<PAGE>
GRAND CENTRAL FINANCIAL CORP.
601 MAIN STREET
WELLSVILLE, OHIO 43968
(330) 532-1517
March 20, 2000
Fellow Shareholders:
You are cordially invited to attend the 2000 annual meeting of
shareholders of Grand Central Financial Corp., the holding company for Central
Federal Savings and Loan Association of Wellsville, Wellsville, Ohio, which will
be held on April 26, 2000 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, Grand Central Financial Corp.'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 Grand Central Financial Corp. has determined
that matters to be considered at the annual meeting are in the best interests of
Grand Central Financial Corp. and its shareholders. FOR THE REASONS SET FORTH IN
THE PROXY STATEMENT, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" EACH OF THE NOMINEES AS DIRECTOR AS SPECIFIED UNDER PROPOSAL 1, "FOR" THE
RATIFICATION OF AMENDMENTS TO THE GRAND CENTRAL FINANCIAL CORP. 1999 STOCK-BASED
INCENTIVE PLAN AS SPECIFIED UNDER PROPOSAL 2, AND "FOR" THE RATIFICATION OF
INDEPENDENT AUDITORS AS SPECIFIED UNDER PROPOSAL 3.
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 Grand
Central Financial Corp. and Central Federal Savings and Loan Association of
Wellsville, 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
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Grand
Central Financial Corp., the holding company for Central Federal Savings and
Loan Association of Wellsville, will be held on April 26, 2000 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 two directors each to a three-year term of
office;
2. The ratification of amendments to 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 Grand Central Financial
Corp. for the fiscal year ending December 31, 2000; 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 February 29, 2000 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 Grand Central Financial Corp. 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 that 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 Grand Central Financial Corp. 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
March 20, 2000
<PAGE>
- --------------------------------------------------------------------------------
PROXY STATEMENT
OF
GRAND CENTRAL FINANCIAL CORP.
- --------------------------------------------------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 2000
- --------------------------------------------------------------------------------
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
April 26, 2000 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
1999 Annual Report to Stockholders, including the consolidated financial
statements of the Company for the fiscal year ended December 31, 1999,
accompanies this proxy statement which is first being mailed to record holders
on or about March 20, 2000.
- --------------------------------------------------------------------------------
VOTING AND PROXY PROCEDURE
- --------------------------------------------------------------------------------
SOLICITATION AND VOTING OF PROXIES
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 EACH OF THE NOMINEES FOR
DIRECTOR NAMED IN THIS PROXY STATEMENT, "FOR" THE RATIFICATION OF AMENDMENTS TO
THE GRAND CENTRAL FINANCIAL CORP. 1999 STOCK- BASED 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, 2000.
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 share
owner 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.
<PAGE>
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,
Georgeson & Company, 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 voting instruction 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.
The close of business on February 29, 2000, 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 1,841,927 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 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 each of the nominees proposed by the Board, or to "WITHHOLD"
authority to vote for each of the nominees 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 ratification of amendments to the Grand Central Financial
Corp. 1999 Stock-Based Incentive Plan (Proposal 2), 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
2
<PAGE>
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.
Proxies solicited hereby are to be returned to the Company's transfer
agent, Registrar and Transfer Company ("RTC"). The Board of Directors has
designated Charles Webb and Company to act as the inspector of election and to
tabulate the votes at the Annual Meeting. Charles Webb and Company 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.
- --------------------------------------------------------------------------------
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 Securities and Exchange Commission, 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
OF PERCENT
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OF CLASS
- -------------- ------------------------------------ ------ --------
<S> <C> <C> <C>
Common Stock The Central Federal Savings and Loan of 154,556 (1) 8.40%
Wellsville Employee Stock Ownership
Plan and Trust (the "ESOP")
601 Main Street
Wellsville, Ohio 43968
Common Stock First Manhattan Co. 119,900 (2) 6.50%
437 Madison Avenue
New York, New York 10022
</TABLE>
(1) Shares of Common Stock were acquired by the ESOP in the Association's
conversion from mutual to stock form (the "Conversion") which was completed
on December 30, 1998. The ESOP Committee administers the ESOP. First
Bankers Trust Company, 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, 1999, 19,155 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.
(2) Based on information disclosed in a Schedule 13G, dated February 10, 2000,
filed with the Securities and Exchange Commission.
3
<PAGE>
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
The nominees proposed by the Board of Directors standing for election
as director were unanimously nominated by the Nominating Committee of the Board
of Directors. Neither Jeffrey W. Aldrich nor William R. Williams is being
proposed for election pursuant to any agreement or understanding between him and
the Company.
Certain amendments to the Grand Central Financial Corp. 1999
Stock-Based Incentive Plan (the "Incentive Plan") are being presented to
stockholders for ratification. See Proposal 2 for further information.
Directors, officers and employees of the Company and the Association were
granted stock options and restricted stock awards under the Incentive Plan.
- --------------------------------------------------------------------------------
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 nominees proposed for election at the Annual Meeting are Jeffrey W.
Aldrich and William R. Williams. Mr. Williams has been nominated prior to the
expiration of his term in order to balance the classes of directors. Neither Mr.
Aldrich nor William R. Williams is being proposed for election pursuant to any
agreement or understanding between him and the Company.
In the event that either of Mr. Aldrich or William R. Williams 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 Directors has no reason to believe that
either of Mr. Aldrich or Mr. Williams 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 EACH OF THE NOMINEES PROPOSED BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF
THE NOMINEES 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 executive officers, 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.
4
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF OWNERSHIP
EXPIRATION BENEFICIAL AS A
NAME AND PRINCIPAL OCCUPATION DIRECTOR OF TERM AS OWNERSHIP PERCENT OF
AT PRESENT AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR (2)(3) CLASS (4)
- ---------------------------------- --- -------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
NOMINEES
Jeffrey W. Aldrich......................... 57 1979 2003 20,000 1.09%
President and Chief Executive
Officer of Sterling China Co., a
dishware manufacturing company
William R. Williams........................ 56 1979 2003 22,000 1.19
President and Chief Executive
Officer of the Company and the
Association
CONTINUING DIRECTORS
Thomas P. Ash.............................. 50 1985 2001 20,000 1.09
Superintendent of the East
Liverpool City School District
Fred C. Jackson............................ 74 1977 2001 20,000 1.09
Retired since 1987
Gerry W. Grace............................. 61 1986 2002 30,000 1.63
Chairman of the Board of the
Company and the Association
EXECUTIVE OFFICERS
(WHO ARE NOT ALSO DIRECTORS)
Daniel F. Galeoti.......................... 44 -- -- 39,100 2.12
Vice President of Mortgage
Operations of the Company and the
Association and Corporate Secretary
of the Company
John A. Rife............................... 44 -- -- 20,000 1.09
Executive Vice President and
Treasurer of the Company and the
Association
Charles O. Standley........................ 46 -- -- 20,000 1.09
Vice President of Commercial and
Consumer Lending of the Company
and the Association
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF OWNERSHIP
EXPIRATION BENEFICIAL AS A
NAME AND PRINCIPAL OCCUPATION DIRECTOR OF TERM AS OWNERSHIP PERCENT OF
AT PRESENT AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR (2)(3) CLASS (4)
- ---------------------------------- --- -------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
All directors and executive officers as
a group (8 persons)..................... -- -- -- 191,100 10.39%
</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) Includes options and awards granted under the Incentive Plan.
(4) As of the Record Date, there were 1,841,927 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, 1999, the Board of
Directors of the Company held 12 meetings. The Board of Directors of the
Association held 12 meetings during fiscal 1999. 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, 1999. 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. The Audit and
Compliance Committee of the Company met four times during fiscal 1999.
EXECUTIVE COMMITTEE. The Executive Committee meets weekly throughout
the year. Each member of the Board of Directors serves on this committee for
four months each year. The Chairman of the Board of Directors is on this
committee 12 months of the year and the President is an EX OFFICIO member except
when a quorum cannot be reached. The purpose of this committee is to act in the
absence of the Board of Directors between meetings of the Board of Directors.
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
1999.
NOMINATING COMMITTEE. The Nominating Committee for the 2000 Annual
Meeting consists of the entire Board of Directors. The committee considers and
recommends nominees to stand for election at the Company's annual meeting of
shareholders. The Nominating Committee of the Company met one time during fiscal
1999.
6
<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 pays $2,500 per year to its directors
for attending Board meetings.
INCENTIVE PLAN. Under the Incentive Plan which was adopted by the
Company's stockholders on July 13, 1999, each member of the Board of Directors
of the Company who was not an officer or employee of the Company or the
Association received non-statutory stock options to purchase 9,694 shares of
Common Stock at an exercise price of $13.00, the fair market value of the Common
Stock on July 15, 1999, the date the stock options were granted, and restricted
stock awards for 3,878 shares of Common Stock each (collectively, "Directors'
Awards"). The Directors' Awards initially granted under the Incentive Plan vest
equally over a five-year period. The first 20% will vest on July 15, 2000. The
Board of Directors has amended the Incentive Plan to provide for the
acceleration of vesting of the outstanding stock options and restricted stock
awards upon a change in control of the Company or the Association. See Proposal
2 for more information.
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following information is furnished for
the Chief Executive Officer and all other executive officers of the Company who
received salary and bonus of $100,000 or more ("Named Executive Officers")
during the years ended December 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION AWARDS
-------------------------------- -----------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
FISCAL SALARY COMPENSATION AWARDS OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITIONS YEAR ($)(1)(5) BONUS($) ($)(2) ($)(3) (#)(4) ($)
------------------------- ----- ------- ------- ------------ --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
William R. Williams 1999 $148,108 $21,000 $ -- $252,070 48,472 $ --
President and Chief Executive Officer 1998 133,950 16,000 -- -- -- --
1997 132,585 16,000 -- -- -- --
John A. Rife 1999 $ 92,961 $11,000 $ -- $151,229 29,083 $ --
Executive Vice President and Treasuer 1998 -- -- -- -- -- --
1997 -- -- -- -- -- --
</TABLE>
- ---------
(1) Mr. Williams' salary includes his base salary and director's fees.
(2) For fiscal years 1999, 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 or payments of above-market preferential earnings on deferred
compensation.
(3) Represents 19,390 shares and 11,633 shares of restricted stock granted
under the Incentive Plan to Mr. Williams and Mr. Rife, respectively. The
dollar amounts set forth in the table represent the market value on the
date of the grant of the shares. The restricted stock awards vest in five
equal annual installments commencing on July 15, 2000, the first
anniversary of the awards. When shares become vested and are distributed
from the trust in which they are held, the recipients will also receive an
amount equal to unaccumulated cash and stock dividends (if any) paid with
respect thereto, plus earnings thereon. As of December 31, 1999, the market
values of the shares subject to the restricted stock awards held by Mr.
Williams and Mr. Rife was $261,765 and $157,046, respectively.
(4) Represents stock options granted pursuant to the Incentive Plan during
fiscal year 1999. See "Option Grants in Last Fiscal Year" table for
discussion of options granted under the Incentive Plan.
(5) During 1998 and 1997, Mr. Rife did not receive a salary and bonus of
$100,000.
7
<PAGE>
EMPLOYMENT AGREEMENTS
The Association and the Company 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")
effective December 30, 1998. The Employment Agreements provide for a three-year
term for each Executive. 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 salaries
for Mr. Williams and Mr. Rife are $135,608 and $92,961, respectively. 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 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. The Employment
Agreements restrict each Executive's right to compete against the Association or
the Company for a period of one year from the date of termination of the
agreement if his employment is terminated without cause, except if termination
follows a change in control.
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 equal to the greater of: (i) the payments due for the
remaining terms of the agreements; 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.
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. Assuming that a
change in control of the Company or the Association had occurred December 31,
1999, the total amount of payments due under the Employment Agreements,
excluding any benefits under employee benefit plans which may be payable, would
be approximately $1,062,027.
8
<PAGE>
- --------------------------------------------------------------------------------
EMPLOYEE BENEFIT PLANS
- --------------------------------------------------------------------------------
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Association maintains a non-qualified deferred compensation
arrangement known as a Supplemental Executive Retirement Plan (the "SERP"). The
SERP provides benefits to eligible individuals (designated by the Board of
Directors of the Association or its affiliates) that cannot be provided under
the ESOP as a result of the limitations imposed by the Internal Revenue Code of
1986, as amended (the "Code"), but that would have been provided under the ESOP
but for such limitations. In addition to providing for benefits lost under the
ESOP as a result of limitations imposed by the Code, the SERP also makes up
benefits lost in the event of a change in control of the Company or the
Association prior to the repayment of the loan and to participants who retire
prior to the complete 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 before complete repayment of the ESOP loan, the SERP provides the
individual with a benefit equal 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 before the scheduled repayment of the ESOP loan less
the benefits actually provided under the ESOP on behalf of such individual. An
individual's benefits under the SERP will generally 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. As of December 31, 1999, Mr. Williams
participated in the SERP.
9
<PAGE>
INCENTIVE PLAN
The Company's stockholders adopted the Incentive Plan on July 13, 1999.
The Incentive Plan provides discretionary awards of options to purchase Common
Stock ("Options") and awards of Common Stock ("Stock Awards") (collectively,
Options and Stock Awards are referred to as "Awards") to officers, directors and
employees as determined by a committee of the Board of Directors. The following
table lists all grants of options under the Incentive Plan to the Named
Executive Officers for fiscal year 1999 and contains certain information about
potential value of those options based upon certain assumptions as to the
appreciation of the Common Stock over the life of the option.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT
OPTIONS EMPLOYEES IN OR DATE
GRANTED FISCAL BASE PRICE EXPIRATION PRESENT
NAME (#)(1)(2) YEAR(3) PER SHARE DATE(4) VALUE(5)
- ---- ----------------- --------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
William R. Williams...... 48,472 31.25% $13.00 July 15, 2009 $166,744
John A. Rife............. 29,083 18.75 13.00 July 15, 2009 100,046
</TABLE>
- ---------
(1) Options granted under the Incentive Plan become exercisable in five equal
annual installments commencing on July 15, 2000, provided, however, options
will be immediately exercisable in the event the optionee terminates
employment due to death or disability, and upon ratification of the
amendments to the Incentive Plan, in the event of a change in control.
(2) The purchase price may be made in whole or in part in cash or Common Stock.
(3) Includes options granted to officers, directors and employees.
(4) The option term is ten years.
(5) The estimated present value of the options granted during fiscal year 1999
have been calculated using the Black-Scholes option pricing model, based on
the following assumptions: estimated time until exercise of 10 years; a
risk-free interest rate of 5.87%, representing the interest rate of the
Constant Maturity Treasury Bill index as of July 15, 1999 with a maturity
corresponding to the estimated time until exercise; a volatility rate of
8.34%; and a dividend yield of 1.55%, representing the current $0.20 per
share annualized dividends divided by the fair market value of the common
stock at the date of grant. The approach used in developing the assumptions
upon which the Black-Scholes valuation was done is consistent with the
requirements of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation."
10
<PAGE>
The following table provides certain information with respect to the
number of shares of Common Stock represented by outstanding options held by the
Named Executive Officers as of December 31, 1999. Also reported are the values
for "in-the-money" options which represent the positive spread between the
exercise price of any such existing stock options and the year-end price of the
Common Stock.
FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END(#)(1) AT FISCAL YEAR-END($)(2)
------------------------------- --------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------- ------------- ---------------- ------------- -----------------
<S> <C> <C> <C> <C>
William R. Williams............... -- 48,472 $ -- $24,236
John A. Rife...................... -- 29,083 $ -- $14,541
</TABLE>
- ----------
(1) The options in this table have an exercise price of $13.00 per share.
(2) The value of unexercised in-the-money stock options equals the market value
of shares covered by in-the-money options on December 31, 1999 less the
option exercise price. Options are in-the-money if the market value of
shares covered by the options is greater than the exercise price.
- --------------------------------------------------------------------------------
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than 10% of any registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Executive
officers, directors and greater than 10% stockholders are required by regulation
to furnish the Company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of the reports it has received
and written representations provided to the Company from the individuals
required to file the reports, the Company believes that each of its executive
officers and directors has complied with applicable reporting requirements for
transactions in Company common stock during the fiscal year ended December 31,
1999.
- --------------------------------------------------------------------------------
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.
11
<PAGE>
Prior to FIRREA, the Association made loans to its executive officers
and directors which were secured by their primary residences. The rates of
interest charged by the Association on such loans were the Association's cost of
funds. Pursuant to FIRREA, in 1989, the Association 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 Association has made loans to its executive officers
and directors, and to Association employees, on the same terms and conditions
offered to the general public. THE LOANS ARE 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 DO NOT
INVOLVE MORE THAN THE NORMAL RISK OF COLLECTIBILITY OR PRESENT OTHER UNFAVORABLE
FEATURES. As of December 31, 1999, the Association had $519,000 of loans to
executive officers and directors all of which had balances of less than $60,000
and were made by the Association 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.
All transactions 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, contain terms no less favorable to the Company than
could have been obtained by it in arm's length negotiations with unaffiliated
persons and are approved by a majority of independent outside directors of the
Company not having any interest in the transaction.
- --------------------------------------------------------------------------------
PROPOSAL 2. RATIFICATION OF AMENDMENTS
TO THE GRAND CENTRAL FINANCIAL CORP.
1999 STOCK-BASED INCENTIVE PLAN
- --------------------------------------------------------------------------------
The Board of Directors of the Company is presenting certain amendments
to the Incentive Plan for stockholder ratification, in the form attached hereto
as Appendix A. Stockholders originally approved the Incentive Plan on July 13,
1999. The Board of Directors of the Company approved the amendments to the
Incentive Plan on January 20, 2000. The Incentive Plan was primarily amended to
provide for accelerated vesting of outstanding Stock Awards and Options upon a
change in control of the Association or the Company. For purposes of the
Incentive Plan, a "change in control" of the Association or the Company means an
event or circumstance that results in a substantial change in ownership or
control of the Association or the Company. In the most typical circumstance, a
change in control of the Association or the Company will result from an
acquisition or merger of the Association or the Company with another entity in
which the Association or the Company is not the surviving entity. Other
circumstances involving a change in control may result from a sale of
substantially all the assets of the Association or the Company, a change in the
composition of the Board of Directors following a contested election of Board
members or an offer by a third party to purchase in excess of 20% of the
Company's outstanding stock. The Company also amended the Incentive Plan for
conforming changes and certain minor administrative matters. The amendments to
the Incentive Plan do not increase the number of shares available for grant
under the Incentive Plan, change the eligibility requirements for participation
in the Incentive Plan, or otherwise alter the type of grants or existing grants
that have been made to the participants of the Incentive Plan. The following is
a summary of all material terms of the Incentive Plan.
GENERAL
The Incentive Plan authorizes the granting of Options and Stock 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
12
<PAGE>
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 is administered by a committee (the "Committee") consisting of
all five members of the Board of Directors, four of whom 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.
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. 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 is 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.
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, 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 cancelled. 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
following termination of employment or service. In the event of
13
<PAGE>
termination for cause, all exercisable and unexercisable Options held by an
optionee shall be cancelled. 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
employment or 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.
ACCELERATION OF VESTING UPON A CHANGE IN CONTROL. As amended, the
Incentive Plan now provides that in the event a change in control of the
Association or the Company, Options will become fully vested and shall be
exercisable for the term of the Option regardless of the optionee's termination
of employment or service; PROVIDED, HOWEVER, that Incentive Stock Options not
exercised within three (3) months of an optionee's termination of employment
shall not be eligible for incentive treatment for tax purposes.
STOCK AWARDS. The Incentive Plan also authorizes the granting of Stock
Awards to employees and directors. 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, upon termination of a
Stock Award recipient's services for any reason other than death, disability,
retirement, or termination for cause, all rights in the recipient's unvested
Stock Awards shall be cancelled. 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 cancelled. In the event of
retirement of a Stock Award recipient, any Stock Awards in which the recipient
has not vested as of his retirement date shall be forfeited. However, in the
event the Stock Award recipient 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 recipient
will continue to vest in accordance with their original terms.
ACCELERATION UPON A CHANGE IN CONTROL. As amended, the Incentive Plan
now provides that all Stock Awards immediately vest in the event of a change in
control, regardless of termination of employment or service.
TAX TREATMENT
THE FOLLOWING BRIEF DESCRIPTION OF THE TAX CONSEQUENCES OF OPTION
GRANTS AND STOCK AWARDS UNDER THE INCENTIVE PLAN IS BASED ON FEDERAL INCOME TAX
LAWS CURRENTLY IN EFFECT AND DOES NOT PURPORT TO BE A COMPLETE DISCUSSION OF THE
FEDERAL INCOME TAX CONSEQUENCES.
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
14
<PAGE>
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.
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. An Incentive Plan participant who has been awarded a
Stock Award under the Incentive Plan and does not make an election under Section
83(b) of the Code will not recognize taxable income at the time of the award. At
the time any transfer or forfeiture restrictions applicable to the Stock Award
lapse, the recipient will recognize ordinary income and the Company will be
entitled to a corresponding deduction equal to the excess of the fair market
value of such stock at such time over the amount paid, if any, therefor. Any
dividend paid to the recipient on the Stock Award at or prior to such time will
be ordinary compensation income to the recipient and deductible as such by the
Company.
A recipient of a Stock Award who makes an election under Section 83(b)
of the Code will recognize ordinary income at the time of the award and the
Company will be entitled to a corresponding deduction equal to the fair market
value of such stock at such time over the amount paid, if any, therefor. Any
dividends subsequently paid to the recipient on the Stock Award will be dividend
income to the recipient and not deductible by the Company. If the recipient
makes a Section 83(b) election, there are no federal income tax consequences
either to the recipient or the Company at the time any transfer or forfeiture
restrictions applicable to the Stock Award lapse.
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.
15
<PAGE>
AMENDMENTS
Subject to certain restrictions contained in the Incentive Plan, the
Board of Directors 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.
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. All Awards under the Incentive Plan shall be binding upon any
successors or assigns of the Company.
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.
STOCKHOLDER VOTE
Stockholders are being requested to ratify the amendments to the
Incentive Plan. If stockholders fail to ratify Proposal 2, the Incentive Plan,
in the form attached hereto, will remain in full force and effect at the
discretion of the Company's Board of Directors. The amendments to the Incentive
Plan must be approved by a majority of the votes cast by stockholders at the
Annual Meeting.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY CARD, IF EXECUTED AND RETURNED, WILL BE VOTED "FOR" THE RATIFICATION OF
THE AMENDMENTS TO THE GRAND CENTRAL FINANCIAL CORP. 1999 STOCK-BASED INCENTIVE
PLAN.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION
OF THE AMENDMENTS TO THE GRAND CENTRAL FINANCIAL CORP.
1999 STOCK-BASED INCENTIVE PLAN.
16
<PAGE>
- --------------------------------------------------------------------------------
PROPOSAL 3. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Company's independent auditors for the fiscal year ended December
31, 1999 were Crowe, Chizek and Company LLP. The appointment of Robb, Dixon,
Francis, Paris, Oneson & Co. ("Robb, Dixon") as principal accountants for the
Company was terminated on January 11, 1999. Crowe, Chizek and Company LLP., were
appointed to replace Robb, Dixon on January 11, 1999. Robb, Dixon's reports on
the financial statements for the past two years did not contain an adverse
opinion or a disclaimer of opinion, and were not qualified as to uncertainty,
audit scope, or accounting principles. The decision to change accountants was
approved by the Board of Directors of the Company. During the Company's two most
recent fiscal years and subsequent interim periods, the Company did not have any
disagreements with the former accountants on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure
which if not resolved to the satisfactions of Robb, Dixon, would have caused it
to make a reference to the subject matter of such a disagreement in connection
with its reports.
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.
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 2001 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 November
20, 2000. 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 Corporate 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
17
<PAGE>
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 2001 Annual Meeting of Stockholders to be timely, the Company would
have to receive such notice no later than January 26, 2001 assuming the 2001
Annual Meeting is held on April 26, 2001 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 nominees 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
Securities and Exchange Commission 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 share owner whose
shares are not registered in your own name, you will need appropriate
documentation from your recordholder to vote personally at the Annual Meeting.
A COPY OF THE FORM 10-KSB (WITHOUT EXHIBITS) FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, 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
March 20, 2000
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.
18
<PAGE>
APPENDIX A
GRAND CENTRAL FINANCIAL CORP.
1999 STOCK-BASED INCENTIVE PLAN
(AS AMENDED AND RESTATED)
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
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Institution or the Holding 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 July 13, 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, as amended and restated.
(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 Bylaws 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 other
decisions relating to the operation of the Plan. The Committee may adopt such
rules or guidelines as
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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 13 of the Plan, the
maximum number of shares reserved for Awards under the Plan is 271,441. Subject
to adjustment as provided in Section 13 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. The maximum number of the shares reserved for Stock
Awards is 77,554. 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.
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.
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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, or
Termination for Cause, the Participant may exercise 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, or, if sooner, the expiration of the term of the
Non-Statutory Stock Option.
(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
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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 of one (1) year following the
date of such termination, or, if sooner, the expiration of the term of the
Non-Statutory Stock Option.
(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) ACCELERATION UPON A CHANGE IN CONTROL. In the event of a Change in
Control, all Non-Statutory Stock Options held by a Participant as of the date of
the Change in Control shall immediately become exercisable and shall remain
exercisable until the expiration of the term of the Non-Statutory Stock Options
regardless of termination of employment or service.
(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 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,
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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, 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, or, if sooner, the expiration of the term of the Incentive Stock
Option.
(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 Option to the extent the Participant exercises such Option
more than three (3) months following the date the Participant ceases employment
or service.
(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 of 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.
(i) ACCELERATION UPON A CHANGE IN CONTROL. In the event of a Change in
Control, all Incentive Stock Options held by a Participant as of the date of the
Change in Control shall immediately become exercisable and shall remain
exercisable until the expiration of the term of the Incentive Stock Options
regardless of termination of employment. 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 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.
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(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, 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.
(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) ACCELERATION UPON A CHANGE IN CONTROL. In the event of a Change in
Control, all unvested Stock Awards held by a Participant shall immediately vest.
(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
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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, as amended and restated 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 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) 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, cash and stock dividends paid with respect to Stock Awards may, at
the Committee's discretion, be distributed to Participants during the forfeiture
period or held by the Trustee in escrow until such time as the Participant vests
in such shares. The Trustee may credit a reasonable rate of interest to such
dividends prior to distribution.
(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
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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.
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:
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(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.
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 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
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<PAGE>
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
price 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.
(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 Board of Directors approved and adopted the Plan with an effective
date of July 13, 1999. All amendments to the Plan are effective upon approval by
the Board of Directors, subject to shareholder ratification when specifically
required under the Plan or applicable federal or state statutory rules or
regulations. The failure to obtain shareholder ratification for such purposes
will not affect the validity or other provisions of the Plan and any amendments
under the Plan.
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 AWARDS UPON A CHANGE IN CONTROL
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,
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<PAGE>
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:
(a) Assume the Awards with the same terms and conditions as
granted to the Participant under this Plan;
(b) 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
(c) Replace the Awards with an immediate cash payment of
equivalent value.
21. COMPLIANCE WITH OFFICE OF THRIFT SUPERVISION REGULATIONS
Notwithstanding any other provision contained in this Plan:
(a) No Option or Stock Award granted prior to December 30, 1999 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 and provided further, that Awards shall become fully vested or
immediately exercisable in the event of a Change in Control;
(b) No Option or Stock Award granted to any individual Employee prior
to December 30, 1999 may exceed 25% of the total amount of Stock Awards or
Options (whichever may be the case) which may be granted under the Plan;
(c) No Option or Stock Award granted to any individual Outside Director
prior to December 30, 1999 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
(d) The aggregate amount of Option or Stock Award granted to all
Outside Directors prior to December 30, 1999 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
APRIL 26, 2000
10:00 A.M. EASTERN TIME
-------------------------------
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 (the "Annual Meeting"), to be held on
April 26, 2000, 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 each nominee listed (except as
marked to the contrary below).
Jeffrey W. Aldrich
FOR VOTE WITHHELD
/ / / /
William R. Williams
FOR VOTE WITHHELD
/ / / /
2. The ratification of amendments to the Grand Central Financial
Corp. 1999 Stock-Based Incentive Plan.
FOR AGAINST ABSTAIN
/ / / / / /
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, 2000.
FOR AGAINST ABSTAIN
/ / / / / /
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 ANNUAL 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 March 20, 2000 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
-----------------------------
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
