**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”) ascontemplated by the Agreement and Plan of Reorganization by and between thePurchaser and the Company (the “Merger Agreement”), the Company, EFS Bank (the “CompanyBank”) and you hereby enter into this agreement (this “Agreement”).  Capitalized terms used but not otherwisedefined in this Agreement shall have the meaning set forth in the MergerAgreement.

 

# 1.            *Options*. Prior to December 31, 2005, you may exercise any and all vestedoptions for the purchase of Company common stock (the “Options”) that you holdas of the date hereof and, with respect to any such Options that are “incentivestock options” within the meaning of Section 422 of the Internal RevenueCode of 1986, as amended (the “Code”), subject to any restrictions on salepursuant to applicable law, sell the shares of the Company’s common stockunderlying such Options, such that all income from such exercise shall beincluded in your gross income for 2005. For the avoidance of doubt, and notwithstanding anything herein to thecontrary, any income that you derive from the exercises of the Options (andsale of the underlying shares) as set forth in the preceding sentence shall notbe taken into account in computing any benefits under any plan, program orarrangement of Mid America Bank (the “Purchaser Bank”), the Purchaser, theCompany Bank, the Company or their affiliates.

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# 2.            *2005 Employment Agreement*.  Prior to December 23, 2005, the CompanyBank 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 thecontrary, the 2005 Employment Agreement Payment shall not be taken into accountin computing any benefits under any plan, program or arrangement of thePurchaser Bank, the Purchaser, the Company Bank, the Company or theiraffiliates.

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# 3.            *2005 Supplemental Executive Retirement AgreementPayment; Supplemental Executive Retirement Plan*.  Prior to December 23, 2005, the CompanyBank shall pay to you : (a)  an amount equal to the amount set forth on Exhibit Aas the “2005 Supplemental Executive Retirement Agreement Payment” and (b) anamount equal to the amount set forth on Exhibit A as the “SupplementalExecutive Retirement Plan Payment”.  Forthe avoidance of doubt, and notwithstanding anything herein to the contrary,the 2005 Supplemental Executive Retirement Agreement Payment and SupplementalExecutive Retirement Plan Payment shall not be taken into account in computingany benefits under any plan, program or arrangement of the Purchaser Bank, thePurchaser, the Company Bank, the Company or their affiliates.

 

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# 4.            *Executive Split Dollar LifeInsurance; Medical Continuation.*

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## (a)           Supplemental Life/Split Dollar Plan. ** **Effectiveas of the date hereof, the Company Bank’s Supplemental Life/Split Dollar Planand each Split Dollar Policy Endorsement thereunder (collectively, “SL/SD Plan”)is amended hereby to provide that (a) the aggregate amount of deathbenefit proceeds which may be paid to your beneficiaries shall not exceed the lesserof: (i) the Three Times Base Salary Amount (defined to mean your currentbase salary as of the date of this letter, multiplied by three (3), (ii) thesum of amounts shown as the maximum dollar amount of each of the endorsementsto which you are a party (the “Maximum Dollar Amount”), or (iii) theamount by which the aggregate death benefits payable under all Policiesmaintained under the Plan for the purpose of insuring your life exceeds theaggregate cash value of such Policies immediately prior to your death,  and (b) the Plan may be amended orterminated following the Effective Time, provided Purchaser maintains, orcauses Purchaser Bank to maintain, in full force and effect a life insurancepolicy or policies (which need not be one or more Policies established underthe SL/SD Plan) insuring your life which provide an aggregate death benefitpayable to your beneficiary or beneficiaries equal to the lesser of the ThreeTimes Base Salary Amount of the Participant or the Maximum Dollar Amount.

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## (b)          Medical Continuation.  For the three year-period following theEffective Date, the Company will continue, or will cause the Company Bank tocontinue, to provide you with access to medical and dental coverage under itsgroup plan as in effect from time to time with respect to similarly situatedexecutives of the Company, including any cost sharing or contributions requiredto be made by you, provided, that, to the extent that the Company is unable toprovide, or to cause the Company Bank to provide, you with (or ceases to beable to provide you with) such continuation coverage under the terms of itsinsurance policies as in effect from time to time, the Company Bank shall payto you a cash payment equal to the Company Bank’s cost of providing suchcoverage (which cost is to be determined by reference to the “COBRA” premiumapplicable to such coverage) reduced by an amount equal to the then applicableemployee contributions.  You shall paythe Company Bank the employee share for such coverage, as determined by the CompanyBank based on the cost of the coverage to be provided to you, on an annualbasis in advance, with the first such installment payable on the Effective Dateand the remaining annual installments payable on January 1 of each yearafter the year in which the Effective Date occurs.  Your eligibility for “COBRA” continuationcoverage under Section 4980B of the Code shall commence upon the EffectiveDate and the COBRA coverage period shall run concurrently with and offset thethree-year period under this Section 4(b). In the event that the Effective Date does not occur, you shall not beentitled to any benefit under this Section 4(b).

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# 5.            *Termination of the Prior Agreements; Agreement toRemain Employed Through Effective Time*.  You hereby agree that, in consideration forentering into this Agreement, effective as of the date hereof, the EmploymentAgreement by and between the Company and you, effective as of April 3,1998, as amended as of February 15, 2005, and the Employment Agreement byand between the Company Bank and you, effective as of April 3, 1998, (the “PriorAgreements”) shall be null and void and no person or entity shall be obligatedto pay to you or any person any amounts in respect of the PriorAgreements.  Further, in consideration ofthe benefits conferred upon you, the Company and the Company Bank pursuant tothis Agreement, you hereby agree not to terminate your employment with theCompany or any of its subsidiaries

 

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# prior to the Effective Time, and, prior tothe Effective Time, the Company agrees not to terminate your employment withthe Company or its subsidiaries without the prior written consent of thePurchaser.  You hereby represent andwarrant that, but for the benefit plans and agreements of or with the Companyor the Company Bank that are specifically referred to herein, any tax-qualifiedpension plans or insured welfare benefit plans of the Company Bank and yourrights in respect of outstanding stock options and restricted stock in respectof Company common stock under the Company’s stock compensation plans, you arenot 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 andhereby waive any rights with respect thereto, including the Company BankSupplemental Executive Retirement Agreement, Company Bank SupplementalExecutive Retirement Plan and Company Bank Management Supplemental ExecutiveRetirement Plan.

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# 6.            *Withholding and Reduction.*  The Company or Company Bank will withhold anddeposit all federal, state and local income and employment taxes that are owedwith respect to all amounts paid or benefits provided to or for you by theCompany or any affiliate pursuant to this Agreement.  You, the Company and the Company Bank agreethat none of the payments and benefits payable or provided to you or for yourbenefit under this Agreement or otherwise in connection with the Merger areexpected to constitute an “excess parachute payment” within the meaning of Section 280Gof the Code.  However, notwithstandinganything 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 toyou under this Agreement or otherwise (the “Payments”) constitute an “excessparachute payment” under Section 280G of the Code and in order to avoidsuch a result the Payments will be reduced, if necessary, to an amount suchthat when aggregated with all other payments, benefits or distributions in thenature of compensation to or for your benefit, whether paid, payable orprovided pursuant to this Agreement or otherwise (the “Aggregate Payments”),the value of such Aggregate Payments shall be equal to three (3) timesyour “base amount,” as determined in accordance with Section 280G of theCode, less $5,000.00.  You hereby agreeto report any amounts paid or benefits provided under this Agreement forpurposes of Federal, state and local income, employment and excise taxes in amanner consistent with the manner in which the Company or Company Bank reportsany such amounts or benefits for purposes of Federal, state and local income,employment and excise taxes.

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# 7.            *Successors*.  This Agreement is personal to you and withoutthe prior written consent of the Company shall not be assignable by youotherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit ofand be enforceable by your legal representatives.  This Agreement shall inure to the benefit ofand be binding upon the Company, the Company Bank and their successors andassigns.  From and after the EffectiveDate, the “Company” shall mean the “Purchaser,” and “Company Bank” shall mean “PurchaserBank,” except to the extent the context indicates otherwise.

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# 8.            *Waiver*. Failure of the Company to demand strict compliance with any of theterms, covenants or conditions of this Agreement shall not be deemed a waiverof such term, covenant or condition, nor shall any waiver or relinquishment ofany such term, covenant or condition on any occasion or multiple occasions bedeemed a waiver or relinquishment of such term, covenant or condition.

 

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# 9.            *Governing Law and Jurisdiction*. TheAgreement 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 submitto the exclusive personal jurisdiction of any Federal court located in theState of Illinois or any court of the State of Illinois in the event anydispute arises out of this Agreement or any of the transactions contemplated bythis Agreement, and (b) hereby waive any right to challenge jurisdictionor venue in such courts with regard to any suit, action, or proceeding under orin connection with the Agreement.  Eachparty to this Agreement also hereby waives any right to trial by jury inconnection with any suit, action, or proceeding under or in connection withthis Agreement.

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# 10.          *Entire and Final Agreement*.  This Agreement shall supersede any and allprior oral or written representations, understandings and agreements of theparties with respect to their employment relationship (including, but notlimited to all correspondence, memoranda and term sheets and the PriorAgreements), and it contains the entire agreement of the parties with respectto those matters.  No agreements orrepresentations, oral or otherwise, express or implied, with respect to thesubject matter hereof have been made by either party which are not set forthexpressly in this Agreement.  Once signedby the parties hereto, no provision of this Agreement may be modified oramended unless agreed to in writing, signed by you and a duly authorizedofficer of the Company and the Company Bank and subject to the prior writtenconsent of the Purchaser.

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# 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 orthe Company Bank without your prior written consent, to a person or entityother than an affiliate or parent entity of the Company or the Company Bank orits successors or assigns; *provided*,*however*, that, in the event ofthe merger, consolidation, transfer, or sale of all or substantially all of theassets of the Company or the Company Bank with or to any other individual orentity, this Agreement shall, subject to the provisions hereof, be binding uponand inure to the benefit of such successor and such successor shall dischargeand perform all the promises, covenants, duties, and obligations of the Companyand the Company Bank hereunder.

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# 12.          *Section Headings*.  The section headings contained in thisAgreement are inserted for purposes of convenience only and shall not affectthe meaning or interpretation of this Agreement.

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# 13.          *Notices*. All notices required by this Agreement shall be sent in writing anddelivered by one party to the other by overnight express mail to the followingpersons and addresses:

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| If to the Company and Company Bank: | 1695 Larkin Avenue    |
|-------------------------------------|-----------------------|
|                                | Elgin, Illinois 60123 |

 

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

 

# 14.          *Execution in Counterparts*.  This Agreement may be executed by the partieshereto in counterparts, and each of which shall be considered an original forall purposes.

 

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If the foregoing is satisfactory, please so indicateby signing and returning to the Company and the enclosed copy of this letterwhereupon 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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