WELLS FEDERAL BANK
2003 STOCK BONUS PLAN
AND TRUST AGREEMENT
Article I
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ESTABLISHMENT OF THE PLAN AND TRUST
1.01 Wells Federal
Bank ("Bank")
hereby establishes the 2003 Stock
Bonus Plan (the "Plan") and Trust (the
"Trust") upon the terms and conditions
hereinafter stated in this Stock Bonus Plan and Trust Agreement (the
"Agreement").
1.02 The Trustee hereby accepts this Trust and agrees to hold the
Trust
assets existing on the date of this
Agreement and all
additions and accretions
thereto upon the terms and conditions
hereinafter stated.
Article II
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PURPOSE OF THE PLAN
2.01 The purpose of
the Plan is to reward and to retain personnel of
experience and ability in key positions of
responsibility with
the Bank and its
subsidiaries, by providing such personnel of the
Bank and its subsidiaries with
an increased equity interest in the parent corporation of the Bank, Wells
Financial Corp. ("Parent"), as compensation for their future professional
contributions and service to the Bank and
its subsidiaries.
Article III
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DEFINITIONS
The following words
and phrases when used in this Plan with an initial
capital letter, unless the context clearly
indicates otherwise,
shall have the
meaning as set forth below. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun and the
singular shall include the plural.
"Bank" means Wells Federal Bank, and any successor corporation
thereto.
"Beneficiary" means the person or persons designated by the
Participant
to receive any benefits payable under the Plan in the event of such
Participant's death. Such person or persons
shall be designated in
writing by
the Participant and addressed to the Bank
or the Committee on forms provided for
this purpose by the Committee and delivered to the
Bank and may be changed from
time to time by similar written notice to
the Committee. A
Participant=s
last
will and testament or any codicil thereto shall not constitute written
designation of a Beneficiary. In the absence of such written
designation,
the
Beneficiary shall be the Participant's
surviving spouse, if any, or if none, the
Participant's estate.
"Board" means the
Board of Directors
of the Bank,
or any successor
corporation thereto.
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"Cause" means
the personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving
personal profits, intentional
failure to perform stated duties,
willful violation of a
material provision
of
any law, rule or regulation (other than
traffic violations and similar offense),
or a material violation of a final cease-and-desist order or any other action
which results in a substantial financial loss to the Parent, Bank or its
Subsidiaries.
"Change in Control"
shall mean: (i) the sale of all, or a material
portion, of the assets of the Parent or Bank; (ii) the merger or
recapitalization of the Parent or the Bank
whereby the Parent or Bank is not the
surviving entity; (iii) a change in control of the
Parent or Bank, as otherwise
defined or determined by the Office of
Thrift Supervision ("OTS") or regulations
promulgated by it; or (iv) the acquisition, directly or indirectly, of the
beneficial ownership (within the meaning of that term
as it is used in Section
13(d) of the 1934 Act and the rules and
regulations
promulgated
thereunder) of
twenty-five percent (25%) or more of the
outstanding voting
securities of the
Parent or Bank by any person, trust, entity or group. This
limitation shall not
apply to the purchase of shares of up to
25% of any class of
securities of the
Parent or Bank by a tax- qualified employee stock benefit plan which
is exempt
from the approval requirements, set forth under 12 C.F.R.
'574.3(c)(1)(vi)
as
now in effect or as may hereafter be amended. The term "person" refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship,
unincorporated
organization or any
other
form of entity not specifically listed
herein.
"Committee" means the Board of Directors of the Bank or the Stock
Bonus
Plan Committee appointed by the Board of Directors of the Bank pursuant to
Article IV hereof.
"Common Stock" means
shares of the common stock of the Parent, or any
successor corporation or parent
thereto.
"Director" means a member of the Board of the Bank.
"Director Emeritus"
means a person
serving as a
director emeritus,
advisory director, consulting director, or other similar position as may be
appointed by the Board of Directors of the
Bank, a Subsidiary or the Parent from
time to time.
"Disability" means any
physical or mental impairment which renders the
Participant incapable of continuing in the
employment or service of the Bank or
the Parent in his current capacity as
determined by the Committee.
"Effective Date" shall mean the date of ratification of the Plan by
the
stockholders of Parent.
"Eligible Participant"
means an Employee, Director or director of a
Subsidiary who may receive a Plan Share
Award under the Plan.
"Employee" means
any person who is employed by the Bank or a
Subsidiary.
"Parent" shall mean
Wells Financial Corp., the parent
corporation of
the Bank.
"Participant" means
an Employee, Director, Director Emeritus or
director of a Subsidiary who previously received a Plan Share Award under
the
Plan.
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"Plan Shares" means
shares of Common Stock held in the Trust which are
awarded or issuable to a Participant
pursuant to the Plan.
"Plan Share Award" or "Award" means a right granted to a Participant
under this Plan to earn or to receive Plan
Shares.
"Plan Share Reserve" means the shares of Common Stock held by the
Trust
pursuant to Sections 5.03 and 5.04.
"Subsidiary" means
those subsidiaries of the Bank which, with the
consent of the Board, agree to participate
in this Plan.
"Trustee" or
"Trustee Committee" means that person(s) or entity
nominated by the Committee and approved by the Board
pursuant to Sections
4.01
and 4.02 to hold legal title to the Plan assets for the purposes set forth
herein.
Article IV
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ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered and
interpreted by the Board of Directors
of the Bank or a
Committee appointed
by
said Board, which shall consist of not less
than two non- employee
members of
the Board, which shall have all of the powers
allocated to it in this and other
sections of the Plan. All persons
designated as members
of the Committee
shall
be "Non-Employee Directors" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended
("1934 Act"). The interpretation and
construction by the Committee of any
provisions of the Plan or of any Plan Share
Award granted hereunder shall be final and
binding. The Committee
shall act by
vote or written consent of a majority of its members. Subject to the express
provisions and limitations of the Plan, the Committee may adopt such
rules,
regulations and procedures as it deems appropriate for the conduct of its
affairs. The Committee shall report its actions and
decisions with respect
to
the Plan to the Board at appropriate
times, but in no event less than one
time
per calendar year. The Committee shall recommend to the Board one or more
persons or entity to act as Trustee in
accordance
with the provision of this
Plan and Trust and the terms of Article
VIII hereof.
4.02 Role of the Board. The members of the Committee and the Trustee
shall be appointed or approved by, and will
serve at the pleasure of the Board.
The Board may in its discretion from time to time remove
members from, or
add
members to, the Committee, and may remove, replace or add Trustees.
The Board
shall have all of the powers allocated to it in this and other
sections of the
Plan, may take any action under or with
respect to the Plan which the Committee
is authorized to take, and may reverse or override any
action taken or decision
made by the Committee under or with respect
to the Plan, provided, however, that
the Board may not revoke any Plan Share
Award already made except as provided in
Section 7.01(b) herein.
4.03 Limitation on Liability. No member of the Board, the
Committee or
the Trustee shall be liable for any determination made in good faith with
respect to the Plan or any Plan Share
Awards granted. If a
member of the Board,
Committee or any Trustee is a party or is
threatened
to be made a party to
any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or
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investigative, by any reason of anything done or not done by him in such
capacity under or with respect to the Plan, the Parent and the Bank shall
indemnify such member against expenses
(including attorney's
fees), judgments,
fines and amounts paid in settlement
actually and
reasonably incurred by him or
her in connection with such action, suit or proceeding if he or she acted
in
good faith and in a manner he or she reasonably believed to be in the best
interests of the Parent, the Bank and its Subsidiaries and,
with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Notwithstanding anything
herein to the contrary, in no event shall
the Bank take any actions with respect to this Section 4.03 which is not in
compliance with the limitations or
requirements set forth at 12 C.F.R. 545.121,
as may be amended from time to time.
Article V
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CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Board of Directors of the
Bank shall determine the number of shares of
Common Stock or the amount of cash
to be contributed by the Bank to the Trust
established
under this Plan.
Such
contributions to the Trust shall be
delivered to the Trustee at the time of such
contribution. No contributions to the Trust by
Participants shall be
permitted
except with respect to amounts necessary to
meet tax withholding obligations.
5.02 Initial
Investment.
Any funds held by the Trust prior to
investment in the Common Stock shall be invested by the Trustee in such
interest-bearing account or accounts at the Bank as
the Trustee shall determine
to be appropriate.
5.03 Maximum Plan Share Reserve; Investment of Trust Assets. The
Trust
shall purchase Common Stock in an amount not greater
than 100% of the Trust's
cash assets, after providing for any required withholding as needed for tax
purposes, provided, however, that the Trust shall not distribute more than
50,000 shares of Common Stock in the aggregate pursuant to Awards under the
Plan. The Trustee may accept the
transfer of Common
Stock held by the Bank
in
other trust accounts, purchase shares of Common Stock in
the open market or, in
the alternative, may purchase authorized
but unissued shares of the Common Stock
or treasury shares from the Parent
sufficient to fund the Plan Share Reserve.
5.04 Effect of
Allocations, Returns
and Forfeitures
Upon Plan Share
Reserves. Upon the allocation of Plan Share
Awards under Sections 6.02 and 6.05,
or the decision of the Committee to return Plan Shares to
the Parent, the
Plan
Share Reserve shall be reduced by the
number of Shares
subject to the Awards so
allocated or returned. Any Shares subject to an Award which are not earned
because of forfeiture by the Participant
pursuant to Section 7.01 shall be added
to the Plan Share Reserve.
Article VI
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ELIGIBILITY; ALLOCATIONS
6.01 Eligibility.
Eligible Participants
may receive Plan Share Awards
within the sole discretion of the Committee. Directors who are not
otherwise
Employees shall receive Plan Share Awards
pursuant to Section 6.05.
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6.02
Allocations. The
Committee will determine which Eligible
Participants will be granted Plan Share Awards
and the number of Shares covered
by each Award, provided, however, that in no event shall any Awards be made
which will violate the Charter or Bylaws of the Bank or its Parent or
Subsidiaries or any applicable federal or
state law or regulation. I
