Document:

exhibit10-1_033108.htm

     

    
      

      Exhibit
10.1

      

      EMPLOYMENT
AGREEMENT

      

      This EMPLOYMENT AGREEMENT (the
“Agreement”) dated this 1st day of May, 2008 is made and entered into by and
between CITIZENS FINANCIAL BANK (the “Bank”), a federally chartered savings
bank, and Thomas F. Prisby (the “Executive”), a resident of the State of
Illinois,

      

      WITNESSETH:

      

      WHEREAS, the Executive is presently
employed as an officer of the Bank and CFS Bancorp, Inc. (the “Corporation”)
(together, the “Employers”);

      

      WHEREAS, the Employers desire to be
ensured of the Executive’s continued active participation in the business and
senior management of the Employers, and the Executive desires to continue to
actively participate in the business and senior management of the
Employers;

      

      WHEREAS, the Corporation and the Bank
desire to enter into separate agreements with the Executive with respect to his
employment by each of the Employers; and

      

      WHEREAS, in order to induce the
Executive to remain in the employ of the Employers and in consideration of the
Executive’s agreeing to remain in the employ of the Employers, the parties
desire to specify in this Agreement the employment arrangement between the Bank
and the Executive as well as certain restrictions, covenants, agreements and
severance payments of the Bank and/or the Executive.

      

      NOW THEREFORE, in consideration of the
foregoing recitals, the mutual agreements herein contained, and upon the other
terms and conditions hereinafter provided, the parties hereby agree as
follows:

      

      
        	
                1)  

              	
                Definitions.

              

      

      

      The
following words and terms shall have the meanings set forth below for the
purposes of this Agreement:

       

      

      
        	
                a)  

              	
                Average Annual
      Compensation.  The Executive’s “Average Annual
      Compensation” for purposes of this Agreement shall be deemed to mean the
      average Base Salary, cash bonuses, vested amounts allocated to the
      Executive under the ESOP and the Corporation’s vested matching
      contributions made to the Executive’s account under the Corporation’s
      401(k) plan for the three fiscal years preceding the Executive’s Date of
      Termination.

              

      

      

      
        	
                b)  

              	
                Base
      Salary.  “Base Salary” shall have the meaning set forth
      in Section 4(a) hereof.

              

      

      

      
        	
                c)  

              	
                Corporation
      Agreement.  “Corporation Agreement” means the employment
      agreement between the Corporation and the Executive dated of even date
      herewith.

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	
                d)  

              	
                Cause. Termination of
      the Executive’s employment for “Cause” shall mean termination by the Bank
      because of any of the following by the
  Executive:

              

      

      

      
        	
                 
      

              	
                i)

              	
                any
      incompetence or intentional failure by the Executive in performing his
      services or carrying out his duties and responsibilities under this
      Agreement; or

              

      

      

      
        	
                 
      

              	
                ii)

              	
                any
      dishonesty, fraud, theft or embezzlement by the Executive;
    or

              

      

      

      
        	
                 
      

              	
                iii)

              	
                any
      willful misconduct or breach of fiduciary duty involving personal profit
      by the Executive; or

              

      

      

      
        	
                 
      

              	
                iv)

              	
                any
      willful or knowing violation by the Executive of any law, statute, rule,
      regulation or government requirement (other than traffic violations or
      similar offenses) or any final cease and desist order;
  or

              

      

      

      
        	
                 
      

              	
                v)

              	
                any
      material and intentional noncompliance by the Executive with any provision
      of any employee handbook, code of conduct or ethics, corporate governance
      guidelines or any rule, policy or procedure of either of the Employers as
      are currently in effect or as may hereafter be in effect from time to
      time; or

              

      

      

      
        	
                 
      

              	
                vi)

              	
                any
      material breach by the Executive of any provision of this
      Agreement.

              

      

      

      
        	
              	
                e)  

              	
                Change in
      Control.  “Change in Control” means the occurrence of any
      of the following relating to the Corporation:  (i) an event that
      would be required to be reported in response to Item 5.01 of Form 8-K or
      Item 6(e) of Schedule 14A of Regulation 14A pursuant to the Securities and
      Exchange Act of 1934 Act, as amended (“1934 Act”), or any successor
      thereto, whether or not any class of securities of the Corporation is
      registered under the 1934 Act; (ii) any “person” is or becomes the
      “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly
      or indirectly, of securities of the Corporation representing 20% or more
      of the combined voting power of the Corporation’s then outstanding
      securities; or (iii) during any period of thirty-six consecutive months,
      individuals who at the beginning of such period constitute the Board of
      Directors of the Corporation cease for any reason to constitute at least a
      majority thereof unless the election, or the nomination for election by
      stockholders, of each new director was approved by a vote of at least
      two-thirds of the directors then still in office who were directors at the
      beginning of the period and, in such case, each new director so approved
      will be considered for purposes of this section to have been a director at
      the beginning of such period.

              

      

      

      
        	
              	
                           
      i)

              	
                For
      purposes of the definition of “Change in Control,” a Person or group of
      Persons does not include the CFS Bancorp, Inc. Employee Stock Ownership
      Plan Trust which forms a part of the CFS Bancorp, Inc. Employee Stock
      Ownership Plan (the “ESOP”), or any other employee benefit plan,
      subsidiary or affiliate of the Corporation or the Bank, and the
      outstanding shares of common stock of the Corporation, on a fully diluted
      basis, include all shares owned by the ESOP, whether allocated or
      unallocated to the accounts of participants
  thereunder.

              

      

       

       

      
        
          2

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	
                           
      ii)  

              	
                For
      purposes of this Agreement (including without limitation the definition of
      “Change in Control”), the term “Person” means any natural person,
      proprietorship, partnership, corporation, limited liability company,
      organization, firm, business, joint venture, association, trust or other
      entity and any government agency, body or
  authority.

              

      

      
 

      
        	
                f)  

              	
                Code. “Code” shall mean
      the Internal Revenue Code of 1986, as
amended.

              

      

      

      
        	
                g)  

              	
                Date of
      Termination.  “Date of Termination” shall mean (i) if the
      Executive’s employment is terminated for Cause or for Disability, the date
      specified in the Notice of Termination, (ii) if the Executive’s employment
      is terminated for any other reason (except in the case of death), the date
      on which a Notice of Termination is given or as specified in such Notice,
      and (iii) if the Executive dies during his employment hereunder, the date
      of his death.

              

      

      

      
        	
                h)  

              	
                Disability.  Termination
      by the Bank of the Executive’s employment based on “Disability” shall mean
      termination because of any physical or mental impairment, incapacity or
      condition which qualifies the Executive for disability benefits under the
      applicable long-term disability plan or policy maintained by the Employers
      or any subsidiary or, if no such plan or policy applies, which would
      qualify the Executive for disability benefits under the Federal Social
      Security System.

              

      

      

      
        	
                i)  

              	
                Good
      Reason.  Termination by the Executive of the Executive’s
      employment for “Good Reason” shall mean termination by the Executive
      within two years following a Change in Control of the Corporation based
      on:

              

      

      

      
        	
                           
      (i)  

              	
                Without
      the Executive’s express written consent, the failure to elect or to
      re-elect or to appoint or to re-appoint the Executive to the offices of
      Chief Executive Officer of the Employers or a material adverse change made
      by the Employers in the Executive’s functions, duties or responsibilities
      as Chief Executive Officer of the Employers as such functions, duties or
      responsibilities exist immediately prior to the effective time of the
      Change in Control;

              

      

      

      
        	
                           
      (ii)  

              	
                Without
      the Executive’s express written consent, a reduction by either of the
      Employers in the Executive’s Base Salary as the same may be increased from
      time to time or, except to the extent permitted by Section 4(b) hereof, a
      reduction in the package of employee benefits provided to the Executive
      taken as a whole;

              

      

      

      
        	
                           
      (iii)  

              	
                The
      principal executive office of the Bank is relocated more than 50 miles
      from Munster, Indiana or, without the Executive’s express written consent,
      either of the Employers require the Executive to be based anywhere other
      than where the Bank’s principal executive office is located or has been
      relocated as provided above, except for required travel on business of the
      Employers;

              

      

      

      
        	
                           
      (iv)  

              	
                Any
      purported termination of the Executive’s employment for Disability or
      Retirement which is not effected pursuant to a Notice of Termination
      satisfying the requirements of paragraph (l) below;
  or

              

      

       

       

      
        
          3

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	
              	
                           
      (v)  

              	
                The
      failure by the Bank to obtain the assumption of and agreement to perform
      this Agreement by any successor.

              

      

      

      
        	
                 
      

              	
                The
      Executive must notify the Bank in writing within ninety (90) days of the
      initial existence of the circumstances giving rise to a termination of the
      Executive’s employment hereunder for Good Reason.  The Bank
      shall then have thirty (30) days following the effectiveness of such
      notice during which it may cure such circumstances and, if so cured, shall
      not be required to make any severance payments pursuant to Section 6(d)
      hereof.

              

      

      

      
        	
                j)  

              	
                IRS. “IRS” shall mean
      the Internal Revenue Service.

              

      

      

      
        	
                k)  

              	
                Key
      Employee.  “Key Employee” means an employee who
      is:

              

      

      

      i)      An
officer of the Corporation having annual compensation greater than $150,000;
or

      

      ii)     A
beneficial owner of 5% or more of the outstanding securities of the Corporation;
or

      

                      iii)   
A beneficial owner 1% or more of the outstanding securities of the Corporation
and has an annual compensation greater than $150,000.

      
 

      For
purposes of determining who is an officer for purposes of Section 1(k)(i), no
more than 50 employees (or, if lesser, the greater of three or 10% of the
employees) shall be treated as officers, and those categories of employees
listed in Code Section 414(q)(5) shall be excluded.  The $150,000
amount in Section 1(k)(i) shall be adjusted at the same time and in the same
manner as under Code Section 415(d), except that the base period shall be the
calendar quarter beginning July 1, 2001, and any increase under this sentence
which is not a multiple of $5,000 shall be rounded to the next lower multiple of
$5,000.

      

      
        	
                l)  

              	
                Notice of
      Termination.  Any purported termination of the
      Executive’s employment by the Bank for any reason, including without
      limitation with or without Cause or upon the occurrence of a Disability,
      or by the Executive for any reason, including without limitation with or
      without Good Reason or upon Retirement, shall be communicated by written
      “Notice of Termination” to the other party hereto.  For purposes
      of this Agreement, a “Notice of Termination” shall mean a dated notice
      which (i) indicates the specific termination provision in this Agreement
      relied upon, (ii) sets forth in reasonable detail the facts and
      circumstances claimed to provide a basis for termination of the
      Executive’s employment under the provision so indicated, (iii) specifies a
      Date of Termination, which shall be not less than thirty (30) nor more
      than ninety (90) days after such Notice of Termination is given, except in
      the case of the Bank’s termination of the Executive’s employment for
      Cause, which shall be effective immediately; and (iv) is given in the
      manner specified in Section 11
hereof.

              

      

      

      
        	
                m)  

              	
                Retirement.  “Retirement”
      shall mean voluntary termination by the Executive after the Executive
      attains the age 55, with at least five years of active
      service.

              

      

       

      
        
          	
                	
                  n) 

                	
                  Separation from
      Service.  “Separation from Service” means the date of the
      Executive’s death or Retirement or the date on which the Executive
      otherwise experiences a Termination
of

                

        

      
        
          4

        

        
          
          

          
            

          

        

        
          
          

        

      

      

        

          Employment
with the Corporation; provided, however, a Separation from Service does not
occur if the Executive is on military leave, sick leave or other bona fide leave
of absence if the period of such leave does not exceed six (6) months or, if the
leave is for a longer period, so long as the Executive’s right to reemployment
with the Corporation is provided either by statute or by
contract.  For purposes of this paragraph (n), a leave of absence
constitutes a bona fide leave of absence only if there is a reasonable
expectation that the Executive will return to perform services for the
Corporation.  If the period of leave exceeds six (6) months and the
Executive’s right to reemployment is not provided either by statute or contract,
there shall be a Separation from Service on the first date immediately following
such six-month period.  Notwithstanding the foregoing, where a leave
of absence is due to any medically determinable physical or mental impairment
that can be expected to result in death or can be expected to last for a
continuous period of not less than six (6) months and where such impairment
causes the Executive to be unable to render the services or carry out the duties
and responsibilities set forth in this Agreement, then a 29-month period of
absence may be substituted for such six-month period.  The Executive
shall incur a “Termination of Employment” when a termination of employment is
incurred under Treasury Regulation 1.409A-1(h)(ii).

           

        

      

      
        	
                 o)  

              	
                Specified
      Employee.  “Specified Employee” means an employee who is
      a “Key Employee” if the Corporation’s stock is publicly traded on an
      established securities market.  An employee shall be a Specified
      Employee for the twelve-month period beginning on the April 1st
      following any calendar year in which the employee is a Key
      Employee.

              

      

      

      
        	
                 2)  

              	
                Term
      of Employment.

              

      

      

      
        	
                a)  

              	
                The
      Bank hereby employs the Executive as Chairman and Chief Executive Officer,
      and the Executive hereby accepts said employment and agrees to render such
      services to the Bank on the terms and conditions set forth in this
      Agreement.  The term of this Agreement shall be a period of
      three years commencing as of the date hereof (the "Commencement Date"),
      subject to earlier termination as provided herein.  Reference
      herein to the term of this Agreement shall refer to both such initial term
      and any extended terms.  The Board of Directors of the Bank
      shall review on a periodic basis (and no less frequently than annually)
      whether to permit further extensions of the term of this
      Agreement.  As part of such review, the Board of Directors shall
      consider all relevant factors, including the Executive's performance
      hereunder, and shall either expressly approve further extensions of the
      time of this Agreement or decide to provide notice to the
      contrary.

              

      

      

      
        	
                b)  

              	
                During
      the term of this Agreement, the Executive shall perform such executive
      services for the Bank as may be consistent with his titles and from time
      to time assigned to him by the Bank’s Board of Directors. The Executive
      further agrees to serve without additional compensation as an officer and
      director of any of the Bank's subsidiaries and agrees that any amounts
      received from such corporation may be offset against the amounts due
      hereunder. In addition, it is agreed that the Bank may assign the
      Executive to one of its subsidiaries for payroll
  purposes.

              

      

       

       

      
        
          5

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	
                3)  

              	
                Loyalty,
      Confidentiality and
Non-Competition.

              

      

      

      
        	
                a)  

              	
                The
      Executive shall devote his full time and attention and his best efforts to
      the performance of his duties and responsibilities under this
      Agreement.  During the term of this Agreement, the Executive
      shall not, at any time or place, either directly or indirectly, engage in
      any business or activity in competition with the business, affairs or
      interests of the Bank or any of its subsidiaries or affiliates or be a
      director, officer, employee or consultant to any bank holding company,
      savings and loan holding company, bank, savings and loan association,
      credit union, thrift, savings bank, financial services provider or similar
      institution, wherever located.

              

      

      

      
        	
                b)  

              	
                For
      a period of three years from the Date of Termination relating to a
      termination by the Bank of the Executive’s employment hereunder for Cause
      or a Disability or a termination by the Executive of his employment
      hereunder upon Retirement, without Good Reason or his election not to
      extend the term of this Agreement, the Executive shall not, at any time or
      place, either directly or indirectly engage in any business or activity in
      competition with the business, affairs or interests of the Bank or any of
      its subsidiaries or affiliates or be a director, officer, employee or
      consultant to any bank holding company, savings and loan holding company,
      bank, savings and loan association, credit union, thrift, savings bank,
      financial services provider or similar institution within a fifty (50)
      mile radius from any present or future office of either of the Employers
      or any of their subsidiaries or
affiliates.

              

      

      

      
        	
                c)  

              	
                For
      purposes of this Agreement, directly or indirectly engaging in any
      business or activity in competition with the business, affairs or
      interests of the Bank or any of its subsidiaries or affiliates includes,
      but is not limited to, serving or acting as an owner, partner, member,
      agent, beneficiary, employee, officer, director or consultant of any
      Person engaged in any banking, lending, financial services or other
      business, operation or activity in which the Bank or any of its
      subsidiaries or affiliates is engaged or is actively developing or
      pursuing on the Date of Termination; except that nothing herein contained
      shall be deemed to prevent or limit the right of the Executive to invest
      any of his funds in the capital stock or other securities of any such
      Person whose stock or securities are publicly owned or are regularly
      traded on any national exchange so long as the Executive is not the
      beneficial owner of more than 1% of the outstanding capital stock or
      securities of such Person, nor shall anything herein contained be deemed
      to prevent or limit the right of the Executive to invest any of his funds
      in real estate.

              

      

       

      
        
          	
                	
                        
      d) 

                	
                  All
      information relating to business of the Employers or any of their
      subsidiaries or affiliates including, but not limited to, that business
      obtained or serviced by the Executive, all customer lists, customer
      information, contact lists, asset, liability, loan, deposit and investment
      information, financial records or information, instruments, documents,
      papers and other material used in connection with, and all trade secrets,
      estimates, projections, goals, strategies and techniques relating to, such
      business, shall be the exclusive property of the Employers or the
      subsidiary or affiliate.  The Executive shall maintain the
      confidentiality of all such information and material that is confidential,
      proprietary or not publicly available (other than through a breach of this
      Agreement by the Executive or any other impermissible disclosure); none of
      it shall be copied, reproduced, duplicated or disclosed without the
      express written permission of the Employers (other than in connection with
      the performance

                

        

      
        
          6

        

        
          
          

          
            

          

        

        
          
          

        

      

      

        
          	
                    

                	
                  of
      the Executive’s services hereunder), and the Executive shall return all
      such information and materials to the Employers upon their request or upon
      termination of employment.  The Executive also agrees that he
      shall not utilize such information or materials, either directly or
      indirectly, for any purposes except rendering his services and carrying
      out his duties and responsibilities hereunder and in furtherance of the
      Employers’ business, unless otherwise expressly authorized by the
      Employers in writing in
advance.

                

        

      

      

      
        	
                e)  

              	
                The
      Executive agrees that, during his employment, and for a period of three
      years following the Date of Termination of the Executive’s employment
      hereunder for Cause, without Good Reason, upon Retirement, upon the
      occurrence of a Disability or the election of the Executive not to extend
      the term of this Agreement, the
Executive:

              

      

      

      
        	
                           
      i)  

              	
                shall
      not solicit any of the Employers’ past or current customers or clients for
      the benefit of anyone other than the Employers or their subsidiaries or
      affiliates;

              

      

      

      
        	
                           
      ii)  

              	
                shall
      not divulge the names of any of the Employers’ past or then current
      customers to any other Person; and

              

      

      

      
        	
                           
      iii)  

              	
                shall
      not, either directly or indirectly, induce or solicit any person to leave
      the employ of either of the
Employers.

              

      

      

      
        	
                f)  

              	
                The
      provisions of Sections 3(b), 3(c) and 3(e) hereof shall be construed
      independent of any other provision of this Agreement and shall survive any
      termination of this Agreement.  The existence of any claim or
      cause of action of the Executive against the Bank, whether predicated on
      this Agreement or otherwise, shall not constitute a defense to the
      enforcement by the Bank of Sections 3(b), 3(c) and 3(e)
      hereof.

              

      

      

      
        	
                g)  

              	
                The
      restrictions and covenants contained in this Section shall be deemed not
      to run during all periods of noncompliance, the intention of the parties
      hereto being to have such restrictions and covenants apply during the full
      periods specified herein.  The Bank and the Executive
      understand, acknowledge and agree that the restrictions and covenants
      contained in this Section are reasonable in view of the Executive’s
      position at the Bank, the competitive and confidential nature of the
      information of which the Executive has or will have knowledge and the
      competitive and the nature of the business in which the Bank and its
      subsidiaries and affiliates are or may be
  engaged.

              

      

      

      
        	
                4)  

              	
                Compensation
      and Benefits.

              

      

      

      
        	
                a)  

              	
                The
      Employers shall collectively compensate and pay the Executive for his
      services during the term of this Agreement at an aggregate minimum base
      salary of $391,000 per year (“Base Salary”), which may be increased from
      time to time in such amounts as may be determined by the Boards of
      Directors of the Employers and may not be decreased without the
      Executive’s express written consent.  In addition to his Base
      Salary, the Executive shall be entitled to receive during the term of this
      Agreement such bonus payments as may be determined by the Boards of
      Directors of the Employers.

              

      

       

       

      
        
          7

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	
                b)  

              	
                During
      the term of this Agreement, the Executive shall be entitled to participate
      in and receive the benefits of any pension, retirement, profit sharing,
      equity based compensation, employee stock ownership or other similar plans
      made available to employees and executives of the Employers, to the extent
      commensurate with his position with the Employers, in accordance with the
      terms of the applicable plans and as fixed by the Boards of Directors of
      the Employers. The Bank shall not make any changes in such plans which
      would adversely affect the Executive’s rights or benefits thereunder,
      unless such change is applicable to all executive officers of the Bank and
      does not result in a proportionately greater adverse change in the rights
      of or benefits to the Executive as compared with any other executive
      officer of the Bank.  Nothing paid to the Executive under any
      plan or arrangement presently in effect or made available in the future
      shall be deemed to be in lieu of the Executive’s Base
      Salary.  Notwithstanding the foregoing or anything in this
      Agreement to the contrary, the Executive understands, acknowledges and
      agrees that the Employers may from time to time, in their sole discretion,
      amend, modify, replace, freeze, suspend or terminate any or all of the
      incentive compensation, pension or other retirement, profit sharing,
      equity based compensation, employee stock ownership, perquisite or other
      plans, benefits and privileges given to employees and executives of the
      Employers, as well as any other rules, policies or procedures applicable
      to executives of the Employers, but only so long as any such actions apply
      to all executive officers of the Bank and do not result in a
      proportionately greater adverse change in the rights of or benefits to the
      Executive as compared with any other executive officer of the
      Bank.

              

      

      

      
        	
                c)  

              	
                During
      the term of this Agreement, the Executive shall be entitled to paid annual
      vacation in accordance with the policies as established from time to time
      by the Boards of Directors of the Employers.  The Executive
      shall not be entitled to receive any additional compensation from the
      Employers for failure to take a vacation, nor shall the Executive be able
      to accumulate unused vacation time from one year to the next, except to
      the extent authorized by the Boards of Directors of the
      Employers.

              

      

      

      
        	
                d)  

              	
                In
      the event the Executive’s employment is terminated due to Disability,
      Retirement or death, and provided the Executive is not otherwise receiving
      substantially similar benefits from another employer, consultant or
      otherwise, the Employers shall provide, at their cost, all existing life
      and medical insurance coverage for the Executive and his spouse for a
      period until they both become eligible for Medicare
      coverage.  Thereafter, the Executive may continue, at his cost,
      the health insurance coverage as an eligible retried employee under the
      Employer’s health and medical benefit
plans.

              

      

      

      
        	
                e)  

              	
                The
      Executive’s Base Salary, compensation, benefits and expenses shall be paid
      by and allocated between the Corporation and the Bank in the same
      proportion as the time and services actually expended by the Executive on
      behalf of each respective Employer.

              

      

      

      
        	
                f)  

              	
                During
      the term of this Agreement, the Employers shall provide suitable office
      space, desk, chairs, filing cabinets, telephones and other usual and
      customary office furniture, fixtures and equipment adequate for the
      performance of the duties and responsibilities assigned to the Executive
      hereunder.

              

      

       

       

      
        
          8

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	
                g)  

              	
                During
      the term of this Agreement, the Employers shall provide to Executive the
      use of an automobile of Executive’s choice with an average annual lease
      cost not to exceed $15,000 per year.  The Employers agree to
      replace the automobile with a new one at Executive’s request no more often
      than once every two years.  Either of the Employers shall pay
      all automobile operating expenses incurred by the Executive in the
      performance of Executive’s duties hereunder.  Either of the
      Employers shall procure and maintain in force an automobile liability
      policy for the automobile with coverage, including Executive, in the
      minimum amount of $1,000,000 combined single limit on bodily injury and
      property damage.

              

      

      

      
        	
                h)  

              	
                During
      the term of this Agreement, the Employers shall provide to the Executive,
      at the Employer’s cost, all perquisites which all other senior executives
      of the Bank are generally entitled to receive, including the payment of
      his annual dues at his country
club.

              

      

      

      
        	
                5)  

              	
                Expenses.  The
      Employers shall reimburse the Executive or otherwise provide for or pay
      for all reasonable expenses incurred by the Executive in furtherance of or
      in connection with the business of the Employers, including, but not by
      way of limitation, travel expenses and all reasonable entertainment
      expenses (whether incurred at the Executive’s residence, while traveling
      or otherwise), subject to such reasonable documentation and other
      limitations and requirements as may be established by the Boards of
      Directors of the Employers.  If such expenses are paid in the
      first instance by the Executive, the Employers shall reimburse the
      Executive therefor.  Any such reimbursement of expenses provided
      in this Section 5 shall be made no later than December 31 of the year
      following the year in which the expense was
  incurred.

              

      

      

      
        	
                6)  

              	
                Termination.

              

      

      

      
        	
                a)  

              	
                The
      Bank shall have the right at any time, upon prior Notice of Termination,
      to terminate the Executive’s employment hereunder for any reason,
      including without limitation termination with or without Cause, upon a
      Disability or the election of the Bank not to extend the term of this
      Agreement.  The Executive shall have the right at any time, upon
      prior Notice of Termination, to terminate his employment hereunder for any
      reason, including without limitation with or without Good Reason, upon
      Retirement or the election of the Executive not to extend the term of this
      Agreement.

              

      

      

      
        	
                b)  

              	
                In
      the event that (i) the Executive’s employment hereunder is terminated by
      the Bank for Cause or upon the election of the Bank not to extend the term
      of this Agreement or (ii) the Executive terminates his employment
      hereunder without Good Reason or upon the election of the Executive not to
      extend the term of this Agreement, the Executive shall in each such case
      have no right pursuant to this Agreement to any severance payments,
      compensation or other benefits for any period after the applicable Date of
      Termination.

              

      

      

      
        	
                c)  

              	
                In
      the event that the Executive’s employment hereunder is terminated as a
      result of a Disability, Retirement or the Executive’s death during the
      term of this Agreement, the Executive shall have no right pursuant to this
      Agreement to severance payments, compensation or other benefits for any
      period after the applicable Date of Termination, except as provided for in
      Section 4(d) hereof.

              

      

       

       

      
        
          9

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	
                d)  

              	
                In
      the event that (i) the Executive’s employment hereunder is terminated by
      the Bank without Cause or (ii) the Executive’s employment hereunder is
      terminated by the Executive (y) due to a material breach of this Agreement
      by the Bank, which breach has not been cured within fifteen (15) days
      after a written notice of non-compliance has been given by the Executive
      to the Employers, or (z) for Good Reason, then the Bank shall so long as
      the Executive does not breach this Agreement following the Date of
      Termination:

              

      

      

      
        	
                           
      i)  

              	
                pay
      to the Executive, a cash severance amount equal to three times that
      portion of the Executive’s Average Annual Compensation paid by the Bank,
      in two equal
      installments, with the first installment to be paid on the first business
      day of the month following the Executive’s Date of Termination and the
      second installment to be paid on the first anniversary of the Date of
      Termination; and

              

      

      

      
        	
                           
      ii)  

              	
                maintain
      and provide for a period ending at the earlier of (A) the expiration of
      the remaining term of employment pursuant hereto prior to the Notice of
      Termination or (B) the date of the Executive’s employment by or
      affiliation with another employer, consultant or Person (provided that the
      Executive is entitled under the terms of such employment or affiliation to
      benefits substantially similar to those described in this subparagraph, at
      the same or lesser cost to the Executive as under the Bank’s plans,
      programs and arrangements on the Date of Termination), the Executive’s
      continued participation in all group insurance, life insurance, health and
      accident insurance, disability insurance and other welfare benefit plans,
      programs and arrangements offered by the Bank in which the Executive was
      entitled to participate immediately prior to the Date of Termination (and
      excluding (x) Base Salary, bonuses and other items of compensation
      included in Average Annual Compensation, (y) incentive compensation,
      pension or other retirement, profit sharing, equity based compensation,
      employee stock ownership or other similar plans, programs or arrangements
      of the Bank, and (z) perquisites and any vehicle provided by the
      Bank), provided that in the event that the Executive’s participation in
      any such plan, program or arrangement as provided in this subparagraph is
      barred, or during such period any such plan, program or arrangement is
      discontinued or the benefits thereunder are materially reduced, the Bank
      shall arrange to provide the Executive with benefits substantially similar
      to those which the Executive was entitled to receive under such plans,
      programs and arrangements immediately prior to the Date of
      Termination.

              

      

      

      
        	
                 
      

              	
                Any
      severance payment made to the Executive under this Agreement shall be
      offset against and reduce any severance payment that would otherwise be
      required to made to the Executive under the Corporation
      Agreement.

              

      

       

      
        	
              	
                e) 

              	
                If
      at the time of the Executive’s Separation from Service, for any reason
      other than death, the Executive meets the definition of a Specified
      Employee, payment of all amounts under subsections 6(d)(i) and 6(d)(ii)
      shall be suspended for six (6) months following the Executive’s Separation
      from Service.  In such event, the first installment shall be
      paid on the first day following the end of the six-month suspension
      period.  The second installment shall be paid no later than
      January 15th
      of the calendar year following the year in which the first installment was
      paid.  If the Executive incurs a Separation from Service due to
      death, regardless of whether the Executive meets the definition of a
      Specified Employee, payment

              

      

    

     

     

    
      
        10

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      

      
        	
                  

              	
                of
      his benefit shall not be suspended; provided, however, that the six-month
      suspension period shall not apply to the provision of any group insurance,
      life insurance, health and accident insurance or disability insurance
      under subsection 6(d)(ii).

              

      

       

      
        	
                f)  

              	
                Upon
      any termination of the Executive’s employment hereunder, the Executive
      covenants and agrees (i) to return promptly to the Bank, at the Bank’s
      headquarters, all confidential information or materials that are still in
      the Executive’s possession or control on his last day of employment with
      the Bank or the location of which the Employee knows (including, but not
      limited to, any confidential information or materials contained on the
      Executive’s personal data assistant or personal or home computer), and
      (ii) to return promptly to the Bank, at the Bank’s headquarters, all
      vehicles, equipment, computers, credit cards, keys, access cards,
      passwords and other property of the Bank that are still in the Executive’s
      possession or control on his last day of employment or the location of
      which the Employee knows, and to cease using any of the foregoing on and
      after his last day of employment.

              

      

      

      
        	
                7)  

              	
                Limitation of Benefits under
      Certain Circumstances.  If the payments and benefits
      pursuant to Section 6 hereof, either alone or together with other payments
      and benefits which the Executive has the right to receive from the Bank,
      would constitute a “parachute payment” under Section 280G of the Code, the
      payments and benefits payable by the Bank pursuant to Section 6 hereof
      shall be reduced, in the manner determined by the Executive, by the
      amount, if any, which is the minimum necessary to result in no portion of
      the payments and benefits payable by the Bank under Section 6 being
      non-deductible to the Bank pursuant to Section 280G of the Code and
      subject to the excise tax imposed under Section 4999 of the
      Code.  The parties hereto agree that the present value of the
      payments and benefits payable pursuant to this Agreement to the Executive
      upon termination shall be limited to three (3) times the Executive’s
      Average Annual Compensation.  The determination of any reduction
      in the payments and benefits to be made pursuant to Section 6 shall be
      based upon the opinion of independent counsel selected by the Bank's
      independent public accountants and paid by the Bank.  Such
      counsel shall be reasonably acceptable to the Bank and the Executive;
      shall promptly prepare the foregoing opinion, but in no event later than
      sixty (60) days following such counsel’s selection; and may use such
      actuaries as such counsel deems necessary or advisable for the
      purpose.  Nothing contained herein shall result in a reduction
      of any payments or benefits to which the Executive may be entitled upon
      termination of employment under any circumstances other than as specified
      in this Section 7, or a reduction in the payments and benefits specified
      in Section 6 below zero.

              

      

      

      
        	
                8)  

              	
                Mitigation;
      Exclusivity of Benefits.

              

      

      

      
        	
                a)  

              	
                The
      Executive shall not be required to mitigate the amount of any benefits
      hereunder by seeking other employment or otherwise, nor shall the amount
      of any such benefits be reduced by any compensation earned by the
      Executive as a result of employment by another employer after the Date of
      Termination or otherwise so long as the Executive has not breached this
      Agreement.  In the event of any breach of this Agreement by the
      Executive following the Date of Termination, the Executive shall
      immediately repay to the Bank all severance payments paid to him under
      Section 6 hereof, plus interest at the rate of 10% per annum from the date
      of such breach until all such severance payments have been repaid in full
      to the Bank.

              

      

       

       

      
        
          11

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	
                b)  

              	
                The
      specific arrangements referred to herein are not intended to exclude any
      other benefits which may be available to the Executive upon a termination
      of employment with the Employers pursuant to employee benefit plans of the
      Employers or otherwise.

              

      

      

      
        	
                9)  

              	
                Withholding.  All
      payments required to be made by the Bank hereunder to the Executive shall
      be subject to the withholding of such amounts, if any, relating to taxes
      and other payroll deductions as the Bank may reasonably determine should
      be withheld pursuant to any applicable law or
  regulation.

              

      

      

      
        	
                10)  

              	
                Assignability.  The
      Bank may, without the consent of the Executive, assign this Agreement and
      its rights and obligations hereunder in whole, but not in part, to any
      corporation, bank or other Person with or into which the Bank may
      hereafter merge or consolidate or to which the Bank may transfer all or
      substantially all of its assets, if in any such case such corporation,
      bank or other Person shall by operation of law or expressly in writing
      assume all obligations of the Bank hereunder as fully as if it had been
      originally made a party hereto, but may not otherwise assign this
      Agreement or its rights and obligations hereunder.  The
      Executive may not assign or transfer this Agreement or any rights or
      obligations hereunder.

              

      

      

      
        	
                11)  

              	
                Notice.  For
      the purposes of this Agreement, notices and all other communications
      provided for in this Agreement shall be in writing and shall be deemed to
      have been duly given if (i) delivered by hand; (ii) sent by certified
      United States Mail, return receipt requested, first class postage
      pre-paid; (iii) sent by overnight delivery service; or (iv) sent by
      facsimile transmission if such fax is confirmed immediately thereafter by
      also mailing a copy of such notice or other communication by regular (not
      certified or registered) United States Mail, first class postage pre-paid,
      as follows:

              

      

      

      
        	
                a)  

              	
                To
      the Corporation:      CFS Bancorp,
      Inc.

              

      

           
Attention: Corporate Secretary

      707
Ridge Road

      Munster,
Indiana  46321

      Facsimile:
(219) 836-2950

      

      
        	
                b)  

              	
                To
      the
      Bank:                Citizens
      Financial Bank

              

      

           
Attention: Corporate Secretary

      707
Ridge Road

      Munster,
Indiana  46321

      Facsimile:
(219) 836-2950

      

      
        	
                c)  

              	
                To
      the
      Executive:          Thomas
      F. Prisby

              

      

            Hinsdale,
Illinois

      
 

      
        	
                 
      

              	
                or
      to such other address or facsimile number as either party hereto may have
      furnished to the other in writing in accordance herewith.  The
      Executive shall promptly provide any changes to his address, telephone
      number and facsimile number to the
Bank.

              

      

       

       

      
        
          12

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	
                 
      

              	
                All
      such notices and other communications shall be effective (i) if delivered
      by hand, when delivered; (ii) if sent by mail in the manner provided
      herein, two (2) business days after deposit with the United States Postal
      Service; (iii) if sent by overnight delivery service, on the next business
      day after deposit with such service; or (iv) if sent by facsimile
      transmission, on the date indicated on the fax confirmation page if such
      fax also is confirmed by regular (not certified or registered) United
      States mail.

              

      

      

      
        	
                12)  

              	
                Amendment;
      Waiver.  No provisions of this Agreement may be amended,
      modified, waived or discharged unless such amendment, modification, waiver
      or discharge is agreed to in writing and signed by the Executive and such
      officer or officers as may be specifically designated by the Board of
      Directors of the Bank to sign on its behalf.  No waiver by any
      party hereto at any time of any breach by any other party hereto of, or
      compliance with, any condition or provision of this Agreement to be
      performed by such other party shall be deemed a waiver of similar or
      dissimilar provisions or conditions at the same or at any prior or
      subsequent time.  The failure or delay of either party at any
      time to insist upon the strict performance of any provision of this
      Agreement or to enforce its or his rights or remedies under this Agreement
      shall not be construed as a waiver or relinquishment of the right to
      insist upon strict performance of such provision, or to pursue any of its
      rights or remedies for any breach hereof, at a future
  time.

              

      

      

      
        	
                13)  

              	
                Governing Law;
      Venue.  The validity, interpretation, construction and
      performance of this Agreement shall be governed by the laws of the United
      States where applicable and otherwise by the substantive laws of the State
      of Indiana.  Any claim, demand or action relating to this
      Agreement shall be brought only in a state court located in Porter County,
      Indiana.  In connection with the foregoing, the parties hereto
      irrevocably consent to the jurisdiction and venue of such court and
      expressly waive any claims, defenses or objections of lack of jurisdiction
      of or proper or preferred venue by such
court.

              

      

      

      
        	
                14)  

              	
                Nature of
      Obligations.  Nothing contained herein shall create or
      require the Bank to create a trust of any kind to fund any benefits which
      may be payable hereunder, and to the extent that the Executive acquires a
      right to receive benefits from the Bank hereunder, such right shall be no
      greater than the right of any unsecured general creditor of the
      Bank.

              

      

      

      
        	
                15)  

              	
                Headings.  The
      section headings contained in this Agreement are for reference purposes
      only and shall not affect in any way the meaning or interpretation of this
      Agreement.

              

      

      

      
        	
                16)  

              	
                Validity.  The
      invalidity or unenforceability of any provision of this Agreement shall
      not affect the validity or enforceability of any other provisions of this
      Agreement, which shall remain in full force and effect; provided, however,
      if any provision of Sections 3(b), 3(c) and 3(e) of this Agreement shall
      be determined by a court of competent jurisdiction to be unenforceable
      because of the provision’s scope, duration, geographic restriction or
      other factor, then such provision shall be considered divisible and the
      court making such determination shall have the power to reduce or limit
      (but not increase or make greater) such scope, duration, geographic
      restriction or other factor or to reform (but not increase or make
      greater) such provision to make it enforceable to the maximum extent
      permitted by law, and such provision shall then be enforceable against the
      appropriate party hereto in its reformed, reduced or limited
      form.

              

      

       

       

      
        
          13

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	
                17)  

              	
                Counterparts.  This
      Agreement may be executed in one or more counterparts, each of which shall
      be deemed to be an original but all of which together shall constitute one
      and the same agreement.

              

      

      

      
        	
                18)  

              	
                Regulatory
      Actions.  The following provisions shall be applicable to
      the parties to the extent that they are required to be included in
      employment agreements between a savings association and its employees
      pursuant to Section 563.39(b) of the Regulations Applicable to All Savings
      Associations, 12 C.F.R. §563.39(b), or any successor thereto, and shall be
      controlling in the event of a conflict with any other provision of this
      Agreement, including without limitation Section 6
  hereof.

              

      

      

      
        	
                a)  

              	
                If
      the Executive is suspended from office and/or temporarily prohibited from
      participating in the conduct of the Bank’s affairs pursuant to notice
      served under Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit
      Insurance Act (“FDIA”) (12 U.S.C. §§1818(e)(3) and 1818(g)(1)), the Bank’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 Bank may, in its discretion (i)
      pay the Executive 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.

              

      

       

      
        	
                b)  

              	
                If
      the Executive is removed from office and/or permanently prohibited from
      participating in the conduct of the Bank’s affairs by an order issued
      under Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C.
      §§1818(e)(4) and (g)(1)), all obligations of the Bank under this Agreement
      shall terminate as of the effective date of the order, but vested rights
      of the Executive and the Bank as of the date of termination shall not be
      affected.

              

      

       

      
        	
                c)  

              	
                If
      the Bank is in default, as defined in Section 3(x)(1) of the FDIA (12
      U.S.C. §1813(x)(1)), all obligations under this Agreement shall terminate
      as of the date of default, but vested rights of the Executive and the Bank
      as of the date of termination shall not be
  affected.

              

      

       

      
        	
                d)  

              	
                All
      obligations under this Agreement shall be terminated pursuant to 12 C.F.R.
      §563.39(b)(5) (except to the extent that it is determined that
      continuation of the Agreement for the continued operation of the Bank is
      necessary) (i) by the Director of the Office of Thrift Supervision
      (“OTS”), or his/her designee, at the time the Federal Deposit Insurance
      Corporation enters into an agreement to provide assistance to or on behalf
      of the Bank under the authority contained in Section 13(c) of the FDIA (12
      U.S.C. §1823(c)), or (ii) by the Director of the OTS, or his/her designee,
      at the time the Director, or his/her designee, approves a supervisory
      merger to resolve problems related to operation of the Bank or when the
      Bank is determined by the Director of the OTS to be in an unsafe or
      unsound condition.  Notwithstanding the foregoing, vested rights
      of the Executive and the Bank as of the date of termination shall not be
      affected.

              

      

       

      
        	
              	
                19)  

              	
                Regulatory
      Prohibition.  Notwithstanding any other provision of this
      Agreement to the contrary, any payments made to the Executive pursuant to
      this Agreement, or otherwise, are subject to and conditioned upon their
      compliance with Section 18(k) of the Federal Deposit Insurance Act (12
      U.S.C. §1828(k)) and the regulations promulgated thereunder, including 12
      C.F.R. Part 359.  In
the

              

      

       

       

      
        
          14

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      event
of the Executive’s termination of employment with the Bank for Cause, all
employment relationships and managerial duties with the Bank shall immediately
cease regardless of whether the Executive remains in the employ of the
Corporation following such termination.  Furthermore, following such
termination for Cause, the Executive shall not, directly or indirectly,
influence or participate in the affairs or the operations of the
Bank.

       

      
        	
                20)  

              	
                Payment of Costs and Legal Fees
      and Reinstatement of Benefits.  In the event any dispute
      or controversy arising under or in connection with the Executive’s
      termination is resolved in favor of the Executive, whether by judgment,
      arbitration or settlement, the Executive shall be entitled to the payment
      of (a) all legal fees incurred by the Executive in resolving such
      dispute or controversy, and (b) any back-pay, including Base Salary,
      bonuses and any other cash compensation, employee benefits and any
      compensation and benefits due but not paid to the Executive under this
      Agreement.

              

      

       

      
        	
                21)  

              	
                Entire
      Agreement.  This Agreement embodies the entire agreement
      between the Bank and the Executive with respect to the matters agreed to
      herein.  All prior agreements between the Bank and the Executive
      with respect to the matters agreed to herein are hereby superseded and
      shall have no force or effect.  Notwithstanding the foregoing,
      nothing contained in this Agreement shall affect the Corporation Agreement
      which is being executed contemporaneously
  herewith.

              

      

      

      
        	
                22)  

              	
                Construction.  This
      Agreement shall be deemed to have been drafted by both parties
      hereto.  This Agreement shall be construed in accordance with
      the fair meaning of its provisions and its language shall not be strictly
      construed against, nor shall ambiguities be resolved against, any
      party.

              

      

      

      
        	
                23)  

              	
                Recitals.  The
      recitals or “Whereas” clauses contained on page 1 of this Agreement are
      expressly incorporated into and made a part of this
    Agreement.

              

      

      

      
        	
                24)  

              	
                Non-disparagement.  During
      the Executive’s employment with the Bank and following any termination of
      the Executive’s employment with the Bank, the Executive shall not publicly
      disparage or make or publish any negative statements or comments about the
      Bank, any of the Bank’s subsidiaries or affiliates or any of their
      respective products, services, directors, officers or
      employees.  During the Executive’s employment with the Bank and
      following any termination of the Executive’s employment with the Bank, and
      subject to applicable law, no executive officer of the Bank or member of
      the Bank’s Board of Directors shall publicly disparage or make or publish
      any negative statements or comments about the
  Executive.

              

      

      

      
        	
                25)  

              	
                Cooperation.  For
      a period of five (5) years following any termination of the Executive’s
      employment with the Bank and upon the request of the Bank or any of its
      subsidiaries or affiliates, the Executive shall reasonably cooperate,
      assist and make himself available (for testimony or otherwise) at
      appropriate times and places as reasonably determined by the Bank or any
      of its subsidiaries or affiliates in connection with any claim, demand,
      action, suit, proceeding, discovery, examination, investigation or
      litigation by, against or affecting the Bank or any of its subsidiaries or
      affiliates.  In connection with the foregoing, the Bank shall
      pay the Executive a fee of $1,000 for each day that the Bank or any
      subsidiary or affiliate of the Bank requests the Executive to cooperate,
      assist or make himself available, and shall also reimburse the Executive
      for his reasonable out-of-pocket travel expenses that are approved in
      advance by the Chairman of 

              

      

       

       

      
        
          15

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      the Bank; provided,
however, that the Bank shall not pay such fee or reimburse for such expenses in
connection with any claim, demand, action, suit or proceeding relating to this
Agreement.

      
 

      
        	
                26)  

              	
                Certain
      Remedies.  The Executive agrees that the Bank will suffer
      irreparable damage and injury and will not have an adequate remedy at law
      in the event of any actual, threatened or attempted breach by the
      Executive of any provision of Section 3.  Accordingly, in the
      event of a breach or a threatened or attempted breach by the Executive of
      any provision of Section 3, in addition to all other remedies to which the
      Bank is entitled at law, in equity or otherwise, the Bank shall be
      entitled to a temporary restraining order, a permanent injunction and/or a
      decree of specific performance of any provision of Section
      3.  The parties agree that a bond posted by the Bank in the
      amount of One Thousand Dollars ($1,000) shall be adequate and appropriate
      in connection with such restraining order or injunction and that actual
      damages need not be proved by the Bank prior to it being entitled to
      obtain such restraining order, injunction or specific
      performance.  The foregoing remedies shall not be deemed to be
      the exclusive rights or remedies of the Bank for any breach of or
      noncompliance with this Agreement by the Executive but shall be in
      addition to all other rights and remedies available to the Bank at law, in
      equity or otherwise.

              

      

      

      IN WITNESS WHEREOF, this Agreement has
been executed as of the date first above written.

      

      

      

      _/s/ Thomas F. Prisby
_______________

       Thomas F. Prisby

      

      Attest:                                                                   CITIZENS
FINANCIAL BANK

      

      

      

      By:
/s/ Monica F.
Sullivan                                   
By:_/s/ Agnes C.
Lasics_______________

      Corporate
Secretary
 (Name
and Title)

      

      

      

      

      

      KD_IM-1325991_3.DOC

      

      
        
          16exhibit10-2_033108.htm

     

    Exhibit
10.2

       

      EMPLOYMENT
AGREEMENT

       

      This
EMPLOYMENT AGREEMENT (the “Agreement”) dated this 1st day of May, 2008 is made
and entered into by and between CFS BANCORP, INC. (the “Corporation”), an
Indiana corporation, and Thomas F. Prisby (the “Executive”), a resident of the
State of Illinois,

       

      WITNESSETH:

       

      WHEREAS,
the Executive is presently employed as an officer of the Corporation and
Citizens Financial Bank (the “Bank”) (together, the
“Employers”);

       

      WHEREAS,
the Employers desire to be ensured of the Executive’s continued active
participation in the business and senior management of the Employers, and the
Executive desires to continue to actively participate in the business and senior
management of the Employers;

       

      WHEREAS,
the Corporation and the Bank desire to enter into separate agreements with the
Executive with respect to his employment by each of the Employers;
and

       

      WHEREAS,
in order to induce the Executive to remain in the employ of the Employers and in
consideration of the Executive’s agreeing to remain in the employ of the
Employers, the parties desire to specify in this Agreement the employment
arrangement between the Corporation and the Executive as well as certain
restrictions, covenants, agreements and severance payments of the Corporation
and/or the Executive.

       

      NOW
THEREFORE, in consideration of the foregoing recitals, the mutual agreements
herein contained, and upon the other terms and conditions hereinafter provided,
the parties hereby agree as follows:

       

      
        	
                1)  

              	
                Definitions.

              

      

       

      The
following words and terms shall have the meanings set forth below for the
purposes of this Agreement:

       

      
        	
                a)  

              	
                Average
      Annual Compensation.  The Executive’s “Average Annual
      Compensation” for purposes of this Agreement shall be deemed to mean the
      average Base Salary, cash bonuses, vested amounts allocated to the
      Executive under the ESOP and the Corporation’s vested matching
      contributions made to the Executive’s account under the Corporation’s
      401(k) plan for the three fiscal years preceding the Executive’s Date of
      Termination.

              

      

       

      
        	
                b)  

              	
                Base
      Salary.  “Base Salary” shall have the meaning set forth
      in Section 4(a) hereof.

              

      

       

      
        	
                c)  

              	
                Bank
      Agreement.  “Bank Agreement” means the employment
      agreement between the Bank and the Executive dated of even date
      herewith.

              

      

       

      
        	
                d)  

              	
                Cause.
      Termination of the Executive’s employment for “Cause” shall mean
      termination by the Corporation because of any of the following by the
      Executive:

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                i)

              	
                any
      incompetence or intentional failure by the Executive in performing his
      services or carrying out his duties and responsibilities under this
      Agreement; or

              

      

       

      
        	
                 
      

              	
                ii)

              	
                any
      dishonesty, fraud, theft or embezzlement by the Executive;
    or

              

      

       

      
        	
                 
      

              	
                iii)

              	
                any
      willful misconduct or breach of fiduciary duty involving personal profit
      by the Executive; or

              

      

       

      
        	
                 
      

              	
                iv)

              	
                any
      willful or knowing violation by the Executive of any law, statute, rule,
      regulation or government requirement (other than traffic violations or
      similar offenses) or any final cease and desist order;
  or

              

      

       

      
        	
                 
      

              	
                v)

              	
                any
      material and intentional noncompliance by the Executive with any provision
      of any employee handbook, code of conduct or ethics, corporate governance
      guidelines or any rule, policy or procedure of either of the Employers as
      are currently in effect or as may hereafter be in effect from time to
      time; or

              

      

       

      
        	
                 
      

              	
                vi)

              	
                any
      material breach by the Executive of any provision of this Agreement;
      or

              

      

       

      
        	
                 
      

              	
                vii)

              	
                any
      termination of the Executive’s employment with the
  Bank.

              

      

       

      
        	
                e)  

              	
                Change in
      Control.  “Change in Control” means the occurrence of any
      of the following relating to the Corporation:  (i) an event that
      would be required to be reported in response to Item 5.01 of Form 8-K or
      Item 6(e) of Schedule 14A of Regulation 14A pursuant to the Securities and
      Exchange Act of 1934 Act, as amended (“1934 Act”), or any successor
      thereto, whether or not any class of securities of the Corporation is
      registered under the 1934 Act; (ii) any “person” is or becomes the
      “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly
      or indirectly, of securities of the Corporation representing 20% or more
      of the combined voting power of the Corporation’s then outstanding
      securities; or (iii) during any period of thirty-six consecutive months,
      individuals who at the beginning of such period constitute the Board of
      Directors of the Corporation cease for any reason to constitute at least a
      majority thereof unless the election, or the nomination for election by
      stockholders, of each new director was approved by a vote of at least
      two-thirds of the directors then still in office who were directors at the
      beginning of the period and, in such case, each new director so approved
      will be considered for purposes of this section to have been a director at
      the beginning of such
period.

              

      

       

      
        	
                i)  

              	
                For
      purposes of the definition of “Change in Control,” a Person or group of
      Persons does not include the CFS Bancorp, Inc. Employee Stock Ownership
      Plan Trust which forms a part of the CFS Bancorp, Inc. Employee Stock
      Ownership Plan (the “ESOP”), or any other employee benefit plan,
      subsidiary or affiliate of the Corporation, and the outstanding shares of
      common stock of the Corporation, on a fully diluted basis, include all
      shares owned by the ESOP, whether allocated or unallocated to the accounts
      of participants thereunder.

              

      

       

      
        	
                ii)  

              	
                For
      purposes of this Agreement (including without limitation the definition of
      “Change in Control”), the term “Person” means any natural person,
      proprietorship, partnership, 

              

      

       

       

      
        
          2

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      corporation, limited
liability company, organization, firm, business, joint venture, association,
trust or other entity and any government agency, body or authority.

       

      
        	
                f)  

              	
                Code.
      “Code” shall mean the Internal Revenue Code of 1986, as
      amended.

              

      

       

      
        	
                g)  

              	
                Date of
      Termination.  “Date of Termination” shall mean (i) if the
      Executive’s employment is terminated for Cause or for Disability, the date
      specified in the Notice of Termination, (ii) if the Executive’s employment
      is terminated for any other reason (except in the case of death), the date
      on which a Notice of Termination is given or as specified in such Notice,
      and (iii) if the Executive dies during his employment hereunder, the date
      of his death.

              

      

       

      
        	
                h)  

              	
                Disability.  Termination
      by the Corporation of the Executive’s employment based on “Disability”
      shall mean termination because of any physical or mental impairment,
      incapacity or condition which qualifies the Executive for disability
      benefits under the applicable long-term disability plan or policy
      maintained by the Employers or any subsidiary or, if no such plan or
      policy applies, which would qualify the Executive for disability benefits
      under the Federal Social Security
System.

              

      

       

      
        	
                i)  

              	
                Good
      Reason.  Termination by the Executive of the Executive’s
      employment for “Good Reason” shall mean termination by the Executive
      within two years following a Change in Control of the Corporation based
      on:

              

      

       

      
        	
                           
      (i)  

              	
                Without
      the Executive’s express written consent, the failure to elect or to
      re-elect or to appoint or to re-appoint the Executive to the offices of
      Chairman and Chief Executive Officer of the Employers or a material
      adverse change made by the Employers in the Executive’s functions, duties
      or responsibilities as Chairman and Chief Executive Officer of the
      Employers as such functions, duties or responsibilities exist immediately
      prior to the effective time of the Change in
  Control;

              

      

       

      
        	
                (ii)  

              	
                Without
      the Executive’s express written consent, a reduction by either of the
      Employers in the Executive’s Base Salary as the same may be increased from
      time to time or, except to the extent permitted by Section 4(b) hereof, a
      reduction in the package of employee benefits provided to the Executive
      taken as a whole;

              

      

       

      
        	
                           
      (iii)

              	
                The
      principal executive office of the Bank is relocated more than 50 miles
      from Munster, Indiana or, without the Executive’s express written consent,
      either of the Employers require the Executive to be based anywhere other
      than where the Bank’s principal executive office is located or has been
      relocated as provided above, except for required travel on business of the
      Employers;

              

      

       

      
        	
                           
      (iv)

              	
                Any
      purported termination of the Executive’s employment for Disability or
      Retirement which is not effected pursuant to a Notice of Termination
      satisfying the requirements of paragraph (l) below;
  or

              

      

       

      
        	
                           
      (v)

              	
                The
      failure by the Corporation to obtain the assumption of and agreement to
      perform this Agreement by any
successor.

              

      

       

       

      
        
          3

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                The
      Executive must notify the Corporation in writing within ninety (90) days
      of the initial existence of the circumstances giving rise to a termination
      of the Executive’s employment hereunder for Good Reason.  The
      Corporation shall then have thirty (30) days following the effectiveness
      of such notice during which it may cure such circumstances and, if so
      cured, shall not be required to make any severance payments pursuant to
      Section 6(d) hereof.

              

      

       

      
        	
                j)  

              	
                IRS.
      “IRS” shall mean the Internal Revenue
    Service.

              

      

       

      
        	
                k)  

              	
                Key
      Employee.  “Key Employee” means an employee who
      is:

              

      

       

      i)      An officer of the
Corporation having annual compensation greater than $150,000;
or

       

      ii)     A beneficial owner of
5% or more of the outstanding securities of the Corporation;
or

       

      
        	
                 
      

              	
                iii)    A
      beneficial owner 1% or more of the outstanding securities of the
      Corporation and has an annual compensation greater than
      $150,000.

              

      

       

      For
purposes of determining who is an officer for purposes of Section 1(k)(i), no
more than 50 employees (or, if lesser, the greater of three or 10% of the
employees) shall be treated as officers, and those categories of employees
listed in Code Section 414(q)(5) shall be excluded.  The $150,000
amount in Section 1(k)(i) shall be adjusted at the same time and in the same
manner as under Code Section 415(d), except that the base period shall be the
calendar quarter beginning July 1, 2001, and any increase under this sentence
which is not a multiple of $5,000 shall be rounded to the next lower multiple of
$5,000.

       

      
        	
                l)  

              	
                Notice of
      Termination.  Any purported termination of the
      Executive’s employment by the Corporation for any reason, including
      without limitation with or without Cause or upon the occurrence of a
      Disability, or by the Executive for any reason, including without
      limitation with or without Good Reason or upon Retirement, shall be
      communicated by written “Notice of Termination” to the other party
      hereto.  For purposes of this Agreement, a “Notice of
      Termination” shall mean a dated notice which (i) indicates the specific
      termination provision in this Agreement relied upon, (ii) sets forth in
      reasonable detail the facts and circumstances claimed to provide a basis
      for termination of the Executive’s employment under the provision so
      indicated, (iii) specifies a Date of Termination, which shall be not less
      than thirty (30) nor more than ninety (90) days after such Notice of
      Termination is given, except in the case of the Corporation’s termination
      of the Executive’s employment for Cause, which shall be effective
      immediately; and (iv) is given in the manner specified in Section 11
      hereof.

              

      

       

      
        	
                m)  

              	
                Retirement.  “Retirement”
      shall mean voluntary termination by the Executive after the Executive
      attains the age 55, with at least five years of active
      service.

              

      

       

      
        	
                n)  

              	
                Separation
      from Service.  “Separation from Service” means the date
      of the Executive’s death or Retirement or the date on which the Executive
      otherwise experiences a Termination of Employment with the Corporation;
      provided, however, a Separation from Service does not occur if the
      Executive is on military leave, sick leave or other bona fide leave of
      absence if the period of such leave does not exceed six (6) months or, if
      the leave is for a longer period, so long as the Executive’s right to
      reemployment with the Corporation is provided either by statute or by
      contract.  For purposes of this paragraph (n), a leave of
      absence constitutes a 

              

      

       

       

      
        
          4

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      bona fide leave of absence
only if there is a reasonable expectation that the Executive will return to
perform services for the Corporation.  If the period of leave exceeds
six (6) months and the Executive’s right to reemployment is not provided either
by statute or contract, there shall be a Separation from Service on the first
date immediately following such six-month period.  Notwithstanding the
foregoing, where a leave of absence is due to any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than six (6) months and
where such impairment causes the Executive to be unable to render the services
or carry out the duties and responsibilities set forth in this Agreement, then a
29-month period of absence may be substituted for such six-month
period.  The Executive shall incur a “Termination of Employment” when
a termination of employment is incurred under Treasury Regulation
1.409A-1(h)(ii).

       

       

      
        	
                o)  

              	
                Specified
      Employee.  “Specified Employee” means an emplyoee who is
      a “Key Employee” if the Corporation’s stock is publicly traded on an
      established securities market.  An employee shall be a Specified
      Employee for the twelve-month period beginning on the April 1st following any
      calendar year in which the employee in a Key
    Employee.

              

      

       

      
        	
                2)  

              	
                Term
      of Employment.

              

      

       

      
        	
                a)  

              	
                The
      Corporation hereby employs the Executive as its Chairman and Chief
      Operating Officer, and the Executive hereby accepts such employment and
      agrees to render such services to, and carry out such duties and
      responsibilities for, the Corporation, on the terms and conditions set
      forth in this Agreement.  The term of this Agreement shall be a
      period of three years commencing as of the date hereof (the “Commencement
      Date”), subject to earlier termination as provided
      herein.  Beginning on the day following the Commencement Date,
      and on each day thereafter, the term of this Agreement shall be extended
      for a period of one day in addition to the then-remaining term, provided
      that the Corporation has not given notice to the Executive in writing at
      least sixty (60) days prior to such day that the term of this Agreement
      shall not be extended further.  Reference herein to the term of
      this Agreement shall refer to both such initial term and any extended
      terms.  As part of the review by the Board of Directors of the
      Corporation on at least an annual basis whether to permit extensions of
      the term of this Agreement, the Board of Directors shall consider all
      relevant factors, including without limitation the Executive’s performance
      hereunder and the input of the Chairman of the Board of the Corporation,
      and shall determine whether to provide notice to the Executive that the
      term of this Agreement shall not be further
  extended.

              

      

       

      
        	
                b)  

              	
                During
      the term of this Agreement, the Executive shall render such executive
      services and carry out such duties and responsibilities consistent with
      his titles and as may be assigned to him from time to time by the
      Corporation’s Board of Directors.

              

      

       

      The
Executive further agrees to serve without additional compensation (except as set
forth in the Bank Agreement) as an officer and/or director of any of the
Corporation’s or the Bank’s subsidiaries and agrees that any amounts received
from such subsidiaries may be offset against the amounts due
hereunder.  In addition, it is agreed that the Corporation may assign
the Executive to one of its subsidiaries for payroll purposes.

       

      
        	
                3)  

              	
                Loyalty,
      Confidentiality and
Non-Competition.

              

      

       

       

      
        
          5

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        	
                a)  

              	
                The
      Executive shall devote his full time and attention and his best efforts to
      the performance of his duties and responsibilities under this
      Agreement.  During the term of this Agreement, the Executive
      shall not, at any time or place, either directly or indirectly, engage in
      any business or activity in competition with the business, affairs or
      interests of the Corporation or any of its subsidiaries or affiliates or
      be a director, officer, employee or consultant to any bank holding
      company, savings and loan holding company, bank, savings and loan
      association, credit union, thrift, savings bank, financial services
      provider or similar institution, wherever
  located.

              

      

       

      
        	
                b)  

              	
                For
      a period of three years from the Date of Termination relating to a
      termination by the Corporation of the Executive’s employment hereunder for
      Cause or a Disability or a termination by the Executive of his employment
      hereunder upon Retirement or without Good Reason, the Executive shall not,
      at any time or place, either directly or indirectly engage in any business
      or activity in competition with the business, affairs or interests of the
      Corporation or any of its subsidiaries or affiliates or be a director,
      officer, employee or consultant to any bank holding company, savings and
      loan holding company, bank, savings and loan association, credit union,
      thrift, savings bank, financial services provider or similar institution
      within a fifty (50) mile radius from any present or future office of
      either of the Employers or any of their subsidiaries or
      affiliates.

              

      

       

      
        	
                c)  

              	
                For
      purposes of this Agreement, directly or indirectly engaging in any
      business or activity in competition with the business, affairs or
      interests of the Corporation or any of its subsidiaries or affiliates
      includes, but is not limited to, serving or acting as an owner, partner,
      member, agent, beneficiary, employee, officer, director or consultant of
      any Person engaged in any banking, lending, financial services or other
      business, operation or activity in which the Corporation or any of its
      subsidiaries or affiliates is engaged or is actively developing or
      pursuing on the Date of Termination; except that nothing herein contained
      shall be deemed to prevent or limit the right of the Executive to invest
      any of his funds in the capital stock or other securities of any such
      Person whose stock or securities are publicly owned or are regularly
      traded on any national exchange so long as the Executive is not the
      beneficial owner of more than 1% of the outstanding capital stock or
      securities of such Person, nor shall anything herein contained be deemed
      to prevent or limit the right of the Executive to invest any of his funds
      in real estate.

              

      

       

      
        	
                d)  

              	
                All
      information relating to business of the Employers or any of their
      subsidiaries or affiliates including, but not limited to, that business
      obtained or serviced by the Executive, all customer lists, customer
      information, contact lists, asset, liability, loan, deposit and investment
      information, financial records or information, instruments, documents,
      papers, and other material used in connection with, and all trade secrets,
      estimates, projections, goals, strategies, techniques relating to, such
      business, shall be the exclusive property of the Employers or the
      subsidiary or affiliate.  The Executive shall maintain the
      confidentiality of all such information and material that is confidential,
      proprietary or not publicly available (other than through a breach of this
      Agreement by the Executive or any other impermissible disclosure); none of
      it shall be copied, reproduced, duplicated or disclosed without the
      express written permission of the Employers (other than in connection with
      the performance of the Executive’s services hereunder), and the Executive
      shall return all such information and materials to the Employers upon
      their request or upon termination of employment.  The Executive
      also agrees that he shall not utilize such information or materials,
      either directly or 

              

      

       

       

      
        
          6

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      indirectly, for any purposes except rendering his
services and carrying out his duties and responsibilities hereunder and in
furtherance of the Employers’ business, unless otherwise expressly authorized by
the Employers in writing in advance.

       

       

      
        	
                e)  

              	
                The
      Executive agrees that, during his employment, and for a period of three
      years following the Date of Termination of the Executive’s employment
      hereunder for Cause, without Good Reason, upon Retirement or upon the
      occurrence of a Disability, the
Executive:

              

      

       

      
        	
                           
      i)

              	
                shall
      not solicit any of the Employers’ past or current customers or clients for
      the benefit of anyone other than the Employers or their subsidiaries or
      affiliates;

              

      

       

      
        	
                           
      ii)

              	
                shall
      not divulge the names of any of the Employers’ past or then current
      customers to any other Person; and

              

      

       

      
        	
                           
      iii)

              	
                shall
      not, either directly or indirectly, induce or solicit any person to leave
      the employ of either of the
Employers.

              

      

       

      
        	
                f)  

              	
                The
      provisions of Sections 3(b), 3(c) and 3(e) hereof shall be construed
      independent of any other provision of this Agreement and shall survive any
      termination of this Agreement.  The existence of any claim or
      cause of action of the Executive against the Corporation, whether
      predicated on this Agreement or otherwise, shall not constitute a defense
      to the enforcement by the Corporation of Sections 3(b), 3(c) and 3(e)
      hereof.

              

      

       

      
        	
                g)  

              	
                The
      restrictions and covenants contained in this Section shall be deemed not
      to run during all periods of noncompliance, the intention of the parties
      hereto being to have such restrictions and covenants apply during the full
      periods specified herein.  The Corporation and the Executive
      understand, acknowledge and agree that the restrictions and covenants
      contained in this Section are reasonable in view of the Executive’s
      position at the Corporation, the competitive and confidential nature of
      the information of which the Executive has or will have knowledge and the
      competitive and the nature of the business in which the Corporation and
      its subsidiaries and affiliates are or may be
  engaged.

              

      

       

      
        	
                4)  

              	
                Compensation
      and Benefits.

              

      

       

      
        	
                a)  

              	
                The
      Employers shall collectively compensate and pay the Executive for his
      services during the term of this Agreement at an aggregate minimum base
      salary of $391,000 per year (“Base Salary”), which may be increased from
      time to time in such amounts as may be determined by the Boards of
      Directors of the Employers and may not be decreased without the
      Executive’s express written consent.  In addition to his Base
      Salary, the Executive shall be entitled to receive during the term of this
      Agreement such bonus payments as may be determined by the Board of
      Directors of the Corporation.

              

      

       

      
        	
                b)  

              	
                During
      the term of this Agreement, the Executive shall be entitled to participate
      in and receive the benefits of any pension, retirement, profit sharing,
      equity based compensation, employee stock ownership or other similar plans
      made available to employees and executives of the Employers, to the extent
      commensurate with his position with the Employers, in accordance with the
      terms of the applicable plans and as fixed by the Boards of Directors of
      the Employers. The Corporation shall not make any changes in such plans
      which would adversely affect the 

              

      

       

       

       

      
        
          7

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Executive’s rights or benefits thereunder, unless such
change is applicable to all executive officers of the Corporation and does not
result in a proportionately greater adverse change in the rights of or benefits
to the Executive as compared with any other executive officer of the
Corporation.  Nothing paid to the Executive under any plan or
arrangement presently in effect or made available in the future shall be deemed
to be in lieu of the Executive’s Base Salary.  Notwithstanding the
foregoing or anything in this Agreement to the contrary, the Executive
understands, acknowledges and agrees that the Employers may from time to time,
in their sole discretion, amend, modify, replace, freeze, suspend or terminate
any or all of the incentive compensation, pension or other retirement, profit
sharing, equity based compensation, employee stock ownership, perquisite or
other plans, benefits and privileges given to employees and executives of the
Employers, as well as any other rules, policies or procedures applicable to
executives of the Employers, but only so long as any such actions apply to all
executive officers of the Corporation and do not result in a proportionately
greater adverse change in the rights of or benefits to the Executive as compared
with any other executive officer of the Corporation.

       

      
        	
                c)  

              	
                During
      the term of this Agreement, the Executive shall be entitled to paid annual
      vacation in accordance with the policies as established from time to time
      by the Boards of Directors of the Employers.  The Executive
      shall not be entitled to receive any additional compensation from the
      Employers for failure to take a vacation, nor shall the Executive be able
      to accumulate unused vacation time from one year to the next, except to
      the extent authorized by the Boards of Directors of the
      Employers.

              

      

       

      
        	
                d)  

              	
                In
      the event the Executive’s employment is terminated due to Disability,
      Retirement or death, and provided the Executive is not otherwise receiving
      substantially similar benefits from another employer, consultant or
      otherwise, the Employers shall provide, at their cost, all existing life
      and medical insurance coverage for the Executive and his spouse for a
      period until they both become eligible for Medicare
      coverage.  Thereafter, the Executive may continue, at his cost,
      the health insurance coverage as an eligible retried employee under the
      Employer’s health and medical benefit
plans.

              

      

       

      
        	
                e)  

              	
                The
      Executive’s Base Salary, compensation, benefits and expenses shall be paid
      by and allocated between the Corporation and the Bank in the same
      proportion as the time and services actually expended by the Executive on
      behalf of each respective Employer.

              

      

       

      
        	
                f)  

              	
                During
      the term of this Agreement, the Employers shall provide suitable office
      space, desk, chairs, filing cabinets, telephones and other usual and
      customary office furniture, fixtures and equipment adequate for the
      performance of the duties and responsibilities assigned to the Executive
      hereunder.

              

      

       

      
        	
                g)  

              	
                During
      the term of this Agreement, the Employers shall provide to Executive the
      use of an automobile of Executive’s choice with an average annual lease
      cost not to exceed $15,000 per year.  The Employers agree to
      replace the automobile with a new one at Executive’s request no more often
      than once every two years.  Either of the Employers shall pay
      all automobile operating expenses incurred by the Executive in the
      performance of Executive’s duties hereunder.  Either of the
      Employers shall procure and maintain in force an automobile liability
      policy for the automobile with coverage, including Executive, in the
      minimum amount of $1,000,000 combined single limit on bodily injury and
      property damage.

              

      

       

       

      
        
          8

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        	
                h)  

              	
                During
      the term of this Agreement, the Employers shall provide to the Executive,
      at the Employer’s cost, all perquisites which all other senior executives
      of the Corporation are generally entitled to receive; provided, however,
      that the Executive understands and agrees that the Chief Executive Officer
      of the Corporation may receive perquisites that are different from those
      provided to the Executive or other senior executives of the
      Corporation.

              

      

       

      
        	
                5)  

              	
                Expenses.  The
      Employers shall reimburse the Executive or otherwise provide for or pay
      for all reasonable expenses incurred by the Executive in furtherance of or
      in connection with the business of the Employers, including, but not by
      way of limitation, travel expenses and all reasonable entertainment
      expenses (whether incurred at the Executive’s residence, while traveling
      or otherwise), subject to such reasonable documentation and other
      limitations and requirements as may be established by the Boards of
      Directors of the Employers.  If such expenses are paid in the
      first instance by the Executive, the Employers shall reimburse the
      Executive therefor.  Any such reimbursement of expenses provided
      in this Section 5 shall be made no later than December 31 of the year
      following the year in which the expense was
    incurred.

              

      

       

      
        	
                6)  

              	
                Termination.

              

      

       

      
        	
                a)  

              	
                The
      Corporation shall have the right at any time, upon prior Notice of
      Termination, to terminate the Executive’s employment hereunder for any
      reason, including without limitation termination with or without Cause,
      upon a Disability or the election of the Corporation not to extend the
      term of this Agreement.  The Executive shall have the right at
      any time, upon prior Notice of Termination, to terminate his employment
      hereunder for any reason, including without limitation with or without
      Good Reason or upon Retirement.

              

      

       

      
        	
                b)  

              	
                In
      the event that (i) the Executive’s employment hereunder is terminated by
      the Corporation for Cause or upon the election of the Corporation not to
      extend the term of this Agreement or (ii) the Executive terminates his
      employment hereunder without Good Reason, the Executive shall in each such
      case have no right pursuant to this Agreement to any severance payments,
      compensation or other benefits for any period after the applicable Date of
      Termination.

              

      

       

      
        	
                c)  

              	
                In
      the event that the Executive’s employment hereunder is terminated as a
      result of a Disability, Retirement or the Executive’s death during the
      term of this Agreement, the Executive shall have no right pursuant to this
      Agreement to severance payments, compensation or other benefits for any
      period after the applicable Date of Termination, except as provided for in
      Section 4(d) hereof.

              

      

       

      
        	
                d)  

              	
                In
      the event that (i) the Executive’s employment hereunder is terminated by
      the Corporation without Cause or (ii) the Executive’s employment hereunder
      is terminated by the Executive (y) due to a material breach of this
      Agreement by the Corporation, which breach has not been cured within
      fifteen (15) days after a written notice of non-compliance has been given
      by the Executive to the Employers, or (z) for Good Reason, then the
      Corporation shall so long as the Executive does not breach this Agreement
      following the Date of Termination:

              

      

       

      
        	
                           
      i)

              	
                pay
      to the Executive, a cash severance amount equal to three times that
      portion of the Executive’s Average Annual Compensation paid by the
      Corporation, in two equal
      installments, with the first installment to be paid on the first business
      day of the month 

              

      

       

       

      
        
          9

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      following the Executive’s Date of Termination and the
second installment to be paid on the first anniversary of the Date of
Termination; and

       

      
        	
                           
      ii)

              	
                maintain
      and provide for a period ending at the earlier of (A) the expiration of
      the remaining term of employment pursuant hereto prior to the Notice of
      Termination or (B) the date of the Executive’s employment by or
      affiliation with another employer, consultant or Person (provided that the
      Executive is entitled under the terms of such employment or affiliation to
      benefits substantially similar to those described in this subparagraph, at
      the same or lesser cost to the Executive as under the Corporation’s plans,
      programs and arrangements on the Date of Termination), the Executive’s
      continued participation in all group insurance, life insurance, health and
      accident insurance, disability insurance and other welfare benefit plans,
      programs and arrangements offered by the Corporation in which the
      Executive was entitled to participate immediately prior to the Date of
      Termination (and excluding (x) Base Salary, bonuses and other items
      of compensation included in Average Annual Compensation,
      (y) incentive compensation, pension or other retirement, profit
      sharing, equity based compensation, employee stock ownership or other
      similar plans, programs or arrangements of the Corporation, and
      (z) perquisites and any vehicle provided by the Corporation),
      provided that in the event that the Executive’s participation in any such
      plan, program or arrangement as provided in this subparagraph is barred,
      or during such period any such plan, program or arrangement is
      discontinued or the benefits thereunder are materially reduced, the
      Corporation shall arrange to provide the Executive with benefits
      substantially similar to those which the Executive was entitled to receive
      under such plans, programs and arrangements immediately prior to the Date
      of Termination.

              

      

       

      
        	
                e)  

              	
                If
      at the time of the Executive’s Separation from Service, for any reason
      other than death, the Executive meets the definition of a Specified
      Employee, payment of all amounts under subsections 6(d)(i), 6(d)(ii) and
      7(a) shall be suspended for six (6) months following the Executive’s
      Separation from Service.  In such event, the first installment
      shall be paid on the first day following the end of the six-month
      suspension period.  The second installment shall be paid no
      later than January 15th
      of the calendar year following the year in which the first installment was
      paid.  If the Executive incurs a Separation from Service due to
      death, regardless of whether the Executive meets the definition of a
      Specified Employee, payment of his benefit shall not be suspended;
      provided, however, that the six-month suspension period shall not apply to
      the provision of any group insurance, life insurance, health and accident
      insurance or disability insurance under subsection
    6(d)(ii).

              

      

       

      
        	
                f)  

              	
                Upon
      any termination of the Executive’s employment hereunder, the Executive
      covenants and agrees (i) to return promptly to the Corporation, at the
      Corporation’s headquarters, all confidential information or materials that
      are still in the Executive’s possession or control on his last day of
      employment with the Corporation or the location of which the Employee
      knows (including, but not limited to, any confidential information or
      materials contained on the Executive’s personal data assistant or personal
      or home computer), and (ii) to return promptly to the Corporation, at the
      Corporation’s headquarters, all vehicles, equipment, computers, credit
      cards, keys, access cards, passwords and other property of the Corporation
      that are still in the Executive’s possession or control on his last day of
      employment or the location of which the Employee knows, and to cease using
      any of the foregoing on and after his last day of
    employment.

              

      

       

       

      
        
          10

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        	
                7)  

              	
                Payment
      of Additional Benefits under Certain
  Circumstances.

              

      

       

      
        	
                a)  

              	
                If
      the payments and benefits pursuant to Section 6 hereof, either alone or
      together with other payments and benefits which the Executive has the
      right to receive from the Employers (including, without limitation, the
      payments and benefits which the Executive would have the right to receive
      from the Bank pursuant to Section 6 of the Bank Agreement, before
      giving effect to any reduction in such amounts pursuant to Section 7
      of the Bank Agreement), would constitute a “parachute payment” as defined
      in Section 280G(b)(2) of the Code (the “Initial Parachute Payment,” which
      includes the amounts paid pursuant to clause (i) below), then the
      Corporation shall pay to the Executive, a cash amount in two equal
      installments, with the first installment to be paid on the first business
      day of the month following the Date
      of Termination and the second installment to be paid on the first
      anniversary of the Date of Termination.  The cash amount shall
      be equal to the sum of the
following:

              

      

       

      
        	
                           
      i)

              	
                the
      amount by which the payments and benefits that would have otherwise been
      paid by the Bank to the Executive pursuant to Section 6 of the Bank
      Agreement are reduced by the provisions of Section 7 of the Bank
      Agreement;

              

      

       

      
        	
                           
      ii)

              	
                twenty
      percent (or such other percentage equal to the tax rate imposed by
      Section 4999 of the Code) of the amount by which the Initial
      Parachute Payment exceeds the Executive’s “base amount” from the
      Employers, as defined in Section 280G(b)(3) of the Code, with the
      difference between the Initial Parachute Payment and the Executive’s base
      amount being hereinafter referred to as the “Initial Excess Parachute
      Payment”; and

              

      

       

      
        	
                           
      iii)

              	
                such
      additional amount (tax allowance) as may be necessary to compensate the
      Executive for the payment by the Executive of state and federal income and
      excise taxes on the payment provided under clause (ii) above and on any
      payments under this clause (iii).  In computing such tax
      allowance, the payment to be made under clause (ii) above shall be
      multiplied by the “gross up percentage” (“GUP”).  The GUP shall
      be determined as follows:

              

      

       

      GUP = Tax
Rate / 1 – Tax Rate

       

      
        	
                iv)  

              	
                Tax
      Rate

              

      

       

      The Tax
Rate for purposes of computing the GUP shall be the highest marginal federal and
state income and employment-related tax rate, including any applicable excise
tax rate, applicable to the Executive in the year in which the payment under
clause (ii) above is made.

       

      
        	
                           
      v)  

              	
                Notwithstanding
      the foregoing, if it shall subsequently be determined in a final judicial
      determination or a final administrative settlement to which the Executive
      is a party that the actual excess parachute payment as defined in Section
      280G(b)(1) of the Code is different from the Initial Excess Parachute
      Payment (such different amount being hereafter referred to as the
      “Determinative Excess Parachute Payment”), then the Corporation’s
      independent tax counsel or accountants shall determine the amount (the
      “Adjustment Amount”) which either the Executive must pay to the
      Corporation or the Corporation must pay to the Executive in order to put
      the Executive (or the Corporation, as the case may be) in the same
      position the Executive (or the Corporation, as the case may be) would have
      been if the Initial Excess Parachute Payment had been equal to the
      Determinative Excess Parachute Payment.  In
  

              

      

       

       

      
        
          11

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      determining the Adjustment Amount, the independent tax
counsel or accountants shall take into account any and all taxes (including any
penalties and interest) paid by or for the Executive or refunded to the
Executive or for the Executive’s benefit.  As soon as practicable
after the Adjustment Amount has been so determined, the Corporation shall pay
the Adjustment Amount to the Executive or the Executive shall repay the
Adjustment Amount to the Corporation, as the case may be.

       

      
        	
                b)  

              	
                In
      each calendar year that the Executive receives payments of benefits under
      this Section 7, the Executive shall report on his state and federal
      income tax returns such information as is consistent with the
      determination made by the independent tax counsel or accountants of the
      Corporation as described above.  The Corporation shall indemnify
      and hold the Executive harmless from any and all losses, costs and
      expenses (including without limitation, reasonable attorneys’ fees,
      interest, fines and penalties) which the Executive incurs as a result of
      so reporting such information.  The Executive shall promptly
      notify the Corporation in writing whenever the Executive receives notice
      of the institution of a judicial or administrative proceeding, formal or
      informal, in which the federal tax treatment under Section 4999 of the
      Code of any amount paid or payable under this Section 7 is being
      reviewed or is in dispute.  The Corporation shall assume
      control, at its expense, over all legal and accounting matters pertaining
      to such federal tax treatment (except to the extent necessary or
      appropriate for the Executive to resolve any such proceeding with respect
      to any matter unrelated to amounts paid or payable pursuant to this
      Section) and the Executive shall cooperate fully with the Corporation in
      any such proceeding.  The Executive shall not enter into any
      compromise or settlement or otherwise prejudice any rights the Corporation
      may have in connection therewith without the prior consent of the
      Corporation.

              

      

       

      
        	
                8)  

              	
                Mitigation;
      Exclusivity of Benefits.

              

      

       

      
        	
                a)  

              	
                The
      Executive shall not be required to mitigate the amount of any benefits
      hereunder by seeking other employment or otherwise, nor shall the amount
      of any such benefits be reduced by any compensation earned by the
      Executive as a result of employment by another employer after the Date of
      Termination or otherwise so long as the Executive has not breached this
      Agreement.  In the event of any breach of this Agreement by the
      Executive following the Date of Termination, the Executive shall
      immediately repay to the Corporation all severance payments paid to him
      under Section 6 hereof and all amounts paid to him under Section 7 hereof,
      plus interest at the rate of 10% per annum from the date of such breach
      until all such severance payments and other amounts have been repaid in
      full to the Corporation.

              

      

       

      
        	
                b)  

              	
                The
      specific arrangements referred to herein are not intended to exclude any
      other benefits which may be available to the Executive upon a termination
      of employment with the Employers pursuant to employee benefit plans of the
      Employers or otherwise.

              

      

       

      
        	
                9)  

              	
                Withholding.  All
      payments required to be made by the Corporation hereunder to the Executive
      shall be subject to the withholding of such amounts, if any, relating to
      taxes and other payroll deductions as the Corporation may reasonably
      determine should be withheld pursuant to any applicable law or
      regulation.

              

      

       

      
        	
                10)  

              	
                Assignability.  The
      Corporation may, without the consent of the Executive, assign this
      Agreement and its rights and obligations hereunder in whole, but not in
      part, to any corporation, bank or other

              

      

       

       

      
        
          12

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Person with or into which the Corporation may hereafter
merge or consolidate or to which the Corporation may transfer all or
substantially all of its assets, if in any such case such corporation, bank or
other Person shall by operation of law or expressly in writing assume all
obligations of the Corporation hereunder as fully as if it had been originally
made a party hereto, but may not otherwise assign this Agreement or its rights
and obligations hereunder.  The Executive may not assign or transfer
this Agreement or any rights or obligations hereunder.

       

      
        	
                11)  

              	
                Notice.  For
      the purposes of this Agreement, notices and all other communications
      provided for in this Agreement shall be in writing and shall be deemed to
      have been duly given if (i) delivered by hand; (ii) sent by certified
      United States Mail, return receipt requested, first class postage
      pre-paid; (iii) sent by overnight delivery service; or (iv) sent by
      facsimile transmission if such fax is confirmed immediately thereafter by
      also mailing a copy of such notice or other communication by regular (not
      certified or registered) United States Mail, first class postage pre-paid,
      as follows:

              

      

       

      
        	
                a)  

              	
                To
      the Corporation:      CFS Bancorp,
      Inc.

              

      

            Corporate
Secretary

      707 Ridge
Road

      Munster,
Indiana  46321

      Facsimile:
(219) 836-2950

       

      
        	
                b)  

              	
                To
      the
      Bank:                Citizens
      Financial Bank

              

      

            Corporate
Secretary

      707 Ridge
Road

      Munster,
Indiana  46321

      Facsimile:
(219) 836-2950

       

      
        	
                c)  

              	
                To
      the
      Executive:          Thomas
      F. Prisby

              

      

            Hinsdale, Illinois 

       

      
        	
                 
      

              	
                or
      to such other address or facsimile number as either party hereto may have
      furnished to the other in writing in accordance herewith.  The
      Executive shall promptly provide any changes to his address, telephone
      number and facsimile number to the
Corporation.

              

      

       

      
        	
                 
      

              	
                All
      such notices and other communications shall be effective (i) if delivered
      by hand, when delivered; (ii) if sent by mail in the manner provided
      herein, two (2) business days after deposit with the United States Postal
      Service; (iii) if sent by overnight delivery service, on the next business
      day after deposit with such service; or (iv) if sent by facsimile
      transmission, on the date indicated on the fax confirmation page if such
      fax also is confirmed by regular (not certified or registered) United
      States mail.

              

      

       

      
        	
                12)  

              	
                Amendment;
      Waiver.  No provisions of this Agreement may be amended,
      modified, waived or discharged unless such amendment, modification, waiver
      or discharge is agreed to in writing and signed by the Executive and such
      officer or officers as may be specifically designated by the Board of
      Directors of the Corporation to sign on its behalf.  No waiver
      by any party hereto at any time of any breach by any other party hereto
      of, or compliance with, any condition or provision of this Agreement to be
      performed by such other party shall be deemed a waiver of similar or
      dissimilar 

              

      

       

       

      
        
          13

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      provisions or conditions at the same or at any prior or
subsequent time.  The failure or delay of either party at any time to
insist upon the strict performance of any provision of this Agreement or to
enforce its or his rights or remedies under this Agreement shall not be
construed as a waiver or relinquishment of the right to insist upon strict
performance of such provision, or to pursue any of its rights or remedies for
any breach hereof, at a future time.

       

      
        	
                13)  

              	
                Governing Law;
      Venue.  The validity, interpretation, construction and
      performance of this Agreement shall be governed by the laws of the United
      States where applicable and otherwise by the substantive laws of the State
      of Indiana.  Any claim, demand or action relating to this
      Agreement shall be brought only in a state court located in Porter County,
      Indiana.  In connection with the foregoing, the parties hereto
      irrevocably consent to the jurisdiction and venue of such court and
      expressly waive any claims, defenses or objections of lack of jurisdiction
      of or proper or preferred venue by such
  court.

              

      

       

      
        	
                14)  

              	
                Nature of
      Obligations.  Nothing contained herein shall create or
      require the Corporation to create a trust of any kind to fund any benefits
      which may be payable hereunder, and to the extent that the Executive
      acquires a right to receive benefits from the Corporation hereunder, such
      right shall be no greater than the right of any unsecured general creditor
      of the Corporation.

              

      

       

      
        	
                15)  

              	
                Headings.  The
      section headings contained in this Agreement are for reference purposes
      only and shall not affect in any way the meaning or interpretation of this
      Agreement.

              

      

       

      
        	
                16)  

              	
                Validity.  The
      invalidity or unenforceability of any provision of this Agreement shall
      not affect the validity or enforceability of any other provisions of this
      Agreement, which shall remain in full force and effect; provided, however,
      if any provision of Sections 3(b), 3(c) and 3(e) of this Agreement shall
      be determined by a court of competent jurisdiction to be unenforceable
      because of the provision’s scope, duration, geographic restriction or
      other factor, then such provision shall be considered divisible and the
      court making such determination shall have the power to reduce or limit
      (but not increase or make greater) such scope, duration, geographic
      restriction or other factor or to reform (but not increase or make
      greater) such provision to make it enforceable to the maximum extent
      permitted by law, and such provision shall then be enforceable against the
      appropriate party hereto in its reformed, reduced or limited
      form.

              

      

       

      
        	
                17)  

              	
                Counterparts.  This
      Agreement may be executed in one or more counterparts, each of which shall
      be deemed to be an original but all of which together shall constitute one
      and the same agreement.

              

      

       

      
        	
                18)  

              	
                Regulatory
      Prohibition.  Notwithstanding any other provision of this
      Agreement to the contrary, any payments made to the Executive pursuant to
      this Agreement, or otherwise, are subject to and conditioned upon their
      compliance with Section 18(k) of the Federal Deposit Insurance Act (12
      U.S.C. §1828(k)) and the regulations promulgated thereunder, including 12
      C.F.R. Part 359.  In the event of the Executive’s
      termination of employment with the Bank for Cause, all employment
      relationships and managerial duties with the Bank shall immediately cease
      regardless of whether the Executive remains in the employ of the
      Corporation following such termination.  Furthermore, following
      such termination for Cause, the Executive shall not, directly or
      indirectly, influence or participate in the affairs or the operations of
      the Bank.

              

      

       

      
        	
                19)  

              	
                Payment of
      Costs and Legal Fees and Reinstatement of Benefits.  In
      the event any dispute or controversy arising under or in connection with
      the Executive’s termination is resolved in favor of the Executive, whether
      by judgment, arbitration or settlement, the Executive shall be entitled to
      the 

              

      

       

       

      
        
          14

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      payment of (a) all
legal fees incurred by the Executive in resolving such dispute or controversy,
and (b) any back-pay, including Base Salary, bonuses and any other cash
compensation, employee benefits and any compensation and benefits due but not
otherwise paid to the Executive under this Agreement.

       

       

      
        	
                20)  

              	
                Indemnification.  The
      Corporation shall provide the Executive (including his heirs, executors
      and administrators) with coverage under a standard directors’ and
      officers’ liability insurance policy at its expense, or in lieu thereof,
      shall indemnify the Executive (and his heirs, executors and
      administrators) to the fullest extent permitted under Indiana law 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 a director or officer of the
      Corporation (whether or not he continues to be a director or officer at
      the time of incurring such expenses or liabilities).  Such
      expenses and liabilities shall include, but shall not be limited to,
      judgments, court costs and attorneys’ fees and the cost of reasonable
      settlements.

              

      

       

      
        	
                21)  

              	
                Entire
      Agreement.  This Agreement embodies the entire agreement
      between the Corporation and the Executive with respect to the matters
      agreed to herein.  All prior agreements between the Corporation
      and the Executive with respect to the matters agreed to herein are hereby
      superseded and shall have no force or effect.  Notwithstanding
      the foregoing, nothing contained in this Agreement shall affect the Bank
      Agreement, which is being executed contemporaneously
      herewith.

              

      

       

      
        	
                22)  

              	
                Construction.  This
      Agreement shall be deemed to have been drafted by both parties
      hereto.  This Agreement shall be construed in accordance with
      the fair meaning of its provisions and its language shall not be strictly
      construed against, nor shall ambiguities be resolved against, any
      party.

              

      

       

      
        	
                23)  

              	
                Recitals.  The
      recitals or “Whereas” clauses contained on page 1 of this Agreement are
      expressly incorporated into and made a part of this
      Agreement.

              

      

       

      
        	
                24)  

              	
                Non-disparagement.  During
      the Executive’s employment with the Corporation and following any
      termination of the Executive’s employment with the Corporation, the
      Executive shall not publicly disparage or make or publish any negative
      statements or comments about the Corporation, any of the Corporation’s
      subsidiaries or affiliates or any of their respective products, services,
      directors, officers or employees.  During the Executive’s
      employment with the Corporation and following any termination of the
      Executive’s employment with the Corporation, and subject to applicable
      law, no executive officer of the Corporation or member of the
      Corporation’s Board of Directors shall publicly disparage or make or
      publish any negative statements or comments about the
      Executive.

              

      

       

      
        	
                25)  

              	
                Cooperation.  For
      a period of five (5) years following any termination of the Executive’s
      employment with the Corporation and upon the request of the Corporation or
      any of its subsidiaries or affiliates, the Executive shall reasonably
      cooperate, assist and make himself available (for testimony or otherwise)
      at appropriate times and places as reasonably determined by the
      Corporation or any of its subsidiaries or affiliates in connection with
      any claim, demand, action, suit, proceeding, discovery, examination,
      investigation or litigation by, against or affecting the Corporation or
      any of its subsidiaries or affiliates.  In connection with the
      foregoing, the Corporation shall pay the Executive a fee of $1,000 for
      each day that the Corporation or any subsidiary or affiliate of the
      Corporation requests the Executive to cooperate, assist or make himself
      available, and shall also reimburse the Executive for his reasonable
      out-of-pocket travel 

              

      

       

       

      
        
          15

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      expenses that are approved in advance by the Chairman of
the Corporation; provided, however, that the Corporation shall not pay such fee
or reimburse for such expenses in connection with any claim, demand, action,
suit or proceeding relating to this Agreement.

       

      
        	
                26)  

              	
                Certain
      Remedies.  The Executive agrees that the Corporation will
      suffer irreparable damage and injury and will not have an adequate remedy
      at law in the event of any actual, threatened or attempted breach by the
      Executive of any provision of Section 3.  Accordingly, in the
      event of a breach or a threatened or attempted breach by the Executive of
      any provision of Section 3, in addition to all other remedies to which the
      Corporation is entitled at law, in equity or otherwise, the Corporation
      shall be entitled to a temporary restraining order, a permanent injunction
      and/or a decree of specific performance of any provision of Section
      3.  The parties agree that a bond posted by the Corporation in
      the amount of One Thousand Dollars ($1,000) shall be adequate and
      appropriate in connection with such restraining order or injunction and
      that actual damages need not be proved by the Corporation prior to it
      being entitled to obtain such restraining order, injunction or specific
      performance.  The foregoing remedies shall not be deemed to be
      the exclusive rights or remedies of the Corporation for any breach of or
      noncompliance with this Agreement by the Executive but shall be in
      addition to all other rights and remedies available to the Corporation at
      law, in equity or otherwise.

              

      

       

       

      IN
WITNESS WHEREOF, this Agreement has been executed as of the date first above
written.

       

       

      _/s/ Thomas F.
Prisby______________

       Thomas F. Prisby

       

       

      Attest:            
                                                                   
CFS BANCORP, INC.

       

       

       

      By:  /s/ Monica F.
Sullivan                                                   By: /s/ Agnes C.
Lasics_____________

      Corporate
Secretary                               
 

       (Name
and Title)

       

       

       

       

      KD_IM-1325990_3.DOC

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