<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
SLIPPERY ROCK FINANCIAL CORPORATION
100 South Main Street
Slippery Rock, Pennsylvania 16057-1245
To be held April 15, 1997
Mailed to Shareholders March 21, 1997
<PAGE>
SLIPPERY ROCK FINANCIAL CORPORATION
100 South Main Street, Slippery Rock, PA 16057
(412) 794-2210
March 21, 1997
Dear Shareholder:
It is my pleasure to invite and encourage you to attend the Annual
Shareholder's Meeting.
The meeting will be held at 7:00 P.M. on Tuesday, April 15, 1997, at the
Slippery Rock Township Municipal Building, 155 Branchton Road, Slippery Rock,
PA. This gives you an excellent opportunity to get acquainted with other
Shareholders, Directors, Officers, and Staff. There will be a short business
meeting followed by a buffet luncheon.
It is my pleasure to report that the Board of Directors has declared a
quarterly cash dividend of $0.15 (fifteen cents) per share to shareholders of
record March 1, 1997 payable on March 28, 1997. The payment of a quarterly
dividend is more common for holding companies our size that are listed on the
NASDAQ Electronic Bulletin Board.
You will find enclosed the Notice of Meeting, Proxy Statement and Proxy
for the Annual Meeting of Shareholders of Slippery Rock Financial Corporation.
Please review the enclosed material and sign, date and return the proxy card
whether you plan to attend or not so that the matters coming before the
meeting may be acted upon.
I look forward to the meeting and welcome the opportunity to discuss the
business of your Corporation with you. In order to plan for the luncheon,
please return the enclosed reservation with your proxy by Thursday, April 10,
1997.
Sincerely yours,
William C. Sonntag
President & CEO
<PAGE>
SLIPPERY ROCK FINANCIAL CORPORATION
100 SOUTH MAIN STREET
SLIPPERY ROCK, PENNSYLVANIA 16057-1245
(412) 794-2210
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
NOTICE IS HEREBY GIVEN that pursuant to the call of its Board of
Directors, the Annual Meeting of Shareholders of Slippery Rock Financial
Corporation will be held at the Slippery Rock Township Municipal Building, 155
Branchton Road, Slippery Rock, Pennsylvania 16057, on Tuesday, April 15, 1997,
at 7:00 p.m., prevailing time, for the purpose of considering and voting on
the following matters:
1. Election of four directors for a term of three years.
2. Approval of Employees Incentive Stock Option Plan.
3. Approval of Non-Employee Directors Stock Option Plan.
4. Such other business as may properly come before the meeting or
any adjournment thereof.
Only those shareholders of record at the close of business on February
28, 1997 shall be entitled to notice of and to vote at the meeting. A Proxy
Statement, a form of proxy and self-addressed envelope are enclosed.
Complete, date and sign the proxy. Return it promptly in the envelope which
requires no postage if mailed in the United States. If you attend the
meeting, you may then withdraw your proxy and vote in person.
This Notice, the accompanying Proxy Statement and form of proxy are sent
to you by order of the Board of Directors.
Eleanor L. Cress
Secretary
Slippery Rock, Pennsylvania
March 21, 1997
<PAGE>
PROXY STATEMENT
INTRODUCTION
The Proxy Statement and enclosed proxy are being mailed to the
shareholders of Slippery Rock Financial Corporation (the "Corporation"), on or
about March 21, 1997, in connection with the solicitation of proxies by the
Board of Directors of the Corporation. The proxies will be voted at the
Annual Meeting of the Shareholders to be held on April 15, 1997, at 7:00 p.m.,
prevailing time, at the Slippery Rock Township Municipal Building, 155
Branchton Road, Slippery Rock, Pennsylvania 16057. Proxies may be revoked at
will at any time before they have been exercised by filing with the Secretary
of the Corporation of an instrument of revocation, by a duly executed proxy
bearing a later date or by appearing at the Annual Meeting and giving notice
of intention to vote in person.
The costs of the solicitation of proxies will be borne by the
Corporation. In addition to the use of the mails, directors and officers of
the Corporation may solicit proxies, without additional compensation, by
telephone or telegraph. Arrangements may be made by the Corporation with
banks, brokerage houses and other custodians, nominees and fiduciaries to
forward solicitation material to the beneficial owners of shares held by them
of record, and the Corporation may reimburse them for reasonable expense they
incur in so doing.
The Corporation's Annual Report for the year ended December 31, 1996, is
enclosed with this Proxy Statement. It should not be regarded as proxy
solicitation material.
VOTING SECURITIES
As of the close of business on February 28, 1997, (the "Record Date"),
there were outstanding 1,378,124 shares of Common Stock of the Corporation
("Common Stock"), the only class of capital stock of the Corporation
outstanding and entitled to vote. Only shareholders of record as of the close
of business on the Record Date, are entitled to notice of and to vote at the
Annual Meeting. Each such shareholder is entitled to one vote for each such
share held.
BENEFICIAL OWNERSHIP BY CERTAIN PERSONS AND MANAGEMENT
There is set forth below information with respect to the beneficial
ownership, as of the Record Date, of certain persons, including directors and
nominees for director, of shares of the Common Stock.
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<PAGE>
Name of Beneficial Amount and Nature Percent of Class
Owner of Ownership (1)(2)
- ------------------ ------------------- ----------------
John W. Conway 47,864 3.47
Slippery Rock, Pennsylvania
Grady W. Cooper 181,947 13.20
St. Cloud, Florida
Robert M. Greenberger 932 *
Butler, Pennsylvania
Robert E. Gregg 4,420(3) *
Grove City, Pennsylvania
William D. Kingery 704 *
New Wilmington, Pennsylvania
Paul M. Montgomery 25,988 1.89
Slippery Rock, Pennsylvania
S. P. Snyder 20,704 1.50
Slippery Rock, Pennsylvania
William C. Sonntag 8,160 *
Slippery Rock, Pennsylvania
Charles C. Stoops, Jr. 42,348 3.07
Pittsburgh, Pennsylvania
Norman P. Sundell 3,456 *
Slippery Rock, Pennsylvania
Kenneth D. Wimer 16,292 1.18
Grove City, Pennsylvania
Officers, Directors and 445,871 32.35
Nominees for Directors
as a Group (4)
- -------------
*Less than l%
[FN]
(l) Each of the identified beneficial owners, including the officers,
directors and nominees for director as a group, has sole investment and
voting power as to all the shares shown as beneficially owned with the
exception of those held by certain officers, directors and nominees for
director jointly with their spouses or directly by their spouses or
other relative.
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<PAGE>
(2) Shares are deemed to be beneficially owned if a person directly or
indirectly has or shares the power to vote or dispose of the shares.
(3) Includes voting power of attorney over 1,496 shares owned by members of
Mr. Gregg's family.
(4) The group consists of 14 persons, being two officers of the Corporation,
one executive officer of The First National Bank of Slippery Rock (the
"Bank"), directors and nominees for director, as of the Record Date.
Principal Holders of Stock
Except as set forth in the following table, no person is known to the
Corporation's management to own of record or beneficially 5% or more of the
outstanding Common Stock as of the Record Date:
Common Stock
Name and Address ------------------------
Beneficial Owner Amount Percent
- ---------------- -------- ---------
Grady W. Cooper 181,947 13.20
St. Cloud, Florida 34769
William J. McDanel 75,444 5.47
Slippery Rock, Pennsylvania 16057
ELECTION OF DIRECTORS
The Corporation's Articles of Incorporation provide that, beginning with
directors to be elected at the 1992 Annual Meeting, there shall be three
classes. In 1992, Class I, II and III were elected with terms expiring in
1993, 1994 and 1995, respectively. Beginning in 1993, one class is elected
each year for a three-year term. The total number of directors shall be that
number from time to time determined by a resolution adopted by a majority vote
of the directors then in office or by resolution of the shareholders at a
meeting thereof. There shall be not less than five directors. The number of
directors for 1997 has been set at 11.
The Board of Directors has nominated Messrs. Robert M. Greenberger,
Paul M. Montgomery, William C.Sonntag and Norman P. Sundell for election as
Class II directors for three-year terms to expire at the 2000 Annual Meeting
of Shareholders, or until their successors are duly elected and qualified.
All Class II directors were elected by the shareholders at the 1994 Annual
Meeting for a term of three years. The remaining seven directors will continue
to serve in accordance with their previous election with the terms of the
Class I and Class III directors expiring in 1999 and 1998, respectively. Mr.
William J. McDanel, a Class I director, resigned as of July 31, 1996 and was
named Director Emeritus.
Each shareholder has one vote for each share registered in his or her
name and does not have cumulative voting rights. Unless authority is withheld
as to a particular nominee or as to all nominees, all proxies will be voted
for the nominees listed below.
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<PAGE>
It is intended that shares represented by proxies will be voted for the
nominees listed below, each of whom, is now a director of the Corporation and
each of whom has expressed his willingness to serve, or for any substitute
nominee or nominees designated by the Board of Directors in the event any
nominee or nominees become unavailable for election. The four persons
receiving the highest number of votes for Class II directors will be elected.
The Board of Directors has no reason to believe that any of the nominees will
not serve if elected.
In the following tables are set forth as to each of the nominees for
election as Class II directors and as to each of the continuing Class I and
Class III directors his age, principal occupation and business experience, the
period during which he has served as a director of the Corporation, the Bank
or an affiliate and other business relationships. There are no family
relationships between any of the persons listed below except Mr. Cooper and
the Messrs. Wimer are first cousins.
Nominees For Election as Class II Directors
Terms Expire in 2000
Directorship
in other
Name and Principal Director Reporting
Occupation (1) Age Since (2)(3) Companies
- ------------------ --- ------------ ------------
Robert M. Greenberger 60 1995 None
Owner and President,
Harry Products, Inc.,
parent firm of Warehouse
Sales and Trader
Horn, Retail Sales
Paul M. Montgomery 72 1971 None
Retired, former
President of the
Bank
William C. Sonntag 48 1989 None
President and Chief
Executive Officer of
the Corporation and
Bank
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<PAGE>
Norman P. Sundell 53 1987 None
Partner
Sundell Auto Specialties
THE BOARD OF DIRECTORS RECOMMENDS THE ABOVE NOMINEES BE ELECTED
Class I Directors
Terms Expire in 1999
Directorship
in other
Name and Principal Director Reporting
Occupation (1) Age Since (2)(3) Companies
- ------------------ --- ------------ ------------
John W. Conway 72 1961 None
Vice Chairman,
Retired, former
Executive Vice
President of the Bank
William D. Kingery 43 1995 None
Vice President and
Treasurer, Springfield
Restaurant Group
Charles C. Stoops, Jr. 63 1984 None
General Tax Counsel,
Rockwell International
Corp.
Class III Directors
Terms Expire in 1998
Directorship
in other
Name and Principal Director Reporting
Occupation (1) Age Since (2)(3) Companies
- ------------------ --- ------------ ------------
Grady W. Cooper 74 1966 None
Chairman of the Board,
former President of
Cooper Brothers, Inc.
Building Supplies
Robert E. Gregg 55 1987 None
Partner, Spring
Meadows Farms
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<PAGE>
S. P. Snyder, 64 1966 None
Retired, former
Owner and Partner,
Snyder Bus Company
Kenneth D. Wimer 70 1971 None
Retired, former
Manager, Cooper
Brothers, Inc.
Building Supplies
[FN]
(l) All directors and nominees have held the positions indicated or another
senior executive position with the same entity or one of its affiliates
or predecessors for the past five years.
(2) Reflects the earlier of the first year as a director of the Corporation
or the Bank.
(3) All incumbent directors were elected by the shareholders.
Board Meetings and Committees
The Board of Directors of the Corporation has various committees
including a Personnel and Salary Committee and an Audit Committee. During the
year 1996 the Board of Directors of the Corporation held 7 meetings and the
Board of Directors of the Bank held 12 meetings. The Audit Committee held 10
meetings. The Audit Committee of the Corporation and the Bank comprise the
same persons and all meetings were jointly held. Each director attended at
least 75% of the combined total of meetings of the Board of Directors and each
committee of which he was a member.
The Audit Committee is responsible for recommending to the Board of
Directors the appointment of an independent public accountant to audit the
books and accounts of the Corporation and its subsidiaries; reviewing the
reports of the Audit Department and the reports of examination conducted by
the bank and bank holding company regulators and of independent public
accountants; reviewing the adequacy of internal audit and control procedures;
and reporting to the Board of Directors. The Audit Committee is presently
comprised of Messrs. Conway, Gregg, Kingery and Wimer who also constitute the
Audit Committee of the Bank.
The Corporation presently does not have a separate Nominating Committee.
The Personnel and Salary Committee of the Bank, consisting of Messrs. Cooper,
Greenberger, Snyder, Stoops, Sundell, and Wimer, met 3 times in 1996. Mr.
Sonntag is ex-officio member of all committees.
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<PAGE>
EXECUTIVE COMPENSATION
Compensation of Directors
Directors are paid $850 for each Board meeting. A total of $105,075 was
paid as Directors fees in 1996.
Executive Compensation
The following persons are considered to be Executive Officers of the
Corporation by virtue of their position with the Corporation or the Bank.
Name Age Position Business Experience(1)
- ------------------ --- -------- ---------------------
William C. Sonntag 48 President and Chief
Executive Officer
of the Corporation
and the Bank
Mark A. Volponi 35 Treasurer of the
Corporation and
Controller of the Bank
Eleanor L. Cress 57 Secretary of the
Corporation and
Vice President and
Secretary of the Bank
Dale R. Wimer 51 Executive Vice
President of the Bank
[FN]
(l) Each of the above persons, has held an executive position with the
Corporation or the Bank for the past five years.
The following table sets forth the cash compensation paid or to be paid
by the Bank for services rendered during 1996 to Mr. Sonntag, the Chief
Executive Officer. No other officer's compensation exceeded $100,000. The
Corporation pays no salaries or benefits.
SUMMARY COMPENSATION TABLE
Annual Compensation (l)(2)
Name and
Principal All Other Annual
Position Year Salary Bonus Compensation (4)
- ------------ ---- -------- -------- ----------------
William C. 1996 $ 85,512 $ 28,167 -
Sonntag, 1995 80,508 26,068 -
President and 1994 75,036 23,365 -
Chief Executive
Officer (3)
[FN]
(l) Information with respect to group life, health, hospitalization and
medical reimbursement plans is not included as they do not discriminate
in favor of officers or Directors and are available generally to all
salaried employees.
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<PAGE>
(2) Information with respect to the Bank's Employees Retirement Plan is not
included as it is a fixed benefit plan available to all salaried
employees on the same terms and conditions.
(3) Does not include amounts attributable to miscellaneous benefits. In the
opinion of management of the Corporation, the cost of providing such
benefits during 1996 did not exceed the lesser of $50,000 or 10% of
Mr.Sonntag's total salary and bonus.
(4) The Corporation has no restricted stock or other long-term incentive
plans. The Board of Directors has approved an Employees Incentive Stock
Option Plan and a Non-Employee Directors Stock Option Plan, but no
grants have been made pursuant to either Plan.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires the Corporation's officers,
directors and persons owning more than 10% of the Corporation's Common Stock
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC"). Officers, directors and such shareholders are
required by regulation to furnish the Corporation with copies of all Section
16(a) forms they file. Except as set forth above in "Principal Holders of
Stock", the Corporation knows of no person who owned 10% or more of its Common
Stock.
Based upon review of copies of the forms furnished to the Corporation,
the Corporation believes that during 1996 all Section 16(a) filing
requirements were complied with in a timely manner.
TRANSACTIONS WITH MANAGEMENT
Certain directors, nominees and executive officers and/or their
associates were customers of and had transactions with the Corporation or the
Bank during 1996. Transactions which involved loans or commitments by the
Bank were made in the ordinary course of business and on substantially the
same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons and did not involve
more than normal risk of collectability or present other unfavorable features.
-8-
<PAGE>
The following table sets forth information with respect to each current
director and executive officer of the Corporation and its affiliates who had
borrowings of $60,000 or greater from the Bank during 1996.
Indebtedness of Management
<TABLE>
<CAPTION>
Highest
Principal
Names Type Year Interest Amount Balance at
and Position of Loan Made Rate in 1996 December 31, 1996
- ------------ ------- ---- -------- --------- -----------------
<S> <C> <C> <C> <C> <C>
Robert Line of 1987 9.29% $ 17,829 $ 15,437
E. Gregg Credit (Variable)
(Director)
Mortgage 1995 8.125% 71,903 71,398
(Variable)
Equipment 1991 10.5% 1,765 0
(1)
Mortgage 1991 8.25% 126,497 119,026
(1) (Variable)
Line of 1991 9.25% 23,000 23,000
Credit (1) (Variable)
Auto- 1995 11.5% 9,931 7,770
mobile (2)
Unsecured 1994 11.04% 4,673 4,037
(2) (Variable)
Unsecured 1995 11.5% 2,851 2,006
(2)
Robert M. Unsecured 1992 10.5% 2,823 1,829
Greenberger
(Director) Line of 1995 8.25% 1,005,491 604,580
Credit (3)
Mortgage 1995 8.0% 139,621 138,525
(4)
Mortgage 1995 8.75% 25,511 25,511
(4)
Mortgage 1987 7.75% 32,012 32,242
(4) (Variable)
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<PAGE>
Line of 1996 11.04% $ 1,516 $ 317
Credit (5) (Variable)
Mortgage 1996 8.25% 200,000 197,238
William Mortgage 1995 7.125% 233,910 224,369
D. Kingery (Variable)
(Director)
Commer- 1992 8.75% 183,060 0
cial
Mortgage (6)
Line of 1995 10.29% 3,549 0
Credit (6) (Variable)
Paul M. Line of 1995 9.29% 72,862 70,591
Montgomery Credit (Variable)
(Director)
Auto- 1993 10.5% 993 0
mobile (7)
Mortgage 1991 9.375% 18,973 17,950
(7)
Unsecured 1993 11.75% 948 0
Unsecured 1996 11.50% 5,000 4,053
Mortgage 1996 9.5% 12,000 11,945
(7)
S.P. Snyder Unsecured 1991 8.25% 14,002 11,002
(Director) (Variable)
Unsecured 1991 8.25% 9,500 3,000
(8) (Variable)
Mortgage 1994 6.875% 114,438 109,303
(9)
Residence 1989 11.956% 4,934 0
(9)
Line of 1987 9.04% 9,684 8,332
Credit (9)
Equipment 1995 10.25% 9,349 4,699
(10)
Equipment 1995 10.25% 23,040 16,132
(10)
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<PAGE>
Equipment 1995 10.25% $21,600 $15,122
(10)
Equipment 1996 9.25% 15,036 12,773
(10)
William C. Auto- 1995 8.95% 14,116 11,505
Sonntag mobile (11)
(Director
and President) Auto- 1995 9.75% 12,731 10,669
mobile(11)
Commer- 1994 9.00% 34,316 26,094
cial (11)
Line of 1993 9.29% 3,682 3,224
Credit (11)
Eleanor L. Line of 1993 9.29% 11,910 624
Cress Credit (12)
(Officer)
Education 1993 12.25% 3,889 2,622
(12)
Mortgage 1994 7.625% 54,329 52,960
(12) (Variable)
Line of 1996 11.04% 2,000 200
Credit (Variable)
(12)
Mark A. Home 1993 7.0% 124,167 122,735
Volponi Mortgage
(Officer)
Line of 1987 11.04% 2,798 2,792
Credit (Variable)
Auto 1996 8.9% 2,582 1,555
</TABLE>
[FN]
(1) Loans to Spring Meadow Farms, of which Mr. Gregg is a partner.
(2) Loans to Mr. Gregg's son.
(3) Loan to Harry Products, of which Mr. Greenberger is owner.
(4) Loans to Mr. Greenberger's brother.
(5) Loan to Mr. Greenberger's son.
(6) Loans to Original Log Cabin Inn, of which Mr. Kingery is the former
owner.
(7) Loans to Mr. Montgomery's children.
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<PAGE>
(8) Loan to Snyder's Garage, of which Mr. Snyder is owner.
(9) Loans to Mr. Snyder's daughter and other relatives.
(10) Loans to business of which Mr. Snyder's son-in-law is a part owner.
(11) Loans to Mr. Sonntag's sister and brother-in-law.
(12) Loans to Mrs. Cress' son and brother.
1997 STOCK OPTION PLANS
Shareholders are being asked to approve and adopt the Corporation's 1997
Employees Incentive Stock Option Plan ("ISOP") and the 1997 Directors Stock
Option Plan ("Directors Plan"). The ISOP and the Directors Plan have both
been approved by the Board of Directors at their meeting held on January 21,
1997, and the Board of Directors recommends that the shareholders approve and
adopt both Plans.
Following is a summary of each plan. A complete copy of each plan may
be obtained by a shareholder by request in writing to:
Eleanor L. Cress, Secretary
Slippery Rock Financial Corporation
100 South Main Street
Slippery Rock, Pennsylvania 16057-1245
ISOP
The purpose of the ISOP is to encourage the eligible employees of the
Corporation and its subsidiaries to increase their efforts to make the
Corporation and each subsidiary more successful, to provide an additional
inducement for such employees to remain with the Corporation or a subsidiary,
to reward such employees by providing an opportunity to acquire the common
stock of the Corporation ("Common Stock") on favorable terms and to provide a
means through which the Corporation may attract able persons to enter the
employment of the Corporation or a subsidiary. The ISOP provides that options
to purchase up to an aggregate of 100,000 shares of Common Stock may be
granted to salaried employees who hold executive, managerial, technical or
professional responsibility, subject to the following terms and conditions.
1. The ISOP shall be administered by a Committee appointed, from
time to time by the Board of Directors and consisting of members of the
Personnel Committee who are not also employees of the Corporation. The
Committee, subject to the provisions of the ISOP, shall have full and final
authority to grant options and to determine the employees to whom such options
shall be granted and the number of shares to be covered by such option.
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<PAGE>
2. The Committee shall have authority to grant only "Incentive
Stock Options" pursuant to Section 422 of the Internal Revenue Code of 1986.
Shares which may be issued or delivered under the ISOP may be either
authorized but unissued shares or treasury shares or partly each as determined
from time to time by the Board of Directors. If any Stock Option granted
under the ISOP is cancelled or terminates or expires without having been
exercised in full, the number of shares subject to such option shall again be
available for purposes of the ISOP.
3. The aggregate fair market value of stock "determined at the time
of grant" with respect to which options are exercisable for the first time by
any individual during any calendar year shall not exceed $100,000.00. The
purchase price at which an option may be exercised shall be the price as
determined by the Committee but shall not be less than 100% of the fair market
value per share of Common Stock on the date of the grant, provided, however,
that in the case of a grant to an employee who immediately prior to such grant
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Corporation ("10% Employee"), the option price shall
not be less than 110% of such fair market value. The option price may be
payable in cash, in shares of the Common Stock already owned by the optionee
having a fair market value on the date of exercise equal to the option price
of the shares being purchased, by delivery to the Corporation of a notice of
exercise with an irrevocable direction to a broker-dealer to sell a sufficient
portion of the shares and deliver the sale proceeds to the Corporation
sufficient to pay the purchase price or by electing to have shares otherwise
issuable to the optionee having a fair market value equal to the exercise
price of the option withheld to pay the exercise price.
4. The date of exercise of the stock option shall be determined
under procedures established by the Committee and the option price shall be
payable at such time in full, provided however that stock options may not be
exercised before the second anniversary of the date on which the options were
granted ("Grant Date"). On or after the second anniversary date, 33 1/3% of
the options may be exercised; on or after the third anniversary of the Grant
Date, 66 2/3% of the options, minus the aggregate number previously exercised,
may be exercised; and on or after the fourth anniversary of the Grant date,
the remainder may be exercised. No incentive stock options shall be
exercisable after the expiration of ten years from the Grant Date of the
grant, except that this period is limited to five years in the case of a 10%
Employee.
5. No stock option rights are transferable by an optionee other
than by will or by the laws of descent and distribution in the state of
domicile of the optionee at the time of death. If employment of an optionee
is voluntarily terminated with the consent of the Corporation or by retirement
under a retirement plan of the Corporation, options must be exercised no later
than three months following the date of termination of employment or ten years
from the date of the grant of the option, whichever first occurs. An
exception to this arises if employment is terminated by disability of the
optionee or by death of the optionee. In either of those cases, the options
may be exercised by the optionee or by the administrator of his or her estate
for a period of twelve months from the date of termination of employment or
ten years from the date of the grant of the option, whichever first occurs.
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<PAGE>
6. All options shall be confirmed by a Stock Option Agreement which
shall be executed by an officer of the Corporation and by the optionee. Fair
market value shall be computed by taking a weighted average of the mean
between the highest and lowest selling price per share of the Common Stock as
quoted in such reliable publications as the Committee may choose on the
nearest date before and the nearest date after the date as of which fair
market value is to be determined. If the stock does not trade in the
over-the-counter market or on a stock exchange, fair market value shall be
determined by an independent and experienced appraiser selected by the
Committee. The obligation of the Corporation to issue or deliver shares of
common stock shall be subject to the effectiveness of a registration statement
under the Securities Act of 1933 if deemed necessary or appropriate by counsel
of the Corporation, to the condition that shares shall have been listed or
authorized for listing upon official notice of issuance upon such stock
exchanges on which the shares may then be listed and all other applicable
laws, regulations, rules and orders which then may be in effect.
7. If there is a change in the number of shares of common stock
issued and outstanding, the number of shares of common stock then subject to
any outstanding option shall be adjusted by adding thereto the number of
shares which would have been distributable thereon if such shares had been
outstanding on the date for determining the shareholders entitled to receive
such stock dividend or distribution. Such changes shall include a stock
dividend distribution declared upon the common stock or an exchange of shares
of common stock of the corporation into a different number or kind of shares
of stock or other securities of the Corporation or another corporation through
a reorganization, reclassifaction, recapitalization, stock split-up,
combination of shares, merger or consolidation. The per share stock option
price shall be adjusted to reflect the adjustment in the number of shares.
8. Stock options shall become exercisable upon the occurrence of
certain events whether or not such options are then exercisable under the
provisions of the agreements relating to them. These events include (i)
purchase of shares pursuant to a tender offer or exchange offer other than by
the Corporation, (ii) for a period of sixty days following the date upon which
the Corporation acquires knowledge that any person or a group of persons has
become the beneficial owner of 20% or more of all voting stock of the
Corporation, (iii) for a period of sixty days following the date of a filing
by any person disclosing an intention to acquire or change control of the
Corporation, (iv) for a period of sixty days beginning on the date, during any
period for two consecutive years, when individuals who at the beginning of
such period constituted the board of directors cease to constitute at least a
majority thereof unless the election or nomination for election by the
shareholders of each new director was approved by a vote of at least two-
thirds of the directors still in office at the beginning of the period and (v)
for a period of sixty days beginning on the date of approval of the
shareholders of the Corporation of a reorganization agreement providing for
the merger or consolidation of the Corporation with another corporation where
present shareholders of the Corporation, will not own immediately after the
reorganization 40% or more of all voting shares for the election of directors
or the sale or other disposition of all or substantially all of the assets of
the Corporation.
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<PAGE>
9. Neither the adoption of the Plan or any action by the Board of
Directors or the Committee pursuant to the Plan shall be deemed to give any
employee the right to be granted a stock option or confer to any employee the
right to continue in the employment of the Corporation or any subsidiary or
diminish in any way the right of the Corporation or its subsidiary to
determine the employment of any employee at any time.
10. The effective date of the ISOP shall be January 21, 1997, the
date of adoption by the Board of Directors provided that such adoption is
approved by the affirmative vote of the holders of at least the majority of
the outstanding shares of Common Stock at a meeting of the shareholders held
within one year of the effective date.
11. The proceeds received by the Corporation for the sale of Common
Stock issued pursuant to the exercise of options shall be used for general
corporate purposes. The Corporation is under no obligation to purchase or
reserve Common Stock to satisfy the exercise of stock options. Furthermore,
the grant of stock options to employees shall not constitute the establishment
of a trust of the Common Stock issuable pursuant to such options.
12. The Board may alter, amend, revoke or terminate the ISOP at any
time. No such termination or revocation shall terminate any outstanding option
previously granted, and no alteration or amendment shall, without prior
shareholder approval, (a) increase the total number of shares which may be
issued under the ISOP, (b) increase the number of shares issuable to any one
person (c) make any changes in the class of eligible employees or (d) extend
the period during which options may be granted. No such action shall, without
the written consent of the holders of an option, adversely affect the rights
of such holder.
13. An optionee who does not dispose of the shares within two years
after an option was granted or within one year after the option was exercised
will not recognize income at the time the option is exercised, and no federal
income tax deduction will be available to the Corporation at any time as a
result of such grant or exercise. However, the excess of the fair market
value of the stock subject to the ISOP on the date the option is exercised
over the exercised price of the option will be treated as an item of tax
preference in the year of exercise for purposes of the alternative minimum
tax. The Corporation is not entitled to income tax deduction under such
circumstances.
THE BOARD OF DIRECTORS AND THE PRINCIPAL OFFICERS OF THE CORPORATION
INTEND TO VOTE FOR THE ISOP AND RECOMMEND THAT SHAREHOLDERS VOTE IN FAVOR OF
THE ISOP.
DIRECTORS PLAN
The purpose of the Directors Plan is to improve the growth and
profitability of the Corporation by attracting and retaining qualified
non-employee directors and providing such directors with proprietary interest in
the Corporation through non-discretionary grants of non-qualified stock
options ("Stock Options") to purchase shares of the Corporation's common
stock, par value $0.25 per share ("Common Stock"). The Directors Plan
provides that Stock Options to purchase up to 36,000 shares of Common Stock
may be granted to directors of the Corporation or any subsidiary who are not
employees of the Corporation or any subsidiary subject to the following terms
and conditions. The Directors Plan shall be administered by a Committee
consisting of those members of the Personnel Committee of the Board of
Directors who are not also employees of the Corporation or any subsidiary.
The Committee shall have the power to perform all such acts as are deemed
necessary or expedient to promote the best interest of the Corporation with
respect to the Plan.
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<PAGE>
2. Shares which may be issued or delivered under the Directors Plan
may be either authorized but unissued shares or treasury shares or partly each
as determined from time to time by the Board. If any Stock Option as granted
under the Directors Plan is canceled or terminates or expires without having
been exercised in full, the number of shares subject to such Stock Option
shall again be available for purposes of the Directors Plan.
3. The aggregate fair market value of Common Stock "determined at
the time of grant" with respect to which Stock Options are exercisable shall
be the price as determined by the Committee but shall not be less than 100% of
the fair market value per share of Common Stock on the date of the grant. The
option price may be payable in cash, in shares of Common Stock already owned
by the optionee having a fair market value on the date of exercise equal to
the option price of the shares being purchased, by delivery to the Corporation
of a notice of exercise with an irrevocable direction to a broker-dealer to
sell a sufficient portion of the shares and deliver the sale proceeds to the
Corporation sufficient to pay the purchase price or by electing to have shares
otherwise issuable to the optionee having a fair market value equal to the
exercise price of the Stock Option withheld to pay the exercise price.
4. A compensatory Stock Option to purchase 300 shares of Common
Stock shall automatically be granted to each non-employee director of the
Corporation as of September 30 of each year, beginning September 30, 1997 and
ending on September 30, 2006.
5. The date of exercise of the Stock Option shall be determined
under procedures established by the Committee and the option price shall be
payable in full at such time provided. All Stock Options under the Directors
Plan shall be immediately vested on the date of grant, provided however that
no Stock Option shall be exercisable after the expiration of ten years from
the date of the grant and provided further that no Stock Option or portion
thereof may be exercised until the shareholders of the Corporation have
approved this plan by such vote as may be required by applicable laws and
regulations.
6. All options shall be confirmed by a Stock Option Agreement which
shall be executed by an officer of the Corporation and by the Optionee. Fair
market value shall be computed by taking a weighted average of the mean
between the highest and lowest selling price per share of the Common Stock as
quoted in such reliable publications as the Committee may choose on the
nearest date before and the nearest date after the date as of which fair
market value is to be determined. If the stock does not trade in the
over-the-counter market or on the stock exchange, fair market value shall be
determined by an independent and experienced appraiser selected by the
Committee.
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<PAGE>
7. If an optionee dies while serving as a non-employee director of
the Corporation or terminates his service as a non-employee director as a
result of disability without having fully exercised his options, the optionee
or the executors, administrators, legatees or distributees of his estate shall
have the right to exercise such options during the twelve-month period
following such date or disability, provided that no option shall be
exercisable more than ten (10) years from the date it was granted. If an
optionee ceases to hold office as a non-employee director of the Corporation
for any reason other than death, disability or removal for cause without
having fully exercised his options, the optionee shall have the right to
exercise such options during the three months following such succession,
provided that no option shall be exercisable more than ten (10) years from the
date it was granted. Options granted to a non-employee director who is
removed for cause shall terminate as of the effective date of such removal.
8. Options shall not be transferable by an optionee except by Will
or the laws of dissent and distribution and during an optionee's lifetime
shall be exercisable only by the optionee or the optionee's guardian or legal
representative.
9. If there is a change in the number of shares of Common Stock
issued and outstanding, the number of shares of Common Stock then subject to
any outstanding option shall be adjusted by adding thereto the number of
shares which would have been distributable thereon if such share had been
outstanding on the date for determining the shareholders entitled to receive
such stock distribution or dividend. If, upon a merger, consolidation,
reorganization, liquidation, recapitalization or the like of the Corporation,
shares of Common Stock shall be exchanged for other securities of the
Corporation or of another corporation, each recipient of an option being
entitled, subject to the conditions herein stated, to purchase or acquire such
number of shares of Common Stock or other amount of other securities of the
Corporation or such other corporation as are exchangeable for the number of
shares of Common Stock which such optionee would have been entitled to
purchase or acquire except for such action. Appropriate adjustment shall be
made to the per share exercise price of outstanding options.
10. Neither the Plan nor the grant of any options under the Plan or
any action taken by the Committee in connection with the Plan shall create any
right on the part of a non-employee director of the Corporation to continue as
such.
11. The effective date of the Directors Plan shall be January 21,
1997, the date of adoption by the Board of Directors provided that such
adoption is approved by the affirmative vote of the holders of at least the
majority of the outstanding shares of Common Stock at a meeting of the
shareholders.
12. The proceeds received by the Corporation for sale of Common
Stock issued pursuant to exercise of option shall be used for general
corporate purposes. The Corporation is under no obligation to purchase or
reserve Common Stock to satisfy the exercise of stock options.
13. The Board may amend or revise the Plan from time to time
provided that no amendment which (a) changes the maximum number of shares that
may be sold or issued under the Plan or (b) changes the class (except as
otherwise provided in case of a split or other division of the shares) or
changes the class of persons that may be granted options shall be effective
until it receives the approval of the shareholders from the Corporation. The
Board may not, without the consent of a holder of an option, alter or impair
any option previously granted under the Plan except as specifically authorized
in the Plan. In any event, certain provisions of the Plan may not be amended
more than once every six months other than to comport to applicable provisions
of law or regulation applicable to the Plan.
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<PAGE>
14. The difference between the fair market value of common stock on
the date of exercise and the option exercise price generally will be treated
as compensation income upon exercise and the Corporation will be entitled to a
deduction in the amount of income so recognized by the optionee. Upon a
subsequent disposition of the shares, the difference between the amount
received by the optionee and the fair market value on the option exercise date
will be treated as long or short-term capital gain or loss, depending upon the
holding period of the shares.
THE BOARD OF DIRECTORS AND THE PRINCIPAL OFFICERS OF THE CORPORATION INTEND TO
VOTE FOR THE DIRECTORS PLAN AND RECOMMEND THAT THE SHAREHOLDERS VOTE IN FAVOR
OF THE DIRECTORS PLAN.
AUDITORS
S. R. Snodgrass, A.C. has audited the Corporation's financial statements
for the fiscal year ended December 31, 1996, and the report on such financial
statements appears in the Annual Report to Shareholders. S. R. Snodgrass,
A.C. has been selected by the Board of Directors to perform an examination of
the consolidated financial statements of the Corporation for the year ending
December 31, 1997.
FINANCIAL INFORMATION
A copy of the Corporation's Annual Report to Shareholders for the year
ended December 31, 1996 accompanies this Proxy Statement. Such Annual Report
is not a part of the proxy solicitation materials.
REQUESTS FOR PRINTED FINANCIAL MATERIAL FOR THE CORPORATION OR ANY OF
ITS SUBSIDIARIES - ANNUAL OR QUARTERLY REPORTS, FORMS 10-KSB AND 10-QSB AND
CALL REPORTS AND A LIST OF EXHIBITS - SHOULD BE DIRECTED TO MARK A. VOLPONI,
TREASURER, 100 SOUTH MAIN STREET, SLIPPERY ROCK, PA 16057-1245, TELEPHONE
(412) 794-2210. UPON WRITTEN REQUEST AND PAYMENT OF A COPYING FEE OF TEN
CENTS A PAGE, THE CORPORATION WILL ALSO FURNISH A COPY OF ALL EXHIBITS TO THE
FORM 10-KSB.
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<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters to be presented at the
meeting. If, however, any other business should properly come before the
meeting, or any adjournment thereof, it is intended that the proxy will be
voted with respect thereto in accordance with the best judgment of the persons
named in the proxy.
SHAREHOLDERS PROPOSALS FOR NEXT ANNUAL MEETING
Any shareholder desiring to present a proposal to be considered at the
1998 Annual Meeting of Shareholders should submit the proposal in writing to:
William C. Sonntag, President, Slippery Rock Financial Corporation, 100 South
Main Street, Slippery Rock, PA 16057-1245 no later than November 15, 1997.
By Order of the Board of Directors,
-----------------------------------
Eleanor L. Cress
Secretary
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<PAGE>
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS OF
SLIPPERY ROCK FINANCIAL CORPORATION
The undersigned shareholder(s) of SLIPPERY ROCK FINANCIAL CORPORATION,
Slippery Rock, Pennsylvania do(es) hereby appoint Donald L. Mershimer and
Frank Gill, or either one of them my (our) true attorney(s) with full power of
substitution, for me (us) and in my (our) name(s), to vote all the common
stock of said Corporation standing in my (our) name(s) on its books on
February 28, 1997, at the Annual Meeting of Shareholders to be held at the
Slippery Rock Township Municipal Building, 155 Branchton Road, Slippery Rock,
Pennsylvania 16057, on April 15, 1997, at 7:00 p.m. or any adjournment(s)
thereof as follows:
Mark an "X" in the box below to indicate your vote.
1. Election of Directors:
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (Except as marked to vote for all
to the contrary below) nominees listed below
SPECIAL INSTRUCTIONS: To WITHHOLD authority to vote for any individual
nominee(s), draw a line through the nominee's name(s) below.
Class II Director for Term Expiring in 2000
-------------------------------------------
Robert M. Greenberger William C. Sonntag
Paul M. Montgomery Norman P. Sundell
2. Approval of Employees Incentive Stock Option Plan.
[ ] Approve [ ] Disapprove
3. Approval of Non-Employee Directors Stock Option Plan.
[ ] Approve [ ] Disapprove
4. In accordance with the recommendations of management, to vote upon
such other matters as may properly come before the meeting or any
adjournment thereof.
IN ABSENCE OF A CONTRARY DIRECTION, THE SHARES REPRESENTED SHALL BE
VOTED IN FAVOR OF ITEM 1, 2 AND 3 AND IN ACCORDANCE WITH THE
RECOMMENDATION OF MANAGEMENT WITH RESPECT TO ITEM 4.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO EXERCISE.
This will ratify and confirm all that said attorney(s) may do or cause
to be done by virtue hereof. Said attorney(s) is (are) hereby
authorized to exercise all the power that I (we) would possess if
present personally at said meeting or any adjournment(s) thereof. I
(we) hereby revoke all proxies by me (us) heretofore given for any
meeting of Shareholders of said Corporation. Receipt is acknowledged of
the Notice and Proxy Statement for said meeting, each dated March 21,
1997.
<PAGE>
If you plan on attending the meeting in person, please indicate in the
box below.
WILL ATTEND [ ] Number of Shares
---------------------
-------------------------------
Signature of Shareholder
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Signature of Shareholder
Dated: Please date and sign exactly as your name(s)
-------------------- appear(s) hereon. When signing as attorney,
executor, administrator, trustee, or guardian,
etc., you should indicate your full title. If
stock is in joint name(s), each joint owner
should sign.
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ADDRESSED ENVELOPE
