CGB&L FINANCIAL GROUP, INC.
MANAGEMENT DEVELOPMENT AND RECOGNITION
PLAN AND TRUST AGREEMENT
ARTICLE I
ESTABLISHMENT OF THE PLAN AND TRUST
1.1 CGB&L Financial Group, Inc., (the "Company") hereby establishes the
Management Development and Recognition Plan (the "Plan") and Trust (the
"Trust") upon the terms and conditions hereinafter stated in this Management
Development and Recognition Plan and Trust Agreement (the "Agreement").
1.2 The Trustees hereby accept this Trust and agree 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
PURPOSE OF THE PLAN
2.1 The purpose of the Plan is to retain personnel of experience and
ability in key positions by providing such key employees with a proprietary
interest in the Company as compensation for their contributions to the
Company and its Subsidiaries and as an incentive to make such contributions
in the future.
ARTICLE III
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 meanings set forth below. Whenever appropriate, the masculine pronoun
shall include the feminine pronoun and the singular shall include the plural.
3.1 "Bank" means Cerro Gordo Building and Loan, s.b., an Illinois
state-chartered savings bank, and its successors and assigns. The Bank, with
the consent of the Board, has agreed to participate in this Plan.
3.2 "Beneficiary" means the person or persons designated by a Recipient
to receive any benefits payable under the Plan in the event of such
Recipient's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time
to time by similar written notice to the Committee. In the absence of a
written designation, the Beneficiary shall be the Recipient's surviving
spouse, if any, or if none, the Recipient's estate.
3.3 "Board" means the Board of Directors of the Company.
3.4 "Committee" means the Committee appointed by the Board pursuant to
Article IV hereof.
3.5 "Common Stock" means shares of the common stock, $.01 par value per
share, of the Company.
3.6 "Company" means CGB&L Financial Group, Inc., a Bank Holding Company
registered under Section 3(a)(1) of the Bank Holding Company Act of 1956, as
amended, that owns 100% of the Capital Stock of Cerro Gordo Building and
Loan, s.b.
3.7 "Director" means a member of the Board of Directors of the Company
or the Bank.
3.8 "Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of a Recipient to perform the work
customarily assigned to him. A medical doctor selected or approved by the
Board must advise the Committee that it is either not possible to determine
when such Disability will terminate or that it appears probable that such
Disability will be permanent during the remainder of the Recipient's lifetime.
3.9 "Effective Date" means the date shareholders of the Company approve
the Plan.
3.10 "Employee" means any person who is currently employed by the
Company, the Bank or a Subsidiary, including officers.
3.11. "Plan Shares" means shares of Common Stock held in the Trust and
issued or issuable to a Recipient pursuant to the Plan.
3.12. "Plan Share Award" means a right granted under this Plan to earn
Plan Shares.
3.13. "Recipient" means an Employee who receives a Plan Share Award
under the Plan.
3.14. "Retirement" means retirement at the Normal or Early Retirement
Date as set forth in the Cerro Gordo Building and Loan, s.b., Employee Stock
Ownership Plan.
3.15. "Subsidiary" means any other entity of which the Company is the
direct or indirect beneficial owner of not less than fifty percent (50%) of
all issued and outstanding equity interests. A Subsidiary may, with the
consent of the Board, agree to participate in this Plan.
-2-
3.16. "Trustee" means those persons (normally members of the Committee)
nominated by the Committee and approved by the Board pursuant to Sections 4.1
and 4.2 to hold legal title to the Plan assets for the purposes set forth
herein.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.1 ROLE OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee, which shall have all of the powers allocated to
it in this and other Sections of the Plan. Members of the Committee shall
not be eligible to receive a Plan Share Award. The Committee shall have the
power to interpret and construe the terms and provisions of the Plan or of
any Plan Share Award granted hereunder, and all such interpretations and
constructions by the Committee 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 appoint one or
more individuals (normally from among its members) to act as Trustees in
accordance with the provisions of this Plan and Trust and the terms of
Article VIII hereof.
4.2 ROLE OF THE BOARD. The members of the Committee and the Trustee or
the Trustees shall be appointed or approved by 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 may not revoke
any Plan Share Award already made. Members of the Board who are eligible
for, or who have been granted, Plan Share Awards may not vote on any matters
affecting the administration of the Plan or the grant of Plan Shares or Plan
Share Awards (although such members may be counted in determining the
existence of the quorum at any meeting of the Board during which actions with
regard thereto are taken).
4.3 LIMITATION ON LIABILITY. No member of the Board or the Committee
shall be liable for any determination made in good faith with respect to the
Plan or any Plan Shares or Plan Share Awards it grants. If a member of the
Board or the Committee 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 investigative, by reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Company
and its Subsidiaries shall indemnify such member against expense (including
attorney's fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by such member in connection with such action, suit
or proceeding if the member acted in good faith and in the manner he
reasonably believed to be in the best interests of the Company and its
Subsidiaries and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
-3-
ARTICLE V
CONTRIBUTIONS
5.1 AMOUNT AND TIMING OF CONTRIBUTIONS. The Board shall determine the
amounts (or the method of computing the amounts) to be contributed by the
Company and its Subsidiaries to the Trust established under this Plan. Such
amounts shall be paid to the Trust at the time of contribution. No
contributions by Employees or Recipients shall be permitted.
5.2 INVESTMENT OF TRUST ASSETS AFTER CONVERSION. The Trustee shall
invest the Trust's assets exclusively in the Company's Common Stock PROVIDED,
HOWEVER, that the Trust shall not purchase more than 4% of the total shares
of Common Stock issued. Any earnings received with respect to Common Stock
held by the Plan shall be held in an interest bearing account. Any earnings
received with respect to Common Stock subject to a Plan Share Award shall be
held in an interest bearing account on behalf of the individual Recipient.
ARTICLE VI
ELIGIBILITY AND ALLOCATIONS
6.1 ELIGIBILITY. Officers and key management Employees of the Company,
the Bank and its Subsidiaries are eligible to receive Plan Share Awards.
Non-employee Directors may receive Plan Share Awards only pursuant to Article
XI hereof.
6.2 ALLOCATIONS. The Committee shall determine which of the Employees
referenced in 6.1 above will be granted Plan Share Awards and the number of
Shares covered by each Award, PROVIDED, HOWEVER, that the number of Shares
covered by such Awards may not exceed the number of shares purchased by the
Trustee prior to the grant of such Awards, and PROVIDED FURTHER that in no
event shall any Awards be made which will violate the Certificate of
Incorporation or Bylaws of the Company, the Federal Stock Charter or Bylaws
or Plan of Conversion of the Bank, or any applicable federal or state law or
regulation. In the event Plan Shares are forfeited for any reason, the
Committee may determine which of the Employees will be granted additional
Plan Shares to be awarded from forfeited Plan Shares. In selecting those
Employees to whom Plan Share Awards will be granted and the number of Shares
covered by such Awards, the Committee shall consider the position and
responsibilities of the eligible Employees, the value of their services to
the Company and the Bank and its Subsidiaries, and any other factors the
Committee may deem relevant, including the recommendations of the Chairman of
the Board.
6.3 FORM OF ALLOCATION. As promptly as practicable after a
determination is made pursuant to Section 6.2 that a Plan Share Award is to
be issued, the Committee shall notify the Recipient in writing of the grant
of the Award, the number of Plan Shares covered by the Award and the terms
upon which the Plan Shares subject to the Award may be earned. The date on
which the Committee so notifies the Recipient shall be considered the date of
-4-
grant of the Plan Share Award. The Committee shall maintain records as to
all grants of Plan Share Awards under the Plan.
6.4 ALLOCATIONS NOT REQUIRED. Notwithstanding anything to the contrary
in Sections 6.1 and 6.2, no Employee shall have any right or entitlement to
receive a Plan Share Award hereunder, such Awards being at the total
discretion of the Committee, nor shall the salaried Employees as a group have
such a right.
ARTICLE VII
EARNING AND DISTRIBUTION OF PLAN SHARES
VOTING RIGHTS
7.1 EARNING PLAN SHARES; FORFEITURES. Unless the Committee shall
specifically state to the contrary at the time a Plan Share Award is granted,
Plan Shares subject to an Award shall be earned by a Recipient in five equal
annual installments over the first five years after the date of grant, if the
Employee remains employed with the Company or a Subsidiary continuously
throughout such period, PROVIDED, HOWEVER, that the Committee may provide for
a less rapid earnings rate than that set forth herein for all Awards or for
any given Award. If the employment of a Recipient is terminated prior to the
fifth anniversary (or such later date as the Committee shall determine) of
the date of grant of an Award for any reason (except as specifically provided
in subsections 7.1(a) and 7.1(b) below), the Recipient shall forfeit the
right to earn any shares subject to the Award which have not theretofore been
earned. No fractional shares shall be issued.
(a) EXCEPTION FOR TERMINATIONS DUE TO DEATH OR DISABILITY.
Notwithstanding the general rule contained in this Section, Plan Shares
subject to a Plan Share Award held by a Recipient whose employment with the
Company or a Subsidiary terminates due to Death or Disability, or any part of
such Award that has not theretofore been earned, shall be deemed earned as of
the Recipient's last day of employment with the Company or a Subsidiary.
(b) REVOCATION FOR MISCONDUCT. Notwithstanding anything herein to
the contrary, the Board may, by resolution, immediately revoke, rescind and
terminate any Plan Share Award, or portion thereof, previously awarded under
this Plan, to the extent Plan Shares have not been delivered thereunder to
the Recipient, whether or not yet earned, in the case of an Employee or
Director who is discharged from the Company or a Subsidiary for cause (as
hereinafter defined), or who is discovered after termination of employment to
have engaged in conduct that would have justified termination for cause.
"Cause" is defined as personal dishonesty, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform
stated duties, or the willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) which results in a material loss
to the Company or its Subsidiaries, or final cease and desist order.
-5-
7.2 DISTRIBUTION OF PLAN SHARES. Plan Shares shall be distributed to
the Recipient or his Beneficiary, as the case may be, as soon as is
practicable after a Plan Share Award is earned pursuant to Section 7.1. All
Plan Shares shall be distributed in the form of Common Stock. One share of
Common Stock shall be given for each Plan Share earned and payable.
7.3 VOTING AND DIVIDEND RIGHTS. No Recipient shall have any voting or
dividend rights or other rights of a stockholder with respect to any Plan
Shares covered by a Plan Share Award prior to the time said Plan Shares are
actually distributed to him. When cash dividends are paid with respect to
Plan Shares allocated to a Recipient, such Recipient shall be entitled to
receive an amount equal to such cash dividend. Stock dividends with respect
to shares allocated to a Recipient shall be distributed when the Plan Shares
with respect to which they are declared are so distributable.
ARTICLE VIII
TRUST
8.1 TRUST. The Trustees shall receive, hold, administer, invest and
make distributions and disbursements from the Trust in accordance with the
provisions of the Plan and Trust and the applicable directions, rules,
regulations, procedures and policies established by the Committee pursuant to
the Plan.
8.2 MANAGEMENT OF TRUST. It is the intent of this Plan and Trust that
the Trustees shall have complete authority and discretion with respect to the
management, control and investment of the Trust, and that the Trustee shall
invest all assets of the Trust in Common Stock to the fullest extent
practicable, except to the extent that the Trustees determined that the
holding of monies in cash or cash equivalents is necessary to meet the
obligations of the Trust. In performing their duties, the Trustees shall
have the power to do all things and execute such instruments as may be deemed
necessary or proper, including the following powers:
(a) To invest up to 100% of all Trust assets in Common Stock of
the Company without regard to any law now or hereafter in force limiting
investments for trustees or other fiduciaries. The investment authorized
herein may constitute the only investment of the Trust and Common Stock shall
be newly issued shares, Treasury shares or shares purchased by the Plan in
the open market.
(b) To invest any Trust assets not otherwise invested in
accordance with (a) above in such savings accounts, deposits and certificates
of deposit (including those issued by the Company or a Subsidiary),
obligations of the United States government or its agencies or such other
investments as shall be considered the equivalent of cash.
(c) To sell, exchange or otherwise dispose of any property at any
time held or acquired by the Trust.
-6-
(d) To cause stocks, bonds or other securities to be registered in
the name of a nominee, without the addition of words indicating that such
security is an asset of the Trust (but accurate records shall be maintained
showing that such security is an asset of the Trust).
(e) To hold cash without interest in such amounts as may be, in
the opinion of the Trustees, reasonable for the proper operation of the Plan
and Trust.
(f) To employ brokers, agents, custodians, consultants and
accountants.
(g) To hire counsel to render advice with respect to their rights,
duties and obligations hereunder, and such other legal services or
representations as they may deem desirable.
(h) To hold funds and securities representing the amounts to be
distributed, to a Recipient or his Beneficiary as a consequence of a dispute
as to the disposition thereof, whether in a segregated account or held in
common with other assets of the Trust.
Notwithstanding anything herein contained to the contrary, the Trustees
shall not be required to make any inventory, appraisal or settlement or
report to any court, or to secure any order of court for the exercise of any
power herein contained, or give bond.
8.3 RECORDS AND ACCOUNTS. The Trustees shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall
be available at all reasonable times for inspection by any legally entitled
person or entity to the extent required by applicable law, or any other
person determined by the Committee.
8.4 EARNINGS. All earnings, gains and losses with respect to Trust
assets shall be allocated, in accordance with a reasonable procedure adopted
by the Committee, to bookkeeping accounts for Recipients or to the general
account of the Trust, depending on the nature and allocation of the assets
generating such earnings, gains and losses. In particular, any earnings on
cash dividends received with respect to shares of Common Stock shall be
allocated to accounts for Recipients, if such shares are the subject of
outstanding Plan Share Awards, or, otherwise to a reserve established by the
Plan.
8.5 EXPENSES. All costs and expenses incurred in the operation and
administration of this Plan shall be borne by the Company and its
Subsidiaries.
8.6 INDEMNIFICATION. The Company and its Subsidiaries shall indemnify,
defend and hold the Trustees harmless against all claims, expenses and
liabilities arising out of or related to the exercise of the Trustees' powers
and the discharge of their duties hereunder, unless the same shall be due to
their gross negligence or willful misconduct.
ARTICLE IX
-7-
COMPANY INSOLVENCY
9.1 PAYMENT CESSATION. The Trustee shall cease payment of benefits to
Plan Recipients and their beneficiaries if the Company is Insolvent. The
Company shall be considered "Insolvent" for purposes of the Trust if: (i)
the Company is unable to pay its debts as they become due, or (ii) the
Company is subject to a pending proceeding as a debtor under the United
States Bankruptcy Code.
9.2 GENERAL CREDITORS. At all times during the continuance of the
Trust, the principal and income of the Trust shall be subject to claims of
general creditors of the Holding Company under federal and state law as set
forth below.
(a) The Board shall have the duty to inform the Trustee in writing
of the Company's Insolvency. If a person claiming to be a creditor of the
Company alleges in writing to the Trustee that the Company has become
Insolvent, the Trustee shall determine whether the Company is Insolvent and,
pending such determination, the Trustee shall discontinue payment of benefits
to Plan Recipients or their beneficiaries.
(b) Unless the Trustee has actual knowledge of the Company's
Insolvency, or has received notice from the Company or a person claiming to
be a creditor alleging that the Company is Insolvent, the Trustee shall have
no duty to inquire whether the Company is Insolvent. The Trustee may in all
events rely on such evidence concerning the Company's solvency as may be
furnished to the Trustee and that provides the Trustee with a reasonable
basis for making a determination concerning the Company's solvency.
(c) If at any time the Trustee has determined that the Company is
Insolvent, the Trustee shall discontinue payments to Plan Recipients or their
beneficiaries and shall hold the assets of the Trust for the benefit of the
Company's general creditors. Nothing in this Trust shall in any way diminish
any rights of Plan Recipients or their beneficiaries to pursue their rights
as general creditors of the Company with respect to benefits due under the
Plan or otherwise.
(d) The Trustee shall resume the payment of benefits to Plan
Recipients or their beneficiaries only after the Trustee has determined that
the Company is not Insolvent (or is no longer Insolvent).
9.3 PAYMENT RESUMPTION. Provided that there are sufficient assets, if
the Trustee discontinues the payment of benefits from the Trust pursuant to
Section 9.1 and subsequently resumes such payments, the first payment
following the discontinuance shall include the aggregate amount of all
payments due to Plan Recipients or their beneficiaries under the terms of the
Plans for the period of the discontinuance, less the aggregate amount of any
payments made to Plan Recipients or their beneficiaries by the Company in
lieu of the payments provided for hereunder during the period of
discontinuance.
-8-
ARTICLE X
MISCELLANEOUS
10.1 AMENDMENT AND TERMINATION OF PLAN. The Board may, by resolution,
at any time, amend or terminate the Plan. The power to amend or terminate
shall include the power to direct the Trustees to return to the Company or
the Bank all or any part of the assets of the Trust, as well as shares of
Common Stock and other assets subject to Plan Share Awards but not yet earned
by the Employees to whom they are allocated.
10.2 NONTRANSFERABLE. Plan Share Awards and rights to Plan Shares shall
not be transferable by a Recipient and, during the lifetime of the Recipient,
Plan Shares may only be earned by and paid to the Recipient who was notified
in writing of the Award by the Committee pursuant to Section 6.3. No
Recipient or Beneficiary shall have any right in or claim to any assets of
the Plan or Trust, nor shall the Company or any Subsidiary be subject to any
claim for benefits hereunder.
10.3 EMPLOYMENT RIGHTS. Neither the Plan nor any grant of a Plan Share
Award or Plan Shares hereunder nor any action taken by the Trustees, the
Committee or the Board in connection with the Plan shall create any right on
the part of any Employee to continue in the employ of the Company, the Bank
or a Subsidiary.
10.4 GOVERNING LAW. The Plan and Trust shall be governed by the laws of
the State of Illinois.
10.5 TERM OF PLAN. This Plan shall remain in effect until the earlier
of: (1) termination by the Board of Directors; (2) the distribution to
Recipients, Beneficiaries, the Company or the Bank of all assets of the
Trust; or (3) 21 years from the Effective Date. Termination of the Plan
shall not, unless expressly specified, affect any Plan Share Awards
previously granted, and such Awards shall remain valid and in effect until
they have been paid, or by their terms expire or are forfeited.
ARTICLE XI
OUTSIDE DIRECTOR AWARDS
Each non-Employee Director on the Effective Date shall be granted a Plan
Share Award equal to ______________ shares, subject to availability, to vest
in five equal annual installments beginning with the first anniversary of the
Effective Date.
-9-
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officers and the corporate seal to be affixed and duly
attested, all on this ______ day of _________________________, 199____.
CGB&L FINANCIAL GROUP, INC.
By: ________________________________
Its: ________________________________
ATTEST:
___________________________
Its: Secretary
IN WITNESS WHEREOF, the following members of the Committee execute this
Agreement, in their individual capacities, as Trustees, accepting and binding
themselves to undertake and perform the obligations and duties of the
Trustees hereunder and consenting to the foregoing Plan and Trust Agreement.
By: ________________________________
(Member)
By: ________________________________
(Member)
By: ________________________________
(Member)
-10-
