Exhibit 10(h)

 

CHANGE IN CONTROL SEVERANCE AGREEMENT

 

                THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (“Agreement”) is made
and entered into as of this 1st day of December, 2000 by and between First
Security Federal Savings Bank (hereinafter referred to as the “Association”
whether in mutual or stock form), and Paul Bandriwsky (the “Employee”).

 

                WHEREAS, the Employee is currently serving as Vice President and
Chief Operating Officer of the Association; and

 

                WHEREAS, the Association is a subsidiary of First SecurityFed
Financial, Inc. (the “Holding Company”); and

 

                WHEREAS, the board of directors of the Association (“Board of
Directors”) recognizes that, as is the case with publicly held corporations
generally, the possibility of a change in control of the Holding Company and/or
the Association may exist and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or
distraction of key management personnel to the detriment of the Association, the
Holding Company and their respective stockholders; and

 

                WHEREAS, the Board of Directors believes it is in the best
interests of the Association to enter into this Agreement with the Employee in
order to assure continuity of management of the Association and to reinforce and
encourage the continued attention and dedication of the Employee to the
Employee’s assigned duties without distraction in the face of potentially
disruptive circumstances arising from the possibility of a change in control of
the Holding Company or the Association, although no such change is now
contemplated; and

 

                WHEREAS, the Board of Directors has approved and authorized the
execution of this Agreement with the Employee to take effect as stated in
Section 2 hereof;

 

                NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein, it is AGREED as
follows:

 

1.             Definitions.

 

                                                (a)           The term “Change
in Control” means (1) an event of a nature that (i) results in a change in
control of the Association or the Holding Company within the meaning of the Home
Owners’ Loan Act of 1933 and 12 C.F.R. Part 574 as in effect on the date hereof;
or (ii) would be required to be reported in response to Item 1 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”); (2) any
person (as the term is used in Section 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 Association or the Holding
Company

 

 

--------------------------------------------------------------------------------

 

representing 20% or more of the Association’s or the Holding Company’s
outstanding securities; (3) individuals who are members of the board of
directors of the Association or the Holding Company 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 Holding Company’s stockholders was approved by the nominating committee
serving under an Incumbent Board, shall be considered a member of the Incumbent
Board; or (4) a reorganization, merger, consolidation, sale of all or
substantially all of the assets of the Association or the Holding Company or a
similar transaction in which the Association or the Holding Company is not the
resulting entity.  The term “Change in Control” shall not include an acquisition
of securities by an employee benefit plan of the Association or the Holding
Company or the acquisition of securities of the Association by the Holding
Company.

 

                                                (b)           The term
“Commencement Date” means December 1, 2000.

 

                                                (c)           The term “Date of
Termination” means the earlier of (1) the date upon which the Association gives
notice to the Employee of the termination of the Employee’s employment with the
Association or (2) the date upon which the Employee ceases to serve as an
employee of the Association.

 

                                                (d)           The term
“Involuntary Termination” means termination of the employment of Employee
without the Employee’s express written consent, and shall, subject to the last
sentence in this paragraph, include a material diminution of or interference
with the Employee’s duties, responsibilities and benefits as Vice President and
Chief Operating Officer of the Association, including (without limitation) any
of the following actions unless consented to in writing by the Employee: (1) a
change in the principal workplace of the Employee to a location outside of a 30
mile radius from the Association’s headquarters office as of the date hereof;
(2) a material demotion of the Employee; (3) a material reduction in the number
or seniority of other Association personnel reporting to the Employee or a
material reduction in the frequency with which, or in the nature of the matters
with respect to which, such personnel are to report to the Employee, other than
as part of a Association- or Holding Company-wide reduction in staff, (4) a
material adverse change in the Employee’s salary, other than as part of an
overall program applied uniformly and with equitable effect to all members of
the senior management of the Association or the Holding Company; and (5) a
material permanent increase in the required hours of work or the workload of the
Employee. The term “Involuntary Termination” does not include Termination for
Cause or termination of employment due to retirement, death, disability or
suspension or temporary or permanent prohibition from participation in the
conduct of the Association’s affairs under Section 8 of the Federal Deposit
Insurance Act (“FDIA”) and shall not include a material diminution of or
interference with the Employee’s duties, responsibilities and benefits unless
the

 

2

--------------------------------------------------------------------------------

 

employee or the Association submits written notice of involuntary termination
within 120 days thereof.

 

                                                (e)           The terms
“Termination for Cause” and “Terminated For Cause” mean termination of the
employment of the Employee because of the Employee’s personal dishonesty,
incompetence, willful misconduct, breach of a fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of this
Agreement.

 

2.                                       Term.  The term of this Agreement shall
be a period of two years commencing on the Commencement Date, subject to earlier
termination as provided herein. Beginning on the first anniversary of the
Commencement Date, and on each anniversary thereafter until the first
anniversary of the Commencement Date after the Employee reaches age 65, the term
of this Agreement shall be extended for a period of one year in addition to the
then–remaining term, provided that, prior to such anniversary, the Board of
Directors of the Association explicitly reviews and approves the extension.
Reference herein to the term of this Agreement shall refer to both such initial
term and such extended terms.

 

3.                                       Severance Benefits, Regulatory
Provisions.

 

                                                (a)           Involuntary
Termination in Connection With a Change in Control.  In the event of Involuntary
Termination in connection with or within 24 months after a Change in Control
which occurs during the term of this Agreement, the Association shall, subject
to Section 4 of this Agreement, (1) pay to the Employee in a lump sum in cash
within 25 business days after the Date of Termination an amount equal to 200% of
the Employee’s “base amount” as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the “Code”); and (2) provide to the Employee during
the remaining term of this Agreement such health insurance benefits as the
Association maintained for executive officers at the Date of Termination on
terms as favorable to the Employee as applied at the Date of Termination. The
total of payments to the Employee under this section shall not exceed three
times his average compensation from the Association over the five most recent
taxable years (or, if employed by the Association for a shorter period, over the
period of his employment by the Association).

 

                                                (b)           Temporary
Suspension or Prohibition.  If the Employee is suspended and/or temporarily
prohibited from participating in the conduct of the Association’s affairs by a
notice served under Section 8(e)(3) or (g)(1) of the FDIA, 12 U.S.C. §
1818(e)(3) and (g)(1), the Association’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 Association may in
its discretion (i) pay the Employee all or part of the compensation withheld
while its obligations under this Agreement were suspended and (ii) reinstate in
whole or in part any of its obligations which were suspended.

 

3

--------------------------------------------------------------------------------

 

                                                (c)           Permanent
Suspension or Prohibition.  If the Employee is removed and/or permanently
prohibited from participating in the conduct of the Association’s affairs by an
order issued under Section 8(c)(4) or (g)(1) of the FDIA, 12 U.S.C. § 1818(e)(4)
and (g)(1), all obligations of the Association 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)                                 Default of the Association.  If the
Association is in default (as defined in Section 3(x)(1) of the FDIA), all
obligations under this Agreement shall terminate as of the date of default, but
this provision shall not affect any vested rights of the contracting parties.

 

(e)                                  Termination by Regulators.  All obligations
under this Agreement shall be terminated, except to the extent determined that
continuation of this Agreement is necessary for the continued operation of the
Association: (1) by the Director of the Office of Thrift Supervision (the
“Director”) or his or her designee, at the time the Federal Deposit Insurance
Corporation or the Resolution Trust Corporation, enters into an agreement to
provide assistance to or on behalf of the Association under the authority
contained in Section 13(c) of the FDIA; or (2) 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 Association or when the
Association 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 any such action.

 

4.             Certain Reduction of Payments by the Association.

 

(a)                                  Notwithstanding any other provision of this
Agreement, if the value and amounts of benefits under this Agreement, together
with any other amounts and the value of benefits received or to be received by
the Employee in connection with a Change in Control would cause any amount to be
nondeductible by the Association or the Holding Company for federal income tax
purposes pursuant to Section 280G of the Code, then amounts and benefits under
this Agreement shall be reduced (not less than zero) to the extent necessary so
as to maximize amounts and the value of benefits to the Employee without causing
any amount to become nondeductible by the Association or the Holding Company
pursuant to or by reason of such Section 280G. The Employee shall determine the
allocation of such reduction among payments and benefits to the Employee.

 

(b)                                 Any payments made to the Employee pursuant
to this Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. § 1828(k) and any regulations promulgated thereunder.

 

5.                                       No Mitigation.  The Employee shall not
be required to mitigate the amount of any salary or other payment or benefit
provided for in this Agreement by seeking other employment

 

4

--------------------------------------------------------------------------------

 

or otherwise, nor shall the amount of any payment or benefit provided for in
this Agreement be reduced by any compensation earned by the Employee as the
result of employment by another employer, by retirement benefits after the date
of termination or otherwise.

 

6.                                       Attorneys and/or Fees.  If the Employee
is purportedly Terminated for Cause and the Association denies payments and/or
benefits under Section 3(a) of this Agreement on the basis that the Employee
experienced Termination for Cause rather than Involuntary Termination, but it is
determined by a court of competent jurisdiction or by an arbitrator pursuant to
Section 13 that cause as contemplated by Section 2(e) of this Agreement did not
exist for termination of the Employee’s employment, or if in any event it is
determined by any such court or arbitrator that the Association has failed to
make timely payment of any amounts or provision of any benefits owed to the
Employee under this Agreement, the Employee shall be entitled to reimbursement
for all reasonable costs, including attorneys’ fees, incurred in challenging
such termination of employment or collecting such amounts or benefits.  Such
reimbursement shall be in addition to all rights to which the Employee is
otherwise entitled under this Agreement.

 

7.             No Assignments.

 

(a)                                  This Agreement is personal to each of the
parties hereto, and neither party may assign or delegate any of its rights or
obligations hereunder without first obtaining the written consent of the other
party; provided, however, that the Association shall require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Association, by an assumption agreement in form and substance satisfactory to
the Employee, to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Association would be required to
perform it if no such succession or assignment had taken place.  Failure of the
Association to obtain such an assumption agreement prior to the effectiveness of
any such succession or assignment shall be a breach of this Agreement and shall
entitle the Employee to compensation from the Association in the same amount and
on the same terms as the compensation pursuant to Section 3(a) hereof. For
purposes of implementing the provisions of this Section 7(a), the date on which
any such succession becomes effective shall be deemed the Date of Termination.

 

(b)                                 This Agreement and all rights of the
Employee hereunder shall inure to the benefit of and be enforceable by the
Employee’s personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Employee should
die while any amounts would still be payable to the Employee hereunder if the
Employee had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Employee’s devisee, legatee or other designee or if there is no such designee,
to the Employee’s estate.

 

5

--------------------------------------------------------------------------------

 

8.                                       Notice.  For the purposes of this
Agreement, notices and all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
to the Association at its home office, to the attention of the Board of
Directors with a copy to the Secretary of the Association, or, if to the
Employee, to such home or other address as the Employee has most recently
provided in writing to the Association.

 

9.                                       Amendments.  No amendments or additions
to this Agreement shall be binding unless in writing and signed by both parties,
except as herein otherwise provided.

 

10.                                 Headings.  The headings used in this
Agreement are included solely for convenience and shall not affect, or be used
in connection with, the interpretation of this Agreement.

 

11.                                 Severability.  The provisions of this
Agreement shall be deemed severable and the invalidity or unenforceability of
any provision shall not affect the validity or enforceability of the other
provisions hereof.

 

12.                                 Governing Law.  This Agreement shall be
governed by the laws of the United States to the extent applicable and otherwise
by the laws of the State of Illinois.

 

13.                                 Arbitration.  Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively
by arbitration 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.

 

6

--------------------------------------------------------------------------------

 

                IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.

 

                THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.

 

 

ATTEST:

 

FIRST SECURITY FEDERAL SAVINGS BANK

 

 

 

 

 

 

 

 

 

Terry Gawryk

Secretary

 

By:  Julian E. Kulas

 

 

Its:  President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

 

 

 

Paul Bandriwsky

 

 

7

--------------------------------------------------------------------------------