SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
GRAND CENTRAL FINANCIAL CORP.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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GRAND CENTRAL FINANCIAL CORP.
601 MAIN STREET
WELLSVILLE, OHIO 43968
(330) 532-1517
March 28, 2003
Fellow Shareholders:
You are cordially invited to attend the annual meeting of shareholders
of Grand Central Financial Corp. The meeting will be held at the East Liverpool
Motor Lodge, 2340 Dresden Avenue, East Liverpool, Ohio, on April 23, 2003 at
10:00 a.m., local time.
The attached notice of the annual meeting and proxy statement describe
the formal business to be transacted at the meeting. During the meeting, we will
report on the operations of the Company. 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 appropriate questions of our shareholders.
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. It is important that your
shares are represented at this meeting, whether or not you attend in person.
Therefore, to make sure that your shares are represented, please sign and return
the enclosed proxy card promptly. If you attend the meeting, you may vote in
person even if you have previously mailed a proxy card.
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
GRAND CENTRAL FINANCIAL CORP.
601 MAIN STREET
WELLSVILLE, OHIO 43968
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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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 23, 2003 at the East
Liverpool Motor Lodge, 2340 Dresden Avenue, East Liverpool, Ohio, at 10:00 a.m.,
local time, for the following purposes:
1. The election of two Directors to three-year terms of office
each;
2. The ratification of the Company's 2003 Equity Compensation
Plan;
3. The ratification of the appointment of Crowe, Chizek and
Company LLP as independent auditors for the Company for the
fiscal year ending December 31, 2003;
4. The amendment of the Certificate of Incorporation of Grand
Central Financial Corp. to change the Company's name to
Central Federal Corporation; and
5. Such other matters as may properly come before the annual
meeting.
NOTE: The Board of Directors is not aware of any other business to
come before the meeting.
Record holders of the common stock of Grand Central Financial Corp. at
the close of business on February 27, 2003 are entitled to receive notice of the
meeting and to vote at the annual meeting and any adjournments or postponement
of the meeting. The annual meeting may be adjourned to permit the Company to
solicit proxies in the event that there are insufficient votes for a quorum or
to approve the proposals at the time of the meeting. 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 THE ORDER OF THE BOARD OF DIRECTORS
/s/ Daniel F. Galeoti
Daniel F. Galeoti
Corporate Secretary
Wellsville, Ohio
March 28, 2003
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
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PROXY STATEMENT
OF
GRAND CENTRAL FINANCIAL CORP.
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This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors to be used at the annual meeting of Grand
Central Financial Corp. (the "Company"). The Company is the holding company for
Central Federal Savings and Loan Association of Wellsville (the "Association").
The annual meeting will be held on April 23, 2003 at the East Liverpool Motor
Lodge, 2340 Dresden Avenue, East Liverpool, Ohio, at 10:00 a.m., local time. The
Annual Report to Shareholders, including the consolidated financial statements
of the Company for the fiscal year ended December 31, 2002, accompanies this
proxy statement which is first being mailed to record holders on or about March
28, 2003.
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VOTING AND PROXY PROCEDURE
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WHO CAN VOTE AT THE MEETING
You are entitled to vote your Company common stock if the records of
the Company show that you held your shares as of the close of business on
February 27, 2003. As of the close of business on that date, a total of
1,645,921 shares of Company common stock were outstanding. Each share of common
stock has one vote. As provided in the Company's Certificate of Incorporation,
record holders of common stock who beneficially own, either directly or
indirectly, in excess of 10% of the Company's outstanding shares of common stock
are not entitled to any vote in respect of the shares held in excess of the 10%
limit and those shares 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
10% 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 10% limit supply information to the
Company to enable the Board of Directors to implement and apply the 10% limit.
ATTENDING THE MEETING
If you are a shareholder as of the close of business on February 27,
2003, you may attend the annual meeting. However, if you are a beneficial owner
of Company common stock held by a broker, bank or other nominee (i.e., in
"street name"), you will need proof of ownership to be admitted to the meeting.
A recent brokerage statement or letter from a bank or broker are examples of
proof of ownership. If you want to vote your shares of Company common stock held
in street name in person at the meeting, you will have to get a written proxy in
your name from the broker, bank or other nominee who holds your shares.
VOTE REQUIRED
The annual meeting will be held if a majority of the total outstanding
shares of common stock entitled to vote (after subtracting any shares in excess
of the 10% limit) is represented at the meeting. If you return valid proxy
instructions or attend the meeting in person, your shares will be counted for
purposes of determining whether there is a quorum, even if you abstain from
voting. Broker non-votes also will be counted for purposes of determining the
existence of a quorum. A broker non-vote occurs when a broker, bank or other
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received voting instructions from the
beneficial owner.
In voting on the election of two directors to three-year terms of
office each (Proposal 1), you may vote in favor of the nominees or withhold
authority to vote for the nominees. Directors are elected by a plurality of the
votes cast. This means that the nominees receiving the greatest number of votes
will be elected. Votes that are withheld and broker non-votes will have no
effect on the outcome of the election.
In voting on ratification of the Company's 2003 Stock-Based Incentive
Plan (Proposal 2), the ratification of Crowe, Chizek and Company LLP as
independent auditors of the Company (Proposal 3), amendment of the Certificate
of Incorporation to change the Company's name to Central Federal Corporation
(Proposal 4) and all other matters that may properly come before the annual
meeting, you may vote in favor of the proposal, vote against the proposal or
abstain from voting. 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 and on
Proposal 4 an affirmative vote of a majority of the outstanding stock entitled
to vote thereon is required to constitute shareholder approval. Shares
underlying broker non-votes or in excess of the 10% limit will not be counted as
present and entitled to vote or as votes cast and will have no effect on the
vote.
VOTING BY PROXY
The Company's Board of Directors is sending you this proxy statement
for the purpose of requesting that you allow your shares of Company common stock
to be represented at the Annual Meeting by persons named in the enclosed proxy
card. All shares of Company common stock represented at the meeting by properly
executed proxies will be voted according to the instructions indicated on the
proxy card. If you sign and return a proxy card without giving voting
instructions, your shares will be voted as recommended by the Company's Board of
Directors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES FOR DIRECTOR, "FOR" RATIFICATION OF THE COMPANY'S 2003 EQUITY
COMPENSATION PLAN, "FOR" RATIFICATION OF CROWE, CHIZEK AND COMPANY LLP AS
INDEPENDENT AUDITORS OF THE COMPANY AND "FOR" AMENDMENT OF THE COMPANY'S
CERTIFICATE OF INCORPORATION TO CHANGE THE COMPANY'S NAME TO CENTRAL FEDERAL
CORPORATION.
If any matters not described in this proxy statement are properly
presented at the annual meeting, the persons named in the proxy card will use
their best judgement to determine how to vote your shares. This includes a
motion to adjourn or postpone the meeting in order to solicit additional
proxies. If the annual meeting is postponed or adjourned, your Company common
stock may be voted by the persons named on the proxy card on the new meeting
date as well, unless you have revoked your proxy. The Company does not know of
any other matters to be presented at the meeting.
You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy, you must either advise the Corporate Secretary of
the Company in writing before your common stock has been voted at the annual
meeting, deliver to the Company another proxy that bears a later date, or attend
the annual meeting and vote your shares in person. Attendance at the annual
meeting will not in itself revoke your proxy.
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If your Company common stock is held in street name, you will receive
instructions from your broker, bank or other nominee that you must follow in
order to have your shares voted. Your broker or bank may allow you to deliver
your voting instructions via the telephone or the Internet. Please see the
instruction form that is provided by your broker, bank or other nominee and
which accompanies this proxy statement. If you wish to change your voting
instructions after you have returned your voting instruction form to your broker
or bank, you must contact your broker or bank.
Proxies solicited should be returned to the Company's transfer agent,
Registrar and Transfer Company. The Board of Directors has designated Richard
Kloch of Crowe, Chizek & Co., LLP to act as the inspector of election and to
tabulate the votes at the annual meeting. Mr. Kloch 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.
PARTICIPANTS IN THE ASSOCIATION'S ESOP
If you participate in the Association's Employee Stock Ownership Plan
(the "ESOP"), you will receive a voting instruction form that reflects all
shares you may vote under the plan. Under the terms of the ESOP, the ESOP
trustee votes all shares held by the ESOP, but each participant in the ESOP may
direct the trustee on how to vote shares of common stock allocated to his or her
account. The ESOP trustee, subject to the exercise of its fiduciary duties, will
vote all unallocated shares of common stock held by the ESOP and allocated
shares for which voting instructions are not timely received in the same
proportion as shares for which it has received timely voting instructions. The
deadline for returning your voting instructions to the ESOP trustee is April 16,
2003.
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STOCK OWNERSHIP
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The following table provides information as of February 27, 2003 about
persons known by the Company to be the beneficial owners of more than 5% of the
Company's outstanding common stock. A person may be considered to beneficially
own any shares of common stock over which he or she has, directly or indirectly,
sole or shared voting or investment power.
PERCENT OF
COMMON
NAME AND ADDRESS NUMBER OF STOCK
OF BENEFICIAL OWNER SHARES OWNED OUTSTANDING
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Central Federal Savings and Loan Association of Wellsville 231,365(1) 14.1%
Employee Stock Ownership Plan & Trust ("ESOP")
601 Main Street
Wellsville, Ohio 43968
(1) The ESOP Committee administers the ESOP. First Bankers Trust Company, N.A.
is the corporate trustee for the ESOP ("ESOP Trustee"). The ESOP Trustee,
subject to its fiduciary duty under the Employee Retirement Income Security
Act of 1974, must vote all allocated shares held in the ESOP in accordance
with the instructions of the participants. As of December 31, 2002, 86,895
shares had been allocated under the ESOP and 144,470 shares remained
unallocated. Under the ESOP, unallocated shares and allocated shares as to
which voting instructions are not timely given by participants are voted by
the ESOP Trustee in a manner calculated to most accurately reflect the
instructions timely received from participants regarding the allocated
stock.
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The following table sets forth information as of February 27, 2003 with
respect to the amount of shares of Company common stock considered to be owned
by each director or nominee for director of the Company, by each executive
officer named in the Summary Compensation Table and by all directors and
executive officers of the Company as a group. A person may be considered to own
any shares of common stock over which he or she has, directly or indirectly,
sole or shared voting or investment power. Unless otherwise indicated, each of
the named individuals has sole voting and investment power with respect to the
shares shown.
NUMBER OF SHARES THAT
NUMBER OF MAY BE ACQUIRED PERCENT OF
SHARES OWNED WITHIN 60 DAYS BY COMMON STOCK
NAME (EXCLUDING OPTIONS)(1)(2) EXERCISING OPTIONS OUTSTANDING(3)
---- ------------------------- ---------------------- ---------------
Jeffrey W. Aldrich 23,878 5,817 1.45
Thomas P. Ash 23,878 5,817 1.45
Gerry W. Grace 33,878 5,817 2.06
David C. Vernon 3,875 -- 0.24
William R. Williams 54,570(4) 29,084 3.32
John A. Rife 41,441 17,451 2.52
Charles O. Standley 33,043 17,451 2.01
All Directors and Executive Officers 262,811 98,888 20.73
as a Group (8 persons)
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(1) Includes shares of unvested restricted stock awarded under the 1999
Stock-Based Incentive Plan as follows: each of Messrs. Ash, Aldrich and
Grace, 1,550 shares; Mr. Williams, 7,756 shares; Mr. Vernon, 3,875; and
each of Messrs. Rife and Standley, 4,652 shares. Each participant has
voting but not investment power as to shares of unvested restricted
stock.
(2) Includes shares allocated under the ESOP to Messrs. Williams, Rife and
Standley for the years 1999, 2000 and 2001. Shares allocated to Messrs.
Williams, Rife and Standley in 2002 have not been determined.
(3) Based on 1,645,921 shares of Company common stock outstanding and
entitled to vote as of February 27, 2003.
(4) Includes 1,000 shares held by Mr. Williams' wife and 1,000 shares held by
Mr. Williams' wife as custodian of his daughter.
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PROPOSAL 1. ELECTION OF DIRECTORS
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The Board of Directors of the Company currently consists of five
directors, who also serve as directors of the Association. Three of the five of
them are independent directors. The Board is divided into three classes with
approximately one-third of the directors up for election each year. As part of
its long-term growth strategy, the Company may expand the size of its Board of
Directors during fiscal year 2003.
There are two directors whose terms will expire at the 2003 Annual
Meeting. The nominees for election at the 2003 Annual Meeting are Jeffrey W.
Aldrich and William R. Williams. The proxies solicited by the Board of Directors
are intended to be voted for the election of the nominees named above. If the
nominees are unable or unwilling to serve, the persons named in the proxy card
would vote your shares to approve the election of any substitute proposed by the
current Board of Directors. At this time, the Board of Directors knows of no
reason why the nominees might be unable or unwilling to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES.
Information regarding the nominees, as well as each director continuing
in office and each executive officer who is not a director, is provided below.
Unless otherwise stated, each individual has held his current occupation for the
last five years. The age indicated in each individual's biography is as of
December 31, 2002. The indicated period for service as a director includes
service as a director of the Association. There are no family relationships
among the directors.
NOMINEES FOR ELECTION AS DIRECTOR
Jeffrey W. Aldrich is President and Chief Executive Officer of Sterling
China, a dishware manufacturing company. Age 60. Director since 1979.
William R. Williams is President of the Company and the Association. He
was formerly also Chief Executive Officer of the Company and the Association
from January 15, 1979 until February 20, 2003. On February 20, 2003, Mr.
Williams announced his retirement as Chief Executive Officer of the Company and
the Association effective immediately and as President of the Company and the
Association effective immediately following the 2003 annual meeting of
shareholders of the Company. Age 59. Director since 1979.
CONTINUING DIRECTORS
Directors with terms ending in 2004:
David C. Vernon is Chief Executive Officer of the Company and the
Association. Prior to assuming those positions on February 20, 2003, he was
Chairman and CEO of Founders Capital Corporation. Founders Capital Corporation
provides consulting services to the Company. Prior to forming Founders Capital
Corporation, Mr. Vernon was Chairman, President and CEO of Summit Bancorp and
Summit Bank in Akron, Ohio. Immediately following the 2003 annual shareholders
meeting of the Company, Mr. Vernon will assume the positions of President of
the Company and the
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Association upon the retirement by Mr. Williams from those positions. He is
Chairman of the Board of the Company and the Association. Age 62. Director since
2003.
Thomas P. Ash is Superintendent of the Mid-Ohio Educational Service
Center in Mansfield, Ohio. Age 53. Director since 1985.
Director with a term ending in 2005:
Gerry W. Grace is owner and President of Grace Services, Inc., a weed
and pest control company located in Canfield, Ohio. He is the former Chairman of
the Board of the Company and the Association. Age 64. Director since 1986.
EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS
Daniel F. Galeoti is Vice President of Mortgage Operations of the
Association and Secretary of the Company. Age 47. He has served the Association
since 1989.
John A. Rife is Executive Vice President and Treasurer of the
Association and Executive Vice President of the Company. Age 47. He has served
the Association since 1979.
Charles O. Standley is Vice President of Commercial and Consumer
Lending of the Association and Treasurer of the Company. Age 49. He has served
the Association since 1987.
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 their business through meetings of the Boards and their
committees. The Boards 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, 2002, the Board of Directors of the Company held
10 meetings and the Board of Directors of the Association held 12 meetings. No
director attended fewer than 75% of the total meetings of the Board of Directors
and Committees on which such director served in 2002. The Board of Directors of
the Company and Association maintain committees, the nature and composition of
which are described below:
AUDIT COMMITTEE. The Audit 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 Committee of the Company met five times
during 2002.
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. The purpose of this committee is to approve
loans. The Executive Committee met 35 times in 2002.
COMPENSATION COMMITTEE. The Compensation Committee of the Company
consists of Directors Gerry W. Grace, Jeffrey W. Aldrich and Thomas P. Ash. The
committee is responsible for all matters regarding compensation and fringe
benefits for officers and employees of the Company and the
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Association and meets on an as needed basis. The Compensation Committee of the
Company met one time in 2002.
NOMINATING COMMITTEE. The Nominating Committee consists of Jeffrey W.
Aldrich, Thomas P. Ash and Gerry W. Grace and recommends the nominees for
director to stand for election at the Company's Annual Meeting of Shareholders.
The Company's Bylaws provide for shareholder nomination for directors. These
provisions require such nominations to be made pursuant to timely written notice
to the Corporate Secretary of the Company. The shareholders' notice of
nominations must contain all information relating to the nominee which is
required to be disclosed by the Company's Bylaws and by the Securities Exchange
Act of 1934. See "Shareholder Proposals." The Nominating Committee of the
Company met one time in 2002.
DIRECTORS' COMPENSATION
DIRECTORS' FEES. All directors of the Association are currently paid an
annual retainer of $12,000. The Chairman of the Association receives $9,500 in
addition to director's fees. The Company pays $3,000 per year to its directors
for attending Board meetings.
INCENTIVE PLAN. The Company maintains the 1999 Stock-Based Incentive
Plan for the benefit of employees and outside directors of the Company and the
Association. On January 16, 2003, the Board of Directors awarded Mr. Vernon
3,875 shares of restricted stock and granted him a non-statutory stock option to
purchase 11,390 shares of Company common stock at an exercise price of $10.05
per share. Mr. Vernon's non-statutory stock option and restricted stock award
will vest ratably over a five year period and fully vest upon his death,
disability or upon a change in control of the Company or the Association.
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EXECUTIVE COMPENSATION
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following information is furnished for
the Chief Executive Officer and the highest paid executive officers of the
Company who received salary and bonus of $100,000 or more during the year ended
December 31, 2002.
LONG-TERM COMPENSATION
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ANNUAL COMPENSATION AWARDS
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RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
NAME AND FISCAL SALARY AWARDS OPTIONS/SARs COMPENSATION
PRINCIPAL POSITIONS YEAR ($)(1) BONUS($) ($)(2) (#) ($)(3)
------------------ ----- --------- -------- --------- ------------ -------------
William R. Williams 2002 $172,515 $ -- $ -- -- (4)
President and Chief Executive Officer 2001 163,698 20,000 -- -- 37,903(5)
2000 155,416 20,000 -- -- $159,440(6)
John A. Rife 2002 $108,453 $ -- $ -- -- (4)
Executive Vice President and Treasurer 2001 104,228 11,000 -- -- 27,794
2000 97,984 11,000 -- -- $106,335(6)
Charles O. Standley 2002 $101,996 $ -- $ -- -- (4)
Vice President 2001 96,473 10,000 -- -- 26,136
2000 90,860 10,000 -- -- $105,345(6)
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(1) Mr. Williams' salary includes his base salary and director's fees.
(2) As of December 31, 2002, the number of unvested shares of restricted stock
held by Messrs. Williams, Rife and Standley was 7,756, 4,652 and 4,652,
respectively. The value of those shares, based on the $9.38 per share
closing pricing of the Company's common stock on that date was $72,751,
$43,635, and $43,635, respectively.
(3) For 2001 and 2000, consists of the market value of ESOP allocations for
Messrs. Williams, Rife and Standley.
(4) As of December 31, 2002, the number of shares allocated under the ESOP to
Messrs. Williams, Rife and Standley, and payments under the SERP to be
made to Mr. Williams, had not yet been determined.
(5) Mr. William's SERP calculation for 2001 has not yet been determined.
(6) Consists of the taxable payment of $6.00 per share special contribution
with respect to unvested shares of restricted stock.
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EMPLOYMENT AGREEMENTS
The Association and the Company maintain employment agreements
(collectively, the "Employment Agreements") with William R. Williams, John A.
Rife and Charles O. Standley (individually, the "Executive"). 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. Effective February 21, 2003, the
Boards of Directors of the Association and the Company notified the Executives
that the Association and the Company are not renewing the Employment Agreements.
The Association Employment Agreements will expire on December 30, 2004, and the
Company Employment Agreements will expire on February 21, 2006. The Association
and Company Employment Agreements provide that the Executive's base salary will
be reviewed at least annually. Effective January 1, 2003, the base salary for
Messrs. Williams, Rife and Standley is $155,489, $111,772 and $103,799,
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, plus all
benefits that would have been provided to the Executive during the remaining
term of the agreement. 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 involuntary or voluntary termination (under
certain circumstances) 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.
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Payments to the Executive under the Association Employment Agreement
are 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.
PENSION PLAN
The Association participates in the Financial Institutions
Retirement Fund, a multiple-employer defined benefit pension plan. Generally,
employees of the Association become members of the pension plan upon the
completion of one year of service with the Association and the attainment of age
twenty-one. The Association makes annual contributions to the Financial
Institutions Retirement Fund sufficient to fund retirement benefits for its
employees, as determined in accordance with a formula set forth in the plan
document. Participants generally become vested in their accrued benefits under
the pension plan after completing five years of vesting service. In general,
accrued benefits under the pension plan, including reduced benefits payable upon
early retirement or in the event of a disability, are based on an individual's
years of benefit service and the average of the individual's highest five years'
salary.
The following table reflects the annual pension benefit that
would be payable to a participant of the pension plan upon retirement at age 65,
based on various levels of the highest five-year average salary and years of
credited service. For the 2003 calendar year, the Internal Revenue Code (the
"Code") limits the maximum annual benefit under a pension plan to $160,000 per
year and annual compensation for benefit calculation purposes to $200,000 per
year.
YEARS OF CREDITED SERVICE(1)
---------------------------------------------------------------------------------------
FINAL AVERAGE
EARNINGS 15 20 25 30 35
-------------- ----------- ----------- ----------- ----------- ------------
$ 75,000 $ 22,500 30,000 37,500 45,000 52,500
100,000 30,000 40,000 50,000 60,000 70,000
125,000 37,500 50,000 62,500 75,000 87,500
150,000 45,000 60,000 75,000 90,000 105,000
175,000 52,500 70,000 87,500 105,000 122,500
200,000 60,000 80,000 100,000 120,000 140,000
250,000 75,000 100,000 125,000 150,000 175,000
300,000 90,000 120,000 150,000 180,000 210,000
350,000 105,000 140,000 175,000 210,000 245,000
(1) As of December 31, 2002, Messrs. Williams, Rife and Standley had 30, 22
and 14 years, respectively, of credited service under the pension plan.
10
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Association maintains the Supplemental Executive Retirement Plan
(the "SERP"), a non-qualified deferred compensation arrangement, for the
benefit of certain officers designated by the Board of Directors. The SERP
provides benefits to participants that cannot be provided under the ESOP as a
result of the limitations imposed by 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 throughout the term of the ESOP loan less the benefits
actually accrued under the ESOP. An individual's benefits under the SERP
generally become payable upon the participant's retirement, upon the change in
control of the Association or the Company, or as determined under the ESOP. As
of December 31, 2002, Mr. Williams is the only participant in the SERP.
FISCAL YEAR-END OPTION VALUES
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, 2002. 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.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(#)(1) AT FISCAL YEAR-END($)(2)
------------------------------ -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------- ----------- ------------- ----------- -------------
William R. Williams 29,084 19,388 $5,526 $3,684
John A. Rife 17,451 11,632 3,316 2,210
Charles O. Standley 17,451 11,632 3,316 2,210
------------
(1) The options in this table have an exercise price of $9.19 per share,
adjusted to reflect a return of capital.
(2) The value of unexercised in-the-money stock options equals the market value
of shares covered by in-the-money options as of December 31, 2002 ($9.38)
less the option exercise price ($9.19). Options are in-the-money if the
market value of shares covered by the options is greater than the exercise
price.
11
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AUDIT COMMITTEE REPORT
-------------------------------------------------------------------------------
The Audit Committee of the Company's Board of Directors is composed of
three (3) non-employee directors. The Audit Committee operates under a written
charter adopted by the Board of Directors, a copy of which is included as
Appendix A to this proxy statement. The Board of Directors has determined that
each Audit Committee member is independent in accordance with the listing
standards of the Nasdaq Stock Market.
The Company's management is responsible for the Company's internal
controls and financial reporting process. The independent auditors are
responsible for performing an independent audit of the Company's consolidated
financial statements and issuing an opinion on the conformity of those financial
statements with generally accepted accounting principles. The Audit Committee
oversees the Company's internal controls and financial reporting process on
behalf of the Board of Directors.
In this context, the Audit Committee has met and held discussions with
management and the independent auditors. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared in
accordance with accounting principles generally accepted in the United States of
America, and the Audit Committee has reviewed and discussed the consolidated
financial statements with management and the independent auditors. The Audit
Committee discussed with the independent auditors matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication With Audit
Committees), including the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of the disclosures in the financial statements.
In addition, the Audit Committee has received the written disclosures
and the letter from the independent auditors required by the Independence
Standards Board Standard No. 1 (Independence Discussions With Audit Committees)
and has discussed with the independent auditors the auditors' independence from
the Company and its management. In concluding that the auditors are independent,
the Audit Committee considered, among other factors, whether the non-audit
services provided by the auditors were compatible with its independence.
The Audit Committee discussed with the Company's independent auditors
the overall scope and plans for their audit. The Audit Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examination, their evaluation of the Company's internal
controls, and the overall quality of the Company's financial reporting.
In performing all of these functions, the Audit Committee acts only in
an oversight capacity. In its oversight role, the Audit Committee relies on the
work and assurances of the Company's management, which has the primary
responsibility for financial statements and reports, and of the independent
auditors who, in their report, express an opinion on the conformity of the
Company's financial statements to generally accepted accounting principles. The
Audit Committee's oversight does not provide it with an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or policies, or appropriate internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions with management and the independent auditors do
not assure that the Company's financial statements are presented in accordance
with generally accepted
12
accounting principles, that the audit of the Company's financial statements has
been carried out in accordance with generally accepted auditing standards or
that the Company's independent auditors are in fact "independent."
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the board has approved,
that the audited consolidated financial statements be included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 2002 for filing
with the Securities and Exchange Commission. The Audit Committee and the Board
of Directors also have approved, subject to stockholder ratification, the
selection of the Company's independent auditors.
Jeffrey W. Aldrich
Thomas P. Ash
Gerry W. Grace
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COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
-------------------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 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 SEC. Executive officers, directors
and greater than 10% shareholders 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,
2002.
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TRANSACTIONS WITH MANAGEMENT
-------------------------------------------------------------------------------
Federal regulations require that all loans or extensions of credit to
executive officers and directors of insured financial institutions must be made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons,
except for loans made pursuant to programs generally available to all employees,
and must not involve more than the normal risk of repayment or present other
unfavorable features. The Association is therefore prohibited from making any
new loans or extensions of credit to executive officers and directors at
different rates or terms than those offered to the general public, except for
loans made pursuant to programs generally available to all employees, and has
adopted a policy to this effect. In addition, loans made to a director or
executive officer in an amount that, when aggregated with the amount of all
other loans to such person and his or her related interests, are in excess of
the greater of
13
$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.
Founders Capital Corporation, of which Mr. Vernon is the founder,
received a consulting fee of $75,000 from the Company on January 24, 2003.
-------------------------------------------------------------------------------
PROPOSAL 2. RATIFICATION OF THE GRAND CENTRAL FINANCIAL CORP.
2003 EQUITY COMPENSATION PLAN
-------------------------------------------------------------------------------
The Board of Directors of the Company approved the Grand Central
Financial Corp. 2003 Equity Compensation Plan (the "Plan") on February 20, 2003,
subject to ratification by the Company's stockholders. The Board of Directors
believes that the granting of stock options and restricted stock awards is an
important component of the Company's overall compensation and benefit
philosophy. In order to continue to be able to attract and retain employees and
outside directors, the Company must have the ability to offer market-
competitive, long-term compensation opportunities.
The Plan is similar to the Company's 1999 Stock-Based Incentive Plan,
which was approved by stockholders on July 13, 1999, in that it allows the
Company to use stock options and restricted stock to reward performance and
build the participants' equity interests in the Company by providing long-term
incentives and rewards to employees and outside directors who provide services
to the Company and its subsidiaries and who contribute to the success of the
Company by their innovation, ability, industry, loyalty and exceptional service.
The Company's 1999 Stock-Based Incentive Plan provided for the issuance of
193,887 shares of Company common stock upon the exercise of incentive and
non-statutory stock options and 77,554 shares of Company common stock upon the
grant of restricted stock awards. Currently, under the Company's existing plan
no shares of Company common stock remain available for the grant of stock
options or for the grant of restricted stock awards.
As part of the Company's long-term growth strategy, implementation of
the Company's 2003 Equity Compensation Plan will position the Company to attract
and retain additional executives, employees and directors. The Company currently
intends to issue additional shares of Company common stock and anticipates that
it will consider expansion into one or more additional geographic markets. In
connection with such expansion, the Company would expect to increase the
Company's Board of Directors by adding directors familiar with such a new market
or markets. The Board has authorized the issuance by the Company of additional
shares totaling up to (but less than) 20 percent of the total stock outstanding
on the date of the issuance of the new shares through a private placement at a
price per share equal to book value per share of the Company's Stock. Such book
value will be determined after recognizing all costs and obligations incurred by
the Company prior to issuance of the new shares. The purchasers of the shares
sold in the private placement are expected to be accredited investors, who
previously expressed interest in purchasing shares in Founders Capital
Corporation, which was founded by the Company's Chairman and Chief Executive
Officer.
14
The following summary is a brief description of the material features
of the Plan. This summary is qualified in its entirety by reference to the Plan,
a copy of which is attached as Appendix B.
SUMMARY OF THE PLAN
TYPE OF AWARDS. The Plan provides for the grant of incentive stock
options ("ISOs"), within the meaning of Section 422 of the Code, Non-Statutory
Stock Options ("NSOs"), which do not satisfy the requirements for ISO treatment,
and Restricted Stock Awards ("RSAs"). ISOs, NSOs and RSAs are collectively
referred to under the Plan as "Awards."
ADMINISTRATION. The Plan will be administered by the Board of Directors
of the Company (the "Committee"). Subject to the terms of the Plan the Committee
interprets the Plan and is authorized to make all determinations and decisions
thereunder. The Committee also determines the participants to whom Awards will
be granted, the type and amount of Awards that will be granted and the terms and
conditions applicable to such Awards.
PARTICIPANTS. All employees and outside directors of the Company and
the Association, as well as other persons who render services to the Company,
are eligible to participate in the Plan.
NUMBER OF SHARES OF COMMON STOCK AVAILABLE. The Company has reserved
100,000 shares of Company common stock for issuance under the Plan. Of that
amount, no more than 30,000 shares may be issued as RSAs. Shares of common stock
to be issued under the Plan may be either authorized but unissued shares, or
reacquired shares held by the Company as treasury stock. Any shares subject to a
forfeited stock option or RSA will be deposited back in the Plan and be
available for future grant under the Plan.
TERMS OF STOCK OPTION GRANTS. The exercise price of each ISO or NSO
will not be less than the fair market value of the common stock on the date the
ISO or NSO is granted. The plan does not permit the repricing of stock options.
The aggregate fair market value of the shares for which ISOs granted to any
employee may be exercisable for the first time by such employee during any
calendar year (under all Company stock option plans) may not exceed $100,000.
Presently, under accounting principles generally accepted in the United
States of America, compensation expense is not recognized with respect to the
award of options to employees and outside directors of the Company and its
subsidiaries.
The exercise price of an option may be paid in cash, common stock or a
combination of cash and common stock, by the surrender of all or part of the
option being exercised, by the immediate sale through a broker of the number of
shares being acquired sufficient to pay the purchase price, or by a combination
of these methods, as and to the extent permitted by the Committee.
Under the Plan, the Committee may permit participants to transfer
options to eligible transferees (as such eligibility is determined by the
Committee). Each option may be exercised during the option holder's lifetime,
only by the option holder or the option holder's guardian or legal
representative, and after death only by the option holder's beneficiary or,
absent a beneficiary, by the estate or by a person who acquired the right to
exercise the option by will or the laws of descent and distribution. Options may
become exercisable in full at the time of grant or at such other times and in
such installments as the Committee determines or as may be specified in the
Plan. Vested options may be exercised during
15
periods before and after the participant terminates employment, as the case may
be, to the extent authorized by the Committee or specified in the Plan. However,
no option may be exercised after the tenth anniversary of the date the option
was granted. The Committee may, at any time and without additional
consideration, accelerate the date on which an option becomes exercisable.
TERMS OF RESTRICTED STOCK AWARDS. Subject to the terms of the Plan, the
Committee has the authority to determine the number of shares subject to an RSA,
the dates on which an RSA will vest and any other conditions which must be
satisfied prior to vesting.
RSA recipients are entitled to all cash and stock dividends or other
distributions (if any) with respect to shares awarded in the form of restricted
stock. The Committee will determine the timing of these distributions. In
addition, before vesting, RSA recipients may direct the Plan Trustee on the
voting of shares of common stock subject to their RSAs.
Unless the Committee determines otherwise, upon the termination of
service of an RSA recipient for any reason other than death, disability or
retirement, all rights to an unvested RSA will be canceled. If the holder of the
RSA dies or becomes disabled, all unvested RSAs held by such individual will
become fully vested. Unless otherwise determined by the Committee, all unvested
RSAs will be forfeited upon a participant's retirement.
EFFECT OF A CHANGE IN CONTROL. In the event of a change in control (as
defined in the Plan) all unvested RSAs and stock options will immediately vest
and all unexercised stock options will remain exercisable for the term of the
stock options regardless of termination of employment or service.
TERM OF THE PLAN. The Plan will be effective upon shareholder approval.
The Plan will expire on the tenth anniversary of the effective date, unless
terminated sooner by the Board.
AMENDMENT OF THE PLAN. The Plan allows the Board to amend the Plan in
certain respects without shareholder approval, unless such approval is required
to comply with a tax law or regulatory requirement.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following brief
description of the material tax consequences of stock options and restricted
stock awards granted under the Plan is based on federal income tax laws
currently in effect and does not purport to be a complete description of such
federal income tax consequences.
STOCK OPTIONS. There are generally no federal income tax consequences
either to the optionee or to the Company upon the grant of an ISO or NSO. On the
exercise of an ISO during employment or within three months thereafter, the
optionee will not recognize any ordinary income and the Company will not be
entitled to a deduction, although the excess of the fair market value of the
shares on the date of exercise over the exercise price is includible for
purposes of determining an optionee's alternative minimum tax liability.
Generally, if the optionee disposes of shares acquired upon exercise of an ISO
within two years of the date of grant or one year of the date of exercise, the
optionee will recognize ordinary income, and the Company will be entitled to a
deduction, equal to the excess of the fair market value of the shares on the
date of exercise over the exercise price (limited generally to the gain on the
sale). The balance of any gain or loss will be treated as a capital gain or loss
to the optionee. If the shares are disposed of after the two year and one year
periods mentioned above, the Company will not be
16
entitled to any deduction, and the entire gain or loss for the optionee will be
treated as a capital gain or loss.
On exercise of an NSO, the excess of the date-of-exercise fair market
value of the shares acquired over the exercise price will generally be taxable
to the optionee as ordinary income and deductible by the Company, provided the
Company properly withholds taxes in respect of the exercise. This disposition of
shares acquired upon the exercise of a NSO will generally result in a capital
gain or loss for the optionee, but will have no tax consequences for the
Company.
RESTRICTED STOCK AWARDS. A participant who has been awarded restricted
stock under the 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 an RSA lapse, the recipient
will recognize ordinary income and the Company will be entitled to a
corresponding deduction equal to the fair market value of the stock at such
time. Any dividend paid to the recipient on the restricted stock at or prior to
such time will be ordinary compensation income to the recipient and deductible
as such by the Company.
A recipient of an RSA 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
the stock at such time. Any dividends subsequently paid to the recipient on the
restricted stock 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 applicable transfer or forfeiture restrictions lapse.
NEW PLAN BENEFITS. The Company anticipates that grants of stock options
and restricted stock awards will be made to outside directors, officers and
employees on or after the effective date of the Plan at levels consistent with
other peer institutions. However, the Board has not made specific determinations
regarding the size of individual awards.
EQUITY COMPENSATION PLAN INFORMATION. The following table sets forth
information about Company common stock that may be issued upon exercise of
options, warrants and rights under all of the Company's equity compensation
plans as of December 31, 2002, including the Company's 1999 Stock-Based
Incentive Plan. The Company's shareholders previously approved this plan.
NUMBER OF SECURITIES REMAINING
NUMBER OF SECURITIES TO BE AVAILABLE FOR FUTURE ISSUANCE UNDER
ISSUED UPON EXERCISE OF WEIGHTED-AVERAGE EXERCISE EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, WARRANTS PRICE OF OUTSTANDING OPTIONS, (EXCLUDING SECURITIES REFLECTED IN THE
PLAN CATEGORY AND RIGHTS WARRANTS AND RIGHTS FIRST COLUMN)
--------------------------- ----------------------------- ----------------------------- --------------------------------------
Equity compensation plans
approved by security holders 182,497 $9.22 --
Equity compensation plans
not approved by security
holders -- -- --
------- --------- --------
Total 182,497 $9.22 --
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION
OF THE GRAND CENTRAL FINANCIAL CORP. 2003 EQUITY COMPENSATION PLAN.
17
-------------------------------------------------------------------------------
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
-------------------------------------------------------------------------------
The Board of Directors has appointed Crowe, Chizek and Company LLP to
be its auditors for the 2003 fiscal year, subject to ratification by
shareholders. A representative of Crowe, Chizek and Company LLP will be present
at the annual meeting to respond to appropriate questions from shareholders and
will have the opportunity to make a statement should he or she desire to do so.
If ratification of the appointment of the auditors is not approved by a
majority of the votes cast by shareholders at the annual meeting, other
independent auditors will be considered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF
THE APPOINTMENT OF CROWE, CHIZEK AND COMPANY LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR FISCAL YEAR 2003.
The following table sets forth the fees billed to the Company for the
fiscal year ending December 31, 2002 by Crowe, Chizek and Company LLP:
Audit Fees $24,750
Financial information and systems
design and implementation fees --
All other fees* 41,725
------------
* Includes fees for tax-related services and assistance with securities
filings.
The Audit Committee believes that the provision of non-audit services
by Crowe, Chizek and Company LLP is compatible with maintaining Crowe, Chizek
and Company LLP's independence.
-------------------------------------------------------------------------------
PROPOSAL 4. AMENDMENT OF THE COMPANY'S CERTIFICATE OF
INCORPORATION TO CHANGE THE COMPANY'S NAME
-------------------------------------------------------------------------------
The Board of Directors has voted to amend the Company's Certificate of
Incorporation to change the Company's name from Grand Central Financial Corp. to
Central Federal Corporation. The Company's subsidiary, Central Federal Savings
and Loan Association of Wellsville, is also changing its name to Central Federal
Bank. The Company's Board of Directors believes the name changes will enhance
the Company's marketing efforts.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE AMENDMENT OF
THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE COMPANY'S NAME TO
CENTRAL FEDERAL CORPORATION.
18
-------------------------------------------------------------------------------
CORPORATE GOVERNANCE
-------------------------------------------------------------------------------
GENERAL
The Company has been reviewing its corporate governance policies and
practices. This includes comparing its current policies and practices to
policies and practices suggested by various groups or authorities active in
corporate governance and practices of other public companies. Based upon this
review, the Company expects to adopt any changes that the Board of Directors
believes are the best corporate governance policies and practices for the
Company. The Company will adopt changes, as appropriate, to comply with the
Sarbanes-Oxley Act of 2002 and any rule changes made by the Securities and
Exchange Commission and the Nasdaq Stock Market, Inc.
EMPLOYEE CODE OF CONDUCT
Since the Company's inception in 1998, it has had a Code of Conduct.
The Company requires all employees to adhere to the Code of Conduct in
addressing the legal and ethical issues encountered in conducting their work.
The Code of Conduct requires that the Company's employees avoid conflicts of
interest, comply with all laws and other legal requirements, conduct business in
an honest and ethical manner and otherwise act with integrity and in the
Company's best interest. During 2002, all of the Company's employees were
required to certify that they reviewed and understood the Code of Conduct. In
addition, all officers and senior level executives were required to certify as
to any actual or potential conflicts of interest involving them and the Company.
The Company also provides training for its employees on the Code of Conduct and
their legal obligations.
Employees are required to report any conduct that they believe in good
faith to be an actual or apparent violation of the Code of Conduct. The
Sarbanes-Oxley Act of 2002 will require companies to have procedures to receive,
retain and treat complaints received regarding accounting, internal accounting
controls or auditing matters and to allow for the confidential and anonymous
submission by employees of concerns regarding questionable accounting or
auditing matters. The Company currently has such procedures in place, and will
monitor any rules adopted by the Securities and Exchange Commission to determine
whether it needs to modify the Company's process.
-------------------------------------------------------------------------------
MISCELLANEOUS
-------------------------------------------------------------------------------
The Company will pay the cost of this proxy solicitation. In addition
to soliciting proxies by mail, Georgeson & Company, Inc., a proxy solicitation
firm, will be paid a fee of $4,500 plus expenses to assist the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of the Company's common stock. Directors, officers and
regular employees of the Company may also solicit proxies personally or by
telephone. None of these persons will receive additional compensation for these
activities.
19
A COPY OF THE FORM 10-KSB (WITHOUT EXHIBITS) FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2002, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE TO SHAREHOLDERS OF RECORD UPON WRITTEN REQUEST TO
CORPORATE SECRETARY, GRAND CENTRAL FINANCIAL CORP., 601 MAIN STREET, WELLSVILLE,
OHIO 43968.
-------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
-------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy materials
for next year's Annual Meeting of Shareholders, any shareholder proposals must
be received by the Company at the Company's main office at 601 Main Street,
Wellsville, Ohio 43968, no later than November 28, 2003. If next year's Annual
Meeting of Shareholders is held on a date more than 30 calendar days from April
23, 2003, a shareholder proposal must be received by a reasonable time before
the Company begins to print and mail its proxy solicitation for such Annual
Meeting. Any such proposals will be subject to the requirements of the proxy
rules adopted by the Securities and Exchange Commission.
20
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SHAREHOLDER NOMINATIONS
-------------------------------------------------------------------------------
The Company's Bylaws provide that in order for a shareholder to make
nominations for the election of directors or proposals for business to be
brought before the Annual Meeting, a 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
shareholders of the annual meeting date was mailed or such public disclosure was
made. A copy of the full text of the Bylaw provisions discussed above may be
obtained by writing to the Corporate Secretary at 601 Main Street, Wellsville,
Ohio 43968.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Daniel F. Galeoti
Daniel F. Galeoti
Corporate Secretary
Wellsville, Ohio
March 28, 2003
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.
21
APPENDIX A
GRAND CENTRAL FINANCIAL CORP.
AUDIT COMMITTEE CHARTER
-------------------------------------------------------------------------------
I. MISSION STATEMENT
The Grand Central Financial Corp. Audit Committee's (the "Committee")
role is to review: the integrity of the financial reports and other financial
information provided by Grand Central Financial Corp. (the "Company") to any
governmental body or the public, including any certification, report, opinion or
review performed by the Company's independent accountants; the Company's
compliance with legal and regulatory requirements; the independent accountant's
qualifications and independence; the performance of the Company's independent
accountants and system of internal controls and disclosure procedures regarding
finance, accounting, legal compliance and ethics that management and the Board
have established; the Company's auditing, accounting and financial reporting
processes generally; and the preparation of information required by the
Securities and Exchange Commission rules to be included in the Company's annual
proxy statement. Consistent with these functions, the Audit Committee shall
encourage continuous improvement of, and shall foster adherence to, the
Company's policy, procedures and practices at all levels. The Audit Committee's
primary duties and responsibilities are to:
o Serve as an independent and objective party to monitor the
Company's reporting process and internal control systems.
o Review and appraise the audit efforts of the Company's
independent accountants and internal accounting department.
o Provide an open avenue of communication among the independent
accountants, financial and senior management and the Board of
Directors.
II. COMPOSITION
1. The Committee shall consist of at least three board members,
each of whom shall be independent, as defined in the Nasdaq
listing standards and applicable Securities and Exchange
Commission rules and regulations. All members of the Committee
must be financially literate at the time of appointment,
meaning they must have the ability to read and understand
fundamental financial statements, including the Company's
balance sheet, income statement and cash flow statement.
Additionally, as required by Nasdaq listing standards,
effective as of the first annual meeting occurring after
January 1, 2004, at least one member of the Committee must be
financially sophisticated, meaning that such person must have
past employment experience in finance or accounting or any
other comparable experience or background which results in the
individual's financial sophistication, including being or
having been a chief executive officer, chief financial officer
or other senior officer with financial oversight
responsibilities.
2. Committee appointments, including selection of the Committee
Chairperson, shall be approved annually by the full Board of
Directors or until their successors shall be duly elected and
qualified.
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3. Committee members shall not simultaneously serve on the audit
committees of more than two public companies, including the
Company.
III. MEETINGS
1. The Committee shall meet at least quarterly. Additional
meetings shall be scheduled as considered necessary by the
Committee or Chairperson. A quorum of the Committee shall be
declared when a majority of the appointed members of the
Committee are in attendance.
2. The Committee shall meet with the independent accountants and
management quarterly to review the Company's financial
statements.
3. The Committee may request any officer or employee of the
Company or the Company's outside counsel or independent
accountants to attend a meeting of the Committee or to meet
with any members of, or consultants to, the Committee.
4. In meetings attended by the independent accountants or by
regulatory examiners, a portion of the meeting will be
reserved for the Committee to meet in closed session with
these parties.
5. Written minutes shall be kept for all meetings.
IV. RESPONSIBILITIES AND DUTIES
In carrying out its responsibilities, the Committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and shareholders that the
corporate accounting and reporting practices of the Company are in accordance
with all requirements and are of the highest quality. To fulfill its
responsibilities and duties the Committee shall:
Documents/Reports Review
------------------------
1. Review and update this Charter periodically, at least
annually, and as conditions dictate.
2. Review any regular internal reports to management and
management's response to such reports.
3. Review the Company's audited annual financial statements and
the independent accountants' opinion rendered with respect to
such financial statements, including reviewing the nature and
extent of any significant changes in accounting principles or
the application therein.
4. Review and approve requests for any management consulting
engagement to be performed by the Company's independent
auditor and be advised of any other study undertaken at the
request of management that is beyond the scope of the audit
engagement letter.
5. Review with financial management interim financial reports
prior to the release of earnings. The Chairperson of the
Committee may represent the entire Committee for purposes of
this review.
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6. Generally discuss earnings press releases and financial
information as well as earnings guidance provided to analysts
and rating agencies.
Independent Accountants
-----------------------
1. Select the independent accountants considering independence
and effectiveness, and approve the fees and other compensation
to be paid to the independent accountants. On an annual basis
the Committee shall review and discuss with the accountants
all significant relationships the accountants have with the
Company to determine the accountant's independence.
2. Review the performance of the independent accountants and
approve any proposed discharge of the independent accountants
when circumstances warrant.
3. Periodically consult with the independent accountants out of
the presence of management about the Company's financial and
accounting personnel, the fullness and accuracy of the
Company's financial statements, the adequacy and effectiveness
of the accounting and financial controls of the Company, and
illicit any recommendations for the improvement of such
internal control procedures. Particular emphasis should be
given to the adequacy of such internal controls to expose
payments, transactions or procedures that might be deemed
illegal or otherwise improper. Further, the Committee should
periodically review Company policy statements to determine
their adherence to the code of conduct. As part of this
review, the Committee shall ensure receipt of a formal written
statement from the independent accountants consistent with the
standards set by the Independence Standards Board.
4. Approve, in advance, all permissible non-audit services to be
completed by the independent accountants. Such approval
process will ensure that the independent accountant does not
provide any non-audit services to the Company or any of the
Company's subsidiaries that are prohibited by law or
regulation.
5. Obtain and review, at least annually, a report by the
independent accountants describing (A) the auditor's internal
quality control procedures, (B) any material issues raised by
its most recent internal quality control review, or peer
review, of the firm or by any inquiry or investigation by
governmental or professional authorities in the preceding five
(5) years relating to an independent audit conducted by the
firm and any steps taken to deal with such issues.
6. Set clear policies for hiring employees or former employees of
the independent accountants.
Financial Reporting Process
---------------------------
1. In consultation with the independent accountants and senior
management, review the integrity of the organization's
financial reporting processes, both internal and external.
2. Consider the independent accountants' judgment about the
quality and appropriateness of the Company's accounting
principles as applied in its financial reporting.
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3. Consider and approve, if appropriate, major changes to the
Company's auditing and accounting principles and practices
suggested by the independent accountants and management.
4. Prepare a report for inclusion in the Company's annual proxy
statement, in accordance with applicable rules and
regulations.
Process Improvement
-------------------
1. Establish regular and separate systems of reporting to the
Committee by each of management and the independent
accountants regarding any significant judgments made in
management's preparation of the financial statements and the
view of each as to appropriateness of such judgments.
2. Following the completion of the annual audit, review
separately with each of management and the independent
accountants any significant difficulties encountered during
the course of the audit, including any restrictions on the
scope of work or access to required information.
3. Review any significant disagreements among management and the
independent accountants in connection with the preparation of
the financial statements.
4. Review with the independent accountants and management the
extent of which changes or improvements in financial or
accounting practices, as approved by the Committee, have been
implemented.
5. Periodically consult with the internal accountants out of the
presence of management and the independent accountants about
internal controls and the fullness and accuracy of the
organization's financial statements.
6. Have in place procedures for (A) receiving complaints
regarding accounting, internal accounting controls or auditing
matters and (B) the confidential submission by employees of
concerns regarding questionable accounting.
7. Report regularly to the Board of Directors, which such report
should include a review on issues relating to the quality or
integrity of the Company's financial statements, the Company's
compliance with legal or regulatory requirements and the
performance of the independent accountants.
Ethical and Legal Compliance
----------------------------
1. Review all legal compliance matters as they occur.
2. Review and approve all related-party transactions.
3. Review any legal matter that could have a significant impact
on the Company's financial statements.
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4. Be authorized to retain independent counsel and other advisors
as it deems necessary to carry out its duties and to assist it
in the conduct of any investigation. In connection therewith,
the Committee shall be provided appropriate funding as
determined by the Committee for payment to accountants and
advisors.
5. Perform any other activities consistent with this Charter, the
Company's Bylaws and governing law, as the Committee or the
Board of Directors deems necessary or appropriate.
6. Establish, review and update periodically a Code of Business
Conduct and ensure that management has a system to enforce the
Code.
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APPENDIX B
PROPOSED
GRAND CENTRAL FINANCIAL CORP.
2003 EQUITY COMPENSATION PLAN
1. DEFINITIONS
(a) "Affiliate" means any "parent corporation" or "subsidiary corporation"
of the Holding Company, as such terms are defined in Sections 424(e)
and 424(f) of the Code.
(b) "Association" means Central Federal Savings and Loan Association of
Wellsville.
(c) "Award" means, individually or collectively, a grant under the Plan of
Non-Statutory Stock Options, Incentive Stock Options and Restricted
Stock Awards.
(d) "Board of Directors" means the board of directors of the Holding
Company.
(e) "Change in Control" means with respect to the Association or the
Holding Company, 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 Holding Company or the Association within
the meaning of the Home Owner's Loan Act of 1933, as amended, the
Federal Deposit Insurance Act and the Rules and Regulations promulgated
by the Office of Thrift Supervision ("OTS") (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
Association or the Holding Company representing 20% or more of the
Association's or the Holding Company's outstanding voting securities or
right to acquire such securities except for any voting securities of
the Association 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
Holding Company's stockholders was approved by a Nominating Committee
solely composed of members who 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
Association or the Holding Company or similar transaction occurs or is
effectuated in which the Association or Holding Company is not the
resulting entity, 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 Association 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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Association or the Holding Company shall be distributed, or (E) a
tender offer is made for 20% or more of the voting securities of the
Association or Holding Company then outstanding.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the committee designated, pursuant to Section 3 of
the Plan, to administer the Plan.
(h) "Common Stock" means the common stock of the Holding Company, par value
$.01 per share.
(i) "Disability" means any mental or physical condition with respect to
which the Participant qualifies for and receives benefits 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.
(j) "Employee" means any person employed by the Holding Company or an
Affiliate. Directors who are also employed by the Holding Company or an
Affiliate shall be considered Employees under the Plan.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(l) "Exercise Price" means the price at which an individual may purchase a
share of Common Stock pursuant to an Option.
(m) "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 for 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.
(n) "Holding Company" means Grand Central Financial Corp. and any entity
which succeeds to the business of Grand Central Financial Corp.
(o) "Incentive Stock Option" means a stock option granted under the Plan,
that is intended to meet the requirements of Section 422 of the Code.
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(p) "Non-Statutory Stock Option" means a stock option granted to an
individual under the Plan that is not intended to be and is not
identified as an Incentive Stock Option, or a stock option granted
under the Plan that is intended to be and is identified as an Incentive
Stock Option, but that does not meet the requirements of Section 422 of
the Code.
(q) "Option" means an Incentive Stock Option or a Non-Statutory Stock
Option.
(r) "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.
(s) "Participant" means any Employee or Outside Director who was granted an
Option or Restricted Stock Award under the Plan.
(t) "Plan" means this Grand Central Financial Corp. 2003 Equity
Compensation Plan.
(u) "Restricted Stock Award" means an Award of restricted stock granted to
an individual pursuant to Section 6 of the Plan.
(v) "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.
(w) "Termination for Cause" shall mean, in the case of an Outside Director,
removal from the board(s) of directors of the Holding Company and its
Affiliates in accordance with the applicable by-laws of the Holding
Company and its Affiliates or, in the case of an Employee, as defined
under any employment agreement with the Holding Company or an
Affiliate; provided, however, that if no employment agreement exists
with respect to the Employee, Termination for Cause shall mean
termination of employment because of a material loss to the Holding
Company or an Affiliate, as determined by and in the sole discretion of
the Board of Directors or its designee(s).
2. PURPOSE
This Plan is intended to provide the Holding Company and its
Affiliates, a means to continue using Common Stock as a form of compensation for
Employees and Outside Directors. Pursuant to the terms of the Plan, the
Committee may grant Options and Restricted Stock Award to Employees and outside
directors to provide additional incentive to continue to work for the success of
the Holding Company and its Affiliates.
3. ADMINISTRATION
(a) The Committee shall administer the Plan. The Committee shall consist of
the entire Board of Directors of the Company.
(b) The Committee shall:
(i) select the individuals who are to receive grants of Awards
under the Plan;
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(ii) determine the type, number, vesting requirements and other
features and conditions of such Awards made under the Plan;
(iii) interpret the Plan and Award Agreements (as defined below);
and
(iv) make all other decisions related to the operation of the Plan.
In granting Awards under the Plan, the Committee shall
consider recommendations of the Chief Executive Officer. The Committee
shall adopt any rules or guidelines that it deems appropriate to
implement and administer the Plan. The Committee's determinations under
the Plan shall be final and binding on all persons.
(c) Each Award granted under the Plan shall be evidenced by a written
agreement ("Award Agreement"). Each Award Agreement shall constitute a
binding contract between the Holding Company or an Affiliate and the
Award holder, and every Award holder, 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 set in
accordance with the Plan, but each Award Agreement may also include any
additional provisions and restrictions determined by the Committee. 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 the Award; and
(vi) the restrictions, if any, placed on the Award, or upon shares
which may be issued upon the exercise or vesting of the Award.
The Chairman of the Committee and such other directors and
employees as shall be designated by the Committee are hereby authorized
to execute Award Agreements on behalf of the Holding Company or an
Affiliate and to cause them to be delivered to the recipients of Awards
granted under the Plan.
(d) The Committee may delegate all authority for the determination of forms
of payment to be made or received by the Plan and for the execution of
any Award Agreement. The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management
of the Holding Company or an Affiliate for determinations to be made
pursuant to the Plan.
4. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 11 of the Plan, the number
of shares reserved for Awards under the Plan is 100,000, including for purchase
pursuant to the exercise of Options (Incentive Stock Options and Non-Statutory
Stock Options); provided, however, that no more than 30,000 may be
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used for grants of Restricted Stock Awards. 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 Holding Company. Shares
underlying outstanding Awards will be unavailable for any other use, including
future grants under the Plan, except that, to the extent the Awards terminate,
expire or are forfeited without vesting or having been exercised, new Awards may
be granted with respect to these shares subject to the limitations set forth in
this Section 4.
5. 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 Options to Employees and outside directors, subject to terms and
conditions as it may determine, to the extent that such terms and conditions are
consistent with the following provisions:
(a) EXERCISE PRICE. The Exercise Price shall not be less than one hundred
percent (100%) of the Fair Market Value of the Common Stock on the date
of grant.
(b) TERMS OF OPTIONS. In no event may an individual exercise an Option, in
whole or in part, more than ten (10) years from the date of grant.
(c) NON-TRANSFERABILITY. Unless otherwise determined by the Committee in
accordance with this Section 5(c), an individual may not transfer,
assign, hypothecate, or dispose of an Option in any manner, other than
by will or the laws of intestate succession. The Committee may,
however, in its sole discretion, permit transfer or assignment of a
Non-Statutory Stock Option, if it determines that the transfer or
assignment is for valid estate planning purposes and is permitted under
the Code and Rule 16b-3 of the Exchange Act. For purposes of this
Section 5(c), a transfer for valid estate planning purposes includes,
but is not limited to, transfers:
(i) to a revocable inter vivos trust, as to which an individual is
both settlor and trustee; or
(ii) for no consideration to: (1) any member of the individual's
Immediate Family; (2) a trust solely for the benefit of
members of the individual's Immediate Family; (3) any
partnership whose only partners are members of the
individual's Immediate Family; or (4) any limited liability
corporation or other corporate entity whose only members or
equity owners are members of the individual's Immediate
Family.
For purposes of this Section 5(c), "Immediate Family"
includes, but is not necessarily limited to, an individual's parents,
grandparents, spouse, children, grandchildren, siblings (including half
brothers and sisters), and individuals who are family members by
adoption. Nothing contained in this Section 5(c) shall be construed to
require the Committee to approve the transfer or assignment of any
Non-Statutory Stock Option, in whole or in part. Receipt of the
Committee's approval to transfer or assign a Non-Statutory Stock
Option, in whole or in part, does not mean that the Committee must
approve a transfer or assignment of any other Non-Statutory Stock
Option, or portion thereof. The transferee or assignee of any
Non-Statutory Stock Option shall be subject to all terms and conditions
applicable to the Option immediately prior to transfer or assignment,
and shall remain subject to any other conditions proscribed by the
Committee with respect to the Option.
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(d) SPECIAL RULES FOR INCENTIVE STOCK OPTIONS. Notwithstanding foregoing
provisions, the following rules apply to the grant of Incentive Stock
Options:
(i) If an Employee owns or is treated as owning, for purposes of
Section 422 of the Code, Common Stock representing more than
ten percent (10%) of the total combined voting securities of
the Holding Company at the time the Committee grants the
Incentive Stock Option (a "10% Owner"), the Exercise Price
shall not be less than one hundred and ten percent (110%) of
the Fair Market Value of the Common Stock on the date of
grant.
(ii) An Incentive Stock Option granted to a 10% Owner shall not be
exercisable more than five (5) years from the date of grant.
(iii) To the extent the aggregate Fair Market Value of shares of
Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by an Employee during any
calendar year, under the Plan or any other stock option plan
of the Holding Company, exceeds $100,000, or such higher value
as may be permitted under Section 422 of the Code, Options in
excess of the limit shall be treated as Non-Statutory Stock
Options. Fair Market Value shall be determined as of the date
of grant for each Incentive Stock Option.
(iv) Each Award Agreement for an Incentive Stock Option shall
require the individual to notify the Committee within ten (10)
days of any disposition of shares of Common Stock under the
circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions).
(v) Incentive Stock Options exercised more than three (3) months
following the date an Employee terminates employment (for
reasons other than death or Disability) will be treated as
Non-Statutory Stock Options. In the event employment is
terminated due to death or Disability, Incentive Stock Options
will remain exercisable for one (1) year from the date the
Employee terminates employment.
(e) ACCELERATION UPON A CHANGE IN CONTROL. Upon a Change in Control, all
Options held by an individual as of the date of the Change in Control
shall immediately become exercisable and shall remain exercisable until
the expiration of the Option term.
(f) TERMINATION OF EMPLOYMENT OR SERVICE. The following rules apply upon
the termination of a Participant's employment or other service:
(i) In General. Unless the Committee determines otherwise, upon
termination of employment or service for any reason other than
Retirement, Disability or death, or Termination for Cause, a
Participant may exercise only those Options that were
immediately exercisable by the Participant at the date of
termination, and only for a period of three (3) months from
the date of termination, or, if sooner, until the expiration
of the Option term.
(ii) Retirement. Unless the Committee determines otherwise, upon a
Participant's Retirement, the Participant may exercise only
those Options that were immediately exercisable by the
Participant at the date of Retirement, and only for a period
of one (1) year from the date of Retirement, or, if sooner,
until the expiration of the Option term.
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(iii) Disability or Death. Unless the Committee determines
otherwise, upon termination of a Participant's employment or
service due to Disability or death, all Options shall become
immediately exercisable and shall remain exercisable for a
period of one (1) year from the date of termination, or, if
sooner, until the expiration of the Option term.
(iv) Termination for Cause. Unless the Committee determines
otherwise, upon Termination for Cause, all rights to a
Participant's Options shall expire immediately upon the
effective date of Termination for Cause.
6. RESTRICTED STOCK AWARDS
The Committee may make grants of Restricted Stock Awards, which shall
consist of the grant of some number of shares of Common Stock to an individual
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 STOCK. Restricted Stock Awards may only be granted in whole
shares of Common Stock.
(b) 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 Restricted Stock Award grant shall not
sell, transfer, assign, pledge, or otherwise encumber shares
subject to the grant 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 Restricted Stock Award grant is not
transferable and may be earned in his or her lifetime only by
the individual to whom it is granted. Upon the death of a
Participant, a Restricted Stock Award grant is transferable by
will or the laws of descent and distribution. The designation
of a beneficiary shall not constitute a transfer.
(iii) If the recipient of a Restricted Stock Award is subject to the
provisions of Section 16 of the Exchange Act, shares of Common
Stock subject to the grant 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.
(c) ACCELERATION OF VESTING UPON A CHANGE IN CONTROL. Upon a Change in
Control, all Restricted Stock Awards held by a Participant as of the
date of the Change in Control shall immediately become vested and any
further restrictions shall lapse.
(d) TERMINATION OF EMPLOYMENT OR SERVICE. The following rules will govern
the treatment of a Restricted Stock Award upon the termination of a
Participant's termination of employment or other service:
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(i) In General. Unless the Committee determines otherwise, upon
the termination of a Participant's employment or service for
any reason other than Retirement, Disability or death, or
Termination for Cause, any Restricted Stock Award 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 Restricted Stock Award shall become null and void.
(ii) Retirement. Unless the Committee determines otherwise, upon a
Participant's Retirement, any Restricted Stock Award in which
the Participant has not become vested as of the date of
Retirement shall be forfeited and any rights the individual
had to such unvested Restricted Stock Award shall become null
and void.
(iii) Disability or Death. Unless otherwise determined by the
Committee, in the event of a termination of a Participant's
service due to Disability or death, all unvested Restricted
Stock Awards held by such Participant shall immediately vest
as of the date of such termination.
(iv) Termination for Cause. Unless otherwise determined by the
Committee, in the event of a Participant's Termination for
Cause, all Restricted Stock Awards in which the Participant
had not become vested as of the effective date of such
termination shall be forfeited and any rights the Participant
had to such unvested Restricted Stock Awards shall become null
and void.
(e) ISSUANCE OF CERTIFICATES. Unless otherwise held in trust and registered
in the name of the Plan trustee, reasonably promptly after the date of
grant with respect to shares of Common Stock pursuant to a Restricted
Stock Award, the Holding Company shall cause to be issued a stock
certificate, registered in the name of the Participant to whom the
Restricted Stock Award was granted, evidencing such shares; provided,
that the Holding Company shall not cause 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. 2003 Equity Compensation Plan 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., 601 Main Street,
Wellsville, Ohio 43968."
This legend shall not be removed until the individual becomes
vested in such shares pursuant to the terms of the Plan and Award
Agreement. Each certificate issued pursuant to this Section 6(e) shall
be held by the Holding Company or its Affiliates, unless the Committee
determines otherwise.
(f) TREATMENT OF DIVIDENDS. Participants are entitled to all dividends and
other distributions declared and paid on Common Stock with respect to
all shares of Common Stock subject to a Restricted Stock Award, from
and after the date such shares are awarded or from and after such later
date as may be specified by the Committee in the Award Agreement, and
the Participant shall not be required to return any such dividends or
other distributions to the Holding Company
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in the event of forfeiture of the Restricted Stock Award. In the event
the Committee establishes a trust for the Incentive Plan, the Committee
may elect to distribute dividends and other distributions at the time
the Restricted Stock Award vests or pay the dividends (or other
distributions) directly to the Participants.
(g) VOTING OF RESTRICTED STOCK AWARDS. Participants who are granted
Restricted Stock Awards are entitled to vote or to direct the Plan
trustee to vote, as the case may be, all unvested shares of Common
Stock subject to the Restricted Stock Award.
7. DEFERRED PAYMENTS
The Committee, in its discretion, may permit an individual to elect to
defer the 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
individuals, of all or a portion of any payment. The Committee shall determine
the terms and conditions of any permitted deferral, including the period of
deferral, the manner of deferral and the method used to measure appreciation on
deferred amounts until paid.
8. METHOD OF EXERCISING OPTIONS
Subject to any applicable Award Agreement, an individual may exercise
any Option, in whole or in part, at such time or times as the Committee
specifies in the Award Agreement. The individual may make payment of the
Exercise Price in such form or forms as the Committee specifies in the Award
Agreement, including, without limitation, payment by delivery of cash, Common
Stock or a cashless exercise with a qualified broker. Any Common Stock used in
full or partial payment of the Exercise Price shall be valued at the Fair Market
Value of the Common Stock on the date of exercise. Delivery by the Holding
Company of the shares as to which an Option has been exercised shall be made to
the person exercising the Option or the designee of such person. If so provided
by the Committee upon grant of the Option, the shares received upon exercise may
be subject to certain restrictions upon subsequent transfer or sale by the
Participant. In the event the Exercise Price is to be paid in full or in part by
surrender of Common Stock, in lieu of actual surrender of shares of Common Stock
the Holding Company may waive such surrender and instead deliver to or on behalf
of the Participant a number of shares equal to the total number of shares as to
which the Option is then being exercised less the number of shares which would
otherwise have been surrendered by the Participant to the Holding Company.
9. RIGHTS OF INDIVIDUALS
No individual shall have any rights as a shareholder with respect to
any shares of Common Stock covered by a grant under this Plan until the date of
issuance of a stock certificate for such Common Stock. Nothing contained in this
Plan or in any Award Agreement confers on any person the 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 an
individual's services.
10. DESIGNATION OF BENEFICIARY
With the Committee's consent, an individual may designate a person or
persons to receive, upon the individual's death, any Award to which the
individual would then be entitled. This designation shall be made upon forms
supplied by and delivered to the Holding Company and it may be revoked in
writing. If an individual fails to effectively designate a beneficiary, the
individual's estate shall be deemed to be the beneficiary for purposes of the
Plan.
B-9
11. 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 any 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 adjustments to previously granted Awards, to prevent dilution, diminution,
or enlargement of the rights of individuals, including any or all of the
following:
(a) adjustments in the aggregate number or kind of shares of Common Stock
or other securities that may underlie future Awards under the Plan;
(b) adjustments in the aggregate number or kind of shares of Common Stock
or other securities that underlie Awards already made under the Plan;
and
(c) adjustments in the Exercise Price of outstanding Options.
The Committee, however, shall not make adjustments that materially
change the value of benefits available to an individual under a previously
granted Award. All Awards under this Plan shall be binding upon any successors
or assigns of the Holding Company.
12. TAXES
Under this Plan, whenever cash or shares of Common Stock are to be
delivered, the Committee is entitled to require as a condition of delivery that:
(i) the individual remit an amount sufficient to satisfy all
related federal, state, and local withholding tax
requirements;
(ii) the withholding of such sums may come from compensation
otherwise due to the individual or from shares of Common Stock
due to the individual under this Plan; or
(iii) any combination of (i) and (ii), above; provided, however,
that no amount shall be withheld from any cash payment or
shares of Common Stock related to an Option transferred by the
individual in accordance with this Plan.
13. NOTIFICATION UNDER SECTION 83(b)
The Committee may, on the date of grant or at a later date, prohibit an
individual from making the election described below. If the Committee has not
prohibited an individual from making this election, and the individual shall, in
connection with the exercise of any Award, make the election permitted under
Section 83(b) of the Code, the individual shall notify the Committee of the
election within ten (10) days of filing notice of the election with the Internal
Revenue Service. This requirement is in addition to any filing and notification
required under the regulations issued under the authority of Section 83(b) of
the Code.
B-10
14. AMENDMENT OF THE PLAN AND AWARD GRANTS
(a) Except as provided in paragraph (c) of this Section 14, 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 law,
regulation, or otherwise. Failure to ratify or approve amendments or
modifications by shareholders shall be effective only as to the
specific amendment or modification requiring shareholder ratification
or approval. Other provisions of this Plan shall remain in full force
and effect. No termination, modification, or amendment of this Plan may
adversely affect the rights of an individual under an outstanding Award
without the written permission of the affected individual.
(b) Except as provided in paragraph (c) of this Section 14, the Committee
may amend any Award Agreement, prospectively or retroactively;
provided, however, that no amendment shall adversely affect the rights
of an individual under an outstanding Award Agreement without the
written consent of the affected individual.
(c) In no event shall the Board of Directors, without shareholder approval,
amend the Plan or shall the Committee amend an Award Agreement in any
manner that effectively:
(i) allows any Option to be granted with an Exercise Price below
the Fair Market Value of the Common Stock on the date of
grant; or
(ii) allows the Exercise Price of any Option previously granted
under the Plan to be reduced after the date of grant.
15. EFFECTIVE DATE AND TERMINATION OF THE PLAN
The Plan shall become effective upon approval by the Holding Company's
shareholders. The right to grant Awards under the Plan will terminate upon the
earlier of: (i) ten (10) years after the effective date; or (ii) the issuance of
a number of shares of Common Stock pursuant to the exercise of Options and
vesting of Restricted Stock Awards equal to the maximum number of shares
reserved under the Plan, as set forth in Section 4. The Board of Directors may
suspend or terminate the Plan at any time; provided, however, that no such
action will adversely affect an individual's vested rights under a previously
granted Award, without the consent of the affected individual.
16. APPLICABLE LAW
The Plan will be administered in accordance with the laws of the state
of Delaware, except to the extent that Federal law is deemed to apply.
B-11
GRAND CENTRAL FINANCIAL CORP.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 2003
10:00 A.M. LOCAL 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, to be held on April 23, 2003, at
10:00 a.m. Local 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 directors of all nominees listed (except as
marked to the contrary below).
Jeffrey W. Aldrich
Williams R. Williams
FOR VOTE WITHHELD FOR ALL EXCEPT
--- ------------- --------------
| | | | | |
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME ON THE
LINE PROVIDED BELOW.
-------------------------------------------------------------
2. The ratification of the Company's 2003 Equity Compensation
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, 2003.
FOR AGAINST ABSTAIN
--- ------- -------
| | | | | |
4. The approval of the amendment of the Certificate of
Incorporation of Grand Central Financial Corp. to change the
Company's name to Central Federal Corporation.
FOR AGAINST ABSTAIN
--- ------- -------
| | | | | |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE LISTED PROPOSALS.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" EACH OF THE PROPOSALS
LISTED. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, INCLUDING
WHETHER OR NOT TO ADJOURN THE MEETING, THIS PROXY WILL BE VOTED BY THE PROXIES
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Shareholders and of a
Proxy Statement dated March 28, 2003 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.
[GRAND CENTRAL FINANCIAL CORP. LETTERHEAD]
Dear ESOP Participant:
On behalf of the Board of Directors, I am forwarding you the attached BLUE
Vote Authorization Form for the purpose of conveying your voting instructions to
First Bankers Trust Company, N.A. (the "Trustee") on the proposals to be
presented at the Annual Meeting of Shareholders of Grand Central Financial Corp.
(the "Company") on April 23, 2003. Also enclosed is a Notice and Proxy Statement
for the Company's Annual Meeting of Shareholders and a copy of the Company's
Annual Report to Shareholders.
As a participant in the Central Federal Savings and Loan Association of
Wellsville Employee Stock Ownership Plan ("ESOP"), you are entitled to direct
the ESOP Trustee on how to vote the shares of Company common stock credited to
your ESOP account as of February 27, 2003, the Annual Meeting record date. These
allocated shares will be voted as directed by you provided your instructions are
received by the ESOP Trustee by April 16, 2003. The ESOP Trustee, subject to its
fiduciary duties, will vote any unallocated shares of Company common stock and
any allocated shares of Company common stock for which no instructions are
provided, in a manner calculated to most accurately reflect the instructions the
ESOP Trustee has received from participants regarding the shares of Company
common stock allocated to their ESOP accounts.
In order to direct the voting of shares of Company common stock allocated
to your ESOP account, please complete and sign the enclosed BLUE Vote
Authorization Form and return it in the enclosed postage-paid envelope no later
than April 16, 2003. Your vote will not be revealed, directly or indirectly, to
any employee or director of the Company or Central Federal Savings and Loan
Association of Wellsville.
Sincerely,
William R. Williams
President
Name___________________________ ESOP
Shares_________________________
VOTE AUTHORIZATION FORM
I understand that First Bankers Trust Company, N.A., (the "Trustee"), is
the holder of record and custodian of all shares of Grand Central Financial
Corp. common stock allocated to me under the Central Federal Savings and Loan
Association of Wellsville Employee Stock Ownership Plan ("ESOP"). Further, I
understand that my voting instructions are solicited on behalf of the Company's
Board of Directors for the Annual Meeting of Shareholders to be held on April
23, 2003.
Accordingly, vote my shares as follows:
1. The election as directors of all nominees listed (except as marked to
the contrary below).
Jeffrey W. Aldrich
William R. Williams
FOR VOTE WITHHELD FOR ALL EXCEPT
--- ------------- --------------
9 9 9
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED
BELOW.
----------------------------------------------------------------------
2. The ratification of the Company's 2003 Equity Compensation Plan.
FOR AGAINST ABSTAIN
--- ------- -------
9 9 9
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, 2003.
FOR AGAINST ABSTAIN
--- ------- -------
9 9 9
4. The ratification of the amendment of the Certificate of Incorporation
of Grand Central Financial Corp. to change the Company's name to
Central Federal Corporation.
FOR AGAINST ABSTAIN
--- ------- -------
9 9 9
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE LISTED PROPOSALS.
The ESOP Trustee is hereby authorized to vote all shares allocated to my
ESOP Account in its trust capacity as indicated above.
-------------------------------- ----------------------------------------
Date Signature
Please date, sign and mail this form in the enclosed postage-paid envelope no
later than April 16, 2003.
[GRAND CENTRAL FINANCIAL CORP. LETTERHEAD]
Dear Stock Award Recipient:
On behalf of the Board of Directors, I am forwarding you the attached
YELLOW Vote Authorization Form for the purpose of conveying your voting
instructions to First Bankers Trust Company, N.A. (the "Trustee") on the
proposals to be presented at the Annual Meeting of Shareholders of Grand Central
Financial Corp. (the "Company") on April 23, 2003. Also enclosed is a Notice and
Proxy Statement for the Company's Annual Meeting of Shareholders and a copy of
the Company's Annual Report to Shareholders.
As a participant in the Grand Central Financial Corp. 1999 Stock-Based
Incentive Plan (the "Incentive Plan") you are entitled to vote all unvested
shares of restricted stock awarded to you under the Incentive Plan as of
February 27, 2003. The Incentive Plan Trustee will vote those shares of the
Company common stock in accordance with instructions it receives from you and
the Stock Award recipients. Shares of restricted stock for which instructions
are not received by April 16, 2003, will be voted by the Incentive Plan Trustee,
as directed by the Company.
At this time, in order to direct the voting of Company common stock awarded
to you under the Incentive Plan, you must complete and sign the enclosed YELLOW
Vote Authorization Form and return it in the accompanying postage-paid envelope
no later than April 16, 2003.
Sincerely,
William R. Williams
President
Name___________________________ INCENTIVE
Shares_________________________ PLAN
VOTE AUTHORIZATION FORM
I understand that First Bankers Trust Company, N.A., (the "Trustee"), is
the holder of record and custodian of all shares of Grand Central Financial
Corp. (the "Company") common stock held in trust for the Grand Central Financial
Corp. 1999 Stock-Based Incentive Plan ("Incentive Plan"). Further, I understand
that my voting instructions are solicited on behalf of the Company's Board of
Directors for the Annual Meeting of Shareholders to be held on April 23, 2003.
Accordingly, vote my shares as follows:
1. The election as directors of all nominees listed (except as marked to
the contrary below).
Jeffrey W. Aldrich
William R. Williams
FOR VOTE WITHHELD FOR ALL EXCEPT
--- ------------- --------------
9 9 9
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED
BELOW.
----------------------------------------------------------------------
2. The ratification of the Company's 2003 Equity Compensation Plan.
FOR AGAINST ABSTAIN
--- ------- -------
9 9 9
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, 2003.
FOR AGAINST ABSTAIN
--- ------- -------
9 9 9
4. The ratification of the amendment of the Certificate of Incorporation
of Grand Central Financial Corp. to change the Company's name to
Central Federal Corporation.
FOR AGAINST ABSTAIN
--- ------- -------
9 9 9
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE LISTED PROPOSALS.
The Incentive Plan Trustee is hereby authorized to vote all unvested shares
of Company common stock awarded to me under the Incentive Plan in its trust
capacity as indicated above.
-------------------------------- ----------------------------------------
Date Signature
Please date, sign and mail this form in the enclosed postage-paid envelope no
later than April 16, 2003.