Exhibit 10.1
August 4, 2010
LNB Bancorp, Inc.
457 Broadway
Lorain, Ohio 44052-1769
Dear Sir or Madam:
EJF Debt Opportunities Master Fund, LP and LAM Financial Holdings LTD, LLP (the
“Sellers”) propose to sell to LNB Bancorp, Inc. (the “Company”), an Ohio
corporation, (i) an aggregate of $2,125,000 face amount of capital securities of
LNB Trust I (CUSIP 502107AA3) and (ii) an aggregate of $2,125,000.00 face amount
of capital securities of LNB Trust II (CUSIP 502111AA5). The capital securities
of LNB Trust I and LNB Trust II covered by this agreement are referred to
collectively herein as the “Trust Securities.” LNB Trust I and LNB Trust II are
wholly owned subsidiaries of the Company. Subject to the terms and conditions
set forth herein, sales of the Trust Securities shall take place on such date or
dates and for the consideration described in section 3 of this agreement.
1. Representations and Warranties of the Company. The Company represents to and
agrees with each of the Sellers that:
     (a) The Company has been duly incorporated and is validly existing as a
corporation in good standing in the state of Ohio, and has the corporate
authority and power to enter into this agreement and effect the transactions
covered hereby.
     (b) This agreement has been duly authorized, executed and delivered by the
Company.
     (c) The common shares of the Company, par value $1.00 per share (the
“Shares”), to be issued by the Company pursuant to this agreement, have been
duly authorized and, upon issuance and payment pursuant to this agreement, will
be validly issued, fully paid and non-assessable.
     (d) The execution and delivery by the Company of, and the performance by
the Company of its obligations under, this agreement will not contravene any
(i) provision of applicable law, (ii) the charter or by-laws of the Company,
(iii) any agreement or other instrument binding upon the Company or any of its
subsidiaries, (iv) any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Company or any of its subsidiaries
and no consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company of
its obligations under this agreement other than those consents, approvals,
authorizations, orders or qualifications which have been obtained.
     (e) The Company’s annual report on Form 10-K for the year ended
December 31, 2009 and its most recently filed quarterly report on Form 10-Q did
not contain as of its date any untrue statement of a material fact or omit any
material fact required to be stated therein or necessary to make the statements
therein not misleading.

 

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     (f) The Trust Securities have not been owned by the Company or, to the best
knowledge of the Company, any affiliate of the Company within the last
12 months.
2. Representations and Warranties of the Sellers. Each Seller represents and
warrants to and agrees with the Company that:
     (a) This agreement has been duly authorized, executed and delivered by or
on behalf of such Seller.
     (b) The execution and delivery by such Seller of, and the performance of
its obligations under, this agreement will not contravene any (i) provisions of
applicable law, (ii) the organizational documents of such Seller, (iii) any
agreement or other instrument binding on such Seller, (iv) any judgment, order
or decree of any governmental body, agency or court having jurisdiction over
such Seller and no consent, approval, authorization or order of or qualification
with, any governmental body or agency is required for the performance by such
Seller of its obligations under this agreement.
     (c) Such Seller has, and on each Exchange Date (as defined below) and
Delivery Date (as defined below) will have, good, marketable and unencumbered
title to the Trust Securities to be sold to the Company by such Seller, free and
clear of all security interests, claims, liens, equities or other encumbrances,
and the legal right and power, and all authorization and approval required by
law, (1) to enter into this agreement and (2) to sell, transfer and deliver the
Trust Securities to be sold by such Seller to the Company. The delivery of the
Trust Securities in accordance with this agreement will convey to the Company
good, marketable and unencumbered title to such Trust Securities, free and clear
of all security interests, claims, liens, equities or other encumbrances.
     (d) The Sellers own, and on each Exchange Date and Delivery Date will own
after giving effect to the transactions contemplated by this agreement, in the
aggregate less than five percent (5%) of the Company’s then-outstanding common
shares on an as-converted basis. The Sellers are not and have never been
affiliates of the Company and, to the best knowledge of the Sellers, the Trust
Securities have not been owned by affiliates of the Company within the last
12 months.
     (e) Such Seller understands that the Shares have not been registered under
the Securities Act of 1933, as amended (the “Act”), are being issued pursuant to
an exemption under Section 3(a)(9) of the Act and may not be resold except in
accordance with Rule 144 under the Act or pursuant to another available
exemption from the registration requirements of the Act.
     (f) Such Seller has not engaged any broker, finder or other person acting
in such capacity that is entitled to any commission or fee in connection with
the transactions contemplated by this agreement.
     (g) Such Seller has the requisite knowledge and experience in financial and
business matters so that it is capable of evaluating the merits and risks of the
transactions contemplated by this agreement and acquiring the Shares in
connection therewith, and such Seller acknowledges that (1) the Company makes no
representation regarding the value of the Trust Securities or the Shares, (2)
the rights and privileges of holders of the Company’s common shares are

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substantially different from, and less favorable than, the rights of holders of
the Trust Securities and (3) such Seller has independently and without reliance
upon the Company made its own analysis and decision to enter into this agreement
and the transactions contemplated hereby. Such Seller is an “accredited
investor” as defined in Rule 501 under the Act.
     (h) Such Seller has not solicited any other holder of Trust Securities to
participate in transactions similar to the transactions contemplated by this
agreement.
3. Agreements to Sell and Purchase. Each Seller, severally and not jointly,
hereby agrees to sell to the Company, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
and the Company hereby agrees to purchase from each Seller at the price set
forth below, the face amount of Trust Securities set forth opposite the Seller’s
name on Schedule 1 hereto; provided, that the Company shall not be required to
(i) purchase more than $1,000,000 face amount of Trust Securities on any
business day, (ii) purchase any Trust Securities of LNB Trust II until it has
purchased all the Trust Securities of LNB Trust I covered by this agreement, and
(iii) purchase any Trust Securities during a “corporate blackout period” as
defined under the Company’s insider trading policy.
     Subject to the foregoing, the sales of the Trust Securities covered hereby
shall take place on such business day or days as the Sellers shall select (each,
an “Exchange Date”), provided that the Sellers shall provide the Company with
not less than one full business days notice of each such Exchange Date and the
face amount of Trust Securities to be sold on each such Exchange Date, provided
that the Trust Securities shall be sold in minimum increments of $100,000 face
amount.
     The purchase price for the Trust Securities to be sold on any Exchange Date
shall equal 48% of the face amount of the Trust Securities and shall be paid for
in Shares. The number of Shares to be delivered shall equal the purchase price
of the Trust Securities sold, divided by the Relevant Share Price (which
Exchange Date, face amount of Trust Securities and Relevant Share Price must be
confirmed in writing and executed by an authorized representative of the Company
and the applicable Sellers at the time of sale on such Exchange Date); provided
that the Company shall deliver cash in lieu of any fractional Shares. For
purposes of this agreement, the “Relevant Share Price” means the average of the
dollar volume-weighted average prices per share of the Company’s common shares
on the NASDAQ Stock Market for each of the five consecutive trading days ending
on and including the second trading day immediately preceding the applicable
Exchange Date; provided, however, that in no event shall the Relevant Share
Price be less than 90% of the Market Price (as defined in the Warrant to
Purchase 561,343 Shares Common Stock of LNB Bancorp, Inc. issued by the Company
on December 12, 2008, as such Warrant exists on the date of this agreement) with
respect to the Company’s common shares on the trading day immediately preceding
the applicable Exchange Date. Notwithstanding anything herein to the contrary,
in no event will the aggregate number of Shares issuable pursuant this agreement
exceed 525,000 Shares (subject to adjustment in the event of a stock split,
stock dividend or other similar event).
4. Payment and Delivery. Payment for the Trust Securities sold on each Exchange
Date and delivery of the Trust Securities sold to the Company shall take place
no more than three business days thereafter (each, a “Delivery Date”). The
Shares shall be registered in the name of the

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applicable Seller, or the name of a custodian or nominee of such Seller, and
delivered to pursuant to such Seller’s instructions, all as specified in
Schedule 2 hereto. On each Delivery Date, the Company will pay to the applicable
Seller the accrued and unpaid distributions due on the Trust Securities
delivered by such Seller on such date in cash, together with any cash payable in
lieu of fractional Shares pursuant to section 3 of this agreement, to such
Seller’s account as specified in Schedule 2 hereto; provided, however, that if
such Delivery Date is a record date relating to a distribution on the Trust
Securities or any date between such record date and the payment date relating to
such distribution, the Company will not pay, on such Delivery Date, to the
applicable Seller the accrued and unpaid distributions on the Trust Securities
delivered by such Seller on such date and such distributions will instead be
paid on the applicable distribution payment date in accordance with the terms of
the Trust Securities and the applicable Seller will reimburse the Company in
cash on such Delivery Date for the portion of such distributions attributable to
the period between such Delivery Date and the applicable distribution payment
date. On each Delivery Date, the Sellers shall deliver the Trust Securities sold
to the Company in accordance with such instructions as the Company may specify
in writing, and such Sellers shall execute such documents and take such further
action as may be reasonably necessary in order to transfer to the Company all
right, title and interest to such Trust Securities.
5. Conditions to the Obligations of the Sellers. The obligation of the Sellers
to sell the Trust Securities covered hereby is subject to the following
conditions:
     (a) The representations of the Company shall be true and correct as of such
date;
     (b) The Company shall have performed, satisfied and complied with the
covenants, agreements and conditions required by this agreement at or prior to
such date; and
     (c) The Shares shall be freely tradeable, without legends, and shall have
been listed on the NASDAQ Stock Market.
6. Conditions to the Obligations of the Company. The obligation of the Company
to purchase the Trust Securities covered hereby is subject to the following
conditions:
     (a) The representations of the Sellers shall be true and correct as of such
date;
     (b) The Sellers shall have performed, satisfied and complied with the
covenants, agreements and conditions required by this agreement at or prior to
such date; and
     (c) The Sellers shall have delivered the certificates representing the
Trust Securities being sold to the Company.
7. Termination. The Sellers may terminate this agreement by notice given to the
Company if (i) trading generally shall have been suspended or materially limited
on or by the New York Stock Exchange or NASDAQ Stock Market, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market or (iii) a material disruption in securities settlement,
payment or clearance services in the United States shall have occurred. The
Company may terminate this agreement by one business days notice to the Sellers,
except that if the consent to this transaction granted by the United States
Treasury Department or Federal Reserve Board is revoked, this agreement will
terminate immediately.

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8. Notices. All notices, requests, demands, claims and other communications
hereunder shall be in writing and shall be (a) transmitted by hand delivery,
(b) mailed by first class, registered or certified mail, postage prepaid,
(c) transmitted by overnight courier, or (d) transmitted by facsimile, and in
each case to the relevant party at the address set forth below:

     
If to the Company:
  If to a Seller:
 
   
LNB Bancorp, Inc.
  EJF Capital LLC
457 Broadway
  2107 Wilson Boulevard, Suite 410
Lorain, OH 44052-1769
  Arlington, VA 22201
Attn: Chief Financial Officer
  Attn: Regina Richardson
Facsimile: (440) 244-4815
  Facsimile: (703) 875-0566

9. Counterparts. This agreement may be signed in two or more counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
10. Entire Agreement. This agreement constitutes the entire agreement among the
parties pertaining to the transactions contemplated herein and supersedes the
parties’ prior agreements, understandings, negotiations and discussions, whether
oral or written, on such matters, and this agreement shall not be amended,
changed, supplemented, waived or otherwise modified except in a writing executed
by each of the parties hereto.
11. Governing Law. This agreement shall be governed by and construed in
accordance with the internal laws of the state of New York.
[Signature page follows.]

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                          Very truly yours,                
 
                        EJF Debt Opportunities Master Fund, LP       LAM
Financial Holdings, LTD, LLP                 By: CVentures, Inc., General
Partner
 
                       
 
                        By:   /s/ Emanuel J. Friedman       By:   /s/ Charles G.
Hauber                  
 
  Name:   Emanuel J. Friedman           Name   : Charles G. Hauber
 
  Title:   CEO of EJF Capital, LLC           Title   : Vice President
 
      Sole Member of EJF Debt                
 
      Opportunities GP, LLC                
 
                       
 
                        Accepted as of the date hereof:                
 
                        LNB Bancorp, Inc.                
 
                        By:   /s/ Daniel E. Klimas                              
       
 
  Name:   Daniel E. Klimas                     Title:   President and Chief
Executive Officer

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Schedule 1

                      Face Amount of     Face Amount of       LNB Trust I    
LNB Trust II   Seller   Trust Securities     Trust Securities  
EJF Debt Opportunities Master Fund, LP
  $ 1,633,000     $ 1,633,000  
LAM Financial Holdings LTD, LLP
  $ 492,000     $ 492,000  

 

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Schedule 2
EJF Debt Opportunities Master Fund, LP:
     Shares shall be delivered to:

         
 
  Registered Holder:   EJF Debt Opportunities Master Fund, LP
 
  Recipient:   [**********]
 
  Delivery Address:   [**********]
 
      [**********]
 
  Contact Information:   [**********]
 
      [**********]

     Cash shall be delivered pursuant to the following wire instructions:

         
 
  Bank Name:   [**********]
 
  ABA/Routing No.:   [**********]
 
  Account Name:   [**********]
 
  Account No.:   [**********]
 
  FFC A/C:   [**********]
 
  FFC A/C:   [**********]

LAM Financial Holdings LTD, LLP:
     Shares shall be delivered to:

         
 
  Registered Holder:   LAM Financial Holdings, LTD, LLP
 
  Recipient:   [**********]
 
  Delivery Address:   [**********]
 
      [**********]
 
       
 
  Contact Information:   [**********]
 
      [**********]

     Cash shall be delivered pursuant to the following wire instructions:

         
 
  Bank Name:   [**********]
 
  ABA/Routing No.:   [**********]
 
  Account Name:   [**********]
 
  Account No.:   [**********]
 
  FFC A/C:   [**********]
 
  FFC A/C:   [**********]