SETTLEMENT AGREEMENT
Exhibit 10.1
SETTLEMENT AGREEMENT, between and among Xxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxxxx (together,
the “Committee”), AMG Investments, LLC, an Ohio limited liability company (“AMG”), and LNB Bancorp,
Inc., an Ohio corporation (the “Company”).
The parties hereby agree as follows:
1. The Company, AMG and the Committee agree that: (a) the Committee shall withdraw its
proposals for consideration at the Annual Meeting of Shareholders of the Company to be held on May
20, 2008 (the “2008 Annual Meeting”) as set forth in its proxy materials dated April 8, 2008; (b)
the members of the Committee and AMG will not, directly or indirectly, engage in any solicitation
of proxies with respect to such proposals or any other proposals to be considered or acted upon at
the 2008 Annual Meeting; and (c) none of the members of the Committee or AMG shall make or cause to
be made any proposals at the 2008 Annual Meeting.
2. The Company shall not submit any matter other than the election of Class I directors for
consideration by the shareholders at the 2008 Annual Meeting unless approved in writing by the
Committee.
3. By April 22, 2008, the Company shall: (a) expand its board of directors to fifteen members
in accordance with the Company’s code of regulations; and (b) elect two individuals designated by
the Committee (but not any person the members of the Committee have advised the Company will not be
designated) and reasonably acceptable to the board of directors of the Company to serve as
directors of the Company in the class specified below. The parties agree that in determining
whether a particular candidate is reasonably acceptable, the decision of the
board of directors of the Company, acting in good faith and in accordance with the Company’s
customary governance review procedures with respect to nominees, shall be final. In the event that
the board of directors determines that a candidate proposed by the Committee is not reasonably
acceptable, it shall promptly inform the Committee of that decision and the Committee shall have
the opportunity to propose an alternative candidate for consideration by the board of directors as
described above. The directors designated by the Committee shall serve as Class III directors.
Directors designated by the Committee shall have the same protections and obligations, and shall
have the same rights and benefits, as are applicable to all non-employee directors of the Company;
provided that for purposes of the Company’s Corporate Governance Guidelines, shares of the Company
owned by the Committee shall be counted toward any requirement that directors of the Company own
shares. AMG and the Committee shall cause any person designated by the Committee to serve as a
director to cooperate with all reasonable requests of the Company in connection with his or her
election as a director, including without limitation the completion of director and officer
questionnaires identical to those completed by the other directors of the Company and other
inquiries relating to such individual’s availability and willingness to regularly attend meetings
of the board of directors and board committees.
4. The Company hereby agrees to provide the Committee and AMG with a reasonable opportunity to
review and comment in advance on all disclosures contained in the Company’s proxy materials that
relate to AMG, the Committee, the proxy solicitation initiated by AMG and the Committee and the
election of directors.
5. In the event that any time prior to the scheduled expiration of their respective terms, one
of the individuals designated to serve as a director by the Committee is unable to serve as a
director, whether because of resignation, removal or otherwise, the Committee shall be entitled to
designate a substitute nominee (but not any person the members of the Committee have advised the
Company will not be designated), who is reasonably acceptable to the board of directors (the
acceptability of any such candidate to be determined by the board of directors in accordance with
the provisions of Section 3 of this agreement), and the Company shall cause such reasonably
acceptable nominee to be appointed to the Company’s board of directors to complete the term of the
original designee. Notwithstanding the foregoing, (a) if at any time the members of the Committee
do not beneficially own (as determined in accordance with Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), in the aggregate, at least 5% of
the outstanding shares of the Company’s common stock, the Committee’s right to designate such
substitute nominee shall terminate; and (b) the Committee shall have no right to designate such
substitute nominee in the event that directors designated by the Committee resign from such
positions pursuant to Section 9(c) of this Agreement.
6. As soon as practicable after the execution of this Agreement but in no event later than the
close of business on April 22, 2008, the Committee will jointly with the Company, issue
a press release setting forth the matters described in this Agreement. The Committee and the
Company shall mutually agree upon the press release. The Company shall announce the settlement on
Form 8-K and shall file the mutually agreed upon press release and this Agreement as an exhibit to
the Form 8-K. AMG and the Committee shall announce the settlement in an amendment to Schedule 13D
and shall file the mutually agreed upon press release and this Agreement as exhibits to the
Schedule 13D. Other than as set forth in this Agreement and except as required by law, none of the
Company, AMG or the Committee shall, and the Company, AMG and the Committee shall cause its or
their representatives, attorneys and agents not to, publicly disseminate any documents or materials
regarding the Annual Meeting, the election of directors at the Annual Meeting or the dismissal of
the lawsuit described in Section 10.
7. Neither the Committee nor AMG shall nominate any candidate for election to the board of
directors at the Annual Meeting, or vote its or his shares of common stock of the Company (the
“Common Stock”), in opposition to the Company’s slate of director nominees by any means at the
Annual Meeting. Other than the immediately preceding sentence and the limitations contained in
Section 9 of this Agreement, there shall be no limitations on the voting rights with respect to the
Common Stock held by any member of the Committee or AMG.
8. Nothing contained in this Agreement shall be construed to obligate the Company to nominate
any person designated by the Committee (or any successor to such person) for election to an
additional term as a director after such person’s term expires; provide, however, that the
Committees’ designees will be considered for nomination for election to the board on the
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same basis
as other incumbent directors. The Company will provide notice to the Committee and AMG no less
than 30 days before the deadline for notice under the Company’s code of regulations by shareholders
of intent to nominate candidates for election to the board of directors at an annual meeting of
shareholders of the Company, if the board of directors does not intend to nominate either of the
persons designated by the Committee (including any replacement thereof designated in accordance
with Section 5 of this Agreement) the for re-election at the expiration of their respective terms.
9. (a) Except as expressly permitted in this Agreement, neither the Committee nor AMG will,
and will not assist or encourage others (including by providing financing) to, directly or
indirectly (individually or as a part of any “group” (within the meaning of Section 13(d)(3) of the
Exchange Act)), for a period beginning on the date hereof and ending 18 months from the date
hereof: (i) seek representation on the Company’s board of directors or the removal of any member of
the board, (ii) propose, effect or seek to participate in (A) any acquisition of any assets of the
Company or any of its subsidiaries, (B) any tender or exchange offer or merger or other business
combination involving the Company or any of its subsidiaries, or (C) any recapitalization,
restructuring, liquidation, dissolution or other extraordinary transaction with respect to the
Company or any of its subsidiaries; (iii) engage in any “solicitation” (as such term is used in the
proxy rules of the SEC) of proxies or consents (whether or not relating to the
election or removal of directors) with respect to the Company; (iv) seek to advise, encourage
or influence any person or entity with respect to the voting of any voting securities; (v)
initiate, propose or otherwise “solicit” (as such term is used in the proxy rules of the SEC)
shareholders of the Company for the approval of shareholder proposals whether made pursuant to Rule
14a-8 under the Exchange Act or otherwise; or (vi) enter into any discussions, negotiations,
agreements, arrangements or understandings with any third party with respect to any of the
foregoing, or make or disclose any proposal to amend or terminate any of the provisions of this
Section 9. The Committee and AMG may acquire securities (or beneficial ownership thereof) of the
Company provided that such acquisitions are not made in connection with any of the actions
prohibited by this Section 9(a) and provided, further, that nothing contained in this Agreement
shall be deemed to amend or modify in any respect the provisions of the Rights Agreement dated
October 24, 2000 between the Company and Registrar and Transfer Company, as amended (the “Rights
Plan”), to authorize any acquisition of shares that would result in any person becoming an
Acquiring Person (as defined in the Rights Plan), or to waive application of any of the provisions
of the Rights Plan in connection with any transaction involving the Committee or AMG.
(b) The provisions of Section 9(a) of this Agreement shall terminate upon: (i) a decision by
the Company’s board of directors to engage in substantive negotiations with any prospective merger
partner or partners identified through a solicitation of indications of interest or otherwise, with
respect to (a) any merger, consolidation, reorganization, recapitalization or other transaction or
series of related transactions that would result in the
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acquisition, directly or indirectly, by
another person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act), of
securities entitling such person or group to exercise at least a majority of the total voting power
of the Company in the election of directors (or, if the Company is not the surviving or resulting
corporation in such a transaction, if the transaction would result in the acquisition, directly or
indirectly, by such person or group of securities entitling such person or group to exercise at
least a majority of the total voting power of such surviving or resulting corporation), or (b) the
sale of all or substantially all of the Company’s assets (each of the transactions referred to in
clauses (a) and (b) above are hereinafter referred to as a “Sale Transaction”); or (ii) the receipt
by the Company of a bona fide unsolicited written proposal (which proposal sets forth a proposed
purchase price) by a potential acquiror with respect to a Sale Transaction; provided, however, that
the provisions of Section 9(a) shall not terminate under the circumstances set forth in this
Section 9(b)(ii) if the receipt of any such proposal or the making of such public announcement
resulted from the breach by either AMG or the Committee of their obligations under Section 9(a)
hereof. For purposes of this Section 9(b), the parties agree that the term “substantive
negotiations” shall not extend to any discussions between the Company and any other party prior to
the earlier of the time that such other party has made a written or oral proposal to the Company
with respect to a Sale Transaction (specifying price) or the time that the Company has provided
non-public business or financial information to such other party.
(c) AMG and the Committee will not, at any time during or after the 18 month period referenced
in Section 9(a) above: (i) bring any action, suit, claim or cause of action against the Company,
its officers or directors, or (ii) engage in any of the conduct specified in clauses (i) through
(vi) of the first sentence of Section 9(a), unless and until each of the persons designated to
serve as directors of the Company by the Committee shall have resigned as directors.
10. Xx. Xxxxxxx agrees to dismiss, with prejudice, all of his claims in the lawsuit styled
Xxxxxxx X. Xxxxxxx v. LNB Bancorp, Inc., Case No. 1:08 CV 473.
11. Each party agrees to bear its own expenses in connection with the proxy solicitations for
the Special Meeting and the Annual Meeting by the parties prior to the date hereof, and the lawsuit
referred to in Section 10.
12. AMG and the Committee, on the one hand, and the Company, on the other, acknowledge and
agree that irreparable injury to the other party would occur in the event any of the provisions of
this Agreement were not performed in accordance with their specific terms or were otherwise
breached and that such injury would not be adequately compensable in damages. Therefore, without
prejudice to the rights and remedies otherwise available to it, the parties agree that each party
hereto (the “Moving Party”) shall be entitled to specific enforcement of, and injunctive relief to
prevent any violation of, the terms hereof and the other parties hereto will not take action,
directly or indirectly, in opposition to the Moving Party seeking such relief on the grounds that
any other remedy or relief is available at law or in equity.
13. (a) AMG and the Committee hereby agree for the benefit of the Company, and each officer,
director, shareholder, agent, affiliate, employee, partner, attorney, heir, assign, executor,
administrator, predecessor and successor, past and present, of the Company (the Company and each
such person being a “Company Released Person”) as follows:
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(i) AMG and the Committee, for themselves and for their respective managers, members,
assigns, agents and successors, past and present, hereby agree and confirm that, effective
from and after the date of this Agreement, they hereby acknowledges full and complete
satisfaction of, and covenants not to xxx, and forever fully release and discharge each
Company Released Person of, and holds each Company Released Person harmless from, any and
all rights, claims, warranties, demands, debts, obligations, liabilities, costs, attorneys’
fees, expenses, suits, losses and causes of action (“Claims”) of any nature whatsoever,
whether known or unknown, suspected or unsuspected, arising in respect of or in connection
with, the composition of the board, or the proxy solicitations for the Special Meeting and
Annual Meeting of shareholders, or
statements made in connection with such proxy solicitations, occurring any time or period of
time on or prior to the date of the execution of this Agreement (including the future
effects of such transactions, occurrences, conditions, acts or omissions).
(ii) The undersigned understand and agree that the Claims released by AMG and the
Committee above include not only those Claims presently known but also include all unknown
or unanticipated claims, rights, demands, actions, obligations, liabilities, and causes of
action of every kind and character that would otherwise come within the scope of the Claims
as described above. AMG and the Committee understand that they may hereafter discover facts
different from or in addition to what they now believe to be true, which if known, could
have materially affected this release of Claims, but they nevertheless waive any claims or
rights based on different or additional facts.
(b) The Company hereby agrees for the benefit of AMG and the Committee, and each manager,
member, agent, affiliate, employee, partner, attorney, heir, assign, executor, administrator,
predecessor and successor, past and present, thereof (AMG, the Committee and each such person being
an “AMG Released Person”) as follows:
(i) The Company, for itself and for its Affiliates, officers, directors, assigns,
agents and successors, past and present, hereby agrees and confirms that, effective from and
after the date of this Agreement, it hereby acknowledges full and complete satisfaction of,
and covenants not to xxx, and forever fully releases and discharges each AMG Released Person
of, and holds each AMG Released Person harmless from, any and all Claims of any nature
whatsoever, whether known or unknown, suspected or unsuspected, arising in respect of or in
connection with, the composition of the board, or the proxy solicitations for the Special
Meeting and Annual Meeting of shareholders, or statements made in connection with such proxy
solicitations, occurring any time or period of time on or prior to the date of the execution
of this Agreement (including the future effects of such transactions, occurrences,
conditions, acts or omissions).
(ii) The undersigned understand and agree that the Claims released by the Company above
include not only those Claims presently known but also include all unknown or unanticipated
claims, rights, demands, actions, obligations, liabilities, and causes of action of every
kind and character that would otherwise come within the scope of the Claims as described
above. The Company understands that it may hereafter
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discover facts different from or in
addition to what it now believes to be true, which if known, could have materially affected
this release of Claims, but it nevertheless waives any claims or rights based on different
or additional facts.
(c) None of the foregoing releases in this Section 13 shall (i) relieve, or be deemed to
relieve, any party from its obligations to comply with the terms of this Agreement, (ii) release,
or be deemed to release, the right of any party to enforce the terms of this Agreement, or (iii)
release, or be deemed to release, any Claim arising from or in connection with fraud.
14. The parties acknowledge and agree that the objective is to reduce the size of the board
through normal retirement of directors as required under the Company’s Corporate Governance
Guidelines in existence on the date of this Agreement, and that upon any such retirements, the
board of directors will take appropriate action to reduce the number of authorized directors until
such time as no more than 12 directorships are authorized. Notwithstanding the foregoing, the
parties agree that: (i) with the exception of the departure of any members of the board who are
within three years of reaching the Company’s mandatory retirement age, any current director who
leaves the board for reasons other than retirement may be replaced by a new director selected by
the vote of a majority of the entire board of directors; (ii) if at any time the number of
directors of the Company is less than 12, such number of directors may be added by the vote of a
majority of the entire board of directors as may be necessary to restore the number of directors of
the Company in office to 12; and (iii) the number of directors may be increased and new directors
may be added to the board by the vote of a majority of the entire board of directors in connection
with acquisitions or strategic alliances. Except as set forth in clauses (i) through (iii) of the
preceding sentence, any increase in the authorized number of directors of the Company beyond 12
shall require, in addition to the approval of a majority of the entire board of directors, the
approval of the board members designated by the Committee (or any successor to such person), which
approval shall not unreasonably be withheld. The parties agree that such approval shall not be
deemed to have been unreasonably withheld if a prospective board member does not bring specialized
expertise or skills that are likely to be of significant value to the Company.
15. Any terms or provisions of this Agreement may be waived in writing at any time by the
party that is entitled to the benefits thereof. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect such party’s right at a later
time to enforce the same. No waiver by any party of a condition or of the breach of any term,
contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be
deemed to be or construed as a further or continuing waiver of any such condition or breach or a
waiver of any other condition or of the breach of any other term of this Agreement.
16. All notices or other communications required, permitted or desired to be given hereunder
shall be deemed to have been duly given if delivered in writing by hand delivery, overnight courier
or mailed by certified mail, or by facsimile with confirmation, and addressed as follows:
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If to the Committee or AMG:
|
AMG Investments, LLC 0000 Xxxxxxx Xxxxxx, Xxxxx 000 Xxxxxx, XX 00000 Attn: Xxxxxxx X. Xxxxxxx Facsimile: 000-000-0000 |
|
With a copy to:
|
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L. Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx 0000 Xxxx 0xx Xxxxxx Xxxxxxxxx, XX 00000 Attn: Xxxxxxxxxxx X. Xxxxxxx Facsimile: 000-000-0000 |
|
If to the Company:
|
LNB Bancorp, Inc. 000 Xxxxxxxx Xxxxxx, XX 00000 Attn: Xxxxxx X. Xxxxxx Facsimile: 000-000-0000 |
|
With a copy to:
|
Xxxxxx, Halter & Xxxxxxxx LLP 0000 XxxXxxx Xxxxxx 000 Xxxxxxxx Xxxxxx Xxxxxxxxx, XX 00000 Attn: Xxxx X. Xxxxxxx Facsimile: 000-000-0000 |
Any party may change its address for receiving notice by giving notice of a new address in the
manner provided herein. Any notice so given, shall be deemed to be delivered on the third business
day after the same is deposited in the United States mail, on the next business day if sent by
overnight courier or sent by facsimile after the close of business, or on the same business day if
sent by facsimile before the close of business.
17. Nothing in this Agreement, whether express or implied, is intended to confer any rights or
remedies under or by reason of this Agreement on any persons other than the parties to it and their
respective successors and assigns.
18. This Agreement is binding upon and shall inure to the benefit of the parties and their
respective successors and assigns. For avoidance of doubt, references herein to the “Committee”
shall mean and include the Committee as a whole and each of Xxxxxxx X. Xxxxxxx and Xxxxxx X.
Xxxxxxxxx.
19. The parties may amend or modify this Agreement in a writing duly executed in the same
manner as this Agreement.
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20. This Agreement shall be governed by and construed in accordance with the laws of the State
of Ohio without giving effect to the conflicts of law principles thereof.
21. This Agreement contains the entire agreement between the parties hereto with respect to
the transactions contemplated herein and supercedes any prior oral agreements of the parties
relating to the transactions contemplated herein.
22. This Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument. Any
counterpart signature page delivered by facsimile transmission shall be deemed to be and have the
same force and effect as an originally executed signature page.
23. This Agreement shall be effective upon the delivery of counterparts by each of the
Company, AMG, Xxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxxxx to each of the other parties.
IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement as of the 18th
day of April, 2008.
| LNB Bancorp, Inc. | ||||||
| By: Name: |
/s/ Xxxxxx X. Xxxxxx
|
|||||
| Title: | President and Chief Executive Officer | |||||
| AMG Investments, LLC | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||||
| Name: | Xxxxxxx X. Xxxxxxx | |||||
| Title: | Managing Member | |||||
| /s/ Xxxxxxx X. Xxxxxxx | ||||||
| Xxxxxxx X. Xxxxxxx | ||||||
| /s/ Xxxxxx X. Xxxxxxxxx | ||||||
| Xxxxxx X. Xxxxxxxxx | ||||||
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