through Participant, shall only have the right to receive from the Bank those payments as specified under this Plan. The Participant, the Participant's Beneficiary, or any other person claiming through the Participant shall have no rights or interests whatsoever in any asset of the Bank, including any insurance policies or contracts which the Bank may possess or obtain to informally fund this Plan. Any asset used or acquired by the Bank in connection with the liabilities it has assumed under this Plan, except as expressly provided, shall not be deemed to be held under any trust for the benefit of Participant or the Participant's Beneficiary, nor shall it be considered security for the performance of the obligations of the Bank. It shall be, and remain, a general, unpledged, and unrestricted asset of the Bank. ARTICLE VI RESTRICTIONS UPON FUNDING ------------------------- The Bank shall have no obligation to set aside, earmark or entrust any fund or money with which to pay its obligations under this Plan. Participant, Beneficiaries of the Participant, or any successor in interest to the Participant shall be and remain simply a general creditor of the Bank in the same manner as any other creditor having a general claim for matured and unpaid compensation. The Bank reserves the absolute right, at its sole discretion, to either fund the obligations undertaken by this Plan or to refrain from funding the same and to determine the extent, nature, and method of such informal funding. Should the Bank elect to fund this Plan, in whole or in part, through the purchase of life insurance, disability policies or annuities, the Bank reserves the absolute right, in its sole discretion, to terminate such funding at any time, in whole or in part. At no time shall Participant be deemed to have any lien nor right, title or interest in or to any specific funding investment or to any assets of the Bank. If the Bank elects to invest in a life insurance, disability or annuity policy upon the life of Participant, then Participant shall assist the Bank by freely submitting to a physical examination and supplying such additional information necessary to obtain such insurance or annuities. ARTICLE VII ALIENABILITY AND ASSIGNMENT PROHIBITION --------------------------------------- Neither the Participant nor any Beneficiary under this Plan shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any of the benefits payable hereunder, nor shall any of said benefits be subject to seizure for the payment of any 7 debts, judgments, alimony or separate maintenance owed by Participant or the Participant's Beneficiary, nor be transferable by operation of law in the event of bankruptcy, insolvency or otherwise. In the event Participant or any Beneficiary attempts assignment, communication, hypothecation, transfer or disposal of the benefits hereunder, the Bank's liabilities shall forthwith cease and terminate. ARTICLE VIII ADMINISTRATION -------------- 8.1 Named Fiduciary and Plan Administrator. The Board shall be named fiduciary and plan administrator of this Plan. Accordingly, the Board shall be responsible for the management, control and administration of the Plan. The Board may delegate to others certain aspects of the management and operational responsibilities of the Plan, including the employment of advisors and the delegation of ministerial duties to qualified individuals. 8.2 Claims Procedure. In the event that benefits under this Plan are not paid to Participant (or to his Beneficiary in the case of Participant's death) and such claimants feel they are entitled to receive such benefits, then a written claim must be made to the Administrator within 60 days from the date payments are refused. The Administrator shall review the written claim and, if the claim is denied, in whole or in part, they shall provide in writing within 60 days of receipt of such claim their specific reasons for such denial, reference to the provisions of this Plan upon which the denial is based and any additional material or information necessary to perfect the claim. Such written notice shall further indicate the additional steps to be taken by claimants if a further review of the claim denial is desired. 8.3 Appeal. If claimants desire an appeal of the denied claim, they shall notify the Administrator in writing within 60 days of the claim denial. Claimants may review the Plan or any documents relating thereto and submit any issues, in writing, and comments they may feel appropriate. In its sole discretion, the Administrator shall then review the appeal and provide a written decision within 60 days after receipt of such appeal. This decision shall likewise state the specific reasons for the decision and if the appeal is denied, shall include reference to specific provisions of the Plan upon which the denial is based. 8.4 Arbitration. If claimants continue to dispute the benefit denial, then claimants may submit the dispute to final, binding arbitration. Arbitration is also available if there is a dispute regarding whether the Participant's participation in this Plan has been terminated for Cause. The arbitrator shall be selected by mutual agreement of the Administrator and the claimant. The arbitrator shall operate under any generally recognized set of arbitration rules. The parties hereto agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such arbitrator with respect to any controversy properly submitted to it for determination. If it is finally determined that the Participant (or Beneficiary) is entitled to the benefits set forth under this Plan, then all amounts that the Participant (or Beneficiary) would have received up to the time of such final determination shall be paid to the Participant (or Beneficiary) with reasonable interest within 30 days after such final determination. 8 ARTICLE IX AMENDMENT OR TERMINATION ------------------------ 9.1 Amendment. The Board reserves the right to amend this Plan at any time. However, to the extent any such amendment would adversely impact the accrued benefits of any Participant, the amendment shall require the written consent of such Participant, even if the Participant is no longer employed by the Bank. 9.2 Termination. Subject to the requirements of Code Section 409A, in the event of complete termination of the Plan, the Plan shall cease to operate and the Bank shall pay out to the Participant his or her benefit as if the Participant had Separated from Service as of the effective date of the complete termination. Such complete termination of the Plan shall occur only under the following circumstances and conditions: (a) The Bank may terminate the Plan within 12 months of a corporate dissolution taxed under Code Section 331, or with approval of a bankruptcy court pursuant to 11 U.S.C. ss.503(b)(1)(A), provided that the amounts deferred under the Plan are included in the Participant's gross income in the latest of (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable. (b) The Bank may terminate the Plan by irrevocable Board action taken within the 30 days preceding a Change in Control (but not following a Change in Control), provided that the Plan shall only be treated as terminated if all substantially similar arrangements sponsored by the Bank are terminated so that the Participant and all participants under substantially similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the date of the termination of the arrangements. (c) The Bank may terminate the Plan provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank, (ii) all arrangements sponsored by the Bank that would be aggregated with this Plan under Treasury Regulations Section 1.409A-1(c) if the Participant covered by this Plan was also covered by any of those other arrangements are also terminated; (iii) no payments other than payments that would be payable under the terms of the arrangement if the termination had not occurred are made within twelve (12) months of the termination of the arrangement; (iv) all payments are made within twenty-four (24) months of the termination of the arrangements; and (v) the Bank does not adopt a new arrangement that would be aggregated with any terminated arrangement under Treasury Regulations Section 1.409A-1(c) if the Participant participated in both arrangements, at any time within three (3) years following the date of termination of the arrangement. 9 ARTICLE X MISCELLANEOUS ------------- 10.1 No Effect on Employment Rights. Nothing contained herein shall confer upon any Participant the right to be retained in the service of the Bank nor limit the right of the Bank to discharge or otherwise deal with Participant without regard to the existence of this Plan. 10.2 Governing Law. The Plan is established under, and will be construed according to, the laws of the Commonwealth of Pennsylvania, to the extent that such laws are not preempted by ERISA. 10.3 Severability. In the event that any provision of this Plan is held to be inoperative or invalid by any court of competent jurisdiction, then: (1) insofar as is reasonable, effect will be given to the intent manifested in such provision, and (2) the validity and enforceability of the remaining provisions will not be affected thereby. 10.4 Establishment of Rabbi Trust. The Bank may, but is not obligated to, establish a rabbi trust into which the Bank may contribute assets which shall be held therein, subject to the claims of the Bank's creditors in the event of the Bank's insolvency, until the contributed assets are paid to Participants and their Beneficiaries in such manner and at such times as specified in this Plan. 10.5 Tax Withholding and Payment of Code Section 409A Taxes. The Bank may withhold from any benefit payable under this Plan all federal, state, city, income, employment or other taxes as shall be required pursuant to any law or governmental regulation then in effect. Moreover, the Plan shall permit the acceleration of the time or schedule of a payment to pay employment related taxes as permitted under Treasury Regulation Section 1.409A-3(j) or to pay any taxes that may become due at any time that the arrangement fails to meet the requirements of Code Section 409A and the regulations and other guidance promulgated thereunder. In the latter case, such payments shall not exceed the amount required to be included in income as the result of the failure to comply with the requirements of Code Section 409A. 10.6 Acceleration of Payments. Except as specifically permitted herein or in other sections of this Plan, no acceleration of the time or schedule of any payment may be made hereunder. Notwithstanding the foregoing, payments may be accelerated hereunder by the Bank, in accordance with the provisions of Treasury Regulation Section 1.409A-3(j)(4) and any subsequent guidance issued by the United States Treasury Department. Accordingly, payments may be accelerated, in accordance with requirements and conditions of the Treasury Regulations (or subsequent guidance) in the following circumstances: (i) as a result of certain domestic relations orders; (ii) in compliance with ethics agreements with the Federal government; (iii) in compliance with ethics laws or conflicts of interest laws; (iv) in limited cash-outs (but not in excess of the limit under Code Section 402(g)(1)(B)); (v) in the case of certain distributions to avoid a non-allocation year under Code Section 409(p); (vi) to apply certain offsets in satisfaction of a debt of the Participant to the Bank; (vii) in satisfaction of certain bona fide disputes between the Participant and the Bank; or (viii) for any other purpose set forth in the Treasury Regulations and subsequent guidance. 10 10.7 Required Provision. Any payments made to the Participant pursuant to this Plan, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. ss. 1828(k) and any regulations promulgated thereunder. 10.8 Entire Agreement. This Plan sets forth the entire understanding of the parties hereto with respect to the transactions contemplated hereby, and any previous agreements or understandings between the parties hereto regarding the subject matter hereof are merged into and superseded by this Plan. 11 IN WITNESS WHEREOF, the Bank has caused this Plan to be executed on the date set forth below. ESSA BANK & TRUST 9-30-2008 By: /s/ Gary S. Olson - ----------------------- --------------------------------------- Date EX-10.7 8 exh107_100608.txt SPLIT DOLLAR LIFE INSURANCE AGREEMENT - OLSON 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 Gary S. Olson (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 five times (5X) 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: ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- 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 - ---------------------- ------------------------------- Date 9-30-2008 /s/ John Burrus - ---------------------- ------------------------------- Date Executive EX-10.10 9 exh1010_100608.txt SPLIT DOLLAR LIFE INSURANCE AGREEMENT - REIMER 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 Diane K. Reimer (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: ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- 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 - ---------------------- ------------------------------ Date 9-30-2008 /s/ Diane K. Reimer - ---------------------- ------------------------------ Date Executive EX-10.9 10 exh109_100608.txt SPLIT DOLLAR LIFE INSURANCE AGREEMENT - MUTO 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: ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- 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 - ---------------------------- ----------------------------- Date 9-30-2008 /s/ Allan A. Muto - ---------------------------- ----------------------------- Date Executive EX-10.8 11 exh108_100608.txt SPLIT DOLLAR LIFE INSURANCE AGREEMENT - HOWES 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 Robert S. Howes, Jr. (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: ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- 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 - ---------------------------- ------------------------------- Date 9-30-2008 /s/ Robert S. Howes, Jr. - ---------------------------- ------------------------------- Date Executive EX-10.11 12 exh1011_100608.txt SPLIT DOLLAR LIFE INSURANCE AGREEMENT (WARNER) 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 V. Gail Warner (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: ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- 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 - ------------------------------ ------------------------------ Date 9-30-2008 /s/ V. Gail Warner - ------------------------------ ------------------------------ Date Executive -----END PRIVACY-ENHANCED MESSAGE-----