<PAGE>
SCHEDULE 14-A 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
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Grand Central Financial Corp.
--------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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:
----------------------------------------------------------------------
<PAGE>
[ ] 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.:
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3) Filing Party:
---------------------------------------------
4) Date Filed:
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<PAGE>
GRAND CENTRAL FINANCIAL CORP.
601 MAIN STREET
WELLSVILLE, OHIO 43968
(330) 531-1517
June 14, 1999
Fellow Shareholders:
You are cordially invited to attend the 1999 annual meeting of
shareholders (the "Annual Meeting") of Grand Central Financial Corp. (the
"Company"), the holding company for Central Federal Savings and Loan Association
of Wellsville (the "Association"), Wellsville, Ohio, which will be held on July
13, 1999 at 10:00 a.m., Eastern Time, at the East Liverpool Motor Lodge, 2340
Dresden Avenue, East Liverpool, Ohio.
The attached Notice of the Annual Meeting and the Proxy Statement
describe the business to be transacted at the Annual Meeting. Directors and
Officers of the Company as well as a representative of Crowe, Chizek and Company
LLP, the Company's independent auditors, will be present at the Annual Meeting
to respond to any questions that our shareholders may have regarding the
business to be transacted.
The Board of Directors of the Company has determined that matters to be
considered at the Annual Meeting are in the best interests of the Company and
its shareholders. FOR THE REASONS SET FORTH IN THE PROXY STATEMENT, THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEE AS DIRECTOR
SPECIFIED UNDER PROPOSAL 1, AND THAT YOU VOTE "FOR" APPROVAL OF THE GRAND
CENTRAL FINANCIAL CORP. 1999 STOCK-BASED INCENTIVE PLAN (THE "PLAN") AS
SPECIFIED UNDER PROPOSAL 2, AND THAT YOU VOTE "FOR" PROPOSAL 3, THE RATIFICATION
OF INDEPENDENT AUDITORS.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR
COOPERATION IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST BE
REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE
CONDUCT OF BUSINESS AT THE ANNUAL MEETING.
On behalf of the Board of Directors and all of the employees of the
Company and the Association, I thank you for your continued interest and
support.
Sincerely yours,
/s/ William R. Williams
William R. Williams
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
GRAND CENTRAL FINANCIAL CORP.
601 MAIN STREET
WELLSVILLE, OHIO 43968
----------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 13, 1999
----------------------------------
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the
"Annual Meeting") of Grand Central Financial Corp. (the "Company"), the holding
company for Central Federal Savings and Loan Association of Wellsville (the
"Association"), will be held on July 13, 1999 at 10:00 a.m., Eastern Time, at
the East Liverpool Motor Lodge, 2340 Dresden Avenue, East Liverpool, Ohio.
The purpose of the Annual Meeting is to consider and vote upon the
following matters:
1. The election of one director to a three-year term of office;
2. The approval of the Grand Central Financial Corp. 1999
Stock-Based Incentive Plan;
3. The ratification of the appointment of Crowe, Chizek and Company
LLP as independent auditors of the Company for the fiscal year
ending December 31, 1999; and
4. Such other matters as may properly come before the meeting and at
any adjournments thereof, including whether or not to adjourn the
meeting.
The Board of Directors has established June 1, 1999 as the record date
for the determination of shareholders entitled to receive notice of and to vote
at the Annual Meeting and at any adjournments thereof. Only record holders of
the common stock of the Company as of the close of business on such record date
will be entitled to vote at the Annual Meeting or any adjournments thereof. In
the event there are not sufficient votes for a quorum or to approve the
foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by the Company. A
list of shareholders entitled to vote at the Annual Meeting will be available at
Grand Central Financial Corp., 601 Main Street, Wellsville, Ohio 43968, for a
period of ten days prior to the Annual Meeting and will also be available at the
Annual Meeting itself.
By Order of the Board of Directors
/s/ Daniel F. Galeoti
Daniel F. Galeoti
VICE PRESIDENT OF MORTGAGE OPERATIONS AND
CORPORATE SECRETARY
Wellsville, Ohio
June 14, 1999
<PAGE>
GRAND CENTRAL FINANCIAL CORP.
-----------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JULY 13, 1999
-----------------------
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to shareholders of Grand
Central Financial Corp. (the "Company") in connection with the solicitation by
the Board of Directors ("Board of Directors" or "Board") of proxies to be used
at the annual meeting of shareholders (the "Annual Meeting"), to be held on July
13, 1999, at 10:00 a.m., Eastern Time, at the East Liverpool Motor Lodge, 2340
Dresden Avenue, East Liverpool, Ohio, and at any adjournments thereof. The 1998
Annual Report to Stockholders, including the consolidated financial statements
of the Company for the fiscal year ended December 31, 1998, and the quarterly
report, including financial information for the quarter ending March 31, 1999,
accompany this Proxy Statement which is first being mailed to record holders on
or about June 14, 1999.
Regardless of the number of shares of common stock owned, it is
important that record holders of a majority of the shares be represented by
proxy or in person at the Annual Meeting. Shareholders are requested to vote by
completing the enclosed proxy card and returning it signed and dated in the
enclosed postage-paid envelope. Shareholders are urged to indicate their vote in
the spaces provided on the proxy card. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY WILL BE VOTED BY THE BOARD OF DIRECTORS IN ACCORDANCE
WITH THE DIRECTIONS GIVEN THEREIN. WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED
PROXY CARDS WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEE FOR DIRECTOR NAMED
IN THIS PROXY STATEMENT, "FOR" THE APPROVAL OF THE GRAND CENTRAL FINANCIAL CORP.
1999 STOCK-BASED INCENTIVE PLAN (THE "INCENTIVE PLAN") AND "FOR" THE
RATIFICATION OF CROWE, CHIZEK AND COMPANY LLP AS INDEPENDENT AUDITORS OF THE
COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
Other than the matters listed on the attached Notice of Annual Meeting
of Shareholders, the Board of Directors knows of no additional matters that will
be presented for consideration at the Annual Meeting. EXECUTION OF A PROXY,
HOWEVER, CONFERS ON THE DESIGNATED PROXY HOLDERS DISCRETIONARY AUTHORITY TO VOTE
THE SHARES IN ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH OTHER BUSINESS, IF
ANY, THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND AT ANY ADJOURNMENTS
THEREOF, INCLUDING WHETHER OR NOT TO ADJOURN THE ANNUAL MEETING.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Corporate Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. However, if you are a
shareholder whose shares are not registered in your own name, you will need
appropriate documentation from your record holder to attend the Annual Meeting
and vote personally at the Annual Meeting.
The cost of solicitation of proxies on behalf of management will be
borne by the Company. In addition to the solicitation of proxies by mail, Kissel
Blake, Inc., a proxy solicitation firm, will assist the Company in soliciting
proxies for the Annual Meeting and will be paid a fee of $3,000, plus
out-of-pocket expenses. Proxies may also be solicited personally or by telephone
by directors, officers and other employees of the Company and its subsidiary,
Central Federal Savings and Loan Association of Wellsville (the "Association"),
without additional compensation therefor. The Company will also request persons,
firms and corporations holding shares in their names, or in the name of their
nominees, which are beneficially owned by others, to send proxy material to, and
obtain proxies from, such beneficial owners, and will reimburse such holders for
their reasonable expenses in doing so.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of
shares of common stock of the Company ("Common Stock"), with each share
entitling its owner to one vote on all matters to be voted on at the Annual
Meeting, except as described below.
<PAGE>
The close of business on June 1, 1999, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
shareholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 1,938,871 shares.
As provided in the Company's Certificate of Incorporation, for voting
purposes, holders of Common Stock who beneficially own in excess of 10% of the
outstanding shares of Common Stock (the "Limit") are not entitled to any vote in
respect of the shares held in excess of the Limit and are not treated as
outstanding for voting purposes. A person or entity is deemed to beneficially
own shares owned by an affiliate of, as well as, by persons acting in concert
with, such person or entity. The Company's Certificate of Incorporation
authorizes the Board of Directors (i) to make all determinations necessary to
implement and apply the Limit, including determining whether persons or entities
are acting in concert, and (ii) to demand that any person who is reasonably
believed to beneficially own stock in excess of the Limit to supply information
to the Company to enable the Board of Directors to implement and apply the
Limit.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of Common Stock entitled to vote (after
subtracting any shares in excess of the Limit pursuant to the Company's
Certificate of Incorporation) is necessary to constitute a quorum at the Annual
Meeting. In the event that there are not sufficient votes for a quorum or to
approve or ratify any proposal at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit the further solicitation of proxies.
As to the election of directors (Proposal 1), the proxy card being
provided by the Board of Directors enables a shareholder to vote "FOR" the
election of the nominee proposed by the Board, or to "WITHHOLD" authority to
vote for the nominee being proposed. Under Delaware law and the Company's
Bylaws, directors are elected by a plurality of votes cast, without regard to
either (i) broker non-votes or (ii) proxies as to which authority to vote for
one or more of the nominees being proposed is withheld.
As to the proposed approval of the Incentive Plan (Proposal 2)
submitted for shareholder action, the proxy card being provided by the Board of
Directors enables a shareholder to check the appropriate box on the proxy card
to (i) vote "FOR" the item, (ii) vote "AGAINST" the item, or (iii) "ABSTAIN"
from voting on such item.
As to the ratification of Crowe, Chizek and Company LLP as independent
auditors of the Company (Proposal 3) and all other matters that may properly
come before the Annual Meeting, by checking the appropriate box, a shareholder
may (i) vote "FOR" the item, (ii) vote "AGAINST" the item, or (iii) "ABSTAIN"
from voting on such item.
Under the Company's Bylaws and Delaware law, an affirmative vote of the
holders of a majority of the votes cast at the Annual Meeting on Proposal 2 and
Proposal 3 is required to constitute shareholder approval of each such Proposal.
Shares underlying broker non-votes or in excess of the Limit will not be counted
as present and entitled to vote or as votes cast and will have no effect on the
vote. For further information on the vote required to implement Proposal 2
during the first year following the conversion from mutual to stock form of the
Company's subsidiary, the Association, which was completed on December 30, 1998
(the "Conversion"), see the discussion under Proposal 2 herein. For purposes of
the rules and regulations of the Securities and Exchange Commission ("SEC"),
shares as to which the "ABSTAIN" box has been selected on the proxy card with
respect to Proposal 2 have the effect of a vote against Proposal 2 and shares
underlying broker non-votes or in excess of the Limit are not counted as
entitled to vote on Proposal 2 and have no effect on the vote on the Proposal.
Proxies solicited hereby are to be returned to the Company's transfer
agent, Registrar and Transfer Company ("RTC"). The Board of Directors has
designated RTC to act as the inspector of election and tabulate the votes at the
Annual Meeting. RTC is not otherwise employed by, or a director of, the Company
or any of its affiliates. After the final adjournment of the Annual Meeting, the
proxies will be returned to the Company.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to those persons believed
by management to be beneficial owners of more than 5% of the Company's
outstanding shares of Common Stock on the Record Date or as disclosed in certain
reports received to date regarding such ownership filed by such persons with the
Company and with the SEC, in accordance with Sections 13(d) and 13(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Other than
those persons listed below, the Company is not aware of any person, as such term
is defined in the Exchange Act, who owns more than 5% of the Company's Common
Stock as of the Record Date.
<TABLE>
<CAPTION>
NUMBER PERCENT
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OF SHARES OF CLASS
- ---------------- ----------------------------------------- ----------- ---------
<S> <C> <C> <C>
Common Stock The Central Federal Savings and Loan Association 155,110 (1) 8.0%
of Wellsville Employee Stock Ownership Plan
and Trust (the "ESOP")
601 Main Street
Wellsville, Ohio 43968
</TABLE>
- --------------------------
(1) Shares of Common Stock were acquired by the ESOP in the Association's
Conversion. The ESOP Committee administers the ESOP. First Bankers Trust,
N.A. has been appointed as the corporate trustee for the ESOP ("ESOP
Trustee"). The ESOP Trustee, subject to its fiduciary duty, must vote all
allocated shares held in the ESOP in accordance with the instructions of
the participants. As of December 31, 1998, 19,709 shares had been allocated
under the ESOP and 135,401 shares remain unallocated. Under the ESOP,
unallocated shares and allocated shares as to which voting instructions are
not given by participants are to be voted by the ESOP Trustee in a manner
calculated to most accurately reflect the instructions received from
participants regarding the allocated stock so long as such vote is in
accordance with the provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
The nominee proposed by the Board of Directors standing for election as
director was unanimously nominated by the Nominating Committee of the Board of
Directors. Gerry W. Grace is not being proposed for election pursuant to any
agreement or understanding between him and the Company.
After obtaining shareholder approval, the Company and the Association
intend to grant to directors, officers and employees of the Association and the
Company, stock options and awards in the form of shares of Common Stock under
the Incentive Plan being presented for approval in Proposal 2.
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of five (5)
directors and is divided into three classes. Each of the five members of the
Board of Directors also presently serves as a director of the Association.
Directors are elected for staggered terms of three years each, with the term of
office of only one of the three classes of directors expiring each year.
Directors serve until their successors are elected and qualified.
The nominee proposed for election at the Annual Meeting is Gerry W.
Grace. Mr. Grace is not being proposed for election pursuant to any agreement or
understanding between him and the Company.
In the event that Mr. Grace is unable to serve or declines to serve for
any reason, it is intended that proxies will be voted for the election of such
other persons as may be designated by the present Board of Directors. The Board
of
3
<PAGE>
Directors has no reason to believe that Mr. Grace will be unable or unwilling to
serve. UNLESS AUTHORITY TO VOTE FOR THE DIRECTOR IS WITHHELD, IT IS INTENDED
THAT THE SHARES REPRESENTED BY THE ENCLOSED PROXY CARD WILL BE VOTED "FOR" THE
ELECTION OF THE NOMINEE PROPOSED BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEE NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO NOMINEES, CONTINUING DIRECTORS AND CERTAIN EXECUTIVE
OFFICERS
The following table sets forth, as of the Record Date, the names of
nominees and continuing directors and the Named Executive Officers (as defined
below), their ages, a brief description of their recent business experience,
including present occupations and employment, the year in which each became a
director of the Association and the year in which each of their terms (or, in
the case of nominees, their proposed terms) as director of the Company expire.
This table also sets forth the amount of Common Stock and the percent thereof
beneficially owned by each director and all directors and executive officers as
a group as of the Record Date.
<TABLE>
<CAPTION>
AMOUNT AND
EXPIRATION NATURE OF OWNERSHIP
NAME AND PRINCIPAL OCCUPATION DIRECTOR OF TERM AS BENEFICIAL AS A PERCENT
AT PRESENT AND FOR PAST FIVE YEARS AGE SINCE (1) DIRECTOR OWNERSHIP (2)(3) OF CLASS (4)
- ------------------------------------- ---- ------------ ------------- ------------------ --------------
<S> <C> <C> <C> <C> <C>
NOMINEE
Gerry W. Grace............................. 60 1986 2002 20,000 1.03%
Chairman of the Board of the Company
and the Association
CONTINUING DIRECTORS
Jeffrey W. Aldrich......................... 56 1979 2000 20,000 1.03%
President and Chief Executive Officer of
Sterling China Co., a dishware
manufacturing company
William R. Williams........................ 55 1979 2001 20,000 1.03%
President and Chief Executive Officer of
the Company and the Association
Thomas P. Ash.............................. 49 1985 2001 20,000 1.03%
Superintendent of the East Liverpool
City School District
Fred C. Jackson............................ 73 1977 2001 20,000 1.03%
Retired since 1987
NAMED EXECUTIVE OFFICERS
(WHO ARE NOT ALSO DIRECTORS)
John A. Rife............................... 44 -- -- 20,000 1.03%
Executive Vice President and Treasurer
of the Company and the Association
Daniel F. Galeoti.......................... 44 -- -- 20,000 1.03%
Vice President of Mortgage Operations
of the Company and the Association and
Corporate Secretary of the Company
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
EXPIRATION NATURE OF OWNERSHIP
NAME AND PRINCIPAL OCCUPATION DIRECTOR OF TERM AS BENEFICIAL AS A PERCENT
AT PRESENT AND FOR PAST FIVE YEARS AGE SINCE (1) DIRECTOR OWNERSHIP (2)(3) OF CLASS (4)
- ------------------------------------- ---- ------------ ------------- ------------------ --------------
<S> <C> <C> <C> <C> <C>
Charles O. Standley........................ 45 -- -- 20,000 1.03%
Vice President of Commercial and
Consumer Lending of the Company and
the Association
All directors and executive officers as a
group (8 persons).......................... -- -- -- 160,000 8.24%
</TABLE>
- --------------------------------
(1) Includes years of service as a director of the Association.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family members) voting or dispositive power as to shares
reported.
(3) Does not include options and awards intended to be granted under the
Incentive Plan, which is subject to shareholder approval. For a discussion
of the options and awards that are intended to be granted under the
Incentive Plan, see Proposal 2.
(4) As of the Record Date, there were 1,938,871 shares of Common Stock
outstanding.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company and the Board of Directors of the
Association conduct business through meetings of the Board of Directors and
through activities of their committees. The Board of Directors of the Company
and Association generally meet on a monthly basis and may have additional
meetings as needed. During the fiscal year ended December 31, 1998, the Board of
Directors of the Company, which was formed on September 10, 1998, held four
meetings primarily related to organizational and other matters in connection
with the formation of the Company and the acquisition of the Association through
the Conversion. The Board of Directors of the Association held 12 meetings
during fiscal 1998. All of the directors of the Company and Association attended
at least 75% of the total number of the Company's Board meetings held and
committee meetings on which such directors served during the fiscal year ended
December 31, 1998. The Board of Directors of the Company and Association
maintain committees, the nature and composition of which are described below:
AUDIT AND COMPLIANCE COMMITTEE. The Audit and Compliance Committee of
the Company consists of the entire board of directors. This committee generally
meets on an annual basis and is responsible for the review of audit reports and
management's actions regarding the implementation of audit findings and to
review compliance with all relevant laws and regulations. Due to the timing of
the Conversion, the Audit and Compliance Committee of the Company did not meet
in fiscal 1998.
COMPENSATION COMMITTEE. The Compensation Committee of the Company
consists of Messrs. Gerry W. Grace and Jeffrey W. Aldrich. Such committee is
responsible for all matters regarding compensation and fringe benefits for
officers and employees of the Company and the Association and meets on an as
needed basis. The Compensation Committee of the Company met one time in fiscal
1998.
NOMINATING COMMITTEE. The Nominating Committee for the 1999 Annual
Meeting consists of the entire board of directors. The committee considers and
recommends the nominees to stand for election at the Company's annual meeting of
shareholders. Due to the timing of the conversion, the Nominating Committee of
the Company did not meet in fiscal 1998, and has met one time during fiscal
1999.
5
<PAGE>
DIRECTORS' COMPENSATION
DIRECTORS' FEES. All directors of the Association are currently paid an
annual retainer of $10,000. In addition, directors receive $125 per executive
committee meeting they attend. The Company does not pay its directors for board
meetings.
INCENTIVE PLAN. The Company is presenting the Incentive Plan to
shareholders for approval, under which all directors of the Company and the
Association are eligible to receive awards. See Proposal 2 for a summary of the
material terms of the Incentive Plan.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth the cash
compensation paid as well as other compensation paid or accrued for services
rendered in all capacities during fiscal years ended December 31, 1998 and 1997
to the Chief Executive Officer and the highest paid executive officer who earned
and/or received salary and bonus in excess of $100,000 ("Named Executive
Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
---------------------------------------
OTHER
FISCAL ANNUAL
NAME AND YEAR SALARY BONUS COMPENSATION
PRINCIPAL POSITIONS (2) ($) ($) ($)(3)
- ------------------- ------ ---------- -------- ------------
<S> <C> <C> <C> <C>
William R. Williams 1998 $133,950 $16,000 $--
President and Chief 1997 132,585 16,000 --
Executive Officer
</TABLE>
- ----------------------------------------
(1) Includes base salary and director's fees for the President and Chief
Executive Officer.
(2) Neither the Company nor its predecessor, the Association, was a reporting
company with respect to the 1996 fiscal year.
(3) For fiscal years 1998 and 1997, there were no (a) perquisites over the
lesser of $50,000 or 10% of the individual's total salary and bonus for the
year; (b) payments of above-market preferential earnings on deferred
compensation; (c) payments of earnings with respect to long-term incentive
plans prior to settlement or maturation; (d) tax payment reimbursements; or
(e) preferential discounts on stock. For fiscal years 1998 and 1997, the
Association had no restricted stock or stock related plans in existence.
EMPLOYMENT AGREEMENTS
The Association and the Company have entered into employment agreements
(collectively, the "Employment Agreements") with William R. Williams, John A.
Rife, Charles O. Standley and Daniel F. Galeoti (individually, the "Executive").
The Association and Company intended that the Employment Agreements would ensure
that the Association and the Company will maintain a stable and competent
management base after the Conversion. The continued success of the Association
and the Company depends to a significant degree on the skills and competence of
Messrs. Williams, Rife, Standley and Galeoti.
The Employment Agreements provide for a three-year term for each
Executive commencing on December 30, 1998. The Association Employment Agreements
provide that, beginning on the first anniversary date of the agreement and
continuing each anniversary date thereafter, the Board of Directors of the
Association may extend each of the agreements for an additional year so that the
remaining term shall be three years unless written notice of non-renewal is
given by the Board of Directors after conducting a performance evaluation of the
Executive. The terms of the Company Employment Agreements shall be extended on a
daily basis, unless written notice of non-renewal is given by the Board of
Directors of the Company. The Association and Company Employment Agreements
provide that the Executive's base salary will be reviewed at least annually. The
base salary for Mr. Williams is $135,608. In addition to base salary, the
Employment Agreements provide for, among other things, participation in various
employee benefit plans and stock-based compensation programs, as well as
furnishing certain fringe benefits available to similarly situated
6
<PAGE>
executive personnel. The Employment Agreements provide for termination by the
Association or the Company for cause (as described in the agreements) at any
time. In the event the Association or the Company chooses to terminate the
Executive's employment for reasons other than for cause or, in the event of the
Executive's resignation from the Association or the Company upon: (i) failure to
re-elect the Executive to his current offices; (ii) a material change in the
Executive's functions, duties or responsibilities; (iii) a relocation of the
Executive's principal place of employment by more than 25 miles; (iv) a material
reduction in the benefits and perquisites to the Executive; (v) liquidation or
dissolution of the Association or the Company; or (vi) a breach of the
Employment Agreements by the Association or the Company; the Executive or, in
the event of the Executive's death, the Executive's beneficiary would be
entitled to receive an amount generally equal to the remaining base salary and
bonus payments that would have been paid to the Executive during the remaining
term of the Employment Agreements. In addition, the Executive would receive a
payment attributable to the contributions that would have been made on the
Executive's behalf to any employee benefit plans of the Association or the
Company during the remaining term of the Employment Agreements, together with
the value of certain stock-based incentives previously awarded to the Executive.
The Association and the Company would also continue and pay for the Executive's
life and disability coverage for the remaining term of the Employment Agreement,
as well as provide medical and dental coverage. Upon any termination of the
Executive, the Executive is subject to a covenant not to compete with the
Company or the Association for one year.
Under the agreements, if voluntary or involuntary termination follows a
change in control of the Association or the Company, the Executive or, in the
event of the Executive's death, the Executive's beneficiary would be entitled to
a severance payment generally equal to the greater of: (i) the payments due for
the remaining terms of the agreement, including, with respect to the Company
Employment Agreements, the value of certain stock-based incentives previously
awarded to the Executive; or (ii) three times the average of the five preceding
taxable years' annual compensation. The Association and the Company would also
continue the Executive's life, health, and disability coverage for thirty-six
months. Notwithstanding that both Employment Agreements provide for a severance
payment in the event of a change in control, the Executive would only be
entitled to receive a severance payment under one agreement. In the event of a
change in control of the Association or the Company, the total amount of
payments due under the Agreements, based solely on the base salaries paid to
Messrs. Williams, Rife, Standley and Galeoti excluding any benefits under any
employee benefit plan which may be payable, would equal approximately $1.13
million.
Payments to the Executive under the Association Employment Agreement
will be guaranteed by the Company in the event that payments or benefits are not
paid by the Association. Payments under the Company Employment Agreements would
be made by the Company. All reasonable costs and legal fees paid or incurred by
the Executive pursuant to any dispute or question of interpretation relating to
the Employment Agreements shall be paid by the Association or Company,
respectively, if the Executive is successful on the merits pursuant to a legal
judgment, arbitration or settlement. The Employment Agreements also provide that
the Association and Company shall indemnify the Executive to the fullest extent
allowable under federal, Ohio and Delaware law, respectively.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Code limits the amount of compensation the Association may consider
in providing benefits under its tax-qualified retirement plans, such as the
Pension Plan and the ESOP. The Code further limits the amount of contributions
and benefit accruals under such plans on behalf of any employee. To provide
benefits to make up for the reduction in benefit flowing from these limits in
connection with the Pension Plan and ESOP, the Association implemented a
non-qualified deferred compensation arrangement known as a "Supplemental
Executive Retirement Plan" ("SERP"). The SERP generally provides benefits to
eligible individuals (designated by the Board of Directors of the Association or
its affiliates) that cannot be provided under the Pension Plan and/or ESOP as a
result of the limitations imposed by the Code, but that would have been provided
under the Pension Plan and/or ESOP but for such limitations. In addition to
providing for benefits lost under tax-qualified plans as a result of limitations
imposed by the Code, the SERP makes up lost ESOP benefits to designated
individuals who retire, who terminate employment in connection with a change in
control, or whose participation in the ESOP ends due to termination of the ESOP
in connection with a change in control (regardless of whether the individual
terminates employment) prior to the complete scheduled repayment of the ESOP
loan. Generally, upon the retirement of an eligible individual or upon a change
in control of the Association or the Company prior to complete repayment of the
ESOP Loan, the SERP will provide the individual with a benefit equal
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to what the individual would have received under the ESOP had he remained
employed throughout the term of the ESOP or had the ESOP not been terminated
prior to the scheduled repayment of the ESOP loan. An individual's benefits
under the SERP become payable upon the participant's retirement (in accordance
with the standard retirement policies of the Association), upon the change in
control of the Association or the Company or as determined under the ESOP and
Pension Plan.
The Association may establish a grantor trust in connection with the
SERP to satisfy the obligations of the Association with respect to the SERP. The
assets of the grantor trust would remain subject to the claims of the
Association's general creditors in the event of the Association's insolvency
until paid to the individual pursuant to the terms of the SERP.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Financial Institutions Reform, Recovery and Enforcement Act
("FIRREA") requires that all loans or extensions of credit to executive officers
and directors must be made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with the general public and must not involve more than the normal
risk of repayment or present other unfavorable features. In addition, loans made
to a director or executive officer in excess of the greater of $25,000 or 5% of
the Association's capital and surplus (up to a maximum of $500,000) must be
approved in advance by a majority of the disinterested members of the Board of
Directors.
Prior to FIRREA, the Bank made loans to its executive officers and
Directors which were secured by their primary residences. The rates of interest
charged by the Bank on such loans were the Bank's cost of funds. Pursuant to
FIRREA, in 1989, the Bank discontinued its practice of making such preferential
loans to its officers and Directors. However, all such pre-FIRREA preferential
loans were "grandfathered" under FIRREA. Since the enactment of FIRREA, the Bank
has not made any loans to its executive officers or Directors. The Bank intends
to implement a policy whereby it will begin to again offer loans to executive
officers and Directors. Such loans, as well as loans made to Bank employees,
will be made on the same terms and conditions offered to the general public. If
the Bank implements a policy of extending credit to executive officers and
Directors, such policy will provide that all such loans will be made in the
ordinary course of business, on substantially the same terms, including
collateral, as those prevailing at the time for comparable transactions with
other persons and may not involve more than the normal risk of collectibility or
present other unfavorable features. As of December 31, 1998, the Bank had
$304,000 of loans to executive officers or Directors all of which had balances
of less than $60,000 or were made by the Bank in the ordinary course of business
with no favorable terms and do not involve more than the normal risk of
collectibility or present unfavorable features.
The Company intends that all transactions in the future between the
Company and its executive officers, directors, holders of 10% or more of the
shares of any class of its common stock and affiliates thereof, will contain
terms no less favorable to the Company than could have been obtained by it in
arm's-length negotiations with unaffiliated persons and will be approved by a
majority of independent outside directors of the Company not having any interest
in the transaction.
PROPOSAL 2. APPROVAL OF THE GRAND CENTRAL FINANCIAL CORP.
1999 STOCK-BASED INCENTIVE PLAN
The Board of Directors of the Company is presenting for shareholder
approval the Grand Central Financial Corp. 1999 Stock-Based Incentive Plan
("Incentive Plan"), in the form attached hereto as Appendix A. The purpose of
the Incentive Plan is to attract and retain qualified personnel in key
positions, provide officers, employees and non-employee directors ("Outside
Directors") of the Company and any of its affiliates, including the Association,
with a proprietary interest in the Company as an incentive to contribute to the
success of the Company, promote the attention of management to other
shareholder's concerns and reward employees for outstanding performance.
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GENERAL
The Incentive Plan authorizes the granting of options to purchase
Common Stock of the Company ("Options") and awards of restricted shares of
Common Stock ("Stock Awards") (collectively, Options and Stock Awards are
referred to as "Awards"). Subject to certain adjustments to prevent dilution of
Awards to participants, the maximum number of shares of Common Stock reserved
for Awards under the Incentive Plan is 271,441 shares, consisting of 193,887
shares reserved for Options and 77,554 shares reserved for Stock Awards. All
employees and Outside Directors of the Company and its affiliates, including the
Association, are eligible to receive Awards under the Incentive Plan. The
Incentive Plan will be administered by a committee (the "Committee") consisting
of all five members of the Board of Directors, four of which are not employees
of the Company or its affiliates. Authorized but unissued shares or shares
previously issued and reacquired by the Company may be used to satisfy Awards
under the Incentive Plan. If authorized but unissued shares are used to satisfy
the grant of Stock Awards and the exercise of Options granted under the
Incentive Plan, it will result in an increase in the number of shares
outstanding and will have a dilutive effect on the holdings of existing
shareholders. It is currently anticipated that a trust (the "Incentive Plan
Trust") will be established which will purchase previously issued shares to fund
the Company's obligation for Stock Awards which such stock will be purchased by
the Incentive Plan trustee with contributions from the Company or Bank. As of
the date of this Proxy Statement, no Awards have been granted under the
Incentive Plan.
TYPES OF AWARDS
GENERAL. The Incentive Plan authorizes the grant of Awards in the form
of: (i) Options intended to qualify as incentive stock options under Section 422
of the Code (Options which afford certain tax benefits to the recipients upon
compliance with certain conditions and which do not result in tax deductions to
the Company), referred to as "Incentive Stock Options"; (ii) Options that do not
so qualify (Options which do not afford certain income tax benefits to
recipients, but which may provide tax deductions to the Company), referred to as
"Non-Statutory Stock Options"; and (iii) Stock Awards. Each type of Award may be
subject to vesting or service requirements or other conditions imposed by the
Committee.
OPTIONS. The Committee has the authority to determine the date or dates
on which each Option shall become exercisable and any other conditions
applicable to the exercisability of an Option; PROVIDED, HOWEVER, certain
regulatory limitations on exercisability will apply to any Option granted prior
to December 30, 1999. See "Amendments" and "Shareholder Approval, Effective Date
of Plan and OTS Compliance." The exercise price (described below) of any Option
may generally be paid in cash or in Common Stock at the discretion of the
Committee. See "Method of Option Exercise." The term of Options shall be
determined by the Committee, but in no event shall an Option be exercisable more
than ten years from the date of grant.
All Options granted under the Incentive Plan to officers and employees
may qualify as Incentive Stock Options to the extent permitted under Section 422
of the Code and to the extent awarded as such by the Committee. In order to
qualify as Incentive Stock Options under Section 422 of the Code, the Option
must be granted only to an employee, the exercise price must not be less than
100% of the fair market value on the date of grant (except in the case of "10%
owners," as described below), the term of the Option may not exceed ten years
from the date of grant (except in the case of "10% owners," as described below),
no more than $100,000 of options may become exercisable for the first time in
any calendar year and the options must not be transferable except by the laws of
descent and distribution. Incentive Stock Options granted to any person who is
the beneficial owner of more than 10% of the outstanding voting stock (a "10%
owner") may be exercised only for a period of five years from the date of grant
and the exercise price must be at least equal to 110% of the fair market value
of the underlying Common Stock on the date of grant.
Each Outside Director of the Company or its affiliates will be eligible
to receive Non-Statutory Stock Options to purchase shares of Common Stock.
Additionally, officers and employees are also eligible to receive Non-Statutory
Stock Options.
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Unless otherwise determined by the Committee and subject to applicable
regulation, upon termination of an optionee's services for any reason other than
death, disability, retirement, change in control or termination for cause, all
then exercisable Options shall remain exercisable for a period of three months
following termination and all unexercisable Options shall be canceled. In the
event of the death or disability of an optionee, all unexercisable Options held
by such optionee will become fully exercisable and remain exercisable for up to
one year thereafter. In the event of termination for cause, all exercisable and
unexercisable Options held by the optionee shall be canceled. In the event of
retirement, an optionee may exercise only those Options that were immediately
exercisable as of his or her retirement date and only for a period of one year
after such termination of service. However, in the event the optionee is
immediately engaged by the Association or the Company after retirement as a
consultant, advisor or director, the Committee has the discretion to allow
unexercisable Options to continue to vest or become exercisable in accordance
with their original terms. In the event of the termination of an optionee's
employment or service due to a change in control, whether such termination is
actual, constructive, or otherwise, the optionee may exercise only those options
that were immediately exercisable on the date of the optionee's termination.
Such Options shall remain exercisable for the remaining term of the Options.
Under generally accepted accounting principles, compensation expense is
generally not recognized with respect to the award of options to officers and
employees of the Company and its subsidiaries. However, the Financial Accounting
Standards Board recently indicated that it would propose rules during 1999 that
would generally require recognition of compensation expense with respect to
awards made to non-employees, including non-employee directors of the Company,
and that the proposed changes would apply to awards made after December 15, 1998
and not fully vested prior to October 1, 1999.
STOCK AWARDS. Subject to the terms of the Incentive Plan and applicable
regulation, the Committee has the authority to determine the amounts of Stock
Awards granted to any individual and the dates on which Stock Awards granted
will vest or any other conditions which must be satisfied prior to vesting.
When Stock Awards are distributed (I.E., vest) in accordance with the
Incentive Plan, the recipients will receive an amount equal to accumulated cash
and stock dividends (if any) with respect thereto plus earnings thereon minus
any required tax withholding amounts. Before vesting, recipients of Stock Awards
may direct the voting of shares of Common Stock granted to them and held in the
Incentive Plan Trust. Shares of Common Stock held by the Incentive Plan Trust
which have not been allocated or for which voting has not been directed are
voted by the trustee in the same proportion as the awarded shares are voted in
accordance with the directions given by all recipients of Stock Awards.
Unless otherwise determined by the Committee and subject to applicable
regulation, upon termination of the services of a Stock Award recipient for any
reason other than death, disability, retirement, change in control or
termination for cause, all rights in the recipient's unvested Stock Awards shall
be canceled. In the event of the death or disability of the Stock Award
recipient, all unvested Stock Awards held by such individual will become fully
vested. In the event of termination for cause, all unvested Stock Awards held by
an Incentive Plan participant shall be canceled. In the event of retirement of
an Incentive Plan participant, any Stock Awards in which the participant has not
vested as of his retirement date shall be forfeited. However, in the event the
Incentive Plan participant is immediately engaged by the Company or Association
as a consultant, advisor or director, the Committee has the discretion to
determine that all unvested Stock Awards held by the participant will continue
to vest in accordance with their original terms.
TAX TREATMENT
OPTIONS. An optionee will generally not be deemed to have recognized
taxable income upon grant or exercise of any Incentive Stock Option, provided
that shares transferred in connection with the exercise are not disposed of by
the optionee for at least one year after the date the shares are transferred in
connection with the exercise of the Option and two years after the date of grant
of the Option. If these holding periods are satisfied, upon disposal of the
shares, the aggregate difference between the per share Option exercise price and
the fair market value of the Common Stock is recognized as income taxable at
capital gains rates. No compensation deduction may be taken by the Company as a
result of the grant or exercise of Incentive Stock Options, assuming these
holding periods are met.
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In the case of the exercise of a Non-Statutory Stock Option, an
optionee will be deemed to have received ordinary income upon exercise of the
Option. In the event shares received through the exercise of an Incentive Stock
Option are disposed of prior to the satisfaction of the holding periods (a
"disqualifying disposition"), the exercise of the Option will essentially be
treated as the exercise of a Non-Statutory Stock Option, except that the
optionee will recognize the ordinary income for the year in which the
disqualifying disposition occurs. The amount of any ordinary income recognized
by the optionee upon the exercise of a Non-Statutory Stock Option or due to a
disqualifying disposition will be a deductible expense of the Company for
federal income tax purposes.
STOCK AWARDS. When shares of Common Stock, as Stock Awards, are
distributed upon vesting, the recipient recognizes ordinary income equal to the
fair market value of such shares at the date of distribution plus any dividends
and earnings on such shares (provided such date is more than six months after
the date of grant) and the Company is permitted a commensurate compensation
expense deduction for income tax purposes.
PAYOUT ALTERNATIVES
Any shares of Common Stock tendered in payment of an obligation arising
under the Incentive Plan or applied to tax withholding amounts shall be valued
at the fair market value of the Common Stock. The Committee may use treasury
stock, authorized but unissued stock or it may direct the market purchase of
shares of Common Stock to satisfy its obligations under the Incentive Plan.
METHOD OF OPTION EXERCISE
Subject to the terms of the Incentive Plan, the Committee has
discretion to determine the form of payment for the exercise of an Option. The
Committee may indicate acceptable forms in the Award Agreement covering such
Options or may reserve its decision to the time of exercise. No Option is to be
considered exercised until payment in full is accepted by the Committee. Any
shares of Common Stock tendered in payment of the exercise price of an Option
shall be valued at the fair market value of the Common Stock on the date prior
to the date of exercise.
AMENDMENTS
Subject to limitations imposed by the Incentive Plan, the Board of
Directors or Committee may amend the Incentive Plan in any respect, at any time,
provided that no amendment may affect the rights of the holder of an Award
without his or her permission and such amendment must comply with applicable law
and regulation. Under federal regulations any stock-based benefit plan, such as
the Incentive Plan, that is adopted by a converted savings institution within
the first year after conversion may not provide for the granting of Awards which
shall vest or become exercisable in installments at a rate greater than 20% per
year and may not permit the acceleration of vesting, except in the case of death
or disability. The Board of Directors intends to take any necessary action,
including the amendment or modification of the Incentive Plan, to provide for
the acceleration of vesting or exercisability of Awards upon the occurrence of a
change in control of the Company or the Association (as defined in the Incentive
Plan) and other circumstances. It is intended that any such modification or
amendment would be submitted to shareholders for ratification.
ADJUSTMENTS
In the event of any change in the outstanding shares of Common Stock of
the Company by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, or other increase or decrease in such shares
without receipt or payment of consideration by the Company, or in the event an
extraordinary capital distribution is made, including the payment of an
extraordinary dividend, the Committee may make such adjustments to previously
granted Awards, to prevent dilution, diminution or enlargement of the rights of
the holder; provided, however, that in the case of an extraordinary dividend,
the Committee may be required to obtain OTS approval prior to any such
adjustment. All Awards under the Incentive Plan shall be binding upon any
successors or assigns of the Company.
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NONTRANSFERABILITY
Unless determined otherwise by the Committee, Awards under the
Incentive Plan shall not be transferable by the recipient other than by will or
the laws of intestate succession or pursuant to a domestic relations order. With
the consent of the Committee, an Award recipient may be permitted
transferability or assignment of Non-Statutory Stock Options for valid estate
planning purposes as permitted under the Code or Rule 16b-3 under the Exchange
Act and a participant may designate a person or his or her estate as beneficiary
of any Award to which the recipient would then be entitled, in the event of the
death of the participant.
SHAREHOLDER APPROVAL, EFFECTIVE DATE OF PLAN AND OTS COMPLIANCE
The Incentive Plan is subject to the regulations of the OTS. The OTS
has not endorsed or approved the Incentive Plan.
The Incentive Plan provides that it shall become effective upon the
earlier of: (i) the date that it is approved by a majority of votes eligible to
be cast by the Company's shareholders at a duly called meeting of shareholders;
or (ii) December 31, 1999. Accordingly, if the Incentive Plan is not approved by
a majority of the votes eligible to be cast by shareholders at the Annual
Meeting, the Incentive Plan and any grants thereunder shall become effective on
December 31, 1999 without further shareholder approval unless it is terminated
by the Board of Directors. In the absence of the approval of the Incentive Plan
by vote of a majority of shares cast at the Annual Meeting, the Options granted
under the Incentive Plan would not qualify as Incentive Stock Options under the
Code and the Common Stock of the Company may no longer be eligible for listing
on the Nasdaq Small Cap Market. Additionally, certain federal regulations may
apply to the Incentive Plan with regard to the vesting or exercisability of
Awards. See "Amendments" above.
NEW PLAN BENEFITS
As of the date of this Proxy Statement, no determination had been made
regarding the granting of Awards under the Incentive Plan.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY CARD, IF EXECUTED AND RETURNED, WILL BE VOTED "FOR" THE APPROVAL OF THE
GRAND CENTRAL FINANCIAL CORP. 1999 STOCK-BASED INCENTIVE PLAN.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF
THE GRAND CENTRAL FINANCIAL CORP. 1999 STOCK-BASED INCENTIVE PLAN.
PROPOSAL 3. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December
31, 1998 were Crowe, Chizek and Company LLP. The Company's Board of Directors
has reappointed Crowe, Chizek and Company LLP to continue as independent
auditors for the Association and the Company for the fiscal year ending December
31, 1999, subject to ratification of such appointment by the shareholders.
Representatives of Crowe, Chizek and Company LLP will be present at the
Annual Meeting. They will be given an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions from
shareholders present at the Annual Meeting.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY CARD WILL BE VOTED "FOR" RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK
AND COMPANY LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF
THE APPOINTMENT OF CROWE, CHIZEK AND COMPANY LLP AS THE INDEPENDENT AUDITORS OF
THE COMPANY.
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement and
form of proxy relating to the 2000 Annual Meeting of Shareholders, a
shareholder proposal must be received by the Secretary of the Company at the
address set forth on the Notice of Annual Meeting of Shareholders not later
than February 14, 2000. If such annual meeting is held on a date more than 30
calendar days from July 13, 1999, a stockholder proposal must be received by
a reasonable time before the proxy solicitation for such annual meeting is
made. Any such proposal will be subject to 17 C.F.R. Section 240.14a-8 of the
Rules and Regulations under the Exchange Act.
NOTICE OF BUSINESS TO BE CONDUCTED AT A SPECIAL OR ANNUAL MEETING
The Bylaws of the Company set forth the procedures by which a
shareholder may properly bring business before a meeting of shareholders.
Pursuant to the Bylaws, only business brought by or at the direction of the
Board of Directors may be conducted at a special meeting. The Bylaws of the
Company provide an advance notice procedure for a shareholder to properly bring
business before an annual meeting. The shareholder must give written advance
notice to the Secretary of the Company not less than ninety (90) days before the
date originally fixed for such meeting; PROVIDED, HOWEVER, that in the event
that less than one hundred (100) days notice or prior public disclosure of the
date of the meeting is given or made to shareholders, notice by the shareholder
to be timely must be received not later than the close of business on the tenth
day following the date on which the Company's notice to shareholders of the
annual meeting date was mailed or such public disclosure was made. In order for
the notice of a stockholder proposal for consideration at the Company's 2000
Annual Meeting of Stockholders to be timely, the Company would have to receive
such notice no later than January 19, 2000 assuming the 2000 Annual Meeting is
held on April 19, 2000 and that the Company provides at least 100 days notice or
public disclosure of the date of the meeting. The advance notice by shareholders
must include the shareholder's name and address, as they appear on the Company's
record of shareholders, a brief description of the proposed business, the reason
for conducting such business at the annual meeting, the class and number of
shares of the Company's capital stock that are beneficially owned by such
shareholder and any material interest of such shareholder in the proposed
business. In the case of nominations to the Board of Directors, certain
information regarding the nominee must be provided. Nothing in this paragraph
shall be deemed to require the Company to include in its proxy statement or the
proxy relating to any Annual Meeting any shareholder proposal which does not
meet all of the requirements for inclusion established by the SEC in effect at
the time such proposal is received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in the Notice of Annual
Meeting of Shareholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are then present at the Annual
Meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the Annual Meeting. However, if you are a shareholder whose
shares are not registered in your own name, you will need appropriate
documentation from your recordholder to vote personally at the Annual Meeting.
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A COPY OF THE FORM 10-KSB (WITHOUT EXHIBITS) FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1998, AS FILED WITH THE SEC, WILL BE FURNISHED WITHOUT CHARGE TO
SHAREHOLDERS OF RECORD UPON WRITTEN REQUEST TO DANIEL F. GALEOTI, GRAND CENTRAL
FINANCIAL CORP., 601 MAIN STREET, WELLSVILLE, OHIO 43968.
By Order of the Board of Directors
/s/ Daniel F. Galeoti
Daniel F. Galeoti
VICE PRESIDENT OF MORTGAGE OPERATIONS
AND CORPORATE SECRETARY
Wellsville, Ohio
June 14, 1999
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU
ARE REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
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APPENDIX A
GRAND CENTRAL FINANCIAL CORP.
1999 STOCK-BASED INCENTIVE PLAN
1. DEFINITIONS
(a) "Affiliate" means any "parent corporation" or "subsidiary
corporation" of the Holding Company, as such terms are defined in Sections
424(e) and 424(f) of the Code.
(b) "Association" means Central Federal Savings and Loan Association of
Wellsville.
(c) "Award" means, individually or collectively, a grant under the Plan
of Non-Statutory Stock Options, Incentive Stock Options and Stock Awards.
(d) "Award Agreement" means an agreement evidencing and setting forth
the terms of an Award.
(e) "Board of Directors" means the board of directors of the Holding
Company.
(f) "Change in Control" of the Holding Company or the Association shall
mean an event of a nature that: (i) would be required to be reported in response
to Item 1(a) of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); or (ii) results in a Change in Control of the Institution or
the Holding Company within the meaning of the Home Owners' Loan Act of 1933, as
amended, the Federal Deposit Insurance Act, and the Rules and Regulations
promulgated by the Office of Thrift Supervision (or its predecessor agency), as
in effect on the date hereof (provided, that in applying the definition of
change in control as set forth under the rules and regulations of the OTS, the
Board shall substitute its judgment for that of the OTS); or (iii) without
limitation such a Change in Control shall be deemed to have occurred at such
time as (A) any "person" (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of voting securities of the
Institution or the Holding Company representing 20% or more of the Institution's
or the Holding Company's outstanding voting securities or right to acquire such
securities except for any voting securities of the Institution purchased by the
Holding Company and any voting securities purchased by any employee benefit plan
of the Holding Company or its Subsidiaries, or (B) individuals who constitute
the Board on the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company's stockholders was approved by a
Nominating Committee solely composed of members which are Incumbent Board
members, shall be, for purposes of this clause (B), considered as though he were
a member of the Incumbent Board, or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Institution or
the Holding Company or similar transaction occurs or is effectuated in which the
Institution or Holding Company is not the resulting entity; provided, however,
that such an event listed above will be deemed to have occurred or to have been
effectuated upon the receipt of all required federal regulatory approvals not
including the lapse of any statutory waiting periods, or (D) a proxy statement
has been distributed soliciting proxies from stockholders of the Holding
Company, by someone other than the current management of the Holding Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Holding Company or Institution with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Institution or
the Holding
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Company shall be distributed, or (E) a tender offer is made for 20% or more of
the voting securities of the Institution or Holding Company then outstanding.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the committee designated by the Board of
Directors, pursuant to Section 2 of the Plan, to administer the Plan.
(i) "Common Stock" means the Common Stock of the Holding Company, par
value, $.01 per share.
(j) "Date of Grant" means the effective date of an Award.
(k) "Disability" means any mental or physical condition with respect to
which the Participant qualifies for and receives benefits for under a long-term
disability plan of the Holding Company or an Affiliate, or in the absence of
such a long-term disability plan or coverage under such a plan, "Disability"
shall mean a physical or mental condition which, in the sole discretion of the
Committee, is reasonably expected to be of indefinite duration and to
substantially prevent the Participant from fulfilling his duties or
responsibilities to the Holding Company or an Affiliate.
(l) "Effective Date" means the earlier of the date the Plan is approved
by shareholders or December 30, 1999.
(m) "Employee" means any person employed by the Holding Company or an
Affiliate. Directors who are employed by the Holding Company or an Affiliate
shall be considered Employees under the Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(o) "Exercise Price" means the price at which a Participant may
purchase a share of Common Stock pursuant to an Option.
(p) "Fair Market Value" means the market price of Common Stock,
determined by the Committee as follows:
(i) If the Common Stock was traded on the date in
question on The Nasdaq Stock Market then the Fair
Market Value shall be equal to the closing price
reported for such date;
(ii) If the Common Stock was traded on a stock exchange on
the date in question, then the Fair Market Value
shall be equal to the closing price reported by the
applicable composite transactions report for such
date; and
(iii) If neither of the foregoing provisions is applicable,
then the Fair Market Value shall be determined by the
Committee in good faith on such basis as it deems
appropriate.
Whenever possible, the determination of Fair Market Value by the
Committee shall be based on the prices reported in THE WALL STREET JOURNAL. The
Committee's determination of Fair Market Value shall be conclusive and binding
on all persons.
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(q) "Holding Company" means Grand Central Financial Corp.
(r) "Incentive Stock Option" means a stock option granted to a
Participant, pursuant to Section 7 of the Plan, that is intended to meet the
requirements of Section 422 of the Code.
(s) "Non-Statutory Stock Option" means a stock option granted to a
Participant pursuant to the terms of the Plan but which is not intended to be
and is not identified as an Incentive Stock Option or a stock option granted
under the Plan which is intended to be and is identified as an Incentive Stock
Option but which does not meet the requirements of Section 422 of the Code.
(t) "Option" means an Incentive Stock Option or Non-Statutory Stock
Option.
(u) "Outside Director" means a member of the board(s) of directors of
the Holding Company or an Affiliate who is not also an Employee of the Holding
Company or an Affiliate.
(v) "Participant" means any person who holds an outstanding Award.
(w) "Plan" means this Grand Central Financial Corp. 1999 Stock-Based
Incentive Plan.
(x) "Retirement" means retirement from employment with the Holding
Company or an Affiliate in accordance with the then current retirement policies
of the Holding Company or Affiliate, as applicable. "Retirement" with respect to
an Outside Director means the termination of service from the board(s) of
directors of the Holding Company and any Affiliate following written notice to
such board(s) of directors of the Outside Director's intention to retire.
(y) "Stock Award" means an Award granted to a Participant pursuant to
Section 8 of the Plan.
(z) "Termination for Cause" shall mean, in the case of an Outside
Director, removal from the board(s) of directors of the Holding Company and its
Affiliates in accordance with the applicable by-laws of the Holding Company and
its Affiliates or, in the case of an Employee, as defined under any employment
agreement with the Holding Company or an Affiliate; provided, however, that if
no employment agreement exists with respect to the Employee, Termination for
Cause shall mean termination of employment because of a material loss to the
Holding Company or an Affiliate, as determined by and in the sole discretion of
the Board of Directors or its designee(s).
(aa) "Trust" means a trust established by the Board of Directors in
connection with this Plan to hold Common Stock or other property for the
purposes set forth in the Plan.
(bb) "Trustee" means any person or entity approved by the Board of
Directors or its designee(s) to hold any of the Trust assets.
2. ADMINISTRATION
(a) The Committee shall administer the Plan. The Committee shall
consist of the entire Board of Directors.
(b) The Committee shall (i) select the Employees and Outside Directors
who are to receive Awards under the Plan, (ii) determine the type, number,
vesting requirements and other features and conditions of such Awards, (iii)
interpret the Plan and Award Agreements in all respects and (iv) make all
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other decisions relating to the operation of the Plan. The Committee may adopt
such rules or guidelines as it deems appropriate to implement the Plan. The
Committee's determinations under the Plan shall be final and binding on all
persons.
(c) Each Award shall be evidenced by a written agreement ("Award
Agreement") containing such provisions as may be required by the Plan and
otherwise approved by the Committee. Each Award Agreement shall constitute a
binding contract between the Holding Company or an Affiliate and the
Participant, and every Participant, upon acceptance of an Award Agreement, shall
be bound by the terms and restrictions of the Plan and the Award Agreement. The
terms of each Award Agreement shall be in accordance with the Plan, but each
Award Agreement may include any 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 and at a minimum, the Committee shall set forth in each Award
Agreement: (i) the type of Award granted; (ii) the Exercise Price of any Option;
(iii) the number of shares subject to the Award; (iv) the expiration date of the
Award; (v) the manner, time, and rate (cumulative or otherwise) of exercise or
vesting of such Award; and (vi) the restrictions, if any, 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 is hereby authorized to execute Award Agreements on
behalf of the Company or an Affiliate and to cause them to be delivered to the
recipients of Awards.
(d) The Committee may delegate all authority for: (i) the determination
of forms of payment to be made by or received by the Plan and (ii) the execution
of any Award Agreement.
3. TYPES OF AWARDS
The following Awards may be granted under the Plan:
(a) Non-Statutory Stock Options.
(b) Incentive Stock Options.
(c) Stock Awards.
4. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 14 of the Plan, the
maximum number of shares reserved for Awards under the Plan is 271,441, which
number shall not exceed 14% of the shares of the Common Stock determined
immediately as of the Effective Date. Subject to adjustment as provided in
Section 14 of the Plan, the maximum number of shares reserved hereby for
purchase pursuant to the exercise of Options granted under the Plan is 193,887
which number shall not exceed 10% of the shares of Common Stock as of the
Effective Date. The maximum number of the shares reserved for Stock Awards is
77,554 which number shall not exceed 4% of the shares of Common Stock as of the
Effective Date. The shares of Common Stock issued under the Plan may be either
authorized but unissued shares or authorized shares previously issued and
acquired or reacquired by the Trustee or the Holding Company, respectively. To
the extent that Options and Stock Awards are granted under the Plan, the shares
underlying such Awards will be unavailable for any other use including future
grants under the Plan except that, to the extent that Stock Awards or Options
terminate, expire or are forfeited without having vested or without having been
exercised, new Awards may be made with respect to these shares.
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5. ELIGIBILITY
Subject to the terms of the Plan, all Employees and Outside Directors
shall be eligible to receive Awards under the Plan. In addition, the Committee
may grant eligibility to consultants and advisors of the Holding Company or an
Affiliate, as it sees fit.
6. NON-STATUTORY STOCK OPTIONS
The Committee may, subject to the limitations of this Plan and the
availability of shares of Common Stock reserved but not previously awarded under
the Plan, grant Non-Statutory Stock Options to eligible individuals upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:
(a) EXERCISE PRICE. The Committee shall determine the Exercise Price of
each Non-Statutory Stock Option. However, the Exercise Price shall not be less
than 100% of the Fair Market Value of the Common Stock on the Date of Grant.
(b) TERMS OF NON-STATUTORY STOCK OPTIONS. The Committee shall determine
the term during which a Participant may exercise a Non-Statutory Stock Option,
but in no event may a Participant exercise a Non-Statutory Stock Option, in
whole or in part, more than ten (10) years from the Date of Grant. The Committee
shall also determine the date on which each Non-Statutory Stock Option, or any
part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Non-Statutory Stock Option.
The shares of Common Stock underlying each Non-Statutory Stock Option may be
purchased in whole or in part by the Participant at any time during the term of
such Non-Statutory Stock Option, or any portion thereof, once the Non-Statutory
Stock Option becomes exercisable.
(c) NON-TRANSFERABILITY. Unless otherwise determined by the Committee
in accordance with this Section 6(c), a Participant may not transfer, assign,
hypothecate, or dispose of in any manner, other than by will or the laws of
intestate succession, a Non-Statutory Stock Option. The Committee may, however,
in its sole discretion, permit transferability or assignment of a Non-Statutory
Stock Option if such transfer or assignment is, in its sole determination, for
valid estate planning purposes and such transfer or assignment is permitted
under the Code and Rule 16b-3 under the Exchange Act. For purposes of this
Section 6(c), a transfer for valid estate planning purposes includes, but is not
limited to: (a) a transfer to a revocable intervivos trust as to which the
Participant is both the settlor and trustee, or (b) a transfer for no
consideration to: (i) any member of the Participant's Immediate Family, (ii) any
trust solely for the benefit of members of the Participant's Immediate Family,
(iii) any partnership whose only partners are members of the Participant's
Immediate Family, and (iv) any limited liability corporation or corporate entity
whose only members or equity owners are members of the Participant's Immediate
Family. Nothing contained in this Section 6(c) shall be construed to require the
Committee to give its approval to any transfer or assignment of any
Non-Statutory Stock Option or portion thereof, and approval to transfer or
assign any Non-Statutory Stock Option or portion thereof does not mean that such
approval will be given with respect to any other Non-Statutory Stock Option or
portion thereof. The transferee or assignee of any Non-Statutory Stock Option
shall be subject to all of the terms and conditions applicable to such
Non-Statutory Stock Option immediately prior to the transfer or assignment and
shall be subject to any other conditions proscribed by the Committee with
respect to such Non-Statutory Stock Option.
(d) TERMINATION OF EMPLOYMENT OR SERVICE (GENERAL). Unless otherwise
determined by the Committee, upon the termination of a Participant's employment
or other service for any reason other than Retirement, Disability or death, a
Change in Control, or Termination for Cause the Participant may exercise
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only those Non-Statutory Stock Options that were immediately exercisable by the
Participant at the date of such termination and only for a period of three (3)
months following the date of such termination.
(e) TERMINATION OF EMPLOYMENT OR SERVICE (RETIREMENT). In the event of
a Participant's Retirement, the Participant may exercise only those
Non-Statutory Stock Options that were immediately exercisable by the Participant
at the date of Retirement and only for a period of one (1) year following the
date of Retirement; PROVIDED, HOWEVER, that upon the Participant's Retirement,
the Committee, in its discretion, may determine that all Non-Statutory Stock
Options that were not exercisable by the Participant as of such date shall
continue to become exercisable in accordance with the terms of the Award
Agreement if the Participant is immediately engaged by the Holding Company or an
Affiliate as a consultant or advisor or continues to serve the Holding Company
or an Affiliate as a director, advisory director, or director emeritus.
(f) TERMINATION OF EMPLOYMENT OR SERVICE (DISABILITY OR DEATH). Unless
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or other service due to Disability or death, all
Non-Statutory Stock Options held by such Participant shall immediately become
exercisable and remain exercisable for a period one (1) year following the date
of such termination.
(g) TERMINATION OF EMPLOYMENT OR SERVICE (TERMINATION FOR CAUSE).
Unless otherwise determined by the Committee, in the event of a Participant's
Termination for Cause, all rights with respect to the Participant's
Non-Statutory Stock Options shall expire immediately upon the effective date of
such Termination for Cause.
(h) TERMINATION OF EMPLOYMENT OR SERVICE (CHANGE IN CONTROL). In the
event of the termination of a Participant's employment or service due to a
Change in Control, whether such termination is actual, constructive, or
otherwise, the Participant may exercise only those Non-Statutory Stock Options
that were immediately exercisable by the Participant at the date of such
termination. Such Options shall remain exercisable for the remaining term of the
Options.
(i) PAYMENT. Payment due to a Participant upon the exercise of a
Non-Statutory Stock Option shall be made in the form of shares of Common Stock.
7. INCENTIVE STOCK OPTIONS
The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Incentive Stock Options to an Employee upon such terms and conditions as
it may determine to the extent such terms and conditions are consistent with the
following provisions:
(a) EXERCISE PRICE. The Committee shall determine the Exercise Price of
each Incentive Stock Option. However, the Exercise Price shall not be less than
100% of the Fair Market Value of the Common Stock on the Date of Grant;
PROVIDED, HOWEVER, that if at the time an Incentive Stock Option is granted, the
Employee owns or is treated as owning, for purposes of Section 422 of the Code,
Common Stock representing more than 10% of the total combined voting securities
of the Holding Company ("10% Owner"), the Exercise Price shall not be less than
110% of the Fair Market Value of the Common Stock on the Date of Grant.
(b) AMOUNTS OF INCENTIVE STOCK OPTIONS. To the extent the aggregate
Fair Market Value of shares of Common Stock with respect to which Incentive
Stock Options that are exercisable for the first time
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by an Employee during any calendar year under the Plan and any other stock
option plan of the Holding Company or an Affiliate exceeds $100,000, or such
higher value as may be permitted under Section 422 of the Code, such Options in
excess of such limit shall be treated as Non-Statutory Stock Options. Fair
Market Value shall be determined as of the Date of Grant with respect to each
such Incentive Stock Option.
(c) TERMS OF INCENTIVE STOCK OPTIONS. The Committee shall determine the
term during which a Participant may exercise an Incentive Stock Option, but in
no event may a Participant exercise an Incentive Stock Option, in whole or in
part, more than ten (10) years from the Date of Grant; PROVIDED, HOWEVER, that
if at the time an Incentive Stock Option is granted to an Employee who is a 10%
Owner, the Incentive Stock Option granted to such Employee shall not be
exercisable after the expiration of five (5) years from the Date of Grant. The
Committee shall also determine the date on which each Incentive Stock Option, or
any part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Incentive Stock Option. The
shares of Common Stock underlying each Incentive Stock Option may be purchased
in whole or in part at any time during the term of such Incentive Stock Option
after such Option becomes exercisable.
(d) NON-TRANSFERABILITY. No Incentive Stock Option shall be
transferable except by will or the laws of descent and distribution and is
exercisable, during his lifetime, only by the Employee to whom the Committee
grants the Incentive Stock Option. The designation of a beneficiary does not
constitute a transfer of an Incentive Stock Option.
(e) TERMINATION OF EMPLOYMENT (GENERAL). Unless otherwise determined by
the Committee, upon the termination of a Participant's employment or other
service for any reason other than Retirement, Disability or death, a Change in
Control, or Termination for Cause, the Participant may exercise only those
Incentive Stock Options that were immediately exercisable by the Participant at
the date of such termination and only for a period of three (3) months following
the date of such termination.
(f) TERMINATION OF EMPLOYMENT (RETIREMENT). In the event of a
Participant's Retirement, the Participant may exercise only those Incentive
Stock Options that were immediately exercisable by the Participant at the date
of Retirement and only for a period of one (1) year following the date of
Retirement; PROVIDED HOWEVER, that upon the Participant's Retirement, the
Committee, in its discretion, may determine that all Incentive Stock Options
that were not otherwise exercisable by the Participant as of such date shall
continue to become exercisable in accordance with the terms of the Award
Agreement if the Participant is immediately engaged by the Holding Company or an
Affiliate as a consultant or advisor or continues to serve the Holding Company
or an Affiliate as a director, advisory director, or director emeritus. Any
Option originally designated as an Incentive Stock Option shall be treated as a
Non-Statutory Stock Options to the extent the Participant exercises such Option
more than three (3) months following the Date of the Participant's Retirement.
(g) TERMINATION OF EMPLOYMENT (DISABILITY OR DEATH). Unless otherwise
determined by the Committee, in the event of the termination of a Participant's
employment or other service due to Disability or death, all Incentive Stock
Options held by such Participant shall immediately become exercisable and remain
exercisable for a period one (1) year following the date of such termination.
(h) TERMINATION OF EMPLOYMENT (TERMINATION FOR CAUSE). Unless otherwise
determined by the Committee, in the event of an Employee's Termination for
Cause, all rights under such Employee's Incentive Stock Options shall expire
immediately upon the effective date of such Termination for Cause.
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(i) TERMINATION OF EMPLOYMENT (CHANGE IN CONTROL). In the event of the
termination of a Participant's employment or service due to a Change in Control,
whether such termination is actual, constructive or otherwise, the Participant
may exercise only those Incentive Stock Options that were immediately
exercisable by the Participant at the date of such termination. Such Options
shall remain exercisable for the remaining term of the Options. However, any
Option originally designated as an Incentive Stock Option shall be treated as a
Non-Statutory Stock Option to the extent the Participant exercises such Option
more than three (3) months following the Date of the Participant's cessation of
employment.
(j) PAYMENT. Payment due to a Participant upon the exercise of an
Incentive Stock Option shall be made in the form of shares of Common Stock.
(k) DISQUALIFYING DISPOSITIONS. Each Award Agreement with respect to an
Incentive Stock Option shall require the Participant to notify the Committee of
any disposition of shares of Common Stock issued pursuant to the exercise of
such Option under the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions), within 10 days of such
disposition.
8. STOCK AWARDS
The Committee may make grants of Stock Awards, which shall consist of
the grant of some number of shares of Common Stock, to a Participant upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:
(a) GRANTS OF THE STOCK AWARDS. Stock Awards may only be made in whole
shares of Common Stock. Stock Awards may only be granted from shares reserved
under the Plan and available for award at the time the Stock Award is made to
the Participant.
(b) TERMS OF THE STOCK AWARDS. The Committee shall determine the dates
on which Stock Awards granted to a Participant shall vest and any terms or
conditions which must be satisfied prior to the vesting of any Stock Award or
portion thereof. Any such terms or conditions shall be determined by the
Committee as of the Date of Grant.
(c) TERMINATION OF EMPLOYMENT OR SERVICE (GENERAL). Unless otherwise
determined by the Committee, upon the termination of a Participant's employment
or service for any reason other than Retirement, Disability or death, a Change
in Control, or Termination for Cause, any Stock Awards in which the Participant
has not become vested as of the date of such termination shall be forfeited and
any rights the Participant had to such Stock Awards shall become null and void.
(d) TERMINATION OF EMPLOYMENT OR SERVICE (RETIREMENT). In the event of
a Participant's Retirement, any Stock Awards in which the Participant has not
become vested as of the date of Retirement shall be forfeited and any rights the
Participant had to such unvested Stock Awards shall become null and void;
PROVIDED HOWEVER, that upon the Participant's Retirement, the Committee, in its
discretion, may determine that all unvested Stock Awards shall continue to vest
in accordance with the Award Agreement if the Participant is immediately engaged
by the Holding Company or an Affiliate as a consultant or advisor or continues
to serve the Holding Company or an Affiliate as a director, advisory director,
or director emeritus.
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(e) TERMINATION OF EMPLOYMENT OR SERVICE (DISABILITY OR DEATH). Unless
otherwise determined by the Committee, in the event of a termination of the
Participant's service due to Disability or death all unvested Stock Awards held
by such Participant shall immediately vest as of the date of such termination.
(f) TERMINATION OF EMPLOYMENT OR SERVICE (TERMINATION FOR CAUSE).
Unless otherwise determined by the Committee, or in the event of the
Participant's Termination for Cause, all Stock Awards in which the Participant
had not become vested as of the effective date of such Termination for Cause
shall be forfeited and any rights such Participant had to such unvested Stock
Awards shall become null and void.
(g) TERMINATION OF EMPLOYMENT OR SERVICE (CHANGE IN CONTROL). In the
event of a termination of the Participant's service due to a Change in Control
whether such termination is actual, constructive or otherwise, any Stock Awards
in which the Participant has not become vested as of the date of such
termination shall be forfeited and any rights the Participant had to such
unvested Stock Awards shall become null and void.
(h) ISSUANCE OF CERTIFICATES. Unless otherwise held in Trust and
registered in the name of the Trustee, reasonably promptly after the Date of
Grant with respect to shares of Common Stock pursuant to a Stock Award, the
Holding Company shall cause to be issued a stock certificate, registered in the
name of the Participant to whom such Stock Award was granted, evidencing such
shares; provided, that the Holding Company shall not cause such a stock
certificate to be issued unless it has received a stock power duly endorsed in
blank with respect to such shares. Each such stock certificate shall bear the
following legend:
The transferability of this certificate and the shares of
stock represented hereby are subject to the restrictions,
terms and conditions (including forfeiture provisions and
restrictions against transfer) contained in the Grand Central
Financial Corp 1999 Stock-Based Incentive Plan and Award
Agreement entered into between the registered owner of such
shares and Grand Central Financial Corp. or its Affiliates. A
copy of the Plan and Award Agreement is on file in the office
of the Corporate Secretary of Grand Central Financial Corp.
located at 601 Main Street, Wellsville, Ohio 43968.
Such legend shall not be removed until the Participant becomes vested in such
shares pursuant to the terms of the Plan and Award Agreement. Each certificate
issued pursuant to this Section 8(i), in connection with a Stock Award, shall be
held by the Holding Company or its Affiliates, unless the Committee determines
otherwise.
(i) NON-TRANSFERABILITY. Except to the extent permitted by the Code,
the rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules:
(i) The recipient of a Stock Award shall not sell,
transfer, assign, pledge, or otherwise encumber
shares subject to the Stock Award until full vesting
of such shares has occurred. For purposes of this
section, the separation of beneficial ownership and
legal title through the use of any "swap" transaction
is deemed to be a prohibited encumbrance.
(ii) Unless determined otherwise by the Committee and
except in the event of the Participant's death or
pursuant to a domestic relations order, a Stock Award
is not transferable and may be earned in his lifetime
only by the Participant to whom it is granted. Upon
the death of a Participant, a Stock
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Award is transferable by will or the laws of descent
and distribution. The designation of a beneficiary
shall not constitute a transfer.
(iii) If a recipient of a Stock Award is subject to the
provisions of Section 16 of the Exchange Act, shares
of Common Stock subject to such Stock Award may not,
without the written consent of the Committee (which
consent may be given in the Award Agreement), be sold
or otherwise disposed of within six (6) months
following the date of grant of the Stock Award.
(j) ACCRUAL OF DIVIDENDS. To the extent Stock Awards are held in Trust
and registered in the name of the Trustee, unless otherwise specified by the
Trust Agreement whenever shares of Common Stock underlying a Stock Award are
distributed to a Participant or beneficiary thereof under the Plan, such
Participant or beneficiary shall also be entitled to receive, with respect to
each such share distributed, a payment equal to any cash dividends and the
number of shares of Common Stock equal to any stock dividends, declared and paid
with respect to a share of the Common Stock if the record date for determining
shareholders entitled to receive such dividends falls between the date the
relevant Stock Award was granted and the date the relevant Stock Award or
installment thereof is issued. There shall also be distributed an appropriate
amount of net earnings, if any, of the Trust with respect to any dividends paid
out on the shares related to the Stock Award.
(k) VOTING OF STOCK AWARDS. After a Stock Award has been granted but
for which the shares covered by such Stock Award have not yet been vested,
earned and distributed to the Participant pursuant to the Plan, the Participant
shall be entitled to vote or to direct the Trustee to vote, as the case may be,
such shares of Common Stock which the Stock Award covers subject to the rules
and procedures adopted by the Committee for this purpose and in a manner
consistent with the Trust agreement.
(l) PAYMENT. Payment due to a Participant upon the redemption of a
Stock Award shall be made in the form of shares of Common Stock.
9. DEFERRED PAYMENTS
The Committee, in its discretion, may permit a Participant to elect to
defer receipt of all or any part of any cash or stock payment under the Plan, or
the Committee may determine to defer receipt by some or all Participants, of all
or part of any such payment. The Committee shall determine the terms and
conditions of any such deferral, including the period of deferral, the manner of
deferral, and the method for measuring appreciation on deferred amounts until
their payout.
10. METHOD OF EXERCISE OF OPTIONS
Subject to any applicable Award Agreement, any Option may be exercised
by the Participant in whole or in part at such time or times, and the
Participant may make payment of the Exercise Price in such form or forms
permitted by the Committee, including, without limitation, payment by delivery
of cash, Common Stock or other consideration (including, where permitted by law
and the Committee, Awards) having a Fair Market Value on the day immediately
preceding the exercise date equal to the total Exercise Price, or by any
combination of cash, shares of Common Stock and other consideration, including
exercise by means of a cashless exercise arrangement with a qualifying
broker-dealer, as the Committee may specify in the applicable Award Agreement.
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11. RIGHTS OF PARTICIPANTS
No Participant shall have any rights as a shareholder with respect to
any shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such Common Stock. Nothing contained herein or in any
Award Agreement confers on any person any right to continue in the employ or
service of the Holding Company or an Affiliate or interferes in any way with the
right of the Holding Company or an Affiliate to terminate a Participant's
services.
12. DESIGNATION OF BENEFICIARY
A Participant may, with the consent of the Committee, designate a
person or persons to receive, in the event of death, any Award to which the
Participant would then be entitled. Such designation will be made upon forms
supplied by and delivered to the Holding Company and may be revoked in writing.
If a Participant fails effectively to designate a beneficiary, then the
Participant's estate will be deemed to be the beneficiary.
13. DILUTION AND OTHER ADJUSTMENTS
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Holding Company, or in the event an
extraordinary capital distribution is made, the Committee may make such
adjustments to previously granted Awards, to prevent dilution, diminution, or
enlargement of the rights of the Participant, including any or all of the
following:
(a) adjustments in the aggregate number or kind of shares of
Common Stock or other securities that may underlie future
Awards under the Plan;
(b) adjustments in the aggregate number or kind of shares of
Common Stock or other securities underlying Awards already
made under the Plan;
(c) adjustments in the Exercise Price of outstanding Incentive
and/or Non-Statutory Stock Options.
No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award. All Awards under
this Plan shall be binding upon any successors or assigns of the Holding
Company. Notwithstanding the above, no adjustment shall be made for an
extraordinary capital distribution before December 30, 1999, which has not been
approved by the Office of Thrift Supervision.
14. TAXES
(a) Whenever under this Plan, cash or shares of Common Stock are to be
delivered upon exercise or payment of an Award or any other event with respect
to rights and benefits hereunder, the Committee shall be entitled to require as
a condition of delivery (i) that the Participant remit an amount sufficient to
satisfy all federal, state, and local withholding tax requirements related
thereto, (ii) that the withholding of such sums come from compensation otherwise
due to the Participant or from any shares of Common Stock due to the Participant
under this Plan or (iii) any combination of the foregoing PROVIDED, HOWEVER,
that no amount shall be withheld from any cash payment or shares of Common Stock
relating to
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an Award which was transferred by the Participant in accordance with this Plan.
Furthermore, a Participant may direct the Committee to instruct the Trustee to
sell shares of Common Stock to be delivered upon the payment of an Award to
satisfy his or her minimum required tax obligations.
(b) If any disqualifying disposition described in Section 7(k) is made
with respect to shares of Common Stock acquired under an Incentive Stock Option
granted pursuant to this Plan, or any transfer described in Section 6(c) is
made, or any election described in Section 15 is made, then the person making
such disqualifying disposition, transfer, or election shall remit to the Holding
Company or its Affiliates an amount sufficient to satisfy all federal, state,
and local withholding taxes thereby incurred; provided that, in lieu of or in
addition to the foregoing, the Holding Company or its Affiliates shall have the
right to withhold such sums from compensation otherwise due to the Participant,
or, except in the case of any transfer pursuant to Section 6(c), from any shares
of Common Stock due to the Participant under this Plan.
15. NOTIFICATION UNDER SECTION 83(b)
The Committee may, on the Date of Grant or any later date, prohibit a
Participant from making the election described below. If the Committee has not
prohibited such Participant from making such election, and the Participant
shall, in connection with the exercise of any Option, or the grant of any Stock
Award, make the election permitted under Section 83(b) of the Code, such
Participant shall notify the Committee of such election within 10 days of filing
notice of the election with the Internal Revenue Service, in addition to any
filing and notification required pursuant to regulations issued under the
authority of Section 83(b) of the Code.
16. AMENDMENT OF THE PLAN AND AWARDS
(a) Except as provided in paragraph (c) of this Section 16, the Board
of Directors may at any time, and from time to time, modify or amend the Plan in
any respect, prospectively or retroactively; provided however, that provisions
governing grants of Incentive Stock Options shall be submitted for shareholder
approval to the extent required by such law, regulation or otherwise. Failure to
ratify or approve amendments or modifications by shareholders shall be effective
only as to the specific amendment or modification requiring such ratification.
Other provisions of this Plan will remain in full force and effect. No such
termination, modification or amendment may adversely affect the rights of a
Participant under an outstanding Award without the written permission of such
Participant.
(b) Except as provided in paragraph (c) of this Section 16, the
Committee may amend any Award Agreement, prospectively or retroactively;
PROVIDED, HOWEVER, that no such amendment shall adversely affect the rights of
any Participant under an outstanding Award without the written consent of such
Participant.
(c) In no event shall the Board of Directors amend the Plan or shall
the Committee amend an Award Agreement in any manner that has the effect of:
(i) Allowing any Option to be granted with an exercise
below the Fair Market Value of the Common Stock on
the Date of Grant.
(ii) Allowing the exercise price of any Option previously
granted under the Plan to be reduced subsequent to
the Date of Award.
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<PAGE>
(d) Notwithstanding anything in this Plan or any Award Agreement to the
contrary, if any Award or right under this Plan would, in the opinion of the
Holding Company's accountants, cause a transaction to be ineligible for pooling
of interest accounting that would, but for such Award or right, be eligible for
such accounting treatment, the Committee, at its discretion, may modify, adjust,
eliminate or terminate the Award or right so that pooling of interest accounting
is available.
17. EFFECTIVE DATE OF PLAN
The Plan shall become effective upon approval by the Holding Company's
shareholders in accordance with OTS and Internal Revenue Service ("IRS")
regulations or December 30, 1999, whichever is earlier. The failure to obtain
shareholder approval for such purposes will not effect the validity of the Plan
and any Awards made under the Plan; PROVIDED, HOWEVER, that if the Plan is not
approved by stockholders in accordance with IRS regulations, the Plan shall
remain in full force and effect, and any Incentive Stock Options granted under
the Plan shall be deemed to be Non-Statutory Stock Options.
18. TERMINATION OF THE PLAN
The right to grant Awards under the Plan will terminate upon the
earlier of: (i) ten (10) years after the Effective Date; (ii) the issuance of a
number of shares of Common Stock pursuant to the exercise of Options or the
distribution of Stock Awards (is equivalent to the maximum number of shares
reserved under the Plan as set forth in Section 4 hereof). The Board of
Directors has the right to suspend or terminate the Plan at any time, provided
that no such action will, without the consent of a Participant, adversely affect
a Participant's vested rights under a previously granted Award.
19. APPLICABLE LAW
The Plan will be administered in accordance with the laws of the state
of Delaware to the extent not pre-empted by applicable federal law.
20. TREATMENT OF UNVESTED, UNEXERCISED, OR NON-EXERCISABLE AWARDS
UPON A CHANGE IN CONTROL
(a) In the event of a Change in Control where the Holding Company or
the Association is not the surviving entity, the Board of Directors of the
Holding Company and/or the Association, as applicable, shall require that the
successor entity take one of the following actions with respect to all Awards
held by Participants at the date of the Change in Control:
(i) Assume the Awards with the same terms and conditions
as granted to the Participant under this Plan; or
(ii) Replace the Awards with comparable Awards, subject to
the same or more favorable terms and conditions as
the Award granted to the Participant under this Plan,
whereby the Participant will be granted common stock
or the option to purchase common stock of the
successor entity; or, only if the Committee
determines that neither of the alternatives set forth
in clauses (i) or (ii) are legally available,
(iii) Replace the Awards with a cash payment under an
incentive plan, program, or other arrangement of the
successor entity that preserves the economic
A-13
<PAGE>
value of the Awards and makes any such cash payment
subject to the same vesting or exercisability
schedule applicable to such Awards.
(b) The determination of comparability of Awards offered by a successor
entity under clause (ii) above shall be made by the Committee, and the
Committee's determination shall be conclusive and binding.
21. COMPLIANCE WITH OFFICE OF THRIFT SUPERVISION REGULATIONS
Notwithstanding any other provision contained in this Plan:
(a) No Award under the Plan shall be made which would be prohibited by
12 CFR Section 563b.3(g)(4);
(b) Unless the Plan is approved by a majority vote of the
outstanding shares of the total votes eligible to be cast at a duly called
meeting of stockholders to consider the Plan, as required by 12 CFR Section
563b.3(g)(4)(vii), the Plan shall not become effective or implemented prior
to one year from the date of the Association's conversion from mutual to
stock form of organization ("Conversion").
(c) No Option or Stock Award granted prior to one year from the date of
the Association's Conversion shall become vested or exercisable at a rate in
excess of 20% per year of the total number of Stock Awards or Options (whichever
may be the case) granted to such Participant, provided, that Awards shall become
fully vested or immediately exercisable in the event of a Participant's
termination of service due to death or Disability;
(d) No Option or Stock Award granted to any individual Employee prior
to one year from the date of the Association's Conversion may exceed 25% of the
total amount of Stock Awards or Options (whichever may be the case) which may be
granted under the Plan;
(e) No Option or Stock Award granted to any individual Outside Director
prior to one year from the date of the Association's Conversion may exceed 5% of
the total amount of Stock Awards or Options (whichever may be the case) which
may be granted under the Plan; and
(f) The aggregate amount of Option or Stock Award granted to all
Outside Directors prior to one year from the date of the Association's
Conversion may not exceed 30% of the total amount of Stock Awards or Options
(whichever may be the case) which may be granted under the Plan.
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<PAGE>
GRAND CENTRAL FINANCIAL CORP.
ANNUAL MEETING OF SHAREHOLDERS
JULY 13, 1999
10:00 A.M. EASTERN TIME
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the official proxy committee of the
Board of Directors of Grand Central Financial Corp. (the "Company"), each with
full power of substitution, to act as proxy for the undersigned, and to vote all
shares of common stock of the Company which the undersigned is entitled to vote
only at the Annual Meeting of Shareholders, to be held on July 13, 1999, at
10:00 a.m. Eastern Time, at East Liverpool Motor Lodge, 2340 Dresden Avenue,
East Liverpool, Ohio, and at any and all adjournments thereof, with all of the
powers the undersigned would possess if personally present at such meeting as
follows:
1. The election as director of the nominee listed (except as marked to
the contrary below).
Gerry W. Grace
FOR VOTE WITHHELD
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|_| |_|
2. The approval of the Grand Central Financial Corp. 1999
Stock-Based Incentive Plan.
FOR AGAINST ABSTAIN
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|_| |_| |_|
3. The ratification of the appointment of Crowe, Chizek and
Company LLP as independent auditors of the Company for the
fiscal year ending December 31, 1999.
FOR AGAINST ABSTAIN
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|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE LISTED PROPOSALS.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" EACH OF THE PROPOSALS
LISTED. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, INCLUDING
WHETHER OR NOT TO ADJOURN THE MEETING, THIS PROXY WILL BE VOTED BY THE PROXIES
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Shareholders and of a
Proxy Statement dated June 14, 1999 and of the Annual Report to Shareholders.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
Dated:
--------------------------
--------------------------------
SIGNATURE OF SHAREHOLDER
--------------------------------
SIGNATURE OF SHAREHOLDER
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PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
