Amended and Restated Employment Agreement between ESSA Bank & Trust, ESSA Bancorp, Inc. and Charles Hangen

1. POSITION AND RESPONSIBILITIES.

2. TERM AND DUTIES.

(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 $271,881 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, 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, as set forth in Section 4(a)(i), (ii) or (iii):

(b) Within 30 days following the occurrence of an Event of Termination under Section 4(a)(i), Section 4(a)(ii) or 4(a)(iii) of this Agreement, 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 or the Prior 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 under Section 4(a)(i), Section 4(a)(ii) or 4(a)(iii) of this Agreement, 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 provided that the Executive is a participant in the defined benefit pension plan.

(d) Upon the occurrence of an Event of Termination under Section 4(a)(i), Section 4(a)(ii) or 4(a)(iii) of this Agreement, 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

(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.

(g) Notwithstanding anything in this Agreement to the contrary, Executive shall not be entitled to any severance payments or benefits under Section 4(b) of this Agreement unless and until Executive executes a release (the “Release”) of his claims against the Bank, the Company and any affiliate, and their officers, directors, successors and assigns, releasing said persons from any and all claims, rights, demands, causes of action, suits, arbitrations or grievances relating to the employment relationship, including claims under Title VII of the Civil Rights Act of 1964 (race, color, religion, sex and national origin discrimination); 42 U.S.C. Section 1981 (age discrimination); 29 U.S.C. Section 621-634 (age discrimination); 29 U.S.C. Section 206(d)(i) (equal pay); applicable state laws regarding discrimination including race, color, national origin, ancestry, religion, physical or mental disability, medical condition, military status, marital status, sex, gender, sexual orientation or age, but not including claims for benefits under tax-qualified plans or other benefit plans in which Executive is vested, claims for benefits required by applicable law or claims with respect to obligations set forth in this Agreement that survive the termination of this Agreement, and (ii) the severance payments or benefits shall not begin before the date Executive has signed (and not revoked) the Release and the Release has become irrevocable under the time period set forth under applicable law.  The Release must be executed and become irrevocable by the 60th day following the date of the Event of Termination, provided that if the 60-day period spans two (2) calendar years, then, to

(h) Notwithstanding anything in this Agreement to the contrary, Executive understands that nothing contained in this Agreement limits Executive’s ability to file a charge or complaint with the Securities and Exchange Commission (“SEC”) about a possible securities law violation without approval of the Bank (or any affiliate).  Executive further understands that this Agreement does not limit Executive’s ability to communicate with the SEC or otherwise participate in any investigation or proceeding that may be conducted by the SEC, including providing documents or other information, without notice to the Bank (or any affiliate) related to the possible securities law violation.  This Agreement does not limit Executive’s right to receive any resulting monetary award for information provided to the SEC.

5. CHANGE IN CONTROL.

(a) “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.

(b) Notwithstanding anything in this Agreement to the contrary, 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 this Agreement 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.

(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 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. If the Bank cannot provide one or more of the benefits set forth in this paragraph because Executive is no longer an employee, and applicable rules and regulations (including, but not limited to the Affordable Care Act) prohibit such benefits or the payment of such benefits in the manner contemplated, or it would subject the Bank to penalties, then the Bank shall pay Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits or the value of the remaining benefits at the time of such

(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.  If the Bank cannot provide one or more of the benefits set forth in this paragraph because Executive is no longer an employee, and applicable rules and regulations (including, but not limited to the Affordable Care Act) prohibit such benefits or the payment of such benefits in the manner contemplated, or it would subject the Bank to penalties, then the Bank shall pay Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits or the value of the remaining benefits at the time of such determination. Such cash payment shall be made in a lump sum within 30 days after the later of Executive’s date of termination or the effective date of the rules or regulations prohibiting such benefits or subjecting the Bank to penalties.

(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 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 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 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.

(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.

(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.

(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 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. §1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359.