EXHIBIT 10(c)


 


Execution Copy


 


CHANGE IN CONTROL SEVERANCE AGREEMENT


 


WHEREAS, First Security Federal
Savings Bank (the “Association”), a wholly-owned subsidiary of First
SecurityFed Financial, Inc. (the “Holding Company”), and Paul Bandriwsky (the
“Employee”) have previously entered into a Change in Control Severance
Agreement dated December 1, 2000 (the “Prior Agreement”); and


 


WHEREAS, the Board of Directors
of the Association (the “Board of Directors”) now believes it is in the best
interests of the Association to amend and restate the Prior Agreement in order
to provide Employee with benefits comparable to those offered to executives of
a similar level at other publicly held savings and loan holding companies 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 on the Effective Date 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
Effective 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 Effective
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 l3d-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 Effective 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 “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.


 


(c)                                  The
term “Effective Date” means January 1, 2003.


 


(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,
Chief Operations 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 Effective 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, bonus opportunity, perquisites, benefits,
contingent benefits or vacation, 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 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


 


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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 Effective Date, subject to earlier termination
as provided herein. Beginning on the first anniversary of the Effective Date,
and on each anniversary thereafter until the first anniversary of the Effective
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. The Association shall submit
this Agreement to the Board of Directors for review and approval of the
extension on an annual basis and promptly notify the Employee of the Board’s
decision regarding such review and approval. 
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, subject to Section 4 of this Agreement, the
Employee shall be entitled to the following:


 


(i)                                     three
times the Employee’s annual salary, at the rate in effect immediately prior to
the Date of Termination;


 


(ii)                                  three
times the greater of (A) the actual bonus earned by the Employee for the fiscal
year preceding the year in which the Involuntary Termination occurs, or, (B)
the Employee’s target bonus for the fiscal year in which the Involuntary
Termination occurs;


 


(iii)                               continued
health benefits during the remaining term of this Agreement, at the level
maintained by the Association for the benefit of its executive officers from
time to time during the remaining term of the Agreement. The continued health
benefits under this Agreement shall be in addition to, and not in lieu of, any
COBRA continuation rights the Employee may have under Section 4980B of the
Internal Revenue Code of 1986, as amended (the “Code”); and


 


(iv)                              full
vesting in any stock options, restricted stock or other similar incentive
awards.


 


The amounts payable under clauses (i) and (ii) next
above shall be paid to the Employee in a lump sum cash payment within 25
business days after the Date of Termination.


 


(b)                                 Temporary
Suspension or Prohibition.  If the
Employee is suspended and/or temporarily prohibited from participating in the
conduct of the Association’s


 


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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.


 


(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(e)(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 Code Section
280G.  The Employee shall determine the
allocation of such reduction among payments and benefits to the Employee.


 


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(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 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 1(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


 


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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.


 


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.


 


14.                                 Entire
Agreement.  This Agreement
constitutes the entire agreement between the parties concerning the subject
matter hereof and supersedes all prior and contemporaneous agreements,
including the Prior Agreement, relating to the subject matter hereof.


 


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IN WITNESS WHEREOF, the parties
have executed this Agreement as of the Effective Date.


 


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


 


	
  ATTEST:

  	
  FIRST
  SECURITY FEDERAL SAVINGS BANK

  
	
   

  	
   

  	
   

  
	
  /s/
  Terry Gawryk

  	
   

  	
   

  	
  /s/
  Julian E. Kulas

  
	
  Terry
  Gawryk, Secretary

  	
  By:

  	
  Julian
  E. Kulas

  
	
   

  	
  Its:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EMPLOYEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Paul Bandriwsky

  
	
   

  	
   

  	
  Paul
  Bandriwsky

  
				



 


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