EXHIBIT NO. 10.38 – EMPLOYMENT AGREEMENT BETWEEN

MAF BANCORP, INC. AND THOMAS R. PERZ

 

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[Thomas R. Perz]

 

MAF BANCORP, INC.

 

EMPLOYMENT AGREEMENT

 

This AGREEMENT, is made effective as of December 1, 2003 (“Effective Date”), by
and between MAF BANCORP, INC., a Delaware corporation (the “Company”) and Thomas
R. Perz (“Executive”).

 

WHEREAS, the Executive was previously employed by St. Francis Capital
Corporation, Inc. (“St. Francis”) and by the St. Francis Bank, F.S.B. (the “St.
Francis Subsidiary”); and

 

WHEREAS, St. Francis has merged with and into the Company and the St. Francis
Subsidiary has become a wholly-owned subsidiary of the Company through a merger
with Mid America Bank, fsb (the “Bank”); and

 

WHEREAS, the Company desires to provide for the employment of the Executive by
the Company following the Merger and the termination of his employment
agreements with St. Francis and the St. Francis Subsidiary (such agreements, as
amended, the “St. Francis Employment Agreements”) in order to assure itself of
his expertise and experience with respect to St. Francis’s markets and customers
and to facilitate the integration of St. Francis and its employees into the
Company’s operations; and

 

WHEREAS, the Executive is willing to commit himself to serving the Company and
the Bank on the terms and conditions herein provided;

 

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

 

1. POSITION AND RESPONSIBILITIES.

 

(a) Executive shall be employed as a Managing Director of the Company effective
as of the date hereof for the Period of Employment as defined hereafter. The
Executive shall report to the Chairman of the Board and Chief Executive Officer
of the Company (the “CEO”). The Executive’s duties and responsibilities shall
consist of such duties and responsibilities as may from time to time be assigned
to the Executive by the CEO, which duties and responsibilities shall be duties
customary for a Managing Director of the Company and will initially involve
assisting in the integration of the operations of the Company and St. Francis
and maintaining the retail banking customer relationships in the former St.
Francis and St. Francis Subsidiary offices, representing the Company in trade
association activities, and assisting the Company in identifying merger and
acquisition candidates. The Executive shall devote substantially all of his
business time, attention, skill and efforts to the faithful performance of his
duties hereunder including activities and services related to the organization,
operation and management of the Company. The Executive also agrees to serve if
requested by the Company, as an employee, and, if elected, also as an officer,
of the Bank and any other subsidiary or affiliate of the Company. The separate
employment agreement between the Bank and/or any

 

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other subsidiary or affiliate of the Company relating to such employment or
service is hereinafter referred to as the “Bank Employment Agreement.”

 

(b) Subject to applicable regulatory requirements, at the first regularly
scheduled meeting of its Board of Directors after the Effective Date, the
Company shall cause Executive to be elected to the Board of Directors of the
Company for a term expiring at the Company’s 2004 Annual Meeting of Stockholders
and to nominate the Executive for election at such meeting for a term expiring
at the Company’s 2007 Annual Meeting of Stockholders. The Company as stockholder
of the Bank, shall cause Executive to be elected to the Board of Directors of
the Bank during such period as he is serving as a director of the Company.
Executive acknowledges that for so long as he is an employee of the Company or
the Bank, he will not be entitled to any compensation in connection with his
service as a director, other than the annual retainer then paid to
employee-directors. In the event he becomes a non-employee director, Executive
will be entitled to such compensation, including stock option awards, as may
then be paid to non-employee directors.

 

2. PERIOD OF EMPLOYMENT.

 

Subject to earlier termination pursuant to Section 4 below, the period of the
Executive’s employment under this Agreement (the “Period of Employment”) as a
Managing Director shall commence upon the Effective Date hereof and shall
continue for a period of twenty-four (24) full calendar months thereafter at
which time Executive’s employment shall terminate. In this regard, the Board of
Directors of the Company and Bank will review the Agreement and the Executive’s
performance annually for purposes of determining whether to extend the
Agreement, and the results thereof shall be included in the minutes of the
Board’s meeting.

 

3. COMPENSATION AND REIMBURSEMENT.

 

(a) Salary. During the Period of Employment, the Executive shall receive a base
salary (“Base Salary”) payable by the Bank in such amount as may from time to
time be approved by the Board of Directors of the Bank; provided, however, that
the Company and Executive agree that: (i) a portion of the amount received by
the Executive from the Bank will be allocable to time and effort of the
Executive spent on behalf of the Company pursuant to this Agreement; and (ii)
that the Company may reimburse the Bank in an amount jointly determined by the
Boards of Directors of the Company and the Bank to reflect such allocable
portion.

 

(b) Bonuses. The Executive shall not be eligible for consideration in 2003 or
any subsequent years for annual incentive bonus or other bonus compensation or
to receive stock option or other equity-based or long-term incentive
compensation, except to the extent otherwise determined by the Compensation
Committee of the Company’s Board of Directors in its sole discretion.

 

(c) Vacation; Fringe Benefits. During the Period of Employment, the Executive
shall be entitled to a paid vacation, periods of absence occasioned by illness
and reasonable leaves of absence, use of a company automobile, and to expense
reimbursement related to country club dues, participation in and attendance at
professional and civic organizations, meetings and conventions, in each instance
in accordance with Company policies applicable to the Company’s comparable
executives (“Comparable Executives”).

 

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(d) Benefit Plans. Except as set forth below, the Executive shall be eligible to
participate in or receive benefits under any employee benefit plans of the
Company applicable to employees generally, including, but not limited to,
tax-qualified profit sharing and 401(k) plans, tax-qualified employee stock
ownership (ESOP) plans, health-and-accident plans, medical coverage or any other
employee benefit plans or arrangements, subject to and on a basis consistent
with the terms, conditions and overall administration of such plans and
arrangements. Following the end of the Period of Employment, the Company shall
continue the medical and dental insurance benefits otherwise provided hereunder
for a period that shall extend through the 36 months following the Effective
Date; provided, however, that nothing herein shall require the Company to
duplicate any coverage Executive may be entitled to receive in connection with
service on the Board of Directors of the Company or Bank. The Executive shall
not be entitled to participate in the Company’s or the Bank’s deferred
compensation, supplemental retirement or any other non-qualified or executive
benefit plans or programs. Executive shall be entitled to participate in the
Directors’ Deferred Compensation Plan.

 

(e) Deferred Compensation Agreement. In accordance with the provisions of the
January 1, 1999 Deferred Compensation Agreement (the “DCA”) between Executive
and the St. Francis Subsidiary, the Bank, as successor to the St. Francis
Subsidiary, has assumed, pursuant to a Bank Employment Agreement, the
obligations of the St. Francis Subsidiary under the DCA, as modified as follows:

 

  (i) Upon the termination of Executive’s employment at the end of the two-year
Period of Employment set forth in Section 2 above, or upon termination of
Executive’s employment prior to such date due to an Event of Termination,
Executive will be entitled to receive the payments described in Section 2 of the
DCA (relating to retirement), commencing on January 1, 2010.

 

  (ii) In the event Executive’s employment terminates due to Disability (as
defined in paragraph 4(f) below) or death, then payments shall be made under
Sections 3(c) and 4 of the DCA, as applicable.

 

  (iii) In the event of termination of employment for “Cause” (as defined in
paragraph 4(e) below), no payments shall be made under the DCA.

 

  (iv) In the event Executive voluntarily resigns prior to the end of the
two-year Employment Period set forth in Section 2 above, other than due to
Disability or circumstances constituting an Event of Termination, then a lump
sum payment determined in accordance with Section 3(a) of the DCA will be paid
to Executive.

 

In the event it is determined that any portion of the payments described in
clause (i) above are subject to excise tax under Code Section 280G and 4999, the
Company shall pay to Executive, at the time such payments are made, an amount
(the “Contingent Gross-Up Payment”) such that the

 

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net amount retained by the Executive after deduction of any federal, state, and
local income tax and Excise Tax imposed by Section 4999 of the Internal Revenue
Code (the “Excise Tax”) upon the payment pursuant to this sentence is equal to
the Excise Tax imposed and any interest charges or penalties in respect to the
imposition of such Excise Tax on the amount paid pursuant to clause (i) above
(to which said Excise Tax applies by reason of Section 280G of the Code). For
purposes of determining the amount of the Contingent Gross-Up Payment, Executive
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Contingent Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of Executive’s domicile for income
tax purposes on the date the Contingent Gross-Up Payment is made, net of the
maximum reduction of federal income taxes that could be obtained from deduction
of such state and local taxes. The determination of the amount, if any, of the
Contingent Gross-Up Payment due under this paragraph 3(e) shall be made by the
independent certified public accountants then retained by the Company, or if
such independent certified public accountants are precluded from providing such
services to the Company, then by another certified public accounting firm of
similar size selected by the Company.

 

4. TERMINATION; NOTICE.

 

(a) The Company may terminate the Executive’s employment with the Company at any
time, with or without Cause. The Executive may terminate his employment with the
Company at any time for any reason.

 

(b) As used in this Agreement, an “Event of Termination” shall mean:

 

  (i) the termination by the Company of the Executive’s full-time employment
hereunder for any reason other than for Cause or death, or

 

  (ii) the voluntary termination by the Executive of employment with the Company
and the Bank following a substantial breach of this Agreement by the Company
which breach is not cured by the Company within thirty (30) days following the
date the Executive gives written Notice of Termination indicating the
Executive’s intention to voluntarily terminate employment as a result thereof.
For purposes of this section, “substantial breach” by the Company shall include,
but not be limited to, either of the following events:

 

(1) a reduction by the Company in the Executive’s Base Salary or failure to pay
or provide the compensation described in paragraphs 3(c) and (d) above, in
either case without the Executive’s written consent; or

 

(2) the Company requires the Executive’s principal office location to be outside
of the Milwaukee, Wisconsin metropolitan area, without Executive’s written
consent and exclusive of required business travel.

 

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(c) Following the occurrence of an Event of Termination, the Company shall pay
to the Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as liquidated damages, the
Base Salary (only to the extent not paid by the Bank) described in paragraph
3(a) above (or in the case in which the Event of Termination is due to
Disability, 75% of such Base Salary) and to continue the life, medical (to the
extent not otherwise provided due to his status as a director) and other
insurance benefits otherwise provided hereunder for the remainder of the Period
of Employment (except as otherwise provided in paragraph 4(f)), as if
Executive’s employment continued hereunder (provided that with respect to
medical and dental coverage only, such period shall extend through the 36 months
following the Effective Date), in exchange for such payments and benefits the
Executive (or his beneficiary in the event of his death) shall execute and
deliver to the Company a release and settlement agreement pursuant to which the
Executive shall waive any and all claims resulting from employment at or
termination from the Company other than payments or benefits which are expressly
provided for in this Agreement or are due under the Statement of Benefits
entered into by and among the Executive, Company, Bank, St. Francis and St.
Francis subsidiary in connection with the Merger. The Executive shall take
reasonable steps to obtain employment and thereby mitigate the amount of
liquidated damages due under this paragraph 4(c) (except in the case of
Disability); provided, however, that the Executive shall not be required to
accept a position other than one within a 35 mile radius of the City of
Milwaukee, Wisconsin. If, during any portion of the period during which payment
of liquidated damages in the form of Base Salary is continuing to the Executive
pursuant to paragraph 4(c) above, Executive shall receive earned income within
the meaning of Section 911(d)(2)(A) of the Code, the aggregate amount of
liquidated damages to be paid or provided under paragraph 4(c) this Agreement
shall be correspondingly reduced by such earned income (other than earned income
received from the Company or any of its subsidiaries) and, if necessary,
liquidated damages payments returned to the Company.

 

(d) In the event the Event of Termination occurs prior to the first anniversary
of the Effective Date, and it is determined that some or all of the
post-employment payments and benefits provided under paragraph (c) are subject
to excise tax under Code Section 280G and 4999, the Company shall pay to
Executive an amount (the “Gross-Up Payment”) such that the net amount retained
by the Executive after deduction of any federal, state, and local income tax and
Excise Tax imposed by Section 4999 of the Internal Revenue Code (the “Excise
Tax”) upon the payment pursuant to this paragraph 4(d) is equal to the Excise
Tax imposed and any interest charges or penalties in respect to the imposition
of such Excise Tax on the amounts paid pursuant to paragraph 4(c) (to which said
Excise Tax applies by reason of Section 280G of the Code). For purposes of
determining the amount of Gross-Up Payment, Executive shall be deemed to pay
federal income taxes at the highest marginal rate of federal income taxation in
the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of Executive’s domicile for income tax purposes on the date the
Gross-Up Payment is made, net of the maximum reduction of federal income taxes
that could be obtained from deduction of such state and local taxes. The
determination of the amount, if any, of the Gross-Up Payment due under this
paragraph 4(d) shall be made by the independent certified public accountants
then retained by the Company, or if such independent certified public
accountants are precluded from providing such services to the Company, then by
another certified public accounting firm of similar size selected by the
Company.

 

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(e) The term “for Cause” shall mean termination because of the Executive’s
personal dishonesty, incompetence, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, or regulation (other than traffic violations
or similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. In determining incompetence, the acts or omissions
shall be measured against standards generally prevailing in the savings
institution industry.

 

(f) The term “Disability” shall mean the Executive’s absence from his duties on
a full-time basis for six (6) consecutive months as a result of his incapacity
due to physical or mental illness and his failure to return to full-time
performance of his duties within thirty (30) days after written notice of
potential termination is given to Executive by the Company or Bank. Any Base
Salary payments and insurance benefits that, pursuant to the provisions of
paragraph 4(c), continue after an Event of Termination that is the result of
Disability, will end on the earlier of: (i) the date Executive’s full-time
employment begins with another employer; (ii) the date of Executive’s death;
(iii) the date that is one year after the Date of Termination; or (iv) the date
that is 36 months after the Effective Date. The amount of any such payments will
be offset by any payments actually received by Executive from (a) any disability
plans provided by the Bank, and/or (b) any governmental social security or
worker’s compensation program.

 

(g) Any termination by the Company or Bank or by Executive shall be communicated
by Notice of Termination to the other party hereto and the termination shall
become effective as of the “Date of Termination” with respect thereto. For
purposes of this Agreement, a “Notice of Termination” shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in detail the facts and circumstances claimed to
provide a basis for the termination. The “Date of Termination” shall be:

 

  (i) thirty (30) days after the Notice of Termination is given if the Notice of
Termination is given by the Company or Bank without Cause or due to Disability,
or by the Executive in the absence of a substantial breach of the Agreement; or

 

  (ii) the date the Notice of Termination is given if the termination is by the
Company or Bank for Cause; or

 

  (iii) thirty (30) days after the Notice of Termination is given if the Notice
of Termination is given in connection with a substantial breach of the Agreement
by the Company or the Bank and such breach is not cured within such thirty (30)
day period.

 

5. POST-EMPLOYMENT RESTRICTIVE COVENANTS.

 

(a) The Executive’s activities during his employment and following the
termination of his employment for any reason shall be subject to the Agreement
Regarding Post-

 

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Employment Restrictive Covenants attached hereto as Appendix A (the “Non-Compete
Agreement”).

 

(b) In the event an Event of Termination occurs prior to the first anniversary
of the Effective Date, and it is determined that some or all of the
post-employment payments provided under Section 7 of the Non-Compete Agreement
are subject to excise tax (“Excise Tax”) under Code Sections 280G and 4999, the
Company shall pay to Executive an amount (the “Gross-Up Payment”) such that the
net amount retained by the Executive after deduction of any federal, state, and
local income tax and Excise Tax imposed upon the payment pursuant to this
paragraph 5(b) is equal to the Excise Tax imposed and any interest charges or
penalties in respect to the imposition of such Excise Tax on the amounts paid
pursuant to Section 7 of the Non-Compete Agreement (to which said Excise Tax
applies by reason of Section 280G of the Code). For purposes of determining the
amount of Gross-Up Payment, Executive shall be deemed to pay federal income
taxes at the highest marginal rate of federal income taxation in the calendar
year in which the Gross-Up Payment is to be made and state and local income
taxes at the highest marginal rate of taxation in the state and locality of
Executive’s domicile for income tax purposes on the date the Gross-Up Payment is
made, net of the maximum reduction of federal income taxes that could be
obtained from deduction of such state and local taxes. The determination of the
amount, if any, of the Gross-Up Payment due under this paragraph 5(b) shall be
made by the independent certified public accountants then retained by the
Company, or if such independent certified public accountants are precluded from
providing such services to the Company, then by another certified public
accounting firm of similar size selected by the Company.

 

6. EFFECT ON PRIOR AGREEMENTS.

 

This Agreement contains the entire understanding between the parties hereto and
supersedes any prior employment or severance compensation agreements between
Executive and St. Francis or the St. Francis Subsidiary. This Agreement shall
not, however, alter or supercede any stock option agreements, deferred
compensation arrangements or Statement of Benefits (described in paragraph 4(c)
above) between the Company, Bank, St. Francis and/or St. Francis Bank and
Executive as in effect immediately following the Merger.

 

7. MODIFICATION AND WAIVER.

 

This Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto. No term or condition of this Agreement shall be
deemed to have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement, except by written instrument of
the party charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein, and each such
waiver shall operate only as to the specific term or condition waived and shall
not constitute a waiver of such term or condition for the future as to any act
other than that specifically waived.

 

8. TAX WITHHOLDING.

 

The Company may withhold from any amounts payable to the Executive under this
Agreement all applicable Federal, State, local or other withholding taxes. In
the event the Company fails to withhold such sums for any reason, it may require
the Executive to promptly remit to it sufficient cash to satisfy all applicable
income and employment withholding taxes.

 

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9. ARBITRATION.

 

Except as expressly set forth elsewhere in this Agreement, it is mutually agreed
between the parties that arbitration shall be the sole and exclusive remedy to
redress any dispute, claim or controversy (hereinafter referred to as
“grievance”) involving the interpretation of this Agreement or the terms or
conditions of this Agreement or the terms, conditions or termination of the
Executive’s employment with the Company or Bank. It is the intention of the
parties that the arbitration award shall be final and binding and that a
judgment on the award may be entered in any court of competent jurisdiction and
enforcement may be had according to its terms. Arbitration shall be initiated by
one party filing a written demand on the other party. Any demand for arbitration
by the Executive shall be made within 20 days after receipt of the Notice of
Termination. The arbitrator shall be chosen in accordance with the voluntary
labor arbitration rules of the American Arbitration Association. The place of
the arbitration shall be the offices of the American Arbitration Association in
Chicago, Illinois. The arbitrator shall not have jurisdiction or authority to
change any of the provisions of this Agreement but shall interpret or apply any
clause or clauses of this Agreement. The arbitrator shall have the power to
compel the attendance of witnesses at the hearing. The parties stipulate that
the provisions hereof, and the decision of the arbitrator with respect to any
grievance, shall be the sole and exclusive remedy for any alleged breach of the
employment relationship and in such event the Company or Bank shall be entitled
to seek relief in any court having jurisdiction thereof. The parties hereby
acknowledge that subject to the foregoing exception, neither party has the right
to resort to any federal, state or local court or administrative agency
concerning breaches of this Agreement and that the decision of the arbitrator
shall be a complete defense to any suit, action or proceeding instituted in any
federal, state or local court or before any administration agency with respect
to any grievance which is arbitrable as herein set forth. The arbitration
provisions hereof shall, with respect to any grievance, survive the termination
or expiration of the Executive’s employment under this Agreement.

 

10. MISCELLANEOUS.

 

(a) If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.

 

(b) The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

 

(c) To the extent not preempted by Federal law, this Agreement shall be governed
by and construed in accordance with the laws of the State of Illinois.

 

(d) Notwithstanding anything herein to the contrary, to the extent that any
compensation or benefits are paid to or received by Executive from the Bank, the
Company or any other subsidiary of the Company, whether paid pursuant to the
Bank Employment Agreement or otherwise, such compensation or benefits shall be
deemed to satisfy the Company’s obligations hereunder.

 

11. SUCCESSORS.

 

This Agreement shall be binding upon and inure to the benefit of the Company,
and its successors and Executive and his successors and assigns. The Company

 

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shall require any successor or assignee, whether direct or indirect, by
purchase, merger, consolidation or otherwise, expressly and unconditionally to
assume and agree to perform the Company’s obligations under this Agreement, in
the same manner and to the same extent that the Company would be required to
perform if no such succession or assignment had taken place.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and the Executive has signed this Agreement, effective
as of the date first written above.

 

MAF BANCORP, INC.

By:  

/s/ Allen H. Koranda

   

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Allen H. Koranda

Chairman and Chief Executive Officer

Executive:

   

/s/ Thomas R. Perz

   

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Thomas R. Perz

 

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