UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
GLB Bancorp, Inc
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
5) Total fee paid:
---------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------------
4) Date Filed:
---------------------------------------------------------------------
March 17, 2003
Dear Shareholders:
You are cordially invited to attend the 2003 Annual Meeting of
Shareholders of GLB Bancorp, Inc. The meeting will be held on Tuesday, April 22,
2003, 10:30 a.m. local time at the Holiday Inn Express Hotel & Suites LaMalfa
Centre, 5783 Heisley Road, Mentor, Ohio.
Your vote is important, regardless of the number of shares you own.
PLEASE READ THE ENCLOSED PROXY STATEMENT AND THEN COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING POSTAGE- PAID RETURN ENVELOPE
AS PROMPTLY AS POSSIBLE. This will not prevent you from voting in person, but it
will ensure that your vote is counted.
Thank you for your attention to this important matter.
Very truly yours,
Richard T. Flenner, Jr.
President and Chief Executive Officer
1
GLB BANCORP, INC.
7001 CENTER STREET
MENTOR, OHIO 44060
(440) 974-0000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders of GLB
Bancorp, Inc. will be held at the Holiday Inn Express Hotel & Suites LaMalfa
Centre, 5783 Heisley Road, Mentor, Ohio on April 22, 2003 at 10:30 a.m. local
time.
A proxy and a proxy statement for the 2003 Annual Meeting are enclosed.
The purpose of the annual meeting is to transact such business as may properly
come before the meeting or any adjournment thereof, and for the specific purpose
of considering and acting upon --
1) election of 11 directors to serve until the 2004 Annual
Meeting of Shareholders or until their successors are elected
and qualified,
2) a proposal to amend GLB Bancorp, Inc.'s 1998 Stock Option and
Incentive Plan for the purpose of increasing by 51,000 the
number of shares authorized for issuance under the plan, and
3) ratification of the board's appointment of KPMG LLP as
independent auditor for the fiscal year ending December 31,
2003.
The Board of Directors is not aware of any other business to be
conducted at the annual meeting. Any action may be taken on the foregoing
proposals at the 2003 Annual Meeting on the date specified, or on any date or
dates to which the annual meeting may be adjourned or postponed. The record date
for determining shareholders entitled to notice of and to vote at the meeting is
March 4, 2003.
We request that you complete, date, and sign the enclosed proxy, which
is solicited by the Board of Directors, and return it promptly in the
postage-paid return envelope provided. Please sign your name on the proxy
exactly as your name appears.
By Order of the Board of Directors,
President and Chief Executive Officer
Mentor, Ohio
March 17, 2003
IMPORTANT: PLEASE VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE REGARDLESS OF WHETHER YOU PLAN TO
ATTEND THE ANNUAL MEETING.
2
GLB BANCORP, INC.
7001 CENTER STREET
MENTOR, OHIO 44060
(440) 974-0000
PROXY STATEMENT
The board of directors of GLB Bancorp, Inc., an Ohio corporation, is
soliciting your proxy for use at the 2003 Annual Meeting of Shareholders, and at
any adjournment or postponement thereof. The annual meeting will be held on
Tuesday, April 22, 2003 at 10:30 a.m., local time, at the Holiday Inn Express
Hotel & Suites LaMalfa Centre, 5783 Heisley Road, Mentor, Ohio. The accompanying
notice and this proxy statement are first being mailed to shareholders on or
about March 17, 2003.
PURPOSE OF THE MEETING
At the annual meeting you will be asked to elect 11 directors to serve
until the 2004 annual meeting or until their successors are elected and
qualified. We will also present to shareholders for their consideration and vote
a proposal to amend GLB's 1998 Stock Option and Incentive Plan for the purpose
of increasing the number of shares authorized for issuance under the plan.
Finally, we will ask shareholders to ratify the appointment of GLB's independent
auditor.
VOTING AND REVOCATION OF PROXIES
Proxies solicited by this proxy statement may be used at the annual
meeting only. We will vote proxies according to the directions given. If you
give no voting instructions, we will vote your proxy in favor of the proposals
discussed in this proxy statement.
Shareholders who execute proxies retain the right to revoke them at any
time before completion of the annual meeting, but revocation will not affect a
vote previously taken. Proxies may be revoked by --
o attending the annual meeting and advising GLB's Secretary that
you intend to vote in person (but attendance at the annual
meeting will not constitute revocation of a proxy),
o giving a subsequent proxy relating to the same shares, or
o filing with the Secretary at or before the annual meeting a
written notice of revocation bearing a later date than the
proxy.
If you decide to revoke your proxy, you should give written notice of
revocation to Ms. Cheryl Jean Mihitsch, Acting Secretary, GLB Bancorp, Inc.,
7001 Center Street, Mentor, Ohio 44060. Unless revoked, the shares represented
by your proxy will be voted at the annual meeting.
RECORD DATE AND OUTSTANDING SHARES; QUORUM
If you were a shareholder as of the close of business on March 4, 2003,
you are entitled to vote at the annual meeting. As of March 4, 2003 there were
2,347,925 shares of GLB common stock issued and outstanding. When present in
person or by proxy at the annual meeting, the holders of a majority of the
shares of GLB common stock issued and outstanding and entitled to vote will
constitute a quorum for the conduct of business at the meeting.
VOTE REQUIRED
Directors are elected by a plurality vote of shareholders present in
person or by proxy and constituting a quorum, meaning the nominees receiving the
greatest numbers of votes will be elected. Shareholders have one vote
1
for each share held. Shareholders are not entitled to cumulate their votes in
the election or removal of directors or otherwise. Approval of the proposal to
increase the number of shares authorized for issuance under the 1998 Stock
Option and Incentive Plan requires the affirmative vote of a majority of the
shares present in person or by proxy at the meeting.
ABSTENTIONS AND BROKER NON-VOTES
Abstentions and broker non-votes are counted for purposes of
establishing that a quorum is present. Abstention may be specified on any
proposal except election of directors, although you may withhold authority to
vote for any or all director nominees. Rules of self-regulatory organizations of
which brokers are members -- such as the New York Stock Exchange and the other
major stock exchanges -- prevent brokers from voting customers' shares held in
street name unless the customer gives specific voting instructions to the broker
or unless the proposal to be voted on is a routine proposal. The self-regulatory
organizations' rules generally allow brokers the discretion to vote customers'
shares on routine matters only, such as election of directors. Proposals to
amend or adopt bylaws or articles of incorporation, proposals to adopt stock
compensation plans, and proposals to increase shares available for issuance
under a plan by more than 5% of shares outstanding are common examples of
non-routine proposals. Brokers generally are not permitted by rules of their
self-regulatory organizations to vote on non-routine proposals unless the
customer gives specific voting instructions. If a broker signs and submits a
proxy without indicating how the proxy is to be voted on a non-routine proposal,
the proxy may be considered a so-called "broker non-vote" insofar as that
non-routine proposal is concerned.
Because directors are elected by a plurality of votes actually cast,
abstentions (or withholding authority to vote for a nominee) and broker
non-votes have no effect on the election of directors. In contrast, abstentions
and broker non-votes will have the same effect as votes against the proposal to
increase the number of shares issuable under the 1998 Stock Option and Incentive
Plan. Article I, section 6 of GLB's Code of Regulations provides that "The act
of the holders of record of a majority of the issued and outstanding shares of
the Corporation present at any meeting and entitled to vote thereat, at which a
quorum is present, shall be the act of the shareholders of the Corporation
unless otherwise provided by law, the Articles of Incorporation or these
Regulations." Although shares abstaining are not counted as votes cast, they are
nevertheless entitled to vote. Likewise, GLB is taking the position that shares
represented by broker non-votes are similarly entitled to vote, although they
too are not counted as votes cast. Therefore, the proposal to increase the
number of shares authorized for issuance under the 1998 Stock Option and
Incentive Plan will not be approved unless a majority of shares present in
person or by proxy and representing a quorum vote in favor of the proposal.
Accordingly, abstentions and broker non-votes will have the same effect as votes
against amendment of the 1998 Stock Option and Incentive Plan to increase the
number of shares issuable.
VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table shows the beneficial ownership of GLB common stock
as of March 4, 2003 by --
o each person known by GLB to own beneficially more than 5% of
the outstanding common stock,
o each director nominee and each executive officer identified in
the Summary Compensation Table, and
o all directors and executive officers as a group.
For purposes of the table, a person is considered to beneficially own
any shares over which he or she exercises sole or shared voting or investment
power or of which he or she has the right to acquire beneficial ownership within
60 days. Unless otherwise indicated, voting power and investment power are
exercised solely by the person named, or voting power and investment power are
shared with members of his or her household. Adjusted for the 10% stock dividend
paid on September 17, 2002, shares deemed to be outstanding for purposes of
computing "Percent of stock" are calculated on the basis of 2,347,925 shares
outstanding, plus the number of shares the person has the right to acquire
within 60 days.
2
SHARES SHARES ACQUIRABLE
BENEFICIALLY WITHIN 60 DAYS BY PERCENT
NAME AND ADDRESS OF 5% BENEFICIAL OWNER OWNED EXERCISE OF OPTIONS (6) OF STOCK
- ----------------------------------------------------------------- ---------------- ---------------------- ---------
Umberto P. Fedeli................................................ 204,270 (1) 88 8.7 %
P.O. Box 318003, Independence, Ohio 44131
Steven A. Calabrese, et al....................................... 158,249 (2) -- 6.7 %
1110 Euclid Avenue, Suite 300, Cleveland, Ohio 44115
Jerome T. Osborne, Chairman of the Board......................... 224,530 (3) 220 9.6 %
7954 Reynolds Road, Mentor, Ohio 44060
Richard M. Osborne, Vice Chairman................................ 459,272 (4) (5) 220 19.6 %
8500 Station Street, Suite 113, Mentor, Ohio 44060
SHARES SHARES ACQUIRABLE
BENEFICIALLY WITHIN 60 DAYS BY PERCENT
DIRECTORS, NOMINEES AND NAMED EXECUTIVE OFFICERS OWNED EXERCISE OF OPTIONS (6) OF STOCK
- ----------------------------------------------------------------- ---------------- ---------------------- ---------
Umberto P. Fedeli................................................ 204,270 (1) 88 8.7 %
Richard T. Flenner, Jr........................................... 1,664 11,550 (7)
James V. Fryan................................................... 33,000 220 1.4 %
George C. Lott................................................... 330 220 (7)
George X. Mechir................................................. 1,650 220 (7)
Jerome T. Osborne................................................ 224,530 (3) 220 9.6 %
Richard M. Osborne............................................... 459,272 (4) (5) 220 19.6 %
Edward R. Pike................................................... 49,500 (8) 220 2.1 %
Thomas J. Smith.................................................. 2,420 220 (7)
Joseph T. Svete.................................................. 20,900 220 (7)
Thomas E. Wheeler................................................ 33,000 220 1.4 %
---------------- ---------------------- ---------
All directors, nominees and executive officers as a group (13 people)1,031,966 (4) (9) 16,698 (9) 44.4 %
================ ====================== =========
(1) Derived from the Schedule 13D filed by Mr. Fedeli with the Securities
and Exchange Commission on November 18, 1999, as amended.
(2) Derived from the Schedule 13G filed with the Securities and Exchange
Commission on February 11, 2000 by Steven A. Calabrese, CCAG Limited,
RC Enterprises I, RC Enterprises II, David S. Calabrese, Eric M.
Calabrese, and the AJC Marital Trust, as amended.
(3) Excludes 3,927 shares held by Mr. Jerome T. Osborne's spouse. Mr.
Osborne disclaims beneficial ownership of those shares.
(4) Includes 29,920 shares over which Richard M. Osborne shares voting
power with six other trustees of the Georgeanne S. Osborne Family
Memorial Trust. Mr. Osborne disclaims beneficial ownership of the
shares held by the Georgeanne S. Osborne Family Memorial Trust.
(5) Also includes 380,595 shares over which Richard M. Osborne has sole
voting power as trustee of the Richard M. Osborne Trust, and 48,757
shares over which Mr. Osborne has sole voting power as manager of
Turkey Vulture Fund XIII, Ltd., according to the amended Schedule 13D
filed by Richard M. Osborne, the Richard M. Osborne Trust, and Turkey
Vulture Fund XIII, Ltd. with the Securities and Exchange Commission on
March 28, 2001. The Richard M. Osborne Trust has pledged 362,775 shares
as security for borrowings. Failure to satisfy debt obligations secured
by a pledge of GLB stock could result in adverse consequences to GLB's
stock price because the lender's sale of GLB stock might not occur
under orderly market conditions. A lender's exercise of its security
interest could also result in a change in control of GLB.
(6) Under GLB's 1998 Stock Option and Incentive Plan, options to acquire
220 shares of GLB common stock were granted effective February 17, 1998
to each director of GLB who was not also an officer or employee of GLB
or Great Lakes Bank. The options vested and became exercisable in five
equal annual installments. The options have a term of ten years.
(7) Does not exceed 1%.
(8) Includes 41,250 shares over which Mr. Pike has the right to exercise
voting and investment power under a Limited Durable Power of Attorney
granted to him on November 3, 1994 by each of his five brothers and
3
sisters, each of whom owns 8,250 shares. The grantors of the Limited
Durable Powers of Attorney retain the right to take any action Edward
R. Pike as attorney in fact is authorized to take under the Limited
Durable Power of Attorney.
(9) Shares beneficially owned and options held by all directors, nominees
and executive officers as a group also include shares held by executive
officer Cheryl Jean Mihitsch, and options held by Ms. Mihitsch to
acquire common stock, of which 3,080 are exercisable.
In the aggregate, Directors Jerome T. and Richard M. Osborne, their
affiliates, and members of their immediate family own, control, and hold with
power to vote more than 25% of GLB's common stock. Under the federal Change in
Bank Control Act and Regulation Y of the Board of Governors of the Federal
Reserve System, approval of the Federal Reserve is necessary to own, control, or
hold with power to vote 25% or more of a bank holding company. For purposes of
the Change in Bank Control Act and Regulation Y, a person is presumed to be
acting in concert with and to own shares held by members of his immediate
family. Regulation Y defines "immediate family" to include a person's parents,
grandparents, siblings, children, grandchildren, relations by marriage, and
others. Control of a bank holding company is also presumed to exist, and Federal
Reserve approval under the Change in Bank Control Act and Regulation Y may also
be necessary, if a person owns or seeks to acquire 10% or more of a bank holding
company's shares. By letter dated May 12, 1998 the Federal Reserve Bank of
Cleveland approved Director Jerome T. Osborne's filing under the Change in Bank
Control Act and Regulation Y, which was submitted to the Federal Reserve Bank in
anticipation of GLB's initial public offering of common stock completed later in
May 1998 and registration of GLB's common stock under the Securities Exchange
Act of 1934. The Federal Reserve Bank's May 12, 1998 approval allowed Jerome T.
Osborne to retain ownership of up to 21.23% of GLB's shares, notwithstanding
that his son, Director Richard M. Osborne, would retain ownership and control of
a larger percentage of shares after completion of the initial public offering.
FIRST PROPOSAL -- ELECTION OF DIRECTORS
Article III, Section 1 of GLB's regulations provides that the board may
consist of no fewer than five and no more than twelve directors, the precise
number being fixed or changed from time to time by majority vote of
shareholders. The number of directors is currently fixed at eleven. At the
annual meeting, the individuals identified below will be nominated to serve as
directors for terms ending at the 2004 annual meeting of shareholders, or until
their successors are elected and qualified. The board of GLB and the board of
Great Lakes Bank are comprised of the same individuals, serving identical terms
as directors of GLB and the bank.
DIRECTOR
NOMINEES AGE SINCE PRINCIPAL OCCUPATION IN THE LAST 5 YEARS
- --------------------------------- ------- ---------- -------------------------------------------------------------
Umberto P. Fedeli................ 42 2001 Umberto P. Fedeli is President and Chief Executive Office
of The Fedeli Group, an insurance brokerage and consulting
firm in Independence, Ohio. Mr. Fedeli was appointed a
director by the board at the annual meeting in 2001
Richard T. Flenner, Jr........... 60 1994 Richard T. Flenner has more than 35 years of experience in
President and Chief Executive the banking industry in northeastern Ohio. Mr. Flenner
Officer joined Great Lakes Bank in 1994 after its succession to the
business of Great Lakes Commerce Bank. Mr. Flenner is a
member of Leadership Lake County and a board member of
the Lake County Hospital Foundation
James V. Fryan................... 65 1995 James V. Fryan is the owner and operator of the "Goodtime
III" dinner and special occasion cruise ship operating out of
Cleveland, Ohio
4
DIRECTOR
NOMINEES AGE SINCE PRINCIPAL OCCUPATION IN THE LAST 5 YEARS
- --------------------------------- ------- ---------- -------------------------------------------------------------
George C. Lott................... 69 1994 Following an approximately 35-year career in banking,
George C. Lott retired in 1995 as Executive Vice President
of Great Lakes Bank. He had served as a director, and since
1987 as Senior Executive Vice President, of Great Lakes
Commerce Bank
George X. Mechir................. 85 1994 George X. Mechir's career in banking began in 1962 with
Great Lakes Commerce Bank, where he served as President
and Chief Executive Officer at the time of his retirement.
Mr. Mechir had also been a director of Great Lakes
Commerce Bank. Mr. Mechir is an attorney
Jerome T. Osborne................ 80 1994 Jerome T. Osborne, Sr. is the founder and President of
Osborne, Inc., a concrete company headquartered in
Mentor, Ohio. Richard M. Osborne, Vice Chairman, is
Jerome T. Osborne's son. Although Jerome T. Osborne, Sr.
is Chairman of the Board and Richard M. Osborne is Vice
Chairman of the Board, neither of them serves as an officer
or receives any compensation therefor
Richard M. Osborne............... 57 1994 Richard M. Osborne is President and Chief Executive
Officer of OsAir, Inc., Mentor, Ohio, a company he founded
in 1963. OsAir is a manufacturer of industrial gases for
pipeline delivery and a real estate property developer.
Jerome T. Osborne, Sr., Chairman of the Board, is Richard
M. Osborne's father. Richard M. Osborne is a member of
the Independent Oxygen Manufacturers Association and the
National Welders' Supply Association. He also serves as
director of one other company whose securities are
registered under the Securities Exchange Act of 1934. See
"--Additional Information Concerning Directors," below
Edward R. Pike, Jr............... 44 1994 Edward R. Pike is the President of Ed Pike Lincoln-
Mercury, an automobile dealership located in Mentor, Ohio
Thomas J. Smith.................. 58 1994 Thomas J. Smith is a director and the President and Chief
Operating Officer of Liberty Self-Stor, Inc. Mr. Smith has
more than 20 years of direct banking experience. From July
of 1994 to May of 1995, he served as Treasurer of Great
Lakes Bank. Mr. Smith is a Certified Public Accountant
Joseph T. Svete.................. 66 1994 Joseph T. Svete is an attorney in private practice and
principal of the law firm Svete, McGee and Carrabine Co.,
LPA in Chardon, Ohio. Mr. Svete is an investor in Turkey
Vulture Fund XIII, Ltd., an investment fund managed by
Director Richard M. Osborne
5
DIRECTOR
NOMINEES AGE SINCE PRINCIPAL OCCUPATION IN THE LAST 5 YEARS
- --------------------------------- ------- ---------- -------------------------------------------------------------
Thomas E. Wheeler................ 56 1994 Thomas E. Wheeler is President of Component Repair
Technologies, Inc., an aircraft engine company located in
Mentor, Ohio. Mr. Wheeler is an investor in Turkey
Vulture Fund XIII, Ltd., an investment fund managed by
Director Richard M. Osborne
ADDITIONAL INFORMATION CONCERNING DIRECTORS
Service as Director with Other Public Companies. Except as may be noted
in this proxy statement, there are no family relationships among any of the
directors or executive officers, and none of the directors or executive officers
of GLB serves as a director of (1) a company with a class of securities
registered under, or which is subject to the periodic reporting requirements of,
the Securities Exchange Act of 1934 or (2) any investment company registered
under the Investment Company Act of 1940. None of the directors or executive
officers of GLB has been involved in any legal proceedings concerning
bankruptcy, either individually or in respect of any businesses with which they
have been involved, nor have any of such persons been convicted of any crime,
excluding traffic violations and similar minor offenses.
Mr. Richard M. Osborne has been an active investor in numerous other
companies, including real estate investment trusts, an energy company, a
convenience store chain and franchisor, an insurance firm and, from time to
time, small and mid-sized bank and thrift institutions in Ohio and elsewhere,
occasionally acquiring substantial stakes in these companies. As a result of
these investments, Mr. Osborne is also a director, Chairman of the Board, and
Chief Executive Officer of Liberty Self-Stor, Inc., a Maryland corporation and
successor to Meridian Point Realty Trust '83, a real estate investment trust.
Director Thomas J. Smith is also a director and the President and Chief
Operating Officer of Liberty Self-Stor, Inc. Mr. Steven A Calabrese, an owner of
more than 5% of GLB's stock, also serves as a director of Liberty Self-Stor,
Inc. Located in Mentor, Ohio, Liberty Self-Stor, Inc. is a self-managed real
estate investment trust that manages, acquires, develops, expands, and operates
self-storage facilities. Liberty Self-Stor, Inc.'s common stock is registered
under the Securities Exchange Act of 1934. Many of Mr. Osborne's investments are
undertaken through entities, including Turkey Vulture Fund XIII, Ltd., an Ohio
limited liability company whose principal business is to acquire, hold, sell,
and otherwise invest in all types of securities and other instruments. Mr.
Richard M. Osborne is Turkey Vulture Fund XIII, Ltd.'s sole manager and majority
owner. As sole manager of Turkey Vulture Fund XIII, Ltd., Mr. Osborne has
exclusive voting power and investment power over shares held by Turkey Vulture
Fund XIII, Ltd.
Director Richard M. Osborne, Director Thomas J. Smith, and Mr. Steven
A. Calabrese have been proposed by a committee consisting of Mr. Osborne and
another individual for election to the board of directors of Dairy Mart
Convenience Stores, Inc. Known as the "Committee of Dissatisfied Dairy Mart
Stockholders," the committee filed preliminary proxy soliciting material with
the Securities and Exchange Commission on December 21, 2001, identifying seven
individuals, including Directors Osborne and Smith and Mr. Calabrese, as
proposed nominees for election to Dairy Mart's board. According to an amended
Schedule 13D beneficial ownership report filed on January 7, 2002 with the
Securities and Exchange Commission by the committee, by each of the seven
director nominees, and by Turkey Vulture Fund XIII, Ltd., Director Osborne and
two other individuals jointly filed a lawsuit in Delaware on December 20, 2001
to compel Dairy Mart to hold a meeting of its stockholders, at which the
committee would nominate its seven nominees for election to Dairy Mart's board.
According to Dairy Mart's Form 10-K Annual Report for its Fiscal Year Ended
February 2, 2002, on September 24, 2001 Dairy Mart and its subsidiaries filed in
the United States Bankruptcy Court for the Southern District of New York
voluntary petitions for protection under Chapter 11 of the U.S. Bankruptcy Code,
and as a consequence all pending litigation against Dairy Mart is stayed
automatically by section 362 of the Bankruptcy Code.
Ownership of More than 5% of Another Public Company. GLB owns
approximately 137,141 shares of the common stock of LNB Bancorp, Inc., an Ohio
corporation and bank holding company whose securities are
6
registered under the Securities Exchange Act of 1934. Director Richard M.
Osborne owns approximately 129,427 shares through a trust of which he is sole
trustee. Based on the number of outstanding shares reported in LNB Bancorp's
Form 10-Q Quarterly Report for the quarter ended September 30, 2002, GLB and the
trust together own 6.1% of the 4,401,032 shares of LNB Bancorp, Inc. common
stock outstanding as of November 13, 2002. They and Turkey Vulture Fund XIII,
Ltd. jointly filed a Schedule 13D report of beneficial ownership of LNB Bancorp,
Inc.'s shares with the Securities and Exchange Commission, last amended by
Amendment No. 2 filed on June 20, 2002. Turkey Vulture Fund XIII, Ltd. declared
in the Schedule 13D filing that, "[t]he Fund believes that there exists
significant inherent value in [LNB Bancorp, Inc.] that remains unrealized by
current management. To maximize the value of shareholders' investment in LNB,
the Fund believes that the Board of Directors of LNB should retain an
independent investment banking firm for the purpose of analyzing and reporting
to the Board of Directors on strategic alternatives that may be appropriate in
order to maximize the value of LNB's common stock. Such alternatives may
include, but are not limited to, the sale of all or substantially all of LNB's
assets or a merger or other business combination of LNB."
Availability of Electronic Filings with the SEC. The Securities and
Exchange Commission maintains an Internet web site containing reports, proxy and
information statements and other information regarding issuers that file
electronically with the Securities and Exchange Commission. The address of that
site is http://www.sec.gov. This proxy statement is available on the SEC's web
site. The Schedule 13D filings referred to above, and other filings with the
Securities and Exchange Commission relating to or made by GLB, Liberty
Self-Stor, Inc., LNB Bancorp, Inc., Dairy Mart, and other companies whose
securities are registered under the Securities Exchange Act of 1934 are also
available on the Securities and Exchange Commission's web site.
Litigation. Great Lakes Bank is the defendant in National Fuel
Resources, Inc. v. Great Lakes Bank, a civil action filed in 2001 in the United
States District Court for the Northern District of Ohio (Case No. 1:01 CV2136).
The plaintiff alleges that Great Lakes Bank wrongfully dishonored a letter of
credit, which was issued on August 16, 2000 in the amount of $316,800 for the
benefit of National Fuel Resources, Inc. Great Lakes Bank issued the letter of
credit on behalf and at the request of Lightning Oil Co., Ltd., a company owned
and controlled by Director Richard M. Osborne. When National Fuel Resources,
Inc. attempted in August 2001 to draw upon the letter of credit, Great Lakes
Bank was instructed by Lightning Oil Co., Ltd.'s lawyer to dishonor the letter
of credit because Lightning Oil Co., Ltd. was seeking civil damages against
National Fuel Resources, Inc. in an amount exceeding the amount of the letter of
credit, in Lightning Oil Co. Ltd. v. National Fuel Resources, Inc., Case No. CA
01-54E (United States District Court for the Western District of Pennsylvania).
Great Lakes Bank expects that the outcome of the Ohio litigation in which it has
been named defendant will be determined by the outcome of the separate
Pennsylvania litigation between Lightning Oil Co., Ltd. and National Fuel
Resources, Inc., a case in which Great Lakes Bank is not involved. The outcome
of the separate Pennsylvania litigation is likely to depend on which of
Lightning Oil Co., Ltd.'s and National Fuel Resources, Inc.'s competing
interpretations of their underlying contract will prevail. For that reason,
further proceedings in the Ohio litigation await resolution of the separate
Pennsylvania litigation. A preliminary ruling in the Pennsylvania case was made
which is consistent with Lightning Oil Co.'s interpretation of the underlying
contract. The preliminary ruling is expected to be confirmed and entered as a
Final Order in the Pennsylvania litigation by mid-2003. When the preliminary
ruling is affirmed and made final by the Pennsylvania court, the Ohio action
against Great Lakes Bank is expected to be terminated with no liability to Great
Lakes Bank.
MEETINGS OF THE BOARD AND COMMITTEES
Board Meetings. GLB's board held 12 meetings in 2002. The board of
Great Lakes Bank likewise held 12 meetings in 2002. The individuals who served
in 2002 as directors of Great Lakes Bank and GLB attended at least 75% of (1)
the total number of meetings of the board of each of GLB and Great Lakes Bank
and (2) the total number of meetings held by all committees on which he or she
served.
Except for an Audit Committee, GLB's board has no board committees. The
members of Great Lakes Bank's audit committee serve also on the Audit Committee
of GLB's board. Neither GLB's nor Great Lakes Bank's board has a nominating
committee. Nominations for director are made by GLB's board. Under Article II,
Section 3
7
of GLB's regulations, shareholders are entitled to submit nominations for
director by following specified procedures. Among other things, these procedures
require that the shareholder deliver to GLB's Secretary a written notice with
the name, age, and business and residence address of each nominee, the nominee's
principal occupation, and the number of GLB shares he or she beneficially owns.
The written consent of the nominee to serve as a director must also be provided
by the shareholder making the nomination. The information must be provided to
the Secretary at least 30 days before the meeting called for the purpose of
electing directors. A nomination made by a shareholder who does not comply with
these procedures will be disregarded.
Compensation Committee. The bank's Compensation Committee, which is
comprised of Mr. Richard M. Osborne as Chairman and Directors Edward R. Pike and
Thomas J. Smith, reviews the performance of managers, employees, and officers
and recommends appropriate salaries, incentives, and benefits. The Compensation
Committee held one meeting in 2002.
Audit Committee. Under Article IV, Section 2 of GLB's regulations, the
Audit Committee must consist of at least three directors who are not also
officers or employees of GLB. The Audit Committee is required by regulations
Section 2 to (a) examine or superintend the examination or audit of GLB's
assets, liabilities, and results of operations at least once each year,
reporting the results to the board, and (b) recommend the selection of
independent certified public accountants to conduct the annual financial
examination or audit. The Audit Committee held four meetings in 2002.
At the end of 1999 the National Association of Securities Dealers, Inc.
amended its rules governing qualification of securities for trading on the
Nasdaq National Market and the Nasdaq SmallCap Market, on which GLB's common
stock trades. The NASD's amended rules provide that every company whose shares
trade on Nasdaq must have an audit committee consisting solely of independent
directors. The audit committee must have at least three members, and it must act
according to a written charter adopted by the company. At least one member of
the audit committee must have employment experience in finance or accounting, or
professional certification in accounting, or financial sophistication derived
from comparable background and experience. The Audit Committee charter was
adopted by Great Lakes Bank's board on July 18, 2000. It too requires that the
committee have at least three members, all of whom are independent and "free
from any relationship that would interfere with the exercise of his or her
independent judgment." The charter similarly requires that each member of the
Audit Committee have a basic understanding of finance and accounting and be able
to read and understand fundamental financial statements, and that at least one
member of the committee have "accounting or related financial management
expertise." GLB believes that its Audit Committee composition satisfies the
requirements of NASD rules, GLB's regulations, and the Audit Committee charter.
The Securities and Exchange Commission and Nasdaq have very recently amended or
proposed to amend their rules governing listing standards and disclosure of
audit committee members' independence and financial expertise. Like other public
companies, GLB is in the process of analyzing these enhanced disclosure and
listing standards to determine what changes, if any, will be necessary in the
composition of the Audit Committee or in the Audit Committee charter.
Audit Committee Independence. The Audit Committee consists of Directors
George C. Lott, George X. Mechir, Joseph T. Svete, and Thomas E. Wheeler. Mr.
Svete is Chairman of the Audit Committee. Crowe, Chizek and Company LLP was
engaged on November 14, 2000 to supplement GLB's and the bank's internal
auditing function. In the opinion of GLB's board, Directors Lott, Mechir, Svete,
and Wheeler do not have a relationship with GLB or the bank that would interfere
with the exercise of independent judgment in carrying out their responsibilities
as director. None of them is or has for the past three years been an employee of
GLB or Great Lakes Bank, and no immediate family members of any of them is or
has for the past three years been an executive officer of GLB or the bank. None
of them has made payments to GLB or Great Lakes Bank in the past three years in
an amount exceeding $200,000. In the opinion of GLB's board, Directors Lott,
Mechir, Svete, and Wheeler are "independent directors," as that term is defined
in Rule 4200(a)(15) of the NASD's rules.
Audit Committee Report. The Audit Committee has submitted the following
report for inclusion in this proxy statement:
8
The Audit Committee has reviewed and discussed the audited
financial statements for the year ended December 31, 2002 and has
discussed the audited financial statements with management. The Audit
Committee has also discussed with KPMG LLP, GLB's independent
accountants, the matters required to be discussed by Statement on
Auditing Standards No. 61 (having to do with accounting methods used in
the financial statements). The Audit Committee has received the written
disclosures and the letter from KPMG LLP required by Independence
Standards Board Standard No. 1 (having to do with matters that could
affect the auditor's independence), and has discussed with KPMG LLP the
independent accountants' independence. Based on this, the Audit
Committee recommended to the board that the audited financial
statements be included in GLB's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2002 for filing with the Securities and
Exchange Commission.
Submitted by the Audit Committee
George C. Lott
George X. Mechir
Joseph T. Svete
Thomas E. Wheeler
REMUNERATION OF DIRECTORS
Directors do not receive cash compensation for their service as GLB
directors in addition to cash compensation they receive for their service as
Great Lakes Bank directors. In 2002, directors other than Richard T. Flenner,
Jr., Thomas J. Smith, and Richard M. Osborne received the sum of $250 for each
meeting of the board of Great Lakes Bank attended, and $100 for each meeting of
the Audit Committee, the Asset/Liability Committee and the Compensation
Committee attended. Directors Richard T. Flenner, Jr., Thomas J. Smith, and
Richard M. Osborne received no cash compensation for their service as directors.
Under GLB's 1998 Stock Option and Incentive Plan, options to acquire 220 shares
of GLB common stock were granted effective February 17, 1998 to each director of
GLB who was not also an officer or employee of GLB or Great Lakes Bank. The
exercise price of those options is $11.82 per share. The 1998 Stock Option and
Incentive Plan provides for an automatic grant of options on similar terms to
any other nonemployee director elected or appointed after the February 17, 1998
adoption of the 1998 Stock Option and Incentive Plan, but during the term of the
plan. Mr. Fedeli therefore received a similar option to acquire 220 shares of
GLB common stock effective upon his appointment as a director on April 24, 2001.
The exercise price is $7.27 per share.
EXECUTIVE OFFICERS OF GLB
NAME AGE PRINCIPAL OCCUPATION IN THE LAST 5 YEARS
- -------------------------- ------ --------------------------------------------------------------------------------
Richard T. Flenner, Jr. 60 See above
President and Chief
Executive Officer
Cheryl J. Mihitsch 54 Cheryl J. Mihitsch joined Great Lakes Bank in May 1995 as Controller. With
Treasurer more than 20 years of experience in banking, Ms. Mihitsch has had
responsibility for back office checking
system operations, IRA and certificate
processing, staff training for new
online computer operations, budgeting
and strategic planning, regulatory
reporting, and financial accounting and
reporting. As Treasurer of GLB, she is
GLB's principal accounting and principal
financial officer. Ms. Mihitsch was
previously President and Treasurer of
Quota International of Lake County, a
women's service organization
9
NAME AGE PRINCIPAL OCCUPATION IN THE LAST 5 YEARS
- -------------------------- ------ --------------------------------------------------------------------------------
Anthony Coniglio 53 Mr. Coniglio has worked in the banking and financial business for more than
Senior Vice President 30 years, holding various positions in retail, commercial, and mortgage
banking. Before joining Great Lakes Bank
in July 2002, Mr. Coniglio served for
more than 20 years with a major bank
headquartered in Cleveland, serving most
recently as Vice President for consumer
lending. Mr. Coniglio currently serves
on his church council and financial
committee
EXECUTIVE COMPENSATION
None of GLB's executive officers receives any cash remuneration from
GLB in addition to compensation received for service to Great Lakes Bank.
Because GLB's business is expected to consist for the foreseeable future of
acting merely as the holding company for Great Lakes Bank, GLB expects that no
separate cash compensation will be paid to officers of GLB in addition to
compensation paid to them by Great Lakes Bank.
The following table shows the annual compensation of the President and
Chief Executive Officer for services in all capacities to Great Lakes Bank for
the fiscal years ended December 31, 2002, 2001, and 2000. No other executive
officer of Great Lakes Bank received salary and bonus exceeding $100,000 in
2002.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------ ---------------------------- -------------
($) (#)
($) RESTRICTED SECURITIES ($) ($)
NAME AND ($) ($) OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY (1) BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
- ------------------------ -------- ----------- --------- -------------- ------------ ------------- ---------- -------------
Richard T. Flenner, Jr., 2002 $ 125,000 $ 2,500 (2) -- 8,250 -- $ 3,729 (3)
President and Chief 2001 $ 103,000 $ 1,500 (2) -- 5,500 -- $ 3,064
Executive Officer 2000 $ 97,000 $ 1,500 (2) -- -- -- $ 2,781
(1) Includes amounts deferred at the election of the named executive
officers under the bank's 401(k) plan.
(2) Perquisites and other personal benefits did not exceed the lesser of
$50,000 or 10% of total salary and bonus.
(3) Represents matching contributions by the bank to the officer's 401(k)
plan account.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows stock option grants in the year ended
December 31, 2002 to the individual(s) identified in the Summary Compensation
Table above.
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF TOTAL EXERCISE
SECURITIES OPTIONS GRANTED PRICE
UNDERLYING TO EMPLOYEES IN PER
NAME OPTIONS GRANTED FISCAL YEAR SHARE EXPIRATION DATE
- ------------------------ ---------------- ----------------- ----------- -----------------
Richard T. Flenner, Jr.. 8,250 53 % $ 9.091 January 15, 2012
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The table below shows the number of shares of GLB common stock acquired
in 2002 or acquirable by exercise of options by the individual(s) named in the
Summary Compensation Table. The table also indicates the extent to which such
options were exercisable at December 31, 2002, as well as the approximate value
of options based on the fair market value of the GLB common stock at December
31, 2002.
10
NUMBER OF
SHARES NUMBER OF SECURITIES
ACQUIRED ON DOLLAR VALUE UNDERLYING UNEXERCISED OPTIONS DOLLAR VALUE OF IN-THE-MONEY
EXERCISE REALIZED AT FISCAL YEAR END OPTIONS AT FISCAL YEAR END (1)
-------------- ------------- --------------------------------- --------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- -------------- ------------- ------------- ---------------- ------------- ---------------
Richard T. Flenner, Jr... 0 $ 0 8,800 15,950 $ 7,910 $ 16,815
(1) In general, a stock option is "in-the-money" when the stock's fair
market value exceeds the option exercise price. The value of
unexercised options equals the estimated fair market value of a share
acquirable by exercise of an option, less the exercise price,
multiplied by the number of shares acquirable by exercise of the
options. GLB common stock is quoted on the Nasdaq SmallCap Market under
the symbol "GLBK." Solely for purposes of the preceding table and for
no other purpose, GLB has estimated the per share market value of the
GLB common stock at December 31, 2002 as $9.50. The foregoing figure is
an estimate only. The estimate does not necessarily reflect the price
shareholders may obtain upon sale of their stock or the price at which
shares of GLB common stock may be acquired, nor should such estimate be
taken to represent management or the board of directors' estimate of
the intrinsic value or appropriate market value of the shares of GLB
common stock.
Options granted under the 1998 Stock Option and Incentive Plan
generally have terms of ten years and become exercisable in five equal annual
installments, the first 20% becoming exercisable on the first anniversary of the
date of grant. The exercise price of stock options is generally the fair market
value of GLB common stock on the date the stock option is granted. The 1998
Stock Option and Incentive Plan provides that options not yet exercisable become
exercisable in full if (a) a tender offer or exchange offer for shares of GLB
common stock is commenced or (b) shareholders of GLB approve an agreement
whereby GLB will cease to be an independent company or whereby GLB agrees to a
sale of all or substantially all of its assets.
Neither the bank nor GLB has written employment agreements with
executive officers, but GLB entered into a Change of Control Agreement on
February 3, 2003 with President and CEO Richard T. Flenner. The agreement
provides for severance compensation if two conditions are satisfied --
1) a change in control occurs, and
2) Mr. Flenner is involuntarily terminated within nine months
after the change in control or he voluntarily terminates
employment for "good reason" within nine months after the
change in control.
The severance compensation will be paid within 90 days after
termination of employment. The amount of the severance compensation is twice Mr.
Flenner's annual salary. No severance compensation is due if termination is for
cause. Likewise, no severance compensation is due if termination of employment
is a result of termination by governmental action or termination because of Mr.
Flenner's disability.
The term "change in control" can be defined in a variety of ways from
one corporation to the next and from one benefit plan to the next. Under the
severance agreements, a change in control means any of the following events
occur --
o Merger: GLB merges into or consolidates with another
corporation, or merges another corporation into GLB, with the
result in either case that less than a majority of the total
voting power of the resulting corporation immediately after
the merger or consolidation is held by persons who were GLB
shareholders immediately before the merger or consolidation,
or
o Acquisition of Significant Share Ownership: a person or group
of persons acting in concert acquires the power to vote 50% or
more of GLB's common stock, or
o Sale of Assets: GLB sells to a third party substantially all
of its assets.
11
If the executive terminates employment for "good reason" within nine
months after a change in control, he will be entitled to severance benefits just
as if he were terminated involuntarily and without cause. Under the Change of
Control Agreement, "good reason" means an adverse change in status, title,
responsibilities, or work environment, a reduction in salary or bonus
compensation, relocation to a new work location more than 20 miles from Mentor,
Ohio, or failure to continue providing to Mr. Flenner the benefits he received
before the change in control.
12
RETIREMENT PLAN INFORMATION
In late 1997 Great Lakes Bank adopted a retirement plan under Internal
Revenue Code of 1986 Section 401(k). The "GLB 401(k) Salary Reduction Plan and
Trust" provides that participants may elect to defer up to 15% of their salary
for investment in various accounts designated by the participant. Deferred
salary is invested for the account of plan participants by the administrator of
the 401(k) plan. All employees over age 21 who have at least one year of service
(of 1,000 hours or more) are participants in the 401(k), although each
participant elects whether to defer salary under the 401(k) plan. Great Lakes
Bank makes discretionary matching contributions up to 50% of participants'
contributions, but no matching contributions are made for salary deferrals
exceeding 6% of a participant's salary. Matching contributions vest ratably over
a five-year period, also becoming fully vested upon death or disability of the
participant.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Great Lakes Bank's authority to extend credit to executive officers,
directors and greater than 10% shareholders (a "principal shareholder"), as well
as entities controlled by them, is subject to sections 22(g) and 22(h) of the
Federal Reserve Act and Regulation O adopted by the Board of Governors of the
Federal Reserve System. Among other things, Regulation O demands that loans to
these insiders be made on terms substantially similar to those offered to
unaffiliated individuals, places limits on the amount of loans a bank may make
to insiders based in part on the bank's capital position, and requires that
certain approval procedures be followed for insider loans. Under section 22(h),
loans to an insider may not, when combined with all other outstanding loans to
the insider and affiliated entities, exceed the bank's loans-to-one-borrower
limit, which in general terms means 15% of capital. Section 22(h) also prohibits
loans exceeding the greater of 5% of capital or $25,000 to insiders and their
respective affiliates unless the loans are approved in advance by a majority of
the board of directors, with interested directors not participating in the
voting.
In addition, the FDIC imposed non-standard conditions as part of the
FDIC's June 14, 1994 approval of the succession of Great Lakes Bank to the
business of Great Lakes Commerce Bank. The FDIC's non-standard conditions
provide that neither Mr. Jerome T. Osborne, Sr. nor Mr. Richard M. Osborne may
o act as an executive officer or operating officer of Great
Lakes Bank,
o assume a title normally associated with executive or operating
officer status, or
o receive compensation from the bank (other than fees for
service on the board of directors, to the same extent other
directors receive such fees, and except that the bank may pay
to the chairman of the board fees for board service of up to
$10,000 per year over that paid to other directors).
The non-standard conditions also provide that Great Lakes Bank may not extend to
Richard M. Osborne or Jerome T. Osborne, Sr., to all other Osborne family
members, or to any financial interest of an Osborne family member, direct or
indirect credit representing, in the aggregate, more than 25.0% of tier 1
capital. The FDIC agreed in 2002 to revise the lending condition. As revised,
loans to Osborne family members are no longer subject to the aggregate lending
limitation, unless the loans are business loans.
During 2002, certain directors and executive officers of the GLB and
Great Lakes Bank, and their associates, were customers of and had banking
transactions with Great Lakes Bank in the ordinary course of business. GLB
expects that these relationships and transactions will continue in the future.
All loans and commitments to lend included in these transactions were made and
will be made in the future on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons not employed by GLB or Great Lakes Bank. The
existing transactions do not involve more than the normal risk of collectability
or present other unfavorable features.
Great Lakes Bank leases its property at 58 South Park Place,
Painesville, Ohio, from Liberty Self-Stor, Inc., an affiliate of Richard M.
Osborne. The annual base rent is $32,400 ($12 per square foot). The bank is also
responsible for real estate taxes, assessments and insurance on the facility.
The lease has a term of ten years. The
13
lease is renewable for an additional ten-year term with an annual rental
increased by 10% from the original rental term. The bank obtained an independent
appraisal supporting the fairness of the lease terms.
In 1998 Great Lakes Bank sold the property at 28500 Chardon Road,
Willoughby Hills, Ohio to Collinwood Properties Co., LLC, a limited liability
company controlled by an affiliate of Michael Osborne, brother of Vice Chairman
Richard M. Osborne and son of Chairman Jerome T. Osborne. Chairman Osborne is
also an investor in Collinwood Properties Co., LLC. The bank leases the property
from Collinwood Properties Co., LLC under a September 16, 1998 Lease Agreement
having a term of ten years and an option to renew for an additional ten years.
Monthly rent paid by the bank is approximately $2,900, plus taxes and utilities.
The bank did not obtain an independent appraisal supporting the fairness of the
lease terms or the sale price. Nevertheless, in the opinion of management, the
terms and conditions of the sale and the leaseback transaction are at least as
favorable to GLB and the bank as those that would have applied in a similar
transaction with an unrelated third party.
In 2001 Great Lakes Bank entered into a lease for branch property in
Mayfield Heights, Ohio with C.R. Green, L.P., an Ohio limited partnership and
affiliate of Vice Chairman Richard M. Osborne and Mr. Steven A. Calabrese, who
owns more than 5% of GLB's common stock. The annual base rent is $75,625 ($27.50
per square foot) during the first through fifth lease years, and $30 per square
foot during the sixth through tenth lease years. The bank is also responsible
for real estate taxes, assessments, and insurance on the facility. The lease is
renewable for an additional ten-year term, with a 15% increase for the first
through fifth years and a 10% increase for the sixth through tenth years. The
bank obtained an independent appraisal supporting the fairness of the lease
terms.
In 2001 Great Lakes Bank entered into a lease for branch property in
Concord, Ohio with Madison/Route 20, LLC, an Ohio limited partnership and also
an affiliate of Vice Chairman Richard M. Osborne and Mr. Steven A. Calabrese.
The annual base rent is $4,792 ($20.00 per square foot) during the first through
fifth lease years, and $22.50 per square foot during the sixth through tenth
lease years. The bank is also responsible for real estate taxes, assessments,
and insurance on the facility. An independent appraisal firm provided to Great
Lakes Bank at its request a limited lease analysis so that Great Lakes Bank
could estimate a market rental rate. Based on comparisons to other properties in
the area, the limited lease analysis estimated a rental range of $20 to $24 per
square foot. Taking this and other factors into account, management believes
that the terms and conditions of the lease are at least as favorable to GLB and
the bank as those that would have applied in a similar transaction with an
unrelated third party.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF THE
IDENTIFIED NOMINEES TO SERVE AS DIRECTORS UNTIL THE 2004 ANNUAL MEETING
OR UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED
SECOND PROPOSAL-- INCREASING BY 51,000 THE NUMBER OF SHARES AUTHORIZED FOR
ISSUANCE UNDER THE 1998 STOCK OPTION AND INCENTIVE PLAN
What is the Stock Option Plan's Purpose? Approved by shareholders at
the 1998 annual meeting on February 17, 1998, the 1998 Stock Option and
Incentive Plan's purpose is to advance GLB's long-term interests by giving key
employees and directors additional incentive to promote GLB's success and to
remain in GLB's service. The plan gives these persons the opportunity to acquire
additional equity interests in GLB, aligning their interests with those of other
shareholders.
We Seek Shareholder Approval to Increase the Number of Shares
Authorized for Issuance under the 1998 Stock Option and Incentive Plan. On
February 18, 2003 the board approved an amendment that would increase the number
of shares available for issuance under the plan, but the proposed amendment will
not become effective unless it is approved by shareholders. The proposed
amendment will not result in any new plan benefits to GLB's directors, officers,
or employees, other than the opportunity to receive additional stock-based
awards under the plan. We propose that the maximum number of shares of GLB
common stock issuable under the 1998 Stock Option and Incentive Plan be
increased from 110,000 shares to 161,000 shares to support future stock option
grants. We propose to amend the first sentence of section 5 of the plan to state
as follows --
14
"Subject to adjustment by the operation of Section 11 hereof, the
maximum number of Shares with respect to which Awards may be made under
the Plan is 161,000, plus any Shares surrendered to the Corporation in
payment of the exercise price of Options or Rights issued under the
Plan."
Except as specifically provided in this second proposal, the 1998 Stock Option
and Incentive Plan will remain in effect without change. A copy of the plan, as
amended to date, is attached to this proxy statement as Appendix A.
We have not planned a specific use for the additional shares. Rather,
the shares available for the grant of options under the plan have been depleted
over the years, so we seek to ensure that an ample reserve of shares exists for
the remaining five years in which options may be granted under the 1998 Stock
Option and Incentive Plan.
What Kinds of Option Awards May Be Made under the Stock Option Plan?
Awards under the plan may take the form of stock option grants, stock
appreciation rights, restricted stock grants, and performance share awards, but
stock options only have been awarded to date. The plan allows for the award of
Incentive Stock Options (ISOs) qualifying for favored tax treatment under
section 422 of the Internal Revenue Code of 1986, as well as Nonqualified Stock
Options (NQSOs). When an ISO is exercised, the holder recognizes no taxable
income, and GLB can claim no compensation expense deduction. NQSOs are options
that are not entitled to favored tax treatment under the Internal Revenue Code.
When an NQSO is exercised, the holder recognizes taxable income on the
difference between the price paid for the shares acquired by exercising the
option and the fair market value of the shares purchased, and GLB is entitled to
a compensation expense deduction. Because the exercise price of options granted
under the plan is the fair market value of GLB common stock on the date of
grant, there are no federal tax consequences to the recipient of the option or
to GLB when an option is granted.
Who Is Eligible to Receive Awards under the Stock Option Plan? Officers
and directors of GLB and Great Lakes Bank are eligible for awards. The committee
administering the plan determines the persons to whom awards are made, but each
director who is not an employee of GLB or Great Lakes Bank is entitled to
receive a single grant of options to acquire 220 shares of GLB common stock.
This automatic grant is made on March 1 to any nonemployee director who has not
already received an automatic grant of options.
Who Administers the Stock Option Plan? The committee administering the
plan is Great Lakes Bank's Compensation Committee. Within plan limits, the
committee has sole discretion and authority to determine the number of shares
acquirable by exercise of an option, the term of the option, the option exercise
price, and whether the option shall be an ISO or an NQSO.
What Are the Basic Terms of Options Granted under the Plan? According
to the plan, no option may have a term exceeding 10 years, the exercise price of
an option may not be less than the fair market value of GLB common stock on the
date the option is granted, and no options may be granted after February 17,
2008. Under plan Section 6, no individual may receive options to acquire more
than 50% of the total shares for which options may be granted under the plan, a
nonemployee director may receive options to acquire no more than 5% of the total
shares for which options may be granted under the plan, and all nonemployee
directors as a group may receive options to acquire no more than 30% of the
total shares for which options may be granted under the plan.
Special rules apply to ISOs. An ISO may be granted to employees only.
In the case of ISOs granted to any person who owns more than 10% of GLB's stock,
the term of the option may not exceed five years, and the option exercise price
must be at least 110% of the fair market value of GLB stock on the date the
option is granted. In addition, the aggregate fair market value, determined at
the time of the ISO grant, of GLB common stock for which ISOs are exercisable
for the first time under the terms of the plan during any calendar year cannot
exceed $100,000.
Options generally become vested and exercisable over a five-year period
in equal annual increments, the first 20% becoming vested and exercisable one
year after the date the option is granted. But all options become fully vested
and exercisable if (a) a tender offer or exchange offer for shares of GLB common
stock is commenced or (b) shareholders of GLB approve an agreement whereby GLB
will cease to be an independent company or whereby GLB agrees to a sale of all
or substantially all of its assets.
15
Options generally are not transferable during an option holder's
lifetime. An option holder generally has three months to exercise unexpired
options after terminating service. But if termination of service is a result of
the option holder's death, the person to whom the option was transferred by will
or by the laws of descent and distribution generally has one year to exercise
options.
How Is the Option Exercise Price Paid? An exercisable option may be
exercised in whole or in part. Options may be exercised by payment of the
exercise price in cash or by delivering shares of GLB common stock having a fair
market value equal to the exercise price.
How Many Options to Acquire GLB Common Stock Are Outstanding and How
Many More Options May Be Granted? As adjusted for a 2-for-1 stock split on March
17, 1998 and a 10% stock dividend paid on September 17, 2002, a total of 110,000
shares of GLB common stock are reserved for issuance upon exercise of stock
options granted under the 1998 Stock Option and Incentive Plan. Options to
purchase an aggregate of 59,465 shares of GLB common stock are outstanding.
Options to acquire no more than 49,935 shares of GLB common stock remain
available for future grants under the plan. But shares subject to options that
expire unexercised or that are terminated or cancelled also become available for
subsequent option grants.
Since the stock option plan became effective in 1998, 110,000 shares
are or have been reserved for issuance under stock options granted through March
5, 2003. Of those shares, 600 have been acquired by option exercises. Shares
subject to options that expire unexercised or that are terminated or cancelled
become available for additional option grants. Options to acquire 9,100 shares
have expired unexercised or have been terminated or cancelled since the plan
became effective in 1998. Of the total 110,000 shares --
o GLB's current executive officers as a group have received
options to acquire an aggregate of 49,200 shares. Of these,
President and CEO Richard T. Flenner has received options to
acquire 32,250 shares, Ms. Mihitsch, Treasurer, has received
options to acquire 13,800 shares, and Mr. Coniglio has
received options to acquire 3,150 shares,
o the ten directors of GLB who are not employees of GLB or Great
Lakes Bank have received options to acquire an aggregate of
2,200 shares,
o the eleven director nominees have received options to acquire
an aggregate of 34,450 shares, and
o all employees of GLB or Great Lakes Bank as a group (18
people), including officers who are not executive officers of
GLB or the bank, have received options to acquire an aggregate
of 57,265 shares.
The following table shows the number of shares of GLB common stock that
may be acquired by exercise of options, including options issued under the 1998
Stock Option and Incentive Plan, which was approved by GLB shareholders. The
1998 Stock Option and Incentive Plan is the only arrangement -- or "equity
compensation plan" -- of GLB providing for issuance of GLB common stock by
exercise of options, warrants, or rights.
16
EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES REMAINING
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE AVAILABLE FOR FUTURE ISSUANCE
BE ISSUED UPON EXERCISE EXERCISE PRICE OF UNDER EQUITY COMPENSATION
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, PLANS (EXCLUDING SECURITIES
WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
------------------------ -------------------- ------------------------------
(A) (B) (C)
------------------------ -------------------- ------------------------------
Equity compensation plans approved by
security holders:
All plans, including the 1998
Stock Option and Incentive
Plan (1).................... 59,465 $ 9.27 49,935 (1)
The 1998 Stock Option and
Incentive Plan only......... 59,465 $ 9.27 49,935 (1)
Equity compensation plans not approved
by security holders.................. - 0 - N/A - 0 -
(1) Does not take into account the 51,000 additional shares to be reserved
for issuance under the 1998 Stock Option and Incentive Plan if the
proposal to increase the number of shares reserved for issuance is
approved.
Traded on the Nasdaq SmallCap Market under the symbol "GLBK," the
closing price of GLB common stock on March 5, 2003 was $10.10 per share.
How May the Stock Option Plan Be Amended? Amendment of the plan is
governed by section 17 of the plan. The board of directors generally has
authority to amend any or all provisions of the plan. However, approval of
shareholders is necessary to --
o increase the aggregate number of shares with respect to which
awards may be made (except under section 11 as a result of
changes in GLB's capitalization, as for example changes
arising out of stock dividends and stock splits),
o materially increase the benefits accruing to plan
participants,
o materially change the eligibility requirements for
participation in the plan, or
o change the class of persons eligible to participate in the
plan.
Other Recent Amendments of the 1998 Stock Option and Incentive Plan. On
August 20, 2002 the board of directors amended Section 4 of the plan, which had
limited to 15,400 the maximum number of shares for which options may be granted
in any one year. As amended, the plan imposes no limits on the number of option
awards that may be made in any one year.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" INCREASING BY 51,000
THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE UNDER THE 1998 STOCK
OPTION AND INCENTIVE PLAN
THIRD PROPOSAL -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The independent auditor of GLB since its inception in 1997 has been
KPMG LLP. Upon the recommendation of the Audit Committee, KPMG LLP has been
appointed by the board, subject to shareholder ratification, to continue in such
capacity for the current fiscal year ending December 31, 2003. KPMG LLP is
considered by the board to be highly qualified.
One or more representatives of KPMG LLP are expected to be present at
the annual meeting. The representative of KPMG LLP will have the opportunity to
make a statement if desired, and will be available to respond to appropriate
questions.
17
Audit Fees. The aggregate fees billed for professional services
rendered by KPMG LLP for the audit of GLB's annual financial statements for the
year ended December 31, 2002 and for KPMG's reviews of the financial statements
included in GLB's Forms 10-QSB filed with the Securities and Exchange Commission
during 2002 were $61,100.
Financial Information Systems Design and Implementation Fees. In 2002
KPMG LLP performed no services and therefore billed no fees relating to
operating or supervising the operation of GLB's information systems or local
area network or for designing or implementing GLB's financial information
management systems.
All Other Fees. The aggregate fees billed for other services rendered
to GLB by KPMG LLP in 2002, including tax preparation services, were $7,700.
Auditor Independence. The audit committee of the board believes that
the non-audit services provided by KPMG LLP are compatible with maintaining the
auditor's independence. To the best of GLB's knowledge, none of the time devoted
by KPMG LLP on its engagement to audit GLB's financial statements for the year
ended December 31, 2002 is attributable to work performed by persons other than
full-time, permanent employees of KPMG LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS GLB BANCORP, INC.'S INDEPENDENT AUDITOR FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2003
SHAREHOLDER PROPOSALS
The proxy is solicited by management and confers discretionary
authority to vote on any matters that properly come before the annual meeting or
any adjournments thereof. If any matter not set forth in the Notice of Annual
Meeting of Shareholders is properly presented at the 2003 annual meeting, the
persons named as proxies will vote thereon in accordance with their best
judgement.
Shareholders desiring to submit proposals for inclusion in the proxy
materials of GLB Bancorp, Inc. for the 2004 annual meeting must submit the
proposals to GLB at its executive offices no later than November 16, 2003. GLB
will not be required to include in its proxy statement or form of proxy for the
2004 annual meeting a shareholder proposal that is received after that date or
that otherwise fails to meet requirements for shareholder proposals established
by Securities and Exchange Commission regulations.
If a shareholder intends to present a proposal at the 2004 annual
meeting without seeking to include the proposal in GLB's proxy materials for
that meeting, the shareholder must give advance notice to GLB. The shareholder
must give notice at least 45 days before the date in 2004 corresponding to the
mailing date of this proxy statement for the 2003 annual meeting. This proxy
statement is being mailed to shareholders on or about March 17, 2003.
Accordingly, a shareholder who desires to present a proposal at the 2004 annual
meeting without seeking to include the proposal in GLB's proxy materials for
that meeting should provide notice of the proposal to GLB no later than January
31, 2004. If the shareholder fails to do so, GLB's management proxies for the
2004 annual meeting will be entitled to use their discretionary voting authority
on that proposal, without any discussion of the matter in GLB's proxy materials.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires GLB's
directors and executive officers, as well as persons who own more than 10% of a
registered class of GLB's equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of GLB stock. Based solely on review of the copies of such reports
furnished to GLB and written representations to GLB, to GLB's knowledge all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% beneficial owners were complied with during the
fiscal year ended December 31, 2002.
18
MISCELLANEOUS
The persons named in the proxy will vote all properly executed proxies.
If a shareholder specifies on such proxy a choice with respect to a proposal to
be acted upon, the proxy will be voted in accordance with such specifications.
If no choice is specified, the proxy will be voted FOR election of the nominees
identified herein, FOR amendment of the 1998 Stock Option and Incentive Plan to
increase the number of shares authorized for issuance, and FOR ratification of
GLB's independent auditor.
Other Business. The board is not aware of any business to come before
the meeting other than those matters described in this proxy statement. However,
if any other matters properly come before the Annual Meeting, for example
matters relating to the conduct of the Annual Meeting, proxies in the
accompanying form will be voted in accordance with the judgment of the person or
persons voting the proxies.
Costs of Solicitation. In addition to solicitation of proxies by mail,
directors, officers, and regular employees may solicit proxies personally or by
telephone without receiving additional compensation. Costs of solicitation will
be borne by GLB. GLB will reimburse brokerage firms and other custodians,
nominees, and fiduciaries for reasonable expenses incurred by them to send proxy
materials to the beneficial owners of GLB common stock.
Availability of GLB's Annual Report for the Year Ended December 31,
2002. GLB's Annual Report to Shareholders has been mailed to all persons who
were shareholders as of the close of business on March 4, 2003. Any shareholder
who has not received a copy of the Annual Report may obtain a copy by writing to
GLB's Secretary. The Annual Report is not part of these proxy soliciting
materials and is not incorporated in this proxy statement by reference.
A COPY OF GLB'S FORM 10-KSB ANNUAL REPORT FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2002, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
BUT WITHOUT EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ALL PERSONS
WHO WERE SHAREHOLDERS AS OF THE CLOSE OF BUSINESS ON MARCH 4, 2003 AND
WHO SUBMIT A WRITTEN REQUEST FOR A COPY TO MS. CHERYL JEAN MIHITSCH,
ACTING CORPORATE SECRETARY, GLB BANCORP, INC., 7001 CENTER STREET,
MENTOR, OHIO 44060
Householding. If you and others who share your address own your shares
in street name, your broker or other holder of record may be sending only one
annual report and proxy statement to your address. Known as "householding," this
practice reduces GLB's printing and postage costs. However, if you wish to
receive a separate annual report or proxy statement in the future, you should
contact your broker or other holder of record. If you own your shares in street
name and are receiving multiple copies of our annual report and proxy statement,
you can request householding by contacting your broker or other holder of
record. Shareholders who share an address to which a single annual report or
proxy statement is delivered may orally or in writing request a separate copy of
the annual report or proxy statement. GLB will deliver the separate annual
report or proxy statement promptly at your request.
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE 2003 ANNUAL
MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY WITHDRAW YOUR
PROXY AND CAST YOUR VOTE IN PERSON.
19
APPENDIX A
GLB BANCORP, INC.
1998 Stock Option and Incentive Plan
(as amended through March 17, 2003)
(share figures in Sections 5 and 19 are adjusted for stock splits and stock
dividends through March 17, 2003)
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its shareholders by providing a means for
attracting and retaining directors, officers and employees of the Corporation
and its Affiliates. It is intended that designated Options granted pursuant to
the provisions of this Plan to persons employed by the Corporation or its
Affiliates will qualify as Incentive Stock Options. Options granted to persons
who are not employees will be Non-Qualified Stock Options.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" - means any "parent corporation" or "subsidiary
corporation" of the Corporation, as such terms are defined in Section 424(e) and
(f), respectively, of the Code.
"Award" - means the grant of an Incentive Stock Option, a Non-Qualified
Stock Option, a Stock Appreciation Right, Restricted Stock or other property or
securities, or any combination thereof, as provided in the Plan.
"Award Agreement" - means the agreement evidencing the grant of an
Award made under the Plan.
"Bank" - means Great Lakes Bank, and any successor entity.
"Cause" or "cause" - means, in connection with termination or cessation
of service as a director, officer or employee of the Corporation or an
Affiliate, personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties or gross negligence.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee referred to in Section 3 hereof.
"Continuous Service" - means the absence of any interruption or
termination of service as a director, officer or employee of the Corporation or
an Affiliate, except that when used with respect to persons granted an Incentive
Option "Continuous Service" means the absence of any interruption or termination
of service as an employee of the Corporation or an Affiliate. Service shall not
be considered interrupted in the case of sick leave, military leave or any other
leave of absence approved by the Corporation or in the case of transfers between
payroll locations of the Corporation or between the Corporation, its parent, its
subsidiaries or its successor.
"Corporation" - means GLB Bancorp, Inc., an Ohio corporation.
"Employee" - means any person, including an officer or director, who is
employed by the Corporation or any Affiliate.
"ERISA" - means the Employee Retirement Income Security Act of 1974, as
amended.
"Exercise Price" - means (i) in the case of an Option, the price per
Share at which the Shares subject to such Option may be purchased upon exercise
of such Option and (ii) in the case of a Right, the price per Share which, upon
grant, the Committee determines shall be used to calculate the aggregate value a
Participant shall be entitled to receive pursuant to Sections 9 or 12 hereof
upon exercise of such Right.
A-1
"Incentive Stock Option" - means an option to purchase Shares granted
by the Committee pursuant to Section 6 hereof which is subject to the
limitations and restrictions of Section 8 hereof and is intended to qualify
under Section 422 of the Code. Unless otherwise set forth in the Award
Agreement, any Option that does not qualify as an Incentive Stock Option for any
reason shall be deemed a Non-Qualified Stock Option.
"Market Value" - means the average of the high and low quoted sales
prices on the date in question (or, if there is no reported sale on such date,
on the last preceding date on which any reported sale occurred) of a Share on
the Composite Tape for the New York Stock Exchange-Listed Stocks, or, if on such
date the Shares are not quoted on the Composite Tape, on the New York Stock
Exchange, or, if the Shares are not listed or admitted to trading on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which the Shares are listed or admitted
to trading, or, if the Shares are not listed or admitted to trading on any such
exchange, the mean between the closing high bid and low asked quotations with
respect to a Share on such date on the National Association of Securities
Dealers, Inc. Automated Quotations System or bulletin board, or any similar
system then in use, or, if no such quotations are available, the fair market
value on such date of a Share as the Board of Directors shall determine.
"Non-Employee Director" - means a director who (a) is an outside
director, as defined in Section 162(m) of the Code, and (b) is a Non-Employee
Director, as defined in Rule 16b-3(b)(3) of the Securities and Exchange
Commission or any successor rule thereto.
"Non-Qualified Stock Option" - means an option to purchase Shares
granted by the Committee pursuant to Section 6 hereof which does not qualify,
for any reason, as an Incentive Stock Option under Section 422(b) of the Code.
"Option" - means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" - means any director, officer or employee of the
Corporation or any Affiliate who is selected by the Committee to receive an
Award and any director of the Corporation who is granted an Award pursuant to
Section 19 hereof.
"Plan" - means the 1998 Stock Option and Incentive Plan of the
Corporation.
"Related" - means (i) in the case of a Right, a Right which is granted
in connection with, and to the extent exercisable, in whole or in part, in lieu
of, an Option or another Right and (ii) in the case of an Option, an Option
which is granted in connection with, and to the extent exercisable, in whole or
in part, in lieu of, a Right or another Option.
"Restricted Stock" - means Shares awarded to a Participant by the
Committee pursuant to Section 10(a) hereof.
"Right" - means a Stock Appreciation Right.
"Shares" - means the shares of Common Stock of the Corporation, without
par value.
"Stock Appreciation Right" - means a stock appreciation right with
respect to Shares granted by the Committee pursuant to the Plan.
3. Administration. The Plan shall be administered by a Committee
consisting of two or more members, each of whom shall be a Non-Employee
Director. The members of the Committee shall be appointed by the Board of
Directors of the Corporation. Except as limited by the express provisions of the
Plan or by resolutions adopted by the Board of Directors of the Corporation, the
Committee shall have sole and complete authority and discretion to (i) select
Participants and grant Awards; (ii) determine the number of Shares to be subject
to types of Awards generally, as well as to individual Awards granted under the
Plan; (iii) determine the terms and conditions upon which Awards
A-2
shall be granted under the Plan; (iv) prescribe the form and terms of
instruments evidencing such grants; and (v) establish from time to time
regulations for the administration of the Plan, interpret the Plan, and make all
determinations deemed necessary or advisable for the administration of the Plan.
Without in any way limiting the authority of the Committee under the
terms of the Plan, the Committee may provide in any Award Agreement that the
recipient of the Award shall maintain in confidence the amount and terms of his
or her award, except as disclosure thereof may be required under applicable law.
An Award shall be subject to forfeiture at the Committee's discretion for
violation of the confidentiality provisions of an Award Agreement, except
insofar as such Award relates to Options or Rights that have been exercised or
Shares that have become vested by lapse of any applicable restrictions.
A majority of the Committee shall constitute a quorum, and the acts of
a majority of the members present at any meeting at which a quorum is present,
or acts approved in writing by a majority of the Committee without a meeting,
shall be acts of the Committee.
4. Eligibility. The Committee may select from time to time Participants
in the Plan from those directors, officers and employees of the Corporation or
its Affiliates who, in the opinion of the Committee, are responsible for or
contribute to the management, growth and profitability of the Corporation and
its Affiliates.
5. Shares Subject to Plan. Subject to adjustment by the operation of
Section 11 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan is 110,000, plus any Shares surrendered to the
Corporation in payment of the exercise price of Options or Rights issued under
the Plan. The Shares with respect to which Awards may be made under the Plan may
be authorized and unissued shares or issued shares heretofore or hereafter
reacquired and held as treasury shares. Shares that are subject to Related
Rights and Related Options shall be counted only once in determining whether the
maximum number of Shares with respect to which Awards may be granted under the
Plan has been exceeded. An Award shall not be considered to have been made under
the Plan with respect to any Option or Right that terminates. New Awards may be
granted under the Plan with respect to the number of Shares as to which such
termination has occurred.
6. General Terms and Conditions of Options and Rights. The Committee
shall have full and complete authority and discretion, except as expressly
limited by the Plan, to grant Options and/or Rights and to provide the terms and
conditions (which need not be identical among Participants) thereof. In
particular, the Committee shall prescribe the following terms and conditions:
(i) the Exercise Price of any Option or Right, which shall not be less than the
Market Value per Share at the date of grant of such Option or Right, (ii) the
number of Shares subject to, and the expiration date of, any Option or Right,
which expiration date shall not exceed ten years from the date of grant, (iii)
the manner, time and rate (cumulative or otherwise) of exercise of such Option
or Right, and (iv) the restrictions, if any, to be placed upon such Option or
Right or upon Shares which may be issued upon exercise of such Option or Right.
Notwithstanding the foregoing, no individual shall be granted Awards with
respect to more than 50% of the total shares subject to the Plan, and no
director who is not an employee of the Corporation shall be granted Awards with
respect to more than 5% of the total Shares subject to the Plan. All directors
who are neither officers or employees of the Corporation, in the aggregate, may
not be granted Awards with respect to more than 30% of the total Shares subject
to the Plan. No Awards shall vest and become exercisable earlier than one year
from the date the Plan is approved by shareholders of the Corporation. No Awards
shall vest and become exercisable at a rate in excess of 20% per year beginning
from the date of grant.
Furthermore, at the time of any Award, the Participant shall enter into
an agreement with the Corporation in a form specified by the Committee, agreeing
to the terms and conditions of the Award and such other matters as the
Committee, in its sole discretion, shall determine (the "Option Agreement").
7. Exercise of Options or Rights.
(a) Except as provided herein, an Option or Right granted under the
Plan shall be exercisable during the lifetime of the Participant to whom such
Option or Right was granted only by such Participant and, except as
A-3
provided in paragraphs (c) and (d) of this Section 7, no such Option or Right
may be exercised unless at the time such Participant exercises such Option or
Right, such Participant has maintained Continuous Service since the date of
grant of such Option or Right.
(b) To exercise an Option or Right under the Plan, the Participant to
whom such Option or Right was granted shall give written notice to the
Corporation in form satisfactory to the Committee (and, if partial exercises
have been permitted by the Committee, by specifying the number of Shares with
respect to which such Participant elects to exercise such Option or Right)
together with full payment of the Exercise Price, if any and to the extent
required. The date of exercise shall be the date on which such notice is
received by the Corporation. Payment, if any is required, shall be made either
(i) in cash (including check, bank draft or money order) or (ii) by delivering
(A) Shares already owned by the Participant and having a fair market value equal
to the applicable exercise price, such fair market value to be determined in
such appropriate manner as may be provided by the Committee or as may be
required in order to comply with or to conform to requirements of any applicable
laws or regulations, or (B) a combination of cash and such Shares.
(c) If a Participant to whom an Option or Right was granted shall cease
to maintain Continuous Service for any reason (excluding death or disability and
termination of employment by the Corporation or any Affiliate for cause), such
Participant may, but only within the period of three months immediately
succeeding such cessation of Continuous Service and in no event after the
expiration date of such Option or Right, exercise such Option or Right to the
extent that such Participant was entitled to exercise such Option or Right at
the date of such cessation; provided, however, that such right of exercise after
cessation of Continuous Service shall not be available to a Participant if the
Committee otherwise determines and so provides in the applicable instrument or
instruments evidencing the grant of such Option or Right. If a Participant to
whom an Option or Right was granted shall cease to maintain Continuous Service
by reason of death or disability then, unless the Committee shall have otherwise
provided in the instrument evidencing the grant of an Option or Stock
Appreciation Right, all Options and Rights granted and not fully exercisable
shall become exercisable in full upon the happening of such event and shall
remain so exercisable (i) in the event of death for the period described in
paragraph (d) of this Section 7 and (ii) in the event of disability for a period
of three months following such date. If the Continuous Service of a Participant
to whom an Option or Right was granted by the Corporation is terminated for
cause, all rights under any Option or Right of such Participant shall expire
immediately upon the giving to the Participant of notice of such termination.
(d) In the event of the death of a Participant while in the Continuous
Service of the Corporation or an Affiliate or within the three month period
referred to in paragraph (c) of this Section 7, the person to whom any Option or
Right held by the Participant at the time of his death is transferred by will or
the laws of descent and distribution, or in the case of an Award other than an
Incentive Stock Option, pursuant to a qualified domestic relations order, as
defined in the Code or Title 1 of ERISA or the rules thereunder may, but only to
the extent such Participant was entitled to exercise such Option or Right as set
forth in paragraph (c) of this Section 7, exercise such Option or Right at any
time within a period of one year succeeding the date of death of such
Participant, but in no event later than ten years from the date of grant of such
Option or Right. Following the death of any Participant to whom an Option was
granted under the Plan, irrespective of whether any Related Right shall have
been granted to the Participant or whether the person entitled to exercise such
Related Right desires to do so, the Committee may, as an alternative means of
settlement of such Option, elect to pay to the person to whom such Option is
transferred by will or by the laws of descent and distribution, or in the case
of an Option other than an Incentive Stock Option, pursuant to a qualified
domestic relations order, as defined in the Code or Title I of ERISA or the
rules there under, the amount by which the Market Value per Share on the date of
exercise of such Option shall exceed the Exercise Price of such Option,
multiplied by the number of Shares with respect to which such Option is properly
exercised. Any such settlement of an Option shall be considered an exercise of
such Option for all purposes of the Plan.
8. Incentive Stock Options. Incentive Stock Options may be granted only
to Participants who are Employees. Any provision of the Plan to the contrary
notwithstanding, (i) no Incentive Stock Option shall be granted more than ten
years from the date the Plan is adopted by the Board of Directors of the
Corporation and no Incentive Stock Option shall be exercisable more than ten
years from the date such Incentive Stock Option is granted, (ii) the Exercise
Price of any Incentive Stock Option shall not be less than the Market Value per
Share on
A-4
the date such Incentive Stock Option is granted, (iii) any Incentive Stock
Option shall not be transferable by the Participant to whom such Incentive Stock
Option is granted other than by will or the laws of descent and distribution,
and shall be exercisable during such Participant's lifetime only by such
Participant, (iv) no Incentive Stock Option shall be granted to any individual
who, at the time such Incentive Stock Option is granted, owns stock possessing
more than ten percent of the total combined voting power of all classes of stock
of the Corporation or any Affiliate unless the Exercise Price of such Incentive
Stock Option is at least 110 percent of the Market Value per Share at the date
of grant and such Incentive Stock Option is not exercisable after the expiration
of five years from the date such Incentive Stock Option is granted, and (v) the
aggregate Market Value (determined as of the time any Incentive Stock Option is
granted) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by a Participant in any calendar year shall not
exceed $100,000.
9. Stock Appreciation Rights. A Stock Appreciation Right shall, upon
its exercise, entitle the Participant to whom such Stock Appreciation Right was
granted to receive a number of Shares or cash or combination thereof, as the
Committee in its discretion shall determine, the aggregate value of which (i.e.,
the sum of the amount of cash and/or Market Value of such Shares on date of
exercise) shall equal (as nearly as possible, it being understood that the
Corporation shall not issue any fractional shares) the amount by which the
Market Value per Share on the date of such exercise shall exceed the Exercise
Price of such Stock Appreciation Right, multiplied by the number of Shares with
respect of which such Stock Appreciation Right shall have been exercised. A
Stock Appreciation Right may be Related to an Option or may be granted
independently of any Option as the Committee shall from time to time in each
case determine. At the time of grant of an Option the Committee shall determine
whether and to what extent a Related Stock Appreciation Right shall be granted
with respect thereto; provided, however, and notwithstanding any other provision
of the Plan, that if the Related Option is an Incentive Stock Option, the
Related Stock Appreciation Right shall satisfy all the restrictions and
limitations of Section 8 hereof as if such Related Stock Appreciation Right were
an Incentive Stock Option and as if other rights which are Related to Incentive
Stock Options were Incentive Stock Options. In the case of a Related Option,
such Related Option shall cease to be exercisable to the extent of the Shares
with respect to which the Related Stock Appreciation Right was exercised. Upon
the exercise or termination of a Related Option, any Related Stock Appreciation
Right shall terminate to the extent of the Shares with respect to which the
Related Option was exercised or terminated.
10. Restricted Stock and Performance Awards.
(a) Restricted Stock. The Committee is hereby authorized to grant
Awards of Restricted Stock to Participants with the following terms and
conditions and with such additional terms and conditions not inconsistent with
the provisions of the Plan as the Committee shall determine:
(i) Restrictions. Shares of Restricted Stock shall be subject
to such restrictions as the Committee may impose (including, without
limitation, any limitation on the right to vote a Share of Restricted
Stock or the right to receive any dividend or other right or property
with respect thereto), which restrictions may lapse separately or in
combination at such time or times, in such installments or otherwise as
the Committee may deem appropriate.
(ii) Stock Certificates. Any Restricted Stock granted under
the Plan shall be evidenced by issuance of a stock certificate or
certificates, which certificate or certificates shall be held by the
Corporation. Such certificate or certificates shall be registered in
the name of the Participant and shall bear an appropriate legend
referring to the restrictions applicable to such Restricted Stock.
(iii) Forfeiture; Delivery of Shares. Except as otherwise
determined by the Committee, upon Termination of Service during the
applicable restriction period, all Shares of Restricted Stock at such
time subject to restriction shall be forfeited to the Corporation;
provided, however, that the Committee may waive in whole or in part any
or all remaining restrictions with respect to Shares of Restricted
Stock. Shares representing Restricted Stock that is no longer subject
to restrictions shall be delivered to the holder thereof promptly after
the applicable restrictions lapse or are waived.
A-5
(b) Performance Awards. The Committee is hereby authorized to grant
performance Awards to Participants subject to the terms of the Plan and any
applicable Award Agreement. A performance Award granted under the Plan (i) may
be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities, other Awards or other property and (ii)
shall confer on the holder thereof the right to receive payments, in whole or in
part, upon the achievement of such performance goals during such performance
periods as the Committee shall establish. Subject to the terms of the Plan and
any applicable Award Agreement, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
performance Award granted and the amount of any payment or transfer to be made
pursuant to any performance Award shall be determined by the Committee.
11. Adjustments Upon Changes in Capitalization. In the event of any
change in the outstanding Shares subsequent to the effective date of the Plan by
reason of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum aggregate number
and class of shares as to which Awards may be granted under the Plan and the
number, class and exercise price of shares with respect to which Awards have
been granted under the Plan shall be appropriately adjusted by the Committee,
whose determination shall be conclusive. Creation of a class of Serial Preferred
Stock or issuance of such shares hereafter shall not be deemed to constitute a
change requiring adjustment under this Section.
12. Effect of Merger and Change in Control.
(a) Merger. In the event of any merger, consolidation or combination of
the Corporation (other than a merger, consolidation or combination in which the
Corporation is the continuing entity and which does not result in the
outstanding Shares being converted into or exchanged for different securities,
cash or other property, or any combination thereof) pursuant to a plan or
agreement the terms of which are binding upon all shareholders of the
Corporation (except to the extent that dissenting shareholders may be entitled,
under statutory provisions or provisions contained in the articles of
incorporation, to receive the appraised or fair value of their holdings), any
Participant to whom an Option or Right has been granted shall have the right
(subject to the provisions of the Plan and any limitation or vesting period
applicable to such Option or Right), thereafter and during the term of each such
Option or Right, to receive upon exercise of any such Option or Right an amount
equal to the excess of the fair market value on the date of such exercise of the
securities, cash or other property, or combination thereof, receivable upon such
merger, consolidation or combination in respect of a Share over the Exercise
Price of such Right or Option, multiplied by the number of Shares with respect
to which such Option or Right shall have been exercised. Such amount may be
payable fully in cash, fully in one or more of the kind or kinds of property
payable in such merger, consolidation or combination, or partly in cash and
partly in one or more of such kind or kinds of property, all in the discretion
of the Committee.
(b) Change in Control. Each of the events specified in the following
clauses (i) through (iii) of this Section 12(b) shall be deemed a "change in
control": (i) any third person, including a "group," as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, shall become the beneficial
owner of shares of the Corporation with respect to which 25% or more of the
total number of votes for the election of the Board of Directors of the
Corporation may be cast (other than any person or group owning 25% or more of
the Common Stock as of the date of adoption of the Plan, and other than any
person who, together with members of his immediate family, owns 25% or more of
the Common Stock as of the date of adoption of the Plan), (ii) as a result of,
or in connection with, any cash tender offer, merger or other business
combination, sale of assets or contested election, or combination of the
foregoing, the persons who were directors of the Corporation shall cease to
constitute a majority of the Board of Directors of the Corporation, or (iii) the
shareholders of the Corporation shall approve an agreement providing either for
a transaction in which the Corporation will cease to be an independent, publicly
owned corporation or for a sale or other disposition of all or substantially all
the assets of the Corporation. Upon a change in control, unless the Committee
shall have otherwise provided in the Award Agreement, any restricted period with
respect to Restricted Stock awarded to such Participant shall lapse and all
Shares awarded as Restricted Stock shall become fully vested in the Participant
to whom such Shares were awarded. If a tender offer or exchange offer for Shares
(other than such an offer by the Corporation) is commenced, or if the event
specified in clause (iii) above shall occur, unless the
A-6
Committee shall have otherwise provided in the Award Agreement, all Options and
Stock Appreciation Rights granted and not fully exercisable shall become
exercisable in full upon the happening of such event; provided, however, that no
Option or Stock Appreciation Right that has previously been exercised or
otherwise terminated shall become exercisable.
13. Assignments and Transfers. No Award nor any right or interest of a
Participant under the Plan in any instrument evidencing any Award under the Plan
may be assigned, encumbered or transferred except, in the event of the death of
a Participant, by will or the laws of descent and distribution or in the case of
Awards other than Incentive Stock Options pursuant to a qualified domestic
relations order, as defined in the Code or Title I of ERISA or the rules
thereunder.
14. Employee Rights Under the Plan. No director, officer or employee
shall have a right to be selected as a Participant nor, having been so selected,
to be selected again as a Participant and no director, officer, employee or
other person shall have any claim or right to be granted an Award under the Plan
or under any other incentive or similar plan of the Corporation or any
Affiliate. Neither the Plan nor any action taken thereunder shall be construed
as giving any employee any right to be retained in the employ of the Corporation
or any Affiliate.
15. Delivery and Registration of Stock. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Committee shall determine to be necessary or advisable to comply with the
provisions of the Securities Act of 1933 or any other Federal, state or local
securities legislation or regulation. It may be provided that any representation
requirement shall become inoperative upon a registration of the Shares or other
action eliminating the necessity of such representation under the Securities Act
of 1933 or other applicable securities law. The Corporation shall not be
required to deliver any Shares under the Plan prior to (i) the admission of such
shares to listing on any stock exchange on which Shares may then be listed, and
(ii) the completion of such registration or other qualification of such Shares
under any state or Federal law, rule or regulation, as the Committee shall
determine to be necessary or advisable.
16. Withholding Tax. Upon the termination of the restricted period with
respect to any shares of Restricted Stock (or at any such earlier time, if any,
that an election is made by the Participant under Section 83(b) of the Code, or
any successor provision thereto, to include the value of such shares in taxable
income), the Corporation shall have the right to require the Participant or
other person receiving such shares to pay the Corporation the amount of any
taxes which the Corporation is required to withhold with respect to such shares,
or, in lieu thereof, to retain or sell without notice, a sufficient number of
shares held by it to cover the amount required to be withheld. The Corporation
shall have the right to deduct from all dividends paid with respect to shares of
Restricted Stock the amount of any taxes which the Corporation is required to
withhold with respect to such dividend payments.
The Corporation shall have the right to deduct from all amounts paid in
cash with respect to the exercise of a Right under the Plan any taxes required
by law to be withheld with respect to such cash payments. Where a Participant or
other person is entitled to receive Shares pursuant to the exercise of an Option
or Right pursuant to the Plan, the Corporation shall have the right to require
the Participant or such other person to pay the Corporation the amount of any
taxes which the Corporation is required to withhold with respect to such Shares,
or, in lieu thereof, to retain, or sell without notice, a number of such Shares
sufficient to cover the amount required to be withheld.
All withholding decisions pursuant to this Section 16 shall be at the
sole discretion of the Committee or the Corporation.
17. Amendment or Termination. The Board of Directors of the Corporation
may amend, suspend or terminate the Plan or any portion thereof at any time, but
(except as provided in Section 11 hereof) no amendment shall be made without
approval of the shareholders of the Corporation which shall (i) increase the
aggregate number of Shares with respect to which Awards may be made under the
Plan (except pursuant to Section 11), (ii) materially increase the benefits
accruing to Participants, (iii) materially change the requirements as to
eligibility for participation in the Plan or (iv) change the class of persons
eligible to participate in the Plan; provided, that no such
A-7
amendment, suspension or termination shall impair the rights of any Participant,
without his consent, in any Award made pursuant to the Plan.
18. Effective Date and Term of Plan. The Plan shall become effective
upon its adoption by shareholders of the Corporation. It shall continue in
effect for a term of ten years unless sooner terminated under Section 17 hereof.
19. Initial Grant. Following adoption of this Plan by the shareholders
of the Corporation at the Corporation's 1998 Annual Meeting of Shareholder of
the Corporation, each member of the Board of Directors of the Corporation who is
not an Employee (which term includes officers) shall be granted a ten-year,
Non-Qualified Stock Option to purchase 220 shares at an Exercise Price per share
equal to the Market Value per share of the Shares on the date of grant. Any
director who is elected or appointed hereafter, but during the term of the Plan,
who is not then an Employee shall be granted a ten-year, Non-Qualified Stock
Option to purchase 220 shares at an Exercise Price per share equal to the Market
Value per share of the Shares on the date of grant, the number of Shares being
subject to possible adjustment as provided in Section 11 in the event of
intervening changes in capitalization; provided, however, that no director shall
receive more than one Award pursuant to this Section 19.
Each Option issued under this Section 19 shall be evidenced by a
Non-Qualified Stock Option Agreement in a form approved by the Board of
Directors and shall be subject in all respects to the terms and conditions of
this Plan, which are controlling. All Options granted pursuant to this section
shall vest and become exercisable in five equal annual installments, with the
first installment vesting and becoming exercisable on the first anniversary of
the date of grant, subject to the Director maintaining Continuous Service with
the Corporation or its Affiliates since the date of grant.
A-8
GLB BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS -- APRIL 22, 2003
This Proxy Is Solicited by the Board of Directors
The undersigned hereby appoints the official proxy committee
P consisting of all of the members of the Board of Directors of GLB Bancorp,
R Inc., or a majority of them, with full powers of substitution, to act as
O attorneys and proxies for the undersigned, to vote all shares of stock of
X GLB Bancorp, Inc. that the undersigned is entitled to vote at the Annual
Y Meeting of Shareholders, to be held at the Holiday Inn Express Hotel &
Suites LaMalfa Centre, 5783 Heisley Road, Mentor Ohio, on April 22, 2003,
at 10:30 a.m. local time, and at any adjournment or postponement thereof,
as follows:
FOR WITHHOLD
1. A proposal to elect the nominees named herein to serve as directors until [ ] [ ]
the 2004 Annual Meeting of Shareholders, or until their successors are
elected and qualified.
NOMINEES: Umberto Fedeli George C. Lott Richard M. Osborne Joseph T. Svete
Richard T. Flenner, Jr. George X. Mechir Edward R. Pike Thomas E. Wheeler
James V. Fryan Jerome T. Osborne Thomas J. Smith
To withhold authority to vote for any individual nominee, print that nominee's
name on this line:
- ----------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. A proposal to amend GLB Bancorp, Inc.` s 1998 Stock Option and Incentive [ ] [ ] [ ]
Plan for the purpose of increasing by 51,000 the number of shares
authorized for issuance under the plan.
3. A proposal to ratify the board`s appointment of KPMG LLP to serve as GLB [ ] [ ] [ ]
Bancorp, Inc.`s independent auditor for the fiscal year ending
December 31, 2003.
The Board of Directors recommends a vote "FOR" the identified nominees and "FOR"
proposal 2 and proposal 3.
(Continued, and to be signed, on the reverse side)
==========================================================================================================
(Continued from reverse side)
This proxy will be voted as directed, but if no instructions are specified
this proxy will be voted "FOR" the identified nominees and "FOR" proposal 2. If
any other business is presented at the meeting, this proxy will be voted by
those named in this proxy in their best judgment. At the present time, the board
of directors knows of no other business to be presented at the meeting.
Should the undersigned be present and elect to vote at the Annual Meeting or
at any adjournment thereof and after notification to the Secretary of GLB
Bancorp, Inc. at the Annual Meeting of the shareholder's decision to terminate
this proxy, then the power of said attorneys and proxies shall be deemed
terminated and of no further force and effect.
The undersigned acknowledges receipt from GLB Bancorp, Inc. prior to the
execution of this proxy of the Notice of the Annual Meeting of Shareholders and
Proxy Statement dated March 17, 2003.
Dated:__________________________________ , 2002
X______________________________________________
SIGNATURE OF SHAREHOLDER
X______________________________________________
SIGNATURE OF JOINT SHAREHOLDER
Please sign exactly as your name appears on
the envelope in which this card was mailed.
When signing as attorney, executor,
administrator, trustee, or guardian, please
give your full title. If a corporation,
please sign in full corporate name by the
president or other authorized officer. If a
partnership, please sign in partnership name
by authorized person. For joint accounts,
only one signature is required.
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.