SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities and Exchange Act of 1934
(Amendment No.1)
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6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material under Rule (S)240.14a-12
Lenox Bancorp, Inc.
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(Name of Registrant as Specified In Its Charter)
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LENOX BANCORP, INC.
4730 Montgomery Rd
Cincinnati, Ohio 45212
Notice of Annual Meeting
and Proxy Statement
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of Lenox
Bancorp, Inc., the holding company for Lenox Savings Bank. The meeting will be
held at 10:00 a.m., Eastern Time, at the Quality Inn Hotel located at 4747
Montgomery Road, Cincinnati, Ohio on Friday, April 26, 2002. The matters to be
considered by shareholders at the Annual Meeting are described in the
accompanying materials.
It is very important that you be represented at the Annual Meeting regardless of
the number of shares you own or whether you are able to attend the meeting in
person. We urge you to mark, sign, and date your proxy card today and return it
in the envelope provided, even if you plan to attend the Annual Meeting. This
will not prevent you from voting in person, but will ensure that your vote is
counted if you are unable to attend.
Your continued support of and interest in Lenox Bancorp, Inc. is sincerely
appreciated.
Sincerely yours,
John C. Lame
Chairman of the Board
March 26, 2002
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS OF LENOX BANCORP, INC.
Time:
10:00 a.m., Eastern Time
Date:
April 26, 2002
Place:
Ohio Room
Quality Inn Hotel
4747 Montgomery Road
Cincinnati, Ohio
Purposes:
. Approve Amended Articles of Incorporation with provisions relating to
. Increasing authorized shares of common stock from 2,000,000 shares to
4,500,000 shares
. Authorizing 500,000 shares of preferred stock
. Opting out of Ohio's Control Share Acquisitions Act
. Increasing the threshold percentage of shareholder votes required for
certain actions to 60% of Lenox's voting power from a majority of such
voting power
. Eliminating a requirement that 75% of Lenox's voting power is required
for certain actions against which the board of directors recommends
. Approve Amended and Restated Code of Regulations with provisions relating
to
. Eliminating the classification of the board into three classes
. Allowing for communications to shareholders and directors to be made
electronically
. Expanding indemnification of officers and directors
. If the Amended and Restated Code of Regulations is approved,
. Fix the number of directors to be elected at five
. Elect five directors
. If the Amended and Restated Code of Regulations is not approved, elect
three directors for terms expiring in 2005
. Approve 2002 Stock Option and Incentive Plan
. Ratify appointment of Baird, Kurtz & Dobson LLP as our independent
public accountants for fiscal year 2002
. Conduct other business if properly raised
Only shareholders of record on March 22, 2002 may vote at the meeting. The
approximate mailing date of this Proxy Statement and accompanying Proxy Card is
March 26, 2002.
Your vote is important. Please complete, sign, date, and return your proxy
card promptly in the enclosed envelope.
Jane Schank
Secretary
March 26, 2002
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GENERAL INFORMATION
Who may vote
Shareholders of Lenox as recorded in our stock register on March 22, 2002 may
vote at the meeting. As of that date, Lenox had 366,847 Common Shares
outstanding.
How to vote
You may vote in person at the meeting or by proxy. We recommend you vote by
proxy even if you plan to attend the meeting. You can always change your vote at
the meeting.
How proxies work
The Executive Committee of Lenox's Board of Directors is asking for your proxy.
Giving us your proxy means you authorize us to vote your shares at the meeting
in the manner you direct. You may vote for all, some or none of our director
candidates. You may also vote for or against the other proposals or abstain from
voting.
If you sign and return the enclosed proxy card but do not specify how to vote,
we will vote your shares in favor of approving the Amended Articles of
Incorporation to, among other things, increase authorized Common Shares,
authorize Preferred Shares, opt out of Ohio's Control Share Acquisitions Act,
increase required shareholder voting percentages and eliminate a shareholder
supermajority voting requirement for matters against which the Board recommends.
We will also vote your shares in favor of approving the Amended and Restated
Code of Regulations to, among other things, eliminate classification of the
Board of Directors, allow electronic communications and expand indemnification
of officers and directors. We will also vote your shares in favor of electing
our director candidates, approving the 2002 Stock Option and Incentive Plan and
ratifying the appointment of Baird, Kurtz & Dobson LLP as our independent public
accountants for fiscal year 2002.
If any other matters come before the meeting or any postponement or adjournment,
each proxy will be voted in the discretion of the individuals named as proxies
on the card.
You may receive more than one proxy or voting card depending on how you hold
your shares. Shares registered in your name are covered by one card. If you hold
shares through someone else, such as a stockbroker, you may get material from
that person asking how you want to vote.
Revoking a proxy
You may revoke your proxy before it is voted by submitting a new proxy with a
later date, by voting in person at the meeting or by notifying Lenox's Secretary
in writing at the address under "Questions?" on page 15.
Quorum
In order to carry on the business of the meeting, we must have a quorum. This
means at least a majority of the outstanding shares eligible to vote must be
represented at the meeting, either by proxy or in person.
Votes needed
Under Ohio law, the nominees receiving the greatest number of votes will be
elected as directors. Broker non-votes are not counted toward the election of
directors or toward the individual nominees specified in the enclosed proxy
card. Broker non votes occur when a broker returns a proxy card but does not
have authority to vote on a particular proposal. If the enclosed proxy card is
signed and dated by the shareholder, but no vote is specified thereon, the Lenox
shares held by such shareholder will be voted FOR the election of the nominees
proposed by Lenox's Board and FOR the other proposals described in this Proxy
Statement. Shareholders are not entitled to cumulate their votes in the election
of directors.
Approval of the Amended Articles of Incorporation, including all provisions
described herein, and the Amended and Restated Code of Regulations, including
all provisions described herein, each requires the affirmative vote of a
majority of the outstanding Common Shares. Approval of the 2002 Stock Option and
Incentive Plan and the ratification of appointment of Baird, Kurtz & Dobson LLP
each requires the affirmative vote of a majority of shares voting. In these last
two instances, only votes for or against these proposals count.
Other Matters
Any other matters considered at the meeting, including adjournment, will require
the affirmative vote of a majority of shares voting.
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APPROVAL OF AMENDED ARTICLES OF INCORPORATION
(Items 1.1 through 1.5 on the Proxy Card)
The Executive Committee of the Board of Directors recommends the approval of the
Amended Articles of Incorporation in the form attached to this Proxy Statement
as Annex I.
The Executive Committee has approved the Amended Articles of Incorporation
attached to this Proxy Statement as Annex I. Shareholders should read Annex I in
its entirety. The Executive Committee believes that the Amended Articles of
Incorporation would be more appropriate for Lenox now that it has been over five
years since its conversion from a mutual institution. Although there are
technical and non-material differences between the Articles of Incorporation now
in effect and the Amended Articles of Incorporation that we are not asking
shareholders to approve, the main differences upon which you may vote as
separate proposals are as follows:
AUTHORIZATION OF ADDITIONAL 2,500,000 COMMON SHARES
(Item 1.1 on the Proxy Card)
The Executive Committee recommends approval of the provisions in the Amended
Articles (see Section (a) of Article Third) authorizing the increase of Lenox's
Common Shares from 2,000,000 to 4,500,000.
The Executive Committee believes that an increase in authorized Common Shares of
Lenox from 2,000,000 to 4,500,000 will give Lenox increased flexibility to issue
shares in connection with future corporate transactions including stock splits,
financings, stock dividends, acquisitions and employee benefit plans.
AUTHORIZATION OF 500,000 PREFERRED SHARES
(Item 1.2 on the Proxy Card)
The Executive Committee recommends approval of the provisions in the Amended
Articles (see Section (b) of Article Third) authorizing 500,000 Preferred
Shares.
Lenox's Articles of Incorporation in effect prior to April 26, 2002 fail to
allow Lenox to issue Preferred Shares. The Executive Committee believes that the
authorization of Preferred Shares will give Lenox increased flexibility to issue
securities on terms to be determined by Lenox's Board in connection with
possible future capital raising and financing endeavors along with other
corporate transactions. Shareholders should be aware that giving the Board the
ability to issue Preferred Shares on terms that the Board can set allows the
Board to issue securities on terms that shareholders might not otherwise
approve. Specifically, the Board may issue Preferred Shares with voting rights
that may dilute and hurt shareholder voting and shareholder control.
OPTING OUT OF OHIO'S CONTROL SHARE ACQUISITIONS ACT
(Item 1.3 on the Proxy Card)
The Executive Committee recommends approval of the provisions in the Amended
Articles (see Article Sixth) opting out of Ohio's Control Share Acquisitions
Act.
Ohio's Control Share Acquisitions Act is viewed as an anti-takeover matter
because it restricts the ability of shareholders to acquire more than 20% of the
outstanding Common Shares without a separate shareholder vote. The only persons
known to management to own more than 10% of the outstanding Common Shares are
those directors listed under "Directors and Executive Officers." During 2001,
bank regulatory concerns made it advisable for Lenox to increase its capital
stock base and, to that end, additional Common Shares were sold to officers and
directors in the transactions described under "Certain Relationships and Related
Transactions." The Executive Committee believes that shareholders should adopt
this provision opting out of the Ohio statute because it would enable Lenox to
raise additional capital from its officers and directors without the necessity
of a special shareholders meeting. The Executive Committee believes that it
would be advisable for the Corporation to have this flexibility should
additional capital requirements call for additions to Lenox's capital stock
account. The Executive Committee also believes that removal of this
anti-takeover matter would, in the long run, be beneficial to shareholders as
Lenox's stock becomes more widely traded in that it would not discourage outside
investors from accumulating significant positions in Lenox's Common Shares. It
should be noted that Lenox has other shareholder protection devices in place
through its Shareholder Rights Plan and Ohio's Business Combination Statute,
which can serve to deter significant acquisitions of Common Shares unless the
acquisition is approved by the Board of Directors.
The Ohio Control Share Acquisition Act, provides that certain notice and
informational filings and special shareholder meetings and voting procedures
must occur prior to completion of a proposed "control share acquisition."
"Control share acquisition" is defined as any acquisition of an issuer's shares
that
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would entitle the acquirer to exercise or direct the voting power of the issuer
in the election of directors at 20%, 33-1/3% and 50% levels.
Assuming compliance with the notice and information filing requirements
prescribed by the statute, the proposed control share acquisition may take place
only if the acquisition is approved by both a simple majority and a majority of
the voting power remaining after excluding the votes of the acquirer, directors
who are also employees, officers and persons that acquire specified amounts of
shares after the public disclosure of the proposed control share acquisition.
INCREASING THE THRESHOLD PERCENTAGE OF SHAREHOLDER VOTES REQUIRED FOR CERTAIN
ACTIONS
(Item 1.4 on the Proxy Card)
The Executive Committee recommends approval of the provisions in the Amended
Articles (see Article Eighth) increasing the threshold percentage of shareholder
votes required for certain actions to 60% of Lenox's voting power from a
majority of such voting power.
The Amended Articles provide that the affirmative vote of shareholders entitled
to exercise 60% of the corporation's voting power shall be required to amend the
Articles, approve mergers and take any other action which by law must be
approved by a specified percentage of all outstanding shares entitled to vote.
Article Sixth of the present Articles requires a majority of the voting power of
Lenox to approve certain actions including the amendment of the Articles,
mergers and dissolution except that with respect to matters against which the
Board of Directors recommends, 75% of such voting power is required. The
Executive Committee believes that, given the fact that Lenox's directors and
officers in effect as of the date of this Proxy Statement beneficially own over
45% of Lenox's Common Shares, a 60% voting power requirement is advisable for
amending the Articles, approving mergers and taking other actions which by law
must be approved by a specified percentage of shares entitled to vote. With
respect to such matters the proposed 60% threshold encourages input from
shareholders who are not now officers or directors of Lenox.
ELIMINATING THE REQUIREMENT THAT 75% OF LENOX'S VOTING POWER IS REQUIRED FOR
CERTAIN ACTIONS AGAINST WHICH THE BOARD OF DIRECTORS RECOMMENDS
(Item 1.5 on the Proxy Card)
The Executive Committee recommends approval of the provisions in the Amended
Articles (see Article Eighth) eliminating the requirement that 75% of Lenox's
voting power is required for certain actions against which the Board of
Directors recommends.
Article Sixth of the present Articles provides that 75% of the voting power of
the Corporation is required to approve certain actions, such as the amendment of
the Articles, mergers and dissolution in cases in which the Board of Directors
recommends against that action. The Executive Committee believes that the
imposition of a supermajority requirement in cases in which the Board of
Directors opposes an action weakens the ability of shareholders to effect
changes in Lenox through amending the Articles, approving mergers or
dissolutions. The Executive Committee believes that the elimination of this
supermajority requirement constitutes the removal of another anti-takeover
mechanism. Again, the removal of such an anti-takeover mechanism would, in the
long run, be beneficial to shareholders as Lenox's stock becomes more widely
traded in that it would not discourage outside investors from accumulating
significant positions in Lenox's Common Shares. As we discussed above in Item
1.3, Lenox continues to have in place other anti-takeover mechanisms.
APPROVAL OF AMENDED AND RESTATED CODE OF REGULATIONS
(Items 2.1 through 2.3 on the Proxy Card)
The Executive Committee of the Board of Directors recommends approval of the
Amended and Restated Code of Regulations in the form attached to this Proxy
Statement as Annex II.
The Executive Committee has approved the Amended and Restated Code of
Regulations attached to this Proxy Statement as Annex II. Shareholders should
read Annex II in its entirety. The Executive Committee believes that the Amended
and Restated Code of Regulations would be more up to date and more appropriate
for Lenox as a public corporation than the current Code of Regulations. Although
there are technical and non-material differences between the Code of Regulations
now in effect and the Amended and Restated Code of Regulations that we are not
asking shareholders to approve, the main
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differences upon which you may vote as separate proposals are as follows:
ELIMINATING THE CLASSIFICATION OF THE BOARD INTO THREE CLASSES
(Item 2.1 on the Proxy Card)
The Executive Committee recommends approval of the provisions in the Amended and
Restated Code of Regulations (see Section 2 of Article III) eliminating the
classification of the Board into three classes.
The present Code of Regulations requires a Board of three classes of directors
with members elected to three year terms. Ohio General Corporation Law requires
that each class have at least three directors, which means there must be at
least nine directors of Lenox under the present Regulations. The Executive
Committee believes it is in the interest of shareholders to provide for the
election of all directors annually and to allow the shareholders or the Board to
chose a smaller number of directors. The Code of Regulations now in effect as
well as the Amended and Restated Code of Regulations provide that the directors
have the authority to fix the number of directors to serve on the Board. The
Executive Committee believes, as noted in Item 3.1 below, that a Board of five
directors is more appropriate at this time to a corporation the size of Lenox
than a Board of nine directors.
The Amended and Restated Code of Regulations eliminates the classification of
the Board into three classes with members being elected to three-year terms, and
instead provides for a Board that consists of one class with all members being
elected annually. The elimination of board classification constitutes the
removal of another mechanism Lenox has that otherwise facilitates the
entrenchment of management. Board classification prevents shareholders from
removing on an annual basis directors that such shareholders might find
undesirable. In other words, board classification forces shareholders to endure
multiple annual elections in order to vote in directors shareholders really
want. The Executive Committee believes that the removal of board classification
is the elimination of another undesirable anti-takeover mechanism. As we
discussed above in Item 1.3, Lenox continues to have in place other
anti-takeover mechanisms.
ALLOWING FOR COMMUNICATIONS TO SHAREHOLDERS AND DIRECTORS TO BE MADE
ELECTRONICALLY
(Item 2.2 on the Proxy Card)
The Executive Committee recommends approval of the provisions in the Amended and
Restated Code of Regulations (see Section 1 of Article II and Section 4 of
Article III) allowing for communications by Lenox to its shareholders and
directors be made electronically.
Recent changes in Ohio law allow communications with shareholders and directors
to be made through electronic means such as facsimile and e-mail, as well as the
traditional means of personal delivery and mail. The Executive Committee
believes that it would be to Lenox's advantage to allow it to utilize these new
provisions of Ohio law in appropriate circumstances.
EXPANDING INDEMNIFICATION OF OFFICERS AND DIRECTORS
(Item 2.3 on the Proxy Card)
The Executive Committee recommends approval of the provisions in the Amended and
Restated Code of Regulations (see Article V) allowing for broader
indemnification of officers and directors.
The Amended and Restated Code of Regulations allows for broader indemnification
of officers and directors and makes the right to indemnification a contract
right. These changes are in line with the provisions contained in many public
corporations' bylaws or regulations. These provisions, which are prospective in
nature, provide some degree of protection for directors and facilitate Lenox's
recruitment and retention of competent and independent directors.
ELECTION OF DIRECTORS IF AMENDED AND RESTATED CODE OF REGULATIONS IS APPROVED
(Items 3.1 and 3.2 on the Proxy Card)
If the Amended and Restated Code of Regulations contemplated above is approved,
the number of directors on the Board will be established either by the
shareholders at each Annual Shareholders' Meeting or by the directors.
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SET THE NUMBER OF DIRECTORS TO BE ELECTED AT FIVE
(Item 3.1 of the Proxy Card)
Item 3.1 asks shareholders to fix the number of directors to be elected at the
2002 meeting at five. Lenox's current Code of Regulations calls for at least
nine directors by virtue of having three classes of directors. The Executive
Committee believes this number is excessive for a corporation the size of Lenox
and that five would be a more appropriate number.
ELECTION OF FIVE NOMINEES OF THE EXECUTIVE COMMITTEE
(Item 3.2 on the Proxy Card)
If the proposal in Item 3.1 is approved, shareholders will vote under this Item
3.2 on the election of five directors for terms expiring in 2003. If the Amended
and Restated Code of Regulations is not approved, shareholders will vote under
Item 4 for three directors, each for terms expiring in 2005 and the other two
classes of directors would remain unchanged.
Nominees for election as directors are designated by the action of the Board or
its Executive Committee. Under the present Regulations, shareholders may
nominate directors and propose other matters by giving notice no later than five
days after notice of the Annual Meeting has been sent. Under the Amended and
Restated Code of Regulations, a similar notice must be given not later than the
45th day nor earlier than the 60th day prior to the first anniversary of the
preceding year's Annual Meeting.
If the Amended and Restated Code of Regulations is adopted, the Executive
Committee recommends the election of the following five persons who have been
nominated by the Executive Committee for election for terms expiring in 2003:
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Gail R. Behymer Gail R. Behymer has been Chairman of Lenox Savings Bank since 2001 and a Director of Lenox
Director since 1995 since 1995 and Lenox Savings Bank since 1993. Mr. Behymer holds a B.S. in Industrial
Management and a M.B.A. from the University of Cincinnati. Mr. Behymer worked at Procter &
Gamble for 34 years with a background in construction and facilities management. Mr.
Behymer held the position of Operations Manager prior to his retirement in 1995. Age: 62
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Gary P. Kreider Gary P. Kreider is a Senior Partner of the Cincinnati law firm of Keating, Muething &
Director since 2001 Klekamp, P.L.L., counsel to Lenox. Mr. Kreider is also an Adjunct Professor of Law in
securities at the University of Cincinnati College of Law and a director of Meridian
Bioscience, Inc. Age: 63
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John C. Lame John C. Lame has been the President and Chief Executive Officer of Lenox since 2001. Mr.
Director since 1998 Lame is also a financial planner and investment advisor for UBS Painewebber Inc. Prior to
joining Painewebber in 1997, Mr. Lame served six years as a vice president with Merrill
Lynch. Mr. Lame also worked at Procter & Gamble from 1979 to 1991. Age: 44
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Guy E. Napier Mr. Napier has been a professional consultant at The Partnering Group since July 1996. Mr.
Director since 2001 Napier served as a Vice President of Packaging Services of Duramed Pharmaceuticals from
1995 to 1996. Mr. Napier has also served as Senior Vice President of U.S. Loyalty Corp.
from October 2000 to January 2002. Mr. Napier also worked for The Procter & Gamble Company
from 1973 to 1995. From 1993 to 1995, Mr. Napier served Procter & Gamble as its Managing
Director, Worldwide Strategic Planning, Paper Products. Age: 50
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Jane Schank Jane Schank has been the Secretary and Treasurer of Lenox and the President and Chief
Nominated for Director in 2002 Executive Officer of Lenox Savings Bank since June 2001. Prior to joining Lenox, Ms. Schank
served for seven years as Chief Financial Officer and Senior Vice President of Bank
Operations at Home Federal Bank until July 2000. From then until she joined Lenox, she was
Senior Vice President of First Clermont Savings. Ms. Schank has nineteen years of
experience in the financial institutions industry including private and retail banking
experience. From 1988 through 1993, Ms. Schank served as Vice President/Regional Manager at
Huntington Bank and from 1983 through 1988, Ms. Schank worked at Provident Bank. Age: 49
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If any of the above nominees is unable to stand for election, the proxies will
be voted for such substitute as the Executive Committee recommends. At this
time, the Executive Committee knows of no reason why any nominee would be unable
to serve if elected.
ELECTION OF DIRECTORS IF AMENDED AND RESTATED CODE OF REGULATIONS IS NOT
APPROVED
(Item 4 on the Proxy Card)
If the Amended and Restated Code of Regulations is NOT adopted, three directors
will be elected for terms expiring in 2005. In that instance, the Executive
Committee of the Board of Directors proposes the election of Mr. Behymer, Ms.
Schank and Stephen N. Romanelli.
Stephen N. Romanelli, age 42, has served clubessential, Inc. as its Chief
Financial Officer since April 2001. From August 1999 to April 2001, Mr.
Romanelli served as Chief Financial Officer of netcaddy.com, Inc. and, prior to
August 1999, he served as Finance Director for the Brazilian operations of The
Procter & Gamble Company. Mr. Romanelli has more than 16 years of marketing and
finance experience with P&G. At P&G, Mr. Romanelli also served as the finance
head of various businesses ranging from high growth, start-up operations in Asia
and Latin America, to established businesses requiring a turn around. Mr.
Romanelli owns no Lenox Common Shares.
If any of the above nominees is unable to stand for election, the proxies will
be voted for such substitute as the Executive Committee recommends. At this
time, the Executive Committee knows of no reason why any nominee would be unable
to serve if elected.
APPROVAL OF THE 2002 STOCK OPTION AND INCENTIVE PLAN
(Item 5 on the Proxy Card)
The Executive Committee of the Board of Directors recommends approval of the
2002 Stock Option and Incentive Plan in the form attached to this Proxy
Statement as Annex III.
The 2002 Plan was adopted by the Compensation Committee of the Board on February
20, 2002, subject to shareholder approval. The principal provisions of the 2002
Plan are summarized below. The summary is qualified in its entirety by the
attached 2002 Plan. Shareholders should read Annex III.
Lenox shareholders approved the Lenox 1997 Incentive Plan at the Annual Meeting
in 1997. Under the 1997 Plan, 59,594 Lenox shares of common stock were reserved
for issuance. However, awards for only 8,787 shares remain available under the
1997 Plan. The Executive Committee believes that incentive compensation of the
type provided in the 2002 Plan will be important to Lenox in attracting and
retaining key employees. It also believes that the variety of awards provided
under the 2002 Plan is better designed to attract and retain selected
individuals and provide incentives to selected individuals for increased efforts
and successful achievement on behalf of or in the interest of Lenox than under
the 1997 Plan.
Purposes of 2002 Plan
The purposes of the 2002 Plan are to further the long term growth of Lenox by
offering competitive incentive compensation related to long term performance
goals to those employees who will be largely responsible for planning and
directing such growth, to reinforce the commonality of interest between Lenox's
shareholders and the employees
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who would participate in the 2002 Plan and to aid in attracting and retaining
employees of outstanding abilities and specialized skills. If the 2002 Plan is
adopted, no further options will be granted under the 1997 Plan.
Administration and Participants
A Committee consisting of non-employee directors to be appointed by the Board
shall administer the 2002 Plan. The Committee will evaluate the duties of
employees and their present and potential contributions to Lenox and such other
factors as it deems relevant in determining key persons to whom awards will be
granted and the type and amount of award to be granted. All employees of Lenox
and Lenox Savings Bank, approximately twenty persons, are eligible to
participate in the Plan.
Shares Available for Award
A total of 150,000 Lenox Common Shares may be issued under the 2002 Plan. If any
shares subject to any award are forfeited or the award terminates without the
issuance of such shares, the shares subject to such award, to the extent of any
such forfeiture or termination, will again be available for grant. The closing
price reported for Lenox's Common Shares on March 8, 2002 was $8.07.
Types of Awards
The 2002 Plan allows for the award of incentive and non-qualified stock options;
stock appreciation rights, in tandem with stock options or free-standing;
restricted stock; performance shares conditioned upon meeting performance
criteria; and other awards based in whole or in part by reference to or
otherwise based on securities of Lenox.
Stock Options
The 2002 Plan provides that the purchase price of Lenox shares purchasable under
any stock option shall be determined by the Plan Committee, provided that the
purchase price of any incentive stock option shall not be less than 100% of the
fair market value of Lenox's shares on the date that the option is granted.
Payment of the purchase price for option shares must be made in cash unless some
other form of consideration is approved by the Plan Committee.
The period of any option shall be determined by the Plan Committee, but no
incentive stock option may be exercised later than ten years after the date of
grant. The aggregate fair market value, determined at the date of grant of the
incentive stock option, of Lenox shares for which incentive stock options are
exercisable for the first time during any calendar year as to any participant
may not exceed $100,000. No person may receive options for more than 10,000
Common Shares in any calendar year. Incentive stock options granted to persons
owning more than 10% of the voting power of Lenox must be at 110% of fair market
value and may be for terms of not more than five years.
Stock Appreciation Rights
A SAR represents the right to receive payment of a sum not to exceed the amount,
if any, by which the fair market value of a Lenox share on the date of exercise
of the SAR exceeds the grant price of the SAR. The grant price, which shall not
be less than the fair market value of a Lenox share on the date of the grant,
and other terms of the SAR shall be determined by the Plan Committee. A SAR may
be granted free-standing or in tandem with new options or after the grant of a
related option which is not an incentive stock option. Upon the exercise of a
SAR, payment may be made in a form that the Plan Committee shall determine.
Restricted and Unrestricted Stock Awards
Restricted stock awards will consist of Lenox Common Shares which are subject to
such conditions, restrictions and limitations as the Plan Committee determines
to be appropriate. Restricted stock will be awarded without consideration other
than the rendering of services or the payment of any minimum amount required by
law, unless the Plan Committee decides otherwise. With respect to Lenox shares
awarded as restricted stock, after the full vesting of such awards the recipient
shall have all rights of a shareholder of Lenox, including the right to vote and
the right to receive cash dividends, unless the Plan Committee shall otherwise
determine. Any Lenox shares issued with respect to restricted stock as a result
of a stock split, stock dividend or similar transaction shall be restricted to
the same extent as such restricted stock, unless otherwise determined by the
Plan Committee. Upon termination of the participant's employment during the
restriction period, all restricted stock shall be forfeited subject to such
exceptions as are authorized by the Plan Committee as to termination of
employment, retirement, disability, death or special circumstances. The Plan
Committee may also issue unrestricted shares on a bonus basis for no cash
consideration.
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Other Awards
The 2002 Plan permits the grant of performance and unit awards as compensation
to participants for services to Lenox or Lenox Savings Bank based on performance
periods and performance goals established by the Plan Committee. Payment of
performance awards may be made in cash or Lenox shares or a combination thereof,
as the Plan Committee shall determine. There may be more than one award in
existence at any one time and performance periods may differ. Recipients of
performance awards are not required to provide consideration other than the
rendering of service, unless the Plan Committee decides otherwise.
Termination of Awards
Awards terminate immediately if employment is terminated for cause or violation
of a written employment or non-competition agreement. Upon death, disability or
retirement, options become exercisable to their full extent and may be
exercisable for a period of one year after the date of death or disability or 90
days in the case of retirement. In the case of a liquidation of Lenox or any
merger in which it is not the survivor or which 75% or more of its outstanding
shares are converted in consideration other than stock, all awards will become
exercisable for a period of at least 20 days after notice of the transaction and
thereafter expire. All awards will also become exercisable in full if anyone
becomes the beneficial owner, as defined under the Securities Exchange Act of
1934, of 35% or more of the voting power of Lenox or if there is a change in a
majority of the Board of Directors effected without the approval of then current
directors.
Amendment and Termination of the 2002 Plan
The 2002 Plan may be amended or terminated by the Board of Directors of Lenox,
provided that no such action shall impair the rights of a participant without
the participant's consent and provided that no amendment shall be made without
shareholder approval which shall increase the total number of Lenox shares
reserved for issuance under the 2002 Plan, or cause the 2002 Plan or any award
granted under the 2002 Plan to fail to meet certain tax conditions.
Federal Income Tax Consequences
The grant of an option or SAR will create no tax consequences for an optionee or
Lenox. Upon exercising a non-qualified stock option or SAR, the optionee must
recognize ordinary income equal to the difference between the exercise price and
the fair market value of the Lenox shares on the date of exercise and Lenox will
be entitled to a deduction for the same amount. No tax is recognized upon an
exercise of an incentive stock option and no deduction is available to the
Company unless the shares are sold within two years of the grant of the option
or one year from its exercise, in which case the tax treatment will be that
accorded to the exercise of a non-qualified option.
With respect to other awards granted under the 2002 Plan that are settled either
in cash or in Lenox shares or other property that is either transferable or not
subject to substantial risk of forfeiture, the participant must recognize
ordinary income equal to the cash or the fair market value of Lenox shares or
other property received and Lenox will be entitled to a deduction for the same
amount. With respect to awards that are settled in Lenox shares or other
property that is restricted as to transferability and subject to substantial
risk of forfeiture, the participant must recognize ordinary income equal to the
fair market value of the Lenox shares or other property received at the first
time the Lenox shares or other property became transferable or not subject to
substantial risk of forfeiture, whichever occurs earlier; Lenox will be entitled
to a deduction for the same amount.
RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
(Item 6 on the Proxy Card)
The Executive Committee of the Board of Directors recommends the ratification of
Baird, Kurtz & Dobson LLP as Lenox's independent public accountants for 2002.
Although not required, the Executive Committee is seeking shareholder
ratification of its selection of Baird, Kurtz & Dobson LLP as Lenox's
independent public accountants for fiscal 2002. The affirmative vote of a
majority of shares voting at the meeting is required for ratification. If
ratification is not obtained, the Executive Committee intends to continue the
employment of Baird, Kurtz & Dobson LLP at least through fiscal 2002.
Representatives of Clark, Schaefer, Hackett & Co., our public accountants for
fiscal 2001, are expected to be present at the Annual Meeting and will be given
an opportunity to make a statement, if they so desire, and to respond to
appropriate questions that may be asked by shareholders.
Effective March 14, 2002 Lenox dismissed Clark, Schaefer, Hackett & Co. as its
independent
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accountants and engaged Baird, Kurtz & Dobson LLP as its new independent public
accountants. The decision to replace Clark, Schaefer, Hackett & Co. with Baird,
Kurtz & Dobson LLP as the principal independent accountants for Lenox was
recommended by the Audit Committee and approved by the Executive Committee.
Representatives of Baird, Kurtz & Dobson LLP are not expected to be present at
the Annual Meeting.
The reports of Clark, Schaefer, Hackett & Co. on the financial statements of
Lenox for the two most recent fiscal years contained no adverse opinion or
disclaimer of opinion, and were not qualified or modified as to uncertainty,
audit scope or accounting principles.
During Lenox's two most recent fiscal years and through March 14, 2002 there
were no disagreements with Clark, Schaefer, Hackett & Co. on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Clark, Schaefer, Hackett & Co., would have caused them to make reference thereto
in their reports on the financial statements for such years.
During Lenox's two most recent fiscal years and through March 14, 2002, there
were no "reportable events" as defined by Item 304(a)(1)(v) of Regulation S-K.
Neither Lenox nor anyone on its behalf has consulted with Baird, Kurtz & Dobson
LLP during Lenox's two most recent fiscal years, or any subsequent interim
period, prior to its engagement of Baird, Kurtz & Dobson LLP except in
connection with an information systems audit performed by Baird, Kurtz & Dobson
LLP in December 2001 required by federal and state banking regulators.
Principal Accounting Firm Fees:
- ------------------------------
Aggregate fees billed to Lenox for fiscal 2001 by Lenox's principal accounting
firm for fiscal 2001, Clark, Schaefer, Hackett & Co., are as follows:
Audit Fees $28,800
Financial Information
Systems Design and
Implementation Fees 3,558(b)(c)
All Other Fees 5,380(a)(b)
---------------
Total $37,738
(a) Includes information systems assessment.
(b) The Audit Committee has determined that the provision of these services is
compatible with maintaining the principal accountant's independence.
(c) Aggregate fees billed for fiscal 2001 by Baird, Kurtz & Dobson LLP for an
information systems audit required by federal and state banking regulators.
DIRECTOR MATTERS
No director attended less than 75% of the total meetings of the Board and
Committees on which that director served in 2001.
Messrs. Behymer, Kreider and Napier are not employees or officers of Lenox. Only
non-employee directors serve on Lenox's Audit and Compensation Committees.
Meetings last year: 7
Actions in Writing last year: 0
On December 6, 2001, pursuant to the 2001 Directors' Stock Option Plan, each
non-employee director who served on a committee of Lenox Bancorp was granted a
non-qualified option to purchase 5,000 Lenox Common Shares and non-employee
directors will be granted an option for another 2,000 shares at the time of
election or re-election to the Board of Directors, with the exercise price being
the closing sale price reported immediately prior to the date of grant. Each
non-employee director who serves as a director of both Lenox Bancorp and Lenox
Savings Bank will be granted an option for an additional 1,000 shares at the
time of election or re-election to the Board of Directors, with the exercise
price being the same as set forth above.
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BOARD COMMITTEES
The Board appoints committees to help carry out its duties. In particular, Board
committees work on key issues in greater detail than would be possible at full
Board meetings. Each committee reviews the results of its meetings with the full
Board. The Board does not have a nominating committee.
The Executive Committee serves at the pleasure of the Board. The Executive
Committee has and may exercise all of the powers of the Board of Directors in
the management and control of the business to the extent permitted by law during
the intervals between meetings of the Board of Directors. The Executive
Committee reports all action taken by it to the Board of Directors. The
Executive Committee is comprised of Messrs. Behymer, Lame, Kreider and Napier.
Meetings last year: 3
Actions in Writing last year: 3
The Audit Committee is responsible for reviewing Lenox's internal accounting
operations. It also recommends the employment of independent accountants and
reviews the relationship between Lenox and its outside accountants. The Audit
Committee has adopted an Audit Committee Charter, which is attached to this
Proxy Statement as Annex IV. The Charter outlines the activities and
responsibilities of the Audit Committee.
Meetings last year: 2
Actions in Writing last year: 0
REPORT OF THE AUDIT COMMITTEE
Lenox's Audit Committee is comprised of Messrs. Behymer (Chairman), Kreider and
Napier. All of the members of the Committee meet standards for independence
established by the National Association of Securities Dealers.
On March 27, 2001, the Committee met with representatives of Clark, Schaefer,
Hackett & Co. and Lenox's internal accountants and reviewed with them the
proposed 2001 Audit Plan, areas warranting particular concentration on the audit
and the effects of new accounting pronouncements. The Committee also reviewed
business analysis and initial risk assessments and the implementation of new
accounting rules on business combinations, goodwill and intangible assets
presented by Clark, Schaefer, Hackett & Co.
At its meeting on February 28, 2002, the Committee reviewed with management,
Clark, Schaefer, Hackett & Co. and Lenox's accounting officers the results of
the audit for fiscal 2001, including the audited financial statements. The
Committee reviewed the requirements of its Charter and the reports that were
required to be disclosed to the Committee. The Committee discussed with Clark,
Schaefer, Hackett & Co. the matters required to be discussed by Statement on
Auditing Standards No. 61 and matters regarding independence.
Relying upon the discussions and reviews described above, the Committee
recommended to the Board of Directors that the audited financial statements of
Lenox be included in its Annual Report on Form 10-KSB for the year ended
December 31, 2001 for filing with the Securities and Exchange Commission.
Respectfully submitted,
Audit Committee
Gail R. Behymer (Chairman)
Gary P. Kreider
Guy E. Napier
The Compensation Committee is responsible for establishing compensation for
management and administering Lenox's stock option and incentive plans. The
Compensation Committee is comprised of Messrs. Behymer (Chairman), Kreider and
Napier.
Meetings last year: 0
Actions in Writing last year: 2
-11-
PRINCIPAL SHAREHOLDERS
The following are the only shareholders known by Lenox to own beneficially more
than 5% of its outstanding Common Shares as of March 22, 2002:
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership Of Class
----------------------------- -------------------------- -----------
John C. Lame 63,892 (1) 17.2%
Guy E. Napier 56,917 (2) (4) 15.3%
Gail R. Behymer 51,758 (3) (4) 13.9%
Lenox Savings Bank 32,417 (4) 8.8%
Employee Stock Ownership Plan
The business address of Mr. Lame, Mr. Napier, Mr. Behymer and the ESOP is 4730
Montgomery Road, Cincinnati, Ohio 45212.
(1) Includes 5,510 shares subject to options exercisable within 60 days and
stock awards for 426 shares.
(2) Includes 32,417 shares held by the ESOP over which Mr. Napier has shared
dispositive power by virtue of his membership on the ESOP Committee and
5,000 shares subject to options exercisable within 60 days. Mr. Napier
disclaims beneficial ownership of the 32,417 shares held by virtue of his
position on the ESOP Committee.
(3) Includes 32,417 shares held by the ESOP over which Mr. Behymer has shared
dispositive power by virtue of his membership on the ESOP Committee, 6,020
shares subject to options exercisable within 60 days and stock awards for
426 shares. Mr. Behymer disclaims beneficial ownership of the 32,417 shares
held by virtue of his position on the ESOP Committee.
(4) The ESOP Trustee has sole voting power over 17,067 shares and shares voting
power over 15,350 shares. The ESOP Committee, composed of Messrs. Napier and
Behymer and Ms. Jane Schank, has dispositive power over all of the shares
set forth above.
-12-
DIRECTORS AND EXECUTIVE OFFICERS
This table lists the executive officers and directors of Lenox and shows how
many Common Shares each owned on March 22, 2002.
Common Shares Beneficially Owned
--------------------------------
Amount and
Nature of
Beneficial
Name and Age Position Ownership Percentage
------------- -------- --------- ----------
John C. Lame President, CEO and Director 63,892 (1) 17.2%
Jane Schank Secretary and Treasurer 47,417 (2) 12.9%
Guy E. Napier Director 56,917 (1) 15.3%
Gail R. Behymer Director 51,578 (1) 13.9%
Gary P. Kreider Director 15,000 (3) 4.1%
Virginia M. Heitzman Director 14,075 (4) 3.8%
------------------------------------------------------------------------------------------------------------
All Executive Officers and 184,045 47.4%
Directors as a Group (6)
(1) See the information set forth in "Principal Shareholders."
(2) Includes 32,417 shares held by the ESOP over which Ms. Schank has shared
dispositive power by virtue of her membership on the ESOP Committee and
restricted stock awards for 10,000 shares of Lenox Common Stock. Ms. Schank
disclaims beneficial ownership of the 32,417 shares held by virtue of her
position on the ESOP Committee.
(3) Includes 5,000 shares subject to options exercisable within 60 days.
(4) Includes 6,689 shares held under the ESOP, with respect to which Ms.
Heitzman has voting but not dispositive power.
On September 25, 2001, Virginia M. Heitzman filed with the American Arbitration
Association a demand for arbitration with Lenox and its wholly-owned subsidiary,
Lenox Savings Bank. Ms. Heitzman's demand sets forth claims for, among other
things, reinstatement of employment and an unspecified amount of damages,
including punitive damages, as a result of alleged wrongful termination of her
employment agreements with Lenox and Lenox Savings Bank. On July 13, 2001, the
Boards of Directors of Lenox and Lenox Savings Bank notified Ms. Heitzman of the
termination of her employment agreements for cause. Lenox and Lenox Savings Bank
previously accrued for the potential payout of the employment agreements and are
contesting the arbitration demands of Ms. Heitzman. The matter is currently
pending before the American Arbitration Association panel. Lenox Bancorp and
Lenox Savings Bank have filed a motion to stay or dismiss the case. The motion
to dismiss was denied by the arbitrator who also ruled that Ms. Heitzman was
entitled to compensation from only Lenox during the pendency of the arbitration.
Lenox has filed a complaint with the Federal District Court for the Southern
District of Ohio to vacate that award. Lenox Bancorp and Lenox Savings Bank have
submitted to the FDIC the question as to whether Ms. Heitzman is entitled to any
payments under applicable federal regulations prohibiting such payments by
certain institutions regulated by the FDIC. On March 8, 2002, the Office of
Thrift Supervision ordered Lenox not to make payments called for by the interim
award unless it receives notice from the OTS that such payment is permissible.
Ms. Heitzman, was CEO and President of Lenox and Lenox Savings Bank from 1994
until 2001 and has been a member of the Board of Directors of Lenox since 1996.
Ms. Heitzman is 44 years old. Her term expires at the 2002 Annual Meeting.
-13-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Lenox's executive
officers, directors and persons who own more than ten percent of a registered
class of Lenox's equity securities to file reports of ownership and changes in
ownership. Based on a review of the copies of such other forms received by it,
Lenox believes that during the last fiscal year, all of its executive officers,
directors and ten percent stockholders complied with the Section 16 reporting
requirements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Gary P. Kreider, who is a member of the Compensation Committee, is a senior
partner of Keating, Muething & Klekamp, P.L.L., Cincinnati, Ohio, a law firm
that provided legal services to Lenox in fiscal 2001.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 28, 2001, Mr. Lame, Ms. Schank and Michael W. Jordan, a director of
Lenox Savings Bank, purchased 7,319, 2,000 and 4,000 Lenox Common Shares,
respectively, from Lenox pursuant to a private offering. The purchase price for
the shares was $11 per share, and was determined by an independent appraisal of
Lenox Common Shares provided by Keefe, Bruyette & Woods. Effective September 28,
2001, the following persons purchased Lenox shares at a per share price of $11
as also determined by Keefe, Bruyette & Woods: Mr. Lame - 23,000 shares; Mr.
Behymer - 10,000 shares; Mr. Kreider - 10,000 shares; Mr. Napier - 12,500
shares; Ms. Schank - 3,000 shares; and Mr. Jordan - 10,000 shares.
During the proxy contest for the election of directors at the 2001 Annual
Shareholders' Meeting, John C. Lame stated that he would seek reimbursement from
Lenox for his out-of-pocket expenses incurred in connection with the election of
Mr. Napier and himself to Lenox's Board of Directors in order to correct what
Mr. Lame believed were deficiencies which led Lenox and Lenox Savings Bank to be
placed under regulatory restrictions by federal and state authorities. A Special
Committee of the Board consisting of Messrs. Behymer and Napier was appointed to
consider this matter. After a detailed and documented review, the Committee
concluded that the total out-of-pocket expenses incurred amounted to $317,900,
of which $60,000 could be reimbursed without further corporate action in light
of the notice given in the proxy materials for the 2001 Annual Shareholders'
Meeting. The reimbursement would be in the form of Lenox Common Shares valued at
the recently appraised value of $11 per share. The Committee determined that the
remainder of the reimbursement should also be issued in Lenox Shares at the $11
per share figure, or 28,900 Lenox Common Shares. This part of the reimbursement
was made subject to ratification by the shareholders. The Executive Committee
determined that the shareholders should be able to make their decision based on
a full year of operation following the election of Mr. Napier and Mr. Lame at
the 2001 Annual Shareholders' Meeting rather than presenting the matter at this
meeting.
-14-
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding compensation paid in
2001 to Lenox's current Chief Executive Officer, John C. Lame, Lenox's former
Chief Executive Officer, Virginia M. Heitzman, and other significant executive
officers.
Annual Compensation
----------------------------------------------------------------------------
Restricted Securities All Other
Name and Stock Underlying Compensation
Principal Position Year Salary ($) Bonus ($) Awards ($) (1) Options(#) ($)
- ------------------ --- ---------- --------- -------------- ---------- ---
John C. Lame 2001 $0 $0 $0 5,510 $0
President and Chief Executive 2000 N/A N/A N/A N/A N/A
Officer 1999 N/A N/A N/A N/A N/A
Jane Schank 2001 $53,308 $10,000 $90,000 10,000 $0
Secretary and Treasurer 2000 N/A N/A N/A N/A N/A
1999 N/A N/A N/A N/A N/A
Virginia M. Heitzman (2) 2001 $52,509 $0 $0 0 $0
2000 $84,250 0 0 0 32,079
1999 $84,250 0 0 0 33,641
- --------------------------------------------------------------------------------
(1) Shares of Common Stock subject to restricted stock awards, plus any
dividends on such shares, are distributed upon vesting.
(2) Ms. Heitzman served as President and Chief Executive Officer of Lenox and
Lenox Savings Bank until July 13, 2001
OPTION GRANTS IN LAST FISCAL YEAR
Number of % of Total
Securities Options Granted
Underlying to Employees in Exercise Price Expiration
Name Options Granted Fiscal 2001 ($/Per share) Date
- ----------------------------- ---------------- ---------------- --------------- -------------
John C. Lame 5,000 33.3 $9.25 12/6/11
Jane Schank 10,000 66.6 $9.00 12/6/11
Virginia M. Heitzman 0 --- --- ----
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FISCAL 2001 OPTION EXERCISES
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End at FY-End (1)
Shares Acquired Value
Name On Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---------------------- ------------------- --------------- ------------------------- ----------------------------
John C. Lame --- --- 5,510/--- $----/$----
Jane Schank --- --- 0/10,000 $----/$----
Virginia M. Heitzman --- --- --- $----/$----
(1) The value of unexercised in-the-money options equals the market value of the
shares covered by in-the-money options on December 31, 2001 less the option
exercise price. Options are in-the-money if the market value of the shares
covered by the options is greater than the exercise price.
SHAREHOLDER PROPOSALS FOR NEXT YEAR
The deadline for shareholder proposals to be included in the Proxy Statement for
next year's Annual Meeting is November 27, 2002. If Lenox's Amended and Restated
Code of Regulations is adopted by the shareholders at the 2002 Annual Meeting,
shareholders who desire to present proposals or board nominations at the 2003
Annual Meeting must provide written notice to our Secretary no later than March
13, 2003 and no earlier than February 26, 2003.
If the Amended and Restated Code of Regulations is not adopted by the
---
shareholders at the 2002 Annual Meeting, (i) shareholders who desire to present
board nominations at the 2003 Annual Meeting must provide written notice to our
Secretary not later than the close of business or the fifth day following the
day on which notice of the 2003 Annual Meeting was mailed or any public
disclosure of such notice was made by Lenox; and (ii) shareholders who desire to
present other proposals at the 2003 Annual Meeting must provide written notice
to our Secretary not later than the close of business on the fifth day following
the day on which notice of the 2003 Annual Meeting was mailed or any public
disclosure of such notice was made by Lenox if notice of the 2003 Annual Meeting
--
is mailed by Lenox less than 40 days prior to the 2003 Annual Meeting date. If
notice of the 2003 Annual Meeting is mailed by Lenox 40 days or more prior to
the 2003 Annual Meeting date, shareholders must provide written notice to our
Secretary not less than 30 days prior to the 2003 Annual Meeting date.
The form of Proxy for this meeting grants authority to the designated proxies to
vote in their discretion on any matters that come before the meeting except
those set forth in Lenox's Proxy Statement and except for matters as to which
adequate notice is received. In order for a notice to be deemed adequate for
next year's annual meeting, it must be received no later than March 13, 2003 and
no earlier than February 26, 2003 if the Amended and Restated Code of
Regulations is adopted by the shareholders at the 2002 Annual Meeting of
Shareholders If the Amended and Restated Code of Regulations is not adopted by
the shareholders at the 2002 Annual Meeting of Shareholders, the dates in the
immediately preceding paragraph shall apply. If there is a change in the
anticipated date of next year's annual meeting or these deadlines by more than
30 days, we will notify you of this change through our Form 10-QSB filings.
QUESTIONS?
If you have questions or need more information about the annual meeting, write
to:
Jane Schank, Secretary
4730 Montgomery Road
Cincinnati, Ohio 45212 or
call us at (513) 531-8655.
For information about your record holdings call the Fifth Third Bank Shareholder
Services at 1-800-837-2755.
TABLE OF CONTENTS Page
- ---------------------------------------------------------------------------------------------------------------------
GENERAL INFORMATION............................................................................................... 1
APPROVAL OF AMENDED ARTICLES OF INCORPORATION..................................................................... 2
AUTHORIZATION OF ADDITIONAL 2,500,000 COMMON SHARES............................................................... 2
AUTHORIZATION OF 500,000 PREFERRED SHARES......................................................................... 2
OPTING OUT OF OHIO'S CONTROL SHARE ACQUISITIONS ACT............................................................... 2
INCREASING THE THRESHOLD PERCENTAGE OF SHAREHOLDER VOTES REQUIRED FOR CERTAIN ACTIONS............................. 3
ELIMINATING THE REQUIREMENT THAT 75% OF LENOX'S VOTING POWER IS REQUIRED FOR CERTAIN ACTIONS AGAINST WHICH
THE BOARD OF DIRECTORS RECOMMENDS................................................................................. 3
APPROVAL OF AMENDED AND RESTATED CODE OF REGULATIONS.............................................................. 3
ELIMINATING THE CLASSIFICATION OF THE BOARD INTO THREE CLASSES.................................................... 4
ALLOWING FOR COMMUNICATIONS TO SHAREHOLDERS AND DIRECTORS TO BE MADE ELECTRONICALLY............................... 4
EXPANDING INDEMNIFICATION OF OFFICERS AND DIRECTORS............................................................... 4
ELECTION OF DIRECTORS IF AMENDED AND RESTATED CODE OF REGULATIONS IS APPROVED..................................... 4
SET THE NUMBER OF DIRECTORS TO BE ELECTED AT FIVE................................................................. 5
ELECTION OF FIVE NOMINEES OF THE EXECUTIVE COMMITTEE.............................................................. 5
ELECTION OF DIRECTORS IF AMENDED AND RESTATED CODE OF REGULATIONS IS NOT APPROVED................................. 6
APPROVAL OF THE 2002 STOCK OPTION AND INCENTIVE PLAN.............................................................. 6
RATIFICATION OF APPOINTMENT OF ACCOUNTANTS........................................................................ 8
DIRECTOR MATTERS.................................................................................................. 9
BOARD COMMITTEES.................................................................................................. 10
REPORT OF THE AUDIT COMMITTEE..................................................................................... 10
PRINCIPAL SHAREHOLDERS............................................................................................ 11
DIRECTORS AND EXECUTIVE OFFICERS.................................................................................. 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION....................................................... 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................................................................. 13
SUMMARY COMPENSATION TABLE...................................................................................... 14
FISCAL 2001 OPTION EXERCISES.................................................................................... 15
SHAREHOLDER PROPOSALS FOR NEXT YEAR............................................................................. 15
QUESTIONS?...................................................................................................... 15
ANNEX I AMENDED ARTICLES OF INCORPORATION....................................................................... I-1
ANNEX II AMENDED AND RESTATED CODE OF REGULATIONS............................................................... II-1
ANNEX III 2002 STOCK OPTION AND INCENTIVE PLAN.................................................................. III-1
ANNEX IV AUDIT COMMITTEE CHARTER................................................................................ IV-1
ANNEX I
-------
AMENDED ARTICLES OF INCORPORATION
OF
LENOX BANCORP, INC.
The shareholders of Lenox Bancorp, Inc., have adopted these Amended
Articles of Incorporation to supersede the existing Articles of Incorporation,
including all amendments.
FIRST. The name of the Corporation shall be Lenox Bancorp, Inc.
SECOND. The place in Ohio where its principal office is to be located is in
the City of Norwood, Hamilton, County, Ohio.
THIRD. The maximum number of shares which the Corporation is authorized to
have outstanding is Five Million (5,000,000), of which:
A. Four Million Five Hundred Thousand (4,500,000) shares of no par
value per share are to be Common Shares; and
B. Five Hundred Thousand (500,000) shares of no par value per
share are to be Preferred Stock.
The holders of the Preferred Stock shall be entitled to receive dividends
out of any funds of the corporation at the time legally available for dividends
when and as declared by the Board of Directors at such rate as shall be fixed by
the Board of Directors before any sum shall be set apart or applied to the
redemption or purchase of or any dividends shall be declared or paid upon or set
apart for any class or series of Common Stock. In the event of any liquidation,
dissolution or winding up of the Corporation, the holders of Preferred Stock
shall be entitled to receive out of the assets of the Corporation payment of an
amount per share as determined by the Board of Directors as a liquidation price
(including accrued dividends, if any) before any distribution of assets shall be
made to the holders of any class or series of Common Stock.
The Board of Directors shall have express authority from time-to-time to
adopt amendments to these Articles of Incorporation with respect to any unissued
or treasury shares of Preferred Stock and thereby to fix or change the division
of such shares into series and the designation and authorized number of shares
of each series and to provide for each such series:
(i) Dividend or distribution rights, which may be: cumulative or
noncumulative; at a specified rate, amount, or proportion; with or without
further participation rights; and in preference
-2-
to, junior to, or on a parity in whole or in part with dividend or distribution
rights of shares of any other class;
(ii) Liquidation rights, preferences, and price;
(iii) Redemption rights and price;
(iv) Sinking fund requirements, which may require the Corporation to
provide a sinking fund out of earnings or otherwise for the purchase or
redemption of the shares or for dividends or distributions on them;
(v) voting rights, which may be full, limited or denied, except as
otherwise required by law;
(vi) Pre-emptive rights, or the denial or limitation of them;
(vii) Conversion rights;
(viii) Restrictions on the issuance of shares; and
(ix) Rights of alteration of express terms.
FOURTH. No shareholder shall have the right to vote cumulatively in the
election of directors.
FIFTH. The provisions of Division (A) of Ohio Revised Code Section
1701.15 apply to this Corporation.
SIXTH. The provisions of Ohio Revised Code Section 1701.831 relating to
control share acquisitions shall not be applicable to this Corporation.
SEVENTH. This Corporation, through its Board of Directors, shall have the
right and power to purchase any of its outstanding shares at such price and upon
such terms as may be agreed upon between the Corporation and any selling
shareholder.
EIGHTH. The affirmative vote of shareholders entitled to exercise sixty
percent of the voting power shall be required to amend these Articles of
Incorporation, approve mergers and to take any other action which by law must be
approved by a specified percentage of all outstanding shares entitled to vote.
ANNEX II
--------
AMENDED AND RESTATED
CODE OF REGULATIONS
OF
LENOX BANCORP, INC.
AS OF APRIL 26, 2002
ARTICLE I
FISCAL YEAR
-----------
The fiscal year of this Corporation shall end the thirty-first day of each
December.
ARTICLE II
SHAREHOLDERS
------------
Section 1. Meetings of the Shareholders.
----------------------------
1.1 Annual Meetings. The Annual Meeting of the Shareholders of this
---------------
Corporation, for the election of the Board of Directors and the transaction of
such other business as may properly be brought before such meeting, shall be
held at 10:00 a.m. on the first Friday in April of each year or such other time
and at such place, if any, and time as designated by the Board of Directors. If
the Annual Meeting is not held or if Directors are not elected thereat, a
Special Meeting may be called and held for that purpose.
1.2 Special Meetings. Special meetings of the Shareholders may be held
----------------
on any business day when called by the Chairman of the Board, the President, a
majority of Directors, or persons holding fifty percent of all voting power of
the Corporation and entitled to vote. No business shall be considered at any
such meeting other than that specified in the notice of the meeting.
1.3 Place of Meetings. Any meeting of Shareholders may be held at such
-----------------
place within or without the State of Ohio or by communications equipment
authorized by the Ohio General Corporation Law as may be designated in the
Notice of said meeting.
1.4 Notice of Meeting and Waiver of Notice.
--------------------------------------
1.4.1. Notice. Notice of the time and place, if any, and purposes
------
of any of Shareholders and the manner of holding the meeting if it is to be
conducted through communications equipment authorized by the Ohio General
Corporation Law, shall be given to each Shareholder entitled thereto not
less than seven days nor more than 60 days before
-2-
the date fixed for the meeting and as prescribed by law. Such notice shall
be given either by personal delivery or mail to the Shareholders at their
respective addresses as they appear upon the records of the Corporation or
by any other method authorized by the Ohio General Corporation Law. Notice
shall be deemed to have been given on the day sent. If any meeting is
adjourned to another time or place, no notice as to such adjourned meeting
need be given other than by announcement at the meeting at which such an
adjournment is taken. No business shall be transacted at any such adjourned
meeting except as might have been lawfully transacted at the meeting at
which such adjournment was taken.
1.4.2. Notice to Joint Owners. All notices with respect to any
----------------------
shares to which persons are entitled by joint or common ownership may be
given to the person who is named first upon the books of this Corporation,
and notice so given shall be sufficient notice to all the holders of such
shares.
1.4.3. Waiver. Notice of any meeting may be waived in writing by
------
any Shareholder either before or after any meeting, by attendance at such
meeting in person or by proxy, or through communications equipment
authorized by the Ohio General Corporation Law without protest to its
commencement.
1.5 Shareholders Entitled to Notice and to Vote. If a record date shall
-------------------------------------------
not be fixed, the record date for the determination of Shareholders entitled to
notice of or to vote at any meeting of Shareholders shall be the close of
business on the twentieth day prior to the date of the meeting and only
Shareholders of record at such record date shall be entitled to notice of and to
vote at such meeting.
1.6 Quorum and Voting. The holders of shares entitling them to exercise
-----------------
a majority of the voting power of the Corporation, present in person, by proxy
or through communications equipment authorized by the Ohio General Corporation
Law, shall constitute a quorum for any meeting. The Shareholders present in
person, by proxy or through communications equipment authorized by the Ohio
General Corporation Law, whether or not a quorum be present, may adjourn the
meeting from time to time without notice other than by announcement at the
meeting.
In any other matter brought before any meeting of Shareholders, the
affirmative vote of the holders of shares representing a majority of the votes
actually cast shall be the act of the Shareholders provided, however, that no
action required by law, the Articles, or these Regulations to be authorized or
taken by the holders of a designated proportion of the shares of the Corporation
may be authorized or taken by a lesser proportion.
1.7 Organization of Meetings.
------------------------
1.7.1. Presiding Officer. The Chairman of the Board, or in the
-----------------
Chairman's absence, the President, or in the absence of both of them, any
officer of the Corporation, shall call all
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meetings of the Shareholders to order and shall act as Chairman thereof; if
all are absent, the Shareholders shall elect a Chairman.
1.7.2. Minutes. The Secretary of the Corporation, or in the
-------
Secretary's absence, an Assistant Secretary, or, in the absence of both, a
person appointed by the Chairman of the meeting, shall act as Secretary of
the meeting and shall keep and make a record of the proceedings thereat.
1.8 Order of Business. The order of business at all meetings of the
-----------------
Shareholders, unless waived or otherwise changed by the Chairman of the meeting
or the Board of Directors, shall be as follows:
1.8.1. Call meeting to order.
1.8.2. Selection of Chairman and/or Secretary, if necessary.
1.8.3. Proof of notice of meeting and presentment of affidavit
thereof.
1.8.4. Roll call, including filing of proxies with Secretary.
1.8.5. Upon appropriate demand, appointment of inspectors of
election.
1.8.6. Reading, correction and approval of previously unapproved
minutes.
1.8.7. Reports of officers and committees.
1.8.8. If an annual meeting, or meeting called for that purpose,
election of Directors.
1.8.9. Unfinished business, if an adjourned meeting.
1.8.10. Consideration in sequence of all other matters set forth in
the notice of the meeting.
1.8.11. Any other business which shall have been submitted in
accordance with Article II, Section 1.12.
1.8.12. Adjournment.
1.9 Voting. Except as provided by statute or in the Articles, every
------
Shareholder entitled to vote shall be entitled to cast one vote on each proposal
submitted to the meeting for each share held of record on the record date for
the determination of the Shareholders entitled to vote at the meeting. At any
meeting at which a quorum is present, all questions and business which may come
before the meeting shall be determined by a majority of votes cast, except when
a greater proportion is required by law, the Articles, or these Regulations.
-4-
1.10 Proxies. A person who is entitled to attend a Shareholders'
-------
meeting, to vote thereat, or to execute consents, waivers and releases, may be
represented at such meeting or vote thereat, and execute consents, waivers, and
releases and exercise any of rights, by proxy or proxies appointed by a writing
signed by such person, or by duly authorized attorney which may be transmitted
physically, or by mail, by facsimile or other electronic medium or such other
method authorized by the Ohio General Corporation Law.
1.11 List of Shareholders. At any meeting of Shareholders a list of
--------------------
Shareholders, alphabetically arranged, showing the number and classes of shares
held by each on the record date applicable to such meeting, shall be produced in
a manner authorized by the Ohio General Corporation Law on the request of any
Shareholder.
1.12 Notice of Shareholder Business and Nominations.
----------------------------------------------
1.12.1. Annual Meetings of Shareholders. Nominations of persons
-------------------------------
for election to the Board of Directors and the proposal of business to be
considered by the Shareholders may be made at an annual meeting of
Shareholders pursuant to the Corporation's notice of the meeting, by or at
the direction of the Board of Directors or by any Shareholder of the
Corporation who was a Shareholder of record at the time of giving of notice
provided for in this Regulation, who is entitled to vote at the meeting and
who complies with the notice procedures set forth herein.
For nominations or other business properly to be brought before an
annual meeting by a Shareholder, the Shareholder must have given timely
notice thereof in writing to the Secretary of the Corporation and such
other business must otherwise be a proper matter for Shareholder action. To
be timely, a Shareholder's notice shall be delivered to the Secretary at
the principal executive offices of the Corporation not later than the close
of business on the 45th day nor earlier than the close of business on the
60th day prior to the first anniversary of the preceding year's annual
meeting; provided, however, that if the date of the annual meeting is more
than 30 days before or more than 45 days after such anniversary date,
notice must be so delivered not earlier than the close of business on the
60th day prior to such annual meeting and not later than the close of
business on the later of the 45th day prior to such annual meeting or the
10th day following the day on which public announcement of the date of such
meeting is first made by the Corporation. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time
period for the giving of notice. Such notice shall set forth as to each
person whom the Shareholder proposes to nominate for election as a Director
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of Directors pursuant to Regulation
14A under the Securities Exchange Act of 1934 and Rule 14a-11 thereunder
including such person's written consent to being named in the proxy
statement as a nominee and to serving as a Director if elected. As to any
-5-
other business that the Shareholder proposes to bring before the meeting,
such notice shall include a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such Shareholder and
the beneficial owner, if any, on whose behalf the proposal is made. The
Shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made shall state the name and address
of such Shareholder, as they appear on the Corporation's books, and of such
beneficial owner and the class and number of shares of the Corporation
which are owned beneficially and of record by such Shareholder and such
beneficial owner.
If the number of Directors to be elected is increased and there is
no public announcement by the Corporation naming all of the nominees for
Director or specifying the size of the increased Board of Directors at
least 70 days prior to the first anniversary of the preceding year's annual
meeting, a Shareholder's notice required by this Regulation shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the 10th day following the day on which such public
announcement is first made by the Corporation.
1.12.2. Special Meetings of Shareholders. Only such business shall
--------------------------------
be conducted at a special meeting of Shareholders as shall have been
brought before the meeting pursuant to the Corporation's notice of meeting.
Nominations of persons for election to the Board of Directors may be made
at a special meeting of Shareholders at which Directors are to be elected
pursuant to the Corporation's notice of meeting by or at the direction of
the Board of Directors or, provided that the Board of Directors has
determined that Directors shall be elected at such meeting, by any
Shareholder of the Corporation who is a Shareholder of record at the time
of giving notice provided for in this Regulation, who shall be entitled to
vote at the meeting and who complies with the notice procedures set forth
in this Regulation. If the Corporation calls a special meeting of
Shareholders for the purpose of electing one or more Directors to the Board
of Directors, any such Shareholder may nominate persons for election to
such positions as specified in the Corporation's notice of meeting, if the
Shareholder's notice required by this Regulation shall be delivered to the
Secretary. Such delivery shall be to the principal executive office of the
Corporation not earlier than the close of business on the 90th day prior to
such special meeting and not later than the close of business on the later
of the 60th day prior to such special meeting or the 10th day following the
day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. In no event shall the public announcement of an
adjournment of a special meeting commence a new time period for the giving
of a Shareholder's notice as described above.
-6-
1.12.3. General. Only such persons who are nominated in accordance
-------
with the procedures set forth in this Regulation shall be eligible to serve
as Directors and only such business shall be conducted at a meeting of
Shareholders as shall have been brought before the meeting in accordance
with the procedures set forth in this Regulation. Except as otherwise
provided by law, the Articles or these Regulations, the Chairman of the
meeting shall have the power and duty to determine whether a nomination or
any business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with the procedures set forth
in this Regulation and, if any proposed nomination or business is not in
compliance with this Regulation, to declare that such defective proposal or
nomination shall be disregarded.
ARTICLE III
DIRECTORS
---------
Section 1. General Powers.
--------------
The authority of this Corporation shall be exercised by or under the
direction of the Board of Directors, except where the law, the Articles or these
Regulations require action to be authorized or taken by the Shareholders.
Section 2. Election, Number and Qualification of Directors.
-----------------------------------------------
2.1 Election. The Directors shall be elected at the annual meeting of
--------
the Shareholders, or if not so elected, at a special meeting of Shareholders
called for that purpose.
2.2 Number. The number of Directors, which shall not be less than
------
three, may be fixed or changed at a meeting of the Shareholders called for the
purpose of electing Directors at which a quorum is present, by a majority of
votes cast at the meeting. In addition, the number of Directors may be fixed or
changed by action of the Directors at a meeting called for that purpose at which
a quorum is present by a majority vote of the Directors present at the meeting.
The Directors then in office may fill any Director's office that is created by
an increase in the number of Directors. The number of Directors elected shall be
deemed to be the number of Directors fixed unless otherwise fixed by resolution
adopted at the meeting at which such Directors are elected.
2.3 Qualifications. Directors need not be Shareholders of the
--------------
Corporation.
-7-
Section 3. Term of Office of Directors.
---------------------------
3.1 Term. Each Director shall hold office until the next annual meeting
----
of the Shareholders and until his or her successor has been elected or until his
or her earlier resignation, removal from office, or death.
3.2 Resignation. A resignation from the Board of Directors shall be
-----------
deemed to take effect immediately upon its being received by any incumbent
corporate officer other than an officer who is also the resigning Director,
unless some other time is specified therein.
3.3 Vacancy. In the event of any vacancy in the Board of Directors for
-------
any cause, the remaining Directors, though less than a majority of the whole
Board, may fill any such vacancy for the unexpired term.
Section 4. Meetings of Directors.
---------------------
4.1 Regular Meetings. A regular meeting of the Board of Directors shall
----------------
be held immediately following the adjournment of the meeting of Shareholders at
which Directors are elected. The holding of such Shareholders' meeting shall
constitute notice of such Directors' meeting and such meeting shall be held
without further notice. Other regular meetings shall be held at such other times
and places, if any, as may be fixed by the Directors.
4.2 Special Meetings. Special Meetings of the Board of Directors may be
----------------
held at any time upon call of the Chairman of the Board, the President, any Vice
President, or any two Directors.
4.3 Place of Meeting. Any meeting of Directors may be held at such
----------------
place within or without the State of Ohio or by communications equipment
authorized by the Ohio General Corporation Law as may be designated in the
notice of said meeting.
4.4 Notice of Meeting and Waiver of Notice. Notice of the time and
--------------------------------------
place, if any, of any regular or special meeting of the Board of Directors and
the manner of holding the meeting if it is to be conducted through
communications equipment authorized by the Ohio General Corporation Law, shall
be given to each Director by personal delivery, telephone, facsimile
transmission, mail or by communications equipment authorized by the Ohio General
Corporation Law, at least seventy-two hours before the meeting. Such notice need
not specify the purpose of the meeting.
Section 5. Quorum and Voting.
-----------------
At any meeting of Directors, not less than one-half of the whole authorized
number of Directors is necessary to constitute a quorum for such meeting, except
that a majority of the remaining Directors in office constitutes a quorum for
filling a vacancy in the Board. At any meeting at which a quorum is present,
all acts, questions, and business which may come before the meeting
-8-
shall be determined by a majority of votes cast by the Directors present at such
meeting, unless the vote of a greater number is required by the Articles or
Regulations.
Section 6. Committees.
----------
6.1 Appointment. The Board of Directors may from time to time appoint
-----------
certain of its members to act as a committee in the intervals between meetings
of the Board and may delegate to such committee such powers as they may
determine to be exercised under the control and direction of the Board. Each
committee shall be composed of one or more Directors. Each committee and each
member thereof shall serve at the pleasure of the Board.
6.2 Executive Committee. In particular, the Board of Directors may
-------------------
create from its membership and define the powers and duties of an Executive
Committee. During the intervals between meetings of the Board of Directors, the
Executive Committee shall possess and may exercise all of the powers of the
Board of Directors in the management and control and the business of the
Corporation to the extent permitted by law.
6.3 Committee Action. Unless otherwise provided by the Board of
----------------
Directors, a majority of the members of any committee appointed by the Board of
Directors pursuant to this Section shall constitute a quorum at any meeting
thereof and the act of a majority of the members present at a meeting at which a
quorum is present shall be the act of such committee. Each committee shall keep
a written record of all actions taken by it.
Section 7. Action of Directors Without a Meeting.
-------------------------------------
Any action which may be taken at a meeting of Directors or any committee
thereof may be taken without a meeting if authorized by a writing or writings
signed by all the Directors or all of the members of the particular committee or
by any other method authorized by the Ohio General Corporation Law. The records
of such action shall be entered upon the records of the Corporation.
Section 8. Compensation of Directors.
-------------------------
The Board of Directors may allow compensation to Directors for performance
of their duties and for attendance at meetings or for any special services, may
allow compensation to members of any committee, and may reimburse any Director
for expenses in connection with attending any Board or committee meeting.
Section 9. Relationship with Corporation.
-----------------------------
Directors shall not be barred from providing professional or other services
to the Corporation. No contract, action or transaction shall be void or voidable
with respect to the Corporation for the reason that it is between or affects the
Corporation and one or more of its Directors, or between or affects the
Corporation and any other person in which one or more of its Directors are
Directors,
-9-
trustees or officers or have a financial or personal interest, or for the reason
that one or more interested Directors participate in or vote at the meeting of
the Directors or committee thereof that authorizes such contract, action or
transaction, if in any such case any of the following apply:
9.1 Disclosure to Directors. The material facts as to the Director's
-----------------------
relationship or interest and as to the contract, action or transaction are
disclosed or are known to the Directors or the committee and the Directors or
committee, in good faith, reasonably justified by such facts, authorize the
contract, action or transaction by the affirmative vote of a majority of the
disinterested Directors, even though the disinterested Directors constitute less
than a quorum;
9.2 Disclosure to Shareholders. The material facts as to the Director's
--------------------------
relationship or interest and as to the contract, action or transaction are
disclosed or are known to the Shareholders entitled to vote thereon and the
contract, action or transaction is specifically approved at a meeting of the
Shareholders held for such purpose by the affirmative vote of the holders of
shares entitling them to exercise a majority of the voting power of the
Corporation held by persons not interested in the contract, action or
transaction; or
9.3 Fairness. The contract, action or transaction is fair as to the
--------
Corporation as of the time it is authorized or approved by the Directors, a
committee thereof or the Shareholders.
Section 10. Attendance at Meetings of Persons Who Are Not Directors.
-------------------------------------------------------
Unless waived by a majority of Directors in attendance, not less than 48
hours before any regular or special meeting of the Board of Directors, any
Director who desires the presence at such meeting of a person who is not a
Director shall so notify all other Directors, request the presence of such
person at the meeting, and state the reason in writing. Such person will not be
permitted to attend the Directors' meeting unless a majority of the Directors in
attendance vote to admit such person to the meeting. Such vote shall constitute
the first order of business for any such meeting of the Board of Directors.
Such right to attend, whether granted by waiver or vote, may be revoked at any
time during any such meeting by the vote of a majority of the Directors in
attendance.
ARTICLE IV
OFFICERS
--------
Section 1. General Provisions.
------------------
The Board of Directors shall elect a President, a Secretary and a
Treasurer, and may elect a Chairman of the Board, one or more Vice Presidents,
and such other officers and assistant officers as the Board may from time-to-
time deem necessary. The Chairman of the Board, if any, shall be a Director,
but none of the other officers need be a Director. Any two or more offices may
be held by the same person, but no officer shall execute, acknowledge or verify
any instrument in more than one capacity if such instrument is required to be
executed, acknowledged or verified by two or more officers.
-10-
Section 2. Powers and Duties.
-----------------
All officers, as between themselves and the Corporation, shall respectively
have such authority and perform such duties as are customarily incident to their
respective offices, and as may be specified from time to time by the Board of
Directors, regardless of whether such authority and duties are customarily
incident to such office. In the absence of any officer of the Corporation, or
for any other reason the Board of Directors may deem sufficient, the powers or
duties of such officer, or any of them may be delegated, to any other officer or
to any Director. The Board of Directors may from time to time delegate to any
officer authority to appoint and remove subordinate officers and to prescribe
their authority and duties.
Section 3. Term of Office and Removal.
--------------------------
3.1 Term. Each officer of the Corporation shall hold office at the
----
pleasure of the Board of Directors, and unless sooner removed by the Board of
Directors, until the meeting of the Board of Directors following the date of
election of Directors and until a successor is elected and qualified.
3.2 Removal. The Board of Directors may remove any officer at any time
-------
with or without cause by the affirmative vote of a majority of Directors in
office.
Section 4. Compensation of Officers.
------------------------
Unless compensation is otherwise determined by a majority of the Directors
at a regular or special meeting of the Board of Directors or unless such
determination is delegated by the Board of Directors to another officer or
officers, the President of the Corporation from time to time shall determine the
compensation to be paid to all officers and other employees for services
rendered to the Corporation.
ARTICLE V
INDEMNIFICATION
---------------
Section 1. Right to Indemnification.
------------------------
Each person who was or is made a party or is threatened to be made a party
to or is otherwise involved, including, without limitation, as a witness, in any
actual or threatened action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that he or she is or was
a Director or officer of the Corporation or that, being or having been such a
Director or officer of the Corporation, he or she is or was serving at the
request of an executive officer of the Corporation as a Director, officer,
partner, employee, or agent of another corporation, partnership, joint venture,
trust, limited liability company, or other enterprise, including service with
respect to an employee benefit plan, whether the basis of such proceeding is
alleged action or inaction in an official capacity as such a Director, officer,
partner, employee, or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent permitted by the Ohio General Corporation
-11-
Law, as the same exists or may hereafter be amended, but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than permitted prior thereto, or by
other applicable law as then in effect. Such indemnification shall be from all
expense, liability, and loss, including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement, actually and
reasonably incurred or suffered by such indemnitee in connection therewith. Such
indemnification shall continue as to an indemnitee who has ceased to be a
Director, officer, employee, or agent and shall inure to the benefit of the
indemnitee's heirs, executors, and administrators. Except as provided in Section
2 with respect to proceedings seeking to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a proceeding,
or part thereof, initiated by such indemnitee only if such proceeding or part
thereof was authorized or ratified by the Board of Directors of the Corporation.
The right to indemnification conferred in this Section 1 shall be a
contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition. An advancement of expenses incurred by an indemnitee in his or her
capacity as a Director, officer or employee, and not in any other capacity in
which service was or is rendered by such indemnitee including, without
limitation, service to an employee benefit plan, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal that such indemnitee is not entitled to be indemnified for such expenses
under this Section 1 or otherwise. An advancement of expenses shall not be made
if the Corporation's Board of Directors makes a good faith determination that
such payment would violate law or public policy.
Section 2. Right of Indemnitee to Bring Suit.
---------------------------------
If a claim under Section 1 is not paid in full by the Corporation within
sixty days after a written claim has been received by the Corporation, except in
the case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty days, the indemnitee may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the indemnitee shall also be entitled to be paid the expense of
prosecuting or defending such suit. The indemnitee shall be presumed to be
entitled to indemnification upon submission of a written claim, and, in an
action brought to enforce a claim for an advancement of expenses, where the
required undertaking has been tendered to the Corporation, and thereafter the
Corporation shall have the burden of proof to overcome the presumption that the
indemnitee is so entitled. Neither the failure of the Corporation, including
its Board of Directors, independent legal counsel, or its Shareholders, to have
made a determination prior to the commencement of such suit that indemnification
of the indemnitee is proper in the circumstances, nor an actual determination by
the Corporation, including its Board of Directors, independent legal counsel, or
its Shareholders, that the indemnitee is not entitled to
-12-
indemnification shall be a defense to the suit or create a presumption that the
indemnitee is not so entitled.
Section 3. Nonexclusivity and Survival of Rights.
-------------------------------------
The rights to indemnification and to the advancement of expenses conferred
in this Article V shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provisions of the Articles,
Regulations, agreement, vote of Shareholders or disinterested Directors, or
otherwise.
Notwithstanding any amendment to or repeal of this Article V, or of any of
the procedures established by the Board of Directors pursuant to Section 7, any
indemnitee shall be entitled to indemnification in accordance with the
provisions hereof and thereof with respect to any acts or omissions of such
indemnitee occurring prior to such amendment or repeal.
Without limiting the generality of the foregoing paragraph, the rights to
indemnification and to the advancement of expenses conferred in this Article V
shall, notwithstanding any amendment to or repeal of this Article V, inure to
the benefit of any person who otherwise may be entitled to be indemnified
pursuant to this Article V or the estate or personal representative of such
person for a period of six years after the date such person's service to or in
behalf of the Corporation shall have terminated or for such longer period as may
be required in the event of a lengthening in the applicable statute of
limitations.
Section 4. Insurance, Contracts, and Funding.
---------------------------------
The Corporation may maintain insurance, at its expense, to protect itself
and any Director, officer, employee, or agent of the Corporation or another
corporation, partnership, joint venture, trust, or other enterprise against any
expense, liability, or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability, or loss under the Ohio
General Corporation Law. The Corporation may enter into contracts with any
indemnitee in furtherance of the provisions of this Article V and may create a
trust fund, grant a security interest, or use other means, including, without
limitation, a letter of credit, to ensure the payment of such amounts as may be
necessary to effect indemnification as provided in this Article V.
Section 5. Persons Serving Other Entities.
------------------------------
Any person who is or was a Director, officer, or employee of the
Corporation who is or was serving as a Director or officer of another
corporation of which a majority of the shares entitled to vote in the election
of its Directors is held by the Corporation or in an executive or management
capacity in a partnership, joint venture, trust, limited liability company or
other enterprise of which the Corporation or a wholly-owned subsidiary of the
Corporation is a general partner or member or has a majority ownership shall be
deemed to be so serving at the request of an executive officer of the
Corporation and entitled to indemnification and advancement of expenses under
Section 1.
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Section 6. Indemnification of Employees and Agents of the Corporation.
----------------------------------------------------------
The Corporation may, by action of its Board of Directors, authorize one or
more executive officers to grant rights to advancement of expenses to employees
or agents of the Corporation on such terms and conditions no less stringent than
provided in Section 1 hereof as such officer or officers deem appropriate under
the circumstances. The Corporation may, by action of its Board of Directors,
grant rights to indemnification and advancement of expenses to employees or
agents or groups of employees or agents of the Corporation with the same scope
and effect as the provisions of this Article V with respect to the
indemnification and advancement of expenses of Directors and officers of the
Corporation; provided, however, that an undertaking shall be made by an employee
or agent only if required by the Board of Directors.
Section 7. Procedures for the Submission of Claims.
---------------------------------------
The Board of Directors may establish reasonable procedures for the
submission of claims for indemnification pursuant to this Article V,
determination of the entitlement of any person thereto, and review of any such
determination. Such procedures shall be set forth in an appendix to these
Regulations and shall be deemed for all purposes to be a part hereof.
Section 8. Effectiveness.
-------------
The provisions of this Article V shall apply only to those persons who
serve as directors and officers of the Corporation after April 26, 2002 and
shall apply to such persons with respect to actions or inactions alleged to have
arisen or occurred prior to, on or after April 26, 2002. Persons serving as
directors and officers prior to April 27, 2002, but not thereafter, shall be
covered by the Code of Regulations in effect prior to adoption of this Article
V.
ARTICLE VI
AMENDMENTS
----------
This Code of Regulations may be amended by the affirmative vote, written
consent, or such other method authorized by the Ohio General Corporation Law, of
Shareholders entitled to exercise a majority of the voting power on such
proposal. If an amendment is adopted by written consent the Secretary shall
transmit by mail or by any other means of communication authorized by the Ohio
General Corporation Law a copy of such amendment to each Shareholder who would
be entitled to vote thereon and did not participate in the adoption thereof.
This Code of Regulations may also be amended by the affirmative vote of a
majority of the Directors to the extent permitted by Ohio law at the time of
such amendment.
ANNEX III
---------
LENOX BANCORP, INC.
2002 STOCK OPTION AND INCENTIVE PLAN
TABLE OF CONTENTS
PAGE
ARTICLE 1 OBJECTIVES................................................ 1
ARTICLE 2 DEFINITIONS............................................... 1
ARTICLE 3 ADMINISTRATION............................................ 3
ARTICLE 4 SHARES SUBJECT TO PLAN.................................... 5
ARTICLE 5 DURATION OF PLAN.......................................... 6
ARTICLE 6 STOCK OPTIONS............................................. 6
ARTICLE 7 STOCK APPRECIATION RIGHTS................................. 8
ARTICLE 8 RESTRICTED AND UNRESTRICTED STOCK AWARDS.................. 9
ARTICLE 9 PERFORMANCE AWARDS........................................ 10
ARTICLE 10 OTHER STOCK UNIT AWARDS.................................. 11
ARTICLE 11 TRANSFERABILITY OF AWARDS................................ 11
ARTICLE 12 TERMINATION OF AWARDS.................................... 12
ARTICLE 13 DEFERRALS................................................ 13
ARTICLE 14 TERMINATION OR AMENDMENT OF PLAN......................... 13
ARTICLE 15 GENERAL PROVISIONS....................................... 14
i
LENOX BANCORP, INC.
2002 STOCK OPTION AND INCENTIVE PLAN
ARTICLE 1
OBJECTIVES
Lenox Bancorp, Inc. has established this 2002 Stock Option and Incentive
Plan effective _______________, 2002. The purposes of this Plan are to enable
Lenox Bancorp, Inc. ("Company") and its subsidiaries to compete successfully in
retaining and attracting key employees of outstanding ability, to stimulate the
efforts of such employees toward the Company's objectives and to encourage the
identification of their interests with those of the Company's shareholders.
ARTICLE 2
DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
2.1 "Advisor" means anyone who provides bona fide advisory or consultation
services to the Company other than the offer or sale of securities in a capital-
raising transaction.
2.2 "Award" means any one or more of the following: (a) Stock Options, (b)
Stock Appreciation Rights, in tandem with Stock Options or free-standing; (c)
Restricted Stock; (d) performance Shares conditioned upon meeting performance
criteria; and (e) other awards based in whole or in part by reference to or
otherwise based on Company Shares, or other securities of the Company or any
Subsidiary.
2.3 "Award Agreement" means a written agreement setting forth the terms of
an Award.
2.4 "Award Date" or "Grant Date" means the date designated by the
Committee as the date upon which an Award is granted.
2.5 "Award Period" or "Term" means the period beginning on an Award Date
and ending on the expiration date of such Award.
2.6 "Board" means the Board of Directors of the Company.
2.7 "Code" means the Internal Revenue Code of 1986, as amended, or any
successor legislation.
2.8 "Committee" means the committee appointed by the Board and consisting
of one or more Directors, none of whom shall be eligible to receive any Award.
Members of the Committee must qualify as Non-Employee Directors as defined by
Rule 16b-3(b)(3)(i). To the
2
extent that it is desired that compensation resulting from an Award be excluded
from the deduction limitation of Section 162(m) of the Code, all members of the
Committee granting an Award also shall be "outside directors" within the meaning
of Section 162(m).
2.9 "Company" means Lenox Bancorp, Inc.
2.10 "Disability" means a "permanent and total disability" within the
meaning of Section 22(e)(3) of the Code.
2.11 "Eligible Employee" means anyone, other than one who receives
retirement benefits, consulting fees, honorariums, and the like from the Company
who performs services for the Company or a Subsidiary, including an officer or
director of the Company or a Subsidiary; and is compensated on a regular basis
by the Company or a Subsidiary. Directors who are not full-time employees of the
Company or a Subsidiary are not eligible to receive Awards under this Plan.
Eligibility under this Plan shall be determined by the Committee.
2.12 "Fair Market Value" means the last closing price for a Share on the
Over the Counter Bulletin Board or any stock exchange or national trading or
quotation system on which such sales are reported. If the Shares are not so
traded or reported, Fair Market Value shall be set under procedures established
by the Committee.
2.13 "Incentive Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code or any successor provision.
2.14 "Non-Tandem SAR" means a Stock Appreciation Right granted without
reference to a Stock Option.
2.15 "Non-Qualified Option" means any Stock Option that is not an Incentive
Stock Option.
2.16 "Officer" means a person who is considered to be an officer of the
Company under Rule 16a-1(f).
2.17 "Other Stock Unit Awards" shall have the meaning set forth in Section
10.1 hereof.
2.18 "Plan" means this 2002 Lenox Bancorp, Inc. Stock Option and Incentive
Plan as it may be amended.
2.19 "Reference Option" shall have the meaning set forth in Section 7.1
hereof.
2.20 "Option Price" or "Exercise Price" means the price per Share at which
Common Stock may be purchased upon the exercise of an Option or an Award.
2.21 "Participant" means a person to whom an Award has been made pursuant
to this Plan.
3
2.22 "Replacement Option" means a Non-Qualified Option granted pursuant to
Subsection 6.3, upon the exercise of a Stock Option granted pursuant to this
Plan where the Option Price is paid with previously owned Shares.
2.23 "Restricted Stock" means Shares issued pursuant to a Restricted Stock
Award which are subject to the restrictions set forth in the related Award
Agreement.
2.24 "Restricted Stock Award" means an award of a fixed number of Shares to
a Participant which is subject to forfeiture provisions and other conditions set
forth in the Award Agreement.
2.25 "Retirement" means any termination of employment (other than by death
or Disability) by an employee who is at least 65 years of age, or 55 years of
age with at least ten years of employment with the Company or a Subsidiary.
2.26 "Rule 16b-3" and "Rule 16a-1(f)" mean Securities and Exchange
Commission Regulations Sect. 240.16b-3 and Sect. 240.16a-1(f) or any
corresponding successor regulations.
2.27 "Share" means one of the Company's Common Shares.
2.28 "Stock Appreciation Right" or "SAR" means the right to receive, for
each unit of the SAR, cash and/or Shares equal in value to the excess of the
Fair Market Value of one Share on the date of exercise of the SAR over the
reference price per Share established on the date the SAR was granted.
2.29 "Stock Option" or "Option" means the right to purchase Shares of
Common Stock, including a Replacement Option, granted pursuant to Article 7.
2.30 "Subsidiary" means any corporation, partnership, joint venture, or
other entity of which the Company owns or controls, directly or indirectly, 25%
or more of the outstanding voting stock, or comparable equity participation and
voting power, or which the Company otherwise controls, by contract or any other
means. However, when the term "Subsidiary" is used in the context of an Award of
an Incentive Option, the applicable percentage shall be 50%. "Control" means the
power to direct or cause the direction of the management and policies of a
corporation or other entity.
2.31 "Tandem SAR" shall mean a Stock Appreciation Right granted with
reference to a Stock Option.
2.32 "Transfer" means alienation, attachment, sale, assignment, pledge,
encumbrance, charge or other disposition; and the terms "Transferred" or
"Transferable" have corresponding meanings.
ARTICLE 3
ADMINISTRATION
4
3.1 The Committee. This Plan shall be administered and interpreted by the
-------------
Committee.
3.2 Awards. The Committee is authorized to grant (i) Stock Options; (ii)
------
Stock Appreciation Rights, in tandem with Stock Options or free-standing; (iii)
Restricted Stock; (iv) performance Shares conditioned upon meeting performance
criteria; and (v) other awards based in whole or in part by reference to or
otherwise based on Company Shares, or other securities of the Company or any
Subsidiaries (collectively, the "Awards"). In particular, the Committee shall
has the authority:
3.2.1 to select the Eligible Employees and Advisors to whom Awards
may be granted;
3.2.2 to determine the types and combinations of Awards to be
granted;
3.2.3 to determine the number of Shares or monetary units which may
be subject to each Award;
3.2.4 to determine the terms and conditions, not inconsistent with
the terms of this Plan, of any Award, including, but not limited to, the
term, price, exercisability, method of exercise, any restriction or
limitation on transfer, any vesting schedule or acceleration, or any
forfeiture provisions or waiver, regarding any Award, and the related
Shares, based on such factors as the Committee shall determine; and
3.2.5 to modify or waive any restrictions or limitations contained
in, and grant extensions to the terms of or accelerate the vestings of, any
outstanding Award, other than Performance Awards, as long as such
modifications, waivers, extensions or accelerations are not inconsistent
with the terms of this Plan, but no such changes shall impair the rights of
any Participant without his or her consent.
3.3 Guidelines. The Committee is authorized to adopt, alter and repeal
----------
administrative rules, guidelines and practices governing this Plan and perform
all acts, including the delegation of its administrative responsibilities, as it
deems advisable; to construe and interpret the terms and provisions of this Plan
and any Award issued under this Plan; and to otherwise supervise the
administration of this Plan. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in this Plan or in any related Award
Agreement in the manner and to the extent it deems necessary to carry this Plan
into effect.
3.4 Delegation of Authority. The Committee may delegate its authority to
-----------------------
Officers of the Company and its administrative duties to Officers or employees
of the Company except with respect to persons who are Senior Officers of the
Company as defined by the Committee.
3.5 Decisions Final. Any action, decision, interpretation or determination
---------------
by or at the direction of the Committee concerning the application or
administration of this Plan shall be final and binding upon all persons and need
not be uniform with respect to its determination of recipients, amount, timing,
form, terms or provisions.
5
ARTICLE 4
SHARES SUBJECT TO PLAN
4.1 Shares. Subject to adjustment as provided in Subsection 4.2, the
------
number of Shares which may be issued under this Plan shall not exceed One
Hundred Fifty Thousand (150,000) Shares. If any Award granted under this Plan
shall expire, terminate or be canceled for any reason without having been
exercised in full, the number of unacquired Shares subject to such Award shall
again be available for future grants. The Committee may make such other
determinations regarding the counting of Shares issued pursuant to this Plan as
it deems necessary or advisable, provided that such determinations shall be
permitted by law. Shares underlying a canceled Option shall be counted against
the maximum number of shares for which Options may be granted to an employee.
The repricing of an Option shall be treated as a cancellation of the Option and
the grant of a new Option.
4.2 Adjustment Provisions.
---------------------
4.2.1 If the Company shall at any time change the number of issued
Shares without new consideration to the Company by stock dividend, split,
combination, recapitalization, reorganization, exchange of shares,
liquidation or other change in corporate structure affecting the Shares or
make a distribution of cash or property which has a substantial impact on
the value of issued Shares, the total number of Shares reserved for
issuance under the Plan shall be appropriately adjusted and the number of
Shares covered by each outstanding Award and the reference price or Fair
Market Value for each outstanding Award shall be adjusted so that the
aggregate consideration payable to the Company and the value of each such
Award shall not be changed.
4.2.2 The Committee may authorize the issuance, continuation or
assumption of Awards or provide for other equitable adjustments after
changes in the Shares resulting from any merger, consolidation, sale of
assets, acquisition of property or stock, recapitalization, reorganization
or similar occurrence in which the Company is the continuing or surviving
corporation, upon such terms and conditions as it may deem equitable and
appropriate.
4.3 Merger, Dissolution or Liquidation. In the event of the dissolution or
----------------------------------
liquidation of the Company or any merger, consolidation, exchange or other
transaction in which the Company is not the surviving corporation or in which
75% or more of the outstanding Shares of the Company are converted into cash,
other securities or other property, each outstanding Award shall terminate as of
a date fixed by the Committee provided that not less than 20 days' written
notice of the date of expiration shall be given to each holder of an Award and
each outstanding Award shall be fully vested and each such holder shall have the
right during such period following notice to exercise the Award as to all or any
part of the Shares for which it is exercisable.
4.4 Change of Control. All outstanding Awards shall become immediately
-----------------
exercisable in full if a change in control of the Company occurs. For purposes
of this Agreement, a "change in control of the Company" shall be deemed to have
occurred if (a) any
6
"person," as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company becomes the "beneficial owner," as
defined in Rule 13d-3 under that Act, directly or indirectly, of securities of
the Company representing 35% or more of the combined voting power of the
Company's then outstanding securities; or (b) during any period of one year (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board of Directors and any new
director whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of the
Directors then still in office who either were Directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof.
ARTICLE 5
DURATION OF PLAN
This Plan shall continue in effect until _____________________, ______,
2012, unless terminated sooner by the Board pursuant to Article 14.
ARTICLE 6
STOCK OPTIONS
6.1 Grants. Stock Options may be granted alone or in addition to other
------
Awards granted under this Plan. Each Option granted shall be designated as
either a Non-Qualified Option or an Incentive Option and in each case such
Option may or may not include Stock Appreciation Rights. One or more Stock
Options and/or Stock Appreciation Rights may be granted to any Eligible Employee
or Advisor, except that no person shall receive during any 12 month period Non-
Qualified Stock Options and Stock Appreciation Rights covering more than Ten
Thousand (10,000) shares of Common Stock and except that only Non-Qualified
Options may be granted to Advisors.
6.2 Incentive Options. Any option designated by the Committee as an
-----------------
Incentive Stock Option will be subject to the general provisions applicable to
all Options granted under the Plan plus the following specific provisions:
6.2.1 If an Incentive Stock Option is granted to a person who owns,
directly or indirectly, stock representing more than 10% of (i) the total
combined voting power of all classes of stock of the Company and its
Subsidiaries, or (ii) a corporation that owns 50% or more of the total
combined voting power of all classes of stock of the Company, then
6.2.1.1 the Option Price must equal at least 110% of the Fair
Market Value on the date of grant; and
6.2.1.2 the term of the Option shall not be greater than five
years from the date of grant.
7
6.2.2 The aggregate Fair Market Value of Shares, determined at the
date of grant, with respect to which Incentive Stock Options that may be
exercised for the first time by any individual during any calendar year
under this Plan or any other plan maintained by the Company and its
Subsidiaries shall not exceed $100,000. To the extent that the aggregate
fair market value of Shares with respect to which Incentive Options are
exercisable for the first time by any individual during any calendar year,
under all plans of the Company and its Subsidiaries, exceeds $100,000, such
Options shall be treated as Nonqualified Options.
6.2.3 Notwithstanding anything in this Plan to the contrary, no term
of this Plan relating to Incentive Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code, or,
without the consent of the Participants affected, to disqualify any
Incentive Option under Section 422 of the Code.
6.3 Replacement Options. The Committee may provide either at the time of
-------------------
grant or subsequently that an Option shall include the right to acquire a
Replacement Option upon the exercise of such Option, in whole or in part, prior
to an Eligible Employee's termination of employment if the payment of the Option
Price is paid in Shares. In addition to any other terms and conditions the
Committee deems appropriate, the Replacement Option shall be subject to the
following terms:
6.3.1 the number of Shares subject to the Replacement Option shall
not exceed the number of whole Shares used to satisfy the Option Price of
the original Option and the number of whole Shares, if any, withheld by the
Company as payment for withholding taxes in accordance with Subsection
15.3;
6.3.2 the Replacement Option Grant Date will be the date of the
exercise of the original Option;
6.3.3 the Option Price per share shall be the Fair Market Value of a
Share on the Replacement Option Grant Date;
6.3.4 the Replacement Option shall be exercisable no earlier than one
year after the Replacement Option Grant Date; and
6.3.5 the Term of the Replacement Option will not extend beyond the
Term of the original Option.
The Committee may, without the consent of the Eligible Employee, rescind
the right to receive a Replacement Option at any time prior to an Option being
exercised.
6.4 Terms of Options. Except as otherwise required by Subsections 6.2 and
----------------
6.3, Options granted under this Plan shall be subject to the following terms and
conditions and shall be in such form and contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee shall
deem desirable:
8
6.4.1 Option Price. The Option Price shall be determined by the
------------
Committee at the time of grant, except that no Incentive Option may be
granted for an Option Price less than 100% of Fair Market Value on the
Grant Date.
6.4.2 Option Term. The Option Term shall be fixed by the Committee,
-----------
but no Incentive Option shall be exercisable more than ten years after its
Award Date, and no Non-Qualified Option shall be exercisable more than ten
years after its Award Date.
6.4.3 Exercisability. A Stock Option shall be exercisable at such
--------------
time or times and subject to such terms and conditions as shall be
specified in the Award Agreement, provided, however, that an Option may not
be exercised as to less than One Hundred Shares at any one time or the
total number available for exercise at that time.
6.4.4 Method of Exercise. Stock Options may be exercised in whole or
------------------
in part at any time during the Option Term by giving written notice of
exercise to the Company specifying the number of Shares to be purchased.
Such notice shall be accompanied by payment in full of the Option Price in
cash unless some other form of consideration is approved by the Committee
at or after the grant.
6.4.5 Transferability of Options. Stock Options shall be Transferable
--------------------------
as provided in Article 11.
6.4.6 Termination. Stock Options shall terminate in accordance with
-----------
Article 12.
6.4.7 Buyout and Settlement Provisions. The Committee may at any time
--------------------------------
offer to buy out an Option previously granted, based on such terms and
conditions as the Committee shall establish. The Committee may also
substitute new Stock Options for previously granted Stock Options having
higher Option Prices than the new Stock Options being substituted therefor.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 Grant. A Stock Appreciation Right may be granted either with or
-----
without reference to all or any part of a Stock Option. A "Tandem SAR" is an SAR
granted with reference to a Stock Option (the "Reference Option"). A "Non-Tandem
SAR" is an SAR granted without reference to a Stock Option. If the Reference
Option is a Non-Qualified Option, a Tandem SAR may be granted at or after the
date of the Reference Option; if the Reference Option is an Incentive Option,
the Grant Date of a Tandem SAR must be the same as the Grant Date of the
Reference Option. Any SAR shall have such terms and conditions, not inconsistent
with this Plan, as are established by the Committee in connection with the
Award.
7.2 Term. A Tandem SAR shall terminate and no longer be exercisable upon
----
the termination of its Reference Option. A Non-Tandem SAR may have a term no
longer than 10 years from its Grant Date.
9
7.3 Exercise. A Tandem SAR may only be exercisable at the times and, in
--------
whole or in part, to the extent that its Reference Option is exercisable. The
exercise of a Tandem SAR shall automatically result in the surrender of the
applicable portion of its Reference Option. A Non-Tandem SAR shall be
exercisable in whole or in part as provided in its Award Agreement. Written
notice of any exercise must be given in the form prescribed by the Committee.
7.4 Payment. For purposes of payment of an SAR, the reference price per
-------
Share shall be the Option Price of the Reference Option in the case of a Tandem
SAR and shall be the Fair Market Value of a Share on the Grant Date in the case
of a Non-Tandem SAR. The Committee shall determine the form of payment.
7.5 Transferability and Termination. Stock Appreciation Rights shall be
-------------------------------
Transferable as provided in Article 11 and shall terminate in accordance with
Article 12 .
ARTICLE 8
RESTRICTED AND UNRESTRICTED STOCK AWARDS
8.1 Grants of Restricted Stock Awards. The Committee may, in its
---------------------------------
discretion, grant one or more Restricted Stock Awards to any Eligible Employee
or Advisor. Each Restricted Stock Award shall specify the number of Shares to be
issued to the Participant, the date of such issuance, the price, if any, to be
paid for such Shares by the Participant and the restrictions imposed on such
Shares. The Committee may grant Awards of Restricted Stock subject to the
attainment of specified performance goals, continued employment or such other
limitations or restrictions as the Committee may determine.
8.2 Terms and Conditions of Restricted Awards. Restricted Stock Awards
-----------------------------------------
shall be subject to the following provisions:
8.2.1 Issuance of Shares. Shares of Restricted Stock may be issued
------------------
immediately upon grant or upon vesting as determined by the Committee.
8.2.2 Stock Powers and Custody. If Shares of Restricted Stock are
------------------------
issued immediately upon grant, the Committee may require the Participant to
deliver a stock power, endorsed in blank, relating to the Restricted Stock
covered by such an Award. The Committee may also require that the
certificates evidencing Restricted Stock be held in custody by the Company
until the restrictions on them shall have lapsed.
8.2.3 Shareholder Rights. Unless otherwise determined by the
------------------
Committee at the time of grant, Participants receiving Restricted Stock
Awards shall not be entitled to dividend or voting rights for the
Restricted Shares until they are fully vested.
8.2.4 Termination of Employment. Upon termination of employment
-------------------------
during the restricted period, all Restricted Stock shall be forfeited,
subject to such exceptions, if any, as are authorized by the Committee, as
to termination of employment, retirement, disability, death or special
circumstances.
10
8.3 Unrestricted Stock Awards. The Committee may make awards of
-------------------------
unrestricted Shares to key Eligible Employees and Advisors in recognition of
outstanding achievements or contributions by such employees and advisors.
Unrestricted Shares issued on a bonus basis may be issued for no cash
consideration. Each certificate for unrestricted Shares shall be registered in
the name of the Participant and delivered to the Participant.
ARTICLE 9
PERFORMANCE AWARDS
9.1 Performance Awards.
------------------
9.1.1 Grant. The Committee may, in its discretion, grant Performance
-----
Awards to Eligible Employees and Advisors. A Performance Award shall
consist of the right to receive either Shares or cash of an equivalent
value, or a combination of both, at the end of a specified Performance
Period (defined below) or a fixed dollar amount payable in cash or Shares,
or a combination of both, at the end of a specified Performance Period. The
Committee shall determine the Eligible Employees and Advisors to whom and
the time or times at which Performance Awards shall be granted, the number
of Shares or the amount of cash to be awarded to any person, the duration
of the period during which, and the conditions under which, a Participant's
Performance Award will vest, and the other terms and conditions of the
Performance Award in addition to those set forth in Subsection 9.2.
9.1.2 Criteria for Award. The Committee may condition the grant or
------------------
vesting of a Performance Award upon the attainment of specified performance
goals; the appreciation in the Fair Market Value, book value or other
measure of value of the Shares; the performance of the Company based on
earnings or cash flow; or such other factors or criteria as the Committee
shall determine.
9.2 Terms and Conditions of Performance Awards. Performance Awards shall
------------------------------------------
be subject to the following terms and conditions:
9.2.1 Dividends. Unless otherwise determined by the Committee at the
---------
time of the grant of the Award, amounts equal to dividends declared during
the Performance Period with respect to any Shares covered by a Performance
Award will not be paid to the Participant.
9.2.2 Payment. Subject to the provisions of the Award Agreement and
-------
this Plan, at the expiration of the Performance Period, share certificates,
cash or both as the Committee may determine shall be delivered to the
Participant, or his or her legal representative or guardian, in a number or
an amount equal to the vested portion of the Performance Award.
9.2.3 Transferability. Performance Awards shall be Transferable as
---------------
provided in Article 11.
11
9.2.4 Termination of Employment or Advisory Relationship. Subject to
--------------------------------------------------
the applicable provisions of the Award Agreement and this Plan, upon
termination of a Participant's employment or advisory relationship with the
Company or a Subsidiary for any reason during the Performance Period for a
given Award, the Performance Award in question will vest or be forfeited in
accordance with the terms and conditions established by the Committee.
ARTICLE 10
OTHER STOCK UNIT AWARDS
10.1 The Committee is authorized to grant to employees of the Company and
its affiliates, either alone or in addition to other Awards granted under the
Plan, Awards of Common Shares or other securities of the Company or any
Subsidiary of the Company and other Awards that are valued in whole or in part
by reference to, or are otherwise based on, Common Shares or other securities of
the Company or any subsidiary of the Company ("Other Stock Unit Awards"). Other
Stock Unit Awards may be paid in cash, Common Shares, other property or in a
combination thereof, as the Committee shall determine.
10.2 The Committee shall determine the employees to whom Other Stock Unit
Awards are to be made, the times at which such Awards are to be made, the number
of Shares to be granted pursuant to such Awards and all other conditions of such
Awards. The provisions of Other Stock Unit Awards need not be the same with
respect to each recipient. The recipient shall not be permitted to sell, assign,
transfer, pledge, or otherwise encumber the Common Shares or other securities
prior to the later of the date on which the Common Shares or other securities
are issued, or the date on which any applicable restrictions, performance or
deferral period lapses. Common Shares (including securities convertible into
Common Shares) and other securities granted pursuant to Other Stock Unit Awards
may be issued for no cash consideration or for such minimum consideration as may
be required by applicable law. Common Shares (including securities convertible
into Common Shares) and other securities purchased pursuant to purchase rights
granted pursuant to Other Stock Unit Awards may be purchased for such
consideration as the Committee shall determine, which price shall not be less
than the fair market value of such Common Shares or other securities on the date
of grant, unless the Committee otherwise elects.
ARTICLE 11
TRANSFERABILITY OF AWARDS
Awards and the benefits payable under this Plan shall not be Transferable
by the Participant during his or her lifetime and may not be assigned,
exchanged, pledged, transferred or otherwise encumbered or disposed of except by
a domestic relations order pursuant to Section 414(p)(1)(B) of the Code, or by
will or the laws of descent and distribution. Awards shall be exercisable during
a Participant's lifetime only as set forth in the preceding sentence by the
Participant or, if permissible under applicable law, by the Participant's
guardian or legal representative.
12
Notwithstanding the above, the Committee may, with respect to particular
Awards, other than Incentive Stock Options, establish or modify the terms of the
Awards to allow the Awards to be transferred at the request of the grantee of
the Awards to trusts established by the grantee or as to which the grantee is a
grantor or to family members of the grantee or otherwise for personal and tax
planning purposes of the grantee. If the committee allows such transfer, such
Options shall not be exercisable for six months following the action of the
Committee.
ARTICLE 12
TERMINATION OF AWARDS
12.1 Termination of Awards. All Awards issued under this Plan shall
---------------------
terminate as follows:
12.1.1 At Expiration of Term. During any period of continuous
---------------------
employment or business relationship with the Company or a Subsidiary, an
Award will be terminated only if it is fully exercised or if it has expired
by its terms or by the terms of this Plan. For these purposes, any leave of
absence approved by the Company shall not be deemed to be a termination of
employment.
12.1.2 Death, Disability or Retirement. If a Participant's employment
-------------------------------
by the Company or a Subsidiary terminates by reason of death, Disability or
Retirement, or in the case of an advisory relationship, if such business
relationship terminates by reason of death or Disability, any Award held by
such Participant, unless otherwise determined by the Committee at grant,
shall be fully vested and may thereafter be exercised by the Participant or
by the Participant's beneficiary or legal representative, for a period of
one year following termination of employment, in the case of death or
disability, and 90 days in the case of retirement, or such longer period as
the Committee may specify at or after grant in all cases other than
Incentive Options, or until the expiration of the stated term of such
Award, whichever period is shorter.
12.1.3 Termination for Cause. Awards shall terminate immediately if
---------------------
employment is terminated for cause. Cause is defined as including, but not
limited to, theft of or intentional damage to Company property, the use of
illegal drugs, the commission of a criminal act, or willful violation of
Company policy prohibiting employees from trading Shares for personal gain
based on knowledge of the Company's activities or results when such
information is not available to the general public.
12.1.4 Employment and Noncompetition Agreements. If an individual
----------------------------------------
holding an Award violates any term of any written employment or
noncompetition agreement between the Company and the individual, all
existing Awards held by such Employee will terminate.
12.1.5 Other. Except as provided above in this Section 12.1, unless
-----
otherwise determined by the Committee at or after grant, if a Participant's
employment by, or business relationship with, the Company or a Subsidiary
terminates for any reason other than death, as provided above, the Award
will terminate on the earlier to occur of the
13
stated expiration date or 90 days after termination of the employment or
business relationship. If a Participant dies during the 90 day period
following the termination of the employment or business relationship, any
unexercised Award held by the Participant, or transferred by the
Participant in accordance with Article 11, shall be exercisable, to the
full extent that such Award was exercisable at the time of death, for a
period of one year after the date of death of the Participant or until the
expiration of the stated term of the Award, whichever occurs first.
12.2 Acceleration of Vesting and Extension of Exercise Period Upon
-------------------------------------------------------------
Termination.
-----------
12.2.1 Notwithstanding anything contained in this Article 12, upon
the termination of employment of a Participant, for reasons other than
those provided in Sections 12.1.3and 12.1.4, the Committee may, in its sole
discretion, accelerate the vesting of all or part of any Awards held by
such terminated Participant, or transferred by the Participant in
accordance with Article 11, so that such Awards are fully or partially
exercisable as of the date of termination, and may also extend the
permitted exercise period of such Awards for up to five years from the date
of termination, but in no event longer than the original expiration date of
such Award.
12.2.2 Except as provided in Subsection 4.2, in no event will the
continuation of the exercisability of an Award beyond the date of
termination of employment allow the Eligible Employee, or his or her
beneficiaries or heirs, to accrue additional rights under the Plan, or to
purchase more Shares through the exercise of an Award than could have been
purchased on the date that employment was terminated.
ARTICLE 13
DEFERRALS
The Committee may permit recipients of Awards to defer the distribution of
all or part of any Award in accordance with such terms and conditions as the
Committee shall establish.
ARTICLE 14
TERMINATION OR AMENDMENT OF PLAN
Notwithstanding any other provisions hereof to the contrary, the Board may
assume responsibilities otherwise assigned to the Committee and may at any time,
amend, in whole or in part, any provisions of this Plan, or suspend or terminate
it entirely; provided, however, that, unless otherwise required by law, the
rights of a Participant with respect to any Awards granted prior to such
amendment, suspension or termination may not be impaired without the consent of
such Participant. No amendment shall, without shareholder approval, increase the
number of shares available under the Plan, cause the Plan or any Award granted
under the Plan to fail to meet the conditions for exclusion of application of
the $1 million deduction limitation imposed by the Section 162(m) of the Code or
cause any Incentive Stock Option to fail to qualify as an Incentive Stock Option
as defined by Section 422 of the Code.
14
ARTICLE 15
GENERAL PROVISIONS
15.1 No Right to Continued Employment or Business Relationship. Neither
---------------------------------------------------------
the establishment of the Plan nor the granting of any Award hereunder shall
confer upon any Participant any right to continue in the employ of, or in any
business relationship with, the Company or any Subsidiary, or interfere in any
way with the right of the Company or any Subsidiary to terminate such employment
or business relationship at any time.
15.2 Other Plans. The value of, or income arising from, any Awards issued
-----------
under this Plan shall not be treated as compensation for purposes of any
pension, profit sharing, life insurance, disability or other retirement or
welfare benefit plan now maintained or hereafter adopted by the Company or any
Subsidiary, unless such plan specifically provides to the contrary.
15.3 Withholding of Taxes. The Company may deduct from any payment to be
--------------------
made pursuant to this Plan, or to otherwise require, prior to the issuance or
delivery of any Shares or the payment of any cash to a Participant, payment by
the Participant of any Federal, state, local or foreign taxes required by law to
be withheld. The Committee may permit any such withholding obligation to be
satisfied by reducing the number of Shares otherwise deliverable or by accepting
the delivery of previously owned Shares. Any fraction of a Share required to
satisfy such tax obligations shall be disregarded and the amount due shall be
paid instead in cash by the Participant.
15.4 Reimbursement of Taxes. The Committee may provide in its discretion
----------------------
that the Company may reimburse a Participant for federal, state, local and
foreign tax obligations incurred as a result of the grant or exercise of an
Award issued under this Plan.
15.5 Governing Law. This Plan and actions taken in connection with it
-------------
shall be governed by the laws of Ohio, without regard to the principles of
conflict of laws.
15.6 Liability. No employee of the Company nor member of the Committee or
---------
the Board shall be liable for any action or determination taken or made in good
faith with respect to the Plan or any Award granted hereunder and, to the
fullest extent permitted by law, all employees and members shall be indemnified
by the Company for any liability and expenses which may occur through any claim
or cause of action arising under or in connection with this Plan or any Awards
granted under this Plan.
ANNEX IV
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LENOX BANCORP, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation to
any governmental body or the public; the Corporation's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board have established; and the Corporation's auditing,
accounting and financial reporting processes generally. Consistent with this
function, the Audit Committee should encourage continuous improvement of, and
should foster adherence to, the company's policies, procedures and practices at
all levels. The Audit Committee shall:
Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system.
Review and appraise the audit efforts of the Corporation's independent
public accountants and any internal auditing efforts.
Provide an open avenue of communication among the independent public
accountants, financial and senior management, any internal auditing
efforts, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors. All
members of the Committee shall have a working familiarity with basic finance and
accounting practices. At least one member of the Committee shall have had past
employment experience in finance or accounting or a professional certification
in accounting or comparable experience or background which results in that
individual possessing financial sophistication.
The members of the Committee shall be appointed by the Board at the annual
meeting of the Board and serve until their successors shall be duly appointed
and qualified. Unless a Chair is appointed by the Board, the members of the
Committee shall designate a Chair.
2
III. MEETINGS
The Committee shall meet at least four times annually, and more frequently
as circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, the director or
coordinator of any internal auditing efforts, if applicable, or the chief
financial officer and the independent public accountants in separate executive
sessions to discuss any matters that the Committee or any of these groups
believe should be discussed independently. In addition, the Committee or at
least its Chair should meet with the independent accountants and management on a
periodic basis to review the Corporation's financials. The Committee shall
maintain minutes of its meetings and activities.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
- ------------------------
1. Review and update this Charter annually.
2. Review the organization's annual financial statements, press releases, and
any reports or other financial information submitted to any governmental
body, or the public, including any certification, report, opinion, or
review rendered by the independent accountants.
Independent Accountants
- -----------------------
3. Recommend to the Board of Directors the selection of the independent public
accountants, consider independence and effectiveness, and approve the fees
and other compensation to be paid to the independent public accountants. On
an annual basis, the Committee should ensure the receipt from the
independent public accountants of their formal written statement
delineating all relationships between them and the Corporation. The
Committee shall, as appropriate, also discuss with the auditor any
undisclosed relationships or non-accounting services rendered to the
Corporation or any of its affiliates that could impact the objectivity and
independence of the independent public accountants, and take, or recommend
that the Board take, appropriate action to oversee the independence of the
independent accountants.
4. Evaluate the performance of the independent public accountants and approve
any proposed discharge and hiring of the independent public accountants
when circumstances warrant.
5. Periodically consult with the independent public accountants out of the
presence of management about internal controls, the fullness and accuracy
of the organization's financial statements, and the adequacy/capability of
financial staff given the business and changes in operations.
3
6. Review with the independent public accountants and the coordinator of any
internal audit efforts the coordination of audit work to assure
completeness of coverage, reduction of redundant efforts, and the effective
use of audit resources.
Financial Reporting Processes
- -----------------------------
7. Meet with the independent accountants and the appropriate financial staff
of the Corporation to plan the scope of each audit prior to commencement of
each audit process.
8. In consultation with the independent public accountants and any internal
auditors, review the integrity of the organization's financial reporting
processes, both internal and external.
9. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in
its financial reporting.
10. Consider and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practices as suggested by the
independent accountants, management, or any internal auditing efforts as
developed by the Committee. The Corporation's President shall have the
authority to implement such changes approved by the Audit Committee.
11. Continue the process of reporting to the Audit Committee by each of
management and the independent public 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.
Process Improvement
- -------------------
12. Following completion of the annual audit, review separately with each of
management and the independent public accountants any significant
difficulties encountered during the course of the audit, including any
restrictions on the scope of work or access to required information.
13. Review and appraise any significant disagreement among management and the
independent public accountants in connection with the preparation of the
financial statements.
14. Consider and review with the independent public accountant and the
coordinator of any internal audit efforts:
(a) The adequacy of the Corporation's internal controls including
computerized information system controls and security.
4
(b) Related findings and recommendations of the independent public
accountant and the coordinator of any internal audit efforts together
with management's responses.
15. Review with the independent public accountants, the coordinator of any
internal auditing efforts and management the extent to which changes or
improvements in financial or accounting practices have been implemented.
This review should be conducted at an appropriate time after implementation
of changes or improvements, as decided by the Committee.
16. Review specifically all repeat audit points and recommendations not
implemented from prior audits.
Ethical and Legal Compliance
- ----------------------------
17. Establish, review and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce this Code.
18. Review management's monitoring of the Corporation's compliance with the
organization's Ethical Code, and ensure that management has the proper
review system in place to ensure that the Corporation's financial
statements, reports and other financial information disseminated to
governmental organizations, and the public satisfy legal requirements.
19. Review activities, organizational structure, and qualifications of any
audit efforts.
20. Review, in cases in which such review is appropriate, with the
organization's counsel, legal compliance matters including, without
limitation, corporate securities trading and foreign corrupt practices act
policies.
21. Review with the organization's counsel any legal or regulatory matter that
could have a significant impact on the organization's financial statements.
22. Perform any other activities consistent with this Charter, the
Corporation's Amended and Restated Code of Regulations and governing law,
as the Committee or the Board deems necessary or appropriate.
LENOX BANCORP, INC.
PROXY The undersigned hereby appoints JOHN C. LAME and JANE SCHANK, or
FOR either of them, proxies of the undersigned, each with the power of
ANNUAL substitution, to vote all shares of common stock which the undersigned
METTING would be entitled to vote on the matters specified below and in their
discretion with respect to such other business as may properly come
before the Annual Meeting of Shareholders of Lenox Bancorp, Inc. to be
held at 10:00 a.m. on Friday, April 26, 2002 at the Quality Inn Hotel
located at 4747 Montgomery Road, Cincinnati, Ohio or any postponement
or adjournment of such Annual Meeting.
THE EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE FOLLOWING PROPOSALS:
1. Approval of Amended Articles of Incorporation, except as to proposals 1.1
through 1.5 below for which a separate vote is provided below:
FOR _______ AGAINST _______ ABSTAIN _______
1.1 Increasing authorized shares of common stock from 2,000,000 shares to
4,500,000 shares;
FOR _______ AGAINST _______ ABSTAIN _______
1.2 Authorizing 500,000 shares of preferred stock;
FOR _______ AGAINST _______ ABSTAIN _______
1.3 Opting out of Ohio's Control Share Acquisition Act;
FOR _______ AGAINST _______ ABSTAIN________
1.4 Increasing the threshold percentage of shareholder votes required for
certain actions to 60% of Lenox's voting power from a majority of such
voting power; and
FOR _______ AGAINST _______ ABSTAIN _______
1.5 Eliminating a requirement that 75% of Lenox's voting power is required
for certain actions against which the board of directors recommends.
FOR _______ AGAINST _______ ABSTAIN _______
2. Approval of Amended and Restated Code of Regulations, except as to
proposals 2.1 through 2.3 below for which a separate vote is provided
below:
FOR _______ AGAINST _______ ABSTAIN _______
2.1 Eliminating the classification of the board into three classes;
FOR _______ AGAINST _______ ABSTAIN _______
2.2 Allowing for communications to shareholders and directors to be made
electronically; and
FOR _______ AGAINST _______ ABSTAIN _______
2.3 Expanding indemnification of officers and directors.
FOR _______ AGAINST _______ ABSTAIN _______
3. If the proposal in Item 2.1 is approved by shareholders,
3.1 set the number of directors to be elected at five.
FOR _______ AGAINST _______ ABSTAIN _______
3.2 elect as directors the five nominees listed below:
FOR _______ WITHHOLD AUTHORITY _______
JOHN C. LAME, GARY P. KREIDER, GAIL R. BEHYMER, JANE SCHANK AND GUY
E. NAPIER.
WRITE THE NAME OF ANY NOMINEE(S) FOR WHOM AUTHORITY TO VOTE IS
WITHHELD_________________________________________
4. If the proposal in Item 2.1 is not approved by the shareholders, to elect
as directors the three nominees listed below, each for terms expiring in
2005.
FOR _______ WITHHOLD AUTHORITY _______
GAIL R. BEHYMER, JANE SCHANK and STEPHEN N. ROMANELLI
WRITE THE NAME OF ANY NOMINEE(S) FOR WHOM AUTHORITY TO VOTE IS
WITHHELD_________________________________________
5. Approval of 2002 Stock Option and Incentive Plan.
FOR _______ AGAINST _______ ABSTAIN _______
6. Ratification of appointment of Baird, Kurtz & Dobson LLP as independent
public accountants for fiscal 2002.
FOR _______ AGAINST_______ ABSTAIN ______
THIS PROXY WILL BE VOTED AS RECOMMENDED BY THE EXECUTIVE COMMITTEE OF
THE BOARD OF DIRECTORS UNLESS A CONTRARY CHOICE IS SPECIFIED.
(This proxy is continued and is to be signed on the reverse side)
Date ________________, 2002
_____________________________
_____________________________
Important: Please sign exactly as name appears hereon indicating, where proper,
official position or representative capacity. In the case of joint holders, all
should sign.
THIS PROXY IS SOLICITED ON BEHALF OF THE EXECUTIVE COMMITTEE OF THE BOARD OF
DIRECTORS