Exhibit 10.1



 








Exhibit 10.1




FORM OF




STOCK APPRECIATION RIGHTS AGREEMENT



THIS STOCK APPRECIATION RIGHTS AGREEMENT (the “Agreement”) is entered into as of this ___day of
______, 20___(the “Effective Date”), by and between LNB Bancorp, Inc., an Ohio corporation (the
“Company”), and ____________ (the “Grantee”).




WITNESSETH:




     WHEREAS, the Company maintains the LNB Bancorp, Inc. Stock Appreciation Rights Plan (the
“Plan”); and



     WHEREAS, a Committee designated by the Board of Directors (the “Committee”) administers the
Plan; and



     WHEREAS, the Committee desires to provide the Grantee with Stock Appreciation Rights under the
Plan upon the terms and conditions set forth in this Agreement.



     NOW, THEREFORE, the Company and the Grantee agree as follows:



     1. Definitions. Unless otherwise specified in this Agreement, capitalized terms shall
have the meanings attributed to them under the Plan.



     2. Grant of Stock Appreciation Rights. As of the Effective Date, the Company grants
to the Grantee ______ Stock Appreciation Rights (“SARs”). Each SAR is a unit of value
measured by reference to any increase in the Fair Market Value of one common share, $1.00 par value
per share, of the Company (“Common Share”) over $______, which is the closing price of a Common
Share (as reported on The Nasdaq Stock Market) on the Effective Date.



     3. Exercise Dates. Except as provided in Sections 4 and 5, no SARs are exercisable
until the first anniversary of the Effective Date. Provided that the Grantee continues to be an
employee of the Company until the dates set forth below, the Grantee will be entitled to exercise
the SARs in accordance with the following schedule:



 









 





	 	 	 	 	 
	 	 	Percentage of SARs Which	 
	Date as of Which SARs May Be Exercised	 	May Be Exercised	 
	 
	 	 	 	 
	On and after the first anniversary of
Effective Date
	 	 	33 1/3%	 
	 
	 	 	 	 
	On and after the second anniversary of
Effective Date
	 	 	66 2/3%	 
	 
	 	 	 	 
	On and after the third anniversary of
Effective Date
	 	 	100%	 





So long as the Grantee shall continue to be an employee of the Company or an Affiliate controlled
by the Company, the Grantee shall not be considered to have experienced a break in continuous
employment because of: (a) any temporary leave of absence which is described under Article 6 of the
Plan; or (b) any change of duties or position (including transfer to or from an Affiliate
controlled by the Company).




     4. Termination of Employment.




     (a) Forfeiture and Exercisability. If the Grantee’s employment with the Company
or any Affiliate controlled by the Company has terminated for any reason, as determined in
the sole and exclusive discretion of the Committee, the Grantee will forfeit all SARs that
have not become exercisable as of such date, provided, however, that upon written request,
the Committee in its sole and exclusive discretion may determine (but shall not be under any
obligation to determine) that additional SARs may become exercisable.




     (b) Death. If the Grantee dies while an employee or within thirty days after
the Grantee’s having ceased to be an employee by reason of discharge without Cause (as
defined below), the Grantee’s beneficiary or beneficiaries shall have the right
(notwithstanding the provisions of Section 3) to exercise any SARs that are exercisable at
the time of death or cessation of employment. Such exercise rights shall terminate upon the
earlier of (i) the date which is one year after the date of the Grantee’s death or cessation
of employment, as such date is determined in the sole discretion of the Committee, and (ii)
the last day of the term of this Agreement.




     (c) Disability or Termination Without Cause. If the Grantee’s employment is
terminated by the Company due to the Grantee’s Disability or if the Grantee’s employment is
terminated by the Company without Cause, the Grantee shall have the right (notwithstanding
the provisions of Section 3) to exercise any SARs that are exercisable at the time of
termination of employment. Such exercise rights shall terminate upon the earlier of (i) the
date which is ninety days after the date of the Grantee’s termination of employment, as such
date is determined in the sole discretion of



 









 






the Committee, and (ii) the last day of the term of this Agreement. For purposes of
this Agreement, “Disability” shall mean that the Grantee’s employment terminates as a result
of a disability condition which entitles the Grantee to disability benefits under the
program of long-term disability benefits maintained by the Company. For purposes of this
Agreement, “Cause” shall mean any of the following: (1) the Grantee’s commission of any act
constituting a felony or a crime involving moral turpitude; (2) breach by the Grantee of any
non-competition, non-solicitation or confidentiality obligation to the Company; (3) any act
of the Grantee involving embezzlement or fraud against the Company or any Affiliate; or (4)
any act of the Grantee involving operational wrongdoing relating to the Company or any
Affiliate. Whether “Cause” exists shall be determined by the Committee in its sole and
exclusive discretion.




     (d) Reasons other than Death, Disability or Termination Without Cause. If the
Grantee’s employment terminates for any reason other than death, termination by the Company
for Disability or termination by the Company without Cause, the Grantee shall not have the
right to exercise any SARs after termination of employment, regardless of whether such SARs
are exercisable at the time of termination of employment.



     5. Change in Control. If a Change in Control has occurred, the Grantee shall have the
immediate right, notwithstanding the provisions of Section 3, to exercise all of the SARs.
Notwithstanding such right of the Grantee, the Committee retains and shall have the right in its
sole and exclusive discretion to take any or all other actions described in Section 7.2 of the Plan
in the event of a Change in Control. Among other matters, and without limiting the Committee’s
rights, in the event of a Change in Control, the Committee may require that the Grantee exercise
the SARs within a prescribed period shorter than the term of this Agreement or otherwise completely
forfeit the SARs.



     6. Exercise of SARs. The SARs may be exercised by delivery to the Company, under
Section 12(f), of a completed notice of exercise of SARs (obtainable from the Company) setting
forth the number of SARs being exercised.



     7. Distributions.




     (a) Definitions.




     i. Exercise Date. The “Exercise Date” is the date that the Company
accepts delivery of a properly completed notice of exercise of SARs.




     ii. Exercise Price. The “Exercise Price” is the closing price of a
share of Common Stock (as reported on The Nasdaq Stock Market) on the Effective
Date, which is set forth in Section 2.




     (b) Distribution Value. Except as may otherwise be provided in Section 8 of
this Agreement, upon exercise of SARs, the Grantee will be entitled to a distribution in
cash equal to the product of i. and ii., where:



 









 






     i. equals the number of SARs being exercised; and




     ii. equals the excess of the Fair Market Value of a Common Share on the
Exercise Date over the Exercise Price.




     (c) Procedures. Except as the Committee may otherwise direct in its sole and
exclusive discretion, the Company will distribute to the Grantee, as soon as practicable
after the Exercise Date, cash in an amount equal to the distribution value described above.



     8. Satisfaction of Projected Tax Liabilities. The Company will withhold from any
payment or distribution under this Agreement cash in an amount equal to the amount which the
Company determines is necessary to satisfy the obligation of the Company to withhold federal, state
and local income taxes or other amounts incurred by reason of the grant or exercise of an SAR or
its disposition. Alternatively, the Company may require the holder to pay to the Company such
amounts, in cash, promptly upon demand.



     9. Designation of Beneficiary. By properly executing a beneficiary designation form
provided for such purpose by the Company and delivering such form to the Company’s Director of
Human Resources at the Company’s headquarters address, the Grantee may designate an individual or
individuals as his or her beneficiary or beneficiaries under the Plan. In the event that the
Grantee fails to properly designate a beneficiary, his or her interests under the Plan will pass to
the person or persons in the first of the following classes in which there are any survivors: (i)
spouse at the time of death; (ii) issue, per stirpes; (iii) parents; and (iv) the executor or
administrator of estate. Except as the Committee may determine in its sole and exclusive
discretion, a properly completed beneficiary designation form shall be deemed to revoke all prior
designations upon its receipt and approval by the Company.



     10. Non-Transferability. The SARs may not be sold, transferred or otherwise disposed
of except in accordance with Article 8 of the Plan.



     11. Termination of Agreement. This Agreement will terminate on the earliest of: (1)
the date Grantee’s employment with the Company or an Affiliate controlled by the Company terminates
and no SAR is then exercisable hereunder; (2) the date immediately preceding the tenth anniversary
of the date of this Agreement; or (3) such other date as may be designated by the Committee in
accordance with the Plan. Any terms or conditions of this Agreement that the Company determines
are necessary to effectuate its purposes will survive the termination of this Agreement.



     12. Miscellaneous Provisions.




	 	a.	 	Successors in Interest. This Agreement will bind and
inure to the benefit of the Company and the Grantee, and their respective
successors, assigns and legal representatives.




 









 












	 	b.	 	Entire Agreement, Plan Controls. This Agreement,
together with the Plan, constitutes the entire agreement between the Grantee
and the Company with respect to the subject matter hereof, and may not be
modified, amended, renewed or terminated, nor may any term, condition or breach
of any term or condition be waived, except pursuant to the terms of the Plan or
by a writing signed by the person or persons sought to be bound by such
modification, amendment, renewal, termination or waiver. Any waiver of any
term, condition or breach thereof will not be a waiver of any other term or
condition or of the same term or condition for the future, or of any subsequent
breach. In the case of any conflict between the Plan and this Agreement, the
Plan shall control.






	 	c.	 	No Employment Right Created. Nothing in this Agreement
will be construed to confer upon the Grantee the right to continue in the
employment or service of the Company or any Affiliate, or to be employed or
serve in any particular position therewith, or affect any right which the
Company or any Affiliate may have to terminate the Grantee’s employment or
service with or without cause.






	 	d.	 	Severability. In the event of the invalidity of any
part or provision of this Agreement, such invalidity will not affect the
enforceability of any other part or provision of this Agreement.






	 	e.	 	Section Headings. The section headings of this
Agreement are for convenience and reference only and are not intended to
define, extend or limit the contents of the sections.






	 	f.	 	Notices. All elections, notices and correspondence
relating to the Plan must be in writing and, if directed to the Company,
directed to the Director of Human Resources of the Company at the Company’s
headquarters address.






	 	g.	 	Savings Clause. Notwithstanding anything in this
Agreement to the contrary, the Company shall have no obligation under this
Agreement to make any payment unless such payment is, without further action by
the Company, in compliance with all applicable federal and state laws and
regulations, including without limitation the Code and federal and state
securities laws.






	 	h.	 	Governing Law. Except as may otherwise be provided in
the Plan, this Agreement will be governed by, construed and enforced in
accordance with the laws of the State of Ohio, without giving effect to its
principles of conflict of laws.






	 	i.	 	Internal Revenue Code Section 409A. Notwithstanding
anything in this Agreement to the contrary, the SARs are intended to meet any
applicable




 









 






	 	 	 	requirements for exclusion from coverage under Section 409A of the Code.
This Agreement shall be construed and administered in accordance with
Section 409A of the Code, Department of Treasury regulations and other
interpretive guidance issued thereunder, including without limitation any
such regulations or other guidance that may be issued after the Effective
Date. Without limiting the foregoing, unless and until different
requirements for exclusion from coverage under Section 409A of the Code
become available or effective: (1) except as provided under Section 5.2(c)
of the Plan, the Exercise Price may never be less than the Fair Market Value
of the underlying Common Shares on the Effective Date (and Fair Market Value
shall be determined in a manner consistent with any applicable requirements
for exclusion from coverage); and (2) in no event shall the Grantee be
permitted to defer compensation relating to the SARs (except for the
inherent deferral of recognition of income until the exercise of the SARs)
under the Plan or otherwise. Furthermore, in the event that the
requirements for exclusion from coverage under Section 409A are liberalized,
or different features are made available contingent upon compliance with
certain requirements, the Committee may, in its sole and absolute
discretion, amend this Agreement in a manner consistent with those
liberalized requirements or to permit the Company, the Grantee or both to
take advantage of those different features. In the event that the Committee
determines that any amounts payable hereunder will be taxable to the Grantee
under Section 409A of the Code and related Department of Treasury guidance
prior to payment to the Grantee of such amount, the Company may (a) adopt
such amendments to the Plan and this Agreement and appropriate policies and
procedures, including amendments and policies with retroactive effect, that
the Committee determines necessary or appropriate to preserve the intended
tax treatment of the benefits provided by the Plan and this Agreement and/or
(b) take such other actions as the Committee determines necessary or
appropriate to comply with the requirements of Section 409A of the Code.





     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its
duly authorized officer and the Grantee has executed this Agreement, each as of the Effective Date.



	 	 	 	 	 	 
	Grantee	 	LNB BANCORP, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Print Name:

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Its: