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.


 





















 


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


 


2





















 


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.


 


3





















 


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.


 


4





















 


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

  	
   

  
					



 





















 


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]