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
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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:
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(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
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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
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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.
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ARTICLE III
BENEFITS
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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
