**Exhibit10.14**

 

**ELGIN FINANCIAL SAVINGS BANKDIRECTOR RETIREMENT AGREEMENT**

 

THIS AGREEMENT is adopted this 18th day of June, 2002,by and between ELGIN FINANCIAL SAVINGS BANK, a State/Stock Savings Bank locatedin Elgin, Illinois (the “Company”) and PETER A. TRAEGER (the “Director”).

 

**INTRODUCTION**

 

To encourage the Director to remain a member of theCompany’s Board of Directors, the Company is willing to provide retirementbenefits to the Director.  The Companywill pay the benefits from its general assets.

 

**AGREEMENT**

 

The Director and the Company agree as follows:

 

**Article 1**

**Definitions**

 

Whenever used in this Agreement, the following wordsand phrases shall have the meanings specified:

 

1.1           *“Change of Control”* means:

 

(a)           Achange in the ownership of the capital stock of the Company, whereby anothercorporation, person, or group acting in concert (hereinafter this Agreementshall collectively refer to any combination of these three [anothercorporation, person, or group acting in concert] as a “Person”) as described inSection 14(d)(2) of the Securities Exchange Act of 1934, as amended (the“Exchange Act”), acquires, directly or indirectly, beneficial ownership (withinthe meaning of Rule 13d-3 promulgated under the Exchange Act) of a number ofshares of capital stock of the Company which constitutes fifty percent (50%) or more of the combined votingpower of the Company’s  then outstandingcapital stock then entitled to vote generally in the election of directors; or

 

(b)           Thepersons who were members of the Board of Directors of the Company immediatelyprior to a tender offer, exchange offer, contested election or any combinationof the foregoing, cease to constitute a majority of the Board of Directors; or

 

(c)           Theadoption by 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)           Atender offer or exchange offer is made by any Person which results in suchPerson beneficially owning (within the meaning of Rule 13d-3 promulgated underthe Exchange Act) either fifty percent (50%) or more of the Company’soutstanding shares of Common Stock or shares of capital stock having fiftypercent (50%) or more the combined voting power of the Company’s thenoutstanding capital stock (other than an offer made by the Company), andsufficient shares are acquired under the offer to cause such person to ownfifty percent (50%) or more of the voting power; or

 

(e)           Anyother transactions 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 theabove, certain transfers are permitted within Section 318 of the Code and suchtransfers shall not be deemed a Change of Control 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 NormalRetirement Age for reasons other than death, Disability, Termination for Causeor following a Change of Control.

 

1.4           “*EarlyTermination Date”*means the month, day and year in which Early Termination 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 or Termination of Service.

 

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

 

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1.9           “*Terminationfor Cause”* SeeSection 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, 1994.

 

**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 bycalculating a 10-year fixed annuity from the Accrual Balance, creditinginterest on the unpaid balance at an annual rate of 7.50 percent, compoundedmonthly.

 

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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           *Disability Benefit.*  If the Director terminates Service due toDisability prior to Normal Retirement Age, the Company shall pay to theDirector the benefit described in this Section 2.3 in lieu of any other benefitunder this Agreement.

 

2.3.1*        Amountof Benefit.*  The benefitunder this Section 2.3 is the Disability annual Installment set forth inSchedule A for the Plan Year ending immediately prior to the date in whichTermination of Service occurs, determined by zero vesting prior to the Directorcompleting ten (10) Years of Service and thereafter the Director becomes 100percent vested in the Accrual Balance. An increase 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.

 

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 aChange of Control, the Company shall pay to the Director the benefit describedin this Section 2.4 in lieu of any other benefit under this Agreement.

 

2.4.1*        Amountof Benefit.*  The annualbenefit under this Section 2.4 is the Change of Control annual Installment setforth on Schedule A for the Plan Year ending immediately prior to the date inwhich Termination of Service occurs, determined by vesting the Director in theNormal Retirement 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 During Active Service*.  If the Director dies while in the activeservice of the Company, the Company shall pay to the Director’s beneficiary thebenefit described in this Section 3.1.  Thisbenefit shall be paid in lieu of the Lifetime 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 During Payment of a Lifetime Benefit*.  If the Director dies after any LifetimeBenefit payments have commenced under this Agreement but before receiving allsuch payments, the Company shall pay the remaining benefits to the Director’sbeneficiary at the same time and in the same amounts they would have been paid tothe Director had the Director survived.

 

3.3           *Death After Termination of Employment But BeforePayment of a Lifetime Benefit Commences.*** **If the Director is entitled to a Lifetime Benefit under thisAgreement, but dies prior to the commencement of said benefit payments, theCompany shall pay the same benefit payments to the Director’s beneficiary thatthe Director was entitled to prior to death except that the benefit paymentsshall commence on the first day of the month following the date of the Director’sdeath.

 

**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 thebenefit.  Such distribution shallcompletely discharge the Company from all liability with respect to suchbenefit.

 

**Article 5**

**General Limitations**

 

5.1           *Excess Parachute Payment*.  Notwithstanding any provision of thisAgreement to the contrary, the Company shall not pay any benefit under thisAgreement to the extent the benefit would create an excise tax under the excessparachute rules of Section 280G 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)           Conviction of a felony or of a grossmisdemeanor involving moral turpitude; or

(b)           Fraud, disloyalty, dishonesty orwillful violation of any law or significant Company policy committed inconnection with the Director’s service and resulting in an adverse effect onthe 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*.  Theclaimant initiates a claim by submitting to the Company a written claim for thebenefits.

 

6.1.2        *Timingof Company Response.*  TheCompany shall respond to such claimant within 90 days after receiving theclaim.  If the Company determines thatspecial circumstances require additional time for processing the claim, theCompany can extend the response period by an additional 90 days by notifyingthe claimant in writing, prior to the end of the initial 90-day period, that anadditional period is required.  Thenotice of extension must

 

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set forth the special circumstances and the date bywhich the Company expects to render its decision.

 

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 specific reasons for the denial,

(b)           A reference to the specificprovisions of the Agreement on which the denial is based,

(c)           A description of any additionalinformation or material necessary for the claimant to perfect the claim and anexplanation of why it is needed,

(d)           An explanation of the Agreement’sreview procedures and the time limits applicable to such procedures, and

(e)           A statement of the claimant’s rightto bring a civil action under ERISA Section 502(a) following an adverse benefitdetermination 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 specific reasons for the denial,

(b)           A reference to the specificprovisions of the Agreement on which the denial is based,

(c)           A statement that the claimant isentitled to receive, upon request and free of charge, reasonable access to, andcopies of, all documents, records and other information relevant (as defined inapplicable ERISA regulations) to the claimant’s claim for benefits, and

(d)           A statement of the claimant’s rightto 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 theprevious paragraph in this Article 7, the Company may amend or terminate thisAgreement at any time if, pursuant to legislative, judicial or regulatoryaction, continuation of the Agreement would (i) cause benefits to be taxable tothe Director 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           *Binding Effect*.  This Agreement shall bind the Director and the Company, and theirbeneficiaries, survivors, executors, successors, administrators andtransferees.

 

8.2           *No Guarantee of Service*.  This Agreement is not a contract forservices.  It does not give the Directorthe right to remain in the service of the Company, nor does it interfere withthe shareholder’s rights to discharge the Director.  It also does not require the Director to remain in the service ofthe Company nor interfere with the Director’s right to terminate services atany time.

 

8.3           *Non-Transferability*. Benefits under thisAgreement cannot be sold, transferred, assigned, pledged, attached orencumbered in any manner.

 

8.4           *Reorganization. *The Company shall not merge or consolidate into or withanother company, or reorganize, or sell substantially all of its assets toanother 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           *Tax Withholding*.  The Company shall withhold any taxes that are required to bewithheld from the benefits provided under this Agreement.

 

8.6           *Applicable Law*.  The Agreement and all rights hereunder shall be governed by thelaws of the State of Illinois, except to the extent preempted by the laws ofthe United States of America.

 

8.7           *Unfunded Arrangement*.  The Director and beneficiary are generalunsecured creditors of the Company for the payment of benefits under thisAgreement.  The benefits represent themere promise by the Company to pay such benefits.  The rights to benefits are not subject in any manner toanticipation, alienation, sale, transfer, assignment, pledge, encumbrance,attachment, or garnishment by creditors. Any insurance on the Director’s life is a general asset of the Companyto which the Director and beneficiary have no preferred or secured claim.

 

8.8           *Entire Agreement. *This Agreement constitutes theentire agreement between the Company and the Director as to the subject matterhereof.  No rights are granted to theDirector by virtue of this Agreement other than those specifically set forthherein.

 

8.9           *Administration. *The Company shall have powers which are necessary toadminister this Agreement, including but not limited to:

 

(a)           Establishing and revising the methodof accounting for the Agreement;

(b)           Maintaining a record of benefitpayments; and

(c)           Establishing rules and prescribingany forms necessary or desirable to administer the Agreement; and

(d)           Interpreting the provisions of theAgreement.

 

8.10         *Named Fiduciary.*The Company shall be thenamed fiduciary and plan administrator under the Agreement.  The named fiduciary may delegate to otherscertain aspects of the management and operation responsibilities of the planincluding the Service of advisors and the delegation of ministerial duties toqualified individuals.

 

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IN WITNESS WHEREOF, the Director and a duly authorizedCompany officer have signed this Agreement.

 
| **DIRECTOR:**             |   | **COMPANY:**                      |
|---------------------------|--------|-----------------------------------|
|                      |   |                              |
|                      |   | **ELGIN  FINANCIAL SAVINGS BANK** |
|                      |   |                              |
| **/s/  Peter A. Traeger** |   | **By**                            | **/s/  Barrett J. O'Connor** |
| **PETER  A. TRAEGER**     |   | **Title**                         | ** President / CEO** |
|                           |        |                                   |  |  |

 

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**BENEFICIARY DESIGNATION**

 

**ELGIN FINANCIAL SAVINGS BANKDIRECTOR RETIREMENT AGREEMENT**

 

**PETER A. TRAEGER**

 

I designate the following as beneficiary of any death benefits underthis Agreement:

 

Primary:  Linda K. Traeger(wife)

 

                                                                                                                                                                                                       

 

Contingent:   Samatha E. Traeger

 

                                                                                                                                                                                                       

 

**Note:  To name a trust as beneficiary, please provide the name of thetrustee(s) and the exact name and date of the trust agreement.**

 

I understand that I may change these beneficiary designations by filinga new written designation with the Company. I further understand that the designations will be automatically revokedif the beneficiary predeceases me, or, if I have named my spouse as beneficiaryand our marriage is subsequently dissolved.

 

 
| Signature | /s/ Peter A. Traeger |   |
|-----------|----------------------|--------|
|      |
| Date      |  6/18/02        |   |
|           |                      |        |  |

 

 

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** |

 

Peter Traeger
|                                                                                               |
|----------------------------------------------------------------------------------------------------|
| **DOB: 8/16/1958  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)** |
| Aug  2028                                                                                          |   |   |   | 15,500 |   | 109,496 |   | 100 | % | 15,500 |   | 100 | % | 15,500 |   | 100 | % | 15,500 |   | 15,500 |
| First Payment Date of September 1, 2028                                                            |

 

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

 

 

 
| /s/ Peter Traeger |   | /s/ Barrett J O'Connor        |   | 6/18/02 |
|-------------------|--------|-------------------------------|--------|---------|
| Participant       |   | Elgin Financial Savings  Bank |   | Date    |

 

 

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