Exhibit
10.14


 


ELGIN FINANCIAL SAVINGS BANK

DIRECTOR RETIREMENT AGREEMENT


 


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


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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.


 


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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, 1994.


 


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.


 


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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.


 


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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


 


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 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


 


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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.


 


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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


 


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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.


 


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IN WITNESS WHEREOF, the Director and a duly authorized
Company 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 BANK

DIRECTOR RETIREMENT AGREEMENT


 


PETER A. TRAEGER


 


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


 


Primary:  Linda K. Traeger
(wife)


 


                                                                                                                                                                                                       


 


Contingent:   Samatha E. Traeger


 


                                                                                                                                                                                                       


 


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/ Peter A. Traeger

  	
   

  
	
   

  
	
  Date

  	
   6/18/02

  	
   

  
				



 


 


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

  



 


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

  



 












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


 


 


 


	
  /s/ Peter Traeger

  	
   

  	
  /s/ Barrett J O'Connor

  	
   

  	
  6/18/02

  
	
  Participant

  	
   

  	
  Elgin Financial Savings
  Bank

  	
   

  	
  Date

  



 


 


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