**EXHIBIT 10(c)**

 

**Execution Copy**

 

CHANGE IN CONTROL SEVERANCE AGREEMENT

 

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

 

WHEREAS, the Board of Directorsof the Association (the “Board of Directors”) now believes it is in the bestinterests of the Association to amend and restate the Prior Agreement in orderto provide Employee with benefits comparable to those offered to executives ofa similar level at other publicly held savings and loan holding companies toassure continuity of management of the Association and to reinforce andencourage the continued attention and dedication of the Employee to theEmployee’s assigned duties without distraction in the face of potentiallydisruptive circumstances arising from the possibility of a change in control ofthe Holding Company or the Association, although no such change is nowcontemplated; and

 

WHEREAS, the Board of Directorshas approved and authorized the execution of this Agreement with the Employeeto take effect on the Effective Date as stated in Section 2 hereof;

 

NOW, THEREFORE, in considerationof the foregoing and of the respective covenants and agreements of the partiesherein, it is AGREED as follows:

 

1.                                       Definitions.

 

(a)                                  Theterm “Change in Control” means (1) an event of a nature that (i) results in achange in control of the Association or the Holding Company within the meaningof the Home Owners’ Loan Act of 1933 and 12 C.F.R. Part 574 as in effect on theEffective Date hereof; or (ii) would be required to be reported in response toItem 1 of the current report on Form 8-K as in effect on the EffectiveDate hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of1934 (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 definedin Rule l3d-3 under the Exchange Act), directly or indirectly ofsecurities of the Association or the Holding Company representing 20% or moreof the Association’s or the Holding Company’s outstanding securities; (3)individuals who are members of the board of directors of the Association or theHolding Company on the Effective Date hereof (the “Incumbent Board”) cease forany reason to constitute at least a majority thereof, provided that any personbecoming a director subsequent to the date hereof whose election was approvedby a vote of at least three-quarters of the directors comprising the IncumbentBoard, or whose nomination for election by the Holding Company’s stockholderswas approved by the nominating committee serving under an Incumbent Board,shall be considered a member of the

 

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Incumbent Board; or (4) a reorganization, merger,consolidation, sale of all or substantially all of the assets of theAssociation or the Holding Company or a similar transaction in which theAssociation or the Holding Company is not the resulting entity.  The term “Change in Control” shall notinclude an acquisition of securities by an employee benefit plan of theAssociation or the Holding Company or the acquisition of securities of theAssociation by the Holding Company.

 

(b)                                 Theterm “Date of Termination” means the earlier of (1) the date upon which theAssociation gives notice to the Employee of the termination of the Employee’semployment with the Association or (2) the date upon which the Employee ceasesto serve as an employee of the Association.

 

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

 

(d)                                 Theterm “Involuntary Termination” means termination of the employment of Employeewithout the Employee’s express written consent, and shall, subject to the lastsentence in this paragraph, include a material diminution of or interferencewith the Employee’s duties, responsibilities and benefits as Vice President,Chief Operations Officer of the Association, including (without limitation) anyof the following actions unless consented to in writing by the Employee:  (1) a change in the principal workplace ofthe Employee to a location outside of a 30 mile radius from the Association’s headquartersoffice as of the Effective Date hereof; (2) a material demotion of theEmployee; (3) a material reduction in the number or seniority of otherAssociation personnel reporting to the Employee or a material reduction in thefrequency 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 aAssociation- or Holding Company-wide reduction in staff; (4) a material adversechange in the Employee’s salary, bonus opportunity, perquisites, benefits,contingent benefits or vacation, other than as part of an overall programapplied uniformly and with equitable effect to all members of the seniormanagement of the Association or the Holding Company; and (5) a materialpermanent increase in the required hours of work or the workload of theEmployee.  The term “InvoluntaryTermination” does not include Termination for Cause or termination ofemployment due to retirement, death, disability or suspension or temporary orpermanent prohibition from participation in the conduct of the Association’saffairs under Section 8 of the Federal Deposit Insurance Act (“FDIA”) and shallnot include a material diminution of or interference with the Employee’sduties, responsibilities and benefits unless the employee or the Associationsubmits written notice of involuntary termination within 120 days thereof.

 

(e)                                  Theterms “Termination for Cause” and “Terminated For Cause” mean termination ofthe employment of the Employee because of the Employee’s personal dishonesty,incompetence, willful misconduct, breach of a fiduciary duty involving personalprofit, intentional failure to perform stated duties, willful violation of anylaw, rule, or regulation (other than traffic violations or similar

 

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offenses) or final cease-and-desist order, or materialbreach of any provision of this Agreement.

 

2.                                       Term.  The term of this Agreement shall be a periodof two years commencing on the Effective Date, subject to earlier terminationas provided herein. Beginning on the first anniversary of the Effective Date,and on each anniversary thereafter until the first anniversary of the EffectiveDate after the Employee reaches age 65, the term of this Agreement shall beextended for a period of one year in addition to the then-remaining term, providedthat, prior to such anniversary, the Board of Directors of the Associationexplicitly reviews and approves the extension. The Association shall submitthis Agreement to the Board of Directors for review and approval of theextension on an annual basis and promptly notify the Employee of the Board’sdecision regarding such review and approval. Reference herein to the term of this Agreement shall refer to both suchinitial term and such extended terms.

 

3.                                       SeveranceBenefits; Regulatory Provisions.

 

(a)                                  InvoluntaryTermination in Connection With a Change in Control.  In the event of Involuntary Termination inconnection with, or within 24 months after a Change in Control, which occursduring the term of this Agreement, subject to Section 4 of this Agreement, theEmployee shall be entitled to the following:

 

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

 

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

 

(iii)                               continuedhealth benefits during the remaining term of this Agreement, at the levelmaintained by the Association for the benefit of its executive officers fromtime to time during the remaining term of the Agreement. The continued healthbenefits under this Agreement shall be in addition to, and not in lieu of, anyCOBRA continuation rights the Employee may have under Section 4980B of theInternal Revenue Code of 1986, as amended (the “Code”); and

 

(iv)                              fullvesting in any stock options, restricted stock or other similar incentiveawards.

 

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

 

(b)                                 TemporarySuspension or Prohibition.  If theEmployee is suspended and/or temporarily prohibited from participating in theconduct 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’sobligations 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 itsdiscretion (i) pay the Employee all or part of the compensation withheld whileits obligations under this Agreement were suspended and (ii) reinstate in wholeor in part any of its obligations which were suspended.

 

(c)                                  PermanentSuspension or Prohibition.  If theEmployee is removed and/or permanently prohibited from participating in theconduct 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 ofthe Association under this Agreement shall terminate as of the effective dateof the order, but vested rights of the contracting parties shall not beaffected.

 

(d)                                 Defaultof the Association.  If theAssociation is in default (as defined in Section 3(x)(1) of the FDIA), allobligations under this Agreement shall terminate as of the date of default, butthis provision shall not affect any vested rights of the contracting parties.

 

(e)                                  Terminationby Regulators.  All obligationsunder this Agreement shall be terminated, except to the extent determined thatcontinuation of this Agreement is necessary for the continued operation of theAssociation: (1) by the Director of the Office of Thrift Supervision (the“Director”) or his or her designee, at the time the Federal Deposit InsuranceCorporation or the Resolution Trust Corporation enters into an agreement toprovide assistance to or on behalf of the Association under the authoritycontained in Section 13(c) of the FDIA; or (2) by the Director or his or herdesignee, at the time the Director or his or her designee approves asupervisory merger to resolve problems related to operation of the Associationor when the Association is determined by the Director to be in an unsafe orunsound condition.  Any rights of theparties that have already vested, however, shall not be affected by any suchaction.

 

4.                                       CertainReduction of Payments by the Association.

 

(a)                                  Notwithstandingany other provision of this Agreement, if the value and amounts of benefitsunder this Agreement, together with any other amounts and the value of benefitsreceived or to be received by the Employee in connection with a Change inControl would cause any amount to be nondeductible by the Association or theHolding Company for federal income tax purposes pursuant to Section 280G of theCode, then amounts and benefits under this Agreement shall be reduced (not lessthan zero) to the extent necessary so as to maximize amounts and the value ofbenefits to the Employee without causing any amount to become nondeductible bythe Association or the Holding Company pursuant to or by reason of Code Section280G.  The Employee shall determine theallocation of such reduction among payments and benefits to the Employee.

 

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(b)                                 Anypayments made to the Employee pursuant to this Agreement, or otherwise, aresubject to and conditioned upon their compliance with 12 U.S.C. § 1828(k) andany regulations promulgated thereunder.

 

5.                                       NoMitigation.  The Employee shall notbe required to mitigate the amount of any salary or other payment or benefitprovided for in this Agreement by seeking other employment or otherwise, norshall the amount of any payment or benefit provided for in this Agreement bereduced by any compensation earned by the Employee as the result of employmentby another employer, by retirement benefits after the date of termination orotherwise.

 

6.                                       Attorneysand/or Fees.  If the Employee ispurportedly Terminated for Cause and the Association denies payments and/orbenefits under Section 3(a) of this Agreement on the basis that the Employeeexperienced Termination for Cause rather than Involuntary Termination, but itis determined by a court of competent jurisdiction or by an arbitrator pursuantto Section 13 that cause as contemplated by Section 1(e) of this Agreement didnot exist for termination of the Employee’s employment, or if in any event itis determined by any such court or arbitrator that the Association has failedto make timely payment of any amounts or provision of any benefits owed to theEmployee under this Agreement, the Employee shall be entitled to reimbursementfor all reasonable costs, including attorneys’ fees, incurred in challengingsuch termination of employment or collecting such amounts or benefits.  Such reimbursement shall be in addition toall rights to which the Employee is otherwise entitled under this Agreement.

 

7.                                       NoAssignments.

 

(a)                                  ThisAgreement is personal to each of the parties hereto, and neither party mayassign or delegate any of its rights or obligations hereunder without firstobtaining the written consent of the other party; provided, however, that theAssociation shall require any successor or assign (whether direct or indirect,by purchase, merger, consolidation or otherwise) to all or substantially all ofthe business and/or assets of the Association, by an assumption agreement inform and substance satisfactory to the Employee, to expressly assume and agreeto perform this Agreement in the same manner and to the same extent that theAssociation would be required to perform it if no such succession or assignmenthad taken place. Failure of the Association to obtain such an assumptionagreement prior to the effectiveness of any such succession or assignment shallbe a breach of this Agreement and shall entitle the Employee to compensationfrom the Association in the same amount and on the same terms as thecompensation pursuant to Section 3(a) hereof. For purposes of implementing theprovisions of this Section 7(a), the date on which any such succession becomeseffective shall be deemed the Date of Termination.

 

(b)                                 ThisAgreement and all rights of the Employee hereunder shall inure to the benefitof and be enforceable by the Employee’s personal and legal representatives,executors, administrators, successors, heirs, distributees, devisees andlegatees. If the Employee should die while any amounts would still be

 

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payable to the Employee hereunder if the Employee hadcontinued to live, all such amounts, unless otherwise provided herein, shall bepaid 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’sestate.

 

8.                                       Notice.  For the purposes of this Agreement, noticesand all other communications provided for in the Agreement shall be in writingand shall be deemed to have been duly given when personally delivered or sentby certified mail, return receipt requested, postage prepaid, to theAssociation at its home office, to the attention of the Board of Directors witha copy to the Secretary of the Association, or, if to the Employee, to suchhome or other address as the Employee has most recently provided in writing tothe Association.

 

9.                                       Amendments.  No amendments or additions to this Agreementshall be binding unless in writing and signed by both parties, except as hereinotherwise provided.

 

10.                                 Headings.  The headings used in this Agreement areincluded solely for convenience and shall not affect, or be used in connectionwith, the interpretation of this Agreement.

 

11.                                 Severability.  The provisions of this Agreement shall bedeemed severable and the invalidity or unenforceability of any provision shallnot affect the validity or enforceability of the other provisions hereof.

 

12.                                 GoverningLaw.  This Agreement shall begoverned by the laws of the United States to the extent applicable andotherwise by the laws of the State of Illinois.

 

13.                                 Arbitration.  Any dispute or controversy arising under orin connection with this Agreement shall be settled exclusively by arbitrationin accordance with the rules of the American Arbitration Association then ineffect. Judgment may be entered on the arbitrator’s award in any court havingjurisdiction.

 

14.                                 EntireAgreement.  This Agreementconstitutes the entire agreement between the parties concerning the subjectmatter 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 partieshave executed this Agreement as of the Effective Date.

 

THIS AGREEMENT CONTAINS ABINDING 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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