**Exhibit10.13**

 

**ELGIN FINANCIAL SAVINGS BANK**

**DIRECTOR RETIREMENT AGREEMENT**

 

THIS AGREEMENT is adoptedthis 19th day of June, 2002, by and between ELGIN FINANCIAL SAVINGS BANK, aState/Stock Savings Bank located in Elgin, Illinois (the “Company”) and THOMAS I.ANDERSON (the “Director”).

 

**INTRODUCTION**

 

To encourage the Directorto remain a member of the Company’s Board of Directors, the Company is willingto provide retirement benefits to the Director.  The Company will pay the benefits from its general assets.

 

**AGREEMENT**

 

The Director and theCompany agree as follows:

 

**Article 1**

**Definitions**

 

Whenever used in thisAgreement, the following words and phrases shall have the meanings specified:

 

 

1.1                     *“Change of Control”* means:

 

(a)                      A change inthe ownership of the capital stock of the Company, whereby another corporation,person, or group acting in concert (hereinafter this Agreement shallcollectively refer to any combination of these three [another corporation,person, or group acting in concert] as a “Person”) as described in Section14(d)(2) of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), acquires, directly or indirectly, beneficial ownership (within themeaning of Rule 13d-3 promulgated under the Exchange Act) of a number of sharesof capital stock of the Company  whichconstitutes fifty percent (50%) or more of the combined voting power of theCompany’s  then outstanding capitalstock then entitled to vote generally in the election of directors; or

 

(b)                     The personswho were members of the Board of Directors of the Company immediately prior toa tender offer, exchange offer, contested election or any combination of theforegoing, cease to constitute a majority of the Board of Directors; or

 

(c)                      The adoptionby the Board of Directors of the Company of a merger, consolidation orreorganization plan involving the Company in which the Company is not thesurviving entity, or a sale of all or substantially all of the assets of theCompany.  For purposes of thisAgreement, a sale

 

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of all or substantially all of the assets of the Company shall bedeemed to occur if any Person acquires (or during the 12-month period ending onthe date of the most recent acquisition by such Person, has acquired) grossassets of the Company that have an aggregate fair market value equal to fiftypercent (50%) or more of the fair market value of all of the respective grossassets of the Company immediately prior to such acquisition or acquisitions; or

 

(d)                     A tender offeror exchange offer is made by any Person which results in such Personbeneficially owning (within the meaning of Rule 13d-3 promulgated under theExchange Act) either fifty percent (50%) or more of the Company’s outstandingshares of Common Stock or shares of capital stock having fifty percent (50%) ormore the combined voting power of the Company’s then outstanding capital stock(other than an offer made by the Company), and sufficient shares are acquiredunder the offer to cause such person to own fifty percent (50%) or more of thevoting power; or

 

(e)                      Any othertransactions or series of related transactions occurring which havesubstantially the same effect as the transactions specified in any of thepreceding clauses of this Section 1.1.

 

Notwithstanding the above, certain transfers are permitted withinSection 318 of the Code and such transfers shall not be deemed a Change ofControl under this Section 1.1.

 

1.1                     “*Code*”means the Internal Revenue Code of 1986, as amended.

 

1.2                     “*Disability*”means the Director’s suffering a sickness, accident or injury which has beendetermined by the carrier of any individual or group disability insurancepolicy covering the Director, or by the Social Security Administration, to be adisability rendering the Director totally and permanently disabled.  The Director must submit proof to theCompany of the carrier’s or Social Security Administration’s determination uponthe request of the Company.

 

1.3                     *“EarlyTermination”* means the Termination of Service before Normal RetirementAge for reasons other than death, Disability, Termination for Cause orfollowing a Change of Control.

 

1.4                     “*EarlyTermination Date*” means the month, day and year in which EarlyTermination occurs.

 

1.5                     “*EffectiveDate*” means January 1, 2002.

 

1.6                     “*NormalRetirement Age*” means the Director’s 70th birthday.

 

1.7                     “*NormalRetirement Date*” means the later of the Normal Retirement Age orTermination of Service.

 

1.8                     “*Plan**Year*”means each 12-month period from the Effective Date.

 

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1.9                     “*Terminationfor Cause*” See Section 5.2.

 

1.10               “*Terminationof Service*” means that the Director ceases to be a member of theCompany’s Board of Directors for any reason, voluntarily or involuntarily,other than by reason of a leave of absence approved by the Company.

 

1.11               “*Years ofService*” means the total number of twelve-month periods during whichthe Director has served on the Company’s Board of Directors.  The Director was appointed to the Board ofDirectors of the Company in January, 1988.

 

**Article 2**

**Lifetime Benefits**

 

2.1                     *NormalRetirement Benefit*.  UponTermination of Service on or after Normal Retirement Age****for reasons other thandeath, the Company shall pay to the Director the benefit described in thisSection 2.1 in lieu of any other benefit under this Agreement.

 

2.1.1           *Amount of Benefit*.  The annual benefit under this Section 2.1 is$15,500 (Fifteen Thousand Five Hundred Dollars).  The Company’s Board of Directors, in its sole discretion, mayincrease the annual benefit under this Section 2.1.1; however, any increaseshall require the recalculation of Schedule A.

 

2.1.2            *Payment of Benefit*.  The Company shall pay the annual benefit tothe Director in 12 equal monthly installments payable on the first day of eachmonth commencing with the month following the Director’s Normal RetirementDate, paying the annual benefit to the Director for a period of 10 years.

 

2.1.3            *Benefit Increases*.  Commencing on the first anniversary of thefirst benefit payment, and continuing on each subsequent anniversary, theCompany’s Board of Directors, in its sole discretion, may increase the benefit.

 

2.2                     *EarlyTermination Benefit*.  UponEarly Termination, the Company shall pay to the Director the benefit describedin this Section 2.2 in lieu of any other benefit under this Agreement.

 

2.2.1            *Amount of Benefit*.  The benefit under this Section 2.2 is theEarly Termination annual Installment set forth on Schedule A for the Plan Yearending immediately prior to the Early Termination Date, determined by zerovesting prior to the Director completing ten (10) Years of Service andthereafter the Director becomes 100 percent vested in the Accrual Balance.  An increase in the annual benefit underSection 2.1.1 shall require the recalculation of this benefit on ScheduleA.  This benefit is determined by calculatinga 10-year fixed annuity from the Accrual Balance, crediting interest on theunpaid balance at an annual rate of 7.50 percent, compounded monthly.

 

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2.2.2            *Payment of Benefit*.  The Company shall pay the annual benefit tothe Director in 12 equal monthly installments commencing with the monthfollowing Termination of Service, paying the annual benefit to the Director fora period of 10 years.

 

2.2.3            *Benefit Increases*.  Benefit payments may be increased asprovided in Section 2.1.3.

 

2.3                     *DisabilityBenefit.*  If the Directorterminates Service due to Disability prior to Normal Retirement Age, theCompany shall pay to the Director the benefit described in this Section 2.3 inlieu of any other benefit under this Agreement.

 

2.3.1*            Amountof Benefit.*  The benefit under thisSection 2.3 is the Disability annual Installment set forth in Schedule A forthe Plan Year ending immediately prior to the date in which Termination ofService occurs, determined by zero vesting prior to the Director completing ten(10) Years of Service and thereafter the Director becomes 100 percent vested inthe Accrual Balance.  An increase in theannual benefit under Section 2.1.1 would require the recalculation of thisbenefit on Schedule A.  This benefit isdetermined by calculating a 10-year fixed annuity from the Accrual Balance,crediting interest on the unpaid balance at an annual rate of 7.50 percent,compounded monthly.

 

2.3.2            *Payment of Benefit.*  The Company shall pay the annual benefitamount to the Director in 12 equal monthly installments commencing with themonth following Termination of Service, paying the annual benefit to theDirector for a period of 10 years.

 

2.3.3            *Benefit Increases*.  Benefit payments may be increased asprovided in Section 2.1.3.

 

2.4*                     Changeof Control Benefit*.  Upon a Changeof Control, the Company shall pay to the Director the benefit described in thisSection 2.4 in lieu of any other benefit under this Agreement.

 

2.4.1*            Amountof Benefit.*  The annual benefitunder this Section 2.4 is the Change of Control annual Installment set forth onSchedule A for the Plan Year ending immediately prior to the date in whichTermination of Service occurs, determined by vesting the Director in the NormalRetirement Benefit described in Section 2.1.1.

 

2.4.2            *Payment of Benefit**.******* The Company shall pay the annual benefit tothe Director in 12 equal monthly installments commencing with the monthfollowing the Normal Retirement Age, paying the annual benefit to the Directorfor a period of 10 years.

 

2.4.3            *Benefit Increases*.  Benefit payments may be increased asprovided in Section 2.1.3.

 

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**Article 3**

**Death Benefits**

 

3.1                     *Death DuringActive Service*.  If theDirector dies while in the active service of the Company, the Company shall payto the Director’s beneficiary the benefit described in this Section 3.1.  This benefit shall be paid in lieu of theLifetime Benefits under Article 2.

 

3.1.1            *Amount of Benefit*.  The annual benefit under this Section 3.1 isthe Pre-retirement Death Benefit annual Installment set forth on Schedule A forthe Plan Year ending immediately prior to the date in which death occurs,determined by vesting the Director in 100 percent of the Accrual Balance. Anincrease in the annual benefit under Section 2.1.1 would require therecalculation of this benefit on Schedule A. This benefit is determined by calculating a 10-year fixed annuity fromthe Accrual Balance, crediting interest on the unpaid balance at an annual rateof 7.50 percent, compounded monthly.

 

3.1.2            *Payment of Benefit*.  The Company shall pay the annual benefit tothe Director’s beneficiary in 12 equal monthly installments commencing with themonth following the Director’s death, paying the annual benefit to theDirector’s beneficiary for a period of 10 years.

 

3.2                     *Death DuringPayment of a Lifetime Benefit*. If the Director dies after any Lifetime Benefit payments have commencedunder this Agreement but before receiving all such payments, the Company shallpay the remaining benefits to the Director’s beneficiary at the same time andin the same amounts they would have been paid to the Director had the Directorsurvived.

 

3.3                     *Death AfterTermination of Employment But Before Payment of a Lifetime Benefit Commences.*** **If the Director is entitled to aLifetime Benefit under this Agreement, but dies prior to the commencement ofsaid benefit payments, the Company shall pay the same benefit payments to theDirector’s beneficiary that the Director was entitled to prior to death exceptthat the benefit payments shall commence on the first day of the monthfollowing the date of the Director’s death.

 

**Article 4**

**Beneficiaries**

 

4.1                     *BeneficiaryDesignations*.  The Directorshall designate a beneficiary by filing a written designation with theCompany.  The Director may revoke ormodify the designation at any time by filing a new designation.  However, designations will only be effectiveif signed by the Director and received by the Company during the Director’slifetime.  The Director’s beneficiarydesignation shall be deemed automatically revoked if the beneficiarypredeceases the Director or if the Director names a spouse as beneficiary andthe marriage is subsequently dissolved. If the Director dies without a valid beneficiary designation, allpayments shall be made to the Director’s estate.

 

4.2                     *Facility ofPayment*.  If a benefit ispayable to a minor, to a person declared incompetent

 

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 or to a person incapable of handling thedisposition of his or her property, the Company may pay such benefit to theguardian, legal representative or person having the care or custody of suchminor, incapacitated person or incapable person.  The Company may require proof of incompetence, minority orguardianship as it may deem appropriate prior to distribution of the benefit.  Such distribution shall completely dischargethe Company from all liability with respect to such benefit.

 

**Article 5**

**General Limitations**

 

5.1                     *ExcessParachute Payment*. Notwithstanding any provision of this Agreement to the contrary, theCompany shall not pay any benefit under this Agreement to the extent thebenefit would create an excise tax under the excess parachute rules of Section280G of the Code.

 

5.2                     *Terminationfor Cause*.  Notwithstandingany provision of this Agreement to the contrary, the Company shall not pay anybenefit under this Agreement if the Company terminates the Director’s servicefor:

 

(a)                      Convictionof a felony or of a gross misdemeanor involving moral turpitude; or

(b)                     Fraud,disloyalty, dishonesty or willful violation of any law or significant Companypolicy committed in connection with the Director’s service and resulting in anadverse effect on the Company.

 

5.3                     *Suicide orMisstatement*.  The Companyshall not pay any benefit under this Agreement if the Director commits suicidewithin three years after the date of this Agreement.  In addition, the Company shall not pay any benefit under thisAgreement if the Director has made any material misstatement of fact on anemployment application or resume provided to the Company, or on any applicationfor any benefits provided by the Company to the Director.

 

**Article 6**

**Claims and Review Procedure**

 

6.1                     *Claims Procedure*.  Any person or entity (“claimant”) who hasnot received benefits under this Agreement that he or she believes should bepaid shall make a claim for such benefits as follows:

 

6.1.1            *Initiation - Written Claim*.  The claimant initiates a claim by submittingto the Company a written claim for the benefits.

 

6.1.2            *Timing of Company Response.*  The Company shall respond to such claimantwithin 90 days after receiving the claim. If the Company determines that special circumstances require additionaltime for processing the claim, the Company can extend the response period by anadditional 90 days by notifying the claimant in writing, prior to the end ofthe initial 90-day period, that an additional period is required.  The notice of extension must 

 

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set forth thespecial circumstances and the date by which the Company expects to render itsdecision.

 

6.1.3            *Noticeof Decision*.  If the Companydenies part or all of the claim, the Company shall notify the claimant inwriting of such denial.  The Companyshall write the notification in a manner calculated to be understood by theclaimant.  The notification shall setforth:

 

(a)                     The specificreasons for the denial,

(b)                    A reference tothe specific provisions of the Agreement on which the denial is based,

(c)                     A descriptionof any additional information or material necessary for the claimant to perfectthe claim and an explanation of why it is needed,

(d)                    An explanationof the Agreement’s review procedures and the time limits applicable to suchprocedures, and

(e)                     A statementof the claimant’s right to bring a civil action under ERISA Section 502(a)following an adverse benefit determination on review.

 

6.2                     *Review Procedure*.  If the Company denies part or all of theclaim, the claimant shall have the opportunity for a full and fair review bythe Company of the denial, as follows:

 

6.2.1            *Initiation– Written Request*.  Toinitiate the review, the claimant, within 60 days after receiving the Company’snotice of denial, must file with the Company a written request for review.

 

6.2.2            *AdditionalSubmissions – Information Access*. The claimant shall then have the opportunity to submit written comments,documents, records and other information relating to the claim.  The Company shall also provide the claimant,upon request and free of charge, reasonable access to, and copies of, alldocuments, records and other information relevant (as defined in applicableERISA regulations) to the claimant’s claim for benefits.

 

6.2.3            *Considerationson Review*.  In consideringthe review, the Company shall take into account all materials and informationthe claimant submits relating to the claim, without regard to whether suchinformation was submitted or considered in the initial benefit determination.

 

6.2.4            *Timingof Company Response*.  TheCompany shall respond in writing to such claimant within 60 days afterreceiving the request for review.  Ifthe Company determines that special circumstances require additional time forprocessing the claim, the Company can extend the response period by anadditional 60 days by notifying the claimant in writing, prior to the end ofthe initial 60-day period, that an additional period is required.  The notice of extension must set forth thespecial circumstances and the date by which the Company expects to render itsdecision.

 

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6.2.5            *Noticeof Decision*.  The Companyshall notify the claimant in writing of its decision on review.  The Company shall write the notification ina manner calculated to be understood by the claimant.  The notification shall set forth:

 

(a)                     The specificreasons for the denial,

(b)                    A reference tothe specific provisions of the Agreement on which the denial is based,

(c)                     A statementthat the claimant is entitled to receive, upon request and free of charge,reasonable access to, and copies of, all documents, records and otherinformation relevant (as defined in applicable ERISA regulations) to theclaimant’s claim for benefits, and

(d)                    A statement ofthe claimant’s right to bring a civil action under ERISA Section 502(a).

 

**Article 7**

**Amendments and Termination**

 

This Agreement may beamended or terminated only by a written agreement signed by the Company and theDirector.

 

Notwithstanding the previousparagraph in this Article 7, the Company may amend or terminate this Agreementat any time if, pursuant to legislative, judicial or regulatory action,continuation of the Agreement would (i) cause benefits to be taxable to theDirector prior to actual receipt, or (ii) result in significant financialpenalties or other significantly detrimental ramifications to the Company(other than the financial impact of paying the benefits).  However, in no event shall this Agreement beterminated under this section without payment to the Director of any vestedbenefit.

 

**Article 8**

**Miscellaneous**

 

8.1                     *BindingEffect*.  This Agreement shallbind the Director and the Company, and their beneficiaries, survivors,executors, successors, administrators and transferees.

 

8.2                     *No Guaranteeof Service*.  This Agreementis not a contract for services.  It doesnot give the Director the right to remain in the service of the Company, nordoes it interfere with the shareholder’s rights to discharge the Director.  It also does not require the Director toremain in the service of the Company nor interfere with the Director’s right toterminate services at any time.

 

8.3                     *Non-Transferability*.Benefits under this Agreement cannot be sold, transferred, assigned, pledged,attached or encumbered in any manner.

 

8.4                     *Reorganization. *The Company shall not merge orconsolidate into or with another company, or reorganize, or sell substantiallyall of its assets to another company, firm, or person

 

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 unless such succeeding orcontinuing company, firm, or person agrees to assume and discharge theobligations of the Company under this Agreement.  Upon the occurrence of such event, the term “Company” as used inthis Agreement shall be deemed to refer to the successor or survivor company.

 

8.5                     *TaxWithholding*.  The Companyshall withhold any taxes that are required to be withheld from the benefitsprovided under this Agreement.

 

8.6                     *ApplicableLaw*.  The Agreement and allrights hereunder shall be governed by the laws of the State of Illinois, exceptto the extent preempted by the laws of the United States of America.

 

8.7                     *UnfundedArrangement*.  The Directorand beneficiary are general unsecured creditors of the Company for the paymentof benefits under this Agreement.  Thebenefits represent the mere promise by the Company to pay such benefits.  The rights to benefits are not subject inany manner to anticipation, alienation, sale, transfer, assignment, pledge,encumbrance, attachment, or garnishment by creditors.  Any insurance on the Director’s life is a general asset of theCompany to which the Director and beneficiary have no preferred or securedclaim.

 

8.8                     *EntireAgreement. *This Agreementconstitutes the entire agreement between the Company and the Director as to thesubject matter hereof.  No rights aregranted to the Director by virtue of this Agreement other than thosespecifically set forth herein.

 

8.9                     *Administration. *The Company shall have powerswhich are necessary to administer this Agreement, including but not limited to:

 

(a)                      Establishingand revising the method of accounting for the Agreement;

(b)                     Maintaining arecord of benefit payments; and

(c)                      Establishingrules and prescribing any forms necessary or desirable to administer theAgreement; and

(d)                     Interpretingthe provisions of the Agreement.

 

8.10               *NamedFiduciary.*The Company shall be the named fiduciary and planadministrator under the Agreement.  Thenamed fiduciary may delegate to others certain aspects of the management andoperation responsibilities of the plan including the Service of advisors andthe delegation of ministerial duties to qualified individuals.

 

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IN WITNESS WHEREOF, theDirector and a duly authorized Company officer have signed this Agreement.

 
| **DIRECTOR:**               |   | **COMPANY:**                      |
|-----------------------------|--------|-----------------------------------|
|                        |   |                              |
|                        |   | **ELGIN  FINANCIAL SAVINGS BANK** |
|                        |   |                              |
| **/s/  Thomas I. Anderson** |   | **By **                      | **/s/  Barrett J. O'Connor** |
| **THOMAS  I. ANDERSON**     |   | **Title**                         | **President/CEO** |
|                             |        |                                   |  |  |

 

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**BENEFICIARY DESIGNATION**

 

**ELGIN FINANCIAL SAVINGS BANK**

**DIRECTOR RETIREMENT AGREEMENT**

 

**THOMAS I. ANDERSON**

 

I designate the followingas beneficiary of any death benefits under this Agreement:

 

Primary:   Chere J.Anderson 

 

 

 

 

Contingent:   Kris L. Anderson

 

**Note:  Toname a trust as beneficiary, please provide the name of the trustee(s) and the exactname and date of the trust agreement.**

 

I understand that I maychange these beneficiary designations by filing a new written designation withthe Company.  I further understand thatthe designations will be automatically revoked if the beneficiary predeceasesme, or, if I have named my spouse as beneficiary and our marriage issubsequently dissolved.

 

 
| Signature | /s/ Thomas I. Anderson |   |
|-----------|------------------------|--------|
|      |                   |   |
| Date      | 6-19-02                |   |   |
|           |                        |        |  |  |

 

 

Received by the Companythis  1st  day of  July , 2002.

 

 
| By     | /s/ Barrett J. O'Connor |   |
|--------|-------------------------|--------|
|   |                    |
| Title  | President/CEO           |   |
|        |                         |        |  |

 

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| Clark/Bardes  Consulting |   | **Elgin  Financial Savings Bank**             |
|--------------------------|--------|-----------------------------------------------|
| Banking Practice         |   | **Director  Retirement Agreement-Schedule A** |

 

Thomas Anderson
|                                                                                               |
|----------------------------------------------------------------------------------------------------|
| **DOB: 1/28/1937  Plan Anniv Date: 1/1/2003   Retirement Age: 70  Payments: Monthly Installments** |   | **Early Termination** |   | **Disability** |   | **Change of Control** |   | **Preretirement Death Benefit** |
|                                                                                               | **Installment** |   | **Installment** |   | **Installment** |   |   |
|                                                                                               | **Payable Immediately** |   | **Payable Immediately** |   | **Payable at 70** |   | **Installment** |
| **Period  Ending  Dec of**                                                                         |   | **Age** |   | **Benefit Level (2)** |   | **Accrual Balance** |   | **Vesting** |   | **Based On Accrual** |   | **Vesting** |   | **Based On Accrual** |   | **Vesting** |   | **Based On Benefit** |   | **Based On Benefit** |
|                                                                                               |   |   |   | **(1)** |   | **(2)** |   | **(3)** |   | **(4)** |   | **(5)** |   | **(6)** |   | **(7)** |   | **(8)** |   | **(9)** |
| 2002(1)                                                                                            |   | 65 |   | 15,500 |   | 18,636 |   | 100 | % | 2,638 |   | 100 | % | 2,638 |   | 100 | % | 15,500 |   | 2,638 |
| 2003                                                                                               |   | 66 |   | 15,500 |   | 38,719 |   | 100 | % | 5,481 |   | 100 | % | 5,481 |   | 100 | % | 15,500 |   | 5,481 |
| 2004                                                                                               |   | 67 |   | 15,500 |   | 60,361 |   | 100 | % | 8,545 |   | 100 | % | 8,545 |   | 100 | % | 15,500 |   | 8,545 |
| 2005                                                                                               |   | 68 |   | 15,500 |   | 83,683 |   | 100 | % | 11,846 |   | 100 | % | 11,846 |   | 100 | % | 15,500 |   | 11,846 |
| 2006                                                                                               |   | 69 |   | 15,500 |   | 108,816 |   | 100 | % | 15,404 |   | 100 | % | 15,404 |   | 100 | % | 15,500 |   | 15,404 |
| Jan  2007                                                                                          |   |   |   | 15,500 |   | 109,496 |   | 100 | % | 15,500 |   | 100 | % | 15,500 |   | 100 | % | 15,500 |   | 15,500 |
| First Payment Date of February 1, 2007                                                             |

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(1) Assumes an implementation date of January1, 2002.  The first line reflects 12months of data, January 2002 through December 2002.

 

 

 
| /s/ Thomas Anderson |   | /s/ Barrett J. O'Connor       |   | 7/1/02 |   |
|---------------------|--------|-------------------------------|--------|--------|--------|
| Participant         |   | Elgin Financial Savings  Bank |   | Date   |   |

 

 

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