Exhibit
10.13


 


ELGIN FINANCIAL SAVINGS BANK


DIRECTOR RETIREMENT AGREEMENT


 


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


 


INTRODUCTION


 


To encourage the Director
to remain a member of the Company’s Board of Directors, the Company is willing
to provide retirement benefits to the Director.  The Company will 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 words and phrases shall have the meanings specified:


 


 


1.1                     “Change of Control” means:


 


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


 


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


 


(c)                      The adoption
by the Board of Directors of the Company of a merger, consolidation or
reorganization plan involving the Company in which the Company is not the
surviving entity, or a sale of all or substantially all of the assets of the
Company.  For purposes of this
Agreement, a sale


 


1

















 


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


 


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


 


(e)                      Any other
transactions or series of related transactions occurring which have
substantially the same effect as the transactions specified in any of the
preceding clauses of this Section 1.1.


 


Notwithstanding the above, certain transfers are permitted within
Section 318 of the Code and such transfers 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 been
determined by the carrier of any individual or group disability insurance
policy covering the Director, or by the Social Security Administration, to be a
disability rendering the Director totally and permanently disabled.  The Director must submit proof to the
Company of the carrier’s or Social Security Administration’s determination upon
the request of the Company.


 


1.3                     “Early
Termination” means the Termination of Service before Normal Retirement
Age for reasons other than death, Disability, Termination for Cause or
following a Change of Control.


 


1.4                     “Early
Termination Date” means the month, day and year in which Early
Termination occurs.


 


1.5                     “Effective
Date” means January 1, 2002.


 


1.6                     “Normal
Retirement Age” means the Director’s 70th birthday.


 


1.7                     “Normal
Retirement 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.


 


2

















 


1.9                     “Termination
for Cause” See Section 5.2.


 


1.10               “Termination
of Service” means that the Director ceases to be a member of the
Company’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 of
Service” means the total number of twelve-month periods during which
the Director has served on the Company’s Board of Directors.  The Director was appointed to the Board of
Directors of the Company in January, 1988.


 


Article 2


Lifetime Benefits


 


2.1                     Normal
Retirement Benefit.  Upon
Termination of Service on or after Normal Retirement Age  for reasons other than
death, the Company shall pay to the Director the benefit described in this
Section 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, may
increase the annual benefit under this Section 2.1.1; however, any increase
shall require the recalculation of Schedule A.


 


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


 


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


 


2.2                     Early
Termination Benefit.  Upon
Early Termination, the Company shall pay to the Director the benefit described
in 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 the
Early Termination annual Installment set forth on Schedule A for the Plan Year
ending immediately prior to the Early Termination Date, determined by zero
vesting prior to the Director completing ten (10) Years of Service and
thereafter the Director becomes 100 percent vested in the Accrual Balance.  An increase in the annual benefit under
Section 2.1.1 shall require the recalculation of this benefit on Schedule
A.  This benefit is determined 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.


 


3

















 


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


 


2.2.3            Benefit Increases.  Benefit payments may be increased as
provided in Section 2.1.3.


 


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


 


2.3.1            Amount
of Benefit.  The benefit under this
Section 2.3 is the Disability annual Installment set forth in Schedule A for
the Plan Year ending immediately prior to the date in which Termination of
Service occurs, determined by zero vesting prior to the Director completing ten
(10) Years of Service and thereafter the Director becomes 100 percent vested in
the Accrual Balance.  An increase in the
annual benefit under Section 2.1.1 would require the recalculation of this
benefit on Schedule A.  This benefit is
determined 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 benefit
amount to the Director in 12 equal monthly installments commencing with the
month following Termination of Service, paying the annual benefit to the
Director for a period of 10 years.


 


2.3.3            Benefit Increases.  Benefit payments may be increased as
provided in Section 2.1.3.


 


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


 


2.4.1            Amount
of Benefit.  The annual benefit
under this Section 2.4 is the Change of Control annual Installment set forth on
Schedule A for the Plan Year ending immediately prior to the date in which
Termination of Service occurs, determined by vesting the Director in the Normal
Retirement Benefit described in Section 2.1.1.


 


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


 


2.4.3            Benefit Increases.  Benefit payments may be increased as
provided in Section 2.1.3.


 


4

















 


Article 3


Death Benefits


 


3.1                     Death During
Active Service.  If the
Director dies while in the active service of the Company, the Company shall pay
to the Director’s beneficiary the benefit described in this Section 3.1.  This benefit 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 is
the Pre-retirement Death Benefit annual Installment set forth on Schedule A for
the Plan Year ending immediately prior to the date in which death occurs,
determined by vesting the Director in 100 percent of the Accrual Balance. An
increase in the annual benefit under Section 2.1.1 would require the
recalculation of this benefit on Schedule A. 
This benefit is determined 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.


 


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


 


3.2                     Death During
Payment of a Lifetime Benefit. 
If the Director dies after any Lifetime Benefit payments have commenced
under this Agreement but before receiving all such payments, the Company shall
pay the remaining benefits to the Director’s beneficiary at the same time and
in the same amounts they would have been paid to the Director had the Director
survived.


 


3.3                     Death After
Termination of Employment But Before Payment of a Lifetime Benefit Commences.  If the Director is entitled to a
Lifetime Benefit under this Agreement, but dies prior to the commencement of
said benefit payments, the Company shall pay the same benefit payments to the
Director’s beneficiary that the Director was entitled to prior to death except
that the benefit payments shall commence on the first day of the month
following the date of the Director’s death.


 


Article 4


Beneficiaries


 


4.1                     Beneficiary
Designations.  The Director
shall designate a beneficiary by filing a written designation with the
Company.  The Director may revoke or
modify the designation at any time by filing a new designation.  However, designations will only be effective
if signed by the Director and received by the Company during the Director’s
lifetime.  The Director’s beneficiary
designation shall be deemed automatically revoked if the beneficiary
predeceases the Director or if the Director names a spouse as beneficiary and
the marriage is subsequently dissolved. 
If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director’s estate.


 


4.2                     Facility of
Payment.  If a benefit is
payable to a minor, to a person declared incompetent


 


5

















 


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


 


Article 5


General Limitations


 


5.1                     Excess
Parachute Payment. 
Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement to the extent the
benefit would create an excise tax under the excess parachute rules of Section
280G of the Code.


 


5.2                     Termination
for Cause.  Notwithstanding
any provision of this Agreement to the contrary, the Company shall not pay any
benefit under this Agreement if the Company terminates the Director’s service
for:


 


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


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


 


5.3                     Suicide or
Misstatement.  The Company
shall not pay any benefit under this Agreement if the Director commits suicide
within three years after the date of this Agreement.  In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on an
employment application or resume provided to the Company, or on any application
for 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 has
not received benefits under this Agreement that he or she believes should be
paid shall make a claim for such benefits as follows:


 


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


 


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


 


6

















 


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


 


6.1.3            Notice
of Decision.  If the Company
denies part or all of the claim, the Company shall notify the claimant in
writing of such denial.  The Company
shall write the notification in a 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 specific provisions of the Agreement on which the denial is based,


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


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


(e)                     A statement
of 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 the
claim, the claimant shall have the opportunity for a full and fair review by
the Company of the denial, as follows:


 


6.2.1            Initiation
– Written Request.  To
initiate the review, the claimant, within 60 days after receiving the Company’s
notice of denial, must file with the Company a written request for review.


 


6.2.2            Additional
Submissions – 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, all
documents, records and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits.


 


6.2.3            Considerations
on Review.  In considering
the review, the Company shall take into account all materials and information
the claimant submits relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination.


 


6.2.4            Timing
of Company Response.  The
Company shall respond in writing to such claimant within 60 days after
receiving the request for review.  If
the Company determines that special circumstances require additional time for
processing the claim, the Company can extend the response period by an
additional 60 days by notifying the claimant in writing, prior to the end of
the initial 60-day period, that an additional period is required.  The notice of extension must set forth the
special circumstances and the date by which the Company expects to render its
decision.


 


7

















 


6.2.5            Notice
of Decision.  The Company
shall notify the claimant in writing of its decision on review.  The Company shall write the notification in
a 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 specific provisions of the Agreement on which the denial is based,


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


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


 


Article 7


Amendments and Termination


 


This Agreement may be
amended or terminated only by a written agreement signed by the Company and the
Director.


 


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


 


Article 8


Miscellaneous


 


8.1                     Binding
Effect.  This Agreement shall
bind the Director and the Company, and their beneficiaries, survivors,
executors, successors, administrators and transferees.


 


8.2                     No Guarantee
of Service.  This Agreement
is not a contract for services.  It does
not give the Director the right to remain in the service of the Company, nor
does it interfere with the shareholder’s rights to discharge the Director.  It also does not require the Director to
remain in the service of the Company nor interfere with the Director’s right to
terminate 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 or
consolidate into or with another company, or reorganize, or sell substantially
all of its assets to another company, firm, or person


 


8

















 


 unless such succeeding or
continuing company, firm, or person agrees to assume and discharge the
obligations of the Company under this Agreement.  Upon the occurrence of such event, the term “Company” as used in
this 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 be withheld from the benefits
provided under this Agreement.


 


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


 


8.7                     Unfunded
Arrangement.  The Director
and beneficiary are general unsecured creditors of the Company for the payment
of benefits under this Agreement.  The
benefits represent the mere promise by the Company to pay such benefits.  The rights to benefits are not subject in
any 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 the
Company to which the Director and beneficiary have no preferred or secured
claim.


 


8.8                     Entire
Agreement.  This Agreement
constitutes the entire agreement between the Company and the Director as to the
subject matter hereof.  No rights are
granted to the Director by virtue of this Agreement other than those
specifically set forth herein.


 


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


 


(a)                      Establishing
and revising the method of accounting for the Agreement;


(b)                     Maintaining a
record of benefit payments; and


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


(d)                     Interpreting
the provisions of the Agreement.


 


8.10               Named
Fiduciary. The Company shall be the named fiduciary and plan
administrator under the Agreement.  The
named fiduciary may delegate to others certain aspects of the management and
operation responsibilities of the plan including the Service of advisors and
the delegation of ministerial duties to qualified individuals.


 


9

















 


IN WITNESS WHEREOF, the
Director 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

  
					



 


10

















 


BENEFICIARY DESIGNATION


 


ELGIN FINANCIAL SAVINGS BANK


DIRECTOR RETIREMENT AGREEMENT


 


THOMAS I. ANDERSON


 


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


 


Primary:   Chere J.Anderson 


 


 


 


 


Contingent:   Kris L. Anderson


 


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


 


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


 


 


	
  Signature

  	
  /s/ Thomas I. Anderson

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
  6-19-02

  	
   

  	
   

  
					



 


 


Received by the Company
this  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

  













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