<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Subsection 240.14a-11(c)
or Subsection 240.14a-12
[ ] Confidential, For use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
ROCKY FORD FINANCIAL, INC.
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which
transaction applies:
________________________________________________________________
2. Aggregate number of securities to which transaction
applies:
________________________________________________________________
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (set
forth the amount on which the filing fee is calculated and state
how it was determined):
________________________________________________________________
4. Proposed maximum aggregate value of transaction:
________________________________________________________________
5. Total fee paid:
________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1. Amount Previously Paid:
____________________________________________
2. Form, Schedule or Registration Statement No.:
____________________________________________
3. Filing Party:
____________________________________________
4. Date Filed:
____________________________________________<PAGE>
<PAGE>
December 22, 1997
Dear Stockholder:
We invite you to attend the first Annual Meeting of
Stockholders of Rocky Ford Financial, Inc. to be held at the
main office of Rocky Ford Federal Savings and Loan Association,
801 Swink Avenue, Rocky Ford, Colorado on Thursday, January 22
1998 at 2:00 p.m., local time.
The accompanying notice and proxy statement describe the
formal business to be transacted at the Annual Meeting. Also
enclosed is an Annual Report to Stockholders for the 1997 fiscal
year. Directors and officers of the Company as well as
representatives of Grimsley, White & Company, the Company's
independent auditors for the 1997 fiscal year, will be available
to respond to any questions the stockholders may have.
You are cordially invited to attend the Annual Meeting.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND, WE URGE YOU TO SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE EVEN
IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. This will
not prevent you from voting in person but will assure that your
vote is counted if you are unable to attend the meeting.
Sincerely,
/s/ Keith E. Waggoner
Keith E. Waggoner
President and Chief
Executive Officer
<PAGE>
<PAGE>
________________________________________________________________
ROCKY FORD FINANCIAL, INC.
801 SWINK AVENUE
ROCKY FORD, COLORADO 81067-0032
(719) 254-7642
________________________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on January 22 1998
________________________________________________________________
NOTICE IS HEREBY GIVEN that the first Annual Meeting of
Stockholders ("Annual Meeting") of Rocky Ford Financial, Inc.
(the "Company"), will be held at the main office of Rocky Ford
Federal Savings and Loan Association, 801 Swink Avenue, Rocky
Ford, Colorado at 2:00 p.m., local time, on Thursday, January 22
1998.
A Proxy Card and a Proxy Statement for the Annual Meeting
are enclosed.
The Annual Meeting is for the purpose of considering and
acting upon:
1. The election of two directors of the Company to a
three-year term;
2. Approval of the Rocky Ford Financial, Inc. 1997
Stock Option and Incentive Plan;
3. Approval of the Rocky Ford Financial, Inc.
Management Recognition Plan; and
4. The transaction of such other matters as may
properly come before the Annual Meeting or any
adjournments thereof.
Note: The Board of Directors is not aware of any other
business to come before the Annual Meeting.
Any action may be taken on any one of the foregoing
proposals at the Annual Meeting on the date specified above or
on any date or dates to which, by original or later adjournment,
the Annual Meeting may be adjourned. Stockholders of record at
the close of business on December 5, 1997, are the stockholders
entitled to vote at the Annual Meeting and any adjournments
thereof.
You are requested to fill in and sign the enclosed Proxy
Card which is solicited by the Board of Directors and to mail it
promptly in the enclosed envelope. The Proxy Card will not be
used if you attend and vote at the Annual Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Francis E. Clute
FRANCIS E. CLUTE
SECRETARY
Rocky Ford, Colorado
December 22, 1997
________________________________________________________________
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A
QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
________________________________________________________________
<PAGE>
<PAGE>
________________________________________________________________
PROXY STATEMENT
OF
ROCKY FORD FINANCIAL, INC.
801 SWINK AVENUE
ROCKY FORD, COLORADO 81067-0032
ANNUAL MEETING OF STOCKHOLDERS
January 22 1998
________________________________________________________________
________________________________________________________________
GENERAL
________________________________________________________________
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Rocky Ford
Financial, Inc. (the "Company") to be used at the 1998 Annual
Meeting of Stockholders of the Company (the "Annual Meeting")
which will be held at main office of Rocky Ford Federal Savings
and Loan Association, 801 Swink Avenue, Rocky Ford, Colorado on
Thursday, January 22 1998, at 2:00 p.m., local time. The accom-
panying Notice of Annual Meeting and form of proxy and this
Proxy Statement are being first mailed to stockholders on or
about December 22, 1997.
________________________________________________________________
VOTING AND REVOCABILITY OF PROXIES
________________________________________________________________
Proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein.
WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED FOR
THE NOMINEES FOR DIRECTORS SET FORTH BELOW AND IN FAVOR OF EACH
OF THE OTHER PROPOSALS SET FORTH IN THIS PROXY STATEMENT FOR
CONSIDERATION AT THE ANNUAL MEETING. The proxy confers
discretionary authority on the persons named therein to vote
with respect to the election of any person as a director where
the nominee is unable to serve or for good cause will not serve,
and with respect to matters incident to the conduct of the
Annual Meeting. If any other business is presented at the
Annual Meeting, proxies will be voted by those named therein in
accordance with the determination of a majority of the Board of
Directors. Proxies marked as abstentions will not be counted as
votes cast. In addition, shares held in street name which have
been designated by brokers on proxy cards as not voted will not
be counted as votes cast. Proxies marked as abstentions or as
broker nonvotes, however, will be treated as shares present for
purposes of determining whether a quorum is present.
Stockholders who execute proxies retain the right to
revoke them at any time. Unless so revoked, the shares
represented by properly executed proxies will be voted at the
Annual Meeting and all adjournments thereof. Proxies may be
revoked by written notice to the Secretary of the Company at the
address above or the filing of a later dated proxy prior to a
vote being taken on a particular proposal at the Annual Meeting.
A proxy will not be voted if a stockholder attends the Annual
Meeting and votes in person. The presence of a stockholder
alone at the Annual Meeting will not revoke such stockholder's
proxy.
________________________________________________________________
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
________________________________________________________________
The securities entitled to vote at the Annual Meeting
consist of the Company's common stock, par value $.01 per share
(the "Common Stock"). Stockholders of record as of the close of
business on December 5, 1997 (the "Record Date"), are entitled
to one vote for each share of Common Stock then held. As of the
Record Date, there were 423,400 shares of Common Stock issued
and outstanding.
Persons and groups beneficially owning more than 5% of the
Common Stock are required to file certain reports with respect
to such ownership pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The following table sets
forth, as of the Record Date, certain information as to the
Common Stock beneficially owned by any person or group of
persons who is known to the Company to be the beneficial owner
of more than 5% of the Company's Common Stock and shares
beneficially owned
<PAGE>
<PAGE>
by all directors and executive officers as a group. Other than
as disclosed below, management knows of no person who
beneficially owned more than 5% of the Common Stock at the
Record Date.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF SHARES OF
NAME AND ADDRESS BENEFICIAL COMMON STOCK
OF BENEFICIAL OWNERS OWNERSHIP(1) OUTSTANDING
- -------------------- ------------ -----------
<S> <C> <C>
Rocky Ford Financial, Inc. 33,856 (2) 7.83%
Employee Stock Ownership Plan ("ESOP")
801 Swink Avenue
Rocky Ford, Colorado 81067-0032
All Directors and Executive Officers
as a Group (7 persons) 72,393 17.10%
<FN>
_____________
(1) Includes all shares held directly as well as by spouses or as custodian
or trustee for minor children, and shares held by a group acting in
concert, over which shares the named individuals effectively exercise
sole voting and investment power, or for a group acting in concert, share
voting and investment power.
(2) These shares are held in a suspense account for future allocation among
participating employees as the loan used to purchase the shares is
repaid. The ESOP trustees, currently Directors Burrell, Clute and
Hancock, vote all allocated shares in accordance with instructions of the
participants. Unallocated shares and shares for which no instructions
have been received generally are voted by the ESOP trustees in the same
ratio as participants direct the voting of allocated shares or, in the
absence of such direction, as directed by the Company's Board of
Directors.
</FN>
</TABLE>
________________________________________________________________
PROPOSAL I -- ELECTION OF DIRECTORS
________________________________________________________________
The Company's Board of Directors is currently composed of
eight members. Under the Company's Certificate of
Incorporation, directors are divided into three classes and
elected for terms of three years each and until their successors
are elected and qualified. At the Annual Meeting, directors
will be elected for terms expiring at the Annual Meeting to be
held in the year 2001. The Board of Directors has nominated
Directors Norman L. Bailey and R. Dean Jones, each to serve for
an additional term of three years and until his successor is
elected and qualified. Under Delaware law, directors are
elected by a majority of the votes present in person or
represented by proxy at the Annual Meeting and entitled to vote
in the election of directors.
Unless contrary instruction is given, the persons named in
the proxies solicited by the Board of Directors will vote each
such proxy for the election of the named nominees. If either of
the nominees is unable to serve, the shares represented by all
properly executed proxies which have not been revoked will be
voted for the election of such substitute as the Board of
Directors may recommend. At this time, the Board knows of no
reason why the nominees might be unavailable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
NOMINEES LISTED BELOW.
The following table sets forth, for the nominees and each
continuing director, his name, age as of the Record Date, the
year he first became a director of the Company's principal
subsidiary, Rocky Ford Federal Savings and Loan Association (the
"Association"), and the expiration of his current term as a
director of the Company. Except as noted below, all such
persons were initially appointed as directors of the Company in
connection with the incorporation and organization of the
Company in January 1997 and remained as such following the
conversion of the Association from mutual to stock form (the
"Conversion"). Each director of the Company is also a member of
the Board of Directors of the Association.
2<PAGE>
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
YEAR FIRST COMMON STOCK
AGE AS ELECTED AS CURRENT BENEFICIALLY
OF THE DIRECTOR OF TERM OWNED AT THE PERCENT
NAME RECORD DATE THE ASSOCIATION TO EXPIRE RECORD DATE(1) OF CLASS
- -------------------------------------------------------------------------------------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2001
<S> <C> <C> <C> <C> <C>
Norman L. Bailey 60 1992 1998 8,736 2.06%
R. Dean Jones 59 1989 1998 12,500 2.95
DIRECTORS CONTINUING IN OFFICE
Wayne W. Whittaker 66 1981 1999 12,500 2.95
Francis E. Clute 60 1987 1999 3,656 (2) .86
William E. Burrell 70 1987 1999 12,500 (2) 2.95
Donald F. Gause 66 1972 2000 12,775 3.09
Brian H. Hancock 52 1991 2000 325 (2) .08
Keith E. Waggoner 51 1997 2000 9,401 2.22
<FN>
____________
(1) Includes all shares held directly as well as by spouses or as custodian
or trustee for minor children, and shares held by a group acting in
concert, over which shares the named individuals effectively exercise
sole voting and investment power, or for a group acting in concert, share
voting and investment power.
(2) Excludes shares with respect to which Directors Clute, Burrell and
Hancock may have "voting power" by virtue of their positions as trustees
of the trust holding 33,856 shares under the ESOP. Unallocated shares
and shares for which no instructions have been received generally are
voted by the ESOP trustees in the same ratio as participants direct the
voting of allocated shares or, in the absence of such direction, as
directed by the Company's Board of Directors.
</FN>
</TABLE>
The principal occupation of each nominee for director and
each continuing director of the Company for the last five years
is set forth below.
NORMAN L. BAILEY is currently serving as President of the
La Junta Golf Club and La Junta Capital in La Junta, Colorado.
R. DEAN JONES has been the owner of Jones Motors, Inc.
since 1986. His past and current community involvement include
being Chairman of the Board of the Colorado Auto Dealers
Association, President of La Junta Development, Inc., Trust
Director of the Colorado Auto Dealers Insurance Trust, member of
the Board of the Buick Dealer Council, member of the Board of
Pikes Peak Hill Climb, Inc. and Director of the National Auto
Dealer Association.
WAYNE W. WHITTAKER has served as a Director and Vice
President of the Association since 1981 and has been a self-
employed real estate and insurance agent since 1953. He also
serves as Corporate Secretary and Treasurer of Catlin Canal
Company, The Pisqah Reservoir and Ditch Company and Larkspur,
Inc. Mr. Whittaker's civic activities include being a block
solicitor for the Leukemia Society of America, Finance Chairman
for the local Shrine Circus, active membership in a local
Methodist church, committee member for the Sunshine District of
Methodist Church Building Committee, Chairman of the Finance
Committee of the Arkansas Valley Board of Realtors and
involvement with the Shrine Children's Clinic.
3<PAGE>
<PAGE>
FRANCIS E. CLUTE has served as a Director and Treasurer of
the Association since 1987. He is the owner of Edco Metal
Works, a machine shop specializing in heating and air
conditioning. Mr. Clute's civic involvement includes membership
in the Rocky Ford Lion's Club, Elks Lodge and Chamber of
Commerce. He is also active with the Rocky Ford Zoning Board
and School District.
WILLIAM E. BURRELL is employed as an Advisor to Burrell
Seeds, Inc. and D.V. Burrell Seed Growers Company and is active
with the Salvation Army.
DONALD F. GAUSE currently serves as Chairman of the Board
of the Association. Mr. Gause was elected to the Board of
Directors in 1972 and served as President of the Association
from 1990 to May 1997. Following the Conversion, Mr. Gause
became Chairman of the Board of Directors of the Association.
He is owner of Don's for Lad and Dad, Inc., a family owned and
operated men's clothing store.
BRIAN H. HANCOCK has been a self-employed Real Estate and
Insurance broker since 1969. He is also a member of the Board
of Directors of the Rocky Ford Housing Authority Nava Manor
Complex.
KEITH E. WAGGONER currently serves as President and Chief
Executive Officer of the Company and the Association. Mr.
Waggoner became President of the Association in May 1997 and was
Executive Vice President of the Association from 1985 to May
1997. His past and current civic activities include being
President of the Lion's Club, member of the Otero Junior College
Advisory Board, President and member of the La Junta Catholic
Parish Counsel, President of the La Junta Catholic Parish
Finance Board and member of the Otero County Planning
Commission.
________________________________________________________________
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
________________________________________________________________
The Company's Board of Directors conducts its business
through meetings of the Board. The Board of Directors of the
Company generally holds regular monthly meetings and holds
Annual Meetings as needed. During the year ended September 30,
1997, the Board of Directors of the Company met 12 times. No
director attended fewer than 75% in the aggregate of the total
number of Board meetings of the Company held while he was a
member during the year ended September 30, 1997 and the total
number of meetings held by committees on which he served during
such fiscal year.
The Company's Board of Directors has standing
Compensation, Asset/Liability Management, Nominating and Loan
Review Committees. The Board of Directors' Audit Committee
consists of the entire Board of Directors. The Board, in its
capacity as the Audit Committee, met two times during the year
ended September 30, 1997 to examine and approve the audit report
prepared by the independent auditors of the Association, to
review and recommend the independent auditors to be engaged by
the Association, to review the internal audit function and
internal accounting controls, and to review and approve conflict
of interest and audit policies.
The Company's Nominating Committee consists of Directors
Whittaker, Burrell and Hancock and is responsible for
considering potential nominees to the Board of Directors.
During the year ended September 30, 1997, the committee met one
time. In its deliberations, the nominating committee considers
the candidate's knowledge of the banking business and
involvement in community, business and civic affairs, and also
considers whether the candidate would provide for adequate
representation of its market area.
The Board of Directors' Compensation Committee consists of
the full Board of Directors. The Compensation Committee
evaluates the compensation and benefits of the directors,
officers and employees, recommends changes, and monitors and
evaluates employee performance. All compensation decisions are
made by the full Board of Directors. The Compensation Committee
met one time during the fiscal year ended September 30, 1997.
4<PAGE>
<PAGE>
________________________________________________________________
DIRECTORS' COMPENSATION
________________________________________________________________
Directors' Fees. The Company's directors receive fees of
$400 per monthly meeting attended. This fee includes any
Executive, Compensation or Lending Committee meeting. No fees
are paid for serving on committees of the Board of Directors.
During fiscal year 1997, the Company's directors' fees totaled
$76,000.
Retirement Plan for Directors and Senior Officer. The
Association's Board of Directors adopted the Rocky Ford Federal
Savings and Loan Association Retirement Plan for Directors and
Senior Officer (the "Retirement Plan") effective November 13,
1996 (the "Effective Date"), for the Association's senior
officer as of the plan's effective date and its directors (i)
who are members of the Association's Board of Directors (the
"Board") at some time on or after the plan's effective date, and
(ii) who are not employees on the date of being both nominated
and elected (or re-elected) to the Board. Directors who become
participants will remain participants even if they later become
employees of the Association.
On the Effective Date, a Retirement Plan bookkeeping
account was established by the Association in the name of each
participant, and each participant who was a director on the
Effective Date had his account credited with an amount equal to
the product of (i) $1,840 ($2,723 for Director Gause), and (ii)
his full years of service as a director prior to the Effective
Date. On each September 30 following the Effective Date, each
participant who is a director (but not a senior officer) on such
date shall have his or her account credited with an amount equal
to the product of $1,840 ($2,723 for Director Gause) and the
safe performance factor. The safe performance factor is
determined based on the Association's actual performance as
compared to budgeted goals for return on average assets, non-
performing assets, and CAMEL rating, provided that the safe
performance factor may not exceed 1.2. Also on the Effective
Date, the Retirement Plan account of Mr. Waggoner, the senior
officer, was credited with an amount equal to $4,000 for each
full year of his service with the Association prior to such
date. On the September 30 occurring during each of the next
eleven years following the Effective Date, Mr. Waggoner's
account will be credited an additional amount equal to $20,669
times the safe performance factor, provided he is an employed by
the Association on such date. Amounts credited to accounts of
participants on the Effective Date became 50% vested on the
Effective Date, with the remainder vesting on March 31, 1997.
Amounts credited to participants' accounts after the Effective
Date will be fully vested at all times. Until distributed in
accordance with the terms of the Retirement Plan, each
participant's account will be credited with a rate of return on
any amounts previously credited. The rate of return will equal
the dividend-adjusted rate of return on the Company's common
stock.
In the event of Mr. Waggoner's disability or death, his
account will be credited with an amount equal to the difference
(if any) between (i) 50% of the present value of all benefits
which would have been credited to his account if he had
otherwise remained employed by the Association to age 62, and
(ii) the benefits which are actually credited to his account at
the time of his termination. If his employment terminates in
connection with or following a change in control, his account
will be credited with an amount equal to the difference (if any)
between (i) 100% of the present value of all benefits which
would have been credited to his account if he had otherwise
remained employed by the Association to age 62, and (ii) the
benefits which are actually credited to his account at the time
of his termination, subject to applicable "golden parachute"
limitations under Subsection 280G of the Internal Revenue Code.
"Change in control" is defined the same as under the Employment
Agreement described below.
Participants' accounts under the Retirement Plan will be
paid, in cash, in ten substantially equal annual installments,
beginning during the first quarter of the calendar year which
next follows the calendar year in which the participant ceases
to be a director or senior officer (whichever shall first
occur). Notwithstanding the foregoing, a participant may elect
to receive Retirement Plan benefits in a lump sum or over a
period shorter than ten years. In the event of a participants'
death, the balance of his Retirement Plan account will be paid
in a lump sum (unless the Participant elects a distribution
period up to ten years) to his designated beneficiary, or if
none, his estate.
5<PAGE>
<PAGE>
Any benefits accrued under the Retirement Plan will be
paid from the Association's general assets. The Association has
established a trust in order to hold assets with which to pay
benefits. Trust assets will be subject to the claims of the
Association's general creditors. In the event a participant
prevails over the Association in a legal dispute as to the terms
or interpretation of the Retirement Plan, he or she will be
reimbursed for his or her legal and other expenses.
During the fiscal year ended September 30, 1997, the
accounts for Mr. Gause, Mr. Waggoner and the remaining directors
under the Retirement Plan were credited $40,848, $80,000 and a
total of $83,840, respectively.
________________________________________________________________
EXECUTIVE COMPENSATION AND OTHER BENEFITS
________________________________________________________________
Summary Compensation Table. The following table sets
forth the cash and noncash compensation for the last two fiscal
years awarded to or earned by the Company's Chief Executive
Officer. No executive officer of the Company earned salary and
bonus in fiscal year 1997 exceeding $100,000 for services
rendered in all capacities to the Company and the Association.
<TABLE>
<CAPTION>
Annual Compensation
-------------------------------
Other Annual All Other
Name Year Salary Bonus Compensation(1) Compensation
- ---- ---- ----------------------------------------------
<S> <C> <C> <C> <C> <C>
Keith E. Waggoner(2) 1997 $43,586 $17,937 $ -- $ --
Chief Executive Officer 1996 41,544 13,249 -- --
<FN>
_________
(1) Executive officers of the Company receive indirect compensation in the
form of certain perquisites and other personal benefits. The amount of
such benefits received by the named executive officers in fiscal 1997 did
not exceed 10% of each of the executive officer's respective salary and
bonus.
(2) Mr. Waggoner became Chief Executive Officer of the Company in January
1997 and of the Association in May 1997. Prior to May 1997 Mr. Waggoner
served as Executive Vice President of the Association and performed the
duties commensurate with the title of Chief Executive Officer.
</FN>
</TABLE>
Employment Agreements. The Company and the Association
entered into employment agreements (the "Employment Agreements")
under which Keith E. Waggoner (the "Employee") would serve as
President of the Association and President of the Company. In
such capacities, the Employee is responsible for overseeing all
operations of the Association and the Company, and for
implementing the policies adopted by the Boards of Directors.
Such Boards believe that the Employment Agreements assure fair
treatment of the Employee in his career with the Company and the
Association by assuring him of some financial security.
The Employment Agreements became effective upon their
execution and provide for a term of three years, with an annual
base salary equal to the Employee's existing base salary rate in
effect on the effective date. On each anniversary date of the
commencement of the Employment Agreements, the term of the
Employee's employment may be extended for an additional one-year
period beyond the then effective expiration date, upon a
determination by the Board of Directors that the performance of
the Employee has met the required performance standards and that
such Employment Agreements should be extended. The Employment
Agreements provide the Employee with a salary review by the
Board of Directors not less often than annually, as well as with
inclusion in any discretionary bonus plans, retirement and
medical plans, customary fringe benefits, vacation and sick
leave. The Employment Agreements shall terminate upon the
Employee's death, may terminate upon the Employee's disability
and are terminable by the Association for "just cause" (as
defined in the Employment Agreements). In the event of
termination for just cause, no severance benefits are available.
If the Company or the Association terminates the Employee
without just cause, the
6<PAGE>
<PAGE>
Employee will be entitled to a continuation of his salary and
benefits from the date of termination through the remaining term
of the Employment Agreements plus an additional 12 month's
salary and, at the Employee's election, either continued
participation in benefit plans which the Employee would have
been eligible to participate in through the Employment
Agreements' expiration date or the cash equivalent thereof. If
the Employment Agreements are terminated due to the Employee's
"disability" (as defined in the Employment Agreements), the
Employee will be entitled to a continuation of his salary and
benefits through the date of such termination, including any
period prior to the establishment of the Employee's disability.
In the event of the Employee's death during the term of the
Employment Agreements, his estate will be entitled to receive
his salary through the last day of the calendar month in which
the Employee's death occurred. The Employee is able to
voluntarily terminate his Employment Agreements by providing 90
days' written notice to the Boards of Directors of the
Association and the Company, in which case the Employee is
entitled to receive only his compensation, vested rights, and
benefits up to the date of termination.
In the event of (i) the Employee's involuntary termination
of employment other than for "just cause" during the period
beginning six months before a change in control and ending on
the later of the second anniversary of the change in control or
the expiration date of the Employment Agreements (the "Protected
Period"), (ii) the Employee's voluntary termination within 90
days of the occurrence of certain specified events occurring
during the Protected Period which have not been consented to by
the Employee, or (iii) the Employee's voluntary termination of
employment for any reason within the 30-day period beginning on
the date of the change in control, the Employee will be paid
within 10 days of such termination (or the date of the change in
control, whichever is later) an amount equal to the difference
between (i) 2.99 times his "base amount," as defined in Section
280G(b)(3) of the Internal Revenue Code, and (ii) the sum of any
other parachute payments, as defined under Section 280G(b)(2) of
the Internal Revenue Code, that the Employee receives on account
of the change in control. A "change in control" is deemed to
occur where (i) as a result of, or in connection with, any
initial public offering, tender offer or exchange offer, merger
or other business combination, sale of assets or contested
election, any combination of the foregoing transactions, or any
similar transaction, the persons who were directors of the
Association before such transaction cease to constitute a
majority of the Board of Directors of the Association or any
successor to the Association; (ii) the Association transfers
substantially all of its assets to another corporation which is
not an affiliate of the Association; (iii) the Association
sells substantially all of the assets of an affiliate which
accounted for 50% or more of the controlled group's assets
immediately prior to such sale; (iv) any "person" including a
"group" is or becomes the "beneficial owner", directly or
indirectly, of securities of the Association representing
twenty-five percent (25%) or more of the combined voting power
of the Association's outstanding securities (with the terms in
quotation marks having the meaning set forth under the federal
securities laws); or (v) the Association is merged or
consolidated with another corporation and, as a result of the
merger or consolidation, less than seventy percent (70%) of the
outstanding voting securities of the surviving or resulting
corporation is owned in the aggregate by the former stockholders
of the Association. The Employment Agreement with the
Association provides that within 10 business days of a change in
control, the Association shall fund, or cause to be funded, a
trust in the amount of 2.99 times the Employee's base amount,
that will be used to pay the Employee amounts owed to him. The
aggregate payment that would be made to Mr. Waggoner assuming
his termination of employment under the foregoing circumstances
at September 30, 1997 would have been approximately $169,787.
These provisions may have an anti-takeover effect by making it
more expensive for a potential acquiror to obtain control of the
Company. In the event that the Employee prevails over the
Company and the Association, or obtains a written settlement, in
a legal dispute as to the Employment Agreement, he will be
reimbursed for his legal and other expenses.
________________________________________________________________
TRANSACTIONS WITH MANAGEMENT
________________________________________________________________
The Association offers loans to its directors and officers.
These loans currently are made in the ordinary course of
business with the same collateral, interest rates and
underwriting criteria as those of comparable transactions
prevailing at the time and to not involve more than the normal
risk of collectibility or present other unfavorable features.
Under current law, the Association's loans to directors and
executive officers are required to be made on substantially the
same terms, including interest rates, as those prevailing for
comparable transactions and must not involve more than the
normal risk of repayment or present other unfavorable features.
Furthermore, all loans to such persons must be approved in
advance by a disinterested majority of the Board of Directors.
None of these loans had favorable terms. At September 30, 1997,
the Association's loans to directors and executive officers
totaled $80,000, or 1.2% of the Company's stockholders' equity,
at that date.
7<PAGE>
<PAGE>
________________________________________________________________
PROPOSAL II -- APPROVAL OF THE ROCKY FORD FINANCIAL, INC.
1997 STOCK OPTION AND INCENTIVE PLAN
________________________________________________________________
GENERAL
The Board of Directors of the Company has adopted the
Rocky Ford Financial, Inc. 1997 Stock Option and Incentive Plan
(the "Option Plan"), subject to its approval by the Company's
stockholders. The initial grant of stock options under the
Option Plan will occur upon the Option Plan's receipt of
stockholder approval (the "Effective Date"). The Option Plan is
attached hereto as Exhibit A and should be consulted for
additional information. All statements made herein regarding
the Option Plan, which are only intended to summarize the Option
Plan, are qualified in their entirety by reference to the Option
Plan.
PURPOSE OF THE OPTION PLAN
The purpose of the Option Plan is to advance the interests
of the Company by providing directors and selected employees of
the Company and its affiliates, including the Association, with
the opportunity to acquire shares of Common Stock. By
encouraging such stock ownership, the Company seeks to attract,
retain, and motivate the best available personnel for positions
of substantial responsibility and to provide additional
incentive to directors and employees of the Company and its
affiliates to promote the success of the business of the
Company.
DESCRIPTION OF THE OPTION PLAN
Effective Date. The Option Plan will become effective on
the date of its approval by the Company's stockholders (the
"Effective Date"), and prior to such date, no awards may be
made.
Administration. The Option Plan is administered by a
committee (the "Committee"), appointed by the Board of
Directors, consisting of at least two directors of the Company
who are "Non-employee Directors" within the meaning of the
federal securities laws. The Committee has discretionary
authority to select participants and grant awards, to determine
the form and content of any awards made under the Option Plan,
to interpret the Option Plan, to prescribe, amend and rescind
rules and regulations relating to the Option Plan and to make
other decisions necessary or advisable in connection with
administering the Option Plan. All decisions, determinations,
and interpretations of the Committee are final and conclusive on
all persons affected thereby. Members of the Committee will be
indemnified to the full extent provided for under the Company's
governing instruments in connection with any claims, actions,
suits or proceedings relating to any action taken under the
Option Plan. As of the date hereof, the members of the
Committee are Directors Bailey, Jones and Whittaker.
Eligible Persons; Types of Awards. Under the Option Plan,
the Committee may grant stock options ("Options") and stock
appreciation rights ("SARs") (collectively, "Awards") to such
employees as the Committee shall designate. A director who is
not an employee will receive the automatic grant described below
(see "Automatic Grants"), and is otherwise ineligible to receive
Awards under the Option Plan. As of the Record Date, the
Company and its subsidiaries had approximately three employee
and seven non-employee directors who were eligible to
participate in the Option Plan.
Shares Available for Grants. The Option Plan reserves
42,340 authorized but unissued or treasury shares of Common
Stock for issuance upon the exercise of Options or SARs. Such
shares may be (i) authorized but unissued shares, (ii) shares
held in treasury, or (iii) or shares held in a grantor trust
created by the Company. The number and kind of shares reserved
for issuance under the Option Plan, and the number and kind of
shares subject to outstanding Awards, and the exercise price of
such Awards, will be proportionately adjusted for any increase,
decrease, change or exchange of Common Stock for a different
number or kind of shares or other securities of the Company
which results from a merger, consolidation, recapitalization,
reorganization, reclassification, stock dividend, split-up,
combination of shares, or similar event in which the number or
kind of shares is changed without the receipt or payment of
consideration by the Company. Generally, the number of shares
as to which SARs are granted are charged against the
8<PAGE>
<PAGE>
aggregate number of shares available for grant under the Option
Plan, provided that, in the case of an SAR granted in
conjunction with an Option, under circumstances in which the
exercise of the SAR results in termination of the Option and
vice versa, only the number of shares of Common Stock subject to
the Option shall be charged against the aggregate number of
shares of Common Stock remaining available under the Option
Plan. If Awards should expire, become unexercisable or be
forfeited for any reason without having been exercised, the
shares of Common Stock subject to such Awards shall, unless the
Option Plan shall have been terminated, be available for the
grant of additional Awards under the Option Plan.
Options. Options may be either incentive stock options
("ISOs") as defined in Section 422 of the Code, or options that
are not ISOs ("Non-ISOs"). The exercise price as to any Option
may not be less than the fair market value (determined under the
Option Plan) of the optioned shares on the date of grant. In
the case of a participant who owns more than 10% of the
outstanding Common Stock on the date of grant, such option price
may not be less than 110% of fair market value of the shares.
As required by federal tax laws, to the extent that the
aggregate fair market value (determined when an ISO is granted)
of the Common Stock with respect to which ISOs are exercisable
by an optionee for the first time during any calendar year
(under all plans of the Company and of any subsidiary) exceeds
$100,000, the Options granted in excess of $100,000 will be
treated as Non-ISOs, and not as ISOs.
Automatic Grants. On the Effective Date, certain
employees and each director of the Company or the Bank who is
not an employee but is a director on the Effective Date will
receive a one-time grant of an Option to purchase shares of
Common Stock at an exercise price per share equal to its fair
market value on the Effective Date (see "New Plan Benefits"
below). With respect to each Option granted on the Effective
Date, the exercise price per share will equal its fair market
value on the Effective Date. In addition, each non-employee
director who joins the Board of Directors of the Company or an
affiliate (including the Bank) after the Effective Date may
receive, on the date of joining the Board, Non-ISOs to purchase
up to 5.0% of Common Stock at an exercise price per share equal
to the fair market value of the Common Stock on the date of
grant (although this award is subject to Committee discretion).
Options granted to non-employee directors will have a term of
ten years, and expire one year after a director terminates
service on the Board for any reason (two years in the event of
the director's death), but in no event later than the date on
which such Options would otherwise expire.
SARs. An SAR may be granted in tandem with all or part of
any Option granted under the Option Plan, or without any
relationship to any Option. An SAR granted in tandem with an
ISO must expire no later than the ISO, must have the same
exercise price as the ISO and may be exercised only when the ISO
is exercisable and when the fair market value of the shares
subject to the ISO exceeds the exercise price of the ISO. For
SARs granted in tandem with Options, the optionee's exercise of
the SAR cancels his or her right to exercise the Option, and
vice versa. Regardless of whether an SAR is granted in tandem
with an Option, exercise of the SAR will entitle the optionee to
receive, without payment to the Company, an amount equal to the
excess of (or, in the discretion of the Committee if provided in
the grant, a portion of) the excess of the fair market value of
the shares of Common Stock subject to the SAR at the time of its
exercise over the exercise price. The exercise price as to any
particular SAR may not be less than the fair market value of the
optioned shares on the date of grant.
Exercise of Options and SARs. The exercise of Options and
SARs will be subject to such terms and conditions as are
established by the Committee in a written agreement between the
Committee and the optionee, provided that each Option, including
all Options granted on the Effective Date, shall become
exercisable with respect to 20% of the underlying shares on each
of the five annual anniversary dates of the date on which the
Award occurred. Such vesting shall accelerate to 100% upon an
optionee's termination of service as an employee or director due
to death or disability (as defined in the Option Plan). In the
absence of Committee action to the contrary, an otherwise
unexpired Option shall cease to be exercisable upon (i) an
optionee's termination of employment for "just cause" (as
defined in the Option Plan), (ii) the date one year after an
optionee terminates service for a reason other than just cause,
death, or disability, (iii) the date one year after an optionee
terminates service due to disability, or (iv) the date two years
after an optionee terminates service due to death. Upon an
optionee's exercise of an Option, the Company may, in the
discretion of the Committee, pay the optionee a cash amount up
to any dividends declared on the underlying shares between the
date of grant and the date of exercise of the Option.
9<PAGE>
<PAGE>
An optionee may exercise Options or SARs, subject to
provisions relative to their termination and limitations on
their exercise, only by (i) written notice of intent to exercise
the Option or SAR with respect to a specified number of shares
of Common Stock, and (ii) in the case of Options, payment to the
Company (contemporaneously with delivery of such notice) in
cash, in Common Stock, or a combination of cash and Common
Stock, of the amount of the exercise price for the number of
shares with respect to which the Option is then being exercised.
Common Stock utilized in full or partial payment of the exercise
price for Options shall be valued at its market value at the
date of exercise, and may consist of shares subject to the
Option being exercised.
Conditions on Issuance of Shares. The Committee will have
the discretionary authority to impose, in agreements, such
restrictions on shares of Common Stock issued pursuant to the
Option Plan as it may deem appropriate or desirable, including
but not limited to the authority to impose a right of first
refusal or to establish repurchase rights or both of these
restrictions. In addition, the Committee may not issue shares
unless the issuance complies with applicable securities laws,
and to that end may require that a participant make certain
representations or warranties. In any event, Common Stock
purchased upon exercise of an Option or SAR may not be sold
within the six-month period following the grant date of that
Option or SAR, except in the event of the participants death or
disability, or such other event as the Board may deem
appropriate.
Nontransferability. Optionees may transfer their Awards
to family members or trusts under specified circumstances.
Awards may otherwise not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent and distribution.
Effect of Dissolution and Related Transactions. In the
event of (i) the liquidation or dissolution of the Company, (ii)
a merger or consolidation in which the Company is not the
surviving entity, or (iii) the sale or disposition of all or
substantially all of the Company's assets (any of the foregoing
to be referred to herein as a "Transaction"), all outstanding
Awards, together with the exercise prices thereof, will be
equitably adjusted for any change or exchange of shares for a
different number or kind of shares which results from the
Transaction. However, any such adjustment will be made in such
a manner as to not constitute a modification, within the meaning
of Section 424(h) of the Code, of outstanding ISOs. The
exercise price of outstanding Options will also be
proportionately adjusted upon the payment of a special large and
nonrecurring dividend that has the effect of a return of capital
to shareholders.
Duration of the Option Plan and Grants. The Option Plan
has a term of 10 years from the Effective Date, after which date
no Awards may be granted. The maximum term for an Award is 10
years from the date of grant, except that the maximum term of an
ISO (and an SAR granted in tandem with an ISO) may not exceed
five years if the optionee owns more than 10% of the Common
Stock on the date of grant. The expiration of the Option Plan,
or its termination by the Committee, will not affect any Award
then outstanding.
Amendment and Termination of the Option Plan. The Board
of Directors of the Company may from time to time amend the
terms of the Option Plan and, with respect to any shares at the
time not subject to Awards, suspend or terminate the Option
Plan. No amendment, suspension, or termination of the Option
Plan will, without the consent of any affected optionee, alter
or impair any rights or obligations under any Award previously
granted.
Financial Effects of Awards. The Company will receive no
monetary consideration for the granting of Awards under the
Option Plan. It will receive no monetary consideration other
than the exercise price for shares of Common Stock issued to
optionees upon the exercise of their Options, and will receive
no monetary consideration upon the exercise of SARs. Under
current accounting standards, recognition of compensation
expense is not required when Options are granted at an exercise
price equal to or exceeding the fair market value of the Common
Stock on the date the Option is granted.
The granting of SARs will require charges to the income of
the Company based on the amount of the appreciation, if any, in
the average market price of the Common Stock to which the SARs
relate over the exercise price
10<PAGE>
<PAGE>
of those shares. If the average market price of the Common
Stock declines subsequent to a charge against earnings due to
estimated appreciation in the Common Stock subject to SARs, the
amount of the decline will reverse such prior charges against
earnings (but not by more than the aggregate of such prior
charges).
FEDERAL INCOME TAX CONSEQUENCES
ISOs. An optionee recognizes no taxable income upon the
grant of ISOs. If the optionee holds the shares purchased upon
exercise of an ISO for at least two years from the date the ISO
is granted, and for at least one year from the date the ISO is
exercised, any gain realized on the sale of the shares received
upon exercise of the ISO is taxed as long-term capital gain.
However, the difference between the fair market value of the
Common Stock on the date of exercise and the exercise price of
the ISO will be treated by the optionee as an item of tax
preference in the year of exercise for purposes of the
alternative minimum tax. If an optionee disposes of the shares
before the expiration of either of the two special holding
periods noted above, the disposition is a "disqualifying
disposition." In this event, the optionee will be required, at
the time of the disposition of the Common Stock, to treat the
lesser of the gain realized or the difference between the
exercise price and the fair market value of the Common Stock at
the date of exercise as ordinary income and the excess, if any,
as capital gain.
The Company will not be entitled to any deduction for
federal income tax purposes as the result of the grant or
exercise of an ISO, regardless of whether or not the exercise of
the ISO results in liability to the optionee for alternative
minimum tax. However, if an optionee has ordinary income
taxable as compensation as a result of a disqualifying
disposition, the Company will be entitled to deduct an
equivalent amount.
Non-ISOs. In the case of a Non-ISO, an optionee will
recognize ordinary income upon the exercise of the Non-ISO in an
amount equal to the difference between the fair market value of
the shares on the date of exercise and the option price (or, if
the optionee is subject to certain restrictions imposed by the
federal securities laws, upon the lapse of those restrictions
unless the optionee makes a special tax election within 30 days
after the date of exercise to have the general rule apply).
Upon a subsequent disposition of such shares, any amount
received by the optionee in excess of the fair market value of
the shares as of the exercise will be taxed as capital gain.
The Company will be entitled to a deduction for federal income
tax purposes at the same time and in the same amount as the
ordinary income recognized by the optionee in connection with
the exercise of a Non-ISO.
SARs. The grant of an SAR has no tax effect on the
optionee or the Company. Upon exercise of the SARs, however,
any cash or Common Stock received by the optionee in connection
with the surrender of his or her SAR will be treated as
compensation income to the optionee, and the Company will be
entitled to a business expense deduction for the amounts treated
as compensation income.
PROPOSED STOCK OPTIONS GRANTS
For information relating to grants to be made under the
Option Plan at the Effective Date, see "New Plan Benefits"
below.
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors has determined that the Option Plan
is desirable, cost effective, and produces incentives which will
benefit the Company and its stockholders. The Board of
Directors is seeking stockholder approval of the Option Plan
pursuant to the requirements of the OTS and to satisfy the
requirements of the Code for favorable tax treatment of ISOs.
Stockholder approval of the Option Plan requires the
affirmative vote of the holders of a majority of the votes
eligible to be cast at the Annual Meeting. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE OPTION PLAN.
11<PAGE>
<PAGE>
________________________________________________________________
PROPOSAL III -- APPROVAL OF THE ROCKY FORD FINANCIAL, INC.
MANAGEMENT RECOGNITION PLAN
________________________________________________________________
GENERAL
The Board of Directors of the Company has adopted the
Rocky Ford Financial, Inc. Management Recognition Plan (the
"MRP"), subject to its approval by the Company's stockholders.
It is currently unknown as to when the initial grant of MRP
awards will occur, although it is currently expected that awards
will not be made upon the MRP's receipt of stockholder approval.
A copy of the MRP is attached hereto as Exhibit B, and should be
consulted for additional information. All statements made
herein regarding the MRP, which are only intended to summarize
the MRP, are qualified in their entirety by reference to the
MRP. The MRP complies with OTS regulations, although the OTS in
no way endorses or approves the MRP and no oral or written
representations to the contrary have been or shall be made.
PURPOSE OF THE MRP
The purpose of the MRP is to reward and retain personnel
of experience and ability in key positions of responsibility by
providing employees and directors of the Company, the
Association and their affiliates with a proprietary interest in
the Company, and as compensation for their past contributions to
the Association, and with an incentive to make such
contributions in the future.
DESCRIPTION OF THE MRP
Effective Date. The MRP will become effective immediately
upon its approval by the Company's stockholders (the "Effective
Date") and prior to such date, no awards may be made.
Administration. The MRP will be administered by an MRP
Committee consisting of not less than two members of the Board
who are "Non-employees Directors" within the meaning of the
federal securities laws. Except as limited by the express
provisions of the MRP or by resolutions adopted by the Board,
the MRP Committee has sole and complete authority and discretion
(1) to select and grant MRP awards to employees, (2) to
determine the form and content of MRP awards to be issued under
the MRP, (3) to interpret the MRP, (4) to prescribe, amend, and
rescind rules and regulations relating to the MRP, and (5) to
make other determinations necessary or advisable for the
administration of the MRP. The MRP provides that members of the
MRP Committee shall be indemnified and held harmless for actions
taken under the MRP in good faith and in the best interests of
the Company and its subsidiaries. As of the Record Date, the
MRP Committee consists of Directors Bailey, Jones and Whittaker.
MRP Trust; Purchase Limitations. The assets of the MRP
will be held in a trust (the "MRP Trust"), as to which Directors
Bailey, Jones and Whittaker will act as trustees ("MRP
Trustees") and thereby have the responsibility to invest all
funds contributed to the MRP Trust by the Company or the
Association. With funds contributed by the Company, the MRP
Trust may purchase, in the aggregate, up to 16,920 shares of the
Common Stock on the Effective Date. Said number of shares is
the maximum that the MRP Trust may purchase, in the aggregate,
pursuant to the MRP. Common Stock purchased by the MRP Trust
may be acquired on the open market or in the form of shares
newly issued by the Company. Said number of shares is the
maximum that the MRP Trust may purchase, in the aggregate,
pursuant to the MRP. In the event an MRP award is forfeited for
any reason or additional shares are purchased by the MRP Trust
associated with an MRP, the MRP Committee may make awards with
respect to such shares.
Types of Awards; Eligible Persons. The MRP Committee has
the discretion to select employees of the Company and/or of the
Bank who will receive discretionary MRP awards. In selecting
those employees to whom MRP awards will be granted and the
number of shares covered by such awards, the MRP Committee will
consider the position, duties and responsibilities of the
eligible employees, the value of their services to the Company
and its affiliates (including the Association), and any other
factors the MRP Committee may deem relevant. In addition, the
MRP
12<PAGE>
<PAGE>
specifically provides for certain automatic awards to certain
employees and all non-employee directors (see "Automatic
Awards" below).
Automatic Awards. Although certain employees and
directors of the Company and the Bank are eligible to receive an
award on the Effective Date, it is currently expected that no
such awards will be made, or be effective on that date.
Vesting. Pursuant to the MRP, freely transferable shares
of Common Stock will be transferred to participants as they
become vested in their MRP awards. MRP awards will become 20%
vested on each of the five anniversary dates of the award,
provided, with respect to each vesting date, that the
participant is an employee or a director of the Company or a
subsidiary on such date. All shares of Common Stock subject to
outstanding awards will be immediately 100% earned and
nonforfeitable upon a participant's death or disability (as
defined in the MRP).
Distributions of Shares; Voting; Dividends. All unvested
shares of Common Stock held by the MRP Trust (whether or not
subject to an MRP award) shall be voted by the MRP Trustees in
the same proportion as the trustee of the Company's Employee
Stock Ownership Plan trust votes Common Stock held therein. The
MRP Trustees shall distribute all shares, together with any
shares representing stock dividends, in the form of Common
Stock. One share of Common Stock shall be given for each share
earned. Payments representing cash dividends (and earnings
thereon) will be made in cash.
In no event may shares received by a participant pursuant
to the MRP be sold within the six-month period following the
date of the underlying award, except in the event of the
Participant's death or disability, or such other event as the
Board may specifically deem appropriate.
No Plan Shares may be distributed from the MRP Trust prior
to the date which is five years from the date of the
Association's conversion from mutual to stock form to the extent
the recipient would after receipt of such shares own in excess
of ten percent of the issued and outstanding shares of Common
Stock, unless such action is approved in advance by a majority
vote of the non-employee directors of the Company's Board of
Directors. To the extent this limitation would delay the date
on which a recipient receives shares, the recipient may elect to
receive from the MRP Trust, in lieu of vested shares, a cash
amount equal to the fair market value of such shares. Any
shares remaining undistributed solely by reason of the operation
of this rule shall be distributed to the recipient on the date
which is five years from the date of the Association's
conversion to stock form.
Nontransferability. Participants may transfer their MRP
awards to family members or trusts under specified
circumstances. MRP awards and rights to shares held in the MRP
Trust are not otherwise transferable by participants in the MRP,
and during the lifetime of a participant, shares held in the MRP
Trust may only be earned by and paid to the participant.
Taxation. Participants will recognize compensation income
when their interest vests, or at an earlier date pursuant to a
participant's election to accelerate recognition pursuant to
Section 83(b) of the Internal Revenue Code.
Financial Effects of Awards. Neither the Company nor the
Association will receive any monetary consideration for the
granting of awards under the MRP. Under current accounting
standards, when MRP awards are granted, the Company must
recognize compensation expense based on the fair market value of
the Common Stock on the date the awards are granted, with such
amount being amortized over the expected vesting period for the
award.
Adjustments for Capital Changes. In the event of any
merger, consolidation, recapitalization, reorganization,
reclassification, stock dividend, split-up, combination of
shares, or similar event in which the number or kind of shares
is changed without receipt or payment of consideration by the
Company, the MRP Committee will adjust both the number and kind
of shares of stock as to which awards may be awarded under the
MRP, and the number and kind of shares of stock subject to
outstanding MRP awards. In the event of (i) the liquidation or
dissolution of the Company,
13<PAGE>
<PAGE>
(ii) a merger or consolidation in which the Company is not the
surviving entity, or (iii) the sale or disposition of all or
substantially all of the Company's assets, all outstanding MRP
awards shall be equitably adjusted for any change or exchange of
shares of Common Stock for a different number or kind of shares
or other securities, which results from the transaction.
Amendment and Termination of the MRP. The Company's Board
of Directors may, by resolution, at any time amend or terminate
the MRP, provided that no amendment or termination of the MRP
will, without the written consent of any affected holders of an
MRP award, impair any rights or obligations under any MRP award
previously granted.
The power to amend or terminate includes the power to
direct the MRP Trustees to return to the Company all or any part
of the assets of the MRP Trust, including shares of Common Stock
held in the plan share reserve of the MRP. However, the
termination of the MRP Trust may not affect a participant's
right to earn outstanding MRP awards and to receive Common Stock
relating thereto, including earnings thereon, in accordance with
the terms of the MRP and the particular MRP award made to the
participant.
Duration of the MRP. The MRP and MRP Trust will remain in
effect until the earlier of (i) termination by the Company's
Board of Directors, or (2) the distribution of all assets of the
MRP Trust. Termination of the MRP will not affect any MRP
awards previously granted, and such MRP awards will remain valid
and in effect until they have been earned and distributed from
the MRP Trust, or by their terms expire or are forfeited.
Proposed MRP Awards. As noted above, no MRP awards are
currently expected to be made on the Effective Date.
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors has determined that the MRP is
desirable, cost effective, and produces incentives which will
benefit the Company and its stockholders. The Board of
Directors is seeking stockholder approval of the MRP in order to
satisfy the requirements of the OTS.
Approval of the MRP requires the affirmative vote of the
holders of a majority of the votes eligible to be cast at the
Annual Meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
APPROVAL OF THE MRP.
14<PAGE>
<PAGE>
________________________________________________________________
NEW PLAN BENEFITS
________________________________________________________________
The following table sets forth certain information
regarding the options expected to be awarded on the Effective
Date. As noted above, no MRP awards are currently expected to
be made on the Effective Date.
<TABLE>
<CAPTION>
Option Plan
---------------------------
Dollar Number
Value ($)(1) of Units (2)
------------ ------------
<S> <C> <C>
Norman L. Bailey -- 1,814
William E. Burrell -- 1,814
Francis E. Clute -- 1,814
Donald F. Gause -- 1,814
Brian H. Hancock -- 1,814
R. Dean Jones -- 1,814
Keith E. Waggoner -- 10,585
Wayne W. Whittaker -- 1,814
All executive officers as a
group (1 persons) -- 10,585
All directors who are not
executive officers as a
group (7 persons) -- 12,698
All employees who are not
executive officers as a
group (2 persons) -- --
<FN>
___________
(1) Based on the fair market value of the Common Stock on the
date of grant less the exercise price. All Options will be
granted at an exercise price equal to the fair market value
of the underlying shares of Common Stock on the date of the
grant, which will occur upon receipt of stockholder approval
at this Annual Meeting.
(2) All Options listed herein will be granted at the effective
dates of the Option Plan and MRP, upon receipt of approval
of the Option Plan by stockholders at this Annual Meeting.
See "Proposal II -- Approval of the Rocky Ford Financial,
Inc. 1997 Stock Option and Incentive Plan," and "Proposal
III -- Approval of the Rocky Ford Financial, Inc. Management
Recognition Plan."
</FN>
</TABLE>
15<PAGE>
<PAGE>
________________________________________________________________
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
________________________________________________________________
Pursuant to regulations promulgated under the Exchange
Act, the Company's officers, directors and persons who own more
than ten percent of the outstanding Common Stock are required to
file reports detailing their ownership and changes of ownership
in such Common Stock, and to furnish the Company with copies of
all such reports. Based solely on the Company's review of such
reports which the Company received during the last fiscal year,
or written representations from such persons that no annual
report of change in beneficial ownership was required, the
Company believes that, during the last fiscal year, all persons
subject to such reporting requirements have complied with the
reporting requirements.
________________________________________________________________
OTHER MATTERS
________________________________________________________________
The Board of Directors is not aware of any business to
come before the Annual Meeting other than those matters
described above in this Proxy Statement and matters incident to
the conduct of the Annual Meeting. However, if any other
matters should properly come before the Annual Meeting, it is
intended that proxies in the accompanying form will be voted in
respect thereof in accordance with the determination of a
majority of the Board of Directors.
________________________________________________________________
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
________________________________________________________________
Grimsley, White & Company, which were the Company's
independent auditors for the 1997 fiscal year, have been
retained by the Board of Directors to be the Company's auditors
for the 1998 fiscal year. A representative of Grimsley, White &
Company is expected to be present at the Annual Meeting to
respond to appropriate stockholders' questions and will have the
opportunity to make a statement if he so desires.
________________________________________________________________
MISCELLANEOUS
________________________________________________________________
The cost of soliciting proxies will be borne by the
Company. The Company will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy materials to the beneficial
owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may
solicit proxies personally or by telegraph or telephone without
additional compensation.
The Company's 1997 Annual Report to Stockholders,
including financial statements, accompanies this Proxy
Statement, which has been mailed to all stockholders of record
as of the close of business on the Record Date. Any stockholder
who has not received a copy of such Annual Report may obtain a
copy by writing to the Secretary of the Company. Such Annual
Report is not to be treated as a part of the proxy solicitation
material or as having been incorporated herein by reference.
________________________________________________________________
STOCKHOLDER PROPOSALS
________________________________________________________________
In order to be eligible for inclusion in the Company's
proxy materials for next year's Annual Meeting of Stockholders,
any stockholder proposal to take action at such meeting must be
received at the Company's executive office at 801 Swink Avenue,
Rocky Ford, Colorado 81067-0032 no later than August 27, 1998.
Any such proposals shall be subject to the requirements of the
proxy rules adopted under the Exchange Act.
16<PAGE>
<PAGE>
________________________________________________________________
FORM 10-KSB
________________________________________________________________
A COPY OF THE COMPANY'S FORM 10-KSB FOR THE YEAR ENDED
SEPTEMBER 30, 1997 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS
OF THE RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, ROCKY
FORD FINANCIAL, INC., 801 SWINK AVENUE, ROCKY FORD, COLORADO
81067-0032.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Francis E. Clute
Francis E. Clute
Secretary
Rocky Ford, Colorado
December 22, 1997
17<PAGE>
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EXHIBIT A
ROCKY FORD FINANCIAL, INC.
1997 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE OF THE PLAN.
The purpose of this Plan is to advance the interests of the
Company through providing select key Employees and Directors of
the Association, the Company, and their Affiliates with the
opportunity to acquire Shares. By encouraging such stock
ownership, the Company seeks to attract, retain and motivate the
best available personnel for positions of substantial
responsibility and to provide additional incentives to Directors
and key Employees of the Company or any Affiliate to promote the
success of the business.
2. DEFINITIONS.
As used herein, the following definitions shall apply.
(a) "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Company, as such terms are
defined in Section 424(e) and (f), respectively, of the Code.
(b) "Agreement" shall mean a written agreement entered
into in accordance with Paragraph 5(c).
(c) "Association" shall mean Rocky Ford Federal Savings &
Loan Association.
(d) "Awards" shall mean, collectively, Options and SARs,
unless the context clearly indicates a different meaning.
(e) "Board" shall mean the Board of Directors of the
Company.
(f) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(g) "Committee" shall mean both the Stock Option Committee
appointed by the Board in accordance with Paragraph 5(a) hereof,
and the Board.
(h) "Common Stock" shall mean the common stock of the
Company.
(i) "Company" shall mean Rocky Ford Financial, Inc.
(j) "Continuous Service" shall mean the absence of any
interruption or termination of service as an Employee or
Director of the Company or an Affiliate. Continuous Service
shall not be considered interrupted in the case of sick leave,
military leave or any other leave of absence approved by the
Company, in the case of transfers between payroll locations of
the Company or between the Company, an Affiliate or a successor,
or in the case of a Director's performance of services in an
emeritus or advisory capacity.
(k) "Director" shall mean any member of the Board, and any
member of the board of directors of any Affiliate that the Board
has by resolution designated as being eligible for participation
in this Plan.
(l) "Disability" shall mean a physical or mental
condition, which in the sole and absolute discretion of the
Committee, is reasonably expected to be of indefinite duration
and to substantially prevent a Participant from fulfilling his
or her duties or responsibilities to the Company or an
Affiliate.
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(m) "Effective Date" shall mean the date specified in
Paragraph 14 hereof.
(n) "Employee" shall mean any person employed by the
Company, the Association, or an Affiliate.
(o) "Exercise Price" shall mean the price per Optioned
Share at which an Option or SAR may be exercised.
(p) "ISO" shall mean an option to purchase Common Stock
which meets the requirements set forth in the Plan, and which is
intended to be and is identified as an "incentive stock option"
within the meaning of Section 422 of the Code.
(q) "Market Value" shall mean the fair market value of the
Common Stock, as determined under Paragraph 7(b) hereof.
(r) "Non-Employee Director" shall have the meaning
provided in Rule 16b-3.
(s) "Non-ISO" means an option to purchase Common Stock
which meets the requirements set forth in the Plan but which is
not intended to be and is not identified as an ISO.
(t) "Option" means an ISO and/or a Non-ISO.
(u) "Optioned Shares" shall mean Shares subject to an
Award granted pursuant to this Plan.
(v) "Participant" shall mean any person who receives an
Award pursuant to the Plan.
(w) "Plan" shall mean this 1997 Stock Option and Incentive
Plan.
(x) "Rule 16b-3" shall mean Rule 16b-3 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended.
(y) "Share" shall mean one share of Common Stock.
(z) "SAR" (or "Stock Appreciation Right") means a right
to receive the appreciation in value, or a portion of the
appreciation in value, of a specified number of shares of Common
Stock.
(aa) "Year of Service" shall mean a full twelve-month
period, measured from the date of an Award and each annual
anniversary of that date, during which a Participant has not
terminated Continuous Service for any reason.
3. TERM OF THE PLAN AND AWARDS.
(a) Term of the Plan. The Plan shall continue in effect
for a term of ten years from the Effective Date, unless sooner
terminated pursuant to Paragraph 16 hereof. No Award shall be
granted under the Plan after ten years from the Effective Date.
(b) Term of Awards. The term of each Award granted under
the Plan shall be established by the Committee, but shall not
exceed 10 years; provided, however, that in the case of an
Employee who owns Shares representing more than 10% of the
outstanding Common Stock at the time an ISO is granted, the term
of such ISO shall not exceed five years.
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4. SHARES SUBJECT TO THE PLAN.
(a) General Rule. Except as otherwise required under
Section 11, the aggregate number of Shares deliverable pursuant
to Awards shall not exceed 42,340 Shares, which equals 10% of
the Shares issued by the Company in connection with the
Association's conversion from mutual to stock form. Such Shares
may either be authorized but unissued Shares, Shares held in
treasury, or Shares held in a grantor trust created by the
Company. If any Awards should expire, become unexercisable, or
be forfeited for any reason without having been exercised, the
Optioned Shares shall, unless the Plan shall have been
terminated, be available for the grant of additional Awards
under the Plan.
(b) Special Rule for SARs. The number of Shares with
respect to which an SAR is granted, but not the number of Shares
which the Company delivers or could deliver to an Employee or
individual upon exercise of an SAR, shall be charged against the
aggregate number of Shares remaining available under the Plan;
provided, however, that in the case of an SAR granted in
conjunction with an Option, under circumstances in which the
exercise of the SAR results in termination of the Option and
vice versa, only the number of Shares subject to the Option
shall be charged against the aggregate number of Shares
remaining available under the Plan. The Shares involved in an
Option as to which option rights have terminated by reason of
the exercise of a related SAR, as provided in Paragraph 10
hereof, shall not be available for the grant of further Options
under the Plan.
5. ADMINISTRATION OF THE PLAN.
(a) Composition of the Committee. The Plan shall be
administered by the Committee, which shall consist of not less
than two (2) members of the Board who are Non-Employee
Directors. Members of the Committee shall serve at the pleasure
of the Board. In the absence at any time of a duly appointed
Committee, the Plan shall be administered by the Board.
(b) Powers of the Committee. Except as limited by the
express provisions of the Plan or by resolutions adopted by the
Board, the Committee shall have sole and complete authority and
discretion (i) to select Participants and grant Awards, (ii) to
determine the form and content of Awards to be issued in the
form of Agreements under the Plan, (iii) to interpret the Plan,
(iv) to prescribe, amend and rescind rules and regulations
relating to the Plan, and (v) to make other determinations
necessary or advisable for the administration of the Plan. The
Committee shall have and may exercise such other power and
authority as may be delegated to it by the Board from time to
time. A majority of the entire Committee shall constitute a
quorum and the action of a majority of the members present at
any meeting at which a quorum is present, or acts approved in
writing by a majority of the Committee without a meeting, shall
be deemed the action of the Committee.
(c) Agreement. Each Award shall be evidenced by a written
agreement containing such provisions as may be approved by the
Committee. Each such Agreement shall constitute a binding
contract between the Company and the Participant, and every
Participant, upon acceptance of such Agreement, shall be bound
by the terms and restrictions of the Plan and of such Agreement.
The terms of each such Agreement shall be in accordance with the
Plan, but each Agreement may include such additional provisions
and restrictions determined by the Committee, in its discretion,
provided that such additional provisions and restrictions are
not inconsistent with the terms of the Plan. In particular, the
Committee shall set forth in each Agreement (i) the Exercise
Price of an Option or SAR, (ii) the number of Shares subject to
the Award, and its expiration date, (iii) the manner, time, and
rate (cumulative or otherwise) of exercise or vesting of such
Award, and (iv) the restrictions, if any, to be placed upon such
Award, or upon Shares which may be issued upon exercise of such
Award. The Chairman of the Committee and such other Directors
and officers as shall be designated by the Committee are hereby
authorized to execute Agreements on behalf of the Company and to
cause them to be delivered to the recipients of Awards.
(d) Effect of the Committee's Decisions. All decisions,
determinations and interpretations of the Committee shall be
final and conclusive on all persons affected thereby.
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(e) Indemnification. In addition to such other rights of
indemnification as they may have, the members of the Committee
shall be indemnified by the Company in connection with any
claim, action, suit or proceeding relating to any action taken
or failure to act under or in connection with the Plan or any
Award, granted hereunder to the full extent provided for under
the Company's governing instruments with respect to the
indemnification of Directors.
6. GRANT OF OPTIONS.
(a) General Rule. Only Employees shall be eligible to
receive Awards. In selecting those Employees to whom Awards
will be granted and the number of shares covered by such Awards,
the Committee shall consider the position, duties and
responsibilities of the eligible Employees, the value of their
services to the Company and its Affiliates, and any other
factors the Committee may deem relevant. Notwithstanding the
foregoing, the Committee shall automatically make the Awards
specified in Sections 6(b) and 9 hereof, and (ii) no Employee
shall receive Options to purchase more than 25% of the Shares
reserved under Paragraph 4(a), and no non-Employee Director
shall receive Options on the Effective Date to purchase more
than 5% of the Shares reserved under Paragraph 4(a), with all
non-Employee Directors as a group receiving Options on the
Effective Date to purchase no more than 30% of the Shares
reserved under Paragraph 4(a).
(b) Automatic Grants to Employees. On the Effective Date,
each of the following Employees shall receive an Option (in the
form of an ISO, to the extent permissible under the Code) to
purchase the number of Shares listed below, at an Exercise Price
per Share equal to the Market Value of a Share on the Effective
Date; provided that such grant shall not be made to an Employee
whose Continuous Service terminates on or before the Effective
Date:
Percentage of Shares
Participant Reserved under Paragraph 4(a)
Keith E. Waggoner 25%
With respect to each of the above-named Participants, the
Option granted to the Participant hereunder (i) shall vest in
accordance with the general rule set forth in Paragraph 8(a) of
the Plan, (ii) shall have a term of ten years from the Effective
Date, and (iii) shall be subject to the general rule set forth
in Paragraph 8(c) with respect to the effect of a Participant's
termination of Continuous Service on the Participant's right to
exercise his Options.
(c) Special Rules for ISOs. The aggregate Market Value, as
of the date the Option is granted, of the Shares with respect to
which ISOs are exercisable for the first time by an Employee
during any calendar year (under all incentive stock option
plans, as defined in Section 422 of the Code, of the Company or
any present or future Affiliate of the Company) shall not exceed
$100,000. Notwithstanding the foregoing, the Committee may
grant Options in excess of the foregoing limitations, in which
case Options granted in excess of such limitation shall be Non-
ISOs.
7. EXERCISE PRICE FOR OPTIONS.
(a) Limits on Committee Discretion. The Exercise Price as
to any particular Option shall not be less than 100% of the
Market Value of the Optioned Shares on the date of grant. In
the case of an Employee who owns Shares representing more than
10% of the Company's outstanding Shares of Common Stock at the
time an ISO is granted, the Exercise Price shall not be less
than 110% of the Market Value of the Optioned Shares at the time
the ISO is granted.
(b) Standards for Determining Exercise Price. If the
Common Stock is listed on a national securities exchange
(including the NASDAQ National Market System) on the date in
question, then the Market Value per Share shall be the average
of the highest and lowest selling price on such exchange on such
date, or if there were no sales
A-4<PAGE>
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on such date, then the Exercise Price shall be the mean between
the bid and asked price on such date. If the Common Stock is
traded otherwise than on a national securities exchange on the
date in question, then the Market Value per Share shall be the
mean between the bid and asked price on such date, or, if there
is no bid and asked price on such date, then on the next prior
business day on which there was a bid and asked price. If no
such bid and asked price is available, then the Market Value per
Share shall be its fair market value as determined by the
Committee, in its sole and absolute discretion.
8. EXERCISE OF OPTIONS.
(a) Generally. Each Option shall become exercisable with
respect to twenty percent (20%) of the Optioned Shares upon the
Participant's completion of each of five Years of Service,
provided that an Option shall become fully (100%) exercisable
immediately upon termination of the Participant's Continuous
Service due to the Participant's Disability or death. An Option
may not be exercised for a fractional Share.
(b) Procedure for Exercise. A Participant may exercise
Options, subject to provisions relative to its termination and
limitations on its exercise, only by (1) written notice of
intent to exercise the Option with respect to a specified number
of Shares, and (2) payment to the Company (contemporaneously
with delivery of such notice) in cash, in Common Stock, or a
combination of cash and Common Stock, of the amount of the
Exercise Price for the number of Shares with respect to which
the Option is then being exercised. Each such notice (and
payment where required) shall be delivered, or mailed by prepaid
registered or certified mail, addressed to the Treasurer of the
Company at its executive offices. Common Stock utilized in full
or partial payment of the Exercise Price for Options shall be
valued at its Market Value at the date of exercise, and may
consist of Shares subject to the Option being exercised. Upon a
Participant's exercise of an Option, the Company may, if
provided by the Committee in the underlying Agreement, pay to
the Participant a cash amount up to but not exceeding the amount
of dividends, if any, declared on the underlying Shares between
the date of grant and the date of exercise of the Option.
(c) Period of Exercisability. Except to the extent
otherwise provided in the terms of an Agreement, an Option may
be exercised by a Participant only while he is an Employee and
has maintained Continuous Service from the date of the grant of
the Option, or within one year after termination of such
Continuous Service (but not later than the date on which the
Option would otherwise expire), except if the Employee's
Continuous Service terminates by reason of --
(1) "Just Cause" which for purposes hereof shall have
the meaning set forth in any unexpired employment or
severance agreement between the Participant and the
Association and/or the Company (and, in the absence of any
such agreement, shall mean termination because of the
Employee's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final
cease-and-desist order), then the Participant's rights to
exercise such Option shall expire on the date of such
termination;
(2) death, then to the extent that the Participant
would have been entitled to exercise the Option immediately
prior to his death, such Option of the deceased Participant
may be exercised within two years from the date of his
death (but not later than the date on which the Option
would otherwise expire) by the personal representative of
his estate or person or persons to whom his rights under
such Option shall have passed by will or by laws of descent
and distribution.
(d) Effect of the Committee's Decisions. The Committee's
determination whether a Participant's Continuous Service has
ceased, and the effective date thereof, shall be final and
conclusive on all persons affected thereby.
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(e) Mandatory Six-Month Holding Period. Notwithstanding
any other provision of this Plan to the contrary, common stock
of the Company that is purchased upon exercise of an Option or
SAR may not be sold within the six-month period following the
grant of that Option or SAR.
9. GRANTS OF OPTIONS TO NON-EMPLOYEE DIRECTORS
(a) Automatic Grants. Notwithstanding any other
provisions of this Plan, each Director who is not an Employee
but is a Director on the Effective Date shall receive, on said
date, Non-ISOs to purchase a number of Shares equal to the
lesser of five percent (5%) of the number of Shares reserved
under Paragraph 4(a) hereof, and the quotient obtained by
dividing --
(i) 30 percent (30%) of the number of Shares reserved
under Paragraph 4(a) hereof, by
(ii) the number of Directors entitled to receive an
Option on the Effective Date, pursuant to this
Paragraph 9(a).
Such Non-ISOs shall have an Exercise Price per Share equal
to the Market Value of a Share on the date of grant. Each
Director who joins the Board after the Effective Date and who is
not then an Employee may receive, on the date of joining the
Board, Non-ISOs to purchase up to 5% of the Shares reserved
under Paragraph 4(a) of the Plan, at an Exercise Price per Share
equal to its Market Value on the date of grant.
(b) Terms of Exercise. Options received under the
provisions of this Paragraph (i) shall become exercisable in
accordance with paragraph 8(a) of the Plan, and (ii) may be
exercised from time to time by written notice of intent to
exercise the Option with respect to all or a specified number of
the Optioned Shares, and payment to the Company
(contemporaneously with the delivery of such notice), in cash,
in Common Stock, or a combination of cash and Common Stock, of
the amount of the Exercise Price for the number of the Optioned
Shares with respect to which the Option is then being exercised.
Each such notice and payment shall be delivered, or mailed by
prepaid registered or certified mail, addressed to the Treasurer
of the Company at the Company's executive offices. Upon a
Director's exercise of an Option, the Company may, if provided
by the Committee in the underlying Agreement (which may not be
utilized to pay out such dividends unless the Plan would
maintain conformity with Rule 16b-3), pay to the Director a cash
amount up to but not exceeding the amount of dividends, if any,
declared on the underlying Shares between the date of grant and
the date of exercise of the Option. A Director who exercises
Options pursuant to this Paragraph may satisfy all applicable
federal, state and local income and employment tax withholding
obligations, in whole or in part, by irrevocably electing to
have the Company withhold shares of Common Stock, or to deliver
to the Company shares of Common Stock that he already owns,
having a value equal to the amount required to be withheld;
provided that to the extent not inconsistent herewith, such
election otherwise complies with those requirements of
Paragraphs 8 and 19 hereof.
Options granted under this Paragraph shall have a term of
ten years; provided that Options granted under this Paragraph
shall expire one year after the date on which a Director
terminates Continuous Service on the Board for a reason other
than death, but in no event later than the date on which such
Options would otherwise expire. In the event of such Director's
death during the term of his directorship, Options granted under
this Paragraph shall become immediately exercisable, and may be
exercised within two years from the date of his death by the
personal representatives of his estate or person or persons to
whom his rights under such Option shall have passed by will or
by laws of descent and distribution, but in no event later than
the date on which such Options would otherwise expire. In the
event of such Director's Disability during his or her
directorship, the Director's Option shall become immediately
exercisable, and such Option may be exercised within one year of
the termination of directorship due to Disability, but not later
than the date that the Option would otherwise expire. Unless
otherwise inapplicable or inconsistent with the provisions of
this Paragraph, the Options to be granted to Directors hereunder
shall be subject to all other provisions of this Plan.
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(c) Effect of the Committee's Decisions. The Committee's
determination whether a Participant's Continuous Service has
ceased, and the effective date thereof, shall be final and
conclusive on all persons affected thereby.
10. SARS (STOCK APPRECIATION RIGHTS)
(a) Granting of SARs. In its sole discretion, the
Committee may from time to time grant SARs to Employees either
in conjunction with, or independently of, any Options granted
under the Plan. An SAR granted in conjunction with an Option
may be an alternative right wherein the exercise of the Option
terminates the SAR to the extent of the number of shares
purchased upon exercise of the Option and, correspondingly, the
exercise of the SAR terminates the Option to the extent of the
number of Shares with respect to which the SAR is exercised.
Alternatively, an SAR granted in conjunction with an Option may
be an additional right wherein both the SAR and the Option may
be exercised. An SAR may not be granted in conjunction with an
ISO under circumstances in which the exercise of the SAR affects
the right to exercise the ISO or vice versa, unless the SAR, by
its terms, meets all of the following requirements:
(1) The SAR will expire no later than the ISO;
(2) The SAR may be for no more than the difference between
the Exercise Price of the ISO and the Market Value of the
Shares subject to the ISO at the time the SAR is exercised;
(3) The SAR is transferable only when the ISO is
transferable, and under the same conditions;
(4) The SAR may be exercised only when the ISO may be
exercised; and
(5) The SAR may be exercised only when the Market Value of
the Shares subject to the ISO exceeds the Exercise Price of
the ISO.
(b) Exercise Price. The Exercise Price as to any
particular SAR shall not be less than the Market Value of the
Optioned Shares on the date of grant.
(c) Timing of Exercise. The provisions of Paragraph 8(c)
regarding the period of exercisability of Options are
incorporated by reference herein, and shall determine the period
of exercisability of SARs.
(d) Exercise of SARs. An SAR granted hereunder shall be
exercisable at such times and under such conditions as shall be
permissible under the terms of the Plan and of the Agreement
granted to a Participant, provided that an SAR may not be
exercised for a fractional Share. Upon exercise of an SAR, the
Participant shall be entitled to receive, without payment to the
Company except for applicable withholding taxes, an amount equal
to the excess of (or, in the discretion of the Committee if
provided in the Agreement, a portion of) the excess of the then
aggregate Market Value of the number of Optioned Shares with
respect to which the Participant exercises the SAR, over the
aggregate Exercise Price of such number of Optioned Shares. This
amount shall be payable by the Company, in the discretion of the
Committee, in cash or in Shares valued at the then Market Value
thereof, or any combination thereof.
(e) Procedure for Exercising SARs. To the extent not
inconsistent herewith, the provisions of Paragraph 8(b) as to
the procedure for exercising Options are incorporated by
reference, and shall determine the procedure for exercising
SARs.
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11. EFFECT OF CHANGES IN COMMON STOCK SUBJECT TO THE PLAN.
(a) Recapitalizations; Stock Splits, Etc. The number
and kind of shares reserved for issuance under the Plan, and the
number and kind of shares subject to outstanding Awards, and the
Exercise Price thereof, shall be proportionately adjusted for
any increase, decrease, change or exchange of Shares for a
different number or kind of shares or other securities of the
Company which results from a merger, consolidation,
recapitalization, reorganization, reclassification, stock
dividend, split-up, combination of shares, or similar event in
which the number or kind of shares is changed without the
receipt or payment of consideration by the Company.
(b) Transactions in which the Company is Not the Surviving
Entity. In the event of (i) the liquidation or dissolution of
the Company, (ii) a merger or consolidation in which the Company
is not the surviving entity, or (iii) the sale or disposition of
all or substantially all of the Company's assets (any of the
foregoing to be referred to herein as a "Transaction"), all
outstanding Awards, together with the Exercise Prices thereof,
shall be equitably adjusted for any change or exchange of Shares
for a different number or kind of shares or other securities
which results from the Transaction.
(c) Special Rule for ISOs. Any adjustment made pursuant
to subparagraphs (a) or (b)(1) hereof shall be made in such a
manner as not to constitute a modification, within the meaning
of Section 424(h) of the Code, of outstanding ISOs.
(d) Conditions and Restrictions on New, Additional, or
Different Shares or Securities. If, by reason of any adjustment
made pursuant to this Paragraph, a Participant becomes entitled
to new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the Shares pursuant to the
Award before the adjustment was made.
(e) Other Issuances. Except as expressly provided in this
Paragraph, the issuance by the Company or an Affiliate of shares
of stock of any class, or of securities convertible into Shares
or stock of another class, for cash or property or for labor or
services either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, shall not affect, and no
adjustment shall be made with respect to, the number, class, or
Exercise Price of Shares then subject to Awards or reserved for
issuance under the Plan.
(f) Certain Special Dividends. The Exercise Price of
shares subject to outstanding Awards shall be proportionately
adjusted upon the payment of a special large and nonrecurring
dividend that has the effect of a return of capital to the
stockholders, except that this subparagraph (f) shall not apply
to any dividend which is paid to the Participant pursuant to
Paragraph 8(b) or 9(b) hereof.
12. NON-TRANSFERABILITY OF AWARDS.
Awards may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or
by the laws of descent and distribution. Notwithstanding the
foregoing, or any other provision of this Plan, a Participant
who holds Awards may transfer such Awards (but not Incentive
Stock Options) to his or her spouse, lineal ascendants, lineal
descendants, or to a duly established trust for the benefit of
one or more of these individuals. Awards so transferred may
thereafter be transferred only to the Participant who originally
received the grant or to an individual or trust to whom the
Participant could have initially transferred the Awards pursuant
to this Paragraph 12. Awards which are transferred pursuant to
this Paragraph 12 shall be exercisable by the transferee
according to the same terms and conditions as applied to the
Participant.
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13. TIME OF GRANTING AWARDS.
The date of grant of an Award shall, for all purposes, be
the later of the date on which the Committee makes the
determination of granting such Award, and the Effective Date.
Notice of the determination shall be given to each Participant
to whom an Award is so granted within a reasonable time after
the date of such grant.
14. EFFECTIVE DATE.
The Plan shall become effective immediately upon its
approval by a favorable vote of stockholders owning at least a
majority of the total votes eligible to be cast at a duly called
meeting of the Company's stockholders held in accordance with
applicable laws, provided that the Plan shall not be submitted
for such approval within the six-month period after the
Association completes its mutual-to-stock conversion. No Awards
may be made prior to approval of the Plan by the stockholders of
the Company.
15. MODIFICATION OF AWARDS.
At any time, and from time to time, the Board may authorize
the Committee to direct execution of an instrument providing for
the modification of any outstanding Award, provided no such
modification shall confer on the holder of said Award any right
or benefit which could not be conferred on him by the grant of a
new Award at such time, or impair the Award without the consent
of the holder of the Award.
16. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may from time to time amend the terms of the Plan
and, with respect to any Shares at the time not subject to
Awards, suspend or terminate the Plan. No amendment, suspension
or termination of the Plan shall, without the consent of any
affected holders of an Award, alter or impair any rights or
obligations under any Award theretofore granted.
17. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Compliance with Securities Laws. Shares of Common
Stock shall not be issued with respect to any Award unless the
issuance and delivery of such Shares shall comply with all
relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities law, and
the requirements of any stock exchange upon which the Shares may
then be listed.
(b) Special Circumstances. The inability of the Company
to obtain approval from any regulatory body or authority deemed
by the Company's counsel to be necessary to the lawful issuance
and sale of any Shares hereunder shall relieve the Company of
any liability in respect of the non-issuance or sale of such
Shares. As a condition to the exercise of an Option or SAR, the
Company may require the person exercising the Option or SAR to
make such representations and warranties as may be necessary to
assure the availability of an exemption from the registration
requirements of federal or state securities law.
(c) Committee Discretion. The Committee shall have the
discretionary authority to impose in Agreements such
restrictions on Shares as it may deem appropriate or desirable,
including but not limited to the authority to impose a right of
first refusal or to establish repurchase rights or both of these
restrictions.
18. RESERVATION OF SHARES.
The Company, during the term of the Plan, will reserve and
keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
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19. WITHHOLDING TAX.
The Company's obligation to deliver Shares upon exercise of
Options and/or SARs shall be subject to the Participant's
satisfaction of all applicable federal, state and local income
and employment tax withholding obligations. The Committee, in
its discretion, may permit the Participant to satisfy the
obligation, in whole or in part, by irrevocably electing to have
the Company withhold Shares, or to deliver to the Company Shares
that he already owns, having a value equal to the amount
required to be withheld. The value of the Shares to be
withheld, or delivered to the Company, shall be based on the
Market Value of the Shares on the date the amount of tax to be
withheld is to be determined. As an alternative, the Company
may retain, or sell without notice, a number of such Shares
sufficient to cover the amount required to be withheld.
20. NO EMPLOYMENT OR OTHER RIGHTS.
In no event shall an Employee's or Director's eligibility
to participate or participation in the Plan create or be deemed
to create any legal or equitable right of the Employee,
Director, or any other party to continue service with the
Company, the Association, or any Affiliate of such corporations.
Except to the extent provided in Paragraphs 6(b) and 9(a), no
Employee or Director shall have a right to be granted an Award
or, having received an Award, the right to again be granted an
Award. However, an Employee or Director who has been granted an
Award may, if otherwise eligible, be granted an additional Award
or Awards.
21. GOVERNING LAW.
The Plan shall be governed by and construed in accordance
with the laws of the State of Colorado, except to the extent
that federal law shall be deemed to apply.
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EXHIBIT B
ROCKY FORD FINANCIAL, INC.
MANAGEMENT RECOGNITION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
1.01 The Company hereby establishes this Plan upon the
terms and conditions hereinafter stated.
1.02 Through acceptance of their appointment to the
Committee, each member of the Committee hereby accepts his or
her appointment hereunder upon the terms and conditions
hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to reward and retain
personnel of experience and ability in key positions of
responsibility by providing Employees and Directors of the
Company, the Association, and their Affiliates with a
proprietary interest in the Company, and as compensation for
their past contributions to the Association, 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, shall have the meanings set forth
below unless the context clearly indicates otherwise. Wherever
appropriate, the masculine pronoun shall include the feminine
pronoun and the singular shall include the plural.
3.01 "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Company, as such terms are
defined in Section 424(e) and (f), respectively, of the Internal
Revenue Code of 1986, as amended.
3.02 "Association" means Rocky Ford Federal Savings & Loan
Association.
3.03 "Beneficiary" means the person or persons designated
by a 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 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
Participant's surviving spouse, if any or if none, his estate.
3.04 "Board" means the Board of Directors of the Company.
3.05 "Committee" means the Management Recognition Plan
Committee appointed by the Board pursuant to Article IV hereof.
3.06 "Common Stock" means shares of the common stock of
the Company.
3.07 "Company" means Rocky Ford Financial, Inc.
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3.08 "Continuous Service" shall mean the absence of any
interruption or termination of service as an Employee or
Director of the Company or an Affiliate. Continuous Service
shall not be considered interrupted in the case of sick leave,
military leave or any other leave of absence approved by the
Company in the case of transfers between payroll locations of
the Company or between the Company, an Affiliate or a successor,
or in the case of a Director's performance of services in an
emeritus or advisory capacity.
3.09 "Date of Conversion" means the date of the conversion
of the Association from mutual to stock form.
3.10 "Director" means a member of the Board.
3.11 "Disability" shall mean a physical or mental
condition, which in the sole and absolute discretion of the
Committee, is reasonably expected to be of indefinite duration
and to substantially prevent a Participant from fulfilling his
or her duties or responsibilities to the Company or an
Affiliate.
3.12 "Effective Date" means the date on which the Plan
first becomes effective, as determined under Section 8.07
hereof.
3.13 "Employee" means any person who is employed by the
Company or an Affiliate.
3.14 "Non-Employee Director" shall have the meaning
provided in Rule 16b-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.
3.15 "Participant" means an Employee or Director who
holds a Plan Share Award.
3.16 "Plan" means this Rocky Ford Financial, Inc.
Management Recognition Plan.
3.17 "Plan Shares" means shares of Common Stock held in
the Trust which are awarded or issuable to a Participant
pursuant to the Plan.
3.18 "Plan Share Award" means a right granted under this
Plan to receive Plan Shares.
3.19 "Plan Share Reserve" means the shares of Common
Stock held by the Trustee pursuant to Sections 5.02 and 5.03.
3.20 "Trust" and "Trust Agreement" mean that agreement
entered into pursuant to the terms hereof between the Company
and the Trustee, and "Trust" means the trust created thereunder.
3.21 "Trustee" means that person(s) or entity appointed
by the Board pursuant to the Trust Agreement to hold legal title
to the Plan assets for the purposes set forth herein.
3.22 "Year of Service" shall mean a full twelve-month
period, measured from the date of a Plan Share Award and each
annual anniversary of that date, during which a Participant's
Continuous Service has not terminated for any reason.
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ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Role and Powers of the Committee. The Plan shall be
administered and interpreted by the Committee, which shall
consist of not less than two members of the Board who are Non-
Employee Directors. In the absence at any time of a duly
appointed Committee, the Plan shall be administered by those
members of the Board who are Non-Employee Directors, and by the
Board if there are less than two Non-Employee Directors.
The Committee shall have all of the powers allocated to it
in this and other Sections of the Plan. Except as limited by
the express provisions of the Plan or by resolutions adopted by
the Board, the Committee shall have sole and complete authority
and discretion (i) to make Plan Share Awards to such Employees
as the Committee may select, (ii) to determine the form and
content of Plan Share Awards to be issued under the Plan, (iii)
to interpret the Plan, (iv) to prescribe, amend and rescind
rules and regulations relating to the Plan, and (v) to make
other determinations necessary or advisable for the
administration of the Plan. The Committee shall have and may
exercise such other power and authority as may be delegated to
it by the Board from time to time. Subject to Section 4.02, 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, and
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 may recommend to the
Board one or more persons or entity to act as Trustee(s) in
accordance with the provisions of this Plan and the Trust.
4.02 Role of the Board. The members of the Committee
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. 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 or impair a participant's vested rights
under a Plan Share Award. Members of the Board who are eligible
for or who have been granted Plan Share Awards (other than
pursuant to Section 6.04) 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 a quorum at any meeting of the
Board during which actions with regard thereto are taken).
Further, with respect to all actions taken by the Board in
regard to the Plan, such action shall be taken by a majority of
the Board where such a majority of the directors acting in the
matter are Non-Employee Directors.
4.03 Limitation on Liability. No member of the Board or
the Committee or the Trustee(s) shall be liable for any
determination made in good faith with respect to the Plan or any
Plan Shares or Plan Share Awards granted under it. If a member
of the Board or the 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 investigative, by reason of anything done or
not done by him in such capacity under or with respect to the
Plan, the Company shall indemnify such member, subject to the
indemnification provisions of 12 C.F.R. Section 545.121, against
expenses (including attorneys' 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 Company
and its Affiliates and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful.
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ARTICLE V
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Board shall
determine the amounts (or the method of computing the amounts)
to be contributed by the Company to the Trust, provided that the
Association may also make contributions to the Trust. Such
amounts shall be paid to the Trustee at the time of
contribution. No contributions to the Trust by Employees shall
be permitted.
5.02 Investment of Trust Assets; Maximum Plan Share
Awards. The Trustee shall invest Trust assets only in
accordance with the Trust Agreement; provided that the Trust
shall not purchase, and Plan Share Awards shall not be made with
respect to, more than four percent (4%) of the number of Shares
issued on the Date of Conversion.
5.03 Effect of Allocations, Returns and Forfeitures Upon
Plan Share Reserves. Upon the allocation of Plan Share Awards
under Section 6.02, the Plan Share Reserve shall be reduced by
the number of Shares subject to the Awards so allocated. Any
Shares subject or attributable to an Award which may not be
earned because of a forfeiture by the Participant pursuant to
Section 7.01 shall be added to the Plan Share Reserve.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Except as otherwise provided in Section
6.04 hereof, the Committee shall make Plan Share Awards only to
Employees. 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, duties and
responsibilities of the eligible Employees, the value of their
services to the Company and its Affiliates, and any other
factors the Committee may deem relevant. Notwithstanding the
foregoing, (i) the Committee shall automatically make the Plan
Share Awards specified in Sections 6.04 and 6.05 hereof; and
(ii) no Employee shall receive Plan Share Awards relating to
more than 25% of the Plan Shares reserved under Section 5.02,
and no non-employee Director shall receive Plan Share Awards
relating to more than 5% of the Plan Shares reserved under
Section 5.02, with all non-employee Directors as a group
receiving Plan Share Awards on the Effective Date relating to no
more than 30% of the Plan Shares reserved under Section 5.02.
6.02 Allocations. The Committee will determine which
Employees will be granted discretionary Plan Share Awards, and
the number of Shares covered by each Plan Share Award, provided
that in no event shall any Awards be made which will violate the
governing instruments of the Association or its Affiliates or
any applicable federal or state law or regulation. In the event
Plan Shares are forfeited for any reason or additional shares of
Common Stock are purchased by the Trustee, the Committee may,
from time to time, determine which of the Employees referenced
in Section 6.01 above will be granted additional Plan Share
Awards to be awarded from the forfeited or acquired Plan Shares.
6.03 Form of Allocation. As promptly as practicable after
a determination is made pursuant to Section 6.02 that a Plan
Share Award is to be made, the Committee shall notify the
Participant 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 Participant shall be
considered the date of grant of the Plan Share Awards. The
Committee shall maintain records as to all grants of Plan Share
Awards under the Plan.
6.04 Automatic Grants to Non-Employee Directors.
Notwithstanding any other provisions of this Plan, each Director
who is not an Employee but is a Director on the Effective Date
may receive, on said date, a Plan Share Award for a number of
Shares equal to the lesser of five (5%) of the number of Plan
Shares which the Trust is authorized to purchase pursuant to
Section 5.02 of the Plan and the quotient obtained by dividing--
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(i) 30 percent (30%) of the number of Plan Shares which
the Trust is authorized to purchase pursuant to
Section 5.02 of the Plan, by
(ii) the number of Directors entitled to receive Plan Share
Share Awards on the Effective Date, pursuant to this
Section 6.04.
Each Director who joins the Board after the Effective Date may
receive, on said date, a Plan Share Award of up to five percent
(5%) of the number of Plan Shares which the Trust is authorized
to purchase pursuant to Section 5.02 of the Plan (or such lesser
number as are available hereunder for Plan Share Awards). Plan
Share Awards received under the provisions of this Section shall
become vested and nonforfeitable according to the general rules
set forth in subsections (a), and (b) of Section 7.01, and the
Committee shall have no discretion to alter or accelerate said
vesting requirements. Unless otherwise inapplicable or
inconsistent with the provisions of this Section, the Plan Share
Awards to be granted hereunder shall be subject to all other
provisions of this Plan.
6.05 Automatic Grants to Employees. On the Effective
Date, each of the following individuals may receive a Plan Share
Award as to the number of Plan Shares listed below, provided
that such award shall not be made to an individual who is not an
Employee on the Effective Date:
Employee Shares Subject to Plan Share Award
Keith E. Waggoner 25%
Plan Share Awards received under the provisions of this
Section shall become vested and nonforfeitable according to the
general rules set forth in subsections (a) and (b) of Section
7.01, and the Committee shall have no discretion to alter said
vesting requirements. Unless otherwise inapplicable or
inconsistent with the provisions of this Section, the Plan Share
Awards to be granted hereunder shall be subject to all other
provisions of this Plan.
6.06 Allocations Not Required. Notwithstanding anything
to the contrary in Sections 6.01 and 6.02, but subject to
Sections 6.04 and 6.05, no Employee or Director 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 any Employees or Directors as a group have such a right.
The Committee may, with the approval of the Board (or, if so
directed by the Board) return all Common Stock in the Plan Share
Reserve to the Company at any time, and cease issuing Plan Share
Awards.
ARTICLE VII
EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 EARNING PLAN SHARES; FORFEITURES.
(a) General Rules. Twenty percent (20%) of the Plan
Shares subject to a Plan Share Award shall be earned and become
non-forfeitable by a Participant upon his or her completion of
each of five Years of Service.
(b) Exception for Terminations Due to Death or Disability.
Notwithstanding the general rule contained in Section 7.01(a)
above, all Plan Shares subject to a Plan Share Award held by a
Participant whose service with the Company or an Affiliate
terminates due to the Participant's death or Disability, shall
be deemed earned as of the Participant's last day of service
with the Company or an Affiliate and shall be distributed as
soon as practicable thereafter.
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7.02 Accrual of Dividends. Whenever Plan Shares are paid
to a Participant or Beneficiary under Section 7.03, such
Participant or Beneficiary shall also be entitled to receive,
with respect to each Plan Share paid, an amount equal to any
cash dividends (including special large and nonrecurring
dividends, including one that has the effect of a return of
capital to the Company's stockholders) and a number of shares of
Common Stock equal to any stock dividends, declared and paid
with respect to a share of Common Stock between the date the
relevant Plan Share Award was initially granted to such
Participant and the date the Plan Shares are being distributed.
There shall also be distributed an appropriate amount of net
earnings, if any, of the Trust with respect to any cash
dividends so paid out.
7.03 DISTRIBUTION OF PLAN SHARES.
(a) Timing of Distributions: General Rule. Except as
provided in Subsections (c), and (d) below, the Trustee shall
distribute Plan Shares and accumulated cash from dividends and
interest to the Participant or his Beneficiary, as the case may
be, as soon as practicable after they have been earned. No
fractional shares shall be distributed.
(b) Form of Distribution. The Trustee shall distribute
all Plan Shares, together with any shares representing stock
dividends, in the form of Common Stock. One share of Common
Stock shall be given for each Plan Share earned. Payments
representing cash dividends (and earnings thereon) shall be made
in cash.
(c) Withholding. The Trustee shall withhold from any cash
payment made under this Plan sufficient amounts to cover any
applicable withholding and employment taxes, and if the amount
of such cash payment is not sufficient, the Trustee shall
require the Participant or Beneficiary to pay to the Trustee the
amount required to be withheld as a condition of delivering the
Plan Shares. The Trustee shall pay over to the Company or
Affiliate which employs or employed such Participant any such
amount withheld from or paid by the Participant or Beneficiary.
(d) Timing: Exception for 10% Shareholders.
Notwithstanding Subsections (a) and (b) above, no Plan Shares
may be distributed prior to the date which is five (5) years
from the Date of Conversion to the extent the Participant or
Beneficiary, as the case may be, would after receipt of such
Shares own in excess of ten percent (10%) of the issued and
outstanding shares of Common Stock unless such action is
approved in advance by a majority vote of non-employee directors
of the Board. To the extent this limitation would delay the
date on which a Participant receives Plan Shares, the
Participant may elect to receive from the Trust, in lieu of
vested Plan Shares, a cash amount equal to the fair market value
of such Plan Shares. Any Plan Shares remaining undistributed
solely by reason of the operation of this Subsection (d) shall
be distributed to the Participant or his Beneficiary on the date
which is five years from the Date of Conversion.
(e) Regulatory Exceptions. No Plan Shares shall be
distributed unless and until all of the requirements of all
applicable law and regulation shall have been fully complied
with, including the receipt of approval of the Plan by the
stockholders of the Company by such vote, if any, as may be
required by applicable law and regulations.
7.04 Voting of Plan Shares. All shares of Common Stock
held by the Trust (whether or not subject to a Plan Share Award)
shall be voted by the Trustee in the same proportion as the
trustee of the Company's Employee Stock Ownership Plan votes
Common Stock held in the trust associated therewith, and in the
absence of any such voting, shall be voted in the manner
directed by the Board.
7.05. DEFERRAL ELECTIONS BY PARTICIPANTS.
(a) Elections to Defer. At any time prior to December
31st of any year prior to the date on which a Participant
becomes vested in any shares subject to his or her Plan Share
Award, a Participant who is a member of a select group of
management or highly compensated employees (within the meaning
of the Employees' Retirement Income Security Act of 1973) may
irrevocably elect, on the form attached hereto as Exhibit "A"
(the "Election
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Form"), to defer the receipt of all or a percentage of the Plan
Shares that would otherwise be transferred to the Participant
upon the vesting of such award (the "Deferred Shares").
(b) Recordkeeping; Holding of Deferred Shares. The
Committee shall establish and maintain an individual account in
the name of each Participant who files an Election Form for the
purpose of tracking deferred earnings attributable to cash
dividends paid on Deferred Shares (the "Cash Account"). On the
last day of each fiscal year of the Company, the Committee shall
credit to the Participant's Cash Account earnings on the balance
of the Cash Account at a rate equal to the dividend-adjusted
total return on Common Stock, as determined from time to time by
the Committee in its sole discretion. The Trustees shall hold
each Participant's Deferred Shares and Deferred Earnings in the
Trust until distribution is required pursuant to the election
set forth in the Participant's Election Form.
(c) Distributions of Deferred Shares. The Trustee shall
distribute a Participant's Deferred Shares and Deferred Earnings
in accordance with the Participant's Election Form. All
distributions made by the Company and/or the Trustees pursuant
to elections made hereunder shall be subject to applicable
federal, state, and local tax withholding and to such other
deductions as shall at the time of such payment be required
under any income tax or other law, whether of the United States
or any other jurisdiction, and, in the case of payments to a
beneficiary, the delivery to the Committee and/or Trustees of
all necessary waivers, qualifications and other documentation.
Within 90 days after receiving notice of a Participant's death,
the Trustee shall distribute any balance of the Participant's
Deferred Shares and Deferred Earnings to the Participant's
designated beneficiary, if living, or if such designated
beneficiary is deceased or the Participant failed to designate a
beneficiary, to the Participant's estate. If, on the other
hand, a Participant's Continuous Service terminates for a reason
other than the Participant's death, Disability, early
retirement, or normal retirement, the Participant's Deferred
Shares and Deferred Earnings shall be distributed to the
Participant in a lump sum occurring as soon as reasonably
practicable. The distribution provisions of a Participant's
Election Form shall become irrevocable on the date that occurs
(i) one year before the Participant's termination of Continuous
Service for a reason other than death, and (ii) on the
Participant's death if that terminates the Participant's
Continuous Service.
(d) Hardship Withdrawals. Notwithstanding any other
provision of the Plan or a Participant's Election Form, in the
event the Participant suffers an unforeseeable emergency
hardship within the contemplation of this paragraph, the
Participant may apply to the Committee for an immediate
distribution of all or a portion of his Deferred Shares and
Deferred Earnings. The hardship must result from a sudden and
unexpected illness or accident of the Participant or a dependent
of the Participant, casualty loss of property, or other similar
conditions beyond the control of the Participant. Examples of
purposes which are not considered hardships include post-
secondary school expenses or the desire to purchase a residence.
In no event will a distribution be made to the extent the
hardship could be relieved through reimbursement or compensation
by insurance or otherwise, or by liquidation of the
Participant's nonessential assets to the extent such liquidation
would not itself cause a severe financial hardship. The amount
of any distribution hereunder shall be limited to the amount
necessary to relieve the Participant's financial hardship. The
determination of whether a Participant has a qualifying hardship
and the amount which qualifies for distribution, if any, shall
be made by the Committee in its sole discretion. The Committee
may require evidence of the purpose and amount of the need, and
may establish such application or other procedures as it deems
appropriate.
(e) Rights to Deferred Shares and Earnings. A
Participant may not assign his or her claim to Deferred Shares
and Deferred Earnings during his or her lifetime, except in
accordance with Section 8.03 of this Plan. A Participant's right
to Deferred Shares and Deferred Earnings shall at all times
constitute an unsecured promise of the Company to pay benefits
as they come due. The right of the Participant or his or her
beneficiary to receive benefits hereunder shall be solely an
unsecured claim against the general assets of the Company.
Neither the Participant nor his or her beneficiary shall have
any claim against or rights in any specific assets or other fund
of the Company, and any assets in the Trust shall be deemed
general assets of the Company.
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ARTICLE VIII
MISCELLANEOUS
8.01 ADJUSTMENTS FOR CAPITAL CHANGES.
(a) Recapitalizations; Stock Splits, Etc. The number and
kind of shares which may be purchased under the Plan, and the
number and kind of shares subject to outstanding Plan Share
Awards, shall be proportionately adjusted for any increase,
decrease, change or exchange of shares of Common Stock for a
different number or kind of shares or other securities of the
Company which results from a merger, consolidation,
recapitalization, reorganization, reclassification, stock
dividend, split-up, combination of shares, or similar event in
which the number or kind of shares is changed without the
receipt or payment of consideration by the Company.
(b) Transactions in which the Company is Not the Surviving
Entity. In the event of (i) the liquidation or dissolution of
the Company, (ii) a merger or consolidation in which the Company
is not the surviving entity, or (iii) the sale or disposition of
all or substantially all of the Company's assets (any of the
foregoing to be referred to herein as a "Transaction"), all
outstanding Plan Share Awards shall be adjusted for any change
or exchange of shares of Common Stock for a different number or
kind of shares or other securities which results from the
Transaction.
(c) Conditions and Restrictions on New, Additional, or
Different Shares or Securities. If, by reason of any adjustment
made pursuant to this Section, a Participant becomes entitled to
new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the shares pursuant to the
Plan Share Award before the adjustment was made. In addition,
the Committee shall have the discretionary authority to impose
on the Shares subject to Plan Share Awards to Employees such
restrictions as the Committee may deem appropriate or desirable,
including but not limited to a right of first refusal, or
repurchase option, or both of these restrictions.
(d) Other Issuances. Except as expressly provided in this
Section, the issuance by the Company or an Affiliate of shares
of stock of any class, or of securities convertible into shares
of Common Stock or stock of another class, for cash or property
or for labor or services either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, shall not
affect, and no adjustment shall be made with respect to, the
number or class of shares of Common Stock then subject to Plan
Share Awards or reserved for issuance under the Plan.
8.02 Amendment and Termination of Plan. The Board may, by
resolution, at any time amend or terminate the Plan; provided
that no amendment or termination of the Plan shall, without the
written consent of a Participant, impair any rights or
obligations under a Plan Share Award theretofore granted to the
Participant.
The power to amend or terminate the Plan in accordance with
this Section 8.02 shall include the power to direct the Trustee
to return to the Company all or any part of the assets of the
Trust, including shares of Common Stock held in the Plan Share
Reserve. However, the termination of the Trust shall not affect
a Participant's right to earn Plan Share Awards and to receive a
distribution of Common Stock relating thereto, including
earnings thereon, in accordance with the terms of this Plan and
the grant by the Committee or the Board.
8.03 Nontransferability. Plan Share Awards may not be
sold, pledged, assigned, hypothecated, transferred or disposed
of in any manner other than by will or by the laws of descent
and distribution. Notwithstanding the foregoing, or any other
provision of this Plan, a Participant who holds Plan Share
Awards may transfer such Awards to his or her spouse, lineal
ascendants, lineal descendants, or to a duly established trust
for the benefit of one or more of these individuals. Plan Share
Awards so transferred may thereafter be transferred only to the
Participant who originally received the grant or to an
individual or trust to whom the Participant could have initially
transferred the Awards pursuant to this Section 8.03. Plan
Share Awards which are transferred pursuant to this Section 8.03
shall be exercisable by the transferee according to the same
terms and conditions as applied to the Participant.
B-8<PAGE>
<PAGE>
8.04 No Employment or Other Rights. Neither the Plan nor
any grant of a Plan Share Award or Plan Shares hereunder nor any
action taken by the Trustee, the Committee or the Board in
connection with the Plan shall create any right, either express
or implied, on the part of any Employee or Director to continue
in the service of the Company, the Association, or an Affiliate
thereof.
8.05 Voting and Dividend Rights. No Participant shall
have any voting or dividend rights or other rights of a
stockholder in respect of any Plan Shares covered by a Plan
Share Award prior to the time said Plan Shares are actually
distributed to him.
8.06 Governing Law. The Plan and Trust shall be governed
and construed under the laws of the State of Colorado to the
extent not preempted by Federal law.
8.07 Effective Date. The Plan shall become effective
immediately upon its approval by a favorable vote of
stockholders of the Company who own at least a majority of the
total votes eligible to be cast at a duly called meeting of the
Company's stockholders held in accordance with applicable laws,
provided that the Plan shall not be submitted for such approval
within the six-month period after the Date of Conversion. In no
event shall Plan Share Awards be made prior to the Effective
Date.
8.08 Term of Plan. This Plan shall remain in effect until
the earlier of (i) termination by the Board, or (ii) the
distribution of all assets of the Trust. Termination of the
Plan shall not affect any Plan Share Awards previously granted,
and such Awards shall remain valid and in effect until they have
been earned and paid, or by their terms expire or are forfeited.
8.09 Tax Status of Trust. It is intended that (i) the
Trust associated with the Plan be treated as a grantor trust of
the Company under the provisions of Section 671 et seq. of the
Code, as the same may be amended from time to time, and (ii)
that in accordance with Revenue Procedure 92-65 (as the same may
be amended from time to time), Participants have the status of
general unsecured creditors of the Company, the Plan constitutes
a mere unfunded promise to make benefit payments in the future,
the Plan is unfunded for tax purposes and for purposes of Title
I of the Employee Retirement Income Security Act of 1974, as
amended, and the Trust has been and will continue to be
maintained in conformity with Revenue Procedure 92-64 (as the
same may be amended from time to time).
<PAGE>
<PAGE>
REVOCABLE PROXY
ROCKY FORD FINANCIAL, INC.
_______________________________
ANNUAL MEETING OF STOCKHOLDERS
January 22 1998
_______________________________
The undersigned hereby appoints William E. Burrell,
Francis E. Clute and Brian H. Hancock with full powers of
substitution to act, as attorneys and proxies for the
undersigned, to vote all shares of Common Stock of Rocky Ford
Financial, Inc. which the undersigned is entitled to vote at the
Annual Meeting of Stockholders (the "Annual Meeting"), to be
held at the main office of Rocky Ford Federal Savings and Loan
Association, 801 Swink Avenue, Rocky Ford, Colorado on
Thursday, January 22, 1998 at 2:00 p.m., local time, and at any
and all adjournments thereof, as indicated below and in
accordance with the determination of a majority of the Board of
Directors with respect to other matters which come before the
Annual Meeting.
VOTE
FOR WITHHELD
--- --------
1. The election as directors of all the
nominees listed below (except as
marked to the contrary below). [ ] [ ]
Norman L. Bailey
R. Dean Jones
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY
INDIVIDUAL NOMINEE, INSERT THAT NOMINEE'S NAME ON
THE LINE PROVIDED BELOW.
______________________________
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C> <C>
2. Approval of the Rocky Ford Financial,
Inc. 1997 Stock Option and Incentive Plan. [ ] [ ] [ ]
3. Approval of the Rocky Ford Financial,
Inc. Management Recognition Plan. [ ] [ ] [ ]
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE
LISTED PROPOSITIONS.
________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ABOVE LISTED
PROPOSITIONS. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD
OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
THIS PROXY CONFERS DISCRETIONARY AUTHORITY ON THE HOLDERS
THEREOF TO VOTE WITH RESPECT TO THE ELECTION OF ANY PERSONS AS
DIRECTORS WHERE THE NOMINEES ARE UNABLE TO SERVE OR FOR GOOD
CAUSE WILL NOT SERVE AND MATTERS INCIDENT TO THE CONDUCT OF THE
ANNUAL MEETING.
________________________________________________________________
<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Annual Meeting or at any adjournment thereof and after notifica-
tion to the Secretary of the Company at the Annual Meeting of
the stockholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated
and of no further force and effect. The undersigned hereby
revokes any and all proxies heretofore given with respect to the
shares of Common Stock held of record by the undersigned.
The undersigned acknowledges receipt from the Company prior
to the execution of this proxy of a Notice of Annual Meeting,
the Company's Proxy Statement for the Annual Meeting, dated
December 22, 1997, and an Annual Report to Stockholders for the
1997 fiscal year.
Dated: _____________, 199__
__________________________ __________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
__________________________ __________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in
which this card was mailed. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title.
If shares are held jointly, each holder should sign.
________________________________________________________________
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
________________________________________________________________
