This Life Insurance Split Dollar Agreement involves
Title: ESSA BANK TRUST ENDORSEMENT SPLIT DOLLAR LIFE INSURANCE AGREEMENT
Industry: Regional Banks Sector: Financial
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
Whenever used in this Agreement, the following terms shall have the
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
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
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
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
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
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.
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.
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.
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
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.