Exhibit 10.2



 





Exhibit 10.2

STOCK OPTION AGREEMENT

(Non-Qualified Stock Option)




          THIS STOCK OPTION AGREEMENT (this “Agreement”) is made to be effective as of June 27, 2005, by
and between LNB Bancorp, Inc., an Ohio corporation (the “Company”) and Frank A. Soltis (the
“Optionee”).




WITNESSETH:




               WHEREAS, pursuant to agreed upon initial terms of employment, the Company has agreed to issue
to Optionee options to purchase 2,500 of the common shares, $1.00 par value, of the Company (the
“Common Shares”); and



               WHEREAS, the Company and the Employee desire to evidence the terms and conditions relating to
the initial grant of the options;



          NOW, THEREFORE, in consideration of the premises, the parties hereto make the following
agreement, intending to be legally bound thereby:




          1. Defined Terms. When used in this Agreement, the following capitalized terms have
the respective meanings set forth in this Section:





	 	(a)	 	Act: The Securities Exchange Act of 1934, as amended, or
any successor thereto.
	 
	 	(b)	 	Administrator: The Company’s Board of Directors or the
Compensation Committee of the Company’s Board of Directors if the Board of
Directors has delegated to the Compensation Committee such responsibility.
	 
	 	(c)	 	Applicable Laws: The requirements relating to the
administration of stock options under U.S. state corporate laws, U.S. federal
and state securities laws, the Code and any stock exchange, market or quotation
system on which the Common Shares are listed or quoted.
	 
	 	(d)	 	Change in Control: “Change in Control” means the
occurrence of any one of the following events:






(i) if individuals who, on the date of this Agreement, constitute the Board of
Directors (the “Incumbent Directors”) of LNB Bancorp, Inc. (herein called
“Company”) cease for any reason to constitute at least a majority of Company’s
Board of Directors; provided, however, that:




(A) any person becoming a director subsequent to the date of this
Agreement, whose election or nomination for election was approved by a
vote of at least two-thirds (2/3) of the Incumbent Directors then on
Company’s Board of Directors (either by a specific vote or by approval
of the proxy statement of Company in which such person is named as a
nominee for director, without written objection by such Incumbent



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Directors to such nomination), shall be deemed to be an Incumbent
Director, and




(B) no individual elected or nominated as a director of Company
initially as a result of an actual or threatened election contest with
respect to directors or any other actual or threatened solicitation of
proxies by or on behalf of any person other than Company’s Board of
Directors shall be deemed to be an Incumbent Director;




(ii) if any “person” (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as used
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of Company representing twenty percent (20%) or
more of the combined voting power of Company’s then-outstanding securities
eligible to vote for the election of Company’s Board of Directors (the
“Company Voting Securities”); provided, however, that the events described in
this clause (ii) shall not be deemed to be a Change in Control by virtue of
any of the following acquisitions:




(A) by Company or any Subsidiary,




(B) by any employee benefit plan sponsored or maintained by Employer or
any Subsidiary or by any employee stock benefit trust created by
Employer or any Subsidiary,




(C) by any underwriter temporarily holding securities pursuant to an
offering of such securities,




(D) pursuant to a Non-Qualifying Transaction (as defined in clause
(iii) of this paragraph (C), below),




(E) pursuant to any acquisition by Employee or any group of persons
including Employee (or any entity controlled by Employee or by any
group of persons including Employee), or




(F) a transaction (other than one described in clause (iii) of this
paragraph (C), below) in which Company Voting Securities are acquired
from Company, if a majority of the Incumbent Directors approves a
resolution providing expressly that the acquisition pursuant to this
subparagraph (F) does not constitute a Change in Control under this
clause (ii);




(iii) upon the consummation of a merger, consolidation, share exchange or
similar form of corporate transaction involving Company or any of its
Subsidiaries that requires the approval of Company’s shareholders, whether for
such transaction or the issuance of securities in the transaction (a “Business
Combination”), unless immediately following such Business Combination:




(A) more than fifty percent (50%) of the total voting power of either
(x) the corporation resulting from the consummation of such Business
Combination (the “Surviving Corporation”) or, if applicable, (y) the
ultimate parent corporation that directly or indirectly has beneficial
ownership of one hundred percent (100%) of the voting securities
eligible



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to elect directors of the Surviving Corporation (the “Parent
Corporation”) is represented by Company Voting Securities that were
outstanding immediately prior to such Business Combination (or, if
applicable, represented by shares into which such Company Voting
Securities were converted pursuant to such Business Combination), and
such voting power among the holders thereof is in substantially the
same proportion as the voting power of such Company Voting Securities
among the holders thereof immediately prior to the Business
Combination,




(B) no person (other than any employee benefit plan sponsored or
maintained by the Surviving Corporation or the Parent Corporation or
any employee stock benefit trust created by the Surviving Corporation
or the Parent Corporation) is or becomes the beneficial owner, directly
or indirectly, of twenty percent (20%) or more of the total voting
power of the outstanding voting securities eligible to elect directors
of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation), and




(C) at least a majority of the members of the board of directors of the
Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) were Incumbent Directors at the time of the
Board of Director’s approval of the execution of the initial agreement
providing for such Business Combination (any Business Combination which
satisfies all of the criteria specified in (A), (B) and (C) of this
Section 10.1(C)(iii) shall be deemed to be a “Non-Qualifying
Transaction”); or




(iv) if the shareholders of Company approve a plan of complete liquidation or
dissolution of Company or a sale of all or substantially all of Company’s
assets but only if, pursuant to such liquidation or sale, the assets of
Company are transferred to an entity not owned (directly or indirectly) by
Company’s shareholders. Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any person acquires beneficial
ownership of more than twenty percent (20%) of Company Voting Securities as a
result of the acquisition of Company Voting Securities by Company which
reduces the number of Company Voting Securities outstanding; provided,
however, that if (after such acquisition by Company) such person becomes the
beneficial owner of additional Company Voting Securities that increases the
percentage of outstanding Company Voting Securities beneficially owned by such
person, a Change in Control shall then occur.




Notwithstanding anything in this Agreement to the contrary, if




(1) Employee’s employment is terminated prior to a Change in Control
for reasons that would have constituted a Qualifying Termination if
they had occurred following a Change in Control,




(2) Employee reasonably demonstrates that such termination was at the
request of a third party who had indicated an intention or taken steps
reasonably calculated to effect a Change in Control, and




(3) a Change in Control involving such third party (or a party
competing with such third party to effectuate a Change in Control) does
occur, then (for purposes of this Agreement) the date immediately prior
to the date of



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such termination of employment (or event constituting Good Reason)
shall be treated as a Change in Control.




	 	(e)	 	Code: The Internal Revenue Code of 1986, as amended, or
any successor thereto.
	 
	 	(f)	 	Fair Market Value: On a given date, the closing sale
price for the Common Shares as reported on any securities exchange, market or
quotation system on which the Shares may be listed or quoted on such date or, if
no such sale occurred on that date, then for the next preceding date on which a
sale was made. If the Shares should be no longer listed or quoted on a
securities exchange, market or quotation system, the fair market value shall be
determined by an arbitrator mutually acceptable to the Company and the Optionee.





          2. Grant of Option. Subject to adjustment pursuant to Section 4 of this Agreement,
the Company hereby grants to the Optionee an option (the “Option”) to purchase 2,500 Common Shares
(the “Shares”). The Option is not intended to qualify as an incentive stock option under Section
422 of the Code.




          3. Terms and Conditions of the Option.




               (a) Option Price. The purchase price (the “Option Price”) to be paid by the Optionee
to the Company upon the exercise of the Option shall be $16.50 per Share, subject to adjustment as
provided in Section 4 of this Agreement.



               (b) Exercise of the Option. Except as otherwise provided in this Agreement, the
Option may be exercised by the Optionee as follows:



                    (i) The Option shall vest and become exercisable with respect to 2,500 Shares on the first
anniversary of the date hereof. The Option which has become vested and exercisable pursuant to
this Section 3 is hereinafter referred to as the “Vested Portion.”



                    (ii) In the event of a Change of Control, any portion of the Option that is not then
exercisable shall vest and become exercisable immediately prior to such Change in Control.



                    (iii) Upon the termination of employment of the Optionee other than for cause, any portion of
the Option that is not then exercisable shall vest and become exercisable upon the effective date
of termination.



          The grant of the Option shall not confer upon the Optionee any right to continue in the
employment of the Company or the Bank nor, subject to the provisions of the Employment Agreement,
limit in any way the right of the Company or the Bank to terminate the employment of the Optionee
at any time.




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               (c) Method of Exercise of Option. At any time prior to the Expiration Date (as
defined in Section 6), the Optionee may exercise all or a portion of the Option by delivering
written notice of exercise to the Company, together with payment in full for the Shares in an
amount equal to the product of the Option Price multiplied by the number of Shares to be acquired.
Such payment may be made in cash or its equivalent (e.g., by check) or in previously issued Common
Shares, which Common Shares have been owned by the Optionee for more than six months prior to the
date of exercise and shall be valued at Fair Market Value on the date of exercise.



               (d) Tax Withholding. The Company shall be entitled to withhold (or secure payment
from the Optionee in lieu of withholding) the amount of any withholding or other payment required
under the tax withholding provisions of the Code, any state’s income tax act or any other
applicable law with respect to any Shares issuable under the exercised Option.



          4. Adjustments and Changes in the Shares.




          The following provisions shall apply to the Option:




               (a) Generally. If the Company shall at any time after the date hereof (i) declare a
dividend on its common shares payable in shares of its capital stock (of any class), (ii) subdivide
its outstanding common shares, (iii) combine its outstanding common shares into a smaller number of
shares, or (iv) issue any shares of its capital stock in connection with a consolidation or merger
in which it is the continuing corporation, the Option Price in effect on the record date for that
dividend, or the effective date of that subdivision, combination or merger, and/or the number and
kind of shares of capital stock on that date subject to the Option shall be proportionately
adjusted so that the Optionee shall be entitled to receive the aggregate number and kind of shares
of capital stock which, if the Option had been exercised immediately prior to that date, the
Optionee would have owned and been entitled to receive by virtue of that subdivision, combination
or merger. The foregoing adjustment shall be made successively whenever any event listed above
shall occur.



               (b) Change in Control. In the event of a Change in Control, the Administrator may,
but shall not be obligated to, make provision for a cash payment to the Optionee in consideration
for the cancellation of the Option which shall equal the excess, if any, of the Fair Market Value
of the Shares as of the effective date of such Change in Control over the aggregate Option Price.



               (c) No Restrictions on Company. The grant of the Option alone shall not affect in any
way the right of the Company to adjust, reclassify, reorganize, or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.



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          5. Non-Assignability of Option. Unless otherwise permitted by the Administrator, the
Option shall not be assignable or otherwise transferable by the Optionee except by will or by the
laws of descent and distribution. The Option may not be exercised during the lifetime of the
Optionee except by him, his guardian or legal representative.




          6. Exercise After Termination of Employment. Subject to the provisions of this
Agreement, the Optionee may exercise all or any part of the Vested Portion of this Option at any
time prior to the earliest to occur of:





               (a) the tenth anniversary of the applicable vesting date; or




               (b) one (1) year following the date of the Optionee’s death or Disability (as defined
in the Employment Agreement); or




               (c) sixty (60) days following the date of termination of the Optionee’s employment with
the Company or the Bank, (i) if the Optionee terminates his employment with the Company or
the Bank upon the occurrence of a Change in Control; or




               (d) sixty (60) days following the date of termination of the Optionee’s employment with
the Company or the Bank, (i) if the Company or the Bank terminates the Optionee’s employment
with the Company or the Bank for Good Reason or Good Cause; or



          Upon the earliest to occur of any of the events described in clauses (a), (b), (c) or (d)
above (the “Expiration Date”), the Option shall terminate, and the Optionee shall have no further
rights pursuant to this Agreement.




          7. Restrictions on Transfers of Common Shares. The Company may postpone the issuance
and delivery of any Shares upon any exercise of the Option until completion of any stock exchange
or market listing or registration or other qualification of such Shares under any state or federal
law, rule or regulation as the Company may consider appropriate; and may require the Optionee when
exercising the Option to make such representations and furnish such information as the Company may
consider appropriate in connection with the issuance of the Shares in compliance with applicable
legal requirements.




          Shares issued and delivered upon exercise of the Option shall be subject to such restrictions
on trading, including appropriate legending of certificates to that effect, as the Company, in its
discretion, shall determine are necessary to satisfy applicable legal requirements and obligations.




          8. Conditions Upon Issuance of Shares.




               (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of the
Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply
with Applicable Laws and shall be further subject to the approval of counsel for the Company with
respect to such compliance.



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               (b) Investment Representations. As a condition to the exercise of the Option, the
Administrator may require the person exercising the Option to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a
representation is necessary.



          9. Rights of Optionee. The Optionee shall have no rights as a shareholder of the
Company with respect to any of the Shares until (a) the Optionee has given written notice of
exercise of the Option, (b) the Optionee has paid the aggregate Option Price in full for such
Shares and, if applicable, satisfied any other conditions imposed by the Administrator and (c) the
date of issuance of a certificate to the Optionee evidencing such Shares.




          10. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio without regard to conflict of law provisions.




          11. Rights and Remedies Cumulative. All rights and remedies of the Company and of the
Optionee enumerated in this Agreement shall be cumulative and, except as expressly provided
otherwise in this Agreement, none shall exclude any other rights or remedies allowed by law or in
equity, and each of said rights or remedies may be exercised and enforced concurrently.




          12. Captions. The captions contained in this Agreement are included only for
convenience of reference and do not define, limit, explain or modify this Agreement or its
interpretation, construction or meaning and are in no way to be construed as a part of this
Agreement.




          13. Severability. If any provision of this Agreement or the application of any
provision hereof to any person or any circumstance shall be determined to be invalid or
unenforceable, then such determination shall not affect any other provision of this Agreement or
the application of said provision to any other person or circumstance, all of which other
provisions shall remain in full force and effect, and it is the intention of each party to this
Agreement that if any provision of this Agreement is susceptible of two or more constructions, one
of which would render the provision enforceable and the other or others of which would render the
provision unenforceable, then the provision shall have the meaning which renders it enforceable.




          14. Entire Agreement. This Agreement constitutes the entire agreement between the
Company and the Optionee in respect of the subject matter of this Agreement. No officer, employee
or other servant or agent of the Company, and no servant or agent of the Optionee is authorized to
make any representation, warranty or other promise not contained in this Agreement. No change,
termination or attempted waiver of any of the provisions of this Agreement shall be binding upon
any party hereto unless contained in a writing signed by the party to be charged.




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          15. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns (including successive, as well as immediate, successors and
assigns) of the Company.




          The Optionee has reviewed this Agreement in its entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Agreement and fully understands all provisions of this
Agreement. The Optionee hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions arising under this Agreement.




          IN WITNESS WHEREOF, the parties hereto have caused this Stock Option Agreement to be executed
on the date first above written.




	 	 	 	 	 
	 	 	COMPANY:
	 
	 	 	 	 
	 	 	LNB BANCORP, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 	 	Terry M. White, Chief
Financial Officer and Corporate Secretary
	 
	 	 	OPTIONEE:
	 
	 	 	 	 
	 	 	 
	 	 	Frank A. Soltis






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