Exhibit 10.5

 

June 28, 2005

 

Barrett J. O’Connor

12448 Foxtail Lane

Huntley, Illinois  60142

 

Dear Mr. O’Connor:

 

In connection with the anticipated merger (the “Merger”) of EFC Bancorp, Inc.
(the “Company”) with and into MAF Bancorp, Inc. (the “Purchaser”) as
contemplated by the Agreement and Plan of Reorganization by and between the
Purchaser and the Company (the “Merger Agreement”), the Company, EFS Bank (the
“Company Bank”) and you hereby enter into this agreement (this “Agreement”). 
Capitalized terms used but not otherwise defined in this Agreement shall have
the meaning set forth in the Merger Agreement.

 

1.            OPTIONS.  PRIOR TO DECEMBER 31, 2005, YOU MAY EXERCISE ANY AND ALL
VESTED OPTIONS FOR THE PURCHASE OF COMPANY COMMON STOCK (THE “OPTIONS”) THAT YOU
HOLD AS OF THE DATE HEREOF AND, WITH RESPECT TO ANY SUCH OPTIONS THAT ARE
“INCENTIVE STOCK OPTIONS” WITHIN THE MEANING OF SECTION 422 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), SUBJECT TO ANY RESTRICTIONS ON
SALE PURSUANT TO APPLICABLE LAW, SELL THE SHARES OF THE COMPANY’S COMMON STOCK
UNDERLYING SUCH OPTIONS, SUCH THAT ALL INCOME FROM SUCH EXERCISE SHALL BE
INCLUDED IN YOUR GROSS INCOME FOR 2005.  FOR THE AVOIDANCE OF DOUBT, AND
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, ANY INCOME THAT YOU DERIVE FROM
THE EXERCISES OF THE OPTIONS (AND SALE OF THE UNDERLYING SHARES) AS SET FORTH IN
THE PRECEDING SENTENCE SHALL NOT BE TAKEN INTO ACCOUNT IN COMPUTING ANY BENEFITS
UNDER ANY PLAN, PROGRAM OR ARRANGEMENT OF MID AMERICA BANK (THE “PURCHASER
BANK”), THE PURCHASER, THE COMPANY BANK, THE COMPANY OR THEIR AFFILIATES.

 

2.            2005 EMPLOYMENT AGREEMENT.  PRIOR TO DECEMBER 23, 2005, THE
COMPANY BANK SHALL PAY TO YOU AN AMOUNT EQUAL TO THE AMOUNT SET FORTH ON
EXHIBIT A (THE “2005 EMPLOYMENT AGREEMENT PAYMENT”).  FOR THE AVOIDANCE OF
DOUBT, AND NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE 2005 EMPLOYMENT
AGREEMENT PAYMENT SHALL NOT BE TAKEN INTO ACCOUNT IN COMPUTING ANY BENEFITS
UNDER ANY PLAN, PROGRAM OR ARRANGEMENT OF THE PURCHASER BANK, THE PURCHASER, THE
COMPANY BANK, THE COMPANY OR THEIR AFFILIATES.

 

3.            2005 SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT PAYMENT;
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.  PRIOR TO DECEMBER 23, 2005, THE COMPANY
BANK SHALL PAY TO YOU : (A)  AN AMOUNT EQUAL TO THE AMOUNT SET FORTH ON
EXHIBIT A AS THE “2005 SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT PAYMENT” AND
(B) AN AMOUNT EQUAL TO THE AMOUNT SET FORTH ON EXHIBIT A AS THE “SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN PAYMENT”.  FOR THE AVOIDANCE OF DOUBT, AND
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE 2005 SUPPLEMENTAL EXECUTIVE
RETIREMENT AGREEMENT PAYMENT AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN PAYMENT
SHALL NOT BE TAKEN INTO ACCOUNT IN COMPUTING ANY BENEFITS UNDER ANY PLAN,
PROGRAM OR ARRANGEMENT OF THE PURCHASER BANK, THE PURCHASER, THE COMPANY BANK,
THE COMPANY OR THEIR AFFILIATES.

 

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4.            EXECUTIVE SPLIT DOLLAR LIFE INSURANCE; MEDICAL CONTINUATION.

 

(A)           SUPPLEMENTAL LIFE/SPLIT DOLLAR PLAN.  EFFECTIVE AS OF THE DATE
HEREOF, THE COMPANY BANK’S SUPPLEMENTAL LIFE/SPLIT DOLLAR PLAN AND EACH SPLIT
DOLLAR POLICY ENDORSEMENT THEREUNDER (COLLECTIVELY, “SL/SD PLAN”) IS AMENDED
HEREBY TO PROVIDE THAT (A) THE AGGREGATE AMOUNT OF DEATH BENEFIT PROCEEDS WHICH
MAY BE PAID TO YOUR BENEFICIARIES SHALL NOT EXCEED THE LESSER OF: (I) THE THREE
TIMES BASE SALARY AMOUNT (DEFINED TO MEAN YOUR CURRENT BASE SALARY AS OF THE
DATE OF THIS LETTER, MULTIPLIED BY THREE (3), (II) THE SUM OF AMOUNTS SHOWN AS
THE MAXIMUM DOLLAR AMOUNT OF EACH OF THE ENDORSEMENTS TO WHICH YOU ARE A PARTY
(THE “MAXIMUM DOLLAR AMOUNT”), OR (III) THE AMOUNT BY WHICH THE AGGREGATE DEATH
BENEFITS PAYABLE UNDER ALL POLICIES MAINTAINED UNDER THE PLAN FOR THE PURPOSE OF
INSURING YOUR LIFE EXCEEDS THE AGGREGATE CASH VALUE OF SUCH POLICIES IMMEDIATELY
PRIOR TO YOUR DEATH,  AND (B) THE PLAN MAY BE AMENDED OR TERMINATED FOLLOWING
THE EFFECTIVE TIME, PROVIDED PURCHASER MAINTAINS, OR CAUSES PURCHASER BANK TO
MAINTAIN, IN FULL FORCE AND EFFECT A LIFE INSURANCE POLICY OR POLICIES (WHICH
NEED NOT BE ONE OR MORE POLICIES ESTABLISHED UNDER THE SL/SD PLAN) INSURING YOUR
LIFE WHICH PROVIDE AN AGGREGATE DEATH BENEFIT PAYABLE TO YOUR BENEFICIARY OR
BENEFICIARIES EQUAL TO THE LESSER OF THE THREE TIMES BASE SALARY AMOUNT OF THE
PARTICIPANT OR THE MAXIMUM DOLLAR AMOUNT.

 

(B)          MEDICAL CONTINUATION.  FOR THE THREE YEAR-PERIOD FOLLOWING THE
EFFECTIVE DATE, THE COMPANY WILL CONTINUE, OR WILL CAUSE THE COMPANY BANK TO
CONTINUE, TO PROVIDE YOU WITH ACCESS TO MEDICAL AND DENTAL COVERAGE UNDER ITS
GROUP PLAN AS IN EFFECT FROM TIME TO TIME WITH RESPECT TO SIMILARLY SITUATED
EXECUTIVES OF THE COMPANY, INCLUDING ANY COST SHARING OR CONTRIBUTIONS REQUIRED
TO BE MADE BY YOU, PROVIDED, THAT, TO THE EXTENT THAT THE COMPANY IS UNABLE TO
PROVIDE, OR TO CAUSE THE COMPANY BANK TO PROVIDE, YOU WITH (OR CEASES TO BE ABLE
TO PROVIDE YOU WITH) SUCH CONTINUATION COVERAGE UNDER THE TERMS OF ITS INSURANCE
POLICIES AS IN EFFECT FROM TIME TO TIME, THE COMPANY BANK SHALL PAY TO YOU A
CASH PAYMENT EQUAL TO THE COMPANY BANK’S COST OF PROVIDING SUCH COVERAGE (WHICH
COST IS TO BE DETERMINED BY REFERENCE TO THE “COBRA” PREMIUM APPLICABLE TO SUCH
COVERAGE) REDUCED BY AN AMOUNT EQUAL TO THE THEN APPLICABLE EMPLOYEE
CONTRIBUTIONS.  YOU SHALL PAY THE COMPANY BANK THE EMPLOYEE SHARE FOR SUCH
COVERAGE, AS DETERMINED BY THE COMPANY BANK BASED ON THE COST OF THE COVERAGE TO
BE PROVIDED TO YOU, ON AN ANNUAL BASIS IN ADVANCE, WITH THE FIRST SUCH
INSTALLMENT PAYABLE ON THE EFFECTIVE DATE AND THE REMAINING ANNUAL INSTALLMENTS
PAYABLE ON JANUARY 1 OF EACH YEAR AFTER THE YEAR IN WHICH THE EFFECTIVE DATE
OCCURS.  YOUR ELIGIBILITY FOR “COBRA” CONTINUATION COVERAGE UNDER SECTION 4980B
OF THE CODE SHALL COMMENCE UPON THE EFFECTIVE DATE AND THE COBRA COVERAGE PERIOD
SHALL RUN CONCURRENTLY WITH AND OFFSET THE THREE-YEAR PERIOD UNDER THIS
SECTION 4(B).  IN THE EVENT THAT THE EFFECTIVE DATE DOES NOT OCCUR, YOU SHALL
NOT BE ENTITLED TO ANY BENEFIT UNDER THIS SECTION 4(B).

 

5.            TERMINATION OF THE PRIOR AGREEMENTS; AGREEMENT TO REMAIN EMPLOYED
THROUGH EFFECTIVE TIME.  YOU HEREBY AGREE THAT, IN CONSIDERATION FOR ENTERING
INTO THIS AGREEMENT, EFFECTIVE AS OF THE DATE HEREOF, THE EMPLOYMENT AGREEMENT
BY AND BETWEEN THE COMPANY AND YOU, EFFECTIVE AS OF APRIL 3, 1998, AS AMENDED AS
OF FEBRUARY 15, 2005, AND THE EMPLOYMENT AGREEMENT BY AND BETWEEN THE COMPANY
BANK AND YOU, EFFECTIVE AS OF APRIL 3, 1998, (THE “PRIOR AGREEMENTS”) SHALL BE
NULL AND VOID AND NO PERSON OR ENTITY SHALL BE OBLIGATED TO PAY TO YOU OR ANY
PERSON ANY AMOUNTS IN RESPECT OF THE PRIOR AGREEMENTS.  FURTHER, IN
CONSIDERATION OF THE BENEFITS CONFERRED UPON YOU, THE COMPANY AND THE COMPANY
BANK PURSUANT TO THIS AGREEMENT, YOU HEREBY AGREE NOT TO TERMINATE YOUR
EMPLOYMENT WITH THE COMPANY OR ANY OF ITS SUBSIDIARIES

 

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PRIOR TO THE EFFECTIVE TIME, AND, PRIOR TO THE EFFECTIVE TIME, THE COMPANY
AGREES NOT TO TERMINATE YOUR EMPLOYMENT WITH THE COMPANY OR ITS SUBSIDIARIES
WITHOUT THE PRIOR WRITTEN CONSENT OF THE PURCHASER.  YOU HEREBY REPRESENT AND
WARRANT THAT, BUT FOR THE BENEFIT PLANS AND AGREEMENTS OF OR WITH THE COMPANY OR
THE COMPANY BANK THAT ARE SPECIFICALLY REFERRED TO HEREIN, ANY TAX-QUALIFIED
PENSION PLANS OR INSURED WELFARE BENEFIT PLANS OF THE COMPANY BANK AND YOUR
RIGHTS IN RESPECT OF OUTSTANDING STOCK OPTIONS AND RESTRICTED STOCK IN RESPECT
OF COMPANY COMMON STOCK UNDER THE COMPANY’S STOCK COMPENSATION PLANS, YOU ARE
NOT ENTITLED TO OR ELIGIBLE FOR ANY OTHER PAYMENTS OR BENEFITS UNDER ANY PLANS,
AGREEMENTS OR ARRANGEMENTS OF OR WITH THE COMPANY OR THE COMPANY BANK AND HEREBY
WAIVE ANY RIGHTS WITH RESPECT THERETO, INCLUDING THE COMPANY BANK SUPPLEMENTAL
EXECUTIVE RETIREMENT AGREEMENT, COMPANY BANK SUPPLEMENTAL EXECUTIVE RETIREMENT
PLAN AND COMPANY BANK MANAGEMENT SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.

 

6.            WITHHOLDING AND REDUCTION.  THE COMPANY OR COMPANY BANK WILL
WITHHOLD AND DEPOSIT ALL FEDERAL, STATE AND LOCAL INCOME AND EMPLOYMENT TAXES
THAT ARE OWED WITH RESPECT TO ALL AMOUNTS PAID OR BENEFITS PROVIDED TO OR FOR
YOU BY THE COMPANY OR ANY AFFILIATE PURSUANT TO THIS AGREEMENT.  YOU, THE
COMPANY AND THE COMPANY BANK AGREE THAT NONE OF THE PAYMENTS AND BENEFITS
PAYABLE OR PROVIDED TO YOU OR FOR YOUR BENEFIT UNDER THIS AGREEMENT OR OTHERWISE
IN CONNECTION WITH THE MERGER ARE EXPECTED TO CONSTITUTE AN “EXCESS PARACHUTE
PAYMENT” WITHIN THE MEANING OF SECTION 280G OF THE CODE.  HOWEVER,
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR THE
PRIOR AGREEMENTS, IN NO EVENT SHALL THE AGGREGATE PAYMENTS OR BENEFITS TO BE
MADE OR AFFORDED TO YOU UNDER THIS AGREEMENT OR OTHERWISE (THE “PAYMENTS”)
CONSTITUTE AN “EXCESS PARACHUTE PAYMENT” UNDER SECTION 280G OF THE CODE AND IN
ORDER TO AVOID SUCH A RESULT THE PAYMENTS WILL BE REDUCED, IF NECESSARY, TO AN
AMOUNT SUCH THAT WHEN AGGREGATED WITH ALL OTHER PAYMENTS, BENEFITS OR
DISTRIBUTIONS IN THE NATURE OF COMPENSATION TO OR FOR YOUR BENEFIT, WHETHER
PAID, PAYABLE OR PROVIDED PURSUANT TO THIS AGREEMENT OR OTHERWISE (THE
“AGGREGATE PAYMENTS”), THE VALUE OF SUCH AGGREGATE PAYMENTS SHALL BE EQUAL TO
THREE (3) TIMES YOUR “BASE AMOUNT,” AS DETERMINED IN ACCORDANCE WITH
SECTION 280G OF THE CODE, LESS $5,000.00.  YOU HEREBY AGREE TO REPORT ANY
AMOUNTS PAID OR BENEFITS PROVIDED UNDER THIS AGREEMENT FOR PURPOSES OF FEDERAL,
STATE AND LOCAL INCOME, EMPLOYMENT AND EXCISE TAXES IN A MANNER CONSISTENT WITH
THE MANNER IN WHICH THE COMPANY OR COMPANY BANK REPORTS ANY SUCH AMOUNTS OR
BENEFITS FOR PURPOSES OF FEDERAL, STATE AND LOCAL INCOME, EMPLOYMENT AND EXCISE
TAXES.

 

7.            SUCCESSORS.  THIS AGREEMENT IS PERSONAL TO YOU AND WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMPANY SHALL NOT BE ASSIGNABLE BY YOU OTHERWISE
THAN BY WILL OR THE LAWS OF DESCENT AND DISTRIBUTION.  THIS AGREEMENT SHALL
INURE TO THE BENEFIT OF AND BE ENFORCEABLE BY YOUR LEGAL REPRESENTATIVES.  THIS
AGREEMENT SHALL INURE TO THE BENEFIT OF AND BE BINDING UPON THE COMPANY, THE
COMPANY BANK AND THEIR SUCCESSORS AND ASSIGNS.  FROM AND AFTER THE EFFECTIVE
DATE, THE “COMPANY” SHALL MEAN THE “PURCHASER,” AND “COMPANY BANK” SHALL MEAN
“PURCHASER BANK,” EXCEPT TO THE EXTENT THE CONTEXT INDICATES OTHERWISE.

 

8.            WAIVER.  FAILURE OF THE COMPANY TO DEMAND STRICT COMPLIANCE WITH
ANY OF THE TERMS, COVENANTS OR CONDITIONS OF THIS AGREEMENT SHALL NOT BE DEEMED
A WAIVER OF SUCH TERM, COVENANT OR CONDITION, NOR SHALL ANY WAIVER OR
RELINQUISHMENT OF ANY SUCH TERM, COVENANT OR CONDITION ON ANY OCCASION OR
MULTIPLE OCCASIONS BE DEEMED A WAIVER OR RELINQUISHMENT OF SUCH TERM, COVENANT
OR CONDITION.

 

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9.            GOVERNING LAW AND JURISDICTION. THE AGREEMENT IS GOVERNED BY AND
CONSTRUED UNDER THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICT OF
LAWS RULES.  YOU, THE COMPANY AND THE COMPANY BANK (A) HEREBY CONSENT TO SUBMIT
TO THE EXCLUSIVE PERSONAL JURISDICTION OF ANY FEDERAL COURT LOCATED IN THE STATE
OF ILLINOIS OR ANY COURT OF THE STATE OF ILLINOIS IN THE EVENT ANY DISPUTE
ARISES OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, AND (B) HEREBY WAIVE ANY RIGHT TO CHALLENGE JURISDICTION OR VENUE IN
SUCH COURTS WITH REGARD TO ANY SUIT, ACTION, OR PROCEEDING UNDER OR IN
CONNECTION WITH THE AGREEMENT.  EACH PARTY TO THIS AGREEMENT ALSO HEREBY WAIVES
ANY RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY SUIT, ACTION, OR PROCEEDING
UNDER OR IN CONNECTION WITH THIS AGREEMENT.

 

10.          ENTIRE AND FINAL AGREEMENT.  THIS AGREEMENT SHALL SUPERSEDE ANY AND
ALL PRIOR ORAL OR WRITTEN REPRESENTATIONS, UNDERSTANDINGS AND AGREEMENTS OF THE
PARTIES WITH RESPECT TO THEIR EMPLOYMENT RELATIONSHIP (INCLUDING, BUT NOT
LIMITED TO ALL CORRESPONDENCE, MEMORANDA AND TERM SHEETS AND THE PRIOR
AGREEMENTS), AND IT CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES WITH RESPECT TO
THOSE MATTERS.  NO AGREEMENTS OR REPRESENTATIONS, ORAL OR OTHERWISE, EXPRESS OR
IMPLIED, WITH RESPECT TO THE SUBJECT MATTER HEREOF HAVE BEEN MADE BY EITHER
PARTY WHICH ARE NOT SET FORTH EXPRESSLY IN THIS AGREEMENT.  ONCE SIGNED BY THE
PARTIES HERETO, NO PROVISION OF THIS AGREEMENT MAY BE MODIFIED OR AMENDED UNLESS
AGREED TO IN WRITING, SIGNED BY YOU AND A DULY AUTHORIZED OFFICER OF THE COMPANY
AND THE COMPANY BANK AND SUBJECT TO THE PRIOR WRITTEN CONSENT OF THE PURCHASER.

 

11.          ASSIGNMENT.  NEITHER THIS AGREEMENT NOR ANY OF THE RIGHTS,
OBLIGATIONS OR INTERESTS ARISING HEREUNDER MAY BE ASSIGNED BY YOU.  NEITHER THIS
AGREEMENT NOR ANY OF THE RIGHTS, OBLIGATIONS OR INTERESTS ARISING HEREUNDER MAY
BE ASSIGNED BY THE COMPANY OR THE COMPANY BANK WITHOUT YOUR PRIOR WRITTEN
CONSENT, TO A PERSON OR ENTITY OTHER THAN AN AFFILIATE OR PARENT ENTITY OF THE
COMPANY OR THE COMPANY BANK OR ITS SUCCESSORS OR ASSIGNS; PROVIDED, HOWEVER,
THAT, IN THE EVENT OF THE MERGER, CONSOLIDATION, TRANSFER, OR SALE OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY OR THE COMPANY BANK WITH OR TO
ANY OTHER INDIVIDUAL OR ENTITY, THIS AGREEMENT SHALL, SUBJECT TO THE PROVISIONS
HEREOF, BE BINDING UPON AND INURE TO THE BENEFIT OF SUCH SUCCESSOR AND SUCH
SUCCESSOR SHALL DISCHARGE AND PERFORM ALL THE PROMISES, COVENANTS, DUTIES, AND
OBLIGATIONS OF THE COMPANY AND THE COMPANY BANK HEREUNDER.

 

12.          SECTION HEADINGS.  THE SECTION HEADINGS CONTAINED IN THIS AGREEMENT
ARE INSERTED FOR PURPOSES OF CONVENIENCE ONLY AND SHALL NOT AFFECT THE MEANING
OR INTERPRETATION OF THIS AGREEMENT.

 

13.          NOTICES.  ALL NOTICES REQUIRED BY THIS AGREEMENT SHALL BE SENT IN
WRITING AND DELIVERED BY ONE PARTY TO THE OTHER BY OVERNIGHT EXPRESS MAIL TO THE
FOLLOWING PERSONS AND ADDRESSES:

 

If to the Company and Company Bank:

1695 Larkin Avenue

 

Elgin, Illinois 60123

 

If to you:                                At the most recent address on file at
the Company.

 

14.          EXECUTION IN COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED BY THE
PARTIES HERETO IN COUNTERPARTS, AND EACH OF WHICH SHALL BE CONSIDERED AN
ORIGINAL FOR ALL PURPOSES.

 

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If the foregoing is satisfactory, please so indicate by signing and returning to
the Company and the enclosed copy of this letter whereupon this will constitute
our agreement on the subject.

 

 

COMPANY

 

 

 

 

 

By:

/s/ Barrett J. O’Connor

 

 

Date:  June 28, 2005

 

 

 

 

 

COMPANY BANK

 

 

 

 

 

By:

/s/ Barrett J. O’Connor

 

 

Date:  June 28, 2005

 

 

 

 

ACCEPTED AND AGREED TO:

 

 

 

 

 

/s/ Barrett J. O’Connor

 

 

Barrett J. O’Connor

 

Date:  June 28, 2005

 

 

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EXHIBIT A

 

2005 Employment Agreement Payment (Section 2):

 

$

1,676,398

 

 

 

 

 

2005 Supplemental Executive Retirement Agreement Payment (Section 3):

 

$

578,621

 

 

 

 

 

Supplemental Executive Retirement Plan Payment (Section 3)

 

$

55,537

 

 

 

 

 

 

 

[1,609 shares multiplied by the Cash Consideration]

 

 

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